Debts are inevitable during this period of global financial crisis coupled with euro zone crisis that has grossly affected different markets. When industries are affected individuals alike are also affected because these companies initiate massive layoffs, interest rates skyrocket, and inflation also rises up which means ordinary individuals have to spend more than they are earning. However, when you realize you are in cash deficit there are prudent financial strategies that can be applied in order to ensure that a person’s healthy financial status is immediately restored. This includes;
Acknowledge the fact that you have a problem
When an individual accepts his/her arrears status this indicates that a person has already instilled the right attitude required to get out of the trap.
Lists income and personal expenditure
When you list down what you earn versus what you spend the information obtained provides the big picture on where exactly people overspend their cash. When this is done most individuals are surprised by the small unnecessary items that consume their cash and they are now able to highlight areas that you can drastically cut down unnecessary spending.
Maximize your personal income
There are various government entitlements that enable individuals to maximize their income but very few people bother themselves with these incentives which include; the Housing benefit & council relief tax, income tax relief, disablement benefits, child tax credit, and job-seeker allowances that can all assist to bolster an individual’s personal income.
Cut down unnecessary expenses
You are required to look down on your personal expenses and prioritize expense areas that require prioritization. This includes subscribing for a train or a public transport season ticket rather than using your personal vehicle. You can also trim amount spent on expensive food items such as beef by shifting to less costly meals such as vegetables.
Prioritize and begin paying your debts
This should be done by listing down all the cash you owe people and prioritize them according to their importance. High interest bank loans and mortgage facilities should top the list, and debts acquired from friends and family members should down come last. When prioritization is completed proceed and pay off cash you owe.
The important thing you must remember in your efforts to get out of your financial difficulties to have a comprehensive debt management plan. This can be achieved by careful financial planning and making sure you don’t overspend when you don’t need to.
Debt consolidation can be a great way of paying back a selection of debts that may have become out of control. The main process is to combine all of the debts into one big debt that is then paid off via a monthly sum to the debt consolidation company. Some claim that this is an excellent method for clearing ones debts. Others believe that these companies are charging a lot for very little work. The costs for a service like this are not hugely dear, but there are certainly a selection of pros and cons that one should consider.
Some individuals lead such busy lives and don’t have the time needed to take full control of their finances. In this situation it is sensible to look for external companies that can help with planning and structuring payment plans. They also look at ones financial in goings and outgoings and suggest ways to cut costs on everyday expenditures such as food, Internet costs and phone bills. They also have certain abilities to cut things which could worsen the financial situation, such as credit cards and store cards. One is required to set up a ‘DMP’ or debt management program, which will help in clearing the outstanding debts.
Some critics believe that combining all your debts into one big sum is a bad idea and that focusing on each individual debt will in fact save you more money. By calling each bank and negotiating the lowest repayment plan and then by cutting costs on every day expenditures, one can efficiently take control of their finances without having to pay for an external company to help. Setting up a plan such as this can also be embarrassing as one must reveal the full extent of their debts, as well as their entire financial situation. One should always research the company before hand, by checking for good reviews and positive customer feedback.
Staying debt free is the ultimate goal of every consumer. The big problem is that it has been given an unpleasant reputation of having no fun. This is because many consumers associate it with denying oneself the best things in life, which is not the case. It is simply a matter of spending wisely and making the right choices. By using these tips, you can enjoy the things you want in life without compromising your financial situation.
Monitor your expenses for 2 months by collecting receipts and keeping a log. Segment the expenses into categories like entertainment and food. Combine it with your monthly bills and get a clear picture of your monthly spending habit. Analyze it to find ways of reducing your expenses. Pay off bills and free up more saving money then develop a budget.
2. Earn more money
If your monthly budget falls short of your credit card accounts, then take extra-part time job. This will pay the bills and keep your finances under control.
3. Credit Cards
Credit cards offer several benefits that you can take advantage of once you have developed good spending habits. When applying for a credit card, choose one that fits your situation. For instance, if you travel frequently, choose one with discount offers in travels, rental cars and hotels. Look for one with the best cash back feature as it will put extra cash in your pocket.
4. Increase your savings as you minimize expenses
Saving money for a purchase is highly advised compared to opening a finance account for a consumer. It may take few months to get the item you want like a television, but if the item is not urgently needed, saving for it allows you to have those things you need most without going into debt.
5. Learn Do It Yourself
Learn how to do tasks that you can easily do by yourself without spending money outsourcing them like changing car oil, vacuum cleaning etc. Any chance you get of doing something by yourself saves you money. For instance when you drive in a facility with valet parking, you can park the car yourself and save on valet charges, wash your vehicle in your driveway without necessarily driving to a car wash. Avoid unnecessary debts by watching controlling your spending. Good luck!