Can forward planning help borrowers save money?

The annual financial cycle for many UK households takes on a familiar pattern as we'll see below, so armed with that knowledge can borrowers save money by planning ahead?

Just as events like Christmas, Easter, and summer holidays come around with expected regularity, so the stresses and strains on household finances take a familiar pattern. Yet despite knowing what's just around the corner, many people fail to make any preparations for these expected financial demands and are then faced with limited choices when it comes to raising any cash required.

Consider the following situation, it's early July, school summer holidays are just on the horizon and many parents are searching the high street travel agents and internet holiday sites for last minute bargains. With little time to plan they may opt for whatever holiday is available and decide to face the financial consequences later by paying for the deal on their credit cards. Then some two months later, having enjoyed their trip, they are left facing the music when the bill arrives from the credit card company with a large outstanding balance.

Rather than paying off the balance in installments, paying the credit card company's high interest rate charges and hoping the balance will disappear before those Christmas expenses raise their head, many people choose to take out lower rate loans in order to turn that holiday debt into a more manageable affair. That's not to say they should become complacent at paying off the debt as quickly as possible, otherwise that lower rate of interest on the loan will be offset by a longer repayment period. It's all about planning ahead, staying within your means and letting your financial head rule your heart.

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