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Tue 26th Aug, 2008
Posted in Consumer Credit, Personal loans, UK Finance, Credit Card, interest rates, Consumer debt, Spending, Unsecured loans, Financial news, Borrowing, Personal debt, Store cards, Secured loans, Debt management, Budgeting, Missed payments, Overdrafts at 12:16 pm by admin
People are making a number of fundamental errors in handling their finance according to Moneyfacts, the comparison website.
It advises people to tackle their bad finance habits in order to stay afloat during these tricky financial times.
One of the worst habits is that of living beyond your means. This fatal flaw is going to see huge numbers of UK adults sinking under unmanageable debt in coming months. People who regularly spend more than their income each month are obviously mounting up debts that they can never tackle. Many of these people will end up using credit cards to pay for basic living costs and then taking out personal loans to clear the credit cards. This is a ticking timebomb, according to MyVesta, the debt solutions provider, and they should know.
Another poor habit is allowing yourself too many credit sources. If you hold a handful of cards each with a limit of thousands there’s always the temptation to splurge. Add to this a number of catalogue accounts or store cards and suddenly all kinds of avenues are open for spending on days when your income is all gone. Moneyfacts strongly recommends paying off the cards or accounts with the highest amount of interest and limiting yourself to only a few once the balances are cleared.
Not being aware of your current financial situation is a big step in the wrong direction. Whilst few people know their exact bank balance, it is always wise to have a handle on your rough debt balance. If you haven’t tallied up all the money you owe in overdrafts, hire purchase, credit cards and loans then you’re burying your head in the sand. By being aware of what you owe you remain in control and can decide which bills need clearing most urgently.
Above all, be aware of missing payments. Many creditors see this as a green light to either slap you with a charge or raise the interest rate on your borrowings. Or both! Whilst borrowing may still be fashionable, there’s no point in spending money unnecessarily. Especially during the credit crunch!
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Fri 1st Aug, 2008
Posted in Bad Credit, Consumer Credit, Personal loans, UK Finance, Credit Card, Consumer debt, IVAs, Financial products, Spending, Unsecured loans, Financial news, Borrowing, Personal debt, Secured loans, Debt management, Budgeting, Missed payments at 10:35 am by admin
TDX Group, the organisation behind the Group Debt Index, claim that there has been a significant rise in the number of debt management plans taken out in recent months.
The Group claim that debt management, such as Individual Voluntary Agreements (IVAs) will rise by a further £5 million by Christmas, growing steadily by year end.
Mark Onyett, chief executive of the TDX Group said: “We’re already seeing far higher numbers of consumers struggling with personal debts and the pressure is set to intensify over the coming months.”
The research showed that an increasing number of people with financial problems are finding it difficult to make repayments on loan and credit card debts.
This accords with research showing the house repossessions are steadily climbing and a rise in people approaching debt charities for advice.
Since the start of the credit crunch many people have tightened their belts, but it simply isn’t enough.
Whilst most families are wise enough not to extend their credit with further personal loans, the increases in the cost of living has pushed many families deeply into debt.
Unfortunately, this Christmas could see many families hard pushed to pay their bills, let alone have the festive season of their dreams.
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Wed 21st Nov, 2007
Posted in Bad Credit, Consumer Credit, Personal loans, Debt Consolidation, UK Finance, Credit Card, interest rates, Consumer debt, Student debt, Unsecured loans, Borrowing, Personal debt, Debt management, Budgeting at 1:52 pm by admin
One of the most expensive times of year for the parents of teens is August. Back to School means arguments about the difference between a good outfit, and an in-style outfit. The difference can be £500.
Adding books, tuitions, bus passes, sports, after school events and social outings can cost more than one month’s income. Few people have enough money to cover a student’s entire list of wants and needs. This problem is compounded when a family is trying to send two or three teenagers to school at the same time.
Many students earn their own money to help cover school costs. But parents need to be aware that others apply for credit cards as a form of unsecured loan without their parent’s knowledge.
Banks actively recruit students. Many students believe this is free money, a perk. They run up the limit, and then accumulate interest for months, before parents learn of the debt.
A student can easily run up an unsecured debt of £5,000 in a matter of weeks. This debt can haunt parents for years, and ruin a student’s consumer credit information report. Parents need to inform their children about the responsibilities and risks of a credit card, before the students are forced to take out a second mortgage or debt consolidation loans to pay their children’s debt.
Back to school is a great time to teach children that fashion does not define a person. It will not make them popular, but it could put them in debt. There is no reason why a student cannot be taught about APR and interest rates, debt management on mortgages and loans, and of course responsibility.
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Tue 23rd Oct, 2007
Posted in Bad Credit, Consumer Credit, UK Finance, Consumer debt, Student debt, Borrowing, Personal debt, Debt management, Budgeting at 11:30 am by admin
Almost every student starts their school year with enough money to last the year. This money is usually borrowed. However, once students start the school year they forget how to budget, and that they must carry this debt for years.
Any bar in a university district will tell about friends who buy expensive rounds of drinks for all their friends, or shops who see the same students day after day buying clothes or shoes.
New friends, and peer pressure can make the most level-headed student careless with their money. Many students feel the pinch because they need friends. They need to recreate the network that helped them survive school.
Others are stepping out for the first time. Faced with the responsibility of being an adult, and the excitement of being independent for the first time, may young adults go punch-drunk.
This lasts for a month or two, then the reality hits. They look at their budget and realize that they won’t survive until spring unless they tighten their belts.
Student loans can take decades to repay. They can make it difficult to apply for a mortgage, own a home, and in some cases, many young adults claim that their student loans are preventing them from starting a family.
The best debt management program is a strong budget. The next is avoiding peer pressure and staying away from social situations where you may be encouraged to spend money, or to treat a whole table of friends.
Remember, it is possible to end the school year without acquiring more debt, or needing to ask your parents to take out a mortgage.
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Wed 1st Aug, 2007
Posted in Consumer Credit, Personal loans, Homeowner Loans, UK Finance, Credit Card, Consumer debt, Spending, Unsecured loans, Financial news, Borrowing, Personal debt, Secured loans, Debt management, Zero percent cards, Budgeting, Tenant loans at 1:34 pm by admin
How much should parents spend getting a nursery ready for their new baby? Well, regardless of what you might think, new figures from Halifax Home Insurance show that the average price of kitting out a nursery is now £2,628. This is the average amount of money that people are spending on everything from designer furniture to autographed football kits and original works of art for their children’s new nurseries.
It appears as if many parents are living out their own childhood fantasies with the items that they are buying for their newborn children. While it is nice to see so many parents splashing out on their children, the fact of the matter is that their new babies will not remember or appreciate any of it.
As well as getting more fancy decorations, baby nurseries are also getting more high tech, with many parents installing televisions, two way baby monitors and even CCTV equipment so that they can monitor their children.
It is amazing how quickly the cost of such equipment can mount up. Even if you just stick to the standard equipment, you will find that it can be quite expensive to prepare for your new child, with clothing, toys, baby equipment and furniture racking up quite a bill by the time you’ve bought everything. With many parents already looking at reduced income once one parent stops working, loans and credit cards are being used to fund nursery purchases.
The important thing for parents to remember is that they will have their baby for life, and there will be a lot of expenses later on that will turn out to be more important for their child, such as childcare, medical care and education costs. Perhaps some parents should consider putting some of this money aside for later use, rather than spending it all before the baby is even born. Whilst cheap loans and zero percent credit cards can offer what seems a good way to buy nursery needs, getting into debt with little idea of what the future holds in expenses and income is probably unwise.
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Fri 20th Jul, 2007
Posted in Consumer Credit, Personal loans, Homeowner Loans, Banking, UK Finance, interest rates, mortgages, Consumer debt, Homeowners, House buying, Spending, Property, Financial news, Housing news, Borrowing, Personal debt, Secured loans, Debt management, Budgeting at 11:01 am by admin
The Bank of England Governor Mervyn King has warned families that further hikes in interest rates should be expected. Mervyn King claims that these interest rates will continue to rise as an alarming number of economic indicators, including property price rises, are remaining elevated as the past rate rises seem to have made very little effect.
Currently the base rate is at an all time high in six years with expected rises which could cause thousands of homebuyers with large mortgages to go into the red. Mr. King not only addressed the issue of the interest rates, but he went on to warn families and first-time buyers about debt and urged them to be more cautious especially at a time of rising rates. Governor Mervyn King said that he fears that many Britons will be unable to cope with another rate rise due to the fact that many of them have taken on excessive debts. Many families are already living on a stretched budget due to the highest borrowing costs since 2001.
This follows a period when interest rates on credit such as cards and personal loans seemed affordable and when consumers had a feel-good factor about borrowing. Secured loans still remain at competitive rates, but consumers may now feel reluctant to borrow.
Many homeowners who are currently on fixed-rate mortgages have not felt the effect that these last four increase have made on many homeowners, and Mr. King fears that many families are ignoring the dangers of high borrowing costs and are not budgeting these interest rate increases into their personal finances. Homeowners who are currently on a fixed-rate mortgage should make themselves aware of the date when the fixed-rate will expire and financially prepare for an increase in their mortgage payments.
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Tue 17th Jul, 2007
Posted in Consumer Credit, Personal loans, Homeowner Loans, UK Finance, Credit Card, interest rates, mortgages, Consumer debt, Inflation, Homeowners, Spending, Property, Financial news, Housing news, Borrowing, Equity release, Personal debt, Secured loans, Debt management, Budgeting at 1:02 pm by admin
Over the last five years rising mortgage payments and living costs have affected households to the point where they now have a significantly smaller portion of income to spend on discretionary purchases. After tax contribution, mortgage payments and household bills have been deducted from an average family’s gross income there is just twenty two percent of the gross income left over for families to spend on items such as clothing, video games, media products, or other electronic equipment. In 2003, twenty eight percent of gross income was left over for the average family to spend on discretionary purchases.
As the household costs continue to rise, many consumers are adversely affected. The increase in mortgage payments that has been driven by the four interest rate rises since last August is having a big impact on consumers. Over the past two years, strong consumer spending has been the power behind Britain’s economy, however figures now show that spending has decreased slightly. Although consumers are taking out secured loans against the rising value of their homes, many retailers are concerned that the spending squeeze is likely to intensify as interest rates are expected to hit six percent by the end of the year.
As basic household bills are increasing, many households are being affected and are therefore cutting down on unnecessary expenses, such as clothing, shoes, or unnecessary electronic equipment. It all depends on the family’s choice and importance of ‘luxury’ items. Whatever the choice may be, there has been a slowed consumer spending growth throughout the country as many households are now stretched with their mortgage repayments and other household bills. Customers are now asking whether the purchases they once put on a credit card or personal loan without a thought are now really necessary.
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Thu 5th Jul, 2007
Posted in Bad Credit, Consumer Credit, Personal loans, Homeowner Loans, UK Finance, mortgages, Savings, Consumer debt, Homeowners, House buying, Financial products, Spending, Property, Financial news, Borrowing, Personal debt, Debt management, Budgeting at 3:10 pm by admin
Current research by Scottish Widows has found that millions of elderly women will be forced to rely on the State pension and other benefits. This is due to the fact that fewer than one in three women are saving money in pension or other investments for the future. Many women, especially those who remain at home to care for their children, do not have the income or the means to set money aside for their retirement fund. This has led many experts to urge companies to take urgent action to encourage women to save for their future, as parenting and caring responsibilities have a huge impact of women’s ability to save. They state that the government and the pension industry must ensure that pensions products are flexible enough to cope with the unpredictable lives of people. If the government and pension industry does not ensure this flexibility women will continue to under-save and pay the price through poverty in retirement.
The survey of 5,000 people performed by Scottish Widows shows that 49 percent of them are seeing aside adequate sums for their old age with 51 percent of those surveyed who face a shortfall. A quarter of those who face a shortfall in retirement have no savings at all. Although there are many who are regaining the confidence in the pensions market, there are not enough who are adequately saving for their retirement. Instead the current climate of borrowing means that women are typically spending more money each month on loan repayments than they are on savings or pensions.
Borrowing in the form of home loans and mortgages can be a way of building wealth through property. However, huge swathes of the population are taking out personal loans for holidays and spending sprees, taking themselves into bad debt for non-essentials.
Almost three quarters of the UK population is not on track for a comfortable retirement. That is why it is extremely important for young people to start focusing on their retirement plans and include a savings or investment scheme into their budget and personal finances to avoid having to live on credit when they reach retirement.
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Mon 25th Jun, 2007
Posted in Consumer Credit, UK Finance, Savings, Inflation, Homeowners, Spending, Borrowing, Budgeting at 1:59 pm by admin
Food is considered to be one of the main driving forces behind the recent rise in the overall inflation that is currently running at 2.5%.
The prices of vegetables have risen along with potatoes by 16.5% over the past year with fresh fish rising by 12.8%, milk by 10.4% and eggs by 14.4%. At this rate people will need to start finding ways to reduce their food bills, especially with the rise in interest rates, which have been affecting households that pay mortgages.
“There has become an expectation amongst British consumers that food should be cheap,” says Abbi Rouse of online loan brokers, Interfinancial Limited. “But this view is being challenged by the current price rises.”
“Many households are now finding themselves borrowing money just to pay normal expenses, so a rethink is needed by many families.”
Some ways to reduce your food bill is by thinking ahead. By planning your meals in advance you will avoid buying unwanted food. If you plan a menu, you can then decide on what items you will need to purchase for the week and create a shopping list.
You should then use this list and stick to buying only what you need. You could also buy in bulk, which can be a cheaper option, especially if you have a large household.
If you life in a flat with one or two flatmates, you could all pitch in together and buy certain items in bulk that you feel you all could use such as rice, pasta, washing powder and cleaning products. However only purchase products that you know you will not throw away or waste.
Often purchasing your fruit and vegetables from roadside markets can be less expensive than buying in the supermarket. Usually at roadside markets you can bargain with the seller, whereas at a supermarket you have to pay the fixed price for the items. You could also save by looking out for special offers as well as reduced items that you could use that day.
“One way the nation wastes their money is in buying out-of-date food that doesn’t get used,” says Rouse. “Those ‘bargain bin’ items need eating the same day and if they are not frozen or used instantly they go in your bin, instead of the supermarket’s.”
“Consumers often assume that buying cheap foods saves them money, but a decent item can often stretch further. An 80p loaf from a proper baker will make great sandwiches, then decent toast, then breadcrumbs or pudding as it goes stale. A 20p plastic loaf goes mouldy after a few days and ends up in the bin.”
There are many ways in which you can cut down the expense of your consumption of food and plenty of fun cook books to help show you how. If you don’t want to buy them, why not get one on loan from your local library?
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Tue 19th Jun, 2007
Posted in Bad Credit, Consumer Credit, Personal loans, UK Finance, Credit Card, interest rates, Savings, Consumer debt, Spending, Financial news, Borrowing, Personal debt, Online shopping, Debt management, Budgeting at 10:29 am by admin
Some habits are hard to break. Shopping is one of the hardest habits to break, especially for those who are ‘bargain hunters’. Unbiased.co.uk claimed that more than 24 million people describe themselves as ‘bargain hunters’ – regardless of their debt levels or the size of their mortgage.
The largest numbers of bargain hunters live in Wales and Scotland, where 55 per cent of people described themselves as bargain hunters compared to 50 percent nationwide. But that more than half of all UK residents consider themselves bargain hunters is possibly an alarming fact.
According to Unbiased.co.uk, 63 per cent of bargain shoppers know their bank balance to the nearest £10 compared with 58 per cent of people countrywide but that isn’t the whole story: evidence shows that many consumers who regularly seek out bargains are actually going into the red just to receive the ‘hit’ of finding something they don’t really need at a bargain price.
Whilst many bargain-conscious consumers are happy to hunt around for designer looky-likey items in Primark, others are keen to find high cost items at knock down prices, frequently seeking out more and more goods on marts like eBay.
This shows that even bargain hunting for the cheapest consumer goods can result in more debt for consumers already bogged down by credit card and personal loan repayments.
“While recent research suggests that Britain’s propensity to save has shown some improvement over the last year, much more remains to be done,” stressed Unbiased.co.uk’s chief executive David Elms.
CreditExpert reports that six million Britons think a personal debt under £15,000 is nothing to worry about. This means that consumers who pay only the minimum payment can pay £4,500 off their debt every year in interest without ever dropping the capital.
This explains why many consumers are financially bound, year after year, even though they are making payments on their loans and credit cards.
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