Debt Reduction

The Cure for Common Household Debt

June 18, 2013 By Tony Standin

At some point in our lives, many of us come to believe that accruing debt is part of life. After all, you can’t build credit without taking on debt, and credit scores are becoming increasingly more important when it comes to finding a place to live, purchasing a vehicle, and even getting a job. The problem is that many people wait too late to stomp their debt break. When you reach the point that your debt is eating up most of your income, you are headed for a financial car wreck.

Budgeting

Many people just “wing it” with their finances and spend money as they feel the need/desire to. Financially speaking, that is the equivalent of trying to drive through the rain without windshield wipers. Without clear visibility, you can’t really see the road ahead. Start by making a list of your expenses, and it should include all your expenses, not just reoccurring monthly bills. Factor in costs like food, gas, parking, etc. While you can’t plan for every single expense, you can account for most of them. Set reasonable limits on personal expenses and stick to them. The first step in managing your debt is to know exactly where your money is going every month. [Read more…] about The Cure for Common Household Debt

Tips to Identify Debt Settlement Scam

March 12, 2012 By Guest

Like many other individuals, if you are drowning under the sea of outstanding debt and looking for a way to come out of it, it is advisable to enroll into a debt relief program, like debt consolidation and debt settlement. When you enroll into a debt consolidation program, a consolidation company negotiates with your creditors to reduce the interest rate on each debt. On the other hand, when you enroll into a debt settlement program, a settlement firm negotiates with creditors to reduce the pay-off amount. However, no matter whichever program you choose, you must be aware of the debt settlement scams. There are many companies who charge high front fees making alluring promises to settle the debt by up to 50 to 70 percent, but ultimately do nothing. To avoid such situation, you must be careful while hiring a settlement or consolidation company.

Let us here discuss how to identify a debt settlement fraud.

If a settlement company calls you too many times and asks you for services, ask for their contact information. If the company does not want to disclose its name and address, and insists you to enroll into their program, then you must understand it is a fraud. Legitimate companies will never contact you over phone and beg you to hire their services.

If you are thinking to hire the services of a debt settlement company, contact the Better Business Bureau to check its credential. The Better Business Bureau can tell you if there has been any complaint against the company you are considering. To know more about the company, you can also approach your state attorney general’s office that can provide with information about the reputation and experience of the firm.

Before signing up for a settlement company, ensure whether or not the company is a member of the Association of Settlement Companies. This association is a trade group that promotes good industry practices. If the company claims to be a member of the association, check the association’s website to ensure its membership.

Ask the company about the effects of debt settlement on credit ratings. If the company is legitimate, it will be honest about the fact that debt settlement affects the credit rating negatively. But if the company is questionable, it will assure you that no negative effect will occur.

Before you start working with a company, make sure you get everything in writing. Fraudulent firms will never put their terms in writing in a legally binding document, and will ask for hefty fees for services. Fraudulent companies will never cooperate with you and entertain your doubts and queries; they will only hurry you for signing on the paper work and enroll in their program.

In conclusion, consider the above mentioned tips in order identify fraudulent debt settlement companies.

Getting Out of Debt

June 19, 2010 By Sherry Tingley

Debt is the single largest self induced headache one can have. We do it to ourselves and we don’t realize the consequences we will pay. When we justify spending money that we don’t currently have, it is like taking a shovel and digging a deep debt hole for ourselves.

Credit card debt is like a cancer. At first you don’t even notice how far down the hole you are going. It starts of small and over time it creeps up on you and before you know it you are thousands of dollars in debt. There are a myriad of excuses that we use to tell ourselves that just this one time, it won’t hurt or I’ll have money next week, the week after that or next month or the next raise. Many of these projections into the future never come true.

The truth is, there are times that using our line of credit is necessary but the problem is, those times aren’t clearly understood by a lot of people. If you don’t understand the difference between needs and desires, you may throw caution to the wind and start digging your debt hole bigger. True emergencies can arise where using our line of credit is our only choice. If that is the case, then the need should truly be necessary for our physical survival and not our mental health survival.

It has often been said that all people are one illness away from bankruptcy. Medical emergencies constitute many of life’s unplanned expenditures. Make sure you have insurance to prevent this from destroying your financial stability.

Debt-Free On Any Income

March 31, 2010 By Sherry Tingley

Financial security may be hard to imagine for a lot of people. To acquire this type of security means that you will have to make sacrifices to achieve debt free living. If you have gotten yourself into debt for medical reasons, lost jobs, over speculating or even the bitter sweet problem of self indulgence, then you will need to find a way to crawl out from the burden of debt.

debt-free-living — Not what you were expecting?

Debt has two faces. One face is called good debt. Good debt is for purchases like housing or schooling that will increase in value over time. The other face of debt is ugly. It’s consumer debt on credit cards that have interest rates that are not tax deductible and can rise over time.

Many books have been written about getting out of debt, which most agree that they want to do. Some dream that they want to become debt free and some people actually do become debt free.

Lyle and Tracy Shamo have written a book called, “Debt-Free On Any Income.” It has an excel spreadsheet program that can help you list all of your debt and pay it down systematically. This is a good system to use and will help you get out of debt.

Let’s say you have four credit cards that have a variety of debt on them. Say for example the balances are $7,540, $238, $4,333, and $1,980. You are looking at a $14,091 debt. That should be enough to wake you up that you need a better payoff plan.

One way to tackle this debt is to make the minimum payments on each account. Then you are easily looking at a very long time before you’ll be debt free, but your credit score will stay intact. Say you decide that you are going to use $200 every month to pay towards your credit card debt. You would want to take the $238.00 debt and put money towards paying off that amount.

When you are done with that bill, you use the same $200 and put it towards the $1,980 debt until it is paid off. Theoretically you should now have more than $200 to put towards your monthly debt. Not having the minimum payment for these two bills could free up maybe $75 a month. So now you can put $275 a month toward your $4,333 bill. As you continue doing this, your monthly minimum payments will go down and the amount you can put towards your debt payoff will go up. By the time you are solely focusing on the largest debt, you’ll have more to pay that off every month.

The key to this plan though is to not incur more debt at the same time you are doing this. Basically you need to decide to quit spending money that is not in your bank account. When that becomes a lifelong habit, you won’t have to face these problems again and again.

The Bank of America/MBNA has issued credit cards and consumer debt they report is $194.70 billion. This includes the U.S., Spain, Canada, Ireland and the U.K. The average credit card debt per household is $16,007, according to CreditCard.com.

All of us can use a little help in controlling consumer debt and living a debt-free lifestyle. Practice using the payoff techniques and the spending rules and it won’t be long before you are on your way to becoming debt free.