If nothing else, the credit crunch has shown us yet again that relying on luck and buying doodahs on debt is never a very secure way to run your life and will come back and bite you at some point. But in these turbulent times, how do you futureproof your finances?

Here are our top tips to help you future proof your finances. 

• Don’t be linked with anyone else financially unless you absolutely have to be. If you are, then it is in your best interests to encourage them to manage their finances well. If you part company, make sure that this is listed immediately on your files.

• Spread anything financial evenly through the year, whether that’s credit card or loan applications, cancellations or completions, mobile phone contract applications, tenancy or mortgage applications, insurance, or new current or business account, etc. If there is a financial search involved it will leave a footprint, and the more footprints on your file in a short period of time, the more of a risk you will appear.

• Take action. There is no debt problem that can’t be solved, but it can take a lot of time and patience, and the sooner you get started the easier it’ll be. Ignoring debt and related problems will adversely affect your credit rating for years and years in to the future.

• Minimise the interest you are paying by moving all your debts on to a 0% card or getting a consolidation loan. If this isn’t possible, list all your debts and pay off the highest charges first, making sure you are still servicing the others each month. If this is causing you problems, approach each one and ask for the terms to be changed to something within your budget – this may cost you more in the longterm but can save your credit rating in the short term. If they won’t negotiate with you (and most will), then the Consumer Credit Counselling Service (www.cccs.co.uk) or the Citizens Advice Bureau (www.citizensadvice.org.uk) will be able to talk to them on your behalf.

• Do use savings to pay off high-interest debt. It is still the sad case that you generally earn less interest on your savings than you are likely to be paying on your credit card debt. Consequently having savings and high-interest debt doesn’t make financial sense.

• Remortgage if you have decent equity in your house. While it means you will be paying more over the longterm, it can offer a reasonable solution that can help you rebuild your credit score. Just make sure you check out the small print and get good independent financial advice.

• Don’t declare yourself bankrupt. Even though it is more acceptable than it once was, it has an adverse affect on your credit for years, and is best avoided unless you have no other option.

• Start taking control. Unfortunately, there is no quick fix, especially if you have got in to really bad habits or your outgoings simply outpace your incomings. However, but actively taking action regularly you can future proof your future prosperity for very little effort. You simply have to be persistent, consistent, and patient.

 

© Claire Burdett. No content to be reproduced without written approval of the author.

Claire Burdett is the Founder and Director of Funky Angel. She is a Writer, Journalist, and Editor, Integrated Marketing Expert, and Home Business Mentor.

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