Every new year brings about fresh starts and new goals. 2021 is finally over and we can all look forward to a new chapter. Having a fresh financial start may be on the top of your resolutions list. After a tough year for consumers, plans need to be made to get things back on track.
Assess your personal budget at the beginning of the year
It’s never too late to create a new budget. You should be planning ahead when it comes to monthly expenditure. The most important aspect when it comes to budgeting is to review it every month.
Once each month is over you need to do a thorough recap. Investigate where you overspent and adjust the budget accordingly. You don’t want to overspend on the same things time and time again.
Be sure to account for all living expenses in your budget. It is often easier to break them down into two sections – fixed expenses and variable expenses. Try highlight all luxurious and unnecessary spending. This is where you can save money.
Focus on paying all your debts on time every month
It’s important to keep up to date with all debt repayments. However, if you intend of using debt to pay off other debt, think again. Borrowing from Peter to pay Paul is a trap many fall into. This will end up making the situation worse.
To maintain a good credit score, you need to stay up to date with all debt repayments and make sure any arrears are caught up with. If you have any default notices or judgments on your profile you should focus on settling those to get them removed.
If you have excess funds, try to pay a bit extra to your more expensive debts. Payday loans, personal loans and credit cards have high interest rates (20%-60% annually) and will cost you a lot of money. Paying these earlier can save you money by eliminating interest and fees.
If repayments are high, try a debt consolidation option
If you find that your debt repayments are too high, try look at debt consolidation options. There are two main debt consolidation options available to consumers.
- A Consolidation Loan – This is a large personal loan that is used to settle smaller debts and be left with just one installment and one loan. Consolidations loans are effective but have strict qualification criteria due to their size. Consumers should be up to date with all payments and have a high credit score to qualify.
- Debt counselling – This is a solution where a debt counsellor would formally negotiate with your creditors. Monthly installments are consolidated into one, lower monthly debt repayment. Interest rates are also reduced making the debt more affordable to repay. Consumers need to be over-indebted, can be in arrears and have a low credit score.
Speak to Vantage today for help with the above. You may be able to free large amounts of cash in your budget with a formal debt solution.