Would you like some help to get out of debt?

Posted by | November 23, 2015 | Finances | No Comments

Financial worries can be really stressful. If you’re in a lot of debt, or struggling to see how you can move past living week to week, it can really take a toll on you. Relationships can suffer, your health could be affected and you might find that you inadvertently do things to make the situation worse – like spending more to feel better. But it is possible to get yourself into a better situation.

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We’ve created a plan you can follow, it might give you a few ideas of things you can try, or understand your overall situation a little better.

1. Assess your situation

Firstly, you need to know exactly where you stand, financially. The most basic way to work this out, is to calculate your total debt, and put that against your total income. Once you subtract your expenses and outgoings from your income, that’s what you’ll have left to pay off your debt. How long will that take? You could also calculate your overall net worth, which is all of your assets, totalled against all of your liabilities (things you have to pay). What’s the total amount you arrive at? Once you understand exactly where you’re at, you can start to make any changes that are needed.

2. Fully understand how credit works

This is important, because the credit card companies aren’t exactly there to help you out! They’re there to make money, and they have a whole lot of tricks up their sleeves to get your hard earned money off you and into their pockets. Do you know what kind of credit card you have? Read up and make sure you completely understand what you’re paying for. Be wary of anything that seems too good to be true as well – like when finance companies offer to take on and ‘consolidate’ your debt. It might seem more simple to just pay one bill but often it’ll be at a much higher rate.

The same applies to other types of credit, like hire purchase, or store credit. Always make sure you understand what the deal is that you’re being offered, and don’t get pressured to make a decision if you don’t.

3. Don’t be afraid to get help

If you feel like you can’t get any further on your own, ask for help. It could be a friend or family member, and perhaps all that’s needed is a different perspective on things. Or maybe you need some emotional support to remind you that you’ll get through it. Sometimes, it’s worth spending just a little, to get some help from a professional, who can give you some good solid advice. As with everything though, make sure they’re reputable, and not just another person out to get your dollars!

4. Make a budget.. yes, you may have to cut costs

It may not sound like a lot of fun, but a good solid budget will help you an awful lot. Once you know what your ingoings and outgoings really are, you can decide what you need to change. There are many excellent tools on the internet to help you set up a budget, but really all you need to know is: what you make (what comes in) and what you spend (what goes out). For some tips on cutting costs, choose the ‘Dollars and Sense’ Intent category in BE Intent.

5. Understand your motivation

The psychology of spending is pretty complicated. Are you an impulse shopper? Do you indulge in ‘retail therapy’? Do you start to feel antsy if you haven’t bought anything new in a while? If there are psychological factors to your spending, then a budget and debt reduction plan might not be enough. If you suspect there is a bit more behind your urge to spend, take the time to try to get more clarity on this. There are often free counsellors available to talk through issues like these. Try your local council to see whether they can refer you.

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