debt relief

What Are Your Debt Relief Options?

March 10, 2014 by editor

How does being in debt affect you? Are you one of the less financially responsible people to shrug it off and worry about it later? Are does it worry you, stress you out and make you feel anxious about the next month’s payment that is coming due in the next few weeks. The problem is, once people fall into debt they often cannot lift themselves out again, they become tied down and only continue to fall into more and more debt as the interest rates increase and the bills slowly start to rise month by month it starts to feel hopeless. However, there are some great debt relief options that are sure to keep you a float in your time of financial burden.

Transfer your Balances

If you struggling with credit card debt and have multiple cards, a great debt relief option would be to transfer the debt from the card with the highest interest onto the card with the lowest amount of interest. This will drop your monthly payment by whatever the APR percentage rate is on each card. If you do not own another card you could apply for what’s called a “0% interest balance transfer card” which would keep your debt with no interest for 6-18 months. Once your debt has become interest free, every payment you make towards your card will reduce the amount of money you owe, rather than partially pay for monthly fees. If your debts are low enough and meet your financial ability, you could even get yourself out of debt by the end of your promotional period with interest free payments.

Home Refinancing

Check your home equity, if your balance is high enough, you could possibly refinance your house and use the money to repay your debts. If you are new to equity and do not know what it is, let me try to explain, your equity is the cost difference between how much money you owe on your house, and how much money your house is actually worth. Let me demonstrate, if you owe $150,000 on your mortgage, yet your house is actually worth $225,000, you possess $75,000 in equity. If you take a new mortgage out on your house for, let’s say, 90% you would then get $60,000 in return. You could then turn that money around and pay off whatever debts you have. Remember to be careful here, this will set back how soon your house will be paid off and will alter your future budget, so make sure to put in the proper consideration before choosing this debt relief option.

A Second Mortgage, or “The Homeowner’s Line of Credit”

If you decide not to refinance your home, another debt relief option you might consider is taking out a second mortgage on your house. This is also known as “Homeowners Line of Credit”. However, this also has to do with home equity. If you have not lived in your house for over 10 years you may have little to no equity at all. This is due to the high interest rates, in the first 10 years you are not really paying the balance down on the house. But, you’re paying interest and mortgage fees instead. If you have been in your home for over 10 years, or made a rather large down payment, you might have enough equity in the home to take out a second mortgage. This is definitely a good debt relief option as it will give you a boost in cash to pay off your debts.

Lower Your Monthly Spending

Many people find themselves in financial situations and often do not realize that it simply comes from their monthly spending habits, even if it’s the occasional bag of chips at the corner store throughout the week it could be adding up to over $100 a month. It is important to make a budget and keep track of how much money you spend on food, clothing and any other bills throughout the month. Once you have made a note to pay attention to wear your money is going every month, you can try to make some cut backs in certain categories in your budget. Although this is not quite a debt relief option, it is still a great way to help yourself out in financial times as it will take any extra money from your budget and put it back in your pocket.

Debt Settlement

Debt settlement, also known as debt negotiation, debt arbitration or credit settlement, is said to be the best debt relief option. If you are seriously in debt, say 5 or 6 months behind on payments, that’s when you should approach your creditors and offer to settle all your debt for something less than what you actually owe. Please note that there have been cases where 50 to 60 percent of debt has been settled this way.

Whatever debt relief option go with, make sure you understand every pro and con of it. It’s better to wait for another month than jump to a decision that would lead you to even more in debt.

Habits That We Get From Consumerism That Lead Us Into Debt

June 25, 2013 by editor

Consumerism is all about spending. At least, that is what you can easily conclude when you observe how society function and act in modern times. We are all encouraged to buy things if we want to live a more convenient lifestyle.

At first glance, there is nothing wrong with that. However, if you factor in the purchase practices of most consumers you will realize how it leads to financial problems in the future. The society that we live in today believe that debt is a necessary risk that we must take in order to enjoy life. That is the mentality that most of us grew up with. We got a really big realization when the recession hit a few years ago and we were faced with mountains of debt and a reduced income. For some of us, the income was totally wiped out.

To make sure that we never have to go through the same financial hardship in case another crisis happens, here are some consumer habits that you need to eliminate.

First of all, you have to stop justifying your wants. We all try to justify how a more expensive car will be cheaper in the long run because it will take a long time before it breaks down. There may be some truth to this but there are second hand cars that have very good owners and thus are well maintained. Or you can justify expensive purchases with the mentality that you are only doing it “once.” To tell you frankly, if your restrictions accept the “just this once” attitude, then you can expect that it will keep on happening again and again.

Our credit card purchases is another habit that we must eliminate. This card, although it means well in protecting your cash, allows you to purchase way beyond your present capabilities. It is not a good idea to rely on a future income that has all the possibilities of not arriving. The better mentality to stay away from debt is this: if you cannot pay for it in cash, then do not buy it.

We also have the bad habit of using shopping as a therapy. Financial experts believe that buying things when you are experiencing a high emotion is a no-no. Whether it is a positive or negative emotion, it will still cloud your judgement. You may think that retail therapy helps but on the contrary, it will make things worse – especially once you receive your credit card statement.

Caring about what people say about you is a mentality that affects your spending habits too. Just because everyone is clamoring for the latest gadget, it doesn’t mean you should follow. Again, if it is not within your budget, do not get it.

In case your reading of this article is too late and you already have accumulated quite a debt amount, there is hope for you yet. Debt consolidation is a great way to solve your current debt problem. If you use debt management, the debt counselor will help arrange for your credit cards to be frozen so as to help you curb the temptation of using them.

Utilize Your Debt Relief Option To Achieve Success Inspite Of Debt

June 21, 2013 by editor

Being in debt does not mean it is the end of the world for you. If you react to it correctly, it might be the catalyst that will help you achieve elusive financial success. You may be surprised that there are millionaires and billionaires who once declared themselves bankrupt. They were able to rise from the ashes of their financial ruin and emerge victorious and happily rich at present.

That can be your success story. If you are wondering how to do that, pay attention to what we will discuss in this article.

First of all, you have to accept that there is something wrong with the way you are living your life. If you got yourself in debt, that means you have been living beyond your means. You have to correct that so you no longer incur debt.

Once that acceptance is solidified, you may want to consider the options that you have to achieve debt freedom. If you want to be successful in life, you want to make sure that your option will not harm your chances to improve your personal wealth. Usually, that means you have to take care of your credit score. It will allow you to gain better deals in loans that you can use to improve your income. After all, this is commonly included in the background check that employers makes for applying employees. It can also open up business opportunities that you may want to set up.

Debt consolidation is your best option at this point. It will provide you with a more structured payment scheme that will eventually assist you in paying down what you owe. If you chose debt consolidation loans, your score will slightly dip as your debt amount increases. However, once you have paid off the other loans with that new loan, your score will improve again. In debt management, it is usually not reflected in your credit report.

Another great thing about this debt relief option is it lowers your monthly payments. You can use the freed amount to grow your savings and to invest it in a business venture. As you grow your income, you can make bigger monthly payments and that will help you get out of debt a lot faster.

Since this debt solution will not reduce your debts, you will feel the full impact of your debt payments. If you work hard to get out of debt, it will leave a more lasting impression on you. That hardship will keep you from incurring more debt or landing yourself in another debt situation. This is very important because you have to learn your lesson. Some people who went the easy way out did not feel the full impact of how debt can ruin their lives. They did not mend their ways and soon ended up in debt once more.

As you pay off what you owe, you need to identify the lessons that you have to learn to keep away from another debt situation. These involve saving, budgeting, smart spending and the overall living within your means state of mind. This is what will fuel the success that you wish to achieve in your life.

Tips To Deal With The High Interest Of Credit Card Debt

June 17, 2013 by editor

Credit card debt becomes difficult to pay off primarily because of the high interest rate. The interest amount that you will pay on top of your principal balance will always change depending on your debt. This means the bigger your balance, the bigger interest you will end up paying for. And that will continue to accumulate unless you do something about it.

Fortunately for you, there are many ways to deal with the high interest on your credit cards. Let us discuss them one by one.

Request for a lower interest.

Ask and you shall receive. Believe it or not, this is sometimes effective especially for those who have a good credit standing and have never been late on payments. Just pick up that phone and give them a call. It wouldn’t hurt to ask.

Refuse interest hikes.

Credit card companies have the right to change interest rates without reason. However, the government mandates that consumers must be informed of it. So if you receive this notification, you also have every right to refuse the hike. Two things can happen here: the creditor can accept your refusal and retain your old rate or they can deny your request and agree to close your credit account (after giving you ample time to pay off your balance).

Transfer your balance to a lower interest card.

Balance transfer is a great way to cut back on high interest for a couple of months so you can make significant payments towards your principal debt. It is actually a great debt consolidation option. For a minimal balance transfer fee (3% of the amount being transferred), you get to enjoy an introductory promo of zero interest from 6 months to a year. That can help reduce your debts significantly.

Apply for a debt consolidation loan.

Speaking of debt consolidation, you can apply for a loan that is big enough to pay off all your high interest card debts and leave you with one big loan that is stretched over a 5 year period. Personal loans usually have lower rates than credit cards – especially secured loans. So if you have a good credit standing or a collateral, this can be a great option for you.

Enroll in a debt management program.

While the low interest is not a guarantee, you can also give debt management a shot – at least if you do not qualify for balance transfer or debt consolidation loans. The credit counselor who will work with you will negotiate with your creditors for a lower interest. If you are current in your payments, they may approve. But again, this is not a guarantee so don’t put all your hopes on this one.

Stop using your cards.

If you really want to solve your interest woes, you need to stop using your credit cards. Pay down your debt and keep you card to ensure that you will not have easy access to it. If your credit score can take a hit, cut your cards and keep only one – preferably the one with the low interest. Don’t worry about your credit score because as long as you keep making good payments on your debts, it will go up.

How To Utilize Debt Management To Stop Collection Calls

June 13, 2013 by editor

Collection calls can be a real stress inducer in a consumer’s life. It is bad enough that you know you failed at money management. The very thought of your inability to pay off what you owe is enough to keep you awake at night. Imagine how worse it would all be to have someone call you every day just to remind you that you have been late on debt payments. These calls are rarely friendly and they are oftentimes abusive, threatening and harassing. You would give anything to have these calls stop so you can think and get yourself out of debt in peace.

While you want to hate these callers, you need to realize a couple of things. One, they are only doing their job. Two, your debt is profit for them and they have every right to collect from you. Three, they are not out to attack you personally. And last, your debts are your responsibility and you are the one who is at fault by putting yourself in a position wherein you cannot afford your debt payments.

Fortunately for you, there is a way to stop the collection calls from happening and that is debt management.

This type of debt relief program involves a debt professional who will help you with your financial difficulties. You will both come up with a debt management plan or DMP that will serve as the new structure of your payments. The counselor will not only take an active role in paying off your dues, they will also teach you how you can keep yourself from landing in another debt pit. With your DMP, the counselor will get in touch with your creditor to ask for approval. This plan contains a lower monthly payment that is stretched over a much longer time frame. If possible they will even negotiate for the creditors to lower your interest rate.

That sounds like a good way to pay off debt right? But that does not answer the question as to how it can help stop collection calls.

The thing about debt management companies is that they are funded and backed by credit companies. That will give you the assurance that these people will be entertained by your creditors. Although that arrangement may seem like suspicious because you might end up being coerced to submit to the plan of your creditor – it does not work that way. At least, there are legitimate companies who sincerely want to help out consumers pay off their debts without getting to the bad side of their respective creditors.

This relationship is the reason why collection calls will stop. When you are enrolled in a debt management program, your application will be reported to your creditors. The debt management company will tell your creditors that they do not need to remind you of your debt. That is because you already took the steps to make sure that you can keep up with payments by enlisting their help. More than anything, your creditors just want the assurance that you will pay off what you owe. Since you are being represented by a debt management company that they recognize, they can ease their worries and as a result, ease up on the collection calls too.

Can Debt Management Save Your Retirement?

June 4, 2013 by editor

Retirement should be a time of relaxation, peace and comfort. If you think about it, debt should have no room in it. So if you are looking down the road into your retirement and you see that your debts are threatening to be a part of it, you need to seriously consider debt management.

While the other types of debt relief option can also help, this is probably the best one for a lot of reasons.

First of all, if you are about to retire, you are under a deadline. If you really want to get rid of your debts before retirement, debt management can make that happen in less than five years. Of course, this does not involve mortgage and student loans – which are quite significant. But for your credit card debt, medical bills, utility bills and other personal loans, you can count on debt management to help you pay them off before retirement. That way, if you have to postpone your retirement to keep the steady income pouring in for your debts, it will not have to be too long.

Another reason why this is helpful is it keeps your debts from being too stressful. This debt solution will enlists the help of a credit counselor who will advise you on the best way to pay off your debts. Together, you will create debt management plan that will be based on your financial capabilities. You will stretch your term so that you are allowed to make smaller contributions towards your debt. The counselor will take charge in negotiating with the creditor to accept this new payment plan. All you have to do is to sit back and concentrate on producing a monthly income.

Aside from the guidance, you will also be relieved from the stress of handling too many accounts. Once your debt management plan is approved, all you have to do is to send the total monthly payment to the counselor. In turn, they will distribute your payments to your various creditors. That will make your life a whole lot easier. Stress can lead to a lot of health ailments so given the fact that you are not as physically strong as you were, this is something that you want to avoid.

Since debt management will allow you to send lower monthly payments, you have more money to deposit to your savings. Although your debts will be paid off, you still need your savings to help you survive. Remember that you will no longer have a steady income once you retire. With the rising cost of living and medical fees, your Social Service benefits may not be enough to cover them. By growing your savings, you will have extra money to spend on your retirement.

Remember that if you have the determination to solve your debt problems, you can have the best retirement that you can ever hope to experience. But the bottom line is, you have to start now. Do not delay it any further since the longer you wait, the harder it will be for you to recover in time.

Debt Consolidation Options That Do Not Require A Loan

June 1, 2013 by editor

If you are wondering if you can consolidate your debts without using a loan, yes that is possible. In fact, there are three ways for you to do so.

The first option is known as debt management. This type of debt relief requires the presence of a debt counselor. With a minimal fee of $50 a month, you can benefit from their expertise, guidance and negotiation skills. You will begin by making a debt management plan that will contain your proposed low monthly payment. Take note that there are no reductions here. You are merely stretching your term so that the longer period will allow you to lower your monthly payments. This plan will be presented by the counselor to your creditor. They will also try to negotiate for a lower interest rate – but that is not a guarantee. When they approve of the plan, you can send the total monthly payment to the debt counselor who will take charge of sending the portions to the creditors – as indicated in your debt management plan. You need to stick to this plan because failing to do so will forfeit the agreement and could return you to your usual high interest contributions.

The other option that you have is balance transfer. This is literally transferring your other credit card balances to a new card. This card has an introductory period that provides you with a zero interest payment plan. This promo usually lasts for a minimum of 6 months to a year. You will pay a balance transfer fee that is a percentage of the amount that you will shift to the new card. It is usually 3% of the debt amount. There is no professional helping out here so you have to be careful. The trick to maximize this debt consolidation option is to put in as much payment as you can into your debt during the promo period. Any amount that you will send will be credited to your principal debt. Using a frugal budget during this period is sometimes the most ideal tool to make it work.

The last option, though usually not associated with debt consolidation is debt settlement. It is only similar because it allows the debtors to create a single payment plan through a debt settlement company. This type of debt relief option targets to reduce the debt of the consumer. The idea is to convince the creditor that you are in a financial crisis so that they will allow you to pay only a percentage of your debt and after you have finished that, the creditor will forgive the rest of what you owe. This is effective but only if you do the negotiations correctly. The creditor will be unwilling at first to give in. But if they do, you can find yourself out of debt in a couple of years.

All of these options have their own pros and cons. Make sure that you do your research to see which one is the best option based on your financial capabilities and the type of debt that you owe. Usually, these three are best for unsecured debts. If the bulk of your problem involves secure loans, you may want to reconsider debt consolidation loan as your debt solution.

Partner Debt Management And Savings To Achieve Fast Debt Relief

May 28, 2013 by editor

Debt management provides an effective way of getting out of debt. However, if you really want to maximize the benefits that you will get from it, you have to make sure that you will grow your savings alongside your debt payments.

Most people think that putting all their extra money on debt payments will get them out of debt faster. However, there are uncertainties in the future that you have to prepare for. These could cripple your finances if you do not make the necessary arrangements for a back up plan.

Your savings is the best back up plan that you can set up for yourself. It is something that will help you face any crisis that fate will throw your way. Even if you have debt management working on paying off your debts, you need to save in order to keep yourself from more debt.

Here’s the thing, even if your finances will allow you to pay off your debts while financing your daily expenses, that does not mean it will not change. One emergency can ruin it all. If the car breaks down or you need to buy something or replace an appliance immediately, you will have to either get it from your debt payment or your household budget. The way most of us think, it is the debt payment that will suffer for the emergency situation.

If you are going through debt management, one of the agreements with the creditor is you should never default on your payment – otherwise, the plan will be forfeit and you will go back to your high interest payments. To keep this from happening, you should build up your emergency fund.

When you have your savings, you can easily pay for any emergency need without compromising your debt payments. That will help you stay true to your debt management plan despite any incident.

The beauty about this partnership is that debt management allows you to make lower monthly payments – thus give you more room for your savings. You can also create a frugal budget so you have more money to set aside for your savings. Or, you can grow your income.

Increasing your cash inflow is an important part of debt relief. You got yourself in debt because your income is not enough to support your expenses. Even as you lower your expenses by making smart decisions about it, you should also increase your income to make the chances of getting back in debt more unlikely.

There are many ways to grow your income. You can set up a passive business so you don’t have to work too hard to make it earn. You can also use your hobby as a source of supplemental income. If you love to bake, whip up a batch of cookies every weekend and sell it to your colleagues. Be creative and resourceful about it and you should be able to find another source that will secure your finances.

Debt relief is hard but the rewards of debt freedom should make it all worthwhile. Learn your lesson by practicing better financial management and keep yourself from another debt situation.

Tips When Using Balance Transfer As A Debt Consolidation Option

May 18, 2013 by editor

Two of the popular ways to consolidate debt are debt management and debt consolidation loans. However, there is another option that consumers may want to use. We are talking about balance transfer. This is an effective debt relief method that have gotten people out of debt effectively.

There are some similarities and differences with the other methods of debt consolidation. Of course, the common trait is the consolidation of debt. You will literally transfer your high interest credit account balance into a zero interest card. Be prepared with some cash though because you will have to pay for this transfer. It is usually a percentage of the debt amount that will be shifted to the new card. It all depends on the card company that you will use to transfer your debts to but 3% is the standard practice.

Although there will also be a lowered monthly payment, it will only be for a short period. The usual term is between 6 months to a year. The lower payment happens because of the zero interest promo period of the card. Any payment that the consumer will make during this period will all be towards the principal debt. After that, the consumer may be faced with a high interest once more.

If you wish to use this as your way to get out of debt, there are a few things that you have to work on.

The crucial period is the time when you have the zero interest. You have to maximize this opportunity to pay off a huge chunk of your principal debt. A suggestion to adapt a frugal budget may be in order here. This means living on a very tight budget. It means cutting back drastically on your fun activities, commuting to work to save on gas, not going out on weekends and not buying anything for the next few months. In other words, anything that you can give up that will not kill you in the process should be given up so the funds can be sent towards your debt payments. This is only for a short period so you may be able to survive through the frugality.

A pitfall that you should be cautious of are the other credit card accounts that you emptied of debt. Make sure that you will not use them again. If you have to cut them off, do so. Although your credit score will decrease, you can always work on increasing it as you pay off the debts on your balance transfer card.

Another reminder is to be careful in using this card for purchases. New purchases are usually not covered by the zero balance. This is usually for the transferred debt and cannot be used for anything else.

Read through the fine prints of your balance transfer so that you know important details like when the zero interest will expire. You have to prepare for this and build your debt payment plan around it. Not only that, you have to make sure that you will never get yourself in debt again. Consider the reasons why you got into that situation in the first place and correct the mistakes you made in the past.

This Is How Running Away From Credit Card Debt Can Make Things Worse

May 7, 2013 by editor

Have you ever been in a very bad situation that you just want to have the earth open up to swallow you in whole? Were you ever in a position that is so distressing that you want to drop and leave everything behind?

Well if you are referring to credit card debt, that is exactly what you should NOT do.

Running away from your credit card debt, or any type of debt in general, is a very bad idea. As tempting as it may sound, you need to face it because in more ways that one, you brought this upon yourself. No one is at fault for your debt problems but yourself – unless of course you were a victim of identity theft which is most unfortunate.

There are many things that can happen if you choose to ignore your debt problems. For one, your credit score will suffer immensely. If you let your credit score go to ruin, you can say goodbye to any plans that you have to buy a home, open a business or to get a good employment. Times have changed and credit scores have risen to be one of the most important measurements of your financial health – specifically in defining how you handle credit. It is scrutinized by lenders, investors, employers and even landlords. While it may not be the end of the world, having a good credit score will open more doors for you than having a bad one.

Another thing that can happen is your debts will accumulate very fast – especially when you have a lot of high interest credit card debts. Think about it and do the math for a second. Late penalty fees are added to your current balance even when you are only a day late on your payments. That means an average of $30-$35. Apart from that, finance charges are added into your balance. Whatever is the sum of all of that plus last month’s balance, that will be the basis of the interest amount that will also be added to you payment. If you are late even for just a few months, that would mean a significant addition to what you originally owe.

Things will also turn for the worse because of the stress that you will have to face. As soon as you miss a payment, creditors will start calling you. When 4-6 months have passed and you still refuse to acknowledge your debt, the collection will be passed on to a third party agency who will be more harassing, threatening and abusive in their collection calls. That stress alone will make it impossible for you to ignore what you owe.

Understand that no matter how it hard may seem to get out of credit card debt, you need to man up to your own actions. Although it can be difficult, it doesn’t mean you cannot ask for help. There are debt relief options that will help you get out of debt even if you have a very limited income.

For instance, debt management allows you to make lower monthly contributions towards your debts. This is possible because you will be stretching what you currently owe over a longer payment term. The debt counselor that will be assigned to you when you enroll in the program can even help negotiate with the creditor for a lower interest rate – which will lower your monthly dues even further.

Know your options and keep in mind that running away from it all is not one of them. Be wiser and responsible when it comes to your finances. Your debt, no matter how grave it may be, does not signal the end of the world.