What advice would you give to someone not in debt

nuno

wow people on this site are really generous with advice!

katsu

Pre-owned is great value - especially cars. A friend of mine bought a new car as he could not afford a mortgage. Someone then crashed into him, not his fault at all, but he was terrified the car would be written off as he owed more on the car loan than the car was worth :eek:

Save up the cash to buy your cars outright (when you move out of London and need a car). We spent £500 on a car and drove it happily for 2 years. We then replaced it with a car we could not have afforded two years earlier - paid for in cash. Far better than my previousd car which I spent two years paying for and paying interest on the loan.

Avoiding interest payments makes your money stretch so much further. It is amazing.

tbourner

I wish I'd opened more bank accounts earlier!!

I'd suggest planning everything as well, do a SOA even. Definitely get your bills and important things on a DD out of a separate bank account, work out exactly how much they will be each month (yearly bills divide by 12 as well) and standing order that amount into that account the day after payday. We do more than that amount so we also cover MOTs and stuff that we don't have a set value for, but that's up to you.

Then your main account is left with your spending money. We have another joint account that we transfer our monthly shopping budget into, which has NO direct debits, NO standing orders and NO overdraft, it's purely our shopping money, when it's gone it's gone. The rest in our personal accounts is ours then (to pay off debts in our case ).

dantheman2010

Dont get a credit card and if you do have a small limit, DO NOT GAMBLE (that was my downfall), dont spend more than you earn. and £21k straight from Uni is a very good wage, well done you.

Hannah_10

If the worst happens and you suddenly find you're getting into trouble- STOP.

Do not take out a loan to pay an overdraft, a mortgage extention to pay a credit card or a payday loan to pay the catalog EVER.

Just stop.

When you're not panicking you make far better decisions. Start with researching your options through one of the debt-help charities.

And food is the FIRST thing you budget out of your income. Never ever the last. When I see people saying "and after all that I only have £15 left this week for food and electric" it's very saddening- food and other essentials come first- not last.

A lot of us are in the debt we're in because when the first signs of trouble set in we tried desperately to resolve them all the wrong ways. My festering £2300 overdraft paid the electric bill for example. What I now know that I didn't back then is - the electric couldn't have cut me off if they'd wanted and don't charge interest. See what panic does!

Life happens. Credit cards aren't the work of the devil, nor are loans, overdrafts or catalogs but things do happen sometimes, you lose your job, you get ill... Sometimes you find you have a debt you can't pay. At that point, at the first sign of trouble- GET HELP.

That overdraft of mine- that one that's for just £2300- that stopped me being a police officer... and all the while the electric couldn't have cut me off if they'd wanted.

foxgloves

Budget, budget, budget! You only have to over spend by just a couple of hundred pounds a month to rack up over 2,000 quid of debt a year. You know what your income is. That's how much you have to spend. First, your essential living expenses need to be paid. Then whatever you can afford to save in an emergency fund. Make out a standing order so that it goes out each month like a bill (only you're paying yourself, which is much nicer!) Whatever money you have left is yours to adopt what lifestyle you will, but within your means. My debts started when I was a student with a cavalier attitude to money & no concept of having an emergency pot of money to help with those big car repair bills, or special occasions. I also overspent every Christmas & in the January sales so was always really depressed come February when reality hit me. Have some treats sometimes if you have paid all your essentials that month, but remember that no amount of treats will come even close to how good debt-free feels. I now have one current account, two savings accounts (one for emergency fund & one for saving up for the sort of large items I would have once bought on credit), a debit card and one credit card which I pay off every month & accept could be useful in an emergency (not my old sort of emergencies like needing new boots, shoes & expensive skincare!) Avoid credit. You are just using someone else's money & paying them for the experience. Good luck! if I could have had my LBM 15 years earlier........

angelicmary85

nuno wrote: »

wow people on this site are really generous with advice!

The people on here are giving you the benefit fo their wisdom, some people perhaps are offering you advice on what they wish they had done differently. You've been offered some excellent advice, use it!!

Taking the time to work through all the different boards may well save you a small fortune. :T

Butti

Annisele wrote: »

As a contrary view...I don't think that credit cards are evil. Section 75 can be an extremely useful way to get your money back if, for example, a seller goes bust before it delivers an expensive item to you.

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How about 'Credit cards are good in a cup of frozen water in the freezer'. i.e. Think hard before you use them and only use them rarely.

They are good for hiring cars etc.

B

Marisco

We have our DD's and standing orders to go out the 1st of every month,(oh gets paid on the last day of every month) it takes a bit of time and effort to work it, but we know then that what's left is "ours"! Good advice about paying cash for a car, we had a car that was on its last legs, but kept it going until we'd saved enough to buy another!! Its great going in with a pile of notes and paying outright - and we got some knocked off for cash:) Takes some saving and planning mind, but worth it in the end!

Jesthar

Not in debt (aside from Student Loan (:mad:) and mortgage), but may as well chip in!

1) Keep a spending diary; I use a spreadsheet of my own design but each to their own. It is ESSENTIAL for seeing where all the pennies go, so you don't find yourself asking at the end of a month 'where did that £130 I'm supposed to have spare go to?'

2) Believe in COD - Cash On Delivery. Otherwise known as 'Don't buy it if you haven't got the money for it, and if you want it but can't afford it, save up for it!'

3) Credit cards have their place, if you can use them sensibly. I have one cashback credit card I use for all normal shopping and big purchases, and I have a direct debit set up to pay it off in full every month. I treat it as a debit card and certainly NOT as 'free money', and as a bonus get a little money back from using it evey year And, if I ever did need it, it provides an emergency fallback.

4) Storecards and accounts do NOT have their place - the APR is too horrific! Either refuse them, use the introductory offer and cancel, or pay off in full any time you spend.

5) Use cashback sites and get paid to shop!

6) If you have a mortgage, overpay on it as much as you can afford to from as early as possible - it will literally save you thousands AND pay it off years sooner! So make sure you can get a mortgage you can overpay on, but get the overpayments back from quickly if needed.

7) Save yourself up a few months worth of essential living money (mortgage/rent, utilities, food etc.) before splashing out on anything - if you are unfortunate to become uneployed for some reason, you'll need it. Not a fun thought, I know, but better safe than sorry. If you don't have a mortgage, save as much as you can into an ISA each year too. If you have a substantial amount to invest, spread it around so you are fully covered if a bank gets into trouble.

8) If you overspend in a month, DON'T PANIC! Some months it happens, even some *years* (I'm having an expensive one this year, unfortunately :mad:. But I have reserves ). As long as it is not a habit (which your spending diary will help you spot) you just need to be a bit careful and get back on track as soon as you can.

9) Remember, financial institutions exist to make a profit, not to put your interests first! Taking the time to compare products, and get advice independent on major thinks like mortgages if you can.

10) Remember to live! Splashing out sensibly when you can afford it is not a crime, you only live once and you should enjoy it!

11) If you do get into trouble, DON'T ignore it - ask for help as soon as possible! The sooner you tackle debt, the easier it is to deal with.

~Jes