Here at Oyster Loan, we’re proud to help our clients find the right lender for them when they need to take out an instalment loan for bad credit. However, that’s not what we’re all about. We see ourselves as a friend to our customers and website visitors. That means that if we can pass on a few tips about how to avoid the need to take out a loan, it’s our pleasure to do so.
We’re pleased to introduce to you Oyster Loan’s manifesto on enjoying life more but living to a budget.
Set a budget
Britain is a great country but it’s certainly not a cheap country to live in. On top of all that expense, life is so hectic these days that we might genuinely believe we’re being good with our money but it’s the careless purchases we make little and often which end up adding up to a significant amount every month.
We recommend that you set a monthly budget and stick to it. How do you do that? Get a piece of paper and draw a line down the middle of it. On the left-hand side at the top of the page, write “What I earn” and on the other side, “What I spend”.
On the left-hand side, make a list of all the money that comes into your account and where it comes from – wages, board, self-employed income, benefits, and so on. Add everything up and put the total at the bottom of the page.
On the right-hand side, do the same but list everything you spend money on every month. It can be difficult to remember everything you buy and where you buy it from so it’s always a good idea to log into your online bank account so all the figures are in front of you. Include everything – your mortgage/rent, council tax, any money you put aside for savings, how much you pay back on existing loans and credit cards, shopping, travel, clothing, Sky, insurance, gym membership, and more. Add up everything you’ve written down and put the total on the bottom of the page.
Then subtract your expenses from your income – what you’re left with is your surplus money every month.
Then go through every item of expenditure. Is there anything you can do without? Could you reduce the number of channels on Sky? Everything you don’t spend money on will add to the surplus cash you have every month.
Don’t buy on impulse, shop around, and go for the bargains
It’s so easy to buy stuff on impulse – we all do it every day. Think about the breakfast and dinner we buy from local stores or the giant cups of tasty coffee. It all adds up, sometimes to thousands of pounds every year. Could you do a packed lunch for breakfast and dinner at work instead?
Switching supermarkets could save you £20-40 a week for a family of four – that’s £1,000 to £2,000 a year. Check your local retailers or favourite online stores for any sales they are currently running for more opportunities to save cash. You can live just as well or even better than you are now for cheaper – please take our word for it!
Holiday and Christmas spending
When you set your monthly budget and stick to it, you’ll notice over time how the money left over at the end of every month just before you get paid gets higher and higher. You should still be careful about Christmas and summer holiday expenditure though and set your own budget for that too.
If you have credit cards that you put presents and holiday spending on, try to make sure that you repay the money you add to your balance as quickly as possible – if you can do that in January, even better.
Use comparison sites
We love comparison sites and you can easily save a four-figure sum every year by using them to find the cheapest suppliers of insurance, TV subscriptions, flights, holidays, car payments, electricity, and gas.
We all know how these companies often take our business for granted and save all the really good deals for new customers. The answer to that is to become a new customer yourself – every year!
Set financial goals
The whole purpose of putting together your own monthly budget is to have a little bit of extra money available at the end of the month. But there’s nothing wrong with training your sites a little bit higher and having longer-term financial goals to aim for.
Are you in your overdraft too much for your own liking? Do you wish your credit card balances were a little lower? Remember every time you pay down debt, there’s less interest to pay meaning your monthly surplus cash goes up. It’s a virtuous circle where you win every month.
Write down a goal for 6 months’ and 12 months’ time about what you want to achieve financially and do everything you can to hit it.
Why it’s better to avoid taking out an instalment loan if you can?
It’s always better to pay for something out of money you’ve earned that from money you’ve borrowed, particularly if you have bad credit. However, life sometimes deals us with unpleasant surprises like funeral bills, medical expenses, or the car breaking down that we can’t foresee. Sometimes, it’s too difficult to avoid.
Before you do take out an instalment loan, ask yourself these four questions…
1. Are the repayments affordable?
You should never take out more debt if you’d struggle to make the monthly repayments from your surplus monthly cash. There should always be a good-sized buffer between what you pay and what you’re left with at the end of a month.
If you think you’re going to find it difficult to make even quite small repayments, you should definitely not take out an instalment loan. You should consider approach a debt charity for help and guidance.
2. Is it really a financial emergency?
Instalment loans are normally taken out by borrowers to cover financial emergencies but are what you’re experiencing at the moment really a financial emergency?
According to the Debt Advisory Centre, 44% of instalment loans were taken out to cover emergency situations. The rest were taken out for treats, holidays present for others, and games consoles among other things.
These are not emergencies and you’d be better off to wait and save up the money to treat yourself.
3. Are you borrowing to service existing short-term debts?
If you find yourself taking out instalment loan after instalment loan because you’re struggling to make repayments, you are in deep financial trouble and you need help. Please reach out to a debt charity straight away and please do not consider taking out an instalment loan.
4. Can you get credit at a cheaper rate than an instalment loan?
You should always choose the cheaper option when borrowing money. Instalment loans can be expensive compared to other forms of finance. Please check out other sources of cash available to you (including friends and family) before applying for an instalment loan.
Final thought on instalment loans the UK
You will notice a big difference in money and how you feel about money two or three months into living within your new budget. You’ll feel better about yourself and more confident about the future too.
All it requires is a few little changes to the way you spend the cash you have. It will feel unusual at first but you’ll surprise yourself how quickly you adapt. Go for it!