Regaining Control Of Your Finances
At some point or other many of us will find ourselves in a position which compromises our financial stability
. The key to preventing initial debt concerns from spiralling into a serious problem is to address any potential issue before it gets overwhelming. We have put together a simple guide to help you to gain control of your money and prevent the onset of overwhelming debt.
Assess Income and Outgoings
Even if you consider yourself to be in a relatively strong financial position it is useful to gain an accurate understanding of your monthly incomings and outgoings. For those who are in a less stable position on the money front, assessing your earnings and expenditure is absolutely imperative. The first port of call here should be your bank statements. Note down precisely how much money is entering your account every month and then work out how much is being spent over the same period. Factor in absolutely all incomings and outgoings in order to gain an accurate representation of the figures involved.
Cut Back If Necessary
If your analysis reveals that you are spending more than you are earning, then it is vital that you consider means of reducing outgoings in order to redress the balance. In some cases this may well require that you cut back drastically. If a reduction of expenditure is necessary then firstly look at your non-essential outgoings and work out where savings can be made- this could mean buying fewer branded items, holding off on costly leisure activities and hobbies or cancelling gym memberships or other non-essential drains on your finances.
Despite the temptation, avoid adding to debt using credit cards or other forms of loan unless entirely compulsory. Although loans and credit cards may allow you to continue to indulge in luxuries they are likely to compound the problem in the long term and render your debt unmanageable further down the line.
Prioritise Your Debts
Having cut down on expenditure the next vital step is to prioritise your essential outgoings and current debts. Payments for rent or mortgage and for utilities are of upmost importance and should not be missed in order to service other less essential debts. Next in line in terms of priority are loans secured on your home and high interest loans such as credit cards and overdrafts, you should endeavour to ensure that payments for these debts are met. Hopefully, having reduced your outgoings on non-essential items, you will be comfortably capable of covering your debts and working your way towards being debt free.
Handling Existing Debt
If, despite drastic cuts in expenditure, you are unable to cover loan payments then it is strongly advised that you contact a professional debt management organisation. They will help you to put together a debt management plan and advise on the best way for you to handle your debt. Although some avenues of temporary debt relief such as balance transfers using credit cards with interest free introductory periods can be useful, they are not sustainable and are a very much short term solution. A debt help organisation such as Abbey Mere will offer more solid means of regaining financial control such as consolidation loans or other debt solutions tailored to your circumstances and contact your creditors in order to alleviate the pressure of high levels of debt.
by: Jamie Lyons
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