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Archive for May, 2011

Can Credit Cards Save You Money?

Written by admin on May 31st, 2011 | Filed under: credit cards

This might seem like a strange question, given the current economic climate. However, as strange as it might seem, there are circumstances in which credit cards can actually save you some money. It is difficult to get ahead financially these days without a credit card, so if you are going to have one anyway, it is best to choose the best credit card for your financial situation with the added perk of putting some money back in your pocket.

First of all, it is imperative you choose the right credit card for you. Everyone’s situation is different, so it is really up to you to decide what’s the best choice. If you travel a lot, a credit card which offers air miles, gasoline rebates or discounts on hotel stays might be perfect for you over a card that offers merchandise or even cash back. Whichever card you choose, keep an eye on the interest rate. Typically, credit cards with rewards have a higher interest rate which may not make the rewards worth the cost.

Other ways credit cards can save you money may be perks you don’t recognize. Comb through your credit card agreement and determine all the options offered. Here are some of the most common:

–  Price protection: If you find the same item you’ve just purchased somewhere else for substantially less, your credit card company may have the option of reimbursing you for the difference with proof of purchase.

–  Return guarantee: It might be past the original store’s return policy time limit, but if you purchase something and decide it’s not what you want or need, the credit card company could take it back with proof of purchase and reimburse you.

–  Extended warranty: Any time you buy a big-ticket item, the salespeople come at you with the extended warranty and horror stories of what could happen if you don’t buy it. Well, if you use your credit card, you may not have to buy an extended warranty because your credit card offers it at no additional fee.

–  Travel advantages: From insurance to travel assistance, from trip cancellation coverage to translator services, your credit card could have your back. Many times credit cards provide trip coverage of some kind that is good to know before you step out of the house on holiday.

Most people don’t realize these perks are contained within their agreement, and therefore don’t take advantage of them. This partial listing can save you a lot of money, so be sure to take a good look at your credit card agreement to see what gems could be lurking in all that fine print.

 


How to Pay Down Debt

Written by admin on May 31st, 2011 | Filed under: debt relief

If you are experiencing debt problems, you are not alone. CNN Money suggests that the average American household with one credit card has just over $10,500 in credit card debts.

You can become debt free by investing some time and energy into sorting out your finances. You won’t pay the debt off overnight, but you will start to feel better as you take control.

Firstly, schedule some uninterrupted time where you can sit down and work through your financial papers. Debt can be a serious matter, so you need to be able to concentrate.

Even sitting down with financial statements may feel overwhelming, but take a deep breath and go ahead. Remember that this is the start of the end of your debt problem.

Create separate piles for different lenders and accounts, remembering to include savings or international bank accounts if you have any. Then create a spreadsheet detailing how much you owe and to whom.

Include how much you are repaying currently, even if that is just the minimum amount. With this information you can begin to understand the severity of the problem and you may even be pleasantly surprised that it is not as bad as you feared, especially if you have savings that you overlooked.

It is amazing how many people forget about an international bank account or a savings scheme. If you are in this fortunate situation, be very happy and pay off your debts immediately.

It may be tempting to spend the money, but in order to be debt free you must discipline yourself. Of course it is lovely to have the finer things in life, but a pride in paying off debt feels much more satisfying

If you are in debt with few resources, then consider asking for help from professional, voluntary services. These organizations will assist you at no cost to find a manageable way through the problem

If you have a large debt and cannot face dealing with your lenders, then ask for the help of a reputable debt management company. Debt consolidation will allow you to make just one monthly payment

An additional benefit is that interest is normally frozen in debt consolidation. This can be hugely advantageous because it allows you to chip away at the existing debt without adding more interest

Some services are available to certain groups of individuals, such as those serving in the military. The military debt consolidation program will enable you to pay off your credit card debt with a simple monthly payment

If you have unsecured debt above $5,000 and really no way of paying all the money back, then look into debt settlement. Here, some of your debt will be written off entirely and you can pay back a small amount monthly.

Think very hard about declaring bankruptcy. It may seem like the only solution, but it has major implications for your future. You may lose your house and often, people lose their relationships because of the stress.

Bankruptcy should really be the last resort. You need to be certain that there is no other way through the situation. Ask for professional advice, as experts can offer solutions and hope.

Being in debt can be worrying and you may feel ashamed but there are ways to overcome the hurdles and enjoy debt free life. It will take sacrifice but it will be worth it.

 


Preparing A Spending Plan

Written by Toi Williams on May 21st, 2011 | Filed under: mindset

Preparing a spending plan will benefit you in many areas of your financial life.  It increases your responsibility with spending and helps you recognize issues before they become disasters.  Spending plans organizes personal finances by carefully detailing income and expenses and creates a spending ratio that allows you to save a certain percentage of your income.

Benefits Of A Spending Plan

Following a spending plan can help you stay out of debt by managing your finances and placing limits on your spending.  The level of detail used can identify areas where potential savings can be obtained and following the plan will help you create a financial cushion that can be used in the event of a financial emergency.  Putting more of your money towards savings will help you meet more of your long-term goals by ensuring that the funding needed for these endeavors are available when needed.

Developing A Spending Plan

Developing a spending plan is not difficult.  The first step is creating an estimation of your monthly expenditures and income.  Gather all of the financial information that you can find, including paycheck information, statements, check registers, and bills, to create an estimate of how much you spend in particular categories each month and the percentage of your income you are spending on each category.  A good estimation will help you see a clear picture of your financial life.

The next step is to monitor your spending to ensure that you are not spending more than you intend in any particular category.  Keep all of your receipts for purchases and copies of your bills for accurate record keeping.  Amounts for items purchased with cash should be written down for inclusion in the spending monitoring.  All purchases and payments should be written into your spending plan on a daily or weekly basis.

Constant review of your progress is important for successfully creating and following a spending plan.  Reviewing your progress on a regular basis can help you identify areas where adjustments are needed and can help you eliminate unnecessary spending.  Any changes that are needed should be implemented quickly to ensure that your spending plan continues to help you advance towards your long term financial goals.


How A High Credit Score Improves Your Life

Written by Toi Williams on May 17th, 2011 | Filed under: credit score

Many people do not understand how important a high credit score can be to your future happiness.  A credit score is one of the first things that many lenders look at when determining whether to extend credit to you.  Keeping your credit score high and ensuring that there are no negative information in your credit history will help you secure your financial future and handle any unexpected expenses that may come along
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Fast Credit Approval

Having a high credit score means that you have a good chance of being approved for additional credit in the future.  Whether you are interested in obtaining a new credit card, purchasing a new car, or getting a mortgage loan, a high credit score will increase your chances of being approved for the loan.

High Credit Limits

If your credit score is above 700 and the length of your credit history is significant, then many lenders will approve you for a higher credit limit than the average offer.  A person with a fair credit score may be approved for a credit line of $2,500, but a person with an excellent credit score could be approved for a credit line of $10,000 or more.  This gives them increased purchasing power for the things that they want and allows them to have enough credit in reserve for any financial emergencies that may arise.

Low Interest Charges

People that have a high credit score pay less in interest charges on their loans and credit cards than a person that has a poor credit score.  This is because a high credit score means that you will not be a credit risk for the company issuing the credit card or loan so they offer a lower interest rate to attract your business.  Having a lower interest rate on credit cards and loans can save hundreds of dollars in interest charges each year.

More Employment Opportunities

Many employment positions require the human resources department to review the credit scores of applicants to determine whether they would be trustworthy additions to the company.  It is believed that people who pay their bills and their loans on time are more responsible, are less likely to steal from the company, and will not abuse the trust of the customers that give them access to their financial information.


Are Credit Card Issues Getting You Down?

Written by Toi Williams on May 11th, 2011 | Filed under: credit cards

Over the past two decades, credit card use has skyrocketed and with this increased usage has come increased problems.  Nearly half of all credit card holders will experience problems with skyrocketing interest rates, credit limit reduction, or making minimum payments at some point this year.  People are discovering that they are in over their heads with credit card debt and have no clue how to remedy the situation.  Finding solutions to credit card issues can be difficult, but following these simple tips can help you manage your credit card use effectively. 

Reduce Number Of Credit Cards Held

The average consumer has multiple credit cards from different credit card companies that they carry with them on a regular basis.  Multiple credit cards raises the chances of making a payment late, which can result in penalty charges of $35 or more and raise the interest rates for the credit card to the maximum amount allowed by law.  If you have more than three credit cards, try to pay off the ones with the lowest credit limits or most restrictions and close the accounts.

Pay Off High Balances

High balances on multiple credit cards can be a severe drain on your finances.  It can be difficult paying at least the minimum balances on each card and keeping track of progress can be discouraging.  Transferring the balances of each credit card to a single credit account can make the process simpler by reducing your obligation to single payment and progress can easily be seen when paying off the balance.  Many credit card companies are still offering low interest rates on balance transfers, so transferring the balances may save you money in interest charges as well.

Credit Limit Reduction

Many credit card companies are reducing the high limits previously offers on certain credit cards to reduce the amount of risk they are exposed to if the account holder defaults on the payments.  This typically happens without much warning to the consumer and can negatively affect various aspects of the person’s life, including decreased purchasing power and lower credit scores.  The only solution is to pay down the credit card to less than 50% of the available credit.  This will return your credit score to its previous level and may allow you to obtain additional credit from other lenders.


It Never is an Investment Piece

Written by admin on May 5th, 2011 | Filed under: saving

With the economy worldwide remaining relatively unstable, many Americans are finding ways to tighten their wallets left and right to deal with rising gas and food prices. We’re seeing extreme couponing, more families eating in, and cars crammed full of co-workers, however, there are still many Americans who aren’t giving up one costly vice: clothing.

Clothing for children has long been seen as expendable. A parent can by a child clothes from Wal-Mart because they will be growing out of them within in few months and that is okay. Wal-Mart provides cheap and suitable clothing for kids. However, parents, and young adults for that matter, don’t seem to hold this standard to themselves.

On fashion shows, in fashion magazines, and often in clothing stores the phrase “it’s an investment piece” can be seen or heard. A piece of clothing is never an investment. Yes, it may last for a few years, but that doesn’t mean that you will receive a high return on it like you would a well-chosen stock. “Clothing can make you look nice, but it is not going to increase your bank account, or become an asset you can claim on your taxes,” says Charles Bulger from Currencies.com.

A true investment is a mutual fund, a stock, or the perfect flip – one that will provide a significant financial return. An article of clothing – like a car – depreciates in value as soon as you take it out of the store. You should never try to legitimize the purchase of an expensive article of clothing by saying “it’s an investment piece.” Boutique-like clothes of similar quality can be found in other places

To save money on your wardrobe without sacrificing quality or style, consider shopping at higher end thrift and consignment stores. Many of these stores hold quality items at a fraction of the cost. Other big box stores, such as TJ Maxx, Men’s Warehouse, or Marshall’s, also offer lower prices for name brand clothing.

However, if you can’t stand to think about shopping at discount stores to increase your monthly budget, consider owning less and saving longer. A higher quality cashmere sweater does cost more than an acrylic blend, but it also lasts longer. So instead of running up your credit card to have a closet full of high end clothes, purchase a few quality items that you can mix and match that actually fit within your budget.