Financial tips of the week: adverse credit problems UK
The credit crunch is the phrase being heard everywhere just now. Most of us will never really grasp the problems afflicting Northern Rock, Bear Sterns and the rest and have no wish to dig into the arcana of the financial markets. But adverse credit problems UK become a reality when we try to remortgage, get a new credit card or even take out a personal loan. One painful option (and one that’s become foreign to the current generation of UK consumers) is to look at the other side of the personal balance sheet. Budgeting is back in fashion and that means seeing what fat can be trimmed from your monthly expenditure … rather than finding new ways to finance it.
The mantra to learn is ‘reduce, reuse, recycle’ which also chimes nicely with the ecologically aware mood of the times. Pretty soon your local council is likely to be charging you for filling or overfilling your dustbin anyway … pilot schemes around the UK are already seeing people moaning that their one bin a week is insufficient. You won’t save a lot of cash by producing your own compost from kitchen peelings rather than buying a bag of John Innes from the garden centre, but you COULD save hundreds of pounds a year simply by turning your central heating thermostat down a couple of degrees and running your washing machine at 40 rather than 60 degrees.
We can’t say it often enough to people suffering from adverse credit problems, but DO A BUDGET. How can you possibly steer a steady financial course if you don’t know how much you have to spend each month and how bad your problems currently are. So get all your bank statements, savings and the like together and work out what you’ve got and how much in debt you currently are. Then plot a route out of debt. It’s amazing how just doing a financial audit like this can start to reduce your spending … there’s nothing like realising you’re spending £2000 a year on takeaway curries to make you reduce your spending.
Remember too that debt is expensive. It’s not just a case of spending more than you earn each month (which is bad enough) but of servicing the debt that ensues. And most people who are profligate with their money aren’t going to be carefully seeking out the best credit card and loan deals either - so they are likely to be spending too much on interest charges. Maintain a credit card balance of £1000 a year at 12% (and such obscene interest charges are not unknown even in the current climate of lower interest rates) and you’re spending a steadily compounding £126 a year just to service the debt.
So for goodness sake, look around for better credit card deals. If you’re too inept or lazy to do it yourself, then employ an independent financial adviser to look at your entire financial picture, but do get one that you pay rather than one who earns from fees on the products he sells to you. The former is obviously more independent and has no vested interest in flogging you certain products. This really IS one area where you should be spending MORE rather than less cash.
