The Most Important Debt Management Advice You Will Ever Receive!Here are a few of my top debt management advice tips. I hope that they offer you some help... Many people borrow too much with the anticipation that they can pay. Everything goes well and then disaster strikes. Life is just like that sometimes. A relative dies, they lose their job, they fall ill or have an accident. Whatever it may be, this setback impacts their ability to earn a living and suddenly those affordable loans become a millstone around the neck. It is normally just a few months after this event that people start to search for debt management advice to help prevent their situation from deteriorating further. In my case, it was a business partner who thought that my money and the business capital were all his. The failing business, startup costs and staff wages quickly became my millstone. Luckily, having helped a number of people through my work in the past, I did not need to pay for debt management advice, I could help myself. Hopefully, this page will go a long way to helping you too. Firstly, in my experience with the people I have helped they need to do some real basics. Mostly, when I ask a few divvy questions, they have not even got to the starting post in dealing with their debt issues. So here we go: 1) Have you undertaken any budgeting yet? For this to work, you ideally need to track all of your income and spending for a full one month period. Two months is better, but this can be a chore, so getting one accurate month behind you will help. Many people have never in their entire lives tried to do this and balance their income and outgoings. For these people, it is hardly a surprise that they have some debt or loan problems. Until you have completed this, it is almost impossible to offer any sort of debt management advice. How can you help point people in the right direction if neither you or they can decide where they are? Budgeting often throws up some unusual situatons. You may find that you spend $100 per month in Starbucks or whatever. If you are struggling to eat, then luxuries like that need to be removed. I recall once helping a couple with this exercise. They couldn't afford their monthly mortgage payment and more besides. When we did their budgeting for a month, I found that they had one Saturday day trip each month. They arranged a babysitter for the day, rail travel and went for a day to a race track to watch horse racing. They loved it. They gave themselves £100 each trip to bet and 'lose' as fun money. When all the costs were added, they were spending around £300 each month on that one day out. By removing that one day out from their month (I know - I'm sooo cruel) they were able to pay their gas, electricity, water, telephone, council tax and home insurance bills! Do you think that helped their finances??? If you seek debt management advice before you have really looked at your finances, you are just paying someone to do work that you should be able to do yourself - and more accurately! 2) Have you looked for a second job yet? I know, I know ... who wants that? Lets be honest here. If you have serious loan issues, there are essentially three things that you can do. You can lower your outgoings. You can increase your income. Or, you can do both. Everything else is just fluff around the edges. So that's it. Debt management advice for dummies. An entire book could be summed up in that last paragraph. If all you can find is part-time work for one evening each week at which you earn, say $40, that is actually $2,000 per year gross. That may be enough to repay a small loan. Use the money to overpay and clear a debt. That will free more of your budget to repay another loan. If you can keep this up for perhaps three years, you will be substantially better off financially. There is a second point to this advice. If you are working harder, you have less hours of 'free time' in which you need to be entertained. That means that you spend slightly less whilst earning slightly more. A double 'whammy' for your finances. Personally, I have always found further study to be great for this. When I am working towards an exam, I have less time and energy for many things. I have background reading to do, perhaps classes to attend and coursework to complete. This means that I want to socialise less and thus spend less money. The cost of the study materials, exams and books easily pays for itsef in my curtailed spending patterns. Though I hate to admit it - hard work REALLY is good for me! 3) Can you do both? Just think of the difference to your finances that these two tips combined can have. If you are able to reduce your spending by $100 or $200 per month and at the same time increase your income by $100 or $200 per month, your financial situation will improve quickly. Finding an extra $200 to $500 per month to reduce your debts will have a substantial impact on your life. This is most if not all of the debt management advice you will ever need! Many people that I have met that needed debt management advice had numerous debts. Typically, they would have several very small loans, each under £1,000 and two or three much larger loans of £5,000 to £15,000 each. If you are able to start quickly repaying the smaller loans and clearing them completely you will make great gains. By repaying these loans and hire purchase agreements, you will free up extra income that was being used each month to service interest payments. This will allow you to overpay even more every month which will further accelerate your progress. You will also find that repaying small debts gives you regular psychological 'wins' to keep you motivated and moving forward. To read more about debt management topics, please also visit:
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