Credit Card Blues
For the average American family, debt, and especially credit card debt is spiraling out of control at a record pace. The average household credit card debt has risen dramatically from $3000 in 1990 to over $8000 today. Personal bankruptcies are also at an all time high, prompting Congress to consider a radical bankruptcy law overhaul, designed to weed out those who are merely taking advantage of the system loopholes while directing many to more palliative alternatives such as a debt management program.
Of course some debts are considered necessary and indeed wise choices. For instance, few if any could afford a house if we had to wait until we could buy it outright. Generally speaking, a home is an asset that, over time, appreciates in value. Another debt that "makes sense" is a student loan. All data points to a direct correlation between income and educational level. However, what about that big screen TV you really didn’t need, or that new car when a used one would have served the same purpose and not have created a financial nightmare. We need to start telling ourselves NO!
Debt Consolidation
Sometimes life can get on top of you and out of control. When this happens many of us indulge in a little retail therapy but when a little becomes a lot then you can hit problems. When your spending constantly out strips your income you will find yourself in debt. The only way out may be a Debt Consolidation Loan to bring all your debt under the one payment.
If you have got yourself into so much debt that you don’t know how you
are ever going to pay it off then a Debt Consolidation Loan may seem the
answer to your prayers. With a Debt Consolidation Loan you will have
just one monthly payment and hopefully be able to finally pay off your
debts.
Of course, your goal in consolidating your debt should be to lower your
overall costs. There are two important points to keep in mind to achieve
this. The first is to get the lowest interest rate possible and the second is
to plan to pay off your debts in 3 - 5 years.
All About Debt Consolidation Loans
Debt consolidation loans can be the answer to a number of financial problems, but before you take the plunge, make sure you’re well informed.
What is a debt consolidation loan?
Debt consolidation is when you arrange a single loan to cover a number of existing debts. Rather than juggling several expensive payments, such as credit card or hire purchase bills, a debt consolidation loan means a single manageable monthly payment. You’ll also benefit form lower monthly interest payments; compare an average secured debt consolidation loan of 12.4% APR to a credit card company charging 19.9% APR.
Besides lower interest rates/ payments; you also benefit from knowing that a consolidation loan runs for a fixed term, and that every repayment you make goes towards clearing the loan. Without consolidation you may find that minimum monthly payments simply service the interest accrued on your debt, without having any impact on the debt itself.
Debt consolidation also offers an opportunity to repair your credit rating. Remember that any missed payments and bank charges count against you in the eyes of lenders. It’s a vicious circle: a poor credit rating means that lenders see you as a risk, which in turn means they charge you higher interest rates. By repaying all your creditors and taking out a single loan; you are already well on your way to rewriting your credit history.
Negotiate Your Way Out Of Debt
Eliminating your debt is a daunting task. What can you do to get out of debt fast? Believe it or not, negotiation along with proper financial responsibility is your foothold out of the rat race. Learning how to eliminate your debt might be one of the most important life skills that you learn because it can bring you happiness and fulfillment. In order to successfully eliminate your debt, you must use a combination of self-control, proper negotiating skills, and some future planning.
Here Are Some Tips
1. Chop ‘em up or freeze ‘em. Start by taking all your credit cards out of your wallet/purse and cut them up into pieces. If you’re one of those people who make the claim that you might need those credit cards in case of emergency, then a unique strategy is to freeze your cards–literally. Put the credit card into a paper cup and fill the cup with water and then freeze it. You won’t have immediate access to the credit card and it will still work for you in case of emergencies. Whatever way you choose to get rid of your credit cards, make it a symbolic ritual of your commitment to get out of debt.
7 Ways to Consolidate Your Debt
If you are in debt, you have several options available to you in your quest to consolidate your balances and thereby reducing your monthly payments or paying off your loan faster. Let’s look at 7 of the most popular and effective ways for you to consolidate your debt.
1. Life Insurance. Yes, many life insurance policies have a cash pay out [loan] provision. If you have held the policy for quite some time, the amount of equity built up in it can be quite large. What if you can’t pay the insurer back? Good question! In many cases the amount you owe will be deducted from what your beneficiaries would receive upon your death.
2. Your Retirement Plan. If you have a 401(k) plan at work, you can usually borrow from the account and use these funds to pay off debt. Caution: if you do not pay back the loan within a certain specified time or you leave your job, you could be faced with penalties and tax charges from the Internal Revenue Service.
Are You Buried In Debt?
Are you having a problem paying your bills? Are you receiving past due notices from creditors? Are most of your accounts being turned over to debt collectors? Are you worried that you might lose your home or your car?
Well, you are not alone. Many people do face a financial crises at some time in their life. The crisis can be caused by personal or family illness, losing your job or just simply overspending. It can seem overwhelming, but you can overcome this crises. Your financial situation doesn’t have to go from bad to worse.
If you know somebody that is in this kind of financial situation, then you can consider these options: budgeting realistically, credit counseling from a reputable counseling organization, debt consolidation, or possibly bankruptcy. How will you know which one will work best for you? It really depends on how much debt you have and your level of discipline.
If you’re out of work, how are you going to deal with your creditors?
Let’s face it, you see in the headlines all the time about jobs cuts, layoffs, corporate restructuring and businesses going out of business.
Consolidate Debt to Help Get You Out of the Quagmire
Will you agree with me if I tell you that, the key to financial success is to live within your means? This is an old belief that modern day income earners have completely forgotten. This is because it is now extremely easy to get into financial trouble. Credit card, store cards and other loans are easy to acquire. However, you will agree with me when I say that they are very hard to pay, you may end up living a paycheck-to-paycheck kind of life if you will not fix the situation immediately.
Consolidation debt may save your sinking credit standing. However, you need to be careful if you need a consolidation debt. Many debt consolidation companies may offer their services when you need a consolidation debt. This may be helpful but it is more advisable if you try to make a realistic personal assessment of your financial condition before deciding on acquiring a consolidation debt.
Debt Consolidation Makes Sense Only with Low Interest Rates
Credit that cannot be managed or is not being repaid requires debt consolidation. Debt consolidation offers borrowers with a chance to repay their high interest loans at low interest rate. You must be thinking, ‘it sounds good, but how is it possible.’ How can high interest loans repaid at low interest.
This is how debt consolidation works ? it replaces multiple unsecured loans with single loan. As compared to several different loans, you obtain one single low interest rate loan. The single monthly payment on this loan is divided to repay the individual loans. This will also make your debt situation manageable. Debt consolidation should be accompanied with low interest rates; otherwise debt consolidation doesn’t make any sense.
It is almost mandatory to find debt consolidation with low interest rate. Otherwise, it would mean financial mishap of the worst kind. You might end up paying more in the long run. Debt consolidation plan can have serious shortcomings to if the plan is not carefully structured.
Finding a good low interest debt consolidation is not always easy. However, an extensive research can certainly open ways to find one. First of all it is important to understand that your financial situation is unique, so what works for your neighbour might not work for you. Your debt consolidation plan will be as unique as your financial status.
Debt Elimination 4
Planning For Debt Elimination Without Surplus Cash
Previously we looked at using surplus cash each month to chip away at those outstanding loans, on our long road to debt elimination. But what can you do if there is no surplus cash every month?
So, you have examined your monthly outgoings, and there is nothing to cut out in the way of expenditure. Or you can make some savings, but it just brings your outgoings and income into balance each month, whereas before your outgoings were in excess of the income. Well, at least you have made some progress by bringing income and expenditure into equilibrium. But where does that leave you in your debt elimination challenge? It is probably time to focus on those debts, and see what can be done to bring down the cost of those loans, and the monthly repayments. It may still be possible to plan for debt elimination in 5 years, especially with your newly developed anti debt mindset.
Individual Voluntary Arrangement IVA, an alternative to bankruptcy
Individual Voluntary Arrangement, IVA is an alternative to bankruptcy - which could provide you with a real solution to your debt problems.
An Individual Voluntary Arrangement (IVA) is an alternative to bankruptcy. If you have a substantial amount of unsecured debt an IVA could be your best solution.
IVAs are controlled by government legislation and can only be set up by licensed Insolvency Practitioners. An IVA acts as a legally binding agreement between you and your creditors, freezing interest charges on your debt and setting an affordable monthly payment amount over an agreed fixed period (usually 5 years).
It is important to remember that you should only consider an IVA if you have sufficient money available to contribute towards repaying your debts each month or additional assets which could be taken into consideration.
Disadvantages of Bankruptcy
Notices placed in the press
Potential loss of assets such as your home, business and car
Long term effect on your ability to apply for a credit or a mortgage
Restriction to work within certain professions or hold a position of office
Your utility suppliers ? gas, electricity etc ? informed
Your bank and building society accounts closed
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