Debt management plans are meant to be flexible to life's occasional ups and downs. But there's still a chance that other issues can creep in that might make being on a DMP difficult. Let's take a look at some measures you can take to make sure your DMP works, even when the unexpected happens.
Stick to your budget
When you had your initial debt advice session, we put together a budget to show where your money needs to go every month. In order to keep your DMP running smoothly you need to stick to the living expenses outlined in your budget. We know that sticking to a budget can take a bit of practice.
There are plenty of budgeting apps you can use to help keep track of your day-to-day spending. If you find the budget we put together doesn’t match the amounts you have to spend each month, get back in touch with us and we can update it.
Review your budget regularly
During your DMP, we’ll contact you to review your budget. Normally this will be once a year, or whenever there’s a big change on the horizon which we know about.
We review your budget to make sure your DMP payments are still affordable, and that the plan is still the best way to deal with your debts.
The easiest way to review your budget is through OnlineDMP. You can check all the income and spending is right, or let us know about any changes this way. Alternatively you can call us and review your budget over the phone.
Let us know if anything changes
Sometimes things can happen ‘out of the blue’ and make life a bit difficult. Big life changes such as moving home, redundancy, marriage, divorce or a new baby can all affect the amount you have available to pay to your debts.
Sometimes unexpected events can have a big effect too, for example health problems or losing your job. Even a series of small changes – a few pounds extra here and there on your bills – can add up to make your DMP harder to manage.
If anything changes about your income or your circumstances, let us know so we can make sure your payments are still realistic and the DMP is still right solution for you.
Don't take out more credit during your DMP
When you enter into a DMP it’s with the understanding that you won’t take out any more credit products while you’re paying off your existing debts. Taking out more credit is likely to prolong the problem rather than make things easier for you.
We understand that sometimes extra borrowing for essentials is unavoidable. If you find yourself dealing with a big unexpected expense such as boiler repairs or replacing an appliance, please call us before deciding on how you’ll pay for it.
If you feel like you need to take out extra credit to cover your day-to-day expenses, this is likely to be a sign that your budget isn’t right. Instead of taking out extra credit, give us a call and we can check if your DMP payments are set at a realistic amount, or if there might be a better debt solution for you.
Save money for emergencies and occasional expenses
When we put together your budget some of the expenses we listed may be to pay for costs that don’t come up every month.
For example, if you have occasional costs, such as an annual vehicle MOT or six-monthly dental checks, you should save the monthly amount in your budget to pay for these.
We may also have included an amount to save for ‘sundries and emergencies’. This is a savings amount to cover costs such as birthday presents or small unexpected household expenses.
Try to get into the habit of saving these amounts in your budget each month. If you don’t do this there’s a risk that when these occasional expenses come up you may not have enough to cover them.
It’s easiest to do this if you keep these savings separate from your day-to-day spending. You could keep this money in a jam jar at home, but it’s safer and less tempting to dip into your savings if they’re in an account. Try transferring the money into a separate savings account with your bank or local credit union.
Don’t pay extra to your creditors outside of your DMP
Sometimes creditors included in your DMP will contact you to ask for an increased payment. Some may even try to persuade you to pay them extra directly, outside of your DMP.
If this happens explain that you’re paying the most you can realistically manage through your DMP. If your creditors need an update about your income or spending, they can get this from us.
Don’t be tempted to pay them extra; if you do, there’s a risk you won’t be left with enough to cover your household bills and other living costs.
If you find you have a bit extra available one month, and you want to pay more to your creditors, get in touch with us for advice on the best way to use the money.
Ask for help if you need it
As we’ve already mentioned, we have a dedicated team of advisors who are here to answer your questions and ensure that your DMP is working for you. The majority of problems can be resolved by staying in touch. You can access OnlineDMP at any time. Most of the information you may need can be found on the existing DMP clients page. Our MoneyAware team are also on hand to give you great budgeting and moneysaving tips.
In addition to our support, you can also speak to people just like you who are currently dealing with debts via a DMP on MoneySavingExpert.com’s DMP mutual support forum thread.