Money Articles

Sharing ideas, observations and experiences is essential to help both you and others out of debt, fast. We will include here informative articles of interest – a ‘must read’ to help give you an insight to making the most of everyday endeavours, to make sure that you know some of the things that Consumer/Retail Giants possibly would rather you didn’t…

Your earning potential

OK, so you’ve established a direction, you’ve got control of your money; you know exactly what’s going on. You’ve set a realistic budget and you know what you need to do to start chipping away at that mortgage.

And you’ve hit something of a snag.

You haven’t got enough money coming in!

Obviously, an increased income will greatly assist you to increase your savings each month. But how can you persuade your employer that you need more.

Well, you’ve now got yourself a powerful bargaining tool – your carefully calculated budget.

HOWEVER, pay rises work both ways. Put yourself in your employer’s shoes just long enough to consider his likely first reaction: Why should he just give you this increase without a return in his investment? Ask yourself before he does – are you working hard enough? What more could I do in the business to make myself even more valuable?

One way of getting there would be to offer your boss an incentive. For instance, if you could formulate an increase in the Gross Profit from , say, £500-600K in one year then ask for 25% of £100,000 ; you’d get your increase and keep the business to its ‘factor 4’ – you’re both winners! Any reasonable employer will be hard pressed to deny a justifiable request if you can show how you will increase his profit and it can be set out in black and white that you are doing your utmost to live within your means.

No light bulb gone on above your head? Drawn an almighty blank? Don’t worry. If you’re stumped for a rock solid persuasive proposal, the best thing to do is get an appointment with your employer and just discuss it.  Between you, you are likely to come up with a strategy to enhance your worth to the company, and get on track to reducing your loan repayment term.

Warning: Don’t waste your pay increase

Don’t relax on your spending habits just because you feel richer. Rework your money plans immediately. Allocate the increase towards savings and debt repayments, not luxuries – otherwise you won’t actually see any gains.

Remember – the more you can pay off, the quicker it will go, and the more you will save.

A warning - Credit cards

Essentially, debit cards are like an electronic cheque: when you pay, the money goes straight out of your account. Credit cards, on the other hand, give you massive scope to ruin yourself.

Credit cards can be a subtle and insidious way of getting into debt. They make it very easy to spend money that you do not in fact have, and allow you to enjoy the benefit of goods and services before you have actually paid for them.

Your bank will tell you that credit cards are a good way to make purchases – and that there are many advantages: consumer protection, the ability to delay payment, earn rewards and so on.

However, this is simply the bank’s way to entice you to use a credit card and fall into their trap. All the advantages are massively outweighed by one huge disadvantage: crippling repayments.

Credit card companies don’t want you to be all organised and efficient.  There’s nothing in it for them if you are. They actually want you to spend what’s not yours because that’s how they make their money.

The card providers make their money from the interest earned on money lent – and it is a killer: with rates as high as 30% this is a very expensive way to borrow. And it’s not the only income source for the card provider.

They’ll suck as much cash from you as they can by various means, such as fines for late payment, card protection, and repayment protection insurance – the list goes on. No prizes for guessing who benefits most out of these schemes.

Credit cards are dangerous. They make it easy to spend, and partial repayments are a devious scheme to make you think you’re paying off your debt while allowing it to linger and linger – with often shocking consequences.

If you have got problems - Ask for help!

Paying off your mortgage quicker

Once all the necessary expenses have been met, any money left each month is not yours to spend - it belongs to the bank. Using this money carefully is crucial to you getting out of debt quicker.

Most mortgage companies allow you to make overpayments but they may put a limit on them. You must aim to make full use of this invaluable facility. Normally, if you miss an overpayment you are not allowed to make up for it later, so try to repay as much extra on top of your standard repayments as you can, ideally every month.

If you reach the monthly overpayment limit, put any further money you have left, however small, into your savings account. It will soon grow.

When your fixed rate term has ended, you can then pay the money you have saved straight off your mortgage. This way you not only pay off some of the borrowed money, but you have also saved enormous amounts of interest. Remember, it’s the interest that costs the most.

As your savings grow and your mortgage decreases you will eventually get to the point where you are able to pay off your remaining mortgage balance.

So, the mortgage comes first and some other things may have to wait until next month or whenever you can afford them

The debt danger signs
  • Do you feel your mortgage is simply too big to manage?
  • Would you rather not think about your finances?
  • Do you not know how much you owe?
  • Do you let bills and statements pile up and avoid opening them?
  • Do you have no savings and live on an overdraft?
  • Do you regularly use a credit card?
  • Are you worried about taking on a bigger mortgage for sizing up, relocating, or business?
  • Do you feel that your finances are in such a state that there’s no way out?
  • Are you content to have a mortgage hanging over you into your twilight years?

If you are concerned or find yourself agreeing with the above then ask for help.

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