Document your monthly costs
The first step in managing your financial issues is determine exactly where your pain points are. Regardless if you’re dealing with a large credit card debt, you’re attempting to increase your retirement savings, or you simply spend too much on dining in restaurants during the week, recognising the main causes of your financial troubles will reveal to you which expenditures have to be prioritised so you can get your finances back on course. Grab a pen and paper and write down your current monthly expenses including debt repayments, food, bills, tuition, transport, and any other items you regularly spend every month.
Decrease your expenditures
After you’ve got your monthly expenditures in front of you, take a closer look and examine which expenses can be decreased and which can be cut out altogether. Although your mortgage repayments obviously can’t be decreased, you can probably lower your food bill by only eating at home and even do away with other entertainment expenses like cable television. It’s crucial that you are pragmatic about cutting down your expenses. Keep in mind, if you’re trying to overcome financial troubles then you must make sacrifices to resolve them.
Create a budget
Now that you’ve got your monthly costs written down without the unnecessary spending, you have to set up a budget. If you’re unfamiliar with creating a budget, there are plenty of fantastic apps you can download on your smartphone. Personally, I’ve found the Budget Planning app from ASIC to be very valuable: https://www.moneysmart.gov.au/tools-and-resources/calculators-and-apps/budget-planner.
This will enable you to figure out how much money you have left every month by looking at your income and expenses. It’s essential that you stick your budget. If you sense that it could be difficult to do this, add a miscellaneous item to your budget to give you some room to breathe, or perhaps a motivation item to reward yourself at the end of the month for following your budget.
Prioritise your debts
Some debts cause more strain than others, so to alleviate your financial strain as best as possible, aim to decrease your largest debts first. Not only will you be saving money by paying less interest, you’ll also feel far better about yourself. Only paying the minimum repayments on your credit card bill can sometimes take years to pay off, so attempt to decrease these types of debts as quickly as possible. Don’t forget, you still have other fixed debts every month like phone bills and electricity, so these need to be taken into account as well.
Still feeling the heat?
If you’ve cut down your expenditures and created a budget but still find that there’s not enough money to settle all your debts, you’ll have to find other sources of income. Are you able to work a second job? Can you sell any high priced household items that you can do without? Reaching out to family or friends is another useful way to try to deal with your concerns. Whatever you do to get extra money, never get a personal loan from the bank to pay off your existing debt – this will only exacerbate an already stressful situation.
Seek financial advice
If the above steps haven’t relieved your financial stress, it’s better to seek financial advice sooner instead of later. Depending on your individual circumstances, there are lots of alternatives available including debt consolidation loans or debt agreements which can help those in need. Don’t fight your debts for years before seeking guidance, speak with Bankruptcy Experts on 1300 795 575 or visit our website for additional information: www.bankruptcyexpertsnewcastle.com.au