Our entire society has come to revolve around using the banking system. Whether it is a matter of purchasing a home, a new laptop, a phone, or paying for an expensive medical procedure, lenders have made it easier than ever to get a loan. However, as easy as it may be to borrow money, the terms and conditions that individuals get are still subjected to the state of the economy, especially if the loans have a variable interest rate. This can take certain loans that seem affordable at first and turn them into highly expensive nightmares. In some cases, even a single variable rate loan can be enough to put a serious dent in one’s finances and make it difficult to keep paying the regular utility bills and other expenses. Things can get more complicated if we also factor in credit card debt and instant short term loans.
However, having to manage extremely expensive debt is not a financial death sentence. In most cases, reducing the cost of an individual’s loans is only a matter of careful planning and taking to the lender. Here is how you too can manage expensive forms of debt:
· Go to the Bank and Refinance Your Loans
Almost all lenders will agree to refinance an individual’s loans if he specifies the fact that he is having a difficult time repaying them. Depending on the borrower’s credit rating, this may be more or less effective, however, in most cases, it should be enough to reduce the interest rate of the debt by up to 20%. This also works for secured loans, simply because lenders would rather get their money back instead of having to take possession of the borrower’s property.
· Get a Debt Consolidation Loan
It is also possible for individuals to get a debt consolidation loan. This can be done before or after refinancing the debt. However, it is usually more profitable for the borrower to first refinance as many loans as possible and only then get a larger, secured debt consolidation loan that can be used to cover them entirely. As a word of caution, please keep in mind that these loans are often secured against the borrower’s home, which means that not repaying them on time will lead to the bank taking possession of the collateral. Other than this, they are great tools when it comes to managing expensive debt. Most consolidation loans have relatively low, fixed interest rates, making them easy to repay.
· Get Some Breathing Room
If you are simply going through a difficult time, financially speaking, getting a second mortgage may help alleviate the issue. However, this can put individuals in deeper waters than before. Generally speaking, the best way to make a bit of financial wiggle room is to avoid using credit cards and taking out payday loans. If you need money for day-to-day expenses, then simply use an online money lending services such as P2P platforms. These allow individuals to borrow money at low-interest rates and the transactions are not reported to credit registers so the loans will not appear in one’s permanent financial records.
· Find a Secondary Source of Income
This is not the ideal solution, however, if nothing else works, finding a secondary source of income should not be difficult. In the age of the internet, it is easy to create content and have it passively generate money. Consider what your skills are and try to create courses to teach others. While you may not earn a lot at first, the amount of money should grow as time passes.
There are a lot of people that have found that it can sometimes be extremely difficult to make do with what they earn in a month. This is sometimes a result of unexpected expenses such as medical bills or home reparation costs. Regardless of the situation, there are times when an individual’s salary is simply not enough to cover all the monthly expenses. The solution that most people use is to borrow money from banks or other lenders such as pawnshops and online lending services. While these are good options, there is a better and easier way to ensure that you will never be caught off-guard.
Properly budgeting your expenses is one of the easiest and most efficient ways to make the most out of your income and ensure that you will always have enough to pay your expenses. This having been said, it does require a bit of information and a lot of planning. Here is what you need to know:
Research is Important
To make a functional budget, you must first look at how you are currently spending your money. This can be done by either keeping a list of all your expenses or by saving the receipts for all the purchases that you make. Do this for at least 3-4 months, to get a clear picture of how you are currently spending your income. After gathering the information that you need, compile lists of essential expenses and one for creature comforts. The latter should include anything from Netflix subscriptions to fast food orders and movie tickets. At this point, it is important to keep in mind that you should not include any expenses that are out of the ordinary, such as medical bills or home renovation expenses. These are temporary expenses, not recurring ones.
Establish Your Priorities
The next step is to establish your spending priorities. Start by looking at your list of essential expenses. Go through each item and eliminate the ones that are not vital for a basic lifestyle. This list should include rent, utility bills, food, and other expenses that are directly tied to the household or your sustenance. Take the items that remain and add them to your monthly budget. This is the amount of money that you will have to spend every month, no matter what happens. Once you finish with the essentials, look at the creature comforts one. Take into consideration how much you are currently spending on these optional expenses and select the ones that you can do without. Proper budgeting is a matter of discipline, which means that it may be necessary to give up certain items to ensure that enough money remains to set some aside after paying the essential expenses.
Set Spending Limits
You will now have to set spending limits for yourself. These should be based on your essential and optional expenses. In most cases, the choice will be between cheaper or more expensive products. For example, when it comes to buying cleaning solutions it is advisable to look for promotions and get products that simply get the job done. Generally speaking, if you are tight on cash, it would be best to avoid premium products unless they are absolutely needed. As you slowly save money, you will be able to buy more expensive items, however, this requires patience and discipline.
Open a Savings Account
Once the budget is set, deposit any money that remains in a savings account. This will serve a dual purpose. First of all, it will make it difficult to spend it on unimportant things. Secondly, a savings account makes money work for you. While there might be only a few hundred pounds in the account at first, as the bank pays compound interest, the amount of money will grow. Furthermore, if there is ever an emergency that requires a larger amount of money, you will have the savings account to fall back on.
If you happen to receive news that family member is in the hospital and needs money the same day, it could be depressing if you do not have cash. Borrowing from friends at such short notice may have negative result. Why not try applying for a same day loan? As the term implies, the same day loan is a loan that you apply for and receive the same day. The lenders understand that you need the amount immediately. Hence, they make it as easy for you as possible to get a loan.
Here are some steps to follow to make sure that you will have a successful same day loan application.
Prepare All Necessary Documents
All lending companies require some documents for people that want to apply for a loan. It is imperative that before applying for the same day loan, you must prepare all the documents for your loan approval.
To qualify for a loan, one must be at least 18 years old, a resident of the UK, must be earning a regular income, and must have a bank account. To prove your age and your address, the lender will ask you to submit a personal identification card that contains your name, birthday, and place of residence.
To prove that you have a stable job and a regular income, you must secure an employment certificate from your employer. Besides, you must submit a copy of your payslips to show lenders the amount that you earn every month. Same day loan lenders would also ask for your income statement to determine if you can afford to pay the loan after deducting all your expenses from your income.
Decide How Much to Borrow and How to Pay
Before you apply, decide how much you want to borrow. Most same day loan lenders offer a maximum of £1,000, which the borrower can pay within three to six months. Once you have all the requirements, the next step is to decide how much you need and the payment schedule that you prefer. You can borrow any amount as long as it will not exceed £1000.
Always check the interest rate and how the lending company computes it. Remember that when the interest rate is high, your loan can cost you a lot of money. Learn to shop for the best loan offer first before submitting your application to the first lender that you find on the internet. The maximum payment period is six months. Nevertheless, you can start making payments before the due date. You may pay back what you borrowed in full but it must not be earlier than three months after you got the lawn.
Complete Your Online Application
Once you already have all the documents you need and have decided how much to borrow, and the payment period you prefer, you can now complete the online application. The application process is easy. The form will ask for additional details regarding your address, job, income, monthly expenses, and banking details.
Wait for Instant Decision
Once the lender receives your loan application, they will immediately decide whether to extend you a loan or not. Evaluation of your application takes only a few minutes, and you will know the decision in an instant. In an instance that some documents are missing, the lender will inform you and ask you to submit them as soon as possible, after which the lender will approve and release your loan.
Receive the Funds
A few hours after the approval of your loan application, you will get a notification that the lending company has deposited the funds to your account. You can withdraw the funds anytime you want.
Financial education, despite its importance, is often ignored by most individuals. This is usually because there is little reliable personal finance information to be found online. There are only a few platforms that offer courses that claim to teach people how to have a healthy financial life, however, these are usually locked behind prohibitively expensive paywalls. Some online platforms even try to sell these courses as get-rich-quick schemes. This having been said, the basics of personal finance, at least on a functional level, are not too complicated. There are only a handful of financial principles and methods that should be used at all times, to ensure that individuals can make the most out of their hard-earned incomes.
The 5 Steps Needed to Have a Healthy Financial Life
· Build up Your Credit Score
Building up an individual’s credit score is the first step on this list simply because it is also the most important. It is often very difficult, if not impossible to increase one’s credit score overnight, and ignoring its status can have serious consequences on the terms and conditions that lenders have to offer. Keep in mind that a credit rating is calculated by looking at the entirety of an individual’s financial records. This includes all the decisions that a borrower makes, from whether or not he makes payments on time to how much he uses his credit cards and how often.
An easy way to slowly build up your credit score is by taking out personal loans when you need them and repaying them on time, with no exceptions. It is also possible to increase one’s credit score by getting a credit card and using is every couple of months. These habits will show banks and other private lenders that you can be trusted with credit and that you can repay the borrowed money without postponing or skipping payments.
· Create a Well-structured, Functional Budget and Stick to It at All Times
A lot of people try to set up monthly budgets in order to better manage their income and expenses, however, most do not design them to also be functional. In other words, a monthly budget should be restrictive enough to allow an individual to save money, but also flexible enough to take into account some unexpected expenses. There are several personal budget models online that are both easy to implement as well as to tailor to your particular financial situation. However, keep in mind that creating a budget is not enough. It is important to also stick to it no matter what. This means that discipline is required to never go over the set limits. A good way to do this is to open two accounts. Keep the budget money into one of them and everything else in the other.
· Know When It Is Okay to Make Expensive Purchases
As a rule of thumb, you should only make expensive purchases when you have at least twice the value of the product in your pocket. This will enable you to buy a phone or a laptop without going into parts of the budget that should have been spent on other important things, such as rent or utility bills.
· Be Smart When Saving Money
Opening a savings account only takes a few minutes and can constitute a great incentive to save money. Furthermore, make a habit out of first depositing money into the savings account and then calculating how much you have for creature comforts.
· Look for Secondary Sources of Income
We live in the age of the internet when it is extremely easy to find a secondary source of income, preferably a passive one. Consider starting a blog or a YouTube channel. Generally speaking, anything that can generate money without you having to actively do anything.
It is not required to take all of these 5 steps to having a financial life, however, each of them has a specific purpose and is an important part of the whole. Try going through them and see what can be integrated into your day-to-day life.
It is almost impossible for an individual to go through life without taking out at least one loan or using a credit card. Our entire society has been built around the banking system, making it an essential part of our day-to-day lives. As a result, banks and other private lenders are constantly coming up with new deals that offer various advantages and market them as aggressively as possible. However, not all loan offers are made equal and some give borrowers more freedom than others. This is usually the case when it comes to lines of credit. This type of debt is not as popular as personal credits, although it is, in many ways, the more advantageous choice.
What Is a Line of Credit?
A line of credit is, for all intents and purposes, a secured bank loan that has a higher value than regular loans and is usually offered for a minimum of 5 years. In many ways, lines of credit are more similar to credit cards than to regular loans. When an individual gets a line of credit, the lender opens a bank account for the client and attaches a certain credit limit to it. The borrower then has the option to withdraw as much or as little as he needs and only pays interest for the amount of money that he uses. For example, if a borrower gets a £25,000 line of credit and only withdraws £5,000, he will only pay interest for the amount of money that he has used. This having been said, he does have unrestricted access to the whole amount, however, he is not obligated to withdraw a particular sum of money.
In most cases, individuals apply for lines of credit when they need to pay for large projects such as home renovations, expensive medical procedures and treatments, or holidays abroad. While there are no restrictions on what lenders can do with the money from the line of credit, most lenders do offer specialised ones in order to allow individuals to borrow as much as possible. Here are the main types of lines of credit:
What Are the Main Types of Lines of Credit?
· Personal Lines of Credit
Personal lines of credit are, as the name implies, given for personal needs. They do require that the applicant have a good credit rating, but there are no restrictions on what can be done with the borrowed money.
HELOCs, or home equity lines of credit are lines of credit that use the equity that a homeowner has in his home or other properties. These have a longer term and a greater value, however, they come with the risk of losing one’s property to the bank. This having been said, please keep in mind that it is usually not in the interest of most lenders to take possession of the borrower’s property and will first try to work with him in order to find a mutually agreeable solution if he cannot repay the money.
· Business Lines of Credit
Business lines of credit are given out to businesses and can use both the company’s assets as collateral, as well as those of the business owner. They have often restrictive in terms of what can be done with the money, however, this depends on the lender.
These are the main types of lines of credit that can be accessed from most lenders in the country. While they do come at a greater risk than regular loans, they offer considerable advantages. For companies that simply require access to a large amount of money to use as running capital, these can be highly useful tools. As for regular people, they can sometimes be the better choice when compared to credit cards.