Financial Bad Habits Top 5
Many of us get into bad habits when it comes to our finances, as a result we end up needing to borrow more money to get ourselves out of trouble. Secured loans are one way to get a loan and to help solve the problem.
However let’s look at some of the reasons we get ourselves into trouble and need to borrow money. So what are the top 5 financial bad habits:
1. Living beyond our means
2. To many credit cards
3. Living for today - not tomorrow
4. Burying your head in the sand
5. Missing payments
With the cost of living increasing, it’s more important than ever to be aware of these bad habits and trying to do something about them. I thought it worth looking at each of these in a little more detail to see what they mean and what we could do about them
Living beyond our means:
Your earn £100 but spend £101. We all do it from time to time and wish we’d not bought XYZ. However consistently spending more than you earn is not a good thing. It means the only way to pay for ‘things’ is to borrow money or eat into savings. If you continually use savings, there will come a time where you run out, at this point you will then be borrowing money!
Keep it simple. Make a list of all your outgoings each month e.g. rent, rates, gas / electric bills, shopping etc etc. Then work out how much you earn each month. Subtract your outgoings from the amount you earn. What’s left is what we call the ‘disposable income’. This is the amount of ’spare’ money you have each month to spend on the nicer things in life.
Be careful and don’t spend more than your disposable income.
To many credit cards:
Don’t keep juggling credit cards. The temptation is to keep getting another credit card, use it, fill it up and then get another one without paying off what you already owe. If you only ever pay off your ‘minimum’ amount of your credit card, it won’t ever go away. Rather than spend more - think for a minute and try to pay off a little extra each month from your card.
Living for Today
It’s more fun to live for today i.e. spend money while you have it and enjoy yourself. However you need to put some money aside for a rainy day or emergency. What if your car goes wrong and you need to fix it. With no spare money you will end up borrowing or using a credit card. This then simply adds to the problem. Rather than spend - why not stay in every other weekend, save some money! This way when you do go out you can enjoy yourself more, knowing you’ve got spare money to enjoy life.
Burying Your Head in the Sand
If you do this, money worries simply add up. You might like to consider help. A secured loan will help clear your debt and give you more structure. It’s also relatively simply to obtain. However you need to get a handle of your finances before they build up and get out of control. Increasing interest charges or fees simply spiral out of control.
Talk to a mortgage broker, a secured loan specialist of even an IVA consultant for help.
Missing Payments
One major problem with missing payments is that it ‘can’ make your credit rating look bad. Try to always make payments when they are due. If you can’t, always try to let the loan / credit card company know. They are normally willing to help and would prefer for you to let them know rather than the hassle of chasing you.
If you do miss payments you will normally be charged a fee, therefore it’s in your interest to make payments on time.
We’ll keep giving you ideas about how to improve your finances. It can seem challenging when times are hard but there is help out there.
