Category Archives: Debt

7 Steps You MUST Take To Get Out Of Debt

There are no magic bullets for getting out of debt, and in most cases the process requires discipline, planning, and time. Having gone through this process myself I’m happy to share my must-win steps on how to get out of debt faster than you ever thought possible.

get out of debt

get out of debt

Step 1 – Decision Time

The word decision comes from the Latin, decidere, which literally means ‘to cut off’. This idea really helped me when I started my debt-free plan. Making a decision to get out of debt means to literally cut off the possibility in your mind that you can stay in debt. There are many gray areas when dealing with money, but DECIDING with 100% certainty that you will get out of debt is an immensely powerful action.

Step 2 – No More Borrowing

It’s a bit clichéd, but you can’t get out of a whole by digging. Continuing to borrow money while you’re trying to get out of debt will crush your motivation and slow down your progress. So you have to set yourself up so that borrowing is no longer necessary. This might take a bit of time, but it’s essential.

Step 3 – An Emergency Fund Is Your Friend

You’ve probably heard this advice a million times, and for most people the idea of having some money ‘just in case’ is almost laughably unrealistic. Here’s what I’ve found. Even a small emergency fund reduces headaches and stressful events. Just knowing that it’s there can be a huge relief, and when something DOES happen, you know you have the money to fix/replace it.

Start small – even $500 or $1,000 is enough to cover many emergencies. Do this before diving into your debt repayment and you won’t have to go further in debt when something happens.

Step 4 – Add It All Up

You have a goal, now you need a plan. To make a plan you have to really understand your situation, so get to work adding up all your debts. You’ll need to know:

  • How much you owe
  • Who you owe it to
  • How much you’re paying in interest

Step 5 – Highest Interest Or Debt Snowball?

There are two schools of thought for debt repayment. Mathematically, paying off your highest interest loans first will save you money. Others argue that behavior is more important, so start with your smallest loan amount and pay it off first, then move to the next (like a snowball). I used this method and found it extremely effective.

Step 6 – Look Ahead

Sites like www.debt.ca/ have a ton of tools and calculators which can help you map out your debt repayment timeline. These tools are also great for understanding how lump-sum payments and small increases in monthly amounts will make huge dents in your debt.

Step 7 – Get Excited

This is a game, and you’ll do better if you’re having fun. Every sacrifice you make now is a victory in the long-run, and enjoying those as much as possible will help during this challenge you’re facing.

Helpful article:  http://www.ic.gc.ca/eic/site/oca-bc.nsf/eng/ca00038.html

5 reasons why your loan application will be accepted

loan-application

loan-application

When you apply for a loan, it is important that you have a professional looking financial statement that will help you in getting your loan reviewed and approved quickly. Lenders don’t want to go through a lot of paperwork don’t figure out whether you can be approved for a loan or not. Prepare a precise and good looking financial statement and submit it ahead of your loan application.

1) Building instant credibility

a) A good financial statement prepared by you will be given more value in comparison to other loan applications.

b) It will also show that you have a better understanding of your finances and have perfect control on it.

2) Professional look

Most of the banks or lenders will ask for a personal financial statement from you. They will give you a form that you need to fill in by hand and submit it. That often looks terrible. It is a good idea to prepare your own professional looking document and submit it ahead of your loan application for a quick review, along with the other supporting documents.

3) Quick Application review and answer to the application

Once you submit the form, you need to know at the earliest whether your loan application got approved or rejected. Many investors and business owners do not want to waste their time waiting for the answer.

The bank or the lender after reviewing your application will be able to get back to you very quickly as because you submitted all your information into a 3 to 4 page format with a 1 page summary sheet of your financial picture. If you submit 30-60 pages application form, its going to take longer time to review it and there are more chances that the lender will not give it that much importance because he has to dig through many pages. When you apply for a loan, you need to be very precise with your information submitted on the application form.

Before applying for the loan application, submit your financial statement and then wait for the lender to get back to you. It will be waste of time sending all your supporting tax returns, bank statements, pay stubs if your loan application did not get approve in the first place as per your financial statement.

It is important that you prepare an accurate financial statement. All the information put in the financial statement should match the records in your tax returns, bank statements, pay stubs etc.

4)  Lenders and banks love to see proper documentation

Banks will save a lot of their time by going through your proper financial statement.

They will tell you in a short period of time whether your loan application was approved or not.

5) Who needs these loans?

Business owners need loan for financing.

Real estate investors and home buyers need loan for the purpose of buying a home.

Franchise applicants.

Real estate agents need loans to give their investors

Or anyone who wants to achieve their financial goals will need such loans.

Things to remember while choosing a debt relief firm

You are knee deep in debt, juggling with your credit card balances and have huge medical and other bills to meet. You are feeling at your wit’s end, maybe facing creditor harassment and wish to get some help. Well, you need not worry because there are thousands other in the same boat with you. Growing debt problems are propelling more and more consumers to seek help from debt relief companies.

But amidst all, it is also worth mentioning that increasing number of debt relief scams are affecting thousands of debt-stricken consumers across the US. In many cases it has been found that the scam debt relief providers coax the debtors into relief programs with false promises and bright hopes of debt relief success stories. But what the debtors achieve by the end of the program is more and more debt and no fruitful solution.

While scam debt relief companies abound, there are also a whole lot of credible and reputable debt relief companies that are ready to extend their help to you. Here are a few things that you need to remember while choosing a debt relief company so you can avoid getting into scams:

• First, check if the company is accredited by the Better Business Bureau (BBB). Also find out if the company is recognized by any other pro-consumer group. Such credentials assure that your debt issues are in safe hands.

• Find out what kind of charges the company is asking for. If the company demands upfront fees, then avoid it right away, because under the new FTC guidelines no debt relief company is allowed to charge you with any upfront fees.

• See if the company is providing you with a transparent deal where all the terms and conditions are clearly mentioned. If you find anything shady about their approach, cancel the option immediately.

• Check if the company has a history of successful debt relief services. Ask the company representatives to provide you with testimonials and case studies that corroborate the company’s reputation and achievement. If the company is reluctant to provide you with same, then it is better to look for other options.

• Find out if the company has reputable lawyers and competent debt arbitrators to work on your debt issues. Check if the debt arbitrators are certified the International Association of Professional Debt Arbitrators (IAPDA) or the Association of Independent Consumer Credit Counseling Agencies (AICCCA). If the company does not have these, perhaps it is not worth putting faith in.

• Find out what your family, friends and acquaintances have to say about the company.

• Google the company’s name and get information and testimonials related to the company on various on-line discussions.

Anxious consumers, steeped in debt, are the ideal victims for the scam debt relief companies. So, it very important that you be cautious even in your toughest of times and prevent yourself from getting vulnerable to the fraudulent companies. Be a little careful and you are sure to get hold of a genuine debt relief firm that will get you out of your debt troubles.

Facts about credit card debt in America

credit-card-debt

credit-card-debt

Debt problems have become more similar like a baseball game in America. An average US citizen is keeping 5- 15 credit cards in their wallet and they are using these cards to make the smallest purchases. The society in US is changed from cash – savings society to a credit – debt society within a span of few years. Take a look at the following facts.

According to the Federal Reserve Board, the American households are reaching to a $2 trillion mark in debts. This is just excluding the mortgage debt.

On an average, one person in a US household is having at least $9000 of debt in one single credit card. So, if a typical household has 3 credit cards, that single family is having $27000 of debt.

What are the reasons for such a high growth of consumer debt?

The answer to this question is credit card companies offering credit cards to every single adult in the family. Previously, the credit card companies used to offer credit to only those people who are responsible and disciplined in making financial decisions. They knew that the person to whom they are offering credit will be able to repay his debts in a reasonable period of time. Nowadays, credit card companies are shoving these cards to almost everyone without reviewing his/her past credit history. There are companies sitting outside the college and offering credit cards to the students of the first year. It is expected that the students who have got a credit card for the first time in life will involve into impulsive purchasing habits by using a credit card. This is what most of the credit companies want when they offer a card to an 18 year old student. They know that s/he will get involved into a lot of spending habits and will rack up to $20,000 worth of credit card debt. He is expected to spend the rest of his life paying his credit card debts with high interests and fees. The story of the credit card debt in US starts from that age and has no end until your death, or is forced to file for bankruptcy or leave the country.

Here lies the importance of debt negotiation program to get rid of credit card debt problem. Debt negotiation plan can reduce your total amount of due to the credit card company with an easy installment monthly plan. So if you are having such problem then don’t waste time any more but go for a reputed debt negotiation company.

Digging Out: Hints for getting out of Debt

Over spending and lack of proper money management skills is the main reason why many of us find ourselves in the predicament known as debt. In order to dig our way out of this negative circumstance there are valuable guidelines that can be followed to better increase our chances of getting out of debt.

Learning to budget is one of the best ways to begin the process of getting out of debt. Once you have come to the realization of how in debt you are you must make yourself aware of your household’s monthly income and the necessities that this income will be going towards. Start by making yourself accessible to some sort of money managing software. If you do not have access to such a software a simple pen and notebook can go a long way in your journey to get out of debt. List all your living necessities down and make sure that it is reasonable and logical. Your budget must be adequate for your living needs. Food, electricity, water, and gas are monthly wages that fluctuate each month. For these expenses set an average amount that you are willing to pay and take initiative to not go over it.

Also, try not to borrow money to get out of debt, particularly consolidation loans. Remember, a consolidation loan is simply a way to combine all your loans and pay them off together. This in actuality means that you are simply combining your debt. This mistake is especially made when those in debt try to pay off their many payday loans. In times of need, if you must borrow money, the best way to go is by borrowing from a family member or a friend because the interest rate would be virtually non existent.

Now let us move on to actually paying off the debt. It is smartest to pay off your highest interest rate debt first. The only scenario where you wouldn’t pay off your highest interest rate is if the balance on one of the cards goes beyond 50 percent of your credit limit. Paying all the balances below 50 percent of the card limit is a way to lower your credit score. After this is done, move on to the highest interest rate and pay that off. Continue this process every month by paying off the card with the next highest interest rate. Keep going until the card with the lowest interest rate is reached. This should be used as your primary account.

Trust deeds are really helpful option for those who have unsecured debts and unable to pay the debts on time. Trust deed protected individuals are not allowed to get pressurised by the creditors.

With this new formed knowledge, the process of digging yourself out of debt is now in your hands. Just remember that budgeting your money is the primary step to getting out of debt. Once you create a plan for the spending of your money you can then move on to actually paying off your cards. It is important to remember that breaking bad money management habits is going to be tough. Although it might be difficult to sacrifice little luxuries it will all be well worth it in the end when you can claim yourself debt free!