When you're in debt, you need to make sure you're making the best possible use of any money coming into your home. Check to see if you're entitled to any benefits or tax credits. You could ask for extra hours at work or rent out a room in your home to increase the amount of money your household has.
Working out your benefits
Many people think benefits can only be paid to people who aren't working at the moment. But, if you're working, but you're on a low wage or you're only working part-time, you may be entitled to benefits to boost your income. Make an appointment for a benefits check with a local citizens advice bureau or an independent advice agency. These agencies should be able to help you work out if you're entitled to any financial help from the government. You can also use online tools to get a quick estimate of whether or not you're entitled to any benefits, but these are no substitute for getting proper help from a benefits adviser.
Make sure the information you provide about your salary, tax, savings and other income is accurate. The calculation will be based on the information you give.
Asking for a raise or extra hours
You may be able to get extra hours at work for a short period of time. This can help you increase your income and start to pay off your debts. Some employees may be able to ask for a raise, while other people's salary can only increase at set times. If it's been a while since you had a raise, you could consider asking your employer for one. If you're in a union, you could speak to your union representative to find out how to go about doing this.
Check that your tax code is correct. If it's wrong, you could be paying more tax than you're supposed to. You should also check if you should be getting tax credits. Information about tax codes and tax credits can be found on the HMRC site.
Take in lodgers
Taking in a lodger can be a useful source of extra income. You can earn up to £7,500 each year tax free. If your lodger pays more than this, you'll have to pay tax on anything over £7,500. There are a few things to consider before taking in a lodger:
- check if you need to get your mortgage lender or landlord's permission
- check how the extra income will affect any benefits you get,
- check how your insurance payments may change
- think about how you'll manage having a stranger live in your home.
A lodger who is a close relative won't be entitled to any housing benefit. So, if you're renting a room to a family member, make sure they're able to afford the rent without applying for housing benefit.
Taking in a lodger can be stressful. Consider your family's situation before taking in a lodger.
Other sources of income
Depending on your own circumstances, there may be other ways of increasing your income. You could:
- apply for help from the Discretionary Support Fund
- cash in any savings or investment policies.
If you own your home you may want to consider selling your home and moving to a smaller property. A smaller property may be cheaper and easier to manage. If you're considering this option, don't forget that you will have to pay certain fees and charges to sell your home. You may also need to do some decorative or repair work to make sure you get the best possible price for your home.
Speak to Housing Rights if you're thinking about selling your home to a company who have said that you can then rent it back. This may seem like a good idea, but the terms and conditions offered in these sorts of deals can sometimes be unfair and the reality of the arrangment can often be different from what you've been led to expect.