I get the feeling that people are currently falling into two camps. Those who are worried that they have - or at least have the possibility of - a significant drop in income, and have no idea how they will cope; and those who have a suddenly realised that the next few weeks give them the opportunity to get their financial house in order, as it were, with in many cases lower outgoings giving them a welcome little extra cash. For now - if you are in the second camp, then I'm going to say well done, that's your lightbulb moment. Now make the most of it and follow through. I'n going to try to do another post on this one as well - but for now, those "camp 1" people need some help.
So - this pandemic has hit a lot of people in the pocket. Some will be affected just short-term, and will be able to catch up later, so if that is you, then try to bear that in mind. Others are going to feel a longer term impact. Both need to start taking steps now to minimise the financial pinch though, as the sooner you act, the sooner you can start having an effect.
First things first - take a breath. Ultimately - and while this may sound crazy, it IS only money, and there are very few unfixable situations in personal finance. Learn your priorities - so the roof over your head - rent or mortgage. Council tax. Heat, light, water. And food - for your family and any animals in your household. Some people might have child support payments. Some of those are fixed costs - which is an advantage as it can help with budgeting - the more things you can fix the costs of, the easier to keep track. Council tax may prove to be an immediate easy win for a small monthly saving - if yours is currently paid over 10 months then switching to 12 monthly payments can help ease the budget, and the money from the two months "off" doesn't just get frittered away because you forget it is there. Similarly with food - sit down and work out your average monthly spend - then set that amount aside each month and you know where you are.
So you have your priority payments - write them down as a starting point, and add up the total cost. Then write down your total income from all sources - if that is uncertain at the moment then write the lowest figure you expect it to be. Subtract the outgoings from the income and whatever is left is your surplus. From that comes all the other things you have to pay for - insurances, service charge if you have to pay it, phone or TV contracts, fuel for cars or other transport costs, and any debt payments you might be liable for among other things. Hopefully there is enough in your surplus figure to cover at least some of your additional expenditure - but if not, then you need to prioritise. This is where different people may take differing views, but I am going to suggest that you put insurances at the top of the list. Also, on the subject of debt - if you have any debt payable to HMRC that would usually be a priority too - and until you hear otherwise, I'm afraid you need to treat it as such, but equally, I'd hope that HMRC come up with a plan pretty soon to help those who need it. The only other form of debt that needs to be a priority right now is anything "secured" - on your home, notably, or perhaps a car.
There IS wider spread assistance out there - your mortgage company will very likely be willing to offer you a mortgage holiday for example - but be VERY careful to make sure you understand the longer term effects of this, and only take it if you really need to. Also, I'd suggest that if you do take this line, then as soon as you are back on your feet, set up a regular monthly overpayment to try to catch up with the payments that have been deferred. If you need to stop paying things like credit cards for a while, so be it - at this stage a phone call to your card provider to tell them you are struggling might well get a far more helpful response than you would expect - they know that people are having problems, and right now there is some slack out there.
Another thing you can do to feel more proactive is to go through your variable outgoings and work out where you might be able to make savings. Things that we can happily take for granted when things are good, right now, we maybe need to think about cutting back on. That weekly takeaway on a Friday night? The top Sky TV package? (Tip - if you are currently paying for a sports pack added to your TV contract then you can very likely suspect that at the moment as there are no sports to show). A new mobile phone every 18 months? None of those things are in any way either essential, or important. Have a think about anything else that you are paying for which perhaps - right now - you might be able to get payments suspended for - gym memberships could be a prime one here. Are you still in contract for your mobile phone? If so then you may be stuck with those payments for a while - but if not, have a think about what you actually need from your supplier, and then ring and haggle for a good SIM only deal. (Another tip - I'm with EE, get 10gb of data a month, unlimited calls and texts, and pay £8 per month. That deal was agreed off a single telephone call which started with me saying "I think I'm paying too much for your services" - turned out, they agreed! Pretty much whoever you might be with they will have similar deals hiding that they can switch you to). Other companies that are often good for a haggle include TV & Broadband providers, and even breakdown insurance companies.
There are some great resources out there to help if you're struggling to see the wood for the trees. (Yes, you see the point of that photo at the top now, don't you!) The always reliable Money Saving Expert forums Debt Free Wannabe board - we can take an initial look over your budget, and make suggestions of adjustments that might help. We are also very good at identifying non essential spending, and can offer all sorts of help about prioritising, or even stopping, debt payments. The free debt charities - I'm going to namecheck Stepchange and Christians Against Poverty (CAP) here, and no, you don't have to be a Christian or even religious at all to access their help! If things are feeling really desperate then remember that the Samaritans are always on the end of the phone. There is also the Campaign Against Living Miserably (CALM) and SHOUT - there are people out there who can listen, and sometimes just talking will help.
Stop. Take a breath. you can get through this.
Robyn
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