Get your finances through the credit crunch

I have put this article together owing to the fact that I have been inundated with enquiries from people being affected by what is currently happening in the world of finance and are looking for ways to weather the storm and come out the other side relatively unscathed. Now there is no easy fix but through diligence and common sense there is a good possibility that this can be achieved. One of the main factors of the credit crunch is the fact that we have been focusing on what we can borrow instead of dealing with what we have. The first thing that needs to be done when facing a financial crisis is to acknowledge that there is indeed a problem that needs to be dealt with. It is all too easy to just bury your head in the sand and hope that it will go away but that is obviously not the solution. Likewise, borrowing more to cover your present debts or trying to consolidate them with a loan is just extending your troubles. Borrowing more is not the solution. It is the reason why you find yourself in the position you are. The plan is to work with the resources you have and use them in the way that is most beneficial to you. This will instill a confidence in you and a greater understanding of the importance of living within your means. You will begin to see the true value of money and not just treat it as a commodity. The reason why people are finding the going tough at present is because they have been spending what they don't have and borrowing far more than they should. Things might be different if the markets were not so unstable but that is not the case. Borrowing is much more difficult now due to more stringent checks and if you find yourself in the position for a loan it will undoubtedly be at a higher rate. The best thing to do is draw up an income and expenditure sheet. In one column you tally up things such as your salary, bonuses, benefits, basically anything that you have coming in monthly. In the other column you list what you pay out monthly. This will consist of things such as your mortgage, fuel costs, outstanding loans, groceries etc... but remember that it should contain only items that are necessary for month to month living. That means no fitness club membership or subscriptions to sky sports and the like. By cutting your costs you will be on the road to saving. When it comes the time that you do finally book that holiday you will appreciate it all the more because you have saved up to be in the position to afford it. Another thing to do is evaluate the outgoings that you have at present. Maybe you could change the mortgage you have for another that would better suit your present position. Now whilst I would never recommend an interest only mortgage over a long period of time, the savings in the short term could be a boon for you. You may find that your situation is not as perilous as you fist thought and the savings could be used to ease the pressure of the commitments of your other outgoings. Then, when you are more financially secure, you can change back to a repayment mortgage and continue on from there. Have you considered the possibility that if you were to change credit cards you could also be saving? Whilst most companies have raised their rates there are still good introductory offers to be had for those with a decent credit rating. Remember too that the longer you are with a credit card company the more money they make from you. As I mentioned earlier, and I in no way recommend this plan of action, you could lump all your bills together and consolidate them in the form of a secured loan or tacked on to your mortgage. For some this is a quick fix solution but in the long term you just end up paying back a lot more money because although your monthly payments will have decreased, the period of time that you will be making repayments will have increased considerably. Saying that, for some people the situation may have deteriorated that much that it is the only option available to them, and if that is the case, then it is better than losing everything. In these days of increased competition between companies in the energy and communications markets it may be of benefit to you to check out your utility bills. Now everyone knows that making sure you turn your emersion off when you don't need it and switching off your lights will contribute to smaller bills but check out the competition and you may be surprised by the offers to be had. And the best way to go about this is to surf the net and see what you come up with. But for some people the harsh reality is that they have reached the point of no return. No matter what option they may resort to, the fact is that they have got themselves into that much debt that there is really no way out of it. Now the cost of living would definitely appear to have increased but the simple fact is that some people have been borrowing way beyond their means and have not stopped to consider the consequences. They now find themselves in a position where that debt has finally caught up with them and they are helpless to do anything about it. The best way towards finding a solution to the problem, and I know I may be stating the obvious here, is to communicate with the people that did the lending. I know I said that this would seem like the obvious thing to do but some people would not give this idea the first consideration. The recurring problem in my line of business is that people have an innate fear of talking with the people they borrowed money from in the first place, preferring someone else, maybe more professionally qualified, to deal with the situation. I can only say that if a financial adviser makes the contact as opposed to the client then the outcome may not be favorable. Once you have decided to meet with the lending company, the way to proceed is to get all your financial documents in order, i.e. your income and expenditure plan and any relevant statements. The important thing is to make sure you have everything in order and be clear about exactly what you require from the meeting. I also pays to set achievable targets, as in if you can afford to repay 350 a month then don't request a repayment of 20. Also be willing to show each of the companies what the other people you have debts with are being repaid. It pays to be open and honest and in doing so you will most likely find that the lenders will be more than willing to work with you and help find a solution to your problems. They will want to know the cause and affect so you must be prepared to acknowledge this and likewise have some sort of contingency plan. Your income and expenditure plan should detail exactly what your outgoings are and with that in mind you will be able to show just what you can afford to repay monthly, giving some sort of figure that can be amicably agreed upon. Let the companies know that you are willing to work through these debts methodically until you reach the point where everyone is satisfied. Doing this can only have a positive outcome as it will be acknowledged that you have given the problem a lot of thought and that you are determined to come up with a solution where everyone is happy. The loan companies want to recoup their debts and if you are able to convince them that you are willing to do that, no matter how long it takes, then they will most likely look favourably upon your predicament. So these are some of the ways in which you can lift the weight of financial burden from your shoulders. Reassess your spending patterns and decide what it is that you actually need, not just what you would like to have. Search for the best offers available on the market when you consider electricity, heating and your telephone bills. If you can save some money in the short term by switching your mortgage from repayment to interest only, then so be it. Consolidate those debts if you think that it is the option best suited to you. As a lifeline in times of dire financial straits, make contact with your lenders in a bid to thrash out a solution to your woes. Take our finances in hand rather than let them cripple you. Mortgage Advice from specialist Independent Mortgage Advisors help information and no obligation mortgage calculators come to Mortgage Route. Financial directory