No matter how much we earn, we all have our own money issues. Here we solve five of the most common cash problems:
Forgetting to plan for the future
So many people live from pay cheque to pay cheque, but to protect yourself (and your family) it’s essential you plan for the future. As a bare minimum, make sure you have a pension and life insurance in place. If your company has a contributory pension scheme and you don’t take it up, you’re missing out on free money!
Of course, no one wants to think about this so it often sits there on your to-do list, but it’s crucial you make a will otherwise your estate would be shared out according to the law, instead of your own wishes. For instance, if you aren’t married and your partner dies without a will, everything would go to his next of kin, no matter what he’d said he wanted or how many years you’ve been together.
Living a lifestyle you can’t afford
Half of us live beyond our means, according to a survey by the insurer Aviva and a quarter of us say we overspend because we can’t bear our children to miss out on anything.
It’s easy to get credit these days, but don’t increase your credit card limit without considering how you’ll repay it and living off your overdraft is never a good idea. When you pay off your credit card each month, try to pay more than the minimum amount or the interest will soon escalate. Small changes like taking lunch into work could save you £25 a week. That’s over £112 a month and £1350 a year!
Over-stretching yourself on the mortgage
Buying a home is an emotionally driven purchase and it can be easy to end up over-investing. But be careful – if property prices drop and you need to sell, you risk finding yourself in negative equity or having to sell at a loss. Similarly, it’s easy to get carried away with renovations – but is that £100K kitchen too expensive for your street? I’ve seen several people end up disappointed after splashing out on top-notch extensions, then discovering there’s a ceiling price for that type of house in their street.
Forgetting to cancel direct debits
When did you look at your bank statement for more than a few minutes? It’s amazing how many things we pay for on direct debit or standing order that we no longer want or need, such magazine subscriptions or gym memberships. Go through it with a fine toothcomb, cancelling anything you’re not using.
Not checking your credit score
Never underestimate the power of your credit report, which details your financial history and shows how creditworthy you are. Your credit score could make or break whether you’re eligible for a certain mortgage or loan (and also determines the rate offered).
Check now to make sure your credit report is in good shape. Go to www.creditexpert.co.uk or www.checkmyfile.co.uk to get your credit scores and reports from the three biggest agencies – Experian, Equifax and CallCredit. If you notice a mistake, contact the relevant agency to dispute it, providing supporting documents.
Look out for any misspellings in your name and address and ensure you’re on the electoral roll, as if records are incomplete or there’s no record of you living at that address, this too can affect your credit score.
To protect your credit rating, pay your credit cards on time each month, by setting up a standing order for the minimum amount. Do try and pay above the minimum each month though, as otherwise this can imply you’re struggling to pay your credit card off. If you’ve already made a late payment, all is not lost! Try contacting the company to have it removed and after three years, a late credit card payment will usually be wiped anyway.
A ‘good’ credit score depends on the scoring system used by each lender. Most credit scores fall between 600 and 750. If you score over 700, that’s generally a thumbs up!
Bindar Dosanjh is an award-winning landlady, property investor, mentor
and lawyer. She started out as a secretary and now has a
multimillion-pound portfolio. www.bridgespropertymentoring.com