HOW ABOUT A FRESH START

There’s a certain sector of the public that I really feel sorry for and sometimes am in a quandary to know how to give the best advice. These people are locked into a debt situation and no matter how hard they try, have no show of ever getting out. It can happen so easily even to hardworking, honest people and this is how it happens.
Advertising to imbibe a materialistic viewpoint is the first temptation. Buy on easy credit and spread the payments over the next few years. So the purchase is made and everything goes along smoothly until the washing machine breaks down. There isn’t any contingency cash available for a repair bill so the machine is traded in for next to nothing on a shiny new model again on hire purchase. Troubles never come singly – the car engine blows up and the same procedure is resorted to,

Now the point of “ no return“ is reached; too many short term loans and for the first time the budget won’t balance – committed expenditure now exceeds available income. If at this point help is sought it’s an easy matter first to reduce sufficient items of expenditure to reverse the situation. If that fails a debt consolidation loan will inevitably do the trick so long as it’s not just the symptoms being treated but a commitment to correct the cause and stay out of future debt.

Unfortunately the majority don’t recognize the problem mainly because they haven’t the capacity to do a feasibility financial plan accurately themselves. Instead they defer the annual bills that come up to pay immediate debts. Then there is a false hope that a miracle will come their way – they will win the big one or Dad will come to the rescue.

Usually debt depression sets in with predictable symptoms, sometimes a spending spree on credit cards with the thought that they may as well be hung for a sheep as a lamb. Then comes the arguments and apportioning of blame.

If it’s at this late stage that many come to me hoping I will wave the magic wand and fix all problems in one fell swoop. Even though I know beforehand it may be a hopeless case I still put the financial plan up on the computer and am never surprised when up comes a horrible weekly shortfall. I then add up all the unpaid bills, credit cards, hire purchases etc. and shock number two sets in.

But it’s good therapy especially when I see that the horror of debt occurs plus a determination that if they ever get out of the situation, they will never get back into it again. If they have a home with sufficient equity to consolidate all debts and loans I can invariably show them the light at the end of the tunnel. If not and there is no chance to trade out of the situation then the only alternative is a trip to the Official Assignee to file for bankruptcy.

For these people who genuinely want to make a fresh start and have learned by their mistakes, I wish I had a trust fund that I could lend the amount required with little or no interest and build in the repayments over two or three years. It would certainly save a few marriages from going on the rocks.