REPOST: 6 Tips For Paying Off Your Credit Card Debt

This article by Bill Hardefopf of Lowcards.com discusses six tips to help pay off credit card debts.

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If you are looking to pay off your credit card debt, you are making the right financial move. It is easy for manageable credit card debt to turn into an overwhelming situation. But the good news is that you can decide when you’ve had enough—and when you are going to start making the moves necessary to pay off your credit card debt and clear up your financial future. The first thing to realize is there are no quick fixes—getting in debt can be a fast process, but leaving debt behind is much more difficult. You will need to outline a strategy and create a budget that you can live with. If you can live with a regimented lifestyle, then you can start to pay off your debt. But what matters more than a strategy is motivation. You’ll need to be self-motivated to pay off your debt—other people aren’t going to make your payments for you. With effort, a strategy and some motivation, you can get out of debt and put your money to work for you.

Utilize The “Snowball” Effect

The “snowball” effect can be extremely useful when paying off loans. It refers to the method of paying off the smallest debt first, and moving from smaller to larger debts. This process can be very motivating, and motivation is one of the biggest factors when it comes to paying off debt. If you believe paying off small balances will motivate you to tackle larger ones, then this strategy might be the right choice for you. If you would rather spread your payments throughout your various balances or you want to pay the highest rate balances first, then this is not the best option.

Pay Off The Most Expensive Balance First

When we say the most expensive balance, we are actually referring to the balance with the highest interest rate. High interest rates can quickly turn manageable debt into something that is out of control. If you use this strategy, you will be paying off the balance with the highest interest rate first, followed by the balance with the next highest rate. While this strategy might not seem as satisfying as the “snowball” effect, you are saving yourself valuable dollars in the long term. This strategy is for those who are looking to be the most cost efficient in paying off debt.

Utilize Balance Transfers

Balance transfers can be very effective for managing debt—especially if you are transferring a balance to a new account with a much lower interest rate. However,balance transfers can have fees of up to 3% of the amount you transfer, so make sure the lower interest rate is worth the cost of the transfer. Don’t forget about your debt after you transfer the balance. Make sure you draw up a plan so you are making payments each month and sticking to your plan.

Consolidating Your Debt

Consolidating your debt can be an option for those who want to simplify the process instead of dealing with numerous open accounts each month. Consolidating your debt is something you should talk over with a financial adviser, because the consolidation process can leave you with higher interest rates. Make sure you will be able to afford the consolidated interest rate before you make the switch. You don’t want to jump in without knowing the risks, because you can’t “un-consolidate” your loans after the process is completed.

Create An Emergency Fund

Creating an emergency fund will allow you to take care of unexpected expenses without incurring more debt. This is critical to staying out of debt and maintaining your lifestyle. Ideally, you’ll want to keep at least several month’s worth of pay saved up for a rainy day. Make sure you aren’t dipping too far into your savings to pay off your debt.

Stop Acquiring New Debt

You don’t need any new credit cards when you are already deep in debt. You need to find a way out first. Acquiring new debt isn’t going to help you get out of old debt—it will only make the situation worse. Instead, you should focus on curbing your credit card usage as much as possible, and if you can, stop using your credit cards altogether. You can then focus on paying off your debt without worrying about how to pay new credit card bills.

Paying off your credit card is not an easy process. In fact, it can be a very difficult, frustrating and time consuming one. But once you complete the process, you will reap the financial rewards of not sacrificing your hard earned cash to creditors every single month. Picking a strategy to pay off your debt should depend on your personal lifestyle choices. If you like for things to be simplified, maybe you should consolidate your debt so you only have to worry about one payment each month. Perhaps paying off the smallest balance motivates you to tackle the other debt. You’ll want to pick a strategy that not only fits your lifestyle, but motivates you to keep going when things get difficult. Having the courage to push through those difficult times will determine if you will be successful. It’s one thing to pick a plan, it is another thing to stick to it. Make sure you remain dedicated throughout the process, and you will be debt free before you know it.

Imagine what you can do with the extra cash each month? It is time to take that dream and turn it into a reality.

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How yuppies can secure a debt-free and financially comfortable future

Young professionals who start saving before they reach the age of 25 accumulate more interest than those who start saving at 30. Furthermore, surveys reveal that more than 62 percent of people under 30 suffer from financial instability.

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It is very important for young professionals to manage their finances early and efficiently to secure a worry-free future. Starting late irreversibly rolls back opportunities for healthy future income.

So how can yuppies get started on the path to financial security?

As a guide, follow these following tips:

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Track spending. The website Under30CEO.com advises knowing where the money is going. This
can be done by tracking spending through online tools such as websites www.mint.com or www.youneedabudget.com. Determining expenditure patterns can help you make adjustments in your budget.  
 

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Consider a retirement plan. Retirement plans provide several advantages for young people, including reduced income tax and automatic withdrawals for one’s personal savings. 401k funds in the U.S., for instance, allow its members to invest in long-term funds.  
 

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 Settle debts. Over-indebtedness can be very disastrous in the long run. Splurging and neglecting credit card bills, for example, can cause a huge problem from collection agencies, which can impede one’s legitimacy for future loans.

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Start investing and saving early. Save more to secure a financial future. Rigorous financial planning is proven to increase savings and interest rates gradually.    

Legacy Reliance Group is a financial services firm that helps clients track their debts, pay their bills, and keep their credit scores high. Get more tips on financial management by visiting this Facebook page.

Financial aid for students: Rights and obligations

Apart from tuition fees, there are other costs associated with acquiring a college education: room and board, books, educational materials, and other expenses a student might not anticipate.

Students who find it difficult or impossible to pay the costs of a college education can apply for a student loan. There are two main types of student loan: federal and private. Regardless of what the student chooses, there are certain obligations that a student borrower is expected to fulfill.

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Obligations of a student loan borrower

Student loan borrowers are required to repay their loan even if they do not complete their education. They should also know their student loan payment schedules and be aware that non-receipt of a bill or repayment notice is not a valid excuse for missing a payment.

Student loan borrowers should inform their school's financial aid office and their lenders of changes in their personal information: their home address, phone number, or e-mail address. Students planning on transferring to another campus, withdrawing from school, or graduating early or late should also inform their school's financial aid office and their lender.

Student loan borrowers are required by law to attend entrance and exit counseling before graduating to ensure that they fully understand their obligations as student loan borrowers.

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Rights of a student loan borrower

Student loan borrowers have the right to loan counseling. They can seek help in understanding the terms of their loans and have a qualified loan counselor go over their options with them.

Borrowers also have the right to contact their loan servicer directly. Students have the right to apply for forbearance or deferment of student loan payments if certain circumstances are met. For deferment, these include unemployment and economic hardship. Students who don't qualify for deferment may apply for forbearance. During the period of forbearance, a student loan borrower is not required to make loan repayments.

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For more discussions on different types of debts and their resolutions, visit this blog for Legacy Reliance Group .

REPOST: Top debt collection complaints

Harassing phone calls and wrong identity are the usual complaints about debt collectors. Read more from this CNN.com article.

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The Consumer Financial Protection Bureau began accepting debt collection complaints in July and has already received more than 11,000 -- the second highest amount after mortgage complaints, according to analysis from the U.S. Public Interest Research Group.

The most common grievance from consumers: That a debt collector came after them for a debt they didn't even owe. About 2,700, or 25%, of complaints were about this.

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Next on the list was harassing phone calls, with 13% of consumers saying debt collectors had called them repeatedly or far too frequently. Another 13% said they weren't given enough information to verify that the debt was in fact theirs or that they owed the correct amount.

Among the other complaints: that collectors tried to go after debts that have already been paid, attempted to collect an incorrect amount, talked about the debt with a third-party like a family member or neighbor, threatened to take legal action against a debtor or contacted a consumer after being asked to leave them alone.

About one in five consumers who have lodged complaints with the CFPB about debt collection have received some sort of relief as a result -- with 3% receiving refunds or compensation and 19% receiving non-monetary relief, such as stopping unwanted calls. But the majority, or 70% of complaints, were left unresolved.

The CFPB is currently reviewing the complaints and collecting comments from consumers, companies and industry experts about ways the agency could rein in unacceptable practices among debt collectors.

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REPOST: Treasury Secretary Sends Warning on Debt Limit

According to Treasury Secretary Jack Lew, congress will likely need to raise the debt limit by late February to avoid a missed payment. Read more in this NewYorkTimes.com article.

WASHINGTON — Treasury Secretary Jacob J. Lew warned Congress on Wednesday that the government would most likely exhaust its ability to borrow in late February, setting up yet another fiscal showdown with Republicans, and this time earlier than congressional leaders had anticipated.

In a letter to Speaker John A. Boehner and the other top three congressional leaders, Mr. Lew said a surge of February spending, mainly tax refunds for 2013, would leave the Treasury with little room to maneuver after the official debt limit is reached on Feb. 7.

The letter amounts to an early alarm bell, coming just weeks after Congress passed its first bipartisan budget and comprehensive spending bill in years. Those bills were supposed to serve as a cease-fire in the budget wars that have rattled the country and the economy since Republicans took control of the House in 2011.

But they left untouched the debt limit, which has been a rallying cry for conservatives for three years. As recently as last week, Senator Harry Reid of Nevada, the majority leader, said the debt ceiling fight could be put off until as late as May while the Treasury shuffled government accounts to meet its obligations.

With his letter, Mr. Lew sought to end such speculation. Unlike past debt ceiling fights, this one is coming at a time of year when Treasury payments soar, leaving him little “headroom” to put off the fight. Last February, government spending reached $230 billion, compared with $45 billion in other months. This year will be worse, because the government shutdown delayed the start of tax season and will concentrate refund payments.

“Protecting the full faith and credit of the United States is the responsibility of Congress, because only Congress can extend the nation’s borrowing authority,” Mr. Lew wrote. “No Congress in our history has failed to meet that responsibility. I respectfully urge Congress to provide certainty and stability to the economy and financial markets by acting to raise the debt limit before Feb. 7, 2014, and certainly before late February.”

Michael Steel, a spokesman for Mr. Boehner, reiterated that the speaker does not want to get “even close” to a default on the United States debt. But, he added, a “clean” increase in the debt limit without some concessions to Republicans “simply won’t pass in the House.”

Mr. Boehner said last week, “I would hope that the House and Senate would act quickly on a bill to increase the debt limit.” But aides signaled they would need some face-saving measure to placate House conservatives who still want to force concessions from the White House, possibly on controlling the growth of entitlement programs like Medicare or easing the path to an overhaul of the tax code.

President Obama continues to say he will not negotiate over the debt limit, which he said is a congressional responsibility, not a bargaining chip. Republicans were infuriated by that stand during the 16-day government shutdown in October. But they acquiesced, reopening the government and suspending the debt ceiling until Feb. 7. Senior congressional Democrats are pushing the White House to maintain its no-negotiating stance.

“With the bipartisan agreements on the budget and on funding the government for this year, we have an opportunity to move past the manufactured crises and work together on real challenges,” said Senator Patty Murray of Washington, the chairwoman of the Senate Budget Committee. “I hope Republicans will listen to Secretary Lew and join Democrats to ensure the U.S. pays its bills on time with no strings attached.”

House Republicans will gather next week for their annual planning retreat. That will kick off efforts to resolve an impasse on the debt ceiling.

Legacy Reliance Group examines each client’s unique financial situation and provides solutions to overcome financial difficulties. Visit this blog site for more related articles.

The debt cycle: Don’t even get a foot in

Unmanageable debt, among all financial struggles, is rooted on a single cause—you.

To understand the nature of debt, one has to understand the debt cycle. As explained by BYU’s Marriott School of Management, the debt cycle starts when spending outpaces income.

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Debt accumulation begins in basic habits, which include ignorance and carelessness in daily finances. When people charge spending to either loans or credit cards, they often do not understand the concepts of interests and costs. Dismissing these eventually mires them in unfettered spending and perennial indebtedness. This cycle can be very difficult to change and escape, especially if people are surrounded by opportunities to spend.

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Another common mistake among people with unmanageable debt is giving in to compulsion and pride. Some people do not want to control their spending, so they find ways to get what they want. This hard-won mentality takes no less than therapy and psychological shift to keep in check.

“Money, like emotions, is something you must control to keep your life on the right track,” said bestselling author Natasha Munson in her book, Life Lessons for My Sisters: How to Make Wise Choices and Live a Life You Love!

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This is the pragmatic voice that anyone trapped in a debt cycle must heed to start digging out of a hole. Live within your means and never borrow money just to maintain a standard of living---and the debt cycle will be as foreign a concept to you as poverty.

Legacy Reliance Group assists clients in debt management and settling financial obligations. For more about the company’s services, visit thiswebsite.

REPOST: Financial planning for do-it-yourselfers

It is possible to get your financial plan under way if you do it on your own.  But make sure you make important decisions to be successful.  Forbes discusses some ways to get you started.  Read the article below.

Financial planning can be an overwhelming topic. Like health insurance or getting a mortgage, people tend to stumble out of the gate.

If you are intent on doing it yourself, rest assured that it’s possible to get your plan under way and successful in about an afternoon — if you first make some basic decisions.

Image source: Forbes.com

1. Decide to save

This is the No. 1 retirement killer. People save too little and begin entirely too late. You should save 10% of your gross income to start and build it up from there, right from your first job.

There will be plenty of priorities fighting for your money. Spending on family, travel, housing and the like. None of it matters more than building a savings account and letting it compound over time into enough to retire.

2. Decide to invest

Investors, especially beginners, can fall into the trap of waiting until they have “enough” to start buying actual investments. So, they put it off. Then the markets seem touchy or there’s a lot of stressful economic news, so they put it off again.

Before long, 10 years has gotten past you and you’ve missed the chance to use that decade to gain a return on your savings. Even if it’s $50, put it into an inexpensive, balanced index fund and keep adding. Never miss a chance to invest early and consistently.

3. Decide to protect

One of the biggest stumbling blocks in your financial plan will be inadequate insurance. It helps to remember that the point of insurance is to transfer risk. If you die tomorrow in a tragic car crash, who suffers financially?  How much? That should help decide whether and how much life insurance to own.

Term life is good enough for most people. Consider long-term care, disability, home and auto coverage and perhaps umbrella coverage if you have teenage drivers at home.

4. Decide to spend wisely

Don’t be penny wise and pound foolish. What does that mean? Well, often we get very caught up on small things, like clipping coupons for restaurant deals. But then we lose sight of the bigger problem, like eating out three times a week! It doesn’t matter that you got a 10% discount if you overspend your budget by 200%.

Likewise, we often put small purchases on credit cards and find ourselves unable to pay it down within the month. If you can’t manage your day-to-day spending, cut up the cards and use cash or a bank debit card. Better yet, save money automatically at work using a 401k plan or other deduction system. Then you can spend what’s left over without worry.

5. Decide to retire

This is a big one. Too many people simply have no long-term goal regarding retirement. They plan to work till they drop.

Pick an age, decide how much you need to retire at that age and then make sure you set aside enough to make it come true. It’s that simple.

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