budgeting

The dangers of re-mortgaging

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?

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Why having credit cards that you don’t use harms your credit score

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.

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Why spending could be damaging your dreams; How to create a budget that supports your life goals Part Four

Photo courtesy of Shutterstock

Photo courtesy of Shutterstock

 

Last week we examined how to cut back on spending and create a life goals budget, this week we look at how to create a monthly savings budget, how to budget with cash envelopes and explore how to evaluate your earnings strategically.

 

Download “Finance-Budgeting-Spreadsheet.xlsb” Finance-Budgeting-Spreadsheet.xlsb – Downloaded 131 times – 17 KB

 

Monthly savings budget – five year plan

 

Now plan how you are going to allocate your savings to your goals each month, using the life goals budget as guidance to when you will start saving and for how long. Also bare in mind when the goal is due to be completed and take into account the more minor things you will need to save for like birthdays, anniversaries or Christmas. This is the stage where you will clearly see how you are able to realize your goals financially and it is an incredibly powerful exercise, one which will empower you to create the life you long for!

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How to boost your credit score (and why you’ll be glad you did)

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!

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How to check your credit score (and why it’s important)

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).

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Why paying off debt before saving is essential

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).

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Budgeting in action: open three instant savings accounts and name them after your goals

Now that you have a brand spanking new budget what better than to organize your savings by opening three new instant savings accounts to celebrate? This will allow you to keep track of how much you have saved up for each goal and means that you won’t ever get the purpose of which monies are for which goals confused and thereby leaving you short changed for completing a goal.

 

I personally have five savings accounts and they are named:

 

  1. Car Savings (for my insurance, MOT, services and maintenance)
  2. Peter Trip (money to see my boyfriend as we live long distance)
  3. America
  4. South Africa
  5. Website (stay tuned – they’ll be a big redesign next year!)

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Budgeting in action: Finish your life goals budget

Please download Accessible Psychology’s ‘Financial Budgeting Spreadsheet’ below, to take part in today’s exercise:

 

Download “Finance-Budgeting-Spreadsheet.xlsb” Finance-Budgeting-Spreadsheet.xlsb – Downloaded 131 times – 17 KB

 

Life Goals Budget, Part Two
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Budgeting in action: do the ‘Monthly Savings Budget – Five Year Plan’

Please download Accessible Psychology’s ‘Financial Budgeting Spreadsheet’ below, to take part in today’s exercise:

 

Download “Finance-Budgeting-Spreadsheet.xlsb” Finance-Budgeting-Spreadsheet.xlsb – Downloaded 131 times – 17 KB

 

Monthly Savings Budget – Five Year Plan

 

Now you have how much each of your three goals will cost in terms of money you can incorporate this information into your ‘Monthly Savings Budget – Five Year Plan’.

 

First of all, check that the amount you find in the ‘Total Monthly Savings’ column matches the amount in the Monthly Expenses and Savings Sheet – specifically the ‘Budgeted’ ‘Total Monthly Savings’ cell. If it does you can skip the technical bit!

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Why spending could be damaging your dreams; How to create a budget that supports your life goals Part Three

Photo courtesy of Shutterstock

Photo courtesy of Shutterstock

 

Last week we explored what to consider when creating a budget and assessing your current spending. This week we examine how to cut back on spending and how to create a life goals budget.

 

Cutting back on spending

 

Once I honestly assessed my current spending I evaluated what I could cut back on and drew up a revised monthly expenditure sheet. Although I felt a strong inclination to make major, often unrealistic, cut backs, I knew I had to be practical in terms of what I needed to live on whilst also being thriftier with my monthly spending. I also made a plan to pay off all debt, a non negotiable element of any budget.

 

To do this yourself, simply use the second column on the first sheet of my downloadable spreadsheet.

 

Download “Finance-Budgeting-Spreadsheet.xlsb” Finance-Budgeting-Spreadsheet.xlsb – Downloaded 131 times – 17 KB

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