WEDNESDAY-19TH DECEMBER 2007- Rising cost of living means time to budget

Rising cost of living means time to budget
Consumers advised not to over-commit in spending income
KOTA KINABALU: Consumers Association of Sabah and Labuan (CASH) Deputy President, Nordin Thani yesterday advised consumers in the State not to be over-committed in their spending and budget their income wisely.
"By budgeting and planning our financial commitments as well as income, we can avoid debts and make the most of our income," he said in an interview here yesterday.
"We have to be realistic about what we can afford. It is easy to become financially over-committed. Our monthly commitments and extra bills would increase for example when we sign up for a new service, such as satellite TV or a post-paid mobile phone line (by contract), buy something on hire purchase or add to a credit card debt," he said.
Nordin added, "another reason for financial over-commitment may be a change in personal circumstances resulting to a drop ofincome, for example, if one loses his job or meet an accident resulting in loss of earning or the need to stop working. When this happens, we have to change our spending priorities."
According to him the most important thing a person has to do at times like this is to review his or her budget as it can help them plan ahead and make the most of their income.
"We must identify our commitments, for example, mortgage, rent, bills, cars and work out how much they cost," he said adding that there is a need to establish the source of income to make the payments with.
It is also important to review the budget regularly, because circumstances are likely to change, he said and pointed out, "by working out a budget we'll know how much money we have for our essential living expenses, such as household bills, rent or mortgage and food and how much we can afford to commit to other plans, like buying a car, taking out another mortgage, going on holiday or saving for the future.
"By prioritizing our commitments we can make sure our basic needs are met and then we can decide what else we can afford, and what we have to save for or do without. By shopping around and negotiating, not just for goods and services but also for financial products such as loans and credit cards, we can make our money go further," he said.
"If one is over-committed and have a debt problem, please, in my view, do not ignore the situation. That is the worst thing one can do, to ignore the problem, hoping it will go away as the earlier one contacts the creditors, the more flexible they're likely to be in coming to an agreement. It is better to decide which debts are priority debts and which are not," he stressed.
According to him, signs when an individual may have a problem include:
1. having rent or mortgage arrears
2. taking out new loans to pay off old ones
3. only paying the minimum amount on your credit card
4. using a credit card for day-to-day purchases
5. ignoring letters from creditors
Nordin added that too many people let debt take control over their life before they sought assistance to settle their problems.
"Consumers are encouraged to take control early to help stop spiraling debt especially at this time of year when people can be prone to mounting credit and debt as their thoughts turned to Christmas expenses.
"If one is really in financial trouble, one could seek help and assistance from Bank Negara, through their Credit Counseling and Debt Management Agency (AKPK) The AKPK offers a helpline, providing free and impartial financial advice to people with debt problems" said Nordin.