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Archive for the ‘Money problems’ Category

Introduction.

There’s a time bomb ticking away for many young people these days that is easily identified as – student loan debt. Student loan problems can remain a problem for years and even decades after a student has finished at college, affecting their prospects of owning their own home, marrying and raising a family or even simply living a debt free life. Student loan problems are, of course, magnified by the need for many former students to take out new loans once they start work to fund buying a wardrobe suitable to their new career, a car to travel to and from work – not to mention to pay for the deposit on a rental apartment.

What can cause student loan problems?

Student loan problems can arise due to a series of factors. With the recession still meaning work is hard to come by student’s parents who have been thrown out of work are no longer able to financially support their off-spring who are at college, meaning that the student maybe has to take out more personal loans, over and above what they thought they’d need and could comfortably afford to pay. Secondly, as anyone knows applying for a loan these days, if your credit score is poor then you’ll pay a higher interest rate on your loan. So, once a student has exhausted low interest rate loans from federal or state sources – they’re at the mercy of the high market rates currently in force. Finally is the problem of students being able to enter well paid employment on graduating. With jobs so hard to find these days, even a few months out of work after graduating can spell financial doom for a student. At present something like 1 in 6 students are behind with the loan repayments, with interest rates of around 15% being typical for delinquency rates.

Avoiding student loan problems.

For anyone hoping to go to college next semester the question is – how can they avoid student debt problems. The simplest answer here is, of course, to only take out an absolute minimum when applying for student loans, even if that means you need to work in the term time. Secondly, do consider carefully where you go to college/university. Moving away from home will significantly increase your costs as a student and, if home life is at all bearable for you, staying at home could well save you $10k to $20,000 a year!

Introduction.

If you’ve just got too many loan and credit card repayments to make and simply can’t keep track of them – then you really should consolidate your debt into one debt consolidation loan. Finding online debt consolidation loans is simplicity itself, just type something like ‘debt consolidation’ or ‘consolidate your debts’ into your favorite search engine and see all the fabulous offers that are available.

Debt consolidation loan benefits.

The main benefits of debt consolidation loans are two-fold. Firstly all of your debts are rolled-up into one loan and, secondly, that then means that you don’t have to remember all the different pay dates for all the separate loans that you had. So, by combining all the loans into one, you’ll only have one interest rate to worry about, rather than trying to calculate how much you owe across several loans all of which have different interest rates and pay dates. A bonus for you here on interest rates is that a debt consolidation loan will invariably also mean you pay less in interest than you would do with several separate smaller loans. Don’t forget too that by consolidating your debts and starting to pay them off on time – it will help to improve your credit score.

Mortgages and debt consolidation loans.

If you’ve got a mortgage that can be a significant factor in the amount of debt you’re in and you ability to pay off lots of separate personal loans. However, you can use the fact that you’ve got a mortgage to your advantage by re-financing your mortgage to release capital to pay off your debts. Look online for mortgage re-finance assistance that explains further how you can re-mortgage your property to release funds sufficient to pay off all your debts. If your debts are very high and the value of your property is low – then a mortgage re-finance plan might not be a feasible option for you. So instead look for online debt consolidation mortgage advice. This is another way of re-mortgaging your property to pay off any debts by, in effect, adding the debts to the life of a mortgage.

Introduction.

We often talk about being deep in debt – but do you really understand the depth of your debt? For some folk, whether they owe $100 or tens of thousands of dollars is pretty academic really as they see the depth of their debt as always being relative to the income they have. So, in simple terms, some one earning $500 a week and being $100 in debt would be considered to be in the same amount of debt as someone earning $2,000 a week with a $400 debt. However, although both people have the same ratio of debt-to-income – are these two people really in the same depth of debt?

Think in depth not ratios!

In the above example both of the people are in a debt of a 1/5 ratio of debt-to-income, of their weekly income. However, the person earning $500 a week will find it far more difficult to clear their debt than the person earning $2000 a week. Why? Well quite simply someone earning $500 a week will find it very difficult to end up with $100 of unused/disposable income at the end of any one week, whereas the person earning $2000 a week should, by reducing their expenditure for a week or two, quite quickly be able to clear their debt.

Disposable income and your depth of debt.

So, a more useful way to look at your depth of debt is to compare your debt to your disposable income. To do this simply add up all of your utility bills, rental/mortgage payments, average food bills and any other essential expenditure from your weekly or monthly pay check. Subtract that amount from your weekly or monthly pay check and that’s your disposable income, cash you can spend on whatever you like. If you have no disposable income, stop reading this now and seek expert debt counseling. Otherwise, next total up all the debts you’ve got and how much their weekly or monthly repayments are. Divide the figure for your debts by the disposable income you’ve calculated and multiply that by 100 to get a percentage. (debts/disposable income x100). If you end up with a figure less than 100% then the depth of your debt isn’t too bad and, with some careful planning, you could clear your debts in a year if you really budget for it. If your figure is over 100% then you currently owe more than you can afford to repay and you are deeply in debt. Debt counseling will be of benefit to you or alternatively perhaps you should seek a debt consolidation loan.

Introduction.

No one wants to start a New Year in debt and yet, following on from Thanksgiving and the Christmas festivities at the end of the previous year – many of us do find ourselves in debt in the New Year. Needless to say, if you are in debt it’ll be because your usual income is unable to stretch to affording to pay for those extra things needed for the traditional end of year celebrations – meaning that you inevitably end up paying for things on your credit card.

Spiraling debt.

There’s absolutely nothing wrong with buying things on your credit card, providing you aren’t maxed out on it and you can make the repayments when the credit card bills start coming in. However, as soon as you miss a credit card repayment your credit score begins to slip and, before you know it, you’re being listed as a bad credit risk and can find yourself in a spiraling debt situation that can run out of control. Why, well that bad credit risk you’ve become makes it difficult to take out a normal unsecured personal loan, should you need to take one out. Meaning that you have to take out secured loans, using something as collateral against your ability to repay the loan. This might be your car or home being under threat of being taken from you, in lieu of the debt payment, should you fail to repay the loan. If you were to fall behind with these payments and have your car, or even worse, your home, taken from you – you would then be in an even worse position than before and needing to go further into the spiral of debt to get a new car or somewhere to live.

Bad credit unsecured loans.

To avoid getting caught in the spiral of debt you need to avoid having to take out secured loans and instead be able to get unsecured loans. An unsecured loan is granted on a ‘trust’ basis according to your ability to pay off the loan – as is indicated by your credit score. With a bad credit rating your credit score would normally exclude you from such offers. However, there are now specialist finance companies that are willing to off unsecured loans to people with bad credit ratings. That is, of itself, good news. However, because a person with a bad credit rating does pose a higher risk to the lender of not having the loan repaid – they will charge you a higher interest rate than someone who hasn’t got a bad credit rating against them.

Introduction.

Whilst only spending on what you can really afford to pay for immediately is the only true way to stay out of debt – the fact is that most of us need to use our credit cards for purchases, but have little idea about managing credit card debt. Well, at the start of another new year, perhaps it really is time that you started to think a little more deeply as to how you can manage that credit card debt you’ve been accruing.

Paying off existing credit card debts.

The first point to understand is that paying off existing credit card debts is a tremendous drain on your financial resources. Convenient as they are, in terms of being a small personal loan available for just about any purchase you want to make, interest rates on credit card loans are utterly crippling compared to the interest rates you could get from a regular personal loan. The result of that is that you’re not just paying for the purchase but typically around an extra 20% in interest. Whilst it is absolutely essential that you pay off the credit card interest debt every month, unless you also start to pay off the capital amount you’ve borrowed on your credit card – you’ll be forever paying it off. So, if you’re stuck in a loop of only ever paying off credit card interest look for a credit card with a lower interest rate and transfer the debt to it – you should then be able to make headway in paying off the capital as well as the interest.

Future credit card purchases.

Managing credit card debt is also about managing what you use your credit card for in the future. Tempting as it might be – never spend up to the limit on a credit card. In fact you’ll be best off only spending up to 30% of the limit for your credit card. The reason for this is that the more credit available to you on a credit card – the better the credit rating agencies will view you should you want to take out another credit card, personal loan, auto loan or mortgage etc. The reason for this is what the credit agencies refer to as the utilization to credit ratio and, for example, by only utilizing 30% of the available 100% of credit – you’re showing them that you’re a responsible purchaser, which means you’ll get a higher credit score. So, if you want to make a $5000 purchase and have two credit cards each with a credit limit of $10,000 – rather than using one credit card for the full amount, the best thing to do is spread the load across the two credit cards at $2500 each.

Introduction.

Do you have any idea how closely associated your identity and money are? In these days of internet banking from our computers and mobile banking on our smartphones – we’re constantly leaving a trail of information about our identity all of which is linked to our banking and finance data. Add to that the trail of identity to be found from our other internet habits and it’s a veritable haven for anyone wanting to capture and steal details about us that can help them to break into our bank accounts and get at our money. So, apart from hoping your bank or loan company really have got your details held securely – what else can you do to protect your identity and money?

Social Security number peril.

If you don’t do anything else – never leave your social security number lying around or give it out to anyone without first establishing they are exactly what they say they are. If you get an email requesting your Social Security number to check it for some reason or other – don’t send it. Just checking the email address making the request can often reveal what is an obvious scam. If you think your social security number has been hacked by someone – run a credit score check on yourself immediately to see if anyone’s taken out a loan in your name – if they have get a fraud alert registered on your credit report and report it to the police.

Keep your cards close to you.

Credit cards and debit cards need guarding every bit as much as a poker hand. Some people have that many of them – they forget what they have got. If one of them goes missing it could be months before they realize, meanwhile it won’t only be money from that one card that the thief will have helped themselves to. Using just one card you could have your whole identity stolen from you and have thousands of dollars taken out in loans in your name – all of which you could be liable for.

Introduction.

If you are in debt – avoiding financial ruin might seem an impossible dream. However, the reality is that by managing your finances more thoughtfully and carefully – financial ruin can be avoided. For some people this might mean engaging the services of a debt counselor or perhaps taking out a debt consolidation loan, to bring all your debts under one loan, with one repayment amount and schedule. But how do people end up on the road to financial ruin?

Juggling bills.

Perhaps the easiest and most common way for people to end up on the road to financial ruin is by constantly trying to juggle bills, resulting in them running up extra late payment charges – which all add to the debt that they’re already in. If that wasn’t bad enough in itself, some people end up resorting to juggling bills trough shear laziness. They just can’t be bothered to organize themselves to know what needs paying or when it needs paying. If you’re truly honest with yourself – and that’s you, then for goodness sake sort yourself out because your financial distress is self-inflicted and easily avoidable. However, if you find yourself having to juggle bills because you’ve genuinely found yourself over-stretched in terms of what debts you can afford to re-pay – then a debt consolidation loan will help you in the long term.

Living in the future.

Another path on the road to financial ruin is followed by those people who are living in the future in terms of what they can afford. On the one hand this could be people who take out too many personal loans or who can’t control their credit card spending. After all at some point in the future they have to be paid off and a failure to do so could lead to spiraling debt and financial ruin. However, here we have in mind those people who spend money they haven’t got today based on a future projection of what they may have or be worth. A typical example here is people who spend money now in anticipation of paying off debts when an inheritance is paid, or perhaps even worse, people who take money from their pension funds leading to potential financial ruin when they are no longer able to work. Whilst there’s nothing wrong with taking out a home equity loan to pay for things that themselves have value or an investment return potential – using home equity loans to pay for relatively frivolous items like the latest home theater system is definitely a road to financial ruin.

Introduction.

Everyone wants to save more money these days, but we’re not all that committed to actually giving anything up in order to make those savings. So, we hope you’ll find these easy savings tips helpful and that they will get you thinking about about other ways that you can save money – without compromising too much in your life style choices.

Your smart phone.

You know you’ve got to hand to those guys at Apple – they did a fantastic marketing job, making us all believe we couldn’t possibly survive without an iPhone. Don’t worry, we’re not suggesting you ditch your smart phone in favor of an old cell phone model – but you really should look at that top of the range iPhone contract you’re on. After all what do you use your smart phone for the most – Facebook, Twitter, email, messaging, calls … you know what guys – other smart phones do all that as well. Moving away from the iPhone could save you anything from $200 to $500 a year.

Avoid peak times.

Why do services cost so much more at peak times like weekday rush hour, or Saturday mornings? Simple, everyone wants to use that service at that time. So, another easy way to save money is to avoid doing things at peak times. OK, perhaps you can’t avoid traveling to work at peak times – but what about that gym membership that entitles you to use the gym after work and week-end mornings – the peak times. Simply by changing your gym membership to off-peak could save you another $50 a month or $600 a year!

Eat your way to savings.

We spend inordinate amounts of money on food a year. Just by making your own sandwich for lunch, rather than buying one from a deli, just once a week could save you $300 a year, take your own flask of coffee too and that could be well over $500 saved – just for doing it once a week, easy savings or what? Similarly cut down on the home orders, creating your own meals and meal plans is great fun and you can guarantee yourself to be eating more healthily. If you order even something like a couple of pizzas a week for home – that will be another $1000 a year you’re spending, cut it down to once a month and you’ve immediately saved nearly $750.

See how easy savings can be!

If you follow just the ideas we’ve listed above you will save yourself at least $1000 a year and could even save yourself up to $2000. Now that’s a lot of money – money you can then treat yourself with on something special.

Introduction.

No one wants to hear from the debt collectors, but unfortunately once you’re in their sights they’re pretty well impossible to shake off – even if you don’t actually have any debt! Reading many of the horror stories about people who end up dealing with debt collectors – you may well think there’s no way of avoiding debt collectors, if you’re one such person … read on.

Avoid the debt – avoid the debt collectors.

Of vital importance to your success in avoiding debt collectors is simply to avoid the debt in the first place. Sound simple, sounds obvious – but the recession that began back in 2007 is still biting hard and causing financial hardship across the country to those who cannot find regular employment. The result of which has been a rise in the number of personal loans and a subsequent rise in loan repayment delinquency. It is absolutely essential that, if having taken on loan or having got into credit card debt – that you ask the personal finance companies concerned to help you sort out a repayment plan you can afford. They’ll want to work with you on that, as they’d rather get their money back slowly than not at all. If you have debts that have spiraled out of control – you might need to consider a debt consolidation loan.

Handling debt collectors.

If all that fails, perhaps your credit score is to poor even for a debt consolidation loan, then unfortunately you have to expect a call from a debt collection company. Handling the debt collectors first call can be highly significant, in terms of how stressful you find being involved with a debt collection company. First of all you have to accept you’re in debt and that you must clear those debts. Secondly, debt collection companies, as opposed to debt settlement companies, are there to recover money for the finance company they represent and, again, it is in their own interests to help you repay the debt – rather than just taking you to court or seizing other assets you might own. So, thirdly and finally, listen to what they say, talk to them about a realistic repayment scheme – and clear your debts.

Introduction.

Although our politicians finally got their act together a few weeks ago and agreed to sort out the national debt – that doesn’t mean to say that we won’t end up paying for their financial mess due to the reductions in the nation’s credit rating. What this means, for me and you, is higher interest rates on our credit card re-payments and credit card blues – as we’ve all previously signed up for variable rate cards in the now false anticipation of falling credit card interest rates.

Beat the interest rate rise.

You can, however, beat the interest rate rise that will soon be being made to your credit card. If you’re thinking of buying something on your credit card – get it now and pay it off before the interest rate rise comes through. Even if you can’t pay off the credit card loan immediately, and the rate rise comes in a few months later, at least you’ll have been able to pay off some of the interest at its lower rate. The same could also be true for taking out a personal loan to make a purchase or an auto loan – take it out now and you should be able to secure it at the current lower interest rate. Food for thought here; winter clothing, Christmas gifts etc will soon be hitting the stores – so buy now to keep your interest payments as low as possible.

Keeping watch for rate credit card interest rate rises.

You’d be amazed how many people don’t know what their current credit card interest rate is until the receive their monthly bill, which could then come as a shock as a small interest rate rise could add hundreds of dollars to your repayments. You need to keep track of your credit card interest so that you can check that you can afford to repay your credit card purchases. So, when mail or email arrives from your credit card company – take the time to read it and look for information about the card interest rate. Don’t ignore it thinking it’s junk mail.