There’s no doubt that financial problems can bring about a lot of anxiety in our lives. Constantly thinking about how you’re going to pay your bills not only makes you apprehensive, but also places stress on your relationships, your family, and your well-being. The fact is, stressing over money isn’t going to fix your financial challenges. If you’ve found yourself in a position where you’re struggling to make ends meet, here are the best ways to address your financial challenges so you can live a worry-free life again.
List your monthly costs
The first step in resolving your financial problems is identify exactly where your pain points are. Regardless if you’re dealing with a large credit card debt, you’re trying to boost your retirement savings, or you merely spend too much on eating out throughout the week, pinpointing the main causes of your financial woes will reveal to you which expenditures must be prioritised so you can get your finances back on track. Grab a pen and paper and document your current monthly expenditures including debt repayments, bills, food, transport, tuition, and any other items you generally spend every month.
Cut back on your expenditures
Once you’ve got your monthly expenses in front of you, take a closer look and examine which expenses can be minimised and which can be cut out altogether. Although your mortgage repayments naturally can’t be reduced, you can probably decrease your food bill by only eating at home and even remove other entertainment expenses such as cable television. It’s critical that you are pragmatic about reducing your expenses. Always remember, if you’re dealing with financial troubles then you must make sacrifices to resolve them.
Create a budget
Now that you’ve got your monthly expenditures documented without the unnecessary spending, you have to develop a budget. If you’re not familiar with making a budget, there are loads of fantastic apps you can download on your smartphone. Personally, I’ve found the Budget Planning app from ASIC to be very practical: https://www.moneysmart.gov.au/tools-and-resources/calculators-and-apps/budget-planner.
This will enable you to determine how much money you have left each month by viewing your income and expenses. It’s critical that you stick your budget. If you sense that it could be too hard to do this, add a miscellaneous item to your budget to give you some room to breathe, or perhaps a motivation item to reward yourself at the end of the month for sticking to your budget.
Prioritise your debts
Some debts cause more strain than others, so to relieve your financial burden as best as possible, aim to reduce your largest debts first. Not only will you be saving money by paying less interest, you’ll also feel far better about yourself. Only paying the minimum repayments on your credit card bill can sometimes take years to pay off, so attempt to lower these types of debts as soon as possible. Always remember, you still have other fixed debts every month like phone bills and electricity, so these have to be taken into account as well.
Still feeling the heat?
If you’ve cut back on your expenses and developed a budget but still find that there’s not enough money to settle all your debts, you’ll need to find other income streams. Are you able to work a second job? Can you sell any expensive household items that you can do without? Reaching out to family or friends is another helpful way to attempt to resolve your challenges. Whatever you do to get additional money, never get a personal loan from the bank to settle your existing debt – this will only compound an already stressful situation.
Seek financial assistance
If the above steps haven’t relieved your financial stress, it’s better to seek financial assistance sooner rather than later. Depending on your individual situation, there are a number of choices available such as debt consolidation loans or debt agreements which can assist those in need. Don’t fight your debts for years before getting assistance, call Bankruptcy Australia on 1300 795 575 or visit our website for more information: www.bankruptcy-australia.net.au