Recently I have been receiving an inordinate number of enquiries from customers asking for advice on how to survive the credit crunch. It is because of this new influx of queries that I am putting together this brief guide as to what is the best action to take. However, before you read on, you must be aware that this is not a quick fix. A quick fix for the situation we are all facing simply does not exist. We live in a world where to borrow is the norm and to save is not, hence the current financial situation. In order to survive it will take a lot of adjustment, a lot of sacrifice and probably a lot of time.
One of the first steps to take if facing financial difficulty is to look at it for the problem that it is. Borrowing can be like a drug addiction, as the more you get into it, the more difficult it can be to get back out of and the more difficult it can be to stop. As such, the first step to recovering from debt is to admit you have a problem. Only by recognizing the situation can you seek adequate solutions. So before you go any further, you must "kick the habit" of borrowing. Only spend the money that you actually own and only spend it on the things that you really need. Deal with your obligations first and foremost. By doing this, you will feel better at the end of each month instantly and will grow to respect the true value of money once again.
The reason why people are finding the going tough at present is because they have been spending what they don't have and borrowing far more than they should. Things might be different if the markets were not so unstable but that is not the case. Borrowing is much more difficult now due to more stringent checks and if you find yourself in the position for a loan it will undoubtedly be at a higher rate.
So the very first thing you should do is make what is known as an income and expenditure sheet. This will detail all your income such as income from employment any tax benefits and allowances. In addition all your outgoings such as mortgages loans HP and credit card payments fuel costs such as electricity gas, and also food and other expenditure. Things that should be detailed on this list are things you have to pay and not things you don't have to pay such as going on holiday etc. If you follow this plan you will be able to reap the benefits soon enough and mark my words you will appreciate them far more if you do wait as you will be able to fund them without having to resort to debt to cover them.
Another thing to do is evaluate the outgoings that you have at present. Maybe you could change the mortgage you have for another that would better suit your present position. Now whilst I would never recommend an interest only mortgage over a long period of time, the savings in the short term could be a boon for you. You may find that your situation is not as perilous as you fist thought and the savings could be used to ease the pressure of the commitments of your other outgoings. Then, when you are more financially secure, you can change back to a repayment mortgage and continue on from there.
Another way of cutting down costs is to change credit card company. Although many credit card providers have bumped up their rates recently, they still offer good introductory rates to new customers with good credit history. Avoid misplaced loyalty to credit companies as they are only making more money off you the longer you stick with them.
As I mentioned earlier, and I in no way recommend this plan of action, you could lump all your bills together and consolidate them in the form of a secured loan or tacked on to your mortgage. For some this is a quick fix solution but in the long term you just end up paying back a lot more money because although your monthly payments will have decreased, the period of time that you will be making repayments will have increased considerably. Saying that, for some people the situation may have deteriorated that much that it is the only option available to them, and if that is the case, then it is better than losing everything.
In these days of increased competition between companies in the energy and communications markets it may be of benefit to you to check out your utility bills. Now everyone knows that making sure you turn your emersion off when you don't need it and switching off your lights will contribute to smaller bills but check out the competition and you may be surprised by the offers to be had. And the best way to go about this is to surf the net and see what you come up with.
But for some people the harsh reality is that they have reached the point of no return. No matter what option they may resort to, the fact is that they have got themselves into that much debt that there is really no way out of it. Now the cost of living would definitely appear to have increased but the simple fact is that some people have been borrowing way beyond their means and have not stopped to consider the consequences. They now find themselves in a position where that debt has finally caught up with them and they are helpless to do anything about it.
The most important thing that you can do when in this situation and normally, it is the last thing anyone actually does, is get in touch with your lenders. That means all of them credit card companies, finance companies and even your mortgage company. One of the biggest issues I have to deal with when helping clients out of situations such as this is the complete lack of contact the lender has had with the client. It is all well and good me speaking to the lenders on the clients behalf but if that is the first call they have had at the end of a long time trying to recover the debt then it rarely goes well.
So start by get all your statements together along with your income and expenditure and get in touch with the lender. Make sure that all your facts are straight be prepared and you should get the result you want. In addition be realistic, if you are supposed to pay the lender 300 per month don't think you will get away with 10 pm . Whatever you do decide to pay them make sure it is a fair distribution between all the lenders of your disposal income, failure to do this will result in them not accepting your proposal, in addition be prepared to tell them what you are paying other lenders so they understand that you are not short changing them.
You will need to explain to them why you are in the situation you are in, above all you will need to make an agreement to pay them something and that is best done from the basis of some sort of calculation, for example get your income and expenditure worked out, tell them what you can afford to give them and why. In addition try and give them some light at the end of the tunnel in so much as a proposal, once you have cleared one of your other debts you can start paying them more. You will find that this approach will make most lenders far more receptive to any deal you offer them. Remember all a lender wants is the prospect of a full repayment and if you can give them the assurance that this is going to happen in time, they will invariably work with you.
So to summarise, you need to change your spending habits, cut your costs down to the bare minimum you can do this by researching the things you have to pay for such as your utility bills etc. Also research you credit cards and loans etc to get your self on the latest best deals. Consider a remortgage or secured loan to consolidate everything. And finally if you are at the last resort get your debts together and start ringing your creditors and making deals with them, but do your homework beforehand. Above all lenders like contact lots of contact ring them before they ring you and you will be better off straight away.
One of the first steps to take if facing financial difficulty is to look at it for the problem that it is. Borrowing can be like a drug addiction, as the more you get into it, the more difficult it can be to get back out of and the more difficult it can be to stop. As such, the first step to recovering from debt is to admit you have a problem. Only by recognizing the situation can you seek adequate solutions. So before you go any further, you must "kick the habit" of borrowing. Only spend the money that you actually own and only spend it on the things that you really need. Deal with your obligations first and foremost. By doing this, you will feel better at the end of each month instantly and will grow to respect the true value of money once again.
The reason why people are finding the going tough at present is because they have been spending what they don't have and borrowing far more than they should. Things might be different if the markets were not so unstable but that is not the case. Borrowing is much more difficult now due to more stringent checks and if you find yourself in the position for a loan it will undoubtedly be at a higher rate.
So the very first thing you should do is make what is known as an income and expenditure sheet. This will detail all your income such as income from employment any tax benefits and allowances. In addition all your outgoings such as mortgages loans HP and credit card payments fuel costs such as electricity gas, and also food and other expenditure. Things that should be detailed on this list are things you have to pay and not things you don't have to pay such as going on holiday etc. If you follow this plan you will be able to reap the benefits soon enough and mark my words you will appreciate them far more if you do wait as you will be able to fund them without having to resort to debt to cover them.
Another thing to do is evaluate the outgoings that you have at present. Maybe you could change the mortgage you have for another that would better suit your present position. Now whilst I would never recommend an interest only mortgage over a long period of time, the savings in the short term could be a boon for you. You may find that your situation is not as perilous as you fist thought and the savings could be used to ease the pressure of the commitments of your other outgoings. Then, when you are more financially secure, you can change back to a repayment mortgage and continue on from there.
Another way of cutting down costs is to change credit card company. Although many credit card providers have bumped up their rates recently, they still offer good introductory rates to new customers with good credit history. Avoid misplaced loyalty to credit companies as they are only making more money off you the longer you stick with them.
As I mentioned earlier, and I in no way recommend this plan of action, you could lump all your bills together and consolidate them in the form of a secured loan or tacked on to your mortgage. For some this is a quick fix solution but in the long term you just end up paying back a lot more money because although your monthly payments will have decreased, the period of time that you will be making repayments will have increased considerably. Saying that, for some people the situation may have deteriorated that much that it is the only option available to them, and if that is the case, then it is better than losing everything.
In these days of increased competition between companies in the energy and communications markets it may be of benefit to you to check out your utility bills. Now everyone knows that making sure you turn your emersion off when you don't need it and switching off your lights will contribute to smaller bills but check out the competition and you may be surprised by the offers to be had. And the best way to go about this is to surf the net and see what you come up with.
But for some people the harsh reality is that they have reached the point of no return. No matter what option they may resort to, the fact is that they have got themselves into that much debt that there is really no way out of it. Now the cost of living would definitely appear to have increased but the simple fact is that some people have been borrowing way beyond their means and have not stopped to consider the consequences. They now find themselves in a position where that debt has finally caught up with them and they are helpless to do anything about it.
The most important thing that you can do when in this situation and normally, it is the last thing anyone actually does, is get in touch with your lenders. That means all of them credit card companies, finance companies and even your mortgage company. One of the biggest issues I have to deal with when helping clients out of situations such as this is the complete lack of contact the lender has had with the client. It is all well and good me speaking to the lenders on the clients behalf but if that is the first call they have had at the end of a long time trying to recover the debt then it rarely goes well.
So start by get all your statements together along with your income and expenditure and get in touch with the lender. Make sure that all your facts are straight be prepared and you should get the result you want. In addition be realistic, if you are supposed to pay the lender 300 per month don't think you will get away with 10 pm . Whatever you do decide to pay them make sure it is a fair distribution between all the lenders of your disposal income, failure to do this will result in them not accepting your proposal, in addition be prepared to tell them what you are paying other lenders so they understand that you are not short changing them.
You will need to explain to them why you are in the situation you are in, above all you will need to make an agreement to pay them something and that is best done from the basis of some sort of calculation, for example get your income and expenditure worked out, tell them what you can afford to give them and why. In addition try and give them some light at the end of the tunnel in so much as a proposal, once you have cleared one of your other debts you can start paying them more. You will find that this approach will make most lenders far more receptive to any deal you offer them. Remember all a lender wants is the prospect of a full repayment and if you can give them the assurance that this is going to happen in time, they will invariably work with you.
So to summarise, you need to change your spending habits, cut your costs down to the bare minimum you can do this by researching the things you have to pay for such as your utility bills etc. Also research you credit cards and loans etc to get your self on the latest best deals. Consider a remortgage or secured loan to consolidate everything. And finally if you are at the last resort get your debts together and start ringing your creditors and making deals with them, but do your homework beforehand. Above all lenders like contact lots of contact ring them before they ring you and you will be better off straight away.
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