Debts are not the greatest – Consolidation of loan

For several years, Sweden has been one of the countries in the Western world where the debts of private individuals have increased most in relation to how much money we earn. This is obviously a little worrying as we have started to approach record figures with a debt ratio of about 161 percent. Even though the Swedes have been at the top when it comes to raising debt in relation to income, we are still only in the middle when comparing debt ratios with other European countries today.

Debts in relation to GDP have also been looked at

debt money

The measure used is thus how much debt you have in relation to disposable income (disposable income is simply how much money you have to move with when wages and grants have been received minus taxes and other expenses). Debts in relation to GDP have also been looked at.

Sweden has had a development where the debt ratio has increased quite a bit and from 1995 it has almost doubled. At that time it was at 88% and in 2010 the Swedes had a debt ratio of 161%. However, today we are not as bad off as some other countries.

Greatest debt growth before the financial crisis

debt money

The countries where people have the greatest debt in relation to disposable income are Denmark, the Netherlands, Ireland and the United Kingdom. The aforementioned countries have debts that are noticeably higher and in comparison it looks relatively good in Sweden.

These countries had the greatest debt growth before the financial crisis and even after that they have continued to develop negatively. However, it is always a bit difficult to compare different countries in a perfectly good way because there are different rules for loans and income measures etc, which you should of course consider when drawing conclusions.

So if we go back to Sweden then we are somewhere in the middle of the 10 countries that were included in the survey but just because we are not at the top does not mean that you should not worry.

Debt levels being reduced

Debt levels being reduced

For example, we have seen one of the strongest debt developments over a number of years, although in recent years there has been a slight slowdown.

However, it is believed that this is partly due to, for example, the boom with increased salaries and more cash at the cashier rather than the debt levels being reduced so much. The debts are still there and that means that for the future you still have to worry about the recession and other things that can poke holes in the bubble.

Common terms for a private loan. We also compare interest rates.

Borrowing money is a pretty big decision if you look at it from an economic perspective. This is normally a rather large expense that one is talking about. For this reason, it is important to check as much as possible before borrowing any money. Here we give you some tips on things to investigate with the lender you intend to borrow.

Who can borrow?

Who can borrow?

The first thing to look out for is if you meet the requirements for borrowing money at all from this lender. Common requirements are, for example, that you must be of legal age, written here in Sweden, no payment remarks and have an income. How large this income should be varies depending on how much loan you wish to take, etc. But it is usually that you should have an income between USD 100,000 – 150,000 at the very least to be able to borrow money.

Just remember that there is nothing that says you can safely borrow money just because you meet the basic requirements. The lender does a credit check that must be passed in order to be able to borrow.

How much can be borrowed?  

How much can be borrowed?  

The usual thing about private loans is that you can borrow between 10,000 and 350,000. But not all lenders offer you as a customer to borrow between these amounts. It is often possible to divide the lenders into two different parts and these are the ones that lend smaller amounts which is often up to about USD 25,000 and those that do not lend small amounts but that offer you instead to borrow all the way up to USD 350,000.

Generally, you can say that those lenders who only have smaller loans are more expensive than those where you can take out the big loans. But just for this, one should not disregard them as it is usually cheaper to lend a small smaller amount to higher interest rates than a larger amount to lower interest rates. It is simply a matter of trying to find the one that is cheapest for the exact amount needed. You should never borrow more than you need.

Maturity 

Maturity 

The maturity is also divided by size of the loans. The loan institutions that only deal with smaller loans also have a maturity that is shorter on these. It is often about 1 – 5 years that you can choose from. You can get a longer maturity of up to 12 years if you borrow a larger sum.

Fees and interest rates

Fees and interest rates

So far we have not talked so much about fees and interest rates, but this is obviously a very important thing to check before you borrow any money. It can differ greatly between different lenders and it is unnecessary to pay more than what is really needed.

Amortization 

Amortization 

In addition to interest costs, you will of course also have to repay the loan itself. This can be done in slightly different ways so be sure to read what the intended lender has for some rules in this regard. The big question is often if you constantly pay the same amount every month to the lender to cover the repayment and interest or if you repay a certain amount every month and then the interest is added on. How it works with amortization, you can read more about if you visit our department which is about just amortization.

Delay Interest and Delay Fees 

Delay Interest and Delay Fees 

Obviously, you have the goal of always repaying your loan as planned. But sometimes unforeseen things can happen and therefore it is good to know what happens to your loan if you do not pay the repayments.

Resolve the loan prematurely 

Resolve the loan prematurely 

Usually when it comes to the issue of private loans, these can be resolved at any time without any extra costs. Just read for security reasons what rules apply to your loan

 

Info and price comparisons of private loans.

 

If you need to borrow between $ 10,000 – 350,000, a private loan or bank loan is also called probably your best option. Basically, a private loan is a pretty simple loan that you will notice from the text below.

What can you do for the money

What can you do for the money

One of the great benefits of a home loan is that you can use the money you borrow for just about anything. Your lender will not ask what the money will be used for, but instead they will only be interested if you can repay them as planned. However, this advantage brings with it a negative thing.

Private loan = Loan without collateral

Private loan = Loan without collateral

The disadvantage is largely that it is a loan with no collateral, which means that interest rates will be a little higher than for other loans such as mortgages. There is the home that is purchased as collateral for the loan, which means that the lender does not take the same risk and thus the interest rate is lower.

If it is thus that you should buy something that works as collateral for a loan such as car or house, it is better to take loans that are specially focused on this. If you are not looking for such a loan, a private loan is your choice and then you simply expect a slightly higher interest rate. Then we do not talk about any hutless interest rates but only that they are a little higher.

Size and repayment period

Size and repayment period

When it comes to size and repayment period, there are two different types of lenders. These are partly those who deal with slightly smaller private loans (up to about $ 25,000 – 30,000) and then those who offer their customers to borrow up to $ 350,000 all the way. The big banks, for example, are such lenders where it is possible to borrow the maximum amount, while those who only offer slightly smaller loans are usually newer players in the market.

It is important to know that it is usually clearly more expensive when you look at interest, etc. if you only want to borrow $ 20,000 than if you want to borrow $ 350,000. As for the repayment period, this also differs quite considerably. For the larger loans, it is often possible to get a maturity of up to 12 years, but for the smaller ones this period usually only extends to a maximum of 5-6 years. Within these limits, you can then largely decide for yourself how long you want to borrow the money. Of course, the total price gets higher the longer you borrow, but the monthly cost is lower.

Requirements for borrowing

Requirements for borrowing

There are no exceptions at all regarding the terms that the lenders set to lend you money. The first requirement is that you must be of legal age and then you must be written in this country. The lender must then be able to see that you have an income that is large enough to cover the monthly costs that come with the loan and therefore an income is required. How large this must be varies depending on the size of the loan. It is logical that a better economy is required to borrow $ 350,000 than $ 10,000.

The most common is also that there must be no active payment remarks. There are very few lenders who can think of lending money to people with payment complaints and in these cases a very good financial situation is otherwise required to balance it all.

Also, there is no guarantee that a lender will approve you even if you meet their requirements on paper. A credit check is done and it is up to them to decide what they think.

Avoid the debt trap in Christmas

Christmas costs a lot of money. December is the month we Swedes spend the most money and as a result since January is the poorest month. We spend money on everything from Christmas food and Christmas presents to trips to and from family and a lot of mixed things. However, the big cost is usually the Christmas presents, especially if you have children. How do you avoid the debt trap in Christmas?

It’s easy to spend more money than you should at Christmas

It

It is quite easy to be moved in the Christmas mood and want to have all that Christmas stuff and many Christmas presents under the Christmas tree. Unfortunately, all this is unfortunately quite a few times so that Christmas digs a little good hole in the wallet and it is not so good. You should keep a little extra good order on your finances as Christmas approaches, so that’s why you get some good tips here that will help you avoid overstating your finances.

Plan and budget Christmas

budget Christmas

A good way to fix Christmas without any problems with the economy is to start planning Christmas and its costs well in advance. There are many benefits to this. You get good order and find out, you can start saving well in advance and spend money and you also have the opportunity to avoid classic debt traps.

If you start by making a budget that shows about how much you can spend on Christmas and everything that comes with it, you have a reason to start from late. It is never wrong to budget for Christmas – it works much the same as setting a budget for a holiday trip, but with a few other expense items. Instead of air travel, hotel, taxi and restaurant visits etc, you can enter such things as Christmas food and Christmas presents in your budget.

Assume how much you can afford to spend and build on from there

When you think about this you will find out if you need to start saving money for Christmas or if you already have enough money anyway. Saving money is a great way to fix Christmas costs without taking any risks with your own finances. You can then start putting away some money each month for a longer period of time so that you have enough for what you want to buy without having to spend your savings or buy on credit.

If you find that you do not have a lot of money left over to your Christmas budget because you have a little money with money in general, you can save, as I said, but you can also start planning a Christmas in advance, which may be slightly cheaper. You can choose slightly cheaper Christmas gifts and perhaps save on some unnecessary expense. There are some things to save money on if you just want to.

By being out in good time you can also save some money straight away. You can, for example, start looking for Christmas presents early and then, for example, possibly buy things when it is sale or if you visit some kind of outlet or low-cost department store. Even if you are there as early as April or May, you can actually buy a Christmas present already, if you only know that it is still important to give away Christmas.

 

Avoid borrowing and trading on credit

Avoid borrowing and trading on credit

Many postpone their costs for Christmas by either buying things on installments or by borrowing. Of course, this can sometimes be a perfectly ok solution but unfortunately too often leads to problems. The biggest problem is that you incur costs that you later cannot afford in your monthly budget. Even in cases where you can easily pay off your debts without a problem, it is still usually worse to borrow or trade on credit because it simply becomes more expensive.

Borrowing money also costs money in the form of interest and although it may feel smooth to get a cash deposit now and repay the money later, it is usually not the best idea. It takes some money to take out a loan, even if the interest rate is low. Especially if you choose one of the slightly smaller loans with high interest rates. One must not forget that one should be able to afford to repay the loan plus pay the interest cost every month in the future.

To trade on installment

Shopping on installment is very popular and there are also many shops that offer installment plans, especially for eg electronics and more expensive things. It sounds good but unfortunately it is quite expensive to use such a plan. The effective interest rate (ie the total cost of the loan with both interest and other fees included) becomes quite high for such a credit and this means that the thing you bought on installment becomes quite a lot more expensive overall than it would have been if you bought it cash directly.

Many merchants try to entice their customers with interest-free installment purchases. This often sounds really good and many people are tapping into such an offer. Surely it sounds perfect to be able to buy something for SEK 15,000 now and pay off a little every month for eg one or two years without it costing anything extra?

However, one should know that it is rarely as good as it sounds. Even if the interest rate is zero, other fees may not be considered. It is such as the setup fee and notification fee each month. This means that even if the nominal interest rate is zero, the effective interest rate can be many percent. Thus, it is still a good bit more expensive to buy the product on installment than to buy it directly – even in cases when you are tempted with interest-free.

Even in the few cases that someone actually offers installment without any additional costs, you have to be a little cautious. If the effective interest rate is zero percent, this means that there are no costs in addition to the price of the product, but the thing to keep in mind is that if at one point you would be late with your payment it can be expensive. In these cases, it is conceivable that the free offer will cease to apply and that the bank’s usual terms with high effective interest rates will take over. Then suddenly you do not have a cheap installment purchase but one that costs a lot extra.

 

Shop for the money you have

The very best way to avoid getting into debt is simply not to incur any debt. By simply paying for things in cash you don’t have to risk that kind of problem. Of course you should not spend all your savings on the Christmas celebration but the more you can pay with money that you actually have the better it is.

The best solution is, as I said before, to start saving money before Christmas so that you have a pot to use for Christmas gifts and other costs. How you choose to do to save money obviously depends on your financial situation. If you have a good income, you can probably put away some each month without making any major changes to your regular budget.

If you have a very tight budget, you may have to pull in other things to be able to get some money over saving. Then look at what your finances look like and what expenses you have. Check if you have any big things you can trim such as insurance, old loans, housing costs, etc. In the next step you can check the costs of food, entertainment, car and transport etc. There is certainly money to save if you just want.

Weigh the advantages against the disadvantages

If you feel that you do not have that much money when Christmas is approaching, it may feel tempting to borrow or buy on installments to manage to buy nice Christmas presents, etc. I clearly understand that you want to celebrate Christmas properly and that many think it is worth spending a little extra money.

Of course, shopping for installments or borrowing money to afford some more expensive things is a way to solve it all. There is nothing to say that you cannot do that – the important thing is just thinking about what this means for the economy in the future. If you want to buy a new TV for the family at Christmas and buy it on installment, you can of course do so, but then you also have to budget for the increased monthly costs that this entails for a year or two in the future.

Count on it to make sure it goes together and that you can afford the extra costs. Utilizing credit in itself is not a bad thing and can be a good way to split up costs that are a little too big, but then you also have to plan so well that you do not get financial problems later because of this. The debt trap is not about borrowing in general but it is about the occasions when you borrow or buy on credit when you can’t really afford it. In addition, when you are unable to pay, it usually only makes you end up with even more worries due to increased costs, etc.

 

Young women obtain debts through online purchases | Loan consolidation

Many of the debts that come to Sunrise Credit have previously been due to SMS loans and expensive small loans that have not been paid on time. Nice enough, the statistics from last year say that debt due to SMS loans has decreased somewhat. However, another pitfall has emerged that, above all, young women have started to appear more and more at Sunrise Credit. The above is called online purchases via invoice.

 

Young women are starting to take on debt

Young women are starting to take on debt

More young women are starting to take on debt and end up at Sunrise Credit and it has been of interest to try to figure out why it has become so. One of the reasons is believed to be an increase in the number of online purchases and that one chooses to pay via invoice. You shop happily without really thinking about how much it costs because you then take it on invoice and not have to worry about paying until later.

For example, a report from the Swedish Consumer Agency states that it is common for young people to shop online and that around 20% of young girls who shop also choose to pay via invoice. However, there is always a small risk of doing this, especially if you are not sure that you have money when it is time to pay. Cases of this kind end up at Sunrise Credit fairly quickly and you get payment notes that hinder you in many situations in life.

Paying via invoice is risky and something you may not need to do unnecessarily. With an invoice to be paid within, say, 30 or 15 days, you can put the debt in front of you and this means that you may be able to shop even if you can’t really afford it. One tip is to always try to pay directly if you have the opportunity and if you can’t afford, you should think once again if you really want to shop at all. Will you be able to afford when it’s time to pay back?

 

What makes e-commerce so good, too which makes it a little dangerous

What makes e-commerce so good, too which makes it a little dangerous

It is very simple and easy to shop things online. You can choose from lots of gadgets – everything from clothes and accessories to perfume – and it’s also easy to pay. You can pay directly by credit card but also by postal payment or by invoice. If you choose to pay via invoice, you can postpone the payment yourself for a while.

What makes it so easy and convenient to shop online is also what makes it so easy to take on debt. Since you can sit and click things home so easily and can also postpone the payment, this is something that more and more people are starting to do and especially young women. It doesn’t feel like real money when you sit there and pick out everything you want and get it sent home when you don’t even need money to be able to get things.

This trend is obviously worrying. The number of debts due to SMS loans has gone down and hopefully this is because more and more people are aware of the risks and do not borrow unnecessarily. Over time, hopefully people will also realize the risks of postponing payment of, for example, clothing by shopping via invoice. Until then, there is the risk that we will see more debt at Sunrise Credit.

Is it possible to take a private loan if you have payment notes?

One or more payment notes can put a spanner in a variety of financial matters. It can be anything from mobile subscriptions to renting an apartment and of course also borrowing money. In the eyes of a lender, simply a person with a payment note is at greater risk of lending money to another when he has not previously repaid his debts. Here we will take a closer look at this particular problem and see if there are any solutions.

Are there opportunities to borrow?

Are there opportunities to borrow?

You should never say that it is impossible to get a private loan even though there are active payment notes, however, you should know that it will probably be very difficult. If you want to borrow from one of the larger banks, you will probably need to visit them in person and then be able to show a very good economy so that they even consider lending money.

This means a stable income and all old debts are repaid. Even if you have this and make a good impression, there is nothing to say that they will approve you as a borrower. But there is a possibility.

The best chance to get a loan from a regular bank is to talk to the bank you are a customer of or any of the other major banks in your city. You must then be able to explain your situation, why you have problems and why you feel that you can manage a loan despite having payment remarks.

If you can show a strong economy or other good reasons why you are able to borrow the money, it can go the way, but there are no guarantees. The more arguments you have for getting a loan, the better it is. It will be easier if it is an old payment note that has long been resolved.

Loan institutions that target people with remarks

Loan institutions that target people with remarks

It is a bit different how it looks in the loan market between opportunity and opportunity, but if you are lucky, there may sometimes be lenders who have chosen to specialize in lending money to people with payment complaints. They will also do a credit check only that they automatically do not say no if there is a payment note, but they include this as a negative part of the overall rating. Positive things like capital and income can be big enough to weigh up the overall rating.

Loan with the guarantor

Loan with the guarantor

Another option for those who want to borrow money but have payment notes is to try to find a person who enters as guarantor for the loan. However, this is something to be careful of as the person going to the guarantor will be liable for repayment if the borrower does not pay his repayments.

For this reason, you should only use a guarantor if you are really sure of being able to repay the loan. It is often a family member or friend who enters as guarantor and it is important not to ruin the friendship for a loan.

If you feel confident about the repayments, a guarantor is a good option as it gives the lender a greater security to lend money. They will then do a credit check on the guarantor also to see that that person has a sufficiently good finances.

 

Price comparison and facts for those looking for micro credits via the Internet.

When these smaller loans came onto the market, they were often called solely for loans. The reason was quite simple as a mobile phone was required to apply for a loan. It is still an option to borrow only using the mobile phone but usually it is a better alternative to increase the loan through the Internet instead. There are a number of advantages to this.

Opportunity to compare lenders

Opportunity to compare lenders

You can absolutely go online and then write down exactly the information required to take out a loan via she the lender that is the cheapest. However, it is easy to always borrow from the same place, whether it is cheapest or not.

When you borrow online, there is no need to automatically go to the same lender, but there are many others to choose from. Sites like this one you are now on compare prices from many different lenders so it is just as easy to borrow from someone who is cheaper.

Furthermore, it is far from all lenders offering their customers to borrow only via . However, everyone can borrow directly through their website. Thus, you have a greater number of lenders to choose from, which means you should absolutely be able to choose the lender that is the cheapest.

Cost less to apply

Cost less to apply

Many lenders do not charge a fee if an application comes in via the Internet. This is especially true if you use e-credentials to prove that you really are you. Directly when comes into the picture this usually entails a cost.

Thus, it is more often cheaper to borrow if you apply for the loan via the Internet which is another clear advantage.

Easier

Easier

If you search through the mobile, the right things should be written in or the form filled in correctly as there is otherwise a risk of extra costs for you. If you fill in the web it is usually much easier to get everything filled in right from the beginning. And if something goes wrong it doesn’t matter since you don’t incur any extra costs.

Compare lenders

Compare lenders

A little further down this page you will find a box where we have compared the cost of micro credit with a large number of lenders. There you will quickly see that prices vary. In this way you get a good idea of ​​what the cost might be for a possible loan. On the left you will also find a box where you can fill in exactly what size of loan you are applying for. There you will then quickly get an answer with the majority of lenders who may want to lend this amount and what it could possibly cost you.

 

List of most indebted municipalities

A while ago, a list of the most indebted municipalities in Sweden appeared. The calculation has simply been made on the number of percent indebted in a particular municipality. We find the municipalities that are most at risk, especially in Sean Cole, Värmland and Bergslagen. However, Sean Cole also has some of the municipalities that are best placed in the same list.

8 percent of the population have a debt

8 percent of the population have a debt

The list includes all municipalities and you can see how many percent of the population in a particular municipality has a debt with the Good Finance and also the total debt to the Kronofogdemyndighet in each municipality. The municipality that comes at the top of the list, which you cannot immediately call an honor, is Ljusnarsberg in Bergslagen. There, as many as 8 percent of the population have a debt with Good Finance.

Link between unemployment and getting high on this list

Link between unemployment and getting high on this list

What you can see is that there is a certain link between unemployment and getting high on this list. There is generally higher unemployment in the municipalities that also have more people with debts at Good Finance. Of course, this is not always the case, but you can see among the 10 municipalities that are at the top that on average they have higher unemployment than Sweden on average.

More people got debts

cash

Another reason may be housing policy, for example, since in some municipalities it is basically impossible to get an apartment if you have payment remarks while in some municipalities things have gone well. One such municipality is Perstorp. There it has been good to get an apartment despite remarks and this may have meant that more people got debts that ended up with Good Finance.

In total, about 420,000 people have debts with the Good Finance and these amount to a total of SEK 62 billion. The largest individual debt is SEK 700 million.

If you want to check out the list of all municipalities, you can do so in the article from DI. There you can see how your municipality is doing.

What are the requirements for a micro credit?

Before applying for a loan regardless of the type of loan it is a question of, it is important to have a good check on the terms and conditions that apply. So here’s a quick look at some of the basic conditions that apply to you who are looking for a micro credit. What we write here should be seen as a basis for the knowledge needed as rules can vary from lender to lender. Writing down everything is not reasonable here either, so be sure to review the terms of the particular lender you choose before submitting a loan application.

What is required of you?

What is required of you?

There are two parts to the terms of the micro credit and that is what is required of you and what applies to the loan itself. When it comes to yourself, it is self-evident that a lender must set certain conditions in order for them to feel secure in repaying the borrowed money.

Income

Income

The most common condition here is that you as a borrower should have some kind of income. When it comes to micro-loans, the income often does not have to be particularly large. However, this can vary slightly as, for example, it requires a better income to be able to repay USD 10,000 in 2 months than is needed to repay USD 1,000 in 30 days. Therefore, if you have a relatively low income check out the rules that the lender sets first.

Age

Age

Another common requirement is age. As always, in order to be able to borrow some money you need to borrow at least 18 years old. But quite a few lenders do not actually settle for this but require a borrower to be older. A rough estimate is that about half of the lenders require customers to be 20-24 years old. How old you have to be to borrow from a particular lender is usually clearly written on their web pages. We also include this in our comparisons.

Something that there can actually be rules about is how old you can be if you want to borrow money. This requirement is not as common for micro credits as for example private loans and mortgages that have a longer maturity. If you are around 70, this should be investigated.

Payment Notes

Payment Notes

If, for whatever reason, you have received a payment note, there is a high risk that this will affect your ability to borrow money. When it comes to micro-loans, most lenders say no to applications from people with complaints. However, there are some lenders who may want to lend money even if there are complaints. The requirement is generally that the debts of the Kronofogden must be paid. Furthermore, the economy must of course be in good order. A rough estimate here, too, says that around a third of all lenders dealing with micro credits approve payment remarks.

Other conditions

Other conditions

There are usually some minor conditions that are required and this is, for example, that you should have a mobile subscription registered on you that can be used when borrowing money. You should also be registered in this country.

As I said, this is a basis for the terms that are placed on you for you to borrow money from a particular lender. In the next article you can read more about what applies to the loan itself.

 

How to save to the pension if you have debts

The question of how to invest in your pension while having large debts is becoming more and more common. According to a survey by Fidelity Investments, almost half of all “baby boomers” will retire with debt. This article gives you some tips on how to save even if your finances include some debt.

In recent years, both the size per debt and the number of debts per household have increased. Although it is more complicated to save pension when you have debts, it can help to know what needs you have for the pension, and to understand the differences between your different debts, as this can help to find the best possible plan for your pension savings.

For those who do not have any debt, it is quite simple in most cases – just saving / investing their money for the future. However, when you have debts, you have to think a step further. In cases where you have money to invest, you always had to ask the question “Should I invest this money or should I pay off some of my loans?”

It can be a balancing act and not always obvious which option is best. Of course, you always have to pay in the interest and amortization that your debt requires as a minimum, so that you do not end up at Kronofden, but you can also pay extra money to settle a debt faster. When you pay extra, the total interest cost decreases and you save money.

Thus, repaying / repaying a debt is a type of investment there as well. The question is only when it is best to pay off extra and when it is better to simply leave the loan and spend the money on other types of investments, such as stocks or funds.

 

What is your pension goal?

What is your pension goal?

Without knowing what your goal with the pension is, it is difficult to decide whether you should pay off existing debts first or invest your capital in a pension plan. One of the biggest risks for investors is to run out of money during retirement. To minimize this risk, there are a number of factors to consider when drawing up your retirement plan.

It can be good to start with crucial issues such as life expectancy (how long will your pension capital last) and minimum cash withdrawals (how much you will need to spend each month during retirement) is a good start.

You also get to think about your standard of living and what you think it can do for an ordinary month, so that you have as good a control as possible about what you really need to do when you have finished work. The more thought and attention you put into your retirement needs, the better prepared you will be for the future. It is important to figure out these things well in advance if you are going to have any opportunity to influence them in a sensible way.

 

Debt or pension: What should you think about?

Debt or pension: What should you think about?

It is never a foolish idea to discuss their retirement goals with a financial advisor or personal banker, so that you can get a certain idea of ​​how you should plan your retirement savings plan. However, there are also some fundamental considerations regarding the structure and cost of your debts that may affect your decision to pay them or invest in retirement. We will take a closer look at these below.

 

Interest costs

The cost of holding debt is important to consider when calculating your options for contributing to the pension. The important thing here is to have a low interest rate. If you have debts with high interest rates then the monthly cost will be high and it can be a good idea to pay off these as soon as possible.

If you have low-interest loans, such as mortgages, there is usually no greater danger of having these loans left. When choosing between paying off the shuttles and investing in the pension, you have to compare the return you think you can get, for example, shares, funds or savings account against the reduced interest expense if you pay off a debt. If the interest rate is low, even the profits will not be that great when you amortize and then it is usually better to spend the savings money on something else.

 

Taxable income

Taxable income

Contributing to retirement accounts with tax relief can allow you to benefit from tax-free growth on your investments. Because of this, it may be more advantageous to deposit money into a pension account than to pay off debt. To get an idea of ​​what this would look like for you, you need to consider how much you are going to pay for the pension each year and compare it with your annual cost to maintain existing debts.

 

Prioritized debt

Paying off credit card debt and other debt with high interest rates should be given higher priority than, for example, loans on house / apartment. If your debts consist only of low-interest loans such as mortgages, your pension savings deposits can take priority over reducing your debts. The important thing, as I said here, is to compare the profit with a lower interest rate return that you can get if you invest your money elsewhere.

 

Age

Prioritized debt

The closer you are to retirement age, the more important it is that you allocate money to your pension savings. The thing to keep in mind here is that pension savings are also about starting in good time. In order to get together for a good pension savings, you need to save for many years and have a savings that is constantly flowing.

If you find out when you are 50 that you need to save for the pension, you basically have only 15 years to save and you cannot spend as much money on pension savings each month. If you had instead started when you were 25 then you would have had an extra 25 years to spend money, which would also have made a huge difference.

If you put aside $ 1,000 a month, then 25 years of savings only in deposited money would be $ 300,000. If you also expect interest or return on all this money, it is more than $ 507,000 in total, if you manage to get an annual return of three percent. It is a lot of money that you miss if you do not start well in advance.

 

Occupational pension

It is important to review their occupational pension as you can choose from two different types of savings to find the one that suits you best. Also keep in mind that the younger you are, and the higher your salary, the greater part of the pension will come from the occupational pension.

This is for those who have a job. If you run your own company then you may not have any occupational pension, or at least you will be able to control it yourself as the manager of your own company. Then it may be extra important to consider their private pension savings even more carefully. If you do not save privately then you may have to live really poor as a pensioner.

 

Premium pension

Premium pension

Remember to also review your premium pension choices. To this, 2.5 percent of your salary and other taxable benefits are allocated each year, and this is invested in funds of your choice. When you choose the funds for your premium pension yourself, it is a good opportunity to influence your future situation yourself.

Of course, you can not make active choices and it has been pretty good so far. Then the money ends up in predetermined funds, which have also proven to perform well. If you are not so invested in funds etc., it can often be better not to give up too much detail control here, but to have it managed automatically by the system.

In addition to this, it is also important to know that there is help to get, if you need it. Don’t be afraid to contact legitimate financial and debt advisers to make a plan before it’s too late.

 

Practical ways to contribute to debts and pensions

Practical ways to contribute to debts and pensions

Bonus and unexpected cash flow: Next time you unexpectedly get some extra money in the account, split it in the middle. Use one half to pay off your debt and put the other half on your retirement savings. If you do not have any expensive debts, you can easily spend the entire deposit on savings.

 

Cut costs

If you have debts, you are probably well aware of your unnecessary expenses, but dig deeper than sp. Even $ 5 or 10 extra a month can help reduce debt or strengthen pension savings. Saving on your expenses to get more money over is a generally good idea for you who have debts that you want to pay off, but of course you can also start saving to be able to afford better savings.

 

Get an extra job

Cut costs

While it may not be as glamorous with an extra job at all times, it can quickly make a difference for your debts, giving you better opportunities to save more money for the future. Working extra much is a good way to get money, but you can also create extra money in the cashier in other ways if you now want to try to get rid of a debt that has a high interest rate, for example by selling old things that you do not use.

Contributing to your own pension savings when you have existing debts can be difficult at times, but it is possible. You often have to make balances and consider if it is best to save or amortize, etc. Pension savings are important, so you need to think about them well in advance. Keep fighting so you can retire and have a better life well into the fall of old age.