Most of us know a good deal when we see it. A bargain basement, heavily discounted price for something we value highly is often too good an opportunity to miss. Without a doubt, you have only a limited time, maybe just a few minutes, to take advantage of it. So what do you do? Many of us wouldn’t be able to help ourselves. The trouble is, we may not be in a financial position to cope with the cost. If you’re not completely sure how much money you can afford to spend right now, then it could be time to get your finances in order.
Start by checking each of your bank statements. If you go back through them all for at least three months, you’ll be able to see how much you spend on average. You’ll also be able to check which payments come out automatically and when. Don’t forget to check on your savings accounts. If you’re making a big purchase, it’s usually better to use savings rather than taking out expensive credit agreements. In the very least, you should cover any deposit without a second debt.
Do you know your credit score? It’s not the end of the world if you don’t have a good credit rating, or if you don’t have much credit left due to other loans. But if you don’t know what shape you’re in, you could risk putting bad marks against your credit record by ‘over-applying’ for credit. A refusal for a loan will show. This will make it difficult to get an affordable mortgage or other loan in the future.
Start by detailing all the things that might appear on there. Utility bills, phone or TV subscriptions, gym contracts, loans and credit cards will all be on there. Underline the ones that are debts – that means there are sums outstanding that you are supposed to pay back monthly. Add it up. If it’s a scary number, then it’s time to see what you can do to get it back in control! Pull out the original agreements, and phone up for a current outstanding balance.
The original agreements will detail the interest rate you are being charged and the total sum you’ll end up repaying. Refinancing could bring that cost down. It might also help you clear the debt more quickly. You can find online auto loan refinance advice and comparison websites for all the kinds of loans, mortgages and credit cards you might have. If you can’t clear them, you might at least reduce your obligation over the term by refinancing.
Whatever big purchase you were interested in, make sure you can genuinely afford it. Most high-value items come with finance packages to help spread the cost of repayment. The trouble is, you’ll pay substantially more than the price tag by the time the debt is paid. If you need a finance agreement, pick one that suits you today and for the foreseeable future.
A detailed household budget, combined with your detailed analysis of outstanding financial obligations, will help you make an informed decision about your next big purchase. It will give you an idea what you can really afford, and whether the bank might agree to another finance deal! Take financial care.
*This is a collaboration post