You scrimped, you saved and you chipped away at your debts like a marble sculptor for years. And if you’ve succeeded at living well within your means by the time that pivotal salary raise comes around – it’s time to reap the benefits and start enjoying some financial freedom.
While we don’t recommend going out and impulsively splurging all your extra cash on a five star break to Bora Bora, or on the latest Porsche Macan – we certainly wouldn’t discourage making some well deserved lifestyle changes as your disposable income becomes a little more amenable.
With greater financial confidence, you may find yourself giving in to the desire to live better and own nicer things– whether that means moving out of that box flat to something with room to start a family, or trading in your rusty old car to something more roadworthy. It might even be time to treat your loved ones to a holiday destination that takes longer than two hours to reach! Whatever it is you’re seeking to upgrade, it’s important to plan ahead and manage your spending in such a way that won’t see you fall into a dungeon of debt. We’ve pulled together some useful tips on how to upgrade your assets and take on those bigger financial commitments with care.
Upgrading your car
Trading in your old car can be a convenient way of subsidising the purchase of a new one. Whether you wish to sell privately or through a dealer, to get the best price for your old car you should ensure it’s well prepared for a sale.
Give it a thorough clean inside and out, ensure you take care of any repairs that need doing and get all the car’s paperwork together – everything from the log book to receipts for any repairs undertaken.
Typically, a dealer will value your car somewhere around 10-20 percent below what he thinks he can get for it on his lot. When taking this into consideration, you might opt to sell privately.
Depending on the price of your new car, you may need to take out a personal loan to cover the outstanding balance. It’s imperative that you determine exactly how much you can afford to pay back every month, keeping your total borrowings (including rent or mortgage) below 30 percent of your monthly income.
When comparing personal loans look for low interest rates, as these will make a big difference to your monthly repayments and try to get pre approved on your loan before you start shopping for your new car to give you some extra bargaining power.
Upsizing your home
Whether your move to a bigger home is sparked by a growing family or the desire for more space to entertain, there are a few ways you can cut costs, even when upsizing.
Don’t rush out and start filling your new home with brand new furniture just because you have more room. Instead, take some time to get a sense of how you’ll use the rooms and space going forward. Spread out your purchases to be kinder to your cash flow.
Measure your space – and if your old furniture is too big or too small, what a great excuse to make a little extra cash by selling it on…
If you’re taking out a home loan – as with a car loan – it’s important to make use of online loan calculators and product selectors to help decide how much you can afford to replay each month and which features and benefits work best for you. For example, if you are ready to purchase your new property but waiting for your current home to sell, a short term loan such as a bridging loan, will let you make interest only repayments.
A reduction on financial pressure at times like this will help you free up extra cash should unexpected expenses come up.
Why not see the world on a bigger budget?
In the age of long working hours and stress, holidays play a large part in maintaining sanity for most people.
There’s nothing better than kicking back on a sandy beach and taking a couple of weeks holiday to relax and unwind – but for some people this also represents a financial drain. If your budget won’t stretch far enough to accommodate an extended trip to a far away land, don’t panic, there are a few other ways you can fund your escape.
Once you have decided how much you will need to borrow, you can establish whether you should use a low rate credit card or a personal loan. A credit card offers flexibility with how much you spend, so if you find it hard to resist the temptation to spend more than is absolutely necessary, it may be worth your while to opt for a personal loan. With both, ensure you can cover the monthly repayments. You don’t want to spend years paying back a two week holiday.
This article is written in partnership with People’s Choice Credit Union
Terms and conditions apply to any product you consider.
