I Owe, I Owe, But I Can't Help Spending More
A record number of people in the UK are now so entangled in debt that their cries for help are assuming a deafening tone. Most of them are in trouble due to slackness in understanding that the ground realities have changed quite a lot in the last year.
An increase in interest rates, fuel bills, gas and electricity charges, and even food prices going up coupled with hardly any increase in their income has not dampened their spending habits. This habit of living off plastic has taken a heavy toll, when they have now realized that they owe a lot more than they can earn. People are spending more on luxury goods, which they now perceive as being necessities. Being behind on their credit card payments acts as a double edged sword since not only do they accumulate penalties and interests over their defaulted payments, but they also continue slipping down in their credit ratings, making it difficult for them to arrange for new finance. If you too feel that you are being sucked into the black debt hole, then try doing the following things to crawl back out and to stay out in the future.
The first thing is to make a proper plan and develop the will power to stick to it, come rain, snow or a sale at ‘Harrods’. Strict financial discipline will be required so make a list of all the different debts, which have to be cleared on a priority basis. If you have any savings then use them to clear off credit card debts. If you have out standings on too many credit cards, then clear some of the smaller ones and cancel those cards. STOP buying any more luxury items until you can afford to buy it with your own money. Check out different mortgage and utility providers and if possible, shift to another provider who can give a better rate for their services. In case you are able to procure a loan, then get it and first and foremost, clear your credit card out standings. You will be able to save a lot in interests and penalties. However, after doing that restrict your spending on your cards and pay off your card payments as soon as possible in future so that you do not fall in the same trap again. Lock up your credit card at home if you cannot resist the temptation to swipe it. Make purchases in cash until you are free of the plastic addiction. Split all major expenses into smaller ones, so that you can pay them off easily. Also check out your insurance policies and shift them to a better provider if you can. Keep an eye on your bank account. Make a decision in life that money is to be saved for medical emergencies, life insurance policies, household utilities, and mortgages and only after that, if there is anything left, on luxuries. This decision will ensure that you have your priorities right and that your children do not end up paying for your choice of lifestyle.
Do not worry if you cannot achieve everything immediately, but make a concrete schedule and stick to it. Get the help of any experienced consultant, family member or friend to help you through since this problem not only affects your wallet but also your mind. The help and support of friends and relatives will help you pull through these rough times.
So, be realistic and practical while trying to get out of the debt trap. Do not repeat the same mistakes once you are out of it. Maintain fiscal discipline, check out different options and follow up on your plan to ensure that in future your spending remains in control and your savings build up year after year.
Article written by: Craig Parker - Make Money Expert |
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