The advice comes after research from Bright Grey revealed that a third of people in the UK are either spending more than they earn, or are just about managing to break even every month.

However, as financial problems tend to point to long-term issues, Think Money has advised people to see if they can identify any areas in their finances that could be improved, by looking back to what shape their finances were in 12 months ago.

A spokesperson for the company said: “Ask yourself some questions. Have your finances, generally speaking, improved? Got worse? Remained largely the same? Depending on what shape your finances are in now, compared with 12 months ago, you could take various approaches to dealing with them.”

Some people may find they could really benefit from a new approach to debt management – such as setting up Direct Debits to make sure their repayments leave their account on time – or putting savings aside for a financial ’safety net’.

How a yearly review of your finances could help is a post from: The Thrifty Scot

Student debt is a problem for society, not just individuals. It could mean the creation of a debt culture, where graduates begin working life believing debt is “normal” and thus living beyond their means. On the flipside, graduates might find the debts they run up at university leave them unwilling or unable to get further credit. A generation of young people who can’t afford to buy cars or get a mortgage could be bad news for the economy as well as putting increasing pressure on rents.

Of course, student debt is also a personal problem: graduating with huge debts is like beginning a marathon five miles behind the starting line: it can soon feel like even doing everything perfectly leaves you with no chance of getting ahead. With that in mind, here are three ways to give yourself a much better chance of starting post-university life with a fair financial chance.

Number one is to not only get a part-time or summer but to make sure you don’t pay too much tax. If you’re working a temporary job such as during the holidays, and you know your total income for the year (not including official grants or student loans) is going to be less than £7,475, then you can avoid paying income tax altogether. To do this, you need to complete form P38(S), available from the HMRC website.

If you’ll be earning more than this, or working in an ongoing job, you’ll have tax deducted weekly based on your earnings. Check your tax code: if it’s anything other than 747L and you only work for one employer, there may be a mistake that could mean you pay too much tax: you can reclaim it later, but that won’t help your cashflow. Contact HMRC (the former Inland Revenue) straight away, or check with your employer.

A second tip is to be very wary about “short-term” measures such as credit cards or loans. It’s one thing if this is purely to cover a cashflow problem and you know how and when you can pay them back, but check carefully that you aren’t having to borrow consistently. If so, the chances are your income and expenses are out of kilter: borrowing treats the symptom but only cutting your costs or earning more will solve the problem.

Finally, consider psychological measures to keep your spending under control. Try going “shopping” without carrying any money or cards, giving you a chance to think twice about prospective purchases. You could also consider a pre-paid card: it’s like a debit or credit card, but you have to pay the money to the bank up front and can then spend your balance. You get the flexibility of being able to spend while out and about without having to carry so much cash, and it can be useful in an emergency; you can also can budget more easily and not be tempted to spend more money than you really have.

Is there a way to prevent the student debt culture is a post from: The Thrifty Scot

Overall, there were 5,378 personal insolvencies in Scotland, which is 4% more than in the same quarter last year.

You can find more information on debt management plans and Scottish debt solutions such as Trust Deeds and Debt Arrangement Schemes here.

Scottish bankruptcy figures

There were 2,852 awards of bankruptcy in the second quarter of this financial year. That represents an 8% decrease on the same period last year. There were far more cases where people petitioned for bankruptcy themselves – rather than being made bankrupt as a result of creditor petitions.

In fact, 6% more people petitioned for their own bankruptcy in Q2 this year than in Q2 last year. The number of people who were made bankrupt by lenders fell by 43% compared with the same period last year.

Just over 50% of the people who applied for bankruptcy themselves took the LILA route into bankruptcy. The Low Income Low Asset route to bankruptcy is for people with significant unsecured debts (that they cannot repay) who have assets and incomes below a certain threshold.

Scottish Trust Deed figures

Fewer people entered bankruptcy in this quarter, but more people entered into Trust Deeds. In total, there were 2,526 new Protected Trust Deeds recorded by AiB, which is 22% more than in Q2 last year.

Trust Deeds can offer Scottish residents a way to repay as much of their unsecured debt as possible and write off the rest, without entering bankruptcy. A Protected Trust Deed protects people in debt from legal action from their lenders if they complete it successfully, although they may need to release equity in their home.

Debt Arrangement Scheme (DAS)

DAS is described by Minister for Energy, Enterprise and Tourism, Fergus Ewing, as “a less severe alternative to bankruptcy”. On a Debt Payment Programme under DAS, people in debt will have interest and charges frozen on their debts – and lenders should see a return of at least 90%.

There were 856 new Debt Payment Programmes started under the Debt Arrangement Scheme in the second quarter of this financial year. That is significantly (72%) more than in the same period last year.

Latest Scottish Insolvency Figures is a post from: The Thrifty Scot

However, there are solutions available to help those that have a high level of debt and are keen to take steps to reduce their outgoings and ease the financial strain. The variety of debt charities that are around are able to offer advice on the best debt solution for your needs and circumstances. One of the options available is known as the debt management plan.

With debt management plans the debts that you owe are not written off in the same way as they might be with other debt solutions. However, they are spread out over a longer period of time and sometimes the interest can be frozen. This means that you can more easily pay the debt off as you will be making lower monthly repayments.

If you want to opt for a debt management plan you can seek advice from a debt advisor to get you started. Once you are signed up to one of these plans you will simply make one monthly payment to your debt advisor and this payment will be distributed amongst your various creditors on a pro rata basis depending on how much you owe them. The monthly amount is worked out based on your income and outgoings.

For many people entering into a debt management plan gives them the flexibility to ensure that they have enough cash left over each month to pay for essential living expenses and meet other financial obligations. The plan is also flexible, which means that if your financial circumstances change the monthly amount paid can also be changed accordingly.

Of course, a debt management plan may not be the most suitable option for your needs, and you may find that one of the other alternatives is better suited. This is something that an experienced debt advisor can help with to ensure that you are advised on the most appropriate solution for your needs and circumstances.

Debt management plans is a post from: The Thrifty Scot

Many younger people in their twenties and thirties are burdened with huge levels of debt, ranging from university loans and fees to credit cards and loans that they have had to take out to keep their heads above water. Many are struggling to even afford to rent a home never mind get a mortgage and buy their own property in the current climate. And when it comes to being able to afford to get married and start a family a huge number of younger people face years of saving before they can even consider this prospect.

With the happy couple splashing out millions of pounds on their huge event against such a backdrop of misery and hardship some people may consider this insensitive, as millions of people that are around the same age will have the wedding forced upon them wherever they look, knowing that they have no hope of even affording the most basic wedding or being able to get anywhere near the property ladder for years to come with the financial climate in the state that it is in.

One thirty year old who said she had no hope of being able to get married, start a family, or get a home for years: “Despite all the raving in the media about the excitement about the Royal Wedding the last thing people of my age want rammed down their throats is having to watch William and Kate spending millions on their wedding and getting everything handed to them on a plate whilst the rest of us struggle to even afford food and pay the rent never mind get married and get a home of our own. I think that having the wedding at a time when the younger generation faces such difficulties affording even the basic things in life is just insensitive. I know that they have asked for charity donations instead of wedding presents but that doesn’t make people like me feel any better when we are wondering how we will fill up the car with petrol to get to work or pay for the food shopping.”

Is the Royal Wedding something that people will be celebrating? is a post from: The Thrifty Scot

There are many concerns about how people that are already struggling will get on over the coming months. The cost of living has soared over recent months and many believe that this will continue over the months to come. The cost of petrol and energy usage has soared, food prices are still very high, and many have had their pay frozen or their benefits cut, which has made the problem even worse.

On top of the continued increase in living costs it is predicted that the base interest rate will go up over the coming months in order to help keep a lid on inflation, and for those that are homeowners with variable rate mortgages this could have a further impact, as their monthly repayments could soar by hundreds of pounds in some cases, having a severe impact on their finances and their ability to keep on top of their financial commitments.

Consumers are now being urged to ensure that they take action and speak to debt experts in the event that they feel they would struggle with their finances if the interest rate does increase. Some will wait until the base rate actually increases and they start to struggle with their finances before they seek advice. However, for those who know that they will struggle if the base rate increases even by a small amount it is advisable to get advice in advance and work out where you will be able to make cutbacks in the event that you need to do so.

There are many debt charities that are able to offer advice on debt problems and financial issues, and by speaking to one of the experts at these charities homeowners can prepare themselves in plenty of time in case of a rate rise. The Bank of England has even expressed concern over how many people will fall into arrears with their loans as a result of possible rate increases.

Don’t let debt problems drag you down is a post from: The Thrifty Scot

Many people don’t even realize how much debt they have and the total of their monthly outgoings until they sit down to formulate a budget and a repayment plan.

To start making a budget for yourself, you need to make a list of all your monthly payments. In doing this, it will be helpful if you also list the outstanding balances of all the debts and the interest rate charged on each one. Don’t forget to include your electricity, fuel, and utility payments because these are essential services.

The amount of money you spend on groceries and leisure also has to be part of this plan. Add up the amount of the outgoings and subtract it from the amount of income you have each month. If you find that there is a negative amount because you have more outgoings that income, then you are in financial difficulty and need the services of a professional to help you clear your debt.

Once you have a clear picture of your finances, then you are in a better position to come up with a structured plan for repaying your debts with the goal of paying them all off in full. The credit cards and loans that have the highest interest rates are the ones you should get rid of first. If you have a credit card or line of credit with a low interest rate, you can transfer some of the balances. The minimum payment may be a little higher but it will still leave you with extra money for paying other bills.

If you are not experiencing any difficulties in making your monthly payment, but need a structured plan to help you clear your debts, any extra money you have can go towards reducing your debts. If you transfer balances to a lower credit card, for example, you can still continue to make the same payment amounts and in this way, you will reduce the balance by a larger amount each month. As you pay off one debt, apply the money to another, and so on. By making larger monthly payments you are reducing the amount of interest that you pay and this reduces the term of the loan.

Another solution for clearing your debts is to take out a debt consolidation loan. In such a loan, the lender will pay off the outstanding balances of the accounts you choose and give you a loan for the total amount.

You will still owe the same amount of money, but instead of having to make several payments on different loans, you have only one monthly payment that is lower than the total of the combined payments because you only have one creditor instead of three or four.

This will relieve some of your financial stress because it does leave you with extra money each month for essentials and to make higher payments on any debts that were not included in the debt consolidation loan.

If neither of these structured plans suits your financial situation, you can avail of the help debt counsellors can provide. Such people can contact your creditors and negotiate with them to lower your payments. They can set up a structured plan for you so that you can make the payment to the counselling agency and the counsellor will disperse the payments to the creditors for you. The amount you do have to pay will be based on your income, your level of debt and the number and amounts of your payments.

Store cards and credit cards do carry high rates of interest and often you do not know how much your payment will be from month to month. It is best to try to eliminate these loans and combine the balances into one loan so that you do have a set amount of payment each month. You can also contact a lender to take out a secured or unsecured loan that will help you organize your finances and make it easier for you to keep up with your monthly commitments.

It is important to get a handle on your finances in an attempt to clear your debts so that you can keep making your payments on time. This will help you keep your good credit rating and allow you to maintain the same borrowing power. When you have a good credit rating, you can also take advantage of good interest rates on any money that you borrow.

Using a Structured Plan Will Help You Become Debt Free is a post from: The Thrifty Scot

The downturn in the economy actually started in the US in the housing market in 2007 and since then it has affected just about every country of the world. It has wreaked havoc on the banking, financial and investment markets in a major way and has changed the way in which anyone can obtain credit. The worst effect of the credit crunch has been in the huge numbers of job losses, which have affected the UK just as much as other parts of the world.

No one doubted that the credit crunch would have an effect on banks and financial institutions when it first made the news, but no one expected the extent of which it is today. It has had an adverse affect on the financial sector with huge losses in what were once profitable businesses and banks have discovered that their sources of funding have essentially dried up.

This has resulted in job losses across the board and this was only the beginning. As more and more companies found themselves in financial difficulty and lenders tightening the conditions under which they approved loans, they were forced to downsize or close, putting many people out of work.

The housing market has also taken a huge hit during the global credit crunch. Only a year or so ago house sold at high prices and many homeowners borrowed heavily on the equity they had built up in their homes.

The huge drop in house prices on the real estate market means that many homeowners with home equity loans or lines of credit are now finding themselves in a position of negative equity. This means that the price for which they can sell their home is not enough for them to even be able to pay off what they owe on the home, let alone pay off other outstanding debts.

Even though house prices and interest rates have fallen to a new low, this does not mean that more people are buying. The stringent lending conditions mean that fewer people are able to qualify for a mortgage. Estate agencies have had to close putting real estate agents out of work as a result of this downturn.

All aspects of the financial sector of the economy have sustained setbacks. Loans, credit cards and other forms of finance have been affected making it more and more difficult for the ordinary consumer to obtain credit when they desperately need it.

This in turn has affected the amount of money that consumers have available to spend outside of paying their bills and looking after essential household expenses. For this reason, businesses with very little connection to the financial sector have suffered tremendous losses.

Consumers have cut back on their spending habits and are becoming more fiscal in looking after their finances. Manufacturing sectors, retail outlets and the service industry has been affected as a result with consumers buying only what they absolutely need. The big name stores are losing money and are not making as much profit as they have been accustomed to making and therefore are downsizing in the numbers of staff members they have on the payroll.

It is not just the large businesses that are suffering from the credit crunch. Many small businesses have had to declare bankruptcy and there have been huge job cuts in the manufacturing and service sectors of the economy.

One recent report from the Federation of Small Businesses says that it is time for the government to stop putting emphasis on trying to lower interest rates and start looking for ways to stimulate the economy so that people can go back to work and start earning a wage once again. This includes focusing instead on finding ways for businesses to find access to much-needed funds to ease the struggles they are experiencing in an effort to retain their workers and keep their doors open.

The recession is now in full swing and is likely to worsen during 2009. This means that more and more people will most certainly lose their jobs in all sectors. Those who do still have a job are watching their money more closely and making an effort to pat off as much of their debt as possible.

Until the economy starts to rebound and the banks start to relax their lending restrictions, there is very little that consumers can do but wait out the recession. No one knows for sure when the end will come and many experts are predicting that it will be some time before any improvements can be noted.

How the Credit Crunch is Affecting the Workforce in the UK is a post from: The Thrifty Scot

The debt charity, National Debtline, has reported an increase in the calls to their hotline from people who do not know what to do about their financial situations. One caller reports that in an attempt to keep the mortgage payments up to date on her home, she has neglected other payments and now she has creditors looking for repayments.

This is a typical situation with many residents finding themselves owing large amounts of money on credit cards and store cards. These creditors are stepping up their efforts to receive payment and are placing charge orders on residents that could force them to sell their homes.

In Britain today, this is a common situation. The debt advisors on the other end of the line try to calm down the callers and allay their fears by offering them solutions to their debt problems.  One of the ways in which they do this is to explain the legal system to the callers and explain what charging orders mean for them. They highlight the options that the callers have left open and in most cases these are quite limited.

“I am resigned to losing my home,” says one caller to the National Debtline, “I can no longer to maintain it.” The problem with putting a home for sale in an effort to obtain the money needed to repay the debt, however, is not a viable solution. This is because house prices have fallen to the point that the sale will not even produce the money needed to pay off the mortgage and the other debts will still remain outstanding. For most, the only recourse is to file for bankruptcy.

Even to declare bankruptcy is costly. A fee of £495 applies to the court charges for bankruptcy filing and most callers do not have this money available.  There are ways though in which UK residents faced with this possibility can obtain the money for this court fee.

There are charitable organizations from which one can get help in paying the fee. The process of getting help with dent advice through the National Debtline takes about an hour and the caller will receive an application form for bankruptcy and help in paying the fees.

Debt advisors report an increase in calls of this nature in recent months. One of the advisors, Aidan Tidy, says that the calls come from all walks of life. Executives and professionals, who had been earning high salaries, are now struggling to keep up with the payments in order to preserve the lifestyle to which they have become accustomed.

Another caller looking for debt advice, Graham, aged 42, says that in the past he had an impeccable credit record and had no problems making payments on credit cards.  Graham is an office administrator who currently owes about £56,000 and has not possible way of making the current payments.

According to Graham, he had access to lots of credit and that was part of the problem. “I borrowed money with every intention of paying it back, but circumstances change,” he says.  “I was getting lots of aggressive letters from creditors and you just feel lonely and vulnerable.

The calls to the National Debtline have doubled in 2009. In January, 2008, the center received about 800 calls a day. In January, 2009, there are about 1600 calls every day.

Another debt advice service, Citizen Advice, reports that they have also seen a dramatic increase in the number of people who are experiencing problems meeting the payments on their credit cards, secured loans and mortgages, all of which are affecting their ability to continue fighting repossession.  Citizen Advice took 3000 calls on January 5, 2009 and are averaging about 2000 calls a day ever since.

The government awarded more than £ 5 million to National Debtline last year to help it pay the salaries of fifty additional counsellors. When these training positions were advertised, there were more than 5000 applications received.

The problem that many people are encountering when looking for help in debt counselling is that there are many agencies who charge a fee for this service.  National Debtline does not charge for its service and trained advisors will help callers find viable solutions to their money problems.

It is always better to ask for help than to suffer in silence. “The earlier you call the better, but it’s never too late to seek help,” one advisor says,  “If you act in a sensible and open way with your creditors, most of the time you can arrive at a workable solution.”

Dramatic Increase in the Numbers of Calls for Debt Advice is a post from: The Thrifty Scot

Whether or not you think your job is safe it is always a good idea to try and get some money into savings, as you never know when an emergency may arise or whether you may find that your income is suddenly reduced for one reason or another. With this in mind it is a good idea to take some steps to help you save money to weather the recession.

Another thing to remember is that with unemployment levels expected to rise and companies on the verge of going bust changing jobs at the present time is not the best idea. Many companies that need to make cutbacks to save money get rid of newer staff members first so if you are in a fairly long standing job and you are pretty secure in your position then stick with it through the recession to minimise on the chances of redundancy.

Of course, no matter how secure you feel in your job there are not guarantees and you may find that you can get greater peace of mind through the recession by having some sort of fallback or protection in place. Income protection insurance cover could prove invaluable at a time like this, and usually costs a set fee per £100 of income that you protect. With this cover you can avoid losing all of your income in the event that you are made redundant, which will give you time to get back on your feet.

You can make a variety of cutbacks on your outgoings in order to start putting some money aside to get you through the recession, and you could be surprised at how much you can save on a monthly basis by making some simple cutbacks and changes. However, you must resist the temptation to spend any money that you save on outgoings frivolously, as the whole point is to try and put money aside into a savings account so that you have something to fall back on in the event of an emergency or a drop in income.

Many people have different insurance policies in place these days, such as home insurance, car insurance, and life insurance. If this is the case then you should look into whether you can get your cover at a cheaper price, as the cost of cover can vary widely from one insurance firm to another. If you can get adequate cover at a lower price than you are paying now you should consider switching, as this will enable you to save money, which can then be put aside into savings.

A variety of services may also be available at a cheaper price than you are paying now, such as gas, electricity, and broadband. Check out the prices with different suppliers and providers to see if you can make savings on these services, and if so save some more money by switching providers. You will find that the Internet is a great way to compare and switch providers with ease and convenience, and you can use one of the various price comparison sites available to make the whole process easier.

You may be paying a fortune each month on your debts, depending on how much you owe, and you could save money on the amount that you repay by switching your high interest loans and debts to another provider or financial product. For example, you could consolidate your debts, such as loans, credit cards, store cards, etc., with a lower interest rate consolidation loan, which could make a big difference to your repayments each month.

All of the extra money that you save by making these changes should be put into a savings account that offers good returns on your money, and this means hunting around for the best place for your hard earned cash given that many banks are now paying rock bottom rates of interest on savings because of the lower base interest rate.

Further advice to help you weather the recession is a post from: The Thrifty Scot