Debt Consolidation vs Settlement vs Management – How They Differ And Which One Is Best For You?

If you are struggling with debt right now, you may be wondering what solution is right for you between consolidation, settlement or management. Just what s the difference with these options and which is the best choice for you?

Like a lot of people, you likely are not very knowledgeable when it comes to settling debt and dealing with financial situations like this. So let’s briefly look at each option to get a general understanding.

Debt Consolidation:

Debt consolidation basically is where you might be taking smaller debts that you have maybe credit card debts, other loans and rolling them into one loan. You’re consolidating them together.

Debt Settlement:

Debt settlement is basically when you’re looking at what you owe, and you negotiate a lower lump sum payment to the creditor. You are actually working with your creditors here to agree on a lesser amount to pay. This option will likely negatively affect your credit score.

Debt Management:

Debt management is a process where the debt is being paid off but through lower interest rates and shorter payoff period. More of your payment is going to pay off that debt versus going towards interest. This is a negotiated amount and may not affect your credit score.

So which one is the best choice for you and your situation? You know you really have to look at your personal situation to determine what might be best for you. Because the circumstances are so different for each person.

It is really a good idea to get some professional help like someone in personal finance. They can spend time with you, counseling you about your assets, income, credit report.

Every situation is different! You need to be looking at what is the best solution for you. And then talk about what those solutions might be. Then you can choose what’s going to work best for you.

And again every person’s situation is different, so it’s better to get advice from a professional and make an informed decision.

So if I choose to consolidate your debt what happens? Well those individual debts that you have credit cards, loans, etc., are rolled into one single loan. But you must use caution, because there may be closing costs associated with that loan. That’s something to consider also. Always read the fine print!

And if you choose to settle your you need to be careful as well. That’s because although it sounds good and you are basically negotiating a lower lump sum payoff of what you owe, there are some fees that could be high and tax implications as well as impacts to your credit report.

If you’re not aware of that you could be getting into something that maybe you really didn’t want to get into. So the bottom line here is seeking advice from a professional and find the best route for your situation.

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Why Debt Consolidation Is A Great Choice To Get Fast Relief From Too Many Monthly Bills!

A mortgage refinance, or what’s commonly termed a debt consolidation loan, is the most straight forward of all your debt relief options.

In truth, if you have good credit, you own a home, you have equity in your home, consolidation may be the best alternative.

That’s because you get a low-interest rate and a real low monthly payment. Also, the interest is tax deductible, so the effective cost is a lot lower.

So what exactly does debt consolidation entail? Well basically you take all your existing debt such as your credit cards, your medical bills, etc and pay them off through the process of refinancing your existing mortgage.

You pay off all of those debts out of escrow. And then you end up with a larger mortgage balance. But now it is one payment and lower than the payment all your previous bills added up to.

Let me stress again this has a much lower interest rate and a much lower monthly payment compared to what you had before.

For most people, this method is usually is a lot more effective use of your capital. The only real challenge these days is actually qualifying for your refinance!

You’ve got to have excellent credit to qualify for this type of loan.  Usually you need to have typically 20% equity in your home, or less than 80% loan to value.

Also, your debt to income ratio really needs to be very good. And then you have got to figure out from lenders what the best rate is and if it’s a good fit for you.

But if you qualify, it’s definitely the first and likely best choice to get fast debt relief so you should check this option out first before looking into any other methods to get out of debt.

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Tips To Save More Money Every Month And Stay Out Of Debt!

Even when you have the best intentions, saving money is hard. Especially if you are living in an expensive city like Chicago, New York or San Francisco.

So, here are some useful tips for you to get the best out of your money.

Depending on the total lump sum of income you have to work with and your current circumstances, it might be a very good idea to split your savings.

Think about locking some of your cash away in a fixed rate bond, preferably for one to five years as well as putting some into a high-interest rate savings account.

It is safer to spread out your savings between a few Federally insured banks just to be on the safe side, especially if you are saving very high dollar amount.

Shop around and be wary of which bank you choose to bank with, as many of the providers belong to the same financial arm. If one bank has problems at least you have diversified so your other savings are still safe!

Credit Cards

Now, credit cards can be a major headache when used recklessly. But used sensibly, they can actually be a very simple way of giving yourself breathing space and saving on any unnecessary bills.

If you can find it, a really good idea is to switch your funds into a balanced transfer credit card that charges 0% percent interest for an introductory term.

That way you get the loan for free while you make a plan to settle full bill.

You really need to make sure you’re on top of things. It’s a given, but make sure you pay back at least the minimum repayment, sometimes more if you can get in front.

With modern day technology easily accessible, there’s no excuse for not setting up an automatic savings plan.

And finally, set up a fixed, regular amount to be transferred from your account to a savings account as soon as your paycheck comes in.

It really doesn’t have to be a huge amount, but the key is to set up something once so that you don’t have to think about it again.

It also probably helps if you’re savings account has some kind of access limitations so that you can’t easily get to the funds once they’re deposited.

By the end of the year, a tidy little sum will have built up, and you’ll be pleasantly surprised and elated at just how easy it all was to do.

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How To Create A Balanced Budget You Can Live With And Avoid The Debt Trap!

If you don’t understand how to go about setting your personal budget, then you are at risk for getting into debt problems. You really need to understand how to create a budget, what it means, and how to manage it properly.

Creating a budget for your personal finance is a way of creating consistency and stability in your day-to-day life. It helps ensure you keep within the limits of your spending and can meet your financial goals and aspirations.

It can be a big change from old habits where your spending may have been out of control or irresponsible. These habits are how many people end up in debt they can’t manage.

The first step in creating a budget is knowing how much you spend in an average month for all your bills and necessities. Because of this, it is usually worth tracking and monitoring your finances for a few months before you calculate your budget.

The more months you have to analyze your spending, the more accurate your monthly averages will be.

Ok, so you’ve tracked all your transactions, and you’ve created some monthly spending averages. If you are similar to a lot of people, Your monthly cash flow is close to zero.

This scenario is remarkably common even without monitoring, people tend to have a feeling for what a normal level of spending is in a month and stick to it. In many cases, people spend just a little bit too much which over time which leads to credit card abuse and increasing interest charges.

Let’s get out of this horrible cycle right now! The first thing you need to do is reduce your spending. In most cases, you can make a modest impact here quite quickly. Some strategies to employ include:

  • Switching your utilities (cheaper cable etc.).
  • Canceling un-needed subscriptions, memberships, etc.
  • Re-financing mortgages, credit cards balances, etc.

Now let’s say we’ve managed to reduce our outgoing spending by $200 a month. Without creating a budget, it’s so easy for this money to disappear on luxuries, so it’s important to be disciplined.

Now we know roughly what our bills are going to be in an average month so we can enter this in the budget first.

Next, you also want to set aside a little each month for miscellaneous spending such as groceries, charity donations, etc.

Next look at your savings. Say you want to buy a bigger place in the near future. If you set $150 aside each month into savings, I will have a nice down payment within a few years.

That may seem like a long time, but you have to start somewhere, and you’d be surprised how quickly you can add up the saving when you give it some real effort

Ok, so next in the budget is luxuries. This covers all your spending on lifestyle and treats such as going out to dinner or the movies. If you’re honest,  you could probably cut back a bit of this stuff if needed.

An average spend may be $200 to $300 per month.  So you are going to set the budget at $400 which gives you a bit of leeway. So now your financial goal each month is to spend no more than $400 on luxury items.

If you find it very trying to stick to your target, there are a few tricks you can use. For example, withdrawing $400 in cash at the start of the month and not spending it. Or not using your credit cards at all (lock them away or give it to someone you trust).

Also, before you buy something, wait 24 hours. Often, after a period of reflection, you find you can probably live without it anyway.

If you can stick to your budget, then there will extra going into your savings each month and not coming out! This will help you keep out of debt! So, once your budget is set, you just have to be disciplined and stick to it. It really is that simple.

 

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After Debt Relief Programs – How To Eliminate All Your Monthly Payments!

Enrolling in a debt relief program may feel like you’ve ended a problem. You know, that problem where you were having trouble making ends meet.

You’ve gotten to the point where paying your bills has become a stressful experience, and needed help to pull things together so you can pay your bills.

But, what you should really be thinking is that, instead of this being the end of a “paying your bills” problem, it’s a new beginning. Let me explain.

Have you noticed that debt-relief companies have stopped promoting their services as a way to become debt free?

Well, that’s because after you’ve finished their program you probably still have car payments, house payments, and maybe other kinds of debt payments.

The truth is that completing a debt relief program doesn’t necessarily mean you’re debt free. But that doesn’t mean you can’t become completely debt free.

Consider thinking of it this way. Beginning your debt relief program is also the beginning of an opportunity to pay off all of your debt. The easiest way to get this across is with a question.

Imagine what your life would be like if you have no credit card payments, no car payment, and even no house payments? No debt payments of any kind!

How would that feel? Well, that is exactly what you could be working towards when you consider your debt relief program as a new beginning with becoming completely debt free in mind.

How you do this is simple.

Once you’ve completed your debt relief program, you simply snowball the payment from your debt relief program into that car payment and pay that car off completely much faster than you would have the traditional way.

This is because a minimum payment is just that, the minimum your creditor will accept. Today most accounts do not have a prepayment penalty.

So, once you’ve completed your debt relief program, you can take that payment – which is probably several hundred dollars – and add that to let’s say your car payment.

This will get your car payment paid off much faster.  When you’ve done that, snowball the former debt relief and car payment on your next debt.

Keep that going until each and every debt is completely paid off. Do this and you’ll own everything instead of owe on everything.

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How To Pay Off Debts Of $10,000 Or More Fast With Some Easy Strategies

Are you falling behind and getting in debt? It seems like for many the magic debt number is $10,000. That’s when we start panicking and realizing there is a real problem.

But actually, with some simple adjustments, you can pay off that debt you have accumulated. It is really possible to pay off $10,000 of debt per year or even more, as long as you’re committed and you follow some easy strategies.

The first might seem a little obvious, but a lot of people don’t do it and that’s maximizing your income. It’s not a secret that the more money you have, the easier it is to pay off your debt.

The very first thing you should try to do is increase what you’re already earning. This might mean working overtime or taking extra shifts, or it might mean negotiating your salary for higher pay.

The most important thing is just that you increase the amount of money coming in and you put it towards your debt.

The second tip that you should do after increasing your income is to keep living like a student. If you have just graduated from getting your degree, don’t go out and buy a car or buy a house.

It’s better to just stay in the same apartment you probably already live in and keep the same bills you had as a student. By not inflating your lifestyle, your money goes a lot further, especially because you don’t have to pay tuition anymore!

When you are trying hard to pay off debt, it will require some sacrifices in lifestyle, but remember it’s only for a short time and you can absolutely do it.

You should be spending at least 15% of your net income on repaying your debt. If you’re not, it’s time to increase those payments until you are.

The third tip I suggest is to use cash windfalls towards your debt and what I mean by cash windfalls are unexpected large amounts of cash that can really put a dent in your debt.

If you paid for your school yourself, you may have tons of tuition credits at tax time. This means when you file income taxes; you usually get a fairly large return.  Instead of taking it on a cruise or buying yourself something, put it all towards your debt.

This lets you pay off thousands of dollars in one payment.

If you receive any kind unexpected large amounts of cash, whether it be from a tax refund an inheritance or even birthday money, don’t blow it! Use it towards your debt.

Finally, one of the best things you can do is devote a single income stream towards debt repayment. This goes hand in hand with the earning more income.

If you can find a second or part-time job, or a hobby that you can do for money use that just for debt repayment.

If you can find a small but consistent income stream, direct that entire income towards paying off your debt and you’ll see the balance go down super fast.

Altogether, these strategies will let you pay off $10,000 or more of debt each year. It might not seem possible at this moment, but you can pay your debt off by focusing on the right strategy.

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Three Simple Tips To Pay Down Your Credit Cards Faster!

Are getting behind on your monthly budget because of mounting credit card debt? You are not alone. Many people are struggling to pay those monthly bills.

But fortunately, there are ways to get back in control of credit card debt. To end the monthly struggles. Yes it is possible!

Here are three easy tip you can use right now to get yourself out of debt sooner.

Number one:

Break the habit of paying only the minimum required each month. The minimum payment is usually two to three percent of the outstanding balance and only prolongs your agony.

Number two:

Examine the terms of all your credit cards and look for ways to consolidate your debt onto a card that has a lower interest rate.

Many credit cards allow this. Doing so will make your debt more manageable and save you money on interest charges.

Number three:

If your total balance is too big to fit on one low-interest credit card, you should pay at the very least the minimum amounts due on all your cards except the one with the highest interest rate.

Funnel the majority of your budgeted payments into the credit card with the highest interest rate.

Once that one card is fully paid off go on to the next highest interest-rate credit card. Continue this pattern until all your cards are paid off.

See how easy it really is! You can apply these tips and see your balances finally go down.

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Getting Out Of Debt – Key Issues And Motivations That May Be Missing From Your Strategy

So you have finally decided that it’s time to make some life changes and you want to liberate yourself from all of your debt. If so, you’ve probably come to realize that it’s no easy feat. It’s really not as easy as a lot of people think.  But, it’s possible with a plan.

The problem for some people is, they are missing some key motivational ingredients needed to correct an unbalanced budget. These need to be corrected before a debt elimination strategy can be started.

Let’s take a look at some of the key things, missing pieces for someone who wants to become debt-free:

First, is the lack of knowledge or refusing to listen to others.

It’s easy to find a solution for that. You read books about finance, listen to other people, but the most important is to have an open mind.

When it comes to personal finances, we are not well-educated. When you’re in college, do you have a subject on personal finance? Not likely. There’s none, so this should be studied well before the problem comes.

Second, inability to see the gravity of the situation.

If you think, “I’m in control because I pay the minimum payment every month,” or “I’m OK, I don’t delay payments,”  that’s not OK.

The truth is you don’t know your real financial situation, or you are hiding from it. The mere fact that you only pay the minimum payment, that’s already a big problem.

For a $1,000 debt, you’re going to pay for months or even a decade. That’s too much. Your not seeing the seriousness of the situation. That’s the danger when you’re making minimum payments. It seems OK on the surface, but you don’t see the big picture.

Three, there’s no roadmap, there’s no strategy.

Your approach should be strategic. You shouldn’t accept problems today then tomorrow you’re just going to let what happens go ahead and happen.

Your goal should be clear. When we talk about the goal, what’s next to that? There should be a timeframe. You should have a target date when you will be able to complete it. You need a plan. That’s important.

One of the motivations that you need to do to become debt-free is to have an all-consuming reason to do it. For example, you can say that in 5 years or 10 years you want to own a  fully-paid house. This is a great reason that you can give to yourself as motivation to become debt-free.

Are you the type of person who likes to write things down? So post it on your wall and view it every day. Put a pic of the house you want to own where you can see it every day and use it for inspiration. You have to be specific and committed to get it.

You also need to consider how to go about putting energy and effort into your debt goals. When you’re trying to cut down all your debts, it shouldn’t be all at once. You can break it down into little ways.

It’s much easier to solve any problem when you break it down. It’s the same with personal finance and debts.

When you have a $7,500 debt, and let’s say you want to pay it off in one year. So take $7,500 and divide by 12. Then divide that by four (weekly). See how the amount gets smaller? It’s like you need to save $75 per week in order to pay your $7,500 debt in a year and a half.

That’s the best strategy. That’s the most practical advice that you can follow because it becomes more realistic. And the smaller amouts won’t freeze you with stress and anxiety that bigger numbers might.

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Simple Tips And Lifestyle Changes To Help You Stay Out Of Debt!

You may be like many people in that you are not doing the right things to stay on a budget and stay out of debt. It’s not all your fault. Most of us are never taught the simple tips to keep a monthly budget.

Fortunately, it is never too late to learn! Here are a few super easy tips to get you going on a healthy budget for long=term financial success.

Start an emergency fund. This is very important! It’s one of the things that help keep you from spending money at the last minute An emergency fund of$1,000 is ideal.

This will keep you from using a credit card, taking out a small loan or from borrowing money from friends and family. If your outgoing spending exceeds your income, then your income becomes your downfall.

Look at your budget every week and know down to the penny where your money is going.

Running a good monthly budget is telling your money where to go instead of wondering where it went. Live within your means. Remeber:

  • You can’t always do what everyone else does.
  • We don’t need as much as we acquire.
  • We don’t require spending like we spend most of the time.
  • You have to stop using your credit card.

Put that credit card away somewhere hard to get to. Now, it’s no longer an impulse purchase because by the time you find the card your interest is likely not to be there anymore.

Overdraft fees are a killer. So take money from the account and put it in the envelope. Use that money as frugally as possible. And when that money is gone, that’s it. That will force you to stay within your budget.

Other things are for example cell phones. These days you have you have kids that are eight, nine and ten years old with cell phones. They have their own cell phones they don’t have jobs they have nothing important to do.

They don’t even need phones at that age. You’re taking away the responsibility of them being resourceful for themselves. Cut that off and apply that amount of money from their cell phone to your bills.

Get them outside the house let them jump rope, go to the park and do pushups or something and make real friends around your house there are plenty of things that we have that we don’t use anymore.

Try garage sales. Selling those things that you no longer need. One man’s trash is another man’s treasure. And it can put money in your pocket.

It’s all a snowball effect. You start at the top of the hill as a small ball, as you roll it down, it becomes larger. It has an avalanche effect. It works in debt and wealth building the same way.

I believe everyone has something that they’re so great at, that they have the ability to go out and earn a living from it or extra income so capitalize on that and also use that income to help you get out of debt and do more.

Use your tax return to put towards your debt. It’s the best possible use for that money. Money goes and stays where it is appreciated.

Don’t eat out all the time. It’s much cheaper and healthier to eat at home cooking fresh food. You will feel better and your wallet will too!

 

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Three Easy Strategies To Pay Off Your Mortgage Faster And Save A Ton Of Money!

Are you feeling depressed about how long it will take to pay off your home loan? Don’t fret a lot of people feel the exact same way.

But what if there were some simple changes you could implement and take years off your loan and save a lot of money? Of course you should be excited about that! Let’s take a look at few easy strategies you can start using right now.

So say you have a home loan of $360,000.  You make the minimum repayments and expects to do so over the next 30 years at a historically reasonable interest rate of five percent.

What you might not know is that over the next 30 years you will accumulate $340,000 in interest charges. Now, intuitively you might understand that if you were able to pay your loan off in 20 years instead of 30, then those interest charges will be lower.

But you may not realize that it could be in the region of $150,000 in savings! So would you like to pay your loan off quicker?  Of course you would!

Here are three easy strategies that you can follow to pay off your house faster and save a considerable amount of money.

I think you’ll be amazed. These tried-and-true strategies have been saving mortgage holders a lot of cash for years.

Strategy 1:

So here we go. You take your monthly home loan repayments, let’s say $2,000, and you cut that in half ($1,000). You then make that payment every two weeks (fortnight).

Now as you’ll be aware there are 26 fortnights in a year but only 12 months. So if you paid off $2,000 every month that would be $24,000 contributed to your home loan, whereas if you pay off $1,000 every fortnight that’s $26,000 contributed to your home loan.

This strategy allows you to pay your home loan off nearly six years sooner, and save yourself almost $75,000!

Strategy 2:

By rounding up your loan repayments, even a small amount, you can make a significant dent in your home loan interest charges.

Say your home loan repayments are $1,951 per month. If you round it up to $2,000, you’ll pay your home loan off nearly 18 months sooner, and save yourself $20,000 in interest!

Strategy 3:

Refinancing can save you a bundle. Here’s what you can do – call your lender and ask them if your rate is as low as it could be. There is a good chance you are qualified for a lower rate.

If you change your home loan from a rate of 5% to one with a rate of 4%, you’ll reduce your home loan by three years and save nearly $75,000! Yes, refinancing can be a hassle, but it seriously pays.

These simple strategies to pay off your mortgage sooner are easy to do and will save you a lot of money. Give them a try!

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