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Debt Management

Do Not Be Scared About Debt, Do This Instead

Hello my fellow Financial Freedom Guerrillas.

I know being in debt can seem overwhelming but you can win if you don’t curl up and die. The last thing you want to do is freeze up, because then the debt will have won. You are stronger than that and I know you can overcome it.

There are a lot of things in life to be scared of, but debt isn’t one of them. The boogie man, Loch Ness monster, Bigfoot, those are things to be scared of. Debt is just an over indulgence of life.

Instead of being scared become resourceful. Think to yourself “what can I do to get out of this situation?”, “What can I do to kill this debt?”

Do you need to get rid of some things? Do you need to cut back on your monthly expenses? Do you need to make more money?

Think about it this way, If you were stuck behind enemy lines and you only have the clothes on your back, would you just lay down and die? I would hope not. I would hope that you would find a way to make it home alive.

Do that with debt!

Use all the resources available to you. Do you have somebody you can stay with? Do you have somebody that can help you come up with a plan? Do you have somebody that can help you learn to fish, instead of giving you the fish?

We are lucky to be at a day in age where we have a huge resource available to us for free. The Internet! Use it to help you find answers to what you’re scared about. Write down all the reasons why you are scared and Google them.

I promise you are not the only one who is scared. Look around and you’ll find other people that have become resourceful and didn’t let being scared stop them from overcoming debt.

Just don’t let that paralyze you, don’t give it power over you, don’t let it eat you alive. Become Rambo and do what it takes to defeat your debt.

Your dreams are waiting for you, so start heading towards them. I’m knocking down all of the barriers in between. Don’t let debt conquer you and kill your dreams, conquer it and make your dreams a reality.

Are you ready to defeat your debt?

How are you/have you become resourceful?

If you want other people to become resourceful be sure to spread the word and use the icons below to share this post.

Debt Management

Avoiding Interruptions In Your Debt Payoff

Paying off debt requires persistence and dedication. Sometimes in the process of getting the upper hand on what we owe, we can run into situations that threaten to derail our strategy. Some are of our own doing, others are external. Let’s review some of each.

Dealing With Lost-Work Injuries

Let’s face it. No matter what other strategies you have to manage your debt, the only way you can pay it off is to remain gainfully employed. And when you are doing everything right but end up off work because of someone else’s mistake, the damage to your life can extend far beyond a few weeks of missed paychecks. Indeed, everything you’ve been doing to try to improve your financial situation can be undone as quickly as a car can run a stoplight.

How do you respond when this happens to you? You can’t let an injury leave you off work with no money coming in. If you do, a vicious cycle can result in which you hurry back to work before you’re fully recovered. You then re-injure yourself and end up off work again, and so you hurry back to work again, and on and on.

This can’t go on. Mike Pines has represented many injured people who ended up without a paycheck because someone else was reckless. His background in the insurance industry makes him uniquely qualified to confirm the importance of recovering money for lost wages when you’re hurt. If you don’t pursue reparations for the full cost of your injury, your entire financial future is in jeopardy.

Avoiding New Debt

This may seem a little too obvious for someone already struggling to pay off existing obligations. But thanks to the availability of your credit score to would-be lenders, your mailbox may contain daily temptations to consolidate debts by taking out new loans.

You must resist those calls for your attention. Most local banks, employer credit unions, and other local lenders who know you better are a much better option for simplifying a jumble of loans and credit cards. The mail-based offers will feature sky-high interest rates, hidden fees, and interminable payoff calendars. You may think you’re doing better by cutting your payments drastically, but you will be stuck paying on it for much longer. Your total payout will be much more by adding all those extra months.

If you really are struggling to make payments, chances are you’ve checked elsewhere for better options. If you’re only looking at something new because of a flashy piece of mail, do yourself a favor and trash it. Remember, the best debt is the one you never owe.

Bring Home (Extra) Bacon

When you’re just barely making payments, it is much better to expand your income than to try to shrink your payments. For those who are already worked to the max, of course, this isn’t an option. Your health, your family, and your performance at your existing employer(s) demand that you have some amount of down time.

But if you’re just trailing along at 40 or 50 hours of work per week and you’d like to get more aggressive in your payments, investigate some options for other work. Maybe you could perform services through your own business, such as cutting grass. Some people have elderly or ill neighbors who can’t mow their own, and they’ll gladly pay the neighbor to do it for them.

There are also freelance writing jobs, part-time work on night shifts, and there really is legitimate online work. Again, ignore unsolicited offers on email or ads and take the initiative to find reputable employers yourself.

Living in debt is unpleasant. It can dominate your every thought, sapping all the enjoyment from your life. The faster you cut it loose, the faster you can enjoy your friends, family, and work. Do what it takes to speed up your payoff, and get ready to enjoy living again!

Debt Management

Advice on Secured Loans

When you are searching for options to fund a new purchase, you have to make a choice between unsecured and secured loans. There are advantages to each of these, and it ultimately depends on the financial condition of the borrower, as to which alternative becomes preferable.

Unsecured Loans versus Secured loans

Unsecured loans are a recent innovation in finance, unlike secured loans which have been around for centuries. Even in the older days, people used to borrow money after keeping their land as security. This was the way most farmers were able to get money to finance buying of seeds and fertilizers for their activities. Unsecured loans have led to larger risks being taken by lenders and this has led to rates and terms for such loans being far more costly and stricter. Mortgages are a form of secured loan, because the property being acquired itself is offered as collateral, to guard against default in payment.

Secured Loans and Credit Ratings

Financial institutions always prefer to have clients that have good credit ratings. Even so, where collateral is offered as security for the loan, they may not give this credit rating too much of importance, as their risks are covered by the asset value of the pledged security. A good credit rating and a loan that is covered by collateral can lead the lender to offer much more generous terms. So, interest rates will be lower, conditions will be easier and payment concessions will figure in the final contract. A poor credit rating along with collateral will still allow you to get the required loan, but because of the poor history, terms are likely to be stiffer and more demanding.

Business Secured Loans

Most banks offer businesses secured loans that require some sort of collateral. This can be in the form of any property that the business has rights over. While property is the most preferred, banks will even offer such loans against equipment, vehicles and any other asset that the business has.  Before such loans are granted, the lender will insist on an independent valuation of the assets, so that they cover the full value of the loan being considered. In some cases, banks may even offer to give such loans against shares or stock, as long as the company has a history of being well traded in exchanges. Businesses even in case of secured loans, are expected to provide complete financial details and history, so that the lender can ensure that they have the necessary business acumen to run the business profitably. A well-run company can even further negotiate to get very advantageous terms, that ultimately lower the cost of such financing.

Secured loans must always be preferred by both individuals and businesses as the interest rates in them are much lower. It also enables an idle asset like a home or other property or collateral to realize its potential value, which otherwise lies dormant. Loans are normally offered that can go as high as a hundred percent of the value of the security offered, though eighty percent is more the norm. Click here if you need to get more information on secured loans.

Debt Management

Can Bad Credit Credit Cards Really Improve My Score?

This guest post was written by Jason Bushey. Jason is a personal finance consultant and blogger. 

If you’re looking to improve your bad credit score, odds are applying for a new credit card isn’t the first solution you came up with. After all, it was likely those very same credit cards that got you into the issue of poor credit in the first place. 

But did you know applying for and receiving a bad credit credit card is one of the easiest and most important things you can do in the journey back from bad credit? 

Here’s how it works. 

For starters, you should know what makes up your FICO scores – the ones being reported by the three major credit bureaus: Equifax, Experian and TransUnion. While there are several factors, the biggies are (in the following order): 

  • Payment History (35%)

  • Amounts Owed (30%)

  • Length of Credit History (15%)

  • New Credit (10%)

  • Types of Credit Used (10%) 

You’ll notice that these all relate in some regard to applying for and receiving a new credit card. For starters, a credit card for bad credit can give you a new credit line to make on-time (and in full) payments each month, thus boosting that most important credit score factor, Payment History

Second and nearly as important is Amounts Owed. This factors in your credit utilization ratio, which is the amounts you owe in relation to the amount of credit available to you (your credit line). It’s important to report to the credit bureaus that you’re using less than 30% of your available credit, and it’s ideal to report less than 10%. So if you have an available total credit line of $1,000, ideally you want to report that you’re using less than $100 of that credit to the CRA’s (Credit Reporting Agencies). 

If you have a poor credit score, odds are you’re reporting more than 30% usage to the CRA’s and – quite possibly – a whole lot more. So by adding a credit line, right away you’re going to lower your credit utilization. And since you’ve started making on-time payments with your new credit card, you’re also continuing to lower that utilization ratio while improving your payment history. That’s a win/win. 

And finally, you’ll notice that credit history and new credit make up a combined 25% of your credit score. Obviously, a new credit card will count as “new” credit, and a new account and consistent on-time payments will work to enhance your credit history. So overall, adding a bad credit credit card and using it responsibly can go a long way towards improving your credit score. 

There’s only one small catch: by and large, credit cards for poor credit are not the most amazing credit cards on the market… 

But what did you expect? The best credit cards are reserved for the consumers that earned it, and vice versa. However, the good news is that there are some strong options available for people hoping to rebuild credit. The Capital One® Secured Mastercard®, for example, is one such credit card that, while on the surface isn’t the best card around, is simply one of the best options available if you have bad credit. 

First, it’s secured, so it does require a deposit guaranteeing your credit line. However, the security deposit is fully refundable and the minimum deposit required is one of the lowest on the market today. ($49 or more based on credit-worthiness.) Once a consumer is approved and their deposit secured, a consumer will be given a credit line somewhere close to 70% of their security deposit. 

OK, so why is this card – and secured credit cards in general – good for improving bad credit? 

For starters, secured credit cards have lower ongoing interest fees than unsecured credit cards. And in the case of this Capital One® card, the small annual fee attached to the card includes credit monitoring tools so that consumers can watch their credit score improve. (That’s the idea, anyways.) 

Plus, after several months of responsible usage and on-time payments, Capital One® may consider members for a new unsecured card. Consider a secured card a credit-builder and a “gateway” card to improved credit, all at once. 

When it comes down to it, there are a lot of things one can do to improve their credit score, but one of the easiest things to do is apply for a credit card for bad credit. This is the first and most simple step one can take on the road to improved credit.

Debt Management

The Ultimate Guide To Slashing Your Personal Debt And Expenses

One thing that most people have in common is debt. Some folks only have a small amount of debt, while others might be drowning in it! We usually get in debt because we want to buy something that we don’t have the spare cash for at the time. Examples include electronic gadgets, cars and houses.

Debt isn’t always a bad thing as it’s a way of proving to future creditors that you are a responsible borrower.

Slash Debt

Source: Flickr

But only if you can manage your debt. If you have to pay out more than you earn, you are on a slippery slope to debt hell.

If that sounds like you, today’s blog post will go some way towards helping you off that debt mountain you’re stuck on. If your money management skills suck, keep reading to find out how you can rebuild your finances.

Make a list of debts and earnings

The first step is to create a list of outstanding debts that you have. It will show you what you pay for each month so that you have an accurate analysis of what you owe and to whom. The list you compile should have the following information:

  • Name of creditor;
  • What you pay each month;
  • What your balance is;
  • Interest rate (i.e. APR);
  • Arrears, if any.

Once you have compiled this list, you need to add in how much you earn each month. For those of you that are self-employed, make a note of your average monthly earnings. You can also include income from other sources like pensions, share dividends and so forth.

I recommend compiling this list on a spreadsheet as it’s easy to update and calculate sum totals. If spreadsheets aren’t your thing, you can always use a pen, paper and a calculator to do the same job!

Determine how bad your debt situation is

Calculate two sum totals – i.e. your debts and your earnings. If you’re in the red and owe more than you earn, you need to address your debt issues immediately. The same applies if you only have a few bucks spare each month.

What you need to do next is contact your creditors and ask if you can reduce or defer your debt payments for a period. Creditors would rather work with you to reach a solution than sue you for outstanding debts.

Make any debts with arrears your top priority. If you are in arrears, it can damage your credit score and make it difficult to apply for credit in the future.

Consider a debt consolidation loan

Do you have a lot of credit cards, especially those with high interest rates? If so, a debt consolidation loan could help you gain control of your finances again. Loans do not compound interest like credit cards do, and you have a fixed set of payments to make to clear the debt.

Approach your bank and see if they’ll give you a loan. If they don’t, you could try applying for a loan from a peer-to-peer lender or even a credit union. In both cases, they will assess your application on its merits rather than just relying on a credit scoring system alone.


Cut Expenses

Source: Flickr

Pay off small debts first

Part of the problem with having debt is not having the motivation to pay it off! If you have this problem, you should consider paying small debts off first. Doing so will help you to achieve your goal of becoming debt-free. That’s because you can use the extra cash freed up towards the next-highest debt and so on.

Of course, if you have some high-interest debts, you should pay them off for obvious reasons. But if all your debts have a similar rate of interest, paying off small debts first is an ideal motivator.

Make sure you have the correct insurance for your car

Having the correct insurance for your car can save you a ton of money in the long run! It means that, if you were ever to have an accident (touch wood), you would be properly compensated for damages. For example, classic cars will be so much much expensive to repair due to their rare parts etc. Getting the correct cover, such as Carole Nash Cherished Vehicles insurance, means that you can be rest assured that your baby will be well looked after without you having to fork out a bomb.

Ditch the car and buy a motorbike

It’s no secret that motorbikes are cheaper to buy and maintain than cars. If you’ve got a car but seldom carry passengers or cargo, sell it and buy a used motorbike instead. You can use the spare cash to pay off your debts faster, and you will lower your monthly expenses too!

Before you go ahead and buy a motorbike, make sure the model you want is one you can afford to insure. For instance, BMW bike insurance quotes might offer higher premiums than ones for Kawasaki bikes.

Get rid of services you don’t need

Cable TV, cell phone contracts and even streaming music services all increase your monthly debts. Your goal is to reduce your debt as fast as possible. To focus on this goal, you need to ditch any expenses you don’t need.

When you’re in a better financial position in the future, you can then consider getting them again. And don’t worry; there are cheap or even free alternatives to what you pay for right now:

  • Cable TV – watch free TV shows and films online;
  • Cell phone contracts – downgrade to a SIM-only or prepay contract;
  • Streaming music – listen to music online for free.

Sell your unwanted possessions

I can guarantee you that everyone has personal possessions they never use or even need. Do a tour of your home and find stuff that you never use and have no attachment to. If they have a value, get busy by listing them for sale on eBay!

You can also use other classifieds or auction websites to advertise your wares for sale. Or for an old-fashioned approach, consider having a garage sale. You could even sell your stuff at a flea market.

It’s quite a fun and rewarding experience. Especially as you’ll have the cash to put towards clearing your debts down quicker! It’s something that I have done loads of times in the past to get some cash together.

As a by-product, you’ll have more space in your home once you sell your unwanted items! Just make sure that you sell valuables for the best prices possible.

I hope this guide will help you to sort your debts out and lead a more stress-free life. Thanks for reading!