Debt consolidationWhen it Comes to the Crunch
Times are pretty hard for all of us right now. In fact it looks bleak out there, and will continue to be so for a while.
1.   You need a Positive Plan
If you have a plan of action then put this down on paper. You can make notes as you go, but actually writing down your plan will give it greater clarity and strength.
You need to know your minimum income for your survival. How much do you need to pay for the basics like mortgage or rent, insurance, food and car each month? You need to save at least three or four times your monthly survival income in an easy access account in case of emergency.
2.   Will you allow me to offer a small piece of advice?
Try and 'Live below your means'.Â
Doing this you will remove unnecessary pressures and financial constraints from your life. It's not a smart thing to always go to the best restaurant, or to drive a big fancy car. Ask yourself do you really need these things? Will a smaller car do; after all it will give better miles per gallon. Will a less smart restaurant do; the food will still be just fine.
There's nothing wrong with having an expensive car, and going to fancy restaurants, if you can afford them. But it's not clever, these days in particular, to live above your means. You will just be living to pay for the fancy goods you already have, and those you plan to have in the future. So a change of mindset may be called for.
3.   What's your monthly expenditure?
Work out what you spend on everything, ie meals out, clothes, holidays, entertaining, credit card repayments etc. etc. Then compare your total outgoings with your income. Don't forget to include the basic outgoings. Ask yourself: are you overspending?
4.   Consolidate your debts
Transfer all your debts into one new loan. You should be able to negotiate a lower rate with your new lender, and having one repayment a month instead of several will definitely be better news for you. Your monthly outgoings will be reduced.
If you are fortunate enough to have a job, then it's better surely to be prudent with your money. Plan to make money, rather than to spend it.Â
5.   Consider your own financial security
Most people work for forty hours or so a week. Here you are trading time for cash. There are other ways to earn a crust. Have other options available, such as working for yourself if your company suddenly folded. There is more to life than working for someone else until you are pensioned off.
6.   The best form of income is passive income
That is when you get paid over and over for doing the work only once. This income is from royalties and can come from your own work, or from dividends and interest payments. This repeats my earlier thoughts about the option of working for yourself. Authors, for example, work once and get paid royalties for the next fifty years or so.Â
If you hedge your bets, and if you have some money aside, it still pays to invest. There are many preconceptions out there, and particularly at the current time, that investing is a risky business. It doesn't have to be. You don't need to invest a large sum of money, small amounts are ok. Be prudent and consider it's better not to take large risks with the current trend.Â
My advice is always seek professional advice before investing. But there are still ways to make your money work for you. The sooner you start investing, the bigger pot of cash you will have in future years. Look upon this as long-term. You wouldn't expect to see your money grow overnight!
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