Avoid Debt while you can
If just one person who reads this article avoids getting into debt, then i think it has been a success. Sometimes, all some people need is a quick reminder now and again, just to keep you on the track to staying debt free.
Some of these quick tips will help you avoid debt while you have a health bank balance. For the spendaholics amongst us, there are still some lessons to be learnt from these 5 quick tips to keep you out of debt:
1. Create a weekly or monthly budget and try not to overspend.
- Base this budget around your monthly income and deduct your outgoings.
- Divide the remaining money into essentials, such as food and bills.
- Try to put some money aside, if there is left over money at the end of the week.
2. Avoid using credit whenever possible - It is probably out of your budget if you are thinking about using credit cards to make the purchase. Cut up that plastic and get saving if you really want the item that bad!
3. Bin all those loan and credit card forms you receive through the mail - Avoid temptations by ditching those shiny leaflets when you want to go on a spending spree. Often lenders will sell personal data to other financial companies, when they are aware you are looking for credit.
4. Think about your savings - Learning about how to save money from an early age is a must. Even £5, £10 or £20 a month into a savings account can really add up over the years, if you have some money spare, tuck it away into a high interest account for a rainy day. This nest egg can help you if you run into financial difficulty.
5. Do some work on the side - Check your local paper and see if there are any part time jobs you could do while you have a few spare hours. The extra cash can help keep you above board, whilst your financial situation improves.
Have you been driven to Debt?
Filed under: Debt Management, Money Saving Tips, Mortgages, Savings
As if rising utility bills aren’t enough, now motoring can drive you further into debt. It’s a little bit of a catch 22 situation, as most work requires you to drive, but with rising costs for running a car, this can put you in a difficult situation.
If you are in some financial difficulty and you rely on a car to get around, take note of some of these car insurance money saving tips and you can save a few pennies along the way.
When completing a car insurance form:
- Check if your car has an advanced security device. If so, note the model and number and let your insurers know. They may offer some form of discount.
- If you have had a long period of ‘no claims, note this thoroughly as you will be rewarded with lower premiums.
- If you are an advanced driver ie: you have passed your PassPlus exam, again note this on the application as some insurers reward drivers who have this additional certificate.
- Make sure you obtain quotes from a large number of insurers before signing a contract. There are a number of car insurance comparison sites which will find you the best deal based on your car and personal details.
By following a few of these simple tips you can ensure that the pleasure of driving doesn’t drive you further into the red.
Student Bank Accounts
If you have ever been a student, then you are probably used to being short on money. Student debt is becoming a major strain on young individuals within education, and it is extremely important to learn how to control your finances while in further education. Otherwise, you may find yourself coming out of university with more debt than you can afford to repay.
Luckily, in most circumstances, student loans are only payable back to the Student Loans Company when a postgraduates salary reaches around £19,000 per year (or £1,250 per month takehome, after tax and National Insurance has been deducted.)
Banks within the UK are extremely keen to attract student accounts, this is because although they make very little on the accounts by offering interest free overdrafts, they can often secure long term customers once the students graduate. They are also willing to offer student credit at attractive rates to encourage reckless spending. Be wary of your bank offering you attract, low limit credit cards, instead focus on managing what money you do have correctly rather than amassing a large credit card bill.
As consumers rarely change their banking providers in later years, getting students to sign up for a current account before they start earning big salaries is a no brainer. With that in mind, be sensible and don’t be drawn to a student account which offers cheap perks. Carefully study their interest rates, overdraft charges and any other additional fees which may affect you after you graduate.
As long as you don’t blow your student loan in freshers week, student loans and student bank accounts can be a fantastic way to get you through university without ammasing a large level of debt.
How to avoid Debt
We talk alot on this blog about how to get yourself out of debt, but we should also consider how to avoid debt in the first instance. With so many financial pressures in todays society, we should always be aware of the well known idiom:
“Prevention is better than cure”
With that in mind, it is always advisable to think before you act, because once you are in debt, it can be a vicious spiral of more and more borrowing.
If you are close to the being in the red, consider a few of these simple steps:
Spend within your means - Never intentionally spend outside your budget. The ‘buy now and think later’ attitude is a surefire way to get yourself into debt. Understand your earnings, take away your monthly expenditure and that is your expendable income.
Keep detailed financial records - Set up a simple excel spreadsheet to calculate your spending. Every time you make a purchase, add this to your spreadsheet and this will allow you to understand where your money is going. Don’t miss anything out, even small purchases add up to a considerable amount over a month.
Avoid using credit cards at every opportunity - By adding to your credit card budget when you can spend via other means, you are increasing the likelihood of overspending or forgetting about this outstanding balance. Relying on varying forms of credit for purchases can lead to a dependency on credit cards for purchases, when in reality, you can’t afford the item in the first place.
Think about your savings - There are various ways to increase your assets, through popular saving methods such as ISA’s, savings accounts, bonds and stocks. If you are able to set money aside on a monthly basis, no matter how small, this can create a ‘nest egg’ for any tough financial spells later in your life.
If you are in debt already, you can take something from these tips. Being able to budget effectively is one of the most important aspects of keeping a healthy bank balance.
Debt Management Tips
Being in debt can put a strain on not just your financial stability, but also your emotional stability, which is why becoming debt free is a process which requires determinationation and persistence! Families, relationships and bad credit ratings can all be rescued if you stay focused, and look for a sensible way out of the red.
Some pointers to help with managing your debt:
- Stay on track - You need to stay focused, and plan out your budgeting strategies carefully. That way, you will regain your self belief and that all important self control, which will enable you to becoming debt free once again.
- Avoid temptations - Unreputable lenders, like loan sharks or pay day loans can get you into worse financial shape than before - These ‘quick fix’ ways of getting money can cost you heavily in the long run. Instead, considering speaking to a debt management consultant or advisor, or ring the national debtline, a registered charity who have knowledgable staff, ready to give you advice on all types of debt related questions. For those who didnt know, their number is 0808 808 4000.
- Seek emotional support from loved ones and friends - Dealing with the stresses of being in debt can be made easier if you share this burden. Tell those you trust about your situation - It can be a great way to relieve your worries, by talking over your situation with others.
- Don’t loose hope - Millinos of people in the past, and in years to come, HAVE and WILL overcome debt, so that means you can too! All you need to do is follow the advice of this site, and apply a clear and focused approach to managing your debt, and things will work out!
5 Money Saving Tips
Lowering your outgoings can free up some extra cash to help pay off your loan and credit card payments. Help to shrink your debt with a few of these quick money saving tips.
1. Learn to freecycle. Check out your local freecycle board for free stuff and information on how to share second hand goods with your local neighbours. Freecycle is a community site set up to allow individuals to recycle their goods rather than dispose them as rubbish. Some notable finds include second hand furniture, television sets, coat hangers and everything in between.
2. Combine your utility bills - Often utility companies will lure in additional customers by offering discounts on gas / electricity and water supplies. You can do this by combining your utilities with one company, saving both money and time on managing your bills.
3. Borrow books from the library - Why spend a fortune on new books and cds when you can give them a test run at the library. Most libraries in the UK are completely free to use, so get yourself down there and find yourself something interesting to read!
4. Bike to work - If you live within a reasonable distance from work, consider buying a second hand bicycle and riding in every day. This has the added benefit of being good for your health, costing next to nothing to do and getting fit at the same time! I couldnt think of anything better, especially when the weather is so good!
5. Give up smoking - This is an obvious one, but cigarrettes can cost over £6 per packet. Ditch the habit and your health (and wallet) will thank you later.
What does IVA mean?
APR, CCJ, IVA … all these different financial terms can get a little confusing. I am in the proccess of compiling a debt jargon dictionary, as there seems to be a number of debt related terms that are quite confusing to the average Joe. Today however, in more detail, i will explain what the term IVA means.
An IVA is short for an Individual Voluntary Arrangement, which is a legally binding contract both you and your creditors. These are often popular with individuals in very severe levels of debt. The IVA is set up to help you reduce the amount of money you have to pay back on a monthly basis, so for some individuals it is a viable way to pay back their debt.
As lenders are keen to get back money that is owed to them, often they will be flexible on payment terms to ensure that some money is paid back, rather than none at all. These payment terms can vary on size and duration, but is usually around 5 years. The IVA is agreed between your creditors, and a repayment plan is adapted to suit your current lifestyle and circumstances.
When individuals are in severe debt, they are faced with a decision - filing for bankruptcy or an IVA, so it is advised to seek professional help if you are unsure on the diferrence between the two.
Save Money by Going Green
Utility bills can be a large expense for any homeowner, especially one faced with debt. Thats why efficient use of electricity and other utilities can save hundreds over a year.
Going ‘green’ is a friendly, efficient way of saving money on your bills by using energy and water efficiently, saving you money and the planet at the same time. Ok, so turning off one light bulb won’t save you thousands, but combined with sensible energy use across a whole household, this can have a great impact on your expenditure.
Try a couple of these tips to save some money:
Consider installing energy saving lightbulbs - These are slower to reach full brightness and will save money compared to a traditional lightbulb. Also remeber t oturn off all your lights when you leave the room - hundreds of hours of energy are wasted by lights left on in empty rooms!
Wash your clothes at a lower temperature - Many washing machines can allow the user to choose a temperature setting for their wash cycle. By washing clothes at a lower temperature, you will save on electricity costs, often without sacrificing the quality of the wash.
Also try doing a full drum of washing at the same time, rather than numerous smaller washes. This will make your washing process more efficient.
Reduce your central heating temperature - Assess the needs of your home before doing this!! Often turning down the thermostat on your central heating system by 1 degrees can save you precious £££’s over a year. Most of the time, you wont even notice the change in the temperature.
All these small changes can add up to a considerable amount over the year, so start going green to start saving!
Save Money - Cancel those unwanted memberships
Reducing your debt can be a long process, so be patient as things will not change overnight. By saving money on basic things like your council tax or learning how to budget effectively can work wonders on your finances. Another way to reduce your outgoings can be by canceling unwanted memberships and subscriptions. One large expense for many are gym memberships.
This may not be applicable to all, but often we have memberships for various services. Whether it is a gym membership, satellite television subscription, charity donations or a mobile phone contract, there are usually areas where savings can be made.
Think carefully about your gym subscription - do you visit the gym on a regular basis? Would you save money by paying on a pay as you go basis? A good friend of mine paid £45 per month for his subscription, but only went 5 or 6 times a month. By switching to a pay as you go subscription at £5 per visit, he saved over £15 per month, not a huge amount, but it all helps!
Could you save money by switching to cheaper methods of exercise? Do you just use running or cycling machines? If so, perhaps buy yourself some running shoes and brave the great outdoors, or buy yourself a second hand bicycle and get peddling! If you use free weights, why not have a look on Gumtree for some second hand gym equipment? This costs considerably less to use overall, and wont add to your monthly outgoings if you aren’t able to attend.
Often when your purse strings are a little tighter, reconsider some of your monthly outgoings and assess whether you can opt for a cheaper version, often there are considerable savings to be made.
Cheap Bus Journeys with Stagecoach
Although it has been quite highly publicised, some of you out their may not be aware of this incredible money saving deal with Stagecoach. They are currently running a number of £1 bus tickets to popular destinations throughout the UK, which is a fantastic way to save money on otherwise expesnive train tickets.
Just visit the Stagecoach offers page, and fill in the travel form. You can also see the full list of bus routes here, so check you can get to where you are looking to go. Most popular routes, ie: London to Manchester are always very busy.
Because demand is quite high, make sure you get booked nice and early, there will be limited availability!
