"Debt Help Guide"
"Debt Help Guide"
Debt Free Survival Guide
Welcome to the Debt free Survival Guide, I sincerely hope you find it useful, informative and helpful. It has been designed to be easy to read but full of practical every day tips that will work for you no matter what your financial situation, that of the national, or indeed, the global economy!
Money doesn't grow on trees...
Remember how your parents used to tell you to “Live within your means?” or that “Money doesn’t grow on trees?” Well they were right! In life there are only two ways you can go with money; either you control your finances or your finances control you! Think about that for a moment. If you don’t have enough money, just how much control do you really have over the day-to-day running of your own life?
Have you ever been in the situation where you have had to work overtime or been forced to walk to work simply because you didn’t have enough money to put fuel in your car or catch the bus? Most of us have at some time or another, me included!
The idea of this guide is to give you some FREE, practical and workable ideas that will ensure you have a stress free relationship with your finances. And let’s not forget, money isn’t important………. Until the day you don’t have any!
If you take away one practical piece of advice from this guide that helps you in the future and prevents a slide into or an increase in debt levels, then it has been a success. Even better, if one or more ideas and tips help you get on your financial feet and stay there, it has been a GREAT SUCCESS!
If you find the guide useful, please tell all your friends where and how to download it and remember it is totally FREE!
Disclaimer
I do have to point out that in no way does this guide set out or claim to be a complete and comprehensive manual to get you out of debt or make you rich. There are no exaggerated claims contained within its pages, but you do need to use your own judgement in applying ideas, tips and techniques that are outlined within it. The author cannot accept any responsibility or liability for any loss, damage or legal implications that could arise from applying the same.
Getting started
The first and most obvious thing to do is look at your situation now. By that I mean work out a realistic budget for all the income and expenditure you have right now. The “Keyword” here is REALISTIC. Without knowing exactly where you stand financially right now you cannot assess your situation or plan how to improve it for the future!
It might sound daunting to work everything out and possibly even a bit scary, however it’s essential. It can be quite an eye opener to see just how much it costs you on a daily, weekly, monthly or annual basis just to survive in life! The good thing is, once you know the situation you are in it becomes much easier to try and do something about it!
For your benefit I have included a budget guide in the form of a spreadsheet. You will need Microsoft Excel installed on your machine to download it and use all the functions, but if you don’t have it you can always print a copy from the web page and simply write the details in.
Ensure that you are totally honest with yourself when completing it; otherwise you are simply wasting your time and will gain no benefit from the exercise. As an example if you normally put £20 – 30 of fuel in your car per week, err on the high side and put down £30 per week. If you don’t spend that much in any given week, having money left over will not be an issue. If however you don’t allow enough, it will very soon become one.
If your household insurance, car tax, TV licence etc have already been paid for the year, still include the monthly amount. If you budget for it throughout the year there can be no nasty surprises when it falls due for payment again! It’s also more sensible to budget monthly so your finances don’t “Yo-Yo” up and down at various points in the year.
If you get a bonus but it isn’t regular or guaranteed, then you shouldn’t include it as part of your average income. This figure should be what you are guaranteed as a basic minimum each week or each month after tax and National Insurance have been taken off, i.e. the amount you go home with.
Ok, so now we have a better understanding of what the budget needs and doesn’t need are you ready to begin? Let’s turn the page and start taking control of your finances!
You can open and use the “Debt Survival Guide” xml document which is basically a Microsoft Excel document. Once you have you will be able to type in your weekly, monthly or annual income and expenditure and see how the figures change the “MDI” figure which is the bit left out of your total income after you have paid all your bills, living costs and liabilities.
You can then see at a glance how the overall picture changes by amending the figures. As an example I have completed some random and imaginary figures. Try changing the weekly income amount from £212.00 to £252.00 and see how everything else alters. Now increase the car fuel allowance from £80.00 per month to £150.00 per month and again watch how it all changes.
Now you’ve hopefully got the idea of how it works and what’s going on put your own details into the form and find out just where your finances are right now. I almost guarantee you will be shocked!
Income and Expenditure
If you want to improve your circumstances after completing the budget planner (and most of us will) then you have to do one of two things. You either need to increase your income, reduce your outgoings or a combination of the two.
If you want to increase your income you can get a bit creative, don’t restrict yourself to stacking shelves at Tesco through the night. Although there’s absolutely nothing wrong with that if it’s what you wish to do, you could maybe let that spare room to a lodger, find a hobby that you really enjoy and find a way to sell products or services relating to it.
As an example, if you’re a keen photographer, why not offer introductory lessons? If you are creative and enjoy making craft gifts, why not find a way to market and sell them? If you already have a “Sideline” perhaps you can find new ways to reach an audience and market your products?
If you cannot increase your income for whatever reason, there is always the option to try and decrease your spending now you know where all your money is going. Remember though that you still have to be realistic about the levels of spending. It’s ok to say you can cut your shopping bill by £20.00 per week, but not always practical to do so.
Sometimes you can cut your costs simply by changing your habits slightly. Instead of going to the superstore and back in a taxi, it might actually be cheaper to shop locally and use the bus or even walk. Little changes can make a huge difference.
Unsecured creditors
If you have credit cards and loans etc you can work smarter to try and clear them. Work out which are the most expensive to service. Can you pay more off these in the short term to get rid of them and then pay the others off afterwards? Is it worth trying to re-finance to reduce the cost of repayments?
If you do look at any form of loan finance ALWAYS use a calculator to assess how viable it is and then look at your budget to see if the repayments are affordable. You don’t need to get bogged down in interest rates, APR’s etc. If you know the monthly repayment and the length of the term, that’s all you need. Simply multiply the two together and that is the TOTAL COST of the loan.
For example, if you borrow £10,000 over 5 years and your repayments are £250.00 per month, you can easily work out the total interest and charges by using this simple calculation;
5 years = 60 month
£250.00 x 60 = £15,000
Therefore in this example your loan has cost you £5,000 over the 5 year term
£15,000 (total repayable) - £10,000 (loan amount) = £5,000 (total costs)
You might think this is quite reasonable for the use of someone else’s money over the term and indeed if you take inflation and risk factors into account, it would seem so.
How would you feel however if the loan amount and term remained the same but the repayments were £320.00 per month? It’s ONLY an extra £70.00 per month, but the following example shows the level of difference it makes.
£320.00 x 60 = £19,200
In this example the total cost of your loan would be £9,200 and maybe not such an attractive proposition. In most cases you will get a nasty surprise over just how much the finance might actually cost you!
Cost savings
It may sound obvious, but shop around and look for bargains. The cheapest item may well not be the best buy, so you need to be careful where, when and how you spend to get the best deals. If you are looking at household electrical goods as an example, they will always be a premium price for the first year or so, but if you can wait and not buy on impulse there are normally great bargains to be had.
Remember how plasma screen TV’s were over £2,000.00 cash price for a medium sized screen when they first came out? After a while with competition in the marketplace and the economies of scale; companies were able to produce more, quicker and cheaper. Now you can pick them up in the supermarket for less than the cost of an old style TV set!
Cars are a big purchase item and there can be some similar sized savings to be had. If you buy an end of the range car for example you can often negotiate a great price as most people want the very latest model variation with all the frills and gadgets. You can get a new car that is only slightly out of date and often save thousands of pounds if you use your head.
Use comparison websites to see if you might be able to reduce things like your utility bills. If you think there are savings to be had, shop around carefully and make a note of where you see the best price. The most annoying thing of all is where you go to many sites and then try to remember where it was you saw that really great deal a couple of hours ago!
Ask friends, relatives and neighbours etc for their experience, but use it as a guide only. You must always use your own judgement in making a final choice. Try never to jump at the first offer you see. Impulse buying can lead to some serious loss of money if you’re unlucky and although you might feel great for a few hours or days, many such “Bargains” can look a lot less attractive in the cold light of day!
Do I really need it?
Not everything in life, purchases included, should be analysed to death; however it’s always a good idea to just ask yourself “Do I really need it?” or “Do I just want it?” before making a purchase. If the answer is you just want it and you can afford it, have saved the money and believe you deserve it, then why not? The act of just thinking through the buying process however can put the brakes on and sometimes stop you making a big mistake.
Again a car is the perfect example. Many people will take a job 20 miles from home because the salary is £3 – 5,000 more per year. However if you consider that Income Tax and National Insurance alone will reduce that amount to perhaps £1,980 - 3,300 it becomes less attractive.
Factor in the cost of financing the new vehicle, the tax, insurance, running costs, fuel etc it becomes even less convincing. Now think about the 10 – 15 hours per week you will be sat in traffic getting to and from the new “improved” job and the whole picture changes.
In such a case you would probably be better to work within walking distance of your home and take that evening job stacking shelves at Tesco!
By now you might be starting to get the picture, I’m not saying don’t buy that car or indeed, work at Tesco! If you want to and it’s right for you, do it. Just be aware that there are ALWAYS choices but not all of them are obvious all the tine.
Bank accounts
If your bank has high charges for their services, try shopping around. All banks are continually looking for new customers and will normally be glad to offer you introductory offers and bonuses. Don’t be fooled however by often useless extras like holiday insurance that you may never use.
Watch out for hidden charges. If you use a lot of cheques and the charges are £0.50 – 0.65 for every one you use, the costs can soon mount up. If possible, don’t pay a monthly fee for your account. The Post Office can offer accounts with very cheap rates and often no or low charges. Access is no longer a problem as you can get a cash card and benefit from online banking.
It’s always a good idea to have your main account and also a bill payment account alongside it. Every week or month when you get paid, transfer enough money to your bill payment account to cover all outgoings for the coming month (including your contingency fund if you have one etc) even if it’s not due to go out that month i.e. quarterly bills for your telephone.
Using this method of budgeting ensures there are always sufficient funds for all your needs and that you get no nasty, expensive surprises. It also means that you can determine from the amount (if any) left in your account, whether or not you are able to put anything into your savings.
Bank accounts, if used sensibly, can be a great tool in the battle against overspending and the accrual of debt. If they are abused, they can be a cripplingly expensive drain on resources! They are generally considered a necessity in this day and age, so the choice is yours!
Try to ensure you have a good idea of the balance on your account at any particular point in the month, so that again you can avoid nasty surprises. Online banking is a really helpful tool and generally banks try to promote it by offering it as a free service. Make use of it and it will pay dividends.
Negotiate, negotiate and then negotiate some more!
Never be afraid to try and negotiate a better deal than the one currently on offer. Every salesman will try to convince you that the value of their product or service is a true, accurate and fair one. Most of them however will be prepared to accept a more realistic price if they are threatened with the loss of business.
It doesn’t matter whether it’s a double glazing salesman at your house, the one at your local car showroom or the owner of the corner DIY store. Not all of them will agree to reduce their price for you so you have to be prepared to walk away if they don’t. The amount of times I have done so only to be chased across the store is quite amazing!
A lot of salesmen will use trickery to get you to sign. “It’s only the cost of a cup of tea per day” is a classic example. If you assume that a cup of tea is £1.20 and there are 30 days in the month, this equates to £36.00 per month or £432.00 per year. They want to make the price seem insignificantly small to tempt you, but don’t be fooled.
Often they will say that they can do you a better deal if you take the finance package. This is normally because the commissions for the highly overpriced finance are so exorbitant they can easily afford to reduce the price by a couple of percentage points! Again, get your calculator out! How many months? How much per month? Multiply the two together and see what you get. Don’t be fooled by their persuasive manner.
Generally there are two types of sale, reactive and direct sales. Reactive sales are where you go into a store or on to a web site etc and enquire about making a purchase. Someone will try to match the goods or services to your needs and take your order. In this sales environment the cost is normally considerably lower than in the direct sales environment.
In direct sales, you will normally be invited to view a demonstration or have a salesman come to your house etc to give you a quote. Make no mistake, in such cases you are about to be sold to. You may not take them up on the offer, but that’s what it’s all about!
With a direct sales approach you will normally be offered goods and or services which are not available on the high street, but you will normally pay more for them as someone has to pay the salesman’s commission and costs on top of the product price.
It is however easier to negotiate face to face with someone who has come on to your own territory if you have the stomach for it. Remember that you can turn your back on the deal and that salesman will never want to lose your business so you’re in a great bargaining position.
In a nutshell, what I’m saying here is, always get the best deal you can no matter what situation you find yourself in. It can be very rewarding (not just financially) to sit back and feel pleased with your new purchase because it made sense on every level and you managed through your own efforts to get a really good deal.
Mortgages
Your home, if you are lucky enough to own one, will probably be the single biggest purchase you will ever make. Be aware that your home should NOT be treated as a cash machine! What I mean is, don’t remortgage to release cash simply for a car purchase, to clear your credit card, pay for that holiday etc.
It may seem appealing to do so but there are some very good reasons why you shouldn’t.
a. For any amount you borrow on a mortgage you will pay back in the region of 2.5 times the original loan. This means that a £10,000 loan taken over 25 years on your mortgage will probably cost you £25,000 to repay
b. Interest rates can go up as well as down. Most people who take out big loans against their property only do so because interest rates are low and there is money freely available. We’ve all had a taste of what can go wrong with the recent “Credit Crunch” and the financial downturn it resulted in.
c. If you re-mortgage your home it’s very likely you will have to extend the term to keep the repayments low enough for your budget. Do you really still want a mortgage at the age of 85?
d. If you buy a car or holiday on your mortgage, they will be long gone and forgotten years before you ever finish repaying the debt.
e. You may think you own your home, but just try missing a payment or two and see who really owns it! I’m not suggesting that you really do stop paying by the way!!! But securing debt against the roof over your head is just storing up potential disaster for the future.
f. You never really benefit from any increase in the equity value of your home! Imagine for one second you live at number 2 Any Street, Any Town, which is semi-detached. Number 4, the semi next door, comes up for sale and is just a mirror image. The same size and specification, the same number of rooms and facilities, identical in all respects. The value is exactly the same as yours and you choose to buy it. Moving next door costs you £10,000 in Stamp Duty, solicitors’ costs, estate agents fees and mortgage costs. How have you made money? This is NOT a trick question, so just think about it for a minute!
g. IF you are able to double the monthly instalments (not many people can) on a normal repayment mortgage, you will have it paid off in a little over 8 years and save many thousands of pounds in interest payments!!! This is because, just like a credit card, the interest is calculated on the outstanding balance each month. Pay more off the balance and the subsequent interest payments are reduced accordingly. Why would you want to increase the level of borrowing?
h. Re-mortgaging your property devalues the equity stake you had in your home massively. Therefore if you were planning to downsize or move to a cheaper area once it’s paid off to benefit from the equity value, it will now be worth a lot less to you!
I can think of many other reasons why borrowing in this way might not be such a good idea and I’m sure you can too if you put your mind to it. What happens if your income reduces etc, but I think you get the general idea by now?
Car finance
Car finance is often a necessary evil, but consider the possible implications very carefully. It may only cost £250.00 per month for that brand new shiny love machine, however for many people that represents 25 – 33% of their monthly net income! And it doesn’t end there; you now have to tax and insure it. Because it’s in warranty you need to get it serviced and maintained by the dealership at premium rates. The fuel doesn’t come cheap either.
Once you have purchased your shiny new toy and driven off into the sunset, consider this: Your new vehicle which was maybe valued at £5,000.00 on the forecourt has probably just cost you double that with the finance. If you have taken it over 5 years, which is the norm, the chances are you will want or need another before you have finished paying for it!
The laws of physics however state that your pride and joy will depreciate faster than a Porsche 911 Turbo can take off! As soon as you drive out of the showroom you can estimate that 30% has been wiped off the purchase cost. Remember though that you now owe £10,000.00 in our example, for a car that has just dropped to a value of £3,300.00 – 3,750.00
When you analyse the statistics, car finance suddenly looks very depressing!
As an alternative, what you could do is buy a car for £500.00 in cash, which will only equate to 2 of the finance payments mentioned previously. While you are driving it, save the £250.00 per month that you would have been paying out. In 20 months (1 year and 8 months later), you can buy your car for cash and it’s yours outright. Your £500.00 “Banger” is likely to still be worth £350.00 or more so you could use it as a trade deposit against the new one and save even more!
At the end of the day, you pay your money, you take your choice, but I know which I’d rather do! If you just dare to think a bit different and not give in to peer or sales pressure, you can have a stress free existence and be a whole lot more financially secure.
Property rental versus purchase
Most people will always advocate buying your home rather than renting and quote many reasons; rent is dead money, it will never be your own, you can do what you like with your own home, your home will become your retirement plan etc.
Now I’m not about to say you should rent not buy, far from it, but be aware of the choices, the implications and what might be best for you personally. Home ownership is a great ideal, but for many people not a practical reality. If you cannot get a mortgage on 3.5 times your wage ONLY, the chances are you can’t really afford it.
Let’s explode some of the myths above shall we?
a. If you rent you generally pay a similar amount to purchase, or a little less. What you do find however is that you have no maintenance costs or worries, assuming you have a reputable landlord. Buildings insurance can be very expensive, as can repairs if required.
b. As previously stated the house is never yours until you have made EVERY payment.
c. Once you own a home you are bound by planning regulations if applicable and financial constraints as well as the time implications. I have a friend who spends all his weekend knocking down walls, building new parts, re-roofing things and doing general repairs. This has been ongoing for the last 4 years and there still seems to be an endless amount left to do, so I empathise with him from the golf course or the football stands as I relax away my weekend! Again it’s a lifestyle choice.
d. Assuming you never re-mortgage, your income continues for the term and everything goes according to plan, your home that you have put all your time effort and money in to is now a business asset that you need to liquidate for your retirement. You are likely to be at or near retirement age and your income may well be in or about to decline. All the other properties in your area have gained in value at the same pace as your home. If you sell it and downsize, move to a cheaper area or rent, you may get some value out of the equity you have amassed, otherwise it will be of no benefit whatsoever. If you need to claim a state pension or any benefits, your entitlement will be affected if you have savings over £8,000.00 If you need to be cared for, the money will have to go for that. If you need to rent from the council you will lose any entitlement to things such as Housing Benefit or Council Tax Benefit etc.
Once again I am not advocating that everyone hands back their keys and joins the queue for a council house, nor am I suggesting that they shouldn’t buy, I am merely stating that the decision is not always as clear cut or beneficial as certain people would have you believe; mainly the ones lending the money and or selling the properties. THEY are the ones who really stand to gain from any such transactions!
If this sounds a bit of a cynical view that’s probably because it is! I’ve had years of experience and eye witness accounts of the misery that can be caused if and when things go wrong. IF you are sure that buying is the right choice for you and affordable, then I would say unequivocally, do it! Just make sure you do so with your eyes wide open and not with your vision tinted by rose coloured glasses!
Employed or self-employed?
For many people the ideal of being their own boss is too much of a temptation not to go for it. This is absolutely fine if the circumstances suit you, but once again can be a minefield and you should be aware of some of the main potential pitfalls before making your decision.
Many people fail to understand their true income level when they are self-employed and to demonstrate I’ll use the example of a previous client called “Mr. M.” He had his own business which on the face of things seemed to be doing well. He had a mobile book club and would take examples of his stock into local businesses and leave them for a few days with an order sheet.
He would return, pick up the order sheet and the money and deliver the items from his van. This seemed like a good model and he was always busy. One day he called my company and asked for help as he had no idea why he was “drowning in debt.”
When I assessed his case I found that he had no assets whatsoever. He was in fact living rent free in his girlfriend’s apartment. He owed £96,000.00 on personal credit cards and loans. Now that is a huge sum of money for anyone to owe as unsecured debt, but he had no assets to show for it remember!
He had a Mercedes “Sprinter” 2.0 litre diesel van, but that had been bought with one of the loans. Because of his predicament his stock had dwindled to virtually nil and he said, “I really can’t understand it, I’m earning good money. I make about £2,500.00 – 3,000.00 per month.”
When we looked into things a bit deeper, he was actually TAKING that amount of money as his gross, out of which he had to pay for and run his van, buy his stock, pay for his meals while he was out doing his rounds etc. Even without rent, his living costs and business expenses completely wiped out his income WITHOUT allowing for any repayment to his creditors.
One of these was an MBNA credit card with a balance of £14,500.00 (now I’m not singling them out for criticism as I have the same contempt for most of these companies) and was paying £235.00 per month. Remember he had already accounted for every penny of his business turnover! The only way he was able to “pay” anything was by getting deeper into debt and “robbing Peter to pay Paul.” He was using one credit card to pay the next, which then in turn paid his loan which had left him overdrawn at his bank, etc.
Out of the payment he was making, which was the minimum required, only £18.00 was coming off the balance! Interest alone was approximately £150.00 per month and he had Payment Protection Insurance that made up the difference of approximately £70.00 per month.
Payment Protection Insurance cannot and will not pay out to self-employed people! If ever there was a classic case of miss-selling, this was it! In certain cases, Payment Protection Insurance can be a valuable asset, but you really need to check EXACTLY what you are going to get very carefully before signing.
Self-employment can be very lucrative, rewarding, enjoyable and challenging. You MUST go into it with the right mind-set and a little knowledge of what you’re hoping to achieve and the belief you have the ability to make it happen. There is never a “right time” to start a business, there is ONLY NOW!
0% interest finance agreements
The first question here has to be “What’s the catch?” By now I’m sure you’ll have realised there ALWAYS IS ONE! Imagine for a second you want to go to a nationally renowned soft furnishing outlet signified by a three letter name. You find exactly the right furniture for you and the nice salesman says you can, “Buy now and pay later” in fact you don’t have to pay until a year later.
Sounds great doesn’t it? Well that’s the whole idea! If it sounded like it was tying you in to a very expensive credit agreement over a long period of time you might not be just as keen! The trouble is, for the vast majority of people that’s just exactly what it does do.
0% interest for a year normally refers to a “Deferred Credit Agreement” which gives you a payment free period for a specified number of months. IF and ONLY IF, you manage to pay off the finance IN FULL within this time period, you won’t pay a penny in interest. Normally though, if you go even ONE DAY over the limit, you will pay a very heavy price.
This is because with such an agreement the interest is only suspended for the duration of the initial term, but is still calculated in to the overall payment amount. The interest for deferred credit is invariably more than for a normal agreement and it’s often the case that after the initial period has expired; it will be “Backdated” to day one!
This means that if you take out a five year term with one year interest free and fail to clear the full balance in the first year you would have been much better off taking out a normal loan! The attraction may well be that you can’t really afford the payments now with your other commitments, but does that make it the right choice?
If you can’t afford it now, what makes you think you will be in a better position next year? A year is a long time and many people forget to factor in the new payments when they’re due to start, possibly taking on more commitments in the meantime. This is a recipe for disaster. Just like the earlier example about the car finance, if you are three or four years down the line sitting on a dilapidated sofa that’s worth no more than a weeks’ shopping, but still have £2,000.00 left to pay, how do you think you might feel about the sofa salesman’s advice at that point?
Be very careful before taking on such a commitment. The best way to use this kind of product to your advantage is to make sure you have the full cash purchase price of the goods in your savings account. Set up a direct debit or standing order from that same account to make the monthly payments. You will still be gaining a small amount of interest every month from the balance on your savings and at the end of the first year, the goods will be paid in full at a bargain price using someone else’s money.
Once again, the choice is yours, but I know which route I’d rather go down.
0% balance transfers on credit cards
As in the last example, the question once again is, “What’s the catch?” Well it’s a very simple one really, the credit card companies have scrutinised buyer behaviour for a long time and over millions of accounts, they know exactly how the majority of people will react to such an offer and how to capitalise on that behaviour!
If you owe £2,000.00 to company “ABC” on a credit card and are paying 16% interest, when company “XYZ” come along offering a 0% balance transfer, most people would jump at it. But why are they being so generous? Or indeed, are they generous at all?
If you transfer your imaginary balance of £2,000.00 there will be no interest charged ON THAT BALANCE AMOUNT and normally the offer will be for a specified period of months. Normally the rate that you revert back to at the end of the introductory period is at least as much, if not more, than your original rate with the previous company.
ANY FURTHER BORROWING will be charged from day one. So if you were at your maximum with the first card and on doing the transfer your balance increases to say £3,500.00 or even £5,000.00 the minute you begin to go over the £2,000.00 threshold you will be charged full interest on the difference! Six or twelve months can go by very quickly and MOST PEOPLE who do such a balance transfer now find they have an even larger credit card balance with more interest being paid every month.
The way that ANY credit card works is by charging you interest calculated on the outstanding balance at the end of the month. The more you owe the more interest you pay. What most people fail to realise is that IF you are in a position to substantially reduce or clear the balance every month it can be a really cheap, effective way of borrowing.
The main problem and temptation comes with the ease of use and the lack of commitment when making a purchase. What do I mean by this is? As an example, try imagining that for your purchase you had to open your purse or wallet and take out nice, new, crispy £20.00 notes which you have worked hard all week for. It would make you think about the cost of purchase far more than handing over an innocuous piece of plastic. Think about that for a minute and I’m sure you’ll agree.
So are 0% balance transfers a good thing or not? Generally no! IF you get to the point where you feel the need to take one of these offers out, I would suggest that the rot has already set in and you have lost an element of control over your finances. Why is there a balance left at the end of the month to need transferring? If you pay your card off as soon as you get the bill you will NEVER PAY INTEREST and surely that is the best way you can ever use a credit card.
The moral of the story once again is “be very careful” about the way you manage your money.
Education and finance
Education is always a topical conversation point and is one of the most important things we can offer to future generations. It’s great that so many students take their education seriously and the results of recent years have been generally worthy of much praise with record numbers getting good “O Level”, “A Level” and Degree grades.
Many students however are ending up tens of thousands of pounds in debt after going through the education system. Once again I am NOT advocating that people should flunk out of the system early and go into a menial job. That is the very last thing I would ever suggest! However, when considering the reasoning behind further education you would do well to evaluate both sides of the argument first.
A good, classic education CAN offer the student a great head-start in the jobs market and POSSIBLY increase their earning potential significantly, but there is no guarantee that it will. How many people do you know that have a decent degree qualification which bears absolutely no relevance to their occupation? Personally I know hundreds who would fit the bill or possibly thousands.
When a student goes to university, they often don’t know which career path they will want to choose, but naturally enough take the subjects they excel in. This can lead to a great degree result in a subject they will never put to good use. I know of one man who had two degrees in art and science, 5 “A Levels” and 10 “O Levels” but couldn’t get a job! He was “over-qualified” whatever that might mean?
Generally it seems to mean that the managers and directors at his prospective new employment saw him as a threat and or believed he would command too high a salary because of his qualifications. Now he is self-employed as a landscape gardener and is very content with his lot. His life has turned out well but not BECAUSE of his education, it was actually IN SPITE of it!
When deciding what you want to do, remember you can always go to work and attend college or distance learning to further yourself but be earning at the same time rather than amassing debt. You can also sign up for a modern apprenticeship and learn through college and practical work experience. There are many vocational training schemes etc and these all provide choices over how you try and establish yourself in the workplace.
If you work for 3 years as an apprentice and then qualify for a guaranteed job at the end of it at a decent salary level without running up debt, perhaps it might be a more sensible choice for many than going to university and ending up £10,000 – 30,000 in debt with no guarantee of employment.
Once again, don’t be “sold” on the idea that you must go to university and get that doctorate, but if it is the right thing for you and you have weighed up all the alternatives, risks, benefits etc, then go for it! If not, just remember you always have a choice!
One final note of caution is that due to record numbers of degree qualifications and financial cutbacks in the jobs market, it gets harder each year for a graduate to walk straight in to a well paid, top job.
Copyright Mick Courcier - Independent Debt Adviser
18/09/2009
