Everyone ends up with a few debts every now and then. Some of them can be kept under control – proper financial planning ensures you can keep track of everything and lose debts one after another. But then, if you have failed to do your homework upfront, chances are you will feel overwhelmed at some point.

Debts come in all kinds of shapes and sizes. Some of them are small and may seem insignificant. Some others are larger and come with high interest rates, as well as fees that keep building up. It feels like a never ending cycle. Understanding how to seek help and who from will help you get back on track before it is too late.

The importance of paying your debts in the correct order

Each debt will come with consequences. Some of them may have serious consequences, while others are not that bad. No debt will be left as it is though, so there will always be some sort of consequences. When struggling with debts, you have to sit down, analyse your options and understand what priority, non priority and emergency debts are about.

Dealing with a debt emergency

A debt emergency is an actual emergency – your debt has been overlooked for too long and action is being taken against you. This type of action can come in various forms. You could end up with disconnection (a utility bill), court action against you, bailiff action or perhaps eviction (common for rent or mortgage issues).

Ideally, you should not wait until you get there. But if you did, you should know that you can get free and independent advice in an urgent manner. Debt adviser will be able to represent you in front of the law, whether you deal with a bailiff, creditor or court. You will also receive beneficial advice on what to do in order to overcome debt.

On another note, make sure you always show up in court hearings – you have the option to make an impression, explain your case and perhaps reach an agreement. Fail to go and the judge may take a decision against you – after all, there is no one representing you there. Others may not necessarily know what your situation implies.

Once in the court, you could explain the situation. You could tell the court what is happening and a decision could be made to help you out. Some courts also rely on various organizations – such as Citizens Advice – to provide last minute advice on the situation and the next steps. If you have a court hearing coming up, talk to someone before your case is discussed.

Free advice on dealing with debt

It is essential to prevent struggling moments. When facing an emergency, seek help. You are not alone in this venture and there is plenty of help out there. Believe it or not, more than 50% of all people struggling with debt have no idea where to start from – this is when a professional debt adviser kicks in to give a hand.

Debt situations can go in more directions. Credit cards are maxed and no one will lend money. Things are out of control and debt grows faster than the income. Plus, it takes way more than expected to pay everything back. Advisers are available by phone, online or face to face. There are free organizations out there, meaning you will not have to pay for advice.

Bottom line, debt can embrace more forms and things can easily spiral out of control. Professional advice will prevent emergency situations, so try to act before it is too late.

Borrowing money implies creating debt. Sometimes, it is your one and only option – the necessity of a new car. Other times, it is simply more convenient to get something now, rather than wait until you save the money for it – you do not mind paying a bit more either. Now, debt can go in two different directions – you have good debt and bad debt. What do these two concepts mean and what are the differences between them?

Understanding what good debt means

Good debt is an investment in your future – usually, the financial one. While you do end up with debt, the long term results tend to be financially better. The impact over your financial position could be low in the early stage and massive later on. Just like any other type of loan such as guaranteed payday loans, this type of debt requires proper planning and a realistic view over the future.

You have to work on clearing the debt as quickly as you can – make sure monthly payments are affordable though. Good debt also involves finding the cheapest way to borrow money. You need to work on the credit amount, charges, terms and interest rates. Sometimes, you might have to find a middle solution between all these.

Good debt can come in more shapes. A student loan is one of the best options – you become a graduate, get a good job and pay the loan off. A mortgage can also represent good debt because you can purchase a home – much better than paying rent. You can also invest in your own business if you have a strong plan. As for getting a car, make sure you purchase a vehicle that you can afford.

Disclosing the concept of bad debt

Bad debt will most likely affect your wealth in a negative way. Generally speaking, it is not very affordable. Other than that, unlike good debt, bad debt will not pay for itself later on. Opposite to good debt, the bad alternative will not always come with a realistic plan. It usually occurs when people make bad financial decisions.

For instance, an impulse purchase is a bad idea. You may not necessarily need that thing. If you need to borrow money to pay your bills, this is also considered bad debt. As a general rule of thumb, think about how you plan to repay the debt. If you are not 100% sure you will be able to repay the loan, you should simply avoid bad debt.

Bad debt can take more forms. For instance, a luxury holiday might be nice to relax, but it is not necessarily a good choice if you cannot afford it. If you end up paying for it for years, you will get into bad debt. Instead, try saving up for this holiday first. You might as well consider a holiday that you can actually afford.

Do you really need a brand new car? New cars lose their value fairly fast. If you end up with financial difficulty, you may not be able to repay the loan – not even if you sell the car. Simply put, you could end up with no car and lots of money to pay. Borrowing money for bills or to cover credit is highly contraindicated too – it will provide relief in the short run, but it will not help overtime.

Bottom line, you have to consider your options in very small details. Good debt can be a good thing if you plan everything upfront, but bad debt and financial issues will come back at you when you least expect them.

Tax is a killer and everyone is trying to find ways to avoid it. Whether it comes to getting tax free money or reducing tax, it pays off doing anything you can to ensure you do not pay more tax than you have to. Luckily, there are ways to save and make money for your family, children and grandchildren without giving the tax man too much. So, what are your best rated options out there?

Becoming familiar with ISAs

An ISA is basically an individual savings account. If you save your money in a cash ISA, make sure you know when the introductory rate reaches to an end, so you can start shopping around. Some banks referred to these investments as NISAs. They are tax efficient and can provide excellent choices for some further investments.

Goals vary widely from one individual to another. Some people use their ISAs to save money. Some others would rather invest the money, whether it comes to shares or stocks. The best part about ISAs? No matter how much interest you gain, dividends or other profits, you will not have to pay income tax on the money.

Understanding how NS&I work

National Savings and Investments (NS&I) are not to be overlooked either. Whenever you save, you want peace of mind. You want to ensure your money is safe. Such options are safe because they are backed by British the government, so there is nothing to be concerned about. Furthermore, there are more options to take in consideration when about to save.

Cash ISAs are quite attractive and common. While children’s bonds are no longer available, those who have managed to sign up can still use them and their options go in even more directions. The good news is that many of these savings products are tax free, so you will not be charged for your hardly earned money.

Premium bonds

Premium bonds are issued by NS&I. They do need a special category themselves because they come with numerous differences from classic savings accounts. This product is also backed by the British government, so there are not too many risks involved in the long run. There is one thing these bonds stand out in the crowd for.

Compared to other investments, these bonds do not give you too much interest. They do not provide regular dividend income and if they do, it is small. Instead, everyone goes into a monthly prize draw. Prices are highly diversified and range between £25 and £1 million. Surprisingly enough, such prizes are tax free.

Pension savings

The British government provides tax relief on pension payments, as it tries to encourage people to save for retirement. There are more types of pension schemes out there and each of them has its own specifications. Some of them provide tax relief, while others supplement the relief by increasing the amount paid into the account too.

On top of all these, the pension fund will grow in a tax free way. As you retire, you can easily ask for 25% of the actual fund – no taxes. However, these rules tend to change every now and then. If you are still young and retirement is decades away, things might be different.

Bottom line, there are more options out there to reduce your tax for savings. There are ways to overcome the tax man and the above mentioned methods represent the most popular choices. Which one is more suitable for your unique case depends on your circumstances, preferences and long term plans. Make sure you understand each option before making a final decision for your savings.