Daily Spends – A Diary of Spending Habits

Whichever newspaper you read and whoever you listen to, it seems that 2009 will be a tough year for Britain’s economy.

With that in mind, it’s important that you take care of your finances and address any debts you may have to ensure that you’re in the best financial shape. Here we take a look at five things that could help you through the recession.

Make a budget

In many cases, you can make a real difference to your financial situation just by noting down where your money is going and making a budget.

Overspending as a result of not budgeting is an easy trap to fall into. You may think you have enough disposable income once your mortgage/rent and bills have been paid, but people often fail to account for nights out, groceries, and any unexpected costs that could crop up.

Nobody can plan their finances 100% accurately, but by putting aside a rough amount for all your main expenses at the start of each month, it’s less likely that you’ll end up overspending.

Speak to your lenders

If you still find yourself unable to manage your debts, then it’s important that you speak to your lenders to discuss your situation. Your lenders may be willing to accept an alternative payment plan or a short repayment holiday in order to help you get back on track.

Of course, there may be situations in which you can’t come to an agreement with your lenders, in which case a more specific debt solution might be more appropriate.

Debt consolidation

A debt consolidation loan is a new loan that pays off your existing debts – effectively ‘consolidating’ several debts into one. This means you will only have to make one repayment each month, which can make managing your finances a lot simpler.

One of the main advantages of a debt consolidation loan is that by spreading out your repayments, you can reduce your monthly outgoings. However, be aware that you will pay more interest than if you had kept the shorter repayment period.

That said, it may still be possible to pay less interest overall if you are consolidating high-APR debts, such as credit cards. So long as your debt consolidation loan’s interest rate is lower than the average APR on your existing debts, you should be able to save money.

Before starting a debt management plan you should be sure that you can afford to make your new payments, and that you won’t risk getting into further debt by continuing your spending. If you are not sure, then another debt solution might be more appropriate.

Debt management plan

A debt management plan is an informal agreement between you and your lenders as to how you intend to repay your debts. It’s technically possible to arrange this on your own, but many choose to do it through a professional debt management company, who can negotiate with creditors and manage all transactions on your behalf.

If you do arrange the plan through a debt management company, you will usually make regular monthly payments to the company, who will distribute the money between your creditors accordingly.

IVA (Individual Voluntary Arrangement)

An IVA is a legally-binding agreement between you and your creditors, allowing you to avoid bankruptcy by agreeing to pay off a percentage of your debts over a set period of time, and write off the rest.

Before you enter an IVA, an Insolvency Practitioner will work with you to put together a proposal and send it to your creditors. For an IVA to go ahead, creditors accounting for at least 75% of your total debt must approve the proposal.

Once the IVA begins, you will make regular monthly payments to your Insolvency Practitioner, who will distribute the money between your creditors. This usually lasts for five years, and on successful completion your remaining unsecured debts will be considered written off.

If you’re a homeowner, you may be expected to release some of the equity in your home in the 54th month (half way through the final year) of your IVA.

Melanie from ThinkMoney.com very kindly wrote this article for me I thought it might be of interest to some of our readers. I hope you found it useful!

Quickish business trip to the States ended with a nasty bout of the flu. Still going on I’m afraid!

It’s amazing how much you can spend on medicines isn’t it? I’ve spent £20.00 allready this week:

Bells Cough Tincture
Beechams All in One Capsules
Lashings of Lucozade
Throat stuff

I know I sound a bit wet . . . I probably only get hit like this once every two years though.

No wonder the pharmaceutical industry are dragging their feet on a cure to the common cold

Budget pizza night tonight. None of this £5.55 for a 9inch mainstreamer rubbish.

I’m talking about a nice rectangular (7inch x 12inch)  thin crust pizza, blind baked for 3 monutes and topped with tomato, olive oil, mozzarella, ham and mushroom – ohhhhh yes!

How much do you reckon this is going to cost me? £2.55 for two of them.

Just seen that Barclaycard have announced steps to help consumers:

> Cut interest rates for some customers
> Freeze interest for other customers
> New helpline for customers struggling to pay their bills

If a money chuck could chuck money?

I’ll tell you . . . Approximately £130.00 over the weekend. I just don’t know where it went.

I wasn’t been frivelous, there was just lots of ‘must do’s’ required:

car bulb
new clothes for children
groceries
fuel

Anyone in Manchester reading? Check ou this bizarre project from some chap up there:

Check it out here: http://www.myspace.com/craftfair