DON'T WAIT TILL YOU'RE 50 TO TACKLE YOUR DEBTS
By Credit Experts
Friday, February 29, 2008.
Our autumn years are meant to be a time of security and financial freedom – the kids have left home and we can expect to put our feet up a bit more and indulge in some of those far-flung holidays we’ve always dreamed of.
But, according to recent research*, the average Briton can’t expect to escape the burden of debt until they are at least 50 years old – and even then they may still have a mortgage, because home loans aren’t included in the figures.
This may make the future seem rather daunting, especially if you believe in living for today. But if you follow our eight things to do before you’re 50, you’ll be able to keep your debts in check for years to come.
Overhaul your finances
Check all your bank, building society, credit card and loan statements so you can see how much you are spending – and whether any obvious savings can be made. You can also do the same with household bills – and then make sure all the paperwork is filed away carefully.
Look for small ways to cut your spending so you can clear your debts more quickly. For example, you may be able to take a packed lunch to work, give up your morning latte, reduce your gym membership or stay in an extra night a week.
If you haven’t already got a savings plan, start one. It doesn’t matter how little you put in but try to make a regular contribution. If you think you will be tempted to plunder the account, use one with restricted access.
Your Money Matters suggests that up to £5,000 a year could be knocked off the average household credit bill simply by shopping around for the best deals on financial products, such as insurance, credit cards and loans, so get on the phone or online and start finding where you can make savings. With energy prices on the rise this year, it’s also worth visiting a price comparison site which matches your profile to available offers.
Get to know your credit report
Your credit report is a personal history of the credit you have taken out, such as credit cards, loans and mortgages, and your repayment record, including any court judgments against you. Lenders use it to check that you make regular repayments and aren’t overstretched, so it pays to make sure it’s in good shape.
Set yourself a goal
There is no point taking stock of your finances without having a medium or long-term goal. Decide where you want to be realistically in a year’s time and ten years’ time and work out how you are going to get there. Your targets could be as minor as paying off one of your credit cards or as big as saving for house or a new car. Review your plan regularly to see how you’re doing.
Don’t lose your identity
Identity fraud is one of the UK’s and America's fastest-growing crimes and it can take hundreds of hours to put right, so take sensible precautions such as forwarding mail and notifying your bank and other lenders when you move, shredding personal documents before throwing them out, checking statements carefully and letting the police know if important papers are stolen. The government also recommends that you monitor your credit report regularly for suspicious activity.
Don’t wait to get help
If your circumstances change or you are struggling to manage your loans, get help as soon as possible from your lenders – they’ll be able to advise you. Increasing numbers of people are going bankrupt or taking out an Individual Voluntary Arrangement to escape debt – but it should be a last resort. Both options stay on your credit report for many years and can mean you are refused credit or charged very high interest.
It’s tempting to live for today and worry about your debts tomorrow, but if you keep your finances on track you should have no problem getting credit – or paying it back.
The easy way to keep an eye on your credit status is to take a free, 30-day trial of CreditExpert, the online credit monitoring and identity fraud protection from Experian. This will give you access to your full Experian credit report and also alert you by text or e-mail whenever there is any significant change to your credit report that could indicate an attempted ID fraud.
Click here to see your free credit report.
* Online research conducted for the 2008 Your Money Matters exhibition in London.
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