If debt is currently an issue in your life, debt consolidation really can save you from the stress of bills, debt collectors, and the nagging thoughts of foreclosure or even bankruptcy. Debt consolidation can drastically change your life within weeks, months, or years depending on your current debt situation. Consolidating your debts will allow you to live with peace of mind that you are taking care of your financial obligations while continuing to live a happy life.
Debt consolidation is taking all of your bills and fitting them into one monthly payment. Fitting all your bills into one payment also means one interest rate, which will limit the amount you pay out every month, saving you a lot of money in the long run. Debt consolidation also makes paying off multiple debts easier because the monthly payments can be lowered when you take away insane interest rates. The average debtor pays more interest every month than they do on the actual principal balance of their debt! Eliminating the sky-high interest rates is a good start to getting your debts paid, without going completely broke.
Many people assume when they cant pay the bills its time to just throw up their hands and consider drastic actions such as foreclosure, repossession and bankruptcy. While there are some extreme cases where bankruptcy would be the best option, foreclosure is almost always avoidable as is repossession. Banks, car dealerships, mortgage companies, and creditors dont like to have to take back property or write off your debts, they would rather work with you on debt consolidation so that they can get back what they are owed and you can go on your way with your credit still in tact. Bankruptcy, repossession, and foreclosure are not easy outs when it comes to debts; in fact, they are choices that will continue to affect you for a long, long time. Consider debt consolidation before making any hasty decisions.
Debt consolidation on your own can be tricky, or downright impossible depending on your credit situation. Luckily, there are debt consolidation companies waiting to help people who are in over their head, just like you! Debt consolidation companies will take your credit report and any unreported debts that you can give them and work out a payment plan for you. These debt consolidation companies often contact each company and strike a deal to lower or get rid of the interest and even split the balance of the amount due. Obviously, lowering or getting rid of interest and part of each debt will limit what you spend each month, enabling you to actually pay the bill.
Whats the catch with this type of debt consolidation? Well, there really isnt one. Yes, this is a business and the consolidator does make money because while he takes away the interest that each company is charging, he will charge you interest or a percentage of what you owe. Doesnt seem fair? It is! It works out better for you, because even though you are still paying interest its just one interest payment for all the debts you currently hold. So, instead of paying twenty seven percent to ten companies youll pay twenty percent to one company. So, you go from having multiple payments and interest rates to just one payment for all the bills and one interest rate. It works! If you follow the plan, and make your monthly payments debt consolidation will soon have your credit report looking much better than it does right now.
You may think that you have so much debt you cannot possibly afford to repay even on a debt consolidation plan. Youd be surprised what these companies can get done on your behalf. And, if your debt is that outstanding you can work through the process slowly, a few debts at a time. There is nothing wrong with the process taking a while, as long as you keep up with the process and intend to actually pay off your debts. Getting your credit where it should be does take time, but its worth it. Your credit is your buying power, and each payment you make gets you closer to having more of it.
Worried that the companies you are dealing with wont work with a debt consolidation company? Youd be surprised. Yes, the companies will loose a little bit of money compared to if you showed up with cash to repay the debt tomorrow, but in the long run its better for them to take a debt consolidation deal than not. Most companies figure theyd rather get a portion of your debt back and settle the deal than not get anything back at all. Getting seventy five percent of your debt back is more reasonable to them than to keep paying debt collectors to contact you and try to get the money back. All in all, any money is worth striking a deal over, and that is why a debt consolidation company can really get you where you need to be. They are professionals and they know how to get companies to agree to their terms.
Debt consolidation companies will usually work with you to get your debts paid off within a reasonable monthly payment. Each month youll make just one payment, reducing the time and stress of paying the bill, and each month youll be a step closer to financial freedom. Paying off your debts, through debt consolidation or otherwise will take a weight off your back that you may not even realize is there. No one wants to have unpaid debts, but sometimes life gets in the way and it happens. It happens to the best of us. But, dont be too proud to consolidate those debts and get back on the right track. Open up your local phone book, or get online and find a debt consolidation service in your area. Contact a debt consolidator not with shame, but with pride, because you are stepping up to do the right thing.
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!
How To Avoid Bankruptcy & Get Out Of Debt Faster Using Debt Negotiation!
Has credit card debt got you thinking about bankruptcy?
Youre not the only one these days. Even with the new bankruptcy laws, credit card debt continues to climb. Unfortunately for most of us, our paychecks dont climb as quickly.
If youre on the verge of bankruptcy, you may have another alternative.
Debt negotiation is a process where you negotiate with your creditors to pay off your debts at a reduced amount for example, if you owe $12,000, you can negotiation a payoff of $5,000. The benefit for the creditor is that they get more money than they may have through bankruptcy, and they get the money sooner. The benefit for you is obvious you get out of debt faster, and save lots of money in interest.
Where do you get the money to pay off the debt?
Take the money you would have normally used to pay your credit card bills, put it aside, and when you accumulate enough to pay off the debt, send in the reduced amount you agreed to.
If this sounds confusing, thats ok. Its really not.
There are many professional companies that will do all the work for you, and charge you a percentage of the savings.
I can speak from experience (I built up a lot of debt trying to start a sporting goods business, which didnt quite work out) that even with the fees, this is a good deal plus you save a lot money by not having to pay the high interest rates on your credit card bills.
Sure, it is a more aggressive approach to getting out of debt than making minimum payments, using credit counseling, getting a debt consolidation loan, or borrowing from a friend or relative. But in the end, youll get out of debt faster
And avoid bankruptcy!
If youve never heard of debt negotiation (also called debt settlement), thats ok too, not many people have. I didnt until I began to seriously consider bankruptcy.
One reason many people are hesitant to consider debt negotiation is that it goes on your credit report. Sorry to tell you, but having lots of debt (even if you pay on time), making payments late, even credit counseling all go on your credit report and can negatively effect your credit. And (of course) bankruptcy is a big negative!
In my case, getting out of debt, removing all the financial stress, and being able to live a normal life were well worth it. With so much debt, having good credit was meaningless anyway.
Plus, I was able to get all but one of the negative items off my credit report (thats a topic for another discussion), and my credit is now back to normal. In fact, I now get more credit card offers than I can handle and fortunately, I can now throw them all in the trash!
When money is tight, and debt is high, there arent many simple answers.
But if you are already considering bankruptcy, then debt negotiation might be the right alternative to help you get out of debt faster!
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.
Most of the high interest credit cards are usually pretty easy to get and really the high interest rate only matters if you are going to roll over your balances from month to month. People that have been involved in bankruptcies, judgments or have a bad credit score, for some other reason are the most common applicants for these high interest credit cards. It might be possible to lower your interest charges with credit card balance transfers. If you are looking to consolidate all your debts or you just want to pay off your high interest credit cards, apply for a card that offers a low rate on balance transfers.
Those of you who want to apply for a major high interest credit card to re establish or just to establish new credit should consider the price that they will ultimately pay, including interest, yearly fees, etc… Those who have good credit may qualify for credit cards that offer a 0 percent interest rate on balance transfers for a full year, but be aware, if you make a payment late, you might end up paying higher interest than before you transferred your balance. A recent FDIC study revealed that the overwhelming rise in bankruptcy rates (up 400 percent in the last 25 years) is directly related to banking de-regulation and the use of high-interest credit cards.
Many credit cards can have interest rates, 15, 19 and even 24 percent or higher. At these very high interest rates you are paying a lot of money in interest. If you are in a bind and missing payments, many credit card companies might agree to reduce your debt on a credit card dramatically if the borrower is able to pay off the balance rather than continue to miss payments, so it might be worth contacting a debt expert to negotiate on your behalf. If you have a good credit score, one way of paying all of your high interest credit card balances, is to take out a debt consolidation loan, which will mean that you can pay off all of your credit cards with one lower interest loan, possibly saving you quite a bit of money.
Cash advance loans online can be a huge lifesaver when you find yourself in a bit of a pinch in between your paydays. So just what is a cash advance loan and how will it be helpful to you?
A cash advance loan (or payday loan) is a very short-term loan that carries extremely high interest rates. Generally, these types of loans last from a period of one to four weeks and you either write a check out that the company will cash when the loan is due or you would have to authorize the company to be able to make withdrawals out of your savings or checking account.
If you are in a bad credit situation when it comes to obtaining a loan, getting a cash advance loan may just be the answer you are seeking. Most all payday loan companies only require that you have either an active savings or checking account and have held your current job between 3-6 months and be able to prove how much you make in a month.
You can obtain your money very quickly when you decide to into applying for cash advance loans online. After you have provided the loan company with all of the information that they require and you are approved you are likely ti have your cash within 24 hours sometimes instantly depending on the company you are getting your loan through.
Getting a cash advance loan can assist you in making your credit score better. Just make sure that when you are getting an advance you make sure that the loan company reports to one of the three major credit agencies.
Now the next time that you are in a bind and need some cash quickly, if you are you sure you can meet the terms, applying for cash advance loans online would be a smart move.
Points seem like a good idea, after all, the interest rate is lowered. But if you don’t have cash on hand in advance, paying points can seem just out of reach. Do you need to pay points?
For most people, paying points just doesn’t make sense.
A point, often called a discount point or origination fee, is equal to one percent of the loan amount. Points are paid to the lender at the time of closing.
By paying points, you are buying down your interest rate. The more points you pay, the lower your interest rate. Lenders started offering points in the early 1980’s when mortgage rates were 15%. The housing market just went dead as people were unable to afford such high interest rates on mortgages.
To stimulate business, lenders offered discounted rates with fees attached, called discount points. Many sellers began to pay the points charged by the lender in order to sell their home. This gave the buyers an affordable mortgage and owners were able to get their homes off of the market.
But times have changed. Interest rates are no longer anywhere near 15% on mortgages — they are more like 7%. The need to fork out a ton of dough in order to get a lower rate isn’t really there for the average home buyer.
Let’s look at the numbers. For example, you find a 30 year fixed rate mortgage at 6.50% with two points. For the life of the loan, you have a fixed rate of 6.5%. But you will have to pay the points at closing. If the home you want to purchase is $192,000, you will have to find an extra $3,840 at the closing to cover the points.
Another lender is offering you a 7% interest rate on the same mortgage.
Which deal is better for you?
You put the standard 20% down on the loan. The monthly payment and interest payment for the 6.5% mortgage is $1,207. The 7% monthly payment increases to $1,270 per month. That’s a difference of $63 per month. If you divide the $3,840 by $63, you will find that it takes 61 months, or five years and one month, to recuperate your points in the form of a lower payment. This is your payback period.
You could put that $3,840 in the bank to earn interest. If your bank is paying three percent interest, you would earn approximately $10 per month. If you pay the points, you are loosing money that you could have made interest on. So, subtract $10 from the $63 savings. Now divide $53 into $3,840 and you will find that the payback period increases to 72 months, or six years.
So you have to stay in that home with that particular mortgage for six years to make back the money you pay in points. Most people won’t stay in a home for over six years today.
And with rising home costs, many home buyers don’t have the extra cash on hand to pay the down payment, closing and points. That’s why many lenders have started offering lower down payment mortgages — they understand how hard it is to save that money.
If the seller wants to pay points, that’s great and extremely rare in today’s market. If you aren’t positive that you will stay in the home long enough to recuperate the cost of your points, it would be best to choose the mortgage without points.