There are many different programs available on the market today for helping with debt relief. Debt counselling, debt management, remortgage deals, and many more. However, they all have one big problem attached, which makes getting out of debt a tricky task. Can you guess what this might be?
You may be thinking that it could be the fees, or the inflated interest rates, or maybe it could be the actual debt management companies themselves. Wrong. The main reason why people fail to get out of debt is the fixed monthly installments that come with all debt management programs.
Do you earn the exact same amount of money each and every month? The answer to this is most probably no. That's not hard to understand. For instance, salespeople very rarely make the exact same amount of money every month. They earn commission on the volume of trade they generate, which in most cases, varies. You could be a retail assistant. In most cases, business is seasonal, and the amount of work available is dependent on the time of year. Overtime hours come and go depending on company workloads. Part-time jobs may offer hours that vary widely from week to week. And so on.
Can you honestly say that you spend the exact same amount of money each and every month? I guess the answer is no. People have fixed amounts of money which go out each month, for example, a fixed mortgage, a personal loan, car finance etc. But what about the other expenses? Daily food expense, the rising fuel prices, monthly phone bills, etc. It's practically impossible to spend the exact amount of money every day, let alone every month.
One of the main causes for people getting into debt is unexpected expenses. When people have a fixed monthly income, they budget all of their expenses around this. An unexpected expense can upset their budgets, leading to debts.
Debt counselling programs seem like a good idea, but sometimes, they can lead to big problems. People often enter these programs with good intention, and are often happy to make the agreed payments on a monthly basis. They may be alright for a couple of months, then the boiler blows up. A new boiler costs around $1,000. What happens to your budget when you are hit by an unexpected expense like this? That's right.