Money worries are one of the biggest causes of mental health problems currently, and it can be difficult to see a solution when you are struggling financially. When in the depths of depression or during a difficult period, it can be easy to ignore your financial worries in favor of not knowing the full extent of the problem.
However, ignoring your financial concerns can be a major mistake, so although it is worrying, it is best to face the problem head-on. Below, we have some information regarding how you can reduce your outgoings and where you can get help from a professional service if necessary.
First Step
Before you begin to look at how you can reduce your outgoings and make living more affordable first, you will need to know the extent of your financial situation. If you have been ignoring your mail, which is normal for some in this situation, the first thing to do is take a breath and open it all.
If you need support while you are doing this, then reach out to a trusted friend or family member to help by sitting with you while you open the mail. Once you have opened everything, make a list of everything that you owe and how much the regular payments are, including the payment dates.
If you have missed payments, make a note of the regular amount and a separate note for the arrears. After making a note of all of the repayments you make, it is time to work out your total income and expenditure.
Begin by working out the income for your household, including wages from all adults responsible for the home, any child or spousal support you receive, and any social security benefits. Then, make a list of each payment you make on a regular basis, including what the payment is for, the date it is paid, and how much it is.
Once you have this written out, you will have a better idea of your budget and whether your outgoings are more than your income. If your outgoings are more than your income, you will need to take steps to reduce your outgoings as quickly as possible.
You can inform the companies that you have financial agreements with, such as credit card companies or car finance to see if there is any support available short-term while you try to resolve the situation. We have included several ways to reduce your outgoings below.
Cut Down Non-Essential Spending
If you are struggling financially, you may need to make the decision to reduce your household’s non-essential spending. Reducing non-essential spending can feel like a wrench when you first consider it, as it can be a significant change for some.
By non-essential spending, we mean anything that does not keep a roof over your head and utilities to keep your home warm. We would recommend you look at these items in stages depending on the outgoings you currently have.
The first things to reduce are the luxury items, such as takeaway coffee, meals out, and takeaways. The change will not last forever, and you can return to these items once you are in a better financial situation, but these items, although nice to have, are not needed for daily life.
You may actually find that without these luxury items, other areas of your life may improve, and you may begin to find you naturally have more energy without the caffeine from your daily coffee shop stop. Without the meals out and takeaways you may lose weight and have fresher skin.
There are many items in our lives that are non-essential; however, there can be a big difference between something that makes us happy and something that we can live without. You can buy coffee to make at home and find recipes online that will replicate your favorite takeaway meal.
If you still need to make savings, you should then look at which other non-essential items you want to prioritize. Consider cell phone plans and entertainment subscriptions for television, music, movies, and books. If you have multiple subscriptions for similar streaming services, now is the time to consider how often you use each one and which ones you can live without.
You may also be able to reduce some of your spending on shopping; moving to a different supermarket can save a significant amount on a like-for-like comparison. You do not need to sacrifice quality or taste to save; simply consider moving to a different brand, and you may find you like the new option more than the original.
Speak to Finance Companies to Make Payment Plans
After considering your non-essential spending, the next step is to speak to any companies with which you are in arrears. Making each company aware of your current financial situation may feel embarrassing, but it can also be financially freeing.
Remember that you are not alone in your financial situation, and companies have entire departments dedicated to helping their customers who need financial support. In the current economy, they will be even more up-to-date with policies and procedures to support those who need it.
Most companies will ask you to go through your income and expenditures, which we have advised you to do as the first step above. Go through the information with the companies to see if there are any alternative payment plans they can offer you.
Although it may take you longer to pay off the obligations you have, it will have less impact on your credit score to make some payments toward what you need to pay rather than paying nothing. You can increase the payments if you find that you have more income in the future.
Consolidate Your Debts
Alternatively, to make contact with the companies you have obligations to, you can look into refinancing loans to help you reduce your outgoings. If you have multiple finance obligations such as credit cards, loans, or car finance payments, this could be the best option for you.
Using a site such as forbrukslån.no/refinansiering/, you can access refinansiering av lån information regarding the best refinancing consumer loans available. Refinancing with a loan means consolidating your debt repayments from multiple sources, dates, and amounts into one affordable monthly repayment for the loan.
By consolidating into one repayment, you can then choose how long you want the loan term to be. The longer the term of the loan, the lower the repayment will be. However, you will pay more interest so it is best to choose the shortest affordable time to repay the loan.
A fixed-interest loan will often be considerably quicker to pay back than variable-interest payments such as credit cards. The interest rate on a credit card will also be significantly higher. We recommend using a comparison service to find the best value loan for your needs, focussing on the one that offers the best interest rate to keep the amount you repay as low as possible.
Refinancing will give you breathing space with your monthly outgoings, and if you choose a loan with no early repayment penalties, you can pay this off early if your financial situation changes.
Seek Professional Debt Advice
If the above suggestions do not work for you or you are unsuccessful in your attempts to take out a consolidation loan or agree on an affordable repayment plan with your creditors, it is time to seek professional debt advice. There are several debt advice companies available to help you with your current situation.
Some may be government-led or recommended, while others can be privately run or run by a charity. Debt advice companies specialize in the steps you can take to reduce your outgoings and will try to find you the best resolution to solve the situation you are in.
Debt advice companies may be able to liaise with your creditors on your behalf to further remove the stress from the situation. Again, you will be asked for the full information about your financial situation, including your income and expenditure.
With this information in hand, a debt advice service can begin to give you advice regarding the next steps to take. A debt advice service may also be able to recommend mental health services that are available to support you while you deal with your finances to ensure that you are looking after your mental health.
It is important to remember that you are not alone in trying to refinance and deal with financial pressures. There are several options available to you when you want to resolve these issues for a better financial future. If you are concerned about your finances, the sooner you seek help, the easier it will be to find a resolution.
Working towards a debt-free future is everyone’s ultimate goal, but for most, there is no immediate fix that can be put in place. Putting in place an affordable plan to resolve your financial worries is the best and most sustainable way to pay off what you can and reduce both your outgoings and your stress levels.
