When you’ve been earning the same income for a year or two, it’s all too easy to fall into complacency. Aside from the pleasant boost of the annual pay rise, you won’t have had to deal with significant fluctuations in a while.
So, you will have settled into a way of making your finances fit your life. Let’s be honest; in this pay packet culture, it’s the best most of us can hope for.
But, while things are tight, we manage. We spread our money over the month and make it last right up until the next payday. All our fixed payments – debt payments, subscriptions, etc., fit within that boundary.
Which can make it incredibly tricky when you suffer a sudden change in your situation. It may be that your hours are reduced at work, or that you lose your job altogether. Or, perhaps the company has taken a hit and needs to cut their pay rates. Whatever the reason, a sudden loss of income can be enough to shake the most stable of financial lives. The lucky among us can turn to savings, but those who survive from pay packet to pay packet have to think again.
Food aside, the main worry is often the fixed payments you just about managed to meet before the change. While you can shuffle most other things by changing habits, your fixed payments will remain. And, if you fail to meet them, they could do real damage to your credit score, as well as accruing extreme debts and interest rates. Before you know it, a snowball of debt will plough you down and make life even harder.
To ensure that doesn’t happen, it’s important to take care of your fixed payments above all. As mentioned above, other lifestyle habits are often more flexible than we realize. But, how do you weather the fixed payment storm?
Know your new finances
Anyone living on a monthly basis has to be good at managing their finances. How else can you make a set amount last for exactly four weeks? The chances are that you took the time to sit down and work out a weekly, and daily budget with your past pay amount. With things changing, it’s time to return to the drawing board. Reassess how much you have, and how to make it last.
Subtract your fixed payments first, and then play with whatever’s left. As long as you have those payments set to one side, you know that the worst is covered. If you can then find a way to make the remaining money last, you’ll take a significant weight off your mind.
This also ensures you don’t accidentally spend the money you need for direct debits and so on. Doing that even once could result in real trouble and backed payments, so make sure it doesn’t happen. It’s also worth checking your bank often for the first few months to make sure your estimates work out. The last thing you want is going overdrawn.
Get a grip on your payments
The next thing you need to know is how to get a tighter rein on your fixed payments. Think of as chucking a big lasso around them, and pulling them in together. The more payments you’re worrying about, the worse things are going to be for you. This is especially true if they all go out on different days. Getting the problem under control can help you pay everything you need to in one swift move.
When it comes to loan repayments, it’s worth considering a debt consolidation loan. This way, a debt consolidation company pays your debts, and you then pay them back for that one loan. Much easier than dealing with different debts at once. You can visit this site and others like them for more information.
Once a consolidation payment is in place, you can return to your finances with one regular payment in mind. If you arrange it so that it’s the day you get paid, you won’t even have to worry about putting money aside.
It’s also important to note that this can be relevant for other payments you have to make each month. Take your bills, for example. If they all go out on different days, change your payment date so that you don’t have to juggle your money any longer. It’s also worth consolidating these as much as possible. Often, electric companies also offer gas and vice versa.
Doing so makes your life much easier, and could even save you with loyalty discounts. The same goes for your phone and internet. Instead of paying a separate phone bill, see if your internet provider offers cheaper phone contracts. You may not get a free phone with a deal like this, but the price change will be extreme. You can always use your old phone until your income is healthier.
Rid yourself of unnecessary expenses
It’s not until we turn a critical eye on our monthly outgoings that we realize some expenses just aren’t necessary. We very much live in a subscription culture. Services like Netflix and Amazon Prime, are commonplace for many families. In fact, it can often seem like not having these things would leave you off the radar altogether. How could you compare notes on the new series of Stranger Things without your Netflix subscription?
For the most part, these monthly payments are harmless enough. After all, they’re relatively small. But, when your incomes are tight already, these expenses could push you over the edge. Besides which, they’re not as little as you might think over the course of a year. That $9.99 monthly subscription will cost you $119.88 over the year. Not so small when you consider it that way, is it?
With that in mind, head to your online banking and cancel direct debits which aren’t related to bills or loan repayments. This will ease the monthly burden in a significant way and, over time, you’ll see just how unnecessary those expenses were.