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What is disposable income?

Disposable income is the amount of money left over after all essential household expenditure (not including payments towards unsecured debts) has been deducted from household income.

Essential household expenditure includes mortgage and rent payments, hire purchase payments (but not unsecured car loans payments), food, drink, council tax, water rates, heat and light costs, telephone, mobile, internet, sky, TV license, life and property insurances, vehicle costs (fuel, parking, car insurance, car tax, repairs & servicing), other essential travel costs, medical optical & dental costs, clothing & footwear, costs incurred by children (school meals, school trips and activities, sports & hobbies, pocket money, transport), laundry & dry cleaning, hairdressing, newspapers & magazines, pet insurance & upkeep and any special unavoidable expenses such as a special diet for a family member.

Living Expenses

The remaining income is described as disposable and it is what is available to spend on non-essential household expenditure, for saving or to repay outstanding unsecured debts.

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MoneyHelper

If you’d like more information on other sources of free debt help and advice you can visit MoneyHelper – an organisation, backed by government and set up to offer free and impartial advice to those in debt. - Click here to visit MoneyHelper