Why do we get into debt?
June 8, 2009
There is a lot of talk about debt these days, and a lot of ill-informed comment about why people get into debt. Many people that don’t have any debt seem to be very angry about anyone that does. Most people that get into debt problems are not just reckless, and some are completely blameless. Understanding why people have debt problems is key to understanding how they can be helped (or help themselves) to avoid debt problems in the future.
Reasons For Debt
Each person’s circumstances will be unique of course, but I think it is possible identify some overall categories:
1. Debt caused by events. Perhaps your finances were OK until you lost your job or faced crippling medical bills.
2. Taking on someone else’s debt. Perhaps your partner ran up large debts without telling you and/or forced you to sign for joint loans. If they managed the finances you could be liable for any debts that they run up on things like joint accounts.
3. Spending to make yourself feel better. Many people use money and spending to compensate for some other lack in their lives. This will almost always lead to financial problems and will not cure the underlying problem.
4. Spending to make other people happy. Closely related to the above point, some people believe that they can only have a relationship/friends if they lavish gifts on people.
5. Just being stupid with money. This is the category that some people seem to think all debtors fall into. It would be foolish to deny that they exist but there is usually some other reason why people behave in this way.
Curing the Disease, Not the Symptoms
A lot of information on getting out of debt seems to focus on the detail of budgeting/paying off debt etc. Although this is valuable it ignores the real root of the problem. Unless your debt problems have been caused solely by unfortunate circumstances/the actions of others then you would be well advised to try and sort out the cause of your debt/spending addiction. If you don’t it will eventually repeat itself.
What’s better, Bankruptcy or Debt Consolidation?
June 7, 2009
Which is better, Bankruptcy or Debt Consolidation?
Which is better, bankruptcy or debt consolidation is a controversial issue. There are many choices for you while you are looking for ways to handle your debt and these can leave you puzzled. Credit counseling programs, debt settlement, debt consolidation loans and bankruptcy are some of the options that you can mull over. The question might pop up in your mind that bankruptcy or debt consolidation: which is better? One must study both options pretty cautiously to find out which of them offers the best solution for your problems.
To get an understanding, you have to see what debt consolidation and bankruptcy can offer you:
Debt consolidation
1) Many people become tense by thinking that consolidating unsecured debts by the application of a secured loan is not safe for them. They feel that in this manner they are not getting into the root cause of their debt problems. Nevertheless, they are exchanging one problem with another. Others emphasize that debt consolidation provides an eternal solution to their problems associated with debt.
2) A debt consolidation loan is the replacement of several unsecured loans like credit card debts through a single loan just to make sure that instead of making numerous payments, you are only required to make one lowered payment for your debts. This would help you directly improve your credit score. However, one of the prerequisites to qualify for a debt consolidating loan is your ability of making the payments promptly. Thus, a stable source of income or employment is crucial. Normally, the lender would tell you to put some security, for instance a home or a car. A co-signer might also be needed.
Bankruptcy
1) When you can’t qualify for a debt consolidation loan, at that point of time you might have to think of bankruptcy. Your financial condition would decide whether you should opt for Chapter 7 bankruptcy or Chapter 13 bankruptcy.
2) Bankruptcy is a complete discharge from some specific types of debts. It means that you are getting freed from your debts and you have to surrender your home and other valuable assets. Regardless of the fact that a bankruptcy is stern and it stays in your credit report for a period of ten years, of late it has converted into an appropriate technique for people to get rid of their financial hassles. More and more people who are troubled to tackle their debt difficulties have been filing for bankruptcy as a result of liquidity crunch. Bankruptcy is not all-inclusive by itself as there are certain debts such as student loans, child support and others that are not addressed by bankruptcy. Neither debt consolidation nor bankruptcy offers every remedy to everyone. It depends on the financial situations of each and every individual.
Therefore, if you wish to find out Which is better, bankruptcy or debt consolidation, then it is a vital decision that you are making, which requires the suggestions of an expert financial advisor. He would help you get a better understanding about the options that you can avail to suit your particular needs.
Different debt help options.
June 4, 2009
If you pay something in cash, you always feel that you are parting ways with your money. This is not the case with credit cards. You happily swipe your credit cards to pay for your purchases. This is the time when you end up spending 12-18% more. You could have easily saved this money. Due to this unlimited spending, people tend to fall into credit card debt.
What are credit card debt repayment options?
There are 3 types of repayment options which can help you to repay back your credit card debts. Here is a brief overview of what to expect from each of these options:
Debt Consolidation Loan -This is kind of loan which is taken to pay off multiple loans. Usually a debt consolidation loan is secured by your house. So you can consolidate high interest unsecured debt at a much lower interest rate and the interest is also deductible through tax. The disadvantage is that if you fail to make payments at due dates then the lender can foreclose your house. You must be aware that most of the people who consolidate their debts with a mortgage have the tendency to fall into credit card debt again within a year. So this debt relief option is less desirable to pay back credit card debts.
Credit Counseling - Consumers often need professional counseling services to solve their debt related issues. Through this they can find a solution to repay their debt through careful budget planning and management. If you feel you need debt help, this option can work well for you. These companies negotiate with your lenders to reduce the rate of interest. You just need to adhere to the agreements, because some lenders will drop you from the program if you do not make a payment every month. Through debt counseling you can be debt free within 5 years with little negative impact in your credit report. The best benefit that you get from consumer credit counseling is that through one monthly payment you can disburse the payment to your creditors.
Debt Settlement - It is a process in which the creditors agree to lower the outstanding amount for the debtors so that it becomes easier for them to pay a lower amount than what they have to pay originally. This is another alternative of debt help. Most of the people who use this option have debts that have not been paid for 3 months or more. The debt settlement company will negotiate with your creditor to lower the rate of interest of your credit card bills. You can also pay reduced amount of monthly bills. All your balances will be paid off once there is enough money to pay the negotiated balance.
It depends on your financial situation as to which option will suit you to pay back your credit card debt. If any debt ridden borrower gets a credit card debt help, it will be first step towards being debt-free and financially stable.
Why it’s important to get out of debt as soon as possible.
June 3, 2009
My husband and I have discussed retiring by the time we’re 50, and one of the major requirements that always comes up is how we want to be completely debt free — and that means no mortgage as well — in order to retire early and do a lot of what we want. (Incidentally, 50 is the age by which we will be childless again.) The reason we are focus on our debt is because other things are already pretty well taken care of: Retirement accounts have been set up, we’ve started a (small) emergency fund, and we plan to make additional modest investments.
But getting out of debt seems to be something that few people consider when they think about early retirement.
Here’s why it is so important to us:
- Debt, even if it is “only” a mortgage, requires regular obligations. True, other bills do as well. But the mortgage payment is the largest monthly obligation we have. It even beats out student loans (which we hope to have paid off well before retirement). If, at retirement, we didn’t have any mortgage payment, that would mean a great deal of money available to us. Which is why our next mortgage will be a 15 year mortgage; we want to be able to pay it off.
- Debt costs money. Interest charges on debt cost money. It is money paid for borrowing. Interest does not result in any increase of goods or quality of life. All it does is cost us money and enrich someone else. If we have all our debt paid off by age 50, we can retire early, knowing that more of our money remains to be used for our benefit. (Imagine being able to invest the money that you make in interest payments!)
- Debt brings with it a psychological toll. Emotionally and psychologically, debt can be damaging. We don’t want to spend our retirement years (or miss early retirement) because we are worried about the burden of debt. When you are worried about meeting your debt obligations, it is difficult to truly enjoy life, and we don’t want that hanging over us as 50 approaches.
The key, though, is to start early. We have a plan now, even though our early retirement goal is two decades away. It’s better if you start earlier because it gives you more time to pay off debt and build up retirement savings. For us, having a plan is what keeps us going and encourages when sacrifices have to be made. It will all be worth it when we retire early at age 50.
Debt consolidation can help you!
June 2, 2009
If you are like one of millions of other Americans that are currently dealing with debt in their every day lives then debt consolidation really could be the solution to the problems that you are currently having and save you from the stress that you have and are getting each day from annoying and aggressive debt collectors and the ever looming worry about maybe even having to file for bankruptcy.
What debt consolidation can do for you is essentially allow you to change your financial lifestyle in a matter of mere months weeks or even years dependent upon what your current debt situation is looking like at the current time. Going about debt consolidation will allow you to get the bit of closure that you need when it comes to dealing with outstanding debt and creditors and in turn will allow you to live the happy debt free lifestyle that you and your family deserve to have.
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What the process of debt consolidation includes is allowing you to take all of the outstanding bills and to take them and lump them all together in order for you to pay one lump sum payment each and every month to pay down all of your debt. This not only makes it a lot easier for you to manage and budget for each and every month but it also means that you get one rate of interest to deal with which will also save you a ton of cash in the long haul and will of course lower the amount that you have to pay back each and every month as well.
What the process of debt consolidation does is allow you to make paying down the amount of debt that you have a lot easier since the monthly payments that you are going to be making will be decreased because you will not be paying such large rate of interest on all of your various different debts. People that find themselves in a lot of debt will in all actuality be paying off more of the rate of interest on their collective debts each month then they would be paying the actual balance of their debts. This is why getting rid of as much rate of interest as possible is a great and solid foundation in getting your debt paid down without having to run out of money in the process.
Now you very well could be thinking that you just have so very much debt on your plate that you are not going to be able to afford to pay back all of your debt regardless of using of a debt consolidation company to help you out. Well you would really be surprised to know what these solutions can do for you and if you really have that bad of a debt hole that you find yourself you can still work yourself out of it slowly but surely.
If the life time of your debt takes a little longer than usual that will be ok so long as you keep making your monthly payments on time each month you will eventually find yourself out of that much debt. The process of restoring your credit profile to a much more manageable place will take you some time no doubt, but it will be very worth doing because down the line in the future your credit will allow you to make investments at a much more manageable rate of interest than you would ever be able to get with poor credit.
Getting started could never be any easier. Fill out the short form on our site and we will put you in direct contact with a highly qualified debt consolidation professional that can help you get on your way to financial freedom immediately.
Dealing with collection agencies.
June 1, 2009
Most collection agencies buy packages of loans that are in default for pennies on the dollar. They are bound by a different set of rules than the original creditor and there are differences in the way that you should negotiate with them. The first step is to have them validate the debt and you can read about how to do that and what it means in my post on Are You Being Hassled by a Collection Agency.
Some things to remember when negotiating with a collection agency:
- All correspondence should be Certified Mail, Return Receipt Requested. You will want proof to send to the Credit Reporting Agencies.
- Do Not talk to them on the phone. You need to have written proof of all negotiations, agreements on the phone are not binding.
- They are not allowed to charge you for validating the debt.
- They are not allowed to sue you unless they have validated the debt.
- They are not allowed to report a debt to a Credit Reporting Agency until they have validated the debt.
- They have 30 days from receipt of your request to provide proof of validation.
If they do not validate the debt within 30 days, you need to send them a request to remove the listing from the credit reporting agencies. Send them a copy of the original request for validation and a copy of the receipt along with a letter requesting that they remove the entry from the credit reporting agency. You can also dispute the entry with each credit reporting agency by sending them a letter with copies of your requests for validation. Most of the time the collection agency will remove the listing and you will be home free.
If they provide proof of validation, the next step is to begin negotiating settlement. This should also be done in writing and sent by Certified Mail Return Receipt Requested. Remember that the original creditor has written this debt off and sold it for pennies on the dollar. You can start your offers as low as 30% of the original amount. If you can pay your offer immediately upon reaching agreement you stand a better chance of settling for the low amount. If not you should request a reasonable repayment schedule.
This is something that we can help you with quite easily here at easy-consolidation.com
Annoying creditor calls. Debt settlement helps.
May 30, 2009
One negative factor of debt settlement is numerous collection calls from collection companies who try their level best to collect the debt.
Debt settlement happens when the clients stop paying their creditors directly. Most debt settlement companies suggest their clients to cease communication with creditors. However, collection companies and creditors keep calling and “harassing” debt settlement clients and often tell them how “bad” a debt settlement program is in order to keep collecting debts, and creditors usually don’t stop calling until they are paid, getting payments, or forced to stop calling by some legal mechanism.
Before we proceed further, it is important to know about FDCPA (Fair Debt Practices Collection Act).
The Fair Debt Collection Practices Act is an Act which creates guidelines under which debt collectors may conduct business, defines rights of consumers involved with debt collectors, and prescribes penalties and remedies for violations of the Act. Its purposes are to eliminate abusive practices in the collection of consumer debts, to promote fair debt collection and to provide consumers with an avenue for disputing and obtaining validation of debt information in order to ensure the information’s accuracy.
FDCPA has certain guidelines for collections companies. The collection companies are not supposed to call clients too late or too early, they are not supposed to threaten or abuse clients, they cannot discuss personal debt with relatives or neighbors, etc. Clients also have an option to tell creditors or collection companies to not call them at work or call their cell phone as these could cause unjust harm to client’s finances. Clients can also request in writing not receiving any calls at all, using a “cease and desist” letter.
There are certain untouched areas of FDCPA:
1. FDCPA is only applicable to collection agencies and some debts are held for long periods of time by original creditors.
2. Collection agencies use a variety of techniques to not comply with the FDCPA. To name some, ignoring it altogether! Cease and desist letters are often ignored as well and the phone keeps on ringing. Unless the client has an ability to either record calls or hire an attorney or maintain a strict log of violations and calls, these violations will continue unabated.
A new service provided by DAAN group utilizing a new technology solves the problems described here. DAAN facilitates all collection calls to be routed to a law firm which maintains a log of all collection calls and FDCPA violations and then forwards the call to the concerned debt settlement company. The technology is easily installed into any home phone, the most problematic source of creditor phone calls. Over time, with correct usage of the DAAN technology, creditors typically find themselves no other outlet than to settle with the intermediary company.
There are few debt settlement companies that provide DAAN services to their clients. This helps the clients manage collection calls and live a peaceful life. Always make sure your debt settlement company offers you protection from collection calls.
The unsecured debt consolidation loan.
May 29, 2009
Now a days debts have become an integral part of your budget. There are certain expenses that you cannot bear within your own pockets. But sometimes, due to some reasons, you have to borrow funds from other sources without repaying the existing loans. It puts you in trouble as the lenders keep on digging your empty pockets. In this circumstance Unsecured Debt Consolidation Loan prove extremely useful.
Unsecured debt consolidation loans are indeed a great help for debtors. It implies that you shoot a number of unsecured loans by another unsecured loan. But more often than not, it involves no security against your money provision and serves your purpose without collateral. It tries to cut your cost with existing debt to a considerable level. The rate of interest you are offered always remains much lower to that of all your existing debt. With the financial process you reduce your debt burden by 50% to 60%.
Though loan providers charge comparatively and it is thus they try to incur a bit high rate of interest on unsecured Debt Consolidation Loan. Even now, you can find it competitive as so many lending players are rivaling to enlarge their business stake. As well as, you can find innumerable websites working for the same cause. After collating different information from various sites, you can compare their loan quotes. And that will help you to choose the best possible one to apt to your situation.
However for all that, a good amount of sum is released. The sanctioned amount usually depends on your repayment capacity and employment-ability. So, depending upon your income level and repaying capability you are granted a good sum. Despite the fact, a borrower of any class structure can get a sum anywhere from $1,000 to $25,000. Along with that, you are given a repayment period of 6 months to 10 years under unsecured debt consolidation loans.
For the unsecured debt consolidation loans, you can make the loan application to any debt consolidation agencies. These agencies help you with their best services of experts of the field. Usually, these experts project a plan to eliminate your outstanding dues with the lowest possible costs. As well as, commercial institutions help you renegotiate with your lenders on your behalf for a better deal.
Three ways to help save money.
April 1, 2009
Today most people live paycheque to paycheque and it’s not uncommon to have ten different monthly payments. There are more and more people getting debt consolidation loans and it’s becoming harder to save with the easy access to credit. This is creating financial hardships with not being able to save and can interfere with your financial goals and dreams. By getting back to the basics of saving money it will help you to establish your financial goals and to manage your debts effectively.
The three easiest rules of saving money are; Establish a budget, Pay yourself first and, Eliminate debt by cutting expenses.
Establish a budget
One of the most important ways to begin to save is to establish a budget and most financial institutions have free budget books to keep track of all your expenses. Many of us couldn’t be bothered to start a budget, but if you don’t know how much money is available then it’s difficult to save. A budget is a financial snapshot of all your positive cash flows versus your negative cash flows. Generally most budgets are calculated monthly therefore you must keep track of all your expenses over a one month period. By taking the time to record all your expenses and implementing your budget, it will give you either a positive or negative monthly cash flow. Now you can begin to save to reach your financial goals. The budget will give you back financial control over your expenses and taking only about two to three hours a month, I consider it time well spent.
Pay yourself first
The next best way to start saving money is the “pay yourself first rule.” Essentially, you are making sure you’re saving for yourself before paying others. The best way to do this is to have 10 percent taken off your paycheque and directed into a high interest savings account, this way you won’t see the deduction or really miss it as well as forcing yourself to live within your means. If you don’t start saving now, then you will keep delaying. Once you establish a savings plan then you can start saving for your financial goals. By doing this your net worth will increase and you’re creating positive behavior. Most people build their wealth over a lifetime not overnight. Once you have started paying yourself first then you can start looking at suitable investments that match your timeframe.
Eliminate debt by cutting expenses
The next most logical way to start saving is to eliminate debt and cut expenses. The major difference is to try and eliminate ‘bad debt’ versus ‘good debt.’ Paying off loans for investments such as property or capital is termed ‘good debt’ because these debts have the potential to appreciate and increase your overall net worth. The debts to eliminate or reduce are the unnecessary, or splurge buying expenses. We all know how much a daily cup of Starbuck’s coffee adds up to over a month and some of us like to spend money on unnecessary consumer items. You really have to figure out how much of these purchases you really need and cut the rest of these expenses down if you’re paying too much. Also work on paying off the highest interest credit cards first and it’s better to have fewer credit cards than too many. This will also help improve your credit rating. The most effective way to save money is to prepare a budget to help you control your expenses and eliminate unnecessary ones. Most of us don’t spend enough time managing our money. By paying yourself first you’re putting yourself ahead of others and creating a nest egg. Once you have a budget, then you can eliminate unnecessary debt and take control over your finances. Too many people let consumer companies take advantage of them and it’s important to be aware of this in your monthly spending. Try and eliminate bad debt and know what good debts are. Keeping track of your cash flows will help you have piece of mind knowing that you’re taking action for your financial goals and dreams.
Good luck, stay consistent and stay tuned!
Consumer Credit Counseling Debt?
July 29, 2008
There are so many different ways of going about getting yourself the proper debt relief help that you are looking for often times many people can feel a bit overwhelmed as to which would be the best possible choice for them and their own unique financial situation. Consumer credit counseling debt help will allow you to make an informed decision when it comes time to make that jump.
Debt Consolidation in and of itself is a way that will allow you to quickly reduce the amount of interest that you are paying on your outstanding bills while at the same time making it a much more manageable process that you can budget for yourself each month. This is one of the best ways to go about dealing with your personal debt crisis. Consumer credit counseling debt help can actually aid you in finding different alternatives that could suit you better though.
The most important piece of advice that can be given to you when it comes to getting the best possible help with your debt situation is to shop around for the best possible rates and terms and conditions when it comes to choosing a debt reduction company to work with. There are sites out there such as this one that can allow you to get multiple quotes from different debt relief companies which in turn will allow you to get the research that you need before hand before you have to make a decision. This is an invaluable tool to individuals looking to get debt relief help.
If you want to completely make over what your current financial situation looks like, going with consumer credit counseling debt help may be the best option for you and it will help you make the long term habit breaking changes that you need in order to stay debt free for the rest of your life. Though it is advisable that this is something that only the most serious of individuals that are looking to clear the debt from their shoulders should consider because it’s going to take a little bit of work on your behalf, but it will all pay off in the end quite easily.
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