{"id":1830,"date":"2014-01-02T09:52:10","date_gmt":"2014-01-02T09:52:10","guid":{"rendered":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/?p=1830"},"modified":"2019-02-28T12:08:32","modified_gmt":"2019-02-28T12:08:32","slug":"budgeting-in-debt","status":"publish","type":"post","link":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/budgeting-in-debt\/","title":{"rendered":"Budgeting in Debt"},"content":{"rendered":"\n

People understand income<\/strong>. It\u2019s simply money coming in. Wages, salary, pension, child benefit, tax credits, dividends, interest on deposit accounts are all forms of income. <\/p>\n\n\n\n\n\n\n\n

People also understand expenditure<\/strong>. It\u2019s simply money going out or what you spend. Some spending is done by cash, some by credit or debit card, some by cheque, some by standing order mandate, some by direct debit mandate and so on.<\/p>\n\n\n\n

\"Monthly<\/figure><\/div>\n\n\n\n

Put the two words \u2018Income\u2019 and \u2018Expenditure\u2019 together however and \nmany people will scratch their heads, even in this day when education is\n \u2013 supposedly \u2013 available to all. An Income & Expenditure Statement<\/strong>\n (I&E Statement) can be a scary concept for some but if you boil it \ndown to its simplest form, it is just a summary of your income in a \ngiven period (usually a month) and what you spend in the same period.<\/p>\n\n\n\n

All you have to do is list your income items for one month and the amount of each and tot them up and then list your expense items for the same month and the amount of each and tot them up. Now you have two monetary amounts. Subtract one total from the other and, assuming your total income exceeds your total expenditure, the difference is your Disposable Income<\/strong> (DI). This DI is the amount of money available to you to do as you please with. You can save it, do some additional spending, give it away as a gift or whatever you please.<\/p>\n\n\n\n

Some obvious problems arise. For many people, it\u2019s not as simple as \nthat to compile an I&E Statement. For a start, you may be part of a \ncouple with or without children and not a single individual. The answer \nis that you include all sources of income and all items of expenditure \nfor yourself, your partner and any dependent children residing with you.\n Call this a family I&E Statement if you like. Secondly, items of \nexpenditure may vary from month to month. You may pay certain items such\n as car insurance once a year. The answer is to calculate the average \nmonthly amount you need to put aside so that you can pay the annual \namount when it falls due.<\/p>\n\n\n\n

The most serious problem however is when your expenditure exceeds \nyour income and you have negative DI. Now you are living beyond your \nmeans. You are spending more than your income. If the month for which \nyou compiled your I&E Statement is typical of the year as a whole, \nthen you must take steps to address the overspend. Otherwise you get \ninto debt which will grow in size as each month passes. If this has been\n going on for a while you may already be seriously in debt. What can you\n do?<\/p>\n\n\n\n

A good start is look at ways of cutting back on your spending and \nthen following through with actual cutbacks. This is often easier said \nthan done. You could look at smoking, drinking, socializing and holiday \nexpenditure. You could look at the cost of utilities and switch to \ncheaper providers of electricity, gas, telephone and mobile phones.<\/p>\n\n\n\n

You could look at ways to increase income. Could you take in a paying\n lodger? Can you or your spouse take on a second or part-time job? Do \nadult children residing with you contribute their fair share to the \nfamily budget? Do you get all the benefits you are entitled to such as \ntax credits and housing benefit? Could you downsize to a cheaper more \neconomical car? Again, you need to follow through with actions \u2013 it\u2019s \nnot enough to decide what you need to do.<\/p>\n\n\n\n

We call all these considerations and the follow-up actions \n\u2018budgeting\u2019. If you find this process is too difficult or demanding for \nyou or your family, do take advice. If you are already encountering \ndifficulties re-paying your debts you may be insolvent. If you want to \ndetermine this one way or the other, do consider going to CCCS, CAB or \nto any reputable commercial provider of insolvency services and \nobtaining professional advice. There you will get free advice and \nassistance in compiling your I&E Statement and you will learn for \nsure if you are insolvent or not.
\nAny reputable Insolvency Practitioner (IP) will determine if you are \ninsolvent. If you are, you can explore and have explained to you the \npossible solutions to your predicament. All available options will be \nexplained. Such options could include Bankruptcy, an Individual \nVoluntary Arrangement, a Debt Management Plan, a Debt Relief Order, an \nAdministration Order, Debt Consolidation or some other financial \nsolution. You can make up mind if you want to proceed further. You \ncommit to nothing at this point and can walk away and \u2018sort out\u2019 your \nown finances.<\/p>\n","protected":false},"excerpt":{"rendered":"

People understand income. It\u2019s simply money coming in. Wages, salary, pension, child benefit, tax credits, dividends, interest on deposit accounts are all forms of income. <\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_seopress_robots_primary_cat":"none","_seopress_titles_title":"","_seopress_titles_desc":"","_seopress_robots_index":"","footnotes":""},"categories":[6],"tags":[],"class_list":["post-1830","post","type-post","status-publish","format-standard","hentry","category-general-debt-articles"],"_links":{"self":[{"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/posts\/1830","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/comments?post=1830"}],"version-history":[{"count":3,"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/posts\/1830\/revisions"}],"predecessor-version":[{"id":3178,"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/posts\/1830\/revisions\/3178"}],"wp:attachment":[{"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/media?parent=1830"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/categories?post=1830"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/tags?post=1830"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}