For some people, paying priority bills on time and in full poses no difficulty and for others it can be a regular worry. But regardless of your financial situation, there will likely always come a time when your money is stretched just too far to meet all of your financial commitments on time. When this happens, it can be stressful trying to establish which bills you should prioritise, and where you can get money quickly in order to manage your cashflow.
One of your biggest essential bills is probably your rent, and it can be scary facing the prospect of missing your rent payment as there are some potentially severe consequences. In a lot of cases, your landlord will probably allow you to catch up the arrears over the next few months, but in some cases, missing your rent payment can result in eviction. It’s likely that you’d have to miss a few consecutive rent payments and ignore any contact from your landlord before this happens, but nevertheless it’s a real threat for many tenants, especially those who live on a tight budget.
A credit line allows you to borrow money when you need it to manage temporary cashflow shortfall, but as a running account service, it can also help you to spread the cost of large payments over several months, so you’re not left bereft of funds and struggling to make ends meet.
One of the ways a credit line can help you meet your rent payment on time is if you find yourself faced with an unexpected payment that hinders your budget for the month. Instead of panicking about how you can meet all of your existing commitments on time, you can use a credit line to cover the unexpected bill and continue with your usual responsibilities as normal. You can either repay your borrowing in full the next time you get paid or spread the balance over a few months – as long as you make at least your minimum payments on time.
Another financially challenging scenario people come across is starting a new rental agreement. Often, you have to pay a deposit which can be up to two months’ rent in advance. This can cause even the most financially savvy to struggle a little. A credit line could help you by allowing you to borrow the funds to pay the deposit so your current finances don’t take an unmanageable hit all at once, and then you can repay the balance as your cashflow allows, giving you flexibility over your finances.
Compared to a personal line of credit loans can also help in times of financial need, and for some people a fixed term loan may be more suitable than a revolving credit service – especially if you find that you often overspend. You should always consider all of your options before immediately applying for credit, because while it can help you in the short term, using credit you can’t afford to repay can cause bigger money problems further down the line.
If you often find yourself stressed about your financial commitments, and in particular your non-discretionary expenses, there might be a few things you can consider to make your financial life a little easier.
Firstly, it might be a good idea to try to save some money in the good months, so that you can meet any unexpected expenses without borrowing money in the bad months. It’s usually sensible to try to save at least one month’s worth of priority bills (rent, energy bills, food) so that if you suffer a big income shock, you know you can cover your important expenses in the immediate future. From there, try to save up to three months’ worth of wages or priority bills so that if you lost your job, or something similarly impactful, you’d have time to recover and find a solution without the added stress of missed payments, arrears or even eviction.
Sometimes though, even savings can do little to help if you have a tight budget or if your expenditure is getting close to exceeding your income. It might be time to look at cheaper accommodation – even if it’s just for a year or two – so that you can recover financially and free up some funds to help you meet your financial responsibilities with ease, or to save towards increasing your financial resilience.
If you realistically can’t do either of the above, you may want to consider contacting a free debt advice charity or money advice service to discuss your current circumstances, and what the best way forward might be. It could be something super simple that you’ve just never thought about before, or you might need more in-depth help, but whatever the solution, you’ll find it quicker if you reach out for help.
For more helpful information about how to manage your money, different financial products or what we do at Polar Credit, take a look at our Info Hub.