It can be a good idea to think about what type of credit card will suit you. If you are …
It can be a good idea to think about what type of credit card will suit you. If you are considering getting a card, then it can be good to look at this, at this stage. If you have already got one, then it can be a good idea to think about whether the one you have is the most suitable for you. There are differences between different types of credit card. One type that is perhaps not that well known is a cash back credit card. These can be great, but they also have disadvantages and it is a good idea to understand a bit more about them so that you can decide whether you think that they will suit you.
How the Cashback Works
The cashback is paid depending on how much you spend on your card. So, it is a percentage of everything that you spend on the card. This means that you will get more cashback if you use the card more. It is worth noting that it will be a very small percentage of what you spend. The amount will vary a lot though depending on which card you pick and so it is worth comparing the different cards to see which has the best cashback rate. It is worth being careful though as there may be additional terms – you may have to spend over a certain amount of money in a month or there may be an annual fee on the card. So check all of the rules before you sign up.
It is also well worth checking out the interest on the credit cards as well. It is possible that they will charge a higher interest rate on this credit card because they need to make the money back to cover the cost of paying the cashback. This will not ne a problem if you plan on repaying the card in full each month. The interest rate will be irrelevant as you will never have to pay any interest. However, you do need to be careful as you never know when there might be a situation when you cannot afford to repay the card and you have to start paying interest. It is also really wise to make sure that you set up a direct debit to repay the card in full each month so that there is no chance that you will forget.
Will it Benefit me?
There is a risk with a cash back card that card holders will use it as an excuse for spending more money on their credit card. It is fine if you decide to pay things on the credit card rather than a debit card or with cash, that you would have bought anyway as you will benefit from the cashback. However, if you like spending money and do not need much of an excuse to spend more, then this could be a problem. You might feel that it is good to buy extra things, that you would not normally of bought, so that you can get the cashback. It is so important to remember that the cashback is a tiny amount and you should not use it as a reason to spend extra money. If you feel you will be tempted to use it as an excuse to spend more than you can afford then it is probably best to not get one. It is also not a good choice for anyone that does not repay the full balance of their credit card. It is far better in this situation to get a card with a really low interest rate.
There are two main type of mortgage when looking at how they are repaid. They are interest only and repayment. …
There are two main type of mortgage when looking at how they are repaid. They are interest only and repayment. Most people will have a repayment mortgage and it might be the one that you are likely to go for as well. However, you need to know what each type is and think about which will suit you the best so that you can decide properly whether an interest only mortgage should be an idea that you abandon or embrace.
What is an Interest Only Mortgage?
This is a type of mortgage where you only have to repay the interest every month and you do not have to make any repayments of the lump sum that you have borrowed. A few generations ago it would be the case that interest only mortgage holders would invest money in an endowment. This is a type of investment which holders would pay into monthly in the hope that it would increase in value enough to repay their mortgage at the end of their term. This worked well until there were financial problems and the stock market crashed and a lot of people had to start paying more in so that they could be sure to meet their target when their mortgage was due to be repaid. This put a lot of people off investing in endowments and many people switched to ISAs and other methods of investment, often using a financial advisor to guide them.
What is a Repayment Mortgage?
With a repayment mortgage you will simply repay some of the mortgage as well as the interest each month. This means that the amount that you owe will shrink over time and you will whittle away the mortgage. This can be something that some people prefer as they feel it is lower risk as they will be reducing what they owe. It means that if they move house, they will not have to carry over such a big mortgage which might mean that they will be able to borrow more money. They also just feel happier and more secure knowing that it is guaranteed that they will repay all of the mortgage. However, this could be a more expensive way to pay for a mortgage compared to the interest only as the money invested could increase in value a lot and it may even mean the mortgage could be repaid early or once it is repaid there could be money left over. Obviously, the reverse could happen depending on how good the investment has been.
Which is Best for me?
Some people really like a repayment mortgage because they like the security that they are being forced to repay the money they have borrowed and they like to see the amount reduced a bit each month. This makes them feel happy that the debt is disappearing. However, there are others that like the fact that they have more freedom and they can invest money and only repay the interest. It means that there is a chance that they might be able to make lots more money than they need and they can change where it is invested if they want to, if they feel it could make more elsewhere. However, there is a temptation that you just pay the interest and do not worry too much about putting money away to pay off the mortgage. There are people that get to the end of their mortgage period and find that they do not have enough money to repay the loan and they will have to sell it to cover the cost, which is not a good situation to be in. So, you will need to think what might be best for you considering how you are with money.
It is worth thinking to start with whether overspending is actually making you happy. You may get pleasure from buying …
It is worth thinking to start with whether overspending is actually making you happy. You may get pleasure from buying an item when you first buy it of course. But how long will that pleasure last? If you have had to borrow money to buy it and repaying that loan stresses you or you have to go without other things to pay for that item then that may not be much fun. If you want other things more but you have already spent the money, then this can be a factor as well. It is therefore worth thinking back about purchases that you have made in the past and think about whether you really have enjoyed it as much as you thought. Also think about items that you want to buy and consider how much you will use them and whether they really will make you happy and be fun or whether you will soon move on to something else.
You Can Pay Less and Still Buy as Much
It is a good idea to start comparing prices on the items that you are buying. Think about every item that you buy from insurance to carrots and whether you could pay less for them. If you can reduce the amount you are paying for different items, you will be able to save money but still be able to buy as much. It will take some effort to do this but it can actually be really satisfying to be able to know that you are no longer paying more than necessary for the items that you buy. Of course, there may be some items that you want to pay more money for. This might sound odd but it is about value for money. Sometimes it is just not worth paying less for things because the quality is not so good, but sometimes we will be paying more than necessary and we can cut down.
You May Enjoy Things More if you Have Less
It is also worth considering whether you might enjoy things more if you actually do not buy so many things. You will have more time to enjoy the items that you are buying if you do not buy so many different items. You might even rediscover things that you already have that you have not really had the time to enjoy. It is worth considering whether this might be the case with you and your things. It is easy to think that we will have more fun and enjoy life more if we spend more money. However, there is a great freedom in learning to love what we already have and be satisfied with that. It might a bit new age hippy, but actually it can be something that we can all do. We can all start to appreciate things more. Think about the time ad effort that went into the things that you have bought. Someone has spent time designing the item and someone else has spent time making it and if you do not spend time appreciating that then their time is not being appreciated. So, if you can spend more time enjoying each thing that you buy then you will end up spending less and you might even have more fun.
A financial advisor will be able to provide you with help with financial matters. Many people will use one when …
A financial advisor will be able to provide you with help with financial matters. Many people will use one when they are taking out a mortgage, for example as they will be able to explain to them about all of the different mortgage types and also they will be able to let you know which they think will suit you the best with regards to your specific circumstances. People might also use them to help them to pick a pension or to find an investment. Most financial advisors are independent which means that they are not employed by a specific company and therefore they are not biased towards a particular product. It used to be the case that they would earn commission on recommendations that they made which meant that they were often biased towards products which paid them the best. However, these days this is not allowed and they have to charge you for their service. This can seem annoying but, if they find you the right product you should be able to spend less or gain more and so that you soon make back the money that you have paid back. There are still some financial advisors that work for particular companies, such as banks and building societies and they are free and will be able to help you with choosing products form that specific place if you decide you want to use them. These will only recommend the products that the institution they work for or any sister companies they are associated with have. Which means what they have to choose form will be much more limited.
When Might I Need One?
If you are taking out a mortgage, investing money, choosing a pension or something like this, then you might want to consider using a financial advisor. You will need to pay for them but as the financial product you are choosing is so important and worth so much money then you could find that it is well worth it. They might be able to direct you to a product that you would not have found on your own and this could help you to be able to make a lot more money or pay less in interest than had you just gone with one that you had found it.
Will They be Worth the Money?
Whether they are worth the money will depend on two things. Firstly, if you do not pay them to do the research into the different products then you will have to do that yourself and this could take up a lot of your time. You might feel that your time is worth a lot of money and so would rather not do this and pay someone to do it for you. You may also not feel confident doing this research yourself. You may feel that you do not understand it all well enough and therefore that you should get someone who knows what they are doing to help you with it. You will also need to think about whether you think that you will be able to make back the money that you have paid for the advisor due to the help that they have given you.
Will I be no Fun if I Reduce What I am Spending?
It can be good, if you are struggling to pay your bills, borrowing too much money or not saving much, to try to reduce how much you are spending. However, many people are put off doing this because they think that it will make their life miserable as they will not be able to buy all of the things that they like any more. However, is this right?
It can be hard for us when we see our family struggling with money especially if we are in a …
It can be hard for us when we see our family struggling with money especially if we are in a position where we are not worrying about our situation. Sometimes helping them can be hard though but there are things that you can consider doing.
Talk to Them About it
If you know they are struggling then it is likely that they have mentioned it. This means that they want you to know and hopefully are therefore willing to talk about it. It could be a good idea to sit down with them and ask them what has happened and what went wrong. It will probably be a relief to them to be able to talk to someone about their problems. It might even help them to start working out a solution, especially if you prompt them to think about this. Guide the conversation gently to asking them about how they are planning on solving their current problems. This can get them thinking about what they should be doing and they might come up with a plan by themselves. However, if they haven’t got a plan you might be able to help them by suggesting a few things that they could try. Hopefully, because you have listened to their concerns and you understand their situation, as long as you have not judged or criticised them, they will take some notice of your ideas and start to make some changes.
Give them Money
You might be tempted to give them some money to help them out. Of course, there is nothing to stop you doing this and you could help them out of the situation that you are in. However, giving people money is not always a good idea. This might sound a bit odd, but it can mean that they get to rely on having the money. If they know that there is money there if they need it, they might not be very careful about looking after their own money and always come asking for some more when they need it. This can lead to them doing it for their whole lives and the problem with this is that when you run out of money or when you die and there is no more money they will have no one left to fall back on and will not know how to cope without the hand out. It can therefore sometimes be kinder to not give them the money or only give it to them when they are really desperate. An alternative could be to lend them the money.
Lend them Money
If you lend them money then you can decide to give them a very low interest rate or no interest at all. You can come up with whatever agreement with them that feels right and fair with regards to repaying it as well. This means that you will get your money back and they will not be replying on you in the same way. Of course, they may still keep coming back to you for loans over and over again, so you may need to be quite careful in how you do it. Or use a more reputable lender like Emu.co.uk. Perhaps only doing it if they have no other options available to them and having a strict repayment system in place so that it is not an easy option for them and they learn that borrowing is not an easy option and saving up for the future and being careful with what they are spending is a better plan to have. It can be hard to see them struggling, but you have to think about whether your actions will have a detrimental impact on them in the future and perhaps leaving them to struggle a bit now will have its rewards for them in the future.
Will a Financial Adviser be of use to me?
There are some people that regularly use the services of a financial advisor. However, there are also some people that never use one at all. You may wonder whether it is a service that you should consider using yourself. It is worth knowing what they can do and then you will be able to decide whether that service will be something that will be useful to you.