FEELING the pinch after a tough year, and all the festive spending? Many people find the idea of taking a good look through their bank accounts scary - particularly around this time of year.
But by really facing up to your finances, you’re also taking steps towards regaining control over your spending habits in 2021.
Consumer rights expert Martyn James from Resolver.co.uk says it doesn’t have to be a nightmare however, or even take that long to get started.
You may even feel some relief from understanding the true state of your finances, rather than having it hanging over you all the time, and it could make it easier to get whatever help you need.
Here, James shares tips to get started...
1. Get back to budgeting basics
Take a deep breath, turn on the computer or grab a pad, and have a look at your bank accounts. You can set yourself a time limit of no more than 30 minutes - just getting started is the most important thing.
Budgeting is often best when it’s basic. A simple spreadsheet is all you need, or a blank piece of paper.
If you have online banking, you can get a list of direct debits and standing orders with one or two clicks. List out when your regular payments are due and total up the cost, then compare it to what’s coming in. In a separate column, include outgoings that you pay-as-you-go, including food shopping, travel and lifestyle spending, including takeaways.
This should be fairly quick to do - and you’ll be left with the sum of money you have left over each month in rather stark terms.
2. Now that’s out of the way, let’s get some cash back
Go back 13 months through your bank statements and note down anything you don’t recognise. This could include sneaky annual debits for services you neither wanted nor needed.
Why 13 months? Many businesses sign you up to annual payments that might have slipped under your radar. So go back a year - and overlap it by an extra month.
Cancel what you don’t need and claim money back if you haven’t authorised the payments. You could dispute unauthorised transactions through your bank or card provider, or take it up directly with the firm that’s debited you.
3. Contact your creditors
If you’re worried that your household income is tight or you’re struggling to stay on top of it, then the sooner you contact your lender, the better. If you’re struggling to meet your financial commitments, ask your lender what help it can offer.
Lenders may, for example, consider suspending interest and charges for a short period if it’s making your situation worse. Loan and credit payment holidays are available too - so ask your lender and explain your situation to them if you’re struggling.
Payment holidays are only intended for those who truly need them. Mortgage and loan holidays can buy you a bit of time to regain control of your finances - but do bear in mind the money you owe just gets tacked on to the end of the mortgage or loan period - and extra interest may still apply.
4. If you don’t need it, cancel it
Not using that gym membership? Gone off that TV streaming site? How about that healthy lifestyle app that’s hurting your less-than-healthy bank balance? Every little bit adds up - so ditch what you don’t need.
5. Be realistic
In some cases, there may be no other way out than to take significant action, such as downsizing to a less expensive property perhaps - if realistically you can no longer afford your existing mortgage and there’s no chance the situation will improve.
Speak to your lender and be sure you understand all the options. Another potential option might be to extend the term of your existing mortgage, if your lender will agree.
6. Switch and save
Energy use will have gone up considerably if you’ve been working from home, so see if you can get a cheaper deal. Take your own meter readings and call your provider asking for a revised bill. Then have a look at the options for switching.
Check if you are out of contract on your mobile, broadband or other annual subscriptions too.
Contact MABS, the Money Advice and Budgeting Service. It is the State’s only free money and debt advice service. They work with all kinds of people, who may have all kinds of personal debt.
The service is fully funded by the government, making it completely free to the public. The Service is independent, with no links to any banks or credit unions, and all your dealings with MABS will be confidential, in accordance with our confidentiality policy.
They have 60 offices all around the country.
You can contact your local office in:
- Cork City – 0761 07 2090
- Dunmanway – 0761 07 2450
- Mallow – 0761 07 2440
- Charleville – 0761 07 2420
- Kerry – 0761 07 2190
They also have a website – www.mabs.ie and their Helpline can be contacted Monday to Friday, 9am to 8pm, on 0761 07 2000.
MABS works with people who may be struggling with debt or who need help in managing their money.
They also talk to government and lenders to find better solutions for those who have money problems, as well as developing tools and resources to help people avoid getting in over their heads.
MABS does not give out any money – instead, they work with clients to ensure that they are getting all income they are entitled to, that they are getting the best value out of this income, and in working out sustainable payment plans with creditors, where debt becomes a problem.
Some of the areas their money advisers work with clients with personal debts, includes:
- Mortgage arrears
- Personal loans
- Utilities arrears
- Credit card debt
- Hire purchases
- Rent arrears
- Court fines
- Catalogue debts
- Sub-prime loans
- Legal moneylenders