In times of austerity and high unemployment in some parts of the UK, mounting debt is a huge issue for many families with 350 people declared bankrupt every day across Britain according to finder.com.
With consumer debt rising and more and more companies offering short-term pay day loans with huge repayment rates, it’s easy to see why so many families struggle to pay off existing loans. There’s a few ways to stop yourself from getting into too much debt. Loan consolidation is a good way to reduce debt and anxiety money issues bring to bear. Here’s three hints to keep you out of the red in the near future.
Don’t buy a bigger house than you need
One of the biggest financial decisions you will ever make is the purchase of your house but so many people – desperate to get on the property – make a hasty choice on which house to buy and which mortgage option to go for. In the instance that you are allowed to borrow a certain amount of money to buy a certain property, it doesn’t necessarily mean you should take the full amount. It’s far wiser to consider how much you can afford – and if this is feasible going forward. One popular method to buy within your means is to spend around 25 % of your income on your home, but be sure you are in a stable job and have the means to keep up with mortgage repayments.
Make an emergency savings fund and be disciplined with it
The best way to put a little aside each month is to save the money on the day you get paid. So, each month on pay day why not set up a savings account and transfer what you can into that account. It may only be a few pounds each month but it will build over time and give you protection should you need the money due to any unforeseen circumstances. Be careful with your saved money though and don’t use it unless you absolutely have to. Building up the money over months will prevent you being tempted to take a short-term loan should you have an unforeseen medical cost, car breakdown or other unexpected expense.
Spend within your limitations.
If you own a house, you’ll also have to furnish it to make it the dream home you’ve been chasing but with this comes even more expenditure on all manner of items. Within this additional purchasing, be mindful of what you definitely need to buy and what you would like to buy. Remember, you don’t need to buy everything at once, it’s better to build that dream home over time. Taking out a short term loan to buy house furnishings could come back to haunt you if your spending gets out of control. As a homeowner, you also need to consider how much you spend on groceries, could you switch energy company and how much do you spend socialising each month? Cutting down just a little could save you plenty of financial bother in the long run.
It’s always worth aiming to have money left at the end of the month and if you don’t, it’s worth getting out a pen and notepad to work out exactly where the money has been going. It’s amazing what you can live without and still enjoy a fulfilling life.