Dealing with debt: action plan for mums
- Mums Tips
- Published on Wednesday, 06 October 2021 18:13
- Last Updated on 06 October 2021
- Monica Costa
- 0 Comments
When it comes to debt, there are so many different pitfalls that we can fall into. Once we start stacking up a few different loans for a few different essentials, they can quickly become unmanageable. This is when it gets easy to start panicking or to lose track of the best way to stay on top of things. Right now, with so much uncertainty surrounding everything from our job security to whether there is going to be any petrol at the local fill-up station, debt is just another issue that keeps us up at night.
This is why it is so important to think about creating a plan to help you deal with your debt. It is crucial to remember that these issues do not go away just because they feel too big to deal with, but it is just as crucial to remember that there is always a way that you can take control. A way that you can create a strategy for managing repayment schedules and interest rates, to look at how you can avoid incurring penalties, and a way that you can make sure that you are covered in case of a rainy day. Here are a few tips that can help you deal with your debt.
Figure Out What You Are Dealing With
Arguably the most important step to take when it comes to dealing with your debt is making sure that you understand it. It is easy enough if you have a single repayment that you are making every month to factor it into your monthly budget. When you are juggling several different repayments, each with their own schedule and interest rate, things can get a little dicey. So, before you do anything else, sit down and look at each of your debt repayments. This can be a tricky step to take if you are someone who feels a little anxious about your finances but trust us: gritting your teeth and understanding exactly what your situation is will absolutely help in the long run.
Make A Repayment Plan
When you take out a loan or you commit to a repayment structure, each commitment will come with its own terms and conditions relating to interest rates and the dates for each payment. This may feel like something that is out of your control, but as you start to get a better handle on the exact terms and amounts, you may realise that there are some debts that you could pay off more quickly. There may also be others which require you to create a bigger cushion in your monthly budget to ensure that you are making that payment every month.
Speaking of cushions, a detailed repayment plan is crucial, but you also do not want to find yourself in a position where you cannot make your payments. We all worry about what our financial situation would be like if we were suddenly unable to work due to unemployment or illness or injury. Income protection insurance can help you to get up to 70% of your gross annual income, and you can learn more here. Drewberry Insurance can help you navigate your way to the best policy, and they have a detailed breakdown of the many benefits of it.
Look For Costs That You Can Cut
Any parent will tell you that it does not matter how carefully you create a budget and a spending plan, there will always be costs that you cannot anticipate. There will always be that extra thing that you need to pay for, whether it’s a school trip, a dental procedure, or new shoes when you can’t find a sale on anywhere. That makes it even more important to identify the costs that you can either cut down on or cut out completely.
You can start quite small with things like taking a packed lunch to work with you instead of buying something out. Think about taking a thermos too and saying goodbye to that cup of coffee you would normally buy on the way (especially if the costs do start going up). During the pandemic, we all signed up to a lot of services that we hoped would keep us entertained and distracted during the long months of lockdown. Now that we are able to go back outside again and get back to our old methods of entertainment and distraction, it is high time that we cancel some of those streaming services, those online gaming subscriptions, and those veggie boxes that we never used all of anyway.
Think Before You Cut
One of the most important things to remember when you are cutting costs to help you deal with debt is that cutting indiscriminately won’t necessarily help. Think about what the consequences of cutting these costs would be. If there are any costs that seem a little unnecessary, but which actually bring your family a lot of pleasure, think about reducing the frequency or finding a cheaper alternative instead of cutting it altogether.
Monica Costa founded London Mums in September 2006 after her son Diego’s birth together with a group of mothers who felt the need of meeting up regularly to share the challenges and joys of motherhood in metropolitan and multicultural London. London Mums is the FREE and independent peer support group for mums and mumpreneurs based in London https://londonmumsmagazine.com and you can connect on Twitter @londonmums