Cutting Costs When your Income is Reduced

Businesses large and small can help their cash flow by taking a look at outgoings. Cutting costs when your income is reduced is something that can be done by everyone.

You may be able to shave costs off your business and personal outgoings and take some of the stress out of the situation. Here are some suggestions:

Cutting Work Costs when your Income is Reduced

Mobile phone contracts

Out of contract but haven’t upgraded the handset? If you’re still paying £30-50+ per month it might be better to swap to a sim only contract. It might cost you only £10-20 per month, depending on your usage.

Subscriptions

It might be a good time to look at all subscriptions you are currently paying and see if you are really using them. These might be regular small payments that people don’t normally miss each month, but they all add up.

Utilities

This could be a good time to look at your gas, electric, broadband, etc. and see if you can get a better deal and reduce your monthly outgoings. This applies for both business and domestic contracts.

Know that you are going to struggle paying your utility bills during this period? We recommend that you speak to your supplier and see what they can offer to you.  If you have been furloughed or are working from home your utility bills are likely to increase.

Work expenses

Paying for either a season ticket for travel or contract parking? You might be able to cancel these expenses or apply for a refund.

Cutting Personal Costs when your Income is Reduced

Income and Expenditure

To allow you to make the right decisions and also to help you make the calls to your creditors it could be helpful to complete a monthly income and expenditure account with your reduced income.

We can provide you with you a template to start you off. Please just contact us for a copy.

Have a look at your personal bank statement and think what you might be able to reduce or stop. Some suggestions are outlined below.

Sky Sports

As a result of the coronavirus, Sky are allowing customers to pause their sports subscription without any cost. Your next bill will show £0 for the sports package -although you will still need to pay for the rest of your bundle. You can still watch all of the 11 Sky Sports channels after pausing it and can watch all the sporting replays.

To pause your membership, call 0800 151 2747, say “cancel Sky Sports” and it will ask if you wish to pause your Sky Sports subscription.
Alternatively, you can visit Sky’s website and follow the instructions.

Gym Membership

It might be worth contacting your gym and seeing if they will freeze your membership.

Children’s activities

Most children’s activities have stopped. It might help to see if you able to freeze or cancel any monthly subscriptions.

Bigger Bills

Vehicles

As a result of the restricted movement  you may have more than one vehicle in the household and  it might be worth considering  moving  the redundant vehicles off road and completing a “SORN” to inform DVLA and reduce your road fund license costs (road tax).

If you decide to take your car off the road and “SORN” with DVLA you could also speak to your insurers and confirm that the vehicle is not being driven and they may agree to reduce your insurance premiums.

Please be mindful however that there may administration fees for changing the policy and you will need to decide whether making the change is worthwhile.

However, DO NOT cancel your insurance policy as the vehicle will not be insured for damage or theft.

Mortgage and rent

If your income has dropped and you are experiencing financial hardship speak to your mortgage provider and they may be able to provide you with a three-month mortgage payment freeze.  Please remember that interest will continue to accrue on your loan, and you may need to agree a plan with the lender on how to catch up on any missed payments.

The Government has stated that landlords are not able to obtain possession for unpaid rent during this period. However, we would recommend that you speak to them and agree a plan together that considers future payments and missed payments.

Creditors – loans and credit cards

If you expect your income to return once the current crisis lessens then we recommend that you speak to your creditors and explain that your income has significantly reduced as a result of the Coronavirus.

We understand that you can ask to reduce your payments to £1 per month until your financial position improves.  You can do this yourself and you don’t need to pay a Debt Management company to do this for you.

We recommend that you speak to your creditors before simply reducing payments, otherwise you will be inundated with calls from your creditors causing unnecessary stress and pressure.

Before you speak to your creditors, we suggest that you review your bank statements and then work out your monthly personal income and expenditure.  You will then be prepared for any questions that are asked over the phone and this may help you negotiate lower monthly repayments during this period.

Making reduced payments may well affect your credit rating. However at the moment the priority is maintaining basic necessities and then paying what you can on remaining items.

The Citizens Advice Bureau might be able to give you further support related to claiming benefits as a result of the coronavirus.

Looking after your own well being

Please do not underestimate the impact this crisis is having on your own well-being. It’s a very stressful time and we recommend that you have look at this online resource about looking after your mental health.

And finally…

Here at Jones Harris we have amassed a huge body of information relating to the whole coronavirus situation. Please don’t hesitate to get in touch for advice and support. If we don’t know the answer ourselves, we’ll be able to signpost you to someone who does.

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