Money expert shares how you can survive January and make it to payday
Let’s face it, January is a long month. After all the fun/excess/insanity of the Christmas break, January is a long, dark month filled with little cheer – and lots of costs.
Money problems are most pronounced in January for a variety of reasons. For a start, many people in full time employment are paid monthly, which often means you get your wages a week earlier in December. This unofficial policy was introduced to help employees over the Christmas hump. But that means an extra week to wait for the January payment.
In addition, various national holidays can throw your direct debits and regular payments out of whack (watch out for this in February too). Oh, and let’s not forget the Christmas overspend, shopping remorse and unexpected bills that lie in wait for us all when the fun fades.
But don’t let January get you down! Here’s my guide to help you get through the next few weeks.
Take a deep breath and see what you’ve spent
Sometimes the thought of going through your spending after Christmas can feel like a form of punishment for failing to keep on top of your finances. But it can actually be a positive thing. For a start, lots of errors happen over Christmas, with duplicate payments, returns not processed and things you didn’t authorise finding their way onto your statements. So you could save some cash by flagging up anything that shouldn’t be there.
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But let’s start with a quick budget, just in case you need some help to get through the next few months.
As I often say in this column, put aside 15 to 30 minutes to make a mini-budget that just covers your main incomings and outgoings each month. The shorter the time you have to work on this, the less stressful it will be. Have the tele or radio on, or play some music so you’re not sat in silence. Make a cup of tea or have a glass of wine if you’re not putting yourself through dry January (like me). Can’t face starting today? Then put a reminder in your diary so you don’t forget.
Not sure how to make a budget? Fabulous free debt charity StepChange has a great budget maker on its website. This follows the standard template of an ‘income and expenditure form’ (I&E) that financial or utilities firms will ask you to fill out if you need support with your bills. So do this once and you won’t have to do it again. Income And Expenditure Form & Financial Statement. StepChange
If you have no money left over each month, or what you have will not cover an emergency, then you are meeting the definition of ‘financial difficulties and all regulated businesses are required to come up with solutions tailored to your individual needs to help you get through the situation. This might involve anything from reduced payments to practical money-saving tips and grants or lower tariffs.
Mystery debits and unexpected bills
Lots of transactions pass through your accounts every Christmas that get missed in all the madness. But not all may be authorised. Here are some things to watch for:
- Shops do sometimes make errors and apply the wrong debts to the wrong cards. This shouldn’t happen, but does.
- Contactless payment totals are keyed in by staff members (often in bars) but if you haven’t checked the device properly, errors do get made. Check tips too, in case you stuck on an extra zero!
- Fraudsters can clone payments, cards and fake authorisations to debit your account, though this is often clamped down on quickly.
- Accounts, from retailers to e-payments systems like PayPal, can get hijacked by con artists.
- Subscription traps, from free trials of services to out-and-out fake firms and rubbish voucher sites that you never signed up to, can reduce your balance significantly.
- Annual payments for services you’ve forgotten about can suddenly debit from your account. Though you can appeal these if you haven’t used the service or were not clearly notified of the renewal.
You’ll need to look for these mystery debits on:
- Your bank accounts.
- Your credit cards.
- E-payment services.
- Your mobile phone bill (I kid you not)
I’d also check your emails for invoices as these can often lead you back to how certain payments are being debited.
Despite all the bells and whistles, your online banking – particularly on your phone – may offer limited services. They certainly don’t feature all the functions available that you can find on your computer. So dig out the laptop if you want to be thorough.
If you don’t recognise everything, then call the card provider or payment service and ask them to explain a bit more about it. You might want to cross-reference the date with your diary in case it jogs your memory. Anything you haven’t agreed to should be returned immediately if the business cannot prove you authorised that specific payment. And if it’s been taken without any permission, you can ask the firm that debited you for compensation along with refunds of all the debits.
Buyer’s remorse
If you’ve overspent, don’t panic. You have a 14-day period where you can cancel most goods and services bought online without charge, so take advantage of this if it’s not too late. You might have to pay return costs if the item has already been delivered or is on the way. Make sure you tell the business within the 14 days that you want to return the goods.
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If you had a shopping frenzy using store credit, make sure you’ve factored that into your accounting. It’s easy to forget about ‘buy now, pay later’ deals, so add them to your budgeting spreadsheet. Speak to the credit firm about any item you can’t afford and go through their official process to return the item and cancel the agreement.
If you’ve overspent on friends or family, then it’s time to be honest and ask if they really need the gifts or if it makes more sense to return a few things. I know this is hard, but it’s better than living off pasta and butter for three weeks.
If you were gifted items and don’t want to reveal you don’t want them, why not use one of the many resale, second-hand or vintage websites to sell them on? In fact, why not have an early spring clean and see what else you have to sell lurking around the house? I’m constantly amazed by what people will buy second-hand and the prices that they’ll pay for it.
Watch out for fraudsters though (only sell using methods like PayPal that protect you if you get ripped off). In addition, it’s easy to find yourself out of pocket by not following the packaging and postage rules for resale or auction websites. So read them thoroughly and photo the parcel contents before posting. There are now tax liabilities for regular online second-hand sellers, but if you’re clearing house, you should be okay.
Utilities, financial debts and other bills
For most people struggling to get through January, the main bills after housing costs are financial contracts and utilities bills.
As I mentioned earlier, you’ll need to have that simple budget to hand for the business. When you speak to the firm, explain that you are in financial difficulties, share the details of your finances that they ask for and ask them what proposals they have. Regulators like Ofcom, Ofgem and the Financial Conduct Authority all have advice on their websites about what you can expect if you are in financial difficulties, so go in armed with their advice.
Whatever you do, don't turn to high-interest lenders or other forms of interest-bearing short-term credit to get you through January. They are a false economy, and you'll end up paying more in the long run. Speak to your bank to see if they can give you a temporary overdraft for a month. If you don't meet their criteria for credit, then take some time to tell them about your situation. If you explain you’re experiencing some difficulties, your bank has an obligation to do what it can to try to help not make the situation worse. They aren't going to write off anything you've spent, but they can give you a break on charges and interest until you're back on top of things.
If your bank or credit provider refuses to help you, or makes the situation worse, make a complaint to the Financial Ombudsman for free.
Martyn James is a leading consumer rights campaigner, TV and radio broadcaster and journalist.
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