Budgeting |
|
Your Money > Budgeting Articles > 10 things not...
|
|
By Sarah Modlock
It's now unofficially official: we are in a recession. There is so much hype, so much information, and yet the way forward is far from clear. While the right thing to do may be different for everyone, there are quite a few wrong turns which could make your financial worries worse right now - and all the more so as we head to a traditionally expensive time of year. Here's 10 ways to make sure the recession doesn't get the better of you. 1. Panic stations It's not the British way to get over-excited, but even the coolest heads can find it hard to maintain a steady approach to the current turmoil. Whatever you decide to do, don't do it in too much of a hurry. Keeping in touch with latest developments will help you judge how and when to take action. For instance, with the Icelandic banks, there was a small window after one was nationalised and the others were in the spotlight. Those who moved their money out in that fortnight are glad they did. At the other end of the spectrum could be decisions about your home. If you're struggling with mortgage payments, start talking to your lender rather than rushing around for loans to cover your arrears. 2. Safety play Not everyone seeks safe harbour in a financial storm but if you want to ensure you savings are not going to disappear then consider obvious secure options such as Premium Bonds, National Savings and the protection offered by nationalised banks such as Northern Rock and Bradford & Bingley. And there is always Dublin. Avoid investing in anything you don't completely understand. And if you're considering withdrawing your cash and putting it under the mattress then be aware this is one of the first places thieves look, according to research from Halifax Home Insurance. Other favourite hiding places which don't work are the sock drawer, on top of the wardrobe and in a bedside drawer. 3. Waiting game Avoid falling into the trap of relying on something to happen. The media may talk about interest rates coming down in the next few months but that does not mean they are guaranteed to drop. More annoyingly, when interest rates do fall, the reduction may not be passed on by your mortgage lender although you can be sure the banks will be very quick to pass it on to savings accounts. Equally, counting on a bonus or pay rise is unwise in a climate where many employers are freezing increases to protect jobs. If you have something to sell, whether it is property or gold jewellery, be realistic about what you can expect from it. 4. Robbing Peter to pay Paul It's true that credit is harder to get and more expensive than before but many people still find card and loan applications dropping through their doors. It's tempting get your mitts on more cash, even if you're not desperate for it right now but want a buffer. It's also easy to view credit limits as extensions of your income instead of debt which must be repaid. More debt will just prolong the agony and add to your worries. 5. Ditching insurance It's easy dump certain policies to save money each month. Because you're stuck with car tax and insurance, you may decide to stop paying your premiums for life cover, private medical insurance and even your pension. New research from comparison site uSwitch.com reveals that almost half of Brits have cancelled insurance or pension contributions in a bid to cut household expenditure and ease financial pressure. This means that potentially just over 19 million people have reduced their financial security, or ditched it entirely, to claw back some cash, often between £50 and £100 a month. Before you stop paying premiums, find out whether any cover is available through your employer or even your credit card. If not, take some time to shop around for cheaper policies that still provide the protection you need. Or adjust your existing policies to increase excess or the length of time before a payout, if possible. People with no dependents will have less to consider than people with a spouse and children. 6. Delusion When you're in debt, it can sometimes be very tempting to say 'what the hell' and spend more. After all, you can't see yourself paying it all off for a long time yet and so you may as well add some extra and have fun. Resist this cycle at any cost. It may make you feel a lot better in the short term but, even if you avoid a guilt trip immediately after, you are digging yourself in deeper all the time. Try going out without your plastic and spending only cash. It's much harder to hand over five £10 notes at a till than tap in a PIN. 7. Quick fixes If something is too good to be true, it probably is. This applies to financial matters more than anything else. So if your mate down the pub says he's into a great share scheme, think twice. If it was that easy wouldn't everyone be doing it? If you are offered money making schemes of any kind, treat them with caution. Make sure you read everything and check any financial firm you are dealing with on the FSA membership list: www.fsa.gov.uk. If you are desperate for credit don't be tempted by the offers that come through your letter box - you could do better. Avoid any 'credit fixing' services which charge you to repair your credit reference file. They cannot do anything for you that you could not do for yourself, for free.
8. Opting out There is a long-standing myth that if you fail to answer letters and phone calls from your bank or even the courts then they will give up and go away. In fact, banks value communication above everything. OK, so not above cold hard cash, but they do want to know that you have not skipped town and they are more likely to head off to court or sell your debt to collector if you do not keep in touch with them. You may be surprised at how flexible they can be - allowing you interest holidays and reduced payments when times are tough. 9. Doing nothing Don't assume your money is working as hard as it can. Unless you have reviewed and switched all your major service providers recently, then chances are you can save money by comparing and moving. Electricity and gas are obvious ones, along with land line and broadband but consider your mobile, credit cards and loans as well as loan protection, car insurance, home insurance, overdraft and your bank account. Make sure your savings are earning as much as possible too. 10. Losing out It may not be the most exciting way to spend time but setting a budget and shopping around will help you stop wasting money and make the money you do spend go further. Don't assume that everything is more expensive in the crunch. Ask for best deals, cheaper packages, reduced prices. The worst anyone can say is no. Useful links: |
| ||||||||||||||||