Y o u r M o n e y
How to ride the credit crunch The Consumer Credit Counselling Service offer timely advice
E
verywhere we look, there are messages of doom and gloom about the credit crunch sparking rising levels of problem debt, bankruptcy and repossession and there seems little doubt that
things are going to get tougher with steep rises in every day living costs such as food, housing and utilities adding to the burden. At the same time, it will be less easy to use credit to plug any gaps between income and expenditure with credit both less available and more expensive.
In such a climate, it is imperative to make sure the household income is put to maximum use. The best way – indeed the only way – of doing that is to budget: boring but true. The very thought of budgeting makes most of us moan and groan, but if you know where to look, there are a lot of ways of making this easier.
The first step is to work out how much money you are receiving each month. Ensure that you are receiving all the benefits to which you are legally entitled – any family with a total income of less than £66,000 should be entitled to something. It is estimated that around £8 billion of benefits are unclaimed in the UK every year.
www.turn2us.org.uk provides a good online tool which calculates if you are entitled to state benefits.
Work out the money you need to live. Be realistic – there is no point in working out a budget that is too tough. Budgets are best done on a monthly basis but don’t forget bills that are paid quarterly or annually. Check against the budget on the CCCS website
www.cccs.co.uk/budget/budget.aspx to make sure you have not forgotten anything or use the self-calculating one on the Financial Services Authority website money made clear
www.moneymadeclear.fsa.gov.uk/tools. aspx?Tool=budget_calculator.
Once you have completed this process, go back to see if there are any areas in which you can save and visit price comparison websites to ensure that you are paying as little as possible for your insurance, utilities, mobile phones and internet. www.
moneysavingsexpert.com offers an impartial service. Pay bills by direct debit as many companies offer discounts for paying this way.
You should now be able to work out how much money you have left over at the end of the month. Depending on your situation, you are now in a position to do one of three things.
1. If you have money left over, you should save some of it. The basic rule is to save enough to keep you going for six months if something unforeseen should happen.
2. If you have any debts, pay these off before starting to save. Prioritise and pay off those with the highest interest first. See if you can take advantage of 0% deals on balance transfers for credit cards, allowing you to repay without incurring any additional interest for a fixed period, but be sure not to spend on the card. Above all make more than minimum payments on credit cards: if the debt is outstanding for more than six months, credit cards are an expensive way of borrowing.
3. If your budget shows you cannot meet your monthly credit commitments, either contact your creditors immediately or get in touch with a debt advice charity such as CCCS.
Consumer Credit Counselling Service (CCCS) is Britain’s largest debt advice charity providing free, impartial and confidential debt advice. CCCS can be reached between 8am and 8pm, Monday to Friday on freephone 0800 138 1111 or go to www.
cccs.co.uk.
Summer 2008 29
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