Save more and clean up your financial debt

3 tips that can change the way you approach debt

07:36 02 August 2014

Paying up all your debts within a short time may not be practicable for many of us.  However, just think that if you do, you will be saving hundreds, even thousands of pounds, which can be put to better use. 

 

• Climbing the Social Ladder

 

These days, it would just be too easy to fall into the trap of spending thousands of pounds in acquiring the latest gadgets or things just to keep up with the requirements of the society.

 

Little do we know that the people we are trying to keep up with are in the same boat as you, struggling to pay off debts caused by trying to keep up with the Joneses.  

 

If you have finally come to a realisation and want to turn things around, this is what you can do:  set aside a small amount in the bank for optional expenses so you do not feel so financially constricted.  

 

• Vehicle Loans

 

Owning a vehicle is part of status symbol, though we convince ourselves that it is really a necessity.  The more cars a household owns, the better for our self-esteem. However, auto loan terms have gotten longer with some reaching up to eight years.  Therefore, in most cases, the car is already fully depreciated in five years and it is not yet even fully paid.

 

What to do to get out of this bind:  Look for an auto loan refinance that offers a lower interest rate with a shorter refinancing term.  This can save you hundreds if not thousands of pounds.

 

• Disregarding your Credit Report

 

Your credit report will depend on how responsibly you are maintaining your credit.  Ironically, to be rated you have to acquire some debts.  Having various types of credit accounts will enable the credit companies to give you a credit score.

 

What to do:  Assess your credit report, which is available to you for free.  See if there are erroneous items there that make your credit profile look bad and start working on it to correct it immediately.    Correcting the mistake early can do wonders in improving your credit rating.