Q: The lockdown has ruined my family’s finances. Before Covid we were able to pay the bills and save a bit of money each month. Now we struggle, and have used up most of our savings. I am back to work full time but my husband’s business has been decimated. What can we do to make ends meet?
BC by email
A: The past 18 months have wreaked havoc on millions of people’s finances, with furlough salaries at just 80 per cent and many self employed ineligible for any kind of help. But as the economy opens up to some kind of normality, it is also time to get our personal finances in order.
It may seem obvious, but key to getting your finances back on track is being honest with yourself about how much you actually spend and how much you pay in bills. List your bills in order of priority. Once you know this you can look to cut bills and trim spending.
Our biggest outgoings are normally mortgage or rent payments. Under current Covid rules, which are due to expire on May 31, eviction is restricted from either a rented property or for non payment of a mortgage, except in the most extreme cases. If you have a mortgage can you move to a lower rate? Leeds Building Society for example is offering a 1.35 per cent fixed rate for two years, which would bring payments on a £130,000 mortgage down to £510.81 a month.
Can you consolidate other debts? Virgin Money’s 26 Month Balance Transfer credit card is offering 26 months interest free credit, so if there are no penalties to move outstanding debt from other cards or loans it could provide breathing space. You will have to pay transfer fees to move your debt on to the new card though — this card charges 1.25 per cent; others may be higher.
Typically, we can all save money on our bills and it is worth looking at all of them — from credit cards to utilities to insurance. Websites such as Uswitch, MoneySuperMarket, Go Compare and Confused.com can help save hundreds of pounds. Use a couple though, as they will often show different prices for the same products.
If you are changing your insurance some companies, such as Direct Line, don’t appear on the sites so you will have to go to them directly to get a quote.
Is your husband eligible for a Covid grant through his business? Go to the Government’s website www.gov.uk/coronavirus/worker-support and see if he can claim any cash to tide you over.
If your situation is beyond these remedies, then you could look to set up a debt management plan. Debt advisers such as Paperweight, StepChange and the Money Advice Service will liaise with your lenders and help you create a plan whereby you make a single affordable payment each month split between all your creditors.
These typically run for 12 months and interest and charges are normally frozen during this period. Good luck with getting your finances back on track.
