Wednesday, August 31, 2016

Get Out of Debt and Stay Out Debt

Blogging Away Debt Our Journeys to a Debt-Free Life 
Many Americans have still not changed their mindset and financial behavior since the recession, government shutdown and huge market declines.  Others are hoping that a burst of money will fall down on them and “poof” their financial situation will improve, while others try to hide under a rock and hope that their bills and debts will eventually go away. They do not! 

Many people are allowing fear to cause them to make hasty decisions.  Don’t let fear cause you to make a decision you will regret in the future. During financial crises, scams, identity theft and other financial schemes increases.  If something sounds too good to be true or requires you to pay money to receive a service that usually is free – do not pay for it. 

If you owe debt and have the money to pay it off do so.  It will maintain your relationship with your creditors, stop those harassing calls, increase your credit score and reduce stress caused by your financial problems.

The first step in getting out of debt is admitting that you have a problem. Next, you have to be committed to getting out of debt, just as you are committed to going to the gym or going to work. Now is a great time to negotiate with creditors to pay back delinquent debt. 

To pay back debt and stay out of debt you have to the way you think about money.  Money is a tool that can be used either to generate debt or to generate wealth.  You have to know how to play to stay in the game.  There are several ways to get out of debt and stay out of debt. You can think outside the box and think of creative and unique ways or play it safe and follow the basic rules for getting out of debt. 

One way to think about the box to get out of debt and stay out of debt is the follow the Voluntary Simplicity movement that states that you do not buy anything new other than basic necessities such as food and clothing.  Shelter is a necessity but does not mean you should buy a home you really cannot afford or a home that has more rooms than you use. It is means examining every aspect of your life to determine what is most important and eliminating everything else.   

A simpler model of the Voluntary Simplicity Movement is to buy used versus new or recycle used good. It takes a lot of hard work to get out of debt.  Here are eight ways to get out of debt and stay out of debt.

A budget helps you identify your total monthly income, how much you owe and how much you spending each month. A budget also quickly identifies areas where you may need to reduce spending. 

Buy needs vs. wants, control your spending, don't buy in excess or more than you need, keep debt (excluding mortgage or rent) at 15% of your total monthly income (after taxes). Reduce expenses by bringing your lunch to work, taking public transportation, shopping at wholesale stores. Delay buying the things you want until you have the money to purchase them. 

Pay the balance in full each month prior to the due date or as soon as you receive the bill, which helps to avoid, paying finance charges. Beware of companies who may move your due date around to prevent you from paying your bill on time in hopes of being able to charge a late fee. Contact the company if you are a victim of this and tell them you want a set payment date.  If they refuse, tell them you want to close your account and give your business to another company.  However, be sure the account that you close is two years old or less or has a low limit of $1,000 or less because closing an active account in good standing can lower your credit score.

Many consumers do not realize that they can send in payments for their debts multiple times a month.  You can pay half of the bill balance with first paycheck of the month then pay the remaining balance with second paycheck of the month. Pay weekly instead of monthly. Pay the minimum monthly payment the first week after you get the bill, and then each week pay as much as you can toward the monthly balance and repeat every month.  You can also pay as much as you can when you get the bill, and then pay more towards the bill when you get extra money. Some creditors are aware of this may not apply your payment to the current month’s bill.  If this happens, contact the creditor and tell them to apply all of your payment to the current month’s bill.

Pay your bills on time. If you are unable to make a payment, contact the creditor right away to setup a payment plan or make other arrangements.  If you generally make your payments near the due date call the company’s customer service department and ask if there is a certain time of the day (am/pm, or hh:mm) that they need to receive your payment to consider it paid on time and make sure your payments arrive by that time.  You can also contact our local post office to find out how long it takes you payment to arrive by mail.

As a consumer, you have the option to negotiate. Do not be afraid to ask exactly for what you what regarding your account.  Negotiate for lower interest rates or get fees waived to help reduce the balance owed. This also makes it easier to pay off the credit card debt.

If you pay the minimum monthly payment, you will end up paying 2 to 3 times what you actually purchased due to finance charges that accrue on your balance. Send more than the minimum monthly payment each month. An easy way to determine how much to send is by reviewing the total amount listed in finance charges field on your statement for the current month.  If your finance charges are equal to or more than your minimum monthly payment then your payment should at least equal to your finance charges.  If your finance charges are less than your minimum monthly payment, your balance will go down faster, however, as a good money management rule you should still send more the minimum monthly payment.

Keep credit card balances at 30% or below the credit limit.  Having accounts with balances above the credit limit will decrease your credit score and may increase the chances of your credit limit being reduced or your credit card account may be closed.

Following these tips will help you pay down debt, increase your credit score and will you on the path to a debt free life.


Andi Fix said...

I got this blog site through my friends and when I searched this really there were informative articles at the place.
credit card merchant loan

charles said...

Your blogs and every other content are thus interesting and helpful it makes me return back again.
1 year installment loans for bad credit

Reliant Credit Repair said...

If something sounds too good to be true or requires you to pay money to receive a service that usually is free – do not pay for it. Real Credit Repair Companies