Introduction to Debt

It is almost inevitable that we’ll run into debt at some point in our life; whether that’s on credit cards, loans, overdrafts or any other item of credit. Debt shouldn’t be feared; in fact without it we’d never be able to establish a good credit score.

The only time debt can become a problem is if you let it run out of control. For example, having large outstanding balances on credit or store cards while attempting to repay car loans and arranged overdrafts is likely to cause financial problems. This is why it is important that you take action as soon as you feel your debt is becoming unmanageable.

Face the facts

Often the core reason people get into heavy debt is because they’ve buried their head in the sand and continued to spend in the same way they always have. Your first step to financial freedom is facing the facts and subsequently working on a recovery plan. Naturally, you will have to make some cutbacks, meaning for the foreseeable future luxuries will be out of the question.

Draw up a spending plan

Drawing up a budget that breaks down all sources of income and outgoings will help you to understand your current financial situation. It will also highlight areas where you’ve been overspending thus giving you a chance to make cutbacks and increase your level of disposable income.

Set Financial Goals

Having drawn up a budget you can then start to set some financial goals. We always recommend setting a list two different types of goals; short-term and long-term. Your short term goals should include things like clearing all loan arrears, clearing your overdraft or paying off the outstand balance on a credit or store card. Naturally your long term goal should be getting debt free; however it’s important that you set a date of when you want to be debt free by. By being both ambitious and realistic with your timescales you will ensure you’re never short of motivation.

Frequently reassess your situation

Throughout your journey to financial freedom it is likely that your finances will be consistently changing, this is why it is important that you continually refresh your budget. For example, if you pay off a credit card balance this is likely to leave you with some extra cash each month that you can churn back into something else e.g. overdrafts or loan repayments.

Ensuring that your budget is always fresh should also give you some idea of your progress. Initially it may be tough, but sticking to your budget is the best way to financial freedom. In order to motivate yourself you could offer incentives or rewards in conjunction with your financial goals. For example; treat yourself to a meal out when you pay off your first item of credit.

Seek Help

If at any point you feel like you’re struggling to stay on top of your finances then seek advice. There are loads of ways in which you can do so; the internet is a great way of doing so if you’re not confident with speaking face to face regarding your problems. Many debt charities will also have trained agents at the end of the phone who help people like you on a daily basis. Try to avoid public forums, these are generally full of people who simply offer their opinion rather than trained advice.

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In this tough economic situation, the livelihood of common man has become miserable. After the recent financial collapse, a large number of people suffered job loss or wage deduction. The condition of the economy is not strong enough to bring over a complete revival of the job market. So, many people are still unemployment. In this scenario, most of them failed to pay of their credit card bills on time and incurred overwhelming debt. If you’re in a similar situation, then you can come out of the debt rut by managing your credit card debt. You’re not required any help from the professionals to come out of this financial maze as you can do it on your own by following some of the simple steps.

Here are some of the important points that you need to consider when you plan to pay off your credit card debts on your own:

Step 1.

Budgeting- A key mantra: It’s needless to say that if you’re planning to manage your credit card debt, you need to start with a budget plan. Well, budgeting is considered to be a key tool to get out of the debt rut. When you’re on a budget plan, it can be easier for you to track your expenses. You can understand where you’re draining your hard earned money. You can avoid splurging when you’re on a budget plan. As a result, you can manage to save considerable amount of money when you’re on a budget plan. Make sure you modify the plan in accordance with the financial situation.

Step 2.

List of the owed amount: Once you formulate a pragmatic budget plan, your next job is to review your financial state. You’re required to prepare a list of the owed amount in descending order of the interest rate. Preparing a list of the owed amount can make it easier for you to pay off the debt.

Step 3.

Approach the creditors for negotiation: You can negotiate with the creditors to lower the interest rate on the principal balance to make the owed amount affordable to pay off. If the creditors don’t agree to negotiate, then you can threaten them to file bankruptcy. In most of the cases, this trick works and you can manage to lower the interest rate on the outstanding amount. Once your interest rate is reduced, you can actually manage to lower your monthly payment.

Step. 4

Avalanche method of payment on the debts: Make sure you prepare a list of the owed amount in descending order of the interest rate. Start paying the high interest debt on top of the chart. Make more payment on the high interest debts, in the meantime make payment on the remaining balance. Once you pay off the high interest debt, start working on next on the list. Try to continue the process diligently unless you pay off the debts in full.

Step 5.

Avoid the use of the plastic: When you’re working on paying off your debts, try to avoid the use of cards. In most of the cases, you find the consumers are tempted to spend when they find teaser offers on the card. Therefore, keep aside your card and spend cash. When you use cash instead of cards then it can be easier for you to stay within your means.

Step 6.

Increase your income: Look for a part time job to make more money during your spare time. You can work as a freelancer or start your own home based business to make some extra cash. You can use the extra money to pay off your debt and regain financial freedom during tough economic situation.

Therefore, you’re required to keep the above mentioned points in mind when you plan to manage your credit card debt on your own. Once you pay off your debts yu can regain control over your financial situation.

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Most of us complain about the constant lack of money for various reasons – small salary or continuous expenses that have already tortured us. In fact, it is quite realistic to prevent those expenses and become financially stable and independent. It is only a matter of time and your wishes. At every age, whether you are young or old, you should remember that the earlier you start to think about financial stability and savings the more confidence in future you will have. So, let’s see what we can do for this from our early 20s to the time of retirement.

Youth without debt

When being young and beautiful we do not consider us to be already grown up but we are willing to make something meaningful for society. It is often occurs that our deeds do not succeed and we make many mistakes. Indeed, financial responsibilities are wide opened for us and we should already think about contribution to our retirement. Small amount of money saved monthly will help to feel stability and consider plans for future as it is a definite time to find an appropriate job.

The next thing that we need to think about except work is credit cards repayment. We should remember that our 20s is not the age to build up debt. Applying for credit cards or even for school loans we have to be sure in our ability to repay all money in time or even in advance. We do not need debts in such an early age.

More responsibilities need more expenses

The most appropriate age to obtain more life responsibilities is 30s. At this age we have more income, create our own family and even may think about our ability to purchase a good house (often with the help of mortgage). This will be a good age for those who refused to obtain debt when they were 20 years old. By the way, our contribution into retirement should be raised.

The right time to invest

The best time for savings and investment comes with our 40s. At this age we have a good job to provide your family with all needs and the age for more expenses. We can easy go wrong being not careful with everything that concerns money. We should save more, invest more and also pay more attention to retirement planning to be sure that it is all right.

Everything goes right in your 50s

When you are fifty everything has to be under control. You have made the needed sum of money and now it works on you. Even often expenses will not prevent your financial stability. Pay off your mortgage and continue retirement funding.

Time for retirement

Depending on when you wish to retire, all plans should be done – the debt is repaid and the needed sum of money is already saved. Then you will see that all your efforts were not in vain.

When creating and following plans for retirement you should understand that complaining on the money need will not bring success in your life. So, get rid of bad thoughts and start to think about your financial stability.

Diana is an accomplished financial consultant writing about socio-economic problems as well as legal and financial articles on debt, bankruptcy, fast loans online, stock market, credit card, personal injury on various websites. She has been writing for the last 5 years.

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Planning a retirement lifestyle is one of the single-most rewarding aspects of working hard all your life. However, this planning is oftentimes wrought with worry, because many people do not understand how to do this successfully so they can live out the best years of their lives in comfort.

From how and where you will reside to how you will care for personal health and end of life decisions, the decisions you make now are critical to successful retirement planning. Here are some helpful tips to help guide you on this journey.

1. Start a retirement fund now. You may have a few years until retirement age, or you may just be starting to think about a retirement plan. Whatever the case may be for you, experts advise planning your retirement with an investment strategy as soon as you can. The sooner you can start to put away money, the more you will have accrued in savings and interest by the time you are ready to retire.

2. Focus on living frugally. The trouble with retirement planning is that some people fall into the trap of trying to get too much stuff early life, which only leads to long term debt. Spending your life paying off debt interest takes away from your ability to dream about the future. Living frugally now pays off later on.

3. Make your “bucket list”. It’s time to start thinking about all the things you’ve always wanted to experience in life. If you’ve put off traveling or taking up a hobby of some sort, now is the time to include this into your retirement planning. This gives you a measurable goal that will keep you on track.

4. Choose affordable living arrangements. Whether you plan to own your home in a few short years, or you want to move in with family; the decisions you make now should include your life needs as a retiree. You may realize that a large house will be too much to manage in your older years, or you may want to have a community of others in your age group as you advance in life.

5. Research services and support for retired people. A portion of your retirement fund will be spent on your personal care and health concerns as an older person. Be sure to plan for these aspects as you put your retirement plan together, considering the advantages of long term care insurance and retirement assisted living communities.

6. Get your will and legal affairs in order. As soon as you are able to, have a personal will drawn up and kept with your lawyer’s office. Let your children or siblings know where to find this information, and assign a power of attorney who can handle things for you if you become ill or incapacitated at any time.

7. Set aside tax free dollars. Being smart with your retirement savings also means investing in the next generation, while enjoying a nice tax shelter. While you can only put a certain amount into your 401k and IRAs each year, you can also put tax free money into 529 plans for your nieces, nephews and grandkids who plan to go to college.

8. Start a second-life career. Most people who retire often want to remain active in other things than leisure living. Consider your talents and experience, and develop a flexible and enjoyable second career path. Perhaps going back to finish your college degree, or starting a home-based business is in order.

9. Work with a retirement investment planner. Getting the most from your retirement often requires the support and guidance of an expert. Periodically review your investment portfolio with a trusted and qualified retirement professional.

10. Pay down debts and reduce overhead. Once you near retirement, consider that you will soon be living on a limited income. Therefore, you want to get your debts paid down as much as possible. Eliminate the burdens of too much property by selling now.

Retirement is a time to celebrate. You can be better prepared and enter this exciting time of your life by planning ahead and reaching your retirement goals in style.

Julia Dennis writes about Eco Friendly Senior living facilities and other assisted living topics for Friendship Village. When she’s not writing she enjoys running and spending time with her children.

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Looks like everything is going to be fine, after nine awkward months of unemployment, you finally land a job. It is more than twenty miles away but it’s a job, and it pays a living wage. After more than a year you feel that both you and your partner can breathe, start to live, and start to pay back the loans that helped to start your new found family life, but before the future beckons  let’s look back.

Before It Came Crashing Down

It may not have been a whirlwind romance, but more of a steady, progressive and eventual marriage, where you both wanted it, and it just happened.  The wedding might have took place in 2006 just one year before the financial crash, where mortgage loans were cheap and plentiful and taking out a 130% mortgage (full cost of the flat, plus 30% for the wedding and holiday), was all the rage.

Both you and your partner may have decided on a brand spanking new flat and furniture. Those two months of choosing and buying might well have been some of the most blissful times you ever had. Not fully understanding the intricate and confusing world of loans it would have been easy to buy and buy more. You were both working you and could afford it. What first started out as an anxious application for a loan application, with the fear of rejection, soon becomes your right to have more credit and loans.

Creditors make this first and most dangerous mistake. When any loan becomes a right, the granting of finance becomes more important than the object you need and your long-term financial situation. Here is how the banks (used to and now) decide to grant you an application.

Banks, Finance Companies and Your Loans

Some members of society still hold a very old fashion view of banks, finance companies and loans in general. Many people have a picture in their mind of the loans clerk reading and sorting out loan applications that come in by post, the clerk deciding the simple ones and passing the more difficult to senior staff. Well a long time ago this is what happened, but not now. In the computer age, when you or your partner applies for loans, it is very rare for any human interaction to occur in the bank’s decision to grant one.

Deciding to Grant You a Loan

The financial companies have all developed computer models. The computer models, not people decide who is approved and for how much. One of their most important tools are the credit reference agencies, they keep a record of all the loans and utilities that the public apply for and how they use those loans, they then share this information with the lender. Since the credit crisis, their searches (as referred to) can have frightening outcomes. If information is wrong, it can say you have defaulted on a loan, when you have not, then it becomes very difficult to obtain credit. To understand how this can affect people, check out the book by Frank Kafka “The Trial” (when the authorities hold all the power). However, the opposite happens when the computers say yes to your loan application, you suddenly have a good credit standing and everyone wants to give you loans. For most of us, as long as we keep in employment and our circumstances do not radically change, it can be fine to take out a loan, as you will more likely be able to pay it back. However, if you have the bad luck to lose your job, the time until a new one arrives can be very harsh. In this case, loans can help dramatically in the short term, though like anything they are best to adopt with moderation.

Wendy Derbyshire is freelance finance writer and guru. She has a deep understanding of the credit market and believes when used sparingly, loans can help propel people to financial stability.

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