One of the biggest problems with the financial climate today, is the amount of personal debt that many people have incurred.
For most people, their income is limited and, in some cases, has even reduced due to redundancy, or having to take a cut in pay, and, of course, ever-rising prices.
There are many ways to try and sort out personal financial problems, though some are better than others. For instance, it is not generally a good idea to take out further borrowing on credit cards. Any special deals the card companies use to obtain your custom usually have a limited life; when the term expires, you may well find you are on a very high rate of interest, and your debt will start increasing again.
One piece of advice I would offer is to approach a professional for free advice and ask about consolidation loans, (you could try your bank, or a charity like CCCS, or a company like Debt Free Direct). The idea behind consolidation loans is that you borrow enough from the bank to repay all your existing debts. You will then have just one commitment, to the bank that loaned you the money. These days, you can even negotiate terms and interest rates, so, although you may find you are making monthly payments for many years to come, at least you will just have the one commitment. As long as you do not take on any further debt, once you have repaid the bank, you will be debt-free.
If you have a mortgage, you may be able to ask your mortgage company for a second mortgage, borrowing enough to repay your existing debts. You will then have to re-negotiate the life of the mortgage, and the amount you pay back monthly, but, as with a bank loan, you will only have one monthly commitment to worry about.
Of course, it is best to avoid debt in the first place, but this is easier said than done. Consolidating your debts in one of the ways listed above, is the next best solution, and will help to make life a little less stressful.
June 23, 2009
With everyone getting in a panic about the credit crunch, the rising cost of living, and imminent global economic disaster, it seems ever more important to make your salary stretch as far as possible. When nearly everyone will one day be earning a regular wage, it seems truly astonishing that schools do not teach such a useful skill as budgeting, and that many parents fail to instil a sense of frugality in their children. But worry not, it’s never too late to learn a new skill, and here are some tips on how to manage your salary wisely.
The first step – and yes, this may be boring, but it’s necessary – is to sit down and work out your income and outgoings. If the latter is greater than the former, you’re in trouble, and it’s time to take control before things get any worse. If you don’t spend more than you earn, it’s still worth taking a look at how you can make better use of your money, as there are always ways of making cutbacks. Even if you have plenty of disposable income, why throw it away? It’s far better to save as much as you can, and use it for something worthwhile, or leave it earning you lots of lovely interest (okay, maybe not that much interest, but it’s better than nothing, or worse, spending everything).
Most people know how much their take home pay will be every month, which makes it easier to budget. Having worked out how much your outgoings are, you can then look at where they can be reduced. Grit your teeth, and spend an evening looking at ways of reducing your expenses. Some things can’t be cut out altogether, unless you want to live by candlelight and cook on a butane store, but they can be reduced. Look at how you can reduce your energy consumption, by keeping the thermostat down and switching off lights, for example, and research cheaper energy providers. Try car-sharing, or cycling to work, if possible.
Now look at non-essentials. This is the easiest way to make savings, even if the prospect of a more frugal lifestyle fills you with dread. Try going out less, cooking budget meals for friends instead of eating in restaurants, waiting for a film to come out on DVD rather than going to the cinema, and buying clothes in the sale. Set realistic budgets for everything, that means not denying yourself any fun, while acknowledging that you don’t have unlimited funds. Buy clothes in the sales and plan your wardrobe. Avoid impulse purchases, and think about whether you really need something. Change your mobile phone plan, and use your landline wherever possible. Keep your credit cards for emergencies. Follow this advice, and more of your income will stay in your bank account!
November 20, 2008
