If you pay your council tax in ten installments, in February and March there is nothing to pay. Some water companies also bill like this, collecting eight monthly payments with nothing to pay from December to March. If you like your monthly out-goings to be as regular as possible, this isn’t a very convenient approach, but it does give you the bonus of a couple of very cheap months!
You may already have plans for the money. if the washing machine has just broken or the children all need new shoes. It’s good to make a positive choice, otherwise it may just get spent in dribs and drabs without you really noticing.
So, are you going to pay the money off your debts or save it? Which of the following ideas would make your life easier in 2016?
Sort out a priority debt
Check out What is a priority debt? – these are the ‘must pays’ that can make your life really difficult if you get into problems with them. If you have any that aren’t completely under control, think about using these two months spare money to reduce or even clear your problem.
Reduce a really expensive debt
Payday loans, doorstep lending, guarantor loans, logbook loans and Brighthouse-style pay weekly debts are all horribly expensive and difficult to escape from. If you have any of these, that’s where this and any other extra money should be going!
Add it to your snowball
If you haven’t heard of snowballing, it’s the fastest way to clear your debts and end up with a great credit record – find out more about how debt snowballing works. In snowballing you pay the minimum off all your debts except one, your “target debt”, which you overpay by as much as possible. So the money that isn’t going on the council tax can be used to make February and March’s snowball bigger. If your target debt is a small one, you might even be able to pay it off completely!
Start an emergency fund
When money is tight, the idea of having an emergency fund might seem like a wishful thinking. But it really can make your life a lot less stressful. So if you don’t already have one, or if you do but it’s got little or nothing in it, then why not use these two months to start one or top yours up?
Credit union accounts are ideal places for an emergency fund. You can get easy access to your savings, but it’s not linked on-line to your bank account, so you won’t be tempted to dip in too often. Once you are a credit union member, you may also be able to get a loan at a good interest rate in future.
There may be a credit union linked to your job, or there may be one in your local area: here is a Credit Union Search facility to see if there is one you could join.
Put it away for next Christmas
If you are wondering if this isn’t the same as the last one, putting the money aside in an emergency fund, the difference is that an emergency fund is mean for unexpected expenses. Christmas isn’t unexpected, it happens every year.
If you could start a Christmas fund now and add the odd £5 or £10 through the rest of the year, Christmas 2016 could be a good one with less worry. And it would also let you pick up presents early if you see a bargain on sale, rather than wait till the last minute when everything costs more.
What are you going to do with yours?
Have you already decided what to do with this small bonus? If you feel like a treat, then lash out on a bunch of daffodils – cheap and cheerful and they’ll remind you that spring really is on the way!