When you have substantial equity, such as a house, that you could base your borrowing on, it is seriously tempting to re-mortgage. But ask yourself this. If you didn’t have the money for a bigger mortgage before, how come you do now? And do you honestly, really have the money now?
By jennyleigh in Finances No Comments Tags: budgeting, finances, why having a credit card you don't use can harm your credit rating, why having a credit card you don't use can harm your credit score, why you should cancel credit you don't use, ]
Did you know that by owning a credit card and not using it, your credit score gets worse? When you think about it, it makes sense, after all, if the credit is not being used there is no opportunity to see if you repay it promptly, thereby handling debt responsibly and gaining a higher score.
By jennyleigh in Finances No Comments Tags: budgeting, finances, how to boost your credit rating, how to boost your credit score, how to maximize your chances of getting approved for a loan, how to maximize your chances of getting approved for a mortgage
I recently checked my credit score and, after it being bad as recent as one year ago, it is now classed as excellent. The entire reason for the transformation was that I took out a credit card. I know, I know, it can be a risky thing to do, but I limited the risk by getting a very low credit limit. Most importantly (and I can’t stress this enough) I only used it to buy things I already had the money for. I simply paid by credit card and then immediately paid off the balance – not leaving myself in debt for more than a few days at a time. If you know you have the discipline to do this (and only if you’re confident you do) this is an extremely effective way to make your credit rating healthy again.
In the UK registering to vote raises your credit score, as does being at the same address for a long period, having the same bank account for a long period and obviously paying all debt on time and in full (and that goes for mobile phone bills too). Remember, in the UK, if you live in shared accommodation your credit score is also effected by the credit rating of those you live with – so choose your housemates carefully!
I recently got my credit score from Doddle, a UK based site which offers the service for free. The reason I did so was because in the next few years I aim to buy a house with my boyfriend and I wanted to be as proactive as I could in making sure I had the best possible chance of securing the mortgage I needed. I was pleasantly surprised to discover that although there is always room for improvement, it is very healthy.
I would encourage absolutely everyone to get their credit rating, which you can now actually do for free. Of course, if your credit score is bad, such credit score sites offer an inexpensive service that tells you how to get your rating healthy again. Although this does cost a small amount of money the service is invaluable and well worth doing if you have a bad rating or are looking to buy a house or take out credit in the near future.
To get your free credit report please click on the links below. Remember ignorance is only bliss so long as you don’t realize the hard way you were ignorant (like getting rejected for a car loan or mortgage for example).
The problem with debt is that often the interest on it is high – really high! In order to become financially healthy we must first pay off all loans and credit card debt. The only exception to this is with mortgages and car leases, which are ongoing costs (unless you are in arrears, in which case pay these off first too).
Everyone knows that nearly half of marriages end in divorce, but did you know that studies have now found that fighting over finances is the number one predictor of divorce? Indeed fifty percent of those that do divorce end their marriage because of financial tensions.
Effective budgeting and planning your finances together can literally save a marriage. I’m not necessarily suggesting every married couple has joint bank accounts but creating a household budget together in a transparent way has a whole host of advantages.
Tim Maurer listed these advantages in his article for Forbes titled ‘10 Ways Budgeting Saved My Marriage’:
It is no exaggeration to say that a major contributor to my breakdown back in 2009 was due to the state of my finances. I had nothing and was totally reliant on my partner for finances, who frequently used money as a means to control me. The situation made me feel helpless.
Although this is uncommon there are many ways that effective budgeting can help prevent a mid-life crisis or breakdown. How many people do you hear of who are struggling financially and then turn forty and breakdown?
What to do if you’re not saving enough to achieve your goals (SPOILER: There’s always a way to achieve your dreams!)
By jennyleigh in Finances, Goals No Comments Tags: achieving your goals, how to save towards your goals, turning your dreams into reality, what to do if you are not saving enough to achieve your goals
How long will it take for you to pay off your debt? When can you start to save and how much will you be saving each month? After doing your life goals budget are your monthly savings enough to fulfill your goals? If not reconsider what you can cut back on so you can save more each month. If you simply want to achieve them but could wait a little extra time to do so you could contemplate taking longer to complete your goals.
Take five minutes to think about what financial freedom would look like for you. How much money would you have in savings? What goals would you want to save up for? Would you start contributing to a pension or contribute more to your existing pension? What insurances would you want to get should the worst happen? Would you want to save money for your children?
It’s a sad fact that millions of people in the UK have just £100 in savings, with the US not far ahead only having $500 in savings. Living without the stability of having emergency savings (typically advised by financial experts as needing to be six months worth of living costs) can have a huge psychological impact. Anxiety, depression and stress can all be symptoms of being financially insecure.
Although budgeting may be a scary prospect considering the state of most people’s savings the alternative is much worse. What if you lost your job? Would you have enough savings to support yourself and possibly your children whilst you look for another?