| Establishing How Bad Your Debt Problem? |
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| Written by James Robinson |
| Sunday, 21 March 2010 10:06 |
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Most of us complain about our finances on occasion. Perhaps we're moaning that we really don't have the cash for some of the little luxuries we might like or that our bills seem to be increasing month on month, leaving us with less to spend on ourselves. Basically, feeling like your finances are a little stretched is nothing new!
Most of us complain about our finances on occasion. Perhaps we're moaning that we really don't have the cash for some of the little luxuries we might like or that our bills seem to be increasing month on month, leaving us with less to spend on ourselves. Basically, feeling like your finances are a little stretched is nothing new! But what if it goes further than that and you find yourself in a position where you can't pay your monthly expenses? What if you can't afford to pay your bills? What if you can't afford your loan, mortgage or credit card repayments? Is this indicative of a serious debt problem? Well, perhaps. But it is possible that your finances are tight simply because you're spending too much on non-essentials. Before going into financial panic mode, you need to assess the severity of the situation. Back to the traditional pen and paper for this then! Write down everything you earn in a month, inclusive of benefits, salary, income from any part time or second jobs and absolutely anything else you receive in a month. Separately, write down all essential expenses you incur in a month. This should include all your bills and a BASIC grocery shop. Be realistic here and cut the non-essentials out of the spending list. We're establishing only the essentials here. Now take a look at the figures. If your expenses are higher than your income then you potentially have something of a problem. But that doesn't mean you should enter automatic panic mode. Instead, calmly assess whether or not the situation is resolvable or even whether it is likely to be long term. It might just be a short term thing if, for example, you have reduced working hours for a couple of months. Basically, if you know it will only be a short term thing you could try personally approaching your creditors to enquire about something of a payment break until the situation is resolved. If, on the other hand, it is looking more like an ongoing issue, you would be better advised to seek a professional solution. DISCLAIMER: This article is provided as information only and is not to be taken as financial advice. Want to find out more about Debt Management #1, then visit James Robinson's recommended site. |