If you have decided to take control of your expenditure, you may get depressed when it doesn’t all go to plan.
But improving your finances is a journey – one that takes time and planning. And as with all journeys, there can be stops and starts along the way. Don’t let these derail your plan!
I’m talking in this article about a plan to clear your problem debts. This could be forced on you if you have borrowed more than you can manage to repay and you are living on a tight budget in an IVA or debt management. Or you may just have decided that you are fed up with so much of your pay disappearing every month in debt repayments.
It also applies if you don’t have large debts but want to cut your expenditure, perhaps so you can save for a house deposit, or reduce your hours at work.
Why budgets go astray
Some of these reasons can be unexpected. A big bill that’s landed on your mat that you’ve forgotten about, or something that you feel unable to say no to – a close friend’s wedding for example, or a school trip for your children.
Your spending also might not be a conscious activity. According to Santander, the typical UK adult spends £948 a year on ‘invisible’ items such as coffee, treats for their children, or shop-bought lunches (adding up to an average of £18.23 a week). If you aren’t tracking these, it may be difficult to see exactly where your budget has gone wrong.
Maybe it’s not you that’s caused the derailment, either. If you’re taking a debt journey with a fellow passenger it’s important you’re both fully on board and willing to move forward. If your partner doesn’t agree with your joint budget or is more of a spender than you, it can make things more difficult.
Just one of these when you’re on a tight budget can distract you from your end goal. Whatever the reason, if it happens to you, don’t despair. The worst thing you can do is use minor blips as a reason to give up.
Here are six ways to jumpstart your debt journey after a fall.
1. Cut yourself some slack – remind yourself of how you have come
Now is a good time to look at how far you’ve come already. If you’ve made the decision to get out of debt and have started the steps to get there, although it may not feel like it, you’ve done the hardest part.
You don’t have to get everything right every time. Making progress in the right direction is better than giving up.
Also, don’t forget your journey is a personal one – as one blogger has put it Don’t Compare Your Beginning to Someone Else’s Middle.
2. Remind yourself of your goals
There are lots of abstract reasons to try to get out of debt – better credit rating, taking back control of your money and not using it on interest or paying off your creditors, and increasing your current earnings.
But there are also plenty of personal reasons for doing it too. Perhaps you want to be able to take your children on holiday or change jobs which may mean earning less. Studies have shown writing down a tangible goal can make you much more likely to reach it.
So remind yourself why getting out of debt is important to you and the benefits it will bring. If it’s a joint goal, talk about it with your partner too and remind each other. If you don’t have a partner, put a reminder of your goal on the fridge, or somewhere you see it often.
3. Think of the reasons why your derailment happened
Be as honest as you can be. Granted, not all reasons are within your control, and the good thing about being out of debt is that you’ll be a lot more prepared to cover any little knocks.
Sometimes it’s not one single large bill that caused the problem, but a lot of smaller spending decisions. here it’s important to know your triggers. If you can identify the situations that cause problems, you can work on ways to minimise these in future:
- Did you feel like you deserved a treat after working hard? Plan ahead for cheaper alternatives!
- Were you guilt-tripped into spending by friends or family? Would it help to tell more people that you are saving money – you can say you are saving for a holiday or a house deposit if you don’t want to tell work colleagues you have too much debt. Learn the power of saying No if you can’t afford to do something.
4. If the plan was simply unrealistic – go for a rethink
Sometimes your plan was never likely to work. You may have planned a “no spend” year say.
That’s a bit like going on a diet that consists only of water and grapefruit. You are definitely going to lose weight… except you are very, very unlikely to be able to stick to it for more than a week or two. And when you snap, the weight loss goes right back on.
If you have planned to cut back everywhere to the bone all at one, then you may not be able manage it for long enough to make a real difference. It is better to get a less dramatic plan that you can actually stick to. You aren’t a failure in this situation, just over-ambitions.
Read Top tips for simple & realistic budgeting that works and think what you need to change.
If you want, you can incorporate some “no spend” elements. Many adults could decide not to buy any clothes for the next year and be fine. But the combination spending nothing on clothes with nothing on entertainment, no alcohol, no presents… it’s a hair-shirt approach to cutting back that will work for very few people.
5. Could a bit of tinkering help?
If you’ve just stopped making progress, it usually just takes determination to restart the journey.
But perhaps some tinkering with your budget would help. Starting to put aside a small amount each month in an emergency fund may make future problems just a bit easier to manage. Or a quick blitz – decide you won’t buy any new clothes for 6 months (this doesn’t work if you have children!) or plan to have a holiday at home this year.
If you have been jolted off track with a loss of income or big new expenses or 6 months on 80% furlough wages, you may need a more major rethink. If you are already in debt management or an IVA, talk to the firm that has set this up for you
Using an app can make it very easy and quick to see at a glance how much has been spent and what is still going to come out of your bank account each month. See my page on Apps that can help you budget for more details. One of them would probably work really well for you!
6. Get some expert advice
Stepchange say more than 40% of their clients take a year or more to get help with their debt problems. If you or your partner need help, debt advisers are trained to give you the hand you need – and might have tips and tricks you haven’t thought of.
There are lots of different places for advice, depending on where you live and what sort of issues you have, see information on where to get help.
Picture from Doghouse Diaries.