L
OOK FOR THE WARNING SIGNS
Recognising when you could get into trouble with your finances can allow you to make moves to avert any difficulties. The list below reveals some of the warning signs to watch out for.
OOK FOR THE WARNING SIGNSRecognising when you could get into trouble with your finances can allow you to make moves to avert any difficulties. The list below reveals some of the warning signs to watch out for.
- Loan payments, excluding mortgages, but including credit card charges, take up more than 20% of your monthly disposable income.
- You are only paying the minimum amount off on your credit cards each month, or maybe even less.
- You're juggling bills or are unable to pay bills. For example, you apply for another credit card and use cash advances from it to pay an existing card.
- You are unable to make a mortgage repayment or pay rent on time. You are
at or near the limit on each of your credit cards. - You regularly go without meals.
- You are unable to make a utility payment.
- You need to sell or pawn possessions to meet your expenses.
- You must work overtime, or take a second job, to cover basic living expenses.
- You have no idea how much debt you actually have.
- You have to seek financial assistance from family or friends or welfare group.
- You inherit a large debt and you are not sure how you will repay it.
- You’re temporarily unable to work and have no income protection insurance or savings.
- You have just lost your job, or are fearful that you are about to, and are concerned about how you will pay all your bills.
- You have received a letter or phone call about outstanding bills from a debt collection agency.
IS YOUR ATTITUDE HOLDING YOU BACK?
It is not only situations or behaviours that can get you into trouble – certain attitudes to money can also signal that you could run into difficulties in the future. Read the statements below to see if any of them sound like you.
“Spending to maintain my image is an investment in myself.”
“Everyone uses debt to get ahead. If I don’t, I’ll fall behind.”
“If the banks offer to increase my credit limit, then they must think that I can repay it.”
“The banks don’t need the money – I’ll pay them back later.”
“I trust him, he won’t rip me off. We have a good relationship.”
“I won’t bother paying this bill and will just go to another provider. They can’t force me to pay.”
“Buying this makes me feel better about myself.”
“Everybody else has one, so I want one too.”
It is not only situations or behaviours that can get you into trouble – certain attitudes to money can also signal that you could run into difficulties in the future. Read the statements below to see if any of them sound like you.
“Spending to maintain my image is an investment in myself.”
“Everyone uses debt to get ahead. If I don’t, I’ll fall behind.”
“If the banks offer to increase my credit limit, then they must think that I can repay it.”
“The banks don’t need the money – I’ll pay them back later.”
“I trust him, he won’t rip me off. We have a good relationship.”
“I won’t bother paying this bill and will just go to another provider. They can’t force me to pay.”
“Buying this makes me feel better about myself.”
“Everybody else has one, so I want one too.”
IF IT SOUNDS TOO GOOD TO BE TRUE, IT PROBABLY IS
There are no free lunches. Any investment scheme that promises otherwise should be viewed with caution. If you see an investment offering returns that seem too good to be true, it is also likely to be very risky, which could mean you lose your money entirely.
TIP: SIGNS YOU COULD BE IN TROUBLE
Hiding purchases from friends and family, because you know you should not be spending.
When you don't know how much you owe and really don't want to find out.
IF YOU FEEL OUT OF CONTROL
Getting into financial difficulties can be a scary experience. The main thing to do is stay calm.
Financial assistance can be provided by your lender or via a government, welfare or community program. First of all, speak to your lender or credit provider.
It is important for you to contact your creditors (those you owe money for payment of bills or loan repayments) promptly and tell them you are having financial difficulties and want to discuss payment arrangements. This is particularly important if creditors hold security over your home or other assets.
It is best to offer something to each creditor, but only what you can reasonably afford to pay. If you have outstanding credit card debt or loan repayments, try to cover the minimum payment or interest on the loan, as this will reduce any additional charges that may apply to the debt. You can speak to your bank about reducing your credit card limit.
Ask if your lender or credit provider has a financial hardship process and will agree to reduce the interest on your debt until you can get back on your feet. If you are having financial difficulties with your credit arrangement, banks that subscribe to the Code of Banking Practice, with
your agreement, will try and help you overcome your financial difficulties, such as develop a repayment plan.You can also speak to your bank about whether the transaction account you hold can let you vary the maximum daily withdrawal limit to assist you better manage your spending.
GET IN TOUCH WITH A FINANCIAL COUNSELLOR
A financial counsellor may also be able to help you. Trained and qualified financial counsellors can help you get a clear picture of your financial situation and develop some strategies to help you get back in control of your money, whether it’s creating effective budgets, working out manageable repayment plans, working with your creditors or addressing a financial crisis caused by a problem with health, unemployment, family break-up or gambling.
TIP: MANAGE YOUR SPENDING
Speak to your bank about:
- Choosing an account that matches the way you want to bank
- Checking the limits on your credit and debit cards
- Setting up an electronic transfer so some of your salary goes into a savings account
- Establishing a direct debit for regular expenses, such as utility bills