Global debt is at an all-time high. Government, corporate and household debt is sitting at around $250 trillion. That’s an average of $32 500 debt for every human on earth. It’s three times higher than global economic output.

•    Since the financial crisis, many countries have been trying to use borrowing to keep the slowing global economy afloat.
•    Lending rates are at an all-time low, allowing practically anyone to get credit.
•    Australia and South Korea currently have the highest household debt.*

We as consumers have become “debt addicts”. We suffer from “buy now pay later syndrome”.

This doesn’t just apply to the lower and middle class. Even affluent professionals are over-spending and living on credit. 

How can we get out of this?

•    Sit down and take a close look at your spending. What you spend, where you spend it and why you spend it. You will be shocked at the frivolous spending you do. 
•    Work out a real budget of what your essentials are. 
•    Look at your luxury and impulse spending and see where you can cut down. Be disciplined. Channel the cut down portion into a savings account.
•    Give yourself a spending budget for luxuries and casual spending and stick to it.
•    Save first and spend later. Set up a direct deposit into a savings account on the same day you get your salary. This way you will always have emergency funds available instead of using credit.
•    Only use credit if you are going to settle the amount at month end.
•     Even a little extra paid towards your debt will get it paid off quicker.
•    Debt can seem overwhelming but, focus on one debt at a time and paying a little more to get it settled. Start with the smallest debt first. 
•    Once you’ve paid off a debt, don’t think of that money as extra spending money. Use the extra money to pay the next debt. It gives you small achievements and goals to work towards. You will be out of debt sooner and can save all that surplus cash. 

Chat to your deVere adviser about helping you manage your spending by working out a financial budget and plan so that you can start accumulating wealth. [email protected]

* https://www.thenationalnews.com/uae

 

Please note, the above is for education purposes only and does not constitute advice. You should always contact your deVere adviser for a personal consultation.

* No liability can be accepted for any actions taken or refrained from being taken, as a result of reading the above.