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Happy hump day all, and boy am I feeling it. This morning was 100% a struggle to get up and out of bed. Work has just been so busy lately and I’ve sure been putting in the hours… hence the short disappearance! It still continues, but we’re in the lead-up to Christmas so that makes it all better, right? Anyway, today I’ve decided to let you into why I made the decision to get a loan, why it’s something you may consider and a few tips on choosing and applying for a loan. I’m not usually one to talk about money issues, but I know this post might help a few of you too.
See, overdrafts seem like an amazing thing.. until, all of a sudden, they’re not. Now, don’t get me wrong, it’s not as though I HAD to get an overdraft. However, sometimes you’re put into situations out of your control which have a massive financial impact. The thing is, these are situations you can’t predict; can’t account for; nor even imagine just how bad they might be. Having spent my time at university not nearing my £500 overdraft limit (my choice), I was suddenly propelled into needing a bigger overdraft. Then spent the next however long stressing about how close I was to that limit and how I was ever going to get away from it.
The thing is overdrafts can be an absolute bitch to get out; especially if you’re paying rent, bills, car costs, etc. They can seem never-ending. Like there’s no light at the end of the tunnel. That’s sure how I felt. It didn’t matter how hard I tried, it didn’t seem like I was getting anywhere. It’s like that old adage… 1 step forward, 2 steps back. Admittedly, the last couple of months were tighter than ever because I had big expenses going out. But I grew tired of wondering whether I was going to live pay check to pay check. As someone who has never been one to waste money, it was even more annoying. Until last week. When I finally decided to take back control.
Now, I’m going to take a minute here just to say that I know I am so incredibly lucky. Although I might be wondering whether I can live pay check to pay check, I have a roof over my head, clothes on my back, food on the table and a car to drive. I am more fortunate than many and I, in no way, dispute that.
So, that being said, last week, I decided (ahead of payday) to take out a loan. It would get me out of my overdraft, so that when I did get paid, I’d be starting on ground zero. Now with the budgets and cash flows already in place (yes, I’m one of the people), I could let the rest do its thing. It means that I’m finally living off my pay, with only one affordable monthly payment to make. It means that, 1 year after setting up a house bank account for all house bills, I’ve finally managed to get them all moved across from my current account to the house account.
Why Consider It?
Although I felt like I had no other option, I also know that I was still in a better position than a lot of people I know. Many people who have been to uni have a much bigger overdraft limit than I did; some people have credit cards on top of overdrafts; and others have store cards to add to the pile.
Did you just read that and think “that’s me”? Well, fear not, because that’s why consolidation loans exist. A consolidation loan is a loan designed for you to pay off many smaller loans. For example, an overdraft, a credit card and a store card.
So, why? Why would you consider a loan of any type? Because it should hopefully take the stress and worry away, and allow you to concentrate on paying one loan off instead of multiple. Rather than feeling crippled and like you’re getting nowhere, you can concentrate on one monthly repayment figure. And, in most cases, it may even help your credit score. An ever-growing concern as you get older and move through each stage of life. If you’re interested in knowing your credit score, you can do so here.
- Look around for the best deals: every bank offers different repayment lengths, different terms and different interest rates on their loans. Make sure you search around for the best one suited for you. Santander and Post Office are among the many you can check out.
- Always read the fine print: I mean, you should never sign anything without reading the small print first… but make sure you’re not signing your life away. In other words, make sure you know exactly what’s there so you don’t get any nasty surprises later down the line.
- Try family and friends first: depending on the size of loan you’re looking to take out, try family and friends first. If they’re able to, it’s a much better option; no interest, variable repayment terms and they’re less likely to beat your door down if you miss a payment. If it’s easier, create a binding agreement so you both uphold your end of the loan. If you do go for this option though, don’t take it for all you can. They’re doing you a favour, so don’t abuse it.
- They don’t have to be long-term: a lot of people automatically think long-term when they think of loans, but that doesn’t have to be the case. It entirely depends on the size of your loan and your monthly repayments, however, but they do come in short-term options too. If all goes to plan with mine, it should be paid back in less than a year.
- Make sure your monthly repayments are affordable: if you don’t choose affordable monthly payments, there’s no point in applying for a loan. It defeats the purpose and doesn’t solve the problem.
- Budget: this is perhaps one of the most important of all tips. If you don’t budget, you can’t determine your monthly affordability and, consequently, the repayment terms or even the loan amount. Sit down and calculate all your income, all your expenses, and work out what’s left. Leave yourself a little spare (emergencies can happen), and the rest is your affordability.
So, with all of that in mind, is a loan something you’d consider? If you want any further advice, drop me a message (here) and I’ll do my best to answer your questions.
Have a great rest of the week,