Discover Debt Freedom!

When most of us find ourselves in a place where we just don’t have enough money to pay for things, we immediately turn to borrowed money. The reason for this is that we don’t want to face any interruption in our lifestyle, so we subconsciously do what we need to do to make the money show up. This might mean selling some stuff, working extra hours, but often it just means borrowing money. Some people use credit cards, others go to the pawn-shop and some people get themselves stuck in payday loans. If you find yourself in a situation where you have a number of PayDay loans it seems that the light at the end of the tunnel has been shut-off, don’t worry, there’s help.

We must first remember that debt is not the problem itself, but rather the symptom of over-spending. Why are you spending more money than you make? Is it because you lost your job and just don’t have any income? Do you just not make enough to get by with the basic necessities of life? Perhaps you just enjoy spending money and can’t seem to stop yourself from spending more than you make. You first have to alleviate whatever is causing this imbalance. It might mean job-hunting like there’s no tomorrow, it might mean picking up a part-time job, or it might just mean getting yourself on a really tight budget, but you have to put yourself in a place where you are making more than you spend on a monthly basis.

After you’ve tipped the balance of power in your income and expenses, we can start to work off those debts. Since payday loans are so much higher in interest rates than credit cards and other debts, they should be your priority after paying for some basic groceries, your utility bill, your mortgage and some gasoline for your car. To get out of them, you have to attack them like they’re the plague, take every extra dime you can have and throw it at your loans. Start with the smallest one, and pay as much on it as you can as possible, and work your way up this list. You might want to have a garage sale, take some money out of your investments if you have any, or perhaps sell some stuff on eBay to free up extra money to help clear the log jam. The point is, make them the priority in your life after taking care of basic necessities and fight to get rid of them like there’s no tomorrow.

When most people go shopping for a home, they get what’s called “house fever.” They decide that they want a house, and won’t let anything get in the way of them doing so. It doesn’t matter if they have a lot of debt that they need to take care of, or have no money put away for a decent down payment. Most people won’t wait until they can save up and pay 20% down on a house and then get stuck paying private mortgage insurance (PMI).

Essentially private mortgages insurance is an insurance policy that will pay the bank if you get foreclosed on. When the bank forecloses a home and sells it, usually they don’t get all of their money back, this is where PMI kicks in. The private mortgage insurance policy that the homeowner was paying for will give the amount of money not made up from the sale of the home. If you get a mortgage and can’t afford to give a 20% down payment, usually you’ll get stuck paying PMI depending on the type of loan that you have. You can expect PMI to be about $50.00 a month for every $100,000 that your home is worth.

A lot of people who are on a road to financial prosperity want to get rid of their debts as soon as possible. Who can blame them? A lot of people develop plans to pay off their debts by paying on the one of with the highest interest rate first, or the smallest amount first, and then working their way through all of their debts. Hundreds of thousands of Americans are actively pursuing a plan like this through Dave Ramsey’s Total Money Makeover. He teaches what are called “the baby steps” which includes paying off your debts from smallest to largest.

A very frequent question among his listeners is whether or not people should try to get rid of their private mortgage insurance as part of their debt snowball by increasing their home equity to above 20%. This means making large extra principal payments on your home. After all, PMI is another payment that you have to make every money, who wouldn’t want to get rid of it?

If you’re very close to getting rid of your PMI say by a few thousand dollars, just go ahead and kick butt until it’s gone, but if you would have to pay $5,000 or more on your mortgage, you should wait to try to get rid of your PMI until you have done some other important things first. You should first get rid of your consumer debts, such as car loans, credit cards, personal loans, and the like. You should also put at least three months of expenses in the bank before focusing on paying down your PMI.

The reason for this is so that you have some cushion in your financial budget before going full speed ahead to pay off your private mortgage insurance. You don’t want to be throwing thousands of dollars a month toward your mortgage payment only to have an emergency happen and then find yourself in another big financial mess.

A great way to get a lower mortgage is to buy a less expensive home. Even in a seller’s market you can still get a good deal on a prefabricated home. There are hundreds of different styles and sizes of manufactured homes to choose from if you know where to look!

Sonja and David eagerly looked forward to their yearly cruises. When David was diagnosed with Alzheimer’s disease, Sonja saw no reason to just sit around at home and wait for the end. She continued to travel with David until less than a year before he finally succumbed to his illness.

If your loved one has Alzheimer’s or another form of dementia you can still enjoy traveling with her, but you will want to take some basic precautions and make sure to buy travel insurance.

Plan ahead. If your loved one needs special accommodations, make sure you notify the places where you will be staying. David, for instance, needed a wheelchair accessible room for the last two years of his illness. Make sure to buy travel insurance for over 65

Make sure your loved one has identification. In case you become separated from your loved one, make sure he is carrying identification with his full name, your name, and how to get in touch with you. (On trips, make sure to list your cell phone number and not just your home number.) A Safe Return bracelet from the Alzheimer’s Association is ideal, but a laminated card that goes in a wallet, a purse, or a pocket can also work. Take this step even if you are sure your loved one still remembers his name. In a stressful situation, even the most basic memories can slip away from a person with Alzheimer’s.

Keep an eye on your loved one. People with Alzheimer’s quickly lose their sense of direction so that even getting around in their own home can become a challenge. I once worked with a man who stepped outside to get his morning paper, forgot which home was his, and got lost. So don’t leave your loved one alone or send her off by herself in an unfamiliar environment. Where she goes, you go.

Allow time for rest. When people with dementia become exhausted, their confusion worsens and they may grow irritable and even combative. Choose low energy activities, give your loved one a chance to rest during the day, and don’t plan on too many late nights.

As much as possible, establish a routine. People with dementia do better when they know what to expect. A vacation can be disconcerting because it throws them into a new and unfamiliar environment. As much as possible, follow the daily routine you’ve established at home (e.g., get up, shower and dress, eat breakfast, take a morning walk, etc.). 

Plan a simple explanation if your loved one exhibits unusual behavior. As David’s dementia progressed, he began making sexually inappropriate comments to young women. Sonja learned to say quietly to his targets, “Please forgive my husband, he has a cognitive impairment.” Your fellow travelers are likely to be very forgiving once they understand that your loved one is ill.

Have fun. Focus on what your loved one can do rather than on what he can’t do. Make plenty of time for activities that are still pleasurable to both of you such as a stroll on the beach or a quiet dinner for two. Even though your loved one’s memory is fading, he can still revel in the present moment.

If you are taking another sort of trip, consider backpacker’s insurance.

Debt consolidation loans are a tempting way to treat finances that are becoming hard to manage. When you have more than one credit card, perhaps a personal loan and mortgage too, the many payments you have to make each month can soon spiral you deep into debt, and the idea of a single payment can seem very enticing. However, there are one or two things you should remember before consolidating. Firstly, can you afford that single payment? If so, ensure that you either limit, or cease, completely, any extra spending such as on credit cards or you’ll soon find yourself back where you started, only with much more debt than before. Secondly, be wary of any fees that might be attached to the new loan. Some lenders can tie you into their deal, much like a mortgage, and you may find yourself paying hundreds in penalties if you want to pay the loan off early.

There are other things to consider, too. You might be tempted to secure the loan on your property. But beware: you may be putting a part of your home up for collateral on what was, in the first place, unsecured debt. This leaves you at risk of losing that home if you cannot pay the debt off. An alternative option to a consolidation loan might be an IVA or debt management if you’re in serious debt.

All in all, consolidation loans can help reduce monthly outgoings, but be sure to research the market and be aware of any small print on the paperwork you sign. You don’t want to sign away more than just those credit card debts, after all.

Prime Time Money hosted the Carnival of Debt Reduction this week, and featured a number of great articles and blog posts for getting out of debt or reducing your debt.  Here are a few that caught my attention:

•  Create Your Own Bill Organizer, at DestroyDebt.com
• The Real Cost of Withdrawing Retirement Funds Early, by Cash Money Life
• Micropayments Make Cents, at Financial Zip.

In the last decade, credit cards have become one of the major ways to purchase items.  No longer just for older, financially established individuals, now most individuals can obtain a credit card as soon as they become an adult.  The easy access to credit cards has become a problem for the nation, as many individuals have failed to learn the basic rules for using a credit card and consumer debt has reached an all time high of over $600 billion.

There are a number of things that should be understood about credit cards before a person begins to use them.  Using a credit card unwisely has the ability to affect your financial future for years to come, resulting in higher interest rates, a lowered credit score, and the denial of credit in some instances.  It is important that individuals learn how to use credit cards correctly before they are expected to handle a credit card on their own.

1.  Purchases Made On Credit Will Cost You More Than Purchases Made With Cash
Purchases that are made on a credit card and are not paid off within a certain time period will always be subject to finance charges and interest payments.  The longer you take to pay off the balance of the credit card, the more money it will cost you in finance charges, fees, and interest.

2.  Credit Cards Should Be Used For Major Purchases Only
One of the easiest ways for an individual to get into debt is to use credit cards for many of their regular purchases without setting aside money to pay off the credit card at the end of the month.  In a very short while, the person will find themselves in financial difficulty as they approach their credit limit and do not have enough money to pay down the amount on the credit card.  By limiting your credit card purchases to major items and emergencies, you will ensure that you will not spend your credit to the limit on frivolous purchases.

3.  Try To Pay Off The Balance As Quickly As Possible
Every day that a balance remains on your credit card is another day that the credit card company can charge you interest and finance charges on that balance.  Credit cards should never be used with the intention of taking a long time to pay off the balance as this is a recipe for debt disaster.  If you must use a credit card to make a purchase, budget your monthly finances wisely so that you are able to pay off the balance of the card within a few months.

4.  Read The Terms And Conditions For The Credit Card Carefully
All of the important disclosures for the credit card will be found in the terms and conditions of the credit card agreement, often found in a separate booklet contained within the credit card offer envelope.  The terms and conditions will spell out the associated fees, interest rates, and finance charges associated with using the credit card and if you decide to apply for the credit card, you are agreeing to abide by the terms and conditions of the credit card whatever they may be.  Individuals that do not read all of the information carefully often find themselves on the hook for a credit card with a low limit and outrageous fees.

5.  Interest Rates May Rise Unexpectedly
In most credit card agreements, there is a clause that the interest rate that you are being charged for using the credit card could change at any moment for numerous reasons or no reason at all.  Many companies will raise the interest rate on the card if they find that you have missed other debt payments or your credit score dips below a certain amount.  Carrying a large balance on the card can mean financial devastation when the interest rate rises if the person does not have enough money to meet the increased payment amounts.  
  

Individuals across the nation are facing a financial crisis today, with skyrocketing debt, unaffordable homes, and job losses occurring in many major industries.  Many of the problems that are facing individuals today could have been avoided by following a few simple financial rules that they should have learned before they were required to manage their own finances.  Becoming financially savvy is the only way that these individuals will be able to get themselves out of debt and stay out of debt permanently.

Rule 1: Don’t Spend More Than You Make
This rule may seem like common sense, but you would be amazed at the number of individuals that are living beyond their means.  In most cases, it is not because the person does not have a good job or cannot afford to pay for more than the basics in life, but it is usually because the person has no financial discipline and chooses to purchase luxury items before they have the money to pay for them.  A person will never get out of debt if they are constantly borrowing money from creditors.

Rule 2:  Keep Accurate Financial Records
Keeping track of how much money you spend and what you spend your money on is the best way to discover where unnecessary expenditures are occurring.  Individuals that do not keep track of their daily spending often find themselves spending more money than they intend too and at the end of the month, are wondering where all of their money has gone.  These records may also be needed to prove your case if a bill payment is lost or misplaced by the company or a negative item is mistakenly placed on your credit report.

Rule 3:  Create A Savings Account
In the days of easy credit, many individuals put off creating a savings account because they felt that they could always use their credit cards to pay for any emergency purchases that arose.  Today, many individuals are finding that their interest rates on their credit cards are skyrocketing and charging emergency expenses to a credit card can be quite expensive.  Creating a savings account gives you some financial flexibility for any unexpected expenses that may occur and will save you a great deal of money on future interest payments.

Rule 4:  Pay All Of Your Bills On Time
Paying your bills late or missing payments can devastate your credit score and repairing your credit score can take years.  Keeping track when your bills are due and paying all of your bills on time can save you a great deal of money in interest payments and increase your ability to get a loan in the future.

Rule 5:  Avoid Unnecessary Debt
In a consumer driven economy, everyone is encouraged to spend, spend, spend, but if you do not have the cash available to pay for the new items, you should think twice about putting those purchases on your credit card.  The interest rates on the credit card will cause the item to cost much more than you realize and over time, the balance on the card will rise to an unmanageable amount if not paid off in a timely manner.  Consumer debt is at an all time high because of the number of people carrying high balances on their credit cards.

I used to have a room-mate that never threw away his mail. He would just let pile up, and it wasn’t uncommon for him to have 50 pieces of mail on the table at a time. My room-mate also had quite a few different debts, and he always paid them on time, so his credit score was quite good. This meant that a lot of companies were more than happy to offer him a credit card, auto-mobile financing, personal loans, and just about any form of debt one could think of. By the time I moved out, It wasn’t uncommon to see 3 or 4 credit card offers in the mail everyday. He was somewhat lazy, so he just let the offers pile up and never did anything with them. Fortunately there’s now away for you to never have to get another unwanted credit card offer or other offer for debt again.

Thanks to federal law, all of the major credit bureaus in the United States have to offer a way so that consumers can remove their names from the marketing lists that Equifax, Transunion, and Experian sell to third parties. Since your information isn’t being sold to banks, credit card companies, and other people pitching you debt, you’re much less likely to get a credit card offer in the mail. It won’t stop your bank, credit union, brokerage house, or insurance company from selling your information. You’ll have to visit each of your financial institution’s websites and check out their privacy policy to see what they do with your information and how you can opt out of your information being sold to accomplish that. Opting out of the credit bureaus will however get rid of the vast majority (around 90%) of the credit card offers that come in the mail.

The process to get your personal information permanently removed from these mailing lists is fairly simple. The three major credit bureaus have created a phone number that you can call and remove your personal information from all the mailing list of Equifax, Transunion, and Experian By making a call to 1-888-5-OPT-OUT, you’ll be able to get off all three companies marketing lists.

If you’re more web savvy, you can accomplish the same task by visiting the website OptOutPreScreen.com. Don’t visit any other sites which claim they will remove your name from such lists, as they are likely phishing sites that are trying to steal your identity. OptOptPreScreen.com was established by Equifax, Transunion and Experian to get your name removed from those marketing lists.

There’s no reason to keep getting credit card offers in the mail. If someone were to steal one from you, they could quite easily open a card in your name, making you a victim of identity theft. If you do ever want to open another credit card, you can just compare offers online and apply that way.

Regardless of your current Credit Score, if you choose to have a Credit Card, be sure to do your due diligence. Compare Credit Card Offers and read the Credit Card Company’s policies for Annual Fees and high interest rates.

There are a lot of books, tables, eBooks, and other works available which are alleged to contain top secret information and tricks of the trade on how to improve your credit score. They often sell for hundreds of dollars, but they’re just not worth it. It’s true that Fair Isaac keeps the proprietary formula that calculates your credit score to themselves, but they do tell you what factors make up your credit score. Did you know that there are two factors which make up 2/3rds of your credit score? It’s true. If you can keep those two factors in-line, chances are you’ll be a-okay when it comes to getting a loan if you need to.

The first primary factor which makes up a whopping 35% of your credit score is your payment history. Do you pay your bills early or on time every single month? Surprisingly enough, most American’s don’t actually do this. Having a few late payments here and there can significantly lower your credit score. If you are sure to pay all of your debt payments early or on time, you are well on your way to having a dramatically better credit score.

Debt utilization, also referred to as capacity, is the second primary factor. Your debt utilization ratio makes up 30% of your credit score. Debt utilization is simply the percentage of credit that you have available that you are actually using. Let’s say you had a credit card with a balance of $2,500 and a limit of $10,000. Your debt utilization would be 25%. Fair Isaac believes that there’s a statistical correlation between those who have a high debt utilization percentage and those who don’t pay their bills on time. Thus you want to minimize your debt utilization percentage as much as possible to improve your credit score in that area. You should never let your debt utilization percentage go up above 50%, otherwise you’re asking for a credit score in the 500’s or 600’s.

If you can keep those two factors in line, you will be well on your way to having a great credit score. Before paying for any books that claim to have any special knowledge offering supposed tricks of the trade and secret methods to improving your credit score, try doing those two things. It’s not going to jump up instantly, and it does take time. It’s not flashy, but minimizing your debt usage and paying all of your payments on time will substantially increase your credit score over time.

Everyone knows that many retail stores use devious little tricks to entice consumers into spending more than they intend.  Subtle tricks, such as placing the least expensive brands on lower shelves out of eyesight or moving the items that many people come into the store for to the back of the store so that people have to walk by more items that they may buy on impulse, have become more commonplace over the years and some people believe that these tricks have contributed to the culture of debt strangling the nation.  It is possible to beat these stores at their own tricks, but only if you are able to recognize what the tricks are.

1. Avoid Impulse Purchases
Stores position their items in the store with the goal of tricking consumers into buying more items than they intend to.  Common methods such as placing slower moving items in huge piles with brightly colored signs is designed to draw your eye and start you thinking about purchasing the item, and chances are once you begin to think about purchasing an item, you will put the item into your cart.  The way to avoid purchasing items that you do not need is to begin making a list of the things that you need before you leave your home and stick to the list once you have arrived at the store. 

2. Pay Off Store Credit On Time
Many stores will offer free financing for a period of time, typically 6 months to 1 year, in order to draw you into the store and give you a false sense of security about making a larger purchase than you can currently afford.  What many consumers tend to forget is that if the total amount of the purchase is not paid off by the time the grace period expires, the consumer will have to pay interest on the total amount of the purchase from the day that the item way purchased, a move that could add hundreds of dollars to the purchase price of the item.  If you would like to take advantage of a financing promotion offered by a retail store, be sure to pay off the purchase before the interest rate grace period has ended and you have just used the stores money for 6 months for free.

3. Purchase Sale Items And Leave The Store
Many stores use sale items as a way to get consumers into the store where they can be bombarded by all of the other tricks stores use to get consumers to purchase their items.  The sale item may be a great value and save you a good deal of money, but that savings cannot be realized if you also purchase the overpriced items that the store actually wants you to buy.  If you are going to the store to purchase the sale item, go directly to the item in the store, purchase it, and leave.

4. If You Only Need 1, Only Buy 1
Everyone has seen the offers for “2 for $5” or “3 for $10” deals used by some companies to move additional merchandise.  What many consumers fail to realize is that, in many cases, they do not have to purchase multiple items to realize the savings, so that single laundry detergent that is listed at “2 for $6” will only cost you $3 if you put it in the cart alone.

5. Leave The Carts At The Entrance
If you are only running into a store for one or two items, there is really no reason for you to push a cart through the store.  Stores offer carts to consumers in the hopes that they will find more things to put into the cart as they wander through the store looking for the items that they need.  If you do not have a cart to carry the excess items, you are much more likely to leave them on the shelf.