Tuesday 12th of October 2010
Individual voluntary arrangement (IVA) answers could be a great source of information for people who are struggling to get into the black but want to start securing their financial future.
According to Ed Bowsher, head of consumer finance at lovemoney.com, growing numbers of individuals in the UK are starting to realise the need to create a nest egg in case a difficult unforeseen scenario crops up.
However, he is worried that the average UK adult still doesn't have enough money stashed away for a rainy day.
"Ideally, you should have a savings cushion equivalent to six months' salary so that you can easily cope if you lose your job or you're hit by another calamity," the expert notes.
Mr Bowsher adds: "I accept that building such a sizeable savings cushion is a major challenge for many people, but it's worth doing if you possibly can."
Answers on IVAs may, however, make that challenge easier, if you're constantly being hit with hefty credit card or personal loan repayments that swallow up your income.
That's because an IVA can clear your unsecured debts worth more than £15,000 over a period of around five years, potentially making your finances more manageable by merging all your repayments into one.
The measure may also offer peace of mind to those of you worried you won't be able to keep up with the rent or mortgage, as it protects the equity on your family home.
Mr Bowsher's comments come following a study from NS&I that shows the number of people regularly saving cash has grown to more than 50 per cent of the population for the first time in three years.
In addition, the research finds the typical amount of money stashed away every month is £87.37 - up from last quarter's average of £85.21.
By Neil Burton
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