Struggling to Budget? Need Help with Personal Debts?

On August 1, 2014, in News, by Lewis Alexander
  • credit report UK from ExperianPersonal debt can accumulate much faster than we realize.
  • Unfortunately, if you fail to budget carefully, you can find yourself scrambling for money when confronted with a bill that you should have anticipated.

It is easy to forget that we need to budget for major ‘rainy day’ expenses: medical care, car repairs, legal fees and unemployment. Nobody likes to plan ahead for disaster. It is also difficult to remember routine costs: car insurance, dental visits, etc. These fees are usually paid only once or twice a year and they are frequently forgotten when creating a budget.

It is often said that wealth tends to generate wealth, but we should also remember the converse: financial losses tend to multiply. We recently spoke with an individual who had a strict budget which worked quite well, until her office chair broke. At first, it wasn’t a problem and she simply sat in another chair. However, her original chair had been padded with leather cushions and the next morning she woke up with severe back pain. This meant that she needed to visit a doctor and subsequently she missed work and realized she couldn’t afford a replacement chair until the next payday. Suddenly, a relatively minor incident began to spiral into a genuine crisis because she was unable to work until the chair was replaced. Ultimately, she had to borrow money by means of a payday loan and was limping for several weeks, simply because she had not factored the cost of replacing this chair into her budget.

  • You should consider how many household items you haven’t included in your budget.

Will you be able to repair the oven or decorate? Normally, you would be fine, even if you couldn’t immediately replace particular items. However, what if you needed that oven tomorrow because family was arriving? What if you needed to change the locks today because someone had stolen your keys? Otherwise, you might be facing additional costs, on top of the item itself. Without an oven, you might find yourself at a restaurant. Without new locks, you might find yourself victimized by crime.

Unfortunately, if you have been following a budget, you will almost inevitably discover that you have allocated insufficient funds. Belatedly, you will realize that you spent too much money on something else, and you will wish that you had been more prudent. However, this is not the time to give up and resign yourself to increasing debt. If your oven has broken, and the family has arrived, you should simply apologize and offer sandwiches. Will the occasion be ruined? You can have an enjoyable time without a cooked meal. Of course, if your locks need to be replaced, you should be concerned but you shouldn’t panic. Hide your valuables, or take them with you when you leave. While you are sleeping, a wooden board can effectively barricade the door.

  • If we seem unsympathetic, it is because lenders will be as well.
  • If your budget does not allow you to spend money, then you must not spend it!

Instead of increasing your debt, which is known as “over-commitment”, you should revise your budget. Do you really need paid for television, or internet, or a mobile phone? Are you sure? Maybe it is time to stop smoking, or quit drinking coffee, or give up chocolate. Can you sell something? Almost everyone has items that they don’t need.

Personal Debt Solutions

The basic principle is to avoid over-commitment. This means that when you are already in debt, you should not incur more debt. Just say no. Stop paying for items that are not absolutely necessary and start saving as much as possible. Even electricity can be a luxury, when it means the difference between bankruptcy and solvency. However, if you continue to accrue debt, creditors will refuse to trust you. Fortunately, if you voluntarily accept the consequences of your financial decisions, there will be light at the end of the tunnel.

You are already over-committed if you are behind on rent, facing mortgage arrears, taking out loans to pay other loans, failing to pay off the entirety of your credit card, using a credit card on a daily basis, or ignoring letters and phone calls from creditors. In such a situation, you should try not to take on any additional commitments, no matter what the circumstances may be.

You must realize that your budget is a binding contract with yourself. This advice may seem obvious, but it can be extremely hard to create a truly effective budget and even more difficult to implement it. Even the best analysts will make mistakes. Nevertheless, if you have decided to reduce your debt, you must persevere especially when the situation is difficult. Therefore, if your budget does not reflect hard reality, then you must resolve the problem, instead of pretending that a credit card will rescue you. Try to think of debt as a specific problem, rather than a mere number. If you are facing ten days without electricity, and you accept a loan at ten percent, then you are essentially agreeing to endure eleven days without electricity (or more, if you don’t pay the bill on time). Quite simply, increasing your personal debt will not avoid a problem, but it will make it more problematic.

We would like to leave you with a simple parable to consider. Presumably, you have heard of the camel loaded with straw / feathers, which suddenly collapsed when just one more straw / feather was placed on its back. Well, you are the camel, and the feathers /straw are your debt. This debt can increase for years without any significant repercussions and you might even think that you can safely carry it. However, someday your chair will break, or your car will require repair, or your employer will downsize, or your landlord will evict you. When this happens, you will need good credit in order to get help from others. If you are already in debt, then you must ask for help from a trusted and reputable source and start saving money and paying your bills. If you do this, then help will be available when you truly need it.

If you have identified that you are struggling financially and would benefit from the debt help and advice of experienced, personal debt consultants, then call LewisAlexander today in confidence.

  • Call 0800 018 6868
  • Lines are open 24 hours / 7 days
  • Calls are usually FREE from a UK land line, mobile call costs may vary.
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