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Money Worries?

money worries real women today

In this day and age, we all have them and they manifest themselves in a number of different ways.  Real Women Today take a look at plans you could make incase the worst case scenario happens to you and your family.

If I lose my job [or my partner does] there’s no way we’ll survive.
In an ideal world we’d have six months’ worth of income stashed away, but not many of us have that luxury and the current economic climate is certainly prohibitive. More realistically, you need to set aside what you need to live on – work out a minimum monthly budget covering essentials, such as your mortgage/rent, utility bills, Council Tax, food, car, insurance and any debt repayments. You actually live more cheaply when you’re not going to work, saving on commuting costs, lunches and clothes. Once you know how little you need, you’ll know how much to save – and it’ll seem less daunting.

Remember, you’re unlikely to get more than just Jobseeker’s Allowance unless you have a small amount of savings and your partner doesn’t work. Check if you’ve got payment protection insurance covering a loan or your mortgage – it should cover repayments if you lose your job. But don’t take out a policy if you already know your job is at risk – it’s unlikely to pay out. Switch credit cards to 0% deals and shop around for lower-cost loans while you can still get credit. Think about investing in your skills while you can afford to, update your CV and think about turning a hobby into a second source of income. With savings and a better chance of earnings, you’ll sleep better at night.

I always stress about money
To stop stressing, you don’t just need more money – you need to feel secure with and in control of what you’ve got. That means knowing exactly where your money goes and not spending more than you can afford. If you’re not happy setting up spreadsheets, download a money-management package, such as the Budget Planner at www.moneysavingexpert.com (The RWT Team have tried and tested this program and it’s very useful). Be specific when itemizing every outgoing. Don’t just write “car” as a cost, break it down into insurance, petrol and parking. Don’t forget annual items of expenditure – the MOT or Christmas – and small items such as that morning latte. You need a true picture of your finances. Then try to cut every item of expenditure by shopping around or cutting it out. Finally, set a budget for what you WILL spend in future and try to stick to it. You should at least aim to balance your budget, but hopefully you should be able to free up cash to start regular saving and investing for your long-term future. That’s the secret to worrying less.

I’ve nothing to fall back on so I dread there being an emergency.
Such is life – you can afford everything until the boiler breaks down, the car dies or the washing machine gives its last spin. You will need to try to commit a regular amount each month to a savings plan that you are happy with. However, it’s also useful to have lines of credit to pay for that unexpected bill. Keep a credit card just for emergency use and keep a good credit rating so you can borrow without difficulty. Check your rating at www.experian.co.uk, www.equifax.co.uk or www.callcredit.co.uk for a small fee. Insurance is there for life’s emergencies – so make the most of boiler-breakdown cover, car insurance, roadside recovery and household insurance. Check your policy is up to date and you have enough cover. Insurance is there to reduce worry and you pay your premiums each month so make sure that you have enough cover! Shop around for the best deals at www.confused.com or www.comparethemarket.com.

I’ll never be debt-free
Aim to pay off even a very small bit of what you owe each month-by-month, rather than just servicing the debt by paying only the interest. If you pay the minimum of 2% of the outstanding balance on a credit card [usually with a £5 minimum], it can take more than 36 years to clear! That’s why you need to set up a payment plan to reduce what you owe. Start with the most expensive debts [those with the highest rates] Switch credit cards to a 0% rate [see www.moneysupermarket.com for best buys] and aim to clear what’s owed by the time the new zero rating ends. A direct debit will commit you to a set amount each month – even £50 a month adds up to £600 a year. Set a monthly target for reducing your overdraft too. Remember the more you pay the less interest you’ll be charged so the easier it becomes to clear your debts. If you’re not disciplined enough to stick to a plan [and fear you’ll be spending up to the limit again] take out a loan to pay off what you owe [but make sure that you cut up your cards and ask to reduce your overdraft limit at the same time]. The benefit of a loan is that you will have repaid it at the end of the term – and then you’ll be debt free.

I won’t be able to retire or if I have to, I won’t be able to afford to live.
Have a plan. Ask a financial adviser [see www.unbiased.co.uk] for their best advice. Don’t forget to take into account any pensions in old plans – to trace “lost” pension rights, go to www.direct.gov.uk and search for The Pensions Tracing Service. Get a grip on your various pensions by switching them into one low-cost plan, such as a stake-holder [but not if you have a final salary scheme, as you’ll lose valuable benefits]. Check that, at the very least, you’ll get the basic state pension – at www.direct.gov.uk, you can ask for a forecast and will be told how to make up any shortfall. You could also make plans to clear your mortgage by overpaying each month – more than a quarter of 55 to 64 year olds are still paying theirs. If you’re mortgage-free when you retire you can always trade down the property ladder to release tax-free cash if you have to.

Which do I do, pay off my debts or save?
It makes financial sense to pay off debts before you save. But if disaster strikes, savings can see you through. There is no single solution but considering an offset mortgage linked to a savings and current account might be the answer for you. They use your savings to reduce [or offset] what you owe, so your interest bill is lower, and because you’re saving interest, not earning, it’s tax free. If you need cash, you can borrow back the money up to your limit, but if you don’t you’ll clear your mortgage quickly and save interest. It can mean the best of both worlds for some people.

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  1. [...] like me, you are constantly battling and losing the battle with your monthly finances and household spend, which can be guaranteed upon, never to quite add up in your favour.  Or, if [...]

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