Monthly Archives: July 2014
Do you need extra finances for small repairs around the house, a new piece of equipment or a well-deserved holiday? Are you wondering which lender to go with and what loan product to go for?
Finding the right loan and making the most of it requires that you examine your own needs and preferences. While every loan will provide you with a sum of borrowed money, each lender will have different terms and repayment obligations, so not every loan will suit your particular financial circumstance.
Don’t be put off by credit history myths
Some potential borrowers are put off from applying for a loan because they are worried about being turned down. They fear a rejection will automatically put off other lenders and that somehow they will be relegated to a blacklist. However, these credit history myths are simply untrue, so if you see a loan product that is perfect for your needs, don’t hold off applying just because you don’t want to be rejected.
Find a loan repayment schedule to suit you
Arguably the most important aspect you need to feel comfortable with is the repayment schedule of a loan. To make sure you don’t commit to repayments that will put you under a lot of financial stress, you need to use a budget planner (free one here) to understand how much you can realistically afford to repay each month before taking out a loan.
Additionally, find out whether the loan you are interested in allows early repayments. Although making early repayments will save you money as interest is normally only charged for the days you borrow, some lenders will impose a penalty fee against these extra payments.
For a flexible lender offering free early repayments, and look at their customer service rating to ensure they have a good reputation. Wonga.com state on their website that 9 out of 10 customers are happy to recommend their services to a friend. Many other reputable lenders will also state their customer rating – don’t be afraid to compare and ask friends and family their experiences, too.
Secured vs unsecured loans
Loans fall into two general categories – secured and unsecured.
A secured loan is one that has been taken out against a property. Lenders face fewer risks with this type of loan because in the event of a default, they can take over the property to recover their capital. Since they face fewer risks, lenders are willing to charge less interest on secured loans.
Although secured loans might be cheaper to finance for borrowers, they also take on greater risks – that of losing their property in the event of a default or missed payment. As this type of loan is also costly to arrange, they only tend to be taken out when a large sum is needed, say for a home renovation project or a wedding.
Unsecured loans on the other hand, are personal loans that have not been borrowed against an asset. The consequence of a missed payment for a borrower is limited to a bad mark on their credit history. Personal loans are quick to arrange and often involve minimal fees.
Lenders tend to charge more interest for this type of borrowing because they face more risks. For this reason, unsecured loans tend to be used when a smaller sum is needed, say if you just need a few hundred pounds for a new laptop or extra money for a holiday.
Personal loans vs credit cards and overdrafts
Credit cards and overdrafts are other types of unsecured personal borrowing. They tend to be used by young people with less earning capacity. The main difference between a personal loan and a credit card or overdraft is that a personal loan requires the borrower to stick to a specific repayment schedule, while an overdraft or credit card will only demand minimal amounts of interest to be repaid.
A clear repayment schedule means that a personal loan will be repaid by the end of the loan term, while borrowing on a credit card or overdraft can result in a debt that carries on indefinitely. There is a great risk of your debt snowballing with credit cards and overdrafts as it takes financial discipline not to borrow more and more.
Whatever loan product you decide on, make sure it matches your financial circumstances and that you borrow only what you can afford to repay each month. Build a strong financial profile and you will be rewarded with cheaper and better deals in future.
Featured image by Imagesource.com
Have you found that when you are traveling, life is much simpler? This isn’t a “no email or phone” thing. When I travel for work, I’m still on my computer and phone. But I might check my email 2 or 3 times per day and send any responses then. I’ll log onto my computer in the afternoon to work on a few things before dinner. Yet at the office, I find myself checking email almost constantly, checking my personal gmail on my phone at every break, answering every single phone call and text immediately, thinking about what needs to get done next and generally not moving through the day with deliberate thought. Instead, it’s an overactive state that ends up in no real action.
That kind of overstimulation is exhausting. At home, the TV is always on. We have family staying with us for a few days who are glued to the TV whenever we’re home, and my husband is also someone who likes the TV on as background noise. I prefer silence. I can usually find silence very quickly when I travel. But home often feels like: BUZZ. BUZZ. BUZZ. Anywhere I look there is something to do: dishes to wash. Clothes to put away or wash. A big pile of clutter.
No matter where or why we are traveling, we pare down to the necessities. Only the clothes you’ll wear. Only the book or two you’ll be reading. If you’re staying in a hotel, open the bedside table’s drawer and marvel in its emptiness (and maybe a Bible). Having just returned from two weeks of simple, enjoyable travel, it makes me wonder why my bedside table is stuffed with a bunch of papers I don’t look at, old knickknacks, and, inexplicably, my husband’s high school varsity letter? What the hell? In my ideal world, there is one book and a lamp on this table. The drawer should be empty, because as I rifle through it, I find nothing useful.
When we travel, our actions are pared down, as are our possessions. In daily life, I find myself making many unnecessary moves (overchecking my phone and email, letting errands take up an entire day), and not making the effort to reduce our existing stuff. But I believe there is a route to sanity in daily life, it just requires something I have never done before. I need to get rid of all the stuff that no longer has a useful, regular purpose. There are three main categories where I see this in my life:
- Clothing, shoes and personal accessories
- Papers and Knick-knacks
I don’t need to live on the road, I love having a home. But that home shouldn’t feel crowded or it takes away from its beauty as “object that provides shelter”. We have a large walk-in closet, but it’s filled with stuff we (mostly I) don’t use. If we got rid of a lot of that stuff, we have a space big enough to do something else (work desk, hideout, meditation room). I have probably 8 large boxes of books. But I am not sure I need those books anymore. Once I have read them, maybe I can give them away? Maybe I can start a little library at a community center. I am tired of being weighed down by stuff. That’s not to say all our stuff is useless. I use our blender at least 3 times a week for smoothies. I wear my workout clothes for tennis, hiking, yoga and everything else active regularly. Our couch is a place for us to wind down and chat at the end of the day, and where guests can feel welcome. And we don’t have any dishes, glasses or cutlery that we don’t use all the time. I’m not looking to get rid of everything, but I think there are a lot of things I can do without.
Within about 60 days of each other, we bought a condo and got married. When I told people these two items, their reactions ranged from active discouragement to frantic worry. No one thought it was a good idea, not even my then-fiance, although he supported me and said we should go for it if I wanted to. But now that the wedding is over and we’re adjusting to our new place, making the changes we need, the same people are proclaiming that it was a great idea. How nice to take care of both at the same time, now you two can begin your life together! Of course, our lives have been together for quite some time, but I agree. We’re not recently married and in the pain of real estate buying as first-timers. And we’re not first time owners trying to save enough for a big wedding that’s coming up. It’s done. The “wedding spending wormhole” as I like to refer to it, has closed in our universe and migrated to another unsuspecting couple who can start shelling out cash for food, beverages, invitations and all that stuff I am still in relief to be done with.
Weddings are a popular topic for personal finance bloggers, with lots of us on our 20s and 30s and either have had a wedding, plan to have one, or plan to have none at all or something small to forego spending thousands on a single day. If we’re not having the wedding, we’re invited to weddings, so we’re all familiar with the expenditures surrounding a wedding. In our case, it was a big deal but it also wasn’t a big deal. I didn’t have guilt about spending too much or too little, and I didn’t do it to please anyone else. We had our own reasons for having our wedding and I am happy we did it. Strangers, family, friends and popular culture all have their opinions on weddings, but that shouldn’t be the end-all reason for why your wedding is the way it is. Make it personal and memorable and all the “10 Reasons Your Wedding is Lame” posts in the world won’t change your mind. Going small and intimate? Enjoy. Doing larger-than-life and hiring Martha Stewart as your wedding planner? Go all out! It’s fun to see people’s personalities in their wedding, it’s a step away from our everyday interactions and a way to mark a moment in time. We want to be conscious and aware of each moment in our lives, but most of us are not. Weddings remind people of the ones they love and what the value in their own relationships and marriages. We had a couple who attended our wedding get engaged immediately after, thanks in small part to the “super romantic” weekend they had at our wedding (her words!) and that has given me so much joy. I’ve already sent her my budget spreadsheets.
And I stumbled upon our condo a few months before the wedding. I wanted to hesitate. But I also knew that it was within reach, something that I had been trying to figure out for years. Did I wait and hope for another unit a few months after the wedding? What for? We had the down payment, it was in the right location, most units in the same price range were depressing and dark. This had light. Windows! A skylight! Other financially compelling reasons! So yes, there were some sleepless nights as I wondered how we would pay for it all in the past few months, but today, I am excited about what’s next.
Have you ever gone on a vacation only to return to an exorbitant credit card bill? I know I have! You almost need a vacation from the vacation you just took! Your stomach sinks and you feel completely sick. Well, keep these tips in mind next time you’re planning a get-away and you’ll come home relaxed, guilt-free, and with money in your pocket!
1. Don’t pay for a flight….EVER! My husband and I never travel unless we have earned miles ahead of time. It is extremely simple and all we do is rotate credit card offers. We sign up for cards with his social one year and the next year we use mine. However, I encourage you to be savvy with them. If you feel you can’t pay off the cards then DON’T sign up. It’s much better to use your own money that you’ve saved to pay for flights if you feel you could go into debt with new credit card offers. We always pay them off each month. Also, always sign up for the cards that will give you the biggest return. Southwest and Chase offer some great rewards!
2. Don’t park your car at the airport. This is an average of $13 a day for airport parking. And even if you go with a competitor and have a coupon you’re still paying for it. Why not ask a friend? Surely you have someone that would be willing to drop you off and pick you up! Tell them you will do the same whenever they need help and you can swap. It is just much better than paying an exorbitant parking fee. You’ll want to save that money for your vacation!
3. Bring Snacks. If you’re traveling with small kiddos, and you’re either flying or driving, you must bring snacks! Even if you don’t have children snacks for you and your spouse are always money savers. Apples, bananas, small individually wrapped almond butters, items like that, will save you tons of money rather than making costly purchases at an airport or even gas station.
4. Only bring carry-ons! My hubby and I have gotten into the habit of only packing carry-on luggage. To check a suitcase is $50 for both ways! That’s a lot of money! Pack smart and you won’t have to be price gauged.
5. Use points for hotel stays. You can also sign up for cards that offer rewards for hotel stays. I know the Marriott does one and I’m sure other hotels do as well. I did this recently for an upcoming trip. My friend paid $650 out of pocket and can you guess how much I paid? Nothing! Nor did I have to pay anything for my flight. All that I have to pay for is food and other activities we decide to participate in! You can really have cheap vacations where you actually feel free to spend a little money because you’re not weighed down by travel costs!
6. Buy food to eat at the hotel during your stay. Limit how many times you go out to eat and budget for those rare occasions. My husband and I went to the nearest grocery store when we went to Hawaii and bought lunch items and other snacks for when we got hungry. We also had a set budget and ONLY used cash on the trip. That way we couldn’t lose track and get carried away! The vacation really becomes a vacation because you’re not coming home with a huge credit card bill you can’t afford! The next time you plan a trip I hope you keep these tips in mind. Not only could you have a free vacation, but you could also end up spending significantly less during your trip! Now who wouldn’t want to come back to a relatively nonexistent credit card bill?