Posts made in July 2017

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The majority of adults will have experienced being in debt at some point in their lives. Whether the amount is large or small and from a professional lender or friend. There is nothing wrong with lending, as long as you ensure that you pay everything back in the manner that you agreed. Trouble arises when you miss repayments or start to cut off communication with your lender. So keep on track and stick to your word. If you do find that you’re struggling to keep your

head above the water with your finances, not to worry. Here are a few pieces of priceless advice to keep you in the black.

Only Borrow What You Can Afford to Repay

The first step is entirely logical: only borrow what you can realistically afford to repay. But the number of people who ignore this basic piece of advice is shocking. Regardless of the reason for your lending, think things through before taking cash from anyone else. How much are you asking for? How much are you earning and how much of this figure is disposable income? How much of your disposable income will you have to forgo every month to meet repayments? If you find that it would take years on end to come anywhere near repaying the full amount, avoid taking it.

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Avoid Taking Large Sums From Family or Friends

It’s tempting to borrow money from friends or family instead of completing a contract with a lender. They are unlikely to charge you interest. They will be more flexible with repayment terms and time spans. Most importantly? It’s extremely unlikely that they’ll turn up at your home ready to repossess your personal belongings if you fall behind on your repayments. Sounds good, right? Wrong. Engaging in financial contracts with your loved ones is a recipe for disaster. It can create tensions and disagreements that pose a serious threat to your relationship with them. Is it worth cutting yourself off from your family for financial gain? No, probably not. Many of us are likely to take kindness for a weakness and will not take repaying people we know as seriously as we would paying back a stranger. The same advice goes for those who are planning on using a loved one as a guarantor for a professional loan. Be careful who you choose and never put them in a situation that could threaten their own financial well-being.

Understand Interest Rates

One of the biggest causes of people spiralling into more and more debt is interest. When you borrow money, the lender is likely to apply an interest rate. This is a set percentage of the amount you’ve borrowed which is then charged to your

account on a monthly basis. This is why it’s so important that you know the interest rates on a loan or credit card before taking one out or putting one to use. If the rate is low, the agreement is ideal. It means that you will pay back a minimal amount each month in return for being handed the money you needed. If the rate is extremely high, chances are you will remain in debt for an extremely long time. You’ll end up paying back more interest and chances are that you’ll pay more out in interest than the amount you borrowed in the first place.

Know Your Options

It is essential that you understand your personal financial situation in order to know the options that are available to

you. If you have a great credit score, chances are that most lenders will be happy to offer you a larger amount of cash with a low-interest rate. If you have a bad credit rating, you are likely to have fewer options and lenders are likely to give you smaller amounts with high-interest rates. So do your research, know your own financial situation and pick the best possible option for your personal situation.

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Stick to the Terms

When you start breaking the terms of your credit agreement, there are serious repercussions. Your credit score is negatively affected and you receive fines or charges for late payments. But don’t worry. If you find yourself struggling, there are options available to you. If you find that you’re in an unfavourable financial position and are already stuck in the throes of debt, borrowing more money may not sound like the sensible thing to do. But it is a completely viable option. Check out DebtSolutionsReviewed.com. They will show you that instead of paying back multiple sources with varying interest rates, you could take out one large loan, clear all of your current debts and be in the preferable position of paying back one, sole lender. This means you are less likely to miss repayment deadlines and there’s also a good chance that the interest rate will be lower than those on your cards.

Maintain Communication

If you do find yourself struggling, it is essential that you maintain communication with your lender. So many of us start to turn a blind eye to our problems. We’ll ignore letters, refusing to read them or placing them straight in the bin. Some of us will hang up when a lender calls. But avoid this at all costs. You can only bury your head in the sand for so long and there will be negative repercussions for cutting off contact with your lender. This can range f

rom fines and charges to bailiffs turning up at your home to repos

sess goods. So maintain communication with your lender at all times. Some will be understanding. If you let them know that you are struggling, they may be able to reduce your minimum repayments. It’s always worth a try.

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 Budget

As you begin to emerge from debt, it’s tempting to start spending excessively again. Many of us will celebrate by forking out large amounts on needless goods. But avoid this. Once you are debt free, you want to remain that way

. So draw up a budget. Forbes.com can show you how. List your salary, all of your essential outgoings and work out how much disposable cash you have left over each month. Never exceed the amount of disposable money. Remember that you don’t have to spend it all every time too! You can put some aside for savings or let it roll over to the next month if you want to splash out on something big.