Tagged: Credit Cards

How to Use the Personal Finance More Is Less Rule



Personal finance is fond of rules. It’s a lot easier to coin a rule that sounds like it would work in most situations than it is to actually go through all the different financial products and explain how one would best use them depending on the situation.

Not only is it difficult to write – and impossible to write exhaustively – it is also boring for the reader and that is simply inexcusable especially in the personal finance world where there is a distinct lack of the sex and drugs and rock and roll that would otherwise paper the cracks caused by bad writing.

Having said all that, though, let me now propose a personal finance rule that might just actually work: it’s called the more is less rule.

The principle says that the more you compare credit cards the less you’ll end up ultimately paying out to your credit card provider.

What’s more it says that the more you compare current accounts the less you’ll end up going into your overdraft and shelling out hundreds of pounds for the privilege.

Why does it work? For a number or reasons but, for fun, let’s just pick three.

First, looking more allows you to find the best deal. It’s as simple as that.

You’re likely to find what someone else wants to tell you is the best deal on the first go. That’s easy. People make a living from telling you that.

Look further, though, and you’ll notice that you and your finances don’t fit some perfect consumer model. You’re unique and you need something that suits you: the money you have as well as the way that you spend and save.

Second, the act of looking is important in itself. It ensures not only that you’re getting more or less the right product but that you understand what you’re getting into which is much more important.

At some point when doing this research you’ll realise why you need to borrow the money or what you really use your current account for. Most other people won’t know that.

Third, and finally, good things take time and work. Personal finances once worked out and automated needn’t take up much of your time but they should take up some.

More doesn’t have to mean a lot but it should mean some.

The more is less rule even applies when you compare savings accounts since these can come with battery of fees or offers that expire and leave you with less money in interest than you could have had.

Debt Management Through Remortgaging

Debt management involves a plan to clear your debts within the shortest time possible at lesser interest rates. To stop your financial situation from plummeting it is advisable that you consult with a debt management company. They can assist in addressing the causes of your financial difficulties. They are able to deal directly with your mortgage lenders and come up with amicable plans of solving your debt problems.

The Individual Voluntary Arrangement is the governments’ way of solving debts to avoid bankruptcy. They have taken the initiative to assist people with their debts. There are no upfront fees charged for setting up an IVA. The advantages of the IVA are:

• 75% write off of your debts
• Frees you from debt in five years or less
• The interest incurred in your debt is frozen
• No fees are charged
In UK about 150- 200 homes are repossessed every three minutes and about 3,000 people become redundant. Debt consolidation through remortgaging can help with your debt problems. It will involve the use of one large loan to clear smaller loans. The aim of debt consolidation is to have just one debt to pay at lower interest rates.

Applying for a debt consolidation remortgage plan is not difficult though you are not at any obligation to accept what is offered to you. You can obtain remortgage for debt consolidation where you use your home as collateral. The lender at this point is at an advantage as his risks are lowered thus offering lower rates.

Always shop around for the best deals that offer more savings to you. Remortgage for debt consolidation can be offered to you at a discount especially if you are at a point of bankruptcy.

In comparison with remortgage the interest plans for credit cards are much higher. With remortgage the total you will pay for your debt will be much lower and the debt will be cleared sooner.
Wrong moves involved with debt consolidation
Hard money loan
One of the biggest myths is that these loans are easy to access and lenders may take advantage of this fact and charge you more interest rates. They usually promise that the loan will help you clear your debts faster.

Consolidators that promise to fix everything
A fee is build in your monthly repayments about 10% of the total. You may not be aware of this but you can always negotiate for a better remortgage plan and have your monthly repayments stretched and still manage to clear your debts.

Remortgaging can help you finance your home. You can refinance with a greater amount than your debts to attract lower interest rates and stretch your repayments for longer periods. But the best way to manage your debts it is to avoid accumulating debts. With the many credit cards on offer and easy to access loans it is wise to just go for what you really need. Remember with remortgaging it is your home you are putting at risk for repossession.

Do’s and Don’ts of Financial Planning

One of the worst things in life is getting into a financial mess, so it is better if financial planning is given its due importance and also is on time, which means very early in life. Usually there is a tendency to spend much more than what is being earned. Needs never end; and every individual want more and more of everything! The best thing is to set aside a budget and spend only when it is very necessary, and not just because your neighbor or friend is enjoying a particular luxury item. It is usually at the end of the month that people start experiencing the financial crunch.

Financial crunches will keep cropping up all the time, but it is for you to decide whether it is really necessary to incur certain expenses or not. Many a times, people spend on things, even if they are not required, and in the bargain tend to hoard. It is best to make purchases only when they are actually required. Emergencies could crop up anytime hence it is very necessary to set aside money for such emergencies. If this is not done, then amounts in the fixed deposits, provident fund, children education funds are utilized, which again affects investments made for the future.

These days credit cards, ATM cards, debit cards, and a variety of other funding cards are available which allow you to instantly withdraw money and utilize it whenever liquid cash is not at hand. Some people use these facilities excessively, which is not at all a good habit, because repayments only eat into the balance in your bank account, reducing it slowly and gradually. It is advisable to curtail use of such cards and purchase wisely. It is because of the new ‘mall’ culture, that people end up spending more than what is actually necessary.

Your financial decisions can be given a direction with the help of financial planning. Investing in mutual funds, recurring deposits, fixed deposits, postal deposits or even investing a significant amount in some good shares in the stock market can help generate additional income and thus ensure your future financial stability, which is very vital. A lot of books as well as tips keep coming up in magazines and newspapers which you could refer to and make best use of. If at all really necessary you could always consider professional guidance to plan your financial situation.