Browsing Tag

finances

Peer to Peer lending – brilliant or insane?

Posted on 15th June 2012 in money

I’m quite fascinated with the emergence of Peer-to-Peer lending.

Excuse my ignorance if I am wrong but isn’t this essentially how banking started out in the first place?

Ok, I’ll admit I got that information from Deadwood, but moving swiftly on the overall premiss as I understand it is that instead of saving your pennies at your local bank or building society, you invest it in one of the (currently) three companies Zopa, Rate Setter and Funding Circle offering peer-to-peer lending and they then loan it out in very small increments in order to offset your risk. So if you invest say £5000 they might spread that across 500 different loans to protect your investment as much as possible and the interest rate is higher than you can currently get from the banks. Plus, at the moment, you even get to choose what rates you would like to set!  Here is the BBC’s take on it.

Personally, while I do think it is a lovely idea, I wouldn’t want to take the risk as the investments are not regulated and the investments are all made at your own risk. Therefore there are no guarantees that you would be able to get your money back! I do think that a lot of people will make a lot of money from this but I also think that at some point (possibly as less scrupulous companies get involved) it will go horribly wrong and people will lose their investments.

What do you think? Would you invest in one?

Take Control Of Your Finances: Step 1 #MoneyMonday

Posted on 6th February 2012 in #MoneyMonday/ budgeting/ CCCS/ debt/ family

As mentioned last Monday in my introduction to ‘Take Control Of Your Finances‘, I am going to be posting a blog each Monday which will help you to take control of your finances.

Some of it may seem obvious, some of it may seem too simple – but until you put it into action you’ll never know how well it could work.

Wouldn’t it be amazing not to worry about bills and unexpected payments?

STEP ONE: Assessing Your Current Financial Situation

Bizarre though it may seem, debt can be as hard to shake off as an addiction to alcohol or cigarettes!

Also, much like the AA 12 step programme, admitting that you have a debt problem is the first step to solving it.

Wait until you have a clear afternoon with a few hours spare – in the few days preceding it, every time you have a spare minute search out paperwork. Get an empty drawer, old shoe box or even just a space on a shelf and put every piece of paper that you can find (even all the unopened scary stuff that you’ve hidden in the kitchen drawer) which relate to finances there; things like bank statements, credit card statements, rent/mortgage statements, utility bills, wage slips, benefits notifications, bailiffs letters, phone bills, shopping receipts etc etc.

The idea being that when you get your free afternoon there will be a huge scary pile of papers there for you!

Make a cup of tea and take the pile to the centre of a room and sit on the floor with it (really) take the top piece and look at it – let’s say that it’s a bank statement, put it to one side on the floor and that is then the start of your ‘bank statements’ pile. Take the next piece, let’s say that it’s a gas bill, put it in a different position on the floor and that is then the start of your ‘utility bills’ pile. Keep working your way through the original pile of paperwork until you have assigned every piece to it’s appropriate pile. You should end up with several smaller, more manageable piles.

Reward yourself with another cup of tea and maybe a biccy or two!

It’s easy to give up at this point – don’t.

This should give you all the information you need to assess your current financial situation.

At this point you’ve got a couple of choices:

* Make an appointment with your local CAB or call the CCCS – these are professionals who will help you, for free, to work through your paperwork and establish your current situation.

If you can be patient and methodical then you will be able to do this yourself, but if you find the whole thing too daunting then pick up the phone to the CCCS – it’s what they do all day, every day and they will help you without any kind of judgement. I’ve used them myself, they are nice people. Having said that, it might be worth completing the follow exercise before you call them so that you’ll have all the necessary figures to hand.

* Work through it yourself.

To work through it yourself, you will now need either a computer with excel (or similar), or a lined notepad.

If you have access to a computer and are confident using it, try this link from Money Saving Expert. Follow the instructions and you should soon arrive at an overview of your financial situation.

If you are doing it ‘old skool’, grab your lined pad, a pen and a calculator – and another cuppa of course!

Start at the top with any monies that you have coming in, something a little like this:

List absolutely every source of income that you have here – you might get regular income from something that I’ve not thought of but it is essential to add every single penny to your list so that you have an accurate figure.

Draw a line under it when you’ve done and add it up to obtain a total. It is important to convert all the figures so that you are adding them all in the same way – ie monthly or weekly. For this process I find it easier to convert everything into a monthly figure so that you know your total monthly income. (For any payments that you receive weekly, x them by 52 and then divide that figure by 12 to get the monthly amount.)

Then repeat the process for your ESSENTIAL outgoings:

It’s a short list isn’t it? That’s because this list is limited to your ESSENTIAL outgoings only. If you have anything else that is truly essential then add it to this list: prescriptions, school meals, hair cuts, essential clothing for example.

Once done, draw a line under it to create your monthly total – this figure SHOULD be less than your income figure.

Then repeat this process with a list called NON-essential outgoings – on this list you put your credit card minimum payments, mobile phone bill, store cards, personal loans, finance agreements, catalogues etc.

Again, draw a line under the list and add up the figures to create a total for your non-essential outgoings.

At this point – if your essential and non-essential outgoings total (added together) less than your income then you are doing fine and simply need to budget better.

If, at this point, the two outgoings totals are more than your income then we will need to look further into ways to bring them all into line.

Either way, now take a new sheet of paper (or start a new spreadsheet) and make a list of all your creditors (people you owe money to) – make 3 columns and put the company name on the left, the total amount of the debt in the middle and the minimum monthly payment on the right:

It is vitally important to list everything here. Once you’ve finished total the 2nd two columns so that you have a total debt outstanding figure and a total monthly payments due figure.

Now you definitely deserve a cup of tea! You might well fancy something stronger but hang on just a little bit longer as we are nearly done for today!

You now have all the information you need to assess your finances.

Keep it all separated and neat either by starting a file if you have one spare or by keeping in carrier bags inside a box or draw so that every time a new piece of post comes you can add it to it’s appropriate pile – keep on top of the filing from today so that you don’t have to repeat the sorting process over again next time!

If all of your monthly outgoings are less than your monthly income then you simply need to look at ways to manage your day to day finances better. You’ve already made a good start and now need to keep on top of the bills as soon as they come in.

If you over spend on unnecessary items, try working out your surplus money each month and then splitting it into 4 envelopes. Allow yourself one envelope a week as a way of disciplining yourself.

Take a look at the ‘demotivator‘ on Martin’s Money Tips, it’s a great way to put yourself off buying a latte on the way to work and you’ll be taking a packed lunch before you know it!

If, however, your outgoings are more than your income then over the next couple of weeks we will look at the ways you can reduce your outgoings and manage your debts. I assure you that no debt problem is unfixable. No matter how much you owe or how little you have coming in, there are ways (legal ways!) that can get you debt free. Although it is natural to worry about your finances, don’t let them depress you and don’t let them ruin your life. There is a way out.

If you can’t wait – pick up the phone and call the CCCS 

Take Control Of Your Finances #MoneyMonday

Posted on 30th January 2012 in #MoneyMonday/ debt/ finances/ money

As January draws to a close, I keep hearing people say that they are struggling financially. For some it is the age old problem of over spending at Christmas, for others it is simply because they are finding it hard to make ends meet.

I’ve had lots of experience of budgeting for various reasons and want to share with you a series of posts (all tagged #MoneyMonday) which I hope may help you regain control of your finances.

So what qualifies me to give advice on this subject?

If you’ve read A is for… And then he left me you will recall that my ex husband left me quite hideously in debt. This was in 2004 which was just before the bankruptcy laws changed – I have to say if it happened to me now, rather than then, I would given serious thought to going bankrupt. Even in 2004 (when the after affects of bankruptcy were much harsher) every debt advisor I spoke to told me to file for bankruptcy.

I wont go back over the details on this post regarding the circumstances, they’ve already been posted here.

Below is a list of the debts I was left with (along with the figure I paid to each lender to clear the debt in full):

Negative equity £12,000 – (settled at £4,600)
Bank overdraft £1,555.54 – (settled at £1,150)
Business overdraft £1,840.69 – (settled at £921)
Bank overdraft £974 – (settled at £750)
Credit card £2,292.35 – (settled at £1,375.41)
Store card £2,635 – (settled at £2,355)
Store card £1,435 – (settled at £910)
Credit card £879 – (settled at £425)
Credit card £1,529 – (settled at £1,100)
Business loan £5,000 – (settled at £2,000)
Bank overdraft £1,841 – (settled at £1,400)
Bank Loan £1,428.71 – (settled at £800)
Store card £893 – (settled at £715)
Credit card £932 – (settled at £800)
Personal loan £781.20 – (settled at £781.20)

As you can see, even with just the debts that I can remember, I was left with £36,016.49 of debt outstanding which cost me £20,082.61 to pay off. I’m pretty sure the total amount I spent paying off debts was closer to £28K so there must be a few that I’ve missed. It took me 6 years – the last debt was cleared in February 2010.

My ex took one debt, an Abbey National current account overdraft of around £700. This was in joint names but he made me sign the account over to him so that he still had a bank account – this, of course, left me without one and with a completely ruined credit rating which meant that I couldn’t get one. For several years I had to use a building society passbook account and had no cards of any kind. Now you can get bank accounts specifically designed for people with bad credit that help you build your credit rating back up.

My divorce Solicitor told me that I wouldn’t be able to assign any of the debts over to my ex. She advised me to go bankrupt. The CAB helped me set up a payment schedule – paying £1 a month to each company and advised me to go bankrupt. The CCCS agreed with the CAB.

I didn’t answer my home phone for several years unless I was expecting a call, as most of the time it was a debt company chasing money, I still find it hard to answer it now. Some companies are ok to deal with – some are terrifying.

I will go over these points in more details over the next few weeks, not necessarily in this order:

1. Don’t ignore your debts. They truly don’t go away they just get bigger and more unmanageable.

2. Get a copy of your credit file – this is a huge step towards taking control, yes it will probably tell you things that you don’t want to know, but do you know what? The debts are there whether you acknowledge them or not! You can get one month’s free trial from Experian.

3. Take control. Get an A4 ring folder and some dividers and make a file for each debt, then make an appointment to see a debt adviser. A FREE one like the CCCS. DO NOT PAY ANYONE TO ‘SORT OUT’ YOUR DEBTS! Either phone them or write to them asap. Tell them you are experiencing financial difficulties. Tell them your income and your outgoings – make sure you include everything that you have to pay out for. They will help you.

4. Dealing with people chasing debt.

5. Debt ‘selling’ – it may looks as though different companies are chasing you for the same debt; that’s because they are!

6. If you have some money to repay a debt, always offer a reduced settlement figure – 99% of the time they will either accept it or negotiate.

7. Managing your budget.

8. Start saving!

I am very happy to try and help if you have any queries that you think I may be able to answer – just let me know on the comments section below and I will reply to you.


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