photo credit: Photos8.com

Being Good With Money Can be Boring!

We all know that we need to budget, watch what we spend, and not put things on credit.  Sometimes this can just seem a little bit dull and depressing!  You start the month feeling sure that there will be some money left at the end for a nice meal out/some new clothes etc. but gradually the money goes on other things.  The car needs to be repaired, the children need new shoes etc. etc.

Temptation is Always There….

This is when the temptation to put things on credit can be very great.  The card that you haven’t used since you got it has 2000 available to spend with zero interest.  The feeling of being freed from your monthly budget is brilliant.  Yes you can afford that meal in an expensive restaurant, the latest techno gadget, or a trip to the theater.

But the Punishment For Taking on Debt is Swift

Take this path and the feeling of freedom won’t last for long.  You will hit the limit on your card, the introductory interest rate will end landing you with a hefty monthly bill.  Suddenly you are back to funding your spending out of your monthly budget, only now you have even less money to spend each month.

Is There Ever a Right Time to Take on Debt?

So when should you be funding purchases from debt?  I think that you should only use your card if you know you can pay the balance off in full when the bill comes.  On very rare occasions it might be worth making a big purchase (e.g. a vacation) on a card if you know that you can clear the balance over a couple of months.  To use your card in any other way is to make yourself permanently poorer.

photo credit: milena mihaylova

When people give advice it is usually affected by their own prejudices and interests. Therefore if you are in debt and looking for credit advice and debt help in the UK (or elsewhere), individuals might tell you that you need to struggle to pay off your debt. This could be because they have not knowledge of debt relief procedures or that they resent the idea that people can be relieved of some of their debt.

Any companies that you get advice from will be influenced by the solution that they are selling, and how much money they can make out of it.

Even charitable organizations will be staffed by people who take their own life experience (and their record of success or otherwise with particular debt solutions) into account. It takes a very skilled debt counselor to completely ignore their own experiences and judge a debtors situation objectively.

This is why that I think that it is essential for people in debt to find out as much information about the various solutions (Debt Management Plans, Individual Management Plans, Bankruptcy etc.) as they can. I also strongly recommend that they get help from a qualified adviser. If the debtor has read widely on debt solutions then they are more able to work towards a satisfactory debt solution with their adviser than if they simply rely on the adviser to tell them everything. It is a case of using your debt adviser as a resource to achieve the most suitable debt solution for you rather than surrendering all control over the situation.

In my own personal debt crisis I had decided that a Voluntary Individual Arrangement (IVA) was the best solution for me, even though the debt advice company that I consulted initially suggested an informal arrangement. I persisted asking for my preferred solution and in the end they agreed. This was actually the method I ended up using to become debt free.