The recession has meant many people have had a tough time with their finances in recent years. Rising unemployment, squeezed disposable incomes, tightened budgets and soaring energy bills are just some of the factors having a big effect on people's finances.
Some people repaying unsecured debts every month may find they can't afford their repayments as they stand - in which case they should get professional help to find the most appropriate approach to the problem.
A debt management plan or the Debt Arrangement Scheme (DAS) could help you get back on top of your unsecured debts with reduced monthly repayments. However, DAS is only available to residents of Scotland , whereas debt management plans are available across the UK.
On the other hand, some people will find that they don't need to enter a debt solution - that sticking to a carefully planned budget helps them to stay comfortably on top of their debts and all their other monthly costs. If you can do this, your credit rating won't be damaged by making smaller payments.
Here are some tips for successful recession budgeting.
Recession budgeting tips
1. Separate 'wants' from 'needs'. It's important to remain focused on the expenses that are really important, so you don't find your finances are drained by non-essentials. Expensive hair cuts, regular trips to the cinema, eating out often: these are all great to have ideally, but not if you can't pay your rent/mortgage or food bills as a result.
2. Give your income a boost. The more money you receive in your account every month, the more you could 'overpay' some of your bills every month - which could not only get you out of debt faster, but save you money on interest too. You could consider selling old clothes or CDs/DVDs that are in good condition, or working some overtime if possible.
3. Prioritise all your essential outgoings. Make a list of all the costs you really can't afford to fall behind with: your rent/mortgage, food bills, gas & electricity, Council Tax payments, etc. If it gives you peace of mind, why not guarantee your regular bills are paid on time every month by setting up Direct Debits for them?
4. Never spend more than you really need to on essential outgoings. Discount stores can be great places for getting food & drink, cleaning products and other household essentials at bargain prices - and could really make a difference to your monthly shopping bills.
5. Consider ways of cutting costs. Vouchers and coupons could get you discounts on everything from clothes to electrical goods. Try shopping online or buying certain items, such as toilet roll and kitchen cloths, in bulk.
Following these tips could not only help you to keep on top of your debts and other important monthly costs, but also help you avoid any financial difficulties further down the line.
