Is Coronavirus making your budget look very sick? is a guest post by Sara Williams who blogs about debt and credit ratings at Debt Camel.
Is Coronavirus making your budget look very sick?
I hope you and your family are safe and well. But millions of people are finding that even if they are OK, their income has fallen and their finances are turning into a disaster.
Whether you or your partner have been laid off, having to self-isolate, can’t work because your children are at home; or your self employed income has melted away, here are my four key tips.
1. Claim every bit of help you can from benefits
Citizens Advice has a great page on what you may be able to claim and that will be kept updated.
You may hope to get through by spending your savings… You may hope the government is going to come to the rescue and give better help directly to the self employed… You may have heard a lot of bad things about Universal Credit before and now a lot of people are saying they can’t get their claims in…
But don’t let any of that stop you putting in claims NOW for Universal Credit if that seems your best hope of getting any support at the moment. Help from benefits may take a while to come through so kick it off now.
2. Be ruthless in cancelling regular payments
Sit down with your bank statements and credit card statements – and your partner’s as well – and look for payments you can cancel.
Obviously this isn’t the time to cancel your life assurance or other important insurances! But you may find insurances on old appliances you no longer have and a lot of small insurances, for lost keys, drains etc. Do you really need them all?
Look for subscriptions – do you have some duplicated with your partner? Both have Amazon prime or Spotify? And for charity donations – you can reinstate these when things are better, but right now you can’t afford them.
3. Don’t borrow any money to repay other debts
This will all still leave many people too short to be able to pay all their debts.
But don’t borrow any more money to try to get through this period. If you knew it was only going to be a month, then paying all your bills on a credit card may be a good idea. Or even getting a small loan.
But no-one knows how long this is going to last. And if you borrow too much now you will end up with a permanent debt problem. When you are in a hole, stop digging!
4. Ask all your lenders for a payment holiday
All mortgage lenders have to give you a payment holiday if you are not already in arrears. And if you are in arrears, the lender should still be offering help.
Other lenders you have to ask for help – offer a lower payment or ask for break for a few months. Ask for interest to be frozen as well, including on your overdraft. This may feel scary if you have never before missed a debt payment but many will be surprisingly sympathetic.
Some lenders are being a bit vague about whether a payment holiday will harm your credit score. It won’t for a mortgage and I hope many other lenders will agree to that in the end. But even if a payment holiday will show as missed payments on your credit record, then it is still better than running out of the money you need for your rent and to feed your family.