Debt Suggestions » credit debt

10 Ideas for Living a Life Without Credit or Debt

admin — Sat, 08 Aug 2009 15:56:24 +0000

Here are some ideas for living a credit-free life, if that appeals to you (if it doesn’t, skip this article and don’t start a debate in the comments!).

Save an emergency fund. Many people use their credit cards as a sort of emergency fund — if there’s an unexpected expense, the card comes out to the rescue. Instead, use the money you aren’t paying towards debt to build up a healthy emergency fund, keeping you out of debt when something unexpected comes up. Living without credit can be risky, but having a strong emergency fund (aim for $1,000 initially, then build it up to 3-6 months or more of expenses).
Save for goals. Once you’ve got the emergency fund adequately covered, you can start saving for other things. Set savings goals for yourself: do you want to travel, or buy a car, or save for college, or renovate your home, or buy a yacht? Decide on your highest-priority goals, and set a dollar figure. Now save towards those goals. Without debt, it should be fairly easy.
Get a debit card. If you need to use a credit card in certain situations, such as buying something online, often you can use a debit or check card instead, if it has the name of a major credit company such as Visa or Mastercard. I went several years without a credit card, but using a Mastercard debit card, and had no problems at all. It actually worked every place you would need a credit card, but I wasn’t buying stuff on credit — it was debited straight from my checking account, meaning I would need to have the money first before purchasing anything.
Earn interest instead of paying it. The problem with debt or credit is that you waste money paying interest. It eats away at your finances. Instead, make your money work for you by investing it. With the magic of compound interest, your investments will grow over time, meaning that money you would have been paying toward interest is now earning interest instead and multiplying. That’s good math.
Buy a car on cash. For those who have been buying vehicles with auto loans all their lives, it may seem impossible to buy a car on cash. But it’s very possible, and many people do it. My grandparents, for example, always buy their cars with cash (and always have, except for their first car 50 years ago). So instead of making loan payments, and paying double the price of the car or more over the term of the loan, they make savings deposits, and end up with the amount it costs to buy two cars in their bank account over the course of five years. This is something I’m trying to do myself — I’m going to use my current car as long as possible, save the amount that I’m now paying for my loan every month (it’s almost paid off now), and then buy my next car in cash. It’ll be a used car, but it’ll be all mine.

Debt Consolidation for Credit Help

admin — Mon, 23 Mar 2009 21:45:47 +0000

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.

Start Improving Your Credit Today

admin — Fri, 20 Mar 2009 13:29:26 +0000

In today’s economic environment, credit scores are more important than ever in borrowing. Sub-prime loans are drying up and the ones that remain are getting more costly in both fees and interest rates. Most financial experts agree that the days of cheap credit are gone for the foreseeable future.

With this in mind, below are the immediate actions you can take to begin rebuilding your credit score. Obviously these steps are not always easily achieved but each action is another step towards a better credit score:

Avoid any new derogatory actions. Each new delinquency, collection, or charge-off on your credit report will affect your credit score for years to come. Often the only way to compensate for these negative attributes is with time. Avoid these actions by limiting your spending or restructuring your debit. Restructuring may be difficult with a low score so it is best to avoid the debt in the first place.

Get out of debt

admin — Wed, 06 Feb 2008 16:33:36 +0000

Some sites that I’ve found that offer good suggestions on how to manage getting out of debt:

9 Ways to Pay Off Debt

You can throw the reminders in the Cuisinart or chuck them into a garbage can, but that won’t make the debt go away. Debt hovers like a carrion bird over a dying beast, with annual rates of 20% or more compounded monthly, month in and month out. You can’t wish it away. But you can pay it down with determination, our free debt-fighting resources, and the good graces of a few wealthy relatives (see tip No. 5). Here are nine ways to get out of debt:

1. Pay more than the minimum
First, break the habit of paying only the minimum required each month. Paying the minimum — usually 2% to 3% of the outstanding balance — only prolongs the agony. Besides, it’s precisely what the banks want you to do. The longer you take to repay the charges, the more interest they make, and the less cash you have in your pocket. Don’t play their selfish game.

Instead, bite the bullet and pay as much as you can each month. If your minimum payment is $100, double that to $200 or more. Examine your normal expenses — you can find the money. (For a gazillion ideas, check out our Living Below Your Means discussion board.) Skip eating out at lunch, and bring it from home instead. Eliminate desserts. Give up happy hour. We all have “luxuries,” and you know what yours are.

Make a few sacrifices, and you will find the extra dollars needed to increase your debt repayments dramatically. Those increased payments will save you hundreds, if not thousands, in interest payments. Plus, you will get out of the hole you’ve dug for yourself much more quickly. Is it fun? No. But it sure beats living a hand-to-mouth existence, fearing bills each month.

MORE HERE http://www.fool.com/ccc/debt/debt03.htm

Don’t Pay Your Minimum Balance

If you’re like most Americans, you have debt. If you’re like many Americans, you try not to think about just how much debt you have and what it’s really costing you. If you did think about it, you might not sleep well.

But ignorance never was bliss, and in order to get out from under the burden of debt, you need to face the uncomfortable (and perhaps downright ugly) truth: it may take you 30 years to pay off that credit card balance.

How can this be, you ask? You may have balances totaling less than $5000. Surely this will be paid off in no more than a couple of years. The credit card company wouldn’t let you take so long to repay them, would it?

The answer is: yes, it would. In fact, if you took 30 years to pay off your balance, you would be the ideal customer.

MORE HERE http://financialplan.about.com/cs/creditdebt/a/GetOutOfDebt.htm

Debt Snowball – The Truth About How to Get Out of Debt

Myth: I should pay off the debt with the highest interest rate first to get out of debt quickly.
Truth: You should pay off the smallest debt first to create the greatest momentum in your debt snowball.

The math seems to lean more toward paying the highest interest debts first, but what I have learned is that personal finance is 20% head knowledge and 80% behavior. You need some quick wins in order to stay pumped enough to get out of debt completely. When you start knocking off the easier debts, you will start to see results and you will start to win in debt reduction.

Debt Snowball Plan
The principle is to stop everything except minimum payments and focus on one thing at a time. Otherwise, nothing gets accomplished because all your effort is diluted.

First accumulate $1,000 cash as an emergency fund. Then begin intensely getting rid of all debt (except the house) using my debt snowball plan. List your debts in order with the smallest payoff or balance first. Do not be concerned with interest rates or terms unless two debts have similar payoffs, then list the higher interest rate debt first. Paying the little debts off first gives you quick feedback, and you are more likely to stay with the plan.

MORE HERE http://www.daveramsey.com/the_truth_about/get_out_of_debt_4055.html.cfm