What do I do if I overspend?

Christmas is great; overspending is not. We are all guilty of splashing out more cash than we have to spare at times. Maybe there’s a great new deal on a new pair of boots we need for winter or perhaps it’s something less exciting like an unexpectedly high heating bill (because let’s face it, this winter hasn’t exactly been warm).

Either way, we know that it’s easy to tap your card or transfer some cash before properly thinking about any upcoming expenses and furthermore, it’s hard to have any foresight when it comes to surprise bills.

So, what can you do about it?

There are plenty of ways to recover from overspending, whether you’re strapped for cash right now or you’re aware of an upcoming payment that you don’t yet have the money for; there are options.

Option 1: Preparation

Have you heard the phrase: if you fail to prepare then prepare to fail? It sounds pretty pessimistic, but the essence is true. If you aren’t prepared for something, then you will need to prepare for the consequences. For example, if you know you have a bill coming up and you haven’t saved the cash to pay it, then you’re going to need to work out how to repay it afterwards. It isn’t failing exactly, but it is like taking the long road round.

Preparation can be anything from writing an upcoming bill on a calendar, to making a spreadsheet of all your outgoings and incomes. It doesn’t need to be fancy, it just needs to work for you and keep your finances organised enough for you to be aware of what’s coming up.

Option 2: Prioritise

Prioritising works best alongside preparation – once you’ve prepared your finances for the month, you can start to prioritise.

At the start of each month, write a quick list of anything you know is coming up that you wouldn’t normally budget for like birthdays or extra childcare. Once you know roughly how much more money you’ll need that month, or over the next few months, you can start to prioritise your non-discretionary expenditure with the aim of cutting down on any luxuries you don’t need.

If you then plan your remaining budget around these payments, you should be able to keep better tabs on your spending and hopefully be mindful of what you do and don’t need each month.

And, if you’re super organised and can plan in advance, think about your expenditure over the next few months. If you have a disposable income each month, think about saving this towards future purchases rather than just spending it because it’s spare. Some people organise a gift jar where they’ll put in some cash each month, so that when someone’s birthday or Christmas rolls around, they won’t have to panic about buying presents out of their normal monthly income. This is especially helpful if you have a sudden change in circumstances which means you’re a little shorter on cash than you would be usually.

Option 3: Reduce Spending

We’ve sort of already touched on amending your monthly expenditure in order to meet a one-off expense, but if you know you have some bad spending habits then you could consider reducing your spending in the long run. Instead of just cutting down for one month, maybe think about trying to save an extra £10 or £20 each month. You don’t necessarily have to save it towards something, but you never know when a bit of spare cash might come in handy. It could be as easy as cutting out that daily coffee shop drink on the way to work, or switching to homemade lunches instead of expensive sandwich shops.

Suddenly, instead of relying on a loan or credit facility, you have the ability to settle the debt independently.

Option 4: Increasing your Income

We all have dreams of unlimited pay rises and winning the lottery (even if we don’t enter!) but there are some more practical ways to make a little extra money each month without exhausting yourself.

It sounds pretty standard but selling things you no longer need online can really help you make a few extra quid when you need it most. Of course, we all think we’ll sell our old stuff eventually, but we never actually get around to doing it. If you have a free day, why not dedicate it to photographing some stuff and uploading it to an online marketplace. Usually, you can choose whether you want to set a certain price of have people to bid on the item. There’s pros and cons to both so figure out which works best for you.

You might not make a fortune, but it’s never a hindrance to have some extra funds in the bank. Plus, tidy desk, tidy mind; clearing out old things you no longer use can do wonders for your Feng Shui.

Option 5: Make Contact

So maybe you’ve tried all the options above, maybe you’ve tried even more, and your finances still aren’t quite stable. The best thing to do is make contact with your creditor or bill provider and explain your circumstances.

Most creditors will allow you to set up a repayment plan for any outstanding or overdue debt. Whether you’ve received an unexpected bill or you’ve not quite managed to live within your means, there is no point in avoiding the problem as loans will usually continue to accrue interest until you’ve settled the debt or got in touch to set up a repayment plan.

Work out how much you can afford to repay each month, whether it’s a temporary token payment or maybe just the balance split over 3 months. Creditors will want to help you repay your debt to them. Remember, your priority bills come first so make sure you only agree to a repayment plan that is affordable.

Habits for the future

The best foundations for financial stability lay in planning and prioritising. Plan your monthly budget and prioritise your spending when something unexpected comes up.

We know it’s not that easy, but it is a good place to start. Get in the habit of tracking your spending and maybe try some easy saving tips. Budgeting doesn’t mean completely stripping away all of life’s luxuries, it just means you know what you spend your money on and where you can reduce your expenditure if you need to. And that’s where prioritising comes in; knowing which one of your expenses is more important and which ones are urgent will go a long way in helping you deal with sudden money problems.

Clear and Fair

It can be tempting to just assume you’ll be able to deal with it later, but what if you don’t yet have the funds deal with it later? That’s where Clear and Fair might be able to help. We know it’s not fun experiencing financial difficulty, especially when we are trying our best to keep the cash flow going, but we can’t help unexpected bills, especially if they have a knock on affect for all your other bills that month.

Clear and Fair compares short term loans so that you can find the cheapest loan for your needs. If payday is just around the corner but your emergency can’t wait, then paying more than necessary for a small loan is just another stress that nobody needs.

Clear and Fair ranks the results of your search from cheapest to most expensive in terms of repayments. We don’t promote any specific lender and so the results you see are only reflective of the cost you pay. You can even do a little research about each of our direct lenders before you choose who you want to apply with.

You can use our calculator to work out how much you will have to repay depending on the amount you borrow and how long you borrow it for, but remember not to apply for more money than you need at that time. Missing your repayments can cause serious money problems and can make obtaining credit more difficult in the future. This is why you need to carefully consider your options before immediately applying for a loan. Try budgeting like suggested above, or maybe skipping that cheeky Friday takeaway this week.

Whatever you do to deal with unexpected expenses, we’d love to hear from you so that we can share your wisdom amongst others. You can tweet us or find us on Facebook!