The goal of the proposed reforms was to “prevent a return of the risky mortgage lending seen in boom times,” but financial analysts have been quick to point out that the cure may well be worse than the disease if it traps the housing market in a spiralling decline.  When homeowners are not able to refinance and those who wish to buy a house cannot find adequate financing, a meltdown in the mortgage market can be the result.

Tacitly acknowledging this, FSA has amended its original plans based on feedback received.  Instead of a number of hard and fast rules, the regulator will require lenders to exercise common sense.  All loans issued must be assessed to be sure that borrowers can truly afford them, and these assessments must include the fact that low interest rates may rise over time.  Debt management considerations for interest-only loans are even stricter: borrowers must provide information about a creditable means of repayment when the full loan comes due.

Personal Finance News / Money Saving News

FSA Revises Plans to Limit Mortgage Availability

In terms of debt, look closely at the money that is left after all monthly obligations are met.  It is from this pool of resources that you can begin to slowly retire credit card balances and pay off loans.  Start with the smallest debt first and use a percentage of the surplus household income to incrementally pay off that obligation.  Once it is retired, move on to the next debt on the list.  By starting with the smallest debt first, you quickly see results and are motivated to continue.

Also take a portion of the disposable income and begin to rebuild your savings.  Even a small amount each pay period will eventually accumulate into a significant sum over the course of a year.  As your disposable income increases, divert a little more into savings, a pension plan, or some type of investment.

This dual approach means that even as your debt shrinks, the savings and other resources are growing.  As a result, there is not only the satisfaction of ending the year with less debt, but also with more money in the bank.  Take some time today and determine how much you can put toward each task.  You may be surprised at how much is accomplished even after a couple of months.

Personal Finance News / Money Saving News

Balancing Debt Retirement with Saving

One of the major focuses is on managing debt.  While it may not be possible to completely retire a mortgage or settle a car loan, it is likely within your power to manage those credit card balances to best advantage.  One simple strategy is to at least pay off every new purchase in the current billing period when the statement arrives, along with the minimum payment plus an additional ten percent.  This approach will help prevent those balances from growing while also making it easier to incrementally retire the older debt.

Along with managing credit cards, take the time to set aside a little money for savings and investments.  Many people exhausted their savings during the last recession, simply to make ends meet.  If you have not replenished those reserves yet, make this a priority.  Even a small amount set aside each pay period would make it easier to get through another economic downturn, should it come to pass.

By keeping your spending under control, retiring as much debt as possible and rebuilding your savings, the ability to weather hard economic times will be somewhat easier.  Don’t wait until later; begin drafting a plan of action for your household and implement it immediately.

Personal Finance News / Money Saving News

Keeping Your Financial Momentum in a Sluggish Economy

First, stop accumulating more debt.  Don’t use credit cards except for emergencies and then pay off those charges as quickly as possible. Along with this strategy, begin to chip away at your accumulated debt.  Always pay a little more than the minimum due.  While you may not be in a position to increase your income as a means of improving your debt to income ratio, there is something you can do about the amount you owe.

Accomplishing this debt reduction will mean some changes in the budget.  Trimming costs and avoiding unnecessary purchase may seem difficult at first, but seeing those lower balances on the monthly card statements will provide incentive to continue managing your spending and eventually be free from financial bondage.

Keep in mind that incrementally reducing your debt will not impact your credit rating overnight.  However, you should see positive results within a few months as your creditors report that you are paying more than the required minimum and the balances keep dropping, your rating will improve.  In time, you will once again be able to command competitive interest rates when attempting to secure a car loan or a mortgage.

Personal Finance News / Money Saving News

Ways to Improve Your Credit Rating

One approach is to work with a debt management company, like Chiltern Debt Management or Debt Plan Direct.  Organisations of this type negotiate repayment terms with your creditors and make it possible to forward one monthly payment to the debt management agency that is then disbursed to your creditors.  The danger here is that some of your creditors will not accept the terms offered, leaving you with the task of still managing those debts outside the repayment scheme.

You can also consider filing bankruptcy.  This can be especially difficult for people who have taken pride in always paying their debts in the past.  Still, some financial advisors say that while bankruptcy may not be personally desirable, it may in fact be the most practical strategy in terms of getting finances back on track.  Discuss this option with a financial professional that can help assess your situation and determine if this is the mot logical solution to your debt dilemma.

In the end, no one can make the decision of how to manage overwhelming debt for you.  Take the time to examine all your options, identify the one that is in the best interest of you and your household, then move forward with that option.  While it may be somewhat embarrassing and unpalatable at first, making the right choice will provide a great deal of relief in the long run.

Personal Finance News / Money Saving News

Dealing With Overwhelming Debt

First, look closely at your variable expenses.  These are your monthly obligations that do not come with a fixed payment.  Examples would be the money you set aside for food at home, meals out, and home utilities like gas and electricity.  Because these are not fixed expenses, you have some control over them.  Find ways to reduce those expenses below the current budgeted amounts, and divert those funds toward covering fixed expenses.  Even minor changes, such as eliminating one meal out each week, or taking a packed lunch to work rather than running out for something will make a significant difference over the course of a month.

Next, reign in your credit card spending.  Use the cards only when necessary.  If possible, transfer the open balances to the card with the lowest rate of interest, then put those other cards away for emergencies only.  You will have fewer obligations to meet each month, and may find it easier to manage the one credit card payment rather than deal with six or seven going to different providers. As a bonus, that one minimum payment is likely to be less than the cumulative payments on all the cards, which frees more of your funds to cover necessary expenses.

Last, don’t be too proud to seek professional financial assistance.  Whether you need someone to help you rework your budget, or require the services of a debt management company like Cut Your Debt to function as an intermediary between you and your creditors, take heart in the fact that everyone needs help now and then.  If it takes outside assistance to help you get control of your finances once more, then take that first step.  A year from now, you’ll be very happy you did.

Personal Finance News / Money Saving News

How to Make Ends Meet

One of the most effective ways to prepare for a possible loss of employment is to learn how to live beneath your means.  Assess your current debt obligations, such as car loans, mortgages, and credit cards to get an idea of what portion of your income is going to cover those debts.  Factor in necessities such as food, clothing, utilities, and transportation, and can readily see how much you need to maintain your current lifestyle.  Try to trim at least 10% off that figure, creating some additional savings that you can put aside to help with the bills while you look for a new job.

At the same time, take steps to pay off as many of your debts as possible.  Paying off your credit cards will not only help your credit rating, but will also create a resource you can call upon to buy food and other necessities while you look for work.  As you pay off an obligation, use those funds to expedite retiring another debt.  With a little luck, you will have very few debts in the event of an end to your job, and can focus on covering the usual household expenses instead.

While losing a job can be traumatic in more ways than one, taking the time to prepare for the possibility allows you to have more control of the situation.  Knowing that you do have reserves to keep the household operating while you find work will make it easier to deal with the loss, and make it possible to focus on locating a new job, rather than worrying about how to keep the utilities on.

Personal Finance News / Money Saving News

Safeguarding Against a Job Loss

First, curb your use of the cards until the balances are paid in full.  This will mean keeping a tight rein on your spending habits through the first of the year retail sales, and most likely for several months thereafter.  Keep in mind the sooner you retire these debts, the less you will spend in terms of interest on those balances.

Next, create extra funds to expedite paying off those credit cards.  Use discounts and voucher codes for necessary purchases, and divert the savings toward retiring your card balances.  Even a little extra applied each month brings you closer to being free of the indebtedness, and improves your overall financial condition.

Last, consider some creative ways to generate extra income in your spare time.  Find little ways to earn money online, sell some of those items collecting dust in the closet at an auction, or simply hold a garage sale.  You not only create some income to help reduce your credit card debt, but also end up with some extra room around the house.

Retiring credit card debt usually requires more of a commitment than creating the debt.  Still, the benefits to you and your budget of eliminating that debt as soon as possible are well worth the effort.  Begin planning your strategy now and make the fast retirement of the card debt a priority during the first quarter of the upcoming year.

Personal Finance News / Money Saving News

Paying Off Your Holiday Debt

While very convenient, it is important to note that responsible use of this loan product is very important.  Before taking out this type of loan, make sure you know what type of commitment you are entering, and that you can comply with those terms.  Failure to do so can make that small loan an extremely expensive undertaking.

Many providers of text message loans allow a full seven-day period for repayment.  Interest on the loan is likely to have a high APR, something that many consumers will overlook since that rate is only applied for one week.  Assuming you pay off the loan on time, the interest paid is likely to be worth it, especially if the loan was to help with emergency situations such as car repairs.

However, failure to pay the loan according to terms will open the door for many different charges.  Administrative fees, transaction fees, and an array of other add on fees will apply each day you are late repaying the loan in full.  In just a few days, you can easily owe twice the original face value of the loan.

As with the more traditional payday loan scenario, many providers will direct you to online information that they recommend you read before applying for a loan.  Take the time to do so.  If you are sure you can honour those terms, this tool can be helpful, and possibly help you avoid costlier problems, such as a returned cheque and the associated overdraft charges.  If you are not sure you can repay the loan on time, chances are you would be better off finding another source of revenue to deal with your emergency. .

Personal Finance News / Money Saving News

Are Text Message Loans Worth It?

One of the outcomes of the recession is that many people who had no trouble keeping up with their credit card balances suddenly found themselves unable to manage them effectively. This was sometimes due to changes in interest rates, or because of the loss of employment and the subsequent drop in monthly income. Even with the recession waning, some households are still having problems managing their credit card debt. Here are some tips on how to improve your situation.

Your first step is to admit you need help. For many, this is a difficult admission, since it tends to conjure up feelings of failure. Tell yourself that by seeking help, you are actually demonstrating that you are responsible enough to realise things must change and that you want to learn new skills that will restore your financial health.

Next, take steps to get the help and financial education you need. Attend seminars on managing credit card debt, using credit responsibly, and how to rebuild your credit rating over time. In addition to local resources, investigate what sites like Debt Advice and the Debt Advisory Line have to offer. While you will no doubt have to make some lifestyle changes, they may not be as dire as you think.

Last, put a plan in place that will allow you to retire those balances. You may go through a debt management agency to create this plan, or work one out with your creditors personally. Both approaches are workable, as long as you stick to the plan and do not allow yourself to slide back into old spending habits. As you watch your credit card debt drop, you will feel empowered once more, and find that it is much easier to think of the future in a more positive manner.

Personal Finance News / Money Saving News

Are Your Credit Card Balances Out Of Control?