Can A Logbook Loan Make You A Better Financial Manager?

Many people believe that going for a logbook loan is the lowest point that they can sink in their lives. Experts advise people to only use logbook loans as the option of last resort. However, the fast growth of the numbers taking logbook loans in the UK is worrying. Even with the high APR (annual percentage rate), extensive risks, and dangers of having the car recovered, can anything good come from the logbook loans? There is a silver lining in this precarious situation. Here is a closer look at Robert Johansen situation that made him emerge a better financial manager.

How Robert ended up with very poor credit score and sought a logbook loan

During the summer of 2015, Robert Johansen took a logbook loan because his credit score was very poor. The poor credit rating had come about from overspending on his credit card and defaulting two bank loans when his daughter fell ill. As a college teacher, all his resources were directed to handling his daughter which meant defaulting on the mortgage and even personal utility bills. Things ran from bad to worse within six months.

With only his car left as the most valuable asset, Robert saw no other alternative but to get a logbook loan. However, he sought advice from a financial expert early enough after borrowing the logbook loan. This is what made Robert emerge as a better person, create new streams of revenue, and march to financial freedom. Here are some great things that can come from a logbook loan.

Learning how to budget and applying the skills in other areas of personal finance

Perhaps the most important thing that one can learn from logbook loans is budgeting. Because there are other loans, credits, and personal expenses to be met, one has to learn about budgeting. If you seek assistance from a financial expert, he will assist you to classify different expenses and direct the resources to those that are more important. When these skills are applied in other areas of personal life, you will emerge from the logbook loan and other debts a better person.

Appreciating the role of experts when handling subjects from areas outside your jurisdiction

If you are not an expert in a specific field of specialization, the best thing is seeking assistance from experts in that area. This philosophy comes out very well when one is handling a logbook loan. Though you might be in nursing, hospitality, education, or engineering among other areas, it becomes easy to appreciate that finances is a different field altogether.

In Robert’s situation, the financial expert came in handy to help him appreciate the importance of good financial planning. He was able to acknowledge the sources of finances and how to spread the resources to cover all the expenses while meeting the loan obligations. You should never make the mistake of allocating the entire salary to repaying the loan only without catering for all personal expenses such as rent and transport costs.

Acknowledging the challenges that lay ahead in quest reach financial freedom

The main road to financial freedom is marred with numerous challenges. However, you can easily overcome them after successfully addressing logbook loans. Robert understood the dangers that come with poor credit score. This appreciation makes people work harder to ensure they are in good terms with lending institutions that have lower rates.

Robert further appreciated the importance of having several streams of revenue. If one fails, there is always a fall back plan to prevent you rushing to high interest and high-risk sources of funds. Think of running a blog, opening a business for other members of the family, and working on a part-time basis after work.

 

Three Things That Determine Whether a Logbook Loan Will Become a Debt Burden

Was your loan application from a bank declined because of poor credit score? Many people who get turned down find solace in logbook loans. The logbook loans are provided against your car and can be processed within a very short time. Logbook loan dealers do not factor credit score when issuing loans but only review the applicants’ ability to repay.

Once you decide to take a logbook loan, it is important to understand all the associated risks and how to avoid them. In many cases, borrowers end up defaulting on the loans because they also have other obligations. In this post, we evaluate five crucial things that determine whether a logbook loan will translate into a financial burden.

High annual percentage interest

One of the main characteristics of most logbook loans is that they come with very high-interest rates. Many of the lenders keep the interest as high as 400% which can make you pay the amount borrowed over 4 times. This high-interest rate can easily make the loan a serious burden in the following ways.

  • The high-interest rate makes the amount used to service the loan too high and leaves no cash for other expenses.
  • Because of the high-interest rates, many borrowers are forced to forego a lot of things that bring strain in their lives. However, they can only hold for a short time before starting to default.
  • If you had allowed the logbook loan dealer to withdraw the monthly deductions from the bank, delays in your salary can trigger unnecessary overdrafts and deepen the debt burden.

To address the issue of high APR, it is very important to carefully evaluate the lender and only pick the one with the lowest rate. Besides, you can negotiate to have the APR lowered.

Taking the loan over a very long period

Just like other loans from conventional banks, the rule is that; the longer the repayment period is, the higher the amount a borrower pays. However, there is a more serious problem that could draw you in the sea of debt if the loan logbook loan is repaid over a long period.

Taking into consideration that the interest rate is already very high, commitment to pay over a long period can cause fatigue. For example, though you have addressed the current issue, it does not mean that another one such as medical emergency will not arise a few months down the line. If future issues arise (which is very probable) the risk of default is very high. This will attract serious penalties and could make the lender to recover the car.

To address this problem, it is important to try and limit the repayment period to the shortest period possible.

Borrowing more than one requires

Though the banks have declined to lend you cash, it should not motivate you to take the maximum available amount being offered by alternative creditors. For example, if you wanted to borrow 1000 pounds to address a medical emergency, going for 5000 pounds because the lender is willing will be a grave mistake.

  • There is a risk of improper use of the cash because you had not planned for it.
  • The borrower will also pay more because the interested calculated on a larger amount is bigger.
  • The debt will be repaid over a longer period which can cause fatigue and raise the risk of default.

It is advisable to carefully assess your ability to repay the loan and only borrow what you need. Note that this means a careful evaluation of all areas of personal lifestyle to determine your repayment capability.

 

Five Things That Can Make a Logbook Loan Sink You Deeper Into Financial Trouble

Once you decide to go for a logbook loan, it is important to appreciate the risks that lay ahead. In many cases, it is considered the credit of last resort because most financial institutions have declined loan applications. Like financial experts point, the logbook loan should only be used with a lot of caution. In this post, we look at five key things that can make you sink deeper into financial trouble after taking a logbook loan.

Prioritizing payment of other less risky loans while giving less focus to the logbook loan

The moment the lender approves your logbook loan, it is important to appreciate that a lot of dangers lay ahead. Because you have already given away the car documents, the risk of losing it becomes real. Failing to prioritize the logbook loan when repaying other bills can only worsen your present credit situation. While other debts need to be cleared as fast as possible, those that do not come with a lot of threats can wait until the riskier logbook loan is cleared. For example, the student loan can wait for a couple of months because it does not attract any interest and no collateral is attached to it.

Taking the maximum that the lender has to offer as opposed to what you need

For many people who have been declined loans by banks, a chance to borrow looks God sent. However, this is a trap that makes most people to nosedive into the sea of trouble within no time. Even if the lender is willing to offer £30,000, but you only need £2,000, consider going for what is needed only.

A bigger logbook loan means that you will repay for a longer time with higher interest rate. Repaying a lot of cash every month for a long time is bound to cause fatigue and raise the chances of defaulting.

Hiding from the lender when meeting monthly payment becomes difficult

If you realize that the sources of revenue are having issues and meeting the monthly repayment is becoming difficult, running away will only worsen the situation. The loan will accrue a lot of interest, and the lender will start looking for the car to recover the money. Instead of running away, it is advisable to visit the lender and tell him what you are going through. Though some additional interest might be incurred, some good lenders will even allow you to readjust the repayment amount for a few months until your issues are resolved.

Failing to relook at personal spending and reworking on the budget

Financial experts in the UK and banking institutions have found that many people get into trouble with personal finance because of poor budgeting. This problem can make things worse by drawing you deeper into the turmoil of debt.

After getting a logbook loan, it is important to relook at your budget from a different angle to help release some cash. If you find it difficult to achieve this alone, make sure to seek help from a financial expert. A good budget will help you to look at personal finances from a long-term perspective.

Looking at the logbook loan in isolation

Personal finance is not about the logbook loan only. To reach financial freedom, it is important to have a bigger picture and factor the loan in the budget. If you look at the logbook loan in isolation, the chances of sliding back into the situation you are in are very high. When drawing a financial strategy, experts advise clients to look beyond the logbook loan and other credits. For example, the austerity measures you adopt should be implemented to help clear the loan, build an emergency fund, finance personal businesses, and create new lines of revenue.

Cheap Home Improvement Tips

Many people think twice about remodeling their homes mainly because they are worried about the expenses. However, home improvement need not be costly if you follow these tips. 

Increase efficiency

Instead of breaking the walls to increase space, make use of every corner properly. For example, consider pull-out drawers with racks to replace that bulky shelf.

Buy your own materials

Instead of having the contractor buy the materials, you can avoid the percentage he charges by buying them yourself. Just have the contractor list down everything he needs, while you can shop around and compare prices from different sellers. This way you would only have to pay for labor.

Buy manufacturers’ leftovers

There might be items on your home that you want to update without buying expensive material. Consider buying remnants of materials such as lumber, wood, and fabric directly from manufacturers. They would be happy to give them to you at a fraction of the cost since they might not have difficulty selling them in the first place.

Declutter and sell

Perhaps one reason you want to renovate your home is because of the trash that you see. Free up some space and make good use of those furniture and fixtures by reselling them. However, check if there are items that you can recycle, such as an old cabinet which you can simply repaint to look brand new.

Do It Yourself

If you’re a DIY junkie, you’ll definitely have fun doing most of the work yourself. Even without prior experience, you can do simple tasks yourself such as removing fixtures or installing door knobs. You can find lots of information online that can help you with home remodeling projects such as carpeting, tiling, and laminate flooring, as long as you’re willing to learn. You can even perform some demolition yourself, but remember to proceed with caution.

Pay for cash rather than credit card

Instead of wasting money on interests, use cash for your home improvement costs. On the other hand, if you need to remodel badly and you are short of cash, resort to 0 interest deals instead. However, make sure that you’ll have the cash ready before your card starts to charge interest and pay off the balance in full.

Make changes on the outside

Rather than a total renovation, consider if the furniture you want to replace is still in good shape. Perhaps a new paint or varnish can give it a fresh and appealing look without having to buy a new replacement. After all, it all comes down to how creative you are.

Shop around

While you’re too excited to feel the sense of living in a new home, it is not wise to hire the first contractor that you talk to. Ideally, you should talk to at least three contractors, but for more comparison, talk to five persons before you hire the one with the best quote.

Go Green

When doing home remodeling, you should not only look at the upfront costs, but the possible returns as well. Even it may seem expensive to upgrade to energy efficient appliances, beefed up insulation, or double pane glass windows, these costs can be covered by your future savings in energy and electricity.

How to Save Money On Your Insurance Policy?

Almost everything in life now is required to be insured- your car, your home, your health, and even your life. These are a few tips to help you save costs on the many insurance policies you will likely purchase. 

Determine the amount of coverage you need

Many people tend to waste money on insurance because they tend to overbuy. For example, for critical illness or other health-related insurances, every disease removed from exclusions can raise the cost of premiums. When choosing a life insurance policy, permanent life insurance is almost always more expensive than term life insurance, because there’s lifetime coverage.

While you might want to get the best and longest protection possible, you should also determine if it is worth it. Perhaps you only need a life insurance for as long as your kids are under your wing. It is likely that you’ll get the right protection that you need from a 30-year term life policy compared to a permanent one, and by the time the contract expires your kids have probably graduated and you’re done paying the mortgage.

Buy insurance while you’re young

Many people tend to wait till they’re older before they realize that they need insurance. Unfortunately, this is not the best move money-wise. The best time to purchase insurance is when one is still young and healthy. Insurance premium rise as one grows older simply because the possibility of death and diseases become closer. You can also save more if you purchase insurance before even a baby is on the way.

Work with an independent broker

Company agents may not always put your wellbeing in mind, as they are more focused on getting higher commissions. Independent brokers, on the other hand, are unbiased, and they can even give you more options and better deals to choose from.

Stay away from riders

Insurance riders are designed to increase the overall costs, but most of the time you don’t really need them. On the other hand, if you really feel that you need a certain feature, try to get it outside of the policy.

Do not lie on your application

Some people tend to lie on their application, such as about smoking for example, in order to get cheaper premiums. However, when you commit fraud, instead of saving money, you’ll end up wasting thousands of pounds because your policy will end when fraud is discovered. Not only that, but you may be faced with legal charges as well.

Combine policies

You may be paying for more than you should if you have different providers for each of your insurances. By combining your homeowners insurance and car insurance for example, you can take advantage of significant discounts. It’s more convenient as well.

Improve your credit

As you may already know, your credit score pretty much dictates everything in your financial life, and your insurance policy is no exception. Before even applying for a policy, check your credit report and see if everything’s looking good. If your credit is not in the best position, consider fixing it and improve your score to better your insurance rates.

Go on a Holiday Without Breaking the Bank

Take advantage of travel-related credit cards. Since you’ll be using a credit card, better sign up for airline credit cards, especially if you’re a frequent traveler. You can easily earn back points on your travels or purchases, especially if you add multiple users. Who knows, the next time you travel is with a free round-trip ticket earned from these rewards.

Travel off-season. It’s actually a no-brainer. Peak seasons are expensive, so you should travel before or after them. There’s no really difference when you’re traveling off-peak, as you are bound to see the same place right? Not only are the prices cheaper, you will love the fact that there’s less crowd so you can appreciate the scenery even better.

Be flexible. Just by making a few tweaks on your plans can save you a whole lot. Instead of flying direct, fly with stops. Consider traveling on weekdays instead of weekends. You can further appreciate the amount of savings when you’re traveling with the whole family. Wouldn’t it be nice to have extra pocket money from these savings?

Watch out for online deals. There are those sites which announce when airlines have sales, so you can get discounted ticket prices. There may also be last-minute bookings which are heavily discounted in order to fill vacancies. On the other hand, there may also be huge savings when you book about a year early.

Be smart in choosing your accommodation. Why stay in a five-star hotel, when you can get quality service from a one-star hotel? You can get nice, air-conditioned rooms without spending much. Besides, you will be traveling to explore the place, not the hotels. You may also want to consider staying in bed and breakfasts or apartments, and keep in mind that you won’t be spending much of your time in your room. However, if you’re a bit picky and you really want to stay in a hotel, what you can do is to watch out for hotel deals from travel sites.

Also remember to choose an accommodation wherein there’s easy access to the places you’re planning to visit, so you can also save up on transportation costs.

Do your research. Doing an online research not only lets you discover places to be, but you can see great tips from other smart travelers. You can find reviews about good and affordable dining places, as well as fun activities to engage in.

In doing your research you should also be open-minded about other cheap destinations to visit. You may find out that a lesser-known country has beautiful tourist spots that you will enjoy, rather than visiting a popular destination that is more expensive.

Know the public transportation in the area. One smart way to trim your vacation expenses is to spend less on transportation. Know the nearest subway or bus stations around your area rather than taking a cab. You may also want to walk around, as walking can give you the best tour ever.

How to Become a Better Saver?

Not everyone is born with an innate talent in saving, and this is actually a skill that is so hard to master. The art of saving requires constant dedication, practice, and patience in order to be perfected. These are more tips on how you can better yourself at saving. 

Don’t Forget to Pay Yourself First

It’s easy to say that you want to save money, but once you’ve gotten hold of that paycheck, you might find it hard to let go. In order to save effectively, have a portion of your salary automatically deposited to your account so you’ll have no chance to spend it on impulse.

Have a Budget

You might be too bored of reading this from every financial blog or forum that you’ve been to, but it can never be taken off the list because it is true. By having a budget, you can keep track of your expenditures and have a detailed view of where most of your money is going. This can help you assess which areas to improve on.

Set Realistic Goals

While having a goal is important, it’s even more crucial to have ones that you can actually meet, or else you’ll become frustrated. Sure you might want to save as much as £500 a month, but don’t be too harsh on yourself if you can only save £100. Ideally, you have to save at least 20% of your monthly salary, but 10% would be welcome if that’s all you can afford for now. To give you the momentum, start out with smaller amounts that you are comfortable with, but make sure to increase your contributions as time goes by.

The “Wait for 24 Hours” Rule

Many impulse purchases happen when you’re out, even if you just originally intended to window shop. If you got tempted with something, walk away from the store and wait for 24 hours before you decide to buy it. This can give you enough time to think if it is a worthy purchase. If that time has passed and you decided that you really want it, then go back for it. But chances are good that you change your mind and decide against buying the item, with the realization that you really didn’t need it in the first place.

Know What to Do With Extra Cash

Perhaps you received a gift, a tax refund, or a bonus. Although your initial reaction would be to spend it immediately, control yourself and deposit it instead.

Save Your Change

Each time you receive a change, toss it to your piggy bank and bring it to the bank once full. Don’t have it changed for bills though, but rather deposit it. This is a great way to save money without you even noticing it.

Make Cut Backs

If you’ve been spending a lot on coffee or dining out, make small sacrifices instead. You can rather just make your own coffee and bag your meals at work. Throw the savings you have gotten from these sacrifices to your account.

How to Achieve Financial Freedom?

Stop Living Paycheck to Paycheck

Living paycheck to paycheck can be your biggest obstacle to financial freedom. You should definitely stop the habit of watching your funds go down to zero month after month. But if you want to continue working only so you can eat three times a day and be able to pay the bills, feel free to do so.

Set Goals

One of the first few things you need is to set a goal which can guide you through difficult times. They should be focused on things that are really important to you so that you’ll be kept motivated.

If you want, you can start on smaller goals first. Because they can be achieved more easily, you can have that boost that you need in order to proceed with other bigger goals. Prioritize accordingly and put your goal on the front burner. Most importantly, know it by heart and stick to it.

Control Your Debts

Being buried in debt can delay all your plans in life, so one of your priorities is to get rid of it first. Don’t be afraid to tackle your debts. Instead of hiding away from them, know what kind of debts you have and the amount of each. Commit to paying them off because they won’t disappear just by watching them.

Also know your weaknesses. If you think you get tempted whenever you bring your plastic cards while you shop, leave them at home. If you’re spending most of the budget on the groceries, limit the time you spend there.

Create an Emergency Fund

Aside from poor spending habits, lacking a safety net when the unforeseen comes is one of the most common reasons for being in debt. Although you didn’t want an accident or illness to occur in the first place, emergencies aren’t good enough excuse for being in debt. At one point in life, disasters will happen, and by building an emergency fund, you can avoid the financial impact of these disasters.

Build Up Your Retirement Funds

Though it may seem like a faraway dream, planning for retirement shouldn’t be delayed at all. In fact, if you desire to retire early like everyone does, the key is to start early as well. If you start saving up for retirement while in your 20’s, then you’ll have more time for your money to grow, even if it means starting out small. Just be sure to balance it out with other areas such as debt repayment.

Make Wise Investments

While saving is good, it often is not strong enough to build your wealth. You need to explore other investment options which will provide profitable returns. Of course, you need to assess the risks. Make sure you diversify your portfolio and have varying rate of returns.

Continue to Educate Yourself

Learning should not stop if you truly want to achieve financial freedom. It’s a continuous process, so make sure you read a lot and make adjustments to your financial habits as necessary.

Financial Questions Aging Parents Should Ask Themselves

Aging is a part of life which is often the most dreaded stage, simply because it brings us closer to the idea of death. Unfortunately, we can never stop time, and we will reach that point someday. Instead of avoiding the idea, it would be best to start facing the possibilities so that you can have peace of mind knowing where your family will stand in case of your death and what will happen to you in case you live longer than expected. 

Do I have a will?

There are a lot of family ties broken because of arguments over inheritance, and unfortunately, they don’t only happen in the movies. Don’t let further tension ruin your relationships. While dealing with your own death is highly uncomfortable, you have to accept that it is part of life, and realize that it is best to deal with it as soon as possible, especially when you’re over the golden years.

What is my current financial situation?

You may have been secretive with the kids about your finances in the past, but at this point you should consider being more open with your financial accounts. Let a trusted child know where you bank, what kind of accounts you have, and how to access these accounts in the event of your death. It is also important to inform your family if you’re leaving any debts behind. Perhaps one of your main focuses at this point should be reducing or completely eliminating it, because the last thing any parent wants to leave their children is debt.

How much will I get from my retirement benefits?

It’s important to obtain the figure early because you don’t want to be guessing how much your family will receive from your death benefits. It’s also important that you know if this money is enough for medical bills and other expenses in case you live longer.

What is covered in my insurance policies?

While people are living longer nowadays, the cost of healthcare becomes higher as well, and who knows how much more costly it would be after a few years. Make sure you understand what is covered in your insurance policy and what are the exclusions. It could be hurtful to see your kids worry about your medical expenses because you discovered that your case was excluded. If you have a life insurance, you should also consider what will happen if you outlive your policy if you have a term-life. You must also know exactly how the payout scheme works for your beneficiaries in case you die. More importantly, check if your beneficiaries are appropriately listed.

Where should I spend my remaining years?

It is one of the most painful things to think about, as any parent would love to grow old living with their loved ones. However, the possibility of long-term care may become a reality as you grow older. Even if you’re hoping for your kids to be your primary caregiver, you can never ignore the possibility of having to live in a retirement home.

How to Have Fun While Saving?

Saving money might be the most daunting task in the world, especially when you’re saving up for a major goal such as owning a home. It could tie you to a few years of obligation and cheating with your budget can be almost unavoidable in such a long period. These are some of the tips that you could use so you can prevent getting bored with saving.

Don’t Cheat

Have you ever been on a diet routine and thought that it’s alright to cheat for a few slices of cakes and just resume with your normal diet the next day? What do you feel afterwards? You feel guilty right? Although the negative effects are not immediately evident, you will feel frustrated right after satisfying your craving, telling yourself that all your previous efforts are wasted. It’s not saying never to eat the foods that you love ever again, but make sure you allocate a reasonable portion and the right moment for it, rather than just suddenly cheating on a two-week diet plan because you got distracted.

It’s the same with budgeting. It’s okay to have fun every once in a while, but make sure it’s included in the plan and not a spur-of-the-moment decision you just made, or else you’ll go around reprimanding yourself for not being able to resist temptation.

Have a Separate Rewards Fund

Instead of cheating, save up money for a special fund that you will use to reward yourself after a job well done. Perhaps you want to buy a new designer bag, gadget, or go on a vacation. Whatever it is, set a goal which includes the amount you need to earn and how long you are likely to save up for it. It will give you something to look forward to and can help motivate you on cutting back on other expenses. For example, rather than being bitter for having to miss a few movies and late night parties, console yourself with the idea that you’ll soon be able to buy that dress you’ve been eyeing for a long time.

Be Creative

Only you can know what makes you happy, and based on this knowledge, you can plan other activities that would be cheap but equally entertaining. If you enjoy the movies, you can rent instead of hitting the cinemas. If you like to bond with friends, you can host a potluck event so you can be with them without straining your pocket. If you want a new décor for your bedroom, read some do-it-yourself articles so you can have a new one without breaking the bank.

Be on the Lookout for Free Fun

Having fun doesn’t always have to be expensive. There’s always something which you can do for fun that doesn’t cost at all. You can enjoy a picnic at the park, a visit at an art museum, a bicycle ride around town, etc. You can still socialize as well by doing volunteer work, participating in team sports or coaching kids to play. These are worthwhile activities that let you enjoy your hobbies without putting a dent on your finances.