Top ways to survive the recession

Boost you income
Why not take on a part time job in the evening after your regular work, or even on a weekend, sure you’ll have less time to watch television or spend time with the family but think of the extra money in your pocket that could pay for a nice holiday or just help pay off those debts. Renting out a room in your house if it’s going spare is another great way of boosting your income, and the money you gain will be tax-free under the government’s rent-a-room scheme.

Insure your income
Insuring your income is a great idea during a recession as if you lose your job the insurance can cover payments on your mortgage for up to a year. The Government will also help homeowners who lose their jobs by paying the interest on mortgages of up to £200,000 from the 13th week after being made redundant. Mortgage protection can cover your repayments but make sure you check the small print as they have very specific terms.

Get a good credit card
Card issuers are pushing up their prices and also reducing their interest free periods so it is vital that you pay off consumer and credit card debts. Switching to a cheaper card is normally the best option and if you’re not in debt then have a think about switching to a cash back card that will give you back a percentage of the money you spend. If you are getting squeezed by those credit card companies and in need of debt help then make sure you shop around wisely for the best options as the recession is limiting them and debt help can be harder to come by.

Overpay your mortgage
If you can afford it then try to overpay your mortgage, Not only will this cut the term of your mortgage considerable and save you lots of money in the long run but will also means that if you do run into difficulties then you can take a payment holiday.

Change your savings
Savings rates have dropped dramatically with them being at the lowest in the history of saving, but there are still accounts that give you more than the base rate. There are still accounts out there that give 4% which is not too far away from the 6-8% we were getting last summer.

Get better insurance
Insurance is a necessity and you can always get cheaper and better insurance for your home/car. All you have to do is not accept that renewal quote, use comparisons sites or call your insurer and tell them you’re leaving as you’ve found a better bargain. They will offer you a better deal, and you can always haggle with them a bit more to get that low price. The same works for Sky TV and mobile phones just call them up and say you don’t want it anymore and they will lower their price to keep you.

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Advantages and Disadvantages of an IVA

Individual Voluntary Arrangements (IVA’s) are becoming an increasingly popular method in which to ease any debt problems. Recent figures suggest that the amount of IVA’s taken out each month now exceeds that of the amount of bankruptcies. However, IVA’s are not always the best debt management solution for some, and there are some advantages and disadvantages which you would have to consider before applying for an IVA.

One of the biggest advantages of an IVA is that they are private; none of your friends or family has to find out. This means there is no social stigma attached to IVA’s. Furthermore, an IVA leaves you debt free in up to five years whilst safeguarding all your assets at the same time. Even during these five years, the repayments that you make are within your means. You are never asked to repay more than you are able to.

Perhaps one of the most stressing aspects of debt problems is having your creditors continually threatening you for your payments. Luckily, an IVA ensures that creditors are unable to contact you, make any demands or take you to court.
For some people, the IVA period of five years is a long time to be repaying debts, and filing for bankruptcy gives you the option of being debt free in as little as a year. Although an IVA is not publicised in the same way as bankruptcy, you can still find a record of your IVA on the Individual Insolvency Register, which is searchable by the public. In addition to these disadvantages, the life of a debtor in an IVA period is highly monitored during an IVA period, with wage slips and salaries checked regularly to ensure that you are repaying the highest amount possible.

If you are seriously considering an IVA, be sure to do a thorough check of the Debt Management comany before you choose. Debt Free Direct discovered several agencies were giving consumers misleading advice on IVA terms, so it is always advisable do your research first.

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Bankruptcy Or Administration Orders

Twitter has taken over and I spend more time on twitter than I should.My poor little blog wishes I’ll pay more attention to her. Let’s address a real problem – BANKRUPTCY. I have written a lot of articles on this topic and will always do.

Administration orders is one alternative to bankruptcy and is a court-based procedure whereby you make regular payments to the court to pay towards what you owe your creditors. You need to have enough monthly or weekly income to meet the payments. If you cannot make the payments this order can be cancelled.

An informal arrangement is another option where you write to all your creditors and try to come to some kind of payment arrangement and this would usually include a timetable detailing when you can pay them. The only disadvantage to this is that it is not legally binding so it could be ignored by your creditors and then they could ask for full repayment of your debt.

The third option could be debt consolidation where you take a loan with a low interest rate say from a bank and this helps to pay many creditors and then you only have one monthly payment to make to pay off your bank loan.

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Tips on Surviving the Recession

Savings

If you have savings then up to £50,000 is guaranteed in UK regulated building societies and bank. This is an allowance for each person so if you have a joint account then up to £100,000 is covered. This all only applies per bank registration and some banking brands will hold them same registration so only £50,000 will be covered by these, even if you have more saved with them.

Redundancy

You are normally entitled to statutory redundancy pay if you’ve work for your employer for more than 2 years continuously. The first £30,000 of this is tax free and anything over this such as bonuses and unpaid wages is quite likely to be taxed.

Getting a job

Even though the numbers of those that are out of work are rising there are still plenty of opportunities out there and you should be able to find the right job to suit you. You may just find that there’s a bit more competition than there was before. Sign up to temp agencies and internet job sites such as monster and jobsite. You can always get a job that’s not for you just to tide you over.

Debt

Make sure to pay the most important bills on your debt first such as the Mortgage and council tax as well as costly credit cards. Don’t be afraid to ask for help form the citizens advice bureau or from friends and family.

Repossession

If you think you will have problems paying your mortgage then you should contact your lender as soon as possible. Repossession should only be considered by the lender as a last resort after all options have been explored and looked at. The Government is also helping those who have lost their jobs by paying the interest on mortgages of up to £200,000

Pensions

If you’re getting close to retirement and have had your pension invested in the stockmarket instead of stocks and bonds then you will probably seen a big drop in its value. There isn’t much that can be done about this but annuity rates are very good at the moment however these are likely to drop so it may be worth while shopping around for a better deal as you do not have to buy one from your current pension provider.

Other related post on Topic

Business Week.com
Being Frugal
75 tips of survival

Top tips for you to survive

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Spending Cutbacks

It is very easy these days to get into debt just through the cost of daily living. It is a sad fact that house repossessions and bankruptcy are becoming more and more common every day. In order to avoid such drastic measures being taken, it is important to take a look at your finances and work out where cut backs can be made.

Simple measures such as changing your shopping habits can make a huge difference. Instead of just picking your usual brands, have a look around the supermarket shelves for alternative brands which may be cheaper. Supermarket own brand goods are usually as good as the leading brand but at a much lower price. By swopping some of your goods for cheaper brands, your shopping bill should easily decrease. Also,look out for special offers and buy one get one frees, but weigh up which is the cheapest option as the own brand items may still be less expensive. If you can afford to, why not put your savings into a high interest bank account. It may only be a few pounds to start with, but this will soon add up over the months.

Why not have a girls or lads night in instead of spending all your money in the pub. A night in with a few drinks is much cheaper and makes a nice change.

Stop spending money on take aways and lunch. By making your own lunch everyday and cooking for yourself will save you money. If you like fizzy drinks or bottled water, then make sure you buy a multi pack from the supermarket instead of buying them everyday from the newsagents. This kind of saving soon adds up.

If you are prone to clothes shopping and you know that you won’t be able to resist buying something from your favourite store, then simply don’t go in there. If you can’t afford it you will only regret it afterwards and if you didn’t know it was in there to start with then you can’t miss it.

For everything you buy, stop and ask yourself if you really need it. Even down to the simple things such as buying magazines and newspapers. A newspaper at 50p a day will cost you over £10 a month.

If you can afford to, open a high interest savings account and set up a standing order for a small amount to be transferred from your current account every month. You will soon forget about this money coming out of your account and you will learn not to miss it. Don’t over stretch yourself though. Just a small amount every month will soon grow and you will have interest added onto it too.

By learning how to be more frugal with your money and having some self discipline will help you to become more financially stable and avoid the stress of debt, and you will find that you don’t need all the things that you used to spend your money on.

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IVA or Bankruptcy?

Both of them are legitimate ways out of debt. Which is better? Well like most things it does depend on your individual circumstances. With bankruptcy your debt is written off, but there is a cost; with IVA only some of your debt is written off.

An IVA or Individual Voluntary Arrangement is where you set up an agreement with your creditors to pay off part of your debts. The amount you pay per month is based on what you can afford and it lasts about 5 years.. You can set up an IVA if you are at least £15,000 in debt and can afford at least £200 per month. Up to 75% of the debt can be written off.

For an IVA, your circumstances will be taken into account – like how much you earn, how stable your job is (is there such a thing as a stable job nowadays?) and how much you can afford per month. So this is not suitable for everyone as you need to have regular money coming in and you need to be able to afford the repayments each month for 5 years. If you fall behind with the payments, you risk being made bankrupt.

With an IVA, your debts need never be known to your friends, family, neighbours or work colleagues and as long as you can keep up the payments, you will have a clean slate within 5 years. An IVA is an arrangement between you and your creditors – no-one else need know, unless you tell them.

Many people regard bankruptcy as a “cop out”, because all your debts are written off and the bankruptcy may even be written off after a year, but this does come at a cost. The bankruptcy remains on your credit reference file for 6 years, so you will find it hard to get a mortgage or any form of credit. Your credit rating is damaged and this can last for many years to come.

With bankruptcy, you also have to declare your bankruptcy in the local newspaper, so all the busybodies in the neighbourhood will know about it – it will be great gossip-fodder for them. This is not very good if you are a private person who doesn’t like to share their financial distress with the rest of the world. You also will find many jobs closed to you – not just high powered jobs like Financial Director of a company, or Company Secretary, but also normal administrative jobs in the Financial Sector. You also can’t practise as a lawyer or chartered accountant..

Basic things like running a current banking account or having a credit card will be closed to you. You will only be able to hold a basic bank account with no direct debits or overdraft facility or even cheque book. So bankruptcy is a step not to be taken lightly as it impacts on so many areas of your life.

Creditors prefer IVA to bankruptcy, because they get at least some of the debt back. IVA is an alternative and should be considered provided you can meet the minimum monthly repayments.

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Social stigma attached to bankruptcy

Nowadays with the credit crunch, does bankruptcy still carry a social stigma? Not as much as it used to, when you rarely heard of people going bankrupt.But in these uncertain times, it is not nearly so much of a stigma.

In fact, there is often admiration, support and a lot of sympathy if someone, who has been trying to run a business, has gone bankrupt. People feel that at least he was trying to do something. It may not have worked out, but that’s just how it goes.

If a person goes bankrupt because of personal debts, there is also concern and sympathy. In these uncertain times, many people feel very concerned about their future and their jobs and feel bankruptcy could happen to anyone. Everything – your mortgage, your bills – all depend on having a regular income. Nowadays, there is no such thing as a “job for life” and jobs which used to be considered safe and secure, like banking ….. Well, need we say more? Even people employed by government departments are no longer safe, because these departments are often undergoing change and “rationalisation”. Head counts are often being done and everyone nowadays fears for their job.

In the past, people were thought feckless if they became bankrupt because of debt, but now our whole system has been built on buying things on “credit”, and it is not surprising that so many people wrack up debts on several credit cards …. And the banks encourage them to do so and are still encouraging people to take out credit cards. How many of us have had unsolicited mail offering us credit cards or loans in the post recently?

I remember years ago an uncle referring to credit as the “glad and sorry” – glad to have it, sorry to have to pay for it. Perhaps people will think a little more now before taking on too much credit.

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Grand designes and property ladders

Home improvement loans are indeed worth taking out. However, rather than using an independent loan company specialising in home owner loans, approach your bank or building society and take extra borrowing on your mortgage as their rates will often be much more favourable.

The reason that I think that home improvement loans are worth while is probably down to television programmes such as grand designs and property ladder.

Both give the indication that as long as you spend the money wisely this will almost immediately add value to your home far exceeding the initial outlay.

Not so much grand designs are they usually build houses on an epic scale, but certainly property ladder indicate that with a few subtle well spent changes here and there you will be quids in.

They often recommend, ensuite bathrooms, knocking down walls, open plan living spaces and new kitchens and bathrooms to increase the value of the property.

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Ways to Avoid Unnecessary Debt

Debt comes in all shapes and sizes and quite clearly, the best kind of debt is small and short term! It would be ideal if these were the only debts, but the reality is that some people have debts which are difficult to service. A downward spiral can follow, since it appears that sometimes the best terms of interest are only available to those people with their finances in reasonable shape. The best advice would appear to be not to get into debt in the first place and it would be wonderful if the majority of people could fall into this category.

If you do need to borrow money, though, then it is important to avoid some of the products out there which do not offer you the best price on your borrowed money. You have to remember that you are expected to pay it back, with the interest, so although some of the marketing materials that land on your (mortgaged!) doorstep may sound appealing and offer instant perks or rewards, the buy now, pay later mentality is foolhardy and ultimately painful. Borrowing over the odds may mean repayments you can’t handle, which will inevitably mean more debt.

So to avoid unnecessary debt, you need to firstly shop around and move all your current debt, if at all possible, to cheaper products. Here, it makes sense to start with the biggest debt first, usually the mortgage. A mortgage is an example of a debt which is common to many of us and is not pathological. Avoid buying on credit, since credit cards are second only to store charge cards when it comes to the cost of borrowing. These debts, which might be relatively small, are the ones that should be second on your list to change or pay off, if possible. Look at all of your outgoings and – yes, you guessed it, it’s not a novel recommendation – draw up a budget and stick to it. Include all of your outgoings in a monthly plan and remember to include those payments which come once a year, like car tax and holidays. Just divide them by twelve and add them to your list.

If you make budgeting a part of your everyday life, then avoiding unnecessary debt will become much easier. It’s not an option to be ignorant about where your money goes; you need to keep a close eye on it from the moment it hits your account or pocket to the moment it leaves. If you seek this kind of intimacy with your financial affairs, the hope is that you will become hooked on keeping on top of the debt and so enjoy being master/mistress of your financial destiny, that the former addiction you had to spending without reckoning will recede and you will have redefined yourself as someone with only healthy debt.

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Debt’s not that bad!

When most people think about debt they automatically think that it’s bad, but debt doesn’t have to be bad. In fact, if you’re good at managing your money, it could even be a good thing and could even possibly make you money. I’ll explain how that can happen.

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