This creates a major financial burden for physicians, especially early in their careers. They are often unable to buy a home or start a family until they have paid off their loans. And, even then, they may find themselves struggling to make ends meet. This is a major problem that needs to be addressed. We need to find ways to make medical school more affordable so that our doctors can start their careers without crippling debt. But for now, here are 5 strategies for doctors to better manage their debt: 

1. Make a budget and stick to it

This will help you track your spending and see where you can cut back. Another strategy is to make extra payments on your loans. As a result, you will eventually pay less interest. You can also look into refinancing your loans. This can lower your monthly payment and save you money in the long run. Finally, don't forget to take advantage of the tax breaks and deductions available to you. 

2. Don't take on more debt

Debt is often a necessary part of a physician’s life. However, this doesn't mean that they should take on more debt than necessary. Managing loans is essential, and physician loans can be a great way to get the money needed to pay for the home you’ve recently bought because you've shifted to another city due to a job. Physicians should be mindful of the amount of debt they are taking on, and make sure they can afford to make their monthly payments. 

It's also important to remember that debt is not always bad. Loans can help physicians buy a home or car, and can even help them start their own practice. However, it's important to use loans wisely, and not take on more debt than is necessary. Physicians should always consult with a personal finance company exclusively for healthcare professionals like LeverageRX before taking out any loan, in order to make sure they are getting the best deal possible. 

3. Pay off debts with the highest interest rates first

Debt can put a huge weight on your shoulders, especially when the interest rates are high. In order to reduce the overall amount you owe and make your payments more manageable, it’s important to pay off your debts with the highest interest rates first. This will reduce the amount of money you pay in interest over time and help you become debt-free sooner.

If you have several different loans, try prioritising debts based on the interest rate, starting with the highest rate and working your way down. You can also use a debt calculator to help you figure out how much you’ll save by paying off certain debts sooner rather than later. 

4. Take courses and learn about financial planning options

Investing in yourself is a great way to improve your finances. Learning about all of the different loan options available to you can help you get the best deal that fits your needs. Many people do not know how to save money or how to invest money wisely. By taking a course on financial planning, you can learn how to save for retirement, build your credit score, and more. This knowledge will help you better manage your money now and in the future.

5. Hire a financial advisor company

When it comes to managing your personal finances, the most important but often overlooked aspect is working with a financial advisor company. When you work with a financial advisor company, you can get help managing your loans and other financial products. This can be especially helpful for physicians who have a lot of student loan debt.

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With equity release, there can be many great things to consider, but like those great things, there are also things that can go wrong. Here, we look at the top 3 pros and cons of equity release with lifetime mortgage and how they can benefit you.

Top 3 Pros 

1. Financial Freedom

With the money you receive from an equity release lifetime mortgage, you can do anything you want. There are no rules to what you can do with the money, even if you just keep it in your savings until you need it. 

2. Clearing Old Debt 

If you have an existing mortgage and have debt that you need to clear, the money from an equity release lifetime mortgage will be ideal. You will be able to get your credit history in good health and use any money that you have left for other investments. Small businesses are a great way to ensure that even after you have released equity, you will still have an additional income to take care of once you get older. 

3. Home Renovations

Home renovations can be expensive, with many people unable to do them while working.  A home renovation plan could be paid in one payment with an equity release lifetime mortgage and give you the chance to live comfortably in your home after retirement. Whether you add more safety features for your home so that you can live safely as you get older or invest in landscaping, you will be able to pay for it all with your equity release. 

What Is Equity Release, And How Does It Work?

An equity release is a loan you take out against the value of your property. According to our equity release expert, John Lawson, you get a period of between 5 - 10 years to repay the loan and an interest rate of up to 7% . To qualify, you will need to have good credit health, a property that you own with a minimum value of £70 000, and you need to have proof of your employment history if you are still working. 

Top 3 Cons 

1. High Interest

The interest rate for equity release is high, and you will likely get far less in value for your home than you would on the open market. The interest is also for life, so you will be stuck unless you move over to another lender and risk the high cost of transfers and repayments. 

2. Loss of Inheritance Value

Your beneficiaries will receive less than expected with an equity release mortgage plan. If you die before the loan is repaid, the lender can sell the property and give them whatever money is left, or they will have to sell the house to cover the outstanding costs. If they do not want to sell, they will have 12 months to repay the loan before the lender takes possession of the property.

3. Defaulting 

If you default on your equity release, the lender will have the right to sell your home to cover any outstanding fees and costs. You get 30 days to repay any money you have defaulted on, but if you do not have the money and your children are not prepared to assist you, you will lose your home. 

Common Questions Answered: 

How Do I Know If An Equity Release Is Suitable For Me?

Fact find can help you decide if equity release can help you or if it will be unnecessary. A financial advisor can help you do the same. 

What Do I Need To Qualify For Equity Release?

You need to be a permanent resident of the UK, be older than 55 and have a property value of £70 000.

Conclusion 

It can be wise to release equity if you know the pros and cons of equity release. Be sure to understand what you are getting yourself into before you decide to put your property at risk. You will benefit from the assistance of a financial advisor if you do not know how to manage your money and are considering equity release. 

The last two years have changed the world in a myriad of ways, one of which is the lingering debt that thousands more consumers are now having to deal with. Unpaid debt or ‘problem debt’ has soared. Pre-pandemic, there were estimated to be just over 1 million UK households facing problem debt. But by mid-2021, Citizens’ Advice estimated that number would have risen to at least 1.5 million.

This increase, coupled with a cultural shift that has occurred since we first entered lockdown, has forced debt collection agencies to reconsider their methods. Digital debt collection is helping to transform the industry, not only for lenders but for borrowers too.

Finding Compassion in Collection

Most people would not automatically link compassion to debt collecting, because, in particular, those with problem debt have often only seen the uncompromising face of an outdated industry. But the sector has recently been through a period of self-reflection.

Firstsource has been working with creditors and collection agencies for over two decades. Throughout this time, we have increasingly found that using compassion, relating to borrowers, finding ways to empathise with them, has been the best way to recover debts. Building a rapport helps borrowers feel appreciated and understood, leading to much higher rates of collection.

One barrier to empathy has been that the number of borrowers has traditionally far outstripped the lenders’ ability to offer this kind of service. It is, in part, this blanket system that has given the industry its current reputation. But the advent of digitised debt collection is poised to change this.

How Debt Collection Digitised

While anyone would be hesitant to focus too much on the positives that have occurred during the pandemic, there are some rays of sunlight that have shone through. For one, consumers have begun to realise the importance of their voices. This has precipitated the aforementioned cultural change, rearranging consumer hierarchy to emphasise the adage: the customer is always right. And now many industries are looking for ways to become more customer-friendly

The debt collection industry has responded by ramping up its digital offerings. Through the use of various modern technologies, debt collectors can offer a more customer-centric service:

• Machine learning: Digital debt collectors are employing machine learning to create tailored repayment plans for each customer. By understanding each borrower’s habits and unique financial situation, collectors can then find the best route to returns.
• Personalised correspondence: Customers are offered a range of electronic communication channels through which they can correspond with their collectors. Then, rather than generic messaging, they receive messages with personalised subjects and details about their repayment plan.
• Automation: These communications are sent to borrowers through automation, reducing costs for collectors and allowing them to focus on finding new ways to further improve the customer experience.

Digitisation has a habit of improving all services, particularly when used as a hybrid service with human interaction, and debt collection is no exception. Many digital debt collectors also offer 24/7 helplines, with phones answered by trained debt collection professionals, for when customers want instant replies from real people.

Why Digital Debt Collection Works

This digitalisation has worked in line with Firstsource’s findings that compassion is one of the best tools debt collectors have. Organisations like Martin Lewis’ Money Saving Expert, Citizens’ Advice, and a range of charities give advice to borrowers. But a pervading feeling from many borrowers that there is shame in being in debt, originating in the power imbalance that exists between debt and borrower, stops many from seeking help.

Each of these applications have started to redress this imbalance, placing more of the power with the traditional underdog in the relationship. By providing unintrusive collections that focus on allowing the customer to decide when, why, and how they are communicated with, collectors help break down the stigma surrounding debt. This is the compassion that Firstsource has been injecting into collections. Empowering borrowers lets them know they are valued and not judged, creating a collection service that is simultaneously more friendly and successful at its primary purpose.

Real Proof Digital Debt Collection Works

These aren’t just pretty words either, the benefits are already translating into real money for organisations that switch to empathetic digital debt collections. The statistics truly prove these methods are wholly more efficient than the traditional approach.

The most tangible way of measuring debt collection success is of course through the money repaid. Clients that have implemented the white-label Firstsource Digital Collection Solution have seen resolution rates climbing by up to 400%, while at the same time collection costs drop by 3-4%. In monetary terms, this has resulted in close to £200,000,000 collected each year.

Delinquency rates are also vastly improved. By providing individualised repayment plans, borrowers are far more easily able to meet the terms. This has led to almost ten million accounts being saved from becoming delinquent each year.

And finally, digital debt collection has also helped boost collectors’ profits by improving productivity. The fully configurable and compliant software easily plugs into their existing stack to begin automated delivery, giving collectors complete control over workflows, processes, and communications. This mitigates compliance and operational risks and reserves employee manpower for more intricate tasks. Employers can use this productivity to scale up their organisations while reducing costs to help for more efficient future budgeting.

Reshaping Our Perception of Debt

For many, there has been little choice but to enter problem debt since the pandemic began. In some cases, whole industries have tumbled, and the fallout has hit everyday people the most. In response, the debt collection industry must take a holistic approach when dealing with borrowers.

Empathy is a powerful tool that has for too long not been properly used by the industry. To reach the growth it strives for, the sector must not be afraid to change, and in this case, that means modernisation. But beyond that, digital debt collection is the best way, not only to improve profit and productivity but to reshape the way society sees debt itself.

Our experts have found that the top 10 equity release companies have made it foolproof for customers to get scammed and ensure property and release plans are in the right hands. 

Are those options safe? Let’s take a look. 

Is Equity Release A Scam Or Rip-off?

No, equity release is not a scam or a rip-off. According to our equity release expert, Jason Stubbs, equity release has many lucrative advantages. You can pay for education, a holiday or pay off old debt. There are no limits to how you can spend your money. 

What Is the Difference Between Equity Release And A Lifetime Mortgage?

An equity release is money released from your home, which weakens your property value and decreases the amount of money your beneficiaries receive once the property is sold to recover the costs. A lifetime mortgage allows you to live in the home until you die, and your beneficiaries can decide to sell the property on their own or pay back the money with other financial means. 

Are You Interested In Equity Release But Concerned About Value For Money?

If you are concerned about equity release or value for money, it is good to note that the amount you get for your equity release plan is lower than what you would have received on the open market. There are also interest rates between 3 - 7% attached for life. If you want to avoid high costs and choose the wrong lender, you could be stuck. 

How Do I Know If Equity Release Is Right for Me?

You will know that an equity release is suitable for you if you have your home evaluated and agree to the amount you will get. If you are happy with the outcome of your evaluation and the means to get equity fits your standards to your lifestyle, then you can manage both. 

If you need to cover the outstanding debt that has become too high or cannot afford to take care of yourself independently but have a home worth equity release, then it is right for you. 

Where Can I Get High-Quality Equity Release Advice?

Fact Find is a great way to determine if you should release equity from your home. It will give you an idea of what you may need the money for and if you could do without an equity release mortgage. Financial advisors also help you understand if you need to release equity to cover any outstanding costs or just need a better lifestyle plan. 

What Are The Risks and Pitfalls Of Equity Release?

The risk in equity release is that you will get a smaller amount paid than you would have received if you had sold your house on the open market. Your beneficiaries stand a chance to lose their inheritance if you default on your repayments. You will have to pay whatever the interest rate is for the rest of your life. 

Common Equity Release Questions 

1. What Is Fact Find For Equity Release? 

Fact find is advice on equity release, lifetime mortgages, retirements, and much more. It is a way to get clarity on taking out equity releases before deciding to go through with it. 

2. What Do I Need To Qualify For Equity Release?

To qualify for equity release, you will have to do the following:

• Have a good credit record
• Be a resident of the UK
• Be 55 or older
• Have the property in your name 

Conclusion 

Although equity release is not a scam, it is still advisable for you to seek financial advice about your choice to release equity. 

You want to make sure that you can repay the money and that your family is aware of the risks that you are taking. They may stand to lose their inheritance if you opt for a home reversion plan and may stick with the repayments if you choose a lifetime mortgage. Either way, it is better to seek advice and to be sure before releasing equity. 

However, this means of attaining quick money can turn into debt even faster if you’re not familiar with the workings of payday loans in your country. In this article, we’ll introduce you to payday loans, touching upon what they are and how they work so that you can avoid becoming a victim of the debt trap. 

What Is A Payday Loan?

A payday loan refers to a loan borrowed by a third party that has a high-interest rate and needs to be paid back in a short period of time, typically in a two-week payday cycle. The loan is dependent on the amount of income you earn, with the borrowing limit being half of your net monthly salary in most provinces. 

This is because many individuals are paid by their employers on a bi-weekly basis, and payday loans are there to pick up the slack until your next payday. By this time, you are expected to pay off the whole loan, the interest rate on it, and any other fees altogether. 

Getting A Payday Loan

Getting a payday loan is not a complicated process; all you require is a job, your identification information, a bank account, and an approved permanent address. However, sometimes you can obtain this loan even if you don’t meet certain requirements as some lenders are not strict about it.

You’ll either receive cash in hand, have money deposited straight into your account or the lender will provide you with a prepaid card for use. The prepaid card has the disadvantage of requiring an activation fee to be paid for it to work. 

When it’s time for you to pay back the loan, the money will either be directly withdrawn from your bank account, or a post-dated cheque given by you in the beginning to the lender will be cashed out. 

Paying Back Payday Loans

Limited credit choices mainly drive individuals to seek out a payday loan in the first place. There are a few ways you can go about paying back your payday loan: you can check whether you are eligible for a personal instalment loan to pay off the payday loan and other high-interest debt that’s been burdening you since the repayment term is longer.

In case your bank refuses to lend you the money, you can turn to a private or subprime lender. Though they’ll most likely offer higher rates on the payday loans than your bank, it’ll still be far less than your collective payday loan

Endnote

A payday loan is meant to be a short-term solution. There are many reasons one might apply for a payday loan, but this type of loan should be approached with caution, especially if you think you’ll have a hard time paying it back on time. It’s important that you think through your decision before taking out a payday loan since interest rates are extremely high and can cause you a lot more trouble than it is worth.

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There is no shame in taking out a loan and often it is the best solution to a financial challenge, but debt can very quickly spiral out of control and can be a slippery slope if you do not know how to manage your loans. This article will look at a few of the best ways that you can manage your loans to prevent spiralling into debt. 

1. Get Your Finances In Order

People often default on loans or run into financial difficulties because they are not organised. You need to sit down and go through all of your loans and what interest you are paying so that you can work out exactly what your financial obligations are each month. If you use a pawnbroker, for example, then you need to understand your loan and work out exactly how much you are paying back monthly and for how long.

2. Understand The Contract

You also need to spend time looking through the contract of the loan (you should always do this before signing anything as well). This is so that you can get a stronger understanding of the agreement, including how long it is for and if you are able to clear the debt sooner. This will help you to avoid any nasty surprises and allow you to adjust your household budget so that you can manage during the course of the loan.

3. Keep Up With Payments

It might seem obvious, but many people do not make their payments each month for one reason or another and this is when you start to fall into dangerous territory. It is smart to set up automated payments so that the money will automatically be paid each month, which means that you do not have to remember and complete a manual payment each month - just make sure that you will always have enough money in your account. You should also look into what the implications of paying late are as every lender will have different terms and conditions. If you are ever struggling, you should always let your lenders know as they may be able to restructure the agreement. 

Conclusion

Loans can be a great solution to financial challenges, but they can also lead to even greater financial challenges and debt if you are not careful. The key is to know how to manage your loans so that you can stay on top of payments, adjust your household budget and pay back the loan in full and on time. When you are able to do this, loans can be incredibly useful and a smart solution to financial challenges.

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The term ‘financial literacy’ refers to taking the time to understand the world of finances a little more, and thinking about how you can save money through budgeting. There are a range of additional benefits that this can provide, including additional independence and being able to work towards your long-term goals. 

These are some of the benefits that come from improving your financial understanding and literacy, and why you should acknowledge your current savings habits to work towards a more secure future. Check this out for more details about financial advice and improving your credit, as well as more information on personal loans. 

Save For Retirement

So many people end up using their savings before they get the chance to retire, or reach retirement age. This can be due to a number of things, but one of the main reasons is poor financial planning and habits. Make sure that you investigate your current monthly expenses to see what you can cut back on. 

Ensure that you are putting away a small amount each month if possible so that you have a higher amount saved for your retirement. Getting on top of your financial situation and improving your financial literacy is essential for you to increase your retirement savings. 

Regardless of your age, you must have enough money in the right place that you can fall back on when needed. This includes medication, surgeries, and other things that will make your retirement a little more pricey. Ensure that you have prioritised saving for your retirement if you are closer to retirement age. 

Avoid Debt 

Another significant reason why you should improve your financial literacy is so that you can get a better understanding of your current income and allow for essential debt repayments. If you currently have a loan that needs to be repaid, or if you have a history of debt, then it could be worth changing your financial habits in order to avoid debt. 

Try to change your priorities and consider implementing a stricter budget so that you do not fall into similar habits that are potentially damaging to your account and credit rating. Creating better savings habits can allow you to repay your debt, or make space in your monthly budget for debt repayments. 

This can prevent additional damage caused by debt collectors, credit agencies, and a harmful impact on your credit score overall that will impact your financial future. 

More Confidence And Independence

Something that will come to anyone who works on the budget and financial literacy is an increased sense of independence and confidence. This is because you will be more aware of your current spending habits, and have the opportunity to reshape your budget and monthly outgoings. 

It could be worth taking a different approach to your finances so that you feel as if you have more control over your spending and have found the best deal with utilities and other regular bills. This can allow you to feel more confident and even treat yourself to something nice every so often. 

This can be an important part of somebody’s journey to financial literacy if you have a lower average income and find yourself regularly asking for help. Making sure that you know all the facts and how a range of things work within the financial world can allow you to be wiser with your money and save a small amount each month. 

Knowing that you can support yourself if you need it can make you feel more independent and assured that you do not need to rely on anybody else in an urgent situation. 

Financial Security

Part of the confidence that comes from improving your financial literacy stems from financial security. This can allow you to make bolder decisions and have a lot more clarity with your purchases in the future. Ensuring that you have a small amount of money saved over time can provide you with additional security. 

If you are interested in saving for a large purchase, have a baby on the way, or if you find yourself unemployed temporarily, a savings account or investment is a great thing to lean on when it is needed.

Avoid asking loved ones for money as this can have a toll on your relationship with them over time, so it is worth putting a little money away when you have it that you can fall back on when it is needed. 

Credit Improvement For The Future

Finally, it is worth making sure that you work on your finances so that you can improve your credit score. This is a three-digit number that banks and credit unions use to assess how likely you are to repay them over time. Whether you want a loan, or financing options for larger purchases including house mortgages, vehicle financing, or a vacation paid in instalments, your credit score can determine how flexible the corresponding institutions will be. 

Make sure that you are creating better habits for the future so that your credit score will be higher. This can allow you more flexibility with the amount borrowed, repayment periods, and even achieve lower interest rates. 

In some cases, this can be the difference between a smaller home and your dream location or building. Try to take better care of your finances now, so that you have additional security for the future. Higher credit scores can open all kinds of doors for you, so it is definitely worth maintaining it if possible. 

Summary

There are so many benefits that come from working on your finances and getting a better understanding of your financial literacy. Ensure that you figure out your main areas of weakness and that you are budgeting for regular bills and utilities that are necessary. Saving for the future can be done after this, but it could be worth seeking custom financial advice in more detail. Check out the link above for more information. 

This represents a record-breaking level of debt for HMRC to collect in a period of financial recovery, with the UK besieged by multiple macro and local economic challenges. Sushil Patel explores them over the next couple of pages.

Overdue Debt

Over the 13 years prior to the 2020-21 financial year, HMRC’s overdue debt averaged £18.1bn, peaking in 2008/09 following the financial crisis, where the debt level approached £26bn. As seen in the figure below, the current level of HMRC debt has increased by £38.5bn (203%) to £57.5bn.  Total overdue debt actually peaked at £72bn in August 2020, before falling to its year-end position of £57.5bn.

Overdue debt as a percentage of tax revenue, which since 2011/12 had stabilised at between 2% and 3%, has also risen to 9.4%.

There are several reasons for such alarming levels of HMRC debt and the primary reason being the support measures put in place throughout the COVID-19 pandemic, restrictions placed on HMRC’s ability to utilise its enforcement powers and HMRC changing their stance and overall approach on the collection of debt.

More than half of the £57.5bn overdue debt (£31.3bn) relates to VAT deferred through the coronavirus VAT Deferral Scheme/VAT New Payment Scheme. Here HMRC offered up to half a million businesses the option to defer VAT payments between 20 March 2020 and 30 June 2020 to the following tax year and gave the option to pay overdue VAT over smaller, interest-free instalments.

Revenue Losses

HMRC reported a decrease in revenue losses of £2.12bn from £4.08bn in 2019/20 to £1.96bn in 2020/21, this was due to the reduction in corporate insolvencies. Revenue losses occur when HMRC formally cease collection activity.

The reduction in insolvencies was partly caused by the government measures to financially support businesses during the COVID-19 pandemic and the introduction of temporary restrictions on the use of statutory demands and winding-up petitions.

For the period ended 31 March 2021, there were 9 cases (23 cases in 2019/20) where the loss exceeded £10 million, totalling £320 million (£634 million in 2019/20).

There were six write-offs (19 cases in 2019 to 2020) relating to Insolvency, totalling £126 million (£391 million in 2019 to 2020).

Although it is certain that large numbers of businesses would have failed had it not been for the introduction of government support measures, many of the measures have now ended, and HMRC will be facing pressure from the government to ensure the debts are collected.

TTP Debt Levels

Another reason for the debt levels increase is due to HMRC’s increased willingness to negotiate Time To Pay (TTP) arrangements with businesses. Due to the volume of cases, HMRC set up teams dedicated to dealing with specific types and amounts of HMRC arrears. The teams initially agreed deferrals of tax arrears on the condition that businesses either pay off the debt in full or contact HMRC in the future to negotiate a TTP (i.e.- an affordable repayment plan over an agreed period).

In the tax year 2020/21, HMRC negotiated approximately 864,000 (2019/20: 648,000) TTP arrangements, an increase of 33.3% from the tax year 2020/21. This increase has resulted in the quantum of debt under a TTP rising by 557% to £15.1 billion. The graph below highlights the significance of this increase when compared to the £2.78bn average debt level over the six years prior.

The coronavirus pandemic has presented HMRC with the extremely difficult task of assessing businesses future trading prospects in a period of unprecedented uncertainty. Key questions such as business viability and past compliance records will be at the forefront of HMRC’s collection process.

HMRC has been forced to take a much more open view on these questions, as many viable businesses have been plunged into extended periods of losses due to closures, national and regional lockdowns, along with sudden changes in consumer spending and habits.

Producing reliable forecasts has become much more difficult and something that management teams must revisit frequently. In many ways, HMRC’s greatest challenge is to find a somewhat unnatural equilibrium as a collector of taxes whilst simultaneously supporting UK businesses.

Ultimately HMRC will be responsible for deciding which options are best for the UK taxpayer in the orderly collection of overdue taxes while safeguarding employment and the ongoing recovery of the UK economy. The TTP scheme has been a resounding success since it was introduced in 2008/9, and it has facilitated the repayment of billions of pounds of overdue tax debts. What is clear is that the scheme is going to play a vital role in delivering the orderly repayment of overdue taxes over the next three years.

HMRC’s Future Outlook

The accumulation of unprecedented levels of overdue debt, debt tied up in TTP arrangements and the significant reduction in the numbers of insolvencies, puts HMRC in a difficult predicament. It is their responsibility to act in the UK Government’s best interests: to manage the levels of overdue debt whilst also ensuring enforcement action is taken against unviable businesses that are arguably trading to the detriment of UK taxpayers.

Some enforcement tactics against unviable businesses are therefore unavoidable, however, HMRC has shown throughout the pandemic that it is keen to support UK businesses. HMRC’s states in its latest accounts, that it has actively ‘reviewed and altered the tone of (their) communications, with different messaging determined by whether customers had experienced a high or low COVID-19 impact as well as offering ‘more flexible payment options such as longer TTP arrangements and extended review periods’.

Kroll expects this will continue to be the case and HMRC should be accommodating with businesses that submit strong proposals that warrant support and that include evidence of:

• An accurate schedule of arrears reconciled to HMRC’s statement of liabilities
• A summary of the background to the request, including specific impacts of COVID-19
• Mitigating actions that have been made and what future actions are being taken to ensure ongoing compliance with the TTP
• A summary of the support provided by other stakeholders (lenders, suppliers, shareholders).

Whether you are just beginning to earn your own money and aren’t sure where to distribute it, or if you’ve been struggling with making the right decisions, this guide will help you to feel more confident with your financial decisions. Not only that, but you will feel braver and more optimistic about the future if you have savings to fall back on or even emergency funds for when you need it most. These are some basics of gaining control over your personal finances. 

Self-Restraint

This might seem like an obvious point, but you’d be surprised how hard it can be to exercise some self-control with money. So many people are impulsive and might find themselves splurging on random items that they don’t need when they’re overwhelmed or stressed. Some great ways to reinforce better money habits are to learn how to reward yourself for tough days without spending high amounts of money. The modern world is full of advertisements and fast-food restaurants that it’s no wonder that you might find yourself spending more money than you need to. A great place to start is to set yourself easy goals, like going a week when you only buy yourself one of two rewards. Then, you could focus on making those rewards more affordable, like making coffee at home instead of heading to Starbucks. 

Future Planning

Another great motivator to save towards is to assess your priorities and try to set up a savings plan. Whether you want to invest this or put it somewhere safe, you could speak with your bank supplier about what your options are. You might want to save for retirement or even a college education in the future. Spend some time thinking about what you want to save for, and let that encourage you to make smarter financial decisions. 

Emergency Fund

Another great way to start saving is to put a small amount away each month or payday and keep it as emergency savings. This can help with injury recovery costs, medication, or even car breakdown. Whatever your future might hold for you, it’s better to be prepared because money worries will only weigh you down during already stressful times otherwise. It is reassuring to know that in an accident or emergency, you have yourself and your family or assets covered. Another way to ensure emergency savings is to search for a great insurance provider. Natural disasters, severe weather patterns, and the loss of a loved one can be protected in one place. Worrying about money isn’t something that anyone should be doing while dealing with an emergency. 

Monthly Divisions

Spend some time assessing your monthly expenses and decide how essential each of them is. For example, you might be paying for a subscription that you no longer use. Of course, bills and utilities should be the priority, but once you spend some time mapping out your monthly costs, you might find yourself more motivated to save or even find more efficient ways to fuel your lifestyle. Rent, utilities, food, and insurance all add up, and you might even find that you could be saving money by moving to a more economic flat or house. 

Credit And Debt

One of the main reasons why so many people avoid working on their finances is because they might have outstanding debt or poor credit. This is why it’s even more important to work on your money management so that further debt is prevented. Working towards repaying loans or debts is also a great way to improve your credit rating. This means that banks are more likely to offer you more flexible repayment plans in the future for bigger purchases like mortgage schemes. It can be daunting when thinking about tackling your outstanding debts, which is why some personal loan companies offer services specifically for this. Seek friendly financial advice and tips on how you can consolidate your debts into one place and make it much more straightforward to eventually pay off. Rome wasn’t built in a day, so it’s important to remember that any small change contributes to a more financially stable, confident future. 

Online Banking

We live in a world where everything is readily available whenever we could possibly want it. That is why more and more people are opting for a banking option that is easy to access and has apps that are easy to use. Do your research to compare which banks offer the best app if this is something that is important to you. It can be an effective motivator when it comes to avoiding impulsive purchases because you will be able to check the app and see how your savings are doing and decide whether you can afford it this month. Checking your accounts on the go is a modern thing that makes banking and financial management more accessible and convenient than ever before. Not to mention, the quality of payment methods and security that are now within reach of banking apps. 

To summarise, this guide has hopefully provided you with some basic definitions to allow you to feel more comfortable thinking about personal finances. Finally getting round to managing your money and setting up savings can be intimidating, especially if you have a history of debt, poor credit, or even outstanding debt repayments. Loan companies are designed to help you and enable you to gain control over your finances for good. Hopefully, improving your knowledge of the world of money management will allow you to feel more confident and comfortable speaking with credit companies and banks about the future. Take some time to figure out what bank services are the most important to you, and think about whether you know where all of your monthly outgoings go to. Good luck! 

The changes include a “pay now” or “buy now” option which will allow Klarna users to pay for items in full right away. The introduction of this new feature follows criticism that the use of “buy now, pay later” services encourages people into debt. 

Klarna, like similar services, offers its users the opportunity to delay or spread the cost of a purchase without being charged interest or fees. This is especially appealing to young and low-income shoppers who may have a harder time meeting the repayment. Critics of the platform also say that people are bombarded with messages and adverts urging them to use the “pay now, pay later” service without there being a straightforward explanation of how the service works and what it involves.

Klarna says that its new feature, as well as other changes, will give customers greater control and clarity. The company also said that it would be performing more thorough checks on how much users can realistically afford to borrow and will begin to use clearer language during the checkout process to protect users. 

While it is a new introduction for the UK, Klarna’s “pay now” option already exists for customers in several other countries. 

If you've been paying student loans back for nearly a decade, you might be wondering if there's an easier way to get out of debt. Many students graduate expecting to hold their balances for decades, and there are parents today whose kids are going off to college while they're still repaying their own dues. Student loan debt may also be preventing you from reaching financial goals, but there are some ways you can take advantage of your age and experience. This guide is designed for 30-something professionals who are looking for easier ways to pay off their loans. If you are in this demographic, you might find that every tip isn't applicable to your situation, but you can still glean some inspiration from the advice.

Use Your Mortgage

If you are a homeowner, which we know is a long-standing dream for many, your mortgage might be even more valuable than you realize. One of the major perks of home ownership is access to additional funding when you need it. Taking out a home equity line of credit (HELOC) can help you pay off expenses, free up room in your personal budget and avoid borrowing more loans. Essentially, this line of credit increases the longer you own your house. The more you've paid off, the more funds you have access based on the value of your ownership percentage. You can read all about the steps to apply for an HELOC and weigh its pros and cons in a helpful online guide.

Refinance with a Private Lender

Student loan refinancing is one way to lower your monthly payments, although you will have to slightly extend the duration of your loan. There's a silver lining here, however. For those who are able to make their lower payments more easily, they may be able to pay off debt sooner. Refinancing can also be a way to create more flexibility in your budget, especially if you're trying to save up for other investments. When exploring private lenders, make sure you compare quotes and research each one extensively. Request estimates from at least three to four lenders before accepting any offer.

Snowball Your Other Debts

The snowball method of debt repayment shifts your focus from big bills to smaller ones. By paying off as many dues as you can in a short period, you free up more room in your budget. This allows you to pay off the bigger debts that are weighing you down faster. Another major reason to consider taking this approach to debt management is reduced interest. Many credit cards and small loans gather unnecessary interest because borrowers settle for paying the minimum. Although it may be convenient on a monthly basis, it could actually be costing you hundreds, if not thousands, in the long-run. For this strategy to work, you should first sit down and write out all of your outstanding debts. Organize them from the lowest amount to the highest. Make a plan to pay off at least one per month, or multiple if you can, so you can dedicate your extra expenses to repaying the bigger debts.

Depending on how much you owe, how high the interests are, what kind of loan it is, and your repayment history, your strategy for getting out of debt may change.

If you’ve fallen behind on payments, the situation may be more urgent. If interest rates are high, paying it off is more pressing to your financial health. When you develop a strategy for getting out of debt, it has to align with your unique financial situation.

Negotiating With Credit Card Companies

Let’s start with credit card debt, one of the most common financial challenges in North America. When you’re carrying a high credit card balance, interest rates hold you back. With interest rates able to reach the 30 percent mark and 20 percent APR being common, it’s a remarkably expensive way to borrow money.

One of the best ways to deal with credit card debt is reducing those charges, which you can do through credit debt counselling. A certified Credit Counsellor from a non-profit credit counselling agency works with you to create a plan to pay back what you owe. That plan includes negotiating with the credit card companies for lower interest rates.

Dealing With Debt Collectors

If you’re being contacted by debt collectors, the situation is urgent. Not only will you be getting calls at home and at work, but your credit rating has already taken a hit. If you’re dealing with debt collectors, try these tips:

• Learn about local rules about how and when they can contact you;
• Find out where the debt originally came from;
• Get all of the information about your debt in writing;
• Talk to a certified Credit Counsellor before negotiating with the collector.

What Happens When You Owe Taxes?

Government revenue agencies have many tools at their disposal to collect funds that they are owed. They can:

• Place a garnishment on your paycheck, collecting a percentage of your wages directly;
• Seize assets directly, taking money out of your bank account;
• Charge late penalties and interest on any funds you owe.

Even if you don’t file your taxes, if you owe them money, the revenue agency will retroactively apply penalties once they learn how much you owe them.

Ignoring the problem is not helpful. Your best strategy for dealing with tax debt is approaching the revenue agency and working out a repayment plan. A credit counsellor from a non-profit Credit Counselling agency can help you budget your payment plan.

Low-Interest Debt

Low-interest debt is often seen as part of everyday life. It usually comes in the form of a mortgage, an auto loan, or a line of credit or HELOC (Home Equity Line of Credit). Many see these as non-urgent loans, and if you can invest for a higher return than the interest charges, you may want to prioritise saving over paying them down.

However, the lifetime cost of interest on a mortgage is sizeable, and it’s not to be ignored. The true cost depends on how much you borrowed and the interest rate, but if you borrowed $500,000 at an average of 3 percent over 25 years, you would pay over $210,000 in interest rates alone.

Even low-interest loans are worth paying off as quickly as possible, if not at the expense of high-interest loans.