Personal finance pdf

Personal Finance PDF What To Do When You Are In Debt If you are struggling to pay your debts, you should not ignore this problem. Instead, you should learn about the options available for getting out of debt and how to avoid scams which target people who have financial problems. After this, you should take the necessary steps to get out of debt. The following is what you should do.

List your income and expenses.

Poor money management is one of the main factors that can make you get into serious debt. It is therefore wise to assess your finances by listing every expense you have and compare your total expenditure to your total income. If you note down your expenses honestly, you will see the magnitude of your problem and find potential solutions. As you add up your expenses, use credit card and bank statements to see exactly how you spend money. If you use cash often, make sure that you also account for it as well.

Address negative cash flow You can address negative cash flow by reducing your expenses, increasing your income by getting a second part time job or both.

There are many things you can do to spend less. For example, if you usually have rent arrears, you can choose to move to an apartment where rental charges are lower that you usually pay. If you have mortgage arrears, you can choose to downsize your home. You must also change your spending habits. Stop using your credit cards unless it is absolutely necessary to do so such as when leasing a vehicle. Use your debit cards, cash or checks when paying for goods and services. If you create a budget that focuses on reducing your expenses, you can be able to start paying off some debts.

Pay off priority debts first You may not be sure about the types of debt to pay back first. If you pay off priority debts first, you are more likely to keep your home, clear your debts faster, avoid court summons and save money in the process. You can also avoid having to file for bankruptcy if you pay off priority debts first. These debts include council tax, income tax, mortgage or rent, electricity bills, hire purchase agreements, court fines and child maintenance.

After paying back your priority debts, you should then focus on paying off non-priority debts. These debts include credit card debts, payday loans, in-store credit debts, overdrafts, personal loans, building society or bank loans and money borrowed from family and friends. If you can afford to pay more than the minimum payment on your non-priority debts, you should target the debts that have the highest interest rate. Pay the maximum amount you can afford without breaking the terms of any other credit agreements you have. After you pay off your most expensive debt, you can proceed on to pay your next most expensive debt. If you do this, you will be able to repay your debts quickly and pay less interest.

Communicate with your creditors When trying to pay off your debts, it is sensible to communicate with your creditors and inform them about your situation. Some creditors may be willing to work with you. They can offer you a payment plan, waive late fees or allow you to skip a few payments.

Get professional help If you find that you are really struggling to pay your debts, you can get professional help. You can contact a reputable independent debt counselling organisation. Such an organisation will help you work out a debt relief solution tailored to your needs. It can also refer you to an agency that provides specialised help. A debt counselling company will contact your creditors to create an overall debt management plan or set up payment plans. You will make a monthly deposit to the debt management firm and the funds will be used to pay your creditors.

Before seeking help from a debt counselling company, check its credentials to ensure that it is legitimate. Illegitimate companies may charge excessive fees, provide bad advice or fail to deliver the services they promise to deliver. They may also fail to discuss alternative ways of dealing with debt. To find a reputable debt counselling firm, you can ask for recommendations from people who have been able to solve their financial problems through the assistance of such a firm. Developing a good plan on how to pay off your debt is the key to getting rid of debt. You should also be disciplined enough to execute the plan you have developed.