It is possible to do just that – get out of debt and save money at the same time – but it will take some effort on your part.
With the economy in both the UK and the US looking distinctly unsteady, with the rest of the world likely to follow suit, it is becoming increasingly essential to control your personal spending.
Using our usual easy-to-understand system of providing you with information, all the important points are highlighted in bold text.
Make love – not debt!
- Credit Cards. If you do have a card, avoid paying more than you need as far as interest is concerned. Lenders are now pushing up their fees. Always pay off any outstanding amount on your card as soon as you possibly can. If you only pay the minimum charge due each month, this could take you years to clear. Therefore, in order to save money you must get rid of any outstanding amounts as soon as possible. Aim at a clean slate each month!
- If you find temptation is too great when you are out shopping and that impulse buys are your downfall – cut up your Credit Card and concentrate on getting any outstanding debt paid off. When you have successfully cleared your debt think very carefully before you apply for another card. Cash transactions are far better. Hard – but a fact of life!
- If you want to buy a specific item on your credit card, ask yourself whether you could afford to pay cash for it. If the answer is ‘No’, then keep your credit card in your wallet. Don’t use it! As a rule, you should only buy what you want if you can afford it. Remember that a credit card purchase is a form of personal loan – you need to pay it off immediately, or you may risk having unmanageable debt.
- Store Cards – are a definite no-no. The interest rates are usually phenomenal. So again the same advice follows – cut it up and clear the outstanding amount.
- Keep a careful eye on Personal Loans as again the interest rate has increased here from around 6% to close on 7% over the past four months.
- Build up a deposit before applying for a mortgage. Mortgages are now increasingly difficult to obtain. There are now 40% fewer loans being granted than there were three months ago. Therefore, the higher deposit you have the better your chances of securing a mortgage.
- Make a serious effort to clean up your credit record. Experian at www.creditcheckforfree.co.uk/home offer the chance to check your credit rating free of charge. It would be best if you took advantage of free credit checks every year so that you can identify points of improvement as well as erroneous reports in your credit history. Bad credit can lower your chances of getting a loan a mortgage when you really need one. It may also affect your possibility of getting the job that you want. But, poor credit isn’t permanent. You can improve your credit rating by lowering your debt-to-income ratio and paying your bills on time.
- Make a list of your debts in order of priority – rent, heating, credit card, personal loans, overdrafts. This will give you a clearer picture of how you should be managing your finances.
- Overdrafts must be watched carefully. Do not exceed your limit as the penalties the banks are now charging are, in some cases, excessive. Just don’t do it!
- If you can, try and build up an emergency savings bank. Even if this just amounts to emptying your purse, pockets or wallet each day of all the small change such as 50p. coins and anything under that amount. Keep this in a jar and you will be surprised how quickly it mounts up.
- For detailed information on Banking go to our Banking Page and read about the various banks and their facilities, rates of interest and services etc.
- There are several small things you can do to stop money leaking away. Everyone needs to learn personal financial planning to prevent unnecessary spending.
a. Have a budget – after you have allocated a specific sums of money for housing, gas/electricity bills and all the other essentials, keep a firm hand on your spending. It can be challenging to keep track of your incoming and outgoing funds, but you’ll be thankful for your effort when you’re able to get rid of your debt.
b. Spending. Learn to haggle – you can do this in shops now as they are more keen than ever to make a sale.
c. Don’t fritter away your money on skinny lattes etc. Life will go on quite normally without them. It doesn’t matter whether you drink brewed coffee at home or at an expensive coffee shop; you’ll still get caffeine in your system either way. But, making your coffee will save you hundreds of dollars every month.
d. Ditch the football season ticket, or at least share the cost with friends. Just how many mid-week fixtures can you realistically attend?
e. Cinema tickets – the large multiples – Vue. Odeon and Cineworld are offering cheap family tickets at the weekend.
f. Cancel your Sky subscription and get a Freeview box which offers most of the channels that you are likely to want to view.
g. If you can think of some more money savers – let us know via the Contact us page.
- Probably most important of all – don’t bury your head in the sand and pretend debt is not happening. It will, it is and you may need to take action.
To remain secure and also save money, the following tips will be of help to you.
- Check that the online retailer you are dealing with has an address and landline telephone number in the real world. Make a note of these in case they should be needed, particularly if the company is based overseas.
- Always use secure web sites. These sites are indicated by a small, golden padlock icon usually located in the bottom, right hand corner of the screen.
- If you are buying an item costing over £100 use a credit card to gain insurance under the Consumer Credit Act. You may well save money here.
- Before completing the transaction check the arrangements for payment and delivery and your cancellation right. Check that you are able to return goods if they prove unsuitable or not as described.
- Print off a copy of your transaction page and also any subsequent emails you may receive relating to your purchase, i.e., confirmation of your order and delivery dates.
- Use retailers that are known to you or those who have been recommended.
- Do not automatically assume that a retailer is based in the UK just because their web address has ‘UK’ in it. Check anything that might cause you a problem in the future.
- Before completing your purchase take into consideration the shipping, postage and packing costs. Balance these against your traveling and parking costs you would have to pay if you journeyed to the High Street.
- Make sure you use a different password for each web site – yes, a bit of a bother, but worth the trouble. Have three or four ready that you can alternate.
- Do not write down these passwords or your PIN number. They are both very valuable. Good exercise for the brain to remember them! This point is particularly important if you are using a shared computer. If you are using a shared computer, remember to log out of any site when you have finished.
- If you must write down these passwords and PIN numbers keep these stored in a small notebook and store it in a place known only you. You have been warned!
- If you are in doubt about any individual purporting to represent a bank or other financial institution, check their credentials. You can do this by telephoning the FSA – 0845 606 1234 or by going to www.fas.gov.uk/register and searching there by name or reference number.
You will now see how to save money and remain secure on the Internet is really just a matter of wise precautions and common sense. Possibly the pleasure without the pain!