If youve spent more than your budget can cope with, then maybe youre thinking about credit to help you through January. Many people fear the long, broke month of January. After a lovely Christmas full of joyous smiles January can see a mood swing in the wrong direction. Many of us turn to credit cards to help get through this terrible month. But without knowledge of the financial industry a person without a great income can fall victim to the evil grip of unscrupulous credit companies.
In his newspaper article, Simon Bain of the Herald tells of how one particular bank has been sending credit card applications to people with offers of a credit card with APR of up to 69% (http://www.theherald.co.uk/business/52784.html). This astounding rate applies with a credit limit of 150, while an APR of 41% applies to a credit limit of 1500.
Quick additional sums of money may seem very tempting to people at this time of year, and without consideration a lot of people will be more than tempted. But its not until later that the repercussions of such a high interest hit home. This can lead to difficulties in February, which spill over into March and so on, until before you know it its Christmas again and you have serious problems.
So before you go looking for short-term solutions that could lead to long-term problems, take some time to consider your options so that you can decide what kind of year youre going to have.
There are many cheap and easy ways to get credit card advice this New Year. The best way is just to log on to the web. There are many sites out there dedicated to offering financial advice. One of these sites is http://Moneynet.co.uk. Here you can check out all of your options. There is a great page dedicated solely to providing credit card advice ( http://www.moneynet.co.uk/credit-card-guide/index.shtml ) as well as many pages advising the card with best introductory rate, the best standard rate etc.
So, before you go down the wrong road, check out what your options are this January, and make sure you truly do have a happy New Year.
Managing your money is a big task. But if you want to get by in this world, its something you have to do. It can be too painful for some, so it gets avoided. But for the people who realize it, the pain/reward relationship is well worth the trouble to spend a few minutes managing your money.
After all, money makes the world go round, so make sure you get your share! And the good news is: its as easy as controlling what youve got!
Heres what you need to make sure that you have control over your financial situation. Here are some valuable budgeting techniques to guide you in your expenses and income.
The first thing you want to do is make sure that you pay for your utilities on time and in full every month. Dont wait until its too late to pay them. The second thing you need to do is make sure that you dont have too many credit cards. Only a few credit cards are necessary to get by in life. You should consider cutting up the rest of them. And the third thing you should do you, if your bills have gotten the best of you, is to consolidate them into a single loan. This will enable you to pay them off over time without getting slammed with high interest rates.
Finally, establish a budget for yourself. This seems difficult and thats why most people dont do it. And because people dont have a budget they find themselves in financial straits.
The easiest way to establish a budget is to take a draw a line down the middle of a piece of paper. On the left, write down your after tax household income. Be sure to write down the after tax amount as you want to measure available income only. After all, you dont get to spend the before tax amount, right?
In the right column, list an average of each monthly bill. But you should also include your typical spending habits as well, like eating out, or impulse shopping. Dont forget to include paying off your credit card as part of the bills!
Now that you have a list of income and expenses, see if theres a way to increase your income, or reduce your expenses. Usually youll find a way to do a little to both.
While it seems so simplistic, so few people do it. And yet, creating a budget and sticking to it often separates the successful people from everyone else. Whats stopping you from doing it right now?
Do you dream of living without the burden of excessive debt hanging over your head? Its possible, but not easy. Living debt free requires financial discipline, all the time. To become debt free and maintain a debt free life, try the following three steps:
1. Get rid of existing debt. This is obviously your first step to living a debt free lifestyle. Cut up any credit cards that you currently have in your wallet, purse, or desk drawer and do not apply for or accept any other cards. Pay your bills on time, sending as much as possible to one account while paying the minimum due on all of your other accounts until the account is paid off. Do this until all of your debt has been paid off.
2. Create a budget. Every single person who lives without debt has a financial budget and follows it. Without budgeting for expenses and incidentals, people overspend on unnecessary items and then when things just happen unexpectedly, (otherwise known as unplanned for expenses) these individuals rely on credit cards to make ends meet. Make a list of every monthly expense you can think of. Then, make another list of every incidental expense that you pay throughout the year but not necessarily on a monthly basis. If you usually get 3 oil changes a year at $20 a piece, you need to plan for $60 a year for oil changes, which is the equivalent of $5 per month. Once you have a comprehensive list, subtract your total monthly expenses from your total monthly income and see what is left over. Be sure you include savings accounts in your expenses. Pay yourself first is a good rule to live by. If there is still money left over, congratulations! Use it to pay more on each individual account until everything is fully paid off, or invest in IRA, 401Ks, or even a money market account with high interest rates to help your money earn more money.
3. Avoid credit like the plague. Make all of your purchases with cash and you will never fall into the debt trap again.
Manage Your Money
As you are starting the process to a debt free life, you should be extremely mindful as to where your money is going. Its important that you track your spending habits for a period of time in order to see where money is being wasted, or where you can cut costs without completely changing your lifestyle. Keep a notebook where you list every single item you purchase, including the amount you paid, where you purchased it, and the reason. Include all bills that were paid, how much you paid, and how much you still owe. After a few months of tracking your spending habits, you will be able to determine exactly where all of your money is going, and you may be surprised at how much your little purchases are adding up and eating away at money you could be using to pay off debt to enjoy a debt free lifestyle! That cup of coffee you grab every morning on the way to work could be costing you $10 or more each week- about $40 per month, and brewing your own coffee at home could save you considerably since you can purchase a can of coffee for about $4 and it will last you about a month!
How to Remain Debt Free after Recovery
One of the biggest mistakes people make after making a financial recovery is to allow themselves to fall back into old habits. Before they know it, theyve racked up another few thousand in credit bills, and theyre heading down the same path to having a desperate situation where they just cant make their payments on time each month.
You do not need to have credit cards in your wallet. Yes, it is a very odd feeling to go from having several cards available to you to none, but it is the safest way to avoid overspending. You may want to keep one credit card in a safe place in your home, for purchases that do require a credit card. Think long and hard before using the card, and if it is possible to buy it with cash, than do that instead. A credit card should not be used for every purchase, nor should it be used when you want to buy something unnecessary that you dont have enough cash to purchase. If you want a luxury item, save your money until you can buy it- if after several months of saving you decide you dont need it, then youve saved the money on an item you previously may have purchased on a credit card, discovered you didnt really need or want it, and then had to pay back three to four times what the item is worth after all the interest and finance charges were added!
They say the first step to beating an addiction is to admit that you have a problem.
Dealing with someone who has a gambling addiction can be painful. They have a tendency to withdraw from family and loved ones, so what are you supposed to do when someone you care about has developed a gambling addiction.
There are several things you will need to do and some of them are very hard to do.
The first thing you have to do is to hide all your valuables, and if this person lives with you, then you need to keep them behind locked doors and if that is not possible then take them to a bank and lock them in a safety deposit box.
If this person is you child or your spouse then you need to limit there access to your money. In many circumstances people have spent their family’s savings and kid’s college funds. So if at all possible try to get that persons name of the accounts if it is not already too late, and cancel all their credit cards.
At some point you will have to confront them. When you do confront them it is important to not yell and do not get angry just tell them how what they are doing affects you. Make sure that all the persons close friends are there to help with this.
It is important that everyone take turns and tell the person how his gambling has affected their relationships, but in a non angry, caring manner. This will help the person realize that the people that care about him see something that maybe he does not and hopefully will take an honest look at his gambling.
Remember the goal of confronting someone is not to make them stop gambling, it is to help them recognize they have a gambling problem and to encourage them to seek professional help.
Some people recommend that you try to get your friend to go to a gamblers anonymous meeting, but I do not recommend this. Gamblers Anonymous is a great organization that truly helps those with gambling problems stay away from gambling, but before you are ready for this most people need one on one sessions with a psychologist or a counselor trained to deal with gambling addiction.
After all is said and done, you must be prepared because most of the time the gambler continues to gamble, maybe they will make a brief attempt to stop before starting again in secret.
With most addictions the person with the problem needs to hit what they call a “bottom”. This is when the gambler has lost everything that really meant anything to them, such as family and friends, and it is only at this point many will see the problem and seek help.
If you know someone who is unwilling to admit their gambling problem I recommend that after you have tried your best to get this person to seek help if they do not, you may have to be prepared to leave them, remember at some point you have to abandon a sinking ship before you go down as well.
To find more information on gambling addiction search gamblers Anonymous and
Codependence websites.
These days credit card or plastic money is very popular and used extensively. It is indeed of great utility if used in a calculative manner, but it is also the main cause that leads many people trap into credit card debt. Let see how it happen to most of people.
Many of retailers are implementing easy payment scheme for their products or services, with some fraction amount of money for monthly installed, you can buy thousand of dollars of items or go for a luxury vacation which you can’t afford to buy if one lump sum of money is needed, these monthly installment are automatically charge to your credit card. Every month, you just pay the minimum amount of your credit card balance and you continue spend on your credit card. Let use a case study to review on how a person credit card debt can grow and how it will take to get rid of it.
Case Study
Scott earn $2,500 a month, he is holding a credit card with interest rates of 12%. All his credit cards allow him to pay a minimum of 3% or $10 which ever is higher. His credit card limit is $15,000.
Scott’s credit card balance at current month is $4,550 ($3000 in principle and $1550 interest). He tends to pay the minimum of his credit card balance and each month he will averagely swipe about $500 on petrol and other utilities.
Let see how’s Scott’s credit card balance grow:
Month 1
Credit card balance = $4,550.00
Minimum Payment = $136.50
New Credit Card Spending = $500.00
New Balance = ($4,550 – $136.50 + $500.00) = $4913.50
Month 10
Credit card balance = $7976.02
Minimum Payment = $239.28
New Credit Card Spending = $500.00
New Balance = ($7976.02 – $239.28 + $500.00) = $8236.74
Month 20
Credit card balance = $11109.85
Minimum Payment = $333.29
New Credit Card Spending = $500.00
New Balance = $11109.85 – $333.29 + $500.00) = $11276.55
Month 30
Credit card balance = $13662.60
Minimum Payment = $409.88
New Credit Card Spending = $500.00
New Balance = $13662.60 – $409.88 + $500.00) = $13752.72
Month 36
Credit card balance = $14961.02
Minimum Payment = $448.83
New Credit Card Spending = $500.00
New Balance = $14961.02 – $448.83 + $500.00) = $15012.19
If Scott continues his practice, his will hit his credit card limit after 36 month compare to current month.
Let say Scott stop using his card with the balance at month 36 of $15012.19 and continue paying the monthly minimum. It will take him 228 months which equal to 19 years to just to pay off his $15012.19 debt.
The above example is just a simple case study to show you how your credit card debt may piles up so quickly without you even aware of it. You need a lot of time and spend a lot of money on interest in order to get rid of this debt. In real life, many people have more than one card and other loans to support; hence situation may even worse.
How to get rid of credit card faster & affordable?
If you are already at this situation, the first thing you need to do is to change your behavior of paying the minimum only. Paying more each month will definitely pay off your debt faster but the question is you may say that you can’t afford to pay more than the minimum. In actually fact, the easiest, faster and affordable way to get rid of your credit card debt is maintain your current minimum monthly payment.
For example, we use back Scott’s case. If he affords to pay the minimum payment of his $15012.19 debt, which is $448.83, this is his affordable payment. If he continues to pay $448.83 every month instead of the minimum of his credit card balance, he will need only 43 months to pay off his debt as compare to 228 months. This mean, Scott will have his debt free life in less than 4 years instead of 19 years.
In Summary
Credit card will remain important in many people life, use it intelligently for your convenient, but you much carefully manage your credit card balance, don’t let this plastic money drag you into financial crisis; the ideal way is pay the balance in full each month.
Offers for home equity loans are widely advertised. Lending institutions make it a point to highlight the advantages any potential borrower shall have in getting this kind of loan. One reason for the aggressive offer is that, with the home equity as collateral, this kind of loan is safer business for the lender than the credit cards.
The aggressive campaign sometimes makes the potential borrower think only of what are highlighted and forget, to their regret later, the so-called fine print in the loan terms. In putting the house at risk, the owner-borrowers owe it to themselves and the family members to make sure they are making a decision they can handle.
The biggest risk of a borrower is the lack of understanding of the loan terms. Here are some of the information any borrower should take time to be well versed of:
Tips to the Borrower:
* Have a clear idea of the reason for the loan. Is it a one-time or ongoing financial need? This is needed to decide if the loan should be Fixed Rate or HELOC (Home Equity Line of Credit). Be sure to choose the appropriate loan package.
* It is a good idea if the take out would go directly to the party whom you want to pay with the loan. This would minimize the risk of spending the money for something or somebody else.
* Ask for an official list of fees and interests before going further with the loan negotiation. Some agents conveniently fail to mention some fees like the closing costs and prepayment fees. Closing costs and prepayment fees are important information just in case the borrower decides to make advance payments later.
* Be wary of scams. Some lenders may appear to be assisting the borrower to have a good deal by approving loans that are more than they can afford to pay but actually, the borrower is being led to the road of payment default and consequently foreclosure.
* Research before signing anything. Contact people who have taken out loans from the lender. The Better Business Bureau is a good source of information regarding good business practices.
* Dont be misled by the low amortization. It may not even be enough to cover the monthly interest and the consequent is a surprise after years of payment that the principal of the loan is not yet paid.
* Dont be afraid or ashamed to ask about anything that is not clearly understood. In fact, any items that seem to be subject to interpretation should be confirmed with the lender.
* The Truth in Lending Act gives the borrower the right to cancel the loan by informing the lender in writing within three days of issue.
The home equity loan is an excellent and tempting source of cash for the home owner. The lenders consider it a safe investment but the opposite applies to the home owner.
Yes, there are advantages like the tax-deductible, lower-than-the-credit card interest and the convenience since you can apply on line and agents are eager to do business. However, the collaterals value is more than what the appraiser reports. The appraiser has no idea of the true value of a home.
If ever a home owner finally decides to have that home equity loan, it should only come after a careful study of the pros and cons of the decision.
Unless you are willing to pay terribly high interest rates, you should try to raise your credit score as much as possible. The lower your credit score, the higher the risk for the lender to grant you a loan and the higher the risk, the higher the rate. This is unavoidable, of course there are special situations that may have caused your financial breakdown, but there are no means to avoid this and lenders cant take subjective facts into consideration when it comes to fixing the interest rate.
Repairing your credit
Repairing your credit may take some time, but here is the way to start. Open a savings account and start making regular deposits. You dont need to deposit large amounts, but the fact that you have an income that lets you put away an amount of money regularly will soon be recorded to your credit history and will highly contribute to raising your credit score and improving your credit history. This is just the first step but as a first step, the most important one.
Credit Cards
Once youve a reasonable amount of money in your savings account, use it to apply for a secured credit card. Secured Credit Cards are just like regular credit cards only that you can only borrow the money that youve previously transferred to an account. There is no risk for the card issuer so youll be able to get it even if your bankruptcy is close in time and your credit is not that good.
After using your secured credit card for a while you can apply (if you havent been offered one yet by that time) for an unsecured credit card. Your credit score improvement will most surely let you get approved without hassles. Make sure you use the card wisely, make small purchases pay the credit card balance always in full if possible, and never miss a payment nor make late payments.
Using your credit card wisely will help you skyrocket your credit score. Now is the time to start requesting small personal loans. Asking for small loan amounts will guarantee that youll get approved. Your regular monthly payments will do the rest, your credit score will soon reach a status where youll be able to request personal loans at very reasonable interest rates.
Final Steps
At this time you should have reached a good credit tag and youll be able to obtain any financial product that you need. Refinancing your home loan would be the next wise step to continue improving your credit score. Or you could request a home equity loan. Either of them will prove to future lenders that you are able to commit to repaying higher amount loans and that youve finally put behind your bankruptcy.
In Debt Over Your Head? These 5 Simple Steps Will Help
The next 5 steps are not difficult. They only take commitment. You can do it. The feeling of freedom and success when the bills are not hanging over your head will make this all worthwhile.
Ready to get stated? Let’s go.
Step #1. Work out where you are now
You may not have looked at your financial position for a while. Maybe that’s why you are suffering under a load of debt presently. But you need to take stock of your financial position now. Unless you know where you are now, it’s hard to work out how to fix things.
Just get a pen and paper and all your credit card bills and look at the situation honestly. List out all your debts and their interest rates and the minimum monthly repayments.
Don’t get worried about how much you owe. It’s been said that anyone can get rid of all their debt within 5-7 years, including their mortgage. That means you too.
Step #2 Stop spending more than you earn NOW
This is the first thing that must be done to start the ball rolling for your financial success. This is most probably the reason you need to take action now. Look at your living expenses and cut out those things you can’t afford.
Also cut up all the credit cards except one for emergencies and commit yourself to only spending what you can afford from your own income.
Step #3. Find some cash to pay down those debts
Once you have come to grips with Step #2, the next step is to work out ways to put some money aside every week or month to start paying down those debts, preferably faster than the minimum monthly requirement. Pay as much as you can. It’s better to pay down these debts than to put the money in the bank. This is because the credit card interest is a lot more than you can receive from the bank for funds on deposit. The aim is pay down the highest interest debt first.
If you have 2 credit cards with the same interest rate, pay off the one with the smallest balance first. That will give you a boost and the resolve to keep on going.
Step #4. Build a Savings Fund
Once you have those credit cards under control it’s time to think about putting some funds aside to start building some savings. You’ll be surprised how fast your money grows if you religiously keep adding to the balance and don’t touch it. If you really need to purchase an expensive item like furniture or car it is better to save for it than to borrow, if at all possible.
Step #5. Pay Down That Mortgage.
Since the interest rate on your mortgage is usually a lot less than credit card and store debt you can leave this item till last. Also it is increasing in value over time – unlike your car, TV, Video, furniture and boat. You will be surprised how many years you can cut off your mortgage repayments by just adding a few extra dollars each month to the payment.
These a just a few basic rules to help you get back on your feet financially. The main principle here is to work on reducing your credit card debt. Once that is done use those freed up funds to build your nest egg and pay off the mortgage. That’s the plan that works.
Now get those documents out, do the sums and start on your road to financial freedom.
Home Business Financing 3 Reasons to use a Credit Card to Fund Your Home Business
Would you like to start your own home business but do not have the money for it? Well, you are part of a club with many members. You may think getting money for a business can be a monumental task. However, it does not have to be. If you anticipate and plan for as many expenses as possible you may want to consider using a credit card to finance your home business.
One of the easiest ways to get a loan for your home business is to apply for a credit card account. It may not be the answer you are looking for. However, credit cards are easy to receive if you have decent credit. Plus they are very flexible in using for spending purposes. Consider these three reasons for using a credit card for your home business.
The most important reason about having a credit card for your business is you get to keep your cash assets. Even though there is a risk of acquiring debt, you still get to keep your cash in the bank for a rainy day. I find this a very valuable benefit because you keep your familys money in tact and reserved for family needs. Your savings will continue for its original intentions (i.e. college money for kids, school clothes, etc.).
Another benefit is that Credit Cards have itemized statements of purchases. This is great for keeping track of money you spend on your business. The itemized statement provides proof that the Credit Card is being used for business expenses. Also, if you use the credit card for all of your purchases you can easily report expenses when tax season rolls around. Payments made that are shown on the statement is proof where your businesses money is going.
Finally, and this is my favorite reason, you have increased purchasing power with a credit card. You can use a major credit card to purchase items almost anywhere in the world. Having direct access to the funds is much more flexible than a loan. This also provides flexibility in time management because you can use the credit card to purchase items at your convenience if you have internet access.
The downside to this is that the credit card minimum payment will be an additional expense. Also, credit cards are a very easy way to acquire a lot debt for yourself if you are not careful. Always practice good and sensible spending practices. Once you start a home business it is very exciting time in your life and you may want to spend money on lots of things that you think you may need.
Always think of the basic needs of the business first. I tend to be very frugal with spending on a credit card then I do with cash. One way to curb spending by asking yourself, Does my business really need this item right now? Give yourself an honest answer and empower yourself to cut down on impulse buying.
Try to think out of the box when getting funding for your home business. A credit card to fund your business start up expenses may make things easier for you. Also, there are many offers for low interest credit cards for a specified time period. So, if you need a few thousand dollars in capital to start and sustain your business for a while then credit cards may be the answer to financing the start up costs your home business.