Tackling the financial problems of Generation Gloom

When 70s disco diva Candi Staton implored young hearts to run free she could have been thinking forward to the 21st century ñ because far from having the time of their lives, todayís youngsters are weighed down by financial woes and the belief that they will never own a home.

One recent survey of 20 to 45-year-olds found that two-thirds of Britainís Generation Gloom believes they have no prospect of buying a property ñ and the same proportion thinks there is no point in even applying for a mortgage because theyíre bound to be turned down.

Another study, by Shelter, suggests that more than 20 per cent of 18 to 34-year-olds have been forced to move back in with their parents because they cannot afford to rent or buy a home, while research by moneysupermarket.com indicates that first-time buyers now expect to have to wait until they are 43 to get on the property ladder if they live in London, or 38 if they live elsewhere.

And the misery is not limited to would-be buyers. More than two million young home owners are stuck in their first property because moving seems an unrealistic goal.

ìThe combination of rising costs, tough mortgage lending criteria and hefty student debt seems to be creating a generation of young people who are putting their lives on hold,î says Peter Turner, managing director at Experian Interactive.

ìBut thereís plenty you can do to improve your financial prospects ñ and the sooner you start, the better.î

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Check out these tips that may help you begin to go from gloom to boom:

1. Learn to budget – Go through your income and spending to find out where your money is going. Check out price comparison sites.

2. Save, save, save – The Halifax reports that an astonishing 95 per cent of 20 to 45-year-olds are not saving and claim to have no spare cash but it is not beyond most peopleís means. Try to start by putting aside a small amount every month.

3. Get to work on your credit report -This is the history of your credit accounts, such as cards, loans and your mobile phone accounts, along with your repayment record. Lenders look at it before they make you an offer, so everything needs to be accurate and up to date. If you spot a discrepancy, alert the lender immediately. You can see your Experian credit report for free with a 30-day trial of CreditExpert.

4. Keep up the good work ñItís best to close unused accounts, paying particular attention to any shared with an ex-partner, or your credit status could suffer if he or she has money troubles. And start tackling your debts ñ make the ones charging the highest interest your priority.

5. Register to vote at your current address – This shows lenders that you live where you say you do and may improve your credit rating.

6. Never skip a repayment – Missed and late payments stay on your credit report for at least three years, which can damage your prospects, so set up direct debits. If there is a legitimate reason for missing a repayment, such as illness, you can add a note of explanation to your credit report.

7. Donít stick your head in the sand – If youíre struggling, talk to your lenders ñ they may be able to make your payment schedule more affordable. Ignoring the problem could result in court action or even bankruptcy, both of which stay on your credit report for at least six years and can mean you are refused credit or charged high interest.

8. Explore all the options – If youíre losing hope of owning a home, ask your parents if they can help with the deposit or by guaranteeing your mortgage. Other options include buying with friends or signing up to one of the growing number of schemes ñ usually run by local authorities or developers ñ designed to get first-timers onto the property ladder.

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