Feeling Financially Frail?

Are you thinking about finances? Do these thoughts bring stress and anxiety?

“YANA”

For the uninitiated this is modern speak for the old adage ‘you are not alone’ if you answer yes to these questions. There  is a lot of help available for the financially frail in the UK.

A reputable lender will make sure that you are choosing the correct financial product to meet your needs. Some of the thing you need to consider include:

1. Are you using the best type of bank account for your needs. Choose a bank that has wide access to free cash machines. If the account you are looking at has added extras, make sure that you are not double paying for those extras and that you meet criteria for any insurance policies that are offered.
2. If you have an account that will let you pay by direct debit or standing order,  it will take some of the stress away because you know that the payment will go out each month (if there’s enough money in the account) so you don’t have to remember to pay it. It is also worth checking out to see if you can get a discount for paying by direct debit, lots of companies do, especially the utility companies. You will also get itemised bank statements either through your mobile, computer or snail mail. When you are working out a financial plan statements are a must to being able to budget effectively.

• See if there is a reason for your spending, we all like a little bit of retail therapy, are you needing a lot of therapy? A counselor may be able to help if there is an underlying issue.
• Check sure which debt need to go to the top of the list to be cleared, for example rent/mortgage.

• Make sure your creditors are aware of your situation and keep them informed as your situation changes and make any payments that you can.

• Suggest an affordable amount to pay regularly to each creditor that is agreeable to you both, if necessary ask if you can extend the term of your debt.

• Tighten your belt and cut up the credit cards, then you can only spend what you have. Rather than do your weekly shop in one big supermarket, shop around, because they all have different offers and you may find that although tinned goods may cheaper in one the other may do a much better deal on fruit and veg. If you collect loyalty points, don’t forget you can usually use them on your shop too.

• Look for a little bit of overtime or other ways to boost your income. Clear clutter at car boot sales or eBay.

All at Sort Me My hope you found this post useful.

Floods, Insurance, Your Premiums and the Help Available

Flooding has caused catastrophe in the UK. The last few years have brought shocking headlines, alerting the nation to masses of people losing not only their homes, but worldly goods alike. Onlookers watch in horror, television viewers pass the news across to friends and then……. daily life takes over and all is forgotten. Those lucky enough not to live through floods have the luxurious ability to return home to a nice warm sofa and a choice of TV channels. For those affected, the nightmare is only just beginning. Insurance will cover any damage…. won’t it?

Unfortunately many families living in ‘high risk’ areas will not be insured for ‘natural disasters’. The cost to protect a property can be astronomical, meaning that many have no choice other than to ‘risk it’. This hardly seems fair, considering lives can be ruined, if not devastated by such happenings.

According to BBC News, a flood insurance fund is going to be created in order to help vulnerable people living in flood risk areas. The idea is to make insurance premiums affordable. For many, this will be a long time coming. Going back to the media, stories have shown families living in caravans for months, even over a year whilst they wait for their homes to dry out. For a family of four or more, this can hardly be a comfortable alternative.

Insurance is set to be capped for residents living in high risk areas and will be based upon council tax bands. The announcement made just yesterday shows that the government have sat up and listened to the people. The method created has been designed to provide an affordable solution that will not directly affect tax payers. This not-for-profit fund is named ‘Flood Re’ and is a concept in the making, hoping to be complete and open for business by Summer 2015. Let’s just hope the deal does not come too late for those residing near water.

Home insurance is a must for everyone. It is vital to protect your home and assets by purchasing buildings and contents insurance. Without these, individuals could find themselves facing torrential debt which is the last thing required when torrential rain clouds are darkening the sky.

 

Borrowing to Buy Essentials?

The title of today’s post says it all. Using credit cards and overdrafts to purchase the weekly shop is becoming more and more familiar within many households. Whilst this shouldn’t be the case, the harsh reality suggests it is with many families struggling to survive by the third week into the month. Let’s strip it right back and start by comparing supermarkets.

Where you shop bears huge impact upon the total at the checkout and researching the cost of individual products can be time consuming but could prove invaluable, especially when there is too much month left at the end of the money. We have found a fantastic tool that takes away some of the hard work. The trolley checker is a mobile application designed specifically with savings in mind. There are three easy steps to using this fantastic app:

Scan

One the app has been downloaded to your phone, visit the supermarket and choose products as usual. The only thing you need to do is scan each item before placing them in the trolley. The app is equipped for scanning barcodes and will tot up the total before reaching the checkout.

Split

Two sections are recommended. Green items which point to the goods cheapest in the supermarket you are currently in. Red items should be separated and paid for via a second transaction. These are the items that could be purchased cheaper elsewhere. The trolley app will let you know which items are green and which are red.

Save

Having paid for goods, a coupon of up to £10 could be redeemed if shopping would have cost less elsewhere. Not only is this facility useful for saving when it comes to prices across the stores, it allows budget users to keep tabs on their total spend. Many of us have completed a grocery shop then began panicking about reaching the checkout. This way, you will be prepared. If you manage to go over budget, see what products can be placed back on the shelf.

There are always options when it comes to ‘belt tightening’. Shops are clever and will place ‘bargains’ at the end of every aisle. More often than not, these are the goods we can all live without. Get ‘shopping savvy’ with the latest app and see how much cash you can save!

 

Borrowing to Buy Essentials?

On May 5th this year, BBC News reported that one in five households across the UK have borrowed money just to cover costs of food during the previous month. Described as a shocking revelation, it appears that despite government changes to the benefits system, working households are not better off as once predicted. So what are the reasons for this?

• Irresponsible lending by financial institutions in the past
• Irresponsible borrowing by individuals spending more than they could afford to repay
• An increase to the cost of living yet salaries remain static

Going back a few years, the methods of obtaining credit were plentiful and simple. Financial institutions were more than happy to deposit funds into a borrowers account based upon minimal checks. Why was this? The answer is simple. The rates of interest meant that annual profits for lenders had the potential to be huge. Guidelines have recently been tightened forcing creditors to follow a strict code of conduct that encourages responsible lending. Should you need to apply for a loan today, behind the scenes, the decision process is rigorous. Customers are now only accepted if they hold a squeaky clean credit file. Should this be any less than perfect, it could be that a secured loan is the only way forward.

Every household and individual residing there is responsible for ‘paying their way’. Ensuring monies owed is manageable is intrinsic to financial management and this all begins with education. In days gone by, many have applied and been accepted for multiple credit cards. Whilst it’s fun during the first big spending splurge, reality soon hits home when the begging letters come calling. Debt will soon spiral out of control and this is something many UK residents have endured, partly due to irresponsible lending.

It is without a doubt that the cost of living continues to creep up whilst the average annual wage has remained the same for two years running. This reason alone, surely has to be held accountable for many people struggling to pay for food. Families with a total income of less than £21,000 per year are having to borrow to survive. 57% of those who struggle have admitted that coping on their current income is difficult. Is this acceptable?

A typical weekly food bill, based on an average family totals £76/week. We are always being told to eat plenty of fruit, veg and wholesome foods. How can we when they continue to rise in cost…….?

 

UK Household Debt: The Ever Increasing Circle… Or Is It?

How Much do you Owe?

Do you ever wonder when debt became such a big issue? Are you aware that there is a National Money Education charity?

Out of interest, I thought I would look at Credit Action’s  website to see how household debt has changed since Jan 2006. Let’s see what I have found:

• Jan 06 average household debt £7,821. Average debt per UK adult £4,144
• Jan 08 average household debt £9,052. Average debt per UK adult £4,748
• Jan 10 average household debt £8,939. Average debt per UK adult £4,667
• Jan 12 average household debt £7,975. Average debt per UK adult £4,221

The household figure is based on debt that is not secured on a mortgage and the ‘per adult’ debt takes into account credit cards, motor and retail finance deals, overdrafts and unsecured loans.  There is a significant increase in these figures when taking mortgages in to account.

I have chosen to look at the data for every two years, but there is data available for every year since 2005 on the above website.

So what does this mean for us UK adults? Well, the average is variable for both household and personal debt, although there does seem to be a more or less consistent reduction in what we owe as a whole. We still need to be concerned about debt because these figures do not really tell the whole story; I mentioned in a previous post that when you are looking at national averages the figures can be somewhat skewed. When you think about it, there will be more people at either side of the average debt figure, some with no debt and others with tens of thousands of pounds worth.

If you find that you are one of the unlucky ones and are not able to manage your debt there are consumer debt companies that can help with finding the correct solution for your personal circumstances. In the mean time I have found some great money saving ideas. Watch this space for the series of posts on stretching your pound for your kids, home and garden.

Do I Need a Pension and Why?

Have you thought about yours?

Are you looking forward to a long, healthy and happy retirement? Are you planning for your twilight years? Or are you going to rely on the state pension? Do current budget restraints make planning ahead that little bit more difficult? For those of us battling with debts, a pension can sometimes be the furthest thing from our minds. It is however, important to think about such a cushion from an early career point.

The state pension was introduced in 1906, providing the over 70’s with 5 shillings a week. The age where you can receive a state pension has changed over the years and is currently set at 67, depending on when you were born. It is also worth noting, that retirement age is no longer the same as the age you become eligible for your pension.  In fact under the Equality Act of 2010 an employer is not allowed to ask a person to retire, unless they are physically or mentally incapable of doing the job and this can be proven.

Bearing this bit of history in mind, you need to consider several things when deciding whether to invest in an additional pension to supplement the state pension:

What age will you want to retire? If it is before the age of 67 it is highly likely that you will need a company or private pension.

Do you actually want to retire, or are you the ‘work till you drop type?’ According to the Telegraph one in ten pensioners are currently employed.

How much will you need to have the lifestyle you want for your golden years? Are you planning on pottering around your garden or spending the cold winter months living in sunnier climes? Obviously, the second option requires a well funded pension pot.

Will you need to sell your home to pay for care should it become a necessity in your old age? According to some research one in five 40 year olds think that this is a likely outcome for them, if you have an adequate pension you may be able to remain in your own home for longer.

What if I’m paying in to a company or private pension and my circumstances change? There are options available, that should be considered when your situation changes. With a company pension you can normally leave it in place and make no more contributions, transfer the pension to your new company or you can cash it in. If you have invested in a private pension, always take financial advice before making any changes.

At the end of the day, it’s down to personal choice either spending all your money living for today or investing in a future that will be financially secure.

Who is Financially Better Off – Pensioners or Young People?

Today’s economic climate tells a story that sees many working well into old age. Gone are the days of retirement at 60 and 65 for the majority. Ensuring your finances are in order at an early age is certainly the way to go in order to avoid future debt. Securing a private pension is become more necessary than ever.

Are you over 60 and believe that your income has risen over the last 8 years? Are you in your 20s and seen your income fall?

The Financial Times suggests that the answers to the above questions are most likely both yes. But what does that mean in real terms?  If you look at the graphs below taken from the Financial Times, you can see that poverty rates have been decreasing since 1979 for pensioners but increasing for families.  They go on to confirm that wages and benefits have not increased in line with the cost of living.

Let’s take a closer look at the pensioner poverty rates. Yes, they are decreasing, however at what cost? According to the Telegraph over a million pensioners now work. In real terms experts say that pensioners have seen their incomes rise by 2 to 3 % in opposition to that of the younger generation whilst middle incomes have witnessed a fall of 12%. Labour has been reported as stating that the wealthier pensioners may see some of their benefits becoming means tested. Their policy would see some OAP’s having to pay for TV licences and losing their winter fuel aid.

An independent think tank has suggested that 1 in 3 workers have not had a pay rise or  have had their pay cut since 2008. They suggest the reason for this is the more flexible job market encouraged by the decline of trade union membership and benefit reform. (Or maybe people would rather be in a job than out of one, fearing redundancy and so they take what is offered.) The changing job market has impacted the economic climate and, according to some has made the recovery more difficult. Past recessions have seen the need to create employment, where as in this recession unemployment rates have not fallen as severely as the disposable income of the employed meaning a lull in consumer spending that has lasted longer than ever before.

People are coping with the ever decreasing amount of disposable income by turning to loans and credit cards. If you find you are in this situation and its getting out of control there are comprehensive guides to   financial solutions available online.

To sum up: I think that older people may be financially better off but this is at the cost of their work free retirement years. Younger people are facing a tide of increasing financial pressure brought on by low wages and job insecurity.

Why choose Buildings and Contents Insurance for your home?

Do you have both? Do you need both?House insurance costs have fallen by 13% since 2010. Surprised? Many people are! Given the current economic climate, most products and services are increasing in price. There is a certain relief attached to finding this is not the case when it comes to insuring your most valuable assets. From a stereo system to the bricks and mortar of your home, are you correctly covered?

Our previous blog talked about the level of cover required when it comes to home insurance. This post highlights the two different types of insurance and how by having these correctly documented could save you having to investigate debt solutions in the case of an unfortunate event.

You can get standalone or combined insurance policies. (Some insurance companies now offer extra discounts if you take out other types of insurance with then such as motor, holiday or pet insurance.) The type of policy you would need, in part depends on whether you are a home owner or tenant. If you are a home owner, still paying on a mortgage, a policy covering the building is usually mandatory and you would have to ensure that you have an adequate policy in place. For the tenant, the landlord would usually have a buildings policy, but would not have contents cover in place.

Hannah Jones from a respectable comparison website is reported to have claimed that since they started to record insurance premiums in  2010, there has not been such a consistent drop in prices, because this year the reduction affects all 121 postal regions. Standalone buildings cover is now 7% cheaper and contents cover is now 16% cheaper. These are of course averages and you might find that your own insurance has gone up; this could be because of individual circumstances that are affected by the underwriting criteria of your insurance company.

An article in the Telegraph from 28 May 2013 the quotes Hannah as saying: “Competition among providers is continuing to drive down the cost of home insurance policies and it’s important that consumers take advantage of this.” This can be a painstaking task, either making contact with individual insurance companies or brokers by telephone or completing a quote on each company’s website. The most convenient way, is to log on to one of the many comparison sites. This means that you only have to enter your details once to compare a few companies at the same time.

This does not necessarily take in to account a combined policy, as I was unable to find any figures specifically for joint building and contents policies because these are usually provided on a more case by case basis.

With the falling prices of insurance, you may find that taking out both building and contents insurance is a more affordable option.

A final word, whatever method you choose to find your insurance provider, always remember to check the terms and conditions and policy wording of any insurance policy you decide to buy.

Home Insurance – Are You Covered for the Correct Amount?

Managing debt encompasses a wide range of issues, even down to how much you pay for house insurance. Being covered for the correct amount is imperative and here at Consumer Debt Solutions we highly recommend you re-visit policy documents to ensure you are indeed correctly covered.

The first thing to look at is the type of policy that you are going to buy. Is it a combined home and contents policy? What type of contents does your policy cover? Does it cover loss outside the home? Will your insurance company pay out for accidental damage?

In this blog I will look into contents insurance policies.  (Watch this space for an update on buildings policies.)

The Money Advice Service suggests there are 3 main types of content insurance that are subject to specific underwriting criteria by the insurance provider:

• There is no limit to the value of the contents of your house, and your insurer will pay the total cost of the items to be replaced or repaired. This is known as an ‘Unlimited sum insured policy,’ it is usually difficult to find this type of policy on a comparison site.
• When you provide the valuation of your property to the insurance company it is commonly referred to as a ‘Sum insured’ policy.
• Then there is the aptly named ‘Bedroom rated’ policy. As you would expect for this policy the insurer works bases their quote on how many bedrooms there are in your house. This can lead to being over or under insured, because although your house might have 5 bedrooms not all of them may contain play stations and high definition televisions.

To find the right type of policy for you, some insurance companies provide item value and policy requirement calculators.

When you have found the right sort of policy for the value of your stuff, you will need to look at the terms, is the policy New for Old or Indemnity basis? Do you know the difference? New for old is kind of self explanatory. However, if you have an Indemnity policy, your pay out could fall very short.  This type of cover will only take account of the current value of an item. For example, when you bought your top of the range 52 inch high definition wide screen television for £2000 when they first came out 2 years later the value is reduced significantly, but your insurer will not pay for you to replace the television with a new top of the range, they will pay the value of the actual item they are replacing.

To sum up if you check the terms of your policy before you buy, you should reduce the hassle when making a claim. When buying a policy on a comparison site remember to check the terms section of the actual company providing the policy, not just the terms of the comparison site.

 

Weird,Wonderful Ways To Watch The Wonga

Here at Consumer Debt Solutions, we believe in the power of economising and like to offer you hints and tips regularly, especially if you are feeling the pinch. Today, because every little helps, I am starting with words. I’ll get straight to the point. Keep reading for 4 ways to look after your pennies and turn them in to precious pounds.

1. Look for free software for your computer. There are now plenty of free programs like Open Office that are very similar in functionality and can be opened by most computers. There is a great list on moneysavingexpert.com that provides links to free software for almost any computer situation like anti virus software to programs that carry out your computer housework cleaning up any unused files.
2. Try and book days out, flights and travel on public transport in advance. If you use buses or trains to get to work, it may be worth considering a monthly pass because you will also be able to use them for weekend outings. Going toplaces like Blackpool can be made much cheaper by the purchase of tickets in advance. Always keep an eye out for offers on cereal boxes. If you cut them out and keep them you have them if you want to use them. I can’t count the amount of times I have seen a voucher, thought I might use it, then thrown it away because I forgot about it. After the tenth time of this happening I set up a folder to keep all my money saving vouchers in.
3. If possible avoid paying for insurance policies in monthly instalments. The credit charge is usually around 10% and if you have a poor credit rating some insurers cover the risk of you defaulting by increasing the percentage of the credit charge applied to your insurance. Always remember to shop around for insurance policies, because sometimes you can get a cheaper deal as a new customer rather than being a renewing customer.
4. Cook from fresh. I know it can be time consuming, but if you use your free software or go to the library and do a search there is plenty of quick and easy recipes available, and as with everything else, with practice, cooking becomes much easier. It may also be worth doing your shop at several of the big supermarkets (if you are collecting the points) because some are cheaper than others for certain items. For example fruit is usually cheaper at Morrisons than Tesco, but Tesco have a wider range of other products. 

We endeavour to continue helping when it comes to watching the wonga! Why not send us your money saving tips?