It’s the quandary that people in debt face every day: How do I spend as little as possible on debt and still manage my risk? Lenders might offer a person taking out a credit card extended credit card payment protection for a small monthly fee, but people may feel they don’t have the spare cash to spend on securing a balance. In their mind’s, paid credit card protection is for those people who are rich enough not to need it, because they can afford the additional cost of carrying it. However, this type of thinking is exactly the opposite of what should be going through someone’s mind when they’re offered payment protection. Instead, they should be weighing the risk of defaulting on debt more than the cost of the small monthly payment used to make sure they can continue making payments if they get ill or are made redundant in their jobs.

How the rich might weigh the risk of not carrying payment protection

First, rich people would figure out how much of a balance they typically carry and whether they have enough savings to cover the balance should they suddenly lose their business or get seriously ill. If they are already carry disability or life insurance, this might help in the case where they were suddenly diagnosed with an illness or suffered a major accident. It would not help them if they lost their business and the associated income. For that they would need to rely on their savings or investment accounts to help repay outstanding debts.

Or, rich people with huge outstanding balances may decide that claiming bankruptcy would be the better option if their hope of repaying their debt in a few years is miniscule when compared to the size of the debt. For those that don’t have the option of a large bank account or business investments to cover an outstanding credit balance, the paid credit card payment protection can offer some peace of mind when they lose a job or get sick or injured. This is much truer for someone who is depending on an employer and a healthy economy to keep from being made redundant. Business owners might decide that claiming bankruptcy makes more sense.

When bankruptcy is not an option

If your livelihood depends on being able to work in your profession, it may be a very bad idea to file bankruptcy to get rid of credit card debt – even if your business fails. Bankruptcy in the UK can bar certain professions from practicing if that individual is declared bankrupt by the courts. In such cases, a payment protection plan can offer some peace of mind that debt payments will be made and creditors will not force that individual into bankruptcy through non-payment. This will give them time to work out an individual voluntary arrangement to resolve all the debt without a bankruptcy declaration. This can not only save their credit for a time, but also save their potential earning power for the future when thing might be a whole lot better.

Other risks that demand that you take out credit card payment protection

Other types of risks that can help you decide whether you should pay the monthly fee for extra credit card protection is whether your loss will affect more than yourself. It may be one thing to lose a credit rating, but quite another if the loss of a job or an unexpected illness also puts your family at risk. If you can cover a mortgage with unemployment benefits for a period of time, but not the additional credit card payments, then you might want to consider taking out extra credit card payment protection. If you happen to be made redundant through no fault of your own, the benefits can mean that you will be able to keep your family fed and housed, even while maintaining a good credit history. This will undoubtedly help you if it takes a bit of time to find a new job or if a job offer is dependent on a good credit history. It can also save you from having to dip into retirement or investment accounts to make up the difference. When the risk of non-payment affects more than just you because you are the primary bread-winner, it makes sense to add extra protection to your accounts to keep you solvent even when things don’t go exactly as you had planned.

Renting a room in your house can be an easy way to save on mortgage costs and top up your income, if you have the space. So do you really need landlords insurance? This article will look at the most common issues you must consider when renting out rooms in your own residence, and how to quickly avoid the costliest problems.

Thinking about sub-letting your house? Government incentives allow home owners to sub-let rooms in their own homes to lodgers, helping both people looking for inexpensive accommodation find places to live and property owners to supplement their income to the tune of around 4000 pounds a year, depending on where you live.

Sounds great, but have you considered all the details? Its common when talking about investing in buy to let properties to think about having adequate insurance to cover you from bad tenants, repairs and other financial pitfalls, but do you really need it if youre only subletting a room in your house? Landlords insurance can be costly, so is it really something you can skimp on?

Are you covered? Whilst theres no legal requirement to have landlords insurance, it does offer additional protection that can be well worth it in a wide variety of circumstances. If you simply rent out a room in your house, chances are this will be adequately covered by your existing buildings insurance. However, you probably arent covered for any situations that may arise with your lodger by sub-letting you become a landlord and are running a business in many respects, even if its a small one. And thats where the problems can arise dealing with lodgers can become more complicated than you might think.

Generally speaking, your lodgers or tenants should be providing their own contents insurance. Additionally, it is probably unwise to let your lodger store anything of high value on your premises, as it makes your home a more likely target for burglaries. Also, make sure you check if youre obliged to provide alternative accommodation in the event that a fire or flood damages your property the last thing you want is to be paying out to house somebody elsewhere, whilst trying to repair your own home as well.

Are you insured against fraud and lawsuits? Theres an increasingly litigious culture in the UK and a growing number of lawsuits are being filed against landlords for frivolous reasons. Have you insured your property against this? If you rely on the income generated by your lodger, then non-payment, property damage and the legal costs involved in evicting a problem tenant can add up fast. However, it is possible to insure against loss of earnings from such events, and whilst this doesnt remove the emotional turmoil, it certainly gives you peace of mind that the bills will be paid in the end.

Is your property safe? Something thats a non-issue for yourself personally is any injury or damage caused by your property. If you hurt yourself in a hotel, for example by touching faulty wiring or falling down damaged stairs, you could quite rightly sue the owner. The same situation can occur in your own house all those little repairs youve been putting off could become a serious problem if something were to happen to your lodger as a result of your negligence. Fix it first before advertising for a lodger and make sure that your rooms are compliant with all the relevant safety requirements carbon monoxide detectors, fire escapes and sound electrics are all essential safety checks to complete up front.