As the Christmas spirit fades you might find yourself struggling to pay for purchases you thought you would have plenty of money to pay or to keep up with repayments on your mortgage or car.
If your financial situation has changed and you are finding it difficult to keep up with debt repayments, contact the lender as soon as possible. Don’t borrow from one lender to pay off another without getting budget advice first.
You can ask the lender about options that could make life easier:
- Ask to reduce payments — You can ask the lender if you can pay less each payment. This is called a ‘variation’. It will mean you will pay more over time because you are extending the loan. You and the lender have to agree on any changes.
- Apply for hardship conditions — If you have something major go wrong in your life, like you have lost your job or your marriage has ended, you can ask for a payment holiday. You can also ask to lower the repayments and extend the term of the loan (or a combination of the two) to give you time to get back on your feet.
- Take the goods back — If it looks as though the items you bought on credit are about to be repossessed, ask if your can return the goods yourself. This is called ‘voluntary repossession’. You will still end up owing money because of the lower resale value of second-hand goods plus interest rates and fees.
But getting in first will save you having to pay repossession fees, which are usually hundreds of dollars.
Plan for the future
If you don’t want to be in the same situation this time next year, having a budget is a great place to start. A budget isn’t about complicating your life — it’s about knowing where your cash is going and making your life easier.
There are also some little changes you can make to help you save:
- Go generic on one name brand item — aim to add one item a month. With most products you won’t even know the difference.
- Use comparison shopping apps — You scan barcodes and will tell you if the item on the shelf is cheaper on the other side of the shopping centre or from an online retailer.
- Flog it! — Got it and don’t need it? Sell it online or at a car boot sale. This is not just good for your pocket, but good for the environment too.
- If you have trouble paying debts or need help starting a budget, it can be helpful to talk through your options with a budget advisor. If you find that your creditor is treating you unfairly, you can ask a dispute resolution scheme for assistance.
For more information and assistance, call, visit or email your local CAB.