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Debt control

What can I do if I'm spending more than I'm getting?

If your budget chart shows you that your expenditure will be more than your income, you have two options (well, three as the best thing to do is both of them):

  1. Reduce your expenditure
    Look for items in your list of expenditure that you can cut down on, such as your shopping bills, your use of the phone or the amount you spend on going out. This can be tough but work out what your priorities are (what do you enjoy most?).
  2. Increase your income
    Look at your current situation. Can your income be increased, for example by working overtime, or taking on a part-time or holiday job? By taking a part-time job it also gives you less time to spend money!

Useful tips:

  • If you have debts, are there ways in which they can be reduced? For example, look at your assets (ie what you own). Is there anything that you can sell, which you do not need?
  • Make a list of your decisions and then plan how you are going to carry them through. Check back from time to time that you are on target.
  • Go back to your budget chart every so often – at least once a year – and go through the process again.

What should I do if I'm badly in debt?

You may find yourself deeply in debt, and that you cannot pay back your creditors (the people you owe money to) on a regular basis. Try aiming to pay off your debts by instalments (in small chunks over a period of time) in a way that you will be able to afford.

Don't ignore the problem

It won't go away, and the longer you leave it, the worse it will get. A few pounds a week adds upto a lot over a year.
You may find yourself deeply in debt, and that you cannot pay back your creditors (the people you owe money to) on a regular basis.

Get help and advice from an expert

There are experts out there who will help you for free. See 'Further information' for more details.

Follow these steps to help you start getting back on track:

Draw up a budget chart

Draw up a budget chart, as described above, which shows your present position and lists all the money that you owe and the people to whom it is owed.

Work out how you can cut expenditure straight away and how you can increase income. What figure are you left with?

List your debts in their order of priority

Put at the top of your list those where failure to pay will have serious consequences, such as the cutting off of services to your home.

Get in touch with your creditors

Get in touch with your creditors (that is, the people you owe money to) straight-away and explain your difficulties.

Show them your gudget chart, including the list of debts; this will reduce the pressure they put on you, and allow you to negotiate a solution which you – and they – want.

Don't borrow more money

Don't borrow more money to pay off your debts without thinking carefully. Get advice first.

This type of borrowing, particularly from unscrupulous firms or people (sometimes called loan-sharks), could get you into serious trouble. They may well charge you very high rates of interest, making it even more difficult for you to repay your debts. Threats could then be made against you. Stick to reputable businesses.

Contact everyone you owe money to

If you make arrangements to pay some creditors without telling others, you could run into difficulties.

If the first person you speak to is unhelpful, ask to speak to someone more senior. Don't give up trying to reach an agreement to pay by instalments, even if creditors are difficult.

This page was updated on 15 July, 2008


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