What to do if you find yourself in debt

There’s no doubt that having children is tough on your finances. Your income goes down, either because you work less or spend more on childcare, just at the time when your expenses go up. So it’s fair to say that many parents have to deal with debt at one time or another.

If you do find yourself in debt, here are some steps to help:

Understand your finances. Often debt happens when we take our eye of the ball concerning our finances. And getting back in control can be a scary prospect, but the first step is to write down all your sources of income and your expenditure every month. Don’t forget those payments that you might make annually, such as car insurance.

Cut expenditure where you can. Once you’ve got a list of all your expenditure, you’ll be able to see places where you could cut back on your spending.

Increase your income. There are plenty of ideas for making money as a mum here at Business Plus Baby, although if you’re planning to make some money fast then make sure you pick a method that allows you to do this. ¬†Offering a service means you can get usually be paid very quickly whereas inventing a product will take much longer and there’s no guarantee you’ll be paid at all. So choose your income stream carefully.

If you can’t pay your bills talk to the company you owe the money to before you start to get threatening letters. Prioritise your bills so that the really important ones are paid first including rent or mortgage, water, gas and electricity.

Get some advice. There are many places you can get debt help and advice. Just make sure you read the small print to make sure you know if a debt service is going to charge you and how much, as some are not free.  You can learn about personal finance and budgeting in many places online and there are plenty of books that can help, too.

Be careful with credit cards. If you’re short of money it’s tempting to pay on your credit card with the intention of finding the money next month. If that money doesn’t show up, then your credit card bill can escalate, causing you even bigger problems.

Shop around. You can shop around for just about anything these days, but the big savings are usually to be found on financial products such as insurance. Companies now reward new customers with the best deals instead of rewarding older customers for their loyalty, so take a look at the price comparison websites every time you renew your policies.

Sell. Look around for things you no longer need and sell them on eBay, your local Facebook swap, sell and buy group or NCT sale.

Don’t be ashamed of slipping into debt, it happens to many of us. So take action early, get back in control and you’ll be able to get back into the black.

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