Debt

Should I Marry Someone with Debts?

Being in a relationship with someone that has debts can be difficult. However, while you are not married, their debts are just their responsibility. However, if you marry them, then that responsibility will be your joint responsibility and this means that you could legally be liable for their debt as well. It could even have an impact on your credit record.

Obviously when you make a decision to marry someone it is not usually based on finance. You will choose someone to marry that you want to spend the rest of your life with and that you are in love with. You will not be so likely to consider factors such as whether they have debts and you may not even know.

It is worth noting that many marriages break down due to financial difficulties. It is not necessarily going to be the case that this will happen just because one partner has debts but it could make it more likely. If both partners have no debt and lots of savings then it is less likely that they would fall out over money than if there is an inequality and one has debt and the other one doesn’t.

The main problem is probably when one person tries to make the other change. They may want to help them get out of debt, trying to get them to spend less and earn more and repay their debt. They may even decide to pay back some of their debt themselves. This can be okay, if the person is prepared to change and stays debt free. Problems happen though if the debt is paid off and then they get more debt. Sometimes it is even done secretly and when this is found out it can lead to huge problems.

It is worth noting that if you have joint accounts, then you will be individually liable for them. So if that account goes into debt then you will both be held responsible and this will have an impact on both of your credit records. Even if you have a joint account that never goes into debt, the fact that you have an account with someone that has lots of debt could still impact your credit record. You may even be expected to repay debt that is not yours if it is associated with you. So if there is an overdraft in a joint account, you will be expected to repay it even if you did not spend the money, because the account is in joint names. The bank will not care that it was not you that spent the money, they will just want it back.

Marrying someone with debt could be a bad influence on you. It could mean that they get you to start borrowing money as well. This could lead to both of you having a lot of debt which could be a huge problem in the future. Trying to repay two lots of debts could be extremely difficult and it could lead to so much stress that your relationship may not survive it.

Obviously turning down a marriage proposal due to someone having debts does seem rather low. However, it is worth thinking hard about what things might be like in the future. Talk about the debt before you marry and explain how you feel about it. Find out if they intend to pay it back and get an idea of their attitude towards money.

It is wise to remember that some debts are not bad. If the person has a mortgage, student loan or something like this then there is a clear reason for their debt and they could be gaining substantially form their borrowing. However, if they have several unpaid credit cards, an overdraft and other personal loans then this could be a lot more of a problem. It is worth thinking about whether this is the sort of debt that you would want to take on and whether you want a relationship that has this debt. You need to think about whether you feel that the debt will get to you over the years and whether it could be a cause of you falling out with each other or whether it will cause you a lot of stress.

Mortgages

Is it Best to get a Fixed or Variable Rate Mortgage?

There are lots of decisions to make when you are choosing a mortgage and one of the main ones is whether you should choose between a fixed rate or a variable rate mortgage. This can be quite an important decision and it is worth giving it a lot of thought.

A fixed rate mortgage means that the interest rate that you pay is fixed for a certain period. This could be a few years or longer, but normally would not be more than five years. The lender tends to fix the rate a little higher than their variable rate so it will be more expensive in the short term. However, if the interest rates go up over the fixed rate term, then you could end up saving money as your rate will not increase. This will depend on what happens to the rates and it can be difficult to predict. Normally a variable mortgage rate will increase when the Bank of England base rate goes up and it could go up at other times as well. If the base rate falls there is a chance the variable rate will also fall but it might not. The mortgage rate changes are down to the lender and they will tend to be more likely to hike it up than lower it, so that they make as much profit as possible. If the rates are low, then you may feel that it is worth fixing because there is a likelihood that they will go up but it is extremely unlikely that they will go down. If the rates are high, then the opposite might be true. This could have an influence on both whether you think that a fixed rate is a good idea and whether you feel that it is a competitive and fair rate or not.

Another advantage of a fixed rate is that you will always know how much you have to repay. With a variable rate, the interest rate could change from month to month and this could mean that the amount that you have to repay will change. If this is decreasing, then that will be great but if it is increasing then it could mean that you will be paying out more each month. If you are finding it difficult to manage your repayments, then having to pay out even more could create a lot of problems for you.

If the interest rate falls then having a variable rate can be a great advantage. You will end up paying less, assuming the lender puts the rate down when the Bank of England puts theirs down. You could save money this way and also have extra money each month to spend or to save. You could even use it to pay off some of the mortgage so that you can become debt free much more quickly. Of course, it is not that easy to predict what the rates may do, often economists, the government or even the head of the Bank of England make predictions about how rates might change, but these are normally only short term predictions and they are not always right. It is much more difficult to predict what might happen further into the future.

With a fixed rate you may be tied in for the term of that rate. This means that you may not be able to change lender or even change the type of mortgage that you have with that lender unless you pay a huge charge. It is well worth finding out whether this will be the case with the fixed rate deals that you are considering. Think about the consequences of being tied into a high fixed rate when there are cheaper deals around and how you might feel about that.

Choosing between fixed and variable rate mortgages is actually very difficult. It can depend on whether you want to know exactly how much you are paying and not have any nasty surprises with rates going up. You may rather try to go for the cheapest variable rate and hope that rates do not go up that much. You may rather not be tied in to a deal, just in case rates go down.

Car Loans

Should I get a Loan so I can buy my Dream Car?

There are many of us that have a dream car that we would really like to own. This might be a modern, brand new vehicle or it might be a vintage car or something else. It might be a specific model which you suddenly see for sale that is not often available to buy. This means that you may think that you absolutely have to buy it and it could be that you do not have the money available to do so.

Many of us will get a same day loan to buy a car. This is because they tend to be very expensive and it means that we would not normally have enough money saved up to be able to buy one. This will mean that the only way to buy a car would be to get a loan.
Getting a loan is a big deal and something that you should not rush into. You need to take time to think about all of the consequences of the loan before you take it out. Firstly consider how you will feel about getting into debt and whether it could make you really stressed, just thinking about how you will make the repayments and the fact that you owe money. You should also consider the repayments and how you will be able to afford them during the whole term of the loan. Think about, not just how you will manage in the short term but also in the long term. It is likely that you will be repaying it for a good number of years and you need to think about what might happen if your circumstances change or if interest rates go up and how you will cope with that.

It is therefore wise to try to take a step back from the situation and think about whether you really are in the right stage in your life to buy the car. Firstly, do you already have a reasonable car that will get you to the places that you need? If you part exchange it, will you get much money for it and will it help to significantly reduce the amount that you will need to borrow? If you do not have a car at all at the moment, can you cope without one? If you feel that you really need one, would it make financial sense if you bought a much cheaper one? It can be difficult to answer these questions honestly when your emotions are trying to get you to purchase your dream car. Try to be honest and give it a lot of thought.

It is also worth considering whether you can afford the car without a loan. This may seem impossible, but there could be a way. Firstly see what savings you have and whether you can use any of those towards the cost of it. Then think about whether you can save any more money so that you can save up towards the cost of the car. You will be able to save more money if you earn more and if you spend less. This could be hard work and will take a lot of determination and commitment. However, it could be well worth it if it means that you can get the car that you have always wanted eventually.

Value for money is something which is worth considering as well. You need to think hard about whether you will think that the car will offer good value. It may be something you have always wanted and therefore you may feel that it certainly will. But consider the ticket price and then add on the price of the loan. Consider any stress the loan may bring you, how hard it will be to manage the repayments and then think again about whether you still feel that it will offer good value for money.

This is such a big decision as it could have a huge impact on your future finances. It is so easy to just think about the benefits of having the car without thinking about the consequences. It is so important to imagine hoe life would be if you have to make loan repayments, both in the present and the future and how you might cope if your circumstances change. It is also important to think whether you think that the car will actually give you good value for money.