Discover Debt Freedom!

During the holiday season, many people are consumed with purchasing gifts to give and food to prepare for their friends and family.  For some individuals, the simple act of holiday shopping becomes a tradition to be shared with loved ones.  People that are filled with the holiday spirit may be less inclined to notice the tricks and triggers that retail stores use to increase the amount of money each person spends during their time in the store.  Being aware of these tricks during your shopping trips can help you spend less and choose better bargains than what the stores are advertising.

Limited Quantities

One of the most common ways that retail stores trick consumers into buying more of their products during the holiday season is to broadcast that they have a desirable item in a limited quantity.  In many cases, the fact that there is a limited amount of the item available will cause people to rush out and purchase the item because they believe that there will not be any of them left if they do not act quickly.  Most retailers receive several shipments of popular items during the holidays, so if you are unable to obtain the item on the advertised day, you can wait until the next shipment arrives or you can order the item online.

Promotional Gift Cards

Is there a better way to bring customers into a store than to give them free money to spend?  Many retailers have begun to mail out promotional gift cards during the holiday season to the people in their area giving them a set amount of money to spend, typically around $10, on a particular day or range of days.  After these consumers enter the store, they typically spend much more than the value of their promotional gift card, adding to the profit of the retailer during this important shopping season.

Buy One – Get One Free Offers

Many consumers focus on things that they believe to be a good deal (like those that got into currency trading and bought Iraqi Dinars) or a great price and nothing can be a better deal than getting something free.  Retailers know this and offer tons of buy one – get one free offers during the holiday season to move more of their merchandise.  This can be good if you are shopping for two different people that like the same things or if you actually need two of the item, but in many cases two of the same item are not needed.  It is best to view these offers as a percentage of the price, and if you would not buy two of the item if each of them were 50% off, there is no need to purchase the item because it is buy one, get one free.

The recent credit crisis has exposed many flaws in the ways that people handle their personal finances.  Individuals that were living on credit have found that credit is not as easily obtained as before, so they must find other methods to finance their lifestyles.  There are many people facing large debt loads that seem impossible to conquer because of their spending in the past.  If you are spending more for your regular expenses than you earn each month, you are one of these individuals heading for a financial disaster.

The only way to avoid this terrible fate is to be able to live within your means.  The best way to control your spending is to create a budget that outlines your monthly expenses and follow it every month.  Limiting your purchases to what you truly need is the only way that you will save money and be able to repay your debts.

Creating A Budget

Creating a budget is not difficult if you follow a few simple steps.  The first thing that you will need is an accurate accounting of all of the expenses you need to pay each month.  This includes rental or mortgage payments, utility bills, groceries, transportation expenses, and other incidental expenses that occur regularly.  This will show you the amount that you are spending each month on these expenses and how much money you will need to earn to cover them.

The next step is creating a spending plan that will allow you to make all of the payments needed for your expenses without causing financial hardship.  This includes scheduling your payments so that they fall during different times of the month and planning to make payments as soon as you receive your weekly or bi-weekly paycheck.  The exact details of your spending plan will depend on the number of expenses you have and how often you receive some type of payment that can be used for paying your expenses.

It is important to allocate some of your earning to savings in your monthly budget.  Every person should have some savings on hand to pay for any financial emergencies that may occur.  At least 10% of your monthly earnings should be placed into a savings account to be used for emergencies only.  Once the budget has been completed, following it will help you reduce your overall spending and ensure that all of your obligations and expenses are paid on time.

It is estimated that more than two-thirds of individuals are carrying crushing amounts of debt and the total debt of consumers across the nation has reached record levels over the last decade.  Many people are drowning in debt as their lines of credit are reduced and credit card companies restrict spending and increase interest rates to improve their balance sheets. 

Many of these people used credit to finance their lives and many are having trouble learning to live within their means.  As their debts continue to increase due to interest charges and additional fees, they find that they will have to reduce spending in other areas of their lives to stay afloat.  People that find themselves owing large amounts of money to creditors should follow these strategies for tackling debt effectively and eliminating debt completely.

Know What You Owe To Creditors

One of the worst things a person can do is deny how bad their financial situation really is.  Ignoring the problem will only cause the situation to become worse and no solution will be found until the issue is tackled head on.  As soon as a debt problem is identified, a spending plan focused on reducing the debt should be implemented as quickly as possible.

Create And Use A Budget

To reduce debt amounts effectively, a plan for repaying the debt will be needed.  The simplest method to accomplish this is creating a monthly budgeting plan that covers all expenses, allocates money for debt repayment, and eliminates unnecessary expenses.  Any additional money earned should be applied towards paying down existing debt as quickly as possible.

Stay Current On All Debt Payments

It is very important to remain current on all of your payments to all of your creditors.  Paying bills late or missing payments decreases your credit score, making it difficult to get credit in the future.  Late payments and will also create more debt due to fees and penalties applied to the accounts for missing payments.  If there is not enough money for you to pay all of your bills and pay down your credit cards, you should pay the minimum payment on your credit cards and focus on bringing all of your accounts current.

Bill Consolidation Is An Option

Many companies that distribute credit cards offer low interest rates for transferring balances to a new credit card.  If you have several credit cards that have balances, you may want to consider placing those balances on a single credit card with a low interest rate.  It is important to read the terms and conditions of the credit card carefully so you will be aware of the features and fees associated with the credit card.

Stop Spending

Your debt will never be paid off if you continue to create debt by charging purchases to your credit cards.  It may be best to take any credit cards out of your wallet during your attempts to pay down your debt so the temptation to use the credit cards to pay for items will be eliminated.  This will help you pay off your debt much more quickly.

Debt collectors calling about paying a debt that is owed is a conversation that many people have experienced over the last decade.  Many individuals that work for debt collection agencies are respectful of the people they are contacting, but some companies abuse the trust of the people by trying to collect past debts that the individual is not legally obligated to pay.

Understanding Debt Expiration

Expired debts are debts that have been in existence for more than seven years without any type of activity on the account.  Legally, a person is not obligated to pay these debts because of a legal statute of limitations placed on collections of debts that are older than seven years. These laws were created to prevent collection agencies from collecting on debts that are impossible to validate.  Even though attempting to collect this type of debt is unlawful, there are debt collection agencies that try to collect these debts. They rely on a person’s lack of knowledge of debt collection laws to collect money they are not legally entitled to obtain.

Why Attempt To Collect These Debts?

The debt collection companies purchase debt from the original creditors for pennies on the dollar. If they can collect any portion of the original debt, it is pure profit for the debt collection agency.  Because of this, some debt collection companies use highly aggressive collection tactics to obtain as much money as they can. These unscrupulous companies want to get the individual to pay the debt more quickly without asking too many questions about what is owed.

What Is The Solution?

If a debt collection company is contacting you to try collecting on a debt that is more than 7 years old, you can inform the debt collection agency that you are fully aware of the laws and any further attempts to collect that debt will result in a report under the Fair Debt Collection Practices Act.  In some cases, alerting the companies is not enough as there have been cases where representatives of the company have changed dates to reflect current activity on the account to extend the period of time the debt is valid. The company should be reported under the Fair Debt Collection Practice Act and you can take the collection agency to small claims court to have them pay damages for harassing you about a debt.

There are some individuals that will not escape the large piles of debt they have created without some kind of plan to pay down their debt quickly.  It may seem as if the situation is hopeless but there are some steps that can be taken to help resolve any bad financial situation.  Knowing what steps should be taken when facing a bad financial situation can reduce the effects that these issues will have on your life and allow you to reduce your debt levels significantly.

Ask For Assistance

Many people get into unmanageable debt because they do not understand how to manage their money effectively.  In order to extract themselves from debt, they will need someone to teach them the proper way to manage their money and create a budgeting plan that will allow them to pay all of their obligations with some discretionary spending money left over each month.  Asking for assistance with managing your finances from a person that you know and trust is one of the best ways to learn good financial planning and money management.

Contact Creditors As Soon As Problems Arise

If a person is unable to pay their debts due to a legitimate emergency, such as the loss of a job or a medical emergency, some creditors will wave late charges or place the account in a hold status to allow the debtor time to recover their finances before placing the account into collections.  It is recommended that creditors be contacted as soon as an issue arises to prevent the debt from spiraling out of control as the debtor struggles to pay all of their obligations.  Each creditor has different guidelines for suspending payments or lowering payment amounts so it is important to speak with a company representative about the options available.

Don’t Hide From The Situation

The single worst thing a person can do when facing a financial disaster is to pretend as if the problem does not exist.  If spending is not reduced immediately when the problems begin, the financial problems will continue to worse month by month until the issues are addressed.  The only ways to get out of debt are to reduce spending or to increase income.  Both of these options require sacrifices that may not be easy to make but are necessary to reduce and eliminate debt.

Having money in the bank can be a lifesaver when facing unexpected financial emergencies.  Additional money in your checking account or a separate savings account can mean the difference between handling these financial issues quickly and effectively or having to go into debt to solve the problem.  Following these simple steps can help you boost your bank account and create enough emergency savings to handle nearly any financial situation that arises.

Calculate Your Monthly Spending

The first step in boosting your bank account is to calculate the amount of money that you spend each month on your regular expenses.  This includes transportation expenses, grocery expenses, clothing purchases, and any entertainment spending that occurs on a recurring basis.  After this amount has been calculated, the total should be multiplied by 6 to identify the amount of money that will need to be saved to pay for 6 months of normal expenses.

Find The Best Bank Account For Saving

Different banking institutions offer different interest rates and perks for different types of savings accounts, so taking the time to look at the features and benefits of several different bank accounts can help you choose the best place to store your money.  To get the best return on your savings, inquire about the different types of savings programs available at several banking institutions to determine which ones offer the most benefits for the amount of money you plan on saving in the account.  In many cases, the savings program with the highest minimum balance will offer the best benefits and features.

Save Before You Spend

It is easy to spend more than you intend and not have enough left over at the end of the month to put enough money into the savings account.  This problem can be remedied by putting a specific amount of money into the savings account as soon as a paycheck is received.  This way the money will be taken out of the money that will be spent before it can be used for expenses and guarantees that the savings account will continue to grow.  Some employers will allow a paycheck to be deposited into two or more bank accounts, so you can have a percentage of your paycheck deposited directly into your savings account.

Resist Accessing The Account

The only way that you will be able to boost the balance of your bank account is if you give the funds time to accumulate without spending any of the money.  Remember that this money is intended for emergency situations only, not to purchase new electronics or take a vacation.  If you can resist accessing the account for frivolous reasons, you will be amazed at how fast the balance of the account will grow.

The hardest debt to get rid of is credit card debt, typically because of the constant increase of the balance due to interest charges, account fees, and transaction costs.  In order to eliminate credit card debt, a financial plan must be made for paying down the balances of the credit cards in the fastest way possible with the person’s current financial situation.  These methods effectively eliminate debt without harming the person’s basic financial security.

Stop Using Your Credit Cards

It is very difficult to pay off credit card debt if you are still using the credit cards to make purchases.  If you find yourself facing high credit card balances, the best thing for you to do is put away the credit cards and pay cash for all of your purchases until your credit card debt is under control.  This will allow you to pay down the existing debt without adding additional debt to the pile.  You will be more motivated to pay off your credit card debts if visible proof of the debt reduction can be seen within a few months of starting your pay off plan.

Focus On High Interest Debt

High interest debt is the most difficult debt to pay off because the interest charges can increase the balance of the account as quickly as you are paying the balance down.  It is important to eliminate high interest debt as quickly as possible to reduce the amount of interest you are paying each month.  Start by paying down the credit card with the highest interest rate first while making at least the minimum payment for all other credit card accounts.  Once the highest interest charges have been eliminated, you will be amazed at how much more manageable making your monthly payments for the other accounts has become.

No Missed Or Late Payments Allowed

Missing a payment date on a credit card account can trigger a significant increase in the interest rate charged for the credit card.  Credit cards with low interest rates are easier to pay off because the interest payment is not adding a large amount to the balance of the credit card each month, so you will want to keep the interest rates for your credit cards as low as possible for as long as possible.  Be sure to make all credit card payments as soon as the bill arrives to avoid missing any payment dates.

A new trend in bill payment today is using means other than the traditional way of writing a check and mailing it in to make a payment.  These other payment methods, including making a payment by phone and paying the bill online, are designed to process the payment faster and provide confirmation that the payment has been accepted in a few seconds.  Although these methods may seem like a benefit because of the time saved, many lenders charge for using these methods, which can cost the consumer a large amount of money over time.

What Triggers The Fees?

The fees that are charged for using these additional methods of paying a bill can vary from lender to lender and often depend on the way that the transaction is being made.  For instance, some companies may not charge for making a payment online because there is no customer service representative involved but will charge a fee for making a payment on the phone if the person must talk to a live individual.  Other companies will charge a convenience fee for making a payment in any way other than traditional check writing for the convenience of knowing that your payment was received, processed, and applied to the account the same day that the payment was made.

How Much Will The Fees Cost?

The amount charged by the lender may not seem like a large amount when viewed as a single transaction, but the amount adds up quickly when the entire picture is viewed.  For example, a convenience charge of $10 per transaction adds up to $120 per year if the same payment method is used every month.  If the person is paying convenience charges for three of their accounts each month, the total is $360 paid in convenience fees each year.  Multiply this by the thousands of consumers that use these payment methods and it can easily be seen how lenders and banking institutions are raking in millions of dollars each year from these charges.

How To Avoid The Charges

One of the most common reasons that a person choose to pay the convenience fees for making a payment using one of these alternate methods is because the payment will not arrive on time if paid using the traditional method of sending in a check.  When these bills arrive in the mail, it would be better to pay them immediately if the money is available in the bank instead of waiting until closer to the due date to make the payment.  This will ensure that all payments are made well before the due date and that all accounts will remain current.

The best debt advice is never to incur any debt.  However, we are surrounded by debts everywhere – mortgages, student loans, credit cards, utility bills. According to “Credit action” report average amount of debt owed by every UK adult is ~ £30,000 (including mortgages). In the current time of economic recession it becomes very difficult to manage debts.  Figures released by “Credit Action” are striking – 1, 900 people are made redundant every day in the UK.  Debt problems can have a significant impact on your life – financial difficulties are leading to constant stress, which on its own can cause various health problems such as severe depression, anxiety and migraines to name just few. Excessive stress can throw your private life (relationship with family and friends) into disorder. Debt problems can have a negative impact on your workplace performance and productivity as well.

If you have debt problems it is essential not to panic. But don`t ignore the problem – it won`t disappear either.  If you are struggling with debt it may seems impossible to manage.  However, we will offer simple guidelines, following which you should be able to get your life back on track.

• Work out your personal budget, analyzing where your money goes.
• Find out how you can cut out your expenditures. Be realistic.
• Sort out how big is your debt.
• Prioritize any urgent debts (such as utility bills and rent).
• Find out if you can pay your debts off, if so, how much.
• If you are unable to pay your debts off with your current income, find out if you can increase your income.( You may want to think about renting out a spare room in your house or applying for the benefits you`re entitled to)

If you worked out all possible options and are still unable to pay your debts off, you can get free and independent debt advice from organizations like Citizens Advice or National Debtline (the list of those and similar organizations is given in the end of the article).  You can get help either online, by telephone or face to face.  Trained advisors will discuss your circumstances with you and offer the best solution.

If your debt is between £3,000 and £15,000 you may want to consider Debt Management Plan (also known as DMP) – an agreement between you and your creditor to make monthly payment. It can be managed by yourself or by a third party (DMP `operator`) which can negotiate with your creditors on your behalf.  If you have surplus income (£200+ after essential living expenses) you will make one monthly payment, which then will be distributed between your creditors.  Most companies will charge for this service, but there are some organizations like National Debtline or Consumer Credit Counseling Service which will do it free of charge.

If you have a debt over £15, 000 you may want to consider Individual Voluntary Agreement.    This solution offers you an ability to pay off one portion of your debts and write off the debts you cannot afford to pay.  If you go for IVA your interest fees and debts will be frozen.

Options like Administration Orders, Informal Arrangements, Consolidating Debts are also available among others.  There are many ways of resolving debt problem and it is often confusing to choose between them. The best way is to use free and independent advice available to you through various organizations all over the UK.  Don`t neglect this opportunity and sort out your debt problems now.

Insurance is important for planning for your future.  Insurance is used to protect the financial security of the family in the event of an unforeseen disaster.  There are a number of different insurance products available for purchase today that can increase financial security and ensure that financial devastation will not occur in the event of the unexpected.  Insurance can be used to build another house, obtain another car, or pay for a funeral that the family may not have been able to afford.  When considering which types of insurance to purchase, it is important to take a few things into consideration.

Why Do I Need Insurance?

Insurance is used to replace items that would be expensive to repurchase.  Items that are generally insured include homes, cars, and possessions within the home.  In many cases, these items would not be able to be repaired or replaced in a timely manner without the help of an insurance policy.  It is important to ensure that all premiums are paid on time to ensure that the policy is not cancelled for non-payment.

Many individuals also use insurance as an investment instrument.  These insurance instruments are structured the same as traditional insurance policies, but the value of the instruments increase and decrease with the stock market.  Many people prefer holding these types of insurance instruments because they can withdraw funds from the insurance instrument to use for other expenses. 

Learn About The Insurance Policies

When using insurance for future planning, it is important to understand the different types of insurance policies and the benefits of each.  Many people are astonished to find out that their insurance policy does not cover things that they thought were covered after an adverse event occurs.  This means that the person must pay the difference out of pocket, an expense that could cost hundreds or thousands of dollars. 

Planning for the future is difficult for everyone because there is no way to tell what the future will bring, but being prepared can limit the amount of damage an unexpected financial emergency can cause.  Many people who buy an insurance policy will never have to use the provisions in their insurance policies, but the individuals that will make a claim will be happy for the protection that the insurance has provided.