My Money Matters Making the most of every penny
2 My Money Matters Budget Sheet Work out how much your income is and how much you are spending. Check this regularly to make sure you are not living beyond your means and getting into financial difficulty. If you get paid weekly work it out weekly. If you get paid monthly work it out monthly. Income Pay after tax Grants Benefits Income from Savings Other Spending (Priority Spending) Food Mortgage / Rent Council Tax Electricity Gas Water Phone / Internet TV Licence (Travel) Bus Fares Car Other (Financial Products) Loans / HP Credit Cards Savings Insurances Other (Leisure) Going Out Alcohol Cigarettes Satellite Holidays Other Total Total This leaves me with an available income of
Making the most of every penny 3 My Money Matters Making the most of every penny It s your money so you should look after it wisely. If you don t there are plenty of other people who will. We all need to keep a track of our money to make sure we can manage our home and pay our bills on time. Paying people late can lead to more costs and make it difficult to get the best deals. No matter how much or how little money we have we can all benefit from reviewing our finances on a regular basis. North Tyneside Council has put together this easy to use guide to some information and advice that is available to help you manage your money better.
4 My Money Matters Budgeting The key to looking after your money is knowing what money is coming in and more importantly knowing how much you are spending. The best thing you can do is write it all down on the budget sheet on page 2. List all the money you receive on a regular basis (income) and all the money you spend on a regular basis (spending). After taking away your spending from your income you will be left with a sum of money, this is sometimes called your disposable income. If your spending is far greater than your income you need to take immediate action. There are people that can help and advise. Details are listed at the back of the booklet. You must be realistic and honest with yourself. Working out your outgoings makes it easy to identify what you really should be spending your money on and shows you what you are actually spending it on. Writing everything down can often surprise you, more often it will shock you. Sometimes this is just the shock you need to prompt you to take action and fix your finances. Use the budget sheet regularly to make sure you are making the most out of managing your money.
Making the most of every penny 5 Dealing with Debt If you do get into financial difficulty DON T PANIC, THERE IS HELP AVAILABLE 1 Do not ignore the problem Ignoring a problem does not make it go away. The longer you leave it the worse it will get and it will cost you more. Talk to the people you owe money to. The earlier you do this the easier it will be. This gives them the opportunity to offer help and it also shows that you are willing to pay your debts. 2 Help is available You do not have to do this on your own. We are here to help, we will find the right person, free of charge, to give you the advice you need. Be wary of companies who offer debt advice but have hidden charges. Our contact details are shown at the back of the booklet. 3 Check your pay If you are working make sure you are receiving at least the minimum wage and check your tax code is right. The Pay & Work Helpline (0800 9172368) can do this for you. 4 Are you getting enough? Check that you are claiming and receiving all of the rebates and benefits you are entitled to. For example, if you pay rent or Council Tax you may be entitled to Housing Benefit and/or Council Tax Benefit for the place where you live. There are also Council Tax discounts and exemptions which may be available to you. Contact us and we can give you further information. 5 Money Health Check Work out your income and spending. This information is essential as a starting point for people to help you. Use the budget sheet on page 2 to do this.
6 My Money Matters 6 What do you owe? Make a list of all the money you owe. Be open and honest with yourself. This is an opportunity to deal with all your debts in one go. 7 What debts must you pay first? Warning non payment of some debts could lead to Losing your home Going to prison Losing your belongings These are called priority debts and include rent, mortgage, loans secured against your home and Council Tax. Negotiate with these creditors first as the action that can be taken against you may be severe. They are more important than other creditors that may pressure you for payment. 8 What about my other debts? You may have other debts that are non-priority, which could include catalogues, credit cards, store cards and loans not secured against your home. These types of debts are not as important as priority debts and there may be an opportunity to reduce your regular payments. Reducing payments may affect your credit rating and ability to obtain further credit so it is always wise to seek free advice on how to negotiate these debts. Details on organisations who can help are shown at the back of the booklet. 9 High Interest Doorstep Lending If you have a doorstep loan make sure you check how much you are paying back. Some doorstep lenders charge interest rates of 200%. You may be able to save substantially on the repayment amount by discussing whether you can transfer your loan to a more affordable loan with the Credit Union. Contact details for Northern Oak Credit Union are given at the back of the booklet.
Making the most of every penny 7 10 Loan Sharks (Illegal Money Lenders) Loan Sharking is illegal. If you have borrowed from a loan shark you do not have to pay this money back and you should get help now by telephoning the Illegal Money Lending Team. (0300 555 2222) Finally - remember you are not alone, being in debt is something nobody plans to do and it can happen for lots of reasons. If you feel your debts are getting out of control then the sooner you act the sooner you can get your life back on track. Being in debt is not a crime. If you face up to the problem of debt openly and honestly you might be surprised how much free help and support is available. Contact details are shown at the back of the booklet. The Consumer Financial Education Body (CFEB) offers a free money guidance service; Moneymadeclear. The service is available by appointment with a trained local guide, by telephone 0300 500 5000 or via the internet at www.moneymadeclear.org.uk The government has launched a website Real Help Now with more in depth information on dealing with debt issues. www.realhelpnow.gov.uk
8 My Money Matters Borrowing Money The most important question to ask is Can you afford to borrow? You should consider: Why you are borrowing How long it will take you to pay it back How much more will you be paying back in interest. For example, it would be unwise to take a loan for Christmas presents and still be paying it back the following Christmas! Loans, overdrafts and buying on credit are all ways of borrowing money. Different methods suit different types of people and situations. Whatever type you choose, it s important to make sure you ll be able to afford the repayments. To work out if you can afford to repay a loan, why not use the budget sheet on page 2 of this booklet. Your disposable income must be higher than the monthly repayment amount being requested by the person offering the loan. If it isn t, you can t afford to repay it. You must remember that paying back loans or credit cards may become a problem if, for example, interest rates go up or your income goes down. You should also be careful of consolidating debts into a loan secured on your property as this may put your home at risk if you are unable to make the payments. Read the terms and conditions of a loan very carefully before you sign up to anything. Shop around and see what are the best options for you. TIP: The Office of Fair Trading provides information on points you should consider before signing any loan or credit deal. www.oft.gov.uk
Making the most of every penny 9 Affordable Buying & Borrowing Some people have difficulty in buying goods and borrowing money because of their credit history, lack of credit history or their general circumstances. They are often forced to buy or borrow from companies who charge huge amounts of interest. If this applies to you there are more affordable options available. Talk to Northern Oak Credit Union they may be able to offer you alternatives, their contact details are given at the back of the booklet. TIP: If you do buy or borrow from high interest lenders be sure to find out how long you will be paying and how much you will eventually pay back. You should also be wary of being sold additional insurance that you may not need. For example, breakdown cover on a new settee.
10 My Money Matters Budgeting Loans If you are in receipt of certain benefits you may be able to apply for a budgeting loan. A budgeting loan can help you pay for items such as: furniture and household items clothes and footwear travel costs costs to improve or maintain your home, or keep it secure rent up front or removal costs to get to a new place costs of looking for or starting work hire purchase (HP) or other debts you may have in relation to the items above. Budgeting loans are interest-free so you only pay back the amount you borrowed. You can apply for a budgeting loan if you or your partner, have been receiving Income Support, Income-based Jobseeker s Allowance or Pension Credit for at least 26 weeks. Contact your local Jobcentre Plus Office or download a form from the website. www.jobcentreplus.gov.uk
Making the most of every penny 11 What is APR? APR stands for the Annual Percentage Rate of charge. You can use it to compare different credit and loan offers. The APR includes important factors such as: The interest rate you must pay How you repay the loan The length of the loan agreement (or term) The frequency and timing of installment payments The amount of each payment Certain fees associated with the loan and Premiums for payment protection insurance that the lender chooses to make compulsory. All lenders have to tell you what their APR is before you sign an agreement. It will vary from lender to lender. Generally, the lower the APR the better the deal for you, so if you are thinking about borrowing, shop around.
12 My Money Matters Questions to ask the lender If you find a deal with a low APR, ask the lender the following questions: Does the interest included in the APR vary or is the rate fixed? If the rate is variable, your repayments could go up or go down. If the rate is fixed, your repayments will stay the same. Are there any charges that are not included in the APR? This could include charges for services such as optional payment protection insurance. If so, make sure you understand: What the charges are Whether you really need the services offered How much you would have to pay and When you would have to pay. What are the conditions of the loan or credit and do they suit you? For example, do you have a choice about how and where you make the repayments? If you suddenly have spare money, can you pay the loan off early without penalties? Can you afford the monthly payments? A more expensive loan (with a higher APR) could have lower monthly payments if they are spread out over a longer period of time. That might suit you better if your budget is tight, even though you would pay more in the long run. TIP: Check the APR. All lenders have to tell you what theirs is, so you can compare like with like. For more information go to www.moneymadeclear.org.uk
Making the most of every penny 13 Emergencies In an emergency you may be tempted to take an instant loan from a doorstep lender or an illegal money lender who will charge excessive amounts of interest, there are better alternatives. Crisis Loans If you need financial help with an emergency or disaster you may be able to get a Crisis Loan. This is an interestfree loan from the Social Fund that you pay back. You can apply for a Crisis Loan if all the following apply: You re aged 16 or over You don't have enough money to meet your or your family's immediate short term needs because of an event or disaster Without the loan there will be a serious damage or risk to your or your family's health or safety For more information contact your local Jobcentre Plus or DWP office or go to www.direct.gov.uk
14 My Money Matters Credit Unions Most people think that you can only get a loan from a Credit Union if you have saved with them, although it is preferable, this is not strictly true. The Credit Union may be able to provide small instant loans for non-savers. The loans are at a slightly higher interest rate than their other loans but are still at a greatly reduced rate to that of the doorstep lenders. Contact details are given at the back of the booklet. Credit Union Loans The table below shows how much you are likely to pay back if you borrowed from a credit union rather than using other lenders. Loan Typical Number Weekly Total Total amount APR of amount repaid interest weeks payable Cheque casher 300.00 246.5% 52 17.00 884.00 584.00 Doorstep lender 300.00 272.5% 52 10.50 546.00 246.00 Credit union 300.00 26.8% 52 6.50 338.00 38.00 *information correct as at 11.02.10.
Making the most of every penny 15 Shopping It is hard not to be tempted to buy things that you do not need or will not use. Shops and supermarkets make the most of customers who are unprepared. Buy one get one free and three for two offers are only good value if you would have bought them anyway. Always write a shopping list and stick to it Only buy what you need and not what you think you need Do take advantage of offers but only if it is a product you use Do try shops own brands as they are often a lot cheaper Try and shop locally or at a market, food is often fresher and you can buy the amount you need and you will have less waste Do not go food shopping when you are hungry
16 My Money Matters It s good to shop around to get the best deals, window shop, use the internet and comparison websites, prices can vary considerably especially on larger or more expensive items. The best label doesn t always mean the best buy. Internet prices can be 10 15% cheaper. If you can, save for big expenditure rather than using credit or buying from catalogues. Interest costs can be high and catalogue prices are often more than in the shops or online. Join the local Credit Union. You can save safely and borrow wisely at an affordable rate. There is always more satisfaction from bagging a bargain than paying over the odds. TIP: If you don t have access to a computer all North Tyneside libraries have computers with Internet access. Contact us for more information on the People s Network.
Making the most of every penny 17 Maximising your income Running a home and looking after yourself and your family is expensive. One way of helping is to maximise your income. That means making sure you get all the money you are entitled to and also making the most of the money you have. Every year about 2 billion of benefits go unclaimed. This might be because: People don t know what they are entitled to They are scared of complicated rules They find it difficult to complete forms They think they are receiving handouts or might lose their independence They don't know they can claim even if they are working. It is important that you make sure you apply for all the rebates and benefits that you are entitled to. If you pay rent and/or Council Tax for the place where you live you may be entitled to Housing Benefit and/or Council Tax Benefit to help you pay these bills. You might think that you are wasting your time if you only get a small amount of Council Tax or Housing Benefit, but qualifying may entitle you to other reductions. For example, prescriptions, dental treatment and pet bills at the PDSA. We can arrange a benefit entitlement check so contact us for further details, or use the benefit calculator on our website to see if you are entitled. If you already receive Housing Benefit or Council Tax Benefit but still have to pay something towards these bills and are having difficulties paying the shortfall, you may be entitled to claim a Discretionary Housing Payment. You can get a claim form from any customer service centre or download a copy from our website www.northtyneside.gov.uk/benefits
18 My Money Matters Make the most of your money by getting the best deals on gas, electricity, telephone, insurance etc. A lot of companies know that people cannot be bothered to shop around for better deals and use it to their advantage by increasing the prices for existing customers and offering the best deals to attract new ones. It takes very little effort to shop around and could save you quite a bit of money. If you have access to the internet, use comparison websites. Alternatively you can telephone a few different companies for quotes. Sometimes just phoning your existing supplier and telling them you are shopping around for a better deal is enough to get them to offer you a discount. TIP: Think about the best way to pay for goods and services. Some companies offer a discount for paying on-line or by monthly direct debit, if you are able to do this you can save yourself a little bit of money and spread the cost throughout the year. Paying on a credit card can be expensive if you don t pay it off before you are charged interest. However, there are sometimes insurance benefits from paying for goods on a credit card rather than by debit card or cash. For example, if you book a holiday and pay for it by credit card if the holiday company goes out of business your credit card company will reimburse you. Key Meters are the most expensive way of paying for fuel. Sometimes if you have arrears then you have very little choice because the supplier deducts payment of the arrears every time you top up. There is however a limit to the weekly arrears amount that can be deducted and all suppliers must offer a social tariff to avoid people falling into fuel poverty. You should contact your supplier to ask about their social tariff. Making your home more energy efficient can help reduce your bills. Increasing your loft insulation, installing cavity wall insulation and having an efficient boiler are all ways to make your home warmer. For some people this work can be done free of charge for others there are grants available.
Making the most of every penny 19 For further information, www.warmzones.co.uk 0191 2234199 Get a council EASE card to access discounts on activities and leisure facilities in the borough. There is also an EASE EXTRA card for under 17's, and a priority EASE card for people on certain benefits. There are a lot of free activities and events in the area so make the most of them. Contact us for more information. If you regularly travel on the bus, metro or through the Tyne Tunnel you will save money by investing in a pass. TIP: Make some extra money by selling your unwanted items through internet auction websites like ebay or go along to a car boot sale.
20 My Money Matters Basic Bank Accounts There are 2 million adults in Britain who don t have a bank account. If you haven t got a bank account you could be paying more than you need to for lots of services. A Basic Bank Account is the simplest form available and you won t need to have your credit history checked to open one. All you need to do is visit a local branch of the bank you choose and ask to open one. They will help you through the steps you need to follow. Having a Basic Bank Account means you can: Receive your wages or benefit directly into your account Pay bills by direct debit or standing order Have a cash or a debit card. A debit card means you don t have to carry cash with you Basic Bank Accounts do not have overdrafts or provide cheque books so you won t get yourself into financial difficulties, but they will charge you if they bounce a direct debit so always make sure you have enough money in your account to cover your bills.
Making the most of every penny 21 Saving Saving is a good way of putting money by for something planned like Christmas, holidays or birthdays or to cover the cost of emergencies. By putting your money into a savings account you can save enough to cover these costs and earn interest as well. If you can it is always better to save than to borrow to pay for many large or expensive items, especially as interest rates on loans and credit cards can be extremely high. You also don t have to worry about losing your money or having it stolen. Even if a bank goes bust, the Government guarantees personal savers will get their money back up to 50,000. The main types of savings are: Bank and building society savings accounts National Savings and Investments Credit Union savings accounts Individual Savings Accounts. Different types of savings accounts offer different rates of interest. Sometimes, however, to get a good interest rate you will have to give the bank or building society notice that you want to withdraw your money. This can be as much as ninety days. So if you think you might need your money in a hurry look for an instant access account. Even if you can only afford to save a little bit each week it can soon add up.
22 My Money Matters Contact Details North Tyneside Council Revenues & Benefits Services Quadrant Silverlink North Cobalt Business Park North Tyneside NE27 0BY 0345 2000 104 team.revenue@northtyneside.gov.uk Age UK North Tyneside (Age Concern and Help the Aged are now partners in Age UK) 0191 2808484 www.ageuknorthtyneside.org.uk Citizens Advice Bureau 0191 2704485 www.citizensadvice.org.uk Community Legal Advice 0845 3454345 www.clsdirect.org.uk Consumer Credit Counselling Service (CCCS) 0800 138 1111 www.cccs.co.uk Consumer Direct 0845 404 0506 www.consumerdirect.gov.uk DAWN (Advice) Ltd Free independent debt advice for North Tyneside residents, 9am 8pm 0300 303 1613 www.dawnadvice.org.uk Department for Work and Pensions Disability Benefit 0800 882 200 Carers allowance 01253 856 123 www.dwp.gov.uk Direct Gov www.direct.gov.uk Jobcentre Plus 0800 055 6688 www.jobcentreplus.govuk Money Made Clear 0300 5005000 www.moneymadeclear.org.uk Northern Oak Credit Union 72 Howard Street North Shields NE30 1AF 0191 296 2611 www.nocu.org.uk
Making the most of every penny 23 North Tyneside Employee Credit Union Quadrant Cobalt Business Park North Tyneside NE27 0BY 0191 643 5881 Shiremoor Credit Union 60 Park Lane Shiremoor Newcastle upon Tyne NE27 0TL 0191 268 7280 National Debt Line 0808 808 4000 www.nationaldebtline.co.uk Illegal Money Lending Team 0300 555 2222 www.direct.gov.uk/stoploansharks The Pay & Work Helpline 0800 9172368 www.direct.gov.uk Pension Service Pension credits 0800 991 234 Winter fuel payments 0845 915 1515 www.thepensionservice.gov.uk Real Help Now www.realhelpnow.gov.uk Office of Fair Trading 08457 22 44 99 www.oft.gov.uk Warm Zone 0191 2234199 www.warmzones.co.uk
North Tyneside Council wants to make it easier for you to get hold of the information you need. We are able to provide our documents in alternative formats including Braille, audiotape, large print and alternative languages. For further information please call 0345 2000 104 The information in this booklet was put together by Revenues and Benefits Services 0345 2000 104. You can contact us at: North Tyneside Council Quadrant The Silverlink North Cobalt Business Park North Tyneside NE27 0BY Email: help.revenues@northtyneside.gov.uk