take control of debt
Do you know what the biggest mistake that people make with regards their finances is? Is it that they forget to pay? Or that they take on too much debt? Perhaps it is that they don’t organise it to the best of their ability?
No, the biggest mistake that most people will make with regards their finances is that they bury their head in the sand when things start to go wrong. They decide that if they ignore it they will go away, that things will get better if they pretend that bad things aren’t happening.
But the bad news is that it doesn’t work like that, finances don’t magically improve if you aren’t looking at them. Acting like an ostrich does no one any good. Not you, not the debt company and certainly not your family.
Get Your Head Out Of The Sand
So how does one go about improving things, avoiding this classic mistake – or rectifying it as soon as possible? How does one get ones head out of the proverbial sand? How how will that improve things?
To properly gain control of your finances the most important step that you can take is to know what your finances are. You need to know what you have, and what you owe. Your income, your expenditure, your essentials and your luxuries. You are going to have to go through your books.
Where to start
The first thing that you need to do is understand just what your income is. For most people this is easy. They will either have a single income from their job, or a double income if part of a couple. But all income needs to be considered, so if there are other streams of income than just a job pay them attention.
This could be other part time jobs, freelancing, shares, businesses owned – anything that puts money in your bank needs to be taken into consideration when doing your finances.
Next consider your essential expenditure. Not debts right now – just mortgage/rent, food bills, heating bills, electricity bills etc. Bills that there is no way, even with the cleverest accountant in the known universe, you would be able to get out of.
Now consider your debts. Think of everything, car loan bills, credit card bills, other loans, etc. Add them up and make a note. Also think of less essential but still important bills such as phone bills, tv bills, computer etc.
Finally work out your nonessentials that you like to spend. Nights out, drinking budgets, socialising etc. Try work out a typical month if you can – going over old bank statements can be especially useful here.
What you now have is a general snapshot of what your finances are. You know your income, you know your vital bills, your important bills, your useful bills and your fun outgoings. This overview now allows you to look at what you need to do to change things.
It could be that you will realise how bad things are, how much you are spending. It could be you will see you need to reduce bills or increase your finances. But whatever it reveals you are better off knowing. Burying your head in the sand won’t do anyone any good.
