Personal Finance Blog UK Archives - Page 5 of 5

What’s the Best Strategy for Clearing Debts?

This post may contain affiliate links please read our disclosure for more info.

Image credit: https://www.bloemfonteincourant.co.za/

It’s no coincidence that debt is a four letter word. As adults, we understand that debts are something we should eradicate from our lives as much as possible. There are different forms of debt of course; mortgage and student loan debts are deemed acceptable by most, whereas credit card debts and loans are not. It’s not a mystery how debt occurs, it is simply a result of spending more money than you have whether in the short term or on an ongoing basis. Debt can have far reaching psychological effects on people and unfortunately many people struggle to cope with the pressure it brings. If you feel this way, please contact the National Debt line via this link.

Strategy for Clearing Debts

Paying debts off can be a fantastic experience, which is quite strange when you consider there is nothing tangible at the end. There is no trophy, certificate or awards ceremony for paying off a debt. What is the best strategy for paying off debts? Individual circumstances may vary of course, but broadly speaking the approach I have outlined below is a good one for most people.

Calculate the Total Amount that You Owe

Be intentional about this, create a spreadsheet with all your debts and interest rates listed. It may not be pleasant reading but facing up to the full extent of your debts is a great first step.

Work Out Which Debt ‘Costs’ You More

In most cases this will be the debt with the highest interest rate. It is likely to be a credit card, they tend to have higher interest rates and cost more. The worst of your credit cards should be your focus. Prioritise this card for any payments you make towards debt without jeopardising your monthly budget.

If Possible Make Minimum Payments on Other Debts

I know, this is easier said than done of course; you may be presented with the choice of paying more of a costlier debt at the expense of missing a payment for a less costly debt. In that situation, I would pay more of the costlier debt. Ultimately, you will reduce your worst debt quicker that way.

Communicate with Your Creditors

Be careful with how much information you communicate to your creditors for this reason, you cannot predict how each will react. ‘Radio silence’ is not an option but proceed with caution. Let’s imagine that you have been made redundant. I don’t need to imagine because that has happened to me. When you tell some of creditors they may be sympathetic and give you some additional flexibility whilst you get back on your feet. However, some will now categorise you as ‘high risk’ and this will affect your credit rating and access to money even for basic essentials.

Be Consistent and Keep up the Momentum

You may be tempted to reward yourself for making progress reducing your debts. In principle this is fine, but my recommendation would be that the celebration is extremely low cost; your favourite bar of chocolate rather than a bottle of champagne, for example.

Peer Group Support

If you know of other people who are on a similar debt reduction journey form a group with them and support each other. It will strengthen your resolve. There are also lots of online communities, websites and podcasts that will give you additional support. Make use of them.

If you follow the steps above you will reduce your debt and by being consistent you will reach the day when you are debt free. On that day, I think you definitely should upgrade your reward or celebration. You will have earned it.

One final consideration for you, in the United States there is a personal finance guru called Dave Ramsey. Rather than the approach I have outlined above, he advocates starting with the smallest debt irrespective of the interest rate in what he calls the Debt Snowball. His rationale is that your Debt Snowball builds momentum and helps you to keep going.

If you have liked this post you will also like the following posts:

How Much Should You Save?

10 Ways to Make Money Now

What are the Different Types of Savings Accounts?

My aim with each blog post is to help you move to a better financial future. I believe that financial education is largely absent from the national curriculum and I intend to share anything helpful that I have learned along the way. I am by no means a financial expert. None of the information on this website constitutes financial advice and is provided as general information only. This is my personal finance blog; my marketing blog is over here and I have been blogging there since 2010.

I hope you have found this information useful. Thank you for reading.

Best regards,

Mike

10 Ways to Make Money Now

This post may contain affiliate links please read our disclosure for more info.

Image credit: Getty Images/Peter Cade/The Image Bank

Planning how to save money and considering how much to save are important topics to consider but sometimes on our financial journey we need to make money in a short space of time. Below I have listed 10 ways that you can do this in a fairly short time span. The quickest are at the top. I have not included surveys that will take you hours to complete or anything that feels like a scam or is misleading. I hope that if you find yourself needing extra cash (we’ve all been there), one of these suggestions helps you out.

Make Money Now

1. Sell Unwanted Items

Sell unwanted items on Gumtree or Ebay. My preference is for Gumtree because of its local focus. You are less likely to get ‘tyre kickers’ who are not really interested in buying. I have used Gumtree many times and it’s a great way to declutter your house and earn extra cash at the same time.

2. Sell Unwanted CDs and Books

There is a company called Music Magpie who will buy your CDs, books, games and DVDs. First of all, you scan all of your items using your mobile phone and then receive confirmation of the amount you will receive for each item. Next you pack all of your items and send off to them for free. They pay when they have received your items and processed.

3. User Testing

Some websites will pay you money to review comapny websites and give your feedback in the form of a short video. UserTesting is probably the most well known of these but there are others. Enroll is an example of one of the others.

4. Get Paid to Switch Bank Account

The introduction of the Current Account Switching Service in 2013 has made switching between banks very simple. Over 4 million accounts have been switched since then . Banks are offering incentives for account holders to switch to them. Fed up with how your bank has been treating you? Make a switch; even if you’re not fed up make a switch to pocket up to £150 just by moving your current account.

5. Ad Hoc Gardening Help

This is a great suggestion for Spring and Summertime. Create a flyer offering your services as a garden labourer and post through local letterboxes of homes with gardens that need a little TLC. You will not need to be an expert gardener. Often these will be gardens of those who are either too busy or unable to complete garden maintenance work for some other reason. Most will be appreciative of your flyer and you are likely to earn money for a couple of hours work for every person that agrees.

6. Hire Out Your Car

If you have a car that is not too old and you are not using it all the time, you may be able to hire it out on an hourly or daily rate. Easycar offer this service nationally in the UK ; it enables car owner to earn money from their car by renting it out.

7. Rent out Your Parking Space

If you are a homeowner and you have a parking space that you don’t use you could rent it to motorists looking for a guaranteed place to park. There are lots of companies catering to this niche. You could advertise your space on YourParkingSpace, JustPark or Parklet to name but three and go on to make between £50 and £300 per month.

8. Hire Out Your Spare Room

The Rent a Room scheme was introduced in 1993 and because of it homeowners can earn up to £7,500 a year tax free by getting a lodger. You can register your room for free on Spareroom or Easyroommate. Your room will need to be furnished and you will need a tenancy agreement.

9. Medical Trials

Perhaps the most controversial inclusion on this list. When people think of medical testing they remember horrific cases when things have gone wrong. Most medical tests are nothing like that. Before participating you would need to consult with medical professionals to assess whether you are right for any specific trial. Medical trials that require you to stay on the premises, like the ones organised by FluCamp can earn participants up to £3,500 for a two week trial. There are lots of other companies running similar trials all over the country.

10. Apply for a Job With a High Turnover of Staff

The best example of a job with a high turnover of staff is a nightshift shelf stacker at your local large supermarket. The unsociable hours mean that it is the sort of job that people are often leaving. As a consequence, there is likely to be a vacancy for you. If you can handle the unsociable hours it may help you earn additional cash during your time of need. This link will get you started. I will cover employment opportunities comprehensively in future posts but wanted to mention this opportunity now.

Of course, you will need to assess the tax implications of any additional income that you are able to generate. This article will give you some guidance.

If you have liked this post you will also like the following posts:

How to get Value for Money When Buying Foreign Currency

Save up to £500 Per Year With a Sim Only Mobile Phone Deal

How Much Should You Save?

What’s the Best Strategy for Clearing Debts?

What are the Different Types of Savings Accounts?

I hope you have found this information useful. Thank you for reading.

Best regards,

Mike

What are the Different Types of Savings Accounts?

This post may contain affiliate links please read our disclosure for more info.

Image credit: http://meridican.com/

I hope that you read my last post and you joined me in making a commitment to increasing your level of saving each month. If you have not had time to read it yet, you can read it here, How Much Should you Save?

In this post, I will give an overview of the different types of savings accounts that are available for most adults in the UK.

Bank Savings Accounts

Perhaps the easiest to set up, these are savings accounts that are usually in the same bank that handles your current account. It is very easy to transfer money from your current account into your savings account each month. The transfer can be achieved very quickly via your bank’s app, assuming that you have downloaded and are using your bank’s app. Unfortunately, this ease of access without any penalties can work against you too. It can be a little too easy to transfer money from your savings account back into your current account, more on that in a future post.

Regular Savings Accounts

If are able to commit to a regular savings account you should be able to secure a higher interest rate than a normal savings account. There are limits to the amounts that you can save and also for how long, but they are definitely worth having if you are able to.

Easy Access Cash ISA

If you open a Easy Access Cash ISA, you will be able to save up to £20,000 tax free each year and still have access to it if you need to. Individual Savings Accounts (ISA) were first introduced in 1999, initially with a limit of £7000. Now the amount you can shield in a tax free ISA is £20,000.

Fixed Rate Cash ISA

The Fixed Rate Cash ISA differs from the Easy Access Cash ISA because savers must commit to not accessing their funds for a fixed term. This term could be one, two or three years. If savers access their funds before the fixed term has finished they are penalised with a loss of interest.

Fixed Rate Savings

If you are comfortable locking away your money for a couple of years, you should consider fixed rate savings because you will secure a higher interest rate

Notice Savings Accounts

As the same suggests, notice savings accounts require the account holder to give notice before they withdraw money. This notice period could be 30, 60 or 90 days in advance.

It used to be that you had to consider the tax implications of savings accounts. However, the introduction of the Personal Savings Allowance in 2016 has meant that most people now no longer pay tax on savings interest.

What type of savings account do you use? Let me know in the comments section below.

If you have liked this post you will also like the following posts:

How Much Should You Save?

10 Ways to Make Money Now

What’s the Best Strategy for Clearing Debts?

I hope you have found this information useful. Thank you for reading.

Best regards,

Mike

How Much Should You Save?

This post may contain affiliate links please read our disclosure for more info.

Image credit: http://yourmoneyrelationship.com/

For many people, saving money is not exciting; when they consider what their savings may allow in the future it can become more exciting. This may mean the chance to have an expensive family holiday or a more comfortable retirement.

Save Money

Whatever your level of salary or wages, you should aim to save 20% of your earnings. Depending on where you currently are in terms of your financial health, this 20% figure could seem insurmountable or very manageable. Please remember this is a guideline.

This guideline is based on the following breakdown of income; 50% on mandatory expenditure including accommodation and associated bills, 30% on discretionary expenditure and 20% on savings.

Is this the Dream versus Reality?

The chart above is from Trading Economics and clearly demonstrates that in the UK most households are not getting anywhere near the 20% figure. My own anecdotal evidence is that there are times when I have been able save above the 20% and other times when no saving has been possible at all.

For our US readers, the situation is actually slightly worse, as you can see from the chart below. There is data from other countries as well on the website, so please explore to find figures for your country if you are not from the UK or US.

I would like everyone who reads this post to take a step forward to a better financial future. We have just started a new month, commit with me to saving 20% of your income, or as close to that as you can. If you comfortable doing so, leave a comment below indicating the percentage of your income that you will save this month, this month being June 2018.

If you have liked this post you will also like the following posts:

What are the Different Types of Savings Accounts?

10 Ways to Make Money Now

What’s the Best Strategy for Clearing Debts?

My aim with each blog post is to help you move to a better financial future. I believe that financial education is largely absent from the national curriculum and I intend to share anything helpful that I have learned along the way. I am by no means a financial expert. This is my personal finance blog; my marketing blog is over here and I have been blogging there since 2010.

I hope you have found this information useful. Thank you for reading.

Best regards,

Mike