Look back ..go forward

Financial worries or just looking for better value for money? Consumer champion Fergus Muirhead answers your questions Get to know overspending habits before asking bank to help you plan ahead

I HOPE that all of you, or more realistically some of you, took my advice a week or so ago and spent a bit of time reflecting on the way you used your money in 2018.

Now it’s time to look at helping you manage your money more efficiently in 2019. We have some great tips coming this year to make sure you’re all using your money as efficiently as possible. January and February are difficult months financially for many of us as we juggle our funds to try to make sure we are able to pay all of the bills that drop through the letterbox over the next week or so as well. Many people also have to cope with the fact that an early salary or wages payment in December makes January a really long month. If you’re starting the year in debt, and that includes long-term debt like mortgages and personal loans as well as shorter term stuff that might be a hangover from Christmas, then now is a good time to take stock of that debt – and how you’re planning on paying it off. Make 2019 the year that you decide to deal with your debt. Millions of us only ever service the interest on overdrafts and credit cards, meaning that the outstanding balance never really reduces because we are only making minimum payments. All we are really doing is contributing to the banks’ profits.

If you feel that you’re in a rut and not getting to grips with reducing debt, then give your bank a call and explain your situation to them.

Be honest and do a bit of work before you pick up the phone. Make a complete list of the amount you owe all of your creditors, then a note of the amount of your monthly repayments to each one.

Then do an overall budget that shows the amount you earn every month in income, pensions and any interest on savings or other income and show how that compares with your overall spending, including the amount you are paying to service your debt.

That will make it easier for your bank to help if they can. It may be that they could offer to reduce or suspend interest that you are paying on overdrafts, for example, or it may be that you could convert an overdraft you are not reducing to a personal loan that you can clear over a set period of time.

Banks and credit card companies do genuinely want to help customers in debt, since it is easier for them to

help you directly than for them to have to involve third party collection agents. But they can only help if they know that you have a problem.

It’s not easy for us to tell them. We don’t like talking about our money and in fact most of us have a real problem admitting to debt. It often seems that the simplest option is to simply ignore it, sweep it under the carpet and leave it until it goes away.

But that will never happen. It can only get worse and that is why you need to deal with it before it becomes too much of a problem.

As well as making sure you have a list of your income and expenditure before you pick up the phone to your bank or credit card company, it’s also a good idea to think through what you are going to ask them to do to help you.

Doing so will help you come across as much more credible. It’s no good picking up the phone and telling then that you can’t pay. You need to have an idea of what you are going to ask them for. Be honest and explain your true situation.

Tell them what you are looking for. Do you want a payment holiday for six months, or a suspension of interest? Be able to tell them how you are going to make up arrears. And when you have come to an agreement, stick to it.