Many people who have loans get very worried about the prospect of interest rate rises. It is not surprising because when the Bank of England raises the base rate then the lenders will often raise their rates as well and if you are on a variable rate, it means that you will end up paying out more in interest each month.
It is wise, if you are worried to calculate the impact of a rate rise. Work out how much extra you will actually be paying if rates go up and this will give you a proper idea of how much extra money you will have to find. You may find that it is less than you imagined and that you will be able to cope, but of course, you may find that you will struggle to find that much extra money.
It is always good to be prepared for a rate rise as they can potentially happen at any time. Make sure that you have a plan for coping with them. You will need to make sure that you will have enough money to cover the increase in interest rate should it happen. A small increase will be easier to cope with but a series of small increases could be just as difficult as one large increase. It is worth looking at your finances to see how you would manage. You may be lucky enough to just have to save less money as you always have some left over when you are paid, but there are many people that are not in this situation and would struggle to manage.
It can be wise, if you can, to put some money by each month into a savings account. Then you would have something to fall back on should you need it. This means that if you have some hard months, where you struggle to make ends meet, you will have some money available to use so that you will not have to go into debt. Of course, savings do not last forever if you keep dipping into them, but they could be a nice cushion and temporary solution.
If you are struggling then you will need to think of ways to manage better. This could mean that you need to think of ways to spend less money and how to earn more money. Neither is completely easy although there are some things that you may be able to do that will not make a big difference to your lifestyle but will make a difference to you financially. If you compare prices on everything that you buy, you may find that you will be able to save significant chunks of money by switching suppliers or retailers. The biggest savings can usually be found on insurance, loans, mortgages, utilities and television packages. Look at what you could save if you change to a different deal or if you switch companies. It is worth checking these things regularly because switching may save you money for a while but then another place could come up with a better deal. Buying less luxuries and shopping in cheaper shops could also help to save money and it may not be that hard either. Asking for a pay rise could also be a fairly easy way to get some extra money. If you do manage to get extra money like this you need to make sure that you do not get into the habit of spending too much of it. If you do then you could be back in the position that you were to start with. Try to save some each month to fall back on and if your loan repayments do go up, you will be able to afford the increase.
It can be wise to consider whether it is worth you paying back your loans early. This could mean that when rates do rise significantly you will have no debt to worry about. Even making small overpayments each month could help to whittle down what you owe and make a big difference to your future. It could bring down the amount of interest you have to pay each month as well so when the rates rise, you will not struggle to find the extra money to pay.