Beat the credit crunch

Staying out of debt in today’s society can be extremely tricky. Remember not all debt is bad and loans such as mortgages, provided they are adequately managed, are not generally harmful. Getting into debt to fund a lifestyle that your income will not accommodate, however, is bad news.

Writing a SOA (statement of affairs) is the first crucial step to ensuring that you do not get into debt. Write down absolutely every bit of income, including benefits and any maintenance payments. Then make a full list of all outgoings. Don’t forget to apportion annual costs such as holidays and birthdays. This budget should give you a reasonable idea of your current status in terms of whether you are living beyond your means.

If you have sufficient income left over but never seem to have any money, it can be helpful to keep a spending diary for a week or two detailing everything you buy. You’ll be surprised how much that sneaky coffee on the way to work adds up every day!

If you simply do not have enough income to pay for your expenses you have two basic options; increase your income or decrease your expenses. A combination of the two should work to bring you within your budget. If you can, try to arrange for some form of debt reduction.

With debt, ignoring the situation is guaranteed to make it worse. Get debt advice, keep on top of your situation and you will be surprised how quickly things turn around!