Facing your Financial Challenges head on

Financial emergencies are like buses. You don’t have one for ages then they come along in threes. Always when your finances are least able to deal with them. The bills, the school clothes for the new school term, or the car needs new brake pads.

It is almost like someone up there knows exactly when your finances are at their lowest ebb that they decide to fiddle with the course of things to trip you up.

Of course, this is not the reality, there is no gremlin in the works, or a jink sitting on your shoulder waiting to mess up your day. Although many people feel that way. Life is full of challenges and financial ones are no exception. All which we can do is to prepare for the worse by learning how best to deal with these sometimes stressful and often annoying situations.

When it comes to financial problems you are not alone, everyone has had to face them. Regardless of who you are, even the richest of the rich have financial problems. Just that theirs are on a larger scale.

The best way to deal with unexpected financial problems is to deal with them straight away. Never let a financial problem out of your sight or out of your mind. It can be tempting to simply ignore the problem and leave it for another day.

This is probably the worse approach to tackling it. Banks, lenders and credit providers will not forget the money which they are owed and will continue to pressure you for repayments, so you may as well deal with it while it is fresh.

Having savings to cover any unforeseen expenses is generally the best way to deal with the problem. Of course, this does depend on if you have savings and how much you have saved up.

How much you ought to save is down to you, but a conservative estimate is to save at least 10% of your monthly wage. Never less, more if you can, but don’t become frugal.

The other 90% is what you live on, the other 10% is yours to keep. Always remember to pay yourself first. This means that when you are paid, you must take 10% out straight away and put it aside. This 10% is yours and no one and we mean NO ONE has claim to it. The other 90% is to pay off debts, bills, expenses.

If you work like this then at the end of one year you will have the equivalent of just over one-month worth of wages. After 10 years of this you will have one years’ worth of wages saved up. This can be used as deposit for a property or business venture.

If you look at all your expenses and how much you need each month to get by you could probably remove a lot of unnecessary outgoings in one go. Things like:

  1. Nights out
  2. Takeaways
  3. Gym membership
  4. Expensive mobile phone contracts
  5. Subscriptions you do not need or use
  6. Entertainment like Netflix of Amazon Prime

The list is not exhaustive, and you can decide what stays on and what comes off. Some financial experts will say that you should have at enough money in the bank to survive 6 months with no income. We would say to have at least 12 months.

To get to 12 months’ worth of savings may take you a while, but if you start now you will be more prepared to face most financial problems in the future.

Let’s look at how you can get to the point of having at least one years’ worth of your wages in the bank in the shortest time possible.

The most common reasons that people take out short-term loans to cover emergencies are as follows:

Car Repairs: Most of us need our cars to get around. Most of the time it is cheaper and more convenient to have a car than to take public transport.

Although having a car does not mean you have to use it all the time. For example, do you need to take the car to the shops, can you walk? If you can walk, then walk. With petrol prices the way they are the moment and only going to be dearer in the future, hitting the pavements maybe an option. Also, it will keep you keep fit and you can cancel that gym membership.

Get a smaller, more economical car. Do you really need that giant 4×4 uber wagon sitting on the drive sucking money out of your pocket faster than you can earn it? No, then get shot of it and downsize.

Many people buy cars thinking them as an asset. Most people are in debt because they simply do not know the difference between an asset and a liability.

In simple terms:

An asset is something that puts money into your pocket

A liability is something that takes money out of your pocket

So, unless you are hiring out your car, or you are a Taxi, then your car is a liability. Buy a smaller car, this will come with lower insurance costs, lower road tax, lower petrol costs, lower maintenance if it is a relatively new car.

Also, learn to drive sensibility. No sudden braking, or acceleration. Drive within the speed limit and learn to use the car gears properly will save you a ton of money in fuel and maintenance

A New Boiler: Ah, the good old boiler. Packs up when you need it the most. In the middle of winter, it decides to stop working. The best tip we have for this is to take out a service contract where you pay a small sum each month.

If the boiler packs up then you won’t be on the hook to pay for an engineer to come out to repair it as it will be covered by the service contract. Although make sure the service contract also covers parts and labour and not just a visit to estimate the cost of repairs.

Property Maintenance: Home repairs can be very expensive. If the roof need fixing or the guttering needs replacing you might be looking at bills running into the hundreds if not thousands which will eat your savings up like a hungry hippo or your may have to take out a loan to cover the repairs.

First, never take the first quote. Get multiple quotes from reliable trades people who have good reviews on trades people comparison websites like trustatrader.

Once you have all the quotes, check that the trades people are all members of trade bodies and offer some form a guarantee. It goes without saying that you would never let anyone near your property to carry out so much as cleaning your windows without proper background checks.

Proper home insurance here is required. Also verify that the trades people you hire carry public liability insurance.

The trades person busy schedule of book now, and we can fit you in next week is not your problem, it’s theirs. Never feel pressured into making any decision if it is you that is going to have to part with the money.

Holidays: Unless you absolutely, positively without question need a holiday then don’t. Most of the time holidays are a pain in the backside, expensive and a disappointment. I will confess that I don’t like going away on holiday unless it is a driving holiday in the mountains some place in Europe. But to spend many thousands of pounds to lay on a patch of sand in the blistering heat which lots of sweaty, noisy, smelly bodies packed closely together has never, ever appealed to me.

I have never seen anyone walk past a builder’s site and throw themselves onto the pile of sand so why do people feel compelled to do it and pay silly money for the privilege. Save the money you would have spent on a holiday for a great holiday once every few years go on a real holiday to the Maldives ?

Job Loss:  Being made redundant is one worse kick in the nads that most of us will experience. It’s happened to me; it’s happened to my friends and will happen to most of us. Good, I hope it does happen to you too, you’ll learn one of life’s important lessons being that no one is indispensable.

I don’t mean that in a horrible way, but life is a series of lessons with are generally learnt with the cost of the lesson being the kick in the goolies.

The term, “being made redundant”, is one which everyone must at one point in their lives experience just to understand how quickly your loyalty to any company or corporation can be rewarded with the strike of an accountant’s pen.

If you have been working with a company for more than 2 years you may be entitled to redundancy pay, this all depends on the contract you have with the employer. But if the company goes out of business then you may not receive anything for your efforts. This is why we recommend to ALWAYS have a side gig,

That side gig could be anything from selling stuff on eBay, to selling services on Ffiver, running a blog with affiliate sales. It is important that you do not have only one source of income. Never put yourself in a situation where you are beholden to your employer.

You want to move away from living from one paycheque to another. Start taking control of your finances today.

Benefits:  Are you entitled to any benefits from the government? Check what you are eligible for. Check that if you have children that child benefits are being paid. You never know what you are entitled to such as tax credits unless you ask

Using Loans For Financial problems:  If you do not have any savings just yet and are facing financial problems you may have to resort to credit cards, overdrafts and short-term loans to see you through to the end of the month for when you are paid.

Lenders will only lend to you if they believe that you have the ability to repay and not place you in financial difficulty.

At some point you are going to have to take the bull by the horns and start taking charge of your financial situation. Better to start now than later.

Many people in the U.K struggle with debts and many do not know how to start to repay them speaking to a debt advisor is one of the best things you will do along with taking action yourself by speaking directly with your creditors. and

You should always seek professional advice when handling debt problems. Cashute are not licensed debt advisers and any information contained in this article should not be taken as legal advice. It is your Responsibility to seek out correct legal advice

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