28 Day Financial Fitness Challenge – Week 3

13 min Read Published: 15 Jan 2022

Own it, Fix it, Grow it

If you missed week 1 you can access it here - 28 Day Financial Fitness Challenge – Week 1

If you missed week 2 you can access it here - 28 Day Financial Fitness Challenge – Week 2

Fix it - Week 3

Day 15 - Cut your household & personal bills

Task: Review all the household and personal bills that you listed in the "Essentials (Needs)" section of the budget planner spreadsheet and identify any that can be reduced.

The article in the resources section will help you reduce the cost of essential bills quickly.

Key Takeaway: The goals of a good budget are to:
1 - reduce the cost of essentials
2 - control discretionary spending
3 - clear debt then grow savings & investments to produce enough income to become financially independent
Time Required: 30 mins
Resources How to save money on your household bills

Day 16 - Tame your discretionary spending

Task: Review all the items you listed in the "Discretionary (Wants)" section of your budget planner and identify any that can be reduced or cancelled altogether.

The article below will help you reduce the cost of essentials

Key Takeaway: The goals of a good budget are to:
1 - reduce the cost of essentials
2 - control discretionary spending
3 - clear debt then grow savings & investments to produce enough income to become financially independent
Time Required: 20 mins
Click to play:

 

Day 17 - Confirm you are paying the right amount of tax and receiving all entitled benefits

Task: 1 - If you are employed, go to this income tax calculator

  • Make sure the ‘tax year’ is set to the current one and the right age band is selected.
  • Don’t worry about the ‘tax code’ field or the email field but fill/tick the others if relevant.
  • Then enter your annual gross salary and click ‘calculate’.

The calculator will tell you the net amount you should be receiving each month (or week) after tax and national insurance. If this number pretty much matches the net amount that goes into your bank account each month (or the net amount on your payslip), that’s great. If the figure was not what you had expected then read this article for more information on what to do next.

2 - Listen to the podcast below (especially if you have children) to see if you or your partner are being hit with the 60% income tax trap.

3 - Find out what benefits you are entitled to, if any, by opening the online tool entitledto and answering a series of simple questions on-screen and you will be shown which benefits you may be entitled to and an estimate of their value.

Key Takeaway: Income tax: In 2017, 6.7 million people paid too much or too little tax because they were on the wrong tax code. So that meant that 6.7million people received either less take-home pay than they should have or eventually got an unexpected tax bill for the underpaid tax. This is a potential problem for anyone receiving an income via PAYE (pay as you earn) such as an employee. If you’re self-employed and not receiving a pension you won’t have a PAYE code in which case your accountant will ensure you are paying the right amount of tax.

Benefit entitlement: It’s important that you maximise the amount of money that you have coming in. That’s why everyone should check if there are any benefits or financial assistance that they are entitled to. These can include income-related benefits, tax credits, contribution-based benefits, Council Tax Reduction, Carer’s Allowance and Universal Credit. In 2016/17 alone about £10 billion of financial support went unclaimed. It’s important to check even if you don’t think you are entitled to anything.

Time Required: 10 mins
Click to play:
Additional Reading: Check you are paying the right amount of income tax

Find out what benefits you are entitled to


Day 18 - Sort your will

Task: If you completed Damien's Money MOT on Day 12 and registered for your free action plan you should have a better idea of whether may need a will or if your existing will needs updating. Today's tasks will help you better understand if you need a Will and explain how to quickly create/update one. Don't forget a Will deals with more than just your assets, it can be used to dictate who becomes the legal guardian of your children if you were to die.

1 - Use this simple tool which quickly tells you how your estate will be divided if you don't have a will. If you are happy with how your estate would be divided and you don't have children then you don't necessarily need a will.

2 - If your affairs are fairly straightforward then there are numerous online companies which offer will writing services. In this article we look at the best online Will writing services in the UK. We explain ways in which you can get a Will for free as well as providing a list of the UK's best paid-for Will writing services.

3 - If your affairs are complex then it's best you seek the advice of a solicitor. Below are the 4 steps that I followed to set the wheels in motion to sort mine and my wife's wills. Go to the vouchedfor website and:

  • enter your postcode
  • select 'legal adviser' from the drop-down and click search
  • on the next page select 'wills and probate' and then 'Making or changing a Will' from the tick boxes
  • click on the contact button for one of the top-rated solicitors. You can then read reviews from verified customers and send a message asking them to get in touch.
Key Takeaway: If you die without making a will you are deemed to have died ‘intestate’ and your estate is distributed in accordance with the law of the land which is unlikely to be exactly how you would have wished it which is why having a Will in place is important. In the event that you are no longer able to make your own decisions (due to ill health for example) you can also establish a power of attorney to nominate a trusted person to make decisions about your finances, health and general care. The podcast snippet below gives more information about this.
Time Required: 30 mins
Click to play:
Additional Reading: The best online will writing services in the UK

How to sort your will today in 10 minutes


Day 19 - Work out a debt repayment plan

Task: The secret to paying off debt quickly and effectively is to try your best to automate the process so your debt is being reduced with minimal input from you once you have set things up.

1 - Read this article and work out your "snowballing" repayment plan which will prioritise the repayment of any credit cards that have the highest interest rate. Tomorrow we will look at ways to reduce the interest rate on your credit cards to help you repay your debt faster. Once you have worked out your "snowballing" repayment plan you can use this calculator (ignore the dollar symbols - it doesn't matter) to work out the date you will be free of credit card debt and add this to your diary. You can also add loan repayments in as well if you are allowed to overpay without charge. If not then add the date your loans will be paid off to your diary as well.

2 - This repayment plan focuses on your credit cards. If you have outstanding loans then you should also focus on overpaying these where possible (as long as there are no penalties for doing so) to clear the debt quicker. You may want to look at whether consolidating your loans can help you pay them off quicker. The two articles in the resource section provide more information.

3 - If you find yourself struggling with your debts then you need to seek professional help and advice. This article will provide more information on free debt advice services that can help you.

Time Required: 30 mins
Click to play:
Additional Reading: What is the best way to consolidate my debt?

Debt consolidation and mortgages: should I remortgage to pay off debt?

Top-5 ways to tackle personal loan debt

 

Day 20 - Optimise your debt repayment plan

Task: Next step with your repayment plan is to reduce all the interest rates you pay on as many credit cards as possible, preferably to 0%. Our article about the best 0% balance transfer credit card deals will help you do this. Also if you have any loans make sure you shop around for the best deal.

1 - Read our article about the how to clear credit card debt with a 0% balance transfer to learn how you can reduce your credit card debt quicker by not paying any interest for the remaining term of your credit cards.

Time Required: 30 mins
Click to play:
Additional Reading: Best 0% balance transfer credit card deals

Can I get an interest-free loan? The best low-cost borrowing options

Is it better to get a credit card or a personal loan?

Can I use a 0% credit card to clear loan debt – and is it a good idea?

Day 21 - Rest Day

Task: Use today to have a break or to finish off any Week 3 tasks that you may not have had time to complete this week.

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