Stop The Loan Culture Before It Is Too Late
Written by: Paul Darvell
Every other advert on TV is for a loan of one description or
another. The UK's appetite for debt has gone through the roof! A
little debt during a boom period is no major deal, everybody is
earning plenty of money, there is a general feel good factor
around. However, those days are over.
House repossessions are at their highest level since the last
housing market crash. Household names are going bankrupt nearly
every day. The UK's trade deficit is running out of control.
Consumer confidence is at a low. All these factors point towards
a slow down - yes, recession!
Now is the time to pull in your belts and stash your money away
to weather the storms ahead.
The main reasons people take out loans are to pay off debts or
to purchase something that they cannot afford. If the loan is to
purchase an item you cannot afford, the question to ask is - do
you really need it? If yes then a loan may be your only option.
If the item is a nice to have, a better option may be to follow
the advice below and save up for the item rather than burdening
yourself with expensive debt.
Taking out a loan to pay off debt and thinking that it is a
solution is pure madness, let me explain.
The reason that you have got into debt is because you are
spending more than you earn. The classic scenario of more going
out than there is coming in. So you get a loan to cover the debt
that has arisen. The loan pays off the debt and you get a
generally warm feeling that you have sorted out your finances.
However, a few months down the line you realise that you are
back in debt and wonder why that has happened. Of course you are
back in debt, you are still earning the same. You are still
spending the same and you now have the extra loan to pay as
well! So it is not surprising you have gotten into debt even
quicker this time around.
You have two options:
1) Take out another loan 2) Take control of your finances
If you choose option one and get a second loan, you are heading
for bankruptcy! This is because your earnings are not increasing
but your spending is massively increasing as you are trying to
pay off al these loans!! You can continue to get loans until the
point when nobody will loan you anymore money, this is the time
that most people will be declared bankrupt!
Loans alone will not resolve most people's financial issues.
Unfortunately, many people hear the adverts from the loan
companies talking about debt consolidation and other options and
get suckered in without knowing enough to be able to decide if
debt consolidation is right for them. The loan companies claim
that they want to help you but actually they just want to sell
you a debt consolidation package or a loan with a ridiculously
high interest rate. Remember, those companies only make money
when we are in debt. If you and I sort out our finances, they do
not make any money.
Whether you have debts or just feel that your finances are
controlling you and not the other way around, it is time to
Your finances are only controlling you because you let them. It
is a bit like feeling nervous when speaking to someone who is an
expert in their field, you may feel you are unable to talk on
the same level and feel intimidated. However, when you are
relaxed chatting to your mates about your favourite football
team etc you can hold your own and are comfortable. The only
difference between those two scenarios is your knowledge. When
you have the knowledge and understanding, you can take on the
So how do you get knowledgeable about managing your finances?
I will try to share some tips with you. However, a short article
like this could never go into enough detail, I will just try to
explain the concepts that you need to grasp. If you do want more
information, click here for my detailed Debt Reduction manual
which explains in detail everything that is covered here and
much much more.
So what are the core concepts?
1) Know your finances intimately 2) Decrease you expenditure 3)
Increase your income 4) Play the interest rate game
Know your finances intimately
The very first thing you need to do is now exactly what money
you have and where it goes. So workout your monthly income and
detail the sources. Does the income come from an employer, state
benefit, interest etc? Then detail out all your expenses.
Decrease your expenditure
You need to cut costs. There is always a way you can do this. By
knowing all your expenses you can go through each expense and
work out how to reduce it. My manual spends a lot of time on
this subject and shares all the tips and tricks that I have
learnt, it can show you how you can save thousands of pounds
each year and gives examples of people who have done exactly
that. Also, don't forget to check out the web site as there is
lots of free advice available.
Increase your income
On top of reducing your outgoings you want to maximise your
income. Think of ways you can receive more money each year.
Again, check out the website and manual for more information. In
the manual there are 9 ways of increasing your income. They
include getting a job, getting extra work, your own business
(this is not as difficult as you may think), getting all the
allowances you are entitled to and reducing your tax
The basic concepts of improving your finances are simple:
* Spend less * Earn more
I think just about everyone can understand that. The difficulty
is how to do it. That is were the website and manual come in,
they (especially the manual) step through your options slowly
with examples at every step so that everyone can understand. You
do not need to be a rocket scientist to understand this manual
As obvious as spending less, earn more may be, many people are
blinded by the magic solutions such as debt consolidation. Don't
get me wrong, I am not anti debt consolidation and sometimes it
can be the right solution but often it is not. Let's think about
it. With debt consolidation you are swapping lots of different
debts for one big one. It seems good because your monthly
payments are reduced. However, the reason the payments are
reduced is because they are secured against your house and the
fact you are going to spend the next 25 years paying them off.
With debt consolidation you are address the effects not the
problem. The problem is that you are spending more than you
earn, that is normally the reason why you are in debt. So after
getting debt consolidation you are still going to be spending
more as you have not reduced your spending or increased your
income. So eventually you will probably need to do more debt
consolidation and in extreme cases you will keep going until you
cannot get anymore loans and end up bankrupt.
The Money In My Pocket manual addresses the problem as well as
the effects for long term financial strength. The manual
provides the information the Loan companies do not want you to
Over the years I have assisted many people who have been
troubled by debt to overcome it and become financially stronger.
Every time, I have given exactly the same advice, or if you
like, formulae to beat debt and better manage their finances. It
is that formulae that I am sharing with you in the manual.
Whatever your next step in controlling your finances is, I wish
To learn more about this topic read my manual at
About the author:
Paul Darvell Money In My Pocket - Become Debt Free!
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