Did you know that shoppers are expected to spend £2.4 billion on Black Friday deals? You could argue this is a little crazy when UK personal debts stands at £1.59 trillion with so many people struggling to make ends meet. You can put your head in the sand until after Christmas about your financial situation but that will only make things worse.

Black Friday

Black Friday

At its heart, Black Friday is an effective marketing strategy. So many minds have worked out just how to tempt you into spending what you cannot really afford. The reality is that you do not save money when you give in to Black Friday. You spend it and perhaps more than you intended and on stuff you did not want until big marketing budgets got into your head and heart.

Community Money Advice

Heather Keates, Chief Executive of Community Money Advice, says:

“Christmas is a challenging time for household finances. At a time of year when families pay more on essential bills such as heating, the cost of Christmas can push households further into debt. We would encourage families to stick to a budget and remember that what we spend in credit will need to be paid for in the new year”.

Debt counselling

As a former debt counsellor, I know how easily a change in  circumstances can often make it difficult for people to pay back debts which can leave people feeling trapped, isolated and powerless. You can’t always predict job losses, increases in fuel/food costs, bereavement or illness. However, sadly a real stigma remains around people who find themselves in financial difficulty.

Case-study

Single mum Anna used catalogues and credit cards to get by until her circumstances changed when her Father died.

Black Friday

Anna, says:

“I felt really low and ignored my debts and bills. Eventually my debts got sold on to a debt collection company who began knocking on my door regularly … to make sure my daughter had what she needed I would go without, things like new clothes for work or even food. It’s been really important to receive long-term support … since gaining a Debt Relief Order I have been helped to budget and apply for discounts I’m entitled to. Overall I’m a much happier person … if you’re in trouble, you might have to push past your boundaries to get the help you need”.

Seek help

I agree with Anna. It is a sign of strength to ask for help. We are blessed in the UK in having charities that can help us free of charge with a whole range of issues. We have several money advice charities only too happy to help.

Community Money Advice manages a network of 159 debt advice charities where 1,200 advisors are currently offering face-to-face help and practical support to 5,328 families, managing £154 million of debt. Face-to-face advice and support is a lifeline to people trapped in debt. In 2018 Community Money Advice helped 19,059 people find freedom from debt and hope for the future.

Community Money Advice are asking anyone experiencing stress because of money problems to seek professional help.

For more information, please visit www.communitymoneyadvice.com

Black Friday Warning

 

 

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Choosing a life insurance policy for you is a task that should not be taken lightly especially if you have dependents that rely heavily on you to survive.

Yes, the task of choosing the right life coverage policy is a tedious one, however, this task can be made a lot simpler if you understand which policy is ideal for you and why.

Continue reading to know five crucial factors that you should keep in mind while shopping for life insurance plans online.

Insurance Amount

While there are various formulas that will help you understand the right insured amount for life insurance policies, a simple and accurate way to calculate which amount works for you is to calculate all your debts, mortgages and other financial obligations and multiply this amount by two times.

Being marginally over insured is always better than being marginally underinsured provided you can afford to pay the premiums for the chosen amount.

Keep in mind that certain life insurance providers might have a maximum insurable limit for people with certain professions.

Clearing your doubts by reading the contract and any terms attached to the life insurance plan is always recommended.

Cost Of Premiums

The cost of premiums for life coverage plans depend on a lot of variable factors that are not limited to, the age of the insured individual, the insured sum, the gender of the potential policyholder, the current health condition of the policyholder, any pre-existing medical ailments, any genetic markers and family ailments and the lifestyle of the potential policyholder.

The premiums you pay to the insurance provider are also subject to other factors such as if additional value-added features are purchased.

At times, insurance providers offer attractive prices for adding an additional member such as a spouse to the policy. Some insurers might also offer good deals on additional coverage such as funeral expenses plans.

Shopping around by comparing 5 or more insurers will help you understand which life insurance plan is ideal for you. Price comparison websites that are designed to compare multiple plans often help you complete the comparison task with ease.

A word of caution to be noted, you should always choose a policy that suits your budget, as purchasing a policy that is very expensive will do you no good if you fail to make payments, as this, in turn, will lead to a lapsed policy. Understanding your budget before purchasing the policy and choosing a plan that offers you added bonuses such as loyalty points, reward points, cash-backs, and instant discounts is a recommended plan of action.

Guaranteed Acceptance Policies

The most common reasons insurance providers refuse to renew life coverage plans include a change in the health status of the policyholder, a change of profession, losing a job, a sudden disability, a new habit such as smoking or a new life choice such as getting married.

Some insurers might also refuse to renew plans if you fail the medical tests for nicotine detection and health issues.

The norm is that guaranteed acceptance policies cost higher than policies that are subject to being renewed upon the sole discretion of the insurer. Guaranteed acceptance plans are an ideal choice for people aged 40 years or above, and for people with pre-existing medical conditions.

Guaranteed plans are also ideal for those policyholders who do not wish to change insurance providers in the future and want to be prepared for sudden changes that can affect the insurer’s decision to renew the policy.

This being said, the insurer has the right to cancel such plans, if the policyholder fails to make regular payments towards the premiums.

In addition, hiding facts such as pre-existing health conditions on the application and not informing the insurer of additional health issues once the policy is active might lead to a cancelled policy.

Stepped or Level Premiums

Choosing a plan with the right type of premium payment is very important as not all shines is gold, sometimes it’s just attractive yet manipulative marketing strategies. Stepped premiums seem attractive at first; however, these premiums slowly increase with time.

Level premiums, on the other hand, might cost more but they allow for you to know exactly how much to keep aside for premiums every month and they do not shock you later.

Moreover, purchasing a policy with the inflation option might result in higher premiums that increase with time and this is not recommended for people on a fixed budget.

Most insurers also give lower premium quotes to policyholders who decide to pay the premiums every month rather than every 3 to 6 months. Paying your premiums on time can also lead to added benefits such as future discounts when the plan is due for renewal.

Maximum Age of Insured Person

If you are seeking a policy for you that allow you to get life insurance coverage until the end, then opting for plans without an expiry of age clause can be helpful.

Such policies are perfect for people who are above 50 years old however, they cost a tad more than policies that expire when the policyholder is 70 to 80 years old however they are worth the peace of mind.

The norm is that these policies are given until the policyholder is 99 years old, which indirectly implies that there is no cut off age for renewing the policy as the insured person gets older.

The Final Decision

Life insurance policies that can be tailor-made to suit your every requirement are a blessing for policyholders who are willing to spend a bit extra, however, if you are on a budget then choosing a policy with transparent terms and money saving options is a good way to go.

Purchasing life coverage plans online is ideal for not only people who would like to save an extra penny, but is also perfect for policyholders who want to compare, review, and then make an informed decision based on the research you have done.

Mortgages enable people to buy homes and change their lives. I remember as a child being intrigued by the word and wondering what it meant. There’s an argument for financial education in schools and at home straightaway. So I am doing my small bit and outlining what to think about before you take one out. The  more clued up you are in advance the less likely it is that you will have a mis-sold mortgage situation.

Definition of a mortgage

A mortgage is simply a loan taken out to buy a property or land. The loan is secured against the value of your home until it is paid off. As a former debt counsellor, it used to surprise me how many people thought the security was theirs when actually it is the lender’s protection. It means that if you do not make the payments, your home can be repossessed.

Affordable mortgages

I am so pleased that people buying homes are now asked to look at how much they can afford. When I was counselling people in financial crisis, it was obvious that so many had over-stretched leading to the inevitable collapse further down the line. The Money Advice Service has an affordability tool so you can work out what is realistic for your individual circumstances.

If you are a first time buyer, really reflect on the other costs involved in owning a home from council tax, fuel and water bills, insurance and maintenance.

What lenders need from you

Lenders need to trust that you want to make the payments and can do so. That is what you would want if you were lending money at a friend or family member too. It makes absolute sense. So get together details of your income and expenditure and outline any debts you have too.

Where can you get a mortgage?

Banks and building societies offer a range of mortgages. The alternative is to seek the advice of a mortgage broker or independent financial adviser. They should tell you about their charges and whether they look at the whole market or just at a specific range of lenders.

It is possible to take out an interest-only mortgage but this does come with risks attached and may be the very thing that leads to you having to make a mis-sold mortgage claim in the future.

Conclusion

Very few of us are financial experts and the purchase of any home is a big one. Take good advice and do your own research too before committing to a loan that usually takes decades to clear.

Mortgages

 

 

 

 

 

 

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Musings Of A Tired Mummy

Building societies are now a common sight on the high street, while we always hear about shifts in the stock market on the news. So many of us have personal savings accounts and pension pots set up now too. But have you ever thought about where these came from, or how each savings initiative has changed over the years? In the following infographic, personal pension specialist True Potential Investor has taken a step through time with this question in mind.

Did you know that the first known building society formed for groups of individuals who were looking to help each other to buy property? Or that the Bank of England was founded towards the end of the 17th century to fund the war effort against France? How about that the Amsterdam Stock Exchange was believed to be the world’s first stock market?

Discover even more fascinating facts by browsing through the full infographic below…

 

Saving

How to manage your debts may be an issue that is causing you sleepless nights. Even worse when you wake up the postman may bring unwelcome letters demanding money that you cannot afford. You will feel anxious and that emotional pain will ripple out to your other family members.  The good news is that you can learn how to manage your debts effectively. There is debt management help and advice you can tap into.

How To Manage Debt

Acknowledge the extent of the problem

Too many people who are struggling financially put their heads in the sand. Nothing will change unless you take action. Do not look at just the debt where the creditor is pushing you for money hardest. Acknowledge and record the full extent of your debts of whatever type. Write down the amounts you owe, the interest rates if any and the contact details for the creditors.

Work out your priority debts

When working out how to manage debt, you need to work out which debts are priority and which are non-priority. The way to do this is to find out the sanctions different creditors have available to them. For example, if you do not pay your rent or mortgage, you may end up losing your home making this a priority debt in most cases. Non priority debts are things like overdrafts, personal loans and credit card bills. Usually, if you contact your creditor, arrangements can be made to pay these off at an affordable rate over time.

Come up with a budget

Do you know how much you are spending and on what items of expenditure? If you don’t you cannot come up with a workable budget. So take some quiet time to list all the things you spend money on weekly or monthly. Include essential items such as housing costs, fuel costs, water bills, food and clothing. Be aware that you may need to curtail spending on socialising, cigarettes and other non-essential items. You can return to these when your debts are under control. Think about all the stress that will be relieved when you know you have a debt management plan in place.

Decide between self-help and seeking support

It is possible to help yourself when working out how to manage your debts. However, most people do not sort out their debt issues straightaway so tension has built up. You may feel better handing over your case to a professional money adviser.

Solutions to debt issues

There are a wide range of solutions to debt issues depending on your individual or family circumstances and the types of debt you have. Most people manage to come to an agreement with creditors where they are paying back but over a longer period than originally agreed. Other possibilities include debt relief orders, individual voluntary arrangements and bankruptcy.

It’s also important to note that things can and do get better. Keep the faith and seek support when you need it.

How To Manage Your Debts Effectively

My Random Musings