Are you making your money situation worse?
WILL this decision actually improve your situation? It’s an important question to ask, but many of us still fall victim to the promise of a quick fix.
I have known many client families who have chosen to borrow money to pay another loan, taken a second loan on a secured asset (usually the car), or chosen to pay their living expenses with borrowed money.
It’s almost always a backwards step, although it may not seem like it at the time.
In all these situations the clients are making things worse in the long run. So here are some top tips to avoid making a situation worse: ● Don’t live on borrowed money. It may be that you need to reduce your lifestyle for a short period, so you can catch up on your other obligations. ● Consider the long-term cost. Many times people choose a 24 month plan because the monthly repayments are smaller, even though the overall cost of the product is higher. ● Better to wait until you can buy it in the cheapest way, which is usually saving up and paying upfront. ● Plan for the unexpected. While you are earning money, put some aside for the ‘‘what if’’ scenarios (‘‘What if I lose my job?’’, ‘‘What if my fridge dies?’’, ‘‘What if my children become unwell?’’) ● Read your bills. Too many people come to us with a crisis, after having ignored their bills for a long time. It’s so easy to put it aside because it’s hard, you haven’t got the money, or you haven’t got time right now. But those bills won’t magically disappear in time, they do need to be addressed – even if it’s communicating with the creditor and working out a reduced payment plan. Raewyn Fox is chief executive of the Federation of Family Budgeting Services.