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Is there such a thing as government aid in free debt consolidation? Many people will tell you that the government will help you pay your debt and they might if it is student loan debt. But if you are looking for the government to give you a check to pay you credit cards, you are most likely going to be disappointed.
If you have credit card debt you are going to have to research your debt consolidation options and select the one that best works for you and your financial situation. You have 2 options for consolidating your debt and they are a loan or a credit counseling service. A loan or a credit card balance transfer is not in your best interest and I would not recommend moving the money you owe from loan type to another.
Credit counseling is your best option for consolidating debt. This is a service that consolidates your debt without a loan. They reduce your interest rates to less then 10 percent in most cases and eliminate your fees. The best part is you only have to make one payment each month no matter how many account have enrolled in the debt management plan.
Your credit counseling agency will handle all interaction with your lenders and that will be a relief. These companies also have budgeting and other educational material available to their members. You can have an online quote for credit card debt relief within a day or two and can be on your way to paying of your debt. There is a lot of information about the government giving grants for debt relief, but there is no reliable evidence that this happens. If you want to get out of debt, it is going to be up to you to take the necessary steps.
Credit card debt relief is not going to be easy, but it is something you must do. There are several small steps that you can take that will expedite the process of getting out of debt. These steps all add up and before you know it you will begin to see a dent in your credit card balances. The biggest problem is most people do not know where to start. Many of them just need a guide that they can follow that lays out a clear plan for paying off their debt.
If you are desperately looking for an answer to your credit card debt problems, this plan will give you the guidance you need to be debt free quickly. If your debt is consuming you and you are ready to do something about it, see how you can begin eliminating your debt today.
- Don’t get into debt. Use cash for all your purchases and don’t take on any debt except home and auto.
- Spend less than you earn.
- When debt is closed out, put 60% in savings and enjoy the remain 40%.
- Take stock of all your liabilities, so you know exactly how much you owe to the world. Put them in a spreadsheet, with monthly payments, interest amounts, balances, and a running grand total of all your balances. Update it monthly as you pay off debt, and watch the overall amount go down slowly. It’s very motivational.
- Have only one credit card with a low limit, and only one loan with monthly payment not exceeding 25% of income.
- Build up an emergency fund first. If you come into extra money (tax returns, etc.), use it to build an emergency fund and pay off debt after that.
- Cut up your credit cards.
- Speak to a credit counseling service to help work out a plan: your “must pay” outgoings, arrange with creditors to freeze interest and accept a revised monthly payment. Warning: a reader informed me that using a credit counselor will show up on your credit report and adversely affects your FICO score — not as bad as a bankruptcy, but it is coded, and lenders can see it. Only exercise this option if you’re really in dire straits.
- Stop using credit cards to make it to the next paycheck. Stop getting further into debt.
- Don’t overpay your debts — leave enough so you have enough for regular expenses too.
- Avoid eating out. Cook your own meals, except on very special occasions.
- For entertainment, visit friends and be creative on how to entertain yourselves and your family without spending a dime.
- Don’t pay off your credit card balance from the emergency account. Don’t touch the emergency account at all — it doesn’t exist!
- Look for expenses coming up in the future and plan for them, so you don’t have to go into debt when they come up.
- Make a budget – Purpose every dollar (including some buffer).
- Snowball the debt – Pay minimums on everything, attack the smallest balance with all the extra cash you can assemble, then move on to the next one.
- Be on the same page as your spouse or partner. Competing interests are suicide.
- Recognize your spending tendencies (and your family’s) and place limits on them. Develop good habits instead.
- Read Dave Ramsey. Read “Your Money or Your Life”.
- Keep trying and don’t give up. Make a commitment, and if you aren’t getting out of debt slowly but surely, revisit that commitment. Change is difficult and it takes drastic change in mindset and behaviors to get out of debt. Anyone can do it – as long as you really want to do it.
- Stop spending! You have to really, truly want to do this. Otherwise, you’ll put yourself on a financial diet and then crash and burn and find yourself justifying why you deserve to spend so much money on a new iPhone when you have a perfectly good phone and $20,000 in debt.
- Praise yourself for every small accomplishment. But, don’t praise yourself by spending frivolously.
- Find the tools that work for you and stick to them. If the tools aren’t working, find new tools. There are plenty of tools and ideas out there – for free.
- Change yourself. If you have a spouse or partner that is contributing to the debt, it can be a big challenge to get them to change. Focus first on changing your behaviors and attitude.
- Be realistic. If you started accumulating debt three or four years ago, realize that it will probably take you more then three or four years to get out of debt and stay out of debt.
- Create a realistic budget. Put as much money as you can towards paying down debt and having an emergency fund, but allow for a little bit of. Only the truly dedicated can live with no social/recreational activities for the amount of time it takes to become debt-free.
- Eliminate. Take a hard look at what’s truly necessary, and be willing to make compromises. Cable TV, satellite radio, and lunches in the office cafeteria are not necessities. If you have a hard time letting go of these things, run your numbers through a debt calculator twice – once with your current budget, and once with additional money currently paying for niceties. You’ll be amazed at how much of a difference those few extra dollars make.
- Get creative. If there’s something you think you don’t have time to do more frugally, find a way around it. For example, cooking at home is much cheaper than eating out. If you don’t have time to cook, try investing in a crock pot.
- Be patient. Debt reduction is a long, slow process. Depending on the method you use, you may see no significant progress at first, but it will happen.
- Stop borrowing money – no matter what! This means no more credit cards, no more car loans, no more cash advances, no more home equity lines, etc. If you can’t afford to buy something with CASH you have now, then YOU CAN’T AFFORD TO BUY IT.
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As the credit crisis winds toward its inevitable conclusion, the number of customers unable to pay off their credit card each month is swelling. And credit card companies, facing the very real possibility of customers defaulting entirely, are now willing to come to a settlement for substantially less than the amount owed. With the credit card companies ready to deal, here’s what you need to know to get your own personal bailout.
Credit Cards are Unsecured Loans
Credit cards are a form of unsecured loans. What does this mean in layman’s terms? An unsecured loan is a loan in which a borrower is not required to use an asset as collateral in order to receive credit. In contrast, secured loans (mortgages or auto loans, for instance) use collateral that may be repossessed should the borrower default on their payments. By the nature of their business models, credit cards and other forms of unsecured loans typically offer shorter payback terms and higher interest rates.
Bailouts for the Delinquents?
With the recent rise in unemployment and wage cuts, credit card debt delinquency has significantly increased and shows little sign of slowing down. So what’s a credit card company to do? Bail you out! If you fall into the delinquency camp, there is a good chance that you may be able to negotiate an agreement with your card provider to pay off a portion of your debt in exchange for them wiping out the rest.
Increasingly, consumers are reporting that they are getting offers from their card providers to wipe out debt in exchange for payments. Few creditors are admitting to the practice. American Express and Bank of America admit to deciding on a case-by-case basis whether to accept partial payments. Other companies are keeping their lips shut, but their trade group, the American Bankers Association, acknowledges that settlements are becoming more common.
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It’s tougher than ever to plan your finances. But it’s also easier than ever to find help on the cheap.
There are a host of Web sites that help you lay out a budget and track your spending and investments. Some let you set up a plan for a long-term goal, like college or retirement, and others offer advice about where to put your money. And many of these services are free of charge.
To help you wade through all the choices, we scoured the Web to find some of the best online tools and got recommendations from personal-finance pros. Here’s a look at some of the best sites we turned up, in a range of categories.
1. Budgeting Your Money
The first and perhaps most effective step to managing your money online is signing up for basic budgeting sites such as Mint.com, from Mint Software Inc. of Mountain View, Calif., Wesabe.com, from San Francisco-based Wesabe Inc., or Geezeo.com, from Geezeo of Hartford, Conn.
These free sites offer tools to help you keep track of what you’re spending, how much you’re saving and how your investments are performing. You create an account, and the sites automatically aggregate all of your online financial data, letting you keep track of credit cards, home loans and bank and brokerage accounts all in one place.
To help you avoid bank or credit-card fees, these sites can alert you via email or text message when a bank account is low or when a credit card is approaching its limit. And the sites can slice and dice the information to help you budget better. For instance, they will automatically show you how much you spend in any given category, such as restaurants or gas stations, and can compare your spending habits with those of other users, so you can identify areas where you might need to cut back.
Some sites, such as Geezeo and Wesabe, also offer a social-networking element that allows users to share tips and advice on a range of money-management issues.
One big caveat: Many of these sites need usernames and passwords for your various online financial accounts to get access to your data, says Jim Bruene, founder of online-banking research company Online Financial Innovations and Finovate, a conference series showcasing online financial tools and companies.
Some sites, like Wesabe, allow you to download statements from your bank or credit-card company and then upload them manually. This can be more time-consuming but a comfort to those who don’t want to give up their passwords, Mr. Bruene says.
There are other caveats to consider when using the sites. For instance, Mint.com showcases advertisements of financial-services companies and shows ads based on your activity on the site. (If you spend a lot on restaurants and gas, for instance, the site may suggest a reward card tied to those kinds of purchases.) Critics say this may create a conflict of interest, since the site is ostensibly trying to help you save money.
Mint.com notes that users must deliberately choose to click on the “Ways to Save Tab” displaying the offers. Donna Wells, the site’s chief marketing officer, says that when users decide to accept an offer, they “save real dollars, the financial institution gets a new customer at a low cost of acquisition, Mint.com sometimes, but not always, receives a small referral fee from the provider. That’s how we keep the Mint.com service free.”
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We are often told that the current financial meltdown is the most serious since the Great Depression. And while that may be true, comparing today’s times to such an awful and demoralizing crisis has the effect of scaring people, thereby making the situation worse. This is the wrong way to react to the situation. Rather than passively absorbing fear and uncertainty, we would do well to remember that some people managed to stay afloat during the Great Depression – and to learn how they did it. In that vein, here are 16 Depression-era money saving tips and how they can be utilized today.
- Pay Yourself First
Without a good-sized chunk of money stashed aside, there is literally nothing standing between you and financial disaster. While you may manage to chug along the way things are now, the slightest change (a sudden spike in credit card rates, temporary loss of income, etc.) could send you reeling. That being said, it’s no surprise that paying yourself first by continuing to save was a common trait of people who survived the Great Depression. You should do the same today, no matter how uncomfortable or counter-intuitive it feels at the time.
- Only Buy What You Truly Need
Together with regular savings, buying only necessities forms the bedrock of the Depression mentality to surviving economic turmoil. You can bet that when people were jumping out of skyscrapers because their net worth evaporated overnight, the people who held it together were not blowing their money on excesses. Similarly, until you conduct a thorough inventory of your spending habits, methodically eliminate waste and ensure that you are only buying what you truly need to survive, you will not be as fortified from disaster as you could be.
- Awaken Your Inner Bargain Hunter
Another defining characteristic of Depression survivors was their relentless spirit of bargain hunting. When money is scarce and the future uncertain, there is simply no excuse for paying full sticker price on any of your purchases. Such times call for a different mentality, one of price comparisons and serious research into where the cheapest prices can be found. Luckily, the Internet makes this task far easier for today’s consumers than Depression-era bargain hunters. A few minutes of research before making any major purchases will usually assure you of getting a better deal.
- Avoid Debt Like the Plague
Today’s recession (much like the Depression of the 1930’s) was caused by excessive borrowing and debt. That being the case, it would be utterly foolish to exacerbate the problem by going into debt yourself (especially if you already have outstanding debt in the form of credit cards or loans.) Going into debt during a recession takes you from the frying pan into the fire, exposing you to the full wrath of collections agencies, ruined credit scores, and possibly even bankruptcy. Rather than allowing this to happen, adopt the Depression mentality: see debt as a plague to be avoided at all costs.
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WASHINGTON – Declaring “good news” in the midst of an economic meltdown, President Barack Obama on Thursday urged families to take advantage of near-record low mortgage rates by refinancing their home loans. “We are at a time where people can really take advantage of this,” Obama said, seated with a handful of homeowners who have already lowered their bills.
But he also warned people to watch out for scam artists, cautioning, “If somebody is asking you for money up front before they help you with your refinancing, it’s probably a scam.”
Rates on 30-year mortgages inched upward this week but remain near the lowest level in decades, allowing borrowers with strong credit and stable jobs to save money if they refinance.
The average rate on a 30-year fixed-rate mortgage rose to 4.87 percent this week, up from 4.78 percent last week, Freddie Mac reported Thursday. That was the lowest in the history of the survey, which dates back to 1971.
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In a down market, especially when many investment portfolio values have been slashed by 30 or 40 percent over the course of a year, it’s become painfully apparent that a large part of those losses comes in the form of the fees you pay to invest your money. Over a period of several decades, from first investment to retirement, investment costs can eat up tens and even hundreds of thousands of dollars, destroying the real rate of return of a mutual fund.
For example, an initial investment of $50,000 over a period of 25 years at 8% would grow to $342,423. However, if the gains are 6% annually due to management costs and related fees, that number drops to $214,593 – a difference of $127,830. Even a difference of one percent can be huge over time – in 35 years, receiving 8% annual on $50,000 yields 739,267; compare this to the 533,829 from a 7% return on the same money.
For the average investor, most investment fees fall into one of three categories: mutual fund expenses, investment advisor fees and brokerage commissions, the per-transaction trading fees for buying and selling individual stocks. Mutual funds have some of the highest expenses, with exchange-traded funds (ETFs) usually somewhat lower.
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new tax year has begun which provides a great opportunity to do a little financial spring cleaning. Even in a tough economy, it is possible to spend less without making major sacrifices.
Get Organized
First things first—gather all of your monthly bills and take stock of your situation. Ask yourself questions like: “Do I need this?”, “Is this the best service provider?” and “How long has it been since I made changes?”
How About that Landline?
If you are really honest with yourself, there are probably several services that you are paying for that don’t produce a good return on their investment. One of the top issues on my list is a landline phone. Obviously there are extenuating circumstances, but fax machines and security systems are often among the excuses people use to hang on to these relics.
For most faxing situations, a scanner and some kind of email or e-fax service will work just fine—we recommend emailing PDFs with embedded signature images where possible.
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1) Watch for fees
Here are some fees you should be on the lookout for:
–ATM fees: According to the latest bankrate.com study, ATM fees average $1.97. That’s 11 percent higher than the prior year
–Overdraft fees: Overdraft fees kick in when you don’t have enough money in your account to cover a transaction
–Maintenance fees: Some banks charge a monthly fee regardless of your balance, while others will ding you only if you fall below a minimum balance
–Teller fees: Some banks will charge you just for going to the teller –perhaps if you have an express, or an online account.. you could even be dinged for writing too many checks
2) Avoiding fees
Don’t use another bank’s ATM. 99.2 percent of ATMs surcharge according to bankrate.com. So, to avoid these ever-growing fees, use your debit card to make a purchase, and just ask for cash back. If you really just need an ATM, make sure you avoid the ones at airports, casinos or any other place where the machine is the only way you can access money. Overdraft fees can be brutal. As high as $40 in some cases and Consumer Reports estimates that translates to over 1000 percent interest rate. Here’s how you can avoid them. First, link your checking account to your savings account. Next, keep track of your deposits/withdrawals and finally, keep a cash cushion (especially if you have companies that withdraw money from your account automatically) .
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When it comes to credit cards, credit card debt and other loans and types of debt, many people are suddenly finding themselves not only way over their heads, but also drowning in it. This is largely a result of the fact that as consumers, we are using our credit cards to purchase too many of the things that we need and use on a daily basis, which is not why credit cards came to be in the first place. In most cases, our weekly, monthly and yearly incomes simply are not enough to allow us to buy these things, and so we regularly turn to credit cards for help and end up charging things up necessarily.
In some cases, and unfortunately it seems like more often than not these days, this use of credit cards is what allows us to get out of hand with our debt in the first place. We end up getting ourselves into more debt than we can reasonably afford to dig our way out of. If you feel like you are over your head in debt, or drowning in debt because your credit card bills are piling up and your income does not support their repayment, then it may actually be time for you to consider taking out a new, better loan; a debt consolidation loan. Debt consolidation loans are designed to help you consolidate numerous credit card bills and other loans into one larger but easier to pay loan.
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