Timelord's Pocket Finance Advice

Overcoming Repayment Concerns

Debt is a dark shadow that is haunting more and more people. When you fall into debt, it seems that you cannot get out of the whole. Too many of us get despondent and give up, but the trick to overcoming debt problems is planning, focus, and dedication. If you are smart with your money, you will be able to avoid the traditional debt traps and get into the black sooner than you think. Here are a few ways for you to prevent debt, and overcome it if you have long-term loans and debts that you have to pay off.

Planning
Life is really not predictable, and there are times when you are going to have unexpected expenses. The trick is to be prepared. You need to put away a certain amount of your income every month for emergencies. Some monetary experts suggest that as much as 20% of your income should go directly into an emergency account. This is money that you absolutely cannot touch until something unexpected happens. If you are lucky enough to escape drastic disasters, this money can then be subdivided and put into retirement, college or holiday funds. The main point is that you absolutely must have that rainy day money that your mom told you about. Safe is better than sorry.

Bigger Repayments
At some point in your life, you will be forced to take out a loan. There are a few ways that you can keep these costs low. Firstly, make sure that you have a good credit rating – you will not get a great repayment rate if you have a dodgy credit history. The second thing that you need to do is to pay back more than is expected. If you have to make a monthly loan repayment of $500, pay back $550 every time. This extra amount is not beyond your financial reach, and the sooner you pay back the money, the less interest you will end up paying. You know exactly how much you are expected to repay, so make a provision for this added amount in your budget – it is essential to get square as soon as possible.

Budget
For anyone who struggles to work with money it is imperative to create a budget. A simple spreadsheet that tracks your income and expenditures is effective enough to show you where you can cut back, and where you can stretch your money.

This guest post was written by Victoria. She is currently learning about Credit Cards Canada and CIBC Credit cards.

Tags: Budgetting, Credit Cards, Repayment

Personal Debt Consolidation Loans: Easy Way to Eradicate Multiple Debts

The pressure of having multiple debts is immense and in fact you should try to get rid of it as soon as possible. Repaying back debts is not an easy thing from a single source of income, but on not repaying the debts, it is your credit score that will get affected. So, in order to get away with the debts, you can opt for personal debt consolidation loans.

These loans provide you an opportunity to merge all your existing debts in to a single affordable amount, which is then paid off with the help of the loan. By doing so, you will no be more be answerable to multiple lenders, which implies that you will get relief from making multiple payments. Instead, you will only make a single monthly payment to a single lender. As these loans are approved with a comparatively low interest rate, you will be able to save a lot of money, which can be used for other purposes.

The loans are further classified in to secured and unsecured form, so that you can borrow the amount as per your need and requirement. Secured form of the loans offer a bigger amount and suitable for clearing huge debts and that too at comparatively low interest rates. But to avail the loans, you will have to pledge one of your valuable assets as collateral. If you need the funds instantly and the amount required is small, then you can opt for the unsecured form of the debt consolidation loans. There is no need of pledging any collateral and is usually approved against a marginally high rate of interest. However, a proper research will enable you to get these loans at comparatively low rates.

Bad creditor borrowers are the major beneficiaries of these loans. First of all they can easily eliminate the debts and further on ensuring timely repayment of the installments, they will be able to improve the credit score.

Before availing personal debt consolidation loans, you must go through the terms and conditions of various lenders. In this regard, you can take the help of online services. By applying online, you will be able to collect and compare the free rate quotes of various lenders. This way, you will be able to select a deal that suits your prevailing circumstances.

Tags: Consolidation, Debt, Debts, Easy, Eradicate, Loans, Multiple, Personal

Reducing personal debt levels in the UK must be a priority

Over the past decade, we have seen the levels of personal debt in the UK rise dramatically. According to recent figures from the Bank of England, Britons currently owe c£230 billion in unsecured debt (not including mortgages and secured loans). I have argued the reasons for this rise in debt on a number of occasions and believe that there is no one reason why levels have grown. Rather I believe that the growth of debt is a combination of both the individual’s willingness to borrow and banks willingness to lend.

A willingness to borrow has been fuelled by a number of factors. Firstly borrowing has become much more acceptable in today’s society. If we look back 20 years, borrowing to pay for household items such as furniture and white goods was far rarer. Back then if you had admitted to paying for your new sofa on HP, eyebrows would have been raised. Now, if you say that you are not going to buy new furniture because you do not want to take credit, this is considered strange.

In addition to society’s changing attitudes towards credit, in the past decade people have (on paper at least) become wealthier than ever before. This is largely due to the significant increase in property prices since the late 1990’s. As prices have risen, home owners have seen the amount of equity in their property vastly increase. This has given many the confidences to increase their personal borrowings safe in the knowledge that they have their house to fall back on through a re-mortgage if things get out of hand.

Hand in hand with the consumer’s willingness to borrow has been the banks willingness to lend. Over the past few years, many banks attitudes to risk became almost blasé. This situation has arguably meant that many individuals have been lent far more than was sensible given that the good times rarely last forever.

The current economic downturn has caused property prices to significantly fall and lending levels to contract. Many people are suffering financial difficulty because of falling incomes and debts that they can no longer afford to service. Arguably, this situation has been minimised by the Bank of England’s decision to reduce interest rates meaning many current mortgage costs have been significantly reduced. However, if unemployment continues to grow, even this may not be enough to save some borrowers from financial disaster.

Despite all the current gloomy economic news, few people believe that the economy will remain in the Doldrums forever. However, when the recovery does start in earnest, we may find that memories are short and the bad times will swiftly be forgotten. The question is how should we try and protect ourselves from falling quite so deeply into trouble in the future?

Some have called for the government to restrict the lending practices of the commercial banks. I do not feel that direct restrictions are the correct course of action if we want to live in a free market society. However, I do believe that bank’s lending practices and marketing tactics were allowed to run too freely during the late 1990 and 2000s. Perhaps regulation surrounding these needs to be tightened. In addition, I believe there should be more done to assist the banks in making their lending decisions. This would involve a greater sharing of information between institutions on the financial health of prospective individual borrowers. However, the is clearly an emotive subject when data protection and privacy issues are taken into consideration.

I also believe that individuals themselves must take a greater responsibility for their future financial wellbeing. One of the skills that has largely been lost from family life is the ability to budget and therefore save for the items we want to buy. If more people were to save for a rainy day, I believe the numbers who find themselves in financial difficulty and have to declare insolvency would be significantly reduced. Of course, making this a reality is easier said than done. However, perhaps one place to start is better financial education in our schools?

Once we climb out of the current financial crisis, I believe that working to reduce the levels of personal debt in the UK and therefore reducing the risk of future problems must be a priority. This will not be easy. It will take the combined efforts of both government, banking institutions and a change in individual attitudes to borrowing and saving. The time to start however is now.

Tags: Debt, levels, Must, Personal, priority, Reducing