Total amount of credit £80, duration of the agreement 29 days, rate of interest 292% per annum (fixed), total amount payable (in one repayment) £98.56. Representative 1281.8% APR.
Spring is upon us, and whilst most people associate "spring cleaning" with sorting out the cleanliness of their own domestic homes, at 247moneybox.com we'd like to extend that concept by providing you with some ideas and advice on organising your finances.
Many people believe that budgeting can be quite restrictive but having a budget and sticking to it can actually be a liberating experience. It offers you more freedom and a sense of comfort in the knowledge that you have taken the necessary steps to securing a financially healthy future.
Getting your finances in order is not as hard as it seems, especially once you have finalised a budget, including any online loan repayments. Here are some simple steps to get the process started!
Organising your finances can be quite a daunting task if you try to tackle everything at once. Much like spring cleaning your home, it's best to start on a smaller room and let the momentum carry you forward. Each bit of success will give you a sense of relief, increase your motivation levels and put you in the right frame of mind to tackle a larger task. Having a "task list" of financial matters that need your attention, or areas that need organising, can also be quite helpful in this regard. Crossing out tasks upon their completion can also fill you with a sense of achievement. For example, you could begin with something as simple as setting up an emergency fund.
Furthermore, be sure to allow yourself sufficient time to develop your financial plan. It is important to note that your financial plan will ultimately impact on your future so overloading your task list and forcing yourself to adhere to strict deadlines, as well as comparing yourself to others, can be counter-intuitive and inefficient.
Spending time organising your bills and receipts in a way that works for you can make it easier to quickly assess your situation and access financial information as and when you need it. This will also ensure the safety and security of any sensitive information you might have at home.
This should include your annual and monthly debits, such as your mortgage or rent payments, any loan repayments and all credit card statements. There are a variety of digital tools currently available in today's technologically advanced world. There is various software and apps that can securely store any paperwork or electronic statements you may have. However, do not be afraid to use something as simple as a filing cabinet or drawer if it is to your preference. This is about you taking ownership and control over your finances, so the system you create needs to ultimately work for you.
Budgeting is essential if you are to get your house in order, figuratively speaking. There are a large number of apps and budget calculators that can make it a lot easier for you to get a sense of your budget and ensure you stick to it.
Having arranged your financial statements in one place the next logical step is to do your own financial audit. You can do this by noting all of your outgoings and contrasting that with every stream of income you have. Assess this on the basis of a typical month, or if you are paid weekly you could narrow this down further.
Make sure you are honest with yourself and try not to forget anything. The things you need to list could be as small as your weekly shop or as large as your mortgage or rent repayments.
This exercise will help you quickly assess whether there is any room for saving or if you have any direct debits that are no longer essential. It is critical you track your spending as you progress throughout the month to help make sure you stay within the budget you have set out. This includes, but is not limited to, the following:
Having said this, the budget is meant to act as a guide rather than be restrictive. Certain months will naturally be more expensive than others and it is impossible to predict certain scenarios such as emergencies, so rather than pressure yourself into sticking to your budget exactly, ensure that you're constantly reviewing your budget as the month goes on. You may find you've over/under-budgeted in a lot of cases. If you track your spending habits over 6-12 months, you should get a more realistic picture as to what your average monthly budget actually looks like. Again, this is something a spreadsheet or certain apps or software can help you determine.
The budget should give you more clarity to your financial situation by highlighting your regular outgoings, but also more control to help you keep on top of them. Setting yourself calendar reminders or speaking to your bank to automate direct debits/set up standing orders will help simplify things and put your mind at ease. This will give you some peace of mind as the likelihood you will miss a repayment decreases.
Beyond this, it might be wise to try and arrange your key bills to all come out on the same date for ease, on your payday, if possible. This would help further simplify the process and ensure you are consistently spending within the confines of your available budget. Speak to your bank, utility companies, credit card providers and any other lenders to see if they can be flexible on your billing date and cycle.
Having this process/billing cycle streamlined will give you more insight and control over your disposable income from month to month, thereby making it less likely you will need to turn to your lender or the use of a credit card to make ends meet.
Having a large number of debts can be a huge burden when other key outgoings are taken into account. It is very easy for this to spiral out of your control if not managed well, so now you have more clarity on your income and expenditure, you should be in a good position to try and tackle any outstanding loans or credit cards you may have.
The first step is to split out your debts and figure out exactly how much is owed to each lender and in total, as well as how much of this amount owed is interest. There are a number of financial calculators available to support you with this.
If the interest or overall outgoings seem too high then it might be worth speaking to your lenders directly to negotiate repayment plans, consolidate your debts or even remortgage your property. Naturally, having a lower interest rate means you will clear more off of the principal amount owed in less time.
Having a clear picture of your debts can help you to arrange a repayment plan. A good way to streamline your repayments is to discuss the possibility of getting all of the repayments to come out on the same date/your payday, much like before. There are debt management plans available that can help you consolidate all of your repayments into one single outgoing, which will make this even easier for you to manage.
Another common approach to tackling a large number of debts is focusing on the loan that has the highest interest rate. If you direct your outgoings there first and clear the balance, then proceed to the one with the second highest interest rate (and so forth) it should help lower the overall burden in time. This is known as the "avalanche" approach.
There is a real sense of achievement from clearing your debts so be sure to set up goals and reward yourself when you hit them.
Having savings offers you peace of mind in case any emergencies should arise, but are also important if you have a goal in mind, such as buying a new car or taking the family on holiday.
Again, this is something you have complete control over and it should not be restrictive. Based on your income and expenditure, decide how much of your disposable income you would like to put away - this is why setting a target can be useful in maintaining your motivation to save.
Assessing your budget and trying to cut out expenditure that is not essential is a good way of getting an idea of how much money you are able to put away on a monthly basis. It will take time to reap the rewards but there is great satisfaction to be taken from knowing you have a "nest egg" to fall back on.
It's easy to forget to focus on your finances as life quite often gets in the way. The good news is that it's never too late to take some of these simple steps to help you work towards a healthier financial future, with or without the need for a personal loan.