Example A

If you find that your Income and Expenditure sheet is matched to example A; that is that you have a disposable income which is the equivalent of 10% or more of your income; and you do not have anything sitting in any column defined as a priority debt or in the column marked none priority debts.

You must be sure that all creditors are up to date payments due and that you have no defaults marked against you. If you have any defaults or have made any agreement with your creditors to repay your balance away from the original credit agreement you must refer to example two for guidance. If not you can use the following as your guide to your current financial position.  

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The good news is that as you are enjoying 10% or more disposable income you are in a very good position to greatly reduce your exposure to the current credit crunch.

The flexibility you have allows you to look at a number of options for either reducing any debt you have or for investment, or in some cases you may have the option to do both.

It is important to understand that just because at this time you are ahead of the game this is not a time to go ahead with unnecessary expenditure, and more importantly it is not a sign that you are able to extend your current credit facilities.  

As you are in a strong position it would be wise to take advantage and look at how you can now further reduce your expenditure allowing you to increase your savings etc.

In the next chapter we talk about how you can reduce your costs over a number of different areas. In particular you are in a strong position to negotiate with other lenders who may be able to offer you a better deal with some of your current obligations.

It may be possible for you to move your mortgage to another lender for a lower rate; it is highly likely that you would be able to transfer some of your credit card debts to other lenders at a much reduced rate or even 0% for a while. Shop around and see what deals you can get, using price comparison web sites is often a quick and very effective way of finding the best deals.

next page: Example B

Example C

Example D

Creating disposable income

Managing your creditors