Take control
Bite the bullet - take a reality check of your finances. It's time to find out where your money goes!
- Collect the information you need for a financial reality check - this will be things like bank and credit card statements, bills, details of direct debits and the like.
- Open any mail that you've got lying unopened in a pile, making sure you have a waste-paper bin near. Rip the junk mail up as you go, but put bills, statements, letters from creditors and any court summons to one side.
- Now write a list of all the people to whom you owe money. Use the pay THEM FIRST system to identify the priority debts and make a list of them and the non-priority debts.
Tax (council)
Hire purchase
Electricity/gas*
Maintenance/child support
Fines
Income tax
Rent/mortgage
Second mortgage
Television licence
You can't have your water cut off for non-payment unless you are a business so water debt is not a priority debt. A typical list might look like this:
Priority Debts
Electricity £ 87
Gas £ 67
Mortgage £ 566
Council tax £ 400
Hire purchase car £7,900
Non-Priority Debts
Bank overdraft £ 500
Bank loan £ 789
MasterCard £ 488
Visa £ 566
American Express £ 900
Next store card £ 233
Dixons store card £ 1,200
John Mills catalogue £ 455
Hire purchase on hi-fi £ 1,45
4. Fill in the 'Reality Check' forms to calculate your actual income and expenditure every week or month. Always start with 'Income' - that's the easy part - and then fill in the 'Spending' part of the form.
5. A free legal advice centre will help you decide what monthly offers of payment you can offer to each of your creditors, and come to an agreement with them. All kinds of people from all walks of life use advice centres and you will be helped in a non-judgmental way.
Taken from 'The Money Secret' by Rob Parsons.
Written by Rob Parsons.
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