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Maximising your income

Lots of people are in debt because they don't receive all the money they are entitled to. Check to see if you can increase your income. You should also have a look at your expenditure and see if you can reduce it.

Are you paying too much tax?
Check with your local tax office to make sure that you have the right tax code. Some employees can claim tax relief on work related expenses. You can get a higher tax allowance if you are registered blind or were widowed before 5 April 2000. If you are over 65 you can also get a higher tax allowance. Some maintenance payments also qualify. Check with your tax office.

A new Children's Tax Credit has been available since April 2001. You can claim if you have a dependent child under 16. Contact the Children's Tax Credit Helpline on 0845 300 1036.

The minimum wage - are you paid enough?
Check that you are being paid at least the national minimum wage. The rates for this are changed by Government from time to time. With effect from 1st October 2009 this is 5.80 an hour if you are aged 22 and over, 4.83 if you are aged 18-21 and £3.57 if you are under 18 and no longer of compulsory school age. For information ring the Government helpline on 0845 6000 678.
Are you getting all the benefits you can?
There are a range of different types of benefits which you might be entitled to. This will depend on your particular circumstances. You may be able to claim:
  • benefits based on National Insurance contributions you have paid. These include Contributory Job Seekers Allowance, Incapacity Benefit, Pensions and Maternity Benefits.
  • means-tested benefits. The amount of help you get depends on how much money you already have coming into your home. There are also set limits on how much savings you are allowed to have and still claim. You do not need to have paid National Insurance Contributions to claim them. They include Income-based Job Seekers Allowance, Income Support and Tax Credits.

Some benefits are not means tested, nor do you have to have paid any National Insurance contributions in order to claim them. These include Child Benefit if you have dependent children. There are also benefits for people with disabilities such as Disability Living Allowance, Attendance Allowance, and Invalid Care Allowance for their carers. Whether you can claim any of these benefits will depend upon the nature of your illness or disability and the effect it has on you.

Working out which benefits you can claim can be complicated. For more information on benefits:

  • contact your local Benefits Agency or a local advice centre.
  • see our section on Benefits.
Can you reduce your expenditure?
If you're struggling to make your mortgage payments, or trying to clear your arrears, one way of increasing the money you have to make these payments is to reduce your other spending.

Look at your personal budget again. Go through every item under Expenditure, and ask yourself these questions:

  • Do I really need this item?
  • Can I reduce the amount I spend on it?
  • Can I replace it with a cheaper alternative?
  • Are there any recent changes in circumstances that could affect the payment?

See the section on Spending money and budgeting for more ideas on reducing your expenditure.

You might want to see what Julie and Rajesh did before you decide on your savings.

When you've decided how much you can save, and on what, you can go back your personal budget to put in the changes.

Case study: Remember Julie and Rajesh? Their weekly budget showed they couldn't afford all their bills - they'd been missing mortgage payments as a result, and had built up arrears.

They go through their weekly expenditure, and identify the following items:

  • Housekeeping - if they spend more time on preparing food and spend less on ready-prepared meals, they think they can save 15.00 a week.
  • School meals - Rajesh will make packed lunches for Julie and their daughter every day, saving 7.50 a week.
  • TV - they decide to cancel their cable TV subscription, saving them 6.00 a week.
  • Maintenance payments - Because Rajesh has lost his job, his income has fallen. He contacts his former partner to negotiate a reduced maintenance payment, reducing it by 5.00 a week.
  • Mobile phone - Julie will only use her mobile for incoming calls and her 'free' minutes - saving 3.50 a week.
  • Childminding - while Rajesh is out of work, they will stop using a childminder/babysitter, saving them another 15.00 a week.

This saves them a total of 52 a week, or 225.33 a month. So their weekly budget now leaves them 17.80 a week to repay their creditors.

Here's their new personal budget.

Example Budget including incomings and outgoings

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