Debt management
By financepress | April 5, 2009
Contact your lenders
If you are struggling to meet your debt repayments, you should always contact your lenders first. In some cases, your lender(s) may be willing to make a temporary agreement allowing you to make lower monthly payments, or even a payment holiday, in order to get your finances in order. If you cannot agree anything suitable with your lenders, then it's time to speak to a debt adviser.Get free debt advice
A good debt management company will offer free, confidential debt advice. In some cases, a little debt advice may be all that's required. A debt adviser will talk you through your situation to help you decide the best way forward for your circumstances. They'll tell you if a simple reshuffle of your finances could help - or, if the situation is a little more serious, they'll recommend an appropriate solution to help you pay off your debts.Assess your own costs
Often, the best form of debt management is to look at your outgoings in detail and see where you might be able to cut back. Consider which costs are essential and which you could do without. Do you really need that satellite TV subscription if you're struggling to pay your mortgage? Also consider costs that you could make lower yourself, perhaps by switching provider. Gas, electricity and broadband, for example, are all provided by a wide range of companies, all of which are looking to compete with each other. Do your research, and you might be surprised at how much money you could save overall.Budget with your money
Some people overspend simply because they haven't planned their finances well enough. By budgeting properly, it's easier to avoid unexpected costs and to ensure you have enough money for all your expenses. At the start of the month, calculate exactly how much you are likely to need to spend by looking at previous months' expenditure. Add up each part separately - your household bills, mortgage payments, food costs, debt repayments, etc. - and the remaining money is your disposable income. By doing this, you know in advance when and where your money is leaving your account, and the disposable income provides a convenient safety net should anything unexpected arise, as well as covering your leisure costs.
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How to regain control and manage your debts
By financepress | March 19, 2009
Plan out your costs
Planning how much money you need to put aside for each of your commitments, including bills and debt repayments, can make a big difference to your ability to stay on top of your finances. Make a list of all your essential outgoings at the beginning of each month, and subtract that amount from your total income. The amount you have left is your disposable income, and you can spend this as you wish - although it may be a good idea to either save some of this or put it towards your debts, enabling you to repay them more quickly.Reduce your outgoings
If you're struggling to repay your debts, consider whether there are any areas in which you can cut back. Expenses such as satellite TV and take-away meals are not as important as, say, food or electricity - so consider which 'luxury' items you could do without. Giving up some of your luxuries until the debts are repaid may be a difficult thought for some people, but if it means repaying your debts more quickly, you will be glad you did it.Keep track of your bank balance
Keeping track of how much money you have at any given time can help you to pace your spending and prevent you from exceeding your limits. Online banking is probably the quickest and easiest way to do this on a regular basis, but you can also call your bank or walk into your nearest branch to check on your balance.Get good debt advice
If you find that none of the above can help your situation, then getting the right debt advice is very important. In some cases, a few words of advice on how to manage your finances might be all that's needed; in other cases, a more specific debt solution might be required. There are a number of debt solutions available, including debt management plans, debt consolidation loans and IVAs (Individual Voluntary Arrangement). All are designed to help people in varying situations, and all aim to help you to avoid court proceedings from your creditors and/or bankruptcy. For more information on a range of debt solutions, visit Debt Advisers Direct
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How has the base rate affected borrowers and savers?
By financepress | February 19, 2009
- Reducing the wholesale cost of borrowing to lenders, and subsequently encouraging them to lend more money to businesses and individuals at lower rates
- Giving consumers less incentive to save money, and therefore encouraging more spending - which can help to fight off shrinking inflation or deflation.
Mortgages
Mortgage holders have arguably been affected the most positively by the recent base rate cuts. In particular, many of those on tracker mortgages have experienced significant falls in their monthly outgoings. At the peak of the market in 2007, it was not unheard of for borrowers to be offered rates that tracked at a fraction of a percentage above the base rate - meaning that some homeowners are now only paying a little above 1% in interest. Some mortgages had even been offered with rates tracking below the base rate, making their current mortgage payments extremely low. Meanwhile, rates on new mortgages have come down on the whole, despite many lenders raising the margins between their interest rates and the base rate. Fixed-rate mortgages are available for as little as 3% to 4% at present (February 2008) - although lenders tend to require a large deposit for their lowest rates.Loans
The effect of the recent base rate cuts on loans has arguably been minimal. Some lenders have lowered their rates slightly following the last few cuts - Nationwide have extended a trial period with a 7.9% interest rate on loans for existing customers, and other lenders such as Alliance & Leicester, Tesco Loans and Abbey are offering similar deals - but on the whole, the cuts have been nowhere near in line with the falls in the base rate. However, this could change if banks become more confident in the coming weeks and months.Savings
It's a widely-held view amongst economists that savers are the worst-affected by the base rate cuts. In short, banks need to offer savings rates below the base rate in order to make money - meaning many savings accounts now offer less than 1% interest. This is a problem because typical interest rates are significantly lower than the rate of inflation - currently 3.1% - meaning savers are technically ‘losing' money. This may not be such a problem to people who simply want to put their money somewhere safe, but for those who rely on interest from savings as a source of income, the reduction in interest can be a serious burden on finances.
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Base Rate Cut Could Boost Mortgage Market
By financepress | November 20, 2008
Following the Bank of England's shock base rate cut to 3%, financial solutions company Think Money have welcomed the news, commenting that firm action is more likely to encourage banks to consider cutting their interest rates accordingly. However, they added, there are still some factors that may prevent lenders from passing on the full 1.5% cut to their mortgages and loans.
The base rate cut, from 4.5% to 3%, is the biggest cut since the Bank of England lowered the rate by 2% in 1981. The base rate now stands at its lowest point since 1955.
Many economists had predicted an aggressive cut in base rates, but the extent of the cut was still unexpected. Most predictions in the run-up to the Bank of England's announcement pointed towards a 0.75% or 1% base rate cut - and only a few days previously, 0.5% seemed a more realistic figure.
A spokesperson for financial solutions company Think Money said: "It would seem that the Bank of England are acting based on Mervyn King's recent statements that the recession would be long and drawn-out, and rather than take the base rate down in small increments, they have 'bitten the bullet' and taken it down further than most people expected.
"Potentially, it's very good news for people and businesses looking for loans, but not such good news for savers."
However, the spokesperson stressed that as with previous base rate cuts, there is no guarantee that lenders will pass the full cut onto their mortgages and loans - although the extent of the cut could at least increase the impact on lenders' behaviour.
"There will still be a lot of uncertainty with regards to what will happen in the economy in the future, as well as some apprehension amongst banks as to how much they might lose from things like defaults on mortgages as the recession takes hold," she said.
"The base rate cut only affects how cheaply lenders can borrow funds from the Bank of England. It does not directly affect the LIBOR rate, which is the measure of how expensive inter-bank lending is. Since lenders rely heavily on borrowing from each other to fund their loans and mortgages, they may well be slow to bring their rates down."
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Fed cuts to 1% Again Helping?
By admin | October 30, 2008
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$700 billion buys a lot of bad debt
By admin | October 24, 2008
Guest Post from Mortgage and Remortgage experts www.ThinkMoney.com
On Monday 29 September, US politicians announced a $700 billion rescue package designed to buy bad debts and restore confidence in US markets.
Basically, the Emergency Economic Stabilization Act would give the Treasury the power to spend up to $700 billion (£380 billion) buying mortgage debts and other 'troubled assets' (sometimes called 'bad debts' or even 'toxic debts') from banks.
It's a hugely controversial move, opposed by many throughout the US and beyond. Many don't feel they've contributed to the debt crisis and are not happy about spending so many tax dollars on the 'Wall Street bail-out'.
Nonetheless, the draft Act does contain a range of provisions which weren't in the initial proposal, and which should provide some protection to tax payers.
As summarised on the BBC website, 'the deal addresses several of the key concerns raised by both Democrats and Republicans:
- The government will get the money in tranches - $250bn straight away, and $100bn at the request of the White House; Congress can veto the release of the remaining $350bn
- Banks that accept bail-out money will have to hand over shares in return, which allows tax payers to benefit from the banks' recovery
- Top bankers, meanwhile, will see their pay limited, and "golden parachutes" - huge payments when they leave the firm - will be banned
- The banking industry will have to help finance the bail-out if the money can not be recovered from the struggling banks themselves
- Four agencies will monitor the deal, including an independent Inspector General and a bipartisan oversight board
- Banks will be obliged to join an insurance programme to protect them against the losses of mortgage-backed securities.'
The White House website contains the transcript of a speech from the President, in which he says: "The bipartisan economic rescue plan addresses the root cause of the financial crisis - the assets related to home mortgages that have lost value during the housing decline. Under the Emergency Economic Stabilization Act, the federal government will be authorized to purchase these assets from banks and other financial institutions, which will help free them to resume lending to businesses and consumers."
At the time of writing, it remains to be seen whether the Act will be passed. It would mean an enormous investment of tax dollars, but could make a huge difference to the health of the nation's finances.
People and businesses looking for mortgages, loans, and other kinds of credit may be particularly keen to see it approved. For many, the credit crunch has been a time of real stress: in so many cases, an inability to get a loan or mortgage has forced them to put their plans on hold, whether they're trying to buy a house, consolidate their debts, or seize a business opportunity.
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Hope for mortgages as LIBOR falls
By financepress | October 23, 2008
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AIG Turns To Buyers And Borrowing
By admin | October 10, 2008
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Markets Snap 10/10/08
By admin | October 10, 2008
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Earnings after the close 10/10/08
By admin | October 10, 2008
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