London Licensed Insolvency Trustee on Becoming Debt Free By Sticking to a Realistic Budget

Blog - Five reasons you can’t stick to your budget

London Licensed Insolvency Trustee on Becoming Debt Free By Sticking to a Realistic Budget

An article that we found of interest was “Five Reasons You Can’t Stick To Your Budget” by Erin Joyce, found in July 11, 2011’s The Globe and Mail.

Often clients who seek professional financial advice are in debt due to poor budgeting skills. People often over extend themselves by purchasing items that are unaffordable, but they pay for them on their credit card or line of credit. This can be problematic for many reasons. People often can’t pay back their purchases in a timely manner and end up paying additional costs for interest. Second, this creates bad habits of ‘buying now, paying later’. If you cannot afford to pay for something, you should avoid the purchase. There are obviously a few exceptions to the rules including purchasing a car, home, cottage or other assets. If you want to live debt free, create a realistic budget and try to live a lifestyle you can afford without constantly putting purchases on credit with no intention of paying it back in a timely manner. If you find yourself in financial difficulty due to spending habits that you are unable to pay back, contact a Licensed Insolvency Trustee. McLennan & Company Ltd is a bankruptcy firm in London that offers free initial consultations for people who are in financial difficulty.

One way to avoid spending above your means is to write down a realistic budget of all of your expenses. This allows you to see where you are spending your money, and gives you a budget for ‘spending money’. You should include all monthly expenses and be realistic when creating your budget. Don’t give yourself a restaurant budget of $50 per week if you know you go out for lunch every day and spend at least $75 per week. Always be realistic with your budget so you can stick to it.

There are five reasons highlighted in the Globe and Mail article that can cause individuals to stray from their budget. Read this list to make sure you don’t make the same mistakes:

1. It’s Unrealistic- It’s easy in theory to decrease expenses on your budget, when the reality may be different.
2. It Doesn’t Allow for Indulgences- Give yourself a “treat” when budget goals are met.
3. It Doesn’t Prepare You for Irregularities- Look at your expense for the whole year, so you don’t forget something; however, be aware of the seasonal or random changes.
4. The Structure Doesn’t Work for You- Find a structure that is user-friendly, there are a lot of good, free software programs for budgeting.
5. It’s Not Up to Date- Be flexible for changing circumstances, made easy with today’s technology.

It is much easier than people think to reduce costs. Some of the simple daily routines you can incorporate are: buying groceries and packing a lunch versus eating out, spending less money on clothes, and choosing a less expensive phone plan.

If you continue to live above your means, you will eventually run into severe financial difficulties. If you get into debt that is unattainable to pay back, please seek out help from a licensed insolvency trustee. They can communicate your options such as filing for personal bankruptcy or a consumer proposal. McLennan & Company Ltd is a Licensed Insolvency Trustee firm (formally known as Trustee in Bankruptcy) in London with satellite offices in Woodstock and Ingersoll. Call us today to learn more about paying back owed debts, and creating a structured financial plan to give you financial security for years to come. Book your free initial consultation today!