Good debt or bad debt?

  By cashmachine | July 8, 2010 - 11:36 am | Budgeting, Credit Cards, Debt Advice, Student Loans Leave a comment

As long as credit is easy to receive, debt will continue to walk with us through life, taunting our every move and aggravating our very existence.

Some debt advisors state that the total amount of debt accrued per month in credit cards, loans, mail order catalogs etc., should not exceed any more than 36% of our gross monthly incomes.  This is the maximum target level a mortgage lender will allow while assessing a potential borrower.

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What is the best next step to take?

The secret to using debt to your advantage is to make sure that you buy assets which will increase in value.  For example, a mortgage will allow you to live in a nice home with the hope of making a profit from it in the future.  A student loan will allow you to study for a good job which will bring you many financial rewards.

Instead of using credit for profitable purchases like the above, most people use their cards to purchase everyday items which decrease in value the moment that they are bought, for example, food or clothes.  If you do have to revert to your credit card for these goods, you should pay your total balance in full to avoid interest charges.

A credit card should never be used to finance a holiday as a holiday does not appreciate in value.  Add to this a card with a high interest rate and you are dabbling with bad debt.  An ideal debt to income ratio should not rise above 20% of an annual income when calculating personal loans, credit cards, utility bills etc.  Figures that rise above this mark are likely to turn creditors away, even if payments are maintained.

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Making the Most of What You Earn

  By cashmachine | June 21, 2010 - 11:21 am | Budgeting, Money, Saving tips, Savings 1 Comment

The first things you have to take into account when you receive your payslip are the unavoidable demands made on your salary by the Government, namely income tax and National Insurance contributions. These are generally deducted before you see your money.  The amount you see as ‘net pay’ is yours but needs to be managed effectively.

It is essential to draw up a list of income and outgoings. Taking your outgoings away from your net income will give you the figure you have left to meet other needs; it may not be a lot but it gives you a starting point from which to work, and can highlight areas in which you can economise. For example, on a working day, you may wish to buy lunch from the nearest supermarket but this could cost around £5 per day. You could reduce this significantly, actually saving over £1,000 a year, by making the effort to prepare sandwiches at home.

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Paying regular utility bills by direct debit saves money because most companies will give you a discount for paying by this method.  Equally, paying bills on time will prevent extra charges being made.  Certain bills, unfortunately, just cannot be avoided because we all need to live to a decent standard

A great way of ensuring that you waste as little as possible is to keep your shopping trips to the minimum; this reduces the temptation to waste money on non-essential items but also cuts down on fuel and transport costs.

You work hard for your money so make it work hard for you.

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Alternatives to Bankruptcy

  By cashmachine | May 25, 2010 - 11:52 am | Bankruptcy, Debt Advice, IVA Leave a comment

Debt Counselling – If you want a sensible alternative to bankruptcy but are unsure where to turn, you may be an excellent candidate for credit counselling. As rates of consumer debt have grown over the past decade, debt counselling services have grown along with it. The best debt relief services can help consumers to dig themselves out of the hole they find themselves in.

Informal arrangement – You could consider writing to all your creditors to see if you can reach a compromise. Include a timetable of when you will repay them.

Individual voluntary arrangement – This is a formal version of the previously described arrangement. You would need to apply to the court with the help of an authorised insolvency practitioner. He or she would supervise the arrangement and pay your creditors in line with the accepted proposals

Administration orders – If one or more of your creditors has a court judgement against you and if your total debts are £5,000 or less, the county court could make an administration order. Under the administration order, you make regular payments to the court, which will then pay your creditors. While you are paying the administration order, your creditors can’t take any further action against you to get their money, without asking the court first. Also, you will not have to pay any interest on your debts. You will have to pay a fee for an administration order, but this will be added to the money you already owe and not charged separately.

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eBay – five things that you could sell today

  By cashmachine | May 25, 2010 - 10:57 am | Frugal Tips Leave a comment

ebayRegardless of what some people say, eBay can be really fun and its a great way to become debt free, if you are in financial difficulties. The bidding frenzy when your stomachs churning in the dying seconds of the auction whether you will win or not. Then there is the rush of actually winning your first item and waiting for it to drop through your letter box.

But, for me nothing can compare to getting the buzz out of making some money, getting those funds into your Paypal account and seeing the fruits of your labour. I even like the wrapping up of the parcels and the trip to my local Post Office, its all part of the eBay experience.

Onto five things most people could sell today, everybody’s different of course but here’s my five ideas, and I might even achieve four of them.

Old junk!

Everybody has junk in the loft, or kicking about their house, it could be anything from old teapots, to an old train set hidden in the attic space, or a pile of old engineering magazines. You should never underestimate the public’s want to buy other peoples tat. Don’t be embarrassed by your junk, embrace it, love it, and sell it! One man’s muck is another man’s brass.

Mobile phone!

Again, if I dug out a drawer or two, I could probably find at least one if not more, old mobile phone. You would be really surprised what people will buy and the price that you get on eBay will often out way most mobile phone recycling companies. However, seller beware, make sure that you clean it out first, you never know what contacts, pictures and messages of a dubious or naughty nature might be lurking in your phones memory.

CD, DVD, Blu-Ray and Books

This is a no brain-er section, if you don’t own at least one CD, DVD, Blu-ray or a Book kicking about that you can live without, what have you been doing for the past 10 years! Have you just been at home watching council television and smoking silk cut extra lights. There is a goldmine to be made with this section, desirable to a buyer and a massive opportunity to clear out that phase you went through when you were into death metal and wearing chainsaws around your neck.

Old Clothes:

I’m not going to expand on this section much, but as long as it’s clean there is a buyer out there for it somewhere. People go crazy for cookie, retro and unusual items of clothing, footwear, handbags and assorted man garments. So get rid of that leather trench coat (see above death metal reference)

The Husband, Wife or Spouse.

Hey its worth a try!

Is IVA less daunting than bankruptcy?

  By moneybags | May 15, 2010 - 9:59 am | Bankruptcy, IVA Leave a comment

IVAs can be a more flexible solution to money problems, and can be a lot less daunting than bankruptcy. Bankrupt people still face the stigma of going through courts; they have their names in the paper and will forever be excluded from certain types of work. But with an IVA, although not a light choice to take, you will be free from your debts in five years with less impact on your credit report.

We’ve all seen the ads for IVA, but it’s not as simple as they make out. You have to be realistic about the money you owe, willing to change your spending habits and have to negotiate how much you pay. You will still have people probing all your finances and will have to be prepared to stick to a tight budget.

Make sure you visit a reputable firm to execute your IVA. There are charities such as the Consumer Credit Counselling Service (CCCS) who are much better qualified than those firms who advertise on TV. Plus charitable and voluntary organisations are much more likely to have your best interests in mind and can therefore advise you better.

Bankruptcy is an Extreme Last Resort

  By green | April 28, 2010 - 5:51 pm | Bankruptcy, IVA Leave a comment

Bankruptcy should always be viewed as an extreme last resort, yes all your debts will be cleared but all of your assets; your house, your car, anything of value which you own can be sold off to your creditors. As well as this you will be declared bankrupt in the newspaper and this can affect your future career chances. There are a number of alternatives which could be suitable for some people.

An IVA (Individual Voluntary Arrangement) is one possible alternative. An IVA must be individually approved but you may be able to keep your assets and is a less drastic means to becoming debt free.

Consider your case carefully, write to all of your creditors requesting that you come to an “informal arrangement”; a payment plan can then be drawn up with each creditor. This will require a severe “tightening of the belt” and that each payment be stuck to.

One final alternative is an administration order. This is only possible when debts total less than £5000 and one creditor has a court judgement against you. One payment a month is made to the court and an administration cost is added on to your total debts. The one payment is split between your creditors and during the period that the administration order is being paid no creditor can take action against you and all interest is frozen.

How to win the lottery

  By cashmachine | April 20, 2010 - 3:25 pm | Money Leave a comment

National Lottery organisers Camelot have released a series of statistics which will seemingly improve your odds of winning the lottery.

According to the National Lottery records which were published last week, you are more likely to hit the jackpot with an old-fashioned which people can spell. John and Margaret top the lists of men and female names respectively, whilst James, Peter, David, Michael, Susan, Patricia, Mary, and Linda also stand a good choice of winning.lottery

Ilford, Essex is in pole position for Lotto wins, where there has been a top prize winning ticket among every 6,722 people. Newcastle-Upon-Tyne closely follows Ilford, where there is a winning ticket for every 6,884 people.

The statistics also reveal you are more likely to get lucky on the lottery if you work in construction, administration or management. Taxi and lorry drivers are in with a better-than-average shot at the winnings, whilst chefs, factory workers and shop assistants are also better equipped to strike it lucky. Bankers, politicians and estate agents however aren’t so lucky, statistically speaking, and are far less likely to win.

Other stats include nearly half (49%) of all lottery millionaires have won with a lucky dip, and nearly 40% of jackpot scoopers claim to have received a ‘sign’ that they were going to win. 53% of Lottery Millionaires considered themselves to be ‘lucky’ people, while 92% described themselves as ‘fairly or very optimistic’ in life.

Popular buys for the newly rich include a Mercedes Car, a holiday to the Caribbean, Canada or Australia, a hot-tub, a walk-in wardrobe and a snooker table.

The final stat revealed the most jackpot winners toast their new found wealth with… a cup of tea!
Don’t despair however, if you are not a Peter, from Ilford who drives a cab and has an optimistic approach to life.

To date, the biggest solo lottery winner is Iris Jeffrey, from Belfast, who won a cool £20,100,472 in July 2004.

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Should you borrow to improve your home?

  By David | April 12, 2010 - 1:56 pm | Borrowing Leave a comment

With the housing market finally slowing down and, some say, potentially about to plummet, now might be a good time to take out a loan to do some home improvements. Now is certainly not the time to try and move up the property ladder, so if your ambitions in that direction have stalled, you could do a lot worse than try to build in some value to your present home ready for the day when the market starts soaring again.

Not all home improvements add value in the long term. For example, if you put in a new kitchen now, unless the market has started to boom again within the next two years, you run the risk of your choices looking dated. Structural improvements though, such as an extension, loft conversion or conservatory; things which add living space, will always eventually pay for themselves.

Also of course, while you are waiting to start climbing the property ladder again, you can benefit from the improvements you make to your present home. As long as you know that you will be able to cover the loan repayments, housing improvement loans are probably one of the best investments there are in terms of property right now.

Celebrity Money Mash-ups!

  By cashmachine | March 31, 2010 - 2:10 pm | Money 1 Comment

There is a craze apparently sweeping the UK. Merging together pictures of celebrities with money notes from around the world. The mix looks surprisingly natural for some;

Julie Roberts can be seen here with a dollar note for a head. With the reported fees she commands for her films, it wouldn’t be too farfetched to suggest the money has gone to her head would it?

Julie Roberts can be seen here with a dollar note for a head. With the reported fees she commands for her films, it wouldn’t be too farfetched to suggest the money has gone to her head would it?

Here, it is difficult to tell if Mr. Bean looks excited or shocked. Perhaps he is a combination of the two. He is on the front of a Filipino peso note after all.

Here, it is difficult to tell if Mr. Bean looks excited or shocked. Perhaps he is a combination of the two. He is on the front of a Filipino peso note after all.

‘King of cool’ Steve Mcqueen is doing what he does best in this mashup. Star of ‘The Magnificent Seven’ was once the highest paid actor in the world; No wonder he looks so at home on the front of a note!

‘King of cool’ Steve Mcqueen is doing what he does best in this mashup. Star of ‘The Magnificent Seven’ was once the highest paid actor in the world; No wonder he looks so at home on the front of a note!

Brad Pitt

A slighter younger Brad Pitt here, with a $50 wedge for a jaw-line. Nowadays, Pitt possesses a similar scruffy beard. A sign of things to come maybe?

A new generation of Gordon Gekkos?

  By cashmachine | March 31, 2010 - 2:10 pm | Borrowing Leave a comment

Wall Street

With the world financial crisis smoke still wafting through much of the western world, it is almost with impeccable timing that a man whom some blame for the igniting of the financial disaster flame will be returning to the big screen; Michael Douglas.

Okay, so really we mean Michael Douglas’s infamous character Gordon Gekko, a lead character whom in perhaps in retrospect, inspired thousands of city bankers around the world to subscribe to his belief that “greed is good”.

Gordon Gekko, from Oliver Stone’s 1987 movie Wall Street, was based upon real life characters that stalked the financial markets at the time, making millions on daring strategies.

Some others believed he was based on a combination of scandalous real-life businessman Ivan Boesky, corporate raider Carl Icahn and junk bond king Michael Milken, who were all facing a growing public backlash for accusations of immortality, of seeing companies as targets not employers, with assets for stripping and not growing.

Stone decided to try and tap into these feelings in Wall Street. Douglas was cast as Gekko, a finance manager without conscience, and Charlie Sheen as a young stock broker who sets out with good intentions but gradually abandons them as he is seduced by Gekko’s beliefs.

Douglas was so convincing and compelling he earned an Oscar for his efforts. However, instead of the film/character turning people off the idea of playing the markets with a black heart, Douglas’s charismatic, powerful performance made him the poster boy for stockbrokers.

Australian Prime Minister Kevin Rudd said after the banking collapse: “It is perhaps time now to admit that we did not learn the full lessons of the greed-is-good ideology. And today we are still cleaning up the mess of the 21st century children of Gordon Gekko.”

Stone has promised the Gekko character is a reformed man, but with the sequel due for release later this year, many hope Stone and Douglas really do get their message across this time.