Whenever you borrow money, your lender passes information about your borrowing to one of three credit reference agencies in the UK: Experian, Equifax and TransUnion. These agencies keep this information in a credit file so other lenders can use it to help them decide whether to lend to you in the future. How much you’ve borrowed and how regularly you’ve repaid, along with other factors, go towards determining your credit score.

If you want to make sure you’ve got a complete list of all the money you owe and who to, you can request free copies of your annual credit reports from each of the three agencies.

These reports give you a clear overview of all your creditors, although the amounts owing may not be current so it’s worth double-checking online. Credit reports are particularly useful if you’re not certain you’ve received every bill and statement; for example, if you’ve changed addresses

When you know how much you’ve got left after setting money aside for the essentials, you can start thinking about the best way to repay your debts. To make the biggest impact with the money you have available for repayments, think carefully when decided who to pay back and by what amount.

Five things to consider when prioritising your debt:

  1. How much do I owe?

  2. How long is my repayment term?

  3. How much interest am I paying?

  4. Are there penalties for missing repayments?

  5. Can I discuss repayment options with this lender?

Looking at the last point, if you’re struggling with your finances and haven’t already done so, give Satsuma a call. There are usually several options we can discuss to help you with your situation.

Managing your budget

Once you’ve named and calculated your debts, your next step is to work out the best way to manage your money.

Here are some essential tips to help you manage your money when you’re struggling financially:

  1. Use real money Whether it’s new fivers, crinkled tenners or trusty pound coins, using cash every time you spend can add an extra level of control. When you go shopping or have a day out, take the exact amount of money you can afford to spend. Leave any extra cash and your cards at home. It’s simple but effective.

  2. Budget for known costs Christmas. Birthdays. School holidays. Some events come round once a year, every year. The problem is, they often bring the temptation to splurge. The upshot is, we can see them coming. Work out how much you spend on these occasions over the year then divide the amount by 12. Put this money away each month until the expense arrives.

  3. Get saving It can be a tough decision, but you really should consider putting away even a small amount of money each month. Saving will help you budget for emergencies and set you in the right direction for a secure financial future. Even if you only set aside a few quid, if you do it regularly, it’ll soon add up.

  4. Watch your bank account Getting into the habit of checking your bank account can make a massive difference to how you think about your money. You’ll always know if you’ve got enough funds to cover your direct debits and other bills. You’ll be able to spot if you’ve been overcharged. You might even realise you’re signed up for services you don’t even use anymore. It’s the difference between a rough idea of bank balance and knowing how much you’ve actually got.

  5. Open a basic bank account Get this one out of the way early. If you’re in debt, make sure the money you do have is safe. If you haven’t got one already, it’s a good idea to set up a new basic bank account with the same bank your current account is with.

  6. Cut back on spending You don’t always need to make huge lifestyle changes to save money. Cutting back on little luxuries and added extras can make a noticeable difference to your budget. For example, something as simple as a £2 weekday coffee adds up to £520 over a year.

  7. Shop around When it comes to non-essential purchases, try waiting a week after you’ve spotted a thing to decide if you really need it. It’s not always easy, but it can help curb impulsive spending. When you’re sure you need the item in question, don’t leap to the first retailer. Have a shop around and compare prices online to find the best deal.