Counting the cost of the year ahead
Christmas was a great time for relaxation and enjoyment. However, with the festive season long over some of us need to be alert to the financial difficulties that the rest of the year may bring.
From the recession and crunch of the late 2000’s many of us have already struggled. From an economic perspective we are officially out of recession although the trauma is certainly not over. The economy is still in a recovery phase and significant risks exist, perhaps with a high degree of sensitivity too.
The economy in 2012 is likely to be aired in the media as prominently as it was last year. The problem is debt. The Government has borrowed huge amounts of money, known as the deficit, which needs to be paid back. This is going to impact most of us at some stage as the cut backs gather pace.
So how will we be affected and how do we prepare?
Potential Future obstacles
It will help to be aware of any future obstacles that may arise. Below is a list of some considerations that you should have moving into 2012:
• Inflation – increase in the cost of fuel, food and other commodities
• Economic contraction – an indicator that organisations may face difficulties ahead
• Interest rates – following their historic low there is a risk of increase to combat inflation
• Job cuts – in the private sector and the public sector
• Restrictions on lending
• Benefit cuts
• Salary reductions
Taking stock
Taking stock should be at the core of any personal finance review. If you don’t know where you are financially then you are not going to be able to plan for the year ahead.
Create a list of income and expenditure. Make sure you know what your income is each month and establish whether the cost of your basic living needs exceed this income. Have an idea of any likely ad hoc expenses and do not forget to factor them in to your budgeting. For example, will you need a new car or washing machine any time soon?
Be aware of who your creditors are and how much you owe them. You will need to know in order to address any debt issues to avoid them getting out of hand.
Assessing your situation
It is important to consider the impact of any change in interest rates, inflation and other factors that can affect you. The more that struggle now, the more you will struggle if these change for the worse.
Taking action
Assessing your current situation and understanding the threats to your personal finances is the first step to achieving financial happiness. If you discover that you are at risk this year, you need to know now so that you have time to act. If you are in debt and struggling to repay those debts then the sooner you seek advice the sooner you can resolve your debt issues.
There are a number of steps that you can take to deal with finance issues. The action that you take will depend on the severity of your situation. It may be as simple as cutting back on spending or as serious as having to go bankrupt.
A number of organisations can help you with your finances. This includes:
Consumer Credit Counselling Service
Martyn Lewis’ Money Saving Expert
This article was written by Mark Davis. Mark is experienced in helping others with debt related issues and has a website that explains bankruptcy.
Written by Mark Davis.
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