- Personal Finance
WE HAVE TO GET OUR DEBTS DOWN
WE HAVE TO GET OUR DEBTS DOWN
If you are like us, the sooner you start to try and decrease your debts , the better off you and your family and your Credit Rating are going to be.
Too many of us go along accepting our debts as a way of life. If you are like we were you just make the minimum payment each time the payment is due because you are afraid of running out of money to feed the family, or pay the electricity or the rates bills. As you have probably realised, by doing this all you are doing is adding extra charges to what is already owing on your account, probably credit card, if I was to guess.
We needed to take control of our finances and our Accountant advised us we should find an incentive to make us put money aside and have it ready each month, and not have to instead resort to make that MINIMUM ONLY PAYMENT. He said what we needed to do was to add up all our expenses, such as our Home Loan Payments, which is the mortgage, ours was a killer, next came those painful Credit Card Debts, ooh not good there either. Eventually we had our list done. For some of you it will be hundreds, others it could be thousands. Just think what a fantastic thing it would be if you could keep this money yourself and not have to hand it over to a Bank or Credit Unions.
DON'T RUN AWAY FROM YOUR PROBLEMS
I don't know about you, but this was not easy for us. The worst thing in the world is to keep saying to yourself 'I DON'T HAVE A DEBT PROBLEM', because these debts are not just going to shrivel up and go poof and disappear, Oh Oh no. If you are finding it really hard to make the required payments each month, it is always a good idea to contact your creditors and explain to them just how bad things really are. I did just that. I phoned up the Doctors that I still owed money to from so far back it was embarrassing. However, to my surprise, I was treated so kindly and given a couple of payment plan ideas which certainly took the pressure of us for a couple of months at least.I suppose it does help to know the secretary also. Although, you should never be afraid to approach these people after all, they can only say no to you. Most times in my experience, they don't, do that. They listen to what you have to say, and tell you how much they appreciate your call and help you to sort out a payment plan. Even the Banks, and Credit Union don't bite your head off you will find. Just try it, next time, things are tough, you will be surprised.
MAKE YOURSELF A PLAN
What you are going to need is an Action plan to reduce debt, in other words, make it smaller,then comes the hard part, You have to Stick to It . You have to make sure that the budget for the family is balanced so as to support you in the means that you should be living in and not the way that you want it to be. Don't worry , we were caught up in that one. What is that saying again "Champagne Living, on a Beer Budget". Now, let's be honest, how many of us are doing just that. Buying items that we know we can't really afford, but buying them because we just have to have them. We get around it by saying that "it called out to me, buy me. We are all guilty of these little ploys once again, to get around buying these things that we know we shouldn't but we still do. Another thing we did was to work out the maximum amount we could comfortably pay off our debts each month, without starving ourselves. Set some money aside when you get your wages to cover the basics, such as food, mortgage payment, rent if necessary and your utilities. Then use any money that is left to pay down your debts. I f you find that this doesn't cut it for you,then think about getting a second job or maybe even a third, if things are really that bad, until you have finally paid off those horrible debts. Just get rid of debts.
PUT INVESTING OFF FOR THE TIME BEING
Dont even think of investing anything at all until you have Paid Off Your Debts. This includes getting a Credit Cards and any loans both personal and home, paid off entirely. Get rid of debts completely. Don't even play the Stock Market, when you are being charged a whopping big 20% Interest Rate on your Credit Card. You probably won't make much there anyway and guess what, you'll still be up for paying tax on any returns. Take my advice, make sure you have Paid of your Debts, so there are no more debt problems.
PAY EXTRA REPAYMENTS
We all know that it could take years to completely eliminate all our debts if you just make the required amount each month. You will still be charged by the Credit Card Provider on the rest of your account, which makes your overall debt go up. Just think how long you will be waiting for that much loved home you both want so much, if you only keep making the minimum payment. You could be waiting a lot less if you paid just a little bit more, when the pay packet allows it. Now, wouldn't it be worth it? I know what my answer to that question would be.
GET RID OF THE CREDIT CARDS
I think I almost cried watching my husband cutting up our Credit Cards. However, I realise now that it was the best thing to do, but it isn't an easy one, especially when you are used to just saying to the salesperson "Just Charge It" When you do this, you will see just how much easier it will get in time. Don't kid yourself though, it isn't easy getting out of this habitual buying method and handing over your hard earned cash instead that so convenient Credit Card. However, it has to be done if you don't want that debt to creep right back up again. You have to therefore, live within your means and either reduce the amount of money that you spend or get yourself a much better job, preferably a better paying one. Let's face it, we could all do with one of those.
If you can't bring yourself to cut up your cards, the other thing you can do is try not to use them as much, especially for everyday expenses that is unless you have the money sitting in your bank account to cover the payment at the end of the month (IN FULL) Yes, that is the big factor, it has to be paid in full. You could also think of replacing your Credit Card with a Debit Card. This card allows you to purchase items online or over the phone just like a regular Credit Card, but it uses the money you have in your bank account, not credit.
WHAT DID WE LEARN
- The sooner you get rid of debts, the better off you and your credit rating will be
- Don't Run away from your problems
- Make yourself a plan
- Don't Invest until paid off your debts
- Try to make extra repayments
- Change to cash by cutting up your Credit Cards or use a Debit Card
- Try to live within your means, don't be the one who lives by that saying "Champagne living on a Beer Budget"
Obviously, we are all very different with regards to the types of payments we have to pay each month and the amount of money we have to pay for repayments. But it all boils down to the same thing, that we all want to get rid of our debt problems. We have to have an action plan to reduce debt. I can't guarantee that what I have said will work for everyone, but I think it is worth a try if you are serious about sorting your finances out and getting rid of those debts. I think that everyone want to do one thing though and that is:
GET OUT OF THE RED, AND BACK IN THE BLACK