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October 6, 2010
 

Savers are still dealing with debts first

While interest rates remain low, people are continuing to pay off their debts rather than add to their savings, according to the Markit UK Household Finance Index.

The research found that fears over tougher times ahead meant households were trying to reduce their debts and in fact, lower levels of debt had been recorded for the eighth month in a row.  Those working in the public sector reported the greatest degree of pessimism, perhaps due to the government cuts which are to be announced.

The only group to record higher savings were those earning more than £57,571 a year.

Read the whole article here

 

Source:  bbc.co.uk

Filed under  //   reducing debt  

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August 17, 2010
 

Should I save or pay off my debts?

According to NS&I's Saving Survey, the amount of money the population is saving has decreased to its lowest level for over two years.  On average, Brits are now setting aside only 6.25% (£81.94) of their monthly take-home income.*

Is this because people are choosing to pay off their debts instead?

Perhaps.  With savings interest rates so low at the moment, it's likely the interest rate you're paying on your debt is far higher than what you're receiving on your savings and so it would make sense for most people to put any spare cash towards reducing debt, as opposed to earning very little putting it in a savings account.

For example,

£1000 in a savings account at 2.5% will earn you £25 after tax

£1000 of credit card debt at 18% will cost you £180 in interest

So, by paying off your debt with the savings, you'll be £155 a year better off.

However, what happens if an unforeseen expense crops up?  Would you be able to access the cash should something unexpected happen?  It is always reassuring to know that you have a small nest egg should you need it, but evaluate your own circumstances - only you will be able to decide whether it is more beneficial for you to pay off your debts or keep some money in your savings account for a rainy day.

If you're in serious debt and need to speak to someone, contact us today.

 

* Credit Action - July 2010

Filed under  //   debt tips   reducing debt  

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July 12, 2010
 

More top tips for reducing your debt

  1. Budget, budget, budget - draw up a monthly budget listing your income and all your expenditure (including putting money away in a savings account should you have to pay for any unforeseen circumstances) and see what's left over.  That's the amount you have for spending each month.
  2. Keep a spending diary - not sure how you got yourself into debt in the first place?  Keep a track of what you spend each day and analyse it at the end of the week - do you really need your shop bought coffee every morning?  Are you using your gym membership? Are there spending habits you could avoid?
  3. Leave your plastic at home - when out shopping, it's far too easy to buy on impulse with that piece of plastic in your wallet.  If it's not there, you're more likely to stop and think about whether you really need it.
  4. Consolidate your debts - it may be worth considering consolidating your debts into one manageable loan which may have a lower rate than some of the interest rates you're paying on all your separate debts.  However, some lenders may ask for your home as security and you could end up paying more interest in the long term so think carefully about whether this option is for you.
  5. Finally - don't give up!  However hard it may seem, just think how much happier and fulfilled your life will be without debt worries.

Filed under  //   debt tips   reducing debt  

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