We are very interested to hear back from people who try it and what they found out about their spending habbits.

Take care

DebtGeek

I found this on youtube this evening, this guy knows what he’s on about. Listen.

In both cases, the root problem is a lack of education. Those who spend money like water don’t understand its value; those who shun financial planning and investing don’t understand its potential. People with greater degrees of financial education tend to be more rational when it comes to financial decisions. (Not always, but often.)

Discern the difference between good & bad debt. Do you know the difference? A bad debt is a debt you incur on a disposable item or a durable good that will depreciate. It is a debt on something that has no potential to gain value. You want to avoid as many bad debts as you can. Of course, there is also good debt – for example, a mortgage, a business loan or a student loan. These are so-called “investment debts” that can potentially create value down the road.

What is an Individual Voluntary Arrangement (IVA)?
An Individual Voluntary Arrangement is a contract between you and your creditors. You pay an agreed monthly sum, usually for 5 years. This is divided up between people you owe money to, who accept the sum in settlement of the amount you owe them.

So how much will I be required to pay?
The monthly payment depends on your income and expenditure, and is agreed so that it will be affordable to you. A standing order authority will be set up and your first payment must be made within one month after your IVA proposal has been agreed with the people you owe money to.

What sorts of people enter into IVAs?
Simply people who cannot pay their debts. If you cannot pay your debts as they fall due, you are insolvent and the law gives you two alternatives – bankruptcy or an IVA.

Are there any other options?
You could get all of the people you owe money to, to reschedule your debts, but this may be difficult if you have a lot of people you owe money to. Some banks and building societies have debt counsellors, and you could try speaking to them. Bear in mind that unlike an IVA, an informal arrangement offers no guarantees. One or more of the people you owe money to could change their mind at a later date, or charge you higher rates of interest later if your circumstances improve. You may also take longer to finally clear your debt.

What are the advantages of an IVA?

• We help you to calculate what you can afford, and you make just one payment to your client account by standing order each month. The payment amount is the same over the whole period unless your circumstances change and you can afford more. Typically, your circumstances will be reviewed annually.
• Once your IVA is approved, all of people you owe money to are legally bound by its terms, as long as you keep paying your agreed monthly sum.
• Once the agreed term of your Individual Voluntary Arrangement is over (usually after 5 years) you have no further obligations to people you owe money to. At this point you stop paying the monthly sum, and can start afresh.
• Your employment will probably not be affected. In fact, your employers will not know about your IVA unless you choose to tell them.
• Unlike bankruptcy, your details will not be advertised in the local press and you are not excluded from running a business, nor will it lead to many professions terminating your employment.

What are the disadvantages of an IVA?
Check out our comparison of IVA Pros and Cons.

What do I need to do?
Before your IVA proposal is put to people you owe money to you need to sign it as a “Statement of Truth”. You do not need a solicitor for this: you simply read it and sign it. We prepare all documentation for you and also contact people you owe money to on your behalf (and if necessary we will make an application on your behalf to your local County Court for an “Interim Order”).

A meeting of people you owe money to will then consider your proposal. You will not usually need to attend as typically the voting is done by proxy instead. Even if people you owe money to do attend, the meeting usually only lasts for between 15 – 20 minutes. We will chair the meeting, and you need to be available at the end of a phone line during this period.

What else should I know?
You might actually pay more out in an IVA than you would if you were made bankrupt. This is because bankruptcy income contributions usually only last for 3 years, whereas contributions in most IVAs last for 5 years. This voluntary increase in the total payment should make people you owe money to sympathetic to your proposal.

Will my home be safe?
You will not usually have to sell your property when in an Individual Voluntary Arrangement. If you do own your home, you need to take reasonable steps at the end of the five year period to make any equity available to people you owe money to (usually by re-mortgaging). This requirement is also true for bankruptcy, except that bankruptcy often means you do have to sell your home.

What if people I owe money to don’t agree?
At least 75% of votes (in value) at a meeting of people you owe money to must be in favour of your proposal. People you owe money to can suggest modifications to your proposal and you can choose whether to accept them or not.

If people you owe money to don’t vote in favour you will still have the option of an informal arrangement, or bankruptcy.

Do I have to pay any costs?
In an IVA all you pay is the amount you can realistically afford, each month for the period of your arrangement (usually 60 months), and that is literally all you have to pay as long as you keep up the payments. In return, people you owe money to agree to write off the debt you can’t afford to repay and pay our fee out of the payments you have made to them.

Don’t

• Use your credit card to make everyday purchases. Items like food, clothing, and gas shouldn’t be purchased with a credit card. Using your credit card as a substitute for cash is a habit that can quickly lead to debt. For ordinary purchases, leave your credit card in your wallet and use cash or debit card instead.
• Get into the habit of making minimum-only payments. Making only the minimum payment each month increases the amount of time it will take to pay off your debt. It also increases the amount of interest you end up paying. To pay your debts off quicker and cheaper, you should pay as much as you can on your balance each month.
• Use your credit card to buy things you can’t afford. Living a borrowed lifestyle is the quickest way to get into debt. If you can’t afford a purchase today, chances are you won’t be able to afford it tomorrow, or even next month.
• Close out a credit card without knowing how your credit will be impacted. There are times when closing a credit card can hurt your credit score. Avoid closing cards that still have a balance or those that make up a significant amount of your credit history.

Do

• Make wise decisions about purchasing items you need versus those you simply want. We’ve all used the word “need” to describe something we really just wanted badly. Using your credit card responsibly means recognizing which things you need and which you just want.
• Let your creditor know in advance if you won’t be able to make your monthly payment on time. The worst thing you can do is simply forgo your credit card payment, no matter the reason. Most creditors will assist you if you let them know before you miss your payment. Simply call your creditor, briefly explain the situation, and ask that any late fees be waived.
• Stay within 30% of your credit limit. A large part of your credit score considers the amount of debt you have. Keeping your balances low helps you maintain a good credit score. Not only that, lower balances are easier to manage than those that are higher.
• Negotiate a lower interest rate. Especially if your current rate is higher than offers you receive. Your interest rate determines how much you pay for carrying a balance on your credit card. Evaluate the interest rate on your credit card periodically to be sure you are getting the best deal possible.

We still have tons of student loans to pay off and I have run out of forbearance time. I don’t know what else to do except go back to school part time. We can’t afford to pay them right now… I am the only one working while my husband goes to school. So my measly paycheck sustains 3 people! Although, not very well at times… one paycheck goes to rent, the other goes to daycare and bills. I don’t know how we’ve made it work, but we have.

I hate living like this. I just want everything to be paid off. The student loan people keep calling me and I don’t know how else I can tell them that I can’t afford it!! I don’t qualify for a low-income deferment. Apparently, I make to much money for that. I guess they weren’t counting on people having to support 3 people on what I make.

But what really angers me is that I am only over the poverty line by, like £70 annually. We found that out when we applied for food stamps and got rejected. They recommended we have another child so that we would qualify. Idiots. Seriously though… I could qualify for all kinds of help if I took a pay cut or got a divorce. We would be living better if I was making less money, or if we never got married. That is just plain nonsense.

Introduction

Your credit score is a numerical value calculated using the information held by one, some, or all of the credit reference agencies, Experian, Equifax and Call Credit and is used by lenders to assess your ability to manage credit responsibly. A lending decision could, of course, be made by viewing your individual credit file, but credit scoring allows a simple, quick and objective decision to be made on anyone applying for credit. The credit reference agencies hold information about every adult in the country who is financially active, in the sense that they have some form of credit, such as a mortgage, personal loan or credit card. It is worth remembering that too little credit, as well as too much, can be detrimental to your credit score. If you have no credit history at all, there is no evidence, good or bad, on which to base a lending decision and, if your credit history is limited, you may simply be viewed as unprofitable.

Improving Your Credit Score

One of the first steps that you can take to improve your credit rating is to make sure that you are on the electoral roll. If you are not, because you have recently moved house or for any other reason, you can – if you are eligible to vote in the U.K., of course – write to your local council and ask them to register you. Local councils send out electoral roll forms once a year, but credit reference agencies update their information from the electoral roll once a month, so registering can potentially improve your credit rating very quickly.

Another thing to remember is that, unless you specifically request a quotation, rather than going ahead with an application straight away, every application for a credit product – including, say, a car insurance policy or a mobile phone contract – leaves a “footprint” on your credit file. Too many such footprints in a short space of time is potentially a sign that a borrower is desperate for credit – even if, in reality, it is just a timing issue – and will adversely affect your credit score.

It is advisable to obtain a copy of your credit file from one, or more, of the credit reference agencies (you can do so for a nominal fee), before you make an application for credit. If you find that an application for credit is rejected, rather than applying somewhere else immediately you should ask the lender concerned why it was rejected. Lenders are legally obliged to tell you and, if what they tell you points to something in your credit history you may well, but not necessarily, be rejected by other lenders. If this is the case, applying for further credit may damage your credit score even more, so you may need, instead, to spend some time repairing or creating your credit rating.

Once you have the credit rating – and therefore, hopefully, the credit – that you desire, it is a good idea to check your credit file at least once every 12 months to make sure that all the information contained in it is correct. If there are any errors, you are legally entitled to contact the lender concerned to request that the erroneous information be corrected or removed, as appropriate. All of the credit reference agencies will, for a monthly fee, monitor your credit file for changes – which may be indicative of identity fraud, or other criminal activity – and alert you if any do occur. If you can obtain a credit card, with a competitive APR, or “Annual Percentage Rate” and operate it within its limit and without missing any payments for a period of time, your credit score will start to improve.

If you feel that your debts are spiralling out of control, debt help is available from organisations such as Citizens` Advice Bureau (CAB), Consumer Credit Counselling Service (CCCS) and National Debtline. All three are charitable organisations, so the advice they offer is not only independent and confidential, but also free of charge.

The original can be found at http://www.youtube.com/watch?v=KqDsevMW7Ds

Try this: If you can afford to pay more or in full, go ahead and pay as much of the balance as you can. You never know when you’re going to have a tough month. Pay in full every month and you can avoid interest charges altogether.

Or, if paying more than the minimum proves difficult, consider working an extra part-time job or decreasing your expenses — or both. Put all of your extra earnings toward the debt.

“Creditors are constantly reviewing your credit activity, and if they see you falling behind with one creditor, even if you have a perfect payment history with them, they can raise your interest rate.”

Try this: On a calendar, mark upcoming paydays and payments that should come out of that paycheck. If you’re mailing payments, send them seven to 10 business days in advance. Better yet, sign up for online bill pay. Just check that the address on file and the address on the statement match, or the payment might not arrive on time. If you’re still late, call the creditor, explain the situation and ask them to forgive the late fee. Check your credit report and be sure the information shows up correctly.

Try this: Make a habit of paying for purchases under £50 with cash, debit or check. Knowing that the money has to clear the bank sooner could help curb your spending habits. Just be sure to check your balance regularly to ensure that you have enough funds.

Try this: “Pay for living expenses first”. After the house or rent payment, necessities such as utilities, groceries and medical care should top the priority list. Next comes the car payment — you want to avoid repossession, obviously. On down the line, secured loans and co-signed debts follow in importance, then unsecured loans and credit cards. “Ideally, everyone can get paid, but if a choice has to be made, paying in this order will do a better job of keeping the home life stable.”

Try this: Maintain an emergency fund of at least three to six months’ worth of living expenses, and keep your insurance policies up to date. Work toward that goal by socking away 10% of your take-home pay each month in a liquid savings account. If you receive a raise or bonus, add that money to savings. Since you’re not used to the extra cash flow, you won’t miss it.

Try this: To find out what’s draining your finances, keep track of where your money goes for a month. Use a spreadsheet, financial software or a pen and paper to categorize your expenses. This will reveal whether you’re spending too much on expenses you could trim, such as restaurant outings and gas. Then you can consider cooking at home more often or consolidating driving trips. Cut back as necessary without cutting out expenses important to you. Cunningham suggests that if you enjoy watching TV but don’t tune in to a majority of the 300-plus channels you have, cut back on your cable/sky package instead of cutting out TV altogether.

Download our home budget spreadsheet

Don’t wait until it happens to worry about how to pay your bills. Do some damage control right away.

Try this: “The best time to negotiate is before the problem spirals downhill,” Call the credit card company and explain the problem you’re about to have. Ask if they could temporarily lower your interest rate or extend your payment deadline. Some issuers have in-house help programs that provide such short-term services to customers.

Wrong. If you have credit cards, pull your credit report at least once a year and check it for errors. Purging your record of inaccuracies can be crucial for getting better interest rates, landing the job you desire and stopping an identity thief from ruining your credit rating. The scores on your credit report also determine how high your interest rates will be on future loans. Dispute anything you think should not be there. The Fair Credit Reporting Act allows for the correction or deletion of inaccurate, outdated or unverifiable information, provided that a reinvestigation into the disputed data sides in your favor. Unfortunately, negative but truthful data must stay put.

Try this: You can request one free copy from each of the big three credit reporting bureaus, Experian and Equifax, every year. Why bother? Errors on your report, such as a payment marked late that came in on time, could raise your interest rates, lower your credit score and affect your ability to obtain credit in the future.

If you do find a mistake, send a correction letter to each of the credit bureaus that show the error. All three allow you to dispute errors online.

Don’t bother with so-called credit-repair clinics that aim to charge you hundreds or thousands to fix your credit record. “Anything you can legally do to repair it, you can legally do for free,” . Of course, if you’re not willing or dedicated enough to write those letters and follow up with the credit-reporting agencies, paying someone else to do it for you may not be such a bad idea. Better to have someone dispute the errors rather than no one. But be extremely careful in selecting such an organization — try to get referrals and seek out others who have been satisfied with the service.

Try this: If you can’t refrain from charging, balance transfers won’t get you out of debt. If you’re really in the hole, consider getting a part-time job and dedicating your earnings to your debt load. If that’s not possible, go back to your budget and cut back on unnecessary expenses such as restaurant outings and cell phone extras. Put the money you save toward paying off your balances. Pay for any new purchases with cash or a debit card.

The original can be found on

http://www.youtube.com/watch?v=7sLXxgwSJcU

I really enjoyed spending money and I found it very easy to do, unfortunately for me the banks were more than happy to keep borrowing me more and more until I had dropped myself right in the sh*t. At the same time I learned how good I could spend, I also learned how bad I was at running a business. It wasn’t too long until I understood that I was not going to learn how to run a business before this one had flopped.

Looking back now, it was a blessing in disguise that everything went plop. It gave me the opportunity to start all over again with nowt. Don’t get me wrong I didn’t go for bankruptcy (probably should of though) I just mean that I had nothing, no assets, no savings, no income. This meant that I could strike a very good deal with my creditors; after all they can’t take anything if you don’t have anything.

What I found when trying to deal with my debt was that there were very few resources with advice from people who have actually been through the same situation. There were lots of debt advisers, financial advisers etc but most of those people were inexperienced with debt on a personal level. That is why I wanted to build a site that would have real solutions from real people in the same situation.

Well that was my first blog on here, I would like to welcome you to my new website, debtgeek was created to share the debt hell that I and other readers have been through and information that we found useful to manage our debts.

If you are currently in debt or have come out the other end and have some advice that you would like to share, please feel free to send over your information or advice to geeks@debtgeek.co.uk and we will publish it as soon as possible.

These are the findings of a poll carried out by Abbey Credit Cards, which discovered that cameras and swim suits are both the top two items Brits most value on holiday and the ones they leave at home by accident.

Overall, 65 per cent forgot at least one essential item before jetting off last summer and the average cost of replacing their treasured items came in at £39 per person.

Head of credit cards at Abbey Callum Gibson stated: “With British holidaymakers forking out the astonishing sum of £1 billion pounds we should maybe all just take a few extra minutes this summer to ensure we’ve packed everything we need.”

Meanwhile, those going abroad this year were reminded by the British Insurance Brokers’ Association that holiday insurance should be treated as essential, rather than optional.

But you can buy a pay-as-you-go phone for as little as £30 and only pay for the odd call as and when you need to.

2. Sell your household clutter on eBay
Take this quick test: You’re at home. Open a cupboard. Look inside. If it’s full of clothes you haven’t worn, or ‘good ideas a the time’ you haven’t used, for, let’s say, three years – you don’t need them. So why not sell them to someone else who does? Ebay, the online auction house, has opened individual sellers to a world of buyers. And you can flog anything for the cost of a small commission.

3. Learn to say ‘no’
It’s easy to capitulate to the demands of a screaming child in a packed Woolworths on a Saturday afternoon. But don’t do it. Similarly, how often does a ‘swift half’ after work turn into a £40 drinking session? Saying ‘no’ a few times a year will do wonders for your bank account.

4. Cancel your gym membership
If you pay your £40 a month by direct debit and you use the gym three times a week, great. If not, cancel your membership immediately. You’ll soon save enough to buy your own bike and, if you’re so inclined, a rowing machine. Consider running home from work three times a week. It’s free.

5. The National Lottery
The odds of winning the jackpot are stacked 14m to 1 against each ticket. Some highly organised syndicates buy 14,000 tickets a week, which reduces the odds to 1,000 to 1 – but that’s no guarantee of a win. For the rest of us, the difference to the odds between buying, say, 10 tickets and one is so insignificant that you should limit yourself to the one and save the extra money.

6. Don’t buy ready meals
If TV chefs such as Ainsley Harriott can knock up a meal from a bag of random groceries including an aubergine and a packet of sultanas – so can you. Ready meals may be convenient, but preparing your own food saves money. A visit to your library will reveal scores of books dedicated to cooking proper meals in minutes.

7. Don’t keep up with the Joneses
Trying to keep up appearances is little more than a costly illness. Remember, you cannot judge someone by what they have because you don’t know how they got it. Chances are they’re in more debt than you are.

8. Save on your home phone bills
BT may seem to behave like a monopoly but it most definitely is not one. If you must use your phone there are scores of cheaper alternatives from cable companies that package your telephone, television and even broadband internet access to low-cost dial-up services that give you access to cheaper calls using your existing BT line.

9. Consider installing a water meter
We take our tap water for granted. And why not? The companies behind the supply exist to make a profit, we pay them to supply water and have every right to expect it to flow from our taps. But if it doesn’t rain, supply runs dry and the price goes up. So you may want to consider the possibility of installing a meter. If you have a big home with few occupants you may be surprised to learn you could halve your annual bill.

10 Don’t buy designer labels
Celebrities are given expensive clothes to wear. You’re not. At the end of the day, and let’s face it you may only wear the outfit once, can you justify paying hundreds of pounds over the odds because a top designer has had his or her name sewn on the label? And can you honestly say you can tell the difference at a distance between a £600 designer bag and a £9.99 one from the market? Think about it.

1. Defer or delay big purchases, unless paying by cash
Christmas is one of the cruellest times of a recession: expensive celebrations, expensive presents, expensive new household appliances…and then the axe falls in January. But, irrespective of the time of year, a recession, or imminent recession, is a time to be prudent. Don’t add to debts, and don’t push the boat out with a lavish lifestyle and all its trimmings. The golden rule is simple: unless you can pay for it in cash — and pay for it comfortably — then think long and hard about buying it.

2. Build an emergency fund
If the axe falls, it might be possible to find a new job almost immediately, but you shouldn’t be complacent, because if no jobs are available there will still be bills to be paid. Building a cash cushion to tide you over for a few months of lean times is good basic financial common sense, but especially so if a recession is likely.

3. Live a more frugal lifestyle
How would you manage on 30% less income — or worse? Cutting out excess costs not only helps you to build that emergency fund faster, it also reduces the inevitable financial ‘change of gear’ should the worst happen. Running lean and light already, you’ll adapt to your new circumstances more quickly and, in the meantime, you’re building that emergency fund all the faster.

4. Reduce your debt burden
If recession is around the corner, reducing our monthly outgoings takes on a whole new dimension. Don’t add to your existing debts, and pay off as much as you can of your present debt burden.

5. Boost your income
Extra income helps you build that emergency cushion faster, pay off debts faster, and pay for big expenses in cash (instead of borrowing). In part, there’s an element of ‘get it while you can’, here. Extra shifts, extra overtime, and payment offered for undertaking extra responsibilities — all of these might this time next year seem a distant memory. But there are longer-term ways of boosting your income. And don’t forget the hidden benefit of a second source of income, one of the great perks of a second job is that while you’re working at it, you can’t go out and spend money at the same time!