Sunday, April 28, 2013

Best Way To Solve Those High Interest Rates On Credit Cards

Credit card debt is one of the things that are troubling the average American today. With over $849B of credit card payables, this ranks as the third highest debt in the country. The thing that makes it very difficult to get out of is the interest rate that you have to pay off on top of what you actually owe. It is one of the highest rates in the industry. And besides that, you also have to pay for finance charges and if you are late for even just one day, over $30 of late penalty fees.

The best way to solve your high interest rate on credit cards is to stop using your cards. If you got yourself in so much financial debt because of your cards, you need to stop purchasing items through them. At least until you learn how to discipline yourself about their use. That is the fastest way to not be bothered by the interest rates - stop acquiring more debt.

To make this possible, you need to start living within your means so the cash that you receive is enough for all your expenses. You can accomplish this by setting up a budget that clearly defines how much your income is every month and the various expenses that should be prioritized.

Even if you are working with the best debt relief program, if you do not stop acquiring debts, you will find it hard to reach your goal of debt freedom. Work on your budget first before you focus your eyes on the debts that you currently have.

The budget that you will create will help you identify how much you can afford to send towards your debt payments. This is very important in choosing the program that will get you out of your credit problems.

As you define all of these and you understand how your budget should be used to pay off your obligations, you can turn your eyes towards your debt payments.

One of the first things that you should do to deal with the high interest on your cards is to call your creditor. If you are finding it hard to pay it off, you should call them to ask how you can lower your interest rate. Tell them of your sincere intentions of settling what you owe but under the present circumstances, you can no longer meet the payment requirements. You may be surprised at how amicable they can be if they see your sincerity.

If that does not produce desired results, you can opt for debt consolidation loan as a way out of your credit card debt. One of the benefits of this debt solution is the reduction of your interest rate - at least if you do it correctly. If you are able to borrow a low interest loan through your good credit score or a collateral, then you can say goodbye to your interest rate problems. Just make sure you stay away from bad credit loans as these have high interest rates.

Another option is balance transfer cards. For a certain fee, you can transfer your high interest credit card debt to a new one that has a zero interest introductory promo. That will give you at least 6 months of no interest so you can make more significant payments towards your credit card balance.

These are only a few of the options that you have to help with your high interest card debt without putting too much negative effect on your credit score. Before you decide, know your options and learn from your mistakes. Start making the right choices towards your finances to keep yourself out of any kind of debt.

Friday, April 26, 2013

All About The Chapter 7 Bankruptcy Process

Consumer debtors have two options when filing for bankruptcy: Chapter 7 and Chapter 13. Anyone who files that they are bankrupt will have to undergo the means test. This test looks at the income of the filer and when they have an above median average salary (at least in the State where they files), they will be forced to submit to the Chapter 13 bankruptcy process. This involves a repayment plan that the court will decide on and mandate the consumer to follow.

But if the filer is found to be qualified for Chapter 7 after the means test, that could lead to all their debts being discharged. This means they do not have to pay cash towards any of the debts included in the bankruptcy filing. To better discuss Chapter 7, here is the usual process involved.

First is the professional consultation. This is very difficult to do on your own. A bankruptcy lawyer is required to help you understand all the legal details. There are various documents to be submitted and it can be quite confusing. Bankruptcy is not something that you can make a mistake and just apologize so just hire the lawyer to keep it from happening.

Your lawyer will require you to submit a lot of information and you need to comply. Do not withhold any details - even your properties and valuable assets will have to be declared. If you keep some assets and they are discovered, it will cause you some punishment from the bankruptcy court. Give them a list of your assets and the value of each. This can be placed in a Statement of Intention that will also indicate the assets that you want to keep.

You also have to give them your income details and also that of your employment. Lastly, you will be asked to list down your creditors and the amount you owe each of them.

Before the actual filing, you will be required to undergo a credit counseling program. You need to enrol with an agency or company that is approved by the courts or the US Trustee. This is needed within 6 months prior to the filing. It is the effort of the court to educate filers about other bankruptcy alternatives.

Once accomplished, the lawyer you hired will file the petition. All the creditors on your list will be notified anytime during the first 15 days after the filing. At the same time, a bankruptcy trustee will be assigned to analyze your finances. They will be in charged of scheduling any meetings with the creditors and court hearings. One of the meetings is known as the 314 meetings wherein the creditors have the chance to question or object the bankruptcy petition.

You also have to undergo Debtors Education that aims to give you the knowledge that will keep you from another bankruptcy situation. This is another requirement before the completion of the bankruptcy process.

If the creditors all have no complaints or objections, the court will decide the properties that will be liquidated, who will get the proceeds and so on. If there are no properties to discharge, then you will proceed to the discharging of the debt.

All of these take about 2 months to complete. Once that is accomplished, your next step is to start rebuilding your credit score - which should have gone through a significant negative impact since you filed for bankruptcy.

Monday, April 22, 2013

How To Use Your Credit Cards So It Doesn't Lead to Debt

Most of the time, people burdened with credit card debt are encouraged to give up using them for purchases. The whole concept of these plastic cards teach consumers bad spending habits. It gives them the ability to buy things even if they do not have the cash to pay it off. That makes it difficult to live within one’s means.

However, there are instances wherein people are forced to use their credit cards. If you find yourself in this situation, there are techniques to use them without putting yourself in debt for it. Here are some important guidelines when using your card.

If you will keep a credit card, make sure you impose rules as to when you can use it. If you want to keep a card for emergencies, define what constitutes an emergency. It is best not to use card for your basic purchases. Make sure the definition is clear and you can stick to it.

Secondly, you need to go back to the fine prints of your credit card agreement. This is the piece of paper you signed when you applied for your card. You need to find out the grace period of your account. This is the time between the end date of your billing cycle and the due date of your billing statement. If you pay your purchase in full within this period, you will not be given an interest. That is the best way for you to keep your payments small. If you cannot find the signed agreement, call your credit card company to inquire.

After every purchase, you will always be required to sign a slip of paper with the amount of your purchase. Make sure that you encircle the amount to guarantee that it is the right amount that should be charged to you. Then you can sign the paper. Keep your copy for reference purposes and be ready with that amount when the billing statement comes in.

If you want to use it for expensive purchases, try not to go over 30% of your credit card limit. You should also create a payment plan to help keep track and make sure that the contributions are made on time.

These are only a few of the things that you should do so you can continue using your credit card without it leading to any debt. In truth, using these cards does not have to lead to destruction - at least if you use them correctly.

Practicing smart spending habits will guarantee that you will not get into any financial troubles. Even if you are paying in cash, there is still the possibility of you putting yourself in debt. Credit cards are not the sole culprit in debt. You need to develop the right habits that displays the right financial management skills. Know how much you can afford to spend every month and stick to it. You should also build up your reserve fund so that you will not miss any payment in case your credit card payments end up being compromised.

Friday, April 19, 2013

Tips To Keep Your Finances On Track And Be Debt Free

Keeping your finances on track is an important part of living a debt free life. Regardless if you had been able to keep up with debt payments or you are drowning in it already, you have to understand that this is one monitoring that you have to fulfill. It allows you to guard your expenses and to make sure that you are prepared for any eventuality that can compromise your current financial standing.

Here are some tips to help you accomplish this task.

First of all, the key to put your finances on track is to know your personal finances. And if you are in debt, you need to know how much you owe. This is very important. If you want to fix something, you need to know what you need to fix, how much damage has to be fixed and your capabilities of fixing it.

You should also get into the habit of checking your credit score as often as you can. It allows you to monitor your debts and see if you became a victim of identity theft or any unauthorized financial transactions made under your name. There is a way to get this for free. The three major credit bureaus are mandated by the government to provide you with a free copy of your credit report every year. You can go to the Annual Credit Report website and you can download one copy from any of the bureaus. Do this on three separate occasions every year and you should be able to monitor your credit without spending for anything.

You also have to monitor your accounts strictly. Make sure all your email address and contact information are accurate so that any missed payments that you may have overlooked will be reported to you. Know when your due dates are and make sure that you pay them on time. In case the credit card company fails to send you your statement, inform them before your due date is up.

Saving is also a good idea. While it will not directly help you monitor to keep your finances on track, it will definitely serve you once your current income is compromised. It allows you to stay true to your usual payments even when there are unexpected expenses cropping up.

Budgeting is one tool that can really help you accomplish all of these feats. It is a great monitoring tool that will allow you to maintain a firm grasp on your financial activities. Your budget will effectively help you manage your finances and control your spending so you are able to prioritize the important expenses.

Being debt free and making the commitment to maintain it means you have to lower your lifestyle. It is not even enough that you lower it up to what your finances can afford. You have to lower it further than that so that you have the extra cash to add to your emergency fund and save up for your retirement.

If you find one that is worthy, get a mentor. They can be your spouse, partner, parent or a close friend. Find someone whom you want to emulate when it comes to financial management. Get their advice and let them know that you want to enlist their aid with your financial problems. Having someone to talk to will really help you overcome your difficulties.

Monday, April 15, 2013

Lifestyle And Financial Lies That Can Ruin Your Debt Freedom

Did you know that we could have prevented major financial problems if we only knew how to detect the lifestyle and financial lies that society dictates? There are several instances wherein you could have made the right choice but when you looked at the “norm”, the bad choice seemed like a good idea in the end.

This is actually when you stop looking at what is around you and you focus on what you want to happen in your life. There are various lies that you need to look into as it might be ruining your chances of getting a debt free life.

One lie that you need to be aware of involves credit approvals. When you are offered or approved of a credit limit, that does not mean you should get it. A card with a high limit will only hurt you if you do not know how to manage it. Similarly, if you are approved of a high mortgage loan, that does not mean you buy a home that reaches that amount. While lenders and credit companies look at your capabilities to pay your debt, you need to focus on what you really need. Even if you can afford a 5 bedroom home, do not buy it if you only need a 3 bedroom house.

In connection with that, another lie that aging people are faced with involves buying a home. Some people view home buying as a sign of maturity and financial stability. However, this decision should not be made based on your age. It has to be done with a huge consideration of your financial capabilities and your plans for the future. One thing about debt is it can dictate the type of life that you will live. If you want to pursue a career that is more personally fulfilling and yet low paying, that will not be possible if you have so many debts to pay off.

Another lie that is quite common for young individuals involves their savings. Some of them forego building an emergency fund because they think that they will not need it. They dip into their retirement money since it is a long way off. No one can be sure of what the future will bring but that does not mean you should be careless. While it is right to enjoy life at the present, do not be too irresponsible with it that it comes to the expense of your future financial stability and security.

People also delude themselves into thinking that any financial problem that they have will go away if they ignore it. Ignorance may be bliss but that will not make your problems any better. In fact, it will get worse. You need to think of a debt relief option that will allow you to solve your financial difficulties now.

Be wary of all these lies and make sure that you get a firm grasp of what you want out of your life. If you want a debt free life, then you need to forego life with a credit card as it is a pitfall to get into debt. It’s all about prioritizing what is important to you and trying not to be swayed by the norm in today’s society.

Friday, April 12, 2013

Techniques When You Are Dealing With Debt Collectors

Debt collectors are probably one of the most disliked people in the financial industry. It is quite sad to be in their position actually. They are only doing their job yet people seem to hate them. Although this negative reputation may not be unfounded because some of them do practice abusive behavior when collecting from consumers. But the bottom line is that they are just doing what they were hired to do. You should always remember that your debt is your responsibility. If they are collecting from you, they have every right to because you had been delinquent on your payments.

When collectors are brought into the picture, that means your original creditor had given up on your account. They have marked it as something that they will no longer profit from. It means that you had been late on your payments for a couple of months already. The chances of your credit score being in trouble is not unlikely to happen.

While the situation may seem ugly and stressful already, you need to keep your head together. There is a silver lining in this seemingly bleak scenario - as long as you know how to deal with your debt collectors.

You have to know that you have the option to stop collection agencies from communicating and harassing you for your debts. However, that usually implies that you have no plans of paying them off and they may be prompted to sue you for your debt. You don’t have to subject yourself to that risk. There are techniques to help you deal with these annoying collectors.

First of all, avoiding the calls of the collector will not do you any good. You should entertain them. You have to treat them as professionals. Be polite even when it is evident that they are being threatening. Sometimes keeping a cool head will get them to lower their tones and be more friendly. You want to show them your good side as it will help you during the negotiation process.

When you are negotiating with them, start with your payment term. As mentioned, at this point, you have been late on your payments - usually because you are in a serious financial crisis and you cannot afford your old terms. Keep in mind the amount that you know you can afford. Never agree if you know that your current finances cannot pay for it. Keep mentioning bankruptcy to get them to agree to the ideal amount that you can afford to pay.

Ask the collector about your credit score too. How will all of this be reflected on your score. Include that in the negotiation. If you can pay them a big amount, you can ask them to remove the record on your credit history. Or if they will not agree, you can ask them to mark your credit record as current or settled - whatever is applicable.

It will help your case if you read about the FDCPA or Fair Debt Collection Practices Act. This law is implemented by the FTC or Federal Trade Commission. It states the right practices of collectors so you know when they are overstepping already and abusing your rights.

Obviously, the only way to appease the collector is to give them the assurance that you want to pay them but you need to base it on the amount that you can afford. If you ever come into an agreement, make sure that it is in writing. Don’t send them any amount until you have a written agreement in your hands.

Wednesday, April 10, 2013

Real Effects of Debt In Your Life

Debt can be very destructive if you are not careful. This is especially true if you mostly have credit card debts. The interest rate of this type of debt can make your balance grow exponentially. If you do not make significant contributions, you may find yourself paying off your debts for a long time.

What makes debt even more dangerous is the effects that it has on your life - especially your future. It can have serious negative effects on the quality of your life in the next few years.

One of the things that can be affected is your career choice. A lot of people want to switch careers but are hindered by the need to have a bigger income. They opt to practice their craft in the corporate world - sacrificing professional fulfillment just so they can satisfy profitability priorities of their employer. Some of them grow tired of the busy work schedules but they have no choice but to stick to it because of the debt obligations that they have to meet.

Early retirement is also another sacrifice that you will make. Some of us could be good candidates for retirement at an early age but we cannot do so because of the debts we acquired in the past. We are all tied to these past purchases that have sometimes grown into a big amount because of the bad financial choices that we have made.

Debt, when it has gone out of control, can also ruin your relationships. A lot of marriages have fallen apart because of financial difficulties. If you cannot practice wise financial management skills, you may find yourself hurting your spouse or partner in the long run. As you restrict your household budget because of the debt payment that you now have to include, resentment may rise in the home. You will be lucky to have a supportive family but this is not always the case.

Living a quality and fun life is also something that you may have to forego. One of the first things that you will get rid of when you are in the midst of debt payments is your fun activities. Of course, you are still encouraged to have fun to maintain the motivation that is needed to complete debt payments. However, you may have to change certain activities to suit your limited budget. If you used to buy expensive gadgets as they became available, you may have to think twice before you do that again.

Any financial plans that you have in the future may also have to be put on hold - especially if you need to get a loan for it. These include buying a home or starting the business that you’ve always wanted to own. Having a lot of debt will lower your credit score and that could make you a high risk borrower. The result of that is a high interest on your loan - which is not a good idea. Also, lender may disapprove of your loan if they see that you have a high debt to income ratio.

The lesson that you need to learn from all these effects is the value of simply saving up for a purchase instead of getting yourself in debt just to get what you want. For instance, if you want to buy a car, you can always save up for a modest and sturdy one instead of buying a luxurious and expensive model. That eliminates the need for your to get a car loan that you have to pay off with interest.

Make smarter spending choices and realize the importance of simply saving up for a purchase. In the end, that is a lot better than spending years in the future paying off a debt for a product that may have lost its appeal already.

Sunday, April 7, 2013

Eliminate Debt Temptations: Live Without Your Cards

If you analyze it carefully, credit cards are created to put us in debt. The fact that it allows us to purchase things that we cannot afford at the moment develops a very bad habit of living beyond our means.

A majority of the people owning cards have found themselves to be in debt at one point or the other. Some of them are able to recover without any problems. These are the people who have sufficient income to cover their payments and keep the whole debt from going out of control. They are the lucky ones.

Unfortunately, a lot of people who find themselves buried in credit card debt usually do not have enough income to make significant contributions to their current balance. This results in a debt that continues to accumulate every month because of high interest rates and other finance charges. Even if you get a debt relief program that will allow you to pay off your debts despite your limited resources, one way to help you stay out of debt is to eliminate your cards from your regular purchases.

This is not to say that you will completely live your life without credit cards. You can keep one card so you are able to maintain a good credit score for future financial assistance needs. What you need to do is to remove the habit of using your cards for unnecessary purchases.

But how do you eliminate credit cards from your life?

First things first, pay off your current balances. You cannot close an account if you still have pending payments to make. There are many debt relief options that will help you pay off what you owe. You have debt consolidation loans, debt management, balance transfer, debt settlement and even bankruptcy as your options.

Once you have paid off or had your debts discharged, you need to close your card accounts. Choose the one with the lowest interest rate and keep that. When we say keep it, that literally means you store it in a place where you will not be tempted to use it unless it is an emergency. That does not include your wallet or your purse.

You need to commit to a cash-only purchase if you really want to stay away from debt. This is especially true for your basic expenses. Financial experts believe that people find it harder to part with actual cash. This makes cash purchases easier to control. You get to think twice before you spend your money. This is not true for credit cards. So if you want to have a tighter grip on your spending, use only cash.

Adapt a budgeting system that will allow you to monitor where your money goes to. This is important so you can make sure that your limited income goes to your priority expenses. Not only that, it will give you an idea as to how much you should spend for food, transportation and other categories on your budget.

Making the decision to eliminate debt temptations will help you live a debt free life. On top of that, you need to practice the right financial management skills. It takes a bit of getting used to but should you succeed, you will eliminate a lot of stress from your life.

Friday, April 5, 2013

Is Debt Financing A Good Option For Small Business Debt?

Debt is not uncommon for businesses. This is especially true when your business is just starting to take off or you have more debts than your profits can handle. You need the finances to cover your overhead expenses. Investments reap profits and if you lack the capital to finance that, you can always look for debt financing to help you out.

Financial analysts say that any debt that is used to help grow your wealth is a smart debt. It will not only help your business stay afloat, it will also allow you to implement marketing strategies that will grow your profits. To reassess this point, here are a couple of reasons why debt financing may be the right solution for your small business debt problems.

First of all, you get to keep your company. Even if you put up business assets as collateral, you still own your company as long as you keep up with your debt payments. You get to make the decisions as to how you will spend the money that you just loaned. You keep full control of everything.

You can opt to split that amount to cover for your overhead expenses and grow your profit. Or you can put a part of that on your debt payments. The important consideration is to have a plan for the money that you are getting. You need to include in that plan how you intend to pay it off - otherwise, you could risk losing your business altogether.

Another reason why debt financing is a good option is because after the debt payment, your obligations to the lender are over. If you are able to grow your business or get the profits rolling because of your loan, then your problems should be over. If you used it to pay off your debts, your limited profits is now free to be used to fund the strategies that will grow your business further.

The lender will have no bearing on the profits that you will gain from the loan that you made. That is yours alone as long as you can pay off the principal of your debt and the corresponding interest rate.

The credit rating of your business will also experience a boost because of debt financing. As you create this new credit account and your business stays true to all the payments, it will create a good reputation for you financial history. It will establish you as a low risk borrower. This will allow you to ask for financial aid in the future with a low interest rate. That will help you in times when you need to borrow an amount to finance a business expansion or something similar.

The great thing about this type of financial assistance is it is only for a short period. If your business has a debt that you need to consolidate, choose this option so you have a solid plan to get your business finances in order. The longest time that you will pay off what you owe is in 5 years. After that, you can enjoy the benefits of your company profits for your own personal wealth or the further growth of your company.

Monday, April 1, 2013

Debt Relief Tip: Grow Your Reserve Fund

Any debt relief expert will tell you that getting out of debt is only one half of the solution towards financial freedom. If you truly want to be debt free and remain that way for the rest of your life, you need to eliminate the cause of your financial downfall.

There are two reasons for accumulated debt. One is poor financial management. This is an internal problem that you can control. It includes your spending habits, budget planning and your overall personal finance management skills. It can be solved by developing the right practices that will help you live within your means.

The other reason for your debt problems involves factors that are beyond your control. These are usually unexpected circumstances that affects your source of income and thus render you unable to produce the resources that will finance your basic needs. It includes job loss, medical illness, accident and even a major economic downturn. It is more difficult to recover from these blows but you need to know that there is a way to help prepare for them.

Growing your reserve fund is a real lifesaver in times of financial crisis. When Americans were faced with the economic downturn in the mid 2000s, even people who practiced wise spending habits found themselves suddenly buried in debt. The reason for this is a lack of reserve or emergency fund. When they lost jobs or had to settle for a low paying one, they turned to their credit cards to finance the most basic needs that they had. We all know how credit cards can be a real pain once the balance starts to increase and you are unable to meet the minimum payments.

If you really want to stay out of debt, you need to grow this fund so that you are prepared for future financial situations that compromises your main source of income.

A lot of people fail to grow their reserve fund because they think that it should be grown quickly. You have to understand that this takes time. Unless you really want to make the appropriate sacrifices, it is alright to make small but steady deposits into your reserve fund. The important idea here is to just start growing it - even as you are paying off your debts. Start with a couple of dollars and as you get used to it, you can slowly increase your contributions every month.

A helpful technique in staying true to your emergency fund contributions is to treat it like a monthly bill that you have to pay for. Include it in your monthly budget so that you are not tempted to spend it. As much as possible, grow this fund in a separate account.

It is also advised that you grow your savings in various banks. Never settle with only one bank because if something happens to that bank, you may lose everything that you worked hard to save. If you want, you can invest your money where it can grow.

Lastly, stop acquiring more debts and start paying off what you owe. Saving for the rainy day and paying off your credit obligations go hand in hand to help you achieve financial freedom.