Financial literacy and money management take a great deal of effort to manage, and unfortunately, our planning doesn’t always pay off.
This is because you can do everything right, and still experience unlucky circumstances that lead to difficulty.
Perhaps your car breaks down, or you have large unexpected bills to pay off, or perhaps you’re between jobs and having a tough time stretching your income.
However, it’s true that problems often breed other problems, and so to the extent you can manage it, it’s important to try and get ahead of issues before they find you.
This way, you can avoid one problem turning into ten, and hopefully find your way back to more stable times.
When your funds are limited, it’s important to avoid the mistakes that compound the issue.
In this post, we’ll discuss three of the most vital to avoid. Plus check out better habits to implement instead.
1. Using Payday Loans
It may feel tempting to pay your way out of debt by using a Payday loan, but all you’re really doing is swapping one debt for another.
The truth is that Payday loan companies prey on those with difficult circumstances and make money of you being unable to pay.
They have stringent protocols to prosecute the debt or to raise interest until you do pay.
All of this can be financially damaging, to say the least, and debt collections agencies will often seek to help ameliorate the situation as fairly as they can, but also with the legal mandate they’ve been provided.
For this reason, it’s important to be mindful about where you turn, try to look for options other than pay day loans and similar e.g. these 24 ways to make money or our free 7 day fast money challenge.
2. Ignoring Creditors
One of the worst things you can do is ignore a debt.
It might be sold to a collection agency or credit recovery firm, it might impact your credit score for longer than you should allow it to, and it could potentially cause a debt to spiral out from under you.
It’s not only a threatening outcome you should be concerned about of course, but also in missing a good opportunity to help you get back on your feet.
In most circumstances, creditors are reasonable.
Talking to them head-on, declaring your intention to pay, setting up a payment plan, and just being communicative are absolutely healthy outcomes, and it’s important to remember that.
Check out these tips to help you reduce debt, including how to deal with debt collectors.
There’s no shame in having limited funds, but there is shame in trying to give creditors the runaround or simply ignore the issue until it goes away.
3. Neglecting Assistance
It may not seem like it, but there’s a plethora of help out there to assist you should you be hard on funds.
Sometimes, charities can help negotiate with your creditors, consolidate your debt payments, offer individual advice, or even refer you to legal assistance where needed.
I’ve written extensively about assistance available in Australia including free money and vouchers.
Many people fail to use these incredible services out of a sense of pride, but there’s no shame in having a lack of funds, and this assistance can give you an unbelievable sense of progress and peace of mind, the kind you need.
WIth this advice, you’re certain to avoid difficult mistakes even when low on funds.