Working at StepChange debt Charity, we often see clients going through a...
How to cope with unexpected costs on a DMP
If you’re on a debt management plan you’ll know that your budget doesn’t allow for a great deal of covering the unexpected.
It’s impossible to budget for every eventuality and unfortunately disaster can strike and you may find yourself with a boiler that needs repair or a broken freezer full of defrosting food.
Whether you’ve been a DMP for years or have just set one up, it’s possible for costs to come out of the blue. But there are things you can do when this happens, and we can tell you how to survive if disaster strikes!
1. Get a quote
Firstly it is a good idea to calculate how much money you will need to solve your problem. Get several quotes for any work needed or if replacing products, and check in stores or online to see how much similar or replacement goods are. It’s important to know how much money you need to aim to find. MoneySavingExpert.com have a great tool called the MegaShopBot.com which you can use to compare the prices of goods online.
2. Second hand goods
It can be a lot cheaper to purchase second hand goods if your budget doesn’t stretch to buying a brand new item. Charity shops, eBay and car boot sales are always worth a look. Local recycling and swap schemes vary from region to region.
And Freecycle is an organisation where you can donate and obtain goods for free from people in your area. As well as getting hold of something you need, you can give something back by donating unwanted goods.
3. Help from family
Anyone who’s watched soaps on telly will know that money and family don’t always mix well! Owing money to family can quickly cause rifts, so be very careful before accepting money from loved ones. It’s important that both sides know exactly what the arrangement is before money changes hand.
If you decide to go down this route you could ask family or friends if they can lend you any money, or buy you goods as a birthday or Christmas present. If others can help financially and they need repaying, it would be a very good idea to ask if they are willing to have an ‘IOU’ until your DMP has ended.
4. Think outside of the box
Could you trade a skill or talent in exchange for work in your home? For example if your brother is a plumber you could ask him to fix your loo in return for a couple of nights’ free babysitting.
Alternatively, you could ask around friends or post on social media sites to see if anyone has a replacement for whatever it that’s broken down. You would be surprised how many people have an old TV set gathering dust in the garage!
Going forward it’s important to ensure that your budget works for you, and ideally that you save for emergencies each month. It’s a good idea to have a second bank account (with a bank you don’t owe any money to) to transfer money into, for emergencies and any costs you don’t cover each and every month, such as birthdays, Christmas or road tax.
While it’s impossible to budget for every eventuality, stack the odds in your favour and produce a realistic budget. Whenever possible save money each month for emergencies and fingers crossed these will be kept to a minimum! Check out our beginners guide to budgeting if you’d like some tips to get you started with your budget.
6. Ask for help
If you’re on a DMP with us then it’s best to speak to us if you find you’re struggling with unexpected expenses. We’ll be able to talk with you about the situation and make practical suggestions about how to deal with the problem.
We know that life has a tendency to throw up bumps in the road and our advisors have experience of helping you manage when things don’t go to plan.