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Bannvale Credit Union |
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51 Main Street |
Telephone - 028 25 821001 |
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Beat the Credit CrunchWith Budgeting Advice from Bannvale Credit Union Ltd Pick up a leaflet in either of our branches for information and advice!
Free
yourself from worry OVER DEBTS
Plan
ahead for a stress free Christmas!
Let
us help relieve the headache of Financial worries Pick up a copy of our Credit Crunch Survival leaflet Now! Think before
taking on new commitments Most people fall into debt through no fault of their own -
often as a result of redundancy, illness or relationship breakdown etcetera. But
it may be that you simply took on more credit card borrowing or interest-free
loans than you could afford to repay. If so, resolve to do things differently in
future. Having an up-to-date budget showing your income and
expenditure will show what money you have available. Check carefully to ensure
that any new commitment really is affordable before you sign up for it. Better still, try to save up for the things you would like
to have. Don't buy on impulse. When it comes to the wise use of credit, being able to
afford the repayments is not the only consideration. It is also important to
match the repayment period to the 'useful life' of the thing you are buying. For
example, if you are taking out a loan for a holiday, you don't want to be paying
for it in 3 years time! Secured and
Unsecured Loans One of the main factors in determining the rate of
interest you will be charged when you borrow is whether your loan is secured
against one of your assets - usually an item of significant value e.g. your
house. If you fail to repay, the asset can be forcibly repossessed by the lender
or at least they can make you sell the asset so that the amount can be
reclaimed. A secured loan is when you offer such an asset as security
to the lending organisation. The advantage here is that you will pay a much
lower rate of interest than with an unsecured loan. However when balancing this
out against the fact that you may lose your home if you fail to repay, the
disadvantages can be huge. Savings Open a separate
savings account where you can save for upcoming expenses e.g. Christmas,
holidays etc. Using
Credit Wisely Overdrafts If you need to temporarily overdraw, it is essential that
you get approval from your bank before you do so, to avoid higher interest rates
and charges for unauthorised lending - typically £25. Credit Cards
Store Cards Store cards work in the same way as credit cards but
usually attract a higher rate of interest. Unless you receive other valuable
benefits from having a store card, you would be best advised to steer clear. Interest Free
Credit Hire Purchase The main difference between other forms of borrowing and
hire purchase is that with other forms of borrowing the goods belong to you
straight away, whereas with HP they become legally yours only when you have
finished paying for them. If for some reason you stop paying for the goods, they
can be repossessed if you have paid less than one third of the total or you can
be taken to court to pay the balance. This form of credit is usually more
expensive, also if your circumstances change for the worse during the agreement,
you may lose both your goods and the money you have already paid. Many people who buy goods through catalogues pay for the
items they purchase on a monthly basis. The risk with a catalogue is that during
the time you're paying for the items you already have, a new catalogue will
arrive and you will be tempted to buy items you don't really need. Budget AdviceBudgeting gives an accurate picture of your financial positionBudgeting
also helps make money go further. Budgeting,
where necessary, can help to get you out of debt. A
budget can be a very effective brake on large impulse spending. Budgeting
can help prevent the running up of debts to the point where payments are no
longer affordable. A
budget can help to reduce stress levels. Evaluate your standard of living. Using credit to finance your standard of living exposes you to enormous risks. As millions of people have eventually found out to their cost, there are no longer many, if any, guaranteed jobs for life. When evaluating how you live you need to think about what you would do if your circumstances changed dramatically. Develop some form of cushion to help cope with a negative change in circumstances rather than spending to the limit. Set out your financial goals - these may include such things as a pension, savings accounts for the children, etcetera. Bear in mind that all your goals will not be achievable immediately, but you may need to start planning for them now. When you are thinking of buying something that is non-essential ask yourself whether it is something you or your family really need or whether it is something you just want. Don't
be afraid to haggle over prices, especially if you are paying cash. A cash
customer is in a much stronger position to bargain than a credit customer. Staying
in control Keep
your own accounts and always check your bank statement Budget
for irregular bills and expenses Use
direct debits which may give you small discounts Educate
your family about managing money - it could save you much heartache Start
a regular savings plan - no matter how small the amount Seek
help immediately if debts start to build up. Preparing
a Personal Budget Having a budget that details all your income and
expenditure will help you to maintain control of your finances and, if
necessary, help to illustrate the problems you may be having meeting your commitments.
Keep a record of everything you spend money on to complete
an accurate picture of your monthly expenditure. Make a conservative estimate of
your annual income and divide it by 12 to get a monthly figure. You also need to work out expenses that do not necessarily
occur every month, such as insurance, holidays, car repairs, vet bills etcetera.
Estimate how much you spend on these each year and then divide by 12 to
determine your monthly cost. If the difference between your income and expenditure is a
positive amount, you have a budget surplus and have money
to pay towards your other financial commitments. If, however, you have more
expenditure than income, you have a budget deficit and
will need to make changes to your spending habits to find money to meet those
commitments. Evaluate and reduce your spending to increase your budget surplus.
Once you have identified the areas where substantial
reductions can be made, you will need to think of ways to actually achieve your
goal. Below is a list of ideas to help you get started: Transport
- do what you can to use one car and perform routine maintenance yourself. If
you are going to town try to use public transport. Utility
Bills - make sure you are with
the cheapest supplier for gas and electricity. Food
- prepare packed lunches for work and school. When purchasing food prepare a
list and stick to it. Try to use money off coupons from papers and magazines
where possible. Clothing
- plan your spending in advance and do not over purchase. Insurance
- shop around for the best deal and make sure you only get the cover your family
really needs. Entertainment/Recreation - draw up a list of things you and your family can do in the vicinity of your home that are cheap or completely free. Try to stick to a limit on spending money and holidays and book accordingly.
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