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Debts can be overcome by cost cutting





raaeft1
One can overcome debts and financial recession by resorting to cost cutting at all levels. This is very difficult to do as we are used to a certain lifestyle in which we spend lavishly on things we desire or want.
But sacrifices have to be made if we are to overcome financial crises especially when we are under tremendous burden of debts including loans and credit card dues.
The more we pay off debts, the better we are. But sometimes, families do not understand this and they do not cooperate in this endeavour.
bigt
raaeft1 wrote:
One can overcome debts and financial recession by resorting to cost cutting at all levels. This is very difficult to do as we are used to a certain lifestyle in which we spend lavishly on things we desire or want.
But sacrifices have to be made if we are to overcome financial crises especially when we are under tremendous burden of debts including loans and credit card dues.
The more we pay off debts, the better we are. But sometimes, families do not understand this and they do not cooperate in this endeavour.


You are right, but I say there are three ways to reduce debt: spend less, make more, or both. The main thing my financial guru told me is that I needed to be on a budget. He was right. My wife and I have been paying off thousands of dollars worth of debt just by making our money work for us and telling it where to go. It's very hard at first, but you will literally find money when you write it all down. Make a plan and live by it.

The quick and dirty version:
After you get on a plan, save some money in an emergency fund, get out of debt, build that emergency fund up, and never get back into debt.

It's hard to put all of my thoughts together at the moment, but ask questions in here or we can start another thread. I wouldn't mind answering your questions. Google Financial Peace
Greatking
this is very true, its called management. cut your coat according to your size. if you earn $10,000 a month. you have a family of five. kids in school. paying bills, investing, you can survive it. all that matters is living within your means. spend less, and cut costs on things less needed. its baseless to spend on luxurious stuff when you really dont have enough. there is nothing wrong with having and enjoying the very best. but when you dont have enough, you do what you can. so when you've got plenty then other stuff can be done. yes its easier said than done espercially when you have lived a certain life for a long time and you have to cut it out or adjust. but anything is possible once you are determined and you make up your mind and in the long run its really for your own good anyway. so whats the big deal? life's good lets' work it!
deanhills
raaeft1 wrote:
One can overcome debts and financial recession by resorting to cost cutting at all levels. This is very difficult to do as we are used to a certain lifestyle in which we spend lavishly on things we desire or want.
But sacrifices have to be made if we are to overcome financial crises especially when we are under tremendous burden of debts including loans and credit card dues.
The more we pay off debts, the better we are. But sometimes, families do not understand this and they do not cooperate in this endeavour.

Debts can be overcome by putting together a list of monthly costs and expenditures first so that you can figure out exactly what your debt status is. Then work out what you need to save. And then find out where you can cut costs, AS WELL AS make money. The details are very important together with a savings plan.

I think one really gets motivated to cut costs, when you can actually see exactly what they are when you do daily record keeping. E-How has some simple suggestions for how to do the record keeping:
http://www.ehow.com/how_4556026_track-personal-spending.html?ref=fuel&utm_source=yahoo&utm_medium=ssp&utm_campaign=yssp_art
Hogwarts
Hm. And yet, this kind of thinking is what's driving us into recession, and will probably cause people to lose their jobs... which makes it impossible for some people to "financially plan"? I'm currently spending as much money as I can, creating business for other people. I feel perfectly secure in my job, and even if I lose my job I'm still financially secure.
deanhills
Hogwarts wrote:
Hm. And yet, this kind of thinking is what's driving us into recession, and will probably cause people to lose their jobs... which makes it impossible for some people to "financially plan"? I'm currently spending as much money as I can, creating business for other people. I feel perfectly secure in my job, and even if I lose my job I'm still financially secure.
Maybe it comes natural and spontaneous to you Hogwarts. Some people actually need to look at their spending vs their income, especially when they find their spending is more than their income and they are always in debt using revolving credit cards, i.e. using one to pay off the other. Best way is to start a log and then to analyse spending vs income.
Hogwarts
The thing is, this recession is happening because people have stopped their spending. Until they realize the cure to it is spending more, they're just delaying the revitalization of the economy. Hence, for example, Governments have been handing money to citizens, hoping that they'll spend it and (at least, temporarily) revitalize the economy.
deanhills
Hogwarts wrote:
The thing is, this recession is happening because people have stopped their spending. Until they realize the cure to it is spending more, they're just delaying the revitalization of the economy. Hence, for example, Governments have been handing money to citizens, hoping that they'll spend it and (at least, temporarily) revitalize the economy.

The most important place for the spending to occur is on the Government and Bank levels. People has to have money first before they can spend. If they do not have money and they are spending, they will just spend themselves into bankruptcy?

Right now I am unaware of Banks giving loans as easy as they used to. I thought also that the bail-out was motivated as part of a "spending" measure of getting Banks to get the money through to the "spenders". That has not happened either, predictably so.
Solon_Poledourus
I quit smoking years ago. Not for health reasons, although that's a huge benefit. I quit because I kept track of how much I was spending on cigarettes, every day for a year. I think it came to something like $3,500.
At that point, I quit smoking and started keeping track of every penny I spent. At the end of each day I put my pocket change in a 5 gallon jug from a water cooler, and at the end of each month I hauled that jug to the bank and deposited it. I still do that.
If I buy so much as a newspaper or a bag of peanuts, I write it down. At the end of each month I go through my expenses and decide how best to spend my money next month. This has helped me greatly, and has saved so much money. I almost feel wealthy now that I cut out all the frivolous spending, and actually live within my means. It's second nature anymore, as I've been doing it for so long now.
The best advice is to spend a month or two tracking your expenses carefully. Because when you wonder why you don't have the money to do or buy a certain thing, the answer will be right there on paper. It makes things alot easier to manage.
deanhills
Solon_Poledourus wrote:
I quit smoking years ago. Not for health reasons, although that's a huge benefit. I quit because I kept track of how much I was spending on cigarettes, every day for a year. I think it came to something like $3,500.
At that point, I quit smoking and started keeping track of every penny I spent. At the end of each day I put my pocket change in a 5 gallon jug from a water cooler, and at the end of each month I hauled that jug to the bank and deposited it. I still do that.
If I buy so much as a newspaper or a bag of peanuts, I write it down. At the end of each month I go through my expenses and decide how best to spend my money next month. This has helped me greatly, and has saved so much money. I almost feel wealthy now that I cut out all the frivolous spending, and actually live within my means. It's second nature anymore, as I've been doing it for so long now.
The best advice is to spend a month or two tracking your expenses carefully. Because when you wonder why you don't have the money to do or buy a certain thing, the answer will be right there on paper. It makes things alot easier to manage.
Thanks for the advice. I really need to buckle down and do something with my spending. I spend well within my means, but all of it seems aimless without a plan. Good start would be to find out how I am spending.
hofodomo01
Yeah, I have a massive amount of private loans for college, and I'll definitely need to watch my budget when I graduate. Hopefully I'll be able to pay it back slowly and on a regular basis...
Ghost900
While I agree that spending or the lack there of is part of the reason we are in a recession, some people spent so much that they have lost there homes to foreclosure and that helped pull the housing market to the bottom. I think it is okay to spend but it all depends on your income and your debt level, for those with small paying jobs the best thing to do is save any money you can in case of being laid off and as a security in the event things get worse.

I am starting Collage and hope to pay as I go as I am going to a cheaper Collage but in the event you need a loan then after you graduate and get a good paying job then it is best to pay off the loans before you start spending on things you don't need.

I am starting to keep track of my spending so I know where my money goes otherwise it seems to just disappear.
standready
Hogwarts wrote:
Hm. And yet, this kind of thinking is what's driving us into recession, and will probably cause people to lose their jobs... which makes it impossible for some people to "financially plan"? I'm currently spending as much money as I can, creating business for other people. I feel perfectly secure in my job, and even if I lose my job I'm still financially secure.


I see the economy as a double edged sword. As a business owner, I like your thinking. Myself and my employees would appreciate more business. Other edge of the sword, my employees get paid no matter what. So I don't. That means I have to cut my personal spending or go into debt.
I have budgets for both the business and personal. Things get crazy far too often.
Greatking
i believe in cutting your coat according to your figure. it fits perfectly, and above all u feel comfortable. oversize budget causes great heartache. what is the sense in living beyond your means. no one is perfect. try as u may, you could come up with debts on your hands, if that should happen, i believe in cost cutting. managing as best as you can. but one must never make it a habit of encountering debts. i know i hate debts. i would rather go hungary a few days than owe people. it gives me sleepless nights. pay up and enjoy peace of mind. live simply and enjoy comfort. when you have more, you do more wisely ofcourse. when you have little you manage and adjust hopeful for a better day. i believe in this i am practicing it. there are a lot of things i need, i dont have enough now so i am managing with what i have. and i know even when i have enough, i will be careful to only acquire things i will need. so help me god! Very Happy
dr2g0n
dios me estoy aburriendo ya de esto a cada rato lo mismo
Dean_The_Great
Budgeting is critical to your financial well-being, particularly in a recession. I always live within my means, that way my savings always grows, even if only a little. This way when large, unforeseen expenditures arise, there is money in the bank ready to go, or a plan on how to get it easily.
andredesignz
http://businesscoaching.typepad.com/the_business_coaching_blo/2008/05/cost-cutting-in.html wrote:
Cost Cutting In Your Business Turnaround
In Day 1 of the Seven Day Business Turnaround Kit from Mark Joyner and Simpleology, you were told to identify your motives for saving the business and then you made sure you knew your financial position and identified all your costs.

The first step in the turnaround plan is to stop the bleeding of unproductive time and money and the second step is to reduce your stress by dealing with your problems and knowing where you are heading.

Day 2 of the Business Turnaround Kit is when you put your cost cutting plans into action and you speak to your creditors.

Make no mistake, Day 2 is a nightmare

You have to make hard decisions, take action and live with the consequences. Cost cutting is never pleasant but you will feel purged.

If you are serious about turning around your business cutting costs is 100% necessary.

I talk about cost creep in my coaching. It is much easier spending money that earning it and that's why you need to go back and review you costs. In a business turnaround situation saving $1,000 of costs in a month is just as good as earning an extra $1,000 of margin from your sales.

You will not survive if you don't stop the bleeding of cash and wasted time. Day 2 of the Business Turnaround Kit is the day that you take action.

Cost Cutting 101

Stop incurring unnecessary costs and anything else which doesn't give you an immediate payback.

When you are fighting for business survival with possibly only a few weeks to go, the "must go to" exhibition in six months time doesn't matter.These are the type of costs you have to cut, the "nice if's" as well as the wasteful and extravagant costs.

If you didn't read about the zero based thinking for making difficult decisions in my Day 1 review, do so now. Take each cost in turn and ask yourself, "Knowing what you know now, would you still start incurring this cost?"

If not you have identified a cost to be cut.

In the cost cutting phase you only have three options:

Keep it

Reduce it

Stop it
Let's take office cleaning as an example and imagine you have an office of 15 people and you are considering whether you can cut your cleaning costs.

Can you stop the contract with the cleaning company and ask your own team to clean their areas? Is this the best use of their time? Will it retain their goodwill and serve as an example of the stringency measures required? What are the consequences if some people take up the cleaning chore and do it but others don't?

If you decide to keep office cleaning but to reduce the cost can you:

Reduce the quantity and move from cleaning every day to three days per week?

Reduce the quality so that certain cleaning tasks are taken out of the scope of the work?

Reduce the cost by negotiating a lower rate per hour?
Cost cutting means looking at your external purchases and being ruthless. If your business goes bankrupt, they have lost the business anyway so don't feel bad. Cost cutting also means looking hard at your own employee team.

Now is not the time to be trying to carry passengers and it's not fair to your other employees who rely on their salaries from you.

The 7 Day Business Turnaround Kit takes you through a generic process for reducing the number of people you employ although you must take legal advice. Mistakes under the employment laws are very expensive. In the UK, you may want to join the Federation of Small Businesses which gives you access to a legal helpline.

Cutting future costs is a great start but if your business has a cash crisis, you have a long list of creditors who expect to be paid and the next step in the 7 Day Turnaround Plan is to deal with these creditors.

Facing Up To Your Existing Creditors

The 7 Day Business Turnaround Kit encourages you to approach your creditors and come to an arrangement. It even gives you a sample script.

This is on the basis that the worst thing you can usually do is to go into hiding and avoid any contact with your suppliers/vendors. They will lose patience quickly and start proceedings to recover their debts and restrict future supplies.

The Business Turnaround Kit doesn't tell you to take insolvency advice but you do need to consider it so that you are clear about your legal responsibilities.

One of the definitions of an insolvent company in the UK is a business which is unable to meet its debts as they fall due. Once you are insolvent, there are serious issues to consider both for your business and for you personally. In the UK the directors become liable for company debts if their company is insolvent and continue to trade when the business has little or no chance of recovery.

There are two options:

Delayed payments - you agree a schedule for past debts but you pay immediately for current purchases.

Waived payments - the supplier agrees to settle for a certain percentage of the debt and to waive the remainder.
You may think that there is no way your hard nosed suppliers will accept this but they have little other option if your business is close to collapse. Some money is better than nothing.

The Seven Day Business Turnaround Kit takes you through the process of doing these difficult negotiations yourself or bringing in a debt restructuring company to do it for you. One debt restructuring firm is recommended but they only cover the USA.

There are risks in talking to your creditors (but there are big risks in not talking as well). Some vendors/suppliers may act precipitately out of self interest on the basis that they can extract their cash before you become bankrupt so you can't hold back on just how serious the situation is.

In the UK there is a formal insolvency procedure called a Company Voluntary Arrangement which covers the agreed reduction of creditors while the business is in a legally protected position. These CVAs require the involvement of a licensed insolvency practitioner. (see CVA for more details).

If your cash crisis is so bad that you believe that you need to consider talking to your creditors, and especially if you are thinking of proposing a reduced settlement, I strongly recommend you take legal advice about the local insolvency/bankruptcy laws.

At The End Of Day 2

Day 2 is as tough as it gets in your business turnaround.

You have cut costs and may have admitted your problems to all the businesses who depend on you for payment.

It is likely that you will have heard tales of hardship and how your actions are ruining the dreams of employees and putting your suppliers' businesses at risk.

But you can look yourself in the eye when you see a mirror. You are facing up to your difficult circumstances, you are taking action, you are being honest and you are dealing systematically with your responsibilities.

The 7 Day Business Turnaround Kit is supporting you throughout the process and by the end of day 2, you have achieved so much.

You have stopped the bleeding.

Your stress levels should be lower. People know the situation and can make their own informed decisions. You can move on to thinking about how you can find your cash injection to give you more breathing space which is covered in Day 3 of the turnaround plan.

Day 2 Assessment of the Business Turnaround Kit

There is no way that the business turnaround kit can cover the local legal compliance issues so you will need to supplement it with legal advice about employment law and insolvency/debt.

The Business Turnaround Kit supports you through the cost cutting process and shows that however difficult and unpleasant Day 2 is, it is an essential part of the process.

Skip over Day 2 and your stress levels remain sky high because you haven't dealt with your problems. Without reviewing your costs and cutting out the non-essential items, you are forcing your business to carry a heavier weight and you are reducing the likelihood of a successful turnaround.

Also included in the Day 2 material is an excellent video from Spiker Humer, an experienced turnaround manager who is now Chief Operating Officer for the Jay Abraham companies which looks at the turnaround process in larger small businesses. [Turnaround is different in a one or two person business compared with a thirty to fifty employee business but they are both considered to be small businesses.]

There is also a long, very quiet video from Internet marketer Tellman Knudson which is well meaning but self indulgent. I would be surprised if many people watch this video given how much has to be done on Day 2 and I would recommend that you skip it.

The intention is to show that you can overcome any obstacle but Tellman does not have the ra ra style of a motivational speaker and I doubt that you are interested in the problems he has overcome. The lessons probably won't be relevant to you and you don't have much time.

Everything else in the Business Turnaround Kit has been short, concise and very focused.

The Day 3 of the 7 Day Business Turnaround Kit review will appear in a few days.


Helios: Please use quote tags and state the source of the copied material (even if it's your own material). You may edit your post to remove this note once you've read it.
raaeft1
I forgot to pay my credit card bill in February and March 2009 and paid the minimum amount due in May but the HSBC Bank has closed my account, reported me to the credit bureau and asked me to pay the entire amount due on the Card.
I have sent emails to the Bank that I would deposit variable amounts in the closed account on a monthly basis as I am not in a position to pay the entire amount at one go.I have been told by experts that I should not worry and not succumb to threats, legal or otherwise from the Bank, but go on depositing money in the account till the entire amount is paid off.
So I have to do cost-cutting and stick to budgets.
deanhills
raaeft1 wrote:
I forgot to pay my credit card bill in February and March 2009 and paid the minimum amount due in May but the HSBC Bank has closed my account, reported me to the credit bureau and asked me to pay the entire amount due on the Card.
I have sent emails to the Bank that I would deposit variable amounts in the closed account on a monthly basis as I am not in a position to pay the entire amount at one go.I have been told by experts that I should not worry and not succumb to threats, legal or otherwise from the Bank, but go on depositing money in the account till the entire amount is paid off.
So I have to do cost-cutting and stick to budgets.
I would be worried if I were you. E-mails are OK in normal circumstances, but since this is an emergency I would have gone in person to the bank to assure them of my sincerity to make good on the debt, and how I am planning to do that.
computerexpert09
It really is hard to find a good job now. Plus it is hard to get the pay you want now. A lot of companies are cutting back on their employee benifts also which is hard on a lot of people who can't really afford medical insurance since its more expensive now. You just have to work as hard as you can and try not to buy too much unnescesary things.
Nameless
raaeft1 wrote:
Debts can be overcome by cost cutting


In other news, education is the best way to to become smarter, loneliness can be greatly reduced by being nice and making friends, and it is to make things wet by putting water on them. There's something wrong with your planning if you haven't already considered this BEFORE entering debt.
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