February’s debt and money news
February’s been a busy month in the world of debt and money...
So your debt management plan (DMP) has been ticking over nicely. Hopefully your creditors have stopped or reduced contact with you and you’re budgeting like a pro.
But we know that this isn’t always the case; kids grow older, bills go up, and your situation can change and adapt.
Reviewing your situation every year, and when things change, can ensure that your DMP is working as it should.
We know how easy it is to look at your monthly surplus and work towards that, rather than budgeting for everything accurately. It’s easy to spend the car tax allowance on extra food but then what happens when it’s due? Something else has to give for you to be able to afford it.
This is why we’re here to help you prepare and maintain a sustainable budget.
Rather than carrying on regardless, we’ll look at your situation again and make any necessary changes to your budget or, more importantly, there may even be other debt solutions that are now available and more suitable to you.
Aside from the benefits of making your budget as accurate as possible and ensuring you’re still on the right debt solution, it’s now a regulatory requirement that we review your plan with you at least once a year – even if your circumstances haven’t changed.
We’re now regulated by the Financial Conduct Authority (FCA). They believe, as we do, that without reviewing your budget at least once a year it’s very difficult to ensure that you can still afford to pay your DMP, it’s the best debt solution for you, or that it’s taking all of your needs into account.
We’ve always asked clients to review their plan every year, but now under the new FCA rules, if you don’t review your DMP – either at your annual review date or earlier if your circumstances change – we’ll have no option but to close your DMP. But don’t worry, we’ll contact you to let you know when your review is due, so watch out for these communications and please don’t ignore them!
In a review, we’ll typically;
It’s similar to how you prepared for your initial appointment with us. Rather than make changes to your current budget, you might find it more useful to start from scratch. This way you won’t be influenced by any old figures.
We need to know how much income you receive. If it’s been a year since your last review it’s likely that this has changed even if you haven’t realised it.
Gather as much information as possible about your income. This would include:
Again, it’s likely that your expenditure has changed since the last time you spoke to us. It could be that the gas bill has increased or you’re saving money on transport because you no longer have a car.
Remember that if you were previously paying towards arrears that have been cleared your monthly payment should have reduced.
We’ll ask you for your priority costs such as rent or mortgage and utility bills but also your everyday costs such as food shopping and travel.
To help you work out your everyday costs always check your bank statements and try writing down everything you buy over a month or, we’ve reviewed some handy apps that do the job for you. Keeping your receipts can be useful as you can then add up the figures and work out an average monthly amount for everyday items.
Although the majority of bills are paid monthly you may also have costs that are less frequent such as your dentist visits and the car’s MOT. To budget for these, work out how much you would spend in a year and divide that by 12. This is the amount you need to budget for every month.
You may also be able to reduce your spending on some costs such as gas and electricity.
If you’ve had any correspondence from your creditors with updated balances it’s useful to give us these too. It means that we can more accurately estimate your debt free date.
Don’t forget that if your debt is sold on to a collections company or your balance is incorrect, you can update us using OnlineDMP (login required).
As we previously mentioned, you need to complete a review of your budget at least once a year throughout the course of your plan.
However, changes in your personal circumstances are almost bound to happen at some time during the term of your DMP. These changes could be anything, such as:
If you do experience a change in your circumstances, whether it’s a short term emergency or a long term situation, there’s no need to panic. Just get in touch with us and we can discuss the best way to deal with this.
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