Sort out your finances in 2020 with help from Logbook Loans
Logbook Loans can help you with your money in 2020. Read on to find out more…
2020! Another year over, a new one just begun.
If you have made a list of resolutions for 2020, chances are that money will be on there somewhere. Whether it’s to change jobs and earn more money, get out of debt, buy something special or save money for the future – you probably have at least one financial goal that you hope to achieve in 2020.
But as the reality of daily life kicks back in, it’s all too easy to let go of your good intentions and slide back into old habits. Which may well be bad habits: habits that you seem unable to break.
So if you are hoping for a new start financially in 2020, how can you go about this? Here are five ways that will help you to start sorting out your finances:
- Stop being an ostrich
No matter how confident you are in different areas of your life – work / friends / sports etc – it can be a different story altogether when it comes to finances. Many of us become just like an ostrich; putting its head on the sand in an attempt to hide from predators. The very mention of money can make us want to hide away.
But the first step to sorting out your finances is to gain a good understanding of what is really going on. Only when you know how much money you have, and where it is going, will you be able to start making positive changes.
So start by making a list of everything to do with your money. You should include:
- Overall assets ie what are you worth (eg home, car, savings)
- Overall debts ie what do you owe (eg mortgage, loans, credit cards, overdrafts)
- Regular income (eg salary/wages, benefits)
- Regular payments (eg mortgage/rent, loan and credit card repayments, household bills).
This should give you an overview of how healthy or otherwise your finances are looking.
- Start tackling your debt
The first priority when sorting out your finances is to pay off unnecessary debt as quickly as you can. In particular you need to look at unsecured debts such as credit cards. If you have high credit card balances and are just repaying the minimum payment each month you are not going to get out of debt any time soon. This is because your credit card balance will have interest added to it every month, and most of your minimum payment is likely to go towards paying off that interest. This means that the balance you actually owe doesn’t really decrease, so you are still in as much debt from one month to the next.
So if you have any savings, it is worth considering using some of them to repay debts. Once you no longer have monthly credit card or other debt repayments to make, it will release that money to start saving again.
Another option that may help repay debt is to take out a new loan to pay off all existing debt completely. You would then just have one manageable monthly payment to make. This could help you to start repaying debt and clear it over a fixed period of time. Just make sure that you don’t then increase your debt with more spending: perhaps cut up your credit cards or give them to someone else to look after for you.
If you are interested in a small short term loan then Logbook Loans may be able to help: take a look at our range of loans online or call us on 0330 400 4137.
- Keep track of your spending
To be able to keep track of your spending effectively you need to make a budget. Not the most exciting prospect perhaps, but it will really help you. Unless you understand where your money is going, you are likely to slide further and further into debt without knowing why.
So, continue the work you started in Step 1, and extend your list to cover in detail all the money you spend each month. As well as major bills, include absolutely everything else you can think of such as food, clothes, transport, entertainment, leisure, etc.
This is an important start to sorting out your finances but it is also essential to test it out in reality. So for the next couple of months at least, do your best to record where every penny is actually going. It’s up to you whether you write this in a notebook, have a spreadsheet on your computer or an app on your phone. Whatever you find easiest: but keep track of everything.
Keeping track in this way will give you a very clear picture of where your money is going. You are likely to find that in some categories you are spending far more money than you thought. And yes, this may now need to change, but the important thing is that you know: and this is the first step in gaining control.
- Make ends meet
This is the big one! You should now know what shape your monthly finances are in but it’s likely that you will need to take action to make ends meet.
The first thing to do is to start paying all your regular essential payments by direct debit. For example council tax, energy, water, broadband/TV/phone, insurances, car tax can all be paid this way.
This has three advantages:
- You can divide the cost equally over 12 months instead of having to pay big bills every year or every quarter.
- You know how much is coming out of your bank account and when (and don’t have to remember to pay the bill).
- Some suppliers give discounts for direct debit payments.
This will also give you a clearer picture of how much money is left each month for everything else.
If you have enough money to cover all your remaining expenditure, you are in a healthy financial position. So make the most of this and ensure that you pay off any remaining debt as soon as you can, and also start to save.
But if your budget shows a shortfall – ie you have less money coming in than you need – there are various things you can do to change this. Look at saving money every way you can. Try these five tips:
- Check every bill to see if really is essential. Look particularly at subscriptions, memberships and insurances. If it’s something you no longer need, contact the supplier to cancel it.
- See if you can get a better deal on some of your suppliers, for example energy, car insurance or broadband/TV/phone.
- Cut down food shopping bills by planning meals carefully and shopping around for the best deals. Where possible cook meals from scratch, and buy enough ingredients to make two meals and freeze one.
- Downshift your lifestyle for a little while. For example pledge not to buy any new clothes for six months, have friends round instead of going out, and forego a holiday this year. Small sacrifices in the short term can reap dividends that will benefit you in the future.
- Make sure you are not paying too much tax. Check out the Which? Guide here to see what you are and are not entitled to.
As well as cutting down expenditure, try to find different ways of bringing in extra income. This can vary from major changes such as looking for a better job or taking in a lodger, to smaller ways such as taking on additional work/odd jobs or selling items you no longer need. Every little helps, and can be a key part of getting your finances back on track.
- Start to save
Last but not least, as soon as you are able to make significant inroads into your debts and get on an even keel month by month, it’s really important to start saving money. Savings provide you with a buffer against the storms of life, and stop you getting into debt when those storms hit. They can also give you access to nice things such as holidays and special treats.
It can be very hard to save money and you will need to be disciplined about it. For many of us, any spare money just seems to evaporate! So the best thing to do is to open a different account for your savings and start putting money into that new account as often as you can.
It’s a good idea to set up a direct debit to put in a regular amount each month, and treat your savings the same as any other bill. Start with a very small amount so that you hardly notice it. You can then gradually increase this amount as the rest of your finances begin to calm down. Also if you get any extra money – for example as a birthday gift – put half of it straight into your savings account.
Your savings will gradually begin to grow and will give you the security you need to begin hoping for a better future.