Loan Digger

The words “neither a borrower nor a lender be” are wise words indeed. When you are in need of debt help, it is very tempting to turn to your family, as they are the people you expect to be able to rely on. How can they refuse you help when you need it most? However, it is not excessive to warn that even close family relationships can break down over financial issues.

If you are in serious debt, then professional advice should be sought from a charity or non-profit organisation. Borrowing more money is not a solution, as it does not actually pay off the debt, and it is very easy to assume that the relative will not mind waiting for repayment, or that as you are family, the debt need not be repaid at all. This would leave huge resentment and may cause lasting damage to the relationship.

Where borrowing money from family can work is if it is for relatively small amounts, and only needed for a short-term loan. For example, perhaps you need the money to repair your car, so that you can get to work, but you know that you will have the funds to repay the loan on pay day, or when some other expected money comes through. You must also be sure that you can pay back the money quickly, without causing further financial problems.

The loan should be treated as any other loan, with absolute intention to repay it, and the relative´s tolerance should in no way be taken for granted.

Do you hail from the kind of family where money is freely lent and borrowed? Some do, and they will always turn to the Bank of Mum and Dad (or Aunty Flo) as the best option to get their short or long term borrowing needs met. It’s probably more to do with habit and a lack of experience of dealing with commercial borrowing, since I know that not all of these borrowers are happy with their easy deal. We all need debt help

from time to time, but there is something about the uncertainty of not knowing what the terms of borrowing are, that is infeasibly stressful.

You may or may not believe me when I say that I have heard some of these people complain that the debts get written off. I am serious. At least with your main banking provider you know exactly where you stand, and they won’t be at all interested in the fact that your car failed its MOT this month and you’re consequently a little shorter than you expected.

If you want to get me started on the gripes and complaints of the lenders, then that’s even easier. They complain with a shrug that ‘Debbie must think I’m made of money,’ yet they keep lending. Sometimes they can’t really afford to, and see the loan as a gift, even though they’ve been told: ‘I’ll pay you back.’ It’s like an unspoken contract, with both parties pulling the wool over their own eyes. (There is no need for duplicity since the other party is colluding in their own self-deception.) T

he thing is that ‘Debbie’ almost certainly means what she says at the time, but the trouble with borrowing money is that we do it because we’re short of it. When our needs increase a bit further down the line, this shortage becomes even more uncomfortable and obviously the most important debts get paid off first. This means that the mortgage, rent, credit card, electricity and grocery bill will always take precedence over Dad’s money.

So why do we do it? Borrow from family, that is. I guess it is because the precedent has been set. Traditionally parents help out their children. Maybe the happiest parents (and adult children) set a cut-off point for this kind of help and have stuck to it. Maybe it would be best for the over-indulgent parents concerned to invite their offspring to source a good deal in the market place and then offer to better it, on more formal terms.

This might be enough to break the pattern of dependency and lack of responsibility without it being too shocking a first step in that direction. It would almost certainly be doing their children a favour, and even those who still delight when a debt is written off will, on some level, be desiring an adult and autonomous relationship with their own money and would rather be in debt to Mr Barclay, Nat West or HSBC than to their own Mum and Dad, ever infantilised and part of a game where everybody knows the outcome, but nobody’s telling.

It is so easy these days for students to find themselves in debt; it seems to be an automatic part of student life. Fortunately, there is also plenty of debt advice to be found which will enable the shrewd student to keep debt to a minimum. Some of the advice is common-sense budgeting, learning to make the most of the money they have and spending it wisely. With this in mind, some very basic advice to students on a limited income includes things like not shopping for food when you are really hungry – it is surprising how tempting even the most unappetising food can be when you are starving. Writing down a shopping list and sticking to it rigorously is also essential, as is taking just enough cash with you for the items on your list and leaving your debit or credit card out of reach.

Another useful tip is to find out if you can share study books; these can be very expensive these days and you may find you can halve or even quarter the cost if you share books and materials with other students on your course.  Stationery doesn’t have to be costly either; there are many stores offering discounts.

When it comes to the actual finances themselves, it’s a very good idea to compare banks before deciding on the one for you. Don’t be tempted to open an account in the first bank you come to in the high street. They all generally have offers to tempt students but the rates of interest and so on will differ from bank to bank.  It is in the interests of all banks to attract students; they know that most people don’t make a habit of switching accounts from one bank to another, so they will do their best to persuade you to open an account fairly secure on the knowledge that you will stay with that bank for years and years. In this way, they are able to bombard you with offers of insurances and loans, and profit from your loyalty.

Many students emerge into the world at the end of their course deep in debt and with a lifetime of worry at a time when they should be feeling motivated and full of hope and potential. It is such a shame to have life blighted like this, so it’s a good thing to bear in mind that keeping out of debt whilst a student will reap rewards when the time comes to look for a loan for a car, say, or to apply for a mortgage for your first home. These are also debts but most people today need a car and everyone needs somewhere to live so these are essentials. Some of the things you may be tempted to buy when you are a student and short of funds may, in the end, not be essential at all.

Lying about anything to a long term partner is always an issue, but is it always a bad thing? Sometimes is it necessary to lie to a loved one in order to maintain happiness? Debt is a sensitive issue and many of us lie about it to try and make it easier for others but should we.
Whether or not you agree with lying to a person for the greater good is a matter of opinion, but one must consider is it the greater good? If you are lying about debt, then you probably need help with it, if not paying it off then help to get through the stressful time. Who better to provide you with emotional support than a loved one?
On the other hand, telling a loved one of money problems may only worsen the situation, if there is nothing that they could do to help is it actually your place to tell them. No body likes to be the bearer of bad news and if there is no helping it, then why should you be, after all many people do say ignorance is bliss.
In my personal opinion, if you value your partners opinion then you should keep it all in the open and up for discussion, who knows, maybe they’ll have a breakthrough idea! If you feel differently though it really is up to you, there is no right or wrong way to go about it. If you don’t want to talk it through with a loved one talk about with experts of other people in debt. Take a look at Talk About Debt.

Many people think negatively about debt. Indeed todays society is focused on personal debt and overspending by the masses when the can’t afford it.

My partner and I have purchased a few houses recently before the housing boom in our area. This was only possible by taking on extra buy to let mortgages. This was a huge amount of debt which most people have due to the high percentage of house sales being mortgaged. Although it is a huge amount of debt it has made us alot of money.

New business startups and even larger companies have been financed in order to get up and running, without this initial debt the concepts would never get off the ground. Amazon is prime example, it was bankrolled for years before it became profitable.

To answer the question, yes, debt has caused stress between me and my partner but I perceive it to be the right kind of debt so its a nice problem to have.

What is a personal loan? Well the clue is in the title; PERSONAL. This means that the loan is money borrowed by yourself personally for something for which you will have no tangible asset. Car loan, holiday payment scheme, student loan, home improvement etc.

I wouldn’t include a mortgage as the house will be a tangible asset and can repossesed by the lender, thus the debt would be cancelled without payment.

I would also comment that credit cards are personal loans. For the individual who pays off the full balance, they are given an interest free personal loan for up to 60 days. Those who don’t have an odd situation as they have a debt (perhaps still accruing) that increased monthly at a rate perhaps 10% above a personal loan rate. But this isn’t seen as a personal loan. Perhaps those who started to consider credit cards as a personal loan might see that they are being ripped off.

A Personal Loan is a loan that is normally unsecured. However, some banks offer you a Secured Personal Loan on your home. The maximum you can borrow on a unsecured Personal Loan is £25,000 and the loan is covered by a Credit Agreement, which is controlled by the Consumer Credit Act.

The majority of Personal Loans are unsecured, offered at a fixed rate over a fixed number of years. That way you always know the cost of the repayments each month and the rate wont change. However, most Personal Loans wont allow you to increase your payments to pay the loan off earlier or they charge you for a lump sum for paying it off before the end of the agreed term.

Generally these loans are used to consolidate existing debts on higher interest rates or to buy the luxuries in life, whilst spreading the cost over a set number of years.

I would never lie to my partner about debt, if I was in any. My relationship is very much based on trust so to me it would be as bad as cheating on my partner. We pool our financial resources so it would be fairly obvious to my partner if I was in any debt. Plus I don’t think it would be fair to lie to a partner about debt as it could affect their credit rating as well.

I have had experience of a member of my family who lies to me about debt and it has put a lot of stress on our relationship. I have been put in the situation where I don’t believe them when they tell me how much they currently owe as I know they have lied about it in the past. I also worry about their financial situation a lot although I know whatever advice I try to give them it just gets ignored.

You race to get to the post from the letterbox before your partner can see it, then pause, a lump in your throat, as you nervously wonder how bad the debt is going to be this month. If this sounds familiar, there’s every good chance that you’ve spent beyond your means, and are so embarrassed by it you don’t want anyone to know, not even your partner.

The problem with this scenario is that it won’t get better by itself. In fact, chances are, it will get steadily worse and even harder to tell your loved one. No one likes admitting they’ve made a mistake, but as prices steadily rise and mortgage payments go up, it is easier than ever to get into debt.

However, there is help out there, and being honest to yourself and your partner about your circumstances is the first step. Be prepared for them to be shocked, but have a plan - explain that you’re in trouble and need help, but that that you’re trying to sort it out. Start by calling the credit company - be honest about your circumstances and they may well be able to help you reduce your payments. Sites such as moneysavingexpert.com have lots of advice on how to cut your bills and make savings. If your partner really loves you, they will support you through this, and be proud of you for dealing with your debt.

Almost everybody will need to borrow money at some point in their life. Thankfully for those that do need a loan there have never been more options than there are today.

Whether you decide to borrow from a bank or a person will largely depend upon your credit rating and whether you have a friend or know someone who is willing to lend you money. We all enter loan agreements with good intentions but sometimes we experience problems. The sad reality is that we are far more likely to default upon repayments to our friends and other people than we are to a financial institution because of the ramifications of our actions. A bank is also far more likely to check whether the loan is affordable to you or not.

If you do have bad credit your only option will most likely be a secured loan or one charging extremely high, often usury, rates of interest. If you were to take out an unsecured loan with bad credit you will find that your repayments are very high indeed. A Payday loan, for example, charges in excess of 1200% APR. A loan from a person, particularly if they are a friend, will often result in far lower interest - if any - charged. This will obviously mean that it is paid off a lot quicker. There is also the major advantage of being able to settle in full, without additional charges, when you wish to.

Borrowing from someone you know is a lot easier and more flexible but you should always take your responsibilities seriously and treat it with the respect you would if it had been a bank loan. If you fail to do this it could irrevocably affect the relationship you have with that person.