Hond Financial

Posts Tagged ‘getting out of debt’

You think I’m joking – but I’m not.The negative health symptoms associated with stress have been widely documents and researched in clinical environments, and moderate amounts of financial debt and increase personal stress levels.  Getting out of debt not only gives us a sense of personal freedom but it also helps us maintain our health.

This is serious stuff, which means that getting out of debt should be your number one priority and not simply for the obvious financial reasons.

Research has shown that the stress of debt, particularly in a recession, can increase suicide rates and also have a detrimental effect on the wellbeing of your family, regardless of whether you keep your job, you’re married or your level of wealth. 

That’s right!  It doesn’t matter how rich you are – your children are still more likely to experience depression, aggression and disobedience if you’re stressed out by debt.

Not convinced? Here are just some of the potential effects of debt stress on your body and mind.

Potential Physical Effects of Debt Stress:

* Hypertension
* Heart Disease
* Strokes
* Lowered Immunity
* Overeating
* Increased Use of Alcohol, Drugs and Cigarettes
* Diabetes

When we consider the negative health impacts of debt, and add those to the financial ramifications debt causes, it can equate to dangerous results. 

And it’s not only your physical health that could suffer, a recent report by the Royal College of Psychiatrists describes the links between worry over debt and poorer mental health.

Potential Psychological Effects of Debt Stress:

* Depression
* Anxiety
* Increased Irritability
* Sleep Problems
* Lack of Enjoyment in Life

The personal cost of mortgage or housing debt can also have a negative effect on our sense of identity, higher levels of uncertainty and feelings of stigma and shame.

All of this information indicates that debt is an important social issue, which has many associated negative impacts.  So what can you do to escape from this trap and stop yourself being eaten up by the debt monster?

The first thing is to realise how you have become caught up in the debt cycle and how the financial companies have manipulated you into that position for their own gain.  The second thing is to change your thinking (or your mindset), about how to manage your finances.  The last thing you need to know for getting out of debt is learning how to save on everything you buy and how to pay off your debts quickly.

During such troubled economic times, debt negotiation or more typically referred to as debt settlement services, are popping up like wild flowers. This is making it extremely hard for the common debtor, who is in need of debt relief, to select between a service that will help them and a organization that will just simply enroll anybody who can pay their fees. There are a couple of obvious indicators that will help expose the loosely run or less honest credit card debt solutions programs out there.

A big indicator of a rep’s interest in actually assisting their customers is their willingness to disclose all information upfront and their willingness to discuss alternatives to the programs offered by their organization. Although debt settlement is a viable option for a lot of consumers in need of debt relief, it isn’t for all. Certain questions should be gone over and answered about a clients’ financial predicament prior to a representative explaining anything about their service and fees. This indicates that a representative wants to have a clear understanding of the issues at hand and understands that every client’s predicament is different. That shows whose interests are really at heart.

Any debt reduction service should have a pre-qualification and compliance procedure implemented. This is very important because this will filter out the potential clients that won’t realize the full advantages of the programs, as well as prevent any mucking up of the internal processes of the organization itself. When a company has too many clients that are consistently slipping up on their commitments to the procedure, it slows down everything. Most settlement organizations will work with customers that slip into unexpected struggles by adjusting their payment schedules. Some just have people that in reality cannot afford to be on the program in the first place. When there are unqualified clients constantly being added to the process, organizations find themselves wasting more time changing problems than settling accounts. Typically, monthly payments are split into fees and set-aside cash for the negotiators to go to settle with on your behalf. If it turns into a problem to set aside the established amount, the negotiators’ hands become tied as to what they can get done for you.   

Another key point to inquire about is a service’s performance standard. There should be a detailed outline of what a company figures to get done as well as the costs for doing so. Also, the extent of the procedure should be outlined. Keep away from becoming involved with programs that go longer than a few years, stretching it out longer than that becomes detrimental to the success of the program. If a organization isn’t able to achieve the level that was promised, there should be some sort of agreement as to what relief the client is extended. In a sense, there should be a minimum performance standard set in stone and a client should not get charged any fees from a company that is not accomplishing what they set out to do.

Before making any concrete decisions, a significant amount of due diligence needs to be executed. When comparing services, make sure to look at everything that is proposed and make educated decisions based on many factors, not just the monthly payment plans. Too many people confuse setting aside money for settlement as a payment of services. Various companies offer varying sorts of program models. Some run things off preset fees and settlement promises, others have contingency plans that are performance based. Many attorney based organizations charge an upfront retainer fee. The contingency fee will typically be based on the savings against the original, total debt per account. Ensure that you precisely understand how much of the monthly payments are being set aside towards settlement and what sum will be going to the fees. Performance run models are often a more beneficial plan because there will be an incentive for somebody settling debt on your behalf to really make sure to get the best possible deal. The more funds they save you, the more money they make themselves. This does not mean that a company which only negotiates on set fees won’t work. It just means that when fees or sometimes retainers are taken upfront, there’s no more incentive for a company to negotiate the best possible deal.

In any case, do your research and pay close notice to the sort of company that you get involved with. Reseach a company out with the Better Business Bureau and look at the kinds of complaints and which ones are unresolved. These types of programs can sometimes take several years to finish and if you cover these points, you are more likely to wind up in a successful relationship between you and your debt settlement company and avoid future issues.

How you got into debt doesn’t matter, getting out of debt now is the issue you have to address. You can’t ignore it, it won’t just go away. You need to find professional help. Before you sign up with a debt relief company, make sure you know what you are getting into. The economic crisis has given scam artists one more way to take your money. Don’t do business with a company you don’t know, research a debt relief company before you sign a contract.

It is best to deal with established companies that have a history of helping consumers pay off their debts and repair their credit. Only sign with debt relief companies that have a proven track record.

Credit Solutions That Work

One such company is Credit Solutions. They won’t take your money and disappear. Their professional staff is trained to look at your income and your debt to determine how much you can reasonably pay each month. Then they contact your creditors and work to reduce or eliminate interest payments so you can finally start reducing your overall debt.

You don’t need another loan when you can’t pay the bills you already have. Credit Solutions will consolidate all of your bills into one payment you can afford. Once you begin to reduce the principal of your debt, your future will begin to look a lot brighter. Debt Solutions counsellors will work with you to find ways to avoid falling into the same credit card trap. They can teach you how and when to use credit wisely, and when to postpone purchases rather than pay on credit. T

They have a proven debt-management solution so you know that you can be confident and that you are going to be able to manage your debt in the best possible way.

In-Charge Canada

An established and reputable company, In Charge Canada can also! assist consumers with credit card debt relief. The credit counsellors are not going to judge you, just provide workable solutions to your debt problem. Working with credit card companies every day gives the staff the ability to reach reasonable settlements with your creditors. Once you can manage your debt, you can learn to control your spending with the help of these financial professionals. Living on a budget means never drowning in debt again.

If you’re afraid to pick up your phone, or open your mail because you know that your creditors are looking for their money, get help now. Contact a company offering credit card debt relief solutions and take charge of your life.

Throughout the past 12 months we have seen quite a number of issues go bad with our much touted economy.  This year will go down in the record books as one that should not be repeated, but should not be forgotten.  Jump to the present and we are in a a pretty bad recession and our national deficit is spiking at an mind boggling rate.  

At this point 365 days ago gas prices were very high and people were singing the blues, if we thought that was bad jump forward to today and were crying for something to change.  

The trickle down effect started last fall when most of our giant banks began to sink and started begging for funds from the government.  This ignited chaos for scores of Americans, countless numbers of people lost their life savings in the stock market.  Speaking of which the market at one point dropped so low people were scared we were moments away from a horrible depression.  

The next sector that got majorly affected is the real estate industry.  We are now witnessing all time highs in the amount of foreclosures and the worst many think has not yet come to fruition.  The scams being run in the sub-prime mortgage sector are what began this entire mess and still continue to bring the economy down.  Most forecast it might take up to ten years for the real estate sector to be strong again.

Finally the automobile industry has run into some large problems.  Many of the large car institutions are in need of government money or are filing for bankruptcy.  If this is a sign of things to come it is quite scary.

Another growing problem for tens of millions of Americans is the escalating amount of defaults on credit cards.  Credit card debt has climbed to a record high as well.  Many debtors are going through a very hard time when attempting to get out of debt.  The good thing is there are debt solutions that can enormously help people to escape the never ending credit treadmill.  One of the more helpful systems of debt relief has become credit card debt negotiation, particularly throughout the recession.  This process aides debtors in saving a lot of income.  

The reason getting rid of credit card debt is imperative for so many is because unemployment is also skyrocketing.  Debtors need to keep more money for themselves to manage their expenses and keep them afloat.  With such hard times saving money has become so important, nobody going through problems right now should wait on trying to get themselves out of credit card debt.

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.