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.

Debts can arise as a result of unplanned and imprudent expenditure, loans, credit cards, and sometimes lay-offs, medical or financial emergencies, or as you may have seen more recently- recession. And if you don’t have a hefty savings account to dig into, in times of emergency, then getting into the vicious cycle of debt and then the subsequent interest and repayments will be the only most expedient alternative for you. While avoiding debt may not really be in your hands, eliminating debt can be, and that is where debt eliminators come in the picture.

Yes! There are ways you can legally eliminate your debt, and take control of your finances finally! No scrimping, postponing family holidays, avoiding eating out, or indulging in those guilt-laden shopping trips. Debt eliminators help you get your finances back on track, so your money goes where you want it to, and investments and savings is the only money you put in the bank. Here are a few ways you can get your accounts back on track-

• Debt Management and elimination services

If all your pay checks go in paying off your debts, and yet your debts only seem to increase, chances are you’re not doing something right and you need professional help. Your finances are obviously in a mess, and a simple way to take care of the situation would be debt management programs. These allow you to hire a third party as your debt eliminators. Negotiating your monthly payments, consolidating your finances, reducing your debts, and guaranteeing you a debt free life in a reasonable number of months, usually 12-48 months, is what these plans promise you. Careful research and testimonials by friends should help you pick the best company for you.

• Debt consolidation

This offers you a solution to all your debt elimination problems by offering you a new low interest loan to pay off all your previous debts. This loan is generally taken against a collateral, and the interest rate is generally manageable so you don’t have to worry about multiple debt and interest payments every month. While this will not eliminate your debt problems completely, it will definitely help make them more manageable and within your reach.

• Credit card debt elimination

You will find that credit cards are one of the biggest culprits when it comes to your debt problems. Overspending, being late on your payments, and high interest rates can add to your debts without you even realizing it. Credit card counseling or debt consolidation are some of the ways you can handle and budget your credit card expenditure and payments.

• DIY

A realistic overview of your income and expenditure, careful budgeting and meticulous planning, working out your monthly payments and interest rates, will help you take control of your finances all by yourself. You can even download free personal budget sheets, or use debt elimination calculators online, to help you take care of things on your own. However, with all the pressure, tension, and sometimes even threat calls from debt recovery agents, you are probably better off with a debt elimination services so you can transfer all your worries to them, and let them handle your debts minus all the tension.

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.

Identity theft is and becoming an even bigger issue now than in the past. It is so easy to steal the personal information of another and use it to obtain credit cards, loans, and other sources that can destroy your credit in a matter of months. More and more cases, little or big, are being reported daily in regards to identity thievery. In my opinion you can never be too cautious in holding your personal information from others.

There are many ways in which one can obtain your personal information including mail boxes, junk mail and other personal information thrown in the dumpster, credit and debit card handling in stores or digitally, lack of the use of a paper shredder, and carelessness in giving out your social security number. These can all contribute to becoming a victim of identity theft, however, sometimes theft is just inevitable no matter how cautious you are. An even bigger problem that is beginning to occur is that of the dishonesty of individuals working within companies that require your personal information to obtain certain documents, services, products, and accounts…

Have you heard about the blood donors in Missouri, Illinois, and Kansas that had their personal records stolen this last April? In fact, over 1 million records were stolen from one of Red Cross’s very own employees. Now how safe do you think your personal records are in the hands of others? Although there have not been many identity theft cases reported yet from this incident, it does not mean that there won’t be. Those who do not keep a close watch on their personal finances are easy targets for identity theft and could possibly not discover they have been robbed until filing their taxes next year…ugh, I don’t even want to think about what I mess that will be!

In May of this year another theft of personal records was reported. Personal information files were stolen right out of the home of a VA employee. Included in the stolen data were names, birthdates, and social security numbers. It is unknown at this time if any veterans have become victims of any fraudulent activity, however, only time will tell.

Even if you are extremely cautious in giving out your personal information you can still become a victim of identity theft. Watch all statements you receive carefully and don’t hesitate to check your credit report at least 3 times a year.

Are you a victim in either of these cases, or perhaps another case that has not been mentioned in this blog? If so, give us your story.

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.

So, I set some goals at the beginning of the year, one being that I would get out of debt and learn to better manage my money and expenses. I have not yet reached this goal because, if you read my last blog The danger in thinking “I can pay it off later” you would know my story; however, going hand-in-hand with being financially stable and money smart would be that of investing. In my goals for the year I have also came to the conclusion that I need to put some money away; whether it be for emergencies or just for a “good opportunity” that comes down the road later on and what better way than to put it in safe keeping where it can accumulate interest AND give you the ability to take it out anytime. Of course there could be a small fee that applies when removing it before the specific time period is over.

At the start of the year as I was reviewing my financial status and where I see it headed, I realized that I have completely failed to prepare myself for unexpected circumstances that could occur. A major problem I see in families today is that they don’t have some stashed cash to help them get out of a pickle if they happen to get in one. It’s not too hard to stash some cash if you have the knowledge. Here are a few easy ways that can help:

• I have been doing a little research on CD’s and what the best possible solution would be to put money in as a way to invest. Here is a quick fact for you to remember all your life: Banks are bad when it comes to investing; especially nation-wide or well known banks. Interest rates tend to be lower than credit unions when investing your money in a certificate of deposit. Look at the comparison below that I have put together of interest rates between banks and credit unions in my local area.

• Take some liquid money out of your paycheck each time your get paid. What I mean by liquid money is tangible money—money that you can stick in a safe place within our house (or wherever is safe) where you won’t dive into it. Once you have accumulated enough to put in an investment plan (because they usually require a minimum) such as a mutual fund or CD, DO IT! The sooner the better—you will want to accumulate interest on that money as soon as possible to give you a little something extra. If you don’t have a high income and can’t afford to put much away each paycheck, start out with just $5 per paycheck or an amount that you can afford.

• If you are working with a company that offers retirement plans, by all means you better take it! These are great ways for you to prepare for the future AND often they are tax deferred. You don’t have to worry about a thing because the money is automatically taken out of your paycheck and put into the fund before you even receive your paycheck. It’s a no-hassle way to invest.

Investing your money in a certificate of deposit is a great way for starters to learn how to invest. It is a small investment opportunity with low-risks. I would suggest that you get out of debt before anything else; but if you are in debt up to your ears and will take a very long time to get out, I would probably suggest that you put some money away so that you don’t have to keep digging yourself even more into debt when unexpected circumstances occur.