Financial Tips
This area contains up-to-date articles covering day-to-day issues and matter with regard to personal finance.
A quick guide to debt consolidation
If you want to make sure you have a bit more money available for unexpected costs on a monthly basis, or to make your debts more manageable, then a debt consolidation loan could be the right debt solution for you.
How does it work?
A debt consolidation loan is a new loan which pays off all your existing unsecured debts in one go - which will leave you with just one debt.
In other words, instead of making several payments to several creditors, you will now make one payment to one creditor until your debt (plus any interest) has been repaid.
This isn't the only benefit of a debt consolidation loan. For instance, you might be able to reduce your monthly outgoings by spreading your repayments out over a longer period of time. However, this may lead to you paying more interest in the long run.
Having said that, if you choose to consolidate high-interest debts, from store or credit cards for example, you might save money in interest. How? Even though you may choose to repay the debt consolidation loan over a longer period of time (and will therefore pay interest for longer), the actual interest rate might be considerably lower than that of your 'old' unsecured debts - so the overall cost could be lower.
Who is it for?
Debt consolidation loans can help people with multiple debts who wish to make their finances easier to manage. Many people thinking about taking out debt consolidation loans are worried about how they will keep up with the costs of living, which is why they want to lower their total monthly expenditure.
Debt consolidation loans would not be suitable for everyone - for example, they wouldn't be right for people who have an unstable income (for example - people with commission-based salaries), or for people who don't think they will be able the repay the loan in a reasonable amount of time.
To find out if a debt consolidation loan would be right for you, you should contact a professional debt adviser.
Article added: 22 june 2009
This article was provided courtesy of GregoryPennington.com
Debt advice: do I need it?
Assessing your own financial situation can be a difficult task. It is often hard to estimate just how much debt you are in, or how serious the situation may be. It can also be hard to determine which debts are causing you problems and which debts aren't.
Debt isn't necessarily a problem. When used wisely, things like a loan or overdraft can be a useful way of raising money.
However, problems can occur if you borrow too much and/or can't afford the agreed repayments. One reason debt can become unmanageable is due to the interest you may be paying on it. All too quickly, 'good debt' can become 'bad debt'.
When this happens, you should take action by seeking debt advice and, if necessary, finding out about the debt solutions that could help you become debt-free.
Should I worry about my student debts?
As a student (or graduate), it's always a good idea to keep a close eye on your finances. Your student loans (provided by the Student Loans Company - SLC) are designed in a way that allows you to pay them back in relatively small amounts over a long period of time. At the moment, the SLC won't require any repayments unless your annual salary is over £15,000.
However, if your student debts are from overdrafts and credit cards, you should try and pay these off as soon as you can. They may be 0% or low-interest now, but that probably won't last forever.
Am I in too much debt? The checklist.
If you can answer 'yes' to any of the following questions, then you probably have too much debt:
- Are my debt repayments taking up a great deal of my income?
- Is my credit card balance always high?
- Have my creditors contacted me about outstanding debts that I can't afford to pay?
If you find that you are in too much debt, you should start by assessing your budget (a record of how you normally spend the money you receive) and trying to earn more and/or spend less, as this may be all you need to start getting out of debt. However, if this doesn't look like it will be enough, then you should seek professional debt advice.
The right debt adviser should be able to offer you tips on how to manage your finances more successfully.
Article added: 07 june 2009
This article was provided courtesy of GregoryPennington.com
