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completed: 2021
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Five ways to alleviate financial stress.

If you’re feeling the financial heat, cut yourself some slack by considering these five stress-beating tips.

Rich or poor, almost all of us live with financial stress. You don’t have to be on the breadline to find it a strain to make the books balance each month and, equally, even relatively well off people often find the commitments they have entered into causing more angst than the rest of us might imagine.

According to mental health organisation MIND financial stress can pose a real threat to your mental health. So if you’re stressing over debts, bills or payments, read on and see how these tips can help you.

1. Identify the areas that need the most attention.

You can’t deal with an enemy you haven’t really identified. So the first step in diffusing financial stress is to understand where the biggest problems are, and so where the biggest wins are to be had.

A general feeling that you can’t handle your financial issues is not nearly as actionable as knowing that your main problem is three debt-laden credit cards. If that were your problem, then you’d know for sure that you needed to find the best way to reduce the interest you were paying each month until you could get them all paid off. Having that plan, in itself, would help you to feel less anxious.

So start by listing out your debts. Make another list of your fixed monthly overheads – rent/mortgage payments/council tax/car/utility bills and internet and phone bills etc. Finally, make a list of your typical day to day outgoings – food/drink/entertainment/travel etc.

Now try to pinpoint the items that are causing the most worry. Ask yourself which payment or outgoing you’d get shot of first to make yourself feel happier. Once you have that in your sights, you can plan to go after it.

2. Consider consolidating existing debts.

If you’ve got a clear fix on how much you need to service your debts, make required loan payments and pay your bills each month, the very first thing to do is compare this to how much income you have.

If you’d need £3,000 a month, but have only £2,000 a month coming in after tax, the most urgent thing to do is make plans to lower the outgoings. Otherwise your debt will spiral further away from you each month.

Consolidating existing debts is a really good place to start. All that this means is that if you have, say, several credit cards, store cards and loan agreements, each with a different lender, you try to arrange a single new loan large enough for you to pay off all of the others with, and with as low an interest rate as possible.

Credit cards, store cards and the kind of loans you may have taken out to pay for a car or holiday all tend to have fairly heavy interest rates attached.

As the kind of loans you might use to consolidate with, such as (if you are a homeowner) Loan.co.uk’s second charge mortgage, generally have far lower rates, this consolidation can go a long way to helping you start to sleep easier at night. Plus, all you have to be willing to do to improve things in this way is a little admin work.

3. Create a budget.

Whether it’s a government, a global corporation or you, no-one can manage their finances without putting together a budget.

Don’t get scared. This is easier than you think, and once it’s prepared you just need to stick to it and maybe review annually to make sure it’s still in line with your income and outgoings.

Open a spreadsheet. In the first column list out all outgoings you have each month. As the list grows, group it into categories. You’ll end up with categories like Credit Cards; Homeloan; Utilities and Council Tax; Insurance; Phone, TV and Internet; Car; Food and Drink; Gifts; Travel; Entertainment; Holiday etc.

Under each category, group all the relevant outgoings. For example, ‘Car’ might have ‘Loan’, ‘Insurance’, ‘Fuel’ and ‘Parking’ under it.

Once you’re happy you’ve thought of everything of any significance, put a value next to it in the second column, showing how much you need to allow for that each month.

Then use the ‘Total’ feature to add all of your monthly outgoings.

Now check your payslip (or combined payslips if you’re doing this together with a partner), and at the bottom of your spreadsheet enter your net monthly income/s. Then simply subtract the outgoings from the total income and see how it looks. If the result is positive, things are broadly under control and you can rest easy, or easier, depending on how positive it is.

If it’s negative, you need to get to work reducing anything in the outgoings that is within your control (like entertainment or spending money), and looking at possible ways to reduce as much as possible of your monthly costs on items like credit card and loan repayments. You can almost always do this with a little careful consolidation and reorganisation.

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