How can you clear your financial backlog?

The word backlog originated from the 17th century, when it literally meant the log at the back of the fire. The idea being that this was the one that would be either used last or saved for later.

But in the 22nd century, we use the word backlog to describe when something gradually mounts up and we know that at some stage we will need to deal with it. Like work. Or financial commitments.

With the rising cost of living, many of us have a financial backlog to deal with. We can’t afford something one month, so push it into the next month. But the next month brings financial challenges of its own. Whether it’s an annual subscription, vet’s bill, car MOT or any number of other things, it means that we have to push yet more into the next month. And so it goes on. 

And sadly, as part of this process, we can start to increase our debt – for example by paying for everyday items on a credit card because we can’t find any other way of doing so.

The problem is that all this can lead to a never ending circle of always being behind financially; always having a financial backlog.

So in this article we look at ways of how to get your finances up to date, and how to manage things going forward, so that the backlog doesn’t build again. It won’t be easy, but it can be done.

Here is our three point plan to clear your financial backlog:

• Face up to the past.
• Change the present.
• Plan for the future.

Let’s take a look . . . . 

Face up to the past

Start by getting an overall picture of where you stand. You need to know how much your financial backlog is, and also why it happened in the first place. 

• How much is your financial backlog?

This can feel pretty daunting, but you need to understand the scale of the problem. So make a list of everything you owe. For example:

• Loans.
• Credit card balances.
• Buy Now Pay Later payments.
• Any overdue bills or payments.

Your aim is to gradually pay these off, and stop them piling up again. We will see how to go about this in the next section.

• What factors caused your financial backlog?

Whilst you can’t change things that have happened in the past, you can often learn from them. So if you now have a financial backlog, it’s also worth trying to understand how that has happened so you can do your best to prevent it happening again.

For example, you could be falling behind because of:

• Rising cost of living.
• Job loss.
• Relationship breakdown.
• Health issues.
• Spending too much on credit cards.
• Living beyond your means.
• Unexpected expenses.

Whilst some of the above factors are outside your control, you need to understand how you got to be where you are, and try to move forward.

Change the present

You now have a clear picture of the size of backlog you need to clear, and it can be a very scary moment. But remember the old saying that Rome was not built in a day? All you can do is tackle things a bit at a time. We suggest that you try the following five tips:

• Make a realistic monthly budget

Record details of all money you have coming in, and everything that needs to go out. You can do this on paper, or a spreadsheet, or by using a budgeting app. 

It also helps if you set up direct debits for all your regular bills. This ensures that bills are paid on time without you having to remember, and you also know exactly what money will be paid and when.

Then start to monitor your spending to see if you can stay within budget. There is often a gap between plans and reality.

• Cut down every possible expense

When you make a budget, and monitor your spending, you may soon realise that you need to cut down some of your spending. This can be possible even if it doesn’t feel like it is. 

Try to get better deals from all your providers, and check you are not paying for things that you no longer use, such as memberships, subscriptions, and insurance that is no longer relevant. 

Also do everything you can to reduce your expenditure on non-essentials such as streaming services, entertainment, alcohol, clothes, cosmetics and hair and grooming products/services.

• Find ways of increasing your income

As well as reducing your spending, it really helps to find ways to increase your income. You may decide to look for a better paid main job, or try to find additional ways of making money. 

See our recent article Ten ways to make money online for a few ideas that may help.

• Plan how to repay your bills and debts

In parallel with getting your budget under control, you need to make a plan to repay your financial backlog.

One good strategy is to channel every single penny of any extra money you have – whether it’s through cutting back spending or increasing income – into paying off a debt. 

Either start with your smallest bill or debt, so that you can see quick results when it’s paid off, or go for the most expensive one i.e. the one with the highest rate of interest so that you start saving money quickly.

Another option to consider is taking out a loan to pay off all your existing bills and debts, leaving you with only one loan repayment to make each month. This can make things easier to keep on top of, and it can be motivating to pour all your resources into crunching one debt then seeing that debt reduce. If you want to do this, emergency loans from Loans 2 Go may be able to help.

• Ask for help

If you try the above tips for a few weeks, but don’t seem to be able to make any headway with clearing your financial backlog, don’t be afraid to ask for help.

Your first port of call is to the companies you owe money to. Many companies may be willing to help you reorganise your payments to make them more manageable. They could do this in a number of ways, including payment holidays, spreading payments over a longer period of time, or moving you to a better deal. 

But do give it a try: if you don’t ask, you don’t get.

Having said that, if you are still feeling overwhelmed, there are professional organisations that can help you. Try by starting with Money Helper – a free and impartial government money advice service that can help point you in the right direction. 

Other professional debt advisory services include:

• StepChange
• Citizens Advice
• Debt Advice Foundation
• National Debtline

Plan for the future

If you have done all the above, you should be well on your way to getting into a stronger financial position.

The final thing to do is look ahead to foresee any financial crunch points coming up. Why not make a list of the next 12 months and check whether there are additional expenses likely to arise at any particular time. For example:

• Annual bills or subscriptions
• Animal injections
• Car service and MOT
• Holidays
• Birthdays
• Christmas

Wherever possible, try to pay bills on a monthly basis and set up direct debits to do this, then they are all taken care of. Where this is not possible, the best thing to do is to divide the total amount of everything by 12 and start putting that amount of money aside each month, ideally into a separate bank or savings account.

Of course this will change the numbers on your monthly budget, and may make it even more necessary to increase your income. It won’t be easy, but the alternative is always running to catch up, and you risk running up more debt again.

But if you manage to plan ahead for the future, and include it in your monthly budget, you will have the reassurance of knowing that all your expenses are now being covered. This means that there won’t be any nasty surprises over the course of the coming year, and you should be able to avoid building up another financial backlog.

We hope that this article has been helpful in suggesting ways that you can gradually catch up with your financial backlog, and prevent it happening again.

Good luck. And do visit us again soon for more financial and lifestyle tips from Loans 2 Go.