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Switch on the TV and you are bound to be bombarded with economists and those with serious knowledge of the finance industry, pontificating on national debt and their indignation at it – and rightly so. However, in all these financial analyses, the not so enlightened viewer is left wondering where he forms in part of this picture. Or does he take an apathetic approach completely?

A Simple Look

To begin with, it is vital to know what the phrase “National Debt” means. It is the total sum of money that the national government has borrowed. The deficit is what the government borrows in a single year or annually which forms part of national debt. The bottom line is national debt is not owed by you and me, but rather the national government. The amount could be owed to a variety of sources which include pensions, banks, funds etc.

So, how does it affect us as citizens? The not so attractive fact is that it is the public who have to bear the brunt of the government’s misspending. It means higher taxes so that the government can pay the interest owed, or it will cut on spending on public welfare schemes – which would include key areas like education, health and infrastructure.

Borrowing

The other effect of course is the cost of borrowing. Those who have high income levels annually get loans at a regular interest rate, whereas individuals who fall in the lower income bracket will be charged a higher rate of interest, as the banks compensate for such individuals deemed as high risk. The same principle is applied to governments, when the national debt rises with higher interest rates for the government, it in turn increases our rate of interest, as the government rate is the baseline for all other interest rates.

This leads to people turning to alternative sources of lending like payday loans which are out of the largest lenders to private individuals in the country. One of the top lending company’s, openwonga.com shows a customer base of over 7 million and it is growing exponentially. This is due to a dramatic rise in the cost of living, which has skyrocketed with less value for more money spent. This means a higher mortgage rate which reduces the number of people who can afford to buy houses. If demand for houses dip because of higher costs, then eventually the housing market compensates in a downward spiral, which does not augur well for those already owning property. All of this leads to us feeling poorer and spending less.

Other areas we see an impact

Those are just the direct repercussions! There are numerous other areas where the consumer has to take a beating. Businesses are affected as the more they borrow, the higher amount they have to payback. This could lead to a rise in costs where businesses increase their prices known as “cost-push inflation”. Higher price for products means lower purchases by consumers.

This could lead to businesses being unable or unwilling to invest in new technology, which would mean the end user, the consumer, not having access to the best products using the latest technology. As businesses will be affected, their profits are likely to decrease even if they raise prices, because of higher costs of production. This would affect their market shares which would in turn affect any pension funds linked to them.

If borrowing gets too expensive, especially for new businesses, they may not be able to take off at all. In such a situation the government moves in to fill in the vacuum by providing services or goods needed. The downside is that the government uses resources less efficiently and effectively as compared to businesses, which are driven by profit. This could lead to a decrease in quality of services, along with complex documentation and a maze of bureaucracy, which does not really help the public. It makes people realise that actually having private enterprises is a far more effective solution.

So, in summary, national debt can lead to a host of problems which directly impacts us, the public. Can we make a change to it? In part, yes. We can of course vote in local elections to help decide on the next Government. You can also read national newspapers and take part in the open discussions and forums to take a more active role in what is going on in our country. Politics and national debt isn’t just for politicians- it affects all of us. Understanding the basis of the issue is one step towards taking part in the national, political discussion and knowing where you stand as an individual living in the UK.

 

How to Avoid Borrowing and Still Get Cash

Oftentimes, when people face a financial emergency or they do not bring enough money in to cover all their monthly bills, they borrow money to help cover these costs. While this often seems like a good idea at first because it covers their immediate need, paying this debt off is not so easy. In fact, the interest accrued on any type of loan will require you to repay a lot more money then you borrowed in the first place.

 

Unfortunately, this typically causes people to get in further behind on the debt and increase their monthly bills. The good news is that there are effective ways that you can earn money to cover your bills. This will avoid the need to borrow money. Below is a look at some effective ways to avoid borrowing money while still earning cash.

 

Apply for Centrelink Payments (government benefits)

If you are a low-income earner, you may qualify for special benefits through the Centrelink office. These benefits can bring extra income into your home, or reduce the costs you need to pay for some of your bills, such as childcare expense and rent. Contact your local Centrelink office to see what benefits you qualify for. Many people don’t realise that the government can provide alternative financial assistance to keep you from taking out high interest loans.

 

Get a Part-Time Job

If you do not have enough money coming to cover all of your expenses, you may need to get a part-time job. Just a few extra hours may be enough to help cover some of your additional bills. You can look for temporary work or seasonal work just to get you through the tough times. You may even be able to find some part-time work online, but be extremely careful to only work through secure sites, and never distribute your personal information.

 

Create a Household Budget

While creating a household budget will not put more actual money into your pocket, it can help to make more cash available. Managing a budget will help you track your money and prevent you from overspending in certain area and then not having enough left to pay your bills. It is vital that you set up a household budget, if you ever hope to get control of your finances.

 

Set Up an Emergency Fund

Setting up an emergency savings account is one of the best tools you can use to avoid borrowing in the future. By setting aside just a little bit of money out of each pay cheque, this account will grow over time. This money should be placed in a separate savings account that is not connected to your other bank account. Then when you have an emergency, you will have this money available to use.

 

Hold a Yard Sale

Most people have many items in their house they the rarely ever use, or no longer use. Rather than having these items clutter up your home, hold a yard/garage sale at your house. Not only will this give you more space in your house, but you will be able to earn some much needed cash, as well.

 

Start a Side Business

Starting a small side business is not as hard as you may think. Consider things that you enjoy doing, or are good at doing, and then determine how to turn those talents into a small business. For example, if you love pets, you may want to start a business as a dog sitter or dog worker. There are many different opportunities, such as babysitting, home repairs, jewellery making, and woodworking. Start by selling your goods and services to your friends, family members, neighbours and co-workers. Use your social media sites to promote your business and bring in some extra cash.

 

If you need more cash to help cover some of your expenses, or you want to make a special purchase, try one, or more, of the great ways listed above to bring more cash into your household. This can help you avoid the need to borrow money and pay all of those high fees and interest payments. This gives you more money to spend on the things that are important to you.

9 Proven Strategies to Eliminate Debt

One of the most stressful things that can happen to a person is falling prey to what I call the “Debt Trap.” If you have problems with debt, you may be desperately looking for a way out.

If you’re wondering just how you can regain control of your finances and effectively eliminate your debt, take a look at these nine different strategies you can use to put an end to your debt once and for all.

1. Change Your Spending Behavior
The first step to becoming debt-free is to put an end to dangerous spending behaviors. If you like to make impulse buys, try to go cold turkey on unplanned or unneeded purchases. Spending money is easy—anyone can do it—it’s saving that takes practice.

2. Start Creating Budgets
Do you have a monthly budget in place? If so, how close are you following it? Not sticking to a pre-planned budget is another common way to rack up debt. Start creating weekly and monthly budgets with all your spending accounted for. If you have significant expenses coming up later in the year, a yearlong plan may also be useful. Start small, and work towards saving a little more each month.

3. Pay Bills on Time
High interest rates and late fees are two things that can eat away at your savings. Avoid these by making sure to make your payments on time. Not only will paying on time free you from having to pay late fees, it will also improve your credit rating.

4. Make More than the Minimum Payment
If you are only paying the minimum on your debt, try to make larger payments. While it may hurt your pocketbook in the short term, it will get you out of debt faster.

Again, start slow; work toward paying a little more each month, gradually increasing over time. Before you know it, you’ll be doubling your payments and cutting your debt in half!

5. Focus on Paying off One Card at a Time

If you try to pay off all your debts simultaneously, you will be overwhelmed. Instead, focus your efforts on one card (preferably the one with the highest interest rate), pay that one off first, and then move on to the others.

6. Cut Down on Unnecessary Expenses
While some expenses like food and shelter are necessary, others aren’t. Minimize your costs by cutting down on unnecessary expenses. Make an effort to look for ways to save money by altering your lifestyle to become a bit more frugal and a bit less frivolous with your spending.

7. Create Emergency Funds

One of the reasons people rack up debt in the first place is because they don’t have any money saved to pay for emergency expenses In fact, a CNN Money report from last year revealed that over 75% of Americans are living paycheck-to-paycheck!

Open a new savings account and try to put an allocated amount of money into it each month. You can even set up your account so that a small amount is automatically transferred to your savings each month—making it even easier to save.

8. Try to Renegotiate Your Interest Rates
Unfortunately, some of your loans and credit cards may have very high interest rates attached to them. Call up these creditors and see if there’s a way to lower your rate. In certain situations, they may actually be willing to renegotiate your interest.

9. Look Into Credit Counseling

If you feel your debt is simply too massive to conquer on your own, a credit counseling agency like CreditGuard can be a powerful ally in helping you better manage your debt. A reputable credit counseling agency can negotiate for reduced interest rates and lower minimum payments on your behalf.

By following these nine steps, you’ll be better equipped to eliminate your debt and build the foundation for a more financially-secure future.

 

UK job seekers received some unexpected good in recent times, as the national unemployment fell to just 7.2% in March. Subsequently, the number of citizens claiming benefits has also fallen considerably, which has prompted leading government officials to forecast an increasingly bright economic future.

Given that the portents for long-term economic growth remain unclear, however, there is still much to be done to ensure that the UK and its residents achieve prosperity. This is especially true in the case of younger job seekers, as youth unemployment remains uncomfortably high despite showcasing tangible signs of improvement.

Taking Control of your Destiny: 3 ways to Improve your Employment Prospects

 

The recent figures at least provide hope for unemployed British citizens, however, and provide a platform from which they can assume control of their job search and seek out viable employment opportunities. Falling unemployment also provides job hunters with motivation to improve their own appeal as candidates for work, which in turn can give them a critical edge in the market place. Consider the following: –

 

  • Target Relevant Skills and Qualifications: The pace of advancement and evolution is more rapid than ever, which means that it is crucial for job seekers to refresh their industry relevant skills. Those who are registered as unemployed my even qualify for funding to complete specific industry courses, especially if it improves their chances of landing long term employment. So be sure to research your area of experience and expertise, and seek out any requisite qualifications as a matter of urgency.

 

  • Broaden your Search for Short Term Work: Temporary work can provide significant financial relief while you are unemployed, so long as you are willing to broaden your search and engage with new or unfamiliar industries. To do this, you may also need to enhance your appeal among a wider range of employers, so be sure to emphasis any transferable experience that you have in the work place. It may also be wise to obtain a free credit check, as having a reputable score will qualify you to work in entry level financial roles.

 

  • Seek out Voluntary Work: Employers often hire individuals based primarily on their attitude, work ethic and defining characteristics, so it is crucial that you sell these through your application, resume and direct communication. Using your time productively while unemployed is of pivotal importance, as it distinguishes you as an organized individual who is committed to find work. You can highlight this by balancing your job search with periods of voluntary work, and subsequently use your up to date resume as a representation of your tenacity and time management skills.

In Summary

 

These steps should help you to find work, even as the level of competition continues to rise in the existing labour market. All that remains is for job seekers to retain control of their finances while they are unemployed, as this means that they do not encounter debt prior to accepting a new position. So while there is nothing wrong with applying for short-term personal loan from a reputable provider, you must take care to ensure that you are able to repay this within the specified time frame.

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