www.1001TopWords.com |
The 7 Secrets to Getting?and Staying?Out of Debt
As vice president of the American Credit Foundation, a nonprofit organization that helps individuals and families manage their debt, Mike Peterson knows firsthand how financial problems can wreak havoc in one's life. Each day, counselors at the Midvale, Utah-based foundation help desperate clients dig themselves out from under piles of unpaid bills, stern notices from collection agencies and ominous foreclosure threats. So, exactly what does it take to get-and stay-out of debt? Here are 7 secrets that will help set you on the right path. 1. Cut Back on Credit Cards Banks love to send offers for new credit cards to consumers, and mailboxes overflow with low-interest-even no-interest-"unbeatable deals." This doesn't mean you should apply for them and risk running up large bills. "Ideally, one should have no more than two or three credit cards," Peterson says. "I would recommend a Visa or MasterCard, followed by an American Express card. Having two or three different cards will allow you more flexibility when utilizing credit, as some companies do not accept one or the other." 2. Understand the Consequences of Breaking Rule #1 Even if you have excellent credit and zero debt, applying for too many credit cards can damage your credit rating. "Generally, inquiries for new credit can affect your credit report for up to two years," Peterson says. "Having too many credit cards-whether carrying balances or just high amounts of available credit-can negatively impact your credit score. Banks will look at your credit based on what you currently owe and also what ability you have to immediately incur additional debt." 3. Stop the Spending To minimize or avoid debt, monitor your monthly expenses-and halt spending when your budget starts to get tight. "An additional reason to limit the number of credit cards you have is to prevent the possibility of not being able to keep track of all of the expenses you have incurred, which may make it difficult or impossible to pay them off each month," Peterson says. If you reach that point, he has one simple rule: "No more charging." "Commit now to discontinue the use of credit cards," he says. "In fact, cut up the cards you have, call the companies, and close the accounts. If you must have a credit card for work, try a debit card. These are widely accepted, and the funds are pulled directly from your checking account." Don't apply for another credit card until you can pay off all balances due and be 100% debt-free. 4. Pay More Than You Owe Once you fully understand the monthly minimums you owe on each debt, add 5% or 10% to your total payment, if possible. "The addition is not mandatory," Peterson says, "but it will dramatically improve the success of your debt-reduction program." 5. Stay the Course Continue to pay 5% to 10% more on each debt until all debts are completely paid off. Even if your minimum payment requirements decrease as your debt diminishes, keep making the same payment, Peterson urges. "And if one credit card is finally paid off, make the same total payment each month," he says. "Just apply the extra funds to one of the other debts." 6. Do the Math Before you dig in your heels and say, "I just can't do this," it's worthwhile to see how Peterson's advice plays out in real dollars. "If you owe $2,000 on a credit card with a 21% interest rate, and you make only the minimum payment each month, you will owe on this account for approximately 19 years-and pay a total of $6,725.64 in principal and interest," he says. "The steps I've already discussed will help you pay off the debt in a fraction of the time. The emotional commitment to make this plan work may not be all that easy, but using this program-even without the additional 5% or 10%-will allow you to pay off the debt in about 8.5 years, and you will save approximately $2,387 in interest." 7. Turn the Tables-and Start Earning Money If you pay off your $2,000 debt in 8.5 years (versus 19 years of minimum payments), you will have 10.5 years to place that monthly minimum payment in an interest-bearing bank account, retirement account or other investment. "Interest is a magical tool," Peterson says. "Creditors use it to their advantage all the time. It can also work in your favor if properly implemented into the right program. If the steps mentioned above are taken, it won't be long before interest is working for you, instead of against you." ----- Australian Debt Reduction offers all Australian consumers free debt consultations to assist them in getting back on top of their debt. They explain debt consolidation in simple terms and if you have over $4,000 in debt there are methods available to the Australian public you may not have heard of to help limit the amount of interest paid and rapidly reduce your debt. Visit Australian Debt Reduction at http://www.australian-debt-reduction.com.au or contact them directly on 1300 306 272
|
RELATED ARTICLES
Do It Yourself Debt Relief With mounting bills and unforeseen hardships, you may be considering some form of debt relief. There are many options to help you, but the best may actually be you helping yourself. Here are some suggestions for starting debt relief and becoming more solvent. Turning Bad Debts into Good Debts through Investing Fundamentals If you've ever earned enough money to put some aside, like most people you've probably invested it with an eye toward security ? since, perhaps, you can't imagine yourself ever getting rich. Save Money When Going Out It seems as though whenever we go out for the night, it costs much more than we originally intended to spend. Having a 'night on the town' shouldn't cost you a whole weeks salary. Reduce Your Debt With These 5 Tips It's never pleasant to realize that you're in financial hot water, but pretending the situation doesn't exist is NEVER the way to deal with the problem. If you're having trouble meeting monthly payments, find yourself borrowing or using credit cards to meet daily expenses, or have one or more of your credit accounts turned over to a collection agency, it's time for you to get proactive and bring your debts back under control. Below you'll find five ways to reduce your debt. Some take time, all take some level of commitment and effort - but it's worth putting in the time to start cleaning up your debt situation. Debt Settlement -- Why the Critics Are Wrong After October 17, 2005, a lot of people are going to become interested in debt settlement as an alternative to bankruptcy. That's the date the new bankruptcy law goes into effect, and it means a rude awakening for many consumers seeking a fresh start in bankruptcy court. What Are The Benefits and Consequences Of Getting Rid Of Debt The Easy Way We have all experienced getting so far in debt we don't know how we're going to get out. There are many different options that you have for quick relief with benefits and consequences. You can look at the overview and see which option is the best option for you. Bankruptcy: What You Need to Know Personal bankruptcy is a legal way to give people with overwhelming debt a fresh financial start. Many people do not realize that there are five types of bankruptcy options available under the U.S. Bankruptcy Code; however, for most consumers there are really only two viable options; Chapter 7 and Chapter 13 bankruptcy. Are You Beating Up On Yourself About Debt? When you hear the word "debt", whats the first thought or feeling that comes to you? For most people debt is "bad" or it becomes the "enemy" and is something that should be avoided like the plague. What Is A Chapter 13 Bankruptcy? Many consumers that are bogged down in debt frequently turn to bankruptcy as a form of restoring their financial status back to a zero balance. Unfortunately many of these same consumers are confused when it comes to the difference between a Chapter 13 bankruptcy and a Chapter 7 bankruptcy. This quick article will explain what a Chapter 13 bankruptcy actually is and what it does for a consumer that files this form of debt relief. Bankruptcy - The Easy Option? Incredibly, since the changes in the bankruptcy law in April 2004, debtors are more likely to petition for their own bankruptcy rather than their creditors! You would think that most people who have been threatened with the prospect of being made Bankrupt would be riddled with fear of the possibility. It is more widely referred to as the "Big B" rather than the dreaded word itself. However, is this a thing of the past? Since the changes in The Enterprise Act 2002 took place in April 2004 it would appear a lot more people are inclined to petition for their own bankruptcy as a solution to their debt problems. Mandatory Credit Counseling for Those Considering Bankruptcy Most Americans are aware of the sweeping changes in U.S. bankruptcy law that were made by Congress recently. These changes, strongly supported by the credit card industry, were designed to make it more difficult for Americans to file for bankruptcy under Chapter 7 of the Federal bankruptcy code. Chapter 7 allows consumers to essentially have all of their debts wiped away by the court. While many people will still be able to file under Chapter 7, many more will have to file under Chapter 13, which requires the establishment of a repayment plan. A less publicized provision of the bankruptcy bill is the one that requires debtors who are considering filing for bankruptcy to first undergo credit counseling. What does this mean for consumers? Bankruptcy - Your Fresh Start Most American consumers are living too close to the edge. They are carrying too much credit card and mortgage debt and have too little in the way of savings. When the inevitable unexpected crisis comes along, they have little left to handle it and quickly slip into a critical financial state. Debt Elimination If you're reading this article right now I'm sure that you are looking for a debt elimination system that will help you get out from under you personal mountain of debt. Hopefully you're not looking for the magic pill that will suddenly dissolve your debt problem. I'm afraid that I have to tell you that there is no magic debt elimination system. Tips For Saving Money Still living from pay to pay? Or envying those great wealth accumulators and wondering how they did it? Every month you make a resolution of saving some dollars from your paycheck, but only end up breaking it. Looking for some magic formula for saving money? Bankruptcy Reform: Designed to Protect Big Business Who will benefit from the new bankruptcy reform laws? The financial services industry and other big business groups, that's who. How To Avoid Medical Collections With medical collections costing doctors millions upon millions of dollars in unpaid bills and collection fees, many people have just one question: Who are these people who are trying to stiff the doctors who delivered them from great physical pain (or the flu, hypochondria, not-so-white-teeth, or a nose that didn't look enough like Brad Pitt's)? Tips To Take Control Of Debt Collection Yes, debt collection tips can help. You may think you have no power when the debt collector comes calling, but think again! Creditors don't like losing out on the ability to collect money owed them. And most creditors will take steps to settle an unsecured debt to collect some money as opposed to no money. Creating A Realistic Budget Budgeting -- ooh, what a scary word! If you want to frighten someone whose finances are out of control, suggest that they tally up their expenses on a piece of paper. We all understand the value of such an exercise, but when it comes to the practicality of putting a budget together, we get cold feet. Budgeting doesn't have to be so painful, when you have a systematic series of steps to follow. The Last Debt Solution Should Be Bankruptcy A debt solution like bankruptcy should really only be used as a last possible solution. The problem with this solution of debt problems is that it includes a lot more than simply eliminating debt. When someone declares them self bankrupted, all debt collection actions against that person are prevented. The court grants an "automatic stay", which - with a few exceptions means that creditors cannot come after the money owed to them. Should You Join a CCCS - Consumer Credit Counseling Service for Debt Relief and Financial Freedom? Do You Need to Join a CCCS - Consumer Credit Counseling Service? |
© Athifea Distribution LLC - 2013 |