Payday loans can be solutions to short-term financial difficulties. Treat them with care, however, as an inability to repay them could ultimately make matters worse than they were to begin with.
Budgeting carefully helps to decide whether a payday loan is a viable solution to your immediate problem. Our ‘Budget Planner’ should help you to work out your budget, but here are a few basics you need to take into consideration.
Effective Budgeting – Income
In order to effectively budget, you need to first of all determine your exact income per month. This means checking:
- Payslips to work out your exact take-home figure
- Benefit statements (tax credits, child benefit, etc)
When listing all your sources of income and the relevant amounts, do not forget to add any contributions or rent you receive from others within your household (lodgers, and so on). If you are paid or receive benefits on a weekly basis, multiply the incoming amount by 4 to get the monthly amount. Ignore one-off payments of any kind and, if your monthly income is irregular, work out an average (take your total income for the past 12 months and divide it by 12).
Expenses (Main bills)
Having worked out how much money you receive in every month, list your regular expenses. This includes:
- Rent or mortgage
- Gas and electricity bills
- Water rates
- Council tax
- Telephone bills (and broadband, if applicable)
- Cable/ digital TV subscriptions
- Existing hire purchase/ loan repayments
- Insurance premiums (life, car, etc)
- Any other payments made via direct debits or standing orders
To ensure you do not forget anything, check your bank statements for the last few months, as this will show you everything that goes out of your bank account on a regular basis. If some of these expenses are billed on a yearly, six-monthly or quarterly basis, divide them by 12, 6 or 4 respectively to get the monthly figure.
Next, estimate regular everyday expenses like, for instance:
- Pet food
- Newspapers/ magazines
You should also include any other regular expenses for dining out, hiring movies or going to the cinema, for example. Again, work out the monthly cost (if, for example, you go shopping or fill up the car once a week, multiply the amount you spend by 4), then add this to the total of your main outgoings.
Income vs. Expenses – Shortfall
Finally, subtract your total monthly expenses from your total monthly income. If there is a shortfall (your expenses exceed your income), examine whether you can trim down your expenses in any way (see ’21 great money-saving tips’). If even trimming down your expenses leaves you with little or no money to play with, a payday loan is not a suitable product for your situation, as it could lead you to greater financial difficulties.
Income vs. Expenses – Money left over
If, however, you regularly have money left over at the end of the month, a short term loan may be just the right answer to get you out of an unexpected financial difficulty. In this case, contact Uncle Buck on Tel.: 01959 543 400 to find out more.