Thursday, February 28, 2013

Online Jobs That Can Grow Your Debt Payment Fund

One of the best things about the Internet is the ability to increase one’s income through the most convenient means possible. This is especially helpful for people who lost their jobs or are rendered unable to work in the office because of an illness or accident. When faced with this crisis, remote work is seen as the saving grace that will keep people from resorting to desperate means in order to survive.

Another reason to get an online job is to increase one’s income for debt payments. If you have a 9-5 job and it is not enough to keep up with your basic needs and your accumulating debt obligations, then an online job may be able to help you out. You can choose a source of supplementary income that will help you meet payments. This is something that you can do in the house so you can continue earning while staying close to your family. It will also allow housewives to help increase the household income to aid their husbands in paying off credit accounts.

So what are the different online jobs that you can consider?

Since this is in the Internet domain, you can choose to be a web developer - at least if you know the language and codes that will help you create a site. You can offer your services to help those wanting to enter the ecommerce business. A lot of them do not know how to develop their own sites and they will be your market. It may seem too technical but the market is big so it is worth a shot. You can learn how to be a web developer through the Codecademy. Their courses are very interactive and you may find yourself enjoying every lesson.

Another career that you can opt to do is be a freelance writer. All of the websites that the developer will make require articles, original copies and all forms to text to fill in the pages. It may be product reviews, informative articles and simple catch phrases or captions. The millions of websites on the Internet will need a writer to update the web content. If you can string two words together and make sense of ideas so people can easily understand them, then this is a great career option for you.

Being a virtual assistant can also be a great career option but it usually requires a lot of your time - at least depending on the needs of your client. Most of the time, clients require these professionals to work full time. The nature of a VAs job is to manage the online clerical tasks of your client so they can concentrate on the more important activities needed to grow their business. The job description includes coordination, travel arrangements and other tasks that can be accomplished online.

You can also use your photography skills to earn online. If you have great photos, you can put it in photo sharing sites. Visitors who like your pictures can use it and pay a fee for the right to post it somewhere else.

These are only a few of the things that you can do to help you earn online. Remote work is a great way to grow your debt payment fund without having to leave the comforts of your own home.

Wednesday, February 27, 2013

Small Business Debt Relief Tips: Lower Your Overhead

Small business debt relief is similar to consumer debt relief. You need to make a couple of sacrifices to help you get out of debt faster. The bottom line is to grow your debt payment fund and there are two ways for your to accomplish this. One is to grow your income and the other is to lower your overhead expenses so more of your income will be allotted for your debt.

Of course, lowering your overhead will not bring much growth to your payment capabilities as increasing your profits. However, the small amount will add up to a significant figure and will help you develop good financial habits.

In order for you to stay out of debt, you should know how to properly spend your revenues. You want to make sure that your profits are going to the right expenses - those that will contribute to the revenue making capabilities of your business.

There are many ways to lower your overhead but you begin by identifying the current expenses that you make. See if they are still practical under the present circumstances. If your office can be relocated to a smaller space, see if you can make it happen. A smaller office means lower rental price and also lower utility bills.

You should also watch your purchases. Think twice before you buy expensive equipment. See if you can share printers with everyone or if that photocopying machine is really necessary in your day to day operations. And if you have to buy one, get price quotations from different suppliers. Compare costs and do not hesitate to negotiate. Do this for any purchase - may it be office suppliers, calling cards or other trivial expenses that you need to make for your business.

If you can cut back on paper consumption, that will help keep your costs to a minimum. A paperless work environment will not only minimize your office supply costs, it will also decrease the clutter in the office. Physical documents need space for storage and having them stored in the cloud (or the Internet) will eliminate this need.

As you do all of these, put in writing all the activities of your business finances. This will help you monitor if you are overspending on any area that can be saved on. Periodically check, analyze and revise your budget if you have to. More importantly, stick to your budget.

Start making wise spending decisions so you can direct your funds into more important and pressing needs - like your debt. Your company will not really grow if you still have debts to your name. Not only that, other businesses may find it hard to begin a business partnership with you if they know that you have a lot of credit obligations.

Tuesday, February 26, 2013

The Debt Settlement Impact On Your Credit Score

All debt relief programs can affect your credit score in one way or the other. The extent of the damage will depend on what the specific program will ask you to do in order to get yourself out of debt.

Your credit score indicates a lot of things about your financial standing. If you have a low score, that means that your are either too deep in debt, or you have a bad habit of not paying your dues. It can also mean that you have too many credit accounts open and you cannot meet all of the payment requirements diligently. These are only a few of what a low credit score will show. Bottom line is, a low score forecasts you in a very bad way financially.

Next to bankruptcy, debt settlement is the option that has the most negative effect on your credit score. When you choose to get out of debt through debt settlement, one of the first things that you will do is to default on your payments intentionally. You need to convince your creditors that you are in a financial crisis and to do that, you have to be unable to pay for your credit obligations. When you start missing your due dates, this will be marked negatively on your score. You can end up losing between 30 - 150 points on your current score.

Of course, you are not really spending that money on something else. What you should have been sending your creditors will be saved in a secure account that will eventually be used as your settlement fund. When this amount is big enough - usually in 6 months or so, you can use the accumulated funds to offer as payment for your debts. When the creditors agree to accept this amount, you can send this payment (which is lower than your current balance) and the rest of your debts is forgiven. Once the whole process is done and your debt is now equal to zero, it is still not a clean slate. Your credit report will show that you “settled” your debts instead of paying it off the traditional way. While it is not really lessen your score, this word will tell lenders that you had trouble paying off what you owe before.

Another effect that defaulting on payments will do on your score is debt accumulation - especially if most of what you owe are credit card debts. These type of credits are notorious for high interest rates and late penalty charges. Once you stop paying your dues, these can grow your debt total significantly. That can affect your credit score because one of the things that it monitors is your total debt amount.

While these can be quite discouraging, it is better to continue with debt settlement if you have analyzed your finances and have come to the conclusion that debt reduction is your best option. Your credit score may suffer but you can always rebuild it once you have settled your debts. Just make sure that you have learned the necessary lessons that will ensure you will stay out of debt for the rest of your life.

Sunday, February 24, 2013

Debt and Your Personal Growth

Debt may be viewed as something negative but it can also be the source of something good. Believe it or not, good or bad debt is not real. There is only debt and the outcome of that situation will depend on how you decide to treat it. If you view your debt as something that can destroy you, that is where you will be heading. But if you perceive it as an opportunity to change your life for the better, then you may be surprised at how your debt situation can turn into something good.

This is not to say that you put yourself in debt just to have the motivation to improve your life. The whole point of this article is to try to look for ways to improve your personal growth a you get out of debt. Hopefully, you can see the silver lining in your debt situation. Even the worst of all situations can result in something good as long as you approach it the right way.

One of the best things that you can accomplish while in debt or going through a debt relief program is to develop proper financial management skills. If you truly want to be free from debt, this is an important undertaking that you need to go through.

The primary reason why you got yourself into a debt ridden situation is because you failed to manage your finances properly during abundant moments. Even if your debt was caused by a sickness or a job loss, a hefty amount of emergency fund or savings would have made borrowing money unnecessary. So if you want to keep that from happening again, it is best to develop the skills that will allow you to grow your savings. That way, any unfortunate circumstance in the future will be well taken cared of financially.

Connected with proper financial management is wise spending. This is a must whether you  are getting yourself out of debt or staying out of it. If you consider yourself to be in a real debt crisis, that signifies that your income cannot meet your current needs. Since you evidently have limited resources, you need to think about every expenditure before you make them. Ensure that your limited income or funds are going to priority expenses and not spent on impulse buying.

The whole point of surviving a crisis is to learn something from it so you do not have to be placed in the same situation again. If that means changing your lifestyle and your environment, then you need to make those changes happen. It all depends on your personality and what you are willing to sacrifice in order to achieve your goals.

More than the money that you need to raise to pay off your debts, you also need to take time to realize the mistakes that got you there in the first place. Once you go to the root of the problem, then you can see how you can attack and solve it permanently.

Thursday, February 21, 2013

Use Financial Management As A Debt Solution

Any debt relief program will always involve financial management. While the main program may not include this, it is a necessary learning for anyone who want to truly achieve financial freedom. Debt relief helps you get out of debt. Financial management will teach you how to stay out of it.

In essence, you can say that financial management is a type of debt solution. It can solve one part of your credit problems. If you think about it, you got into so much debt because you cannot manage your finances well. You had no control over where your money goes and how you spend your income. Because of that, you spent left and right without realizing that you were spending more than what you can actually afford.

In truth, you can get out of debt by using one financial management. But you cannot achieve financial freedom without it - even if you stay true to your debt relief program. So if you want to solve your credit woes, this should be one of your priorities.

Financial management allows you to take the right step towards an abundant life without any debt. To acquire these management skills you need to practice the following:

Live on a budget. A budget plan is one of the main things that will help you manage your finances. This plan will help you identify your income and in effect, understand just how much you can afford to spend every month. It also helps you monitor your expenses. Budgets are usually tedious because you have to identify all the details of your finances. But that has rewards because it keeps you within your means. Which leads us to the next skill that you need to develop.

Pay in cash. When you eliminate credit cards from your mode of payment, you can stay within your budget. If you pay for everything in cash, you are kept from acquiring debts just to complete a purchase. That is a great way to control your spending.

Think before you buy. It is important that you always reconsider before buying anything. Apply the ten second rule before you bring a product to the cashier. Think hard if it is necessary or you can live without it. If something can contribute to grow your income, invest on it. For bigger purchases, use the 30 day rule. A month should be enough to erase any urges to buy something because of a hype. But if it is necessary, then you can expect that the feeling of wanting to buy it will not go away.

These are only a few of the financial management skills that you need to develop. This will keep you from acquiring more debt as you pay them off using your limited funds. These skills will also help you limit your spending so you can grow your debt payment fund and finish paying your credit faster.

Wednesday, February 20, 2013

Tips When You Have Maxed Out Your Cards

Credit card companies allow consumers to acquire products and services despite the lack of cash on hand to pay for them. However, you can only use it up to a certain amount. That is known as your credit limit. This restriction is based on your ability to pay off debts. The wealthier you are, the higher the credit limit will be.

Sometime (or most of the time), consumers do not monitor this limit. The only time that they consider it is when their cards are refused upon payment. When you have reached your credit limit, it means your balance is equal or higher than that amount. If this limit is $10,000 and the accumulated purchases plus interest and finance charges is equal or higher than that figure, that means you have maxed out your card. If you have more than one card and you have maxed them all out - then you are in a serious debt situation.

What do you do to rectify the situation? First of all, stop using your cards. Anyway, you cannot use it since you have reached the limit but it will still help to take steps to keep your cards away. Store it in a place that will keep you from using it. That way, when you start paying it off and reducing the balance of your card debts, you will not be tempted to use it again.

When you have your cards secure, you can begin to plan how to pay off your debts. There are debt consolidation programs that you can use to help in your debt payments. Maxing out your cards means your minimum payments have grown into a significant amount and you may need help to meet that requirement.

Debt consolidation has two programs. One involves debt consolidation loans that will require you to get a big loan that is enough to cover your other debts. The other involves a debt management company who will assign a debt counselor to help you distribute payments to creditors based on a plan that you both will make.

These two options involve stretching your credit over a longer period so you can make smaller monthly payments. The usual term is 5 years. With the smaller monthly dues, you can live comfortably with enough for your daily expenses while staying true to your debt payments.

You should also be able to enjoy lower interest rates - but this is not really a guarantee. Although in most cases, this happens to consumers opting to consolidate debts. In loans, you should have applied for one that has a lower rate than your current average interest. In the other option, your debt counselor will try to negotiate with your creditor for a lower interest rate.

So when you learn that you have maxed out your cards, do not panic. There are ways to keep things from turning for the worse. Just make sure you create an effective plan that will both get you out of debt and more importantly, stay out of it.

Tuesday, February 19, 2013

What To Do If You’ve Been Missing Credit Card Payments Due to Sickness

Are you having problems with your debt payments because you had been sick? This is one of the common reasons why people have been missing out on payments. Of course, this is an unfortunate incident that no one definitely anticipated and want to happen. It is most distressing for the individual if their condition led to the acquisition of more debts and their inability to pay off any existing credit accounts.

Instead of worrying about that, you need to concentrate on making yourself well again. That should be your priority. Debt can be really stressful and you need to concentrate on making yourself better so you have the energy to battle your debts.

But that does not mean you ignore your debts completely. As you are recuperating from your condition, you need to inform your creditors about your current financial state. This is the first thing that you should do. It doesn’t matter if you already missed out on a couple of payments or you are just on the brink of doing so. Pick up that phone and call your creditor. But before you do that, make sure you have the necessary documents that will prove that you are indeed in a severe medical condition. It is common for them to ask for proof so make sure you are ready with the evidence.

When you are ready, call and inform them that you are unable to continue with your current payments. State that this is because of a sickness that requires you to pool in your limited resources for the medical treatment needed to get better. Let them know that you have every intention to pay for your debts but given the situation, it is just not possible. Discuss with them the options that you have like debt settlement or bankruptcy. In most cases, they may opt for the former as bankruptcy could result in them getting nothing from you.

Send a formal letter after the phone call to state your current condition. Actually, you can start by sending a letter prior to making the call. Either way, a letter is more important than the call.

Informing your creditors will stop the collection calls from happening and thus head off unnecessary stress. As you keep them in the loop, you should be able to satisfy your medical treatment expenses while dealing with your debt problems.

If you need help in settling your debts with limited funds, get in touch with a reliable debt settlement company. They can help take over the negotiation with the creditors so you do not have to deal with any of the stress and you can concentrate on getting well.

Monday, February 18, 2013

Beware of the Credit Card Minimum Payment Pit

If you had been content on making the minimum payment on your credit cards, then this is a wake up call for you. Contrary to what you may believe, paying only the minimum amount stated on your credit card bill cost you more than what you believe. That amount is only 4% of the principle amount that you owe. That the the only percentage that you are paying for and the rest are finance charges and the high interest rate what cards are notoriously for.

This article will prove to you why paying more than the minimum can save you more in the long run. Financial experts will always tell consumers that sticking to the minimum payment is the most common pitfall that can trap you. It gives you a false sense of complacency - thinking that you are solving your debt problem when in truth, you are not. Most of us want to minimize our debt payments so we can allot more of our income for our daily expenses. That can be satisfied by the minimum payment and will keep your credit score from suffering. However, this method will maximize the extra payments that you will make outside of the actual debt that you owe.

It all makes more sense if we do a bit of number crunching. Let’s us assume that you have $5,000 worth of credit card debt with an APR (annual percentage rate) of 20%. Your minimum payment is $200. If you stick to this amount, it will take more than 11 years (11 years and 11 months to be exact) to finish paying your credit card balance. Not only that, you will be paying more than $3,400 worth of interest. That amount could have been spent on something more enjoyable right? And this is with the assumption that you will no longer use your credit card.

But if you add $50 to the minimum to make your monthly payment $250, you can pay off your debts in 25 months - that is 2 years and 1 month. That is a significant reduction on the 11 years that you need to spend finishing your debts if you have stuck with the minimum amount. Not only that, you will only end up paying for $1,133 worth of interest.

The more you increase the amount you pay every month, the less time you will spend paying for your credit card debts. If you make your monthly payments bigger, like $300, you only spend 20 months to completely pay off your debts. The interest amount also becomes a little over $900 only.

Imagine all the savings that you will get by skipping on your morning Starbucks latte or opting to take a brown bag for lunch everyday. It doesn’t have to take years to finish your debts. You can make the decision to finish your debts sooner by paying more than the credit card’s minimum payment requirement.

The decision is yours to make.

If you find it hard to meet the minimum payment, then opt for other debt relief options. Programs like
debt negotiation may be a better alternative than sticking to the minimum.

Friday, February 15, 2013

How to Go on a Debt Diet to Avoid Bankruptcy

If you are in debt and you want to avoid bankruptcy, you may want to consider going on a diet. No, that does not literally mean starving yourself so you can grow your debt payments.

Did you know that getting out of debt is the same as reaching your ideal weight? The results may be different but after analyzing things, you will realize that the principles to succeed in both endeavours are the same. Let us look as some of the principles needed to reach your intended weight.

You begin by identifying your target weight. Before you go into a diet, the first thing that you do is to identify your target weight. When you are in a debt diet, you also have to define your goals. This will help you create your plan of attack.

You create a diet plan. As mentioned, you will be needing a plan to help you reach your goals. When you are trying to lose weight, you come up with a diet plan that will include what you can and cannot eat. It also shows how many times you will exercise to help burn off the fat. In your debt relief effort, this will be your budget, spending and payment plan. You can actually opt to create all three or just two of these. The important thing is to have a plan that will serve as your guide throughout the whole process.

You watch what you eat. When you want to lose weight, one of the things that you need to do is to watch what you eat. You make sure that you do not eat more than what you need to survive. The same is true for your debt diet. You watch your expenses to make sure that you will not spend more than what you can afford. Not only that, you also watch that the expenses made are only those necessary for you and your family to survive. This is to maximize the disposable income that you need to pay off your debts.

You exercise to get rid of the unwanted fat. Exercising is very important. This will help you get to your ideal weight faster. The counterpart of this activity in debt relief is any endeavour that you make to lessen your debts. That could be increasing your income or lowering your expenses to grow your debt payment fund. You can also include here your efforts to grow your emergency fund. Eventually, after your debt payments, your savings will be your safety net to make sure that you stay out of debt.

Continuous plan even after reaching ideal weight. When you reach your ideal weight, you cannot go back to eating whenever and whatever you like. Otherwise, all your efforts will be for nothing because you will gain what you worked so hard to lose. The same can be said for debt. If you fail to continue monitoring your spending, live on a budget and save your extra money, you may end up acquiring debts once more.

Thursday, February 14, 2013

How to Stop Acquiring Debt

When you are in any debt relief program, it is a must that you stop acquiring debt. If not, all your efforts will be for nothing. However, that is easier said than done. If you got yourself in debt, that means you have some problems with financial management. You need to work on that while you are getting yourself out of debt.

One of the things that you need to learn, if not the most important, is to stop taking in more debt. This will allow you to control your current financial condition. Making your debts worse will only result in a longer debt relief program. Instead of enjoying your debt free life as soon as possible, you will put yourself further into debt.

So how do you stop acquiring debt? Simple, you live within your means. To do that, you need the help of a budget.

First of all you should make a list of your income and expenses. Since most debt payments are made on a monthly basis, you should input your monthly income. It is also important that you do not include irregular income - like your commissions. If you have to, put in the lowest amount that you get. That way, you can keep your budget from falling short.

For your expenses, you need to include every detail of your expenditure. That includes your food, groceries, clothing, transportation, rent (if applicable), schooling expenses and other things that you usually spend on. Again, this should be every month. If you have annual or quarterly expenses, convert them into monthly expenses.

By identifying these two categories in your finances, you have created your budget. However, it is not yet over. The goal of your budget is to provide you with the information that will help you control your spending so you live within your means. You still need to make sure that your expenses is lower than your income. If not, then you need to tweak your finances so your income is bigger. You can do that by increasing your income or by cutting back on what you usually spend on. The budget can help you spot the unnecessary expenses that you should stop incurring. Or if you are only spending on the basic expenses yet you still fall short, you know that the problem is your income and that it has to grow.

Of course, creating a budget and identifying your income and expenses is not the only thing that you need to work on to stop acquiring debt. You also need to save up for any unexpected expenses. Accidents can happen and your source of income can fail all of a sudden. To help you survive these situations, you need to build up your financial security. Saving is the best way to do that. Grow your emergency fund and save up your extra money. That should give you and your family a more secure future.

Wednesday, February 13, 2013

How the Government Helps with Debt Relief

While there is no direct financial help from the government, you will find that there are a lot of programs in place that will help consumers get out of debt easily. One thing that you need to understand is that your debt continues to be your responsibility. Despite the shaky economy that contributed to your debt problems, amassing so much debt remains to be your doing.

So what can you expect from the government? Well first of all, they have put into place various laws that will protect consumers from any abusive practices. Two of the most prominent are the Fair Debt Collection Practices Act (FDCPA) and the Telemarketing Sales Rule (TSR).

The FDCPA targets credit card companies and collection agencies. This act lists how creditors and collectors should conduct their collection efforts. If you know the rules involved in this, you will understand your rights as a consumer. You will know that you should not be threatened, harassed early in the morning or late in the evening and be told lies just to get you to pay your debts. Some collection practices are very abusive and you need to know that this is not legal. In fact, you can report them the the authorities - specifically the Federal Trade Commission (FTC) or the State Attorney General.

Another act that you need to be aware of is the TSR. This targets the practices of debt relief companies. If you want to get out of debt, you will naturally look for a program that will help you achieve that. This act is applicable for the debt relief options that involve third party companies.

When people all over the country started to lose their jobs, debt problems started to rise. That resulted in people getting desperate to achieve freedom from debt. Unfortunately, that also resulted in several debt scams. As people became desperate, other took advantage and offered debt solutions that did nothing but to put the debtor further in debt.

This is where the TSR can help. It tells both consumers and legitimate companies how they should act. You need to be aware of this rule so you can differentiate the scam from the not.

These are only are few of the debt relief laws that consumers can benefit from. You should also be aware of the financial aid that low income individuals and household can avail - that can certainly help families provide for their basic necessities while paying off their debts.

Ultimately, knowledge will help you get out of debt. Regardless of the debt relief option that you will choose, this will be your best defense against getting scammed.

Tuesday, February 12, 2013

Tips in Creating a Debt Payment Plan

While a debt relief professional will help make getting out of debt easier, there are tools that you can use to do things on your own. If you want to accomplish debt relief on your own, you need to create an effective debt payment plan. This plan is different from your budget plan - which, incidentally is also a useful tool in any DIY (do-it-yourself) debt relief option.

Creating a payment plan will begin with your budget. This budget plan will help you by identify your income and the various expenses that it funds. It will help you separate your wants and needs. At the end of your budget, you should be able to compute for your disposable income. This amount is what you can use to help pay off your debts. To compute for the disposable income, you need to deduct your expenses from your income.

Once you have your disposable income, you can proceed with the actual payment plan. You begin by listing all your debts. Put your priority debt at the top of the list and put the next priority after that and so on and so forth. Make sure you input details like the credit account, amount owed, minimum payment requirement and the due date. These details will keep you from missing your due date and making the wrong payment.

When all your debts are listed, get your disposable income and distribute the funds according to the minimum payment. One of three things can happen: you can have more than enough of your disposable income to cover all the minimum; you can have just enough income for all the minimum; or your income can fall short of the required minimum.

In the first scenario, all you have to do is to get the extra amount after all the minimum requirement has been met and you put that in your priority debt. The idea is to pay off that debt faster. Once you finish that, you can proceed to your next priority and so on.

If you fall under the second scenario, you need to go back to your budget and grow your disposable income first. Since this figure is dependent on your income and expenses, you can either increase your income or lower your spending. Any of the two is effective in growing your debt payment fund. When you are satisfied with the amount, you can proceed to implement the same actions as the first scenario.

But if the third scenario is more applicable to your current situation, then you need to see if you can grow your funds further by increasing your income or lowering your expenses. If that is still not enough, you need to opt for debt relief programs that will allow you to make lower monthly payments on your credit obligations.

As you pay off your debts, you will feel the motivation to go on and pay off the rest. The progress may be slow but you can speed things up by hiring a professional to help you with a debt relief program. The important thing is to understand how your finances can handle your debt payments - something that your payment plan can help you accomplish.

Sunday, February 10, 2013

How to Use Debt to be Successful

Did you know that your debts can actually help you be successful? If you research on how wealthy people achieved success, you will realize that it all boils down to proper financial management. Millionaires learned how to live within their budget and would usually choose to spend only on things and investments that will help grow their money.

So how does your debt come into play? The answer to that is simple. If you really want to get out of debt, you will realize that you need to incorporate proper financial management skills to accomplish that. That is how you use your debts and turn it as your fuel for success. Here are the habits that successful people have that are also required to achieve debt relief success.

Creating a Budget Plan. A budget plan will allow you to monitor every penny that is spent from your income. This will help you ensure that your money is only going to expenses that matter to you. Not only that, it creates a monitoring tool for your debts and the debt payment fund that is needed to accomplish your debt relief program.

Think Before you Spend. Successful people always act with a purpose. They will never go or spend anything on things that will not contribute to their growth. This is why you need to think before any expense is made. If you come across something that you want to buy in the mall or in the grocery, use the ten second rule to think if you really need that certain product. If it is an expensive expense, give yourself a month to think things over. Not only can you use that time to think about that purchase, you can also save up for that expense. If the urge to make that purchase is because of a hype, you will lose that feeling soon enough.

Live Within your Means. If you look at how the rich live - especially the self made millionaires, you will realize that they live within their means. Not only are they wise spenders, they never spend more than what they can afford. Given your debt condition, spending for things that you cannot afford is a big no-no. This is why credit cards should be used wisely and only if necessary. If you are not careful, you may end up acquiring more credit card debt - instead of getting rid of it.

Any negative situation brings an opportunity to grow and be successful. Even if you feel discouraged because of your debts, take heart because you can get out of it. Armed with the determination and discipline to develop the right habits, you can solve your debt problems and make sure you stay out of it to live a financially successful life.

Friday, February 8, 2013

Using Your Budget as a Debt Management Tool

Your budget is more than just the listing of your income and expenses. It can be a very effective debt management tool.

Debt management is a type of debt relief option that will allow the debtor to pay for their debts according to their financial capabilities, without having too much effect on your credit score. That is probably two of the most important things that debtors look for before settling with a debt relief option.

In this debt relief option, you will be assigned a debt counselor that will assist you in your efforts to get out of your credit obligations. One of the first things that they will do is to sit down with you to identify how much you can afford to pay your debts. They will discuss your finances so you are able to create a budget that will serve as your roadmap throughout the debt relief process.

You can choose to go on your own or you can choose to continue working with the debt management professional. But if you choose to do everything yourself, you will find it a lot easier if you stick with your budget plan.

The characteristic that will make your budget plan most helpful is the list of expenses. When in debt, this is one of the first things that you will change - how you spend your income. Even before you decide to increase what comes in month on month, you will first check how you can save.

While creating your budget, you have to separate the wants from the needs. The latter will involve the expenses that is required for you and your family to survive comfortably. The wants include the entertainment costs and other spending that you can live without. If you feel that your debt payment can increase further, then you concentrate on your want list.

Ultimately, your budget becomes your best debt management tool because it will help you control your finances so you know what to expect for your debt payments. More than that, it will teach you how to live within your means. One of the goals of debt management is helping the debtor stay out of debt.

Your budget will not only keep you from acquiring more debt, it will train you to stay debt free once you have made the last payment to your creditors. This is probably the most important benefit that you can get from your budget.

Thursday, February 7, 2013

Choosing a Debt Relief Option Based on Your Financial Situation

If you are in debt and you want to get out of it fast, there is a specific debt relief option that you take. It all depends on your financial capabilities. If you have to choose an option to help you get out of debt, you need to consult your finances first. It will tell you just how much you can afford to put aside for your debt payments.

While all financial situations are unique, we can classify them into three different categories. The first involves those with enough income for both basic expenses and debt payments. The second involves those who have enough for basic expenses but can barely meet the minimum payments. The last are those who have barely enough for the basic expenses and nothing for their debts.

Among the three, the first category is probably the one that you want to be in. Being in debt is not a problem as long as you have the means to pay for it. In this financial situation, you can opt for the snowball or avalanche method wherein you will pay for all the minimum of your credit card debts while choosing a few priorities. Your priority debts will be paid more than the minimum requirement.

If you want to consolidate your debts, you can opt for debt consolidation loans or debt management. Both will allow you to have lower monthly payments (at least, lower than what you average at the moment) by stretching your payment term.

But if you fall under category two, you are in more trouble than the first. Having enough to feed your family and take care of basic necessities is comfort enough but if debt collectors are bothering you, it is quite hard to ignore the stress of debt. However, there is a debt relief option that you can avail if you still want to pay your debts. This option is known as debt settlement.

This option involves a risk because you will be defaulting on your payments to prove to the creditor that you are in a financial crisis. As you wait for your creditor to take notice that you have stopped paying them, you will put aside money as your settlement fund. You or a debt negotiator that you will hire will talk to your creditor to get them to settle with you. The idea is to agree to a settlement amount that you will pay for and once you have completed that, the creditor will forgive the rest of your debt.

In the last scenario, having barely enough for basic necessities, let alone debt payments, will point you towards bankruptcy. This is the least liked by both debtor and creditor because of credit implications and debt discharge, respectively. But if you have no asset to liquidate, this is the best option for you.