Genistar teaches the Rule of 72, the rate at which a sum of money doubles at a given percentage. Take a look at this Better Explained article.
The trouble with living on the never-never
Banks charge more interest on loans taken out than they provide for money invested with them. Using the same rules of engagement as above, calculate the money that is milked off your loans, credit cards, and store cards, etc. Do your own calculations on MoneyChimp. How are your investments doing? How much are you REALLY being charged for your loans and credit cards? As Sam pointed out, if you only pay the minimum, you may find that the debt amount increases and you'll spend the rest of your life paying it off at that rate. This is why I abhor credit cards, won't touch store cards, and refuse to take out loans.
What I know
The last time I got finance was for a new cooker and washing machine at 0% interest plus a small fee of less than £30. I paid it off on time, end of problem. Had I not, I'd have been liable for compound interest on the principal over a set number of months. I've actually known this since secondary school, I took Business Studies for the Intermediate and Leaving certs.
I also know that, credit rating or not, sometimes it's better to tell your credit card company to get lost and wait for the debt collectors to ask for a quiet word in your shell-like than to be stuck in an ever-increasing cycle of debt. Anyway, I've actually done that twice because the creditors would not stop piling on the interest even though I explained my situation and asked them to freeze it.
Debt collectors buy up the debt and if you stick to an agreed debt management plan they won't add interest to it. It's usually the money owed in full to the bank or credit card company and you can make a deal to pay it off in installments. If you name a sum of money and challenge them to take you to court if they don't like it (get Citizens Advice to back you up if they won't accept it), they'll usually accept as little as £10 a week without asking you to fill in an incomings/outgoings form to prove you can't afford to give them more. Stick to those terms and when the last payment has been made, you're out of debt. Don't make a habit of doing that, it will affect your credit rating, but it got me out of a tight spot at the time.
What Sam says
You really want to be honest with yourself about your income and expenditure. Dig those red-rimmed bills out of the bin and from beneath the sofa cushions and get them on the table. Get your partner to reveal all credit and store cards. Get those bills on the table too. Now check your bank balances. Check your wage slips. If you are spending more than you're earning, stop doing that right now. You are not obliged to keep up with the Joneses. Consolidate your debts where possible to pay them off in a lump sum and cut up those store and credit cards. Buy only what you need. Use those savings to pay off your debt sooner and beat the banks.
The number of people whose expenditure is debt-funded is ridiculous. They have two cars in the drive and nothing in the fridge; each of the partners will have up to four store and credit cards and neither knows what the other is spending.
Work towards clearing your debts off as quickly as you can and be careful not to incur more. Make a plan to trim your spending and put your savings towards paying off your debts more quickly. Make plans for all of your financial goals and stick to them. If you can't, you may have to redraw your plan; the idea is to get you to think for yourself about finance and empower you to make the best decisions for yourself and your future. I won't do this for you. That's your job. But I will give you the tools.
What I want
Well I'm not in debt so I don't need to make a plan for paying it off. However, I do want to live in the level of comfort my in-laws enjoy when I retire. To that end, I've got some money already stashed in an pension plan I started in 2008 while working for an insurance company. When I left the business I stopped the payments but they kept piling on the interest, etc., so it's getting to a lovely size. I might just leave that alone. I'm in a workplace pension scheme in my current job as well and have tucked away a small amount in an ISA shared with Richard and on my own. I need a long-term investment plan and that's why I asked Sam to help.
What Genistar offers
The Game Plan would be useful and the Life and Serious Illness Protection can come in handy if I either experience a catastrophic bout of ill health or snuff it. Since we don't have a mortgage Richard would make out like a bandit if I bit the dust. That would work both ways if we were both insured, of course. Mind you, since they're not actually brokers, they can recommend the financial products listed above, not actually sell them. I still need an investment plan and my little ISA from the Yorkshire Bank appears to be the best bet for someone in my situation as I don't have a huge some to invest. I think that's what the Game Plan is for. I'll have to fill it in.
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