Personal Finance and Investing » Debts

Personal Finance – What is Good and Bad Debt?

admin — Sat, 18 Dec 2010 13:25:00 +0000

What is the difference between good and bad debt? Can they even exist this way? I thought debts were just debts, and nothing more. Debt is borrowed money. Everyone knows that. However, debts are essential in our lives. We all use them to our advantages. On the other side of the coin, use it too much, and it becomes a curse instead.

When we go to college, we might not have the large sum of money to dispose of. Therefore, the need for a loan is apparent. Loan, too, is a type of debt. In this case, debt is a good thing and it helps serve as the stepping stone in life. But what take a car for another example. Is it a good thing to get involved with a debt to obtain a car? As opposed to investing in yourself; an education, borrowing huge amount of money for buying a car can be a good or bad thing. It is a good thing if you are a salesman, needing mobility all the time. But it is a bad thing indeed, when you are buying that car just for satisfying your ego.

In a vacation, you would spend also, large sum of money. In financial terms, this is a huge waste. Yes, you will get nice and great memories, as well as unforgettable life experiences. But it is no asset in terms of business and money matters. This example can be an extreme case. Some will argue that having a holiday releases much stress and heals the mind.

In the end, the point is to do it when you can afford it. There is no use trying to splurge more than what you already spend or can afford. How is this relevant to debts? It is when you try to take a loan, or large portion of cash to go for a vacation or splurging moments. Enjoying on credit is definitely a bad debt, rather than a good debt. A good debt is like a college education. It serves you in the future.

Compare Debt Consolidation With Debt Settlement

admin — Wed, 10 Nov 2010 19:16:05 +0000

Although debt consolidation and debt settlement are both popular debt relief solutions these days, these two programs differ greatly. Understanding the unique differences between these two solutions will help you decide what solution will work better for you and your needs. There are advantages and disadvantages associated with both forms of debt control. Let’s examine both options further to identify the differences, the advantages, and the disadvantages of each debt solution.

Debt consolidation is fairly easy if you choose a good company to work with. With a few simple phone calls you can be well on your way to getting your debt back under control. If you use debt consolidation, you can either pay a company small fees every month that can eventually pay off your creditors or you can opt for a loan and pay off all your bills with the funds you are approved for. In contrast, debt settlement is a lengthy program and it can take several years before you see a resolution. You may have to hire a lawyer in order to get settlement arrangements underway, and there are myriad fees associated with such programs.

Some creditors may or may not be willing to work with a debt settlement representative or agent too and you will have to work out what bills you can get under the settlement program as well as the debts belonging to creditors that are less flexible. You may find that creditors like MasterCard and Visa are far less willing to settle your debts. Your initial workings with a lawyer or agent can prove overwhelming as you struggle to work with creditors and negotiate fees. What’s more, debt settlement can sometimes become a public affair through advertising and publicity; creditors, not wanting that kind of publicity may refrain from doing business with you in the future.

Debt consolidation practices are far more private. There is no publicity or advertising involved when you opt for consolidation. Debt consolidation allows creditors to collect more payments over a period of time so that they can recoup more of their losses. Even celebrities have made use of consolidation plans in order to pay back past debts and to get back on track again financially.

In conclusion, you will find that both debt settlement and debt consolidation have their benefits and their disadvantages. You will want to fully examine your options before you make a final decision about the solution that is going to work best for you and your needs. Do not let your decision intimidate you into not taking care of your debts; any positive move toward remedying your debts will provide you with a more stable financial ground to stand on. When your debts are paid off you will finally get the peace of mind you crave. Just take care that you work with a genuine and reputable counselor or debt settlement agency. Examine all your options, compare possibilities, and then move forward to manage your debts.

Things That You Should Know About Bankruptcy Lawyer Cape Coral Or Bankruptcy Lawyer Charlotte

admin — Mon, 18 Oct 2010 14:47:49 +0000

So you have got into severe debts and now you are thinking of absolving your debts using the legal system. If you are new to debts then you cannot start the legal process without the help or assistance of a lawyer who has specialization in the subject. If are a resident of Cape Coral then you have got to hire a bankruptcy lawyer Cape Coral who can assist you in your case. On the other hand if you are from Charlotte then you can enlist the services of a good bankruptcy lawyer Charlotte. However you have to be involved during the entire process because it is not wise to leave everything to your lawyer. He or she may not know the finer details or intricacies of your case and your participation is very important otherwise your case can weaken at the final stages.

The first important thing is to choose a competent lawyer. Leave the phonebook alone because you cannot afford to make a random choice regarding something which is so important. Talk to friends or people you know better. Ask them whether they have ever filed a Chapter 7 or Chapter 13. If they reply in the affirmative inquire from them about the antecedents of the lawyer that they had engaged. If you get to know from them that they were satisfied with the representation of the said lawyer then ask for his or her number. You have to make sure that your bankruptcy lawyer Cape Coral is a good prospect. Your case is very important for you and therefore only lawyers with bankable references and credentials should be hired to handle your case. Do not zero in on only one bankruptcy lawyer Charlotte. For best results consult with at least a couple of lawyers. Ask them questions about their charges and what steps they will take to execute the legal process so that you get a satisfactory result.

You have to provide information to your lawyer about your case. There can be verbal information and also documented information. If getting documented information is not possible immediately ask your lawyer what can be done at the earliest without jeopardizing your case. A competent lawyer will definitely be able to guide you in this aspect. Keep the original documents with you and only give the photocopies to your lawyer. If in case the originals are required then make photocopies of the same before handing the originals. You have got to play safe although once your process is done you get back your original documents.

Is a Debt Consolidation Loan Advisable Or Not?

admin — Fri, 08 Oct 2010 23:02:02 +0000

Are debt consolidation loans advisable or not? More often than not the answer will be yes. A debt consolidation loan is commonly regarded as a first step towards eliminating debt. Before taking the first action towards a consolidation loan, it is important for you to realise that the primary purpose of this option is to eliminate debt and not to defer the problem.

Among others, a debt consolidation loan is a personal loan that enables an individual to consolidate different debts into one payment. For instance, an owner with three types of debts to different companies could be interacting with these on an individual basis. Something which will develop into inefficient budgeting therefore missed payments. By utilising a debt consolidation loan, you can with the aid of a lending agency settle these debts just once a month.

One of the disadvantages of this type of loan is credit qualification problems. If you already were experiencing a hardship before you finally applied for the consolidation loan, you will most likely pay a much higher interest rate. Occasionally you might not qualify for the loan at all. A useful tip is to apply for the loan when you sense the trouble coming, not after you have been in the middle of personal financial hardship for months.

The main purpose of debt consolidation loan is to offer you relief from the rapid escalation of your debt. There are a variety of attractive offers available to you. Initially this offer might have an annual percentage rate which is usually zero percent in the short term. This is one of the major reasons which make the debt consolidation loan a very favourable alternative.

Apart from the annual percentage rate, offers for a debt consolidation loan may include a zero interest rate for purchases made within the first five months of balance transfer. This is another factor that reduces the rate at which your debt escalates. Other benefits may include additional reward points on your reward plan of the credit card you are consolidating the debt to. You can claim reward points for other attractive rebates, rewards, goods etc.

Occasionally, your new consolidation might also cater for your current spending requirements both in terms of your required spend and credit limits. For example, the new credit card might be a co-branded card which might be offered by an airline you might have started travelling with quite frequently. This type of card might offer travel discounts, shopping vouchers or discounted offers. This can open up much more opportunities if you compare it to your current account.

The Major benefits of a debt consolidation loan include an initial annual percentage rate (APR) is lower. Seeing that debt consolidation is used as a strategy to attract new customers, they usually offer a zero percent APR for an initial six to nine month period when you join a debt consolidation programme. There is a zero percent interest on purchases which is offered as an incentive to join for a short initial period. The ease of management enables you to track and manage fewer debts. The program might offer reward point, rebates and discounts.

Debt Consolidation and Credit Scores – Your Way to a Better Rating

admin — Wed, 22 Sep 2010 07:08:48 +0000

There are many people out there who are afraid of debt consolidation. Many have fallen so deep into debt that the only options left to them are either bankruptcy or debt consolidation. And yet, many are so scared that consolidation will irreparably damage their credit that they choose to go with bankruptcy. The fact is that nothing could be farther from the truth. For anyone mired in a sea of red ink and left with the options of settlement, bankruptcy, or consolidation, the latter is the best method of repairing their financial standing and keeping it solid.

The first reason for this is that process of debt consolidation is one that naturally lends itself to improving one’s credit score. Every major bureau takes the number of accounts that a person has open into account when calculating his or her credit score. Each loan puts a small penalty on the report. By consolidating all of these open lines of credit into one loan, a person is able to close those other accounts, which means that he or she will already get a benefit out of the process.

The next reason is that consolidation simply makes it easy to pay down red ink, without once asking creditors for help. Bankruptcy erases the debts and, because creditors get no money, also severely damages one’s score. The same goes for settlement. Throughout the entire process, one never asks a creditor for help or assistance. It shows both the major credit bureaus and future creditors that one can pay off one’s responsibilities, and that one does not need help. Because the amount of money that one pays is unaffected, it need not even appear on one’s report.

Finally, consolidation is an easy process. The agencies that give out the loans deal almost exclusively with people in tough financial shape and are very forgiving of delinquent payments and likely to help one out. Many companies offer free debt assistance services, such as counseling, which can help one plan a map towards renewing one’s financial life. Even if one is unable to make his or her payments for a few months such an organization is unlikely to report him or her to a major credit bureau, as long as the payments are made eventually. This goal of these companies is to ensure that their customers are free of their liabilities, and end up with a positive score, and they do it well. This is the best way to recover from heavy debt while keeping one’s credit score intact.

Does Debt Consolidation Affect Credit Rating?

admin — Tue, 21 Sep 2010 19:53:04 +0000

Are you considering a debt consolidation loan or a debt consolidation program? Have you ever wondered if debt consolidation affects your credit rating? Here is 3 reasons why debt consolidation affects credit ratings in a positive way.

Tip #1

If you have a lot of credit card debt, then it is affecting your credit rating in a negative way. One thing that credit card companies don’t tell you is that if you carry a balance on your cards and it is over 25% of your credit limit, then you are actually penalized on your credit rating, even if you pay your payments on time. So if you consolidate debts that include credit cards with high balances, then you are doing yourself a favor and helping your credit.

Tip #2

You can consolidate not only credit cards, but if you have a car or a personal loan, then when you consolidate those and pay them off you will improve your credit rating. The credit companies love to see that you paid off a car or a personal loan. It helps to boost your credit score quite a bit.

Tip #3

If you have enough debt that you are considering consolidating it, then it is obvious that you need to. The key is that if you consolidate your debt and payoff credit cards, then you need to stop using the credit cards and get rid of them. If you consolidate your debts and then you run your credit cards back up to their limits you are doing nothing to help yourself. You will end up in a worse situation, then you were in to begin with.

So if you are considering consolidating your debts keep in mind that debt consolidation will affect your credit rating and it can be in a positive way if you are responsible and smart with your debt consolidation.

Financial Planning – Get the Big View of Your Finances

admin — Tue, 21 Sep 2010 07:11:04 +0000

Many people are adept at handling their daily finances. Paid the bills? Check. Shopped for the best deal on that new TV? Check.

But what happens with the bigger picture? If you’ve ever had a nagging feeling your money could be working harder and smarter, consider doing some financial planning.

The process is like taking a hike up a nearby mountain to get the big view. It will take some time and a little effort. But, with the landscape laid out in front of you, it can be easier to find the best road to any destination. Plus, you may see intriguing new areas to explore.

How does it work? Financial planning starts with taking a holistic look at short and longer-term goals. Next, it’s followed by making a financial plan to reach those goals. Make your dollars match your values, and meet your overall needs. You may be surprised to find larger strategies you’ve overlooked.

There are times when it’s best to seek professional advice, but there is much you can do yourself. First, we’ll explore steps you can take. Then we’ll find out when it’s smart to hire a pro.

“Do-it-yourself” financial planning

Here are some planning actions you can take.

Think about short and long-term goals. What are your dreams? Do you want to buy a home, get a college degree, or travel the world? Maybe you long to retire early. Start a notebook or online diary to record your goals. Take inventory of where you are now. How much savings do you have? How much are you earning and spending? What are your personal assets and debts? Record your expenses for at least 3 months to really get an idea of where your money is going. You can use resources like Mint.com, Kiplinger’s budget form, or programs like Quicken. Go over your basic needs, including risk management. Make sure you have the right kinds of insurance for health, home and possessions. If you have dependents, or own things, make sure you have a will or trust so you get to say what happens after you’re gone. Pick a goal and create an action plan. Let’s say you want to buy a home, but don’t have the savings. It’s suggested that monthly payments and other housing expenses don’t exceed 30% of your average income. Work with this figure to see what you can afford, and what you’ll need to save for a down payment. Go to Bankrate.com for calculators that will tell you how long it’ll take. Review and revisit your goals and progress every month.

When to hire a professional planner–If you were organizing a large wedding or event, hiring a caterer would be smart. And most of us would head to a medical professional for health problems we did not understand. Likewise, consider hiring a competent financial planner if you find yourself in any of the following situations.

If the sums are large, consider additional help. Did you get a life insurance payment, or inherit Aunt Susan’s estate? If you’re fortunate enough to have received a windfall or inheritance, you’re a good candidate for help. If your finances are complex or disturbing you, get assistance. Are you headed for bankruptcy or juggling too much debt? Not sure whether you’ll meet retirement goals? If you’ve had a recent divorce or loss of spouse,consider help. This is a time when people feel fragile, and may not be at their best to make informed decisions. Ask a trusted professional what your options are, and then take some time to reflect before acting. If you’re unable to move forward or make decisions about your money,seek help. This might be just the step you need to get your finances in order.

So, how does one find a trusted professional? It’s best to choose someone who bases their advice on a per-hour or per-job fee, rather than commissions alone. This will help insure there’s no conflict of interest. A top-trained planner often has earned the CERTIFIED FINANCIAL PLANNER™ designation. You can search for these and other fee-based professionals at the National Association of Personal Financial Advisors http://www.napfa.org/

Financial planning-by you or someone else–can lead to added awareness about how your money serves your life.

The 10 Great Strategies On How To Improve Your Personal Finance Immediately

admin — Wed, 08 Sep 2010 09:18:32 +0000

1. Know your current financial standing.

Before you can make any plans to save for any activity, be it for your children’s education, retirement or buy that dream home, you need to know where you stand financially today. You may need to take the trouble of getting a financial planner if you do not know how to create a financial plan. If you do know how to create a financial plan then you can save a fair bit of money in engaging a financial planner.

2. Save regularly.

Getting into the habit of saving is a good virtue. You will never know when you are in dire need of that extra cash when unforeseen events happen like job retrenchment or a loved one becomes ill which requires a lot of medical attention incurring high medical costs. As a guide it is a must for you to have set aside 3-6 months of your current salary to meet emergency needs.

3. Control your cash flow.

No matter how rich you are, you must be able to control your cash flow. The simple rule is what comes into your pocket needs to be more than what goes out of your pocket. You need to be aware which item is giving you income and what is causing you to spend.

4. Reduce your expenses

Start by keeping track of your daily, weekly then monthly expenses. Find those expenses that are not a necessity and eliminate them. A good example of this is paying for magazine subscriptions which you do not read. When you have identified all these items that are not worth your dollar, you can greatly reduce your expenses by 25-30%. It is advisable to only have one credit card so that you can better track your expenses. Make sure you pay the full amount by the due date of every credit card invoice before it snowballs into an incredible debt.

5. Review your debts

As a rule of thumb, your debt incurrence should not exceed 30-35% of your total income. Gambling and vices are good candidates that can lead you into debt. Poor money management can also lead you into debt even you could have struck the 2 million lottery or inherited a big wealth from your relative.

6. Be frugal but not stingy

Only purchase goods when it gives you good value for your money. It is wise if you know when to buy something of quality and pay a premium versus when to buy something less branded but still serves the same purpose as a branded item. If you were to always choose the items based on cheap pricing, that item could fail in a short time causing you to purchase another, this will lead you into greater expenses than you originally did not anticipate. You will also be labeled as someone who is stingy, not willing to spend the money when it is absolutely necessary.

7. Review your investment portfolio

If you have invested in stocks, mutual funds (unit trusts) or the various funds, you would like to review them on a regular basis. Your review period could be quarterly, half-yearly or annually. For example, when you have done your quarterly analysis and find that the company stock you have invested is not giving your target returns based on financial figures or external interference, then you would want to replace that stock with a better performing company stock.

8. Educate yourself financially

There is a wealth of financial information and it is free when you surf the internet or go to your neighborhood library. You could attend seminars, read books, read newspapers and listen to audio tapes which are some of the ways where you can get more knowledge.

9. Be generous

There is a famous saying “You get what you give”. When you are generous, some how the spiritual forces know this and reward you back many times over. When you give, there is a natural tendency for the other person who receives will want to give you back.

10. Pay yourself first

Before you pay all your monthly expenses, you should cultivate the habit of paying yourself first. If you have a day job, when it comes to pay day, you can start putting say 5% of your salary into another bank account. You can gradually increase this percentage when you have more take home pay or you feel you deserve more reward. Many people pay themselves last. By the time they have paid off other expenses, they will have nothing to pay themselves.

Bad Credit Personal Loans – Provides Financial Back Up

admin — Thu, 02 Sep 2010 06:14:26 +0000

Individuals have to fight a lot for their survival. Even in case of availing a loan, you are required to prove your credential. Such a situation makes it more difficult for you when you are tagged with a bad credit mark. Lenders turn down your loan application without even ponder over you money situation. However, you can reverse the situation now, as bad credit personal loans are here to provide you financial back up at an affordable choice.

Usually bad credit personal loans are obtained without bothering much about credit conditions. These loans are formatted in secured and unsecured forms. This classification put options before you to avail an amount based on your affordable condition. A secured form is accessible to borrowers who are ready to offer an acceptable asset as collateral for the loan security. On the other hand, unsecured form can be obtained without attaching any asset. This loan option is beneficial for borrowers like tenants, non-homeowners, students, graduates, self-employed, unemployed, etc. with the absence of collateral, the loan is approved very quickly. However, the amount you are approved happens to be at a slightly high rate of interest.

You can fulfill your various personal demands. These obligations can suitably use the amount gained under bad credit personal loans. The amount availed can be used for home renovation, wedding, expansion of business, availing education, purchasing property, etc. In fact, you can also use the raised funds to pay off your existing debts to shed off the bad credit tag. By doing do so, you will able to restore and rebuild your credit score.

For all that you will find several lending institutions across the money market. But online tool is considered an optimal solution to avail bad credit personal loans. Here, the lenders approve the loans instantly at very competent rates. Besides, the processing goes hand in hand. However, you need to compare other different lending quotes before you actual avail any loan.

Bad credit personal loans provide finances to meet the demands along with assist you to rebuild your credit rating.

Fast Credit Repair for your huge debts

admin — Tue, 31 Aug 2010 09:50:37 +0000

You must know that credit score or credit rating is everything today. The credit rating will affect banks and the other creditor firms to give you loan approval that you apply for. Again, the credit history means everything for your loan approval for sure. If you have high credit score, then you must be easier to get approval of any loans from any financial firms. In short, you have high possibility to obtain the credit cards and loan as well more quickly. Furthermore, the high score of credit rating will allow you to acquire good job easier. This means, you can pay the apartment on time to the landlords too, right? Therefore, if you have bad credit rating, you need credit restoration soon to make it better.

For your information, obtaining fast credit repair will allow you to improve your credit score quicker. You see, without the credit repair, the authorized loan and bank card will give you higher interest rates in this case for the debts. This is because the creditors are afraid of the debtor’s ability to repay the debts on time. The creditors must take high risk to give loan to those people with bad credit score. Therefore, usually they charge higher interest rates instead. If you need help for your credit repair, Lexington law can be a good choice.