Abacus Daily Debt News

Advice given by Charles Dickens in his 1850 Novel, David Copperfield.

A famous line from Charles Dickens’ David Copperfield equates money with happiness:-

“If a man had twenty pounds a year for his income, and spent nineteen pounds nineteen shillings and sixpence, he would be happy, but that if he spent twenty pounds one he would be miserable.”

This may sound like stating the obvious, but the cause of much misery stemming from debt problems is that too many people simply spend more than they earn for no good reason other than credit is available to them.

It is true that most debt related problems are a result of change in circumstances; this is certainly the case for most of our debt management clients. However consider this, is you’re treating yourself to a period of overspending now, then you must at some time do the reverse, spend less than you earn to repay your debts, plus the interest. 

To this, many people say for example, “I need to spend now to kit out my new flat, I won’t need to spend so much later on”. There is some sense to this, but if your overspending is just a way of life without laying any foundations for the future, then think about this:-

• Where were you financial 12 months ago, where you are now and where you will be in 12 months time?
• Does this conflict with your longer term financial plans?

I wonder if Oscar Wilde had debt problems, one of his famous quotes is:

“Moderation is a fatal thing. Nothing succeeds like excess.” –Oscar Wilde

Budget for how much cash you’ll need for the course of the week and do your best to stick to it.

Don’t treat the cash machine like a bottomless pit of money.

This is especially true is your are already over drawn with your current account. Each trip to the cash machine is borrowing more money and leading your further into debt.

If you do your weekly food shopping while hungry, you are more likely to make impulse, non-essential food purchases

Shopping after lunch has a second benefit as you may loose a few pounds of weight if you’re better able to resist such temptations.

…and more importantly, stick to it.

Many people with a finance and debt management problem have a needless over spending problem.

One place to cut down on this is in the supermarket. How many times have you bought food on impulse only to throw it in the bin when it’s gone off?

Make a list before you go. When arriving at the checkout, anything in the basket which is not on the list, get rid of. If it’s stuff you just want, then you can’t actually need it as you didn’t know you wanted it unitl you saw it.

If you’re feeling brave, budget how much you’ll need to spend and take cash only with no other means of payment.

Exceptions can be justified if the item is on offer and by making a calculated, non-planned purchase now, there is reduced planned spending at a later time, and hence a net saving.

Another example of turning planned spending in to overspending is doubling up when clothes shopping.

How many times have you gone out to buy for example a jumper, and come home with having bought two from the same shop. You couldn’t decide which you prefered so you bought them both. Worse still, they are the same, except in colour. What always happen’s is that you will prefer one over the other and that one you will wear more and get better value from it.

The raw ingredients to make a sandwich costs about 25p, so why pay £2 for one from a shop?

If you buy lunch at work everyday, think how much you could save if you bothered to make yourself a packed lunch. I know lunchboxes are very un-cool, but could easily save £50 plus per month, and eat a lot healthier at the same time.

Sit down and work out how much you spend each month. List essential outgoings and all other non-essential spending.

Most people are surprised at how much that can save if they were more disciplined with their money. When I did this, I realized I had a £25 per month magazine and a £17 per month chocolate habit. So not only did a save some money, I lost a few pounds also.

You can use this handy income and outgoings calculator to see where all your money goes.