Discover Debt Freedom!

Getting out of debt and staying out of debt should be the goal of every consumer, especially those that have gotten themselves into trouble with excessive debt in the past.  It is estimated that nearly 33% of American households have more debt than wealth and this number continues to increase as high unemployment and tight credit markets squeeze the American consumer.  Getting out of debt is becoming increasingly more difficult as new rules are put into place to limit debt relief, but following some simple tips can help an individual find financial freedom and remain debt free.

Banks and credit card companies make a profit of billions of dollars in over-limit charges and bounced check fees annually.  Each transaction that goes over the limit of your credit card will cost around $35 in penalty charges and many financial institutions will process large purchases before small ones in order to charge more fees.  Knowing how much money or credit is available for your account before you begin to spend money will help you avoid numerous fees and avoid destroying you credit score.

If you are one of the people that do not like carrying cash, consider using a debit card.  Many people do not like to carry cash with them because they are afraid of being robbed, having money stolen, or losing cash out of inattention.  Debit cards use the money in a bank account to pay for purchases and you will not have to worry about interest payments or late fees on the items that you purchase.

In many cases, the first price you see for an item is not the best or cheapest price for that item.  Comparing prices before you shop will help you save money on everything from groceries to insurance to club memberships.  People that comparison shop before heading to the stores often get more for their money as they find deep discounts and 2-for-1 specials on the merchandise they desire.  Price comparisons are so popular that there are many websites on the internet that allows consumers to compare items across a number of different retailers to determine which one has the best price.

One of the biggest money drains commonly seen today is the impulse purchase.  Many items bought on impulse are rarely used and often sit in a closet with the price tag still attached for months or years after the purchase.  By learning how to resist the temptation of the impulse purchase, you will save a great deal of money and avoid cluttering your home with unnecessary items.  Identifying problem spending areas in your life and correcting them is one of the best ways to get out of debt and stay out of debt.

Cutting costs and eliminating expenses in your daily life is a good way to ensure that you will have money to save for emergencies or for other needs.  Many of the things that we purchase and bad habits we pick up are the result of choosing convenience over taking the time to do things for ourselves.  These simple ways to cut costs in your daily life can save you thousands of dollars every year.

Eliminate Coffee House Purchases

Many people would be surprised to learn that specialty coffees from coffee houses have one of the highest markups of any product purchased.  The costs of these specialty coffees add up quickly, with those who have a regular habit of purchasing one of these coffees each workday spending nearly $1,000 per year on the caffeinated calorie bombs.  Instead of purchasing these specialty drinks, get ready for work a little earlier and brew your own coffee at home.

Reduce Entertainment Expenses

In the quest for great entertainment, some people pay more than they should for access to entertainment items.  There are many different ways to reduce your entertainment expenses, including scaling down your cable package to basic service, renting books from the library instead of purchasing them, and choosing inexpensive concerts featuring local artists instead of shelling out big bucks to see big name artists in large venues.  Although you may have fewer options that you are familiar with, you will have more opportunities to discover new things for a lot less money.

Use Your Bank’s ATM

Using an ATM for any company other than the bank holding the account you are withdrawing from will cost you multiple fees for every occurrence.  In many cases, you will pay a fee to your bank for using a competitor’s ATM and another fee to the other company for the convenience of using their ATM.  The charge for each transaction can be $3.50 or more, with a twice a week habit costing you nearly $400 in additional bank fees annually.

Perform Regular Car Maintenance

Performing regular maintenance on your car can lengthen the life of your car, help you avoid costly repairs, and save money in gasoline expenses.  Important maintenance items to perform include keeping the right amount of air in your tires, getting your oil changed at regular intervals, and keeping adequate amounts of fluids in the vehicle.

Finding ways to save money and putting those ideas into practice can be difficult and time consuming; so many busy individuals waste money instead of finding time to implement complicated savings plans.  Fortunately, there are many easy ways for busy individuals to save money without spending a lot of time or effort on the task.  Here are some of the best methods for busy individuals to save money on their everyday activities.

Make Your Payments Automatically

Any busy individual knows that having many things on your mind makes it easy for one or two important items to slip your mind.  When this missed item is to place a payment in the mail, the consequences can be wide-ranging, from a decrease in your credit score to late payment fees being levied against the account.  Automating your payments eliminated these consequences by ensuring that your bills are always paid on time.  Many banks offer this feature on their websites for free and this ability gives the busy individual one less thing to worry about.

Comparison Shop Online

It used to be a hassle to comparison shop because that meant you needed to find pricing information on several different websites to find out which company had the best price on the object wanted.  Today, there are websites that will pull pricing information from the websites of different companies that have the item available and list the companies and the corresponding prices on a single webpage.  These websites can search the entire web in a matter of seconds, ensuring that you find the best price for the item you are looking for.

Bundle Services

Many companies will give you a discount if you are purchasing more than one service from that company.  Bundling your cable, internet, and telephone services can save you as much as 40% of the cost of purchasing all three services separately from different companies.  It is also possible to bundle insurance products by purchasing your home and auto insurance policies from the same company.  Before signing up for services from any company, ask the representative if there are any discounts available for purchasing multiple services.

Cancel Unused Memberships And Subscriptions

Many people pay for media subscriptions and memberships into clubs, such as health clubs, with good intentions, and then they do not use the services that they are paying for.  This can be a large waste of money as the person is billed for things that they are receiving no benefit from.  Canceling unused memberships and subscriptions can save you hundreds of dollars each year.

The United Statesis a nation where over-spending has become the norm. More people are borrowing money just to make ends meet and purchase items that they cannot normally afford.

This debt is growing as the use of credit cards become part of daily living, rather than as conveniences for long tern projects and purchases.

Credit use begins right out of high school when a person turns 18. College student mailboxes are stuffed full of credit card offers. Students with little or no knowledge of credit and finance receive two, three or more credit cards with limits exceeding a $1,000. It is here that borrowing becomes the norm.

Students have little money and their part-time jobs often don’t provide little more than minimum wage. It starts with putting $20 or $30 on the card for pizza.

Soon, they want a new video game system and the debt begins to slowly crawl up and they only make minimum payments. TheUnited Statesis an instant gratification society.

By the time students graduate from college, they already have thousands of dollars in debt. They usually also have student loans to pay back.

If they find jobs right out of college, then they continue putting money down on credit cards to pay down the balance, but the trend of casual borrowing is ingrained into them. Instead of seeking to clear debt, more and more people turn to balance transfer cards to see them through.

They borrow money to purchase their first cars. They borrow money for new homes. They borrow money for the most important purchases rather than taking the time to save.

With a higher income, credit card companies offer to increase credit limits to the point where each card has several thousand dollars available. Balance transfer cards are becoming more popular as people are looking to take advantage of interest free repayment periods. See here for more information on balance transfers.

Cards offer rewards and incentives to borrow more money. Everyday purchases, from groceries to gasoline for their cars, go onto credit cards. People overextend their paychecks by not budgeting correctly, or by spending money on unnecessary items, which leads to more borrowing.

During times when the economy is difficult and jobs become scarce, people resort to emergency borrowing just to keep the bills paid

This may mean higher interest rates and longer repayment periods. If they cannot pay the loans or credit cards, their credit limit sinks and they are forced into even higher interest rates and more debt.

We live in an electronic age and paper money is used less and less in favor of electronic debit and credit card purchases. Almost every department or grocery store has the ability to swipe cards for purchases and people can even rent movies using their credit or debit card.

The Internet has made the process of using credit cards for everyday purchases an everyday occurrence. People no longer have to drive long distances for products. They can simply press a button and purchase it with the click of a mouse.

This casual use of credit and borrowing for banal and ordinary items has created an epidemic of debt that can take years to eliminate.

In the end, people are left with a mountain of debt, a low credit score and few options, such as bankruptcy or credit counseling.

Many people that find themselves living paycheck to paycheck or facing large amounts of debt know that reducing their expenses can help them regain their financial footing, but most do not consider using an alternate income plan to boost their earnings.  The problem with many employment positions today is that the hours worked and the salaries paid are fixed, giving the employee no opportunity to make additional money when needed.  Having an alternate income plan allows a person to choose when and where they can make additional money when they want.

Options

There are many options available for earning money with an alternate income plan, so the choice of which revenue stream to use will depend mainly on the personal preferences of the person making the choice.  Some people have creative hobbies that they can turn into a revenue stream, such as knitting baby blankets, sewing home furnishings, or woodworking.  Others choose to do odd jobs around the neighborhood in their free time or baby-sit neighborhood children on weekends.  Freelancing or consulting is another good way to bring in additional revenue as long as you are not violating your employment agreement with your primary employer by doing so.

Review Your Talents, Finances, And Time Constraints

Depending on your current situation, not every idea for an alternate income may be viable.  It is important to capitalize on what you are good at and balance that with how much time and money you can afford to invest in making your ideas a reality.  You must remember that materials and equipment, if needed, can be upgraded later using the proceeds from previous success.  This way, you are not investing a lot of money in a plan that proves to be unprofitable.

The amount of time you are willing to spend earning additional income is another important consideration when creating an alternate income plan.  Think realistically about how much time you will be able to devote to the activity daily or weekly and whether you will need the activity to generate income immediately or whether you can afford to take the time to grow your own business.

Creating The Plan

Once you have narrowed your options down to between one and three activities, it is time to make a detailed plan of how you will accomplish your goal of creating an additional revenue stream.  Make a list of the item that you will need, tasks that you will need to accomplish to get started, and steps to increase your income over time.  Building an alternate income stream takes time and hard work, but the benefits of having an increased income is worth the effort.

If you are looking to buy a new or newer car and you need to finance part of all of the purchase, make sure that you do your homework ahead of time so that you don’t end up in an unnecessarily high interest loan.

Most automobile dealerships will be more than happy to provide you financing on a new or used car. In fact, many dealerships will try to push their financing on you or force you to finance the vehicle through them to get certain incentives. The reason that dealerships are so quick to provide you a loan, is that dealerships stand to gain far more on financing your vehicle than actually selling it to you. Loans from auto dealerships can come at much higher interest rates and less favorable terms than if you had gone down to your bank ahead of time.

If you do know that you want to finance a car, do some research and come up with a few different models and a price range for what you would like to finance. Take a trip down to your bank or credit union and speak with a banker. Tell them what you’re hoping to do and they should be able to give you a quote. If you’re dealing with one of the nation’s mega banks, it’s probably also worth talking to a community bank to see if you can get a better deal locally. Make sure that you have your financing ready to go before ever walking into a dealership.

When financing a car, you’ll have a number of different options to choose from on the rates and terms. Ultimately your goal should be to pay off your car loan as quickly and easily as possible. Don’t sign up for more than a 36-month loan. Individuals that get 60 month loans often find themselves in situations where they need to get rid of their car, but can’t because they owe more than what the car is actually worth to the bank. Have a nice down-payment on your vehicle and get as short of a term as you can afford and you won’t have to worry about being upside down on your vehicle. You can use tools like a Car Finance Calculator to determine how much you should borrow and what it will cost you to do so.

Ultimately, the best way to buy a car is to pay with cash, but not everyone can do that. If you do have to finance a car, borrow as little as possible and pay it off quickly.

It is very important to do some research and learn about student loans before signing up for one.  Knowing the definitions of the terms used and understanding the conditions of the loan will help you choose the correct loan for your needs.  Signing a long term financial product that you do not fully understand is a recipe for disaster.

A student loan is an expensive financial product.  Depending on the school the student is attending and the length of time they are in school, the eventual cost of the loan can be more than $30,000, not including interest charges and loan fees.  Many of the people searching for student loans do not have much financial knowledge because they are fresh out of high school or focused their employment in other areas to take care of their families.  Unfortunately, this means that many people make the wrong decisions about what student loan to sign up for through ignorance.

T he amount of money that will be needed to complete your chosen course of study should be the first thing considered when deciding on a student loan product.  You do not want to have multiple loans with different repayment dates because it increases the chances of triggering fees and penalties for missed payments.  The amount borrowed should take into consideration all of the expenses the borrower will have while they are pursuing higher education, including tuition, books, meals, housing, and incidentals, along with the amount of money contributed by family members or the student’s employment.

It is important to remember that every dollar borrowed using a student loan will incur interest, dramatically increasing the amount to be repaid to the lender.  Different lenders will offer different interest rates for the student loans they extend, so it may be beneficial to obtain several different quotes to see which lender has the best student loan rates.  A difference of a single percentage point in the interest rate for the loan can save you thousands of dollars over the life of the loan.

The repayment terms of the loan are something else that should be considered before deciding which lender to sign with.  Some student loans have generous repayment terms that give the student plenty of time after graduating to find a job before beginning to repay the loan.  Other loans have terms that dictate a different time period for repayment that may pressure the student into accepting any employment position offered so that they will not default on the loan.  Attempting to pay off the student loan as quickly as possible will save you money in interest charges and be reflected positively in your credit history.

Because peer to peer lending is such a new financial innovation, many people are not familiar with the lending process and are interested in learning how this process works.  There are several companies that offer peer to peer lending and the process has been streamlined to make it as simple as possible for borrowers to apply for peer to peer loans and for lenders to find appropriate peer to peer loan applications to finance.  The peer to peer lending process operates in the same way across nearly all peer to peer lending companies.

The first step is for the borrower to create their peer to peer loan profile.  Any person looking for peer to peer loan can create a peer to peer loan profile detailing the amount of peer to peer loan needed and the interest rate that they are willing to pay for the peer to peer loan.  During the process of creating the peer to peer loan profile, the borrower will have to disclose specific financial information that will be provided to the lenders evaluating the peer to peer loan profile for financing.

As soon as the peer to peer loan profile has been created, lenders can begin bidding to finance the peer to peer loan application.  The lender’s bid will include the percentage of the peer to peer loan that that they are willing to finance and the interest rate that they will accept for that financing.  If the peer to peer loan profile is popular and many lenders bid on it, the interest rate for the peer to peer loan will decrease as lenders are willing to accept lower interest rates for their participation.

The peer-to-peer lending process provides lenders with two methods of choosing which peer to peer loan applications to finance.  The first method is manual selection, which allows lenders to browse through individual profiles to find ones that they would be willing to finance.  The second method is automatic selection, which allows lenders to provide a specific set of criteria for acceptable borrowers, such as a minimum interest rate or maximum peer to peer loan amount, and the amount that they would like to lend to borrowers that match these criteria.  Peer to peer loan profiles that match the criteria chosen will be automatically chosen for financing up to the amount specified by the lender.

Once the bidding has been completed, the qualified bids are combined into a single peer to peer loan for the borrower.  The peer to peer loans are repaid monthly with each borrower making a single payment for each peer to peer loan.  Those payments are distributed among the lenders that provided financing for the peer to peer loan.  The payments for each of the peer to peer loans the lender is financing are deposited directly into the account of the lender.

There are several credit card mistakes that individuals typically make without thinking that can lower their credit score by a significant amount.  The mistakes may seem minor at the time, but their effects may be felt for years after the action has occurred.  There are many factors that can affect your credit score negatively, but avoiding the most common mistakes made with credit cards can help you keep your credit in good standing and your credit score high.

Missed or Late Payments

Because a nominal fee is charged to accounts when a payment is late or missed, many people believe that the charge is the only consequence of their actions and is such a small amount that the penalty is negligible.  Unfortunately, the penalty charge is only the beginning, as the company will report late or missed payments to the credit reporting bureaus for inclusion on the account holder’s credit report.  This will reduce the person’s credit score and alert other creditors that the person may be a credit risk.

Revealing Credit Card Information

Many people make the mistake of revealing their credit card information to parties that intend to steal the information and use it for criminal activities.  Preventing the theft of this information is as simple as remaining diligent about keeping the information secure and refusing to reveal credit card information to parties that you are unsure about.  Any legitimate company will have various payment methods available for making payments, including talking to a live representative of the company, and will never request personal or credit card information by email or by calling the person on the telephone.  If you receive a request by email, either call the company using a phone number listed on a previous receipt or on the company’s website, not the email received, to verify the company’s need for information.

Carrying A Credit Card Balance

Carrying a credit card balance exposed the cardholder to a number of negative possibilities, including increasing the amount paid to the company in interest each month and increasing the risk that the person will go over their credit limit and trigger penalties.  Paying off the entire balance of the credit card when the bill is received will eliminate these risks as all of the money borrowed from the credit card company has been paid back.  Paying off the balance of the credit card each month will also raise your credit score as your ‘available credit used’ ratio decreases.

There is no denying that times are tough for many households right now, with dimes and dollars in short supply. However, at what point should you admit enough is enough and consider consolidating your debts?

Many Americans are finding there is too much month and too little pay check and are having to sacrifice luxuries to make ends meet. But there comes a point when reorganising finances becomes necessary.

Before considering debt consolidation, there are several other steps which should be considered.

First of all, it is essential to work out a realistic monthly budget and calculate exactly how much cash there is available to spend on the bills.

Sitting down and calculating income and expenditure can give surprising results as many people rely on mental lists to pay bills.

If debts are on the brink of becoming a problem, non-essential spending must be scrapped. Whilst it may feel painful, it won’t last forever and will free up more cash to pay off bills.

Conversely, it is also important that all essential spending is budgeted for. For big expenses that only crop up occasionally, such as children’s shoes, average the cost out over the year and add a little to each month’s outgoings. This means the money left over can safely be allocated to debt payments.

For those with a reasonable credit record, switching credit card balances to either a low rate or 0% interest card will help make debts shrink more quickly. A good comparison website such as Moneysupermarket will help identify the lenders offering the best deals.

It can also be a good tactic to focus on one debt at a time rather than paying a little extra on all of them. Pick the debt with the highest interest rate and put all the extra cash on that bill. Getting rid of the debt with the highest interest rate first means less money will be wasted on interest payments in the longer term.

Unfortunately those with a less than perfect credit history may find it difficult to get an application approved, as many providers are still operating a cautious lending policy.

When all other alternatives have been exhausted, debt consolidation should be considered. It is far better to face facts sooner rather than later; the biggest mistake most people make is letting their problems drift on for too long.

There are several advantages to debt consolidation, including the peace of mind it can bring to know that payments have been reduced to an affordable level.

Many people who have accumulated large amounts of debt with several lenders find it is enormously helpful to only have one monthly payment to focus on, rather than trying to pay several bills each month.

In addition, having a larger amount of debt with one lender often means the borrower qualifies for a lower rate of interest, lowering the repayments even further.

On the flip side, if the length of the borrowing increases – which it probably will – even if the interest rate drops, because the term has extended, the total amount repayable may actually rise.

Finally, for those that do consolidate, ensure that any of the previous credit facilities are closed down. It is all too easy to end up dipping bck into an account that has been left open and before long, the debts are back to square one, but with a consolidation repayment on top.