Recently I have been receiving an inordinate number of enquiries from customers asking for advice on how to survive the credit crunch. It is because of this new influx of queries that I am putting together this brief guide as to what is the best action to take. However, before you read on, you must be aware that this is not a quick fix. A quick fix for the situation we are all facing simply does not exist. We live in a world where to borrow is the norm and to save is not, hence the current financial situation. In order to survive it will take a lot of adjustment, a lot of sacrifice and probably a lot of time.
First of all, without casting any aspersions on any particular person it has to be said, that getting your particular financial situation sorted, may be a little like being an alcoholic in so much as the first step is admitting you have a problem. The reason for this is if you can't admit you have a problem you will not be able to properly implement the solution. Before you do anything detailed in this article you have to change the way that you spend. You have to stop spending money other than what you have to spend to survive and meet your obligations for borrowings. It is worth it because once you have come out of this you will be a far better person and you will appreciate money and the things it can do for you far more.
Most people are feeling the credit crunch badly because over the past few years they have spent too much and most of the money that they have spent has come from borrowings. Now in a normal market this kind of practice can be OK. However in this market it is totally unacceptable because borrowing is very tight and if you are able to borrow at all it will be at higher market rates than you would have normally been used to.
The best thing to do is draw up an income and expenditure sheet. In one column you tally up things such as your salary, bonuses, benefits, basically anything that you have coming in monthly. In the other column you list what you pay out monthly. This will consist of things such as your mortgage, fuel costs, outstanding loans, groceries etc... but remember that it should contain only items that are necessary for month to month living. That means no fitness club membership or subscriptions to sky sports and the like. By cutting your costs you will be on the road to saving. When it comes the time that you do finally book that holiday you will appreciate it all the more because you have saved up to be in the position to afford it.
The next thing is to reassess your outgoings. Look at ways of reducing the costs, such as changing your mortgage or remortgaging. I would never recommend interest only mortgages as a long term option, but if it is just to bridge a gap until you are back on your feet again, interest only for a while is an option. Better to meet interest only mortgage payments for a while than to fall behind completely and be looking at even more trouble. At least you will be able to keep up your other outgoings also. Once you have your finances in better order again, you can revert back to your repayment method.
You can also look for cheaper credit cards, a lot of credit card companies have put up their interest rates recently. However they are still offering reduced rates for good quality new customers. With that in mind don't stick with your provider if they have decided to rip you off you should have no loyalty there.
Another option, although by no means a recommended one, is to join together all your debts into one, either onto your mortgage or as a secured loan. This is definitely a last resort option, as it will mean you eventually have to pay off a lot more money. Only consider this if you can see no other alternative or if you think there is no way out. Although your monthly payments will be a lot less, you will be making those payments for a long time to come. Nevertheless, if you think that as things stand you run the risk of falling behind or even losing everything, this alternative could be your only realistic way out.
In these days of increased competition between companies in the energy and communications markets it may be of benefit to you to check out your utility bills. Now everyone knows that making sure you turn your emersion off when you don't need it and switching off your lights will contribute to smaller bills but check out the competition and you may be surprised by the offers to be had. And the best way to go about this is to surf the net and see what you come up with.
But for some people the harsh reality is that they have reached the point of no return. No matter what option they may resort to, the fact is that they have got themselves into that much debt that there is really no way out of it. Now the cost of living would definitely appear to have increased but the simple fact is that some people have been borrowing way beyond their means and have not stopped to consider the consequences. They now find themselves in a position where that debt has finally caught up with them and they are helpless to do anything about it.
The best way towards finding a solution to the problem, and I know I may be stating the obvious here, is to communicate with the people that did the lending. I know I said that this would seem like the obvious thing to do but some people would not give this idea the first consideration. The recurring problem in my line of business is that people have an innate fear of talking with the people they borrowed money from in the first place, preferring someone else, maybe more professionally qualified, to deal with the situation. I can only say that if a financial adviser makes the contact as opposed to the client then the outcome may not be favorable.
The first thing to do when approaching your lenders is to get all of your statements together along with the income and expenditure report we mentioned earlier. Go as well prepared as you possibly can and make sure all your facts are right. This way you should achieve the result you want. You must also be realistic. If you are unable to meet the required payments of 300 per month, don't go and suggest they drop it to 10 per month. Make sure you evenly divide up your income amongst all of your lenders and be prepared to show each lender what you are paying back to the others. By being honest and transparent about your situation, your lenders are far more likely to sympathise with your proposal.
They will want to know the cause and affect so you must be prepared to acknowledge this and likewise have some sort of contingency plan. Your income and expenditure plan should detail exactly what your outgoings are and with that in mind you will be able to show just what you can afford to repay monthly, giving some sort of figure that can be amicably agreed upon. Let the companies know that you are willing to work through these debts methodically until you reach the point where everyone is satisfied. Doing this can only have a positive outcome as it will be acknowledged that you have given the problem a lot of thought and that you are determined to come up with a solution where everyone is happy. The loan companies want to recoup their debts and if you are able to convince them that you are willing to do that, no matter how long it takes, then they will most likely look favourably upon your predicament.
So to summarise, you need to change your spending habits, cut your costs down to the bare minimum you can do this by researching the things you have to pay for such as your utility bills etc. Also research you credit cards and loans etc to get your self on the latest best deals. Consider a remortgage or secured loan to consolidate everything. And finally if you are at the last resort get your debts together and start ringing your creditors and making deals with them, but do your homework beforehand. Above all lenders like contact lots of contact ring them before they ring you and you will be better off straight away. - 15224
First of all, without casting any aspersions on any particular person it has to be said, that getting your particular financial situation sorted, may be a little like being an alcoholic in so much as the first step is admitting you have a problem. The reason for this is if you can't admit you have a problem you will not be able to properly implement the solution. Before you do anything detailed in this article you have to change the way that you spend. You have to stop spending money other than what you have to spend to survive and meet your obligations for borrowings. It is worth it because once you have come out of this you will be a far better person and you will appreciate money and the things it can do for you far more.
Most people are feeling the credit crunch badly because over the past few years they have spent too much and most of the money that they have spent has come from borrowings. Now in a normal market this kind of practice can be OK. However in this market it is totally unacceptable because borrowing is very tight and if you are able to borrow at all it will be at higher market rates than you would have normally been used to.
The best thing to do is draw up an income and expenditure sheet. In one column you tally up things such as your salary, bonuses, benefits, basically anything that you have coming in monthly. In the other column you list what you pay out monthly. This will consist of things such as your mortgage, fuel costs, outstanding loans, groceries etc... but remember that it should contain only items that are necessary for month to month living. That means no fitness club membership or subscriptions to sky sports and the like. By cutting your costs you will be on the road to saving. When it comes the time that you do finally book that holiday you will appreciate it all the more because you have saved up to be in the position to afford it.
The next thing is to reassess your outgoings. Look at ways of reducing the costs, such as changing your mortgage or remortgaging. I would never recommend interest only mortgages as a long term option, but if it is just to bridge a gap until you are back on your feet again, interest only for a while is an option. Better to meet interest only mortgage payments for a while than to fall behind completely and be looking at even more trouble. At least you will be able to keep up your other outgoings also. Once you have your finances in better order again, you can revert back to your repayment method.
You can also look for cheaper credit cards, a lot of credit card companies have put up their interest rates recently. However they are still offering reduced rates for good quality new customers. With that in mind don't stick with your provider if they have decided to rip you off you should have no loyalty there.
Another option, although by no means a recommended one, is to join together all your debts into one, either onto your mortgage or as a secured loan. This is definitely a last resort option, as it will mean you eventually have to pay off a lot more money. Only consider this if you can see no other alternative or if you think there is no way out. Although your monthly payments will be a lot less, you will be making those payments for a long time to come. Nevertheless, if you think that as things stand you run the risk of falling behind or even losing everything, this alternative could be your only realistic way out.
In these days of increased competition between companies in the energy and communications markets it may be of benefit to you to check out your utility bills. Now everyone knows that making sure you turn your emersion off when you don't need it and switching off your lights will contribute to smaller bills but check out the competition and you may be surprised by the offers to be had. And the best way to go about this is to surf the net and see what you come up with.
But for some people the harsh reality is that they have reached the point of no return. No matter what option they may resort to, the fact is that they have got themselves into that much debt that there is really no way out of it. Now the cost of living would definitely appear to have increased but the simple fact is that some people have been borrowing way beyond their means and have not stopped to consider the consequences. They now find themselves in a position where that debt has finally caught up with them and they are helpless to do anything about it.
The best way towards finding a solution to the problem, and I know I may be stating the obvious here, is to communicate with the people that did the lending. I know I said that this would seem like the obvious thing to do but some people would not give this idea the first consideration. The recurring problem in my line of business is that people have an innate fear of talking with the people they borrowed money from in the first place, preferring someone else, maybe more professionally qualified, to deal with the situation. I can only say that if a financial adviser makes the contact as opposed to the client then the outcome may not be favorable.
The first thing to do when approaching your lenders is to get all of your statements together along with the income and expenditure report we mentioned earlier. Go as well prepared as you possibly can and make sure all your facts are right. This way you should achieve the result you want. You must also be realistic. If you are unable to meet the required payments of 300 per month, don't go and suggest they drop it to 10 per month. Make sure you evenly divide up your income amongst all of your lenders and be prepared to show each lender what you are paying back to the others. By being honest and transparent about your situation, your lenders are far more likely to sympathise with your proposal.
They will want to know the cause and affect so you must be prepared to acknowledge this and likewise have some sort of contingency plan. Your income and expenditure plan should detail exactly what your outgoings are and with that in mind you will be able to show just what you can afford to repay monthly, giving some sort of figure that can be amicably agreed upon. Let the companies know that you are willing to work through these debts methodically until you reach the point where everyone is satisfied. Doing this can only have a positive outcome as it will be acknowledged that you have given the problem a lot of thought and that you are determined to come up with a solution where everyone is happy. The loan companies want to recoup their debts and if you are able to convince them that you are willing to do that, no matter how long it takes, then they will most likely look favourably upon your predicament.
So to summarise, you need to change your spending habits, cut your costs down to the bare minimum you can do this by researching the things you have to pay for such as your utility bills etc. Also research you credit cards and loans etc to get your self on the latest best deals. Consider a remortgage or secured loan to consolidate everything. And finally if you are at the last resort get your debts together and start ringing your creditors and making deals with them, but do your homework beforehand. Above all lenders like contact lots of contact ring them before they ring you and you will be better off straight away. - 15224
About the Author:
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