Swipe the Card, but Responsibly!

Posted by abarnes on February 15, 2010

Learn the tricks of the trade before you start swiping your credit card. This is not inherent knowledge but you shall have to acquire the know-how. Plastic money is a blessing in disguise, however every person should be aware of how, when, where and why credit cards should be used. Responsible and sensible usage of cards shall inculcate healthy habits of spending and perhaps prevent splurging.

WHAT SHOULD NOT BE DONE

  • Don’t make use of credit cards for everyday or regular purchases. Clothes, food or gas should be bought with cash and not by using your card. Your card should not serve as a proxy for cash, if this is done, you would soon be digging into debt. The best option is to shell out cash or use your debit card to buy items and things of daily use.
  • Don’t make it a practice to make the minimum-payment only each month as this extends not only  the time period you would take to settle your debt but would also increase the total interest amount you would have to pay in the end. Therefore, for a cheaper and quicker settlement of debt-dues, you should try to pay off as much as possible each month.
  • Don’t use your card to make expensive and beyond-your reach purchases. Your “Buy-now-pay- later” approach might soon land you in debt. For anything that you do not have enough funds to buy now might still be unaffordable for you even later, hence refrain from buying that on credit.
  • Don’t close a card account unless you are aware how it could impact your credit. Avoid closing card accounts with outstanding balances or those that are a significant portion of your history of credit as doing so might damage the credit score.

 WHAT SHOULD BE DONE

  • Satiate your needs but you need not fulfill all your whims and fancies. Use the card to buy essentials but don’t indulge in luxuries. Just because you possess a credit card or two does not necessarily mean that you should pick up anything you fancy, use it only if you need to. Be a sensible spender, not a careless spendthrift.
  • Better late than never. Inform your creditor beforehand if you would be unable to pay your monthly amount on time. Do not make the mistake of keeping your creditor uninformed and then forgoing the monthly payment. Call the creditor, explain your condition, check for late fee waiver and most often than not, creditors will be willing to help you if they get to know about your dilemma.
  • The total debt amount you owe is a major part of consideration of your own credit score; hence limit yourself to within 30 percent of your prescribed credit limit. The lower your balances, the better your credit score would look. To add to that, lower balances can be easier to manage.
  • Bargain for a lower rate of interest if the current interest rate you are being charged is higher. The rate of interest determines the sum you would have to pay for a carry-forward balance on your card. Periodically, review the rate of interest being charged by your card company to ensure you have the best deal offered to you.
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Debt Relief Through Proper Budgeting

Posted by abarnes on January 28, 2010

In order for a budget to work well, and provide debt relief, it must be realistic.  This means you must determine realistic estimates for both income and expenses, realizing that there are often conflicting needs and wants within a family what what debt relief means to everyone, and that external factors can affect your debt relief budget also.  Some of the factors you need to consider when developing your budget for debt relief are as follows: 

  • Inflation and economic conditions (fluctuations in the consumer price index, interest rates, inflation, taxes)
  • Personal spending style (rate, patterns of spending, conflict of styles within the family)
  • Opportunity cost (the cost of giving up one option for another reflects personal tastes and preferences)  Revision of your original estimates is often necessary and can help in identifying your family’s priorities. 

Debt Relief Budget Suggestions

The following debt relief suggestions can help in getting the most for your family’s money:

  • Develop a debt relief type system for handling money which involves everyone’s cooperation.
  • Be realistic about needs, demands and what the family can afford.  Plan and purchase basics first.
  • Establish a debt relief mentality of planning ahead for long-range and short-term goals.  Be prepared to take advantage of special sale prices on planned purchases when they do occur (a savings of 25 percent or more may be realized).
  • Become informed about the your indivudal situation and monitor availability and prices of products, including seasonal values.
  • Practice sound shopping habits with stress on the idea of debt relief and try to get the best buy. Always “buy,” never “be sold” items. Make a habit of doing pre-shopping research.
  • Use and care for goods to get the maximum service with a minimum of repairs and maintenance costs.
  • Use ability, talent and time to perform as many services as possible at home rather than buying these services and you should see immediate help toward your debt relief plan.
  • Use credit wisely and keep credit costs to a minimum to achieve debt relief .
  • Keep accurate records and avoid overpayment of income taxes.
  • Don’t become addicted to such items as labels, prestige stores, specialty shops and gimmicks. Evaluate quality of product as well as price.
  • Take advantage of public parks, libraries and services and use when advantageous.
  • Be alert to fraud and exercise consumer rights and responsibilities in the selection, purchase and use of goods and services. It is estimated that the average consumer loses 5% of their income due to unwise consumer habits.
  • Study habits of family members. Identify and eliminate waste such as buying convenience or luxury items or overbuying in quantities. Avoid spending on impulse, misusing goods and discarding useful items.  Keep accurate records of how money is used. Periodically, maybe quarterly, evaluate your progress in using money, and make adjustments.
Posted in Debt Relief | Leave a comment

How To Get Debt Relief By Controlling Spending

Posted by lzazueta on January 23, 2010

If you’re looking for ways to get debt relief, money control is a great way to start. Typically, people who are in debt and struggling to keep their head above water don’t consider money control as way to get out of debt. However, it’s important to realize that you did not get into debt overnight and you will not get out of debt overnight.  Money control can be a great way to, over time, significantly reduce debt balances and regain control of your finances. To better control your money, and get debt relief, consider the flowing as a good start to get out of debt fast.

Steps to Control Money

To get the most from income a family needs to:

  • Set short- and long-term goals
  • Plan spending and saving
  • Build financial security
  • Avoid excessive consumption (including unnecessary tax and credit costs)
  • Reevaluate spending and saving as conditions change
  • Get Debt Relief

A money control system based, on a BUDGET or SPENDING PLAN, can provide debt relief and get you out of debt in a shorter time that trying to simply make minimum credit card payments alone. Such a plan can reduce or eliminate many money concerns and help a family meet their financial needs.

A plan for spending and saving will show not only the family’s projected income and expenditures, but should also be able to help reach goals, build financial security, avoid excessive consumption and eventually provide long-term debt relief.  The family will need to analyze the plan and perhaps look for alternative ways to increase income or decrease expenditures.

In addition, the family must protect what it does own by avoiding misuse of its property and making use of insurance to guard against the risk of loss.  The family can also increase total income by using personal resources such as time, ability and materials on hand instead of money whenever possible.  By continuing to evaluate, make necessary changes and follow the spending plan, a family will be better able to take charge of its money and get the most from it.

Spending Plan Requirements

How people spend money indicates their values and goals.  No one can tell a family how to spend its money or what their lifestyle should be.  Each family needs to decide how its income is allocated.

Family members must work on the plan as a team.  A great deal of discussion is necessary so that individual differences can be heard and common goals identified.  Each member must practice money control in order to stick to the plan.

Each person needs a personal allowance, beginning as early as age 5 or 6.  This amount is for personal spending and an individual may not need to account for it.  A spending plan does not need to be a straightjacket.

Finally, record keeping should be kept simple so that records are helpful and keeping them is not a burden.  The person who enjoys record-keeping the most should be in charge, but all members should know what records to keep track of and where the complete set of family records can be found at all times.

Defining Goals

Often MONEY INCOME is confused with REAL INCOME and PSYCHIC INCOME.  While money income is the actual income in dollars and cents, real income is the total goods and services that income will buy.  A wise family can use sound buying habits to achieve greater real income from its money income.  Psychic income, on the other hand is the amount of satisfaction one receives from purchased goods and services.  Ultimately, psychic income satisfaction is most important for families.  Only through a system of conscious goal setting and money management can this satisfaction be attained.

Effective money management depends on the way a family chooses to live and the goals it plans to achieve.  Think about where your family is today and where it wants to be five or ten years from now.  Make plans and set goals to attain these dreams.  It is extremely important to write down goals and make them specific.  As circumstances change, and as individuals and the family go through various stages of their life cycle, the family’s goals, timetable and spending plan will need to be revised.

The whole family should be a part of the budgeting process, since every decision either helps or hinders achievement of individual goals.  Take time for a family discussion of this important phase of the budgeting process.

The object of the plan is to help the family reach its goals, not to make the family follow confining rules.  Don’t get discouraged if the first plan doesn’t work.  Rework the plan to fit your family’s changing needs and desires.  Review or analyze it periodically to be sure that the spending plan continues to help the family manage the income effectively to reach its goals.

Long-term goals and objectives can give overall direction to your financial planning.  These goals are usually set for five to 10 years or more in the future.  Stock investments or a down payment on a house might be long-term goals.  Keep in mind that many factors will influence these plans.  Be willing to be flexible and make adjustments as needed.

Intermediate goals should be obtainable within one to three years.  A dream vacation or a new kitchen may be intermediate goals.  Short-term goals are those attainable in the next three months to one year, such as buying a new appliance or winter coats.

Both intermediate and short-term goals are often a part of a long-term goal (such as saving a portion of funds each year for college education).  For example, a long-term goal of saving for a college education may be broken down into annual goals of saving $500 for each child in a college fund.  When writing your intermediate and short-term goals be specific in dollar amounts so that you can easily measure your progress in achieving your long-term goal.

Posted in Debt Relief, Get Out of Debt | Leave a comment

Get-Out-of-Debt-Fast

Posted by lzazueta on January 16, 2010

When making a plan to get out of debt, the most important thing we, as consumers, can do is really understand that we have a debt problem in the first place. Once we realize that we really do suffer from debt problems, the means by which to get out will become clearer. For example, we can start by making a plan to get out of debt that begins by controlling our spending and making better financial decisions.  We also have to fully understand our cash flow situation and work with what we have available. A good place to start is by allowing at least an hour or two hour per week to deal with our finances. Realistically, it really should happen on the same day and time day each week to create a routine that we will stick with! Once we begin to realize the benefits of that extra saved money, we can develop a clear and consistent plan to get out of debt and implement and act upon it by paying down our smaller debts first and slowly moving towards the larger ones.

If we continue to carry credit card debt, it can often be overwhelming and create a need for debt relief. As mentioned earlier, getting out of debt can often be a process that is made easier by proper money management. Such plans can often help people feel more satisfied with their current income and get more accomplished with less money needed.  It is a known fact that we spend money every day and don’t even think about it.  We all do it and money leaves our pocket, wallet, or purse and is forgotten. We simply do not remember or register what we do with our funds and this creates debt problems and drives the need people for seeking debt relief.  For example, when you stopped at Starbucks this morning, how much was the coffee, the scone, the tax and tip? Is that money you could have used to pay down debt? While small by itself, it ads up and can make a real difference over time.

If we begin to track our spending, and see it in black and white, we can then begin to understand where the money goes and if our decision to spend the money in a certain way was in fact wise or not. Once you understand this, you can make significantly better decisions on how to spend, how to save and truly get out of debt.

Posted in Debt Relief, Get Out of Debt | Leave a comment

Get Out of Debt in 2010

Posted by abarnes on January 11, 2010

When it comes to getting out of debt as a New Year’s resolution, there are several ways to get started. Americans want to pay down their credit card debt in 2010; unfortunately, most people do not know where to begin or how to get started. If you find yourself struggling with credit card, but want to get out of debt consider the following from IAPDA certified Debt Arbitrator Alan Barnes.

Figure out exactly how much extra money you can put towards your highest interest rate credit card debt and begin to make that payment monthly instead of just paying the minimum credit card payment. 

  1. Continue to pay the minimum on your other debts until the one with the highest interest rate is paid off.
  2. After one debt is paid off, pay may begin to pay down the debt with the next highest interest rate and continue this process until you get out of debt.
  3. It is very important during this process to stop using credit cards and go to a strictly cash based system until you are out of debt.
  4. Once debt free, it is also a good idea to close all credit card accounts except one card — use that card as your only card and try to use it for emergencies only and make sure to pay it off monthly.

 Or you might consider this option too. 

  1. Get all your credit card debts together and place them in order from smallest to largest. Then, begin to pay down your smallest debt first. By using this method, you may feel like you are getting more accomplished when getting out of debt and keep you motivated in the process.
  2. Continue to pay the minimum on your other credit card debts as you normally would.  This will help keep your credit rating intact while you get out of debt and strengthen your financial situation.
  3. After one debt is paid off, pay of the next smallest and continue the process. This will help you achieve debt freedom in a more efficient manner that just making minimum payments.
  4. While working on the other credit card debts, stop using credit cards and go to a pay by cash system until you get out of debt or you are sure to run into other problems that will prolong the process.
  5. Once you get out of debt, remember to close all accounts except for the one as mentioned earlier — use that card as your only credit card and only spend what you can afford to pay off monthly.
Posted in Get Out of Debt | Leave a comment

University Study Shows Benefits of Debt Settlement

Posted by abarnes on January 11, 2010

A recent academic study, from Southern Methodist University, confirms what the debt settlement indsutry has been saying for years. Debt settlement is the best method for reducing consumers’ unsecured debt. The study by Southern Methodist University Associate Professor of Marketing Richard A. Briesch found that debt settlement programs, especially compared to credit counseling, “create the greatest consumer welfare of any approach.”

“Dr. Briesch’ research affirms solidly what we have already known, that debt settlement is a viable and appropriate method of helping today’s financially strapped consumers receive the much needed help they deserve,” Chris Kesterson, President of TASC, said.

Other key findings of the “Economic Factors and the Debt Management Industry” study include:

• Credit counseling fees and payments for a consumer account can exceed 29 percent of the consumer debt, levels that are “exorbitant”; and

• The debt settlement company has an increasingly higher value to customers with higher account balances and higher total debt.

The report can be found at www.consumercreditchoice.org.

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Looking to avoid bankruptcy

Posted by lzazueta on December 11, 2009

Do you have too many bills to pay and not enough money to pay them? Are you considering filing bankruptcy as a way to reach debt relief? It’s ok, there’s a light at the end of the tunnel. Filing is not your only choice; you have options if you are looking for a way to avoid bankruptcy.

The good news is that in many cases, bankruptcy can be avoided. Hundreds of thousands of people needlessly file bankruptcy each year. While bankruptcy may seem like the best solution to your problems, in many cases, it’s not. Make sure you properly look into all options prior to making the decision to file. The following is a link to information on some of those other debt relief options that may help in your decision making process.

Many people think that filing bankruptcy is the silver bullet that will fix all of their debt and credit related problems; however, filing bankruptcy is the worst thing you can do to your credit. Most lending institutions will consider your bankruptcy when evaluating you for a personal loan even after the bankruptcy has expired. Qualifying for a loan after filing for bankruptcy can be very difficult and could cost you considerably more than a person that has not filed for bankruptcy. It is understood that some situations will require you to file for bankruptcy. However, you should avoid bankruptcy if at all possible. Debt Regret can help eliminate most, if not all, of your unsecured debt so that you do not have to file for bankruptcy. If you require additional information on the subject of bankruptcy you may want to contact a bankruptcy attorney in your area.

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.

Chapter 7 bankruptcy is entitled Liquidation: In a Chapter 7 bankruptcy, a court-supervised procedure occurs during which a court-appointed trustee collects the assets of the debtor’s estate, converts them to cash for repayment, and makes all necessary distributions to the debtor’s creditors; however this is all done within the debtor’s right to retain certain exempt property. Traditionally, there is little or no nonexempt property in a chapter 7 bankruptcy.

Due to this fact, there may not be an actual liquidation of the debtor’s assets. In this case, it is called a “no-asset bankruptcy.” It is important to realize that a creditor that is trying to collect on an unsecured claim will only get a distribution from the bankruptcy estate if the case is an “asset bankruptcy” and the creditor can provide proof of their claim with the bankruptcy court. In almost all chapter 7 bankruptcies, the debtor will be grated a discharge that releases them of personal liability for most dischargeable debts. The entire process normally takes just a few months from the time the bankruptcy petition is filed. 

Chapter 13, bankruptcy is entitled Adjustment of Debts of an Individual with Regular Income: A chapter 13 bankruptcy is traditionally used for people who have a regular source of income or a full-time job. For many people, chapter 13 is preferable to chapter 7 because it allows the debtor to keep some assets. A chapter 13 bankruptcy allows the debtor to repay creditors over time.

This time traditionally varies from three to five years. This type of repayment proposal takes place at a confirmation hearing.  During this confirmation hearing, the court will either approve or disapprove the debtor’s repayment plan. This decision largely depends on whether the repayment plan meets the Bankruptcy Code’s requirements for confirmation. In a Chapter 13 bankruptcy the debtor is usually able to remain in control of their possession and property while making payments to creditors; however, payments are made via a court trustee. 

Unlike chapter 7 bankruptcy, the debtor does not receive an immediate discharge of their debts. Under chapter 13 bankruptcy, the debtor must complete the repayment plan before the discharge is granted; however, the debtor is protected from lawsuits, garnishments, and other creditor action while the plan is in effect.

It is important to remain cognizant of the fact that not all debts are discharged under bankruptcy. The debts that are able to be discharged will vary under each chapter of the Bankruptcy Code. However, the most common types of non-dischargeable debts are tax claims, debts that are not presented by the debtor to the court while filing for bankruptcy, debts for spousal or child support or alimony, debts to governmental units for fines and penalties owed to government entities, debts for personal injury caused by the debtor’s operation of a motor vehicle while driving intoxicated, debts for willful and malicious injuries to person or property, debts for government funded or guaranteed educational loans, and debts for certain condominium or cooperative housing fees. 

In order to file for bankruptcy, you must file a petition in federal bankruptcy court. You must file a statement of assets and liabilities as well as schedules listing of your creditors. Once you have finished filing bankruptcy, your creditors can no longer take action against you to collect discharged debts.

In chapter 13 bankruptcies, you may end up paying back 50% or more of your current debts. Additionally, if you miss a regularly scheduled payment at anytime during your chapter 13 bankruptcy repayment plan, you could end up in violation of the court and forced to repay all the debt!

One of the most difficult parts of bankruptcy is learning to live with the fact that filing bankruptcy limits your personal spending to items that the court considers absolutely necessary. In most cases, debtors do not complete their chapter 13 bankruptcy repayment plans. Most people filing chapter 13 bankruptcies think they will be able to complete their repayment plan; however, only about a third of them actually do. Additionally, chapter 7 bankruptcies may stay on your credit longer than a chapter 13 bankruptcy. This time ranges from 7-10 years for most people. Many people do not realize that if you own a home with a sizable amount of equity, have a fair amount of assets to protect, or have co-signers on a loan, you most likely will not be able to file chapter 7 bankruptcy under current law. Now that the new bankruptcy legislation has passed, it will be even more difficult to file for bankruptcy.

 Note: This should not be considered legal advice of any kind. All information on this site is for informational purposes only! If you need any type of legal advice or advocacy, you must contact a licensed attorney.

Posted in Avoid Bankruptcy | Leave a comment

Debt Settlement Works, Well

Posted by abarnes on November 11, 2009

As banks and credit card companies continue to suffer their worst financial loss in decades, debt settlement continues to demonstrate that they provide an invaluable service, not only to consumers but also to the creditors. According to TASC, the debt settlement industry has returned more than $2.2 billion in consumer debt last year alone! 

Due to the rising unemployment rate and a growing number of complaints against creditors and collectors, more and more consumers are seeking the services of good debt settlement companies, like those that are members of TASC.

TASC accredited debt settlement companies are some of the best debt negotiators in the industry.  To me, it does not make much sense that when the banks need money most and are depending on the American tax payers for a “bail-out”,  some creditors, like credit card companies, are turning their backs on hundreds of millions of dollars immediately available to them to settle these accounts. I guess they would rather take more from the consumer and just sue those that can’t pay when they have fallen on hard times.

According to TASC research, an estimated $500 million in settlement funds, saved by consumers, are available to credit card companies at this time; additionally, the credit card industry charge-off rate now exceeds 10 percent! 

Further, bankruptcy filings in the United States now exceed 6,000 per day, according to a report from Automated Access to Court Electronic Records. It is very clear that debt settlement works. Any reputable debt settlement program provides the consumer with a three-year plan to get out of debt without the 10-year stain of bankruptcy on their credit report. Consumers avoiding bankruptcy ultimately helps creditors as well.

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Debt Settlement or Debt Consolidation?

Posted by abarnes on October 24, 2009

Are you considering debt consolidation or debt settlement?

 If so, you should first consider professional debt settlement services first! Debt settlement involves negotiating with your creditors to settle your debt for amounts less than you currently owe on them! In many cases, debt settlement can provide you with an opportunity to pay off your debts quicker and provide you a way to save on the balances you already owe.

Posted in Debt Consolidation | Leave a comment

Wanting to avoid bankruptcy?

Posted by admin on September 9, 2009

Wanting to avoid bankruptcy? There are new bankruptcy laws you should know about before you even think about filing! Bankruptcy Law – Credit Counseling. 

With the new bankruptcy laws, no mater if you are thinking of filing Chapter 7 or Chapter 13 bankruptcy, you are required to attend credit counseling. This must be done before you file, and must be done before a court approved credit counseling center. You need to submit a certificate or in some cases, repayment plans to the courts, as proof that you have met the requirements under the new bankruptcy law.  After filing bankruptcy, you will then be required to submit another certificate showing that you have attended another credit counseling course, learning to manage your personal finances. 

New Bankruptcy Law – Chapter 7 Filings:  The requirements for filing a Chapter 7 bankruptcy have also changed. Now, due to the changes in the laws, you have to prove your income. If you have a higher income than stated by the median income within your state, you will likely have to file a Chapter 13 bankruptcy instead of a Chapter 7.  With chapter 7 the bankruptcy trustee gathers and sells the debtor’s nonexempt assets and uses the proceeds to pay the creditors. Part of the debtor’s property may be subject to liens and mortgages that pledge the property to other creditors. In addition, the Bankruptcy Code will allow the debtor to keep certain “exempt” property; but a trustee will liquidate the debtor’s remaining assets. Potential debtors should realize that the filing chapter 7 may result in the loss of property. 

Bankruptcy Law – Chapter 13:   With the new bill and filing chapter 13 your “reasonable living standards” is no longer determined by a judge on a case by case basis, there is now a National Standard determined by the IRS for all debtors. You will also be required to take what is called a means test. This is used to determine rather you are capable of making repayments under a Chapter 13 repayment plan bankruptcy So basically you are now on a long payment plan paying back all your debt. A lot more than what you would be paying if you chose another form of debt relief If your thinking of filing chapter 13 or chapter 7 you can pretty much say good bye to cable TV, cell phones, movies, or anything else that are not with in “reasonable living standard”. 

The tough new bankruptcy law will have Americans do away with the court systems of filing bankruptcy and turn to settling their debt. Banks started settling for less then the original balances because it is beneficial to them for the following reasons.  1.) Lump-sum of 30-50% today is far better than the same amount collected over 3 to 5 years. 2.) Under Chapter 13, it will take the creditors 3 to 5 years to recover that 30-50%. 

It is important to understand the new bankruptcy laws and how they would affect you before you even think about filing bankruptcy in any state. Make sure you do your research and know what is best for you before you decide on how to eliminate your debt. 

Note: This is not to be considered legal advice of any kind. If you are interested in filing bankruptcy, you should consult with a licensed attorney in your state.

Posted in Avoid Bankruptcy | Leave a comment
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