The Debt Trap

The enormous fees and interest charges levied on the credit cards make it impossible for some people to pay off their running card bills. The debts often keep piling up as the interest amounts keep accumulating and create an extremely stressful situation for the debtor. Debt consolidation offers a great resort to those who need to obtain loan at a lower interest rate and finish their previous debts with its help. Many debt relief companies can rescue one from such a situation. They offer a loan amount that can help pay off all the loans and pending payments against a collateral security that could be a house or any other asset.

Why should you choose to consolidate your debt?

• By opting for debt consolidation, the amount of monthly payments going out reduce considerably, leaving you with more cash in hand.

• Consolidating your debt can actually be beneficial in the long run as it is the best solution to pay off short-term debts completely.

• Almost all debt consolidation companies offer low interest rates besides ensuring that your bills are paid in lesser time.

• It helps you manage your funds in a more effective manner.

• For a lot of people making multiple monthly payments is a big hassle. Debt consolidation eases out the burden by consolidating your payments and making you answerable for a single payment to the debt management firm.

• Quick payments can help you re-age your accounts which in turn is highly rewarding for your credit history. Note that paying off the debts in a routinely and quick manner gives a boost to your credit scores in the long run.

• Also, you can get relief from late payment charges or over-limit fees, because the debt management company makes all monthly payments well in time.

• Most importantly these debt consolidation agencies have almost put an end to the harassment that debtors face at the hand of credit card companies. They take charge to settle your bills and even ensure legal actions in case the creditors create any havoc.

Besides relying on debt consolidation to pay off your debts, you need to practice a disciplined money management routine to ensure that you don’t end up in a debt mess once again. So, it is essential to tighten your purse strings and avoid any unnecessary expenditure.

Ground work to be done

Before you start your search for a debt consolidation company, it is advisable to get your facts straightened first. There are two things that you should be extremely careful about:

• Check the credentials of the debt consolidation company and its history. There are a number of fraud companies that pretend to take care of your debt and actually end up creating an even messy situation for you.
• Ensure clear and elaborate documentation to avoid any confrontation later. When it comes to legal matters, the documentation is what counts.

For those who are eligible for financial aid should take advantage of that opportunity to obtain the funds for school. There are a number of students who do not know how to go about obtaining government grants. It’s easy! Fill out the FAFSA form online when you do your yearly taxes then stop by your financial aid office located at your school. Schools sometimes like to make it a hassle and will give you the run-around (trust me, I know). I have to say that it is totally worth it.

For those of you that are not eligible for government grants, here are some tips to help you bring in some extra revenue to pay for schooling:

Sign-up for scholarship mailing lists. There are so many scholarships offered that anyone can obtain. Apply for as many as you can/have time for. The list is sometimes endless.

Save Save Save! If you have a job I can’t stress more to save as much as possible. Sure, I know that you have bills to pay, but instead of eating out so much or purchasing those little trinkets you will end up throwing away next year when you switch dorms, put that money towards your college funding.

Get a job while in school. I know it’s hard to work and go to college at the same time, but sometimes it is absolutely necessary. Even if you have to get a part-time job it will be worth it in the end. A number of students graduate with a massive amount of debt that will take them double the amount of time they spent in school to pay it off.

Start a small business. There are many affiliate type programs or multi-marketing businesses out there that you can bring some extra cash in with that don’t require a lot of your time. For more ideas of how to do this you can check out a website we have designed specifically to help those market products or even build their own websites.

These are just a few ideas of ways you can bring some extra money in to help save for college or pay as you go. If you are eligible for financial aid I would highly suggest you do all you can to get that for yourself. Trust me, you will be happier by taking this route as opposed to graduating while swimming a pool of debt.

You may think that only people who know a lot about computers can have a website. WRONG! I found an amazing company that can do this for people who are computer-illiterate such as myself. Everest Web Design will do exactly what you want. You tell them what you are looking for and they will custom build a website based on your needs and wants! The best part of all is that they are very affordable. They have some of the best prices out there in the market for building web sites and rank high on quality.

If you are struggling financially in your business or would just like to increase the revenue, I strongly suggest looking into Everest Web Design to have a website made custom for you. If you have questions feel free to comment on this blog and ask. They have designed a number of our websites for the different departments that we work for and have helped us increase our business tremendously. Check them out.

In order to obtain overdraft protection on your account a credit card must be issued from the same bank of which your checking account resides in. Along with this feature fees will be required if you do happen to overdraw on your account and in comes your overdraft protection.

A couple facts:

-Overdraft protection transaction fees range anywhere from $25 – $35

-Each transaction made to make overdraft protection kick in and after will have a fee tacked on to it. If you purchase items from 4 different stores, you will be charged that transaction fee 4 times.

Overdraft protection can save you from bouncing checks and other fees that stores charge for bouncing checks, however, it can also end up costing you large sums of money if not careful. Always keep track of your spending!

Many American’s will be affected by the inflation in the US economy that is occurring. Whether you like it or not, interest rates will be rising with the moving economy. Many American’s are unaware that they even hold an adjustable rate mortgage loan. If you are unsure as to what the details are of your current mortgage loan, I would suggest you find out quickly. You could find yourself in a bind and strapped for cash if not prepared for the changes to come.

The number one thing I would suggest to you is to get in depth with your mortgage information. Get all the details and decide if you will be affected by the changes to come in the near future. Search out all your options, whether it be refinancing or increasing your income. Rising rates could drastically affect you and the economy.

If you know absolutely nothing mortgages yet you hold one, take the initiative to educate yourself. There are many resources available to you. There are a number of lenders willing to give you a free quote on refinancing your home and can provide you with a fixed rate.

How do you consolidate? It’s simple, by rolling all your student loans into one and locking it into a single rate, you can decrease your payments and your accumulated interest. If you are still in school the best rate you could get would be a 4.75. As for those who are on a repayment plan, the best rate you could get before June 30th would be 5.375—or course these figures apply to Stafford loans that were taken out after the year 1998.

Word of warning: Those who have already consolidated their student loans previously are not eligible to reconsolidate.

If you currently have a student loan, whether you are still in school or on a repayment plan, now is the time to consolidate for a better rate.

I won’t deny it, my parents were not the best teachers when it came to financial preparedness. In fact, growing up I watched them use the credit card for everything. Of course they owned a business and if you are an owner of a business you would know that a credit card is a bare necessity; however, in my home, a credit card was used for absolutely everything. There was no encouraging of putting money in a savings or investing in a bond, mutual fund, or CD. Budgeting is a word I learned on my own after I moved out and found an excessive amount of debt that had somehow accumulated in the balance of my credit card and saw no possible way to pay it off with the wage I was making. I do have to give them some credit for putting such a big emphasis on getting a real job at the age of 14 to purchase the things that I would need or want in hopes to teach me responsibility, however, the education on properly saving and investing my money was never given to me.

Teaching children to be financially prepared should be the responsibility of the parents, not the school. I do agree that the school should hold a required course on the basics of money education to reinstate what has been taught by the parents, not to mention new discoveries and statistics of this particular subject, however, what good is it if the parents are not being the prime example?

In a recent press release on April 30, 2006 with Blue Financial it states that 40 percent of workers between the ages of 21 – 30 have not even begun to plan for a retirement by investing in a retirement fund or some other type of investment service. It also states that among this group of young individuals there is a lack in knowledge of good and bad debt which could affect the economy negatively years to come.

Financial preparedness should be taught to children and young adults by the parents. Public schools, as well as private schools, should hold a mandatory class to educate students on money education; however, parents should be the example and take most of the responsibility. To help those get out of debt and prevent debt from accumulating in years to come, education is the key.

BIG PROBLEM: Capital One does not report your line of credit to the credit bureaus. In fact, they only report your highest outstanding balance that you hold on the card. Let’s say that the highest balance you have ever reached on the card was $1,800. Your credit will not show your line of credit, thus making you look as though you are at high risk for holding large amounts of debt.

Why do they do this? I’m not really sure. My guess would be to keep you as one of their customers. Once they have you, and have ruined your credit score, it will be very hard for you to be approved for credit cards from other companies, therefore forcing you to keep them as your credit card carrier.

Next time, supposing you haven’t already signed your life away with Capital One and have your credit score ruined, you might want to double check on the scoring of your credit.

A popular trend in our society today is to move debt around. It is thought to be beneficial to refinance your mortgage while simultaneously taking out a cash-out to pay off your excess debt; however, it is not considered paying off your debt. It simply is just added on to another loan and then the “payback” time frame is then extended only leaving you with more accumulated interest to pay off. To get out of debt, you have to pay the money you owe back to the creditors. I’m not sure if this is some misconception or if people just enjoy soaking in their own mess that we like to call a “pool of debt”.

Another popular way to move debt around is to transfer your credit card balances to another credit card. This is very bad! Even if the new credit card offers 0% APR for a year, the behavior scores on your credit report might kill your rating. You can probably get away with this for a little while, but soon enough it will catch up with you and creditors will stop approving you for credit cards… then what will you do? File for bankruptcy?

Bankruptcy used to be a popular way to overcome debt, however, now it is harder than ever to file. With the new bankruptcy laws passed in October of 2005, you will find it difficult to take the “easy way out” by filing for bankruptcy.

Credit counseling is another common way to get out of debt, however, you still have fees to pay which add to your expenditures. More and more people are starting to go with this option especially since filing for bankruptcy is now hard to do. Credit counseling is not such a bad idea; there are just a few things to watch out for. Click HERE for more details.

There you have it—some of the most popular ways that American’s deal/overcome their debt. Be quick to recognize your debt, but careful in choosing your method of getting out of debt. Besides, you don’t want to be like everyone else… right?

Click on the links below for more information

Consumer Credit Counseling
Debt Consolidation
Debt Settlement
Budgeting
Credit Card Debt
Bankruptcy

Do you watch the caller id like a hawk hoping that it isn’t another collection agency calling to collect funds for overdue balances from over a year ago? My roommate and I recently had a conversation regarding the trauma that the collection agencies left on her. Remembering back to her younger years, she recalls when her mother would repeatedly tell her that if anyone from a collection agency were to call, to tell them that the person they were calling for wasn’t home. She was left with the impression that collection agencies are “bad” people and that they can take you to jail. To this day, at the age of 23, she is still encumbered by fear with the memories of getting calls from the collection agencies.

So, you may be one of those people because your parents didn’t pay their bills while you were growing up, however, you don’t have to be one now! There are ways to deal with and avoid getting calls from a collection agency. They are as follows:

1. Always pay your bills on time. This is what got your parents into a trap the first time; don’t be a follower!
2. So, maybe you are in a bit of a pickle with your bills, if you do get a notice, don’t ignore it. Follow up on it with the creditor and tell them your situation. Often times you can set up a payment plan to pay off the debt slowly.
3. Become familiar with the Fair Debt Collection Practices. There are certain laws that you may not know that could be beneficial to you when getting bombarded with calls from collection agencies.
4. If you are currently in some type of debt program, i.e. credit counseling or debt settlement, you can send letters to your creditors informing them that you are taking care of your debt and to not call. If they receive some type of written documentation like the example given, they cannot call you.
5. If collection agencies are after you, make sure the figures they are giving you are accurate. Often times there could be errors in their reports or your creditors’ as well.
6. If you believe that you have paid a specific bill but are being chased by collections, find all proof that you may have of paying the funds, and don’t wait another day to get that taken care of. It takes 7 years to get reports of late payments off of your credit report.

There you have it! Some tips of dealing with or avoiding calls from collection agencies.