Anyone who has experienced money worries will know that debt problems are some of the most stressful difficulties an individual or family can face. Worrying about whether or not you will be able to meet payment deadlines or pay the mortgage this month take their toll on your happiness and health but by following some straightforward tips to improve your budgeting techniques you can gain control of your finances and avoid bankruptcy.
First of all, sit down and make a clear list of all your monthly expenditure. Many problems with debt occur when your outgoings regularly exceed your monthly income so the first rule of budgeting is to know exactly what money comes in and exactly what money goes out each month. If you find it difficult to manage your money, it might help to work this out on a weekly rather than monthly basis to ensure you have an even tighter control over matters.
Once you’ve worked out what you are spending you may find that your outgoings are greater than your income. If so, try to identify areas in which you can spend less money. Perhaps you could cut down spending on clothes or leisure activities, or look out for special offers to reduce the weekly shopping bill. If you drive to work perhaps you could car share and save on petrol money.
Money problems are often caused when people have an unrealistic view of what they are able to spend so once you’ve worked out your weekly or monthly budget try to keep it in mind at all times and ensure you spend accordingly. Setting up standing orders or direct debits to ensure that all your monthly commitments are paid on time will ensure that bills are paid on time and stop you incurring bank charges if payments have to be refused by the bank. You can often choose which date of the month payments are taken from your bank account so organize things so that large bills get paid immediately after your salary or other income has been paid in.
While credit cards can be useful for large purchases, debt problems can often arise if credit is used to fund expenditure that is unrealistic. Try to pay off at least 10% of any existing credit card balances each month. It may also be worth looking around to see if you are eligible for a more competitive deal with another provider. If possible, it is always cheaper to pay for goods outright rather than take out credit, so if you can’t afford to pay for something now, ask yourself if it is really essential.
Finally, try to save a little bit each month. Experts on debt agree it’s wise to have three to nine months income saved as a contingency fund in case disaster strikes. Losing a job, or finding yourself too ill to work is a frequent cause of debt problems and building up a savings fund is a great defense.