Reducing the costs associated with Payday loans
I would first like to caveat this article by saying that payday loans are a very expensive long term way to borrow money, but when used correctly can help get individuals out of difficult situations. We must realise that getting any form of credit or loan to pay off existing debt can in many cases increase the overall amount of debt that you have to your name. With this in mind, we need to be aware that sensible money management and planning is a better long term solution to financial hardship.
If you are in the unfortunate situation (like many of us here) of being short of money towards the end, then it is possible that you may need quick cash fix to tide you over until payday. The payday loans market has rapidly expanded over the last few years in response to the UK’s weak job market and overall impact of global financial crash, so there are a number of ways we can reduce the associated costs of using these kinds of services.
Payday loans commonly have a bad repuation, but are a common source of money for many people in the UK
But what exactly are Payday loans?
Short term or ‘payday loans’ are commonly seen as short term loan that helps an individual keep above board until their next payday. Typcially these loans are granted on a repayment schedule or a few days to a few weeks. The interest rates (APR) are typically in the hundreds or commonly, thousands of percentage points which can be overseen by the short repayment periods.
Many payday loan companies do not require proof of income or similar such documentation which enables a large percentage of the UK population to get access to money, when they may be refused from typical lenders (such as high street banks and credit card companies). The payday loan industry is also considered a common source of lending for individuals with bad credit ratings (people that have had IVAs etc).
How can we reduce the costs associated with taking out such a loan?
The first tip would be to borrow no more than is required at any one time - if you need £50 to cover you until payday, dont borrow £75. This will reduce your overall repayments dramatically and will lower your dependence on this type of lending.
Also shop around for the best interest rate for the type of loan you want. The APR% does change dramatically from lender to lender, so do your research when looking to compare payday loans. You can look them up online at many of the bigger comparison sites and deal aggregator sites.
Also, do ensure you put all of your efforts into paying back the loan as soon as your salary comes in. This will ensure you arent faced with any repayment charges or additional interest.
Watch out for the pot holes!
We can often forget that your health can be an expensive thing to keep in check as i learned quite recently. Usually, we talk mainly about financial matters, tips and the like - but today we will be looking at compensation. Many people are unaware that if you suffer from an accident out in the public domain, for example in the highstreet then you can claim against the council or private party responsible for the accident if it can be proved that they were at fault.
I recently had a run in with a large pot hole, which cause serious damage to my bike. I usually bike to keep costs down, and it is also great for keeping my heart in check - i would recommend it to anyone…! However when i hit the pot hole i bent my wheel badly and came off my bike, hurting my arm when i landed on the road.
Accidents can be a pricey affair - especially if you dont consider a no win no fee personal injury company. There are lots of expenses, such as having to take time of work - medical care and medication for example. If you do have an accident, make sure you follow up any potential opportunities for compensation as there are a many laws that are out there to protect you. You can often employ solicitors that work for you for free, and will pay back any compensation should you win your case in court. Always worth considering if you want to be paid for any accidents that were caused by the wrong doings of others.
Councils are held responsible for poorly maintained public roads, which is why you can often put in a claim if you suffer injury as a result of potholes and the like..
Ill keep you posted on how my claim goes, but i hope i can be compensated ! Im not looking for a large lump sum, just enough to get my bike back on the road and some money to cover the inconvenience of a sprained wrist!
Financial Freedom through Compound Interest
Becoming financially independent so that you only have to work if you want to is not such an impossible dream as you may think. Most people, though, think that they need much more money than they actually do to reach that stage of complete financial freedom and they feel overwhelmed so they do nothing about it.
So, what does financial freedom mean to you? If your housing costs, food and other essentials, cars and a little entertainment were covered for you each and every month for the rest of your life, would you not be financially independent? Most people don’t need millions of pounds to cover these costs therefore it isn’t such an unattainable goal.
The secret is spending less than you earn and investing those savings. Most people spend much more than they earn and this is how they end up in the never ending cycle of working to pay off things they have already bought which they may rarely use. The easiest way for most people to save money each month to put in an investment is to set a certain percentage of their income which is allotted to savings and then have it automatically deducted from their wages.
Once your savings are invested you will benefit from compound interest which is basically the equivalent of a snowball that rolls down a hill, picking up more snow as it goes. Essentially, if you invest £10 in February, in the first month you will earn interest on your tenner, but the following month you will be earning interest on your tenner plus the interest you earned the previous month. So, if you invest a small amount every month then you would be surprised how much you can earn over time.
For example, if you invest £50 every month for 20 years at an annual rate of 9%, which is extremely conservative, at the end of those 20 years your investment would be worth over £33,000. Essentially you have almost tripled your money because your total investment works out to £12,000. What if you could invest £100 every month? Or even more.
If you think it’s impossible to set aside even £50 a month you really need to draw up a budget and see where your money is going. You will often find that if you cut out a couple of pints each week you will save even more than £50. Isn’t your financial freedom worth it?
3 Small Changes for Big Savings
People associate saving money with sacrifice and this is probably the main reason you haven’t done anything to this end. But there are so many options to save money which will not affect your lifestyle, in fact you probably won’t even notice the difference.
Save ££££’s a year by making your own food and bringing it to work. This allows you to plan your weekly expenses more effectively.
1. Cut down on grocery shopping. Most of us buy too much food that we end up throwing away because it begins to morph into a new life form. There was a brilliant sale on for chickens and you bought 20, but you are only shopping for yourself so what are you going to do with 20 chickens. You can only keep them in the freezer for so long before they get freezer burn so you will end up throwing most of them away. Buy in smaller quantities and you may find your food bill will drop by as much as 50%.
2. Dining out. We all need a break every now and again but that doesn’t mean you should eat out for lunch and dinner every day. Instead of buying your sandwiches for lunch or dropping by your favorite eatery every day, try making your own sandwiches at home. You don’t have to be a 5 star chef to make a sandwich. You can probably save anywhere up to £20 every week just from sandwiches.
3. Expensive TV contracts. Do you really watch £150 television channels all the time or do you find yourself going back to the same three or four channels all the time? So if you don’t watch them why are you paying for them? Change your cable plan to something more in line with your TV habits and you could save as much as £35 every month.
With these changes you can save at least £150 every month without even noticing which you can put into an investment and with compound interest in 20 years you will have £110,000. It’s amazing what you can do just by making your own sandwiches, so imagine what you can do if you make even more small changes.
Debt consolidation explained
Consolidating credit cards can be a good way to reduce your monthly debt repayments and overall money owed.
Debt consolidation can mean a number of things, and should be only considered in some circumstances. However, i will attempt to outline what this term means and exactly how it can help you in certain financial situations.
Unfortunately, alot of the readers on this blog have experienced debt in their life and for some, debt consolidation is a light at the end of the tunnel. Debt consolidation can actually reduce your overall debt quite dramatically by lowering your monthly payments and shrinking your overall debt repayments.
Say for example you have £2,000 outstanding on a two different credit cards at 17.9% and you pay off £40 per month. On average you would be paying back this debt for over 7 and a half years!(93 months). If you change this to a 12% loan and pay off the credit card in full, you will be paying off the debt for just over 5 and a half year (70 months). Thats a massive 23 months or 920£ you would save by just transferring the debt or ‘consolidating’ this into a more effective and manageable payment. Debt consolidation can also be a good way to exercise good money management as you are working towards sensible ways to reduce your debt and taking positive action to fixing your financial problems.
You may find that credit may be difficult to obtain when you already have outstanding debt, but i would always suggest searching for better interest rates every 6 months to a year on your outstanding debts.
Whilst debt consolidation can be an effective debt management tip, it is imperative that the money from the loan is used in its entirety on the outstanding credit card debt (in the above example). Avoid spending this money at all costs to avoid running yourself into a worse financial situation or even bankruptcy!
As with all posts on this website, this should not be considered financial advice. I am not a financial advisor, just someone who has managed their way through debt and wants to share the experience with you all. If you are worried about your debt or finances in general then i suggest you seek professional financial advice.
Making Savings a little easier - Savings Calculator Widget
The web is full of handy gadgets and widgets to use on your website, so its only time i shared this one with you. This savings calculator (from car insurance comparison site Confused.com) is a quick way to track how much you can save over a set period.
Simply put in the amount you wish to save, the period you wish to save over and your current interest rate and click calculate! I’ll be looking to add more widgets like this to the site over time to help with your debt management. Stay posted folks.
Savings Calculator Widget created by Confused.com
Anyone out there with good widget ideas for this site, feel free to post a comment below! Lets start 2011 with good intentions in mind..
Consumer saving can protect against debt
MANCHESTER, England–(BUSINESS WIRE)–Debt management company Gregory Pennington (http://www.gregorypennington.com) has reminded consumers that putting money into savings can offer good protection against debt - and even a small amount could be the difference between struggling and getting by.
The comments come after research by HSBC found that 30% of adults have less than £249 in savings - the equivalent of five days’ average take-home earnings - meaning a serious financial emergency could land them in debt.
More worryingly, a quarter (25%) of people in the 25-34 age group said they had no money in savings at all, putting them at a much higher risk of financial difficulty.
An expert at debt management company Gregory Pennington commented:
“We all come up against unexpected costs now and again - some worse than others. For example, most of us could probably deal with a phone bill which is higher than normal, but when it comes to things like car repairs the costs can be significantly higher.
“Savings can greatly lessen the impact of these expensive costs. Obviously, the more people save the easier it can be to cover the cost, but even a small amount of savings could be the difference between getting into debt and getting by.
Click here to read the rest of this release…
Can more credit be a positive thing?
Bank loans can be a great way to reduce your overall repayment on outstanding debt
Often without warning, we can find ourselves in debt and no way out. Whether this situation is due to unforeseen circumstances, or reckless spending, there can be a number of positive steps you can take to get yourself back on track.
I will often advise against taking out further credit, such as bank loans to curb your financial problems, but there are times when these are a good way of saving you money in the long run. Say for example you have £10,000 outstanding on a credit card at 17.9% APR and you can only afford to pay off £200-300 per month. With interest, the total repayment costs could become astronomical - which is a good opportunity to consider additional credit.
By taking out a bank loan at say 7.9% you can make yourself some considerable savings on the total repayment amount than if you were to continue with the credit card repayments. By using a loan to cover the balance on the credit card (and of course - make sure you use the loan just for the credit card payment!), you can change the debt to something more cost efficient.
Consolidating loans can be a daunting thing to consider, especially if you already have existing debt, but think more in the longer term and you will see the value that a bank loan can have. Of course, be sure to shop around for the best rate on loans which can improve your savings in the long run.
Cool Corporate Events and Top Team Building Activities
The latest trend in team building programmes and corporate events near London is indoor skiing and snowboarding on real snow.
A unique team building experience at The Snow Centre in Hemel Hempstead, only 20 minutes outside London, is The Mountain Challenge. Visitors are split into teams and, with help from their local mountain guide, they have to devise the quickest route to reach the summit of The Snow Centre’s slopes and raise a flag. Before they can start the climb, the teams have to undertake a series of challenges to raise the necessary funds to compete in the expedition. Instructors Steve Cross and Greg Price developed The Mountain Challenge to help teams improve their team working skills, negotiation, budgeting, project management, creativity and lateral thinking.
The Snow Centre also is a popular off site local destination for breakfast and lunch meetings, offering a unique view, wireless Internet and Costa Coffee. There are two fully serviced conference rooms for 45 or 55 people available. The site offers free car parking and full disabled access. Both conference rooms have air conditioning, wireless Internet access, overhead projectors and a TV and DVD player with all the necessary computer leads. The delegate rates include room hire and a hot or old buffet lunch. Refreshments such as tea and coffee will be brought to your room.
Businesses can also take out a range of snow side activities such as Ski and Snowboard Lessons, Recreational Lift Passes for all abilities or the World Cup Slalom. This last activity is an excellent method of promoting a competitive atmosphere as well as stimulating the team spirit. The World Cup Slalom includes race training from a highly qualified instructor. The group will be split in two teams after the training, and these teams will be pitted against each other to race through the gates and see who wins. After the entertainment on the snow, visitors can head back to their conference room or to The EDGE for food and drinks.
The Snow Centre offers corporate memberships. The discount depends on how many people sign up at the time of purchase.
Simple tips for improving your credit rating
Filed under: Credit Cards, Debt Management, Financial News, Money Making Tips
One of the problems many people in debt find is having a consistently low credit rating, which can limit chances to be approved for further credit when in times of need (such as needing a mortgage or car loan for example.) The article will outline the use of certain offers, the electoral roll and other credit rating boosting tips to help raise your all important credit score to help you get a credit card or loan.
A credit score is a points based system whereas lenders can assess your suitability for a financial product, such as a credit card, loan, mortgage or even a mobile phone contract. If you are unfortunate to miss payments on our utility bills or council tax for example, or if we fall behind on credit payments then our credit rating an be negatively affected. This can cause problems later in life should we need to be accepted for certain ‘high credit score’ worthy products, such as a mortgage. Luckily, however there are a number of things you can do to bring that rating back up, and improve the chances of being accepted in your next application.
Make sure details for all of your financial accounts match - Be sure to check that your banks, credit cards and financial products are being billed at exactly the same address. Sometimes a financial payment may not be credited to your file if the accounts are found on different address details. This can be especially true if you mis-spell an address or something similar. By checking that all are the same can ensure your transactions and payment history are correctly stored.
Make sure you are on the electoral roll - This is a quick process to ensure that can be completed by contacting your local council, who will often point you in the right direction for electoral roll registration.
Check for fraudulent activity under your name - By contacting one of the major credit reference agencies, you can find out if there is any suspicious activity under your name that might be from fraudulent activity or identity theft. This can be removed in some cases by the credit agency, which can help to improve your chances of gaining a higher credit score.
Quick tip - Be wary of applying for multiple products within a short period of time as these can go against you in future applications. Many people fall into the trap of for example, being declined a loan with one company and then applying with another company that same day. This can actually worsen your chances to gain credit. Instead, wait a few months before your next application, whilst carrying out some of the tips above and you should see your credit score increase in the mean time! Good luck!
