A couple of days ago, a very dear friend was chatting to me and explaining that she was very concerned about her finances. Her monthly finances are a struggle, but they just about make ends meet. However, there's no room to move in their budget, and when they suddenly discover they're down a salary, it's a serious problem and that's what has just happened.
She's intelligent, and has thought on her feet, "Christmas is coming but Christmas doesn't matter, keeping a roof over our head does" she said confidently - though I know well enough her confidence is just a front hiding her fear. Then she said those words which filled me with dread, "I'm thinking about taking a pay day loan.." Even though she's intelligent enough to know that the rates on these loans are ridiculously high, and that she won't be able to pay it off next month as next month their income will only cover the usual outgoings, the fear of being unable to pay their bills and put food on the table for her child is huge. I listened and felt my heart sinking, I want to help, but financially we're struggling ourselves and in January we're taking a large cut to our income ourselves, so instead I've tried to offer some advice.
So far, I've suggested she speaks to someone at the CAB and her health visitor (she has a 2yr old), makes a list of who she needs to pay and try to speak to them to explain her situation and see if she can spread payments due over the next few months. I've pointed her towards the Old Style thread on Money saving expert, as there are lots of helpful practical tips on how to survive on a shoestring. I've also reinforced that the percentage rates on payday loans would mean she'd never have the chance to catch the money she owes up, and it would effectively dig her deeper into trouble. I've also pointed her towards the The Money Advice Service for further help on her finances and to see if they can help.
I've been trying to think about all the little things we do to make savings, but when you've been doing things a while you assume everyone does them? Switching provider for gas/electric. Make all meals from scratch, don't waste food! Buy second hand.. the list goes on..what have I missed? Or do you have any advice to add?
Ms G x