Debt

Step by Step Guide to Paying off your Debt

Being in debt can be really miserable and can make life extremely stressful. Sometimes it can even feel like you will never be clear of your debt and that you will just have to keep borrowing more and more money to manage. Luckily there are ways that you can clear your debt and the sooner you start the better.

You may find that in your local area there are debt counsellors that you can see for free. They are experts trained to help people just like yourselves in getting out of debt. They will not judge and will be used to seeing all sorts of people with different financial problems and can be extremely useful in helping.

If you would rather look at things yourself then you need to start by gathering together all of your financial information. You need to work out how much you owe and how to, how much money you have coming in and how much you usually spend. Then you will be in a position to start dealing with things. This can be a hard step as you have to face up to exactly how much you owe, but it is worth it in the end.

You will then need to decide which debt you would like to pay off first. It makes financial sense to pick the most expensive and get rid of that but many people prefer to do the smallest as then they can get something paid off fairly quickly which feels great and motivates them to move on and do the next. It is up to you to pick the one you think you would like to get rid of first. Make sure that you then check whether there are any charges for repaying the debt early. These are called early redemption fees and tend to be common on mortgages and car loans, but it is worth checking all of your loans as the fees could be so high that you may calculate that you are better off not repaying early. You may also be better off not repaying student loans as the debt will be written off at the end of thirty years so you may not pay it all back anyway.

You now need to think about where you will find the money to repay the debts. If you have money in a low interest savings account, then this is best used to pay off debt that has a higher interest charge. It may feel scary no longer having any savings, but you will save so much money and feel so much better if you can pay off a chunk of debt this way.

You should also look at the difference between the money you have coming in and what you spend. If you have some left over then you should be using this to pay back the debt. Whether you have quite a bit or very little, it is worth looking for ways to get more so that you can pay the debt off more quickly. You can do this by seeing if you can earn more and spend less.

There are plenty of different things that you can do to achieve both of these. It is just a matter of considering what you are prepared to do. It is worth focussing on your goal of being debt free and remembering that the life style changes that you make may not have to be permanent. Once the debt is gone, then as long as you do not accumulate more debt you will be able to ease up a bit.

It is worth thinking about whether you have the time to see if you can earn extra money, perhaps by doing more work, setting up a business, selling things or doing some freelancing. There are many ways, these days, that extra money can be made although some will pay a lot better than others. It can also be worth seeing whether you can reduce your spending, perhaps by cutting down on luxuries, finding cheaper retailers, changing suppliers and things like that. There are lots of ideas online on how to save money and make more money which could really help.

Tips

Tips on Getting Money without Resorting to a Loan

It can sometimes feel that you are in a position in your life where there is no other choice but to get a loan. In some circumstances this can be okay and the borrowing could be a really positive thing. However, in many circumstances it can actually make things a lot worse in the long term. It is therefore really important to make sure that you think hard before you take out a loan and make sure that you are making the very best decision for you and your circumstances. If the loan is something that you feel you will struggle to repay, it is to pay for something which is not necessary or it is extremely expensive, then it could be better to try to find alternative ways to find the money.

To start with think about whether you really need the money. Is the item you are buying completely necessary? Do you have some savings you could use to buy it? Could you wait and save up some money to buy it? In most cases you should be able to wait a while and think of other ways to get the money that you need.

If you have no savings, then you will need to have a look at other ways of getting extra money to pay for the things that you want. You may feel that you have tried a lot of things, but it is worth seeing whether there are any ways that you have not thought of.

If you have a job, then see whether you can get a pay rise, some extra hours or overtime or whether you can get an advance of your salary. All of these should help you to get some extra money in an easy way and you could find that they make a significant difference to your situation. However, not everyone will have a job or if they do, they may not have the opportunity to work extra hours, get an advance or ask for a pay rise.

There are plenty of ways that you could increase your income. You could consider getting an additional job, perhaps something in the evenings or at weekends to boost your income a bit. This could be tiring and a big commitment but doing this for a while could make a big difference to your income and provide you with the opportunity to buy extra things without having to borrow money.

You may have items in your home that you could sell. They do not have to be old or antiques, although these could potentially make quite a bit, but even clothing or shoes that you have not worn for a while, household items or even furniture. There are lots of opportunities for selling things like this. You could sell at auction, use an online auction site, through a social media page or even at a table top sale. The option you choose will depend on the type of item that you are selling.
If you have a hobby then you may be able to find a way of making money out of it. If you make things, then you could sell them and make some extra money that way. If you have a skill like this, you could teach others and charge them for your training courses. You may even be able to take up something new that you could make money from.

If you want some extra work then you could consider freelancing. There are many areas where you can do this and it could be a good way to pick up some extra money. You will find that you can pick up jobs online, which could be a simple way to connect with customers.

There are lots of other ways that you could make money online as well such as by doing surveys, watching adverts, selling advertising on your blog, video or website or taking part in free lotteries. It is easy to search and find ways to get money, although some will be a lot easier than others. However, you should be able to find a way that you can earn some extra money which should help you to avoid having to get a loan.

Guarantor Loans

Guarantor Home Loans—Tips for becoming a Guarantor

Becoming a guarantor is a big responsibility, so you will therefore need to make sure that you get all of the tips and advice you can before moving forward. The more of this information you get, the better off you will. This definitely isn’t something that you should rush into, because you will very likely end up regretting it. Since you will be responsible for paying back the primary borrower’s loan in full if they cannot, you will need to get all the information you can before proceeding.

Benefits of having a Guarantor

There are lots of different benefits of having a guarantor, including:

Some lenders will let you borrow 100% of the purchase price plus 5% costs of your first home or investment property without any proof of savings whatsoever.

You will save a significant amount of money on the Lenders Mortgage Insurance (LMI) premium.

You will have a much easier time borrowing a higher amount because the lender will feel more comfortable knowing that someone will take over paying back the loan if the primary borrower cannot for whatever reason.

The fact is that a person can usually borrow a lot more money if they have a guarantor, so you will need to keep that in mind if you are the one borrowing.

Impacts of being a Guarantor

You will need to fully understand that you will be completely responsible for paying back the loan that your friend or family member is taking out if they are not able to for any reason. As a guarantor, you are bound to pay the loan if the borrower defaults, but the transaction can have a negative impact on your credit score as well.

Have you been asked to be a Guarantor?

If you have been asked to be a guarantor for someone who wants to take out a home loan, you will need to know what you are getting out of it. You will be assuming a pretty big risk, so you definitely want to get everything in writing before proceeding.

As a guarantor:

You are responsible for paying back the loan in full if the borrower defaults for any reason.
You may be required to service the portion of the loan that you have placed a guarantee for in the event of loan repayment default.
You could lose your house if the borrower defaults on the loan.
You can provide either your owner occupied or investment property as security.
You may have to refinance your existing loan to provide a guarantee to the borrowers.
You may discover that some lenders will refuse to accept 2nd mortgages as security for the guarantee.
Seek independent legal and financial counsel

Before you make everything official, you will need to seek out independent professional legal and financial advice from qualified persons. It is crucial that you have a full and complete understanding of all your legal and financial obligations as a guarantor.

Consider your decision carefully

You will definitely want to take all the time necessary to carefully consider whether or not you want to become a guarantor for someone else. It’s also a good idea to make sure that the person who is asking you to be a guarantor is trustworthy; you should know this person very well. Since there is always the risk of the person defaulting on the loan and leaving you with the rest of the payments, it is essential that you trust them completely.

Other things to keep in mind

Becoming a guarantor is a very big deal because of the potential risk involved. Since you could lose your home if the borrower can no longer make repayments on the loan, you will need to evaluate your own financial situation and decide if it’s a risk you can afford to take. The more time you spend thinking about these things, the better your chances will be of making the right decision overall. You absolutely do not want to rush into this kind of decision. Those who take all of these things into consideration should be able to minimize their risk as a guarantor.