debt relief

Reasons Why You Must Care For Your Credit Score

June 24, 2013 by arizona

Some people usually have two opinions about credit score monitoring. One of them is that it is unnecessary. They think that monitoring how well you take care of debt is unimportant if you are paying off what you owe regularly. There are others who think that it is ridiculous to take care of it as well – especially since raising one’s score involves putting yourself in debt.

If you are one of the people who believe the issues mentioned above, here are some of the things that you must consider.

First of all, your credit score will play a huge role in any financial assistance that you plan to apply for in the future. If you wish to buy a home or put up your own business, you need to start taking care of your credit score now. Lenders and most banking institutions look at your credit report to see your payment behavior and if you can still accommodate the debt that you are about to loan. A bad credit score will not keep you from being approved of the loan but it can spell the difference between a 5% and 15% interest. If you have a low credit score, that makes you a high risk borrower. Lenders will have to take steps to protect their loan investment and that is usually in the form of a high interest rate. Think about the savings that you will get if you only took time to take care of your credit score.

Prospect employers will also look at your score before they hire you. It may not be the main reason for hiring you but when it comes to choosing between two applicants with the same qualifications, they will definitely go for the one with the better score.

Landlords also look at the credit report of applying tenants. It can cause you a home in a safe neighborhood if you have a bad score. You can end up in a not so reputable place where your security and that of your family can be an issue. If you want to live in a good and safe neighborhood, you have to take better care of your score.

Also, you can save yourself from the destructive effects of identity theft. Your credit report can help you spot unauthorized loans under your name. You can report it immediately to the account involved. Not doing so could end up forcing you to pay for a debt that someone else benefitted from.

If you are in debt and you are worried about the effects of debt relief on your score, know that there are options that will not harm it. Debt consolidation is a great option that will keep your score from being damaged. It hardly has an effect and in fact, it will help you raise your score. This type of debt relief restructures your payment scheme so that it becomes easier to accomplish. Since there is no debt reduction, it should not be reflected in your credit report. All it will register is the fact that you are now paying your dues more responsibly.

Debt Consolidation Loan Checklist To Avoid The Pitfalls

June 20, 2013 by arizona

If you want to use debt consolidation loan as a way out of your debt situation, you have to make sure you qualify for it. While it is very tempting to run away from your debts, you need to face the music and own up to the financial mess that you created. This debt relief option is effective but to know if it is the right solution for your problems, here are a couple of things that you may want to look into.

First of all, you have to qualify for a loan that is big enough to cover all, if not most of your debts. The idea is to use the new loan to payoff your other debts so you can enjoy a single payment every month. If you know that you will only qualify for a loan that is enough to pay only 2 or three of your 7 debts, then you may want to consider another solution for your debts.

The second item in your checklist is the interest rate. You want to aim for a lower interest rate than your current because you are after a lower monthly payment. If it ends up to be bigger like payday loans, or something similar, you could end up making your debts worse.

As mentioned, it should decrease your monthly contribution. This happens because you have stretched your payments over a much longer term. If this is not achieved by the loan that you are applying to, then you should opt for a different debt relief program.

The fourth in the checklist is your ability to pay the monthly dues in the next 3 to 5 years. In this debt relief option, your debts are not reduced. It is only restructured so it is easier to pay off. Because of that, you need to secure your payments by creating back up plans. This is more difficult to guarantee which is why you are highly encouraged to set up supplemental income sources. With the ease brought about by the single payments, you should be able to concentrate on growing your income by either taking in more work or setting up a personal business.

These four items in your checklist must be met to ensure that you solve your debt problems. If you want to use this option, be very careful about racking up more debt. Once you have paid off what you owe your credit cards, for instance, you might be tempted to use them again. Never forget that debt consolidation loan is only about restructuring your debts, not paying it off completely. You still have to do that so make sure you do not add to what you owe.

Another part of what you should do is to accept that something has to change in your life. Most of the time, debt is a result of overspending. You had been spending more than what you earn. You need to change this and start living within your means.

What You Need To Know About Refinancing Your Debts

June 16, 2013 by arizona

Refinancing your debts is the best way that you can consolidate both your secure and unsecured loans. If you are burdened with mortgage, credit card, medical bills, utility dues and other types of debt, this is something that you can consider. You refinance your mortgage – meaning, you put your home on the line so you can adapt a lower interest rate, longer payment term and possibly have extra to pay off your other debts.

While that may seem appealing, you need to understand what refinancing is all about before you choose it as your debt solution. Like other debt relief programs, this can work perfectly for some while it can lead to disaster for other financial situations.

First of all, you have to understand why you are refinancing your mortgage. If you want a solution that will actively take on your debt payments, then this is not your solution. This only restructures your debt and does not really pay it off.

Most of the time, your goal in refinancing should be to consolidate your debts to allow you to make better progress in your payments. The single payment scheme will allow you to put in less effort in monitoring your debt and more into growing your income.

Another goal of refinancing is to get a lower interest rate. This happens because it extends your payment term to 15 or 30 years. If you do not like a term that long, then refinancing is not for you as well. Debt consolidation loans may prove to be the better option as it usually takes only 5 years. But even if the term is very long in refinancing, you can really benefit from the low interest.

This type of debt solution will allow you to make lower monthly payments and the low interest may be appealing for those who want to solve high interest credit card debt. But remember, you could end up paying more in interest. You are only relieving yourself of high monthly payments but if you total it, you actually increased your overall debt payment.

The key to making this successful is to do it only once. Believe it or not, people sometimes refinance several times. This happens because they do not have the discipline to correct past mistakes. The single payment can be deceiving in the sense that it gives consumers the false sense of security and thus prompts them to reuse the credit cards that were paid off by the refinancing. This puts them in a tight spot once more and prompts them to do another refinancing. It becomes a cycle that you need to be careful of. Do it once and make sure you learn your lesson so you never incur more debt.

Refinancing a mortgage will entail costs and you have to think about that. You need to pay off closing costs for you to complete your refinancing. Before the lender approves of the loan, they need to have the home appraised and that involves costs that you will shoulder.

Bottom line is this – make sure you are going through refinancing with the right intentions and with a clear and solid plan to pay it off. Check out your old loan and see if there are prepayment penalties. Do all the appropriate calculations to make sure that it will do you well financially to go for this type of debt relief option. See if it will help you achieve your financial goals – not just making your life easier in terms of debt payments.

Best Way To Battle Debt Stress Through Debt Management

June 12, 2013 by arizona

Debt stress in a real problem for a lot of consumers. This is when you are overcome with the feeling of helplessness and panic because you feel like your debts are something that you can never get over. You feel distraught and depressed because you know that your income is not enough to support the payments that you have to make every month.

Debt relief is composed of a lot of efforts and one of them includes your attitude towards the payment program that you will adapt. You need to choose a plan that will allow you to override the stress that you are feeling so that you can concentrate on growing your income for your payment obligations.

One way to effectively deal with debt stress is through debt management. This program will allow you to enjoy the expertise of a debt counselor. They will help you create a debt management plan that will restructure your debt payments so it complements your financial capabilities. It will work around the monthly amount that you can afford to send towards your debts. Then, they will stretch your balance to meet your payment capabilities. The smaller your payments, the longer you have to pay off your debts – but it commonly does not go beyond 5 years.

The lower payments will help reduce your stress because you get to free up some funds to loosen the restriction on your budget. Either that or you can put it away towards your savings account.

The counselor will take over the negotiations with the creditor at this point. They will be the one to show the plan to the creditor for approval. Once they get the approval, all you have to do is to send the total payment to the counselor on a monthly basis. They will take charge in disbursing the fund to the various creditors that you enrolled in the program.

The single monthly payment will keep things easier for you and thus relieve some of the stress you are feeling. You can then concentrate on growing your income so that you have more money to allot towards your payments or to put away in your savings.

Your ability to save is probably one of the important habits that you have to develop to truly get yourself out of debt. Your reserve fund will help you take care of any emergency situation that needs financing. Not only that, it will also help you in case your main source of income is suddenly stopped.

The great thing about the lower payments in debt management is you can grow your savings faster. It can serve as a security net and will help you feel more at ease. You won’t have to be afraid of the circumstances that your future will bring because monetary wise, you know that you and your family will be well provided for.

Tips To Grow Your Debt Payment Fund For Balance Transfer

June 8, 2013 by arizona

When you are in debt, one of the things that you have to attend to is growing your debt payment fund. If you want to get out of debt immediately, you want to grow your means to pay it off. The bigger the amount that you can contribute every month, the faster you can achieve debt freedom. This particular act is applicable across all debt relief options – even for balance transfer.

This type of debt consolidation involves getting a new card that will provide a zero interest promo period. This timeframe usually lasts between 6 months to a year. During this time, every payment made will be towards the principal amount – no interest. Of course, there is a balance transfer fee – which is about 3% of the debt that will be transferred. But beyond that, all other payments will be deducted from the principal balance. This will allow you to make a significant cut on your debt – even if it is just for a year.

There are many ways to grow one’s debt payment fund. Let us discuss them one by one.

The fastest way to increase this fund is to cut back on your spending. Start by making a budget and identifying where all your money goes to. Is it going to priority expenses or are you wasting it away on impulsive spending? Make sure that your money goes just where you intend it to. Look at the expenses that you can cut back on. If you have a neighbor who works near your office, why not carpool with them? Or if the mass transit is not much of a hassle, it may be best to ditch your car and utilize the public transport system. Simple changes like cooking instead of eating out will give you savings that when combined, will end up being a significant amount.

While cutting back on your spending will also increase your payments, that will be limited. If you want a bigger increase in your monthly payments, that should involve growing your income. There are many ways to do this but you should try to choose one that will require less effort – at least if your day job is stressful as it is.

A lot of people use their hobbies to earn extra so this may be a path that you can follow. If you can cook really well, why not offer catering services for small gatherings? Or you can bake batches of cookies and other pastries to sell to your friends and colleagues. If there is a weekend market, you can also set up a table to sell your goodies. The same can be applied to carpentry or arts and crafts skills. If you love gardening, offer to take care of your neighbor’s front and back yards. You can do this every weekend.

There are also several online jobs that you can apply to. Freelancing is a strong industry over the Internet. Writing, web development, graphic arts – these are only among the few that you can apply for.

Check out which solution works best for you. If you are intent on using balance transfer, you want to take advantage of that zero interest period. Grow your debt payments and make bigger contributions on your debt. That way, when the promo is over and the high interest kicks back in, you already made a significant reduction on what you owe.

Aim For Financial Stability With Debt Consolidation

June 3, 2013 by arizona

Financial independence, while a good goal, is sometimes not enough. If you want to recover from your debt situation, you may want to opt for financial stability instead. You can easily confuse the two but let us define them for you.

Financial independence refers to your ability to supply your current needs without putting yourself in debt. Financial stability gives you the same but it also goes further – it allows you to pay for unexpected expenses that are beyond your usual budget.

Financial stability can be achieved by one thing: savings. This is the best way for you to prepare for any incident is by growing your emergency or reserve fund. That way, you do not have to think about where you will get the extra amount that you have to raise immediately. You can simply dip into your savings without compromising your usual expenses or borrowing money just to finance that emergency need.

This is easy if you have enough money to save. But how do you aim for financial stability when you are in the midst of a debt crisis? Surely you have to prioritize your debt payments right? While your debts may be a priority, you have to realize that your savings should be prioritized as well. It will help you keep up with debt payments even when an emergency situation arises. But how do can you afford both?

This is when debt consolidation becomes the perfect debt solution. Let us identify the reasons one by one.

First of all, debt consolidation allows you to make lower monthly payments. Although the debt balance is not reduced, the payment term is extended over a longer period and that lowers the contribution every month. This will free up some funds that can be used to grow your savings.

Another reason why debt consolidation can help you achieve financial stability is through the easy payment method that it lays out for you. All debt consolidation types will make it easier to pay off debts because of the single payment scheme. This relieves you from exerting too much effort in monitoring debts and will also minimize late payments. Because of this, you get to focus more on growing your income – which in effect, will help you increase the amount that you can put into your savings.

Lastly, you can benefit from the personal finance education that debt consolidation will teach you – at least if you opted for debt management. To be financially stable, you need to practice various financial management skills and be consistent with it. These include creating a budget and making sure that you will stick to it. Smart spending is also something that you need to implement so that you will not waste your money.

What you have to remember is that financial stability cannot happen overnight. You have to realize that it takes time and you have to be patient in sticking to your goals. And once you have achieved both debt freedom and financial stability, make sure that you will never leave that financial state ever again.

How To Make Your Get Out Of Debt Plan Easier

June 1, 2013 by arizona

Debt is a tough situation to be in. You experience stressful nights and frustration because you cannot spend your money the way you want it to. That is because you have to prioritize your debt payments. The repercussions of ignoring your debt is too great .

But just as it is tough to be in debt, getting out of it is tougher. You have to exert self control, determination and discipline to be successful. The key to achieve debt freedom is to approach your debt relief with a plan. If you just throw caution in the wind and dive headlong into debt payments, you could find yourself losing your way as you progress.

Of course, making a plan is for nothing if you cannot follow it. Given that, here are a few tips to make sure that your debt out of debt plan is easier.

First, make a realistic plan. This can be achieved by basing it on your budget. Consider your income and the various expenses that you have when you create your budget plan. It is very important that you choose the priority expenses that you will pay off first and eliminate those that are not really necessary. The goal here is to know how much you can afford to set aside as your debt payment fund. While cutting back on your expenses is important, you should make sure that you will not overdo it. Try not to make your life too miserable.

Which leads us to the next tip in making your debt free quest motivating: do not completely remove fun activities. If you know that you need to spend on some fun activities, allow yourself to indulge and put that in your budget. Just shift your money around so you can afford it. There are many ways to do this. If you love the outdoors, look for cost efficient ways to enjoy that. If you want to hang out with friends, organize a backyard barbeque on weekends or a movie marathon day and have everyone chip in on the food. You get to spend time with them without the usual expense that it will cost to dine in a fancy restaurant.

Setting up milestones will also motivate you to keep on edging forward. Small successes provide encouragement for anyone going through debt relief. Reward yourself every now and then by marking significant achievements like a certain percentage paid off from your debt. These will help you keep your eye on the biggest prize – debt freedom.

Growing your income is also an effective way of implementing your plan. Of course, you want to find a way to earn without burning yourself out after your day job. Using your hobby to earn extra is a good way to go. Doing something you love will not really feel like work at all. There are also online jobs that you can pursue – that way you can work anywhere. Finding a passive income business will also allow you to bring in more money without exerting too much effort to do so.

By growing your income, you get to increase your debt payments and thus get out of debt faster. It will also allow you to put in money in your savings so you can make your financial security net stronger. The whole point of this is to motivate yourself so you are encouraged to complete your plan.

If things get too tough, use debt management as your way out of debt. You will be helped by a debt counselor who will assist you throughout the whole process.

What Makes Debt Consolidation The Perfect Solution For Credit Card Debt

May 21, 2013 by arizona

There are many considerations to determine if a particular debt relief program is perfect for a debt situation. It all depends on your financial capabilities in terms of debt payments and also what you are willing to sacrifice to reach your financial goals.

Debt consolidation can be the perfect debt solution for people with credit card debt – especially for those who are concerned about their credit scores. This has the least effect on your credit history and if there will be a decrease, it is only minimal and you can easily recover from it.

In this type of debt relief, the consumer will enjoy a single payment scheme that is often lower than your current credit card minimum payment. This happens because the current debt amount of the consumer will be distributed over a longer payment period. This will allow people to avoid late penalty fees even when they can only afford to pay lower than the minimum requirement.

There is also the high possibility of a lowered interest rate – which is another reason why debt consolidation is a perfect debt relief option. The high interest of credit cards make it a very hard debt to get out of. If you really want to solve this problem, you may want to concentrate on the interest. After all, you are wasting money by paying it off. So the less you pay, the more savings you will get.

However, getting a low interest rate is not a guarantee and will depend on the specific program that you will use as a solution. With debt consolidation loan, this happens by choosing a low interest loan. The requirement to get approval for this is either a high credit score or a personal collateral that is valuable enough to guarantee the loan amount that you will take.

If you choose debt management, however, this is not a guarantee because it will depend on how the debt counselor will get on the good side of the creditor. In some cases, the creditor will agree to lower your interest rate. In most instances, they will only agree if you manage to make your payment current. But nevertheless, the possibility is still there.

Another reason why this debt solution is perfect for credit card debt is because it creates a single payment scheme for the consumer. Instead of juggling and trying to keep up with multiple accounts that you have to pay for, you get to combine them. With debt consolidation loan, you pay off the other debts with the loan you applied for and thus be left with only one debt to pay for. In debt management, you will just send the total monthly payment to the debt counselor who will distribute the funds to your creditors – according to the debt management plan that you created beforehand.

While debt consolidation is without a doubt effective, you need to realize that it all relies on your own ability to stay out of debt. Practice proper financial management so you can conquer your debt problem by never being in the same financial situation again.

What Is The Difference Between Debt Consolidation Loans And Debt Settlement?

May 13, 2013 by arizona

Over the course of making it through life, we have decision points that either makes or breaks us. It could be about educational decisions, career and the like. They each have their own take on how well we live our life but none is as unique as the financial decisions we make. These has the lingering effects that we feel well into the twilight of our lives. And getting on the wrong end of those financial decisions could mean debt.

Debt can come in many forms just as getting rid of it has many options to choose from. The two most common alternatives are debt settlement and debt consolidation and choosing one from the other has different sets of pros and cons. It all depends on your current financial status and need.

Debt consolidation loans require getting financial aid so that you can pay off all your other debts. The whole idea is to combine your debts by paying them all off and maintaining the one loan that you used to pay. The end result will be a single and more manageable payment instead of multiple accounts. Another target is a lower monthly payment. There are personal loans that last for 5 years, this allowing you to distribute your balance over a longer payment period. It will result in a lower monthly payment. That lowered payment is also a result of low interest rates. Getting a low interest loan is important to make this happen. That can be accomplished if you have a good credit score or you have a collateral. But if not, then you may have to consider your other options.

Getting a loan to combine your debts also require you to have a steady income. You are not reducing your debt balance. Despite the lower monthly contribution, you will still end up paying for everything that you owe. If you cannot afford that, then your obvious option is debt settlement.

As a debt relief option, debt settlement is a great option because it aim for the reduction of your balance. This is done through debt negotiation. You can do it on your own or you can hire a professional to help you out. The whole process begins by defaulting on your payments deliberately. You want to convince your creditor that you are in a financial crisis and not paying your debts is one of the effective ways to do that. Instead of sending payments, you will put that amount aside for your settlement fund. You will then concentrate your efforts on convincing your creditor that you cannot meet payments anymore. You will haggle to pay pennies for every dollar that you owe. When you reach an agreement, you will pay only a percentage of your debt and have the rest of it forgiven.

As appealing as the whole reduction may sound, you have to remember that defaulting on payments will decrease your credit score significantly. If you do not feel comfortable with this and you have a steady income anyway, you can always opt for debt consolidation loans instead.

What’s Next After Your Debt Consolidation Loan Is Approved

April 29, 2013 by arizona

Debt consolidation loans may be an effective debt solution but you need to realize that it has a high fall out rate. That does not mean to say the whole concept is flawed. There have been success stories but unfortunately, these do not make up the majority.

If you think about it, the reason why debt consolidation loans seem to be unable to help with debt is because of how consumers treat it as a debt relief option. Sometimes people are so focused on paying off their debts and once they get the loan approval that will pay it off, they start to relax. They are under the impression that the debt problem is over because the confusing multiple bills are now gone and replaced by one big loan. Also, if the debts paid off are mostly credit cards, it will be very tempting to use them again because they are all on zero balance once more.

These are only a few of the reason why financial experts dislike debt consolidation loans. You need to realize that it all boils down to how you react to the loan approval. Everything that leads from there will either be a success of failure depending on how you act.

So how should you act once your debt consolidation loan is approved?

First of all, you want to pay off your debts immediately. Don’t make excuses to pay only a portion of the debt and then spend it on something else. Put everything into your debt payments as planned.

Once you have paid off all your dues you have to do something about your credit cards. You can either close them off except for one, or you can keep them in a place where you will not be able to easily access them.

Another task that you have to accomplish after you got your loan approval is to map out how you will pay off this new debt. No matter how good it feels to completely pay off your credit card debts, you need to keep in mind that you haven’t solved it yet. You merely shifted your debts around but you still have to pay them off.

Create a debt payment plan and make sure that you will stick to it. You can also create a budget plan or revise it if you already have one. Make sure both your debt payment plan is budget coincides with each other. Put in your budget the amount indicated in the other plan so you don’t make a mistake of forgetting any payment. This is very important for your credit score too. As you pay off this loan diligently, you can expect that your core will rise steadily.

Lastly, you should put aside an amount every month so you can grow your reserve fund. Saving should be combined with your debt payment efforts because it is one of the most effective ways of keeping you from another debt situation.

Opting for debt consolidation loans will bring you towards financial freedom but you need to be very cautious about how you will manage it once you get the loan approved. In the end, it’s still about how you make smart financial decisions.