Auditing your life will get your finances back on track

Take stock and balance the books

There was a time when my partner and I lived pay cheque to pay cheque. The money came in, the bills came out. We didn’t really know where we stood and each month we would end up in the red. This happened month after month after month.

Finally we hit rock bottom. After going into the red one to many times, extending our overdraft as much as we could, and borrowing from anyone and everyone; the letters started arriving and the phone wouldn’t stop ringing from these people and companies we’d borrowed and owed money to.

We’d gotten ourselves in such a mess that if we didn’t do something immediately; we were going to lose everything.

The next day with everything heavy on our mind we discussed our next move. I’ll be honest and tell you we were close to just crawling under a big rock and staying there. We didn’t do that though.

All this time we had been just getting by (if you could call it that) and although we knew deep down this day would come, we had hoped it wouldn’t.

We decided there and then that we would sort this mess out. No longer would we be weighed down with the pressure of owing all this money. No longer would we let debt control our lives. We’d had enough of struggling through. We decided to take back control of the situation. Instead of the debt controlling us, we’d control the debt.

We once dreamed of living a life full of riches. Sitting there that day, we knew if we could just get a hold of the situation and get back on track we’d be rich in other ways, rich in life. The only way this was going to happen was by auditing our lives and getting our finances back on track.

Be organised

Before you start anything, you need to get organised. Start by digging out a few months’ worth of bank statements, bills, debts and receipts.

You may think you know everything about your finances, however, you may well miss something so it’s best to get prepared. Having them all to hand will make it easy to run through what you spend and how much money you have coming in.

Make a list

Now you have everything to hand, draw up a list of all your bills and debts for each month by either writing them down on a price of paper or using a spreadsheet (as it can do all your adding up for you).

Rather than just your normal bills, think about cash you draw out and how you spend that, as well as any money you put aside each month to save for birthdays, the car MOT and so on.

Then, when you know everything that you spend, make a list of all your income and any other regular money you receive.

You’ll then be able to see all your income and outgoings in one place and be able to start balancing the books. You’ll obviously want to have more surplus at the end so you have spare money to save or to shop.

Analyse and review

Now you have a monthly budget and can see how you spend your money. The next task it to break each part down and cut the costs.

This will take some time to do but you will start to see the results quickly.

Start at the top of the list and work your way down one at a time. For instance, take your regular payment for council tax. Are you paying this over 10 months? If you ask your council you may be able to spread the payments over 12 months instead which will reduce your monthly spend.

For your gas and electricity bills compare different providers to see if you can reduce your spend. However, to make the most out of it, and get cashback too! Use Quidco Compare to do your comparison and you could save time and money and earn cashback when you switch.

Once you’ve looked at your regular bills and have made cuts where you can, turn to your other expenditures. If you go out once a week, or you have a magazine subscription, consider cutting back on them to save extra cash, or even look to increase your income by taking on a part time job.

Go back and start again

But don’t stop there. You’ve done it once so you can do it again. Every few months, go back to the top of the list and do it again.

Grab your statements and list everything out again. You may find that your spending habits change and that, as you were monitoring your spending on one thing, you may have started spending more elsewhere.

Auditing our lives has really helped us free up extra cash. We found extra money that we’ve been able to use to pay off debt and start a small saving fund.

Why don’t you try it too see how much extra money you could save each month, you might be surprised.

Ricky Willis is the founder and editor of the award winning Skint Dad blog. As well as hunting down bargains on the High Street and online; you can also find Ricky sharing his money saving ideas on Twitter and Facebook.

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Ricky Willis / @SkintDad

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