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Convert a cash ISA into an investment ISA

By
Debt Crusher
– May 15, 2012Posted in: Debt

Often when people first take out an Individual Savings Account – or an ISA, as they are more commonly known – they initially go for a cash ISA. This is a type of savings account, but it is different to other savings products as it offers tax efficient savings, which means that any interest you earn on the money in the account is tax-free. There is also a yearly limit as to how much you can put into these ISAs (£5640 for the 2012/13 tax year).

Nestegg cash ISA in Investment

These cash ISAs are a very good financial product and are hugely popular, but after a while a lot of people want to take their money to the next step and start to contemplate transferring their cash ISA into a shares ISA. One of the reasons for doing this is that if you have an investment ISA, the annual limit is double that for a cash ISA – the full ISA tax allowance is currently £11280. Alternatively, you can choose to save up to half of that amount in a cash account still and save the rest in the form of shares – as long as the cash element doesn’t exceed 50% of the total, how you make the split is up to you.

One option when you open an shares ISA is to use the same provider that you use for your cash ISA. This is generally a simple process and shouldn’t take you long to complete. However, you might decide that you want to get a different provider for your new share ISA – or even transfer your cash ISA completely into a share ISA.

If you do decide to look for a new provider, it is important to do your research carefully. There are many different types of ISA available and you need to get the best stocks and shares ISA for your needs. Some invest in a wide range of companies on the stock market in order to spread the risk of investment, while others focus on specific types of company, which can be higher risk but can also produce better returns if the market does well. Other types of investment ISA, such as those investing in government gilts, are lower risk but tend to produce lower rates of return. It’s important that you make sure you choose an account that works for you – also remember to check out the terms and conditions as to whether there are any restrictions on how and when you can access your money.

Also remember that you cannot have multiple stocks and shares ISAs – while you can have different providers for your cash and share ISAs, you can only open one of each ISA type per tax year and cannot exceed the overall annual limit. When you have chosen the account that you want, you need to go through the process to open it before you close your current cash ISA. This is because once you close an ISA, the money in it becomes subject to tax, so when you open the new ISA, remember to fill in the transfer form to put your current savings into the new account so that you maintain your tax efficient savings.

Overall, transferring a cash ISA into a share ISA is a straightforward process, but it does require a bit of thought to ensure that you end up with a deal that’s right for you and your money.

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5 Debt Myths

By
Debt Crusher
– April 23, 2012Posted in: Debt

Debt today is commonplace and it takes a considerable amount of discipline to ensure your finances are on track. Debt can be managed though and although it is not a simple thing to do, a number of myths abound which make correcting your financial situation more difficult than it needs to be.

Lies about Debt - Debt Myths

You Are Not Eligible to Ever Borrow Money Again

Virtually everyone can improve their financial situation by requesting professional help and by managing their finances in a responsible fashion. By so doing, you will be able to improve your credit rating.

Fortunately, situations such as bankruptcy and IVA’s (individual voluntary arrangements), only appear on a person’s credit file for a seven year period, which means that all bad credit would have been removed from your credit file by the end of that time.

Once you are in a debt management plan, you are permitted to borrow money again, but it is valuable to remember that the interest rates will normally be high.

Write-off up to 90% of Your Debt

IVA’s are designed so as to allow you to pay off your debt in an as affordable manner as possible and a percentage of debt can be written off but this is, in reality, closer to fifty percent and certainly never as high as ninety percent. Seventy-five percent is pretty much the highest percentage you can expect to have written off. A debt organization will be in the best position to advise you if you qualify for an IVA and on the amount that individuals can write off.

Debt Experts are Always Supportive of You

The advice from a debt expert can vary according to whether they are attempting to assist the individual in debt, together with their creditors, just the creditors, or solely the person in debt. This typically makes the advice given very flexible, so it is important to seek advice from debt advice charities, which are known for their balanced approach to these issues.

Be aware that most debt advisers make money by managing your debt solution, so attempt to source a debt advice charity, which will offer free debt management plans. By not paying for this service, a person can save a considerable amount in fees and will have more money available to reduce their debt that much quicker.

You Can Not Get A Bank Account If You Are Bankrupt

It is far more difficult to open a bank account after you have gone bankrupt, but it is still possible.

Select banking facilities will still offer bank accounts to undischarged bankrupts. If you have a credit card, it is important to manage it correctly by paying on time. Always compare bad credit credit cards that the different banks offer; you might pay lower banking costs or a lower interest rate at some banks. Having credit cards can increase your credit rating, but the misuse of these cards can send your credit score plummeting. Always manage your credit cards diligently and compare bad credit credit cards so you can pay on time.

Bankruptcy Will Cause You to Lose Your House

The vast majority of people who are facing bankruptcy are afraid of losing their home. Whether a bankrupt individual loses his home or not depends on the person’s highly specific financial situation, but, in general, taking the house is typically considered only as a last resort. Ways of keeping your home include opting for an IVA solution and placing an offer to purchase the receiver’s claim on equities in the house.

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Loans Basic – What is LTV?

By
Debt Crusher
– April 17, 2012Posted in: Paying Loans

When a person decides to buy a home, there are many factors that go into getting loans. One of the most important is the LTV, also known as the loan-to-value-ratio.

When you want to buy a home, the first thing the bank or loan company will want to know is how much it is worth. Most homes are appraised just before a sale to get the actual true value. The bank will then ask you how much you will need for home loans.

For example, if want to buy a home worth $150,000 and have $40,000 for a down payment, your loan amount will only be $110,000. Your LTV would be the loan amount divided by the home value, so for the example that would be .73 or 73 percent.

The LTV is a way for the bank to calculate their risk if a home loan is defaulted. If the bank forecloses on the home, they want to make sure they get their money back. For the example, that would mean the bank already has $40,000 in potential income already that they do not have to loan out.

If they sell the house, they may only get $130,000, but their $110,000 loan amount is covered. Homes that have a higher LTV come with a larger risk of the bank not getting the full loan amount back. If the amount owed for a $150,000 home was $140,000 and it is sold for $130,000, the bank has lost money.

This can have a profound effect on whether the bank will allow for loans to go through. The LTV, mixed with other factors such as credit score, can mean the difference between a home loan and a rejection. Banks generally like to have a maximum LTV of about 80 percent. The benefits of a lower LTV include a potentially lower interest rate or borrowing term.

When the LTV of a home is higher, the bank requirements become stricter because there is a higher risk. They may seek a higher interest rate, so they will get more money or require the borrower to purchase mortgage insurance. They can also require a larger down payment to lower the LTV within acceptable levels. Higher LTV loans are usually restricted to borrowers with a higher credit score and good borrowing history since the likelihood of default is less.

If you want to meet guidelines for some federal loans, many require an LTV of 80 percent or below. Banks are very aware of the economic downturn and the issues with the housing market. Home prices are dropping and many people have been hit with upside down mortgages where they owe more than what the house is worth. Banks are wary about lending money for homes and the LTV has become an important indicator of risk.

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What Are You Doing To Pay Down Debt?

By
Debt Crusher
– April 16, 2012Posted in: Debt

Oh what a world (from Wizard of Oz) we live in where we can buy and own so many things yet have so little income or savings.  I know a lot of people with mountains of debt and yet they keep buying and buying.  However at the mention of 401k and savings and things of that nature they are quick to say they don’t have money.  I see them consistently taking out the much needed payday loans just to get by.  Are you one of those people with hundreds or thousands of dollars in debt?  If so what are you doing to get rid of the debt?

How to Pay Down Debt

Changing Your Mind Set Is A Great First Step

Many people will tell you do to this or that but if you don’t want to you are not going to stick with it in the long run.  People have to really want to save and understand that paying off debt is important and will provide them with a better quality of life.  Instead of buying a nice pair of heels or tickets to that basketball game why not put the extra money towards paying down the debt on the credit card.

This doesn’t have to be a drastic change but yet something you can sustain for a long period of time.  You know they say it takes 3-6 months before something becomes a routine or habitat.  Start with some thing as little as making an additional $20 payment to your credit card or maybe not using your credit card at all.  These little changes will add up and you will get in the habit of paying off debt.

Not Always Following the Crowd – Be Different

There are more then a few of us that feel that we need or deserve things in life because we see others with them.  Do you really need that new car with the $700 monthly payment?  Could you have gotten by with a used car with no payments at all?  Think about the money you would have saved in just one year, almost $8500!  That’s not chump change and chances are you wouldn’t even need a cash advance or payday loan ever again.

Not saying that you spend all your money on cars and clothing but a majority of people’s money goes towards things that they don’t really need to.  Eating out for lunch every day, ordering takeout 2-3 times per week, shopping, vacations, and etc are just a few.  Be different and pay yourself first and take money and get rid of those unwanted bills.  You will feel a lot better and have more money to actually enjoy life.

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Getting Rid of Student Loan Debt – It’s not Going Away

By
Debt Crusher
– April 13, 2012Posted in: Debt

Unlike most things, student loans are one of those debts that will not go away without you paying it off.  No not even filing for bankruptcy can cure the curse of the student loan debt nightmare.  Times have changed drastically and it is estimated that the average college student will owe between $25-30K for their first four years of high education.

As tuition continues to rise and jobs become more infrequent many are not only questioning how to pay off these loans and still be able to live a decent life but also is going to school really worth the debt.  Like a bank and home loans student loans are very profitable and do not have much competition.  When you think about banks and banking centers you could more than likely find one on every corner.  Student loan companies don’t have such a problem and know that going to college is like buying homes, it the America dream.

Just How Can You Get Rid of this Debt

Well the easy answer is to say, “Just pay it off” but then that is easier said done.  One option you have that you can chose is to opt to pay what is known as income based repayment.  This is where you are a student whose monthly student loan debt is actually more than the income you make.  What will happen is they will look at your annual income and then base you monthly loan payment as to what they think you can afford.

No it doesn’t get you out of paying the payments but it does give you breathing room to make sure that you are still making payments that are meeting the criteria to say you are current. And you also get the government on your side as for the first three years of this payment will have the government paying interest on any subsidized parts of the loans.

No Money or Job then Try Deferments or Getting Forbearance

For some of you it may be tough to just say you can’t make the payments or not picking up the phone or getting on the net to get help.  I am here to tell you that this could be a big mistake.  If you fail to make your payments not only are you killing your credit but also you are simply putting off the inevitable.  These payments unlike bank loans, credit cards, and etc. will still exist and can possible take your social security payments.

Deferments are actually preferred as to forbearance because they deliver temporary relief from having to pay back any payments and the government will pay the interest for you.  The one thing with deferments is that you will be required to proved that you don’t have the income necessary to make payments and it is only allowed for a total of three years.

Though interest will accrue many people go the forbearance route simply because they are much easier to get approval for.  Hardship forbearance is the most used and is often approved on one-year bases for a total of three years.

One Sure Way to Get Rid of Student Loans

Are you willing to work for a non-profit organization for ten years?  If you are the type that loves working and don’t mind doing it at a not-for-profit you will qualify for the public service loan forgiveness program.  This not only goes for not-for-profit but also the government as well.  Simply work ten years and fill out paperwork that confirms that you what and were you worked.

Yes anyone can qualify just so long as you have worked for any level of government or for a 501 not-for-profit company or business.  And to top it off there is no income requirement based repayment. The only requirement is that you have had direct lending for the loans however even if you haven’t you can consolidate them and they will still qualify.

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