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Learning how to handle money

Recognising the debt trap in financing as early as possible

Whoever keeps on getting dunning letters delivered to his mailbox, is visited by the bailiff or even has visited an advisor about his debts should know that he cannot handle money issues very well. Handling money is far from easy and has to be learned step by step. The reasons for wrong ways to handle money are manyfold, learning how to take care of money issues as a grown-up is quite usual these days. While our grandfathers were raised with the idea to save enough money first in order to be able to buy something big later, ideas today are much different.

Both shops and banks advertise their loans and it almost seems as if buying something now and paying for it later has become a must. Customers who do not buy something on credit are rare, and it is when the new and expensive TV is in the living-room that a lot of people feel on par with neighbours or friends. At this point, it does not matter that somebody has to pay monthly rates from now on while the TV is technically still owned in large parts by the bank or the respective shop. A lot of consumers have to learn how to handle money properly, meaning that they can only spend as much money as they earn every month less the money spent on fixed spendings such as rent or electricity bills. People who get into financial troubles after spending too much money on hire purchases may have to get back to actually saving money after clearing all outstanding debts first, just like it was usual two or three generations ago. The trend towards plastic money has cost many people dearly. No matter what kind of features the respective credit card has, all of them make money spent invisible, it is therefore not realised by many people that they spend it. If somebody realises that credit cards lead to unnecessary spendings or to losing touch with one´s bank account, he shall stop using the card and start paying cash for all purchases for a certain amount of time. A lot of people find it helpful to stay away from card payments to get out of financial troubles. Another important way to accumulate debts are mobile phones. A lot of calls and text messages as well as subscriptions for new ringtones and other services make the phone bill quite expensive. Pay as you go may be helpful to get a feeling for how long calls really are. Many consumers find it easier to handle their money when using cash and making a plan for certain spendings that can be followed without exceeding it. The old-fashioned book of household accounts is not a very comfortable but effective way to get to grips with one´s own finances.