If you get into hot water
Take action:
- Discuss the situation with family and friends
- Speak to your credit card provider and see what you can negotiate
- Seek advice.
Credit needs some BRAVE steps:
Budget for your repayments
Research the deals and charges
Avoid the “impulse buys”
Value your freedom – fix a realistic limit for your card
Every credit charge is a debt – try alternatives to credit.
Begin with a budget
If you’re moving out or staying at home you may have to start paying some new bills including rent or board, electricity, phone, mobile phone and gas, to name just a few. If you have a car there could be more.
Budgeting to pay these bills is not as easy as it sounds, especially if you are only relying on income from part-time work, Youth Allowance or Abstudy. Keep track of your budget so you can make sure you have the money to not only pay the bills when they arrive, but also have money on hand for the unexpected.
First, look at how much you really spend each week and then work out how much you have coming in. Write down and add up how much you spend each day, week, month or quarter on:
- Your home – rent, board, gas, electricity telephone, insurance
- Food and clothes – don’t forget take-away meals and any clothes you buy for work
- Travel – list the costs of running a vehicle (insurance, rego, petrol, service costs) or any public transport costs
- Financial commitments – include the repayments you should be making on any loans or credit cards<.li>
- Entertainment, videos, movies, restaurants, cafes etc
- Other things – cigarettes, alcohol, study fees, CDs, magazines, gifts etc. Don’t forget regular occasional items like haircuts or video rental. And do you have any pets? A mobile phone? Do you buy scratch-its or lotto?
Be honest! This can only help you make it as complete as possible.
Now add up all the money you have coming in:
- Wages – include any money from casual work you do
- Government assistance – Youth Allowance or Abstudy
- Student loans
- Share dividends, interest from term deposits etc.
If your outgoing is more than your income, you will need to work out how you can get more money coming in than going out and where. You may have to make some sacrifices.
Look carefully at all the things you buy that are not strictly necessary and find ways to spend less. You might be able to get more money coming in too, either regularly or a one-off.
By keeping your income higher than your spending, you’ll have enough money to not only pay the bills, but to also put some aside. It’s a good idea, especially when you’re faced with the unexpected, like your fridge blowing up or your car breaking down.
If the borrower does not do what they promised to do in the credit contract (i.e. not repaying the debt), this is called ‘a default’.
A lender must give a borrower written notice before they take legal action if the borrower defaults. This notice is called a ‘default notice’.
The types of legal action that lenders can take include:
- Repossessing the mortgaged property
- Applying to the Court for it to decide how much the borrower owes the lender (this is called a judgment).
The default notice must set out what you, the borrower, have not done and what you must do for the lender not to take legal action.
