Entries from December 2011 ↓

How To Get Out Of Debt-The Smart & Quick Guide

The holiday season is just about behind us and what lies ahead for many is the mounting piles of bills left over from the spending- and over spending- that frequently goes on this time of year. If you find yourself faced with mounting debt there are things you can- and should- start doing to help get out of debt.

More and more Americans are faced with rising debt loads. We are carrying too much credit card debt and we keep buying. The first step is, of course, admitting that you have a problem. Realize and accept that you have a problem. That is what must happen before you can begin to create a plan that will help you fix the problem. It took you a long time to incur the debt and it wont go away over night, either.

Stop Using Credit

Put your cards away. Stop using them. That only makes an already large problem even bigger. Pick up the phone and call your credit card companies and ask them to lower your interest rate. Many may say no but some may very well say yes, especially if you have been a customer with them for some time and have made your payments on time. Tally up all the debt you owe and look at the interest rates and balances.

Some experts suggest paying the balances that have the highest interest rates first. Some experts say pay off the smaller balances first. That leads to a level of success and makes you more inclined to keep to your new path. Whichever path you choose, stick to it and track your progress.

Create A Budget

The best way to ensure that you are living on less than what you make is to create a budget and stick to it. It doesn’t help to have the best budget in the world if you never follow it. Track your income and expenditures on a daily basis. Focus your attention on what you spend your money on and if it something you truly need more than you need to be out of debt.

Being in debt makes you captive to those to whom you owe money. In essence, they own your life. Isn’t it time you take it back? Look at your income. If possible, find additional ways to bring income in and focus those dollars to paying off your debt. Let your budget- a zero based budget works best, be a road map to your money. The budget will show you where every dime of your income goes.

Cut Back on Expenses

During this period of debt repayment, only spend on those items that are necessities. Now is not the time for frivolity– no matter how much fun it might be. Your goal here is to rid yourself of the debt you owe thereby creating a life of more freedom. There are things you can do without; there are compromises you can make. You have to decide which is more important to you and your family.

Emergency Fund

One way to prevent the use of credit cards is to start an emergency fund. Many experts say this should have around $1,000. It exists to protect you in the event of emergency. It is to help you when those unexpected situations arise so that you are not tempted to use your credit card and raise your debt amount. Remember that if you do have to tap into the emergency fund, you should replenish it as soon as you can to continue the prevention of credit card usage. Once you paid off your debt you can then begin adding more to the emergency fund as an additional savings account.

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Build Your Credit and Be a Full-Time Student

Everyone wants to be successful, and for many people, graduating with a college degree is a big step towards that goal.  A lot of students register for twelve or more college credits per semester; a twelve credit semester categorizes that student as “full-time”.  That being said, taking on a full-time schedule is no cakewalk.  When you add the responsibilities of housing, transportation, and other various college costs into the mix, the title of “student” becomes even more of a task to uphold. However, just like anything else in life, there are ways to be successful in your student career.

Now, if you’re wondering how your credit score plays into being a student, think about where you are going to live.  When you apply to rent an apartment or a town house, most of the time, they will run a credit check.  The same goes for purchasing a car, whether it is new or used.  Student loans are also approved and denied based on credit.  Unfortunately, due to the economy right now, banks are tightening up and taking fewer “risks,” making it hard for creditable people, especially students, to get a credit card or a student loan.  The answer to this problem is simple.  Although some banks are holding back, many of them are offering student credit cards.

What are these student credit cards?  It is right in the name, they are made specifically for students.  Banks realize that building your credit is crucial and while attending school it is not easy.  That is why they offer these special credit cards.   The student cards have low limits, low interest rates, and fewer requirements to be approved.

Having a credit card, student or not, should not be taken lightly.  Credit card debt will damage your credit score, to say the least.  The whole purpose here is to build your credit.  A few things you should focus on are listed below.

Many banks offer student credit cards, so look around.  Look over all the terms and conditions.  If a certain bank is offering rewards and bonuses it could be your best choice.  Every little bit helps.

Know your limit.  Set the limit on your credit card to something reasonable.  If you have a job, set your limit to something that reflects your income.  By knowing your limit, you won’t exceed it and in turn you won’t be charged a fee.  Also, by setting your limit accordingly, you will have the cash to pay your bill off right away.

With that being said, only make purchases on the credit card when you have to cash to pay it off.  This goes along with setting your limit in relation to your income.  By having the cash, you are actually using the credit card as a tool.  It is building your credit and that is the goal.

Everything with credit cards is connected.  Don’t get stuck paying annual fees and don’t leave a balance on your card.  When you can pay your balance off right away, you are in a good position.  As stated above, know your limit and only purchase what you can pay for.

Building your credit score with a student credit card will help you in the long run.  For example, having a great credit score from your credit card will put you in a prime position for the house or apartment you’re applying for.  That goes for purchasing a car, as well.  When the dealer sees that you have good credit, it will boost your chances of getting the car.  As for school, a good credit score can lead to a student loan that will help with all of your college needs, such as tuition, books, food, etc.  All college students should consider student credit cards, however they should be taken and used very seriously.

This article was written by Erica Stanley. Erica is a frugal blogger who enjoys giving advice on the internet. She works to provide the best SEO Services

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The FDCPA – Is it really proficient in ruling out illegal debt collection practices?

According to recent research, it has been revealed that there has suddenly been a speedy increase in the number of FDCPA lawsuits against the illegal debt collection practices. In 2011, a total number of 850 names of debt collection agencies have been forwarded in about 960 district consumer statute lawsuits and it is also anticipated that the figures will rise drastically in 2012. The complaints are primarily of FDCPA violations and harassment by creditors and debt collectors. Though the debt consolidation and credit counseling agencies are there to put an end to all collection calls, not much difference is being created with the figures. The charges that are brought against the creditors are use of abusive and threatening language, third party disclosure and many more accusations.

The number of consumer complaints against the creditors is rising to a horrible rate but the most surprising fact is that despite the FDCPA being enforced since 1977, the creditors don’t miss a single opportunity of harassing the debtors and this fact is prominent from the rising lawsuit filings. The possible reason for these violations may be the obsolete nature of the FDCPA. When the Fair Debt Collection Practices Act (FDCPA) was enforced in 1977, the cell phones and auto-dialers were not even invented. This is the reason it’s really not clear how the FDCPA can be applicable at a time when the deceptive debt collectors use the most modern technologies to take an undue advantage of the debtors.

Know your rights as a debtor – Some FDCPA violations

If you’re finding yourself at a sticky situation due to a third party debt collection agency, you should educate yourself on the rights as a debtor. Knowing your rights will help you get over the harassment that you’re not supposed to undergo. The FTC had passed the Fair Debt Collection Practices Act (FDCPA) in 1977 to safeguard the debtors from the clutches of the deceiving debt collectors. Check out some actions that the debt collectors can’t take as per the FDCPA.

  • The debt collector can’t ask you to pay back a fake amount. Any kind of misrepresentation of the debt amount that should be repaid is disregarded by the FDCPA.
  • The debt collector can’t call you repeatedly as the FDCPA considers continuous calls as harassment.
  • He can’t ask you to pay the fees, interest rates and the expenses that are not allowed by the law.
  • He can’t call you before 8.00 a.m in the morning and after 9.00 p.m at night.
  • He can’t use a language that threatens you as this is considered to be violence as per the FDCPA.
  • He can’t inform a third-party illegally about the debt amount that you owe. He may contact your friends or neighbors but only for asking your telephone number or address.

How can debtors avoid this harassment caused by the debt collectors?

If the debt collectors keep on disturbing you for an account that you rightfully owe, you should keep your calm during the call and avoid entering into any argument with them. You can enroll yourself in a debt consolidation program so that you can start repaying your debts through single and affordable monthly payments that can satisfy your creditors and debt collection agencies. Don’t forget to ask for a debt validation to make sure whether you actually owe the debt for which you’re getting calls.

Therefore, when you’ve fallen back on your monthly unsecured loan payments and your accounts are being turned down to debt collection agencies, stay aware of the rights so that no one takes an undue advantage of your ignorance. You may also get help from a professional debt consolidation firm to put an end to all collection calls for good.

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Do You Need A Quick Cash Loan?

It can be extremely frustrating when you need money either for business or personal reasons and cannot get your hands on some cash. Quick cash loans are available, but they often come at a higher cost than one would like to pay. Interest rates for these types of loans fluctuate, depending in large part on the credit-worthiness of the borrower.

For those individuals and companies that have good credit and a high FICO score, such loans are fairly easy to obtain. If you have a credit score near 800, you will get a lower interest rate and better terms on your cash loan than if your credit score is 500-600.

Traditional sources of getting cash fast include banks and credit unions. One can fill out a short application with one of these lenders and usually have a decision within a few business days. If you always need access to some quick money, you may want to set up a line of credit with your local banking institution. That way, you can borrow up to your credit limit at a reasonable rate and pay back the loan under your own terms.

Businesses often run into some short-term cash flow problems. They may have extended credit to their customers and have a large amount of outstanding accounts receivable. While waiting for payment, they can find that they need access to some money for daily operations or perhaps to meet the week’s payroll. Instead of telling the employees that business is a little slow and the employees will have to wait until next week to be paid, a company can avoid embarrassment and get a short-term cash loan to meet their current obligations.

Individuals also have pressing financial needs that make it necessary to use short-term cash loans. Again, access to such loans is usually directly related to an individual’s credit history. Those with the best credit almost always get better treatment when they apply for such loans.

There are other sources besides banks or credit unions where one can get quick cash. Most of us have probably used a credit card to purchase something when we did not have enough cash on hand. Credit cards are a source of financing, but should only be used when there are no other options. Typically, you will pay a high interest rate for the convenience of financing a purchase or borrowing money on your credit card.

Another way to have access to money when you need it most is to create a line-of-credit. One can have a relationship with their bank that allows them to draw $5,000, $10,000 or more at any time they want. Naturally, you will still pay interest on the loan, but the terms of repayment are usually left to the borrower. If you choose to pay off the loan in a month as opposed to a year, you will save on the cost of borrowing that money.

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