Discover Debt Freedom!

Get Out of Debt and into Wealth

Archive for November, 2008

The Difference Between A Secured Loan And An Unsecured Loan

Written by Toi Williams on Nov 29th, 2008 | Filed under: Uncategorized

Many people that are attempting to manage their financial future effectively will eventually turn to a loan to obtain additional money for their financial needs.  A loan can be used for many different things, such as purchasing expensive items, making costly additions or repairs to the home, or buying personal vehicles to transport the person or their family.  There are two main types of loans that may be available for the person to choose from; secured loans and unsecured loans.

Secured Loans
A secured loan is a loan that is secured by items of value that can be seized by the lender in the event of a default on the loan.  Also called collateral, the items that are used to secure the loan are often examined by the lender before they approve the loan to make sure that the value of the item is as much as the borrower is claiming it to be.  It is believed that holding the ability to seize these assets will reduce the chance of the person defaulting on the loan and if the person does default on the loan, the lender has a chance to reduce their losses by selling the assets used as collateral for the loan.

Secured loans are generally made to people that have a blemished credit history or a lower credit score than the lender is comfortable with.  These loans have higher interest rates associated with the loan and the amount of money that is loaned under a secured loan is often less than what could be obtained with an unsecured loans. The lender would rather have the loan repaid under the terms of the agreement, but being able to seize the collateral that has been attached to the loan will mean that the losses suffered by the lender under a default will not be as great.

Unsecured Loans
Unsecured loans are typically viewed as the most desirable type of loan available to people today.  These loans are typically made to people that have an excellent credit history, a very good credit rating, and have a high enough salary to easily repay the loan without creating a financial hardship.  No collateral is required for an unsecured loan because the person has demonstrated that they will be able to repay the loan and the interest with no problems.  For people that have a good history with the lender that they are using to obtain their loan, obtaining an unsecured loan can be accomplished in a short period of time.

The type of loan that is offered to the person will depend on many different factors.  The lender will look at the credit history of the person to determine whether the person has ever had a problem with paying their obligations on time as well as the value of the items put up as collateral for a secured loan.  If the lender determines that the person may be a credit risk, the person will be offered a secured loan but if the lender determines that the risk of default is minimal, then the person will be offered an agreement for an unsecured loan.

3 Reasons To Choose A Loan Consultant Carefully

Written by Toi Williams on Nov 28th, 2008 | Filed under: Uncategorized

Many of the people that are in the market for a loan do not understand the importance of finding a good loan consultant.  There are thousands of loan consultants employed with different financial companies across the nation and each one is charged with matching each borrower to the loan products that are best for their needs and their financial situation at the time.  Having a good loan consultant is very important to being able to do business with the lender to obtain the loan products that you need.

Increased Access To Loan Products
Being able to obtain a loan when needed can be very important to a person’s financial future.  Being able to qualify for a loan can help you purchase a car, make a costly repair to your home, or obtain money for a financial emergency that costs more than what you have tucked away in your savings account.  In order to be able to obtain a loan in a timely manner when needed, you will want to have a good relationship with a loan consultant that can advise you on the best financial products for your needs.  Having the ability to call on a good loan consultant can mean the difference between being able to take care of a problem and financial ruin.

Help With Understanding The Loan Products
A loan consultant is employed by the company that lends the money for the loans and is trained to explain different types of financial products available from the lender.  The loan consultant’s job is to let the person seeking a loan know about the different types of financial products available and help them find the right type of loan for their needs and current financial situation.  The loan consultants are the main contact for the borrower at the lending company that is providing the funding for the loan and is available to answer any questions that the borrower may have.

Properly Filling Out Paperwork
The loan consultant is also the person that helps the borrower fill out all of the paperwork that is needed for the loan correctly.  Most people obtain loans infrequently so they may not understand all of the terms that are used in the loan agreement or may not know about the newest financial products that may be the right type of loan for their needs.  Some loans have tons of paperwork required to be filled out for approval for the loan and there may be a lot of personal information that the person will need to provide to the lender so that the lender can accurately judge the person’s ability to repay the loan.  The loan consultant will go over the paperwork with the borrower and answer any questions they have about the loan requirements or completing the paperwork.

Loan consultants pride themselves on the relationship that they have with the people in their area that do business with the lender and will do all that they can to retain a positive reputation.  These consultants know that the loss of reputation from people in the area saying negative things about their services may be something that neither they or their company will be unable to recover from because no one wants to go to a lender that may be cheating their customers.  For this reason, a loan consultant will do their best to match all of their customers to the correct loan products for their needs.

4 Simple Ways To Reduce Your Grocery Bill

Written by Toi Williams on Nov 26th, 2008 | Filed under: saving

With food prices rising quickly, many people are concerned about the amount of money that they are spending on food each month.  The price of many items at the grocery store has risen by 30% or more and the increases are continuing at an alarming rate.  The increased prices are causing many people to reevaluate how they are spending their money when they go to the grocery store.  There are easy ways to reduce your grocery bill and following these tips can save you hundreds of dollars every year.

Using Manufacturer’s Coupons
Many manufacturers make coupons for their products available in the local newspapers or on internet websites to lure people into trying their products.  Their reasoning is if they can get a consumer to try their product, the person may become a regular customer.  These coupons can save you a lot of money on the products that you purchase regularly in nearly every category, from cleaning supplies to meats to condiments.  Coupons could save you 25% or more off of the price of the item.

Purchase Items That Are On Sale
One of the easiest ways to save money on your grocery bill is to purchase items while they are on sale.  A person can get the items that they typically purchase at a discounted reduced price if they review the sales flyers for the grocery store and purchase the items that are on sale for that week.  The sales flyers may be delivered to your home, found in the local paper, or picked up from the entryway of the grocery store.

Stock Up On Staples
Many items that people use regularly can last for months inside their packaging.  If you purchase these items in bulk when they are on sale, it can save you a lot of cash each year.  For example, if a bag of rice that costs $5 was on sale for $3 per bag and you purchased enough to last 4 months, over those 4 months you would be saving 40% off of the regular price of the rice while still consuming the same amount in the same time period.

Buy Fresh Foods While They Are In Season
Certain foods are abundant at certain times of the year, such as apples in the fall and strawberries in the summer and because there are more of these items available, they are generally priced lower so more will be sold.  In some cases, these fresh products are marked as a sale item while they are in season to attract the attention of the consumers in the store.  Purchasing the items in season allows you to purchase them at a lower price and adds variety to your diet by enticing you to eat different fruits and vegetables at different times of the year.

How To Spot Debt Relief Commercial Scams

Written by Toi Williams on Nov 25th, 2008 | Filed under: scams

In recent years, the number of commercial scams that are on television have dramatically increased and are taking advantage of more individuals than ever before.  It is hard to know which debt relief scams are masquerading as a legitimate business and which companies you should be suspicious of when it comes to debt relief.  While it may be difficult for most individuals to spot that a debt relief commercial is a scam, there are several things that you can look for to determine whether the program may be operated as a scam.

Unbelievable Results
There are several things that an individual should look for when trying to determine whether or not a debt relief commercial is a scam.  One of the easiest things to spot is the commercial promises unbelievable results in a very short period of time.  In reality, it is nearly impossible to make a large amount of debt disappear in a short amount of time or to work out a program with your debtors where you are only paying pennies on the dollar to pay off your debt.

Difficult To Understand Information
Scam artists set their sights on people that are not sure about the way the financial world works, using commercial scams that lure the individuals in and convinces them to give money or access to their personal and financial information.  This allows the scam artist to steal the individual’s identity or their money without having to do a great deal of work.  It is very important to check the claims that the commercial makes against what is actually possible when it comes to debt relief to see if the claims made on the commercial are can be done or are legal before deciding to send money to enter the debt relief program.

Lack Of Business Address
Debt relief scams are easy to conduct and are difficult for any government agency to stop because they can be operated from anywhere in the world, including someone’s basement, and reach a large number of people in a short period of time.  As one program is shut down, another one springs up in a different location.  The worst thing about commercial scams is that there are very few legal remedies available if you fall victim to one of these predators.  In most cases, you can make a report about the loss of money or theft of identity but it is rare for anyone to be prosecuted for the crimes.  One reason that there are not a lot of convictions for the crime is because the individuals running the scam are nearly impossible to find. 

The number of commercial scams that have been discovered in the last few years is a small fraction compared to the estimates of the number that has avoided detection.  Debt relief scams can be conducted anywhere that the scam artist desires and still reach people across the country.  As long as there are individuals that will fall for the scam, there are scam artists that are willing to take advantage of the situation.

Is The Time Right To Take Out A Personal Loan?

Written by Toi Williams on Nov 23rd, 2008 | Filed under: Uncategorized

Choosing the right time to take out a personal loan can be a difficult decision for many people.  Sometimes, there are financial reasons that make it a good idea to take out a personal loan while in other cases, a new personal loan will end up causing a financial hardship for the person.  There are many pros and cons to taking out a personal loan and choosing the right time to take out the loan could be very beneficial for your financial future.

Benefits Of Taking Out A Personal Loan

There are many benefits to taking out a personal loan at the right time in your life.  Over time, the payments that you make on your personal loan can help you build up your credit score, which makes it easier to obtain additional financial products at a good interest rate in the future.  With a steady record of on time payments for the life of the loan, the person’s credit score can be increased by a significant amount.

Some people choose to take out a personal loan to have the money to be able send their child to college while other people choose to take out the loan to pay off high interest debt so that their monthly payments will be lower and they will not be paying as much in interest payments.  Many people choose to take out a personal loan in order to take advantage of a lower interest rate.  In some of these cases, the person’s credit was not considered excellent when they applied for a credit product and now they have a credit score that would qualify them for a lower interest rate. 

Types Of Personal Loans

When choosing whether obtain a personal loan, a person will typically have a choice between two different types of personal loan products.  The first type is a secured loan, which is typically offered to a person that has a lower credit score or a credit history that has a record of delinquent or missed payments.  A secured personal loan will require the person to put up some collateral, such as their home or their car, so if they default on the personal loan, the lender will have some way to recoup some of the money that they are owed.

The other common type of personal loan product that is typically chosen by people is an unsecured loan.  These loans are generally offered to people that the lender considers a low credit risk, meaning that they have a higher credit score, a long record of on time payments in their credit history, and make enough money to be able to pay the loan off easily.  This option is generally considered to be the most attractive option and will typically have a lower interest rate for the loan. 

It is important for the person to read all of the terms of the personal loan before signing any paperwork to make sure that they understand exactly what they are agreeing to.  Some people choose to obtain a long term loan where their monthly payments are lower but they have to pay on the loan for a longer period of time.  This may be an acceptable option for people that are younger, but may not be an attractive option for people that will be retiring soon.  Others choose a shorter term for the loan, where the monthly payments are higher, but they are paying off the loan in a short period of time and paying less in interest. 

The choice of whether to take out a personal loan will depend on a number of different factors, but with careful consideration, the person will be able to determine the right time to take out a personal loan.

Tips For Choosing The Right Mortgage Loan Analyst

Written by Toi Williams on Nov 21st, 2008 | Filed under: Uncategorized

Obtaining a mortgage loan to purchase a home is a very important decision and you may need the assistance of an expert to help you find the right mortgage loan for your needs.  A good mortgage loan analyst will have the homeowner’s best interests in mind while helping them find the mortgage loan that is right for their financial situation and the home that they desire.  There are a number of things that you should keep in mind when looking for a mortgage loan analyst and remembering these items can help you find the best analyst for your needs.

Shop Around
Many homeowners give their business to the first mortgage loan analyst that they find.  This is because of the belief that all mortgage loan analysts are equal and will do their best to help the homeowner as much as they can.  In a perfect world, this would be accurate but the reality is that there are a number of people that scam homeowners that do not know a lot about financial products.  It is important to look for the best mortgage loan analyst to make sure that they are charging a fair rate and are conducting business properly.

Obtain Referrals
Many homeowners know someone that has had to obtain a mortgage loan in the past, such as family members or friends in the area.  Asking these individuals for advice about mortgage loans for your home may give you better insight into the financial practices of some of these companies and indicate warning flags to look out for to avoid being taken advantage of.  Any homeowner that may have obtained a home loan in the past few years may be able to steer you towards a good mortgage loan analyst or away from a bad one.  You can use their experiences to find the right mortgage loan analyst for your needs.

Trust Your Instincts
There may be times when the homeowner may feel like the situation is just not right or becomes suspicious of the mortgage loan analyst because of something that they have said.  When a homeowner needs to obtain a mortgage loan for their home, there is a large amount of money at stake and the wrong decision could have a devastating financial impact on the person for many years.  If the homeowner is uncomfortable talking to or doing business with the mortgage loan analyst, it is a good indication that they should be choosing someone else.  There are many different things to keep in mind when choosing a mortgage loan analyst and although it may be a difficult decision, choosing the right mortgage loan analyst will reduce the risk of losing money and paying extravagant fees to purchase your new home.

Creating A Budget In 3 Simple Steps

Written by Toi Williams on Nov 19th, 2008 | Filed under: mindset, saving

The number of people falling into debt increases in each month of this economic downturn and the amount will continue to increase as the economy continues to slow.  Many of the individuals that depended on credit to finance their lifestyle now find that the amount owed to their creditors is astounding and they are unable to obtain a home equity loan like in the past because lending standards have tightened so much. 

Add this to the fact that many companies are cutting the hours of their employees and some two earner households are having their finances cut in half because one party has been laid off and you have a recipe for financial disaster on your hands.  Having to live solely on what the individuals are paid by their company in each paycheck will result in a large reduction in the amount of money that they are able to spend each month.

The only way to keep them from spiraling into insurmountable debt is to create a strict budget and stick with it.  This will ensure that the person is not spending more money each month than they can afford.  While this can be hard for a person that was used to buying whatever they wanted with a swipe of a credit card, the reality is that many people are going to have to monitor their spending and start living within their means.

What Do I Need To Do To Create A Budget?

Creating a budget that will help a person manage their finances is not as difficult as many people may think.  The first step in the process is determining how much is spent each month and what that money is spent on.  For two months or more, a careful record should be kept of all of the things that the person has spent money on that month, including all bills, personal purchases, and even items purchased out of vending machines.  All receipts for this time period should be kept as well to provide a cross reference for the record.  This provides a better picture than attempting to remember everything purchased during the month.

After determining what the person is spending money on each month, it is time to eliminate the items that they are wasting money on.  Many people make unnecessary purchases without thinking because they were never concerned about the money spent on these items before.  These unnecessary items need to be eliminated from spending and the money that went towards these purchases should be put toward paying down debt.

Now, it is time to create the monthly budget.  The goal is to have less money going out than you have coming in from your paycheck and any other income sources. The large the gap is between them, the better it will be for your financial future.  By detailing each expense and the amount, you can create a budget that accounts for all monthly spending.

The most important part of creating a budget is sticking to the budget.  Training the mind to pass up certain types of purchases may be hard, but it is possible to create a budget and stick to it until all debts have been repaid if the person is determined to do so.

5 Simple Ways To Increase Your Savings

Written by Toi Williams on Nov 16th, 2008 | Filed under: mindset, saving

Many people get into debt because they often spend more than they can afford.  This reduces the money that they have available for emergencies and can result in deeper debt when the unexpected occurs.  The majority of people that are in debt find it difficult to get out of debt and the troubles caused by their excessive spending can last for a number of years.  If a person wants to avoid getting into debt, the best way is to learn money management tips that help save more money each month and to save this money to provide funding for any unexpected expenses that may arise.

Avoid Overpaying For Purchases
There are many purchases that people make everyday that are overpriced when compared to making the purchase at the grocery store or taking the time to prepare an item themselves.  For example, buying the typical six pack of beer at the local grocery store costs around $5.00, but those same beers purchased at a bar cost around $18.00, an increase of 260%.  Specialty coffees are also items that are cheaper to make yourself as coffee made at home costs about 1/8 of the price.

Automatic Savings Account Deposits
Many companies allow their employees to split their direct deposited paychecks into up to three different accounts.  People that take advantage of this benefit can have a percentage of their pay transferred into their savings account every payday.  Directly depositing this money into a savings account prevents the money from being spend on frivolous items and saves the person from having to physically transfer the money from checking to savings.

Document All Purchases
To learn what you are spending your money on, you should document all purchases, whether they were paid with money from your bank account or placed on your credit card.  This provides a good look at what percentage of your money you are spending and what you are spending large sums of money on.  This will also help to identify areas where spending could be trimmed to save money.  People that document all of their purchases rarely spend more than they intend because they are able to see how their spending is affecting them each month.

Round Purchase Amount To Whole Dollars
Want an easy way to have additional money in your checking account to ensure against small overdrafts or start savings?  Every time that you write a transaction in your ledger, round up the amount of the purchase to the nearest whole dollar.  This makes it easier to subtract purchases from the balance and over time the cents will add up to a significant amount of money in your checking account.

Check Your Credit Report On A Regular Basis
Experts estimate that many of the credit reports compiled by the three major credit bureaus contain mistakes that can be very costly to people using credit or attempting to obtain a loan.  By reviewing your credit report regularly, any mistakes will be noticed quickly and steps can be taken to correct the information before it begins to cost you money in higher interest rates and additional fees for loans.

Attempting To Get Credit For The First Time?

Written by Toi Williams on Nov 15th, 2008 | Filed under: credit cards, credit score

Because having good credit is so important these days, many individuals are wondering how to get credit for the first time.  Getting credit for the first time can be difficult, depending on the actions that you have performed prior to applying for credit.  In the world of credit reports and frequently updated credit scores, even small mistakes can have a large impact on your credit history which affects your ability to obtain credit in the future.  In fact, many people have already done things that had an impact on their credit history before ever applying for a credit card or a loan.  There are things that you can do to improve your chances of getting credit for the first time and following these tips may allow you to obtain a lower interest rate for your credit products as well.

The Importance Of A Good Payment History

When attempting to get credit for the first time, it is important to remember that every payment that you make on accounts has the ability to affect your credit history.  Even if you have never applied for credit from a lender or a bank, a credit history is still being created which details some of the choices that you have made.  Late or missed payments can have a great impact on your credit history and may stay on your records for as long as seven years.  Maintaining a good payment history is very important when getting credit for the first time.

Finding A Co-Signer

Another important tip for getting credit for the first time is to “piggyback” on someone else’s credit until you are able to establish your own credit.  This technique works by having a person with established credit and a good credit history co-sign for a loan or a credit card, allowing you to obtain credit to begin establishing your own credit history.  The person that co-signs the loan for you should be some one that you can trust and that knows that they can trust you, like a parent, a grandparent, or other close family member.

Obtaining a co-signer to help you obtain a credit card or loan is one of the fastest ways to obtain a credit history, but there are some risks involved with the technique as well.  If the person chosen as a co-signer has had credit problems in the past, then they may not be able to help you get a lower interest rate than you would have qualified for on your own.  Another danger with this method is the fact that any mistakes that you make when using the credit card, such as missing a payment or paying late, will be reflected in the co-signer’s credit report and may create a reduction in their credit score.

Getting credit for the first time does not have to be a difficult task, but there are a number of different ways that can be used to make the process easier.  By remembering that virtually any transaction that you make has the potential to affect your credit score, you will insure that your credit history is positive, which will make it easier for you to get the credit products that you desire.

How To Correctly Dispute Unauthorized Credit Card Charges

Written by Toi Williams on Nov 14th, 2008 | Filed under: credit cards

When a person has been a victim of credit card theft, often their first indication of the violation is charges that cannot be explained appearing on their credit card statement.  Without knowing the proper way to dispute these charges, the victim may be held liable for these charges and will end up paying for items that criminals have purchased using their credit card number.  Most credit card companies have policies that state that the victim will not be responsible for charges made on their credit card due to criminal usage, but the charges will only be dismissed if the person knows how to properly dispute the charges.

Review Your Records

If a credit card charge that is not familiar shows up on your credit card statement, the first thing that the person should do is review their records to determine whether they may have forgotten that they have made the charge.  There is nothing more embarrassing than attempting to dispute an unauthorized charge and realizing that you were actually the one that made the purchase.  People that use their credit cards on a regular basis should especially be careful because it is very easy to forget about a charge or miss identifying a charge that shouldn’t be there.

Inform The Credit Card Company Of The Charge

If a charge that cannot be explained does appear on your credit card statement, it is important to inform the credit card company of the unauthorized charge as quickly as possible.  In many cases, the charge that is made on the credit card without your consent will be one with a high dollar value as the thief tries to obtain as much as they can from the account as quickly as they can before their actions are noticed.  If the credit card has only been used for purchases less than $100 in the past and all of a sudden a $600 charge on the credit card appears, this is a good indication to the credit card company that the purchase may have been fraudulent.

The faster the charge is reported to the credit card company, the easier the charge will be to remove from the account and the better chance the company will have of finding the thief and prosecuting them.  If more than a few days has passed since the charge to the account has been made, the credit card company may require that you send them a written statement attesting to the fact that you did not make the charge and that you do not know who charged the purchase to your account.  These written statements often have to include permission for the company to prosecute whichever person is found to have used the credit card or credit card number to make the purchase. 

Keeping Track Of The Issue

After the credit card company has been contacted about the unauthorized charges on the credit card account, it is important for you to continue to monitor the situation to make sure that it is taken care of.  You should save the credit card statement that includes the unauthorized charge until the next credit card statement arrives so that you can make sure that the charge has been taken off of the account and the account balance has been corrected.  If you have online access to your credit card account, you may want to monitor the account online to make sure that the representative at the credit card company has taken care of the problem.