If you've found yourself in a position where you're in serious debt and can't think of a way out, here are some valuable tips that, when put into practice, will help you find your way out of trouble.
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If you have found yourself in a position where you are in serious debt and cannot think of a way out of the situation, then take a few minutes to read the following tips. Some may seem obvious, but do put them into practise as they will help.
Assuming that you are in a situation whereby your income for example; is $5,000 per month and your expenditure is $7,000.
This is not a good position to find oneself in. A better position would be if you were earning $5,000 per month and your expenditure was only $3,600!!
It is so easy to despair when you encounter your first financial crisis. You're not alone. Many people face a financial crisis some time in their lives.
If you're struggling to pay your debts as well as covering living expenses, we are here to help. Through our national panel of Debt Management specialists, we can help customers with $10k or more in debt by consolidating your existing loans, stopping Debt collectors from contacting you and re-negotiating repayments on your terms!Whether the crisis is caused by personal or family illness, the loss of a job, or overspending, it can seem overwhelming. But often, it can be overcome.
The important thing to bear in mind is, not to panic! We have all done it. We have all succumbed to the temptation of freely available credit. We have all signed on the dotted line for items based purely on self-gratification only to regret the decision at a later date.
Of course, once it starts it tends to spiral out of control and you then find yourself in this current predicament.
Take Stock
The first thing you have to do is take stock of your debt.
At this point you should be very realistic with yourself and itemise every expense no matter how trivial it may seem. Most people fail at this hurdle because they lie to themselves about the expenditure.
They conveniently forget about certain items, make excuses about other bills or blame the problem onto someone else. Anything in fact, except facing up to the reality check.
I must stress again, that in order to stop the downward spiral of debt you must be brutal in your approach. If you really cannot face the breakdown of your expenses then get someone you know to help you.
The most obvious first step is to prepare a budget and although it may not be everyone's idea of fun it is nevertheless necessary if you are to take the first step towards overcoming your financial situation.
Have you seriously considered preparing a budget? Not just a mental note but a written exercise taking a long, cold, hard and truthful look at your predicament.
It may sound a very obvious statement to make but the first step toward taking control of your financial situation, is to do a realistic assessment of how much money you earn and how much money you spend.
The operative word here being "realistic."
It may not be pleasant to be so forthright about your own circumstances but if you choose to ignore certain aspects then you are just deceiving yourself and the whole exercise would become a complete waste of your time.
Consider these questions:
- How many credit cards or debit cards do you have?
Try to reduce the number of credit cards you own and set yourself a monthly expenditure budget. Do not exceed the amount you selected. Rather than have multiple credit cards shop around for the one offering the best rates and transfer over to that card. The less credit cards or debit cards you have the less the temptation to overspend.
- How many times a week do you go out?
Do you really need to go out clubbing every night of the week? Why not reduce the number of nights out from seven to two or three. You may be pleasantly surprised to find that you can live quite well without going out every night.
- How much do you spend on cigarettes and drink?
What amount per week do you spend on cigarettes and drink? Quite surprising, isn't it? Why not try to cut down on the amount you smoke and drink not only for the sake of your finances but more importantly for the sake of your health.
- Do you really need more clothes?
This is a difficult question to answer as we all have different views on style, clothing and fashion. Nevertheless, you need to assess your own circumstances and decide whether that particular item of clothing is absolutely necessary or not. In most cases you will find that it is not as critical as you first thought.
- Will the car not last another year?
Why change the car now. Will it not last for another year? If you must have a new car this year, does it have to be the top of the range model? You will be pleasantly surprised at how much you can save by not having a few of the latest gadgets added.
- The weekly shop
Ask yourself, do I really need two shopping trolleys worth of food every week?
We are all obsessed by our weight and yet we all walk out of the supermarket laden with excess and then wonder why we are putting on weight. This in turn means that you will spend more money on fancy diets, get more depressed and end up eating more food! Try to buy less and buy fresh.
There is no magic wand as far as recovering from debt is concerned. It takes time, it can be a struggle but it will be worth it in the end.
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While many people would consider their home or their car to be their most valuable asset, it's your ability to earn an income that is most important in shaping your financial future.
Statistically, two thirds of working Australians will suffer an injury or illness that will sideline them for 90 days or more.
The majority of these people would not be able to pay their mortgage or meet car finance and other loan commitments without adequate income insurance.