Debt Consolidation

COPING WITH DEBT 2

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Are you having trouble coping with debt and paying your bills? Are you receiving notices from creditors? Are you worried about losing your home or your car? You are not alone. Many people face financial crisis at some point in their lives and it can seem overwhelming, if the crisis is caused by: Personal or family illness; The loss of a job; or Overspending. But often, the crisis can be overcome, and your financial situation does not have to go from bad to worse, if you consider these options: Option 1- Self-help by using a Realistic Budgeting Technique You can take control of your financial situation, by doing a realistic assessment of how much money you take in and how much money you spend; Option 2- Talk with your Creditors. Your creditors may be willing to work out a modified payment plan for your unpaid bills. . Option 3- Talk with your Lender/Credit Provider. Your lender/credit provider may be willing to work with you, if they believe you are acting in good faith and the situation is temporary. Option 4- Seek Expert and Professional Advice. You should also consider seeking help from a professionally qualified and licensed finance broker or mortgage broker. Because, a broker can help you when you are trying to decide which option best meets your needs and circumstances. When reading this article you should be able to determine which option will work best and remember also, that each option you select will depend on a number of factors such as: Your level of debt; Your level of discipline; and Your prospects for the future. Option 1 – SELF-HELP BY DEVELOPING A BUDGET If you haven’t as yet developed a personal budget? Then you should start taking control of your financial situation right away, by doing a realistic assessment of how much money you take in and how much money you spend. So, why not start right away, by adopting the following The following steps and determine your bottom line: Step 1: List All Your Income and Expenses You can take control of your financial situation, by doing a realistic assessment of how much money you take in and how much money you spend. You should start by: Listing your income from all sources; Listing your “fixed” expenses – those that are the same each month (like mortgage payments or rent, car payments, and insurance premiums); and Listing all your “other” expenses – that vary (like groceries, entertainment, and clothing). Remember, to write down all your expenses, even those that seem insignificant, as this is a helpful way to: Track your spending patterns; Identify necessary expenses; and Prioritise the rest. Step 2: Create a Budget The next step is to create a budget of your expenses (how much you spend) and subtract these expenses from your income. When developing your budget you should remember:

That some bills will come in monthly and some will come in less often; and That your goal is to make sure you can make ends meet on the basics such as: ? Housing; ? Food; ? Health Care; ? Insurance; and ? Education. You can use this Budget Planning calculator, which can help you to: Develop and maintain your budget; Balance your income and expenses; Create plans to save money and pay down your debt; and See how much money you spend. Step 3: Determine Your Bottom Line If you have prepared your budget using the budget planning calculator, you will be able to determine right away – what is your bottom line? The Budget Planning calculator will calculate your bottom line, which will enable you to determine right away: Do you have any money left over at the end of the month? If not, what expenses can you reduce or eliminate? or Do you have to find a way to make more money? (i.e. getting a second job, etc.). Option 2 – TALK WITH YOUR CREDITORS If you talk to your creditors, you may find that they are willing to work out a modified payment plan for any of the following bills you have to pay and which are unpaid: Rent payments; Rates (council, water); Utilities (electricity, gas, etc.); Home, contents, private health insurance; Education expenses (school and child care fees). Etc. Option 3 – TALK YOUR LENDER/CREDIT PROVIDER If you stop making payments lenders/credit providers can foreclose on your home loan or repossess your car. So, if you fall behind on your home loan or car loan – contact your lender/credit provider immediately. As most lenders/credit providers are willing to work with you if they believe you are acting in good faith and the situation is temporary. Some lenders/credit providers may consider: Reducing or suspending your payments for a short time. But keep in mind, that when you resume your regular payments, you may find that you have to pay an additional amount towards the past due debt; or Agreeing to change the terms of the home loan or even the car loan by extending the repayment period to reduce your monthly debt. But, you should consider asking whether additional fees would be assessed for these changes, and calculate how much they total in the long term. Option 4 – SEEK EXPERT AND PROFESSIONAL ADVICE If you have numerous credit card debts, you may consider seeking help from a qualified and licensed finance broker or mortgage broker to fix your debt problems. The licensed brokers can help, advice and guide you so, that you can role all your loans into one loan. But before, you consider taking out a new loan to consolidate your debts, you should make sure your new interest rate, including fees and costs, is much lower than what you are paying on all the debts you are consolidating. Because, if you end up paying a higher interest rate, you will find that: You are losing money; and You are making your problem worse. Because, a consolidation loan involves taking out one new loan to pay off your credit card debts, you will find that your new consolidation loan may be secured against your home. So, you may have to pay: Application fees; Legal fees; Valuation fees; and Stamp Duty. Remember: To check the loan term. Because, if you pay off a short-term debt (like a credit card or a personal loan) over a very long term, you will still pay more in interest and fees in the long run. Even if the interest rate is lower on the new loan Finding, a suitable solution to your debt problems is a major financial decision. Always remember to research all your options very carefully. So, now that you have read this article you should have a basic understanding of a number of options available to you, and which you can consider to help solve your debt problems. http://www.singhfinance.com.au is a reputed Australian finance brokerage firm that employs a team of expert and professionally qualified finance brokers, who are willing to help you solve your debt problems. They can help you to determine which option best meets your needs and circumstances, and if you require finance they will even obtain a pre-approved debt consolidation loan for you. They can also help you find suitable building and comprehensive motor vehicle insurance for you. Call on 0424 190 908 today or visit their website and simply click on the “ENQUIRE ONLINE” form. Disclaimer: This article is of a general nature only and does not constitute professional advice. I strongly recommend that you seek your own professional legal and accounting advice in relation to your particular circumstances.

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Robert B. Wilfong

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