Discover Debt Freedom!

Get Out of Debt and into Wealth

Archive for May, 2009

Increase Your Savings With 5 Simple Tips

Written by Toi Williams on May 30th, 2009 | Filed under: saving

The easiest way to get into debt is to spend more than you can afford.  This reduces the money that you have available for emergencies and can result in significant amounts of debt when the unexpected occurs.  It can be very difficult to get out of debt and the troubles caused by excessive spending can last for a number of years.  The best way to avoid getting into debt is to learn money management tips that help save more money each month and to keep this money in savings for funding any unexpected expenses that may occur.

Track Everything That You Purchase
To learn what you are spending your money on, you should track all of your purchases, whether they were paid with money from your bank account or placed on your credit card.  This provides a good look at how much money you are spending and what you are spending large amounts of money on.  This will also help in identifying areas where spending could be cut to save more money. 

Make Savings Account Deposits Automatic
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 spent and saves the person from having to physically transfer the money from one account to the other.

Review Your Credit Report Regularly
It has been estimated that as many as 25% of the credit reports compiled by the three major credit bureaus contain mistakes that can be costly to people using credit or attempting to obtain a loan.  By reviewing your credit report regularly, any mistakes that have been added to the credit report will be noticed quickly and steps can be taken to correct the information before it begins to be reflected in higher interest rates and additional fees for loans.

Avoid Overpaying For Purchases
There are many purchases that are made everyday that are overpriced when compared to purchasing the item at the grocery store or taking the time to prepare an item themselves.  Most of the prices of restaurant foods or convenience foods are 3 times or more higher than if the person had purchased the necessary ingredients to make the item themselves.  For example, a cup of coffee made at home may cost around $0.20 to make but purchasing that same coffee at a coffee shop will cost $1.00 or more, which is about 5 times more.

Round Account Ledger Entries 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.


The Benefits Of Insurance For Your Family

Written by Toi Williams on May 28th, 2009 | Filed under: Uncategorized

There are many benefits of insurance that can be realized by you and your family.  Insurance products are becoming more and more popular in today’s rush to protect the items that are important to individuals and many more products are being made available to satisfy niche markets in the industry.  The positive benefits that come from having the proper insurance products to protect the future of your family is one of the main reasons why individuals choose to purchase these insurance products.

Different Types Of Insurance

One of the main benefits of insurance is that the individual will not be responsible for the total cost of the item that is insured in the event of loss, damage, or theft.  This is most commonly seen in home owners insurance which may insure your home against fire, water damage, and natural disasters.  Having the proper home owner’s insurance for your home will insure that your family will be able to repair or rebuild the home in the event of a natural disaster or purchase another place to live if the home has been completed destroyed.

Car insurance is also a good option to keep more money in your bank account in the event of an accident.  Having the proper amount of car insurance will ensure that the individual will be able to have their car repaired or have a new car purchased for the cost of the deductible for their policy and they will not have to shell out the entire cost of the car.  Because the insurance policy will pay for a majority of the cost associated with the repairs, the family is allowed to keep their money for use on what is important to them, like food and bills, and not cause them to pay thousands of dollars due to an accident.

Life insurance is a very important type of insurance to have, especially if you have a family or children that will need to be taken care of in the event of your untimely death.  Having an adequate life insurance policy will allow your family to pay off your debts and provide you with the funeral that they desire for you without incurring a debt that would be difficult for them to repay.  The funds obtained from the life insurance policy may also be used to replace the wages lost from the death of the family member.

Insurance Offers Peace Of Mind

Beside monetary benefits, another benefit to having the proper insurance coverages is peace of mind.  If you possess the right insurance policies for your needs and have ensured that your monthly premiums have been paid on time, you and your family know that you are covered in the event that the unthinkable occurs.  The loss of property or life will be traumatic, but the family will have the means to continue and get their lives back on track without the worry of how they are going to pay for or replace the items that they need.

It is very important to obtain the different types of insurance that may be needed by your family prior to an adverse event occurring, as that is what insurance is supposed to protect you from.  The numerous benefits of insurance for your family can only be obtained if the insurance policy is in place before the unexpected occurs.


Credit Card Mistakes That Can Destroy Your Credit Score

Written by Toi Williams on May 27th, 2009 | Filed under: credit cards

There are a number of different credit card mistakes that people routinely make that can dramatically decrease their credit score, resulting in the person appearing less credit worthy to credit card lenders.  Most of these common mistakes are things that people would not think of affecting their credit score, but the reality is that there are many different things that can decrease your credit score that you may not be aware of.  If you can steer clear of these common mistakes that millions of people make each year, you can keep your credit score high and the interest rates for your credit cards low.

Not Keeping Credit Card Information Secure
A common mistake that many people make with their credit cards is not keeping the information about their credit cards secure.  Preventing the theft of information by thieves is simple as long as you are diligent about protecting your personal and financial information.  These thieves know how to strike when people are distracted or not paying attention to the information that they are giving out on the internet, on the phone, or by mail and can open many different credit accounts in a person’s name with a small amount of information in just a few hours. 

Carrying A Large Balance On The Credit Card
The best way to use your credit card is to only charge the amount that you are able to repay each month.  If you pay off the balance of your credit card each month, you will not only save a lot of money in interest payments but you will also raise your credit score by demonstrating that you know how to use credit responsibly.  The credit card companies may increase your credit limit so that you have more credit available if you need it because they know that you will repay them at an acceptable rate.

Missed Or Late Payments
The most typical mistake that many people make when it comes to credit cards is to believe that a single late or missed payment on their credit card is not important.  Some people think that the only consequence of a delinquent payment on their credit card is a penalty charge and are willing to pay the charge to avoid having to pay the minimum amount due on the credit card at that time.  These people do not realize that the late payment will also be reported in their credit history and will lower their credit score by a significant amount each time a payment is late or missed. 

Maxing Out Credit Cards
Another common credit card mistake that many people make is to max out their credit cards.  Companies that issue credit card consider people that use more than 50% of their available credit to be a credit risk because the company assumes that the person is using their credit to maintain a lifestyle that their salary will not cover and will not have the ability to pay the money back promptly because they are spending more than they are earning each month.  There have been many cases where a person was not allowed to take out a loan or an additional line of credit because they had used a more than 50% of their available credit and had been labeled as a credit risk by the credit card company.


The Increasing Popularity Of Professional Credit Repair Software

Written by Toi Williams on May 26th, 2009 | Filed under: credit score

The number of people that are facing massive amounts of debt increases each month and the amount of people that find themselves in this situation will only continue to grow as the economy continues to slow.  Many people depended on credit cards and loans to maintain their lifestyle and now owe a large amount of money to numerous creditors.  In the past, a person may have been able to obtain a home equity loan to pay down their debt and repair their credit, but with home values plummeting, many people are now trying to find professional credit repair software to manage their credit situation. 

People are finding that they must now live on the amount that they are paid in each paycheck, which typically results in a large reduction in the spending capital that they have each month.  The only way that these people will be able to keep themselves from getting deeper into debt is to use professional credit repair software to ensure that they are able to begin paying off their debts and to make sure that they are not spending more than they can afford each month.  While this may be a difficult adjustment to make, the reality is that people are going to have to stop living beyond their means when they are carrying a great deal of debt and the best credit repair software can help keep them on track.

How To Use The Software

The first step in using professional credit repair software is determining how much the person actually spends each month.  For a period of at least two months the person should keep track of all expenses and all receipts.  This will show the person what their financial needs are and shows them all the things that they spend money on each month.  Keeping the receipts will provide the person with a record of what items they are wasting money on each month. 

Once the spending patterns have been determined, it is time to use the professional credit repair software.  The goal is to spend less money each month than you are receiving from your paycheck and any other sources during the month.  The bigger the gap between intake and spending, the better it will be for the person’s financial future.  By detailing each expense that you must pay each month and the amount of money it will take to satisfy that expense, you can use the professional credit repair software to account for all of your necessary monthly spending.

The most important part of using professional credit repair software is sticking to the instructions provided by the software and applying any money that is saved by using the software to paying down debt to eventually become debt free.  Completing the debt elimination process will be hard, especially for people that are lacking in financial responsibility, but it is possible to use professional credit repair software and stick with it until all debts have been repaid.


Want To Save Money On Your Credit Cards?

Written by Toi Williams on May 22nd, 2009 | Filed under: credit cards

Many people have begun to protest many of the practices of the credit card company that tend to cost them more money than they believe they should be paying.  The anger from the general public has become so vocal about these credit card practices that Congress has recently passed the Credit Cardholder’s Bill Of Rights cracking down on the worst practices and the President is expected to sign this legislation into law quickly.  But there are a number of things that people can do on their own to save money on their credit cards and adopting these methods has the potential to save a person hundreds of dollars in credit card costs each year.

Pay Off Your Credit Card Monthly

One of the easiest ways to save money on your credit cards is to never charge more to then than you can pay off each month.  Carrying a balance on the credit card will result in finance charges and interest fees that can add a significant amount to the amount that will need to be paid off.  These charges cannot be levied before a certain period of time has passed, so paying off the credit card in full before these charges are levied results in an interest free loan for the month.

Pay Your Bill Immediately

In order to avoid problems and significant charges to your credit card account, it is best to make a payment on your credit card as soon as possible after you have received your bill to make sure that your payment will not be received late.  Making a payment on your credit card late gives the credit card company numerous opportunities to make money off of you.  Many credit card companies use the fact that you have missed a payment due date to skyrocket the interest rate for the card to the highest allowable limit, which could be as much as 30% for some cards.

Another charge that will be levied is a late payment charge, which could be as high as $39 per occurrence, even if the payment is only a few hours late.  If the person is close to their credit limit and this late payment charge pushes them over their credit limit, the credit card company will use this as a reason to charge the account an over-limit fee, which could add another $39 charge to the balance of the account.  A single missed or late payment could cost the person $80 or more in fees and interest rate hikes.

Limit Use Of The Credit Card

Although the temptation to place purchases on your credit card can be very high, going this route will cost the person a large amount of money.  In addition to the interest charges and finance charges, there is a good chance that the person will spend more than they can afford to repay, will go over their credit limit triggering additional charges, or will carry a balance on the card which allows the company to charge high fees for using the credit card.  The best way to use a credit card is to only use the credit card for emergency purchases and to pay cash for everything else.


Understanding Credit Repair Software And Its Goal

Written by Toi Williams on May 19th, 2009 | Filed under: credit score

Many of the people that would like to find credit repair software to help them get out of debt quickly do not understand the importance of understanding how the credit repair software works.  There are hundreds of types of software programs sold across the nation and each one offers the person the credit repair solutions that are best for their needs and their financial situation.  Choosing good credit repair software is very important for being able to get out of debt and repair your credit.

The Proper Steps

Credit repair software can provide a person with the steps that will be needed to get out of debt and repair bad credit in a reasonable amount of time.  Most people do not use this type of software frequently so they may not understand all of the terms or calculations that are used by credit repair business software.  Some credit repair software has many requirements for the person to follow and the person will need to provide personal information to the software so the software can accurately determine what will be needed for the person to repay their debts in a timely and efficient manner.  The information portion of the software program will go over the paperwork with the person and provide answers to any questions they have about the credit repair software or the steps they will need to take to repay their debts and repair their credit.

Accurate Information

The information in the credit repair software will explain different types of repayment methods that the person can use to eliminate their debt.  The person seeking credit repair software should know about the different methods available and the requirements for each one before determining which methods will be the best for their needs.  The information pages of the software can answer any questions that the person may have about what they need to do for the repayment plan and help them find the right repayment methods for their current financial situation.  In some cases, the information from the credit repair software may be able to suggest ways to lower payments on some of the person’s debts by using some of the lesser known tactics of the financial industry.

Good Reputation

Good credit repair software companies will pride themselves on the relationship that they have with the people that use their products and conduct business in the right way to keep a good reputation.  The credit repair software company knows that a loss of confidence in the product by people in the market for the software may be something that the software company will be unable to recover from because no one wants to use software that may be driving their customers deeper into debt.  For this reason, credit repair software companies will do their best to provide the correct debt repayment plans for their customer’s needs.


The Most Common Reasons To Refinance A Home

Written by Toi Williams on May 16th, 2009 | Filed under: loans

Making the decision to refinance a home is a big one, especially in today’s economic climate.  There are a number of different reasons for a person to refinance a home and the reason why the person is choosing to refinance the home will determine what kind of mortgage agreement they will sign to obtain the refinancing.  Some of the reasons that people choose to refinance their home are good ones that will benefit them in the long run, but some of the reasons for refinancing can cause a person financial hardship in the future.

Changing Mortgage Terms
Many people choose to refinance their mortgage in order to change the terms of their first mortgage, generally to lower their interest rate or their monthly payment.  This is fairly easy to accomplish and straightforward to understand, with the homeowner basically taking out a new mortgage to cover the rest of the money that is owed under the old mortgage.  This type of refinancing is only good for the homeowner if the change in the payments is significant, often more than $200 per month.

Extracting Equity
Another reason that a person may choose to refinance their home is to extract some of the equity in the home to be used for other purposes.  In these cases, a mortgage is taken out in an amount that is higher than the amount that is currently left on the original mortgage and the person uses this money to pay off the original mortgage with the extra money being placed into a bank account to be used for other purposes.  Taking the equity out of the home in this way can extend the length of time that you will need to make payments on your home, but you will have the money that you need to handle your immediate financial situation.

Many homeowners choose to extract equity from the home in order to make repairs or upgrades to the home, which will increase the value of the home for appraisal or future sale.  Other homeowners choose to take equity out of the home to pay for a child’s college education.  One of the worst reasons to extract equity out of the home is to pay for an expensive vacation because you may have a good time on your trip, but fun is the only benefit you are getting for your money and the money that you have taken out of the home will take a long time to rebuild.


Did You Know That These Things Affect Your Car Insurance Rate?

Written by Toi Williams on May 15th, 2009 | Filed under: saving

There are a number of different things that can affect your car insurance rate and many people are unaware that these things can affect their car insurance rate significantly.  Because of the current economic climate, many people are trying to find as many ways as possible to save money and avoiding these common mistakes that raise your car insurance rate can save you a great deal of money in the long run.

Control Your Credit Score
Many people are unaware that most car insurance companies pull their credit report and partially base their car insurance rate on their credit score.  If a person misses payments on their credit accounts or defaults on an agreement, it can drop their credit score significantly.  This can result in an increase in the person’s car insurance premium because the person is no longer considered a safe investment by the insurance company.

Avoid Lending Out Your Car
Every year, thousands of people receive an increase in their car insurance rates because of the actions of someone that has borrowed their car.  Even if you are a safe driver, the person that you lend your car to may not be and their actions while driving your car are reflected on you, even if you were not present at the time of the accident or incident.  In some cases, the insurance company may refuse to pay for the claim, leaving the car owner saddled with the entire cost of the repairs to the car.

Choose Your Car Carefully
Some cars cost significantly more to insure than others because of the higher costs of repairing the car in the event of an accident.  Because many of the parts on these cars cost much more than similar parts purchased for more affordable cars, the insurance company will hedge their bets by having the person pay a higher car insurance premium to help cover the costs of purchasing these parts.  If you would like to have a lower car insurance rate, be sure to choose a reasonably priced car that does not have a lot of high tech items that would need to be replaced in the event of a minor crash.

There are a number of different things that can affect a person’s car insurance rate and a person may only be able to exert control over a few of them, but by paying careful attention to the choices that they make, a person may be able to reduce the amount of their car insurance rate by a significant amount.


The Worst Credit Card Company Practices Revealed

Written by Toi Williams on May 14th, 2009 | Filed under: credit cards

Over the last few months, a lot of information has been on the news about credit card companies and their practices.  Some of these practices have so enraged the public that Congress is holding hearings and meetings to try to find a way to force these credit card companies to amend their worst practices and intend to make these changes into law with the Credit Cardholder’s Bill Of Rights.  Some of these practices many people have heard of but many more often go unnoticed until they begin to negatively affect the card holder’s finances.

Practice 1 – Universal Default Clauses

The universal default clause present in many credit card agreements is one of the main reasons why many people receive an interest rate increase on their credit card.  Under a universal default clause, being late with or missing a payment on any account that is monitored by one of the three major credit reporting bureaus acts as a default on the credit card, allowing the credit card company to increase the interest rate that you are being charged on their credit card to the maximum amount.  In many cases, paying an account two hours late can trigger an interest rate increase of 15% or more, which is also retroactively to any balance that is being carried on the credit card.

Practice 2 – Double Cycle Billing

Double cycle billing has become more prevalent in the last few years as more credit card companies find that they can get away with the practice without much hassle from the general public or industry regulators.  Double cycle billing occurs when the credit card company levies a finance charge for the account that is based not only the current balance of the account, but the previous months balance as well.  People that make large payments on the account are still charged finance charges on the portion of the debt that they have paid off, which allows the credit card company to make more money off of the card holders.

Practice 3 – Anytime, Any Reason Interest Rate Hikes

A little known clause in many credit card agreements states that the credit card company reserves the right to increase the interest rate on a credit card account at any time for any reason that they deem necessary.  Many people were not concerned about this clause in their credit card agreements until the recent financial crises hit and many credit card companies used the crises as an excuse to increase the rates of large numbers of credit card holders by a significant amount – often by more than 10%.  This higher interest rate applied to the entire balance carried on the credit card, causing significant financial hardship to people that had a large balance on the credit card at the time of the interest rate increase.

These practices and several more are now being debated by lawmakers to determine what practices are fair business practices and which ones are taking unfair advantage of credit card holders.  Congress is considering passing a Credit Cardholder’s Bill Of Rights to curb some of the worst abuses of the credit card industry and level the paying field for all consumers.


Want To Get The Best Car Insurance Rates?

Written by Toi Williams on May 7th, 2009 | Filed under: saving

In today’s economic environment, many people are trying to get the best deals on everything that they can, including the best rates for their car insurance.  A lot of the factors that go into determining a person’s car insurance rate are beyond a person’s control, such as the person’s age, sex, or the area that they live in, but there are some things that a person can do to ensure that they will be getting the lowest car insurance rate that is available to them.

Shop Around For The Best Rates
One of the best ways to get the best rate for your car insurance is to shop around to different car insurance companies to see who would be able to give you the best deal.  Some car insurance companies have lower rates while some other companies offer specials like lower deductibles or safe driver discounts.  Compare the different offerings from different car insurance companies to see who has the best car insurance plan for your financial situation.

Consider Increasing Your Deductible
A simple way to lower your car insurance premium is to raise the deductible that you will pay out of pocket in case of an accident.  Car insurance companies look favorably on people that choose the higher deductibles for their insurance because it shows that the person is confident in their ability to be a safe driver and do not think that they will have to pay that deductible anytime soon.   If you are a safe and considerate driver, the chances that you will ever have to pay this higher deductible are greatly diminished and in the meantime, you can pay the lower rate for your insurance coverage.

Carefully Evaluate Your Coverage
In many cases, people pay for insurance coverage that they do not really need because it is offered to them by a persuasive insurance agent or they believe that they need to comply with an existing law in their state.  Over time, the costs of these items add up to a significant amount of wasted money.  It is important to review these laws and the actual worth of your car to determine which coverage you actually need and eliminate the coverage that you are paying for that will provide no benefit to you in the long run.

There are a number of different things that a person can do to exert some control over the amount that they are paying for their car insurance policy.  By carefully reviewing all options and making sure that you are only paying for the coverage that you need, you can reduce your car insurance rate significantly.