How to Avoid Debt and Protect Your Home
Here are some tips on how to avoid debt and protect your mortgage or rent payments in these economically trying times.
Let the good times roll…
When interest rates are low, monthly mortgage rates can be more manageable. You could overpay your mortgage every month if your lender will allow you to and this may provide a buffer if/when times get tougher. It might also be pertinent to take out mortgage or income protection, unemployment cover or redundancy insurance.
Look for good deals
If you are coming to the end of a mortgage deal and think you may not cope on a standard rate if rates rose, start looking for other deals.
Talk to your mortgage lender
It is not in your lender’s interest for your house to be repossessed. Most lenders have procedures to help you if you are struggling. Look at changing your mortgage to interest-only for a period or consider reduced payments. You may also be able to take out mortgage payment protection insurance to cover your repayments if you are made redundant.
Don’t avoid your problems, face them
A mortgage should be the first thing paid, ahead of credit card bills and other debts. The charity Shelter advises people to keep on top of their mortgage and rent payments when dealing with debts or they may be danger of losing their homes. Getting help and advice can stop mortgage arrears or rent arrears turning into a problem that threatens your home.
Organise your money
Shelter says that whatever your situation, knowing where your money goes can help you deal with debt and get you back in control.
Deal with debt
Using credit cards, store cards and short term loans to cover daily costs can quickly turn into long-term debt. No matter how bad things may seem there is help and support available to get you through and deal with your debts.
Think about taking out mortgage payment protection insurance
Mortgage protection insurance can help protect your monthly mortgage commitments in times of crisis if you suffer accident, sickness or unemployment (ASU). For many, the mortgage repayments are the most important monthly bill – how would you cope if you lost your income?
Review your finances
The Money Advice Service recommends people:
- Check any spending, borrowing and savings and prepare for the future, both good and bad.
- Look at your bank statements and review your energy bills, rent or mortgage payments. Shopping around can potentially save you hundreds of pounds each year.
- Make sure that you are not paying for any unwanted services on direct debit or standing order, for example gym or magazine subscriptions.
- Change your daily spending habits, stop having a morning coffee and a shop-bought lunch.
- Check interest rates on your loans and saving accounts to ensure that you are getting the best deal. You want a low rate on your lending and a high rate on your savings.
- Set up direct debit payments like utility or credit card bills then the money will automatically be paid from your account when it’s due. This will help you stick to your budget and avoid late-payment charges, but take care you have a enough money in your account to pay them and that you don’t go overdrawn and incur expensive charges.
- Set aside time each month to stay on top of things. Revisit your action plan. Check how you’re doing with your budget and make any necessary tweaks.
You can also use the Government’s Money Advice Service online health check and get a personal action plan in less than 10 minutes. It gives advice and provides tools and planners, which can help you make informed choices and manage your money better.
With over 30 years’ experience in providing payment protection insurance (PPI), the team at http://www.firstcallpaymentprotection.co.uk endeavour to provide the best value payment protection, meaning you can protect your payments (mortgage, income etc) against loss of income.
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Debt Management-Keeping Credit Card Debt Under Control
When we think about debt management we think of house mortgages, credit cards, and car payments. The best way to manage your debt is to not get into debt in the first place. Unfortunately this is easier said than done. With so many credit card companies and banks offering easy credit and lenders just about throwing money at you, it is really easy to get into debt fast. For many people, debt consolidation can provide the much needed relief than can ease financial stress.
Debt is basically borrowing money from someone else with the understanding that you will pay back what is borrowed in a certain amount of time. The companies that you borrow from will charge a fee or “interest” based on the amount owed in order to make money off of what you borrowed. The longer it takes you to pay off the debt the more interest the company makes off of what was originally borrowed. It is better for the lender to keep you from paying off the total amount because they make more money if you pay it off slowly.
When considering borrowing money for a house, car, or for credit card purchases, it would be beneficial to do your homework and shop for the lowest interest rates available. Interest rates are established by your credit score. This score (hypothetically) shows how responsible you are at paying back what you borrow. The more you borrow, the faster you pay off, and the longer your loan the better the score. The higher the number the better your rates will be.
Most people get into trouble with their credit and debt when they use credit cards. Credit cards are designed to allow individuals to borrow money to pay for things when you don’t have the money to buy them yourself. You can use credit cards pretty much anywhere for just about anything. The trick to managing your credit card use is to only borrow the amount that can be paid back before interest is applied. If you only have twenty dollars at the end of the month that you can spend freely, then only twenty dollars in credit should be applied against the card.
The bottom line to debt management is, if you are going to borrow money, try to pay it off as soon as possible, go with the company with the lowest interest rates, and always be responsible with your payments. Missing a payment will lower your credit score and hike up your interest rates. It’s important to remember that companies can raise interest rates without prior notice. For those who have already exceeded their limit, however, debt consolidation can be a way to combine all amounts owed in order to ensure that monthly payments remain within budgetary limits.
How to Get Money for Paying Settlements
One of the hardest parts about debt settlement, even when you’re going through a debt settlement company, is coming up with the money to settle your account. Even though you’ll be paying just a percentage of your total debt, you still have a lump sum of money that you must come up with. Settlement is often delayed because debtors don’t have the settlement funds quick enough. Look for multiple ways to build up your settlement account.
Use Your Debt Payments
Once you start a debt settlement program, you’ll stop sending money to your creditors every month. You can instead, immediately funnel that money into a savings account that’s used to accumulate money for your settlements. This will likely be the major source of your settlement funds.
Save Your Tax Refunds
If you’re going through settlement around tax time, your refund might be large enough to settle an entire account. Otherwise, you can put the refund in your settlement account with the other money you’ve saved for settlement. Going to a tax professional may help you get a larger tax refund that you anticipated.
Tap Into Home Equity
With enough equity in your home, you can borrow the money to pay for your settlements. Check out a home equity loan before you become delinquent on your accounts. Once you’ve fallen behind on your payments, it can keep you from getting approved for the home equity loan. If you go this route, realize the equity is a loan that you’ll have to pay back once all your accounts are settled.
Get a Part-Time Job
You can use the income from a second job to help fund your settlements. If you combine the earnings from your part-time job with the minimum payments you were paying on your debt, you can contribute quite a bit of money toward your settlements. You may feel overworked by taking on a second job, but remember that it’s only temporary and you’re working toward a higher goal.
Reduce Your Expenses
Take a close look at how much money you’re spending every month and decide if you can cut out some expenses. For example, you may forgo cable television, professional haircuts, or internet service on your cell phone. Cutting out several expenses may save you several hundred dollars a month, all of which can be used to pay off a settlement. You’d be surprised at how quickly you can adjust to a life without these amenities. Even if you have a hard time, remember that it’s just temporary and you can always return to this lifestyle after you’ve paid your debt.
Sell Some Assets
You can sell off your valuable assets to come up with a little extra money for your debt. Of course, only sell off the ones that don’t have sentimental value. You can sell these assets in a yard sale or list them on Craigslist or eBay. You’d be surprised at how much money you can get from the things inside your own.
With a little creativity and lot of hard work, you can generate extra money for your settlements beyond what your regular paycheck would normally allow.
Steve Dowell is an expert writer on subjects related to debt settlement, consolidation, bankruptcy as well as saving and credit improvement. Read more on his blog debtsettlement.com.
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Four Credit Card Debt Negotiation Options!
By Noah Zee
Everyone has become mired in the recession, and is looking for relief, especially when it comes to credit card debt negotiation. Credit cards used to be a means to financial freedom and consumer buying power. Lately, they’ve devolved into a “ball and chain” for those unfortunate enough to fall too far behind on monthly payments. Although there is a glimmer of hope, but only if you carefully negotiate with your credit card company after choosing from one of the following options.
There exists four main methods which could work for you, and only you can decide which is best when proceeding with your credit card debt negotiation attempts.
1) Lump-sum Settlement
If you have a large amount of funds available, you could negotiate with your debtor and offer to pay a reduced lump sum. Verify that your debt will be completely stricken should you decide to pursue this course of action. Also note that even though you may be satisfied with a debt which has been “paid off”, the effect on your credit score will have a negative impact. It will be noted as a “charge-off” and remain as part of your record for approximately seven years.
2) Forbearance Program
A forbearance program, if approved by your credit card companies, allows you to have some breathing room for a specified length of time while you strive to get back on your own two feet. It must be clearly understood that such programs do not forgive you of any debt, they only permit you to have a slight break from making regular, full payments. This could mean that your minimum monthly bill may be decreased, a portion of the fees disposed of, reducing the card’s rate of interest, or delaying payments for over twelve months.
3) Debt Management Program
A debt management program is essentially a service whereby a counselor who specializes in credit card debt negotiation will arrange repayment terms on your behalf. This situation is ideal if you do not wish to speak with debtors at all, and prefer to have a trained professional handle the details. A necessary side effect is that all accounts involving credit cards will be shut down. And do not forget that though your credit score may be damaged, it is far better than enduring a bankruptcy.
4) Workout Arrangement
This fourth method of credit card debt negotiation will cause the company to probably freeze your line of credit, reduce the rates of interest, and stop calculating late fees. Using these terms could be permanent until you have submitted the entire balance, or temporary, to give you more leeway and time to raise enough funds. Keep in mind that the detrimental effects on your FICO credit score may be cushioned if past payments have been performed in a timely manner, so there is some hope.
Credit card debt negotiation is not going to be easy, it will take higher than average discipline to see it through. But if you are able to stick to it and fulfill what you have planned, then your attempts will surely have been worth it.
Knowing everything there is to know about credit card debt negotiation can help when dealing with creditors. Depending on how critical your situation, you might also want to explore credit card debt counseling services to help you steer away from potential pitfalls.
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Debt Consolidation Student Loans
For many students graduating from college the last thing on their minds is how to repay the many loans they may have accumulated over the course of their studies. They are frequently more focused on celebrating graduation as well as finding a job. However, it doesn’t take long for multiple bills to start coming in as, rarely, does a single provider cover all costs associated with higher education.
For those facing the dilemma of impending multiple student loans there are debt consolidation programs designed to combine payments so they are more affordable for those who will, likely, begin employment at the bottom level. Depending on the career choice, the amount of net income can vary widely and, sometimes, the income will not cover all payments once they are totaled.
The majority of consolidation loans extend the repayment period once loan amounts are combined and a total is calculated. For graduates this makes the cost of borrowing more affordable, but it’s important to remember that the longer it takes to repay a loan the higher the repayment since interest will accrue for a longer period of time. Therefore, it’s best to repay as much as possible while still in school in order to prevent being burdened by debt upon graduation.
These loans have many benefits that serve to relieve financial stress while trying to start a new life. The overall interest rate is generally lower since the length of the loan is extended. These loans are frequently locked into a fixed rate rather than changing over time. The result is lower payments and the ability to have the peace-of-mind that comes with knowing that multiple payments will not be coming in the mail every month.
To figure out how much you would have to repay you can calculate payments based on a simple method. Let’s say that you have $40,000 worth of combined loans by the time you graduate. Part will be at an 8% interest rate while others will be higher. Therefore, for every $1000 you borrowed you would repay about $200 per year. Once combined at a lower interest rate and extended to 10 years, however, you would repay $100 per year. By reducing the overall payment more available cash is provided. If loans have gone delinquent, late fees and over-limit charges can also be included or eliminated all together on consolidation occurs.
For many graduates student loan consolidation is the only viable option in order to prevent bankruptcy, for which student loans cannot be excused, or falling into arrears. It’s important to research companies carefully who provide these types of loans. Understanding origination fees, repayment penalties, periods of repayment, and interest rates should all be taken into consideration before a final decision is made.
Small Business Debt Consolidation
Starting a business is fraught with challenges and, many times, unexpected situations can rack up costs beyond what is available. This can result in the need to acquire multiple loans to keep running. Small business debt consolidation was designed to relieve the financial burdens of new businesses in order to ensure a positive outcome in the future. Although they work much like debt consolidation for any other purpose, there are some unique differences.
These loans are designed to focus a plan on meeting creditor demands while providing entrepreneurs with the liquid assets needed to ensure they remain solvent. There are several types of these loans and knowing exactly what you need help prevent future problems. For example, for some people debt management, where a third party company negotiates with creditors, is all that’s needed. With this option payments become affordable as the business develops the client base needed until they find themselves in the black.
The most common option is working with a lender in order to secure a loan that pays off all debts. However, for those who may have difficulty qualifying, working with a specialist to which one payment is made rather than many, can ease financial stress so that entrepreneurs can focus on working toward achieving their dreams. In this case the payment made to the specialist is then distributed by them to each creditor on a monthly basis.
It should be noted that there are some disadvantages to these programs. For instance, if the interest rate with vendors is already low, acquiring a consolidated loan may result in higher payments over time as they would include extended repayment periods even if the interest rate is lower. However, the advantages often outweigh any disadvantages.
For one thing all vendors are paid in full meaning that interest is no longer accruing on outstanding balances. For consolidation loans with low interest rates it could be that the payoff, in the long run, could be less than the total that would have been paid otherwise. Additionally, by having a zero balance, credit ratings improve.
There are many things to consider when business owners seek to resolve financial concerns, especially for those who are trying to get their fledgling businesses off the ground. It’s important to remember that different individuals will require different resolutions. Generating a plan that will ultimately ensure the stability and success of the business should be the ultimate goal.
Debt Consolidation – The Common Questions Asked
If you are struggling to meet the monthly payments on various debts and you feel overwhelmed in juggling credit cards, loans and overdrafts, you are stepping into a debt problem and a debt relief solution is needed to avoid it becomes serious and causes more financial troubles to you. Debt consolidation can be the easiest and quickest solution to settle the burden.
But, if it is the first time you try to consolidate multiple balances into single account, you may want to know what exactly is involved when you consolidate debts and whether it is a right solution for you. Below are the most common questions asked by people when they are considering debt consolidation.
1. Do I need to be a homeowner to consolidate debt?
No, it is not. Although you will get the best deal for a consolidation loan at the lowest interest and if you have a home as collateral, you don’t need to be a homeowner to consolidate debt. Without a home as collateral, you may choose to consolidate debt through an unsecured loan. There are many good unsecured loans that you can choose to consolidate debt, especially if you have a good credit score.
2. Can my monthly payment be reduced after the consolidation?
Generally, debt consolidation loans carry low interest rates compared to many other forms of debts. So, if you consolidate debt into an interest rate that is lower than your existing rates, the monthly payment will be reduced. But, if you are struggling to make the monthly payments due to the total payment is greater than your monthly earnings, then you are looking for the reduce of monthly payment to a level within your financial affordability. Under this scenario, you will need to find a consolation loan with a longer repayment term so that the month repayment amount is distributed throughout the period. But, you should aware that you have to pay more in total interest if you get a consolidation loan with long payment term to consolidate debt.
3. Will my creditors stop harassing me?
Yes. In fact, the existing delinquent debts that cause the phone harassment from creditors are paid off with the new consolidation loan. Since your creditors are paid, they won’t call you anymore. As long as you follow the payment schedule of the new loan that use to consolidate debt, you will be debt free once the loan is paid off. But, if you repeat the behaviors of late or miss payment on the consolidation loan repayment, the lender of the new loan will start calling you to chase you for payment. So, once you have stopped the phone harassment from creditors with debt consolidation, don’t let it happens again.
4. Will my credit rating be affected if I consolidate debt?
Debt consolidation won’t affect your credit score. As long as you make the loan repayment on time and don’t create new debt that can causes problem to you, your credit rating will not be affected. In fact, it will improve your credit rating by paying off the problematic debt with a new loan.
Summary
Many people will ask the above common questions before they choose to consolidate debt. The answers to these questions will help you decide whether the debt consolidation is a right solution for you.
Jennifer L. Todd is a finance expert and author for http://www.debtconsolidationmakeeasy.com. Visit her website to learn about debt consolidation and find the best debt relief solution to get your finance back to order.
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Two Immediate Steps Towards Improving Your Credit
By Colin Peters
Stop doing what you are doing if you want to change your situation. This is true for so many things in life and specific to repairing bad credit. There are two steps you can take to stop further delinquencies on your credit and start to fix your credit. The two actions you must take are: 1) pay your bills on time and 2) do not apply for accept new credit accounts.
Pay on time. Even if you are only able to pay the minimum amount, by paying on time you are demonstrating your ability to reliably pay your creditors which is important to improving your credit score and fixing bad credit. Paying your bills on time can improve your credit score by p to 30%. Nowadays we are all paying many bills or have a variety of accounts that keeping track of them is not only important but paying them by their due date is essential. It is easy to forget about an account. Sound crazy? Have you ever signed up for something that had a free trial and forgot to cancel? Have you ever signed up for a service that bills annually? Have you ever moved and had a bill not be forward by the post office?
So start by paying on time and consider using automatic withdrawal or online bill pay from your bank if keeping track of your bills is challenging. Mortgages, credit cards and car loans are examples where you need to show consistency. Pay on time for 12 months straight to begin building your credit score.
Do not apply for credit. Resist any offers you might receive for at least 6-12 months. Keep any accounts you have paid off for at least a year. This will help reduce your debt ratio and show that you have been accepted before. Even if you need more credit, by holding back you will begin to lower your debts that will improve your score while reduce the ration that many creditors place an emphasis on: your debt ration. Over 5 years ago, a debt ration below 40% was good, however now you should aim for a debt ratio below for 30-35%. The requirements to get approved for credit have become stricter so you need to tighten up this ratio.
These two steps alone will have a significant impact on how to fix bad credit. You should follow these two steps by either repairing your credit yourself or hiring a professional who can do it legally, professionally and in a timely manner. Learn more at FixMyCreditHQ.
FixMyCreditHQ.com provides feedback from real experience fixing personal credit. Learn what solutions are available to you so you can start to fix your credit. Go to: http://www.fixmycredithq.com
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The Three Top Secrets of Financial Freedom
For most people, the notion of financial freedom is a myth. It is considered to be highly elusive by many people, but is something that a lot of individuals hope to achieve in life.
While it may be difficult to attain this degree of financial stability, it is definitely not impossible. Freedom from debt can be realized not only by business owners, but even by ordinary employees.
To help you on your journey towards a debt free life, here are Three Top Secrets of Financial Freedom:
Live Within Your Means.
To put it simply, all you need to do is to limit spending your hard earned money only on things you are fully capable of paying for. As long as you have a stable income and spend money wisely on the things you really need, this is one of the keys to becoming debt free.
The rising popularity and accessibility of credit cards has created huge problems for millions of people around the world. Since it has become so easy to apply for a credit card and start borrowing money, more and more people find themselves incurring more debt that they cannot handle. These people may be happy at first, because they get to take home nice and shiny things from the store now. However, when the bills come, they may not be able to generate the money to pay their debts in full. This not only jeopardizes their credibility with banks, but also their financial stability.
Learn to Save More Than You Spend.
One can’t express the importance of saving money enough for the future. Some people who have money in their pocket go on a natural high because of their purchasing power. The fact that they are able to buy things can make them happy, but who needs instant gratification when you cripple yourself in the long run?
Keep in mind that you may not be working and receiving a steady income for the rest of your life.
Prepare yourself for the future by saving money today and become well-equipped to handle any monetary problems you may face in the road ahead. Start saving as much as you can on a monthly basis.
Finally, Make Your Money Start Working for You.
Did you know that you can multiply the amount of money you have saved if you invest it wisely? If you have a substantial amount of extra cash, consider investing it in an interest bearing money account or other investments that net you at least 5% annual gains. You might think it sounds crazy now, but when you retire from work and have no working income, your investments may help you live a comfortable retirement.
As the years go by, you may find that good financial decisions that you make now can pay generous dividends in the future.
With the right mindset and a proper plan for your financial future, Financial Freedom can truly be yours.
Dwight Anthony is an Expert Author and loves to write on Financial Freedom and Personal Development topics.
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What Do You Do When a Debt Collector Crosses the Line?
If you are deep in debt and behind on your bills, you are no doubt getting regular phone calls from debt collectors. It’s important that you know your rights and that you know that a debt collector can and can’t do or say legally.
Most professional debt collectors will follow the rules set by the Federal Fair Debt Collection Practices Act. But every now and then, you may get a call from a less than professional collection agency that crosses over the line. In fact, the Federal Trade Commission lists complaints against debt collectors among the top complaints they receive. This one industry receives more complaints than all of the others combined!
If you take into consideration that relatively few people lodge a formal complaint, then you realize the actual number of violations must be very high indeed. In fact, it’s a little too high to account for the size of the industry and the volume of accounts that are in collections. Unfortunately, the situation seems to be getting worse instead of better.
So, what do you do if you are a victim of abusive and illegal collection tactics? First, arm yourself with knowledge. Make sure you know your rights by visiting the Federal Trade Commission website.
A common and illegal threat is that they will take your house or other possessions away from you if you don’t pay your debt. If the debt is unsecured, they can’t take your belongings from you. Now, if you default on your car loan, your car can be repossessed. If you default on your mortgage, your house can go into foreclosure. But, unsecured credit card debt is unsecured. They only recourse they have is to take you to court and get a judgment against you. At that point, they may be able to garnish your bank account or your wages.
Another threat is that they will issue a warrant for your arrest if you don’t pay your bill. Again, this is far beyond the scope of power for a debt collector. The only debt you will go to jail for is one owed to the IRS. Failure to pay an unsecured debt is not a criminal offense. And threatening you with jail or accusing you of committing a crime is against FTC rules.
You can request that they stop contacting you by phone. You have the right to request that all communications be in writing. If they fail to honor your request, and continue to call you anyway, they are violating federal law.
If a collector ever makes a statement such as: “We know where you live…” you can and should report them immediately. This can be interpreted as a threat of violence and is very, very illegal.
Other things that collectors are not allowed to do include:
Discussing your debt with a third party
Interfering with your employment by calling you at work
Using of obscene or profane language or shouting
Making constant and unrelenting telephone calls
Failing to respond to written disputes
Publishing debtor information
If you feel your rights have been violated by a debt collector, what can you do? You can and should file formal complaints with the Attorney General for your state as well as the state of the debt collection agency. You can and should also file a formal complaint with the Federal Trade Commission. All of this can be done online. You can also sue a collector for harassment, abuse and violation of rights.
If you are the victim of unfair collection practices, you don’t have to just take it. You can fight back and stand up for your rights.
My name is Cheree Miller. I’m not a financial counselor or legal advisor. In fact, I’ve made some poor choices in my life. I’ve been broke, with creditors calling, writing, and sending court summons. I’ve had my bank account garnished and wondered how I was going to feed my family. But, I can tell you that you can learn to make good choices where your money is concerned. You can get out of debt if you remain focused on the end goal instead of wallowing around in a pity pool feeling sorry for yourself. Better yet, you can retire rich if you start saving for your retirement now!
Life was meant to be enjoyed. For more resources on getting out of debt and living debt free, visit http://www.imdebtfree.net. While you’re there, sign up for my free newsletter with more tips on how to get and stay debt free, and receive my free report “101 Powerful Tips for Legally Improving Your Credit Score”.
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