Discover Debt Freedom!

Get Out of Debt and into Wealth

Archive for December, 2009

Time Tested Tips For Handling Debt Disasters

Written by Toi Williams on Dec 31st, 2009 | Filed under: debt relief

Debt disasters can strike at any time, anywhere, and without warning but many of the people that find themselves facing a debt disaster have months of forewarning that trouble is brewing.  Instead of hiding your head in the sand and pretending that the financial problems do not exist, the best course of action is to take some steps to take control of your financial situation and manage the debt disaster before it snowballs into something bigger.  Here are several tips for handling debt disasters.

Tip 1 – Be Honest About Your Situation
Many people find themselves facing a debt disaster of epic proportions because they have remained in denial about their financial situation as the situation slowly became worse and worse.  The only way that you will be able to handle your financial situation is to be honest about the severity of the situation and the steps that were taken to get to that point.  By accessing the situation honestly and taking responsibility for your actions up to the point where you realized the situation was out of control, you will have a better understanding of the actions that will be needed to reverse your situation and will able to create an effective plan to handle the problem.

Tip 2 – Remain Calm And Be Patient
It is very important to remember that your financial situation was not created over the course of a few weeks and the issue will not be solved that quickly either.  It is important to think clearly, refrain from panic, and have the patience to allow the methods to work.  You cannot think correctly when stressed out and decisions made under duress may not be the right decisions for your particular situation.

Tip 3 – A Good Plan Is Key
One of the most important steps for handling a debt disaster is to create a good plan for resolving or mitigating the debt disaster without going crazy or destroying your credit score.  In many cases, you will have to reevaluate your standard of living and make significant cuts to your monthly spending until you can return to your previous standard of life without creating debt.  If the debt disaster is a minor one, then you may be able to return to your previous life after a brief time period, but in some cases, the new standard of living will have to last for a long period of time to repair the damage done during the previous years.

By carefully evaluating your financial situation, you may be able to find several hundred dollars worth of savings each month by cutting expenses that are not necessary and choosing less costly everyday items.  Although facing a debt disaster will be difficult for you and your family, the tough times will not last forever and eventually you will be able to return to your normal life with a greater appreciation for what you have and are able to do.


Getting The Most Out Of Gift Cards

Written by Toi Williams on Dec 30th, 2009 | Filed under: Uncategorized

Gift cards have become a staple of the holiday season, with millions of gift cards purchased and given each year.  Instead of worrying that the recipient will not like the gift that was picked out for them, these gift cards allow the giver to control the amount spent on the gift while giving the recipient some flexibility in what they receive.  These gift cards can be a great way to allow someone to choose the gift that they would prefer and it is important that both the giver and the receiver understand the best ways of using the gift cards to get the most value out of the gift cards.

Look For Hidden Fees Before Purchasing
Some store gift cards are loaded with hidden fees that reduce the total purchasing power of the gift card.  These fees may include activation fees, physical card fees, or other fees deemed necessary by the card issuer.  While these fees are not typically disclosed on the front of the gift card, they should be included in the terms and conditions of the gift card per the disclosure laws in effect for these products.  If there are initial fees for the gift card, you may be paying $50 for a gift card that only has $40 of purchasing power. 

Use The Entire Amount
One of the biggest mistakes made by individuals redeeming gift cards is to choose an item that is slightly under the price limit of the gift card in order to avoid paying anything for the item.  This is the equivalent of giving free money to the retailer because, chances are, the person will never go back to the retailer to redeem the last few dollars on the gift card allowing the retailer to keep the money without having to give up merchandise in return.  The best way to get the full value of a gift card is to use the entire amount and pay the few dollars extra for the sales tax.

Pay Attention To Expiration Dates
A few gift card issuers place expiration dates on their gift cards and after this date, the remaining balance on the gift card can no longer be spent.  Although many people use their gift cards within a short period of time of receiving them, people that need more time to decide on their purchase may find that the expiration date has passed and their card is no longer valid, allowing the issuer to keep both the money and the merchandise and leaving the gift card recipient with nothing.


Paying Too Much In Credit Card Fees?

Written by Toi Williams on Dec 29th, 2009 | Filed under: credit cards

In anticipation of stricter regulation of credit card products by the federal government, many credit card issuers are increasing the interest rates, fees, and other charges associated with using the credit cards in order to “beat the clock” on regulation.  While this may help the credit card issuer’s bottom line, it is hurting the large number of individuals that are carrying a balance on their credit cards by snagging a larger portion of their income for paying down the credit card balance.  If you are finding that you are paying far too much in credit card fees, here are some simple ways to bring down the amount.

Minimize Credit Card Use
Although many credit card issuers offer rewards for increased usage of the credit card, using a credit card for routine purchases can be a recipe for disaster.  These rewards can entice individuals to use their accounts to pay for more items more often, creating a higher balance on the account that will be subject to fees and interest payments.  It is smarter for the person to use the credit card as infrequently as they can and to pay cash for small everyday purchases to decrease the amount of the balance of their credit card.

Make Sure Payments Are Timely
Making a payment on the credit card late gives the credit card issuer many different opportunities to impose fees on you.  The first fee charged against the account will be a delinquent payment fee, which could be as high as $39 for each occurrence.  This charge can be added to the account by the credit card issuer even if the payment is only a few hours late or is delayed in the mail.  If the delinquent payment penalty fee increases the account balance to the point where it is over the credit limit, the credit card issuer can justify charging an over-limit fee to the balance of the account, which adds another $39 fee to the total balance.

Avoid Interest Rate Increases
Many credit card issuers use any missed payment to dramatically increase the interest rate for the account to the highest allowable limit, which could be as much as 30%.  To avoid these tactics and extortionate fees, a person should make their payment for the credit card as soon as they receive the bill to make sure that the payment will be received on time.  Many credit companies have an option where you can pay your bill online, which posts the payment to the account by the next day.  When the transaction has been completed, you will receive a receipt indicating that the transaction has been processed and that posts the date that the payment will post to the account.


Businesses Behaving Badly

Written by Toi Williams on Dec 21st, 2009 | Filed under: scams

Many people across the nation either have experienced or know someone who has experienced a business behaving badly.  This encompasses a wide range of barely legal but completely unethical behaviors on the part of the business to trick consumers out of their hard earned money.  Even though a small percentage of businesses engage in these behaviors, they tend to affect entire industries as confidence in the fairness of business practices are eroded across the board.  Here are some of the most notorious abuses and how to recognize them.

The Old Bait And Switch
This is one of the most common practices of unethical businesses and one of the hardest to detect until it is too late.  With this practice, the company promises the consumer an amazing deal, such as a heavily discounted price or extra services, to draw in the customer. After a short period of time, the price is raised or the person is billed for the additional services automatically, typically without warning.  The consumer then has the choice of paying the much higher price or paying an extortionate early termination fee to cancel their agreement.

The Fine Print
This technique is typically used in television or print advertisements and is one of the most easily recognized abuses by businesses.  The advertisement promises a great deal on a product or a service, but in tiny print at the bottom of the advertisement, there are a few lines that state additional conditions for the deal, such as an extremely limited quantity, automatic enrollment in another service, or that the price will be raised after a short period of time.  People that accept the deal as advertised are often hit with an unpleasant surprise that was buried in the fine print of the advertisement within a very short period of time.

Automatic Debits
Today, many businesses require you to submit a credit card number or bank account number for the “convenience” of automatic monthly payments to the company.  The problems typically come when the consumer tries to cancel the service or the company adds a new service to the contract and starts billing the consumer for the service without their consent.  It is best to be wary of whom you are giving your credit card or banking information to and in many cases, you may want to choose a service that does not require automatic debits to your accounts.

Term Layering
Layering is a fairly new technique used by businesses to make sure that consumers remain confused about the terms and conditions that they are agreeing to when they are doing business with the company.  Term layering is basically placing parts of the terms and conditions of a service in many different places so that it is difficult for the consumer to have all of the terms and conditions in a single place at the same time.  Some places where these binding terms can be found include product pamphlets, store receipts, store websites, and order forms, with only a portion of the terms and conditions printed in each place.


Having Trouble Saving Money? Start Small

Written by Toi Williams on Dec 17th, 2009 | Filed under: saving

One of the most common reasons that people have trouble saving money is that the large lifestyle changes that would result in saving a great deal of money quickly turn them off to the entire process.  If a person is uncomfortable with the process, then they are less likely to stick to the program that was chosen and will resort to their old habits before they have accomplished their goal.  There are a number of ways to start saving money in small ways that will not have a great deal of impact on your current lifestyle and making these small changes into regular habits can help you save hundreds of dollars each year.

Trim Small Expenses
Many individuals have a number of small expenses that they pay for throughout the course of a week without even thinking about it and these purchases can add up to a significant amount of money.  In most cases, these purchases are not necessary and the person is paying for the convenience of the item.  By cutting out these small purchases or substituting a cheaper alternative, you may be able to save around $100 per month which should be added to your savings account at the end of each month.

Round Up Checking Charges
If you track your purchases using a checking account ledger, one of the easiest methods to save small amounts of money is to round up the actual amount of the purchase to the nearest dollar or add a “saving charge” of one or two dollars to each purchase.  The amount is so small for each purchase that you will not even notice while you are building a comfortable cushion in your checking account a few dollars at a time.  At the end of the year, you will be pleasantly surprised at the amount of money you have been able to save.

Use Coupons For Necessary Purchases
If you have to make a purchase of a necessary item, try to use a coupon for the purchase.  Coupons are not just for groceries anymore as many companies have recognized the usefulness of coupons in attracting new customers and keeping previous ones.  Now coupons can be found for numerous items, including clothing, household appliances, and vehicle oil changes.  Many coupons can be found in your local newspaper or mailed to your home by businesses or coupon companies.

Making these small changes in your lifestyle can result in the saving of a large amount of money each year and will eventually lead to saving methods that save larger amounts of money in a shorter amount of time.  The biggest step in saving money is getting started and as time goes by, saving for the future will become easier.


Should I Apply For A Store Credit Card?

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

Every time you go to the check out line at certain retailers, you hear a specific script being read asking you if you would like to save a percentage off of your purchase by signing up for a store credit card.  Employees at these stores are required to ask anyone that is not already paying for their purchases with a store credit card if they would like to spend several minutes applying for a credit card and approval can typically be granted within a matter of minutes.  But are these store credit cards really the deal that they are advertised to be?

The Discount
In most cases, the company will give you 15% to 30% off the total price of your purchases on the day that you are approved for the store credit card.  More generous stores will also send you discount cards and gift certificates throughout the year as an appreciation gift for using the credit card in their store.  The amount received is generally based on the amount that you spend in the store.

Unfortunately, the interest rates that are charged on these store credit card are often much higher than the interest rate charged by banks and the major credit card issuers.  This means that carrying a balance on these credit cards can end up costing you much more than you are saving in discounts from the store.  If you are making a major purchase that will take you several billing cycles to pay off, it may be cheaper to place the purchase on a different credit card and forgo the discounts the store is offering.

Balance Limits
Store credit cards will generally have a much lower balance limit than general purpose credit cards.  This can cause harm to your credit score as the percentage of credit you are using for each of your credit cards factors heavily in the calculation of your credit card.  It is much better for your credit score if you place the purchase on a credit card with a higher limit than maxing out the store credit card.

Convenience
One of the biggest drawbacks to the store credit card is that it can only be used at a specific retailer.  This is good if you tend to do all of your shopping at that store, but people that shop with several different retailers often must get a different credit card for each retailer, which leads to multiple payment dates and an increased chance that you will default on one of the cards to trigger a higher interest rate and late charges.  Many people prefer to obtain one credit card with a higher limit that can be used anywhere rather than multiple store credit cards that can only be used in one place.


How to Get Affordable Car Insurance For Your Teen

Written by admin on Dec 14th, 2009 | Filed under: saving

While it is still early into a new year, parents and teens alike are already planning months ahead for the inevitable – sweet sixteens and high school graduations. One of the most sought-after gifts from the teen side of the equation is the want of a new Car. As many parents find it difficult now to maintain their own cars, adding an extra one to the mix can be difficult; though not having to chauffeur the kids around town to practice and part-time jobs, it can be a relief to turn over responsibility to the kids.

The task of buying and maintaining the spare Car for your teen can be quite expensive but it doesn’t have to be over the top. Here are some tips for finding affordable car insurance and to expenses low and expectations for your kid’s responsibility levels high:

Split the Responsibility

  • There are a lot of different expenses that come with car ownership. Make a list and divide up the responsibilities between you and your child. Put it in writing so everyone will be on the same page. Some expenses include:

Insurance (whether a teen gets their own insurance or is added to the parent’s policy)
Registration
Inspections
Oil Changes
New Tires
Car Washes/Cleaning
Parking/Speeding Tickets

  • There may be advantages to shopping elsewhere for a teen’s vehicle insurance. Adding a teen driver to a parent’s policy may not be the cheapest route. This will depend mostly on the type of car your child will drive. If you allow them the more expensive family vehicles, expect to pay a large sum for added coverage of a teen driver. If your teen drives a reliable used car, it may be less expensive to shop around for a policy all their own and get the basic insurance coverage.
  • Adding a teen to your policy also has advantages if your policy offers discounts for multiple vehicles or loyal customer incentives. Don’t be afraid to shop around to find the best situation for your finances.
  • Require that your child become responsible for maintaining the vehicle at all time by keeping it clean and performing daily maintenance checks on tires, paint, and fluids in the engine.
  • Lay down the ground rules about driving safety and make it clear that as parents you will not be paying for any violations incurred by your teen. Make sure your child understand the consequences of driving at unsafe speeds, disobeying traffic rules, and other reckless acts – from the realities of tickets to fatal accidents. You can also incorporate in the rules the different consequences for different actions – such as traffic violations will result in the loss of driving privileges.
  • Make sure your child knows what to do in the event of an emergency. Any mistakes can cost both you and your teen in the event of an incident or accident.
  • One of the most important things a parent can do is continue to educate their teens on the true costs of owning and maintaining a car of their own. Make sure they go through the process of registering the car, shopping for insurance, and scheduling maintenance appointments. Make sure they know that the cost of owning a Lexus is different than the cost of owning a Toyota. Go so far as hypothetically creating the financial devastation as well as the emotional one of being the cause of an accident due to careless acts or driving under the influence. The more information the child learns along with you, the more inclined they might be to take greater responsibility for their driving.

What Are My Options For Dealing With An Old Debt?

Written by Toi Williams on Dec 10th, 2009 | Filed under: collections

As collection agencies get bolder and more companies sell them debts that they have been unable to collect, more and more people are finding notifications that they owe old debts in their mailbox or on their answering machines.  Although the statute of limitations on most debts is seven years, most individuals do not know how long ago the debts were incurred or when the last payment on the debt was made.  There are several options that can be used for dealing with an old debt and the method chosen will depend on the individual’s specific circumstances.

Ask For Debt Validation
One of the first things that you should do when informed of an old debt is ask the collection agency that sent the notification to validate that the debt is yours and is a valid charge.  There are a number of unscrupulous collection agencies out there that sent notifications for fraudulent or legally uncollectible debts in the hopes that the person will panic and pay the debt without asking too many questions.  If the collection agency is unable to validate the debt, then notice should be given to them in writing that they need to stop contacting you about the matter and if they contact you about the debt after receiving this written notice, they can be reported to the Federal Trade Commission (FTC).

Debt Settlement
In many cases, if the debt is more than a year old, the collection agency will be willing to settle the account for a percentage of the total so that they are paid something instead of wasting time and energy for no payment at all.  If you choose to settle the debt, make sure that you have the terms of the settlement in writing from the collection agency and that you check your credit report after the payment has been made to make sure the collection agency has reported the account as settled.  It is also a good idea to keep a copy of the check or money order used to pay the settlement amount just in case you need it as proof of payment down the road.

Legal Representation
If the debt is not valid or the collection agency is harassing you, you may want to consider hiring a lawyer for legal representation.  Once you have notified the collection agency in writing that you are being represented by a lawyer and all further communications should be directed to them, the collection agency is no longer allowed to contact you directly.  If the debt is not valid, then the collection agency will generally not risk fighting with a lawyer in court on a case that they are going to lose.


Simple Tips To Keep Holiday Spending Under Control

Written by Toi Williams on Dec 8th, 2009 | Filed under: mindset, saving

People caught up in the holiday spirit of the season often spend more than they intend on items to celebrate the holidays.  Decorations for the home, treats, and gifts can all add up to a significant amount of money if these purchases are not carefully monitored by the person doing the purchasing.  There are some simple tips that you can use to make sure that you do not spend more than you intend this holiday season.

Make A List, Check It Twice
Making a list of all of the things that you need for your home and what gifts you would like to purchase for friends and family this holiday season will help you control your spending on holiday items.  By making a list, you can quickly identify which items are necessary and which items are additional and can be eliminated from the list to save money.  Making a list will also allow you to estimate how much you will spend for all of the items and help you make the determination on whether the purchases will be affordable on your salary.

Send Holiday Greeting Cards
Shipping gifts to friends and family members all over the nation will quickly become expensive due to the shipping costs charged by the major shipping companies.  A better way to acknowledge those individuals that do not live close to your home is to send them a holiday card with a personal note about how you are thinking about them and your wishes for them to have a happy holiday.  If sending a gift is desired, consider sending something small, like entertainment tickets, gift cards, or personal checks, along with the card.

Shop Sales
During the holiday season, many retailers will have a large amount of their merchandise sale priced to ensure that the merchandise will be moved during the busiest shopping period of the year.  By focusing on the sales racks with the deepest discounts, you can save as much as 50% off the total cost of your holiday spending.  In order to save time and save even more money, review the sales flyers that are mailed to your home or inserted into the local newspaper to compare prices across stores so that you can purchase the best items at the lowest prices available.

Avoid Credit Card Use
Purchases placed on a credit card will always cost more than a purchase made in cash because of the fees and interest tacked onto the purchase amount.  Many people use their credit cards during the holiday season to spend money that they do not have on purchases that they do not really need.  In order to stay within budget for your holiday celebration, use cash or a debit card whenever possible for purchases and do not purchase anything that you have to use credit to pay for.


Financial Tips: The 10% Rule Of Saving

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

Saving money can be a difficult task.  There are so many different vendors vying for your hard earned cash and commercials telling you that you need the latest products that it is very easy to find that you have spent too much of your salary and have not saved any money by the time the month is over.  If this sounds familiar to you, then you may be interested in implementing the 10% rule of saving.

What Is The 10% Rule Of Saving?

The 10% rule of saving is one of the easiest ways to ensure that you are saving money each month and a good way to secure your financial future.  In simple terms, the rule states that every time you are paid an amount of money, 10% of that amount should immediately go into a savings account.  By transferring the money immediately, there is less chance that you will spend the money on unnecessary items.

Ways To Follow The Rule

Many employers have made it easy for their employees to implement the 10% rule of saving in regards to their salary.  Employees that choose to deposit their paychecks into their bank account by direct deposit can list up to three bank accounts for deposits along with a specific percentage for each account.  This allows them to place the 10% that they would like to save directly into their saving account without having to think about it each time they are paid.

If this is not an option at your employment location, there are other simple ways that can be used to follow the 10% rule of saving.  One method is to have your checking and savings accounts at the same banking institution and have them linked so money can easily be transferred between both bank accounts.  With online access to the accounts, the 10% that you would like to save can be taken from the checking account and placed into the savings account with a few clicks of the mouse.

Using the 10% rule of saving will help you increase the balance of your savings account significantly within a short period of time.  The money saved can be used for financial emergencies or high-cost purchases that are needed for the household.  This financial rule of thumb is easy to follow and can dramatically change your financial stability if you stick to the rule.