Debt Advice

Are you up to your eyeballs in debt? It’s not a prime position that you want to be in, and it has to be one of the first areas that you must work on in improving your personal life. Is your credit score horrible? Well read on and I will try and set you on the right path in improving this situation.

Rewind back 15 years, and my financial situation was bleak to say the least, I had a credit score that was barely middle 300’s which is worse than no credit rating. I was 3 years delinquent on a student loan, and some credit card companies decided to give me some credit cards (suckers) and of course I was months delinquent on those also.

I would get calls all of the time asking me when I was going to pay, and my answer was, well I didn’t answer, the phone that is. Could I have paid some? Yes, I just wasn’t interested in paying, besides if I payed them, then I couldn’t go partying, and that was way more important wasn’t it? Selfish, irresponsible? You bet! But I never had anyone teach me about finances. In my opinion most parent’s are really dropping the ball when it comes to this subject, along with a lot of other life lessons, but thats a totally different subject. Our schools are not teaching basic finances, kids don’t learn how to balance a checkbook, or about interest rates on credit cards, this is a vital life lesson that is not being taught and people are learning the hard way about this subject. Remember from my other articles that there is a easy path in life and there is a uphill path, and sadly to say the majority of society takes that uphill path.

Steps to take

The first thing we need to do is collect some data, take out a piece of paper, and write down everything that you have to pay on a monthly basis, (ie. Credit cards, utilities, rent, mortgage, car note, doctors) whatever it may be, then I want you to write down the interest rate that you are paying beside each item. (utilities and doctors usually will not have this). Put them in order from highest interest rate down to lowest, and this is the order that we will pay them off. Next I want you to write down in a journal every single cent that you spend over the period of one month, I know this is a pain but trust me it will be very helpful in locating money that is leaking from your budget, people will be surprised how much sodas add up to in a months time.

Developing our Game Plan

Ok now that we have the our data we need to develop a plan, we will start concentrating on the highest interest item first, you will still need to make all of your monthly Minimum payments as scheduled, if you were paying more than the minimum on some then stop doing that. Now we need to identify how much extra income we have available, take all of your bills on a monthly basis, adding up the minimum monthly payments, then take your monthly salary and subtract your monthly minimum payments from your monthly salary and this will give you your extra income. Now I know that emergencies happen and that sometimes you need a little put back just in case, and I fully understand this, but having said that if you are truly committed to getting yourself out of this situation, you will do what it takes to make it happen. Next in addition to the minimum monthly payment on your bill that has the highest interest rate, take the extra income that you have allocated or what you feel that you can use to getting out of debt and apply it in addition to the monthly minimum to the bill with the highest interest rate. Now I don’t recommend putting it all on one check and sending it in, because sometimes certain creditors will take out the interest first out of the extra monies, so handle the situation like this: make a check out for the minimum, then write a separate check for the extra you are going to pay and in the notes of the check write, apply to the principal only. What this does is it pays down on the actual amount that you have borrowed and will not go towards the interest the company is charging, which will in turn cut down on the over all amount of interest that you will pay in the long run.

After you get that highest interest bill totally paid off then you will concentrate on the next bill on your list. Take the minimum that you were paying on the first bill you paid off plus the extra and this will be your new extra income total that you will apply on a separate check along with the minimum on the next bill that we will be concentrating on. Continue this strategy until you owe no one, now you will always have your utilities, they will never go away, but you will no longer be paying people for the privilege of them lending you money.

Example: Visa Bill Balance $200.00 monthly minimum $10.00 21% interest

Mastercard Balance $400.00 monthly minimum $15.00 18% interest

Auto Balance $5000 monthly minimum $300.00 9% interest

Extra income = 50.00

So our first month we will pay all of out monthly payments like usual but in addition to the $10.00 minimum on the Visa Bill since it is the highest interest bill we will write a separate check for the $50.00 extra income and send it in also applying it to the interest. And in a little over 3 months the Visa bill will be gone forever. Now we take our $10.00 that we were using to pay the monthly minimum on our Visa bill and add it to our extra income which will be $60.00 and make the monthly minimum of $15.00 on our Mastercard and on a separate check for $60.00 apply it to the principle on our Mastercard. In about 6 months our Mastercard bill will be gone then we will have an extra income amount of $75.00 to start knocking off that Auto bill.

Trying to make you sick

I just wanted to give you a little truth to the way our creditors have us by the short hairs, I hope it will make you sick and motivate you to do something about your situation. It pains me to see people struggling financially, and the credit companies preying on you like some sharks to a wounded fish, and totally taking advantage of the situation. You need to move back in control of your finances, and stop letting the creditors dictate how you will live.

If you have a balance on a credit card of $5,000 at say 18% interest with the payment being $100.00 a month it will take you 46 years to pay off and you will pay back in addition to the 5,000 you borrowed a whopping $13,926 dollars for a total of $18,926 dollars, just to borrow 5,000 dollars. Right now the national average balance for consumers who have debt is $9,300 dollars and the average interest rate is 13%, with a monthly minimum being $200.00. This loan will take you 33 years to pay off and you will pay an extra $11,450 dollars for a total of $20,750 dollars WOW.

So what are you waiting for? I hear it all the time, I can’t afford to pay extra, well I am here to say you cannot NOT afford to pay extra, it’s your money, find the way, you can do it, have faith and use your positive thinking skills on how you can get out of this situation.

I wish you much success!!

For more Financial articles go to http://www.findworkfromhome.com

About The Author

Charles Hamel is a baby boomer, hippy, born in the 60’s, who spent 10 years of his life in the United States Navy as a Field Combat Hospital Corpsman and served during Operation Desert Storm/Desert Shield. He is a World Traveler, having spent time in Korea, Philippines, Hawaii, Guam and Japan. I am a Husband, a Father, a Chef, a Vegetarian and a Environmentalist. A spiritual being on a journey of self discovery and awakening. I am a writer, a computer nerd, a musician, a meditation practicing, music aficionado. I am a Blogger, entrepreneur, non-follower, always marching to the beat of my own drum, intuitive, easy going, technology geek.

Debt Counselling

Being in debt can undoubtedly be one of the most stressful situations you find yourself in. There is help out there! The following article is written by Charles Parson and gives advice on how to get debt counselling.

Once an individual has determined that he or she is in trouble in terms of debt, that is, the expenditures per month exceed the monthly income, it is time to go about setting a course of action to right the situation before disaster results. Most debtors will embark on either an official or unofficial debt consolidation program that could include any or all of the following elements: debt counselling, debt management, or consolidation loans.

Individuals should keep in mind that as taking out a loan to pay off the creditors is just another form of debt, it is the least desirable of these options. Instead, the first step in a program would be to make a monthly budget that takes into account expenditures such as food, utilities, car payments, mortgage payments, and insurance payments. All of these expenditures have priority as they are essential to life and must be taken care of first.

After determining how much money each month is needed for these bills, debtors will need to determine how much they can afford to put towards those outstanding bills. If individuals show enough initiative in these cases and report their plan to a creditor, the odds are that they may accept the plan as is and the debtor will not have to resort to more stringent measures of formal debt consolidation.

Formal debt processes should be avoided for the consumer for the simple fact that, even if the measure is a relatively burden free process such as debt counselling, there is a good chance that your creditors will find out that you have applied for credit repair measures. In order to receive effective consumer debt counselling, an individual must disclose information about finances and debts and these reports will cause a negative score on credit, affecting future applications. Again, though, there are some creditors that may see the application as a sign of individual initiative in terms of paying them back and therefore may still be willing to extend an individual credit once the current situation is resolved.

The very last resort for any individual debtor is taking out a loan in order to consolidate their bills. The worst case scenario is taking out a secured loan, where the individual puts up collateral such as a house. Although a second mortgage seems appealing due to the fact that individuals receive a large hunk of cash quickly, the fact is that if an applicant cannot pay their debts, they stand to lose absolutely everything. Individuals must really think about how they came to this spot in the first place; is it really worth a house to pay off the bills that were incurred going out to eat or on home entertainment systems? If an individual must opt for a loan, they should make sure it is unsecured.

When it comes to debt consolidation and alleviation, there are a few main parts.

The first part comes in recognizing that the situation needs a solution, and looking into options. Next, the money and means to pay off creditors must be found. Finally, individuals must make sure that they see how the situation occurred in the first place and take steps towards avoiding similar mistakes in the future. Individuals who find themselves in heavy debt must take the bull by the horns and be prepared for a lengthy process which requires a lot of commitment in order to re-establish financial well-being.

About The Author:

Charles Parson routinely produces informative papers on subjects dealing with business debt and credit repair. His articles on debt counselling can be encountered on http://www.creditenio.com/counselling.html and also other web pages.

Asking for help with debt

Debt is a problem that we all tend to get into in this day and age. It is a word that most of us cringe over and wish to forget about and (unfortunately!) it's not something we can run from. It can often feel like a kind of slavery.

The first step into debt is to spend money that you don't have. It’s usually a slow process starting with unsecured debt, for example, in the form of: credit cards and store cards. Debt is particularly a major problem for students in further and higher education. This is a self-perpetuating problem that is not going away.

For most of us, being in some kind of debt is just simply a fact of life. Learning how to manage debt is what can put you ahead.

The first step is (of course) acknowledging that you can’t handle the problem on your own. There is so much advice out there! I think that sometimes people get so immersed in their worries that they don’t ask for help. In most cases, there are viable solutions to clearing your debt but you have to take the first step.

Companies who specialize in debt consolidation can be helpful, however you should always make sure you do your research thoroughly. Talk to friends or family for recommendations. You could also take advantage of the free advice that's available from debt counselling services such as National Debtline (www.nationaldebtline.co.uk). Organisations like these can be invaluable to helping you clear your debt.

Debt is the wrong enemy. I think that debt is a symptom of a bigger problem in society. Credit card debt is a fact of life and a major social problem in some Western countries. And it’s getting worse. Where will it end?