Debt Counsellors And Consolidating Debt
April 30, 2012 
0 Comments
Debt Counsellors And Consolidating Debt
Perhaps you have found yourself slipping so seriously into debt that you needed to approach a debt counsellor to help you sort out the problem. This, they will no doubt do for you. They have vast experience and they know exactly how to handle your problems. You just need to follow their leadership. They may decide to consolidate your debts into one package and you will have to pay an affordable amount off monthly or weekly, until your finances are under control again. Or they may give you advice, help you to work out a budget for your day to day living, and show you the best ways to spend the least amount of interest. Your life is slowly coming back under your control again. Now you have to face the next question. How to prevent it ever happening again?
There is only one rule that should guide you. Your expenditure must never exceed your income. This sounds so simple. The problem is that unexpected expenditures crop up in life that you have to handle. So you take out a loan to pay it off long term. Then another unforeseen event of expenses comes up and you need something elseand you do it again. I dont need to tell you. Youve already been there.
You will probably be on a strict budget still, and when your credit loosens up, you will be faced with the enormous temptation to relax and ease the pain of doing with budgeting. Dont yield to it! Lock your credit cards away, or even cut them up. Close your store credit accounts and save the fees you are paying monthly to keep them open. By this time you will be in the habit of paying off fixed monthly accounts, such as your house mortgage, school and medical expenses, car payments and utility bills. After this you set aside for your food and living expenses, and stick strictly to that budget. Now, whatever is left over, is what you have to work really carefully and shrewdly with. Your best bet is for you and your family to make a list of everything each member needs and wants and prioritise this list. Set each item down in order of importance. Now sit down together and, with common sense and a lot of sensitivity, meld these lists until you come up with a family priority list that each member feels happy about and is prepared to stick to.
One of the first things on your list should be to start building up a reserve fund. Even if this is really a tiny weekly or monthly amount, dont ever be tempted to use that amount for anything else at all. This should be kept for absolute emergencies, not for that bargain you saw at the store, that you are sure you wont get again! This amount is untouchable. If you are brutally honest with yourself, you will know when a real emergency justifies spending it. As soon as you are in a position to, put aside another similar amount, and also keep it sacred. The difference is that you should take this money, say, once a year and treat yourself and your family with it. Splash out and have fun. If you do this you will find that the stringent measures you take during the rest of the year to keep your budget under control will be easier to bear. Besides, if you can control your finances, you deserve the reward!
If you are thinking of consolidating debt to reduce interest payments, then before you commit, it would be a good idea to speak to a debt counsellor first.
This is the VOA Special English Economics Report, from voaspecialenglish.com Dubai’s recent debt problems have brought attention to the growth of Islamic finance. A government-owned group of companies, Dubai World, has been seeking to restructure twenty-six billion dollars of debt. About six billion of it is in Islamic bonds, including a three and a half billion dollar bond set for repayment in December. The biggest difference between Western and Islamic finance involves beliefs about charging interest on borrowed money. In Islam, the basic idea is that you should not make money from money itself. Instead of interest, lenders charge fees. Ghiyath Nakshbendi at American University in Washington is an expert on Islamic financing. He says “The bank will estimate its costs based on its fixed costs, variable costs, the cost of their employees, the rent and so on and so forth. And from that they estimate how much they are going to charge. But he points out that this system can make Islamic financing costly. The costs of the system are shared by the borrowers. The fewer the borrowers, the more each has to pay. In many cases, Islamic financing requires the lender and borrower to share profits and losses. Ghiyath Nakshbendi explains what that means with Islamic bonds, called sukuk. He says the bondholders are buying a share of a business or property. If business is good, then they could get back more than they expected. But if it fails, then there is no guarantee of repayment …
Recent Comments