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So what else can we be doing during these difficult times? Well we already know that many of the world’s main business sectors have been hit by the 2008 credit crunch; the property industry, the mortgage industry, the car industry etc so what can we do to help keep the wolves away from the door so to speak? Well the natural reaction is to just save all the money that we have and I don’t for one minute begrudge anyone that chooses to do so. I wish I would have done the same pre 2008. However, by doing this and tightening the purse strings it can lead to other things that are not necessarily related to saving money such as stress and unhappiness. However, once again, during difficult times many people may wish to make such sacrifices in order to make it through the credit crunch. Of course there are different levels to just how far you can go in terms of saving. Some may go to the extreme and just cut out all luxury activities completely, whereas some may find a mid-way and manage to balance saving with a less amount of luxury buying. The latter would be my preferred choice if I were to go down that route. For example ideally I wanted to upgrade my car by the end of the year but due to my new saving regime, this is no longer a possibility even though my current car is falling apart and I am in desperate need of a new model! However, sticking to my guns I will repel any suggestions that I should indeed invest in a new motor and instead will do what I said I would do and wait until next year to see how things pan out. But, what if certain people do not want to go down the route of continuous saving? Well, apparently if you do have some spare finances there are a number of ways in which you can invest even with the current difficult times that the country find itself in. I suppose if there are people with some spare capital and it is just going to lay gathering small amounts of interest in their current accounts then why not consider some other alternatives? Maybe I should do this – maybe then I would be able to get my new car?!

Yesterday I managed to speak with someone within the finance industry who is pretty clued up when it comes to cars, finance and the stock markets. He was saying that the although the amount of finance and credit currently being available from the lenders is less than it was six months ago, he said that the people qualifying for loans etc are those that are less of a risk and that their criteria should have been the basis for all applications many years ago. Instead, he said that the companies were so keen to offer credit to customers that even though there were huge elements of risk involved with such applicants, the higher rate of APR and interest they would gain would deem it beneficial. However, currently, those with a bad credit score are struggling to find a financial institute that will loan them the monies for a car, general purpose loans and credit card bills etc. He said that things should be how they were in past time where vigorous checks were carried out and very specific criteria needed to be met in order for a car dealership to issue car credit for example. The problem therefore lies with those that instigated this changed of criteria and therefore contributed to their own downfall in that those people who qualified under the new rules appear to now be the ones that are not making the repayments regularly.

Firstly, do not spend what you don’t have! One of the things that have struck me over the last few weeks is that people can spend less if they want to do so. The only problem being that it has taken something like the current credit crunch for them to realise that they should reduce their spending levels. My theory is that you should always act and not react. Why should you wait for a situation to occur before you change your ways? It is the same thing with an illness; people suddenly decide to change their lifestyle upon realising that they have a problem. It is the exact same with finance and credit – look to reduce your debts, daily spending and any outgoings before you are down to the last pound. I had one of my friends not so long ago come to me complaining that they were being charged X amount of monthly interest by the credit card provider. My response was simple; get a new 0% credit card, transfer the balance and then you will not be paying the interest. It was that simple. Off they went and so now, although there is the same level of debt to be paid back, more of the actual debt is being paid off as opposed to just the interest.

An Individual Voluntary Arrangement otherwise known as an IVA is a measure taken to prevent the dull and disheartening option of bankruptcy. An IVA can be for people that have mortgage repayment problems, debts with their credit cards or car credit repayments, store cards, personal loans, over drafts or just have low levels of capital cash. The reason that an IVA would be suitable in these instances is because it may well be the only option to help reduce these debts in a fixed and manageable manner. By setting up an IVA, you will also be free from any creditors contacting you in regards to your outstanding balances. Normally, to qualify for an IVA, your debts will be above 13-15 thousand pounds (depending on the company you enter into an IVA with). A certain, set amount of money then needs to be guaranteed to this on an ongoing monthly basis. It needs to be noted though that certain types of debts cannot be included in an IVA. For example secured loans, car finance debts, council tax arrears and parking fines cannot be settled using an IVA. These need to be separately.

We know what gets us into bad credit but what can be done to help us get out of it or better still what measures can we take to ensure we don’t get into it to begin with. Too be honest, the answers may be much simpler than you think. Firstly, pay your bills on time and every time. By not doing this, it will be sure to have a negative effect on your overall credit score / rating. Secondly, try to decrease the number of credit or store cards that you have – the more temptation the worse off you are. Upon cancelling these cards with the relevant people, update the agencies that report on your credit status. Thirdly, reduce your limits on your bank accounts, savings accounts and credit cards (if not already cancelled). You should also obtain regular credit reports to make sure that any measures that you have taken to reduce your debts are officially updated. Finally guys – just use a bit of common sense. If you cannot afford something then don’t buy it. Don’t just base this upon the amount of cash you have in your back pocket – think further ahead to see how much monies you may have to pay out for other things in the coming weeks and months. By gaining this type of understanding, you will give yourself the foundation to make the correct financial decisions and most importantly, not get into debt.