How To Get Out Of Debt » Debt Tips

Biggest Mistakes You Can Make With Your Debt

Admin — Wed, 30 Nov 2011 21:22:20 +0000

U.S. citizens currently have more than $2.4 trillion dollars in debt. If you’re in that number, you have to tread carefully if you want to be sure you’re making the moves that decrease your debt instead of making it go up. Here are some debt mistakes you should be sure to avoid.

Making minimum payments or take your time paying it off. There’s one universal truth about debt and that’s that minimum payment are very expensive and time-consuming. Sticking to the minimum means you’ll pay a tremendous amount of interest and pay your debt off over the longest period of time.

Add to it before you pay it off. Perhaps what’s worse than paying the minimum on your debt is increasing it faster than you’re paying it off, even if you are paying extra on all your accounts. Avoid adding more debt on top of what you’re already dealing with. Pay off some of your existing debt before you take on any additional large expenses.

Being in denial about how much debt you have. A head-in-the-sand approach to your debt doesn’t mean your debt doesn’t exist and your debt won’t go away just because you ignore it. Ignoring your debt will never end well. It’s better to know what you’re dealing with no matter how much you may end up disliking the truth.

Taking too long to figure out a solution. It may not be obvious, but there’s a clock ticking on your debt. If you take too long to decide how you want to deal with your debt, you may run out of better options, leaving you only with bankruptcy.

Missing payments on any of your accounts. Whether it’s intentional or a genuine mistake, missing a payment on your debt can set you back several months. Not only will you have to pay the late fee, you’ll also have to make up two payments instead of one. Unfortunately, if you can’t afford to catch up, you could end up too far behind to catch up.

Borrowing from one creditor to pay off another. Robbing Peter to pay Paul won’t reduce your debt, especially if you don’t have a good plan for paying off either. The exception is when you seek an affordable debt consolidation plan to conquer your debt. Even then, you still have to be careful to avoid all the other debt mistakes on this list.

Trying to pay off your debt without changing your lifestyle. Perhaps one of the biggest things keeping you from paying off your debt is the lack of money to fund your debt plan. If you never scale back your lifestyle and reduce your living expenses, you may never come up with the extra money necessary to get out of debt faster.

In life, some mistakes are to be expected. However, when it comes to your debt, it literally pays to avoid making big mistakes. Making the right debt decisions is crucial to making your get out of debt plan work.

----------------------------------------

This guest post was written by Eliza Collins, a personal finance writer specializing in saving strategies, alternative income and debt relief options. You can read more of her articles at the debt settlement blog.

When Debt Is Good To Have

Admin — Sun, 13 Nov 2011 03:44:26 +0000

Debt is a liability best avoided. Purchasing items with cash protects you from that liability. However, this isn’t always possible and financing is available for such cases.

Before taking on a new debt consider the following questions: Is this something you need but simply cannot afford to pay for outright? Will the purchase appreciate in value? Can all of the monthly expenses related to the purchase be paid comfortably? There are a few instances where the answer to those questions can be yes.

Mortgage

Finding a great deal on a house is far easier today than it was before the real estate bubble burst. However, paying for a house outright just isn’t feasible for many people. Fortunately, houses increase in value, and financing a prudent amount can be a wise investment versus paying rent.

A large down payment is always favorable when purchasing a home. Twenty percent or more down payment gets rid of the need for private mortgage insurance, or PMI, which protects the bank in case you stop making payments. Consider choosing a 15-year mortgage if possible. It means a slightly larger monthly payment, but will save you thousands of dollars in interest, making the investment more profitable.

Car

In many locations, a car is a necessity. Having reliable transportation to get to work is right up there on the list of priorities with food and shelter. Because a vehicle is so important, financing one can be a good decision.

Set a budget before shopping for a new car. Determine ahead of time how much you can comfortably afford per month. And remember, a financed car means higher insurance rates because comprehensive and collision coverage are required by the lending agency. Take that into consideration as you determine what you can afford. Also remember that a new car depreciates very quickly after being driven off the lot and so a reliable used car is a very wise choice.

Education

Investing in education is great way to spend money, providing the student with a life-long asset. Like purchasing a car or home, financing an education should only be done after other cost-cutting methods have been employed.

Many students are eligible for federal financial aid. Scholarships also abound for those willing to take the time to locate and apply for them. Even with all of that help, there usually tends to be a need for more financing. In that case, federally backed student loans are available to students with need. These loans offer very low rates and students do not need to begin repayment until after they graduate. In some cases, the interest paid on these loans is tax-deductible.

Money spent on these debts will yield greater dividends in the end. A home can build considerable equity; a direct way to validate your investment. Or the result can be indirect, as in the use of a car to take you to work where you will grow your income. Either way, good debts are investments that will yield a high return.

George Gallagher is a finance and education blogger. He helps students with their own debt with not-for-profit student loan consolidation.

Debt Settlement: How To Negotiate With Creditors Or Collection Agencies For Debt Settlement

Admin — Wed, 20 Oct 2010 16:12:55 +0000

Today we have a guest post from a reader named Martha that I think you all are really going to enjoy. She has some very interesting insights into debt settlement....

*****

Debt Settlement: How to negotiate with creditors or collection agencies for debt settlement

Debt Settlement is the process of reduction in your debt amount. In the process of Debt Settlement the creditor reduces the debt amount to a certain limit and in return the debtor agrees to clear off the entire debt in a lump sum payment. Debt Settlement is also known as Credit Settlement and Debt Negotiation. The process of Debt Settlement does not arise till the consumer continues to pay off his amount regularly. It arises only when the consumer stops paying his installment regularly and the debt gets on accumulating.

The process of Debt Settlement involves negotiating with the creditors on the remaining loan amount. The process of negotiations is either done by debt settlement companies or by the individuals themselves. But the debtors prefer going for the debt settlement companies as their experience and skills of the debt settlement executives help in a fair negotiation. The negotiation helps the debtor in saving a part of their money. A successful settlement occurs when the creditor becomes aggressive in paying off a percentage of the remaining debt amount. Only unsecured debts such as credit card debts and medical bills are being covered under the process of debt settlement. The debtor in return must clear off his due regularly in order to avoid the accumulation of the debt amount and avoiding the situation of debt settlement.

A professional approach to debt settlement is very important. This process helps in a better debt settlement and more reduction in the due amount. Thus you must prefer going for the debt settlement companies for the processes of debt settlement. The debt settlement companies in return charge you with a certain fees. But you must also insure that you should be having lump sum cash in hand if you are opting for the debt settlement companies. Debt Settlement Companies offers you a settlement by a reduction of 35 to 40% in the loan amount. But the basic disadvantage of going for these debts settlement companies is that they might charge you with a higher fee. They in fact might take a certain percentage on the loan amount being reduced. These companies take a time of 12 to 60 months for the process of Debt Settlement. This might sometimes bring trouble to the debtors.

Debt Settlement completely erases your debt. It's a process that helps in paying off your debt easily and that too at a reduced amount. Debt Settlement is a legal process of reducing your loan amount or your debt amount. Debt Settlement can lower your debt balance; avoid any future situation of bankruptcy and save a part of interest and loan amount due. The creditor also encourages the debt settlement process as he would get his balance amount and would not have the fear of loosing all his money if the debtor files the bankruptcy.

Summary: Debt Settlement is a process of reducing the loan amount and in return facilitates both the debtor and the creditor.

The Truth About Student Loan Debt

Admin — Sat, 05 Jun 2010 02:46:35 +0000

This is the time of year when hundreds of thousands of eager young Americans are looking forward to their first year in college. The last thing most of them are usually thinking about is how they are going to pay off all of the student loans that they are signing up for. But they should think about it. After all, do you buy a house or a car without first considering how you are going to pay for it?

But somehow it has become "politically incorrect" to suggest to college students that they should consider how in the world they plan to pay for the education they are about to receive.

Most young college students assume that they will just run out and get a great job once they graduate and that paying off these loans will be no problem.

But for millions of young Americans, that has turned out to be a very faulty assumption. In fact, in the current economy millions of recent college graduates are unemployed and "good" jobs are few and very far in between.

And it gets really hard to pay off tens of thousands in student loan debt without a good job.

The New York Times recently profiled Cortney Munna - a recent college graduate who has not been able to get that "good job" and who now finds herself in student loan hell. She told the New York Times that she would gladly give back her education to get out of all this debt....

"I don’t want to spend the rest of my life slaving away to pay for an education I got for four years and would happily give back."

The truth is that is exactly where hundreds of thousands of young Americans find themselves.

So if you are getting ready to take out huge student loans, you might want to think twice before signing the dotted line.

So just how bad is it out there?

Well, with tuition at some universities now running more than $30,000 a year (before you even add fees and expenses), students are racking up debt at an alarming rate.

The Project on Student Debt estimates that 206,000 students graduated from college with more than $40,000 in student loan debt during 2008. Using 2008 dollars, that represents a ninefold increase over the number of students graduating with that amount of debt in 1996.

So the truth is that we have a real student loan debt crisis on our hands.

Young people are getting into massive amounts of debt and they are not getting good jobs that allow them to be able to service all of this debt.

And bankruptcy is not an option for these young people either.

In fact, federal bankruptcy law makes it nearly impossible to discharge student loan debts.

So once you are in student loan hell you are basically stuck there for the rest of your life.

So, young person, think really, really hard before you sign that dotted line.

Because once you take that student loan, it is going to follow you for the rest of your life.

Want To Get Out Of Debt? Don’t Rely On Debt Settlement Companies

Admin — Tue, 27 Apr 2010 22:41:45 +0000

For millions of Americans who want to get out of debt, the smooth advertisements of the "debt settlement" companies are a little too hard to resist. They promise to settle your debt for pennies on the dollar. They promise to get you out from under credit card bills that you can’t pay. But do they get the job done?

Well, for the most part, no.

The U.S. Government Accountability Office recently announced that an extensive investigation found rampant fraud, abuse and misrepresentation in the debt settlement industry.

The following is a quote from a GAO report to a Senate committee about what the investigation discovered....

While we determined that some companies gave consumers sound advice, most of those we contacted provided information that was deceptive, abusive, or, in some cases, fraudulent. Representatives of several companies claimed that their programs had unusually high success rates, made guarantees about the extent to which they could reduce our debts, or offered other information that we found to be fraudulent, deceptive, or otherwise questionable.

It turns out that many of these debt settlement companies charge very large up front fees which customers are not able to get back later if they are not pleased with the results. Some of them even claim to be government-approved or part of the economic stimulus program.

The GAO says that fewer than 10% of the people who hire these debt settlement companies actually settle their debt for "pennies on the dollar".

So if you do hire one of these companies you might want to keep your expectations in check.

The reality is that most people who sign up with these companies fall further behind on their debts, they see their credit ratings go down the tubes, and they often end up having collection agencies coming after them.

The bottom line is that if you want to get out of debt you should not rely on a debt settlement company. In addition to being out the huge fees that you pay to such a company, you will probably just ruin your credit and end up much farther behind on your bills.

The truth is that you would be much better off trying to reduce your expenses, working with your creditors to construct a reasonable payment schedule and figuring out a way to start bringing in more income.

So what do you think? Do you think debt settlement companies are the way to go? Have you had a positive or a negative experience with a debt settlement company? We would love to hear your story - please feel free to leave a comment below....

Five Tips That Can Help You Get Out of Debt – How Consumers Can Legally Eliminate Debt

Admin — Sun, 14 Feb 2010 20:40:07 +0000

Five Tips That Can Help You Get Out of Debt - How Consumers Can Legally Eliminate Debt

By Ryan Worthington

Are you a consumer who ran into some financial trouble that has spiraled out of control? If so, you may be looking for tips on how you can get out of debt. If so, keep reading on for some helpful debt relief tips that you should implement today!

1 - Decide to Take Action

It is one thing to research your debt relief options and another thing to actually go through and implement them. Implement them is what you want to do. If you are serious about getting out of debt, be truly serious. Getting back on your financial feet isn't too difficult, but it isn't very easy either. Know and be prepared for some financial ups and downs.

2 - Focus Your Attention on Debt Settlements

When it comes to seeking debt relief, you have a number of choices. Three common choices include bankruptcy, consolidation, and settlement. Your best option is likely settlement because you still pay some of your debts (making good on what you do owe), but you don't pay all of them. A percentage of what you do owe gets forgiven or eliminated and this percentage is typically around 60%.

3 - Enroll in a Debt Relief Program

If you were to opt for bankruptcy or consolidation, you would need professional help. Someone needs to help you with bankruptcy proceedings or someone needs to give you a consolidated loan. Settlement is a bit different because you can negotiate with your creditors. Despite the fact that you can handle the negotiations yourself, it is within your best interest to enroll in a debt relief program. They handle the negotiations for you and then help you make payment by setting up a payment plan.

4 - Trim Your Spending & Apply That Money Towards Your Debts

Enrolling in a relief program is recommended and you should have monthly payments that you can afford to make. On that same note, you will get out of debt faster if you can pay more. So what you should do is look at your spending. Focus on your monthly bills and everyday purchases that do add-up. See where you can eliminate or reduce purchases for the time being. Take this extra money and use it to get out of debt faster!

5 - Make Your Agreed Upon Payments

Finally, it is important to make your agreed upon payments. If you enroll in a debt relief program, these on time payments can help improve your credit score little by little. Most importantly, it is the only way for you to regain control of your finances.

If you are over $10,000 in unsecured debt you really should consider getting a debt settlement. Creditors of unsecured debt are fearful of collecting and they also have stimulus money to make debt settlements financially feasible for them. Once the economy turns around it will be too late to eliminate your debt.

Check out the link below to locate legitimate debt relief companies in your area: Free Debt Advice

Article Source: http://EzineArticles.com/?expert=Ryan_Worthington

http://EzineArticles.com/?Five-Tips-That-Can-Help-You-Get-Out-of-Debt---How-Consumers-Can-Legally-Eliminate-Debt&id=3673568