Can you imagine your credit card statement showing that it would take 112 years to repay the balance ? That was the situation one of our young clients found herself in. She kept spending up to the limit but couldn’t afford to repay more than the minimum monthly payment. She accepted every offer the bank made to increase her limit.
What interest rate are you paying on your credit card? I say it all the time – Know you numbers.
Those Easy, Almost Instant Loans
One of my personal soapboxes at the moment are all those advertisements on television about how easy it it is get a loan for a relatively small amount of money. I think they are below $5,000. It is all so, so easy. The only thing is that they don’t mention having to pay it back.
I think these loans are almost unconscionable. They are preying on people in difficult circumstances.
They also don’t mention the interest rate they are going to charge you either. They don’t really help at all as the debt they cause grows quickly. Know your numbers?
Fees and Commissions
If there is a service provided it is fair to charge a fee. It is the level of fee that often needs to be questioned.
You job is to know the going rate for all the fees you are going to be charged or if you are organised enough to have some money in savings what interest will you earn?
Your mortgage broker and financial adviser have to be paid. If you are not paying them as you won’t need to with the mortgage broker ask if he/she earns more commission for one loan compared to another. They are meant to be sourcing the best loan for you not the loan that earns them the most from the lender.
If you are paying your financial adviser a fee (which I advise) check that he/she is not receiving a commission from products they may recommend. Some advisers use to earn most of their money that way – how can you trust their recommendations then?
If you are buying a property the agent selling the property is being paid by the vendor so the agent works for the vendor not you. If you want help buying then you appoint a buyers’ agent and you pay the fee.
Some selling agents are trying to be tricky with words and advertise they do not charge a commission. They need to be paid of course so they charge a set fee. Beware this may be payable if the property is not sold. A commission may well be a better way of paying a selling agent as it gives more incentive to achieve a higher price than a flat fee does.
Know you numbers.
Do you know the going rates at the moment? Compare that to the credit card or personal loan rates you might be paying What about car finance? These are numbers which impact on your life. Please know your numbers.
Do you need to make some changes?