How did I get into this situation?
One thing is certain when you signed for any loans, credit cards, or other finance
you currently have, you were not expecting your finances to become more difficult
to manage. After all with wages rising and general quality of life improving,
the payments on any finance you take out, may seem large at the moment, but as your
income increases over time, the payment to the loan will comparatively reduce.
However nothing goes totally to plan.
In some cases there may be a cumulative effect, like our scenario below:
Mr X is single and lives with his parents. He takes out car finance
Effect: Increased expenses; making finance repayments, insurance payments and maintenance
costs
He then moves in with his partner
Effect: Household expenses increase
Together they take out a credit card to make home improvements
Effect: More spending ability and another bill to pay
They then decide to consolidate their debts into one loan
Effect: They reduce their outgoings
They both receive pay rises
Effect: More spending ability and increased credit worthiness
They take out a credit card
Effect: More spending ability and another bill to pay
Their first child is born
Effect: Increase in living expenses and reduction in income due to maternity pay
They take out a further credit card to spend on the baby
Effect: More spending ability and another bill to pay
They take out finance for an additional car
Effect: Increased expenses; making finance repayments, insurance payments and maintenance
costs
Their second child is born
Effect: Increase in living expenses and reduction in income due to maternity pay
Mrs X reduces her hours at work due to childcare
Effect: Reduction in household income, but outgoings remain the same
This type of situation is fairly typical, what starts out as one person taking out
finance and taking on responsibility, shortly becomes finance for a whole family.
Reaching a stage where the family are finding it increasingly more difficult to
maintain payments to their creditors but can’t identify where things started
to ‘go wrong’.
No one could say that any of the spending in this example is unreasonable, however
a point is reached in a person’s finances where, if they were looking at a
situation dispassionately, they could have said ‘that is where things became
difficult’ much sooner than they did.
Other circumstances can be ‘one-offs’ and be totally outside your control.
Whereas we would never condone the use of credit to pay for credit, we know that
it happens. Again, if the customers had looked at their situation dispassionately,
they may have decided that their situation should have been dealt with far sooner.
Your priority should always look at how a course of action will affect you, rather
than second-guessing the outcome of a chain of events, or carrying on in the hope
that your situation will improve.
This is where Promise would be able to help. Because we can take a step back
& look at your finances impartially, we will provide you with our best advice
concerning your courses of action.
In most circumstances we can help.
Case Studies