What does the credit crunch mean for you, the potential (or current) home owner? Money Week has a great article about how you will be affected by the credit crunch that is due to hit the UK.

Here are a few highlights if you don’t have the time to read everything (though you really should make the time to read the article, it is very interesting):

The number of bankruptcies in the UK is higher than it has ever been. Usually bankruptcy is declared by life changing events like business failures, divorce or surprise bills but this year the majority of bankruptcies have been declared by people who have taken on more credit than they should have, meaning that too much money has been spent on things that the borrower probably did not need. Eighty Three percent of people who declared bankruptcy did it because they spent more money than they earned.

“Loose credit lending” is slowly becoming less and less loose. This means that the people who supply others with credit and loans will probably start to leave the money lending/credit offering market which means that, should you want to take out a line of credit, you will most likely need to do so through a bank instead of an independent company.

The article gives a number of reasons for these situations and talks about the financial history of the UK to give our current situation some perspective. The truth is, finances are getting tighter in the UK and you need to make sure your personal finances are under control.

If you have a lot of outstanding debts, you might consider taking out a secured loan, using your home as collateral, to pay off the smaller debts that are under your name. This will save you money and, probably time, later on. This way you can pay off your debts now instead of hoping that a debt consolidation loan will be readily available in a few months.

Obviously, the credit lending companies are not all going to close down over night, but if there was ever a time to get your finances under control, this would be it. Don’t wait to pay off your debts. Do it now, so you will not have to worry about whether or not you can do it later!

The article on Money Week is informative and insightful and is definitely worth the read.

Everybody has debt and everybody has experienced a time in his or her life when the debt has seemed to take over. All of a sudden, your debts are managing you instead of you managing them. It isn’t anything to be ashamed of and it is absolutely something that you can fix.

The best way to take control of your debt is to take out a debt consolidation loan. A debt consolidation loan can also be classified as a personal loan and it is money that you use to pay off the rest of your debts. You will still owe money, but instead of making several small payments you will only need to make one payment. This also saves you money in terms of interest. Your interest payments will be considerably smaller for a debt consolidation loan or a personal loan than they would have been on several credit payments.

Of course, once you have gotten your debt consolidation loan, that doesn’t mean that you will be able to slack off on your financial management. You will need to have an even stricter sense of financial control while paying off your debt management loan and one of the ways you can take control of your spending is to make a budget and stick to it.

A budget sounds boring and a little bit complicated, but it really isn’t. You obviously already know how much you owe or you wouldn’t have gotten the debt consolidation loan. The first thing you need to do with your new budget is figure out what your monthly bills are: Add together your monthly debt consolidation loan payment, your rental or mortgage payment and your utility payments. The next amount you want to set aside each month is the amount of money you will spend on food—this is how much money you will spend on groceries. While everybody likes to go out to eat once in a while, that money qualifies more as “entertainment.” The amount of money you spend on your housing, utilities, loan payments and food will be the amount that you absolutely must bring home every month and will be your “priority spending.”

After your priority spending, you will want to set aside a little bit from each paycheck into a savings account. Nobody wants to think about a rainy day, but the rainy day fund could end up being your down payment on a new home or how you pay for a new car as well as how you pay for emergencies!

Now that you have paid for your “priorities” and saved some money, the rest of your paycheck each month is left up to you! You can play with this amount however you want—new clothes, new toys; going out on the town… it’s up to you.

You see? Budgeting is not as hard as you thought! It is more about setting priorities than doing a bunch of math.

Happy New Year! 2008 has finally started and with a brand new year comes brand new financial responsibilities. A new year is a great time to figure out what your financial goals are. Do you want to reduce your debt or even become debt free? Do you want to buy a home? Do you want to buy a car? These are all questions that you want to ask yourself. Where do you want your finances to stand on December 31, 2008? On January 1, the end of the year feels so far away, but financial goals are far more attainable when you work on them a little bit each day.

Making any kind of major purchase takes a lot of research and most likely a substantial loan. This is especially true if you are thinking of buying a home. If you are thinking of buying a home, take the first few months of 2008 to learn everything you can about mortgage loans. Experts say that the interest rates and housing rates are going to be dropping in 2008 so you do not want to run out and buy something in January when the same home could be thousands less in a few months. You also do not want to apply for a mortgage loan until you know what is going to happen to the interest rates—especially if you think a fixed rate mortgage loan is the best option for you and your family.

If your financial goal is to eliminate your debt, you might think about taking out a debt consolidation loan or a personal loan to roll all of your smaller debts into one larger one. This can make those monthly payments a lot easier. It’s easier to remember to make one payment than to make five or six, right? There is a fair amount of research involved with debt consolidation and personal loans as well. Don’t fall for the first offer you find on the internet. Look into a few lenders and see who will offer you the best deal—the lowest interest rate, the lengthier repayment period, etc.

One of the best ways to find out what kinds of lenders are interested in you is to fill out the sixty second form offered by Spotloans. This will put your information into the hands of potential lenders who, if they find your information fitting to their lending criteria, will contact you. This saves you a lot of time in your research!