In colloquial terms, debt is money that is owed. Even the most uneducated of individuals is aware of the concept of debt and the dire need of prompt repayment associated with it. With the advent of internet banking and the mainstream use of credit cards, indebtedness has become a major issue for many economies. Globally, there have been several incidents of indebtedness where entire economies have collapsed due to the accumulation of massive amounts of debt by their citizens. The global financial crisis of 2007-2008 is perhaps the most significant example of how piling up debt can destroy the world. Lessons, however, have been learned by now. Therefore, the world is now on a mission to minimize its debts and everyone has their own part to play.
Important Debt Tips
In certain situations, taking on debt becomes inevitable. However, there are always ways that would help an individual ultimately avoid the evil of debt. Following are a few tips which, when implemented in the practical life, would help manage expenses and avoid debt.
- Wherever possible, making payments in cash is advisable. This helps an individual keep track of how much is being spent and how much is being saved.
- Restrain from indulging in impulsive and spontaneous buying behavior. This is because most impulse purchases are expensive items which are often not needed and hence, a waste of money.
- Spending limits should be established and caution must be taken in staying within the set limits.
- Credit card payments should be made promptly.
- Keep a track of all purchases made through a credit card.
- If it is not possible to avoid borrowing, the lender offering the lowest interest should be used.
- Look out for credit scams including credit repair or credit counseling.
- Try to steer clear of balance transfers and if a transfer must be made, it should be to a low rate card.
- Avoid lending credit cards because it is difficult for you to control what someone else purchases on your credit card.
- Individuals without a savings account are highly recommended to open one up. A habit of saving part of the monthly income should be developed. This would help an individual deal with unforeseen financial troubles such as medical bills and insurance blunders. After all, it is better to be safe than sorry.
- Bills should be paid on time. Accumulating bills can often lead to crossing due dates and having to pay extra. Also, unpaid bills are often forcefully added to credit cards, which accumulates further debt that could very easily be avoided.
- Offers that aim to entice instant purchase through advertisements such as “buy now, pay later” should not be taken up. These are merely ways of postponing debt.
- Do not fall for the low interest rate loan schemes available for purchasing high-value items such as a car or a house. Low interest or not, they are means of unnecessary debt accumulation. A better option would be to save up and then purchase.
Implementing these tips in practical life should lead to a debt-free existence!
There are many different budgeting methods and styles that you can start with. It gets confusing when you try to sort through and look for the budgeting strategy that you’d want to implement when you’re budgeting. A common term that you may have heard of is the zero dollar budget. What it means is that when you’re budgeting, you spend every dollar that is coming in. Your budget will be designed so that you don’t go into negative or have money left over. You’ll end with zero as the total money left. To clear up a common misconception, a zero dollar budget doesn’t mean that you can’t pay off your debt or save your money, but it simply means that you’ll have no money left to spare.
Advantages of a Zero Dollar Budget
There are many advantages of using this budgeting method and the biggest is that you’ll put purpose to every dollar of your income. You’ll be assigning extra money to your savings category or putting it towards debt repayment. This prevents you from wasting your money and instead focuses it on your spending and saving habits. This budgeting method of a zero dollar budget also lets you transfer your income among the categories in case any unexpected expense comes up such as a car repair or a medical bill.
Additionally, you can implement this zero dollar budget theory on other budgeting methods. For example, it works perfectly with the 50/20/30 budgeting method as well as the envelope system. This budgeting method is all about budgeting to the last dollar so that there’s no waste of money. It’s an ideal method for those who are working towards specific financial goals.
Implementing the Zero Dollar Budget
Implementing the zero dollar budget is easy and you can do it on paper, by creating your own spreadsheet, or using any budgeting software. You’ll be dividing your budget into categories and assigning each category a specific amount until the entire income has been allocated. This will mean that your expenses and income are exactly the same. You’ll need to cut back if your expenses are higher than your income, but if your income is more than you can spend, you can put the extra money in your savings account or towards paying off your debts so that no money is going to waste.
Creating a zero dollar budget is not enough as you need to maintain it by tracking your expenses throughout the month. This will mean that you’ll have to cut back on one category if you overspend on another so that the amount remains the same and you don’t end up going in the negative. Tracking your spending daily is important so that you can know when to stop and stay on your budget.
Budgeting is not easy and can take a lot of initial work, but it’s the best tool you have to manage your finances, achieve a good balance and reach your goals such as early retirement and home ownership.
Many of us know that dreaded feeling of seeing the bills come in each month and wondering how we’re going to pay them all. With the ease of gaining credit and the vast number of places to shop, including online, it can take no time at all to accumulate a large amount of debt.
The problem comes in trying to pay off that debt, which usually is attached to high interest rates, therefore increasing the amount you owe and the time needed to pay it off. It can easily become a vicious cycle of interest charges and endless payments with no hope of ever seeing the end.
There is a solution, however, that can greatly help those with numerous credit card or other debts to pay. A debt consolidation loan can offer a better interest rate, while combining your debts into one payment. You receive your loan, use it to pay off your debts and then you only have one payment each month to pay back the loan. This kind of loan works to save you money on interest and also the hassle of having to pay multiple bills each month.
First, a debt consolidation loan can save you a lot of money in interest on your debt. Often, these loans are given at much lower rates than typical credit cards, which can be as high as 20 – 25%. If you pay just the minimum payment on a credit card, you’re often only paying slightly more than the interest being charged and it will take a very, very long time to pay it off. Having a lower interest rate allows you to pay down the debt faster, while making the same amount or less in payments every month.
Simplicity is another benefit in choosing to consolidate debt. Instead of having to pay and keep track of several different bills each month, all you have is the consolidation loan to pay. One bill instead of three, five or ten. And it is often a lower payment than your other bills combined.
There can be great peace of mind in taking out a debt consolidation loan. Knowing that all your high-interest bills are paid off and you are saving a good amount on interest each month makes bill-paying much more bearable, especially when it’s only one bill that you are paying. Contact your lender today to find out your options with a debt consolidation loan and get on track to being debt free, once and for all.
The first advantage of having all your loans consolidated is the fact that you’ll only be making one payment, rather than several of them. This helps to avoid the confusion that comes with having multiple loans to attend to.
This could be a good option for those struggling with repaying their loans via credit cards. Loan consolidation offers you an opportunity to stay on top of the financial situation you’re likely to wind up in while struggling with multiple loans.
The option could also work for those wishing to repay all their debts quickly so they can get out of debts completely. Instead of handling multiple loans, you could lump them together and repay them off in full or in large amounts to get out of debts quickly.
Loan consolidation also works for those looking for a way to avoid damaging their credit scores. At the same time, this could also help you built a better credit score, considering all the small loans you have will be organized in one place, thus making it easy for you to come up with a solid plan on how to repay all of them.
It goes without mentioning that if you succeed to talk the service provider into reducing your interest rate you’ll end up paying less that you could have had you chosen otherwise.
These are but only a small fraction of all the benefits that comes with consolidating all the loans you have. One caveat though, we suggest you exercise extra caution while deciding on the service to work with. If you’re lucky to get a good company, then rest assured there’s a lot to gain when you choose to have all your loans consolidated.
Debt consolidation means taking out a new loan to repay your old loans with a debt consolidation service. It is that simple. But why would anyone do that?
One reason could be low interest rate. The new debt consolidation service may have lower interest rate than the old one. Or, the monthly repayment amount could be low. Any kind of debt consolidation service untied to any asset, like credit card debt or student loan debt, can be repaid using debt consolidation loans.
However, debt consolidation is a short term strategy. You just feel good that you have taken some action for your debt. But in reality, the debt consolidation service still exists. You just changed its terms and duration. You can’t clear a debt by borrowing. Companies offering debt consolidation service always make it sound like a great solution to your all financial problems, but you should see through their sales talk and examine the facts. Take extra care if a debt consolidation online programs advices you to secure the loan against your home or other personal property. This is calling for a disaster.
The satisfaction you get from a debt consolidation service is momentary, even if you get low interest, because as per new contract, you pay for longer time. This always results in paying the debt consolidation lender more, This is the core of debt consolidation online programs!
One instance when debt consolidation services could be justified, is when you want to simplify the debt consolidation repayment process by combining multiple small debts into a combined single loan. You may even qualify for reduced debt consolidation service rates and a shorter new term.
Finally, debt consolidation is not for everyone. Check all other available options, get expert advice, and ensure that you are making the right decision to stay out of finance problems.
The Canadian population has had a saving culture for many years. This culture is no longer popular as household debt has increased over the years. In 1982, Canadians were saving about 20% of their annual income. This percentage had dropped to about 3.6% in 2014. The growing debt has become one of the worrying Canadian finance issues. Households are turning to debt to maintain a middle-class lifestyle. Part of the debts go to buying cars and furnishing homes. Many students use student loans and credit cards to meet their needs. Hence, young people are embracing a debt culture instead a saving culture. In fact, some studies indicate that Canadians now save less than Americans who spend large amounts of money on luxuries. One of key components of household debt in Canada is mortgage debt. Many households have used mortgages to buy and furnish their homes. At the same time, housing prices have been rising at an alarming rate in Canada.
The high housing prices and demand for mortgage loans have increased the level of household debt significantly. The high prices have favored the old generation that invested in real estate in the 1980s and 1990s. However, young families are rushing to take mortgage loans in fear that housing prices will continue to rise in the coming years. In the last 1970s and 1980s, 34-year old Canadians were spending about 38% of their income to buy houses. By 2010, the same group was spending about 46% of their income on housing. Economies have warned about the adverse effects of the rising debt culture on the economy. The rising housing prices is not only one of the alarming Canadian finance issues but also an indication of higher interest rates in the future. Financial institutions are likely to raise their lending rates as the demand for mortgages and other loans by households continue to increase. Household spending has exceeded disposable income while debt to income ratios have reached their highest mark in history.
Many people have their own thoughts as to what financial freedom means. For the purpose of this blog, financial freedom refers to living debt free. Living debt free takes time and patience as it is not an easy task, but it is possible and has many advantages such as the establishment of a personal savings or emergency fund to keep you from incurring further debt.
When you pay only the minimum amount due on credit card balances each month, very little is put towards the principle balance. To get rid of credit card debt it is necessary to make higher payments each month. Take advantage of special offers such as a lower interest rate as this makes it easier to pay the balance remaining on your credit cards. If you prefer to stay within your current monthly budget, try contacting credit counselors to inquire about a rate reduction and lower payments.
Credit cards are a convenient way to purchase items you want or need, but to get rid of debt you need to stop using them and carry cash. When carrying cash, you are more likely to only buy what you can afford; decreasing you chances for incurring further debt. To better understand how much you can afford to spend each month, it is necessary to create a monthly budget.
Unfortunately, there may be times when it is absolutely necessary to use your credit card as emergencies do happen. If you find yourself in this situation it is best to pay off any new charges each month instead of carrying the balance over month-to-month. This is important to continue living debt free.
The same concept applies to any loans you may have for a car, house, boat etc. Choosing shorter term loans allows you to save money by paying less interest and paying the debt off in full much sooner.
Maintain a savings account that is used for emergencies only. Each pay period you can choose to deposit a specific percentage of your wages into this account. If emergencies happen or you experience job loss, using this emergency fund can help you maintain your finances without incurring further debt from using credit cards or loans.
Finally, reducing overall spending is necessary. Stick to your budget and only spend what you can afford. Avoid expensive trips and dining out as these are likely to increase debt if these expenses don’t fit within your budget.
Debt consolidation is an excellent option for those who have multiple debts which they find hard to repay. In case, the rates of interest on the financial obligations are variable, or perhaps you don’t have sufficient time period to settle your debt, debt consolidation is a great solution. This will save you from personal bankruptcy or even losing your possessions. Debt consolidation financial loans makes it less difficult for you to pay off more than just one high-interest personal loan. You will get assistance from numerous sources should you be looking for the best free debt consolidation.
It is possible to approach nonprofit, as well as, government departments for totally free debt consolidation support. If it is not possible to employ a debt consolidation company, this can be the smartest choice to suit your needs. By means of best free debt consolidation, it is possible to comprehend your true economic condition and whether or not you require a second loan, mortgage loan or just an alteration in lifestyle.
The most effective free debt consolidation can be obtained over the Internet. You just need to use the Internet and search for the listing providing debt consolidation. Look for a totally free online quote. Never ever shell out anything for the quotes; a legitimate organization is not going to charge anything at all for any debt consolidation quote.
You can select the company that provides the least expensive quotes. Obtaining the best cost-free debt consolidation is the greatest solution to improve your financial resources and help you control the rise of bad debts.
The ideal free debt consolidation can be obtained through numerous non-profit agencies too. You might make contact with individuals at the church or club to comprehend nonprofit organizations providing the very best 100 % free debt consolidation. If you require a financial loan, you will end up being forwarded to an organization associated with the government to enable you to pay off your debt immediately.
The most effective cost-free debt consolidation services assist you maintain personal credit record and also steer clear of upcoming loan issues. It is feasible to find out methods for minimizing the likelihood of getting into financial debt once again through guidance which is provided by the best free debt consolidation programs.