Hond Financial

Posts Tagged ‘debt problem’

Are you in debt? Is your life spiraling out of control because of your debt? Are you scared to admit to other people that you have got a debt problem? If you have answered yes to one or more of these questions then this article could well prove to be beneficial for you. I will be providing free advice and resources about debt relief which I hope will prove to be of benefit to its readers.

I am not writing this article to try and sell you anything; I do not work within this sector. I run a how to stop stuttering course here in the UK and I also help people to become cost reduction experts as well as working part time for a composite door company.

It is a tough scenario, your outgoings are higher than what you earn. You are only able to pay the minimum repayment amounts from you credit card or loan debts and on some months are not able to even do this. You could not be working harder but each month the debt problem gets worse. You feel like you are letting your whole family down, you feel ashamed of yourself and are unsure of what to do next. You are scared to tell your husband/wife/partner for obvious reasons. Christmas is just around the corner, how will I be able to afford all of the presents? Does this sound familiar?

The time has arrived when the worries must be replaced by some form of positive action~The time has arrived when the worries must be replaced by some form of positive action}. Firstly, however hard it might be you have to tell your husband/wife/partner. Of course it will be a massive shock to them, of course they will be angry, of course they will have a go at you~It has to be expected that they will not be happy about the situation and that at the outset they may seem rather angry}. Despite all of this you have to do it. They are likely to act in a negative manner in the short term but may well come up with some answers or solutions after the initial shock has warn off.

Secondly, seek professional help. In the UK we have some great companies such as payplan who can prove to be a huge help for people who are in debt. They have seen similar problems to the one you have a million times before. One of their first roles will be to attempt to freeze the amount of interest that you are paying on the debt and will start by contacting, usually in writing, all of the companies that you are in debt to. They will tell these companies that you want to repay the debt and will negotiate an affordable repayment scheme for you.

A bad credit rating save you from bigger difficulties? Hasn’t it done just that for many young people? I will explain it with few true stories.

Good Credit Rating Story

My friend started his early years with good credit rating. He was able to get credit cards whenever he wants, as well as finance cars, snowmobiles and more. He made the payments, and get stuck into debt while he was at it. He had over twenty thousand dollars in credit card debt, plus loans on cars and business tools when he was just 30 years old.

Eventually it was just too much to handle. After considering bankruptcy, he was convinced that the credit card companies would reduce his balance due if he just threatened to declare bankruptcy. However, he had to stop paying on the cards, or the credit card companies wouldn’t believe he was in financial trouble. After doing this, he drafted a nice letter to the companies, explaining his condition. Most cut at least 30% off what he owed, but he had to pay the remaining money immediately, which he did with a home equity loan.

As a result he was able to rebuild his credit score as his bad credit rating was not as bad as if he had actually declared bankruptcy. He also started to rebuild his credit balances. His good credit rating enabled him to begin again the process of overburdening himself with debt. He lives a stressful life, to say the least.

A Bad Credit Rating Can Be A Good Thing

Another friend had her first credit score based on the phone bill in her first apartment, which she never paid on time. It was eventually disconnected. At an early age this and some other small credit infringements, destroyed her credit scores. Is it good for her or not?

Just because she cannot take any further money she is not overwhelmed with debt and at the edge of bankruptcy. She has to buy things for cash when she has it, or wait until she saves enough. She cannot buy anything on credit till she dont have the cash to buy but it is good for her as she will never be under the stress of paying debt? No that is not true.

She seems happier than most people, perhaps partly because she just doesn’t have the debt-stress that is so typical today.

Bad Credit Rating Can Be A Good Thing?

I’m not saying you should intentionally try to get a bad credit rating, but if you already have one, know that it isn’t all bad. If you will borrow more then you will get stuck into deeper debt problems. Why not look at it as an opportunity to stop going further into debt, and a chance to learn better habits?

Pay cash for everything. Pay down those credit card and loan balances (the higher interest ones first). The moment you get your cards paid off, start setting aside money to buy a good used car for cash. then, when you’ve done that, start putting what would have been a car payment into a savings account, for a future down payment on house or a business (the only things you should borrow for). Your bad credit rating can be a good thing if you take it as a chance and learn a lesson from it.

Most Frequent travelers know all about credit card blocking, many from painful first hand experience. Hotels post notices of their policy regarding holding, usually in the form of an obscure plaque some clerks will point to when an inquisitive visitor checks in. Car rental companies rapidly recite their policy to callers wanting to reserve an SUV for the family vacation. Still hundreds of unsuspecting consumers will feel the pain of credit card blocks every day. What is the use of credit blocking?

Due to the risk involved, credit card issuers block your credit. The block did not immediately blocks your account, but it just reduces the credit amount available in your account. Including the amount of the block may be more than you think as the bank may add in additional estimated charges such as gasoline for a car rental or food for a hotel stay. Even a pay-at-the-pump transaction can cause a $100 block to be placed on a card. These blocks or “holds” can cause for some rather difficult times if you unknowingly end up in the worst situation.

Suppose you are flying to Las Vegas for the weekend. Assuming you have not yet acquired high-roller status, you will need to reserve a flight, car rental and hotel room.

Each of these reservations will cause a block to be placed on your ever-faithful rewards credit card. Then in an effort to smooth-over the news of your impending excursion, you take your significant other to the finest restaurant in town. Imagine your surprise when waiter lets you and the patrons in a two-table radius know your charge has been declined.

Another, and even more heinous scenario, would have the person securing these future charges with a debit card. Each reservation would have placed a block on the checking account underlying the credit card. Then the flowers, dinner, cab fare and concert tickets would have all generate separate overdraft charges. Not to mention any checks clearing during the time the blocks are in effect. It hurts.

Always maintain a balance well below the usable limit of your credit card to avoid any blocking problems. Although this is wise advice it may not always be possible considering the somewhat varying amounts and timing of the blocks. One tidbit that is unwavering is that reservations should not be placed on a debit card. Ever.

You can also keep an spare credit card to avoid this situation. A method employed by many, a spare credit card can be used to place all the reservations thereby protecting the available credit of your preferred card. Then when the actual charges are made the preffered card can be used and any rewards can be accumulated. An additional benefit is the block transactions provide activity on the spare card furthering its value as a tool to enhance your credit score.

Like many credit related issues, knowledge and a little foresight can go a long way in preventing unexpected problems and expenses. Now since you know about credit block, it is the time for a action to make sure you do not fall into the trap of credit block.

Credit cards are convenient to use but still they can be very costly consumer product too. Most people don’t realize just how expensive carrying around a credit card in your wallet can be. Each year many big spending credit card consumers can throw hundreds or even thousands of dollars out the window using credit cards. These below listed credit card tips can help you save hundereds of dollars each year whether you are a big credit card user or not.

Never Pay the Minimum Payment

Your credit card company usually makes sure you know that there is a minimum payment. Even if you owe thousands of dollars, your minimum payment can seem extremely low, sometimes only 3% of your total balance. However, what the credit card companies don’t tell you is that if you have a large balance and only pay the minimum payment for the next few years you will cost yourself possibly thousands of dollars in interest costs alone. In fact, that purchase at the record store for $50 over time will double. Always make sure that you pay more than the minimum payment so that you have to pay less interest on the borrowed amount.

Transfer Your Balance to a Lower Interest Credit Card

Most Americans receive several credit card offers each month and most have some very enticing interest rate offers. For instance, many credit card offers will transfer your existing high interest rate credit card for free to the new card and allow you either 0% interest for 3 months or a very low interest rate for a specific period of time. If you have a high balance in which you pay hundreds of dollars each year on interest payments, in many cases it is in your best interest to accept these offers and enjoy zero or low interest for the next 6 months to a year.

Use a Debit Card Instead of a Credit Card

Sometimes we use credit cards because we have become habitual to its use. But why use something that is so expensive when we don’t need to. We can easily pay for that meal or fill up our car with gas with our debit card and not pay any interest. Why not use debit cards when they are just as convenient as credit cards. Use your debit card to avoid high interest fees in the long run and you can literally save hundreds in interest fees each year.

We have all seen the ads for “free credit reports” in our email and on various websites.

Are all those credit report offers original?

Unfortunately, most are not actually free. Most credit reporting companies require a monthly “credit monitoring” or other fee – one that most people really don’t need.

Under the Fair and Accurate Credit Transactions Act (FACT Act) consumers can request and obtain a free credit report once every 12 months from each of the three nationwide consumer credit reporting companies – Experian, Equifax, and TransUnion.

To get your credit report, visit www.AnnualCreditReport.com and you can order your credit report online. You can also use email or mobile phone for making request.

Other websites that claim to offer “free credit reports,” “free credit scores,” or “free credit monitoring” are not part of the legally mandated free annual credit report program. So do not get into these offers.

What should you do if you find any wrong or damaging information on your credit report?

You can also file a dispute online or you can contact the credit bureau that issued the report in writing.) Stay to the point and provide an explanation about what you think should be removed. By law, the credit reporting agencies must investigate your dispute within 30 days, and notify you in writing – if the information cannot be verified as correct, it must be removed.

The best way to monitor your credit all the year is to order one credit report once in every 2 or 3 months. While not all creditors report to each of the 3 major credit bureaus, this will give you a good idea about any changes in your credit.

Can you know your credit score for free?

Unfortunately, your credit score is not considered a part of your free credit report, and must be purchased separately. Before applying for any major credit purchases it is good to know your credit score.

Does credit score repair work?

Yes credit repair does work. The credit reporting companies must remove any items that are not correct. You can dispute any item you think is damaging for your credit score and nothing can stop you from doing that. While the credit reporting agencies have no obligation to remove any items just because it hurts your credit, many individuals are able to get damaging items removed from their credit report, and improve their credit score, just by asking for the item to be verified.

But be careful – there are many companies that will charge you a fee, basically to do what you can do on your own. You should be aware of the fraudelent companies that offers to create a new identity or credit file for you, as it may get you in trouble.

Informed consumers are always able to protect their credits!

If you’re like most Americans, offers for credit cards arrive in your mail on a daily basis. Why are credit card companies so eager for your business? There are many causes. Credit cards, for one thing, are not free cash. Funny enough, many customers think of them this way, and that—aha!—is how credit card companies make their money.

Credit cards have varying APRs or annual percantage rate you will notice it when you read through the fine print about credit cards. It refers to the interest rate you have to pay on your credit card charges if you did not pay your full monthly balance. When have you go for shopping last time, think about it. Are you sure that everything you bought from market you can pay for those items from your monthly paycheck? If not, you are a credit card company’s dream come true. You see, these companies bank on the chance that consumers will use their credit cards to buy more than they can actually afford at the time of purchase. When the bill comes and it can’t be paid in full, the customer pays interest on this borrowed amount, and that interest accrues daily. This money reaches directly into credit card company’s bank account. With thousands of customers falling into this plight on a monthly basis, you can see where the companies get rich quick.

But how can you avoid falling into the credit card trap? A little forethought and budget planning can help you prevent paying interest and still allow you to benefit from credit card perks.

Go for the mileage credit cards. Most airlines offer credit cards that earn you frequent flier miles based on the number of dollars you spend. Enticing, right? Sure.

Always remember your spending limits and do not cross them. Telephone and internet are two easy ways of checking your card balance. Know when the closing date is for your monthly statement, and make sure you stay below your limit. That way you can take advantage of the bonus without digging yourself into a rut.

Speaking of the credit card rut, let’s go back to that interest thing. Did you know that interest, if left unpaid, also accrues interest? Take a look at this example. You have racked up $10 in interest on your credit cards in one month, based on a balance of $100. (This assumes a 10% monthly interest rate.) Because you leave that unpaid, the next month’s interest accumulate on the new balance of $110. That means the next month you owe an additional $11! That’s a $21 total fee for your $100 in purchases. Did you really find a bargain when you bought that jacket at 20% off? Perhaps not.

If you buy responsibly and keep track of your purchases, you can avoid credit card traps. If you are smart enough you must know how to use credit card for your betterment.

It is really amazing that someone’s life can be drastically affected by three numbers. Here’s a crash course on what they are and what consequences they can bring.

You sit down to look at your credit report for the first time. Warm regards, if your scores are more than 720! You have excellent credit; stop worrying. If your scores are below 700, no problem—let’s get to work. Take solace in the fact that the national average credit score is around 676 according to the Gallup Organization. If you’re scores are below 400, 500, or 600, then you surely have room for betterment and only one way to go—up!

If the numbers I’ve mentioned don’t make any sense to you or you have no idea what they mean, don’t fret—I’ll explain. Credit scores range from 350 to 850. All three of the credit bureaus—Transunion, Experian, and Equifax—offer  FICO credit scores using a complex mathematical formula developed by Fair, Isaac and Company, but they each give the scores a different name: At TransUnion, the FICO is known as the Empirica; at Equifax,it is called the Beacon credit score; and at Experian, it is called the Experian/Fair, Isaac Risk Model.

If you have excellent credit means if your credit scores are above 720 you will be able to get the best interest rates available. The interest rate you will receive for a home loan will rise as your credit scores fall down, this is known as tiered pricing. The more of a risk the lender takes on you, the higher your interest rate will be. In addition, all investor have their own break points between tiers. What this means is that one investor may increase the interest rate if a score drops below 700, while another lender won’t give a higher rate until the score drops below 690.

In summation, you should do everything in your power to maintain good credit scores, and be sure to shop around and do your homework when looking for a home loan because all lenders are not created equal. I think you’ve already catched the moral of the article but just in case you have not, here it is: Good credit scores save lots and lots of money, and be sure to choose a moneylender wisely to get the best rate for your credit scores.

Seeing people buying food or shopping clothes using credit cards has been commonplace these days. Credit cards can be used widely from shopping to dining and in many more things.

Credit cards has become status symbol nowadays so everyone wants to use it. These sleek and slim cards are easy in use and can be used for buying anything instead of caring about how much money does one have in his pocket.

Short of cash and hungry? No grocery supplies? Going to a party but no money to buy that dress you’ve been drooling for? Don’t worry Your good ol’ credit can care of that for you. No worries.

Credit Cards: Not Free Money

But wait. A credit card spree may be fun, but that doesn’t free you from responsibilities in paying the expenses you incurred from using your credit card.Credit cards, after all, are interest loans in disguise. Many charges are associated with the use of credit cards, including:

“A finance charge, which is an interest charge for the unpaid portion of your monthly bill;
“An annual membership fee;
” Or you can be charged higher interest rate on the late payment fee.

In fact, many credit-card holders face credit-related problems. Unperfect buying decisions, lack of information on credit card fees, and disregard for upcoming credit payments are among the reasons why many credit-card users are often hard-pressed in paying their debts. Many of them cannot even pay the actual shopping charges, just barely managing to pay credit card company charges.

Before you get drowned in a sea of debt, here are some tips to help you manage your credit-related expenses:

“Be credit concious. Applying for a credit card application means you are ready to assume the responsibility for paying your credit. Paying off your credit expenses is your responsibility not of anyone else.” Use your credit cards wisely and sparingly. Remember: Paying goods and services using credit cards are more expensive than using cash or checks. Credit payments include interest and other fees. Use credit cards as sparingly as possible.

If you really need to use credit cards, carry only the cards that you will actually use. “Use credit only if you are sure you can repay it. Paying your debt on a credit card using another does not count.
” Avoid impulse shopping on your credit card.
“Use credit card only when you need it really .” Seek credit counseling as soon you see financial problems on the horizon.

Usually we apply for more credit cards then is needed. We feel like we have to be able to purchase almost any type of item at anytime, whether we can really afford it or not. Having several credit cards allows one to buy products and services at will. Is it right or wrong?

There are many companies offering credit cards and loans online, but all may not fit everyone’s needs. A credit card is a significant financial tool that needs to be used wisely and cautiously. Never allow yourself to get so far behind on your creditcard balance totals that you can only afford to pay the minimum payment amount or small amounts each month towards the reduction of your debt. That is the interest rate trap. Do not cross your credit cards limits otherwise you will get trapped in paying off your cards debt for years.

However, having credit cards can be a positive, productive personal finance tool and does not have to be a negative to your credit status or your lifestyle. A few key points:

• Convenient to use and carry
• Offers valuable customer protections
• Use it with caution and good judgement
• Each month pay your monthly bills fully, as it eliminates interest charges

Having credit cards is a priviledge and huge personal responsibility. You must utilize and manage your credit rating wisely and carefully at all times. The saying that if you can not afford to pay cash, then you can’t afford credit card is quite true and we should take care of this warning. Using creditcards in this manner makes them your friend and not your foe. Having credit cards in your name is not bad just take care not to go into debt for more than can repay. Doing so will only serve to damage your credit rating and it can and will create larger credit problems for yourself into the future that may be difficult or impossible to repair.

When shopping for a new credit card, comparison shopping is important, because it can save you money. Make sure that all the expenses and conditions related to credit card offer are under your knowledge. These can make a real difference in how much in fees and interest charges you will possibly be paying each month. Be sure to compare these costs with any of your existing financial instruments, cards, loans, mortgages, etc. You may be able to replace some of your current bills with less expensive options. Some of the costs and terms to consider are the annual percentage rate (APR) for goods and services as well as for any cash advances you may request, the annual fee, and the grace period.
Also compare other fees, late-payment charges, and over-the-limit spending fees.

You’ve analyzed your past expenses, put them into spreadsheets, loaded Quicken with all of your data and come up with a  financial budget. Now what? The tough part! You actually have to stick to your budget and put your plans into action. This is easier said than done. In many cases you will have forgotten about your budget and your financial goals 6 months or a year down the road. How do you keep this from happening to you? Here’s how. Remember to follow some of these ways below so this doesn’t happen to you.

1. Create a budget with achieveable targets – Let us assume that one of your budget goal is to not eat out for lunch or dinner regularly. If you are honest with yourself you may find this to be an unrealistic goal. Sometimes it’s a nice break to eat out and have a relaxing rewarding evening. In other words you can say that you will not keep such hard targets. Hard and unachievable goals are one of the main causes for unsuccessfulness of your financial budget.

2. Budget for expenditures that don’t occur on a routine basis – Make sure you remember expenses that occur once a year, such as holiday presents, birthdays, vacations, weddings, car maintenance costs, etc. These expenses don’t occur monthly and they will bust your budget plans wide open. Make a list of these events on a calendar and put a dollar figure to them. Make a advance planning of the unexpected expenses so that you can get along with them. The daily routine expenditures are not the reason your budget will fail. It is these “gotchas” that will wreck havoc on your budget if you don’t plan for them.

3. Put your budget in writing – Take the time to write down your budget plans. Making a mental note of your budget goals is a recipe for failure. Don’t assume that your financial future will take care of itself by making a simple mental note to yourself. If you have your budget goals detailed in writing you can review and remind yourself weekly and monthly of your financial goals.

4. If you have a bad month or week, don’t give up so easily! – Let’s say you have been reaching your budget goals for three months. In the fourth month, for whatever reason, you didn’t reach your budget goals. Maybe you even stopped trying to follow your budget! If this happens, don’t just throw your hands up in the air and admit to downfall. Everybody falls off the wagon sometimes. Your budget is a journey. There will be bumps in the road, so the key is to realize that everyone makes mistakes. This relates to a story I like about a great old time golfer named Walter Hagen. Before each round of golf, he told himself that he would have 4 or 5 wrong shots. During the golf round, if he hit his ball into a bunker, he would tell himself, “There is one of my bad shots that I was expecting”, hit the ball out of the bunker and move on. It didn’t phase him one bit because he had knew there would be some bad shots in his round.

5. Adjust your budget over time – This one is a biggie! It can take months or even years to fine tune a financial budget. When you initially made your budget plans, you probably had to guess at some of your figures. They might not have been in touch with the realities of every day life. For example, It might happen that you may have underestimated your monthly grocery or utility bills. If this happens, estimate all of the underlying money that was spend in this category to see if your initial estimate was unrealistic. If it was, try to come up with a more accurate number and then to stick to that new figure. It is this type of adjustment that is one of the keys to making sure you can stick to your budget.

6. Review your budget every month – This is where you will make any adjustments that are needed. Set aside the first day of each new month to review your income and expenditures and match them to your budget goals. By regularly viewing your expenses and comparing it to your budget, you can adjust your spending habits . This gives you a chance to analyze areas that exceeded your budget limitations and make the adjustments in your spending habits or your budget. The goal here is to not forget about your budget. One tip that has worked for me is to put a printout of my basic budget goals on the refrigerator. That way every day, several times a day, I would notice my budget goals sheet. I may not read it every time, but I notice it and it reminds me that I need to stick to my budget. That is why tip number 3 is so important.

7. Set specific short-term goals – Let us assume that one of your budget goals is to have all of your credit card bills paid off in two years. If your credit card balances total $20,000 that would be $10,000 a year. Divide that number further into quarterly reductions in your credit card bills, in this case $2,500 every 3 months. Now, this is a more tangible budget goal to shoot for isn’t it? I find that when I divide intermediate and long term goals into short-term tangible stepping stones, I am able to feel a greater sense of achievement and am more likely to succeed. This brings us to number eight.

8. Reward yourself – That’s right! Treat yourself when you reach some of your short-term goals. Since your financial budget is really a journey, take some time to smell the roses on your way. Sticking to your budget should not be a restrictive, unpleasant experience. Not only should you take the time to enjoy your financial achievements along the way, but use part of your budget for fun things that you enjoy. Just make sure your treats don’t end up breaking your budget!

9. Pay yourself first – I’m sure that one of your budget goals is to save and invest a portion of your income. One of the keys to make sure you succeed at this is to do what the IRS does with your paycheck, take it out of your discretionary income immediately. In this way, the money is saved very easily. Move the money immediately into a savings or mutual fund account. Many mutual fund companies can setup automatic deductions from your paycheck. Despite your best determination to save, the hectic, daily demands of life can reduce the amount you are able to save.

10. Attitude is everything – Mostly when people think of a budget, they picture restrictions and pain. Almost like a diet. You know what happens with most diets? They don’t seem work for long! First, if your budget is too strict, too restrictive on your spending, it won’t work either. However, you will need to limit your expenditure in some areas and this will take some adjustment in your attitude. I feel very limited and sorry for myself when I can’t purchase something that I want, I remember my financial goals I set with my budget. I think about the satisfaction I feel when I achieve those goals. Over time, you find that you don’t want to disappoint yourself by breaking your spending goals on a spur of the moment purchase. Now, I actually get more pleasure knowing that I am moving towards my budget goals when the thought of an impulse purchase crosses my mind.

If you follow these steps, your budget plans are more likely to be a great success. By taking some simple steps you will find that living within a budget is not as tough as you imagined. It can actually be fun and rewarding!