Or ‘How to Sort Our Your Money Mess’
‘Where on earth should I begin?‘ This is something I’ve been asking myself when thinking about starting this blog. It’s also something most people ask themselves when they make the decision to get a handle on their finances.
Mr.B and I don’t use credit cards or any sort of credit. We do have debt, however, in the form of a mortgage. This is often referred to as ‘acceptable debt’, but to us, we won’t fully relax until that bad boy is paid off. It’s going to take a long time, but we’re determined to get it paid off early-(er). That being said, in the past, we have each taken out loans, have bought items from catalogues and thankfully, we didn’t encounter any problems that caused us to get behind on payments. It could so easily have happened though.
You may have credit card debts that are mounting up or you may be having sleepless nights due to being behind on your electricity bill. So where should you begin?
Ok, so let’s get real. Getting behind on any bill is a worry and will have to be addressed at some point. I’ve had many close family and friends dealing with debt. Growing up, it was a way of life. I remember as a little girl, having to hide and keep quiet when the debt collector was knocking at the door. I remember having to answer the door at times, after being told to lie and say that my mother wasn’t home. I also remember having our gas and water cut off. Sort of tells you why I’m passionate about personal finance, right?
Some debts appear to cause more problems than others, such as those debts that cause the phone to keep ringing, with creditors hassling you to pay up, and you may be tempted to address these first, to the detriment of other areas. Robbing Peter to pay Paul? Yeah, sometimes Paul’s going to have to wait.
If you find yourself having problems with unsecured debt such as credit cards and loans, but you’re also behind with your mortgage or rent, you need to prioritise paying to keep a roof over your head, no matter how many times those credit card people are calling you each week.
Get Your Basics Covered
One of the great voices in personal finances; Mr Dave Ramsey calls this sorting out your ‘Four Walls’. These are the areas you must take care of before anything else:
We all have to eat. This is priority number one. Potatoes and bread are needs. Biscuits, crisps and eating at McDonald’s are wants. Sorry, I love junk food too, but you know it’s true.
This comes next. If you can’t keep a roof over your head, then you’re stuffed. Talk to your landlord, mortgage company or council, make an agreement and get up to date on those rent or mortgage arrears. This section also refers to your Council Tax and your basic utilities, such as gas, electricity, and water. Internet and TV subscriptions aren’t part of this, as, though it may be painful to cut them out, they obviously aren’t a need.
If you work, you need a way to get there so that you can keep earning. This may mean making sure that you can put fuel into your car every month, or be able to afford your bus fare/travel card.
This means covering the basics to keep you and any children warm and with adequate shoes.
Once you have all of these areas covered, then you can begin to look at what you have remaining each month. Only then should you begin to address your other bills. I’ll cover tackling unsecured debt repayment in another post.
Please never lose hope. There is always a way out of debt, but it needs careful thought, planning and to be thought of as more of a marathon and not a sprint. If you ever find yourself feeling desperate, please consider using Citizens Advice and National Debtline to talk to somebody about it. Finally, if I can help in any small way, please send me a message.