Tips for doctors in financial difficulty
1. Don't throw your money away
Why spend more than you need to on your mortgage, bank account, credit card, insurance, gas/electricity or phone company? The good news is that there are people out there whose job it is to work out this kind of information for you free of charge.
http://money.guardian.co.uk/ provides comparative information, news, fact sheets, special reports and online advice on just this kind of topic. Moneysavingeexpert.com also has an interesting range of comparisons, articles and guides - as well as its own take on budgeting - The Money Diet Calorie Counter. Price comparisons are also available on http://www.moneysupermarket.com/
To limit the temptation to borrow or spend try logging on to http://www.mpsonline.org.uk/ to block junk mail.
2. Get some free advice
If debt is a serious problem for you, you can now get free, impartial Money/Debt Management advice from a number of organisations - which might include arrangements for renegotiating or rescheduling debts. For instance the Consumer Credit Counselling Service and National Debtline both offer free online information and telephone advice.
Their contact details are in the money and finance section of http://www.support4doctors.org/
Alternatively you can usually arrange to see an adviser at your local Citizens Advice Bureau, if you would like a more personal approach.
Also consider talking to your bank/building society, to try to get them to help you now rather than pursue you later.
A first step to budgeting is to set up standing orders or direct debits to cover all your essential costs [mortgage, council tax, insurances, professional subscriptions, utilities] and make these payable a few days after your salary is due into your account. This means most of your essential bills are paid on auto pilot and any money remaining is, in theory at least, there for spending or saving.
In practice, life [and budgeting] isn't quite that simple. There'll be all sorts of one off debts [like car insurance and car tax] to take into account as well - but standing orders and direct debits are a useful first step and you can then move on to one of the various online budgeting tools available to make sure you've covered the rest. For instance www.ivillage.co.uk/money/cashflow has one of the most straightforward. It is designed for a female audience but its budget planner seems equally applicable for male users.
If you're spending more than you're earning then you don't need to be a financial genius to know you need to earn more or spend less. What you decide to save on is your decision but don't ignore debts, they'll only grow bigger. Where possible start by clearing the debts with the highest rates of interest [APR], otherwise these will just keep growing.
4. If you've just qualified
Start budgeting from day one. Your income might look good after all those years as a student but you've probably now got sizeable students debts to pay off, postgraduate education isn't cheap, you need insurance cover for the essentials, you may want to buy a house, start a family and enjoy a professional lifestyle - how far will your salary really stretch?
5. Avoid store cards and don't use credit cards for long term borrowing
"I do not borrow on credit cards. It is too expensive. I have four children. I give them advice not to pile up debts on their credit cards". Matt Barrett, Chief Executive, Barclays
Credit cards are fine provided you pay off your debts in full each month - or can transfer your debt to a 0% introductory offer rival card and then repay the debt in full during the trial period. However, as Mr Barrett conceded to the Commons Treasury Committee, a Barclaycard customer who made only the minimum monthly repayment might take more than ten years to pay off the balance. That's the effect of interest rates [APRs] on credit cards which are often four or five times the rate of inflation. With interest rates of up to 30% store cards are even worse. If you've got a store card the best advice is probably to pay off your debt and tear the card up.
6. A taxing experience?
For expenditure incurred wholly, exclusively and necessarily in performance of your employment duties and not reimbursed by your employer, tax allowances are available, so claim them. Write to your tax office, explaining what you are asking for and enclosing proof of the expenditure you are seeking tax allowances on. Expenditure the tax office is likely to consider eligible includes: professional subscriptions [for example the BMA and medical royal colleges] - see www.hmrc.gov.uk/list3/index.htm travel expenses incurred while working [rather than commuting - although if you are on call this might mean travel from home]; medical equipment required solely for the performance of your duties; and relevant conference fees - in each of these examples provided your employer has not already reimbursed you, of course. For more complex cases get professional advice. If you claim back more than £2,500 a year youll end up having to complete a Self Assessment tax return, so dont get too carried away here.
7. If you're out of work and have little income and savings
If so this probably means you had no income protection insurance - or you had but there was an exclusion clause in the small print, such as a pre existing medical condition. Either way you have a real problem. However, you may be eligible for help from an occupational benevolent fund [a charity for doctors and their families]. A useful starting point is the Royal Medical Benevolent Fund, at http://www.rmbf.org/. The Fund can advise if you are likely to be eligible for their financial help and may also be able to provide specialist Money/Debt Management Advice - perhaps to help you renegotiate your debts and/or secure the full State Benefits for which you are eligible.
Royal Medical Benevolent Fund