All too often we receive emails sent to us telling people that they have large debts or problems with their finances and where they ask for help, for example through a loan or tips on how to cope with their problems. In this blog post, I therefore thought to summarize a number of different tips and things you can do to get out of debt and get a better economy.
First of all, I want to make it clear that there is very rarely any easy way out of financial worries and in case large debts have been incurred. Large debts often take a long time to recover from, given that such a situation usually does not have that much extra money to move around. This guide cannot do miracles, but hard work is required. However, you can get good tips on what to do and what to avoid.
“I have big debts and need help getting rid of them”
We usually try to say that you should never take out a loan unless you are relatively confident that you can pay back without any problems and that you should be responsible and careful with your finances, but those who already have debts have no help with these tips. . It’s a little too late, the debts are already there. What are some alternatives for those who have debts and want to get rid of them?
What you can do
1. Review your expenses – To be able to pay off your debts and afford the regular bills every month, you need to do a thorough review of your finances and see where your money is actually going. If you are going to get rid of your debts, you have to pay them off and then you may need to find more money in your budget.
Try to cut down on everything you don’t really need, all unnecessary expenses and all luxury consumption. Sure, it will be sadder when you can’t afford to spend money on such fun things that gild everyday life, but it is something you unfortunately have to sacrifice when the economy does not allow it. It is clearly more important to get back on your feet and get started on a stable economy than to spend money on things that are essentially bonuses.
2. Pay off the most expensive debts first – If you have several loans / credits that you have to pay off each month, you should look up what you are actually paying and which of the credits are the most expensive. Often it is the small loans and installment purchases etc that cost the most and then you should try to spend the most money on paying off them.
If you can pay off a debt and avoid it altogether, there is suddenly money left over from this item that you can put on to pay off another debt and then it is even faster to repay. The more debts you settle the more money you can release.
So you should start by paying back as much as you can on the most expensive credit and then work your way up towards those who are not so expensive. If you have very small debts of some kind, you should also take these quickly and similarly, you should prioritize if you have any bill or debt that is about to go to Kronofogden or similar. This is what you would like to avoid.
3. Collecting Expensive Small Loans – A common tip is to collect their expensive small loans into a single large loan. It is not uncommon for people to contact us about getting a big loan so that they can settle their small expensive loans and the basic idea is not wrong. We do not lend any money ourselves, but only have information, but we agree that the principle can be very good.
For it to go the way you need to make sure you can get a great cheap loan that covers all or most of your expensive smaller loans / credits. You then use this money to repay all the expensive credits and then just keep the big loan. The advantage is that you can save a lot of money each month in interest in this way plus it is much easier to keep track of just a single loan.
However, it is not certain that you can get a large loan anyway. You have to meet certain requirements in order for it to go the way, for example, that you have an income, that you do not have excessive debts and poor creditworthiness, etc. Sometimes payment remarks or debts at Kronofogden are obstacles. Try to contact your bank for a personal meeting and tell us about your situation. Then show that you are really struggling to get your finances organized and what positive things are there.
How to avoid it
1. Taking more smaller loans to keep you afloat – It is common for people who have financial problems and, for example, have trouble paying their bills every month to try to fix this by borrowing more money. They try to cover up their acute money shortage by borrowing more, but the worry with this is that you just push the problem in front of you and that you make it even worse.
When you borrow to keep your finances afloat in this way you only dig a deeper and deeper pit for yourself. If you borrow to afford to pay the bills this month, you will probably have the same difficulty paying the bills even next month. Then add on the new loan and the interest rate for it, then it will be even harder to pay.
2. Just giving up and sticking your head in the sand – Unfortunately, it is quite common for people who start to have bigger financial problems just give up and become indifferent. When new bills come in, they may not even open them or choose to ignore them instead of trying to address the situation and find a solution.
Of course, it is a very bad idea to just give up and stop caring. Although it is difficult and it feels like there is no way out of the problems, you have to try. It only gets worse and worse the longer you ignore their problems. The sooner you deal with your debts and financial problems, the easier it is to find a solution and get rid of them.
“I have been laid off / unemployed and cannot pay my bills”
If you have lost your income and suddenly find it difficult to pay the bills, this is of course a difficult situation. It is then important to find the best solution that will allow you to adapt to your new situation.
A basic tip is to start saving for a buffer for preventive purposes. This is something to keep in mind while having a job and having the opportunity to spend money. You can easily save up to one or a couple of monthly salaries in the buffer and this money is only intended as a security for the occasions when you receive an unexpected expense or if your income decreases. A buffer of this kind can save your finances in case something happens.
You who are already in this situation probably have no buffer or it will start to run out. In this situation, it is rather a matter of trying to find quick temporary solutions that will allow you to pay your bills and avoid debt collection and the Crown Magistrate, etc.
1. Cut down on all unnecessary expenses – Just like before, a first step is to review your expenses and cut down on everything you don’t really need. You can cancel newspaper subscriptions, Netflix and Spotify, choose a cheaper TV package and the Internet, quit smoking, stop eating out, etc. There are many good savings tips for those who really want to keep their budget down.
You should also look over your more expensive fixed costs such as insurance, loans, electricity, car, food, accommodation etc. It may not be possible to completely eliminate these costs but since these are a bit larger amounts it is often possible to save slightly larger sums if you take the time to compare and choose the most affordable options.
Living cheaply is A and O when you have a poor income. Your budget, where you keep track of all your income and expenses, must go together so you don’t go minus every month. Try to get it together so that you at least go out evenly. Once you have stabilized there and know that you can manage from month to month, the next step is to look at how you can improve your situation.
2. Make sure you get all the money you need – When you become unemployed, sick or so, you are obviously entitled to a certain amount of compensation depending on your situation. As a sick leave, you have sick pay or sickness benefit and later, if you would be away for a longer period, sickness / activity allowance from the Social Insurance Office. You should check that you get all the money you need and at the same time also check with your insurance company if you can get any extra compensation from eg a health insurance.
As an unemployed person you should of course check out the A-cash and that you get the money you can get. Then the next step is to be back on the horse as soon as possible and look for new jobs and look for new ways of earning income. Look for suitable jobs and search for jobs as best you can. If you are struggling and doing your best, it usually takes time.
If you cannot find a job where you currently live, it may be appropriate to start looking for jobs that are within commuting distance or even to move. Without a job, you will normally not be able to survive for too long if you do not plan to live very well.
“I do not get a loan / the bank refuses my application”
One problem that is quite common nowadays is that people try to borrow money but are denied. In some cases, you should not take out a loan and then you can say that it is good that the lenders are tough and refuse – since such a loan probably would have only led to bigger problems. In some cases, however, a loan might have been a good help.
The problem you may encounter when applying for a loan is that you do not meet any of the lender’s requirements. The most important requirements that most lenders have are that they have a certain annual income / fixed income, that they do not have payment remarks and that they can pass a normal credit check.
If you do not have a job, study or run some kind of own business it can be a bit difficult sometimes to get a loan. Having an income is one of the most important requirements of the bank as it is the single most important thing for the borrower to be able to repay the loan and pay the interest each month. If you have no income, it is difficult to afford.
Payment notes as an obstacle
Payment reminders are often a major obstacle. You get a complaint if you have failed to make a payment and the case has been forwarded to Kronofogden and registered there as an order for payment (and if the case has not been resolved within three weeks). However, it is not Kronofogden who takes care of payment remarks but it is the credit reporting companies that register this in their databases so that companies can use them to find out financial information about people.
If you have a payment note, it is difficult to get a loan and it can also be difficult to rent an apartment, obtain mobile subscriptions and buy on installments etc. This is because a note is seen as a strong sign that you have not managed your finances properly and then you may not be able to handle your future payments either.
If you have one or more payment notes, then it is a pretty big obstacle if you want to take out a private loan, as most lenders who have such loans do not usually approve notes. It is stupid because it is just a private loan you need if you want to collect your expensive small credits into a large loan.
There are some lenders who may want to lend to you anyway, but it is often clearly harder to find. You may need a co-applicant and may receive a slightly higher interest rate than you would otherwise have received. You can try to talk to your own bank and explain your situation and then even show everything that is positive about your financial situation, so maybe they can forgive an old remark.
The credit check shows your overall financial strength
Every time you apply for a loan, the lender does a credit check. They will then contact a credit reporting company that has collected financial information about you (which is free to obtain from, for example, Kronofogden and other places). It states, for example, what you have for income, your current loans and liabilities, payment notes and some other good financial info that makes it easier to assess how stable your finances are and if you can pay back a loan.
All this is weighed together when the lender does its credit check. If you have something that automatically rejects the application so that you do not have any income either or you have an active payment note then it will be a quick stop and you will get a no. If the basic requirements are approved, it is instead an overall assessment that determines. So you may not have too many bad points in your finances overall if you want to be able to get a loan.
“How to get a loan despite poorer finances?”
First and foremost, keep in mind that one should not always take out a loan. You can take out a loan to collect your expensive small credits into a cheap loan but you should not borrow to meet your expenses for a specific month eg. Then it is better to look at other alternatives. For those who want to borrow and where it is actually ok to take out a loan, there are a few tips.
1. Order on the economy – Having a good order in your finances, paying bills etc. in time and having some saved capital is always good. It also helps you when you want to take out a loan because the lender looks at your entire finances when making their assessment. If you have been denied previously, you can review what may be the problem and try to correct it.
2. Not too many applications / credit information – Something that lenders can look at and weigh in their assessment is if you have many credit information taken in your name, eg at UC. This is a sign that you have, for example, applied for loans from a large number of lenders or otherwise done things that require a credit report (paid on installments, etc.).
A large amount of credit information in their name is regarded as something negative because they can for example be a sign that people do not trust your finances or that you have debts. Therefore, you can be refused to borrow just because of this. Try not to apply for loans with too many different ones. One idea might be to apply through a loan broker, where you can submit your application to a large number of lenders with just a single credit report.
3. A co-applicant can make a difference – When you yourself have a little too low income or poor finances to get a loan on your own, it can make a difference if you have someone who is good for the loan with you. You then share the responsibility for the loan and you can both be obliged to repay the money.
You can be the person responsible for all payments yourself, but your co-applicant can thus become liable if for some reason you are unable to pay the money every month. You can choose someone from your family, partner or close friend as a co-applicant, but remember that you have a great responsibility here so that the person who helps you should not have problems for your sake.
4. Borrowing despite poorer finances – Quite a few lenders have tough claims regarding payment reminders and other things and that means you can’t take out a loan anyway if you have problems with any of the requirements that exist. However, you can to some extent turn to alternative lenders who have slightly lower requirements.
There are not many such lenders but there are some. It can be difficult to take out a private loan with a payment note, but you can, for example, get a loan at a slightly smaller amount, for example up to SEK 30,000. There are lenders that offer, for example, SMS loans that do not see remarks as an absolute obstacle, and there are also lenders who can consider lending to people who usually find it difficult to get a loan.
The advantage of these lenders is that you can get a loan even if you have a financial situation that usually leads to problems. In many cases you should avoid a loan if you are in a bad financial situation but sometimes it can be ok. For example, if you have an old payment note, either because of negligence or that you have since fixed your finances and take care of it properly.
If you have your own company or have recently moved to Sweden, it can sometimes make it more difficult to get a loan. But just because you are new to the country or self-employed, or if you do not have a fixed income does not automatically mean that you do not have a strong economy. So that’s why these lenders can sometimes be good to have.