For many of us, debt is a necessity. Without it, financial goals such as owning your own home may never become a reality. Used properly, debt can be a valuable financial management tool that can help you achieve your long-term goals.
However, there is a big difference between:
- using debt as part of a well-constructed financial plan and investing is sound assets, and
- using debt to cover the difference between what you earn and what you spend. This is living beyond your means. If debt is used to finance excessive spending, it could lead not only to financial distress, but may lead to losing access to being able to borrow in the future.
The following spending patterns are indicative that your debt level may be too high for you to manage comfortably:
- using credit to buy food, petrol or pay utility bills,
- only managing to pay the minimum amount each month on your credit card, paying little off the principal, or
- being forced to live on credit each month, as your debt repayments use up most of your salary.
If you find that you are having difficulty controlling debts such as a credit card or personal loan, you should contact the credit provider. If they are aware of your circumstances, they may be prepared to restructure your payments over a longer period. Remember, it is in the interest of the lender to recover their money, even if it does take a little longer than expected.
It is also a good idea to get assistance from a qualified financial adviser. With the right advice and a workable budget in place, it may only be a matter of time before you are in control of your debt once again.
If you would like more information, please Contact Us.