7 ways to avoid a debt crisis

Get your finances in shape for Christmas

186491666As we fast approach one of the most expensive times of the year, it’s time to make sure we’re not going to spend 2015 regretting overspending. Budget expert Elaine Colliar of website MortgageFreeinThree has these top tips for keeping your finances in check…

1 You can’t begin to control your spending until you know where your money goes. Create a forensic spending diary for the previous three months – if you’re the sort of person who avoids opening bills and bank statements, recruit a friend to hold your hand.

2 You have to trim down your spending until it balances your income, and that means you will simply have to do without some things. If you smoke or drink you have to ask yourself whether that is more important than feeding your children – it’s that simple.

3 Scrutinise every bill to see where you can reduce spending – scour the money pages and comparison websites to see how to reduce power and utility bills, and check your thermostat is set properly. That doesn’t mean freezing, but it does mean ensuring that you aren’t heating an empty house all day.

4 You may not have the credit rating to switch to a cheaper credit card but if you can, do it. Then set yourself a budget of what you can spend on food and household essentials and plan menus in advance to help you avoid random deals. Approved Food is a great way to save on staples, or use cash to shop – you won’t be tempted to buy things you don’t need.

5 Once you’ve stopped your debt growing you can begin to eat away at it and throw every spare penny you have left at the end of the week at the debt. Even if it’s just a pound it will give you a psychological boost and keep you going – it’s like sticking to a diet.

6 Join a credit union to help you cope with emergencies like broken washing machines and exploding boilers. Saving around £20 a week for three months will enable you to borrow around £1,000.

7 Play a game with yourself to find ways of shaving a few pounds off everything you buy – can you get things cheaper elsewhere? Use the internet – Freecycle, voucher schemes and eBay will all help you save money, and YouTube will teach you to mend or make anything.

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