Smarter Money - Take control and stay on top of your finances

Important Notice

This booklet gives information of a general nature and is not intended to be relied on by readers as advice in any particular matter.

We suggest you consult your financial planner on how this information may apply to your own circumstances.

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LOOK FOR THE WARNING SIGNS

Old road sign warning motorists of cross roads ahead

Recognising when you could get into trouble with your finances can allow you to make moves to avert any difficulties. The list below reveals some of the warning signs to watch out for.

Loan payments, excluding mortgages, but including credit card charges, take up more than 20% of your monthly disposable income.
You are only paying the minimum amount off your credit cards each month, or maybe ven less.
You're juggling bills and or are unable to pay bills. For example, you apply for another credit card and use cash advances from it to pay an existing card.
You are unable to make a mortgage repayment or pay rent on time.
You are at or near the limit on each of your credit cards.
You regularly go without meals.
You are unable to make a utility payment.
You need to sell or pawn possessions to meet your expenses.
You have no idea how much debt you actually have.
You have to seek financial assistance from family or friends or welfare group.
You inherit a large debt and you are not sure how you will repay it.
You're temporary unable to work and have no income protection insurance or savings.
You have just lost your job, or are fearful that you are about to, and are concerned about how you will pay all your bills.
You have received a letter or phone call about outstanding bills from a debt collection agency.

IS YOUR ATTITUDE HOLDING YOU BACK?

It is not only situations or behaviours that can get you into trouble - certain attitudes to money can also signal that you could run into difficulties in the future. Read the statements below to see if any of them sound like you.

"Spending to maintain my image is an investment in myself."

"Everyone uses debt to get ahead. If I don't, I'll fall behind."

"If the banks offer to increase my credit limit, then they must think that I can repay it."

"The banks don't need the money - I'll pay them back later."

"I trust him, he won't rip me off. We have a good relationship."

"I won't bother paying this bill and will just go to another provider. They can't force me to pay."

"Buying this makes me feel better about myself."

"Everybody else has one, so I want one too."

IF IT SOUNDS TOO GOOD TO BE TRUE, IT PROBABLY IS

There are no free lunches. Any investment scheme that promises otherwise should be viewed with caution. If you see an investment offering returns that seem too good to be true, it is also likely to be very risky, which could mean you lose your money entirely.

People do get caught out. Every year the Australian Securities and Investments Commission (ASIC) publishes the most outrageous scams for the year in their Pie in the sky awards. You can view the awards at www.fido.asic.gov.au. The website also contains information about the latest scams and tips on what to look out for.

TIP

SIGNS YOU COULD BE IN TROUBLE

Hiding purchases from friends and family, because you know you should not be spending. When you don't know how much you owe and really don't want to find out.

TIP

MANAGE YOUR SPENDING

Speak to your bank about:

Choosing an account that matches the way you want to bank
Checking the limits on your credit and debit cards
Setting up an electronic transfer so some of your salary goes into a savings account.
Establishing a direct debit for regula expenses, such as utility bills

IF YOU FEEL OUT OF CONTROL

Getting into financial difficulties can be a scary experience. The main thing to do is stay calm.

Financial assistance can be provided by your lender or via a government, welfare or community program. First of all, speak to your lender or credit provider.

It is important for you to contact your creditors (those you owe money for payment of bills or loan repayments) promptly and tell them you are having financial difficulties and want to discuss payment arrangements. This is particularly important if creditors hold security over your home or other assets.

It is best to offer something to each creditor, but only what you can reasonably afford to pay. If you have outstanding credit card debt or loan repayments, try to cover the minimum payment or interest on the loan, as this will reduce any additional charges that may apply to the debt. You can speak to your bank about reducing your credit card limit.

Ask if your lender or credit provider has a financial hardship process and will agree to reduce the interest on your debt until you can get back on your feet. If you are having financial difficulties with your credit arrangement, banks that subscribe to the Code of Banking Practice, with your agreement, will try and help you overcome your financial difficulties, such as develop a repayment plan.

You can also speak to your bank about whether the transaction account you hold can let you vary the maximum daily withdrawal limit to assist you better manage your spending.

GET IN TOUCH WITH A FINANCIAL COUNSELLOR

A financial counsellor may also be able to help you. Trained and qualified financial counsellors can help you get a clear picture of your financial situation and develop some strategies to help you get back in control of your money, whether it's creating effective budgets, working out manageable repayment plans, working with your creditors or addressing a financial crisis caused by a problem with health, unemployment, family break-up or gambling.

To locate a financial counsellor you can call the NSW Credit and Debt Hotline on 1800 808 488 or Consumer Affairs Victoria on 1300 558 181 for referral information. Or you can call your local council to find out whether there is financial counselling available in your area.

Alternatively, the Australian Financial Counselling & Credit Reform Association website contains a list of organisations in each State or Territory that will be able to provide a financial counselling or credit advice service or refer you to the appropriate service. Visit www.afccra.org/counselling.htm.

If you have a dispute with a financial services provider, you can also contact the Financial Ombudsman Service on 1300 780 808. The Ombudsman provides a free and independent dispute resolution service. Before you contact the Ombudsman, you should first contact your bank or financial services provider to see if the dispute can be resolved directly. For information about the Financial Ombudsman Service visit www.fos.org.au.

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