When you have a budget and you know what money is coming in and what you are spending it on, then you’ll be able to identify debt problems ahead of time. That’s why making a budget, as well as other money management techniques, is an important piece of debt advice. We’ll go through it briefly here but it’s recommended that you get in touch with professionals for more individually tailored advice on debt.
Making a Budget
One of the reasons that people get in to trouble with their debt is that they don’t know how much they are spending in a month. They may not even know how much money they are getting in. These are problems that will be solved by making a budget.
To make a budget you have to detail all of your sources of income. This includes money from your job, and the income of anyone else in the house as well. Even if they don’t have any obligations on the debt, it’s a good idea to know where you stand financially overall.
You should also be as detailed and precise as possible on your expenses. So be realistic about how much you spend on groceries, and put down all the bills you have to pay as well as what you have to pay on your debt of course. If it turns out that your expenses are higher than your income then you are going to have to make some changes of course.
If you can’t afford to pay for everything, then you’ll have to prioritise your payments. This is an important piece of debt advice and will help you from falling in to more financial woes.
The most important payments are the ones that you have to prioritise of course. These are the essential living costs as well as any secured debt. In terms of the essential living costs, this means things like rent, groceries and utility bills. It’s also important to keep up with repayments on secured loans of course because otherwise you may lose your property.
After you’ve worked all that out hopefully you will have at least some money left over for everything else. That will include both luxury items like going to the cinema, as well as unsecured debt. The former you should think about reducing, and the latter you’ll need expert debt advice on. That is, if increasing your income to cover it all is not possible.
Increase Your Income
There are lots of ways of increasing your income, so you should certainly consider that possibility. One option of course is to get a second job, perhaps something part time in the evenings and weekends. Although you don’t want to overwork yourself.
There are also other sources of income potentially, for example if you are disabled or if you’re on a low income you may be able to get money from the government. Either directly or in the form of tax breaks. Asking for rent from adult children who live with you might also be a possibility.
If increasing your income is not possible and you can’t make enough cuts in your budget to cover debt payments then you should contact debt advisers as soon as possible. The longer you leave it, the worse the situation will become and your options will probably decrease.
With some of the available ways to deal with debt you have to meet certain conditions in order to qualify for them, for example to get an IVA you have to have at least 200 of disposable income a month and owe at least 15,000. There are also conditions to administration orders, debt relief orders and bankruptcy. With more informal solutions though it doesn’t matter, things like debt management plans and debt consolidation loans.
If you’d like more advice regarding how to make use of Advice on debt, visit the place where author Alfie Powell also regularly is found writing at: http://www.debtadvice.net.