If you are struggling paying your bills, you need to take drastic action RIGHT NOW to stop things getting out of control.
If you are only paying the minimum amount on your credit cards, you will be accruing interest which makes it harder and harder to pay your day to day bills and things like rent/mortgage. You could be at risk of losing your home.
Contrary to what the TV adverts for debt consolidation companies would like you to believe, re-mortgaging isn't the answer.
Yes, you end up paying less every month, BUT you end up paying thousands in interest over 10-25 years. Because you have not tackled the reasons for your debt problem, and because you have money spare every month, you just keep spending. Before long you need another long term loan to pay off the new debts.
Below are 5 things you can put into place TODAY that will show you the reasons for your
overspending and help you tackle your debt problems before its too late.
SPENDING DIARY - Every single day make a note of EVERYTHING you spend money on. It is
amazing how the trivial things soon add up to a few pounds every day - a paper or packet of sweeets when you need petrol, crisps from the vending machine at work etc.
This will really highlight where your daily cash is frittered away.
A computer spreadsheet is a good idea to fill in at the end of every day, but a simple notebook will
suffice.
BUDGET - You need to write down EVERYTHING you spend your money on i.e. car tax, maintenance, food, kids sports, gym membership, gas, electric, holidays, birthdays.
You will then know how much you have going out each month (for annual expenses, divide by 12,
for weekly expenses, multiply by 52 then divide by 12 to get monthly totals).
This will also highlight how much is spent on things like work lunches and kids school dinners.
Compare your monthly expenditure to your monthly income so you can see how much you have spare or how much overdrawn you will be at the end of the month.
LOSE ALL LUXURIES - Cancel or reduce mobile phone contracts, dvd membership, expensive
cable/satellite t.v. packages, gym membership, cut out weekly/daily take-aways, cancel school/work dinners (take a packed lunch - work/school dinners are a big expense). These are all luxuries so at the very least should be cut down, on or got rid of all together if you are really struggling.
MEAL PLAN - Four people should be able to eat very well on £50-£60 a week - yes really. It is very
easy however to wander round the shops buying anything that takes your fancy (if the kids are with you its even worse, if possible leave them at home). The solution is simple. Make a meal plan,
write yourself a shopping list and stick to it.
REDUCE SPENDING ON CREDIT CARDS - Credit cards are just so easy to put money onto and if you are not paying off the balance in full every month, the interest is crippling.
If you can, transfer balances to 0% cards. If you are refused new credit cards, then pay off the
card with the highest interest first, then CUT UP THE CARD and CANCEL IT! If you think you may need the card for emergencies, just have one and hide it in a drawer.
You can reduce your debt problems without getting stuck with years and years of re-mortgage
payments. Start today and good luck.
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