Debt Management - What You Should Know

By Faith Kat Fay

There are some people who are in huge debts. Some of these people have been affected by poor performance of the economy while others are not. There are also some young people who borrow money from banks in order to finance their college education. This has left them to be in debts thus struggling to pay them.

There are many reasons why people borrow money and later on find it very difficult in paying them. However, there are those who borrow money with wrong intentions. Before thinking of borrowing money, you should have a clear purpose what you intend to do with it. Do not borrow money in order to finance your expensive lifestyle.

Debt management is important especially if you are using credit cards. Do not get yourself in a huge debt as a result of accumulated interest charges on your credit card. Bear in mind that you will find it difficult to clear your credit card debt when the economy is performing poor. Moreover this will get worse when the government introduces tight monetary measures.

You should know the importance of paying all your debts before their due dates. Some ways of managing debt are discussed below. They are not difficult to apply.

1. Debts with High Interest

You should never forget to pay a loan that has a high interest rate. You should first pay a loan that has got a high interest rate before paying other debts. Avoid accumulating interest charges as result of failing to pay the monthly fixed amount.

Debt management experts always recommend the payment of loans that attract high interest rates first before paying debts that attract low rates of interest.

2. Credit Card Temptation

Credit cards have made many people to do impulse buying that has led them to be in huge debts. You should leave your credit at home or discipline yourself to use it during emergency situations only so as to avoid the temptation of buying things that you have actually not planned for.

You should only use your credit card during emergency situations.

3. Pay Before Due Date

You are required to pay a certain amount of money on a monthly basis once you secure a loan from a bank. It is not a must that you should be paying this amount each month till you complete paying your loan. You can decide to pay your loan in advance. One advantage of paying your loan in advance is that its interest rate will be lowered.

4. Borrowing Money

This is another way of paying your debts. You can borrow money from a financial institution that charges interest rates that are low in order to finance the payment of your loan that is of high interest rate in case you do not have any money. Although this basically means exchanging one debt for another debt, you will have avoided from being penalized as a result of failing to pay your loan.

In the present times you should learn on ways on how to get out of debt for once and for all. Click the link to be directed to a webpage where you will learn ways of managing your debt. The author of this article is Faith Kat Fay.

4 Warning Signs You're Digging Yourself in a Debt Hole

By Samantha Seiffert

One of the worst things about debt is how easy it is to get in trouble with it. For example, using your credit cards can be fun. Those two big, leather-covered recliners look really comfortable and would be perfect for your family room. So, what the heck? Just charge them on one of your credit cards. You could make just the required minimum monthly payment of $20 or $30 and you wouldn't be digging yourself into a debt hole would you? Well, maybe not unless you saw one or more of these four warning signs.

Warning sign #1: Using credit to buy necessities

If you can pay off your credit card bill in full each month, then using it to buy groceries is okay. However, if you're using it to buy gas, groceries or other essentials and don't have a plan to pay off your balances within 90 days, you may be digging yourself into a debt hole.

Warning sign #2: Your balances exceed 10% of your income.

Let's suppose you earn $60,000 year. In this case, if you're carrying more than $6,000 in revolving debt, your ability to react to a financial crisis could be limited. Carrying a balance in excess of 10% of your income is not exactly terminal but is a signal that you should start working to reduce your balances as quickly as possible. It's important to understand that this is different from having minimum monthly payments that exceed 10% of your income. If you have minimum payments this high, they will exceed your income. That's not a danger signal it's a glaring red sign that you should get to a credit counselor post haste.

Warning sign #3: Making just the minimum monthly payments

If you're in a position where you can make only the minimum monthly payments on your revolving debt (usually credit card debt), you need to worry - unless it's just a temporary situation. In many cases, the required minimum monthly payment will be only enough to cover your interest charges and will do nothing to reduce your balances. If you continue to make just the minimum monthly payments required, you could literally never get out of debt. In one example I saw recently, the person could get out of debt making just the minimum monthly payments but it would take him 17 years.

Warning sign #4: No cushion

You really need to have saved three to six months in living expenses as an emergency fund. If you don't, you're flirting with danger. Your employer could stop giving you overtime work, put you on furlough temporarily or terminate you. You could have an emergency medical issue or a big car repair bill. You need to think what would happen if you encountered one of these problems. If you believe this would put an immediate stress on your financial life then you're playing too close to the edge and need to bulk up your savings.

In summary

None of these for warning signs mean that you're in immediate danger of having a financial melt down. But they are just that - warning signs that you could be flirting with danger. So take heed and do what you can to start reducing your revolving debts before you do dig yourself into a big debt hole.

Six Ways To Deal With Debt During Tough Times

By Samantha Seiffert

Americans are still having a problem with debt as evidenced by the fact that credit card debt is sharply higher vs. last year. In fact it was up 5.9% over July 2011. The Federal Reserve has reported that the average American household is now burdened with $15,587 and credit card debt alone and of course, just about everyone is faced with serious financial issues during this period of bad financial news.

If you're having debt problems

If you are experiencing problems with debt, there are things you can do to ensure yourself of a better financial future. Here are six things you could do to brighten your financial picture regardless of the state of the economy. But do understand that doing a better job of managing debt requires you to change how you think about spending your money and must be open to utilizing the professional and educational resources that are available.

Be ready to make sacrifices

The first and probably most essential step if you're stressed by credit card debt is to determine where you can make spending cuts. You will have to look at what luxuries you could give up and your decision-making process, especially if you feel you've been making bad decisions.

Learn how to do things differently

You've probably heard the old saying, "if you keep doing what you're doing, you'll keep getting what you're getting". You will need to learn how to change your habits to get out of debt, which means changing the way you approach your finances. You must stop overspending as you did in the past

Take advantage of the financial tools now available

There are a number of great money management tools available either as apps you can use on your smart phone or tablet or as software for your computer. As an example of these the very popular Mint.com could help you develop a budget, keep track of your spending, monitor your investments and will even send you an alert if it finds a financial product that's better or cheaper than one you're currently using. Websites such as InCharge.org offer a myriad of educational materials and interactive tools including home budgeting calculators and even financial games where you can have fun while you're learning to make better decisions.

Always pay on time

You've undoubtedly heard many times how important it is to pay on time but this cannot be over stated. It is definitely in the top five things you can do to have a better financial future. If you're constantly paying over-limit charges and late fees, you're spending money you shouldn't be spending.

Do it now

How many times have you decided to do something about your finances but then just kept putting it off and did nothing? You need to create a budget and a spending plan today and start following them. Otherwise, you'll just continue spending too much and never get your debt under control.

Get help

There are non-profit credit counseling agencies in almost every city and town. Don't be afraid to go to one for help. These agencies are staffed by counselors who have helped hundreds of people get control of their finances and get out of debt. Most either charge nothing or have very low fees. Your counselor will review all of your earnings and your debts, help you create a budget and, if necessary, even a plan to pay back your creditors and become debt free.

Reasons Why A Budget Is Not Helping Your Debt Management Efforts

By Samantha Seiffert

While you are going through debt relief efforts, a budget plan is your roadmap to success. A lot of people use it to identify their financial capabilities so they can plan how they will go about debt management.

The concept of budgeting can help you get over debt but there are times when it seems to fail in helping you. If this is something you can relate to, we have below the possible reasons why your budget is keeping you from conquering your finances and ultimately, your debts.

One possible reason is you failed to create a realistic one. While we want to have the highest savings, you need to list down the real expenses that your family needs. Sometimes, you cut back on spending so drastically that you end up not following it. Only you can determine what you can handle or not. If you think that you need a gradual change in cutting back, go for that method.

Another reason why you think it is not working is because it is still too early to see results. Give it some time before you see results. Especially if you opted for the gradual cut back, you need to be patient before you can see the savings accumulate.

If your spending is higher than your income, then it is not the budget that is the problem - it is your expenses. If you really want this plan to work and give you savings, you need to make sure that the total income is higher than all your spending combined.

It is also important that you complete your budget list. This is connected with setting a realistic budget for you and your family. For instance, if you failed to include an allowance for your children's projects and extracurricular activities, that can seriously ruin the plans that you have set. It can eat up the savings that you are expecting for the month.

The most common reason why your budget is not working is you are not disciplined enough to stick to it. Since you spent time to think about it and analyze what you can handle or not, it is only right that you take effort to follow it. All your planning will be for nothing if you don't.

Some people also fail to allot a budget for fun things. Unless you know that you can live without it, you have to give a certain amount for all the fun things that you want to do. Give yourself a break every once in a while and that should be stated in your budgeting plan. Just opt for the most cost-friendly fun things to do. For example, you can go on picnics with the family. It entails costs but not as high as dining in a fancy restaurant.

One way to make this plan work for you is to make sure you adjust it accordingly. If you began your budget while school is out, you need to revise your expenses when it resumes. If the holiday comes in, allot a portion of your income for the gifts that you need to purchase in honor of the season. Remember the annual expenses that you need to spend for like birthdays and anniversaries.

In truth, you will get more than just an organized debt management plan if you execute your budget properly. You will also gain the discipline that is needed to get your finances in order. You will learn how to live within your means and in effect, keep yourself out of debt for the rest of your life.

Understanding Your Opponent: Debt Settlement in the Eyes of Your Creditor

By Samantha Seiffert

Debt settlement is definitely not a walk in the park. You will go through a lot of trying times in the process and you have to understand the repercussions on your credit score. Not to mention the finance-related stress that you will experience.

Although it is your attitude that will give you the determination, patience and discipline to get you out of debt, your knowledge of how to accomplish it will also play a role. Apart from studying how to negotiate a debt settlement, you should also understand your opponent.

Creditors are not out to get you for personal reasons. It is the nature of their business to get you to pay off your debts. It is a return of their investment after all. You can expect that from any business. While you may think otherwise, they are not the bad guys here. Your debts are your responsibility and asking you to pay them back is part of their right.

Understand that while your creditors seem to concentrate on getting you to pay, they have other concerns too. Their foremost concern is to get their parent company to earn - usually, these are larger bank and financial institutions. These establishments have shareholders and your creditors want to keep them happy by keeping the stock value at its highest. Lower stocks would mean lesser revenues and dividends. These stocks suffer when people start defaulting on their payments and end up not paying for their whole debt altogether after filing for bankruptcy. Credit card companies want to avoid this as all cost. That is why most debt settlement companies advise their clients to extend their patience.

Creditors do not want your debt to be charged off because that is a reason for stock values to go down. This is what drives them to accept settlement offers. When you have this in mind, you will understand how you can effectively approach your negotiating strategy.

Another important factor that you need to look into is bankruptcy. You may be wondering why your creditors are very hesitant to have you file for this debt relief option. In truth, this is the worst case scenario for the credit card company. If you qualify for a Chapter 7 bankruptcy, the chances that the creditor will not get a single cent is very high. That also means they are prohibited from going after you ever again - at least for the debt that had been discharged. Even if the debtor has properties that can be liquidated, credit card debts are among the last to be paid off - if there is any left at all.

These are the reasons why the threat of bankruptcy and delayed payments are encouraged during the debt negotiation process. You may be averse to missing payments due to its credit damaging consequences but remember that creditors have other reasons to hate it as well. They don't want their parent company to lose money through lowered stocks so they get aggressive in their collection efforts. If they start bluffing on lawsuits, threaten them back with bankruptcy.

Bottom line is, knowing what is important to your opponents will allow you to use the right cards during negotiation. There is still the risk of them saying no - especially if your payment defaults will not really affect their stocks (e.g. dealing with large banks, lower number of debtors defaulting on payments, etc).

Just stick to your financial crisis story and hint the possibility of bankruptcy consistently. Be polite yet firm in your stand. More importantly, never agree to settle for an amount that you cannot afford. If things get too complicated, you always have the option to hire a professional to work with you.

Debt Management - What You Should Know

By Faith Kat Fay

You should know the importance of paying all your debts before their due dates. Some ways of managing debt are discussed below. They are not difficult to apply.

1. Debts with High Interest

Debt management experts always recommend the payment of loans that attract high interest rates first before paying debts that attract low rates of interest.

2. Credit Card Temptation

You should only use your credit card during emergency situations.

3. Pay Before Due Date

4. Borrowing Money

How a Budget Plan Can Be an Effective Debt Management Tool

By Samantha Seiffert

Debt management is one of the debt relief options that will protect your credit score from harm. That is because it will neither require you to miss payments or put yourself further in debt by taking another loan to close your other credits. This form of debt relief will teach you the discipline required to pay off your debts one by one.

If you will hire a debt management company to help with your case, the most that they can do is to help negotiate for a lower interest rate and possibly the waiving of any additional finance charge. They will not however, be able to reduce your outstanding balance the way a debt settlement can. So if this is your chosen debt relief course, you will end up paying for the whole debt at the end of a program. Given that, the need to manage your account and your limited income is all the more vital to ensure your freedom from debt.

These concerns can all be addressed by a well constructed budget plan. In essence, this is probably the only debt management tool that you will need in this debt relief option. Part of your debt management plan is to create this at the beginning of the program.

The goal of this plan is simple: it will help you define your financial capabilities so you can pay off your debts and save money all at the same time.

Most of us think too harshly about a budget driven life. We think that it is too restricting. Well having too much debt is restricting too. You cannot buy the things that you want at the moment because all your extra income goes to debt payments. The only difference is when you live a budget driven lifestyle, you don't get bothered by collection calls and the fear of being slapped with a lawsuit. Once you get used to it, having a budget will allow you to acquire the things that you want to buy without putting yourself under the stress of being in debt.

As a debt management tool, your budget will allow you to look at the bigger picture of your finances. Through your budget, you can identify how much you can spend for your basic necessities. You will be able to look at the details of your expenses to see where your money is really going. This knowledge will allow you to decide if that is where you really want it to go or if it should be diverted into your savings. When you have a budget, any need to cut back on spending will be easily done since you can identify them immediately. By doing so, you can create a bigger debt payment fund or disposable income that will help eliminate your debts faster.

This tool will serve as your road map to help you through any detours or delays. For instance, any unfortunate events while on a debt management program can be easily resolved since you can immediately identify where you can get funds from. It can be from the savings you have been building up or from your "want" expenditure.

A budget is not really necessary to complete a debt management program but it will help you finish faster. You get straight to the point without experimenting on financial cutbacks that can blow up in your face.

When your finances are limited and you have debts to pay on the side, it helps to categorize where they go to make sure it pays the right things. The important thing while on a debt management plan is to keep your focus so you reach your goals faster.

Click Here to find the best solution to your debt problems. As a leading debt management company, National Debt Relief has helped over 100,000 consumers with credit card relief.

Signs You Need to Hire a Debt Settlement Professional

By Samantha Seiffert

The thing about debt settlement is there are no guarantees that you will get what you intended to achieve. You are putting your debt relief aspirations in the hands of the creditor or collector. You have no power over how they will decide on your case and how much they will forgive and settle with you.

Given this uncertainty, some debtors choose to work on debt settlement on their own to get away from the high service charge imposed by professional companies. While this is understandable you need to be aware of the signs that tells you to give up on the other options and finally accept that debt settlement is the best course of action.

Here are the signs you should already consider hiring a debt settlement company to help you achieve financial freedom.

You tried cutting back on expenses but still end up short. This is probably one of the hardest things to do when you are overcoming debts. Lowering your standard of living is a reminder that you are buried in debt. It is even more aggravating if you cut on expenses and your income is still not enough to cover for your basic necessities and minimum debt payments. If your expenses is higher than your income, debt settlement may be your best option.

You tried negotiating with creditors but the stress is too much to handle. Do it yourself debt settlement is possible but some people find it too stressful. If you wish to deviate from the emotional trauma and stressful collection calls, let it be handled by a third party. The detachment and professionalism that experts bring to the negotiation may be more beneficial than your tearful conversations with cold collectors.

You are suddenly left unable to meet minimum payments. There are unfortunate incidents like sudden illnesses, job loss or accidents that render your funds and savings depleted. When this happens, you are suddenly unable to meet your minimum payments. If, like the first option, your income is suddenly lower than your expenses, you need an expert to help you identify how you can survive with a negative net income and still pay off your debts.

You find it hard to keep up with the rules of the game. Do it yourself debt settlement can be a very tiring endeavour and you will find that collectors and creditors have a lot of tricks up their sleeves. If you are struggling to understand the mechanics of debt negotiation, this is the time to opt for professional services. They can educate you and help you understand your rights when it comes to fair debt collection practices.

You need an external motivator to keep you on track of your debt reduction efforts. While they are not necessarily coaches, hiring a debt settlement company will help keep you on track because someone is checking on you and urging you to maintain payments. If you think you cannot do this alone, hire a professional service to remind you of your debt obligations.

Regardless of your choice of debt relief, remember that making the decision to do something about you financial woes is a monumental step already. Take it one step at a time and keep a close watch on your finances. Never promise or enter into any agreement that you know you cannot meet. Debt freedom is possible - you just need the right tools and programs to make it happen. Sometimes, having a professional help out can make it a whole lot faster and easier to manage.

Click Here to find the best solution to your debt problems. As a leading debt management company, National Debt Relief has helped over 100,000 consumers with credit card relief.