People who live undisciplined lifestyles are saddled with debt mainly as a result of personal acts of commission or omission.
They actively jump into the pool of debt. Alternatively, they may fall violently into the pool as a result of their inattention to legal or statutory requirements for record keeping and reporting.
Addiction does not only apply to substance abuse; one can be addicted to drugs, as well as to destructive lifestyles. Let us call this type of addiction lifestyle imbalance.
Lifestyle imbalance is manifested in living beyond one’s means. It may be a result of trying to keep up with the Joneses. It is also possible that being disposed to over-consumption way beyond one’s means may be psychologically driven.
Some people feed their self-esteem on their ability to acquire material goods and to explore a wide range of activities, well beyond their real means. However, they contentedly prop up their self-image to the observing audience while building an underlying and growing bubble of debt that they pray does not burst.
Lifestyle imbalance is also reflected when people overspend on grooming, overseas calls, their vehicle or their home, for example.
Undisciplined use of time, either through procrastination or through devoting excessive time to one particular activity, can also contribute to major financial setbacks.
Record keeping: everyone needs to devote some time to proper record keeping. Certain documents need to be safely stored. Some receipts must be saved and orderly filed. Certain dates, times and expenses need to be noted for easy reference for relevant statutory authorities. Certain correspondence must be dealt with promptly.If keeping records is a weakness for you, then hire someone to maintain the relevant files. A claim to real property may be lost due to poor record keeping. When receipts cannot be found, you may have to pay again or a claim may be disallowed. Alternatively, if an apparent debt is not settled, the “creditor” may make claim to your property. Land tax and water receipts fall into this category.
Tax reporting: this is the time of year for filing income tax returns. Filing income tax returns early or on time is an indispensable discipline. Many people pay as you earn (PAYE).
However, even if you pay as you earn, as long as you have earned over a threshold annual amount, you are required to file a personal income tax return.
If you are a small business owner, you have the additional requirement to file an annual return which includes the financial report on that business. As long as you are operating a business, you must file a return of income, whether you have net income or not.
And if your business grosses over $60 000 per year in revenues, then you must register with the Value Added Tax (VAT) Authority.
The fines for non-payment and/or late payment of income taxes (and VAT) and for late filing fees and accruing interest could easily become insurmountable debt in a short period. And debts arising from taxes payable are Crown debts that must be paid.
Louise Fairsave is a personal financial management advisor, providing practical counsel on money and estate matters. Her advice is general in nature; readers should seek personal counsel about their specific circumstances.
