If you’ve completed a budget and discovered that you have more going out than coming in, this must mean that you’re borrowing money from somewhere to cover your bills and household costs. If you’re in this position it’s easy to panic, but there are some steps you can follow to try and deal with the situation and get yourself back on track. If you don’t act, you will find yourself falling further into debt.
Your priority bill payments are those which keep a roof over your head, keep your home supplied with heat and light, and those which can have the most serious repercussions if you fail to pay them.
Once you’ve separated these out, it’ll be easier to see which of your outgoings aren’t so much of a priority.
Trying to maintain payments to loans like personal and payday loans, credit cards, catalogues and store-cards will most likely result in you falling behind with the more important bills or borrowing more money, whether this is from family, credit cards or an overdraft.
You may be able to apply for breathing space whilst you try and make some changes to balance your budget.
This will give you 60 days' protection from your creditors, including enforcement action, and must be initiated by a debt adviser.
If you’ve fallen behind with the payments to your priority bills and not yet made an arrangement to pay back the missed payments, you’ll need to do this before you pay your non-priority creditors.
You can offer your non-priority creditors a token payment of £1, then pay whatever else you have towards your priority bills using the calculations on our offers to creditors page. You will need to have completed a budget, and know what you have left over before you do this.
You can use this template to offer token payments to your non-priority creditors.
If you’ve recently experienced a change in your situation like a loss of income, or if you’re on a low income, ill or disabled, care for someone, or have children living with you, you could check to see if you’re entitled to any benefits. You can visit our benefits guide to find links to benefits calculators and other useful information. If you live with other people who have a low, or no, income, see if they can do the same.
If you live with other adults – including grown-up children – that aren’t paying anything towards the bills, you need to consider asking them to pay into the household. You shouldn’t be borrowing money to support other people, and a small contribution from them could really make a difference.
Can you do a second job? This doesn’t necessarily mean a bar job in the evenings – though this may be a way to have a good social life without spending money. There are lots of part-time jobs that you can now do from home
Check if you’re getting the right support. If you live alone (or you are the only adult in your household), with someone who’s severely mentally impaired, or everyone in your house is a full-time student, you should get a reduction in your council tax.
Cancel subscriptions you don’t need or use. If you keep justifying your gym membership by going once every couple of months, you need to have a rethink and consider what else you could pay for with this money e.g. it could pay your water bill for the month. So that would be one less thing to worry about.
Visit our budgeting page for tips on how to cut back on non-essential and variable costs.
Consider switching provider for your utilities. You can find Ofgem accredited comparison sites here. You should also consider switching your telecommunications and entertainment packages, or asking your current provider for a better deal.
If you have any non-essential items on finance that you could live without, you could talk to your lender about stopping the payments and handing them back. There may be some money left to pay, but you can treat it the same as any other non-priority debt and offer only what you can afford, or a token payment.
If you’re able to cut back enough to cover your bills and essential costs, but not enough to afford your debt payments, you can get debt advice to see which options are available to manage your debts.