With the cost of living increasing, more and more people are feeling the pinch. Interest rates have risen which has pushed up monthly mortgage payments while energy, fuel and other prices have increased too. For some households, the burden of this will become too much meaning that they struggle to make all their monthly payments. In this situation what are your options? Where do you turn to for help? We take a look at the solutions available, including debt advice and consolidation.
Cost of Living Increase
It has been a tough few years for many. After recovering from the effects of the pandemic, a war in Ukraine, and other external factors started to force up prices in other areas. The country is predicted to fall into recession and the Bank of England is continually increasing interest rates to try and counter inflation. The effects of this have become far reaching including:
- Monthly mortgage payments have increased due to rising interest rates while this has also have a knock on effect for loans and credits too.
- Energy prices have increased with further increases expected. They are not just small increases either and have a significant impact on monthly budgets.
- Fuel prices have increased. It doesn’t seem long ago that we were paying around £1.30 for a litre of fuel – now that is £1.70-£1.80
- As prices rise across the board, many businesses have had to pass on costs to their customers. This means our groceries and other consumables are more expensive too.
When the Income Doesn’t Cover the Expenses?
Even for those that manage their finances very carefully and budget monthly, a rise in the cost of living will soon start to place a squeeze on the household budget. Some may be fortunate enough to have a buffer, or to have enough disposable income to manage the change. But what happens when it starts to spiral out of control and there is no more money to play with? How are you supposed to pay for the boiler breaking down or an emergency plumber, for example?
When the expenses outweigh the income, you find yourselves having to make tough decisions. This may include cancelling those added little benefits and treats first and foremost or having to forsake family holidays. It may not end there and you may find yourself wondering which bills you need to pay first!
How to Manage Your Finances
First and foremost, it is a good idea to sit and write down everything that you have to pay out and everything you have coming in. Remember to include child benefit and any other additional sources of income. You may even want to create a monthly budget spreadsheet if you don’t have one already.
Prioritise the Bills
Mortgage/rent and council tax must be top of the list. Obviously your electric and utilities are priority too. Then you can assess those things that you can afford to cut back on
What Can You Trim and Where Can You Save?
Netflix, Amazon Prime and other subscriptions can perhaps be cancelled. Use money saving sites to check if you can cut the cost of your mobile phone, your broadband, home insurance etc. Be sure not to cancel anything that may incur penalties without checking first. You will be surprised at how much you can save just by having a quick financial makeover.
Enquire About a Mortgage Holiday
You may be able to take a payment holiday however, remember that this will have an impact on your credit file and should only be used as a last report. You can learn more ways to save money on your mortgage here.
Contact Your Credit Card Providers
If you are struggling to pay credit cards and other debts, contact the providers and explain this. They may be able to arrange a repayment plan where the interest is frozen or lowered for an agreed amount of time.
Debt Advice and Consolidation
If you are considering debt consolidation as an option be very careful. There are so many online companies that offer this service – often online companies that have no personal point of contact. If this is a route that you are considering, be sure to contact a reputable and reliable company that can help and advise you on the best options for your particular requirements.
Don’t Suffer in Silence
While money troubles can cause us no end of sleepless nights and anxiety, there is help available. Talk to someone. There are many debt advice and consolidation services that will offer help and advice. If you talk it through with someone, you may realise that it’s not as bleak as you think and that there are solutions available to you.
At Buzz Financial, we understand how much stress and strain that money worries can place on you and your family and are here to help. We would be happy to offer our advice and look at your individual situation with you. Please contact us on 01934 756717 or drop us an email if you prefer. One of our friendly and experienced team can help you find the best resolve for your personal circumstances.