How does debt consolidation work?

 

You have probably heard of debt consolidation at some point, and may have a vague idea of what one is. Most people, when they hear those two words, think, “great, another loan. That’s all I need”.  It doesn’t quite work that way, and it can really help you out if you’re in a bind with several debts that don’t seem to be going anywhere, no matter what you do. Lot’s of people have misconceptions about how payoff personal loans can help, among other services, so allow us to tackle that subject now and explain just how the whole thing really works.

Debt consolidation: the concept

 

The whole point of debt consolidation is to enable those who are having difficulties managing their various debts, to group together (or, consolidate) these debts into one payment rather than several that are hard to keep track of, and end up costing more. Most people just find it easier, also, to look after just the one loan instead of several each month. Not only that, as mentioned above, by grouping these bills together into one you are likely to obtain lower payment amounts each month compared to paying everything separately.

As an example, let’s say that you have 3 credit cards and they have interest rates of 12%, 18% and 25% respectively. By grouping these debts together, you may end up with a monthly interest rate of 10% or 15% which is going to save you a fair amount of money over the life of the loan repayments.

In a similar vein, consolidation of your loans can also help to lower the minimum monthly payment. This is helpful especially for those that are struggling to meet the minimum monthly requirements of the existing loans. If you have been missing payments, and incurring fees as a result, this would provide much needed breathing room, and opportunity to get things back on track in other areas so you are not left worrying about things on top of the debt.

It is worth keeping in mind though, that while a consolidation loan can help in a very real and big way, lower monthly payments will mean it will take slightly longer to pay it all back and it could also mean paying more interest in the long run – although that is not set in stone if the interest rates are also lower.

Where do you get a consolidation loan?

 

The link in at the top of this piece will help a lot, but there are other places. The majority of debt consolidation loans deal with student loans and credit card debt, but they can be applied to other forms of debt too. There are a number of companies out there in the wild that provide the debt consolidation services that you may need, of which these include:

 

  • Mortgage lenders
  • Credit card companies (yep)
  • Peer-to-peer lenders
  • Debt management companies
  • Banks

 

Mortgage providers will often, as you may expect, provide a consolidation loan secured against your home. This kind of loan uses your home equity, and is called a Home Equity Line of Credit. Generally speaking, these types of loans have a more favorable interest rate than other types of debt consolidation loan but the risk is also higher – after all, if you fail to keep up with the repayments, you run the very real risk of losing your home.

Another option that is open to some people, is to take on all of the debt onto a credit card. This can be via a transfer, in the case of other card debts, or by simply paying off debts using the credit card and then just paying off the one debt that you are now left with.

This method can either be very good, or incredibly bad. In the case of transfers, it is very often the case that there will be a 0% interest fee, for upto 12 months, on balances that are transferred. This is excellent if you can pay it all off within that timeframe, but not so great if you cannot. This can end up being an expensive option if you can’t pay it quickly because some credit card companies will charge interest on the entire balance, retroactively; which includes amounts you have already paid off.

What is your best bet for debt consolidation

 

Ok, let’s assume that you are not totally confident that you can pay off the debt in the time period that a credit card balance transfer will allow and that you either do not have a mortgage or you don’t like the idea of putting your home in the line of fire/ What happens now?

A peer-to-peer solution may well be the best way for you to move forward. A peer-to-peer loan is different than those offered by debt management companies. The biggest difference is that there are no hidden, or ‘extra’ charges and they very often offer much better interest rates than any bank you would care to think of.

Will debt consolidation hurt your credit score?

 

While the majority of consolidation loans will not affect your score in a negative way, since the outstanding debts are still being paid, the approval process may include what’s called a hard credit check. All credit checks of this nature impact your credit score, taking off a few points each time and these can stay off for upto two years.

In the end, the only thing that will have a negative impact on your credit score is you. It seems obvious, but to protect those three digits you have to make making regular, on time re-payments a priority – after rent / mortgage and food, naturally, and don’t forget car and gas payments if you need your vehicle to get to work!

Debt consolidation can be a great help if you allow it to be, just be sure to make payments each month to make sure it keeps working for you, and not against you.


How A Personal Injury Can Affect You Financially

A personal injury can affect people in a number of ways, of course, your health will be your first concern. But the financial effect of a personal injury shouldn’t be ignored and unfortunately many times it is.

A minor personal injury might mean you can get back to your normal routine within a month or if you’re lucky even a few weeks. But more serious personal injuries can have long wide-reaching effects, especially where your finances are concerned.

You might also find that unfortunately, people won’t be all too sympathetic to your plight either. After suffering a personal injury it’s easy to think well it’s only money at least it was nothing more serious but while your health is paramount and should be your first focus you can’t really ignore your finances, can you?

This is especially true if you have a family to support, despite the onslaught of personal injury adverts on television these days not many people will be thinking about the financial impact a personal injury can bring about.

But you should and that’s why you shouldn’t be put off from claiming compensation. Let’s take a more detailed look at how a personal injury can impact you financially and examine what you can do to help you get your finances back on track.

 

Time Away From Work

 

Unless you’re incredibly lucky you’ll likely be away from work for quite a while after suffering a personal injury. Now depending on where you work this can affect you differently, you will have sick pay but who knows how long you’ll get it for and you might also have health insurance.

However, the majority of people likely won’t be so lucky and even if you are that sick pay won’t last forever and getting money from insurance can take a while. Sure, if you have savings this could alleviate the financial burden for a while, but is it fair that you’re left out of pocket for an injury that wasn’t your fault?

When you look at the above situation it’s easy to see why people don’t like to think about their finances after suffering a personal injury isn’t it? An all too common mistake many people make or in some cases feel they are forced into is returning to work to quickly after suffering a personal injury.

You need to give yourself time to heal and recuperate after suffering a personal injury but with the added financial burden you could feel like you have no option but to return to work as quickly as possible. But you should never do this, which is why seeking compensation is so important and if you are having a lot of financial problems you should speak to the Citizens Advice Bureau as soon as possible.

 

Diminished Capacity

 

The next big financial difficulty you’re likely to face after suffering a personal injury is the very real possibility that you’ll have diminished capacity, but what does this mean exactly? Diminished capacity could impact you in a number of ways but when it comes to personal injuries it will likely mean that due to your health you won’t be able to do everything you used to be able to.

For example, if you work in an office and suffer an accident that injures your hands or arms you might have difficulty typing. That might mean that your old job might not be suitable for you anymore or you’ll only be able to work part-time.

This could be a temporary problem that will heal in time, but it could take years before it does and in more serious cases you could have a life-long disability. This could impact your finances in a wide number of ways if you have to work part-time then you won’t be bringing is as much money, will you?

And if you can’t return to your old job and have to find a new one then you’ll have even less money, won’t you? Plus, if you are left with a disability after suffering a personal injury then you might find it difficult to find another job. Of course, benefits can help alleviate this if you are entitled to any, but it’s added stress that anyone could do without.

 

What Can I Do About It?

 

So, that’s the main two ways your finances can be affected after you suffer a personal injury because we have a national health service in the UK you won’t have to factor medical bills into your finances, unless you decide to go private. But those two factors are problem enough on their own.

One thing you should make sure you do is make a claim for compensation depending on the nature of your injury, don’t worry you might be able to get help with this. If you’re injured at work and are a member of a union get in contact with them as quickly as possible because they may be able to take care of the legal matters for you. For more information about making claims visit Warriors For Justice.

The same applies for traffic accidents if you’re a member of a motoring agency and like we mentioned earlier talking to the Citizens Advice Bureau will be beneficial as well. But there is one other impact thing you need to think about as well when you’re claiming for compensation.

 

Your Pain And Suffering

 

You can think of your pain and suffering as the third impact on your finances when you’re claiming compensation the pain and suffering you feel and have endured are a major factor. You shouldn’t just be claiming for the money you’ve lost due to being out of work the trauma you’ve experienced is a big factor in what you’re owed.

This includes mental anguish as well, and while it might feel uncomfortable mentioning this when claiming for compensation it will ensure that you are sufficiently compensated after your injury. No amount of compensation will make suffering a personal injury worth it but it will help lessen the financial impact and help you find justice after suffering an injury.

 


Types of mortgage – a quick guide

For most people, a mortgage represents the biggest type of financial transaction made in life, and as such, it’s important to find a product that’s right for you.

There’s a lot of jargon in finance – and mortgages are no different. So we have teamed up with the guys over at Your Property Wizard who provide a range of services including home reports in Glasgow to help you understand the different types of mortgage and some of the associated terms you’ll hear – to make sure you’re choosing the product that’s 100% right for you.

An overview

Mortgages can be sorted into two broad types; ‘fixed’ and ‘variable’ rates. What this essentially means is that the interest you pay will either be set a definite amount for a period of time (normally for up to 5 years) – or it could fluctuate, hence, ‘variable’.

Both fixed and variable rate products have their pros and cons, so we’ll take a closer look:

Fixed rate mortgages

You’ll generally see these mortgages advertised as ‘Fixed for 5 years” or similar. This means that no matter what happens to the country or bank’s interest rates, the amount of interest the mortgage accrues stays the same, meaning your payment stays the same.

Pros

  • Having a fixed amount for a certain time period really helps people budget, giving you some certainty around your monthly expenditure
  • If interest rates go up, you’ve locked your repayments at a lower rate

Cons

  • The interest rate you get will normally be a bit higher than that of variable rate mortgages
  • If overall interest rates fall, you remain paying the higher rate you ‘fixed’

Questions to ask

  • It’s worth asking what happens if you choose to settle or find another mortgage in the ‘fixed’ period. Banks offer these rates to ensure they’ve got your funds coming in consistently for a period of time, so they’ll often charge you if you change your mind – and the charges can be large.
  • Finding out what happens at the end of the fixed period is also important – as standard practice would have you transferred to what’s known as the ‘standard variable rate’ – the bank or building society’s most basic interest rate. This is normally higher than what you’ve been paying, so your payment could go up. Start planning your next move a few months in advance.

Variable rate mortgages

Choosing a variable rate mortgage means the interest rate could be subject to change at any time. If this is the type of mortgage you opt for, it’s important that you’ve got some additional funds available to pay the monthly amount, should it suddenly go up.

There are different types of variable rate mortgage, they are:

Standard Variable Rate

This is the most basic mortgage product offered by a lender and is usually only impacted by the Bank of England’s base rate. There’s no time limit associated with this kind of product.

Pros

  • You’re never locked in to a SVR product, meaning you’re free to shop around for other products as you choose – and will have no penalties to pay if you want to change.

Cons

  • Your monthly repayment could go up (or down) – which makes budgeting difficult.

Tracker Mortgages

A tracker mortgage is normally aligned with the Bank of England’s base rate – usually with a few percent added on top. So, people with tracker mortgages will have seen their interest rate go up by 0.25% in line with the Bank of England increase in October 2017.

Pros

  • Tracking doesn’t just track upward – which means any decreases in interest rate are also reflected in your monthly payment.

Cons

  • Increases in base rate will see increases in your monthly payment – and if you’re locked in to the mortgage there’s a chance you’d have to pay an early settlement fee if you wanted to move to a different product.

Discount Mortgages

This type of mortgage fixes a discount that is in relation to their SVR. So as an example, a SVR of 5.5% with a 1.5% discount would see you fixed to an interest rate of 4% for the time you’re fixed. It’s important to understand what the SVR is to begin with though – as big discounts are only good if they drop the final interest rate lower than competitors.

Pros

  • Works out cheaper than SVR mortgages
  • Any decrease in the SVR is likely to be reflected in the rate and your payment

Cons

  • If the SVR or Bank of England base rate goes up – so does your payment
  • There are usually early repayment fees associated with this type of mortgage

Capped mortgages

A capped mortgage is similar to a tracker product – although an interest rate cap means your rate (and therefore repayment) will never exceed a certain level.

Pros

  • You’ll be able to calculate a maximum monthly figure that your mortgage could rise to – and it will never go higher while you’re on the product.
  • Your rate can still fall – it just won’t rise.

Cons

  • The cap is often set very high – meaning it’s sometimes unlikely that the rate would ever exceed the cap anyway
  • The rate can be increased as high as the cap at any time, meaning you should be sure you can afford any payment that could occur
  • The lender could put the interest rate up at any time

Offset mortgages

Offset mortgages are a more recent product than a lot of others on our list – and they work for borrowers who have savings and a mortgage with the same lender.

In effect, you only pay interest on the different between the amount you owe and the amount you have in a savings account – so, if you have £20,000 saved and a mortgage of £220,000 – you’ll be paying interest on £200,000, rather than the full amount.

Pros

  • Your savings work in your favour, essentially acting as an overpayment while they’re held by the lender

Cons

  • It’s important to do the maths on this type of product to make sure you’re getting the most from your money

Make sure you truly compare

You’ll notice there’s been ‘fees’ mentioned quite a lot through this comparison – and it’s important you don’t forget or overlook those fees.

Fees can be applied either when you secure the mortgage product you want – or should you decide to settle the mortgage early. They can be large – sometimes a percent of the interest owed at the point of repayment, so make sure you understand what they are prior to committing.

 


Precious Metals Retirement Investing: Minimising Risk

Regardless of what plans we have for the future, it’s important to ensure that we’re minimizing risk where we can. A lot of people will rely on paper-assets to secure their future, but many may not take into account the risks associated with such assets. However, more and more people are looking for alternative ways to diversify their portfolio to help counteract such risk, with one of the most popular investments being that of precious metals.

Why Precious Metals?

Precious metals retirement investing can be a popular choice because of the security it is able to offer. While there can be fluctuations within the world of precious metals when it comes to its value, its real pull is that it doesn’t fall within the same demographic as paper-based assets. For example, if there were troublesome times within the housing market, there can be a number of ramifications. As a result, those who have an investment based on paper-assets can see the value of their investment drop.

Precious metals do a stellar job of counteracting such effects, as such metals retain their value in times of strife, because they are rare, and much sought-after.

Evidently, we need to ensure that we’re only dealing with reputable companies when it comes to investing in precious metals, but a little bit of groundwork can help us have a more secure financial future.

What About The Mining of Precious Metals?

When it comes to investing in precious metals, there can be a couple of options available to you, but it’s important that we understand what each avenue offers, and what we can expect from our investment.

Rather than invest in precious metals, some may prefer to invest in the mining companies themselves. While this is a fairly popular practice, there can be more risk involved than investing in the precious metals direct. As it is a company you will be investing in, there can be risk based on how much profit it makes. You will also be making investments via the New York Stock Exchange, which in itself comes with its own set of risks.

Of course, if you are a seasoned investor in shares, then you may be fully confident when it comes to investing in precious metal mining companies. However, if you’re new to the world of investing it can be advisable to seek professional advice before making any commitments.

Investing in precious metals directly means that you are investing in a high-value, tangible asset that can easily be sold at a later date should the need arise. It also allows us to build a more secure nest egg for our family.

Precious metals are often not subjected to economic and political and economic factors and often rises in value as time goes on. This allows investors to have an alternative source of income that can help recovery within a troublesome financial period.

Factors to Consider

Those looking to invest in precious metals as part of their retirement will need to ensure they consider some factors before making an investment. For example, some may choose to convert their current Individual Retirement Account into a God Individual Retirement Account. This is certainly possible, and it’s often the case that many providers will advise on a rollover to ensure you hit the ground running. Generally, those who offer Gold IRAs will tell you exactly what is needed from you, but you should check the terms of current IRA to see if there are any restrictions in place. In some instances, an employer may not allow for it unless you leave the company, but each IRA will have its own rules depending on how it was set up.

Some may be unsure of how much to invest, and different companies will give differing amounts. It is advisable not to invest anything less than $5,000, but this amount can be very generic. This is another reason as to why you should review your current financial plan, as it will give you a clear indication of the options available to you.

Ensuring the Precious Metals are Eligible

There was once a time when only gold and silver American Eagle coins were eligible, but this all changed in the Taxpayer Relief Act of 1997, where several IRS regulations were amended. As a result, there are many different types of precious metals that can be invested in. However, if you’re looking to make a retirement plan, it is often the case you will need to employ the services of a custodian, who will be able to point you in the right direction when it comes to eligible precious metals. A great resource on this is mineweb.net – everything you need to know about precious metals IRA rollover.

You can also check out this short video below on the gold IRA rollover process:

As long as we operate in the right way, investing in precious metals can put us on the right path when it comes to making a robust financial future.


Are working from home jobs good for the environment?

Are working from home jobs good for the environment?

It might not be the primary focus for people looking to establish themselves in working from home jobs, but research seems to indicate that the environment benefits when people adopt their home as their office. What impact will you working from home have on the environment? What’s the picture like for the UK as a whole? And is it working for the big companies who’ve taken remote working onboard?

Reducing your carbon footprint

Effectively, working from home reduces your personal carbon footprint – meaning your individual environmental impact on the world is lessened. If you’re working for a larger company, they’re likely to have targets that relate to their wider carbon footprint – there are a lot of factors involved in a company doing so – but managing individual employee impact can really add up toward those goals.

What is your carbon footprint?

The official definition of a ‘carbon footprint’ is ‘the total amount of greenhouse gases produced, directly and indirectly, to support human activity’.

So, in real terms, that’s the fuel you use to drive your car, take public transport, rely on public services, throw your rubbish away, heat your house, make a cup of coffee… and so on. The list is incredibly long, but for most of us, going to work drives this figure up an incredible amount.

Commuting

Getting places by car is generally one person’s biggest contribution to their carbon footprint and damage to the environment as a whole. You might be surprised to hear quite how much carbon dioxide your car emits – every litre that your engine burns creates 2.3 kilograms of CO2. At average 2017 fuel prices, that means £1.20 spent at the fuel pumps produces the equivalent to around 2 and half bags of sugar’s worth of CO2.

Those numbers scale up to massive figures if your car takes you to and from work each day – and 75% of all UK workers do. The most recently figures show the average commute in the UK is 10 miles – for a car offering 40mpg in fuel economy that means around 5kgs of CO2 produced every day.

Working from home means you’re negating that impact altogether. What’s more, you’re reducing the strain on the country’s road infrastructure, reducing traveling times and upping other road users fuel economy and output. Your personal contribution to this might be minimal – but don’t forget, you’re one of thousands of people each year who’s switching to working from home.

Of course, working from home isn’t the only option here, many people are moving toward cycling to work with government subsidised schemes – and lots of people use public transport. Even though public transport might appear popular, outside of London it accounts for a very small amount of all commuting – with just 7% of people choosing it over their own car.

Lunch

To continue the driving theme – millions of UK office workers add to their commute by taking their car to get lunch each day. By doing so, you’re adding to the higher carbon footprint that’s already associated with the individually packaged products you’re most likely to buy. Home workers are far more likely to make lunch from ingredients they have at home – meaning a double-win for the environment versus someone who’s taking their car to get a meal deal…

Heating your house

So, you’re sitting at home burning through carbon as your computer happily consumes electricity from the grid – surely this is going to have a negative impact compared to the 9-5 workers who leave their house empty for the day? Well, you might be right, but don’t forget, they’re still going to an office where there’s a huge draw on electric, so even if they could teleport there without using transport, they’re not far behind your household carbon output.

Your energy consumption at home is going to be up as a result of working from home – but the numbers pale into insignificance compared to those associated with the commute you no longer make.

Saving trees

If you can’t be handed a piece of paper, you’ve saved a piece of paper. Moving toward entirely electronic communication means the ‘hard copies’ that are in filing cabinets and folders around the office are continually reducing year on year. Huge numbers of companies have made commitments to be entirely paper-free in the not-so-distant future – and cloud-based computing technology makes this more and more feasible by the day.

It’s likely that there’s always going to a need for paper – but as technology develops, the number of trees that are felled will undoubtedly reduce. If there’s one solid ally when it comes to reprocessing all that CO2 we’re churning out of our cars – it’s trees. We could do with keeping as many standing as possible.

Conference or video call meetings

Another benefit of ever-improving technology is the connectivity is offers us as employees. Where national meetings have previously meant long car journeys, flights or time on trains, the enhanced performance of video calls can mean something close to a traditional meeting can be had on a shared screen. Not only does this have a positive impact on the environment – it frees up vast numbers of hours for all concerned.

Is it working?

In 2012 computer giant Dell put a plan into place that would see 50% of all their employees working remotely by 2020. Although even now it is some way off, the environmental impact is significant – last year, with 20% of their workforce working remotely, around 6.1 million kilos of carbon was saved. That’s around 16 million miles of car journeys. They’re not the only company making big promises either – Amazon, Xerox, Google and many others are all increasingly offering work from home positions.

So, the short answer is yes. The most significant improvements are being made by taking cars off the road – but everything adds up. If you’re an employer looking at the possibility of introducing working from home jobs, or an employee looking to make your work time home based – you’re likely to be doing a great deal for your carbon footprint and the environment as a whole.


7 ways to be financially secure in retirement

7 ways to be financially secure in retirement

Have you prepared for retirement? If the answer is no, you’re part of an increasingly large number of people in the same situation. For a lot of individuals in the UK it’s hard enough to get from month to month without factoring in pensions and savings – increasingly so with the impact of the financial downturn on the economy.

With every passing year, the average UK life-expectancy increases – meaning you’re likely to be relying on your pension longer than anyone before. For that reason, it makes sense to think soon about some ways of ensuring financial comfort security though your later years. For every habit that will keep you comfortable in retirement, there’s a bad habit that will put you at risk – for that reason, have a look at our 7 dos and don’ts relating to financial stability in retirement.

Don’t rely entirely on the state

The basic state pension currently stands at £159.55 a week – which is very small compared to any full-time wage. A state pension is not designed for financial stability – instead, it is an amount intended to cover food and utilities, with little or nothing left over.

What’s more, research shows that less time at work generally equals a greater spend for most people – that’s not to say that your spending will go up dramatically, but trying to balance increased free-time with a significantly reduced income just doesn’t work.

Do start thinking about retirement now

If retirement is a long way off then the prospect of planning for it now might seem premature – but don’t be fooled, around 50% of pensioners say they would like to have factored more time into planning for retirement – with around 33% saying they are experiencing reduced comfort since finishing work.

There are a number of things you can be doing now, saving, investing or exploring private pension options – don’t be one of the people who forever puts off planning to regret it further down the line.

Don’t rely on inheritance

If you have a financially secure parent or parents with their own homes then you might feel that there’s no need to plan for future financial security. However, relying on inheritance can be a risky tactic. Firstly, there is no reason to believe people will live well into their 90s – which can often mean a child being well into retirement age with no sight of that expected income.

What’s more, even if you are certain of your parent’s financial position, there’s an increasing chance that property prices will grow to a point where a hefty amount of inheritance tax is due, denting your plans – and that’s before you’ve considered funding any care provision that might be required as your parents age.

Do factor retirement into your budget

Many financially secure people say that having a budget was one of the key steps toward becoming comfortable. How this works for each individual is a little different – but essentially you would want to have income and expenditure columns. There is no need to worry about any amount of money being left over when all your expenditure is taken from your income – provided you’ve factored everything in to your costs.

When planning for retirement, ‘savings’ or ‘pension contributions’ should become one of those costs. It’s very easy to think that you can ‘put away whatever’s left’ when the end of the month comes around – but this rarely happens without planning. Instead, decide on an amount of money and treat it in the same way you would a bill that is taken each month.

They key is to make it an achievable amount of money – it’s better to save consistently than it is larger sums sporadically. As you become comfortable with the amount you’re putting away you can adjust upwards and calculate what that means to your retirement as you continue to save.

Don’t rely on a partner

Until recently a married person was able to ‘top-up’ their entitlement to a pension assuming their other half had a fuller National Insurance record. However, this is now a thing of the past, so pensions will be based entirely on your own contribution.

It’s not just changes in pension policy that mean relying a spouse can be a reckless idea, while a couple can have a huge history together, putting your financial well-being entirely in the hands of someone else does sometimes end badly – so whether it’s a state or private pension that you’re banking on always being accessible for the both of you, you should always look to keep yourself financially buoyant should there be any big life changes.

Do try to be debt free when you hit retirement

It might be easier said than done, but aiming to be free from debt when you reach retirement can make life enormously more comfortable. If you’re a number of years away from pension age this gives you more opportunity to plan how becoming debt-free will look – do you need to seek specialist debt support? Would sitting down and working out a black and white budget help? Does being in debt change your thoughts about taking full retirement?

Everyone’s situation is a little different – but virtually everyone in the UK is in some level of debt. Don’t let retirement creep up on you, you can very easily find yourself in a situation where your pension just doesn’t match your out-goings. For more information and advice read Getting Out of Debt and Staying Out of Debt.

Don’t rush in to cashing-in

It can be enormously tempting to ‘cash-in’ one or more of your pensions to take a big chunk of money and do the things you’ve always wanted to. Try to temper your thoughts of exotic locations or big money purchases – even if they look like they’ll add to life in the short-term, your lifestyle might feel the pinch more long-term. It’s easy to think that a pension signifies the later stages of life – but there could very well be 30 plus years to fund beyond your holiday of a lifetime!

Plan – but don’t be down

The key handling finances with retirement in mind is to strike a balance that works in the short and long term. There’s often no need to cut your spending to the bone thinking about retirement – but at the same time, it’s important not to be reckless thinking the time will never come. Budgeting is vital, getting your plans on paper is a great way to get an overview of what life could look like as you reach your golden years.


10 Ways To Improve Your Credit Score

10 Ways To Improve Your Credit Score

Having a poor credit score can negatively impact your life and create stressful situations and unfortunate scenarios that people want to avoid. A poor credit score can make getting approval for any loan extremely tricky; often banks will refuse loans to those with a poor credit history. If you are offered a loan, you will often find that you have to pay higher rates or have more restrictive terms which can mean the loan is more hassle than it is worth.

Credit scores can also affect your employment, employers can check your credit history during the hiring process, and this could stop you getting your dream job, a bad credit rating can also make getting security clearance difficult. At home, a poor credit score can affect your ability to be able to rent a flat or house as landlords are wary of applicants who may pay late, or not pay at all.

While it may sound trivial, a poor credit rating can even stop you from getting a mobile phone contract and may even force you to pay higher insurance premiums. Poor credit affects you and your loved ones personally too, it can create a tremendous amount of pressure and strain on relationships and can make you feel stressed, worried and anxious.

Fortunately, a poor credit rating doesn’t last forever, and it is possible to rebuild your score and repair any of the problems it has. If you’ve checked your credit score and now want to make it better, here are ten of the best ways to improve your credit score.

  1. Check And Fix Mistakes

Unfortunately, mistakes do happen, or even worse, people become a victim of fraud. If you see unusual activity or mistakes on your credit score, make sure to challenge them by complaining to the credit reference agency. During the challenge, the mistake will be marked as ‘disputed information’ and lenders aren’t allowed you use it when assessing your rating.

  1. Add Your Name To Electoral Roll

Those missing from the electoral register will find it much harder to get credit. The electoral register documents your name and location so that you can be recorded to vote in Government elections. Adding yourself to the electoral roll is easy, just register to vote online or by post.

  1. Don’t Close Unused Accounts

A factor in credit history is how long you have had credit with creditors. If your account is inactive or unused, you will still be rewarded for a long-term positive credit history. Don’t have too many accounts open as you may be susceptible to fraud.

  1. Avoid Bankruptcy

Filing for bankruptcy is one of the worst things you can do to your credit score; it will be a substantial and immediate drop which can last for over ten years. While some consider bankruptcy as an easy way out to start over, it makes starting afresh tough.

  1. Negotiate Resolutions With Creditors

Unexpected circumstances can arise, and by and large, creditors understand this. If you cannot pay your bills, get in contact with your creditor to discuss a solution that is acceptable and meets your financial situation. The negotiation will avoid negative information being stored on your credit history and can really help you in times of financial difficulty.

  1. Use A Credit-Building Card

Some credit cards are designed to build credit to improve your score. The creditor loans you money on the card and you agree to a monthly fee to pay back the loan which can be as little as £50 but can make all the difference to your score. If you pay your fee back monthly, after a year your report will say you have made 12 months of successful repayments.

  1. Avoid Credit Repair Companies

Some businesses will offer to repair your credit history for a fee. This is costly and they cannot, legally, do anything that you can’t already do yourself. Save money and improve your score on your own.

  1. Plan Ahead

If you know there is a big purchase coming up, make sure to plan ahead and improve your credit score gradually, by the time you get to the purchase you’ll have months of ‘good credit deeds’ behind you as evidence.

  1. Stop Applying For Credit Cards

Every loyalty credit card or other credit systems will be noted as a credit enquiry and can impact your credit score for over a year. Applying for lots of credit cards in a short time span indicates money worries and can do a lot of damage to your score.

  1. Pay On Time

This may be harder to do, but late payments are incredibly detrimental to your score. Set up payment reminders on calendars and devices, so you are prepared for when bills are coming and when you need to pay them.


When Should I Consider An Individual Voluntary Agreement?

An Individual Voluntary Agreement, commonly shortened to IVA, is an attractive debt solution that could make you debt free in just five years, with up to 70% of your debt written off. An IVA is a formal and legally-binding debt solution plan that works on the premise of paying your creditors with affordable monthly payments without the worrying threat of legal action or stress from creditors hassling you for payment.

As with all debt solutions, IVAs are only suitable for some types of debts, and you may not be eligible. This article will explain more thoroughly about what an IVA is and who could benefit from the agreement as well as offering the advantages and disadvantage of the scheme.

What Is An IVA?

An Individual Voluntary Agreement (IVA) is a government-backed and legally-binding agreement that is upheld by you and your creditors. It is a formalised debt solution that can help you to pay your debts back over a period of time, usually in affordable, fixed monthly sums.

As the IVA is legally binding, it means that the courts approve it and that you and your creditors have to stick to it. For you, it means that if you can’t make your repayments, your creditors may force you to be declared bankrupt. For your creditors, the fact that it is legally binding means that they accept your contributions to the debt and can no longer chase you for the debt. Once the period of the IVA is up, the creditors write off the remaining debt, and you will not be hassled by them again.

An IVA is a form of insolvency but different to bankruptcy. With bankruptcy, your bank account is likely to be closed, and there is little flexibility. With an IVA you can continue to use your bank account, and you have more flexibility regarding your personal circumstances.

How Do You Set Up An IVA?

Using an insolvency practitioner, usually an accountant or solicitor, they work out an achievable and affordable repayment plan. The insolvency practitioner will then send your offer to your creditors, and it is the creditor’s decision whether or not to approve your repayment plan.

A creditor meeting is held where all of your creditors can discuss your plan. For approval, 75% of the creditors must be in agreement on your repayment plan. Creditors also have the chance to approve your plan providing that you agree to make certain modifications to the agreement. If you accept the changes, or if there are no changes, the IVA will be approved on the day of the meeting.

If the creditors propose changes that may require you to take time for consideration, the meeting can be adjourned for up to 14 days. While most people assume lenders will not accept an IVA, the creditors actually have more chance of recuperating part of the debt this way compared to other methods, providing you give your best offer to creditors, they are likely to be favourable of the agreement.

Once an IVA is agreed, you begin to make monthly repayments to your insolvency practitioner; they will distribute the money to the creditors as well as keep a proportion to pay for their fees.

Is An IVA For Me?

IVAs are common debt solutions for those who have at least a spare £100 a month from their income and for those who have either two or more two debts, from two or more creditors.

An IVA is a prime choice solution for those with debts over £10,000 and is ideal for people who don’t want to deal with creditors directly.

What Are The Advantages?

Some of the benefits include;

  • Legally binding – no one can chase you for debt once in force
  • Limited time – you could be debt free in five years
  • Creditors accept only part of the debt will be repaid
  • It is flexible, pay back what you can afford
  • The practitioner deals with the creditors, so you don’t have to
  • Your home and family are protected, and you have money to live.

At the end of the IVA, the remaining debt is written off, and after six years, your record of the IVA will be taken off the insolvency register so that you can build your credit rating up again.

What Are The Disadvantages?

  • The IVA will put you on the insolvency register, which affects your credit rating
  • The scheme is not available in Scotland
  • The IVA must be set up by a qualified person, and they will charge a fee around £5,000 to set up an agreement which adds to the debt
  • If you are an accountant or solicitor, you may be prevented from working
  • You may have to remortgage your home and sell your car and other high-value goods
  • Your savings and pension payments will often be used to pay creditors.

Throughout the length of an IVA you commit to paying a set monthly sum, this means you have to commit for the whole period. If you struggle to keep up with payments, your IVA will fail, and you could be made bankrupt.

What Are The Alternatives?

If an IVA doesn’t suit your personal circumstances, there are other debt solutions such as bankruptcy, a Debt Relief Order or a Debt Management Plan.

 


How To Be More Financially Stable

If you are having a hard time managing your finances, it is the time that you will employ some proven and tested tips and tricks to get your goals achieved faster and become financially independent. You will find that there are a probably a number of things that you have been doing wrong today that may have caused you to still be stuck in this financial quagmire that you are in below, we list down some of the things that you can do if you want to be financial stable.

For example, lets say you are doing some home improvements. This doesn’t need to break the bank! This article 10 Low Cost Home Improvements shares some great tips on how to make carry out these on a budget.

One of the things that you need to know about IVA and how to better prepare for your future is to make sure that you get rid of your debts. If you have been racking up some really huge numbers due to your credit card purchases, see to it that you will actually do something about it and get it paid off. The longer you are in debt, the higher interest rates you pay. So, getting it paid off as soon as you can is the best way to go.

You will want to stop your accumulation of debts as well. You cannot really start planning about your Trust Deeds or establishing your Protected Trust Deeds when you have a huge debt hanging in front of you in the first place. Aside from making sure that you get it paid off, make it a point to stop accumulating more. Getting rid of all those credit cards you have and maintaining only a single one for emergency purposes is always a good way to go.

Think of your retirement. It is not often time that you will be able to stay in your job or do what you have been doing now. At some point, you will grow old and you will want to retire and spend the rest of your lives in peace and convenience. So, always make surer to craft out a financial plan that will clearly figure your future in. this way, when you are old and unable to earn any more money, you are sure that you will have something figured out to allow you to live as comfortably as possible.

Save money, it is when you just spend and spend and not really hold back that you will start having problems if you want to be more financially stable, then there would be a need for you to set aside a specific number every time you get paid. This can help serve as your rainy day fund. This way, if and when there is ever an emergency spending that you need to do, you will know exactly where you are going to pull those funds from.

If you want to retire early, then you might want to start your savings as early as now too. It is advised though that you should think twice about the idea of leaving the workforce. This is because there are a lot of consequences that might befall you if you will no longer have a specific source of income moving forward. Always a have a plan B if you ever decide to resign from your job so you will not be stuck financially later on.

Invest some of your money too. Sometimes, people are way too afraid of losing their cash if they do. That is part and parcel of investments when you do it right, you get ROI and when you do it wrong,  you lose the money. The key is to look for the best investment programs here in the market today, consider its reputation and how good the feedback coming from other interested investors so you will know what to expect put of it should you decide to put some money down on them. Also, never put all of your eggs in a single basket alone.