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Over-commitment

It is easy to become over-committed. Every time you sign up for a new service (such as cable TV or a mobile phone contract), buy something on hire purchase or add to a credit card debt, you increase your monthly commitments.

Before you sign up for a new service or a new credit commitment, make sure you can afford the payments. Create a budget sheet and keep it up to date, thinking about how you would make the payments if your income dropped.

• Find out how a personal budget can help

Changes in circumstance

Another reason for over-commitment may be a change in personal circumstances that leads to a drop in income - for example, if you:

Any of these events could cause a drop in income and mean that you have to change your spending priorities. If something unexpected does happen, it's important to review your budget as soon as you can.

You should also check if you can increase your income through benefits or tax credits.

• How to find out if you qualify for benefits

• How your tax credits entitlement is worked out

• Download 'Increasing your income' - information from National Debtline (PDF 47K) Opens new window

• Help with PDF files

Budgeting

A personal budget can help you to plan ahead and make the most of your money. You'll need to:

• identify your commitments - for example, mortgage, rent or hosuehold bills
• work out how much they cost
• work out where the money comes from to pay for them
• look at ways of reducing your spending - for example, you may be able to get better deals on your gas and electricity and your insurance
• spread the cost by paying bills by Direct Debit - there are usually easy payment schemes for most regular bills such as TV licence and water rates
• stop paying for items that are no longer necessary

It's important to review your budget regularly, because your circumstances are likely to change.

• Budgeting

Priorities and plans

By working out a budget you'll know how much money you have for essential living expenses (such as household bills, rent or mortgage and food) and how much you can afford to commit to other plans (such as buying a car, taking out a mortgage, going on holiday or saving for the future).

By prioritising your commitments you can make sure your basic needs are met and then you can decide what else you can afford, and what you may have to save for or do without.

• Which debts to pay off first

• Planning your personal finances

Get the most from your money

By shopping around and negotiating - not just for goods and services but also for financial products such as loans and credit cards - you can make your money go further.

• Loans made clear Opens new window

What to do if you're over-committed

If you are over-committed and have a debt problem, don't ignore the situation.

Signs you may have a problem include:

By listing and prioritising your debts, budgeting and talking to your creditors you can get the situation in hand.

More useful links

• Managing money

• Managing your money from the Money Advice Service Opens new window

Useful contacts

• Money, tax and benefits contacts