Managing personal debt is a major issue for many people and its worsening as most global economies are struggling. Living free of any debt should then be our immediate goal to secure our lives in an uncertain job market but this is not as easy as it sounds...or is it?
Take control of your personal finances
You simply cannot take control of your finances if you’re not 100% sure where all your money goes to. Creating a budget on excel is not that difficult and with internet banking, it’s easy to find out exactly where all the money goes. This may be tedious and even scary for many but knowing where your money goes is worth all the time and effort. A simple budget can reveal numerous areas where money can be saved monthly, some obvious areas are
- Your vehicle insurance. Most people tend to choose an insurance company and stick with it and most insurance companies these days offer loyalty programs to keep clients but why? Every year the amount you owe on your car decreases but your monthly insurance payment never decreases. So why accept that for a loyalty bonus that you may not even get, find cheaper insurance.
- Life is short ....right? But is life insurance in your twenties required? Probably not if you're single and still stay with your parents.
- Sell any unnecessary appliances, laptops and anything that doesn’t add value to your life. Money made this way can be used to settle some outstanding debt.
- Instead of paying off a home loan in 20 or even 30 years at a fat interest rate, pay an extra 10% monthly. Increase that extra 10% if you get a raise at work, this will dramatically decrease the time spent paying for your home. It also gives you a better chance of actually owning your home before you decide to move and renting is still the best option for young, single adults.
- Lastly, look at all the small items that eat away at your money pile each month, such as paid TV channels that you don’t watch, expensive coffee shops (and I love coffee).
If all else fails...
Running for the Mexican border usually doesn’t help but being honest with the companies that you owe will help tremendously. Contact them first and have a proposal prepared, even if it seems pointless to you at first. Approaching a debt management company is also an option but be aware that your credit rating may suffer and that you may struggle to apply for loans later. The best piece of advice is still to be completely transparent and honest.
Lastly, start today with something small and remember that debt has been around for centuries and it will still be around for years to come....So relax, breath and enjoy Life.