What a Load of Rubbish - This Makes Me So Mad!

I've just received the following message via an email from elephant-loan.co.uk, a company that I have never had any dealings with, nor do I intend to, especially now:

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Dear xxx

Financial Institutions, Lenders, Banks and Building Societies have changed their Lending Criteria due to the current financial climate.

You now meet the Basic Lending Criteria as you are; over 18 years old, in some form of employment, earn more than £650 per month, have access to a bank account and are paid at least once a month.

Therefore:

You have been Pre-Approved for a loan of up to £15,000

Loans available to Tenants and Home Owners

New loan rates starting at 7.9% APR


CCJs, Arrears and Defaults accepted

Loan amounts from £80 to £25,000

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Just a little bit annoyed by the above because it is a prime example of how some gullible fools can be lulled into a false sense of security and encouraged to take on debt! The red text was highlighted by me. I fully understand that there are millions of people out there who have debt, but there are so many of those people who shouldn't really have had access to credit in the first place because they simply cannot budget for themselves. I know - I was one of them!

We nearly all fell for the endowment policy sales - the guy selling them wore a suit, why question him. We nearly all fell for the 'take a loan, it's only X amount each month', we nearly all fell for the 'have a store card, get 10%  off all your purchases today' and we nearly all forgot to ask what happens if or when our circumstances change and then we cannot afford to pay it.

That was probably because we'd nearly all been brainwashed into believing that Personal Payment Protection Insurance would save us. When it didn't, many became unstuck. (Few policies cover self-employment - check the small print.) When the endowments failed to pay out enough to cover the original mortgages, many became unstuck. When the interest rates went up and up and up, many became unstuck.

It's the monstrous debt trap all over again, waiting to swallow up the next generation. But it's not too late to alert them to the dangers. The Government won't do it - they can't even climb out their own debt pit! So it has to be up to us, as friends, colleagues, family or even just as someone wanting to help avert a future tragedy; we are the ones who must 'save the world' if it really is money that makes this wacky world go round... and if anyone really does want saving!

MY TOP 10 TIPS FOR BECOMING DEBT FREE

1. Don't incur any more debt
2. Keep up payments on existing debt to avoid costly defaults or service charges
3. Plan to clear those existing debts one by one, most expensive first
4. Prioritise ALL spends
5. Stop spending on non-essentials - do you smoke/drink/go to the gym/expect holidays etc?
6. Get your spending priorities right - if you have debt worries then your priorities need changing
7. Make savings wherever possible - cook & bake more, make your own laundry detergent, cancel subscriptions etc
8. Calculate your true budget
9. Stick to that budget
10. Don't try to save cash while there's debt unless that debt is interest free and you can earn more by saving any surplus after making the minimum payments.

I think my biggest shock has been seeing how some people deal with debt. It is their inability to take initial responsibility or to see it as a result of their own doing, their own overspending, that astounds me most. A budget should always include 'spare cash left over', because that's what gets saved for the weeks or months when there is nothing left, for when the choice of avoiding the overdraft looks most bleak. It's also the only money that can, realistically, be spent on luxury, non-essential wants, as opposed to real needs.

Most of us fall into the trap of thinking we can't afford to save a fixed percentage of our income when, in actual fact, that should probably be one of the most important regular expenses we incur whilst earning. It's the best way to protect ourselves from future, possibly severe, austerity measures.

Saving is good, regardless of how hard the banks are currently trying to penalise us for it. If you don't want to save it in cash, save it in something that you know FOR A FACT will be able to help you out during a financial crisis.

Don't resort to fiddling the figures in order to burden yourself with more debt. Drag out that breadmaker, get yourself down to the library and swat up on your frugal living habits, swat up on your batch cooking skills, dust down the sewing machine and get your knitting needles out; if you don't want to wear charity shop clothes, redesign them. Do anything, just don't sit and sulk until you've drowned in debt.