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Four Signs You Have a Serious Problem with Debt

April 4, 2017 debtmanagement

Have you thought much about your debt lately? The thing about debt is that it can creep up on you. You charge a couple of lunches here, a new coat there, and then an overnight stay at a nice hotel. You haven’t paid any attention to what these charges are doing to your total debt. Why not continue to ignore it?. After all, what you don’t know can’t hurt you, right?

Wrong.

Trying to ignore your debt is like trying to ignore your shirttail relations. Neither is going to go away and in the case of debt, things are only going to get worse.

Are you in serious trouble with debt?, Here are the signs to look for.

Your debts are growing

If your debts are not shrinking, the odds are they’re growing. As painful as it might be, you need to add them up, and then compare this total with where you were A month ago and two months ago. If you find your debts are increasing, there’s one simple reason. Your spending more than you earn. Fortunately, there’s an easy fix for this. You need to either find ways to increase your income, or you need to reduce your spending.

You’re getting hit with late payment fees

Late payment fees mean you’re not paying your bills on time. This is a sure sign that you’re having a problem with debt, plus it’s costing you money. Let’s say you’re being charged a late fee of $25 on your credit card payments. While that may not seem like much, it can add up over time. Get more than 180 days behind on a payment and you’ll be in default. The odds are that your lender will then sell your debt to a collection agency, which is something you definitely don’t want to have happen.

You have a “bad” credit score

Have you checked your credit score recently? If not, you absolutely need to. You can get your score free on-site such as CreditKarma.com or CreditSesame.com. You could also get it from one of the three credit reporting bureaus – Experian, TransUnion, and Equifax. If you find your score is below 600, you have at best a “poor” credit score. This is costing you money in the form of higher interest rates and higher insurance premiums. It’s also a big sign you’re having a problem with debt.

You live from paycheck to paycheck

When you’re two or three days away from a paycheck, do you wonder if you have enough money left in your bank account for a drive-through latte? Do you have to postpone having lunch with a friend because you’re close to flat broke? This means you’re living from paycheck to paycheck, and that’s never a good thing. It’s not only a sign you’re having a serious problem with debt, but it’s also just no way to live.

What happens if you pay off your debt?

Paying off your debt can be an amazing stress reliever. For that matter, the stress related to dealing with your debts can actually cause you to experience physical problems.

When you pay off your debt, you’ll no longer be required to pay interest fees and late charges. A second important benefit is that this frees up your future income. Whether you’ve thought of it this way are not, when you create debt you’re borrowing money from your future self. Stop running up debt, and you’ll have more money in the future and probably a better life.

Once you get your debt paid off, you should be able to use the money you now have to create an emergency fund. Most experts say your fund should be the equivalent of six months’ living expenses. However, that’s just not doable for most people. Try for three months of your net income instead. If even this seems out of reach, try to save at least $1000. Do this and you’ll have money available to help in the event you become ill, lose your job, or the transmission in your car falls out.

Finally, when you pay off your debt, you’ll have money to invest or to save for retirement. If your company’ offers 401(k), be sure to participate. If not, open either a traditional or Roth IRA and start socking money into it. If you have money left over after this, invest it in something safe like a low-cost index fund, and then never touch it.

In summary

If you find you are seriously in debt, you need to go to work and get rid of it. It’s not only the best thing you can do for your future self, it’s an easy way to get a raise without having to wait for your employer to give you one.

Free Debt Management Tips: Six Bills You Could Easily Get Cut

March 27, 2017 debtmanagement

If you think your bills are fixed and can’t be cut, you have another think coming. According to the bill negotiating service, BillShark, we consumers could save as much as $50 billion a year just by haggling over certain bills. Cell phones are where you can currently get the best deals, as the cell phone companies are currently engaged in a price war. The founder of BuildFixers, Ben Kurland, has noted that if your cell plan is more than six months old, this might not be the most efficient plan for you.
If you think your bill fixed and can’t because you have another think coming according to the building associating service bills we consumers could save as much as 50 billion a year just by handling over certain bills cell phone bills are where the biggest savings can currently be found as a cell phone companies are engaged in a price war. Billfixers founder, Ben Kurland, has noted that if your cell phone plan is more than six months old, it may not be your most efficient plan.

Six other bills you could get cut in without working out much of a sweat are:

Pay television

Of course, when we say pay television, we basically mean cable TV. If you have more than one cable company in your area, you can probably get a better deal simply by changing providers. We have two cable TV companies where we live, and they are currently slugging it out to attract new customers. If you have only one cable TV provider where you live, consider cutting the cable entirely. You should be able to get all your local channels with an indoor HDTV antenna. Then, there’s Netflix, Hulu, and Amazon Prime for catching up on old programs and for movies.

Alarm systems

If you have an alarm system in your home, it’s almost certain you can cut your bill. If you have a long-term contract, try haggling with your provider. If you can’t get a better deal, Vivant Home Alarm is currently offering free installation and says it charges less than two dollars a day. You could do even better with SimpliSafe. It uses a fast cellular connection, so you can monitor your home 24 hours a day no matter where you are. SimpliSafe also includes 24/7 professional monitoring and police dispatch, and costs just $14.99 a month – with no contract.

Storage units

If you have a lot of stuff in a storage unit, you may not want to consider moving it to a new unit just to save money. But if you haven’t yet rented a unit, there’s a website, SelfStorage.com, where you can find the best storage units close to you at the best prices. The site allows you to view and compare storage options nearest to you, and without the hassle of calling around for prices. When you find one, you can then book the unit free in just a few minutes – either online or on the phone.

Gym membership

Want to get in shape on the cheap? Joining a gym can get expensive. In fact, one source says belonging to a gym costs an average of $58 a month. You can beat this by using free passes. Some health clubs offer free one-day passes, while others have week-long passes, or even two week passes. If you work for a large employer, it probably offers some kind of workplace wellness program, which would be like a gym membership except for free. And some cities have discount gyms that cost as little as $10 a month.

Satellite radio

Since there’s only one satellite radio provider, SiriusXM, you can’t comparison shop. However, you can save money with SiriusXM. It doesn’t talk about this much but it actually offers three pricing tiers. The first is titled Mostly Music, and offers 80 channels of great music. It’s priced at just $10.95 a month. While this tier does not include online streaming, you could add it for just $4 a month. The next tier is called the Select Package, which costs $14.99 a month and includes more than 150 channels of sports, music, and comedy – though you cannot add Internet streaming to this plan. Finally, there is the top tier, All Access that provides all of the 160+ channels, as well as online streaming from your tablet, phone or computer.

The Internet

You may be able to get a better deal from your current Internet provider just by threatening to switch to a different company. It’s also possible to save money by reducing your usage. Think about how you use the Internet. If it’s just for general web surfing, email and social media, you only need a speed of 1 Mbps (megabyte per second). But if you’re an online gamer, you’ll need 1-3 Mbps, and if you’re into high-definition video streaming (think HDTV movies), you’ll need 5-8 Mbps.

In summary

Write a list of all your bills. Then, ask yourself how many you might be able to cut. We’re willing to bet you’ll find more than just the six mentioned here. The fact is, it only takes a little time and effort to get a lost of your bills reduced.

The Best Apps for Debt Management

March 15, 2017 debtmanagement

It’s hard to believe that the iPhone is just a bit more than 10 years old. Who would have thought we could have a computer in our pockets that would also let us make phone calls and write text messages.

It’s clear that practically all of us now take our smartphones for granted. If you don’t believe how important these little devices have become just go sit in a waiting room somewhere. We’d be willing to bet several dollars that at least 80% of the people will be doing something with their smartphones.

What are your most popular apps?

Is the camera your most popular app? Is itGoogle, Chrome or Safari, ESPN, Twitter, or your music app. We love all of these. We also love our bank app that now allows us to make deposits. All we have to do is take a picture of the front of a check and it’s back and presto! The money is immediately deposited in our account.

Financial apps

There are now almost more financial apps than you can count. One of the most popular is Prosper Daily (formally known as BillGuard), which will not only track your spending but also protect your credit cards from fraud and mistakes. There’s also Level Money that acts kind of like a mobile money meter and helps track your daily cash flow. LearnVest will monitor your money, and Level Money will tell you how much you can afford to spend on a day-to-day basis. Qapital will entice you to save through gamification and small actions you take every day. If you have trouble saving money, there’s Digit, which will save money for you, and Acorns that utilizes a smart system called “round-ups” that will help you save money practically painlessly.

Good and bad debt

The above-mentioned apps can help a lot with your finances, but what if your problem is that old demon debt?

Some experts believe there is such a thing as good debt and bad debt. Good debt to them is where you use the money to do or buy something that will increase in value. The number one example of good debt to them is a mortgage, as the house is almost certain to increase in value over the years. They think that borrowing money for educational purposes can also be good debt.

Just about everything else is bad debt, and at the top of this list is variable debt, and especially credit card debt.

A personal loan is generally considered to be bad debt as is a personal line of credit. However, these loans usually have fixed interest rates. This means their interest rates remain the same throughout the life of the loan. They also normally have a fixed term. For example, a personal loan might have an interest rate of 9% and a term of three years. At the end of those three years, the loan has been paid off and the borrower owes nothing more.

Credit card debt is very bad debt for two reasons. First, it usually has variable interest so that the credit card issuer can change the interest rate just about whatever it wants to. Second, credit cards are based compound interest. What does this mean? Here’s an example. Let’s suppose you owe $1000 on a credit card at 12% interest. The next month you will owe $1012 and will then pay 12% interest on it.

Apps for debt management

There are debt management apps that can help you with your struggle. One of the most popular of these is Ready for Zero. It’s designed to help you pay off your debts and build your wealth. Other popular apps for managing debt are Pay Off Debt, which has been around since 2009, and Debt Manager, which can help you track and pay off all your debts using the fastest and cheapest way possible.

There is also Debt Tracker Pro, which has a very simple user interface that allows you to focus directly on paying off your debts. It’s built around the debt snowball system, where you would be encouraged to first pay off the debt with the lowest balance.

Debt Payoff Assistant also uses the snowball method for getting out of debt. It will track multiple debts, and has built-in calculators and charts that showing your progress towards becoming debt-free.

In conclusion

If your finances are a mess, and if you’re seriously in debt, take heart. As you have read, there are apps available that could help you get your finances under control, and more importantly, to get your debts paid off in a timely fashion. Spend a few minutes online reading about these apps, and then choose one. You’ll be glad you did.

3 Important Tips for Managing Credit Card Debt

March 7, 2017 debtmanagement

Of all possible debts, the worst by far is credit card debt.

The reason it’s so bad is because it’s what’s called variable debt. Other debts like a mortgage or auto loan are fixed debts. They have one payment a month and a fixed term, so you’d know exactly when you’ll have the debt paid off. For example, auto loans typically have terms of five, six, or seven years. Personal loans typically have a term of three or five years.

That old demon called compounding

Fixed debts also have fixed interest rates. As an example of this, the interest rate on a personal loan can be as low as 5.99%, though most come with higher rates. The interest rates on a 30-year mortgage are still near all-time lows. In addition, the interest on these loans is built into their monthly payments. When you make your last payment on one of these loans, that’s it. You owe nothing more.

Unfortunately, it’s different with credit card debts. While they do have fixed interest rates, your debts are compounded each month. Let’s suppose you owe $1000 on a credit card at 15% interest. At the end of the first month, when interest charges are applied, your balance will then be $1013, and so on. It gets even worse if you owe $5000 on a credit card with an APR of 16%. If this is the case and you make just the minimum payment of $125 a month, it would take you 4.8 years to pay off your balance and would cost you $2000 in interest.

Tip #1: Avoid credit card debt

The best thing you can do with credit card debt is avoid it like Ebola. If you have more than one credit card, choose the one with the lowest interest rate, and then freeze the rest in a block of ice. That way you won’t be tempted to use them. You can use the remaining one, but never charge more than you can pay off when you get your statement. This offers two benefits. The first is the obvious, which is that you won’t be running up debt. The second is if you use that credit card sensibly, you’ll have a record of your spending that you could use in budgeting.

Tip #2: Negotiate with your credit card providers

If you’ve run up a serious amount of debt on several credit cards, contact your card issuers and negotiate with them. One of the upsides of credit card debt is that it’s unsecured debt. Almost all unsecured debts can be negotiated, and credit card debts are no exception.

Four things can usually be negotiated with credit card companies. The first is your interest rates. If you have credit card debt at 19%, you might be able to negotiate it down to, say, 13%, which would mean lower monthly payments. The second thing that can usually be negotiated is to have your payments waived for a few months. This would give you time to get your balances under control or to catch up on your payments.

Third, you could negotiate to have your credit card debt converted into a fixed, monthly loan. While you wouldn’t be able to use the card anymore, you’d at least know what your monthly payment will be each month, and when you will have the debt completely paid off.

The fourth thing that you might be able to negotiate is your balance. This is the hardest by far because you need to be experiencing a serious financial emergency to get the credit card company to agree. This could be that you’ve lost your job, just went through a divorce where you were stuck with almost all the debt, or were hit with huge medical bills. And you may be required to provide documentation that proves your emergency.

Tip #3: Settle your debts

A secret that credit card companies would rather you didn’t know is It’s possible to negotiate settlements. Let’s suppose you owe that $5000 we mentioned earlier. You could contact the credit card issuer and offer to make a lump sum payment of maybe $1500 to settle the debt. Your offer probably won’t be accepted but with a little back-and-forth you might be able to settle it for $2500. Of course, you would need to have the money available to immediately send the credit card company.

In summary

If you’re struggling with credit card debt to the point where you’re several months behind, take heart. You do have alternatives that could help you better manage or even pay it off in a reasonable amount of time. The important thing is to choose a strategy and start contacting your credit card companies.

5 Amazingly Simple Tips for Debt Management

February 27, 2017 debtmanagement

Being seriously in debt is just no fun. It can keep you lying awake nights wondering what you’ll do about it. Debt can even have a bad effect on your health, as the stress related to it can cause fibro myalgia, a spastic colon, arthritis, high blood pressure, and even heart disease.

Fortunately, there are tips for managing those debts, and to ultimately get them paid off. And these tips are amazingly simple.

1. Make a plan

This is something you might dread, but making a plan to pay off your debts is absolutely critical. You wouldn’t start tearing your engine apart without a plan for repairing it and the same is true of your debts. The easiest way to organize them is with a spreadsheet such as Microsoft Excel or the free Google Sheets. Be sure to list all your debts with the names of your creditors, your balances owed, and the interest rates.

There are two popular ways to pay off debts. The first is called the avalanche method. It’s where you order your debts with the one with the highest interest rate at the top down to the one with the lowest interest rate. You then focus on paying off the debt at the top of your list as this will save you the most money. The second pay off plan is called the snowball method. Instead, of organizing your debts with the one with the highest interest rate at the top, you organize them so that the one at the top is the debt that has the lowest balance. If you focus all of your attention on paying if off, you should get it repaid fairly quickly, which will give you momentum to pay off the debt with the second lowest balance, and so on.

2. Consolidate your debts

A second good tip is to consolidate your debts. You can do this several ways, depending on the type of debt. Is most of your debt credit card debts? You could consolidate them by transferring all their balances to a new card with a lower interest rate, or better, yet one of those 0% interest balance transfer cards. You would then have only one payment to make a month, which should be much easier to remember. Plus, those monthly payments will be lower than the total of the monthly payments you’re currently making.

Is your problem student loan debts? In this case, you have two alternatives. The first would be to get a federal Direct Consolidation Loan. The interest rate on this loan would be based on the weighted average of the interest rates on the loans you’re consolidating, and then rounded up to the nearest one-eighth of 1%. So, your new payment should be for a good deal less than your current payments.

Second, you might be able to get a private debt consolidation loan. Interest rates on loans such as this are now at practically an all-time low. In addition, there are a number of online lenders, where you should be able to find a pretty good deal.

3. Get counseling

Just as, if you were having serious marital problems you might go to a marriage counselor, you could go to a debt counselor for help — in the form of a nonprofit consumer credit counseling agency.

When you contact one of these agencies, you’ll be assigned a debt counselor that will review your finances and either suggest a budget designed to help you get your debts under control or what’s called a debt management plan (DMP). This is another way to consolidate your debts because if you accept the plan, you won’t be required to pay your creditors anymore. Instead, you’ll make one affordable payment a month to the credit counseling agency, which will then disburse the money to your lenders. It typically takes from four to five years to complete a DMP, but at the end you’d be basically debt-free, and you’ll have good credit.

4. Learn to negotiate

One of the things lenders don’t want you to know is that almost any unsecured debt can be negotiated. If you’re wondering what are unsecured debts, they are the ones where you weren’t required to provide any collateral. Medical debts, credit card debts, department store credit card debts, and old cell phone bills are typical of unsecured debts that can be negotiated. A good rule of thumb is to never pay one of these debts without first trying to negotiate a settlement.

The way this works is about the same as with any negotiation. You contact one of your lenders, and offer to make a lump sum payment, for say, 40% of your balance. The lender will probably refuse this offer, but will likely make a counter offer, and you then go back and forth until you arrive at a number that’s acceptable to both of you. Of course, you must have the money available to make that lump sum payment.

5. Use the nuclear option

Bankruptcy is often called the nuclear option because it essentially blows up your credit. But it is a way to get out from under most of your unsecured debts. However, bankruptcy can’t free you from secured debts like auto loans and your mortgage. It also won’t discharge alimony, child support, family support, and student loan debts. But if your biggest problem is your unsecured debts, then filing for bankruptcy would definitely get you a fresh start.