Buying a house is exciting – and that’s why it’s important to take a step back and check that you’re weighing up all the facts every now and again.
That might sound boring – but thinking with your heart instead of your head can lead to issues further down the line… you’d be amazed at how many people say “I wish we’d just thought about…” a year or so after moving home.
Don’t worry though, The Loans Department has shared these 9 important considerations you can refer back to throughout the process!
“How much can I/we afford?” is a question that people often approach with no real intention of getting a calculator out and making some notes.
If you run your finances as a tight ship, then you’re probably already up on what you can afford – but if you’re in the habit of living month-to-month with no real system to your income and expenditure then now’s a good time to get a good understand of your financial picture.
The reason we say this is simple – money is very difficult to keep track of. Think about how much you spend on food shopping each month, now add the figure up from your bank statements – there’s a very good chance that most people are significantly out on those two numbers!
Work out what comes in, what goes out and what your monthly commitments are – then work out what you can afford to spend each month. Miscalculations at this stage can have a big impact on your enjoyment of your new house.
It’s easy to hope for the best when you’re buying a new house – but the only thing you can really take as a certainty is how much you can afford now.
Perhaps you’re thinking about that job promotion that’s just around the corner? Or maybe you’re of the opinion that you can slice your outgoings down to size when you move in? Perhaps you can – but to be sure, try cutting back now and see if it suits you.
If your plans don’t come to fruition then you’re going to be very uncomfortable in a home you can’t quite afford.
Looking around potential new homes is wonderful – and if you’ve seen any day-time television you’ll be well aware that sellers often look to make their homes as ‘sellable’ as possible, stripping out as much as they can so you can see yourself and your things in the space.
Combine this with a charming and persuasive estate agent and you’ll quickly find yourself saying yes when you were just planning a look around. Unless you’re visiting with the intention of making an offer then don’t – and don’t be swayed by estate agents suggesting anything different. It’s a big decision; do it on your terms, not those of a salesperson.
As a nation we’re often stereotyped as being polite – we tend not to feel comfortable haggling over price or terms. If this sounds like you, buying a house is a time to step out of this comfort zone.
You’re not hear to make friends with the vendor – you want the best possible price. Start low – you can always move up – but if they say yes right away, you might find yourself wondering if you could have gone a little lower…
This could be the house you’re going to live in for a significant amount of time – so don’t make a decision based on 10 minutes of looking around!
If this house looks like it could be the one, then explore every inch of the place – will you fit your furniture in? Where will guests stay? How accessible is the storage? Can you put a cat-flap in? Will your car fit in the garage?
Some of those are obscure questions – and you’ll have your own list – but it’s important not to leave any unknowns if you’re going to be 100% happy in your new place.
When you walk into a house you love it’s possible all those important questions will slip out of your mind. Write them down and note the answers as you look around – your brain might not be trustworthy when your heart is excited!
Google Maps is useful – but it’s not going to give you a really accurate feeling for what the drive from your home to work is like at 8am on a Monday morning, nor is it going to tell you whether or not you’ll have to park 5 streets away after you’ve been shopping.
Get a feel for travel to and from the house. If you can, travel your commute routes from the house at times you’re likely to be making them, see what the school-run is like – and so forth. Get a feeling for what travel will be like if you decide this is the house for you. You might not worry about an extra 10 minutes on your commute now, but those minutes add up…
When you buy a house, you’re buying a life in a new area – whether that’s somewhere different in the country – or just a new part of the same town or city.
Make sure you like the area before you commit. What’s the walk/drive to the local shop like? Are you going to feel comfortable will your family accessing the local amenities? What are crime levels like? Are you likely to see flooding? Who are the neighbours?
It’s unlikely that you’ll be able to shut the outside world out completely – so aim to find a little bit of the outside world you’re happy with!
No one can predict the future – but you can have a good guess at what life is going to look like for you during your time in this new house. Will your family expand? Could you extend? Could you remortgage further down the line? What development will be happening in the area?
These things might not impact you for years – but years can fly by – so it’s better to think about them now, rather than end up wishing you had.
Financial worries are regularly reported to be the worst source of stress for adults, and stress can have a seriously negative affect on your mental health. But don’t worry, money is not as difficult to keep under control as you think it is. Here are five top tips for helping you make the most of your money for a stress-free life.
This might seem quite basic, but you’d be amazed how many people aren’t actually sure how much of their income is expendable after tax, rent and utilities and how much they spend. A budget can help you get in control of your finances, and, most importantly, help you to see where you can afford to cut-down your spending. Maybe you don’t need to buy yourself a morning coffee every day? Or maybe your finances can motivate you to quit smoking?
This might be the most crucial step, and it is very important that you consider everything when you are figuring out a budget. If you have internet banking, or access to your previous statements, use the past 3 months of expenditure as a basis. But, don’t forget all the seasonal, one-off costs, such as Christmas, holidays and birthdays. It may take you a few months of trial and error to get the balance perfect, but you will feel much more in control of your finances.
Almost everyone will have a certain amount of debt. Whether it is student debt, credit card debt, a mortgage, or a car loan, debt has become a very normal aspect of modern life. This means you need to get on top of them, just like you got on top of your income and expenditure. First of all, make sure you include all your debt repayments in your budget. This is very important as some people can lose track of their debts, particularly if a creditor sells your debt on to another provider, and this can cause a really nasty shock later on when it re-emerges.
Secondly, you should note down what your ‘priority debts’ are. These are debts like tax arrears, which have very severe consequences if you don’t pay them. While it is important to pay off non-priority debts, and, at the very least, keep up with minimum monthly payments, the immediate consequences of not paying off a credit card bill is much less severe than not paying tax, rent or utilities.
Last of all, you should make sure that you understand your debt solution options. Most people think that bankruptcy is the only option when you are in financial trouble, but the truth is that there are a huge number of debt solutions available for people in all kinds of financial situations. Some are legally binding, while some are informal, but there is almost definitely a solution for you if you are stressed and struggling. There are plenty of websites and advisors who can help you if you want to find out more.
When you have organised your budget, and sorted out your debts. The next step is to think about savings. The most important thing to do is save for a financial emergency. Generally, it is advised that, before you save for anything else, you put aside 6 months subsistence in case something happens that prevents you from working for a while. This may be moving location, being injured, having a child, or one of the many other life events that can dramatically affect your financial situation.
So, for example, if you spend £300 on rent, £50 on utilities, and £200 on expenses every month, you will want to make sure that you have £3,300 saved to help you survive a financial emergency.
Now that you are prepared for the worst, you can start to think about your future. It is often argued that you should try and save at least 10% of all your pay checks, but the truth is, most people find that they should really be trying to save as much as possible. You may have short term goals, such as a car, or a holiday, but you will also have long term goals, such as your pension. Having so many goals can make you feel like there is never enough money, but take it one day at a time and you’ll be alright.
First of all, you need to separate your long-term goals from your short-term goals. Any goals which are shorter than 10 years into the future can be dealt with through normal savings products, with a bank. This should allow you to put aside money, bit-by-bit, and earn a little bit of interest. These goals could range from anything from a particular holiday, to a car, or, even, a deposit on a house.
For long-term goals, you might want to think about investing. This is because, if your interest rate is lower than the current inflation rate, your money may begin to seriously lose value if you only rely on savings products. This is more complicated, and not for everyone due to the risk involved. You are also likely to need more expendable income to be able to try investing. If you want to know more about investing, and savings, click here.
As we said earlier, money is one of the worst stresses that life throws at you, so the single most important thing you have to learn is to take a deep breath. Money should always be respected, but it is also not the most important thing in life. Make sure you are still treating yourself well; whether it is a bit of retail therapy, tickets to the match of the year, buying yourself a good-quality laptop for your studies, or just hanging with your best mate – there are all sorts of things that you do that are just important as saving money.
If you’re struggling with your finances, the idea of trying to get back into control might be one that fills you with dread.
You’re not alone in your situation though, millions of people face debt problems and trying to get on top of them can be daunting. However, when you do – you’re virtually guaranteed to feel better.
Knowing where to start is sometimes a problem – debt can be overwhelming. Follow our step by step guide and, usually in a matter of hours, you’ll start to feel better and have a more in depth understanding of where you stand.
Step 1. Do you need some support?
Talking to companies about your debt can feel intimidating – people often feel like they’re going to be ‘told off’ or face harsh criticism when they talk to the organisations they owe money to.
Firstly, we can reassure you – this isn’t going to be the case. It’s in no one’s interest for you to be spoken down to when you’re on the phone. Generally, organisations want an open line of communication between themselves and you, so being unkind isn’t the way to go.
If you’re still a bit unsure, people like to have a friend or loved one on hand when they’re looking through paperwork and making phone calls. If you think it would be useful, invite someone you know you can trust around and put the kettle on – it’s always good to have some moral support.
If there’s no one you know that might be able to help – you can book to talk to someone at the Citizen’s Advice Bureau – you can sometimes us a room there too.
Step 2. Collect all your financial information together
It’s useful if you can make a list of every company you know you owe money to. This might include banks, loan and credit card companies, insurance providers, the companies that supply your utilities, TV or mobile phone contracts – as well as companies who you’ve bought things on credit with.
If you’ve borrowed money from individuals – friends, family or other people you know, add them to the list too, you might not have a formal agreement in place with them, but it’s important to get a full picture of where you are.
If possible, find contact numbers and your account reference numbers for each company. You’ll usually find these on letters or emails you’ve been sent.
Step 3. Prioritize your debt
If there’s more and one person or company you owe money to it’s vital that you deal with the most important ones first.
The most serious consequences come from falling behind on payments for the following:
If you owe money for any of these things you should consider these your priority debts. These are the companies or organisations you should speak to first.
Although all debt is serious, there are less severe consequences for not paying the following:
Of course, this isn’t to say you shouldn’t talk to these companies or people too, you will need to – but they can be the calls you make after the priority debt calls.
Step 4. Work out how much you can afford
Working out a budget at this stage is helpful. It doesn’t have to be in depth, as it might need to change to account for your priority debts.
You’ll need to know how much money you bring in each week or month. You should also work out what your essential living costs are, as well as what your current expected payments are to each of your creditors.
If you earn a variable amount each month add up the last 3 months and divide the amount you get by 3. This will give you an average month’s earnings and a good guide for your income when you talk to creditors.
At this stage you might have a figure in mind you’d be comfortable to pay going forward. Note this down too, as it’s likely they’ll ask.
Step 5. Talk to priority creditors
When you talk to the companies or organisations you own priority debt to you should explain to them exactly why you’ve been unable to pay. Honesty is always the best policy – and gives them the information they need to come to an arrangement.
Explaining to them that you’re working through your debts systemically in an attempt to get some financial control back is good, it shows you’re taking responsibility and is a good indication you’ll keep new payments up.
Always note the name of the person you talked to and when the call was. If possible, confirm what you’ve agreed by letter or email – and keep a copy of your correspondence.
Try to make a payment as soon as you can, even a small one is an indication you’re taking the debt seriously. Now you’ve started talking to priority creditors – work through them all as soon as you can to avoid any further charges or action being taken.
Step 6. Talk to non-priority creditors
It’s likely that non-priority creditors will chase you more often than those you owe priority debts too – however, do make sure you get the priority debts in order before you move on to these.
Now you’ve made contact with the most important creditors – you can take the amount you’ll be paying them and add it to your essential outgoings in your budget.
Once again, talk to the companies and organisations you owe money to, explain that you’ve got arrangements in place for your priority debts but that you’re keen to cover everything you owe. Ordinarily you’ll be expected to talk a creditor through what you’re paying out and coming to an agreement about how much you can afford.
Be careful not to over commit to the first company you speak with if you owe more than one lower-priority debt, you should act fairly and try to pay an equal amount to each.
Once again, record who you’ve spoken to and any agreements made.
Step 7. Show your working out if necessary
You might find the companies you’re talking to want to know how you’ve come to the figures you’ve offered. This is fine – if they request bank statements or payslips it’s simply to make sure you’re paying things off or catching up as quickly as is possible.
Remember, priority debts should always be handled first – with other debts after that, even if you’re advised otherwise.
Nowadays, it has become the norm for people to save for everything. It could be a new car, or it could be for a deposit for a new home. However, more and more people are finding the cost of living to be high, and with so many financial commitments to meet, it can be difficult to put money away for a rainy day.
It can be difficult to save if income is low, but that doesn’t mean it’s impossible. Sure, there may be some changes you need to make along the way, but once you’ve tailored your budget in the right way, you should see your savings grow.
Don’t Underestimate Shopping Lists
Whether we do our grocery shopping online, or in the store itself, there’s no denying that there is a slew of different offers that try to persuade us to part with our money. This is where having a shopping list can be helpful.
Going shopping without a list can mean that we’re probably spending more than we need to when it comes to the shopping, money that could be better used towards something else. It can be a good idea to write a list of necessities which will not only help us towards our saving goals, but also ensure that our budget is in check.
Don’t Over Commit
When trying to get our savings in order it’s easy to assume that we must deposit a set amount each week or month. While there’s nothing wrong with making a few cutbacks to factor in the money we’re trying to set aside, we shouldn’t look to place ourselves in financial hardship.
Some weeks may be better than others, so we should only look to save money where it’s possible. Even if you feel the amount is rather small for a savings account, it soon mounts over the year.
Take Advantage of Services Offered by Your Bank
While banks can be seen as the ones who are looking to take our money away, the truth is that they offer some truly unique services that look to aid us in our saving goals. Although some banks may not offer the service, many will offer a service where your purchases are rounded off to the nearest pound, with the difference being deposited into a nominated bank account, which is normally held at the same financial institution.
For example, if you were to spend £5.20 on your shopping, the amount taken would be £6.00. The £0.80p difference is then deposited into your savings account. While it may not seem like a large amount in the interim, over time, you will be surprised at how much you save over time.
Seek Out the Best Interest Rates
While finding an account with a good interest rate would make us rich anytime soon, it certainly makes a difference when it comes to maximising your saving options when on a tight budget. The best interest rate may not always be with your current financial institution, so in some instances you may need to look to transfer from your current account to an external savings account.
If you’re unsure of where to start when it comes to finding the best interest rates, then why not use one of the many comparison tables available online. They can help compare accounts in a fraction of the time it would take you to carry out the task manually.
Cut Down on the Commute
While it’s a necessary expense, the commute to work can be expensive, especially with the distance some of us have to cover. However, this doesn’t mean that we should spend as much as we do.
If you currently pay for your ticket by the day, why not look as to whether any savings can be made by purchasing a monthly or annual pass. Similarly, if you frequently travel by bus, they may offer a discounted ticket that can be used for unlimited travel during the week.
If you travel by car, then why not see if your place of work has a carpooling system in place. Not only can it be healthier for the environment, but also easier on the pocket.
Try and Cut Down on Waste
Cutting down on waste can be tricky, especially if we share our house with a lot of little people, but it’s not impossible. Things like milk and bread may not seem expensive, but having to constantly replenish goods that have been spoiled can soon add up. Asking everyone to ensure that food is stored properly ensures that we are getting the best value.
The same can be applied to meal preparation. If we constantly serve up helpings that re too much, we are effectively throwing money in the bin. Of course, there will be waste at times, but doing our best to minimize it ensures that we are able to save more money in the long run.
Buy in Bulk, When Possible
While it may cost us more in the short term, buying in bulk can actually help us save money over time. This means that more can e deposited into our savings account as opposed to being spent in replenishing supplies.
Of course, there are some things that can’t be bought in bulk, but if you find that you’re forever spending money on toilet tissue and washing powder, then it may be more cost-effective to buy in bulk.
While we may not be able to save at the rate we would like, saving money where possible means there is more that can be set aside. Try not to be discouraged, as the starting period may seem a little pointless. However, once you have made a few adjustments, you will find that your saving endeavors soon gather traction.
Investment is an activity where you spend a certain amount of money to triple the amount whether in short or long period. Investment can be anything from buying stocks to being part of a business venture. Either way, investment is the reason why you can earn money, and there are a lot of benefits when you make investments. A lot of people would love to invest because of the benefits that they can get. Aside from that, you will not only improve your finances, but you will also get a chance to improve and build yourself to have better lives in the future.
So why does one need to invest? There are many reasons why you should start one, and the following benefits are listed below.
• You continue to spend money
When you are about to invest, then the benefit to it is you can still spend money, but this time rather than adding more items in your home or adding more bills to yourself, you are spending money to earn money. Which means you wouldn’t have to worry about saving because when it comes to the investment, you are spending to earn.
• You earn money through this
Another great benefit of investment is you can earn a lot of money from it. This is the reason why a lot of people enjoy making investments because you would only need to spend a couple of hundreds and after a while, you will be earning thousands if you choose the right investment perhaps.
• You can do this anywhere
Investment doesn’t mean you would always be in the office because as long as you have a gadget that can keep up with all your investment, then you can do this kind of work almost anywhere as long as you have an internet connection. From the comfort of your home to the park, you can do the work there. This is very flexible, and you get to earn a lot of money.
• You have less work to do
This might be the great thing about investment, and that is you would have less work to do. There are after all financial services that can make your investment so that you would have less work to do. This way rather than stressing about earning money, making investments lets you relax and earn a lot of money.
• Many options to invest
There are so many types of investment same as many choices you can choose. Investment can be through buying properties, starting a business and much more. When you decide to invest, it is important that you know where to put your money in. You have to check the background thoroughly if you are investing in a company, or perhaps you have to do some research if you want to buy properties for you to get the best location.
Investing doesn’t always require you a big amount of money; there are so many ways to invest. Even offering your skills can also be an investment, and then, later on, expand it. To be successful in it, you will need to assess yourself what are your financial goals, because you might be doing the wrong way. Some people want to invest because they want to earn extra money so they can increase their lifestyle, this shouldn’t be your goal in life. Investing also means money management skills; you invest because you want to grow financially and be free from debts. With that, you cannot only live a life you want you are also able to do the things that you love too.
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