A guide to
managing your
money and
dealing with debt
Prepared on behalf of The Money Advice
Money problems can result
from many things – a change
in circumstances perhaps that
has resulted in a drop in income
or increased expenditure, or
simply not having enough to go
around. This booklet will help
you take control and stay in
control of your money.
There are more people than you might think experiencing problems with money. Our experience is that financial difficulties can affect everyone from high-income earners to people on a low income, so if you are worried about money you are not alone.
This booklet contains a tried and tested Three-Step Approach to money problems based on budgeting, dealing with debts and making payments. If you would like more information on a particular problem, you can get a range of information leaflets on specific debts such as housing, utilities or personal loans, from any MABS office.
There are seven golden rules in dealing with a money problem. If you follow these you won’t go far wrong. 1. Don’t ignore it – it won’t go away and the longer you leave it, the worse it gets.
2. Don’t borrow money to pay off your debts without thinking carefully and seeking independent advice. Though borrowing can seem like a solution, you may be storing up greater difficulties for later on, for example you may end up losing your home.
3. Ask everyone you owe money to if you can have more time to pay – Contact each person either by phone, letter or in person and ask for breathing space to assess your full situation and work out what you can actually afford to pay. You will find a sample letter to help you at the back of this booklet.
4. Check your rights and entitlements – staff at the Irish Financial Services Regulatory Authority (IFSRA) – LoCall 1890 777 777– can tell you how credit companies must operate by law. You may find for example that your repayments are insured against sickness, redundancy and so on.
5. Be open and honest with the people you owe money to about your circumstances. Show them a copy of your household budget so each can see what you can
realistically afford given your other commitments. You will find a sample personal budget sheet and letters to help you at the back of this booklet.
6. Always attend court hearings and take a copy of your personal budget with you and explain your situation. The court’s role is to decide whether you owe the money and how much you can realistically afford to pay.
7. Keep copies of any letters and forms you send or receive – these may be useful in convincing a creditor or court that you are being reasonable.
Three-step approach
to money management
and dealing with debts
It can often be difficult to know where to start, particularly where you owe money to a number of institutions. You may find it helpful to approach
your money problems one step at a time. The following steps aim to let you first take control of your money and then stay in control:
Step one – budgeting Step two – dealing with debts
Step three – making and monitoring the payments
Step one – budgeting
There’s nothing mysterious about a budget. It’s simply a plan of the money you expect to receive and how you expect to spend it. Here are some suggestions for drawing up a budget.
Decide who you will include. Do you want to make out a budget for the whole household or just for yourself? Remember if you share your home with a partner or other adults, you all use fuel and you all need to eat. It may be that each of you has loans and bills in different or joint names. The budget plan has most chance of success if it takes account of all household income, expenses and commitments.
Ignore any arrears, loans and credit debts for the moment. The initial aim in budgeting is to try and sort out your regular weekly or monthly essential spending first. So, list any arrears on your rent or mortgage, any outstanding bills and any personal loans or credit debts on a separate sheet and ignore all these for the moment. We will look at how to deal with these in stage two once you have worked out a
Decide whether you will budget weekly, fortnightly or monthly. We would suggest the easiest approach is to budget weekly if you are paid weekly, or fortnightly or monthly if you are paid in this way. By converting all the figures to the same basis (weekly, fortnightly or monthly), you can see how much you have coming in and going out and whether or not there is any money left over. This is the key to taking control. Always try to do this conversion as accurately as possible – dividing by four, as many of us do, to convert a monthly bill to a weekly amount gives a very inaccurate figure. The most accurate way to convert amounts from monthly to weekly is to multiply by 12 and divide by 52.
Write down your income and spending. Take a piece of paper and a pencil (you might want to change the figures later) and on one side write down the money coming in each week or month, and on the other your weekly or monthly spending and commitments. Include your mortgage or rent payments, your weekly shopping, and how much fuel you actually use each week or month.
Be realistic and honest with yourself. At the back of this booklet is a budget sheet listing a number of common items of spending if you feel it would help. You can also get a spreadsheet from our website,
www.mabs.ie.
Add up your income and what you spend – see whether there is a surplus (an amount left over) or a deficit (not enough to go around). The first time you see everything written down can be a bit of a shock. If you have found it hard to make ends meet, the figures may show you why.
Whether you have money left over or not enough to go around, you should now have a fairly accurate picture of what is happening to the money coming into and going out of the household, as long as you have been honest with your self.
Making ends meet
If you do not have enough to make ends meet there are two main options open to you: maximising your income or reducing your spending.
Can I maximise my income?
Even if you have a surplus, raising extra income can help you to manage your money more easily. Perhaps taking on a part-time job or letting a room in your house is a possibility. Below are some other options for you to consider.
Social welfare entitlements Your local Citizens Information Centre (CIC) can help you check that you are claiming all your entitlements whether you are working or not (see the local telephone directory for details of the nearest Centre). You can also get citizens information over the Internet from the following Comhairle websites:
www.cidb.ie www.oasis.gov.ie
or from the Department’s own website,
www.welfare.ie
Health board payments These are administered by Community Welfare Officers generally based in your local Health Centre or Clinic. Some of these payments need you to meet certain conditions – again your local CIC can tell you what these are.
Tax
Your local tax office will advise you about the credits you are entitled to given your circumstances. You can also get information on the Comhairle websites and the Revenue website,
www.revenue.ie. Insurance
Check to see whether any of your loan repayments (your mortgage, for example) are covered by payment protection insurance.
Employment
There are various legal provisions on wages, dismissal, equality and redundancy that may mean you are owed money by your employer or previous employer. You can find out more through your local CIC, the Comhairle websites, or on the Government’s own website,
www.entemp.ie.
Back to Work Training schemes Again you can get information on the various schemes through your local CIC and the Comhairle or Department of Social and Family Affairs websites.
Welfare funds
Certain larger employers may have schemes in place to assist employees (or past employees) who are experiencing financial difficulties. There may also be local community or voluntary groups who may be able to assist.
Can I reduce my expenditure?
Try and identify areas where you could maybe cut back on spending. With your budget in front of you see if the following plan might help.
• First put a mark against commitments that can’t be changed (your rent for example where payments are fixed). • Then look at payments or bills that
might be varied. Controlling the energy that you use (heat and light) can reduce the cost of your bills. You may be able to re-negotiate lower mortgage or insurance payments or cut back on using the the telephone. • Now consider how you might budget
for essential weekly spending, groceries, housekeeping, clothing and so on. You might find keeping a daily spending diary useful for a while (a week or two) to get an idea of where your money is going and where you might be able to economise.
• Next, look at your spending on other items, such as entertainment and so on. Although again you may decide to make cutbacks here, try and leave room for a social life for you and your family while being realistic about your budget.
• Finally, look at including an amount in your budget for dealing with unexpected expenses that may crop up and towards savings for education costs and so on.
Hopefully after you have made perhaps difficult choices and decisions you will have at least a balanced budget that will cover your basic living costs. Any surplus is the money for paying arrears and credit commitments.
Income – Living costs = Surplus money for arrears and creditors.
If your living costs (without taking into account arrears and credit debts) are still more than your income, you may need to seek advice on what to do. A full list of MABS offices is included at the end of this booklet.
Step two – dealing
with arrears, loans
and credit debts
Check you owe money legally
Before putting forward proposals out of your surplus, it is always worth checking any documents you might have, as sometimes you may find that a company has acted improperly. For instance, legal documents or those for a loan may not have been properly drawn up, the account balance may be wrong, the institution may have wrongly applied charges. The Office of the Director of Consumer Affairs (in the case of credit agreements) or any MABS office can tell you your rights if you want to check into this.
See which of your debts are most important
Now turn to the list of arrears, loan repayments and credit debts that we suggested you make earlier. The golden rule here is to prioritise your debts. Some debts are more important than others as the law gives different creditors different ways of getting their money back.
Before making any proposals from your surplus, split your debts
into two categories: priority debts and secondary debts.
Priority debts
These are debts where if you fail to pay, • your house may be repossessed, • you may be evicted,
• your fuel or telephone may be disconnected, or
• you may have to pay a fine or go to prison.
Use your surplus to make proposals to these creditors first on a weekly or monthly basis as appropriate given your budget.
What to offer
Housing and utility creditors will normally be prepared to accept an amount on top of your normal payment or use it to clear arrears over time. In other cases (tax and TV licence, for example) you may need to clear the arrears within a fixed time, so you will need to work out your weekly or monthly proposals on this basis.
Try and ensure if at all possible that the offers to priority creditors do not use up all of your surplus and that you still have money left over to offer towards any outstanding credit commitments.
How to make the offer Contact your priority creditors as soon as possible to explain your situation – you may find the sample letters at the back of this booklet helpful. Sending each a copy of your budget is often an effective way of persuading them to accept reduced payments that you can afford over a longer period.
If you require more information about dealing with a particular priority debt, mortgage, rent, fuel, or court order, we have a specific leaflet on each one, which you can get from any MABS office or the internet at
www.mabs.ie.
Secondary debts
These are debts where money has been loaned to you without you having to provide any security. Personal loans, credit cards and credit union loans are all examples of secondary debts. Though you can be taken to court if you have failed to keep up the payments, as long as you don’t ignore the problems and you respond to court documents with details of your financial circumstances, you will generally only have to pay what you can afford in line with your budget.
What to offer
Offer each secondary creditor a share of any remaining surplus based on what they are owed. The ones you owe more to should receive more than the smaller ones.
How to make the offer Again, sending each a copy of your budget is generally an effective way of persuading them to accept reduced payments in line with your ability to pay. Ask them to suspend any interest charges to be suspended to help you reduce your balance quicker. You will find a sample letter to help you at the back of this booklet.
If you have no surplus, send the companies a copy of your budget to show them this and ask for a moratorium (breathing space) to see if things improve in three to six months time.
CHECK If they take you to court, tell the court the same thing – nobody can get blood out of a stone.
If you require more information about dealing with a particular secondary debt, credit cards, car loans or credit arrears for example, we have a specific leaflet on each one, which you can get from any MABS office or from our website, www.mabs.ie.
Step three – making
and monitoring the
payments
Once you have drawn up a budget and decided how much to pay to cover living costs, arrears and credit commitments, the key to staying in control is to find the most convenient (and cheapest) way to pay as many debts as possible when you receive your income.
There may be costs involved in setting up the various accounts referred to below, so it may pay to shop around and see what services you can get locally (such as credit unions, post offices, banks) to find the cheapest option that works best for you. As you will see, some options (paying bills through the post office for example) are free.
There are a variety of ways you can choose to manage your money, but whatever facilities you choose should ideally consist of three elements.
A ‘working account’ facility
Try to have all your income including any cash you receive paid into this account. This is the account you will
draw on for your groceries and other daily household needs. Banks, post offices, building societies and some credit unions offer this type of account, in some cases along with a laser or cash-point card. If you have a credit card, try to pay your monthly credit card bills from this account.
A ‘bills account’ facility
If possible, ask your working account provider whether you can set up a separate bills account into which you can transfer have a weekly or monthly amount transferred on when you get paid to cover future bills and credit commitments. You should then be able to set up automatic transfers from this account to cover your various bills. Banks and building societies often offer such accounts (check the costs involved).
Alternatively, you could opt to pay for your bills on a pay-as-you-use basis. Both the ESB and Bord Gáis offer a variety of schemes.
Another option is to pay regular amounts towards a range of bills through the post office’s (free) bill-pay service. Some credit unions and employers also operate their own budget schemes.
If you get a social welfare payment, the Department of Social and Family Affairs operates a Household Budget Scheme along with An Post. Under this scheme, you can opt to have up to 25% of certain social welfare payments deducted at source to cover local authority rent, ESB, gas and telephone bills.
Many MABS operate a special budget account scheme in partnership with participating credit unions. The scheme allows you to pay weekly amounts in line with your budget to a range of creditors through the credit union. More details are available from any MABS office.
A ‘savings account’ facility
Again ask your working account provider if you can set up a separate savings account into which you can transfer a weekly or monthly amount at the time you are paid. Alternatively you could choose to pay the money into a credit union or post office account. The credit union offers both competitive interest rates on savings as they grow and opens the door to credit if needed in future.
This account will ensure there will always be something to fall back on in case of an emergency.
Keeping an eye on these accounts
If you just have one account, it can be difficult to know what money has or hasn’t come out, so there is an advantage to separating your ‘working’, ‘bills’ and ‘savings’ accounts. In this way, you know that what you have in your ‘working account’ is money for living costs, as money for bills and saving will be in separate accounts.
Seek further advice
If you require further guidance on money management or dealing with debt, please contact your local MABS for an appointment to speak to a Money Adviser in confidence. Some other useful addresses are listed below.
Useful contacts
AIM Family Services, 6 D’Olier Street, Dublin 2 (01-670 8363)
- legal information, mediation and counselling service for couples experiencing marital and family problems
Citizens Information Centres (nationwide)
- local free confidential information on a range of rights, entitlements and services. Centres are listed in the Golden Pages and on the Comhairle website
www.comhairle.ie
Citizens Information Call Centre (Lo-call 1890 777 121)
- independent information on citizens’ rights, entitlements and services - funded by Comhairle
Comhairle, Hume House, Ballsbridge, Dublin 4 (01-605 9000)
- the statutory body responsible for providing information, advice and advocacy on social services
Commission for Communications Regulation, Block DEF, Abbey Court, Irish Life Centre, Lower Abbey St, Dublin 1 (LoCall 1890 229 600) - the independent body responsible
for licensing and regulating the telecommunications and postal industry
Commission for Energy Regulation, Plaza House, Belgard Road, Tallaght, Dublin 24 (Tel: 01-400 0800)
- the independent body responsible for overseeing the gas and electricity industry
Energy Action Ltd, Unit 14, Newmarket, Dublin 8 (01-454 5464) - energy efficiency information and
services for older people in the Dublin area only
Family Mediation Service - Dublin: 1st Floor 5, St Stephens
Green House, Earlsfort Terrace, Dublin 2 (01-634 4320)
- Cork: 3rd Floor, Hibernian House, 80a South Mall, Cork
- Galway: 1st Floor, Ross House, Merchants Road, Galway (091-509 730)
- Limerick: 1st Floor, Mill House, Henry Street, Limerick (061-214 310)
(There are also a number of part-time centres – details available from any of the above)
- a professional, free and
independent mediation service for couples who have decided to separate
Free Legal Advice Centres, 13 Lower Dorset Street, Dublin 1 (01-874 5690)
- runs a network of (free) part-time advice clinics throughout the country and a telephone information and referral line
Irish Bankers’ Federation, Nassau House, Nassau Street, Dublin 2 (01-671 5299)
- the representative body for banks and building societies – promotes a code of ethics for dealing with customers, including those with mortgage arrears
Irish Energy Centre, Glasnevin, Dublin 9 (Domestic Energy Enquiry Service, 1850 37 66 66)
- information on energy awareness and conservation
Irish Insurance Federation Information Service, 39 Molesworth St, Dublin 2 (01-676 1914)
- free information and advice on matters related to insurance
Irish League of Credit Unions, 33-41 Mount St, Dublin 2
(01-614 6700)
- the representative organisation for all affiliated credit unions in Ireland
Insurance Ombudsman of Ireland, 32 Upper Merrion St, Dublin 2
(01-662 0899)
- independent arbitration of disputes between policy holders and (member) insurance companies
Irish National Organisation for the Unemployed (INOU),
Araby House, 8 North Richmond Street, Dublin 1 (01-856 0088)
- information on entitlements for the unemployed
Office of the Director of Consumer Affairs, 4-5 Harcourt St, Dublin 2 (01- 402 5555)
- information on consumer rights and legislation
Society of St. Vincent de Paul, 8 New Cabra Road, Dublin 7 (01-838 4164)
- help and support for people in need
Threshold
(Housing Advice Agency) - 19 St Mary’s Abbey, Dublin 7
(01-872 6311),
- 8 Fr. Matthew Quay, Cork, (021-427 1250),
- Augustine House,
St Augustine Street, Galway (091-563 080)
- advice and information on matters relating to housing
Irish Financial Regulatory Services Authority, PO Box 9138, College Green, Dublin 2
(1890 777 777)
LETTER ASKING FOR TIME
Address Date
Dear Sir/Madam Account Number:
I am writing to you with regard to the above account. The purpose of my letter is to inform you that I am currently experiencing financial difficulties and am in the process of trying to resolve these difficulties.
I am therefore in the process of assessing my full financial situation and working out how much I can afford to pay to each of my creditors, taking into account all my living expenses and commitments.
While I am undertaking this process, it would be of immense help to me if you would put a hold on any action being taken to recover this debt, also if you would suspend any interest or other charges currently being added to this account.
May I take this opportunity to thank you in advance for your co-operation. Yours faithfully
Name Signed
LETTER MAKING AN OFFER
Address Date
Dear Sir/Madam Account Number:
Further to recent correspondence, I am writing to advise you that I have now completed a full assessment of my current financial situation taking into account all my living expenses and commitments.
As a result I am now putting forward an offer of € per week/month as being realistic in my current circumstances. Should circumstances improve to the extent where I can afford to increase this offer, I will contact you immediately.
In the meantime, I hope that this proposal will be acceptable to you. I would be grateful if you would suspend any interest and other charges being added to the account to help me resolve my difficulties within the shortest possible period.
I look forward to hearing from you. Yours faithfully
Name Signed
Carlow Carlow 0503 40977 Cavan Cavan 049 4362900 Clare Ennis 065 6841991 Shannon 061 360422 Cork Charleville 063 81603 Cork City 021 4552080 Dunmanway 023 55155 Mallow 022 43879 Donegal Derrybeg 074 9560747 Donegal 073 40900 Letterkenny 074 9129909 Dublin Ballyfermot 01 6235443 Ballymun 01 8620059 Blanchardstown 01 8206324 Clondalkin 01 4575782 Cherry Orchard 01 6233900 Coolock 01 8674892 Crumlin 01 4560731 Dun Laoghaire 01 2302002 Dundrum/ Rathfarnum 01 2951104 Exchange House Travellers’ MABS 01 6798358 Finglas 01 8642148 Killinarden 01 4519630 Meath Street 01 4731878 North Strand 01 8366925 Pearse Street 01 6706555 Rialto 01 4731856 Swords 01 8901102 Tallaght 01 4634920
Galway Galway City 091 569349 Tuam 093 24421 Kerry Tralee 066 7129750 Kildare Kilkock 01 6284466 Newbridge 045 435558 Kilkenny Kilkenny 056 61777 Laois Portlaoise 0502 61727 Leitrim Ballinamore 071 9644994 Limerick Limerick 061 310620 Limerick (PAUL) 061 419388 Longford Longford 043 47705 Louth Dundalk 042 9327823 Drogheda 041 9842810 Meath Navan Town 046 9072836 Mayo Ballina 096 72902
Castlebar 094 9028888 Monaghan Catleblayney 042 9749189 Offaly Tullamore 0506 23211 Roscommon Roscommon 0903 27811 Sligo Sligo Town 071 9141022 Tipperary Carrick on Suir 051 645077
Clonmel 052 29313 Nenagh 067 41033 Thurles 0504 23510 Tipperary Town 062 33410 Waterford Waterford City 051 857929
Dungarvan 058 44922 Westmeath Athlone 0906 476616 Mullingar 044 40871 Wexford Wexford 053 21504 Wicklow Arklow 0402 91200 Bray 01 2760411
Personal Budget Spreadsheet
Weekly Expenditure
Rent/Mortgage € ESB €
Coal € Gas/Oil €
Groceries € Milk/Bread € Toiletries/Cleaners etc. € Phone(s) € Clothes(s) € Baby Goods € School/Contributions € School Books € Donations/Raffles etc. € Medical Expenses €
Chemist € Papers €
Lotto € Entertainment €
Cigarettes € Hardware/Maintenance € Household Goods € TV Rental € TV Licence € Cablelink € Videos € Car Petrol/Diesel € Car Insurance € Car Tax € Car Maintenance € Car Repayments € Transport Costs € House Insurance € Misc. Expenses (1) € Other Insurance € Misc. Expenses (2) € Total Expenditure € Weekly Income
Wages/Social Welfare € Children’s Allowance € Part-time work (average) € Other income € € Total Income € € Balance Available € Loans/Arrears Loan/Arrears 1 € Loan/Arrears 5 € Loan/Arrears 2 € Loan/Arrears 6 € Loan/Arrears 3 € Loan/Arrears 7 € Loan/Arrears 4 € Loan/Arrears 8 € Total Loan/Arrears €
www.mabs.ie
For free, confidential advice and assistance contact your nearest:
MABS Money Advice and Budgeting Service
The Money Advice and
Budgeting Service (MABS)
This leaflet is prepared on behalf of the Money
Advice and Budgeting Service (MABS), a free,
confidential and independent service for people
with debt and money management problems.
Disclaimer
Every effort has been made to ensure that the information contained in this leaflet is accurate, but the Department of Social and Family Affairs accepts no legal responsibility for any errors or omissions contained in it. If you have a specific legal query relating to matters raised in this leaflet you should get detailed legal advice.
