New Year is traditionally a time for making numerous different resolutions. Most people get discouraged quickly though, because they set up ambitions or even unreal goals. The effect is that they often resign from their former intentions- such as repaying debt or saving - already in the first week. Contrary to what one may think, New Year's resolutions do not have to be tough. KRUK suggests what actions to take to conclude your efforts with success.

Be honest with yourself: how many times you have been telling yourself, on a number of different occasions, that you will start saving? How many times have you tried to put even small sums aside, only to grab them in a couple of weeks because it happened that you needed some extra funds? Do you know someone who, despite relatively small earnings, can take his family for holidays thanks to the money earned? Instead of wondering how he does it, start acting yourself.

First of all: what is your attitude to repaying debt?

To start introducing any changes at all that in the end are supposed to help you in repaying debts and saving up, you must first ask ourselves - what is your attitude to the repayment of debt? Does it matter? Apparently yes, because it shows you what values drive you in the process of managing the available financial resources. It is your attitude that decides whether you fall into debt easily, what you do when you have liabilities, and what is the main reason for your expenses. A study* conducted by KRUK identifies 5 types of attitudes towards debt - the Careless, the Avoiders, the Indebted for Others, the Forgetful and the Lost.

Secondly: implement a single, key rule in your life

Regardless of which personality type you are, there is a one key rule of managing your home budget - first the liabilities and life expenses, and then pleasure and leisure. What does it mean? The very moment your salary is transferred to your account, you should pay all the bills (rent, electricity, gas, water), as well as installments for credits, loans, debt or payment plan purchases. Then you can calculate how much you will need for every-day expenses, such as food, detergents, travelling and other necessities. Now, it's best if we put aside a portion of what is left from that sum, and spend the rest on pleasures, such as cinema, restaurant or our passions.

Though some may find it hard to believe, significant changes can be observed after several months already. Firstly, regular payment of liabilities allows you to avoid fees, penalty interest and costs, i.e. costs of reminder letters. These can be really large sums in an annual perspective! Secondly, you learn effective management of budget, because you know exactly how much money you will have in the given month. Unnecessary expenses or another loan will not be so tempting a solution anymore. Thirdly, you slowly repay current debt by not taking another debt on your shoulders. You will repay all the debts one after another in a blink of an eye, causing that the sum in your pocket will steadily grow in time! The extra money can be spent on leisure, or on increasing the pool of savings laid aside every month.

Thirdly: implement the above rule effectively!

Alas, even the most carefully constructed rule does not work if you fail to adapt it to your personality. Let's check what is your attitude to money and debt.

If you belong to the Forgetful (the group that falls into debt often due to forgetting about payment of several installments), why not set a reminder alert in your phone? A good idea for such persons is also setting automated transfers in your online banking account, so that all the payments are made timely.

If you represent the Careless type (a group that spends money spontaneously), it is important to define priorities for yourself, and to buy those things that are the most needed in the first place - not what you feel like buying at the given moment. If you really want to buy something, think about how you can acquire additional funds for the purchase. By this we don't mean increasing your debit, but ideas like selling unnecessary sports gear, unworn clothes, finished books on auction portals.

The indebted for others (a group for the members of which the happiness of others is worth any money) must first of all assess whether their home budget can handle another help to the family. You do not have to resign from supporting your close ones entirely, but you can assign a specific amount that can be directed for that purpose. Besides, remember to settle your own liabilities first, and only then support others.

For the Avoiders (a group that does not think about the future and that avoids repaying debt), a change of attitude to financial institutions and to the issue of paying liabilities is necessary. After all, nobody gave you the equipment that you bought on an installments plan for free, nor does the power plant provide you electricity free of charge. Nobody will also repay your credit for you. A simple method to place yourself in the shoes of the bank or service provider is this: how would you feel if your friend did not give you your money back, despite numerous promises of repaying the debt? A good motivation in this case is starting repayment of even the smallest liabilities. The easiest way to do it is settling the smallest amount first. The sense of success that comes with it will surely encourage you to pay any subsequent debt.

As the Lost (the group with the worst financial standing, often not understanding the financial agreements concluded), it is worth asking someone close for help, who will help you to calculate all the expenses and the amounts that you can spend on them. Such person can also support you in signing the agreement, to avoid consenting to unbeneficial terms.

Fourthly: perseverance

A saying goes: Rome wasn't built in a day. The same applies to your New Year's resolution on repaying debts and saving. Do not expect immediate effect, and do not let the initial failures put you off. Quitting debt, as well as saving, is a multi-stage process that requires scrupulousness and keeping on the track set. Whenever you feel like giving up a resolution, just imagine that your debt will start decreasing, and the savings start increasing in a several months already. And imagine how you will regain peace and financial stability, and will be able to spend the surplus on pleasures.

Good luck!

**'Portrait of indebted poles' - a study performed by Maison Research House for KRUK Group between October and November 2015.

***

KRUK S.A. is a leader on the debt processing market in Middle Europe. Since 1998, we have dealt with thousands of private and business debt cases. Our numerous corporate partners include: banks, financial institutions, IT, real estate, manufacturing companies or local government entities. In 2011 the Company has made its debut at the Warsaw Stock Exchange.

KRUK S.A. is a part of Grupa Kapitałowa KRUK, which in Poland also includes RAVEN Legal Office, ERIF BIG S.A. Register of Debtors, KRUK Investment Funds Society and PROKURA NS FIZ securitization fund. KRUK Group's headquarters are located in Wrocław. KRUK Group also operates in Romania, the Czech Republic, Slovakia and Germany, employing over 2400 persons (as on December 31, 2014).

Visit our page at www.pl.kruk.eu and follow us on Twitterwww.twitter.com/kruk_sa.

More information:

Karolina Duniec - KRUK S.A. - tel. 71 79 02 170, e-mail:karolina.duniec@kruksa.pl

Marta Kindeusz - H+K Strategies - tel. 609 160 053, e-mail: marta.kindeusz@hkstrategies.com

KRUK SA issued this content on 2016-01-07 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 2016-01-07 20:30:09 UTC

Original Document: http://en.kruk.eu/news/art90,new-years-resolutions-how-to-implement-small-changes-in-everyday-life-and-quit-debt.html