Debt Management: Managing a Budget to Manage Debts

HOW TO MANAGE YOUR DEBTS: BUDGET MANAGEMENT FOR DEBT MANAGING

Creditors could use you and your family at pleasure for 60 days, at one time, then keep or sell you to another at auction as slaves!..

Many in debt do not know how to avoid or ease the pain of innocence of debt management…

But credit we need, be it as money loans, or by easy-payments or hire purchase.

Many with debt problems are innocent of debt management. Not only credit one needs, but,  indeed, one often, if can be reasonably managed, has wisdom considerations on the lines of (as the Cypriot thinker-writer-poet teacher Orhan Seyfi Ari put it) “I am no so rich as to afford cheap things” -and these have to do with personal finance. That is a money problem to many who have no or little knowledge of personal budgeting and debt management.

Advice on managing debt problems is often source-specific, not of general use ~psychology, politics, law, commerce, each, advises from its own perspective -in practice one needs in all respect relevant basic advice in coping with debt.

The following seeks to combine these ~it is easy to learn how to manage debt, cope with it, and then avoid debt and problems -here is how:-

>> First, know these –it helps manage your debt, and do not panic if civil debts are causing you anxiety –there are ways of managing debt.

1. Normally you may not be imprisoned for debts unless concealing funds -you may complain to the police if the creditor harasses or tells your employer…

2. Creditors may not repossess goods you have bought on credit or by loan -unless hire purchase goods of which remains unpaid still a portion of it specified generally by law yet…

3. If you think that the price was extortionate you can take the creditor to court -if you can show so the court may reduce your debt and you owe less…

4. Creditors must show that help in debt management, in paying your debt was considered ~many accept small regular payments if realistic -some may freeze the interest on the debt…

5. If a creditor sells your debt to a non-bona-fide party you may choose not to deal with other than the creditor’s own staff or lawyers in respect of that debt… Indeed the creditor having by such sale of your debt lost title to it, you may be able lawfully to deem your debt erased if you can show the party to whom it has been sold not to be a bona-fide party.

6. Debts up to sums specified by law may be arbitrated at courts, often at no cost -if you need it free legal representation may be available…

7. If you lose in court, repaying the debt in time given you by law protects and keeps your credit rating from being adversely affected…

8. If you can not manage to repay a debt and worse comes to worst, you may ask the court to pay by instalments or, if you can satisfy that you will be able to manage the debt and keep up with them, by lower instalments -if circumstances change or you can not manage the instalment you may ask again to give you more time or lower the instalment more…

9. If you cannot manage debt repayments and bailiffs got involved, lawfully may not be confiscated any essentials -e.g., beds, bedding, clothes, cookers, tables, chairs (or anything that you may need to continue earning your living)…

(Also, beware: administrative or clerical errors are known to have resulted in the form of demand for bailiff notice fee and under payment of seizure of goods for credit amounts –i.e. if one has overpaid by additional instalment and the credit balance has been mistaken for short payment.)

10. Credit agencies by law must give you details of your credit rating, and if you have been successful in managing your debt after a judgment against you and have satisfied it, credit rating agencies must correct their records.

(Laws to do with debt vary among countries and states –it helps to enquire)

>> Second, do the following: if you need to budget differently and fear that you may not manage to repay debts as expected, ensure to contact your creditors for more time or lower instalments.

1. Work out your net income –debt management begins with knowing what you have regularly coming in…

2. Work out your essential outgoings -rent, mortgage, electricity, gas, food, toiletry, child-care, telephone, fares, car, in Britain the TV license fee, and the like…

3. Calculate your disposable income -what’s left for other things…

4. Trying not to upset your budget for essentials, see what you can offer who…

5. Write to your creditors and explain your circumstances and the above and make an offer, e.g., time-wise, or instalments-wise ~keep copies of all letters, records of payments -and where sent.

(If taken to court you will need to show all of the details above ~if you can not sort these out, you may ask the county court to do so for you -that is not bankruptcy but last-resort administration: it is the court managing you debt by way of you regularly paying to the court what it decides -for all of your creditors, for the court to pay each creditor separately on your behalf)

>> At the meanwhile, and later, you need to budget, to manage not to get into debt… You do not want your house or valuables sold, nor your employer ordered to deduct from your pay ~nor the worry, the anxiety affecting your wellbeing.

(A branch of humanistic psychology, indeed, considers financial wellbeing to be a basic essential to one’s proper functioning.)

There is a way to avoid such risks…

Change your money habits -this is not so difficult to do…

If you often have debts or debt management problems, list them, look for a pattern…

You may be compulsive

(A test advertisement in an experiment by the New York Times offered “nothing” for $1.- -many responded, most of the sent money and ordered it).

You may not be adequately money conscious -money goes, you don’t know how or where…

You may be insufficiently organized, overlooking, delaying and allowing repayments to accumulate (delayed instalments may add to any interest payable, and may involve a charge)…

You may be panicky in debt management ~running to ‘loan-sharks’ and trying to manage and repay your debts by debts by loans to be repaid themselves, for ever paying the interest on them –with interest charged on interest too and often amounting to several times what you borrowed.

(If you do need to borrow, consider joining a credit union ~their loans are interest free.)

There is a tried, tested and proven psychological technique to help manage your debts and become debt-free…

The rewards awareness technique ~it is not difficult and works in managing your debts by overcoming the negativity opposing changing your money habits.

Keep a daily record of what you spent, what is left, if you wasted or could have saved.

Be conscious, especially, of what you could have saved but wasted -and haw the waste accumulates and what it adds up to ~it is important in managing debt, changing money habits

(This, in experiments carried out, not only with group support, but also at lone individual level, it has been enormously, and popularly as to the ease of getting into the habit of it, successful).

Think of this: It will constantly keep you aware of your income and out-goings -habitually ~it will enable you to manage your debts and make free of debt problems and risks involved in debt.

This is as much a budget management technique as a debt management and essential.

I will also boost your self respect and the pride and confidence in yourself to show to yourself and those around you that you can be, are, in charge of your money affairs more, better and easier.

It is also fun ~give it a try -do try it.

Tags: budget, debt, Debts, Manage, Management, Managing

Debt Prevention and Management Go Hand in Hand With a Budget

A budget is not just something that those who are having financial hardships use; it is also a useful tool in debt prevention and management. There are millions upon millions of people today who live pay check to paycheck, not ever really knowing where there money is going or why they never seem to have any, unless of course they borrow it in the form of loans or credit cards. They do not control their money, it controls them.

There is another type of person out there, one who takes complete control of their money no matter how much or little they make. These are the people who tell there money what to do and as a result are financially sound with every decision they make now and in the future.

So what is their secret weapon in a world filled with debt? A simple budget that tracks income and expenses. A personal budget takes control of your money and tells it what to do. Once you have that control you can begin to manage your debt and prevent debt from occurring in the future.

If you currently have debt and it is overwhelming your ability to make sound financial decisions then building a personal budget is the first step to gaining back control of your money. The first thing you will do is simply writing down all your financials on a piece of paper. As you become more comfortable with the process you can use one of the many software programs available to track your money. But at the beginning it’s easier if you keep it simple and just write it down on a piece of paper.

By writing down all you income in one column and all your expenses in another column you can quickly find out if you are spending more each month then you make. If this is the case you can then use your newly created budget to start identifying where your greatest expenditures are occurring and find areas where you can start cutting your spending habits. Many people are rather surprised where they are spending their money the first time they build a budget.

The other thing that a personal budget can do when it comes to debt management and prevention is change your attitude towards how you use your money. When your spending habits are staring you back in the face and it’s affecting your daily life and your future plans you will be surprised at how it changes how you look at money and its power to give you the life you always wanted.

Having a monthly budget is the best debt prevention and management tool that everyone should use. Having a working plan for your money ensures that what it does and where it goes remains in your control at all times.  In fact the reason so many people have financial problems is a lack of control over their money and the fact that it does not work for them because it is spent before they know why.

Tags: budget, debt, Hand, Management, Prevention

A Revenue Budget is an Essential Management Information Tool

The first stage is to ensure the organisational chart clearly represents the management responsibility of each department and activity area. Financial accountancy and cost accounting should be integrated and aligned to enable detailed management information reporting and accurate financial records for each activity.

The cost and management information reporting system should be focused upon critical items where management action influences the financial result. Before setting the revenue budget the managing director, advised by the financial director or management accountant, should identify all crucial elements of the business that may have an impact on future financial performance.

Having established the departmental responsibility for producing the budget and the critical items that will be monitored the accountant should prepare budget templates and hold pre-budget meetings with the departmental heads. At these series of meetings the department heads will receive the budget templates and discuss the detail required and the timetable for submission.

Management responsibility for producing the departmental budget is crucial to achieving the financial targets and can be greatly enhanced by relating bonus payments to the level of achievement.

The work of the management accountant is to receive all the departmental budgets and put them together in a final budget for approval by the directors. Throughout the budget approval process adjustments are likely to be required to reach the overall financial objectives but once finalised each budget should be signed off by the department head responsible.

Simply taking the previous years numbers and adding a percentage is a simple solution to preparing the next year budget but is likely to be of poor quality. Quality comes from department heads and managers generally taking responsibility for their own areas of activity and agreement to the detailed financial parameters.

The sales budget critical areas are the list of individual products, additions and deletions from the existing product range, the volume of sales by product and the selling price including any proposed changes. In addition all sales channels, advertising plans, promotion and marketing campaigns should be evaluated to support the sales plan.

Sales administration costs including representatives, sales office and overheads of the sales function need to be evaluated and related directly to achieving sales budget. The higher variability included in the sales department costs can be a distinct advantage. For example, relating the numbers to be employed directly to the sales volume to be achieved, staff bonuses payable on achieving the objectives.

The production budget should start not from the numbers of people employed in the past but be set according to the numbers required to produce the budgeted production volume of the future.

The budget approval process is an ideal opportunity to consider in detail the business overheads, staff numbers and qualities required to drive the business forward. Fixed costs may be incorporated into some areas to ensure the administrative costs are controlled.

For example, a works canteen may have a fixed cost to be paid by the business each month. It would then be the responsibility of the canteen manager to provide the employees with the service required while budgeting to set the price of those services at a level which ensured the contribution from the company created a break even position each accounting period.

Too many businesses set budgets for the future based upon historical costs and sales volumes which are divorced from management responsibility. By budgeting with individual management responsibility for achieving the financial targets the overall performance of the business can be better managed and controlled to achieve the desired financial performance.

A prime responsibility of the management accountant is to evaluate the critical areas in cost accounting, ensure those areas are aligned to management responsibility and present the revenue budget compared to the financial accounts to enable the organisation to achieve and extend its financial performance.

Tags: budget, Essential, Information, Management, Revenue, Tool

The Revenue Budget Is An Essential Management Information Tool

The first stage is to ensure the organisational chart clearly represents the management responsibility of each department and activity area. Financial accountancy and cost accounting should be integrated and aligned to enable detailed management information reporting and accurate financial records for each activity.

The cost and management information reporting system should be focused upon critical items where management action influences the financial result. Before setting the revenue budget the managing director, advised by the financial director or management accountant, should identify all crucial elements of the business that may have an impact on future financial performance.

Having established the departmental responsibility for producing the budget and the critical items that will be monitored the accountant should prepare budget templates and hold pre-budget meetings with the departmental heads. At these series of meetings the department heads will receive the budget templates and discuss the detail required and the timetable for submission.

Management responsibility for producing the departmental budget is crucial to achieving the financial targets and can be greatly enhanced by relating bonus payments to the level of achievement.

The work of the management accountant is to receive all the departmental budgets and put them together in a final budget for approval by the directors. Throughout the budget approval process adjustments are likely to be required to reach the overall financial objectives but once finalised each budget should be signed off by the department head responsible.

Simply taking the previous years numbers and adding a percentage is a simple solution to preparing the next year budget but is likely to be of poor quality. Quality comes from department heads and managers generally taking responsibility for their own areas of activity and agreement to the detailed financial parameters.

The sales budget critical areas are the list of individual products, additions and deletions from the existing product range, the volume of sales by product and the selling price including any proposed changes. In addition all sales channels, advertising plans, promotion and marketing campaigns should be evaluated to support the sales plan.

Sales administration costs including representatives, sales office and overheads of the sales function need to be evaluated and related directly to achieving sales budget. The higher variability included in the sales department costs can be a distinct advantage. For example, relating the numbers to be employed directly to the sales volume to be achieved, staff bonuses payable on achieving the objectives.

The production budget should start not from the numbers of people employed in the past but be set according to the numbers required to produce the budgeted production volume of the future.

The budget approval process is an ideal opportunity to consider in detail the business overheads, staff numbers and qualities required to drive the business forward. Fixed costs may be incorporated into some areas to ensure the administrative costs are controlled.

For example, a works canteen may have a fixed cost to be paid by the business each month. It would then be the responsibility of the canteen manager to provide the employees with the service required while budgeting to set the price of those services at a level which ensured the contribution from the company created a break even position each accounting period.

Too many businesses set budgets for the future based upon historical costs and sales volumes which are divorced from management responsibility. By budgeting with individual management responsibility for achieving the financial targets the overall performance of the business can be better managed and controlled to achieve the desired financial performance.

A prime responsibility of the management accountant is to evaluate the critical areas in cost accounting, ensure those areas are aligned to management responsibility and present the revenue budget compared to the financial accounts to enable the organisation to achieve and extend its financial performance.

Tags: budget, Essential, Information, Management, Revenue, Tool