How to resolve your finances and get back on track

Are you in a bad financial situation or are you always broke? Do you feel like you have never got enough money to do everything that you would like to do? Many people these days live from paycheque to paycheque and I strongly believe, talking also from my personal experience, that most of the time it is to do with them not managing money properly. Sometimes it could be that their personal circumstances have changed such as sudden loss of their job, divorce etc and that they truly couldn’t help the situation and found themselves caught up in it. In both cases, there are things that can be done to get out from this uncomfortable and depressive situation. 8.3 million people in the UK are over-in indebted and 22% of UK adults have less than £100 in savings. Here you will not just find tips on how to get out from a money issue situation but also how to change your attitude and habits to benefit your finances.

First of all, the first thing is to deal with the stress that the lack of money and not been able to pay your debts has caused you. You need to think realistically, stop complaining about your situation and take action. Besides if your mind and body are not in good shape because of financial stress then how can you have a clear mind and the strength to take action and find solutions to your problem?

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Secondly to really understand the situation deeply on how people get themselves in financial difficulties, we need to have a look at differences between people who are successful with money and people who are always broke. People that live from paycheque to paycheque as soon they get paid they splash out most of their wages on buying items which are on sale or for example cheap clothes down the market or different things from the car boot sale. They actually believe that by not buying expensive things, clothes etc, that they are being good with their money which in reality what they are really doing is being irresponsible about the way they’re spending it and cluttering their homes with unnecessary things. Looking at this in a psychological prospective, people buy things which they don’t really need as a comfort or maybe because by having so many things they feel richer. They also tend not to spend their money wisely by buying takeaways, hot drinks, dining out often and going in too many places which really, they cannot afford. And don´t underestimate a packet of cigarettes for example as when you total it up you will be shocked at the amount that you have spent. Some people smoke one packet of cigarettes a day and in the UK a packet can cost £11 which is £3,696 a year. With that money you could pay a credit card balance off ! Of course I understand that for some people giving up smoking for example can be difficult but just by reducing the quantity that you buy per week it will not just benefit your finances but also your health. On the other hand we have successful people who spend their money on assets. This is a great way to make more money for example if you buy a ballet studio you can rent it out to different teachers or students. There are also other ways to make money and if it works I believe that it is the best way to make money! A good example is to start a YouTube channel and if it ends up getting a big audience and becoming popular you can make money while you sleep. Most of the successful and richest people in the world make money using this kind of method and if it’s not something for you there are so many other options to try out!

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In order to sort out your finances the first step is to look at the following factors:

- Cash flow or income (money that you bring in)

- Expenses (money that you spend)

- Liability (something that costs you)

- Assets (something that pays you)

You will need to write these down and go through them carefully to really understand where you are going wrong. Bear in mind that something which is a liability for some people might be an asset for others. For example a house is a liability if you have a mortgage to pay for it but if you bought the house and you are renting it out to people then it becomes an asset. It is important to note down your expenses because primarily it is by reducing them that you will be able to change your situation without getting a second job!

There are different options for you to look into and which one you select depends on how much debt your are in. Some people have so much money to pay back to companies or banks that they have to declare bankruptcy. People who are in debt starting from £5.000 can use this resource, but it applies more for people who are in at least £20.000 debts or more. If your debts are less than £5000 then you can look into other options such as Debt Relief Order ( DRO) or Individual voluntary arrangement ( IVA). Of course in different countries there are different rules and the names of these companies could vary but you can always find something. I would strongly suggest not to take the bankruptcy path unless you have to because even if it can be a solution for people who are in real serious debts, it also means that once it has been discharged it will remain on your credit file for a further five years. During this time it will be harder for you to get credit and even if you manage to get it, the interest rate will be higher as you are considered a high risk borrower. You may even struggle to get just a standard current account especially with an overdraft facility. Another alternative is to look into get an app to pay off your debts quicker. I personally never tried them but I know people who have and they have been recommended. They usually pay the debts with the highest rate first and they also tell you how quickly you are going to pay your debt overtime.

Finding different options to clear up your debts is definitely a good way to start to improve your financial situation but there are also other options to look into to improve it. A good way is to invest your money but make sure that whoever you are investing your money with are government requested and that they are not dodgy. You could also invest in education because by having more skills you can expand your chances in getting a higher paid job or completely change your career. That can help your financial life but also increase your self esteem. You could also get an app such as Clear Score, which I personally found useful as you can receive your credit report monthly. With this app for example you can check if you are eligible to get a credit card or a mortgage and how to improve your credit score too.

Sometimes even if it may seem the best way out asking a friend or a member of the family to lend you money it is not the best solution as you only put yourself into more debt! On the other hand talking to someone and asking for advice might help to find some ideas on how to solve the matter.

If you have any more questions please do not hesitate to leave me a comment below or contact me. I would also love to hear your thoughts and opinions! Also don't forget to subscribe if you don't want to miss any of the future posts

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