With the recent collapse of Lehman Brothers, Wall Street plunges, and global economic turmoil no wonder consumer and industry confidence continues to drop. Analysts predict the UK is heading toward recession, if we’re not in one already, and things will not get any better through 2009.
Many people have already begun the somewhat painful pinch of the purse strings and the word “budget” has become a household catchphrase. Riding out this credit crisis can be made a bit easier by improving our household finances even more.
Below you will find a few common sense tips, thanks to the Fool.co.uk
- Improve your budgeting - The basic tenet here is “don’t spend more than you earn”. Plain, simple, to the point. Easy? It can and should be but prior to the credit crisis and easily available credi many of us learned very bad spending habits. Times have changed and so must our attitude about money, borrowing, spending and budgeting.
- Work Your Mortgage - If your mortgage is currently on a fixed rate but will be ending soon, contact your lender to get an idea of how much your payments will increase once it reverts to the typical SVR. See your lender as your ally and if the numbers don’t stack up, consider remortgaging well before your fixed rate ends. On that note, be sure you understand any costs and fees involved in a remortgage. Will your current lender or new lender charge a fee? Will they both? Find out as soon as possible and weigh the alternatives.
- Avoid Borrowing (if possible) - According to the Fool, Britons have acquired over £200 billion in non-mortgage debt including credit cards, personal loans, store cards, etc. If possible, make higher repayments than your monthly minimum. Consider 0% balance transfer credit cards but be sure to read the fine print to see if there are any fees involved.
- Shop Around For Better Deals - For example, before your insurance policy is up for renewal, shop around online. Price comparison sites allow you to compare everything from gas and electric to car insurance and broadband. Use these services to find the best deals and get into the habit of comparing. The more consumers compare and shop around the more providers are compelled to offer competitive prices.
- Add To Your Savings - When possible, consider higher interest savings accounts including ISAs. Put this money way “for a rainy day” and let your savings build interest. Ultimately, it’s better to pay off your debts before saving because the interest charged on unsecured debt is usually higher than interest earned from your savings account. However, if you have spare cash then invest it and earn tax-free interest.
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