Making Cents: ‘Debt can be managed better with goal-setting’

Last week, Brendan Bartley of health and wellbeing consultants Spectrum Wellness offered advice for individuals and households on how to deal with post-Christmas debt and get finances back on track.

Brendan specialises in personal financial planning and this week he look at ways for readers to get a better handle on their finances for the long-term and hopefully have a healthier bank balance by the next new year. 

Brendan says households who are not in full control of their spending can get locked into a cycle of debt and he explained how this happens.

“For many households, their income may leave them very tight when it comes to meeting even the absolute necessities of life, such as accommodation, food, clothing or education,” he says. 

“In such cases, an unforeseen expense can see them having to reluctantly resort to short-term debt. That’s always going to be a difficulty.”

However, for many more of us, it is our spending patterns rather than lack of cash that causes problems.

“For others, their cash flow can be much stronger, but they struggle to rein in their spending on often, so-called discretionary spending items, that might include high-end shopping, foreign travel or luxury items,” explains Brendan.

“It all boils down to whether our debt is associated with ‘must-have’ or ‘nice to have’ goods or services, the latter being something within our own control, albeit with a change of lifestyle or spending practices.”

If deep down we know we are in the second category, what should we do?

“Debt can be managed a little better if we practice financial ‘goal-setting’,” says Brendan. 

We all recognise that debt involves us spending someone else’s money now — and paying it back later — and usually with high rates of interest that further eat into our cash flow. We still must come up with the money ourselves.


"Financial goal-setting turns that idea around; why not budget to come up with the money before the expense, rather than afterwards?

“For example, you plan to spend €1,200 on a foreign trip this time next year: Budget to set aside €100 per month from now until then; avoid the debt, avoid the interest cost and ultimately, reduce the stress.”

Holidays are just one of many triggers that can derail a budget. 

Brendan offers key suggestions to help you take back control of your finances and “position you to optimise your take-home pay”.

The first steps are to track your everyday expenses and prepare a household budget.

“Monitor the stuff you spend your cash or debit card on,” he says. 

“This will allow you analyse your spending into different areas of your life.

“Record your take-home pay each month, together with an analysis of where you spend it all: Accommodation, household bills, discretionary spending, etc. Do you run a profit, a loss, or a break-even situation each month?”

Once you have a draft budget, keep track for a month or two and see how it compares to the reality.

“Predict what your income and expenses will be for the forthcoming month. 

"Review it after the month is over and assess if your estimates were accurate and where you might need to make adjustments or cut-backs. You’ll get better at this with practice.”

Brendan believes these simple changes can make you feel more in control of your finances, but budgeting is an ongoing exercise. 

Once you feel you have a handle on your finances, set aside time to review your budget periodically, particularly if your circumstances change.

“I see this all the time at Spectrum Wellness, where clients move to part-time work, thereby reducing their income, or earn a promotion and a pay rise resulting in more disposable income, or perhaps you’ll have more money as education costs finish or whatever the case may be,” he says.

“An annual review will keep your budgets relevant and up to date and will allow you to get an informed handle on your own situation.”

Deal of the week 

Virgin Media has brought out a range of January offers for new and existing customers.

Pick of the deals for those not currently with the company is the Virgin Media Mix for €49 per month.

It promises broadband speeds of 240mbps plus the TV package includes access to all the Uefa Champions League and Uefa Europa League matches on Virgin Media Sport channel, access to apps such as Netflix, YouTube and a range of other add-ons.

Their offers for existing customers include two months FreeSport (app) access — worth €20 for Virgin Media Broadband/Broadband and home phone and mobile customers.

Virgin Media Broadband/BB and home phone customers can move to Full House 360, Sky Sports and Cinema for €99 per month, saving €36 per month for a year.

It also has deals for customers adding extra elements to their existing packages.

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