Smart Money Extra

Believe it or not, most people would not be in the financial situation they are in right now if they could just follow a few simple money management tips. If you adhere to the following three tips, it is extremely difficult to find yourself in a poor financial position.

Don’t spend more than you make
This should be common sense, but too many people don’t follow it. Don’t spend more money than you make, plain and simple. Too many people live off their credit card and end up going broke and claiming bankruptcy because of their extravagant lifestyle. This is easily avoided if you just live within your means and don’t spend more than you make.

Only borrow money for non-depreciating assets
Most people borrow money and go into debt for silly things. A good piece of advice is to only go into debt for non-depreciating assets like a house. This way, you are never just throwing money away.

Record what you spend
Finally, record everything that you spend. Not only will this give you information on what you spend at the end of every month, it will make you feel more accountable when you make purchases and you will think twice about what you buy.

As long as you don’t spend more money than you make, only borrow money for certain things, and record all your expenses, you will have no trouble staying in good financial health and not falling into the debt trap that many people become a victim of.

Sometimes, people find themselves in money trouble that they cannot easily navigate themselves out of. And, even more often, people are afraid to admit it and they end up digging themselves into a deeper whole than they need to be in. here are some warning signs that you should look out for that may signal the need for a professional money manager…

You are paying bills with credit
If you are paying your bills with a credit card, something needs to change. When this happens, it is an early sign that your spending or your money management is out of control.

You don’t know where your money is going
If you cant figure out where all your money is going, and your payment schedule looks like a tangled spider web, you may need the help of a professional money manager to get you out of your problem. They will be able to straighten everything out for you.

You don’t have enough for the bare essentials
When you don’t have enough money to buy enough food to feed yourself and your family, or you are struggling to pay other bar necessities, it may be a sign that you need some professional help. There is a good chance that you are spending too much money and are living beyond your means.

Seeking the help of a professional money manager is a good idea for many people. Don’t be embarrassed to seek help – that is what they are there for.

Debt management is a way to manage your debt problems. It can be undertaken by an individual often taking advantage of free help that is available from charitably organisations such as the Citizens Advice Bureau, or it can be set up professionally using a debt management company or organisation.

The advantage of doing it yourself with the help of an organisation such as the CAB is that it is free, but that is probably where the advantage ends as doing it in practice can be difficult and there are many potential pitfalls that need to be negotiated.

The disadvantage of using a professional debt management company is that you will need to pay a fee which is in most cases around 15% of the total repayments that you will make towards your debts. When the plan is in place you will make monthly payments to your debt management company most of which will be redistributed to your creditors but which will also include the 15% fee.

As it says on the tin, a debt management company manages debt professionally. Just as you could pop in to your local pharmacist for some informal advice on which medicine to take for a particular ailment, you would almost certainly be better advised to pay a visit to your local General Practitioner. The advantage of using a professional organisation is that the people with whom you deal do what they do every day of the week. They are used to dealing with creditors and they know the right buttons to press and boxes to tick. An individual will be attempting to achieve the same thing for the first time, and the chances of getting it wrong are substantial. It could end up costing a lot more than the 15% fee.

No doubt the DIY approach works out for some people, particularly if they are skilled negotiators and can deal with their debt collectors in a cool or objective manner, but most find that the benefit from professional help.

Many people wonder, “Why don’t I have any extra money?” there really is no simple answer to this question, but more often than not, the answers can be grouped in any of the following reasons…

You spend too much
A lot of people have the bad habit of living beyond their means. Everybody likes buying things, but if you cannot afford it, you should not get it. In the world of loans and credit cards, almost anything is accessible to anyone, so you have to be smart and know when you should not purchase something.

You don’t keep track of your spending
Very few people actually keep track of their spending, and they spend more on things than they actually should. The truly smart person watches everything they spend, and is always trying to save money whenever they can.

You don’t make enough money
Believe it or not, a lot of people overestimate the amount of expendable income they have. They don’t account for all the monthly bills that are automatically withdrawn from their account, and are unaware of many expenses they have to pay. The easiest way to have more extra money is to make more income in the first place.

If you fit yourself into one of the above categories and find a way to fix your problem, you will no doubt find some extra money at the end of every month to spend and find out where all your money is actually going.