Getting In Trouble With Money? We’ve Got Your Back December 8, 2016My MoneyOff

Are you having money issues? Perhaps you have found yourself with some form of debt recently. Or, maybe you are just struggling to live on a manageable budget. The truth is that most people have these types of problems with finances and it is remarkably common. No one is particularly great at living managing their personal finances. If they are, it will be the exception rather than the rule. The good news though is that there are ways to get your financial situation back on track. Most of the time this is just about avoiding common mistakes with borrowing, spending and budget. You also need to think about investments and several other long term financial issues. So let’s look at some of these problems and start thinking about how to tackle them effectively. We will begin by thinking about borrowing money.

The pitfalls of borrowing. There are a number of pitfalls that you need to avoid when you think about borrowing money. The first is making sure that you are getting these funds from a reliable source. You may say, well of course I am but be careful with this assumption. There are plenty of businesses online who have the specific intention of getting your money. Or rather putting you in a situation where you have so much to pay back that you couldn’t possibly afford it. There are plenty of lenders who put their borrowers into what is essentially a debt cycle. They borrow from one source, find that they can’t afford to pay it back and then borrow again. The cycle continues until the borrower is left with a serious level of debt.

If you’re looking at whether a lender is reputable, it’s quite simple. You just need to complete some research on the company online. Specifically, you should investigate whether they have good customer reviews. If they do then you should feel fairly comfortable borrowing from them. However, there might be signs that should cause you to worry. For instance, if anyone has mentioned hidden costs you should steer clear of that company.

Be aware that there are now caps on how much lenders can charge people borrowing funds. If you think a lender is charging over this amount, you can get that money back. You just need to contact them directly and tell them that they are breaking the law. If they don’t respond you can speak to your financial ombudsman. They should be able to resolve the situation for you. If they find that the company has charged you an unfair amount, all debts could be canceled.

Of course there is more that can go wrong with borrowing than dealing with a shady company. You might find that it’s you that has made a mistake. For instance, you could fall into the trap of borrowing too much. You might think you can afford to borrow money and that will probably be true to a certain point. If you are borrowing more than you can afford you will end up in debt. Remember, when calculating if you can afford to borrow you need to look at interest rates. Most reputable lenders have calculation tools on their site. Using one of these, you can find out exactly how much you will be expected to pay.

One of the other mistakes people make borrowing money is not actually classing it as borrowing at all. This is quite common with people who use credit cards. You might think that using a credit card is like spending your own money. When of course it isn’t because you’re buying on…credit. You don’t have that cash to spend at all and you certainly can’t leave bills to mount up. Credit cards basically allow us to buy anything that we like, but that doesn’t mean that we should. If you do this, you will find that your debt builds quicker than you would like to imagine. If you are using credit cards, you should try to make sure that they are zero interest. This means that for a fixed period you won’t pay anything on what you owe.

The Trouble With Budgets. Usually, people will borrow or borrow more than they can afford because they have no idea how to budget. They have never tried and truth be told, probably aren’t all that interested in the idea at all. If you’re not living on a budget you will have no idea how much you can afford to spend and how much you owe each month. That could be a dangerous path to take. Instead, you should think about doing an accurate calculation of all your spendings. You can then work out how much you can actually afford to waste each month. We say waste but we actually mean buying things that you don’t need but want. Christmas is a brilliant example of a luxury. You want to be able to buy all the gifts for your kids, but you don’t actually need to. Your kids could be perfectly happy without you taking on these costs. That’s why it’s important to work out what you can actually afford to spend through the festive season. Or, you could start the new year well over your actual budget.

Planning a budget is simple when you know how. You just need to look at your monthly bills and add them all up. Once you have done that you can take them away from your total earnings. This should not just include your job but virtually any way that you might make money. If you’re wondering why it’s so difficult to budget it’s probably because you only have one source of income. Most people who handle money well have multiple sources of income and that doesn’t mean they have second jobs. It just means that they’ve found another way to add a cushion of cash to their bank account.

Making Investments. One of the best ways to add more money to your income would be through investments. There are lots of ways to invest. The most obvious would be to put your savings into a high-interest accounts. Accounts like this are designed to work for you. Over the year your money will gradually build to the point where you are making quite a lot on your savings. Rates do differ and the best rates are on locked accounts. This means that you can’t withdraw the money for a fixed time without losing the interest that you have collected. The best interest rate without this type of condition will be somewhere around 1 percent. But that could still be enough to make a few extra hundred through the year depending on how much you save.

You can also look into investing in stock markets or shares. The secret to stocks is buying bonds that are low cost but high risk. You can then leave them, store them in a safe and let them accumulate value. Eventually in a few years you should be able to get them out and find some of them have grown massively. Others won’t have grown at all and may even have lost value. But if you buy enough shares you should still make enough that you earn a little money. It’s like planting multiple seeds and waiting to see which one grows the strongest.

We hope you take this advice on board. If you do, we’re sure you can keep your finances healthy and dodge the mistakes. You certainly shouldn’t find yourself in trouble with money using these tips.

Photo by LD Prod | Shutterstock

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