Monthly Budget Check. Debt Health Check. Financial Planning.
When facing challenges with debt, for whatever reason, one of the first things an individual should do is to take stock of their current situation. Sometimes this seems to be a daunting task to undertake, but it can be achieved in as little as five minutes, and can set the foundations for a plan to sort everything out.
Clear Start has a simple monthly budgeting process that runs quickly through the following:
- List of debts, amounts and to whom
- Details of any property, mortgage and further borrowing
- Monthly income, after tax
- Monthly expenditure, the basic costs of living
From this information it is relatively simple to understand whether it is possible to recover from the debt situation or whether a more sophisticated debt settlement programme is required such as a debt management programme or an Individual Voluntary Arrangement (IVA).
Very frequently individuals who complete a monthly budget check with Clear Start find that they are unable to afford the minimum monthly payments on all of their personal loans and credit cards.
An example of what can be found out from a monthly budget check:
| Total | £22,400 | £710 |
|---|---|---|
| Type | Balance | Monthly |
| Credit Card 1 | £3,400 | £170 minimum |
| Credit Card 2 | £4,800 | £240 minimum |
| Credit Card 3 | £1,800 | £90 minimum |
| Bank Overdraft | £4,400 | £100 interest and charges |
| Personal Loan | £8,00 | £100 repayment |
| Total | £1,650 |
|---|---|
| Type | Monthly |
| Primary Salary | £1,600 after tax |
| Other income (e.g. benefits) | £50 |
| Total Monthly Income | £1,300 |
|---|---|
| Type | Monthly |
| Rent | £500 |
| Insurance | £20 Contents insurance |
| Council tax | £90 |
| Utilities / Bills | £80 Gas, Electricity, Water |
| Telephone / TV | £70 Landline, Mobile, TV licence |
| Health | £20 Contact lenses |
| Household | £300 Supermarket bills |
| Social / Leisure | £100 |
| Secured Finance / HP | £100 Car loan |
| Other | £20 |
Summary and Findings
In the example above the individual is required to pay £710 per month to service their borrowing. However once they have taken away their monthly expenditure (£1,300), from their monthly income (£1,650) there is only £350 left to pay off credit card bills and loans, etc.
If this person were to carry on like this the situation would only get worse, and the debt would continue to build up, so it is important to act as soon as possible.
For this example situation, it may be possible to organise a consolidation loan to pay off all debts in one go, and just have one affordable monthly payment. Alternatively this person might be able to settle their debts by making payments each month for five years into an Individual Voluntary Arrangement (IVA).
To speak to an advisor to run through a monthly budget check call 0800 954 6241, or complete the enquiry form.
To contact an advisor call 0800 954 6241. Alternatively complete an online enquiry form and an advisor will call you back at the time that you specify.