Whether it be through impulsiveness, bad luck or general lack of knowledge we have all, at some point, thrown ourselves into financial horror. The only real way to keep yourself completely out of the deep end is to keep your money tight – so here are five simple tips to keep you away from debt, doom and disaster.
1. Spending and not saving:
The easiest way to get into debt is borrowing (as we know!). When money is tight and urgently needed we often turn straight to loans. The truth is if you already have the money there from savings, you you can avoid paying back significantly more than you borrowed to greedy lenders. Pinch the pennies and build up a personal fund – stay ahead of your creditors!
2. Over-priced dream homes:
As a rule of thumb you should never buy a house where the mortgage or rent payments are more than 25 – 35% of your monthly income, leaving room for other monthly outgoings, emergencies and a bit left for yourself. That dream home can easily become a monetary nightmare otherwise.
3. Ignoring bills:
It may seem like a good idea to pay your electricity bill a few weeks after you move when everything is settled, or ignore debts you left behind, but the interest will keep piling and eventually turn into massive monthly repayments if not dealt with straight away. Don’t try and fool people, thinking they’ll forget. And if you do get into trouble, arrange payment or discuss repayment plans immediately!
4. Payday/Short-Term Loans:
For the few of us that are tempted to use these, avoid like the plague. If you do take out one of these high-interest loans, only lend the absolute minimum. If you need more than 30% of your next paycheque then consider other options rather than the quick and easy solution – you will only end up borrowing again when you come up short after paying off the first loan.
5. Not searching for deals:
You can be surprised how much money you can save. If you love shopping and spending money, try shopping for the cheaper deal first. Price comparison sites can be the most valuable form of window shopping!
Finally, remember you know yourself better than creditors or banks. Think before you jump into that ‘buy now pay next year’ you’re convinced you’ll save for monthly and pay bang on time. Would you really religiously save, or put it off month after month? Will you always stick to the ‘this is the last payday loan, I swear!’ deal? Interest and charges are how our lenders make their money; a frequent lender incurring a lot of charges is a gold mine!