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-webkit-border-vertical-spacing: 2px"> <center align="left"> <h1> <blockquote><a name="Contents" id="Contents" style="background-image: initial; padding-left: 15px; -webkit-background-clip: initial; -webkit-background-origin: initial; background-color: initial; background: no-repeat initial 0% 0%">How to work out what you can sensibly afford to pay</a></blockquote></h1></center> <blockquote align="left"> <div align="left"> <div align="left"> <h1><span style="font-size: medium; font-weight: normal"><span style="font-weight: normal">To commit to a debt repayment plan you must first be able to afford to pay regular instalments for long enough to get the job done. So, before deciding how to pay your debts, you must work out how much you can pay. In doing this, do not disregard the importance of your own wellbeing. You do not have to live like a pauper so that you can afford to make debt repayments. Law supports this view. For example, bankruptcy provides protection for the first $50,000 that you earn each year</span><a href="#_ftn1" id="_ftnref" name="_ftnref" title="" style="background-image: initial; padding-left: 15px; -webkit-background-clip: initial; -webkit-background-origin: initial; background-color: initial; background: no-repeat initial 0% 0%"><span class="MsoFootnoteReference"><font color="#000000"><span style="font-weight: normal; text-decoration: none">[1]</span></font></span></a><span style="font-weight: normal">. It also protects your tools of trade (so you can continue to earn a living); essential household property, even a modest car</span><a href="#_ftn2" id="_ftnref" name="_ftnref" title="" style="background-image: initial; padding-left: 15px; -webkit-background-clip: initial; -webkit-background-origin: initial; background-color: initial; background: no-repeat initial 0% 0%"><span class="MsoFootnoteReference"><font color="#000000"><span style="font-weight: normal; text-decoration: none">[2]</span></font></span></a><span style="font-weight: normal">.</span></span></h1> <p align="left"><span style="font-weight: normal">The first use of your money should be to ensure your wellbeing, your family, too. The demands of creditors come a distant second. Creditors would rather you believed that they can take everything you own in payment. However, this is just not true. </span><span style="font-weight: normal"> <o:p align="left"></o:p></span></p> <p align="left"><span style="font-weight: normal">The pressure you feel probably stems from finding that, after paying your creditors, you cannot pay for food, accommodation, or other essentials. This is no way to live, so turn it around. Put your needs first. Keep enough of what you earn to cover your day-to-day living costs. Whatever amount is left at the end of each month can be used to repay your debts.</span><span style="font-weight: normal"> <o:p align="left"></o:p></span></p> <p align="left"><span style="font-weight: normal">if you want to solve your debt problems properly and not just hide them for a while then it is vital to calculate how much of your earnings you need to keep to cover your essential living costs. Use our Spending Planner to list all of your normal living costs, ignoring debt repayments to unsecured creditors. Calculate exactly how much spare cash you have to pay to creditors each month.</span><a href="#_ftn3" id="_ftnref" name="_ftnref" title="" style="background-image: initial; padding-left: 15px; -webkit-background-clip: initial; -webkit-background-origin: initial; background-color: initial; background: no-repeat initial 0% 0%"><span class="MsoFootnoteReference"><font color="#000000"><span style="font-weight: normal; text-decoration: none">[3]</span></font></span></a><span style="font-weight: normal"> <o:p align="left"></o:p></span></p> <h2><a id="_Toc137023411" name="_Toc137023411" style="background-image: initial; padding-left: 15px; -webkit-background-clip: initial; -webkit-background-origin: initial; background-color: initial; background: no-repeat initial 0% 0%">Control spending</a></h2> <p align="left"><span style="font-weight: normal">Making a Spending Plan can be a sobering experience. You need to be honest with yourself about what you spend money on and how much. Too often people approach budgeting by overlooking their real spending just to make the figures look good. There is a saying, “Garbage in, garbage out.” This is particularly true of budgeting.</span><span style="font-weight: normal"> <o:p align="left"></o:p></span></p> <p align="left"><span style="font-weight: normal">Planning your spending is a two-step process. On your first attempt, list what you are spending on and note the level of spending you should be allocating to each item. For example, don’t skimp on your groceries. Spending $100 per week for an individual is advisable particularly as this has to cover food and cleaning products. Allow for gift giving, clothing replacement, and personal entertainment too. These things keep you sane and are a part of everyone’s life. Missing these finer points is the usual cause of budgeting failure.</span><span style="font-weight: normal"> <o:p align="left"></o:p></span></p> <p align="left"><span style="font-weight: normal">Now, do it again. Review your Spending Plan and rank your spending needs from ‘non-negotiable’ to ‘non-essential’</span><a href="#_ftn4" id="_ftnref" name="_ftnref" title="" style="background-image: initial; padding-left: 15px; -webkit-background-clip: initial; -webkit-background-origin: initial; background-color: initial; background: no-repeat initial 0% 0%"><span class="MsoFootnoteReference"><font color="#000000"><span style="font-weight: normal; text-decoration: none">[4]</span></font></span></a><span style="font-weight: normal">. Reconsider the level of spending allocated to each, making adjustments as you go. Reduce spending on less important items perhaps drop some items from your list altogether until your spending either matches your earnings or is less than your earnings.</span><span style="font-weight: normal"> <o:p align="left"></o:p></span></p> <p align="left"><span lang="EN-US"><span style="font-weight: normal">After completing your Spending Plan you will know how much spare cash, if any, you have each month to pay off your overdue debts without causing yourself unacceptable hardship. The honorable thing to do is to offer to split this money amongst your creditors fairly. </span><span style="font-weight: normal"> <o:p align="left"></o:p></span></span></p> <p align="left"><span lang="EN-US"><span style="font-weight: normal">When you cannot pay all creditors what they are owed, it is a legal requirement that you should pay each of them in proportion to the amount they are owed, relative to the total of your debts</span><a href="#_ftn5" id="_ftnref" name="_ftnref" title="" style="background-image: initial; padding-left: 15px; -webkit-background-clip: initial; -webkit-background-origin: initial; background-color: initial; background: no-repeat initial 0% 0%"><span class="MsoFootnoteReference"><font color="#000000"><span style="font-weight: normal; text-decoration: none">[5]</span></font></span></a><span style="font-weight: normal">. For example, a credit card debt which is one quarter of your total debts, should be paid one quarter of the monthly allocation for debt repayment.</span><a href="#_ftn6" id="_ftnref" name="_ftnref" title="" style="background-image: initial; padding-left: 15px; -webkit-background-clip: initial; -webkit-background-origin: initial; background-color: initial; background: no-repeat initial 0% 0%"><span class="MsoFootnoteReference"><font color="#000000"><span style="font-weight: normal; text-decoration: none">[6]</span></font></span></a><span style="font-weight: normal"> <o:p align="left"></o:p></span></span></p> <p align="left"><span lang="EN-US"><span style="font-weight: normal">Whether what you can afford to pay is enough, will be decided by each creditor individually. How much they ultimately collect from you is up to them. They can either agree to your payment plan or accept the consequences. You are not responsible for their outcome.</span><span style="font-weight: normal"> <o:p align="left"></o:p></span></span></p> <p align="left"><span lang="EN-US"><span style="font-weight: normal">It would be terrific to know exactly how much is enough but there is no law or golden rule that prescribes this. It is up to the creditor. There are patterns to creditor behavior though.</span><span style="font-weight: normal"> <o:p align="left"></o:p></span></span></p> <p align="left"></p> <ul> <li>Creditors do not like arrangements running longer than three years;</li> <li><span lang="EN-US"><span style="font-weight: normal">If they extend the time to pay they expect you to pay them interest in compensation; and </span></span></li> <li><span lang="EN-US"><span style="font-weight: normal"><span lang="EN-US"><span style="font-weight: normal">Creditors do offer and accept discounted settlement if cash payment is made quickly.</span></span></span></span></li></ul> <p align="left"><span style="font-weight: normal">Creditors do not have to accept your offer of repayment. Your offer needs to be commercially realistic. At the very least they expect you to clear your debt in under three years. Knowing this helps to calculate the minimum acceptable rate of repayment</span><span style="font-weight: normal"> <o:p align="left"></o:p></span></p> <h4>Exercise: How to calculate the minimum acceptable repayment </h4> <p align="left"></p> <ol> <li>Add up all of your overdue unsecured debts; then</li> <li><span style="font-weight: normal">Divide the total by 36 (months); </span></li> <li><span style="font-weight: normal"><span style="font-weight: normal">The result indicates the minimum monthly debt repayment that creditors would expect you to offer. </span></span></li></ol><span style="font-weight: normal"> <p align="left"></p> <h2>Other Chapter Topics</h2> <div> <ul> <li><a title="" href="../../DebtFind.htm">Finding out what you owe</a></li> <li><a title="" href="../../DebtSolve.htm">Learning about your options</a></li> <li><a title="" href="../../DebtDecision.htm">How to choose the debt solution right for you</a></li></ul> <ul> <div><font size="7"><span style="font-size: 36px"><strong><span style="font-size: medium; font-weight: normal"><br /> </span></strong></span></font></div></ul></div></span> <h2>Would you like more help?</h2> <p align="left"><span style="font-weight: normal">Is your situation complex, urgent or you wold prefer an independent assessment of your circumstances? Book an appointment for a personal telephone consultation <font><font><font>(</font></font></font><a href="email.htm" class="titleb"><font><font><font><font><font color="#000000"><span style="text-decoration: none">CLICK HERE</span></font></font></font></font></font></a><font><font><font>) or call 1300 305 510, Australia-wide.</font></font></font></span></p> <h4 align="left"> <div align="left"> <p align="left">Notes:</p> <p align="left"></p> <hr align="left" /> <div id="ftn" align="left"> <p><a href="#_ftnref" id="_ftn1" name="_ftn1" title="" style="background-image: initial; padding-left: 15px; -webkit-background-clip: initial; -webkit-background-origin: initial; background-color: initial; background: no-repeat initial 0% 0%"><span class="MsoFootnoteReference"><span lang="EN-US"><font color="#000000"><span style="font-weight: normal; text-decoration: none">[1]</span></font></span></span></a><span lang="EN-US"><span style="font-weight: normal"> Division 4B Bankruptcy Act 1966</span></span></p></div> <div id="ftn" align="left"> <p><a href="#_ftnref" id="_ftn2" name="_ftn2" title="" style="background-image: initial; padding-left: 15px; -webkit-background-clip: initial; -webkit-background-origin: initial; background-color: initial; background: no-repeat initial 0% 0%"><span class="MsoFootnoteReference"><span lang="EN-US"><font color="#000000"><span style="font-weight: normal; text-decoration: none">[2]</span></font></span></span></a><span lang="EN-US"><span style="font-weight: normal"> Section 116(2) Bankruptcy Act 1966 (Cth)</span></span></p></div> <div id="ftn" align="left"> <p><a href="#_ftnref" id="_ftn3" name="_ftn3" title="" style="background-image: initial; padding-left: 15px; -webkit-background-clip: initial; -webkit-background-origin: initial; background-color: initial; background: no-repeat initial 0% 0%"><span class="MsoFootnoteReference"><span lang="EN-US"><font color="#000000"><span style="font-weight: normal; text-decoration: none">[3]</span></font></span></span></a><span lang="EN-US"><span style="font-weight: normal"> Refer to the Spending Planner included in the Tool Kit</span></span></p></div> <div id="ftn" align="left"> <p><a href="#_ftnref" id="_ftn4" name="_ftn4" title="" style="background-image: initial; padding-left: 15px; -webkit-background-clip: initial; -webkit-background-origin: initial; background-color: initial; background: no-repeat initial 0% 0%"><span class="MsoFootnoteReference"><span lang="EN-US"><font color="#000000"><span style="font-weight: normal; text-decoration: none">[4]</span></font></span></span></a><span lang="EN-US"><span style="font-weight: normal"> Use the Spending Prioritizer included in the Tool Kit</span></span></p></div> <div id="ftn" align="left"> <p><a href="#_ftnref" id="_ftn5" name="_ftn5" title="" style="background-image: initial; padding-left: 15px; -webkit-background-clip: initial; -webkit-background-origin: initial; background-color: initial; background: no-repeat initial 0% 0%"><span class="MsoFootnoteReference"><span lang="EN-US"><font color="#000000"><span style="font-weight: normal; text-decoration: none">[5]</span></font></span></span></a><span lang="EN-US"><span style="font-weight: normal"> Sections 109 and 122 Bankruptcy Act 1966</span></span></p></div> <div id="ftn" align="left"> <p><a href="#_ftnref" id="_ftn6" name="_ftn6" title="" style="background-image: initial; padding-left: 15px; -webkit-background-clip: initial; -webkit-background-origin: initial; background-color: initial; background: no-repeat initial 0% 0%"><span class="MsoFootnoteReference"><span lang="EN-US"><font color="#000000"><span style="font-weight: normal; text-decoration: none">[6]</span></font></span></span></a><span lang="EN-US"><span style="font-weight: normal"> Use Payment Distribution Calculator in the companion Tool Kit</span></span></p></div> <div id="ftn" align="left"> <p><span style="font-weight: normal"><br /> </span></p></div></div></h4></div></div></blockquote></span></td></tr></tbody></table><br /> <font size="-2"><font color="#FFFFFF"><span style="color: #000000; font-size: medium"> <table align="left" style="border-collapse: separate; border-width: 1px; border-color: #666666; border-style: dotted"> <tbody align="left"> <tr align="left"> <td align="left" style="border-collapse: separate; border-width: 1px; border-color: #666666; border-style: dotted"> <center align="left"> <h1> </h1></center></td></tr></tbody></table></span> <table border="0" cellspacing="0" cellpadding="0" width="100%"> <tbody> <tr> <td valign="top" colspan="3" height="1"> <p><a href="" onmouseover="closeIt()"><img alt="" src="images/filler.gif" width="1" height="1" border="0" align="bottom" /></a></p></td></tr> <tr bgcolor="#000000"> <td valign="top" colspan="3" height="1" bgcolor="#003333"> <center> <table border="0" cellspacing="1" cellpadding="0" width="100%" height="19"> <tbody> <tr> <td align="center" class="titlen"> <p><a href="index.htm" target="" class="titleg"><font color="#FFFFFF">Home</font></a> </p></td> <td align="center" class="titlen"> <p><a href="who.htm" target="" class="titleg"><font color="#FFFFFF">About Us</font></a> </p></td> <td align="center" class="titlen"> <p><a href="brochureindex.htm" target="" class="titleg"><font color="#FFFFFF">Brochures</font></a> </p></td> <td align="center" class="titlen"> <p><a href="email.htm" target="" class="titleg"><font color="#FFFFFF">Get Help Now</font></a> </p></td> <td align="center" class="titlen"> <p><a href="contact.htm" target="" class="titleg"><font color="#FFFFFF">Contact Us</font></a> </p></td> <td align="center" class="titlen"> <p><a href="links.htm" target="" class="titleg"><font color="#FFFFFF">Links</font></a> </p></td> <td align="center" class="titlen"> <p><a href="privacy.htm" target="" class="titleg"><font color="#FFFFFF">Privacy</font></a> </p></td> <td align="center" class="titlen"> <p><a href="#" target="" class="titleg"><font color="#FFFFFF">Members</font></a> </p></td></tr></tbody></table></center></td></tr> <tr> <td valign="top" colspan="3" background="images/topshadow.gif"> <center><a href="" onmouseover="closeIt()"><img alt="" src="images/filler.gif" width="1" height="12" border="0" align="bottom" /></a></center></td></tr></tbody></table></font></font> </body> </html>