MONEY

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Budgeting 
Tax and National Insurance
Bank accounts and savings  
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Credit 
Money problems / dealing with debt 
Getting help and advice about debt
For Contact Details see our A-Z

Whatever money you have to live on, the chances are it never goes far enough! If that sounds like you, it might help to work out a budget plan of what your income is and what you spend.... see below

BUDGETING

If your income is more than your expenditure, then what’s left over is for you to spend as you like, or to put aside towards a holiday or unexpected expenses. If your expenditure is more than your income you need to take action. Money problems don’t go away if you ignore them, they just get worse. See below for more information about dealing with debt and here for who can help.

The CAB also publish a free guide ‘York on a Budget’. Pick up a copy from CAB or Castlegate for ideas on saving money locally.

You can get stuff for free online from York Freecycle - furniture, bikes, baby equipment, clothes etc are all offered regularly. See here for more information.

CAB can help with applications to charitable trusts if you are on a low income and struggling e.g. to replace broken items, or getting furniture for a new home. See also here.

For Contact Details see our A-Z

moneysavingexpert.com has plenty of tips for saving money; e.g. pre-paid cards, getting the best deal from banks, insurance etc., a benefits calculator, freebies directory and how to be a wiley consumer. See also Consumer Rights

When you start work you'll usually pay income tax and national insurance (NI) out of your wages. Your employer will deduct these before paying you, and must give you a payslip showing what has been deducted. Your earnings before tax is called your 'gross' pay. Your pay after deductions is called your 'net' or take-home pay.

You can earn a certain amount of money before you start paying tax and NI. Deductions are made on any money you earn over this amount. Your employer needs your tax code to work out the amount of money to deduct - for most people this is currently '747L' which means you that you can earn £7475 in the current tax year (April 2011 to March 2012). This is the equivalent of approximately £623 per month or £144 per week. 

If you haven't given your employer your tax code (i.e. your P45 from your last job) you may be paying too much tax. More information at direct.gov.uk. (search for 'income tax basics')

You'll usually need a bank or building society account, to keep your money safe and for wages or benefits to be paid into. You can also pay for things without using cash. 

A current account comes with a cash card to withdraw money. Shop around for free banking and interest paid when you are in credit, low charges on overdrafts, standing order and direct debit facilities (to pay money out of your account regularly like rent or bills). Most now offer telephone and internet banking. You can also open a current account with the North Yorkshire Credit Union. See here.

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If you need to go overdrawn on your account, make sure you arrange it with the bank first, as they will charge you a lot more for an unauthorised overdraft. Find out what it will cost you first.

Most banks, building societies and the Post Office offer a ‘basic account’. This should allow you just to pay money in, and withdraw it at a cash machine. There is no credit check, so it shouldn't matter if you have a bad 'credit rating'. If you claim benefits, or get a job for the first time, you will need an account to receive your money.

If you don't want or can't get a debit or credit card (because e.g. you are under 18 or have a bad credit rating) then consider a prepaid card. It can be loaded with money and used in shops (chip and pin) or online to make cheaper purchases. All of the cards will charge you a fee, but you can still save money this way. Go to moneysavingexpert.com and search for 'prepaid cards' for more information, comparisons and offers.

It’s worth having a savings account so that you are less likely to spend it with your ‘everyday money’. Check out the interest rates in banks, building societies and the Post Office. You can also save with the North Yorkshire Credit Union; see below.

Credit = buy (or borrow) now and pay later. Credit is nearly always a service you pay for, so you pay the amount borrowed plus a percentage on top. You usually pay it back in instalments over a period of time. You cannot normally take on any kind of credit before you are 18. No company will lend you money without believing they will get it back from you - for example because you have a regular income, or you have a history of paying money back on time. After all, this is their business. Credit comes in several forms –

• Hire purchase (HP) and credit sales – you pay a deposit and then make weekly/monthly payments. With hire purchase, the goods do not belong to you until you have made the last payment, whereas with credit sales you are the owner of the goods as soon as the contract is made.

• Bank loans – banks offer personal and ordinary loans, and budget accounts to spread the payment of bills over a year.

• Overdrafts – many bank accounts allow you to keep withdrawing money even when your account has nothing in it. If you have not agreed this with the bank you will be charged more than if you have agreed it. Charges vary from bank to bank.

• Credit cards and store cards – card companies send a monthly statement telling you what you have bought on your credit card and how much you owe. If you do not pay it all off within a month or so you will have to pay interest - usually quite high.

North Yorkshire Credit Union is a savings and loans service for anyone who lives or works in York/North Yorkshire. It is open to anyone 16+ and you can save in small amounts. It costs £1 to join - phone for an application pack or pick one up from Castlegate. They also offer a current account, with a cash card and facilities for standing orders and direct debits. It’s a much better way to borrow money than through internet loan companies, and they won’t lend you money if making the repayments will cause you further hardship. For Contact Details see our A-Z.

• Ask yourself whether you can really afford the repayments, and if you really need what you are buying. Credit can be very tempting, and also very expensive. Circumstances change - if you lose your job or are unable to work because of illness you can suddenly find yourself in a lot of debt.

• Check the ‘Annual Percentage Rate’ (APR) i.e. the % interest you pay over a year. An APR of 30% means that over one year, you will pay back £130 for every £100 you borrow.

• Make sure you have read the agreement fully and have understood it. Keep copies of all agreements. Never sign a blank form. If you change your mind about an agreement get advice as soon as possible - you may be able to cancel it but it depends upon the timescale and circumstances.

If you find that you cannot keep up with the repayments, get advice as soon as possible, from Castlegate, CAB or from CCCS or National Debtline (see below). Don't expect independent advice from the company you owe money to, or take their word for how much they'll accept as a minimum payment.

Refused credit?

If you are refused credit in a shop, it may be because you (or your address) are considered a credit risk (i.e. bad payer). Often they use details provided by a credit reference agency to make this decision. You have the right to be given the address of the agency they use and you can write to request a copy of your file – there is a fee of £2. Make sure you are requesting your statutory credit file, as other more expensive reports are offered, but not necessarily needed. A fact sheet on credit reference agencies, explaining your rights, is available from nationaldebtline.co.uk (see below).

Hiding from debt won’t make it go away. It may be easier than you think to get debts under control, especially with professional help. You may end up with a bad credit rating but you’ll feel loads better. The following is a six point guide to dealing with debt. There are also details of some local and national organisations that can help you sort out debt problems.

1. Maximise your income: If you are struggling to make ends meet, make sure you are not missing out on any benefits or tax credits that you may be entitled to - see p.105/6 for who can help.

2. Make a budget plan: call in at Castlegate for a budget plan or download one from nationaldebtline.co.uk. Work out your income and outgoings. Talk it through with someone and see if there are any savings you could make - for example taking sandwiches to work, buying a bike or reducing your mobile phone costs.

3. Prioritise your debts: List everyone you owe money to. Your priority debts are the ones with the most serious consequences, not the ones hassling the most. First should be rent or mortgage arrears, then secured loans, gas, electricity and water bills, Council Tax and unpaid fines or maintenance payments. Tackle other debts after these, such as credit card or bank debts.

4. Contact the people you owe money to and explain the situation: Send a copy of your budget plan to all your creditors with an offer of repayment that you can afford. Don’t worry if it is small. Most creditors would prefer this than to chase you for missing payments. If you can’t afford anything now, tell them so, and that you’ll contact them again if your situation changes. Ask them to freeze any interest. Sample letters available at nationaldebtline.co.uk, but you can get help doing all this from Castlegate or CAB. CAB can contact people you owe money to on your behalf.

Answer creditors letters, and if they are calling you, insist that they deal with you in writing instead. It is easy to be talked into agreements you can't keep or aren't happy with over the phone. Creditors are allowed to remind you of missed payments but not to harass you.

5. Don’t borrow other money to pay off your debts. This often works out more expensive, no matter how tempting. Avoid debt consolidation companies – they are in business for your money.

6. If you are dealing with your debts, it is usually pointless for creditors to take you to court, but if this happens, don’t ignore court summons - fill in the papers and attend the hearings. The courts can often arrange a repayment schedule that’s manageable, and will stop people pestering you. Unpaid debt (other than Council Tax arrears) is only a civil offence, not a criminal one. You won’t be arrested for it, or put into prison!

Getting help and advice about debt

If you would like help dealing with debts, there are local and national organisations you can contact. For example, to help with working out a budget, contacting creditors and arranging affordable repayments with you.

If this is just not possible, for example because your debts are too big, they can also advise about other options - for example a Debt Relief Order (DRO) or bankruptcy. Some of these options can only be done with a specialist debt adviser who can talk you through the process and make arrangements on your behalf.

You can get debt advice from CAB or Castlegate. CAB also have specialist debt advisers who can help arrange DRO's and advise about bankruptcy. You'll need to see a general adviser first, who'll refer you to one of their specialists if needed.

National Debtline run a free advice line to help you sort out debt, and website, nationaldebtline.co.uk from which you can download their ‘self-help pack’, factsheets, sample letters, a budget sheet, ‘what if’s...’, all with clear advice to follow and make debt manageable. You can also use their online too, 'My Money Steps' which can help you make a personalised plan of action to tackle debt.  For Contact Details see our A-Z

The Consumer Credit Counselling Service (CCCS), offers free and confidential debt counselling, either by phone with one of their debt counsellors, or online. Their website has an online tool 'Debt Remedy'. It takes 20 minutes or so to work through the session and get a personalised plan of action. For Contact Details see our A-Z

GamCare - can help if you have a problem with gambling, or think you might do. They offer a helpline, and offer online support. 

For Contact Details see our A-Z.

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