By 2016 it is anticipated that the average family will have £10,000 worth of unsecured debt. It is an unsurprising statistic as the family budget is under constant pressure. The biggest pressure is the squeeze on available money to the average family who are now thought to be £1100 per year worse off.

Therefore it is wise to start looking at what you can do now to protect your family and your sanity. Debt is crushing and can have a profound impact upon physical and mental health. It is not a shame to get into debt and there are often many reasons beyond control that can put a person into debt. For instance, illness, job losses, family breakdowns etc…

However, there is a form of getting into debt that can be avoided and that is the form of debt of living beyond your means. Living beyond your means can make you appear more successful to the outside world, however unless you have a successful win at the lottery or accumulate a mass of wealth it does and it WILL catch up. No matter how nice your surroundings are or how popular you’ve become, getting into debt, ignoring debt and not sorting it out can have disastrous consequences.

On the flip reverse of getting into debt try living to your means. Providing successfully for your family is the first step to having the balance between control and freedom.

The formula that I’m about to share with you is not a new formula. It’s a long, tried and tested formula that would have been practised for generations before us. It’s simple, buy what you can afford. In fact don’t just buy what you can afford but go cheaper, buy less than you can afford… And account for emergencies.

So how do you do that?

You prepare yourself mentally. First you see it as a challenge and then you be honest with yourself.

The Formula

1.Take a good long look at the income that your family brings in.  Write it down.

2. On another piece of paper make a list of your monthly outgoings such as:

  • Rent
  • Fuel (electricity, gas, coal)
  • Council Tax
  • Grocery
  • Toiletries
  • Car (loan if you have one)
  • Car tax
  • Car Insurance
  • House Insurance
  • Life Insurance
  • Pension
  • MOT
  • Petrol
  • TV License
  • House Phone
  • Sky/Cable/Netflix
  • Internet
  • Mobile Phone
  • Children’s pocket money
  • Milkman
  • Newspapers/Magazines
  • Socialising
  • Hobbies (gym membership)
  • Tobacco
  • Work/school lunches
  • Home DIY
  • Haircuts
  • Clothes

Account for everything that you can think about and work out how much you spend for each of the above categories. Be honest, everything needs to be accounted for

3. Then look at the surplus, from that I like to work out how much to put aside for:

  • Birthdays
  • Christmas
  • Easter etc…

Anything after that is savings for emergencies. Car repairs, household items needing to be replaced etc… And lastly, days out and the family holiday.

The above is a good guide to help prevent you from getting into debt that you can control. However, if you are in debt it is best to go to your local citizen’s advice and seek professional help. They can put you into contact with the right organisations who will guide you with income and expenditure sheets helping you to account for an allowance for all of your needs.

For me, I have survived without credit for over five years now. The above theory has helped me a lot to account for everything and to ensure that all of mine and my children’s needs are met. As an adult there are many times that the children’s needs have had to be met before my own. But I’m an adult and I can deal with it. My situation has been complex as I was left in a financial disaster, however the above has given me guidance on how to cope and how to realise that the family needs must be met first. I sincerely hope that other families prevent themselves from getting into the same mess. On the positive side we learn from mistakes that do help us to evolve. The message is simple. Debt is a headache and a stress if you can prevent it then do. It’s a lifestyle choice, its education. And the good news is:

Its education that can be learned and it does get easier over time… Tips to make it easier if your outgoings are higher than your incomings:

    • Get rid of pride.  Everybody would adore living in a big house and driving a nice car.  However that can often come at a price.  It’s a price that can severely affect health and freedom.  The emphasis should be on relationships and affordable experiences not trying to impress other people with fancy possessions.
    • If necessary downsize living accommodation and live in accommodation that you can afford and that allows for other needs on the budget list to be met.  It is not the end of the world if children of the same sex have to share a bedroom for a while.
    • Buy a car that you can afford.  Pay cash.  Many say that their only credit is their car.  But remember a car is not an asset and they depreciate faster than it takes to pay a loan back.  By the time you have paid a car loan and the interest your car is not worth a great deal. You have wasted a lot of money and not invested.  If you are a car fan, why not try a “make do” car for a while, then put money aside for the car that you really would like.  In the short term you are not getting what you want but in the long term you will benefit.
    • Save rather than borrow… it makes sense, you earn interest on your savings whereas you pay interest on what you borrow.
    • Use coupons, it all adds up.  Many supermarkets put vouchers through doors offering money off items or so much off when you spend a certain amount.  Farm Foods being one.  You can stock your freezer up and use your voucher.  £5 might seem a little amount but it is money that can be put to other uses.
    • The food shop is somewhere that a lot of people can cut back on within reason.  We all need to eat.  However, a carrot is a carrot whether it comes from Aldi, Lidl, Asda etc… it will still have the desired effect in your stew.  It’s just the price of that carrot can vary greatly.  Therefore, look at where you do your food shopping.
    • Make full use of pound shops or bargain shops for cupboard staples, household objects and toiletries.
    • Give your children pocket money.  I was dubious about this but it works.  My children do not ask me for money because they have their own budget.  That budget is drawn up into our plan.  I know where I stand with money and they are learning how to budget and have a sense of responsibility.
    • As I pointed out earlier.  I am all for experiences with my family however my holiday budget is not huge.  Shop around for your holidays.  Not everybody loves camping myself included.  If you use the internet it’s possible to go on holiday abroad at all inclusive through companies such as teletext… I’ve found that it’s cheaper to take my children abroad for a holiday.  We are happy with sunshine, a beach and a pool.  And I don’t believe in spending my life in a hotel, so as long as it’s clean, we can wash, sleep and eat I’m happy.  If a beach holiday isn’t for you, there are amazing caravan holidays in the UK, just set your spending budget.
  • Look at family days out.   Not having money doesn’t mean that you can’t take children on days out. Save the big spending special days for when you can afford them.  In the mean-time make the most of The National Trust membership, family railcard – just travelling by train is fun, a trip to the park, strawberry picking, taking long walks, go on bike rides, visit local museums.  When you step out of your front door the options are endless. Nature doesn’t cost money.  A wise man or not so wise man which ever you prefer.  Karl Pilkington summed it up for me on An Idiot Abroad.  “People want to spend time on their arses.”  Some just prefer to spend money to do it in nicer surroundings.  However If you drive out to the countryside, with a picnic blanket you can do that for FREE.
  • When having a day out.  Take a picnic or a flask.  Coffee from a flask is just as good when you need that caffeine hit to keep you motivated.
  • Look at the exercise regime – Do you pay for an expensive gym membership but not use it? Remember that walking, running or gardening are free plus they give you the added benefit of fresh air.  You will not get fresh air in a sweaty gym.   If you have space, a home exercise DVD can save you money. Exercise is all about moving and that doesn’t have to cost – contrary to belief, you do not need a personal trainer.  Plus if you take up walking you will save on petrol.
  • Look at your beauty regime, are you paying over the odds for things that you don’t need too.  Make compromises.  Dye your own hair but have it cut professionally, have home facials but still go to the nail bar.  It’s possible to have treats it just depends which one is more important to you. Set your budget or even learn a new beauty skill.
  • Make the most of your resources, if you have a garden then use it.  Gardening with children can result in fresh fruit, vegetables and herbs which can spice up bland dinners.
  • DIY – doing it yourself can save money, you might not get the professional results but you will get something, practise makes perfect and you may surprise yourself.  Any parts of DIY that you do struggle with then try asking a friend for help.  In return you could offer your skills, maybe you can cut hair, do nails, service a car, look after children – sharing is a way of sharing resources.
  • Ditch the designer labels – find yourself without them, don’t let the designer labels give you your worth… You are the designer label.
  • If you really want designer labels then head for the charity shop.  Top charity shop tip: go to affluent areas, their charity shops are laden with labels and most of the time they have been barely worn.
  • Buy second hand furniture and learn to make it over.  As your savings grow you can always replace if you so wish.  I’ve had the brand new sofas but I also know how quickly they wear so I can honestly say that for me I will never buy new again.  I like to see that money in my pocket.

As I’ve pointed out, there are times when debt is unavoidable due to unforeseen circumstances. BUT overspending because we believe we deserve it is something that can be avoided. It’s down to you. Set yourself the challenge. Be honest. Lose the pride. Stop trying to impress people with material things and MOVE FORWARD TO A MORE JOYFUL, SIMPLE AND FREE LIFE.