February 2013 - Advicentips

Dealing with debt

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Feb 282013

Here are some tips to help you deal with debt.

How to get out and stay out of debt. (ARA) – According to American Consumer Credit Counseling, Inc., the average balance on a credit card is $7,000, offering an average interest rate of 18.9 percent. Additional statistics show that the average household has 10 credit cards and, not surprisingly, over half of those households report having trouble paying their minimum monthly payments and dealing with the debt as a whole. Common indicators of a debt problem include not knowing the state of your personal finances; not knowing how much you owe or what interest rate you are paying; missing payments; having poor savings habits; using one credit card to pay another, or living paycheck-to-paycheck. For many Americans, the statistics and debt problem indicators hit even closer to home with the conclusion of the holiday shopping season and the onset of the ever-dreaded tax season. Facing debts is one of the major barriers for people in dealing with their personal finances. “Millions of Americans love the instant gratification of using their credit card and hate thinking about the serious consequences of accumulating debt. Debt can paralyze people from moving forward. But, with a solid plan and the right tools, paying off their credit cards and eliminating their debts can be tolerable and even enjoyable. “Numerous options are available for those who are struggling to shut the door on debt. Declaring bankruptcy is not necessarily the best option. There are many websites that provide advice, tools and resources for those needing assistance.

To help you get started on the road to dealing with your debt, here are a few tips:

Put Yourself First

That’s right! It sounds a bit surprising, but according to Debtors Anonymous (www.debtorsanonymous.org), it’s critical to take care of yourself while eliminating debt. No, this doesn’t mean that you can go on a spending spree if you are feeling depressed. Instead, get plenty of rest and eat well to keep energized while focusing on your goal of being debt free.

Keep a Record and Prioritize

Keep track of every nickel you spend for a month and record amounts spent in appropriate categories – i.e. housing, transportation, food, clothes, entertainment, etc. It doesn’t have to be a fancy software program – just a pencil and a pad of paper will suffice. At the end of the month, analyze where your money is going. Decide if the items purchased are necessities or niceties. Be realistic. What spending can you eliminate or reduce in order to reach your goal of being debt free? Perhaps you can pack your lunch rather than eat out every day, rent a movie rather than see the latest release, or scale down on your clothing budget. Do you really need another tie or an additional pair of black shoes?

List Your Debts

Create a list of your debts – the amount you owe and the interest rate. Make the minimum payment each month – but more importantly, make a commitment to pay off the debt with the highest interest rate first by making an extra payment. After you’ve paid off that debt, apply the amount you were paying on the old debt to your next debt with the next highest interest rate. Don’t reduce the total debt payment amount just because one debt is paid off.

Create a Spending Plan

Once you have made a record of how you spend your money and have concluded which expenses are necessary, then you are ready to create a spending plan. Start by projecting how much money you will spend in each category for the month. Change the amount if your situation changes. Didn’t expect to break your arm and dent your vehicle’s bumper in the same month? Make adjustments and move forward. Create a new plan for each month. This is the best tool to stay in control of your spending. Remember that some of these tips are appropriate for your lifestyle, some of them are not. Personalize your plan and keep focused.

Cut Up and Cancel

Get rid of those credit cards! Cut them up and cancel them. Be aware that when you try to cancel your credit card, the company may offer you an extended line of credit or a lower interest rate. Do not be tempted! It’s not your glowing personality that entices them to do business with you. If you can handle having one, keep a credit card for emergency purposes (which doesn’t include a last-minute trip to the Bahamas to beat the winter blahs). Pay off that one credit card each and every month – or else be back in the same shipwrecked boat of debt. Minimum monthly payments are not acceptable.

Debit Not Credit

Love the feel of plastic sliding through your fingers while making a purchase? Worried you will have withdrawal? Use a debit card that immediately withdraws money from your checking account. Experience the feeling of gratification knowing you’ve paid for the item you just picked out.

Income-producing Investments

Use credit to purchase items that give you some income-producing potential. There is such a thing as good debt – a mortgage for a home, a loan for an education or the start of a new business. Sorry, payments on an expensive new SUV don’t count unless you make a living as a chauffeur. Also be careful of “get rich quick” schemes, and the countless offers of systems to generate thousands of dollars in income quickly. These rarely work, and often lead you towards other systems that will cost you time and money, before realise you are deeper in debt and no closer to a solution.

Credit is Not Income

If you apply for one of the seven credit card applications that arrive annually in an average American’s mail, and receive a $5000 line of credit, don’t consider it a raise. It’s not your money and you haven’t earned it. You have simply been given the opportunity to accumulate debt at the lender’s benefit. Americans paid out approximately $65 billion in interest last year alone. With the exception of your mortgage, credit payments should never exceed 10 percent of your income.

Shop Around and Be Smart

Take a look at other interest rates. Be smart. Don’t finance your car with a credit card if you can get a car loan at a lower interest rate. If your current interest rate on your credit card is 15 percent and another company is offering you 8 percent, contact your credit card company and see if they will meet the competitor’s rate. If not, take advantage of offers to transfer your higher interest rate cards to lower interest rate cards. It’s worth the time to shop around while you are lowering your debt.

Save, Save and Then Save Some More

Start saving today. If your credit card payment of $500 per month was eliminated and you were able to invest that amount in a savings vehicle earning a 10 percent return, you would save over $1 million in 30 years. That’s real money in your piggy bank.

Leave the Piggy Bank Alone

If you have already started a 401K plan or have a savings account, resist the temptation of using your investments to pay off your debt. Take advantage of the good side of interest – the compounding side – and keep your investments on track. Think long-term, not short-term, while paying off your debts.Hopefully, these tips will help you deal with your debt problems, and lead you to a debt free life.

5 Secrets to Getting Out of Debt Fast

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Feb 072013

As they stare down at a teetering pile of bills, so many consumers wonder how they racked up such a large debt. The answer boils down to simple mathematics.

“On a basic, fundamental level, the problem is created by spending more than you make,” says Brad Stroh, co-CEO of the San Mateo, California-based Freedom Financial Network, LLC, a company that specializes in debt resolution services.

The reasons for doing so, he notes, are varied:

. Spending addictions . Lack of budgeting (mistaking the amount of money coming in and going out) . Loss of income (reduced hours, layoffs, forced to leave the workforce) . Increased costs (health-related expenses, fuel and other basic living expenses) . A personal hardship (divorce, medical illness, loss of a loved one or other major changes in a person’s life)

You can, however, get out of debt-but it takes commitment. Here are 5 steps to accomplishing your goal.

1. Start Planning-and Saving “The only way to guarantee solid financial footing is through proper planning-and that’s where most consumers go wrong,” Stroh says. “Proper planning means monthly budgeting of cash flow, combined with saving for long-term security.”

Stroh recommends saving at least 5% of your income to ensure long-term financial security.

“Of course, this percent will vary by age group and the individual’s financial goals and objectives,” he says. “Younger people can expect to spend their early years saving less of their income, paying off student loans and debts incurred during periods of lower income. Older individuals should be planning for retirement and saving a larger share of income.”

2. Seek Professional Help If you are facing financial hardship, do not procrastinate when it comes to seeking professional advice.

“People often wait too long,” Stroh says. “If someone is living paycheck to paycheck, is behind on any revolving financial obligations (including credit cards), is using credit cards to pay for necessities, or is facing collection, he should consider getting immediate advice from a professional debt management firm or financial advisor.”

3. Stop Spending If you continue to spend money, despite your ever-growing debt, you likely have a bona fide addiction that requires psychological intervention.

“Debt problems are frequently symptomatic of more fundamental personal issues, such as reticence to address difficult financial problems,” Stroh says. “Spending addictions can have many causes, including lack of personal confidence and fulfillment. Similar to many other addictions, a spending addiction can fill a void in an individual’s life-albeit with a fleeting source of satisfaction. People with spending addictions constantly strive for the ‘high’ that they receive from buying clothes, cars and other goods. This leads to a long-term problem when they cannot meet the consequent financial turmoil that comes when the bills arrive. For anyone who may think he has a serious spending addiction, we advise seeking professional counseling or therapy to resolve the fundamental sources of this addiction.”

4. Start Communicating If you’re like many consumers with outstanding debts, the last person you think about speaking with is the creditor-the company you’ve been avoiding at all costs.

“Not contacting your debt creditors to discuss and develop a plan for paying, settling or reducing the principal amount and/or interest on the debt” is one of the worst mistakes you can make, says financial expert Ivan Gelfand, president and CEO of Pepper Pike, Ohio-based Ivan Gelfand, Inc., and author of “Your Money, Your Future” (to be published in April).

He also recommends contacting relatives or friends for temporary assistance in reducing debt and making payments, which will lower your outstanding debts’ interest rate.

5. Conquer Denial-Today! Many consumers who recognize-and even accept the fact-that they have a spending addiction refuse to address their problems, according to Stroh.

“Budgeting is not fun,” he says, “but dealing with creditors is even less fun. Many people will therefore bury their heads in the sand, hoping their problems will go away. Unfortunately, outside of winning the lottery or getting a windfall inheritance from a long-lost uncle, budgeting and consulting with a professional counselor are the only ways to successfully resolve financial problems.”

——— Fox Symes assists all Australians discover the truth about their debts and how they can rapidly reduce them. There are methods available to the Australian public and you can discover how to use these to assist you in reducing your debt with a free phone consultation from Fox Symes. Visit http://www.foxsymes.com.au or contact them directly on
1300 361 204.

Rob Sallay

Consolidating Your Credit Card Debt

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Feb 062013

Credit cards have revolutionized the purchasing experience since Diners Club released the first credit card in the year 1950.

The Dinners Club credit card gave consumers limited credit that, at times, even surpassed the personal savings of some participants. It allowed them to buy items they usually could not afford if they were to make a straight cash purchase. It also provided the convenience and safety of not having to carry large amounts of cash.

On average, American households possess 4 credit cards or a total of 13 payment cards if debit cards and store cards are included. There are, actually, 1.3 billion payment cards of assorted types in circulation in the United States.

But, if you think that credit cards have made the lives of modern American consumers easier, you may be wrong…

Statistics show that the average credit card debt for each household in the U.S. is $4,800 per month. Also, there were 1.3 million credit card holders declaring bankruptcy in the year 2003.

And if you still consider yourself unaffected by credit card debt, then consider this: upon retirement, most Americans can only expect to receive about 37% percent of their annual retirement income because of prior debt payment. This will leave many individuals depending on the government, family and charity for economic survival.

These are some scary facts. So before you find yourself in a position of economic uncertainty, it might be wise to evaluate your spending and current credit card debt.

If your credit card debt exceeds what seems to be a reasonable level, you may want to consider credit card debt consolidation.

So what is credit card debt consolidation?

In a nutshell, credit card debt consolidation is taking all your credit card payments and consolidating them into one monthly payment. This way, you don’t have to worry about managing the payments individually. Aside from this advantage, it may also provide you with the following additional benefits:

– Reduce interest payments
– Waive late and overtime fees
– Reduced monthly payments
– Debt relief in a shorter time
– Credit improvement
– Save more money in the long run

There are actually two major types of credit card debt consolidation…

You may want to consider a Credit Card Counseling firm. They assist consumers by consolidating all their monthly payments into one single payment and then dispersing this to the creditors on behalf of the consumers.

The other type is through a home equity loan or other secured loan. This is done by exchanging an unsecured debt (such as
credit card debt) for a secured debt (a debt backed by specific assets such as real estate).

Now, credit card debt consolidation isn’t a magic balm that will drive all your credit card debt malaise away. But, it will make paying all your debt easier and might save you money in the long run. Definitely an alternative worth considering…

Debt Handling Solutions

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Feb 062013

Sometimes debt can seem overwhelming. In those instances, or even before things get that far out of hand, get back to basics and try some of these debt handling solutions.

BASICS – Lower insurance deductibles for your homeowners, renters and vehicles policies where appropriate and save money. Don’t take chances on bouncing checks; instead get covered with overdraft protection and pay about the same as what it would cost for one bounced check to cover our account for an entire year. Ask your banker about packaged account services. Many offer free savings and checking accounts with free overdraft protection and checks, free online bill paying and more. When you shop, check your receipts, even for groceries. Many times items ring up at incorrect prices. Sometimes store policy allows for no errors, meaning you get the items free if it wrings up wrong. So carry along a handheld calculator or pencil with small notepad to tally up your charges.

REACH OUT- If you have medical debt, the first thing healthcare offices try to do is get you to charge the bills or refinance your home, etc. STOP. Before you take such a drastic step, check with legal counsel. There are often other steps to take first. For example, notify the billing parties and tell them you need to apply for financial aid. Many have forms to complete, and although they may be lengthy, remember they’re for free money to pay your bills. Reach out, take forms and fill them out. Then set up minimum payment arrangements for the remaining balances, even if it’s just $10 a month for 30 years. Healthcare bills are not like credit card debt and do not need to be reported to the credit bureau in the same manner.

Also reach out with merchandise and return any recently purchased items that you can for a refund. Credit cards and mail order companies generally allow you 30 days to inspect your purchase. Return any you can for refunds. If purchases are beyond the 30 days and for various reasons don’t hold up to their end of the “bargain;” i.e. they broke already or never worked right to begin with, get on a letter writing campaign pronto. Write the place of purchase and copy the manufacturer, the distributor, the Better Business Bureau and your state Attorney General’s Office. State the reasons our product is faulty and that you want a refund. It’s often rewarding to get help with other entities like these. No need to go it alone!

So before your debt gets out of hand, take charge and get back to basics. Put some of these debt handling solutions into practice and make the most out of what you have.

For more information go to: http://www.ampleadvice.com

Article Source: http://www.articleplanet.co.uk

Debt Management

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Feb 062013

Debt management. To be sure, the phrase has been in use for some time now and the Federal Trade Commission reports that there is a fast growing area of complaint involving the so-called Credit Management or Debt Management industry. But what is debt management anyway? And why do people consider it as either potentially lucrative or downright hazardous path to follow?

Introduction

The term debt management is actually an umbrella for a large group of debt-environment functions and activities. Debt management involves one or all of the following: debt reduction, consolidation, negotiation, settlement, bankruptcy, credit repair clinics, and even deciphering credit reports. To have some inkling as to what debt management really is, let’s first define these few terms:

Credit Repair Clinics – These are services offered by institutions that are said to help you fix your credit. Nolo Press and other notable consumer groups for debt management issues strongly advise against credit repair clinics. They say that a lot of these clinics are illegal. Some of their actions include stealing the credit files of folks under the age of 18 or the credit files of those who have died or live in far away places. Some have also been said to break into credit bureaus and change files. Still, others suggest you to start a new IRS Employer Identification Number (EIN) which is illegal and prevents you from earning Social Security benefits. But the bottom line of these so-called debt management operations is that they can’t do anything that you can’t do for yourself.

Deciphering Credit Reports – It can be a bit intimidating trying to study credit reports. However, if you take it slowly, you can get through it. Debt management involves some bit of understanding of credit and credit reports. If you want to correct your credit, then you need to understand it first.

Debt Reduction – Debt reduction is just that – reducing your debt.This is perhaps the most logical way to manage your debt. Reduce your debt so you’ll have little trouble with it.

Debt Settlement and Negotiating with Creditors Yourself – There’s no doubt that debt management can be a daunting task. Although settling debtsmight be best relegated to professionals, there is still nothing like self-involvement.

Debt Management vs. Bankruptcy The differences in impact between debt management and bankruptcy are debatable. Deciding which course of action is best for you can be very tricky.This is because there are so many factors involved and these are often dictated by external circumstances. In theory, we all know bankruptcy to be a method used by people when they are absolutely unable to repay their debts. However,we known that this is not always the case in reality. The idea therefore is to find out if it is a temporary or permanent problem. Then and only then can start deciding which is best: debt management or bankruptcy. John

Debt Stacking – Fast Track Out of Debt

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Feb 062013

You go to the mail box and scan – a couple fliers (nah), your magazine subscription (yes!) and bills (groan). Every month the bills show up and as you sigh and take out your check book you wonder if you will ever be free.

Each month you pay the minimums and although you KNOW you’ve got a handle on it – you are not charging your credit card or accumulating new debts anymore – it seems that you will be paying the minimum fees forever.

Did you know that HOW you pay your debts can affect how soon you will finishing paying them off – even if you keep paying the same amount for debt every month? Of course you might be able to get a consolidation loan, but if you’re not eligible or are not interested then there are several other things you can do.

It’s not always the easiest to figure out the mathematics, but there are three steps to quicker debt relief – guaranteed.

STEP ONE – Create a list.

List your smallest debts first followed by your largest high-interest debts (credit card) and then your largest low-interest debts (Lines of credit and taxes).

Plan to pay the minimums on all debts with these goals in mind.

STEP TWO – Small bills first.

They may not be the highest interest, but every bill that you are paying some interest on means you are usually only paying minimal amounts on the principal. Multiple debts are also a sure way to bring your spirits down. Paying off small debts first is a quick way to start checking them off – and freeing your mind.

STEP THREE – Move the payments along.

When one debt is paid add the funds to the next debt. For example, say you’re making $75 payments to a small debt. When the debt is cleared add the $75 to the next debt on your list. If the next debt had a minimum payment of $100, you will now pay $175 until it is paid off. When that one is finished, take the $175 and add it to the next payment and so on.

STEP FOUR – Save the cash!

Don’t forget that when your debts are cleared you have set yourself up for a better financial future. The best way to take advantage of your new situation is to use all the money you were spending on debts and start investing or saving it every month.

With this strategy your debts will clear faster meaning you will pay less interest, you will see progress as you clear small debts first, and you will not be tempted to use the funds for personal use instead of debt repayment.

It is a worthwhile goal to get out of debt. Seeing that goal come sooner and teaching yourself discipline sets you up for a brighter financial future. You OWE yourself that!

For more information go to: http://www.ukisolutions.com

Article Source: http://www.articleplanet.co.uk

Different Ways Of Dealing With Debt

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Feb 062013

Bills, creditors, debt collectors. Are you yearning for the days when all you had to worry about was the money in your piggy bank? If so, you are far from alone. Whether its illness, loss of a job, or simple overspending, it happens to the best of us.But that doesn’t mean your financial situation needs to go from bad to worse.
Steps You Can Take To Regain Control When Finances Get Out Of Hand…

Developing A Budget: Start by doing a realistic assessment of how much money comes in and how much your spend. List income sources, “fixed” expenses (mortgage or rent, car, insurance) and expenses that vary (entertainment, clothing, recreation). Don’t leave anything out, no matter how trivial it seems.Obviously, the necessities are your first priority. Then you can prioritize the rest. The bottom line Is, that unless there’s money to cover, you’re going to have to cut back on spending.
Contacting Your Creditors: Many creditors will work with you if you let them know you are having trouble making ends meet. Tell them why it’s difficult for you and try to work out a modified payment plan that reduces your payments to a more manageable level. Don’t let them give up on you – get to them before they resort to collection agency action.
Dealing With Debt Collectors: Nobody wants to deal with the bill collector – least of all you! But, should it happen, be sure you know the rules. The Fair Debt Collection Practices Act is the law that dictates how and when a debt collector may contact you …
A debt collector may not call you before 8a.m. or after 9p.m … or at work if the collector knows that your employer doesn’t approve of the calls. Collectors may not harass you, make false statements, or use unfair practices when they try to collect a debt.
Debt collectors must honor a written request from you to stop further contact.
Bankruptcy: Personal bankruptcy is generally considered the debt management tool of last resort because the results are long-lasting and far-reaching. A bankruptcy stays on your credit report for 10 years, making it difficult to acquire credit, buy a home, get life insurance or sometimes even get a job. Learn more about bankruptcy.

On the other hand, bankruptcy is a legal procedure that offers a fresh start for people who can’t satisfy their debts. Individuals who follow the bankruptcy rules receive a discharge or court order that says they do not have to repay certain debts. There are two primary types of personal bankruptcy:

Chapter 13 allows you, if you have a regular income and unlimited debt, to keep property, such as a mortgaged house or car, that you otherwise might lose. In chapter 13, the court approves a repayment plan that allows you to pay off a default during a period of three to five years, rather than surrender any property.

Chapter 7 known as straight bankruptcy, involves liquidating all assets that are not exempt. Exempt property may include cars, work-related tools and basic household furnishings. Some property may be sold by a court-appointed official (trustee) or turned over to creditors.

NOTE: You can receive a discharge of your debts under Chapter 7 bankruptcy only once every six years.

Both types of bankruptcy may get rid of unsecured debts and stop foreclosures, repossessions, garnishments utility shut-offs and debt collection activities. Both also provide exemptions that allow you to keep certain assets, although exemption amounts vary.

Personal bankruptcy usually does not erase child support, alimony, fines, taxes and some student obligations. Also, unless you have an acceptable plan to catch up on your debt under Chapter 13, bankruptcy does not allow you to keep property when your creditor has an unpaid mortgage or lien on it.

Being burdened by debt is overwhelming and puts you into a position of great vulnerability. And, clearly, yielding to bankruptcy is an extreme measure that requires a great deal of thought. In the last few years, a record number of consumers have been filing for bankruptcy.

To find out more about bankruptcy, how the most common chapters of bankruptcy work, bankruptcy terminology, and easy steps anyone can take to repair there credit report, visit: http://www.creditandyou.com it’s a free information website!

Credit And You.com

Online Debt Consolidation Loans- a revolt against debts

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Feb 062013

Are you tired of being swamped with bills from different creditors each month? Definitely, you must be. Dealing with a number of lenders at a time is a tiring job. Remembering whom to pay and how much is tough; you may forget to pay interest on any loan or the loan altogether. See, how a debt consolidation loan can help in eliminating these debts.

Debt consolidation loan works as a debt management tool by consolidating all the debts of the borrower into a single loan. Debt consolidation loan provides opportunity to borrowers to repay debts quickly and become debt free.

A borrower can enjoy various benefits with a debt consolidation loan. This loan can help in reducing borrower’s monthly payments keeping them away from the pressure of handling number of lenders. Since the debtor is accountable to only one lender, it will be relatively easier to make payments now.

With so many loans to repay, you may by mistake forget to pay an installment on the loan. Did you know this might affect your credit report adversely? Yes it may be a bit surprising to you, but it is true. Debt consolidation loan can keep you away from this risk, by making you accountable to only one lender and one loan.

Applying for a debt consolidation loan online gives you the convenience to get fast and cheap loan. A borrower can access the Internet from his office, home or cyber cafes and can browse number of online loan websites at a time. Online lenders offer the benefit of applying for the loan as per the convenience of the borrower. These websites are generally open for 24 hours a day, 7 days a week and 365 days a year. Most of the online debt consolidation loan websites employ experienced and professional staffs that work round the clock. They screen borrower’s loan application and work out to find the most appropriate loan for them. A loan seeker can also take advise from loan advisers who work for online lenders.

It is very easy to apply for a debt consolidation loan online. A borrower needs to fill up and submit a short and simple application form online, which hardly takes few minutes. You can collect loan quotes from various online lenders, which are available free or for nominal cost. Comparing different loan quotes can help you find the best deal.

Applying for a debt consolidation loan online can be a good idea, but take care you may not get into a trap. Check whether the website really exists, do read its terms and conditions. Online loan websites will ask for some personal information to check your credit status. Be extra cautious, some bogus websites may misuse your personal information and may sell it to some third party for monetary benefits. Always remember prevention is better than cure, a small effort on your end can save you from a big loss in future.
Online lenders offer both secured and unsecured debt consolidation loan. Secured debt consolidation loan is secured against the collateral of the borrower such as car, house or bonds it may range from 3,000 to 75,000. Unsecured debt consolidation loan is an unsecured loan. A borrower need not put any security against the loan. It can be borrowed for any amount ranging from 1000 to 25000. Unsecured debt consolidation loan is perfect for tenants who do not have any property to keep as a security against the loan. Homeowners can have the benefit of both secured and unsecured debt consolidation loan.

Online lenders also offer debt consolidation loan to people with bad credit history or arrears. This loan can help them in improving credit rating. Paying bills in full and on time will show the improvement in the credit rating.

Online debt consolidation will ensure you a debt- free future. You just need to be careful while selecting an online lender and see how debt consolidation loan keeps you away from all the troubles attached with serving several lenders.

Alex

Debt Consolidation – Take Control Of your Debt And Your Life

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Feb 062013

It’s no fun being in debt.

Money shortages are always stressful and serious debt can emotionally drain you.

And yet, while you’ll find lots of advice about the practical aspects of debt management, there is precious little help available for the psychological side of things.

Negative feelings like fear and anxiety need to be dealt with before they start to overwhelm you. So here are some self-help tips on how to deal with this challenging period in your life:

— Count Your Blessings

It’s only money.

Now that’s probably the last thing you want to hear right now, but it’s true. If your only problem in life is lack of money then count yourself lucky.

Losing your money isn’t like losing a loved one, or being diagnosed with a terminal illness.

Money problems can be solved.

— Accept Responsibility

Your own spending behavior is at least partly responsible for creating the problem.

So stop blaming the credit card companies for ‘pushing’ the debt drug onto you, the poor helpless victim.

You’re responsible.

And that simple act of accepting responsibility will empower you and propel you towards right action.

— Stop Spending

When you’re digging yourself into a hole, the first thing to do is… stop digging.

Obvious?

Perhaps. But when someone realizes the sheer horror of serious debt, it’s almost a natural defense mechanism to go into denial mode.

And one common method of denial is to continue spending and borrowing more money.

Just stop.

Rip up the credit cards. (Don’t worry, you’ll survive fine without them.)

And remember that you need exactly four things in this life: food, water, (basic) clothing, and shelter. Consider everything else a luxury.

— You Are Not Your Money

Sadly nowadays, money buys status. It’s easy to believe that your value as a person depends on the value of your bank balance.

Nonsense! You are a unique individual with many special qualities. There will never be anyone quite like you ever again. You’re wonderful! You’re terrific! And your character and personality are not a product of money.

Plus, does it really matter what other people think of you? Well that depends on what you mean by ‘people’…

Quite often they are “acquaintances”… or anonymous strangers you pass in the street who may admire your latest designer suit… or shop assistants happy to sell you another expensive item of jewelry.

Are these people really important to you? Of course not.

Focus on the folks close to you who really matter. True friends and family don’t judge you by your wealth.

— Grab The Opportunity

Life’s problems are nothing more than tremendous opportunities for personal self-growth.

Ask yourself what you are learning from being in debt. Is it a humbling experience? In which case, is it really such a bad thing to discover what it means to be human?

Perhaps you are learning compassion for other humans, and beginning to see the beauty in other, ‘ordinary’ people.

And if you’ve lost your job – a common cause of debt problems – then look on it as an opportunity for a new start in life. What would you love to do – instead of just making money?

As you may have realized, being in debt is not all bad news.

Viewed as opportunity for self-growth, it can be the turning point on the road to true ‘riches’.

Paul Davis

The Effects of Consumer Debt

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Feb 062013

Consumer Borrowing

Consumer borrowing in the UK has now crashed through the 1 trillion barrier. 80% of this is due to credit card borrowing, loans and mortgages. How are people managing to handle their debt and what effect is debt having on families today?

The National Consumer Council reports that 6 million families in the UK are already struggling to make repayments towards their debt, and Citizens Advice reports that over the last 6 years, they have seen a 44% increase in the number of people seeking debt advice. This may be just the tip of the iceberg. There must be many families in the UK who have debt problems, but are not aware of the free help and advice available.

Tackling Debt

According to a DTI survey carried out in 2002, a household is likely to be over-indebted if:

25% of your annual income is spent on repaying Creditors
50% of your annual income is spent on repaying credit and mortgages
You have 4 or more companies that you owe money to.

People find it difficult to make repayments for a number of reasons. Generally, the underlying cause is some kind of change in personal circumstances such as job loss, divorce, illness or a new baby. In these instances some people may resort to more borrowing in order to pay creditors or household bills. This is not always the best option.

Effects of Over-Indebtedness

The personal effect of struggling to repay debt can be far reaching. Sometimes a lack of financial awareness can lead to stress, depression, anxiety, mental health problems, relationship breakdown and even suicide.

Raising Financial Awareness

The Government recognise the need to raise financial awareness amongst the general public. The financial cost of debt is not only on an individual level, but there is also a cost to society in general.

People who experience stress due to their situation, will probably seek advice from their GP and may take time off work, therefore, this has an effect on already hard-pressed NHS and productivity due to absenteeism.

People who have had homes repossessed need to be re-housed, generally by the local Council. Those who seek legal aid due to debt issues also incur a cost to the taxpayer.

The Solution before the Problem

Will raising financial awareness alone tackle the issues of debt problems? It helps for people who are already struggling with debt, but are there other areas the Government should be looking at?

If you pay your creditors on time, regardless of what it takes to pay them, you are classed as a good payer and therefore, not a risk when it comes to additional borrowing. In fact, your finances could be in turmoil and you could be taking money from one card to pay another but you may still obtain even more credit.

The freedom creditors have to advertise loans, credit cards and mortgages could be challenged as well as how decisions are made regarding lending.

If people, who are currently in financial difficulty, find they cannot borrow more money, they should be made aware of the free financial advice that is available. Free Debt Management Companies such as Payplan, www.payplan.com, can negotiate repayments with creditors so that monthly payments are reduced and become more manageable.

Nicola Bullimore

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