Steps to Getting in Control of your Finances

For many people, personal finances are a worry - with credit card debts, the worry of mortgage repayments and fear that incomes will fail to keep pace with the cost of living. It's essential to be in control of your finances in these difficult times. We look at ways to stay ahead.

Assess the situation.

The first step to dealing with problem finances is to face up to them. This means taking a deep breath and adding up your debts, from all sources. Once you have done this, categorize them. If you have a mortgage debt, this is less of a concern because it is held against an asset; your home. However, you may still want to check that you are on the most competitive mortgage product that you are eligible for and that your repayments are affordable, as you can make substantial savings just by shopping around.

Personal debts.

If you have non-secured debts, these are your focus area. Non-secured debt is held in many forms; credit cards, personal loans, catalogue debts and overdrafts. They are called unsecured debts, because there is no asset held against them. For example, if you have a car loan - then it's against a car. If necessary you could sell this asset to recoup the loan, or part of it. However, credit card debts usually have no assets attached that could be sold to pay them off, especially if you have an unchecked spending habit.

Do a budget.

When you can see your debts on paper, work out your monthly budget. Assess your income and work out which bills you have every month. Go through your direct debits and see if any can be cancelled. Assess how much money you have after bill payments for your living, shopping, entertainments and other costs.

Decide on a repayment plan.

Your budget will show you where you can save money. Cancel non-essential services, shop around for better deals and downgrade your brands when doing the weekly shop. Set aside a sum each month to repay your debts bit by bit, starting with the most expensive. If you can't find income to do this, work out ways to increase your income or further reduce your outgoings.

Stay motivated.

Nothing feels as good as being debt-free and if you are working towards this goal, you will find plenty of support from national debt charities, online forums and other debt support groups. Seek help if you can't find a way out of your debt and speak to others with similar goals to you. As well as finding great sources of fellow support and motivation, you will start to identify ways of socializing and meeting new people without spending money. 

Once you can change your behavior patterns, switching shopping for new and absorbing hobbies and meeting friends with common goals, you will find new impetus and enthusiasm for your new objectives and be far less inclined to fall back into debt again. With planning, organisation and self-discipline, the freedom of a debt-free life can be yours.

AUTHOR BIO:
Jackie Graves writes regularly on personal finance, debt support and tools such as prepaid credit cards for a range of websites and blogs. She strongly believes in the ability to rebuild a bad credit score.

How to Pay Off Credit Card Debt in 2013

English: First 4 digits of a credit card (Photo credit: Wikipedia)

With 2013 just around the corner many will be making new year’s resolutions about how they are going to join the gym, stop eating chocolate or fix their finances. While these pacts are all made with the best intentions, come Mid-February the majority of people will revert back to their old ways and forget about their resolution.

The one resolution that we are going to focus on throughout this article is the one regarding finances; and the various ways you can go about consolidating debt.

Debt can come in many forms, however arguable the most common is credit card debt; whether you've slowly amounted debt or have maxed it out in a matter of one purchase; getting it off your back is not that easy. Making minimum payments will chip away at the amount however depending on the amount owed and the interest rates attached; this method can take a number of years.

Arguably the best way to get rid of credit card debt is to transfer the complete debt over to a 0% balance transfer card. These work on the basis that you are charged no interest for a specific time frame; instead you will be charged a small transfer fee of roughly 3% of the balance.

The idea of a 0% balance transfer card is that you pay the complete balance off within the 0% interest time frame – failing to do this will result in you being charged interest each month after the 0% timeframe. Of course, one way of avoiding interest is to transfer the remaining balance over to another 0% interest card and continue to repay the debt that way.

The only problem with 0% balance transfer cards is their availability. Often, only those with immaculate credit histories will be eligible, therefore anyone with missed payments or defaults on their record will be declined.

When this is the case there are still a few options available. Many choose to take out a debt consolidation loan, much like credit cards, the cheapest rates will be reserved for those with immaculate credit history meaning that if you have had trouble with credit commitments in the past then the subprime loan market may be the only option.

Naturally, with subprime lenders offering finance to those with bad credit they will be less willing to lend large amounts and the rates will be much higher. Generally credit card debt will range from £1,000 to £10,000 and there are only two types of subprime loans that offer this amount; guarantor and logbook loans.

Logbook loans are loans that are secured against your vehicle, the amount offered by the lender will be dependent on the value of the car. The rates may however be more expensive than the interest rates of your credit card, although they are one way you could organise your debt if you have more than one credit card.

Guarantor loans are a unique loan product that requires the backing of an individual to stand as guarantor on the loan application. The guarantor simply supports the application and promises to pay if the borrower fails to do so. Guarantor loan lenders will be able to offer between £1000 and £7,500 over a term of 1 to 5 years. 

Author Bio: This article has been written by Jason Scott on behalf of UK Credit Guarantor Loans. To learn more about the loan market or for more money saving tips, visit their website and click on the blog section. 

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Credit Card Cash Advances: What do they Really Cost?

Credit Card (Photo credit: 401(K) 2012)

It is the shopping season: stores are trying to entice people in to buy overpriced presents for their children and grandchildren and adverts on TV are waving expensive toys in front of the nation’s kids as a means of putting pressure on the adults that will be fulfilling the role of Santa. Even the most frugal individuals may find it difficult to resist spending large amounts of money during this period, as it is a time when consumerism is at its peak. Unfortunately there is nothing special about the festive season that magically generates cash once a person has ran out, which means that Christmas shoppers can sometimes end up spending beyond their means and taking out credit card cash advances whilst caught up in the holiday excitement. What most people do not realise is that when withdrawing credit, they are being charged stupid amounts for the convenience and costing themselves more money than they should be forking out.

High Interest Rates and Fees

One of the major downsides to credit card cash advances is that interest rates charged on cash withdrawals are usually considerably higher than those charged on regular credit card purchases. In addition to this, these advances often come with upfront fees of between two and four percent of the amount advanced. Over 50s empowerment, protection and security charity AARP likens cash advances to bait placed in a trap. The charity warns that people are particularly vulnerable to taking this bait during the holiday season but urges them to resist the temptation.

No Interest Free Period

Another reason that these advances should be avoided is that the fifty-or-so day interest free period that most providers offer on regular purchases does not usually extend to credit card cash advances. This means that interest will start to accumulate on the balance straightaway when you withdraw money. This is one of the many dangers of credit card cash advances and makes them a costly way to borrow cash both in the short term and in the long term. According to the NBC News network, the majority of Americans are now over seventy five thousand dollars in debt. You can do your bit to alter this statistic by steering clear of borrowing money altogether or, if there is no other option, choosing more sensible alternatives to getting credit card cash advances.

Better Alternatives to Cash Advances

Making use of an overdraft facility is a wiser choice than getting a cash advance, as most charge less on borrowing. If you go for this option then ensure that your overdraft limit is sufficient to meet your withdrawal needs and be sure to contact your bank straight away if you think that you are going to go over your limit. Some credit card providers offer money transfer facilities that allow you to transfer funds from your credit card to your current account without incurring any interest. This is usually done as part of an introductory balance transfer offer. It is another viable choice, as is using a low rate purchase card. The interest charges are usually far less for these cards and they also provide the benefit of an interest-free period in which you can clear the balance. Unsecured loans could also prove to be a better option in the long term if you are constantly in need of extra funds and know that there is a high chance that you will be borrowing cash for an extended period.

Emergency Situations

In the event that you have no choice but to borrow cash using your credit card, try and opt for the card that charges you the lowest level of interest and fees for making cash withdrawals. Most credit card providers will charge you a fee for each cash withdrawal that you make so it is a good idea to withdraw the whole amount of money that you require in one go. This will ensure that you only pay the cash withdrawal fee once. Finally it is important to pay off the outstanding amount as soon as possible in order to avoid wracking up more interest. Putting this off is liable to result in you becoming swamped with debt and being unable to turn the situation back around.

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