Debt Solutions

Saving money is a great way to stay debt free. If you start early enough it means when purchasing items, the item will only ever cost as much as it is. Using credit cards and other similar methods of payment, the interest payback on the item can often make the item end up costing more than the displayed price. The more you save, the more your bank will reward you with interest and the more debt you will avoid and the more debt fee you will be.

Although saving money can sometimes be hard, when there are bills coming in and your income may be low having a good amount of savings can help you avoid large interest rates on payments and say debt free. Saving money is a great habit to get into. Whether you decide you want to spend you savings on a luxury item like a car, or even just live off it while times may be harder, the money you have in your savings will always have a use.

A great way of saving money and a way to build up your savings and reduce debt is to start transferring a small amount of your earnings into a separate account. Doing this will quickly build up your savings while having very little effect on your day to day life while giving you extra money when you may need it which helps you stay clear of debt and remain debt free. For example if you put away just $10 a week, in a year you will have $520 which can be put towards Christmas gifts or a new TV or other extra things you may not always budget for helping you to reduce debt.

Collect up any change you have around your house. There is so much money just lying around your house without even realizing it. Saving money is easy if you get some money bags from the bank, and count it up and take it in. Even if collecting it all up may only make $20, it is still money that was otherwise just lying around on your floor doing nothing and while it not be enough money to really help you be debt free, it is enough for a little treat at the end of the week like a nice bottle of wine without feeling like you are tapping into your savings or main income but while still feeling like you are saving money.

Another great way of saving money is to cut down or quit something you do already. If you smoke or drink, cut down or quit. Place any money you would’ve spent drinking or smoking in a jar or take it to the bank. This not only benefits your health but also helps you stay debt free. Even if you are just saving the money you may normally spend on a packet of crisps or a chocolate bar, over time you will really notice the difference it can make to your finance and can help reduce debt.

Budgeting - 5 Tips to Avoid Debt

No Debt - No Problem 

1. Make a budget, this is the most important thing you can do. Having a budget will help keep track of your spending which in turn will help you stay debt free. When making a budget, it should include how much money you have coming in, and how much you have to spend each month on bills and essentials. Whatever is left on your budget sheet when you take the outgoings from the incomings is your budget for the month. Every time you spend something, no matter how small put it on your budget sheet and work out how much you have left. Small items add up quickly, just a few extra bars of chocolate or some non essential items in town can end up making you spend money you don’t need to be spending, and that you often forget you have spent.
2. When buying an item in town, don’t buy it straight away, go around to different shops, have a look at other items, look for the cheapest you can find or try and find a similar item within the price range of your budget. Going around to different shops will help the impulse go, if at the end of shopping around you still feel you need the item then make sure you can afford it. If you can’t afford it and you don’t need the item, then be strong and do not buy it.
3. Make a shopping list. It may seem like something only old people do, but making a shopping list really works. It not only helps you stick to your budget, it makes sure you only buy the items you intended to buy when you set out. Stores are designed to make us buy things we don’t want or need, and often when shopping we end up coming back without what we set out for. Make a list, stick to it. It will help.
4. Set a budget for each shopping trip. If you are going into town to shop, take out $100 from the bank or whatever you can afford and set this as your budget for the day. Only spend the money in your wallet or purse. Having cash will make you stick to your budget. Don’t buy anything on card even if it’s a debit card. Only spend what you have. Even a few small extra payments on cards, it will mount up. If you absolutely must have something that is out of your budget range for the day, check tip 2.
5. To save some extra cash, take around 10% of what you earn every week or month, and put it somewhere safe like a separate bank account. The money will soon grow and can be put towards something your saving for. 10% isn’t so much money that you will notice it being gone from your main spending budget.

Hopefully using these tips will help you get a better grip on your finance and help you budget for the future and avoid debt.

Avoid Credit Card Debt - Consider Hidden Credit Card Costs

The Fixed-Rate Credit Card That Isn’t: When you take out a fixed-rate mortgage, you know what the rate will be for the entire life of the loan. When you take out a fixed-rate car loan, you know that the interest rate will be the same on the first payment as the last. When you take out a fixed-rate credit card, it’s an entirely different story. Severe credit card debt can be avoided if you’re careful.

Variable-Rate Cards: Just like with mortgages, a variable rate means the interest rate is tied to another interest rate in the economy, and will change if that interest rate changes.

Every card issuer that offers a variable-rate card is free to decide how it’s going to compute the rate. One, for instance, may determine the rate by adding 5 percent to the prime rate as listed in the Wall Street Journal. Another may choose to tie the rate to the federal discount rate.

Most variable-rate cards change rates quarterly but some do semiannually-it is up to the card issuer to decide. Information about how the variable rate is determined, and when it changes, has to be disclosed up front in applications and solicitations. According to CardTrak.com, most variable-rate cards have interest rate “floors” below which the interest rate cannot go, even if the index rate goes lower. If rates dip very low, as they did in 2001, consumers may be better off getting a lower-rate card elsewhere than sticking with a bottomed-out variable rate.

Tiered-Rate Cards: A few credit card programs offer tiered rates: The interest rate depends on the balance on the card. For example, a tiered card may charge 17 percent on balances up to and including $1,000, and 13 percent on balances above $1,000. This rate structure is designed to reward higher balances and make more money off lower balances. Tiered-rate cards are usually not good deals because they “reward” customers for going deeper into debt.

Different Rates for Different Balances: Many cards now charge different rates for different balances. There may be a lower rate for the balances you transferred from another card during a promotion, for example, or another rate for cash advances. If you have balances subject to different interest rates, your issuer will print an “effective” rate on the statement, which is basically an average of the different rates you are paying.

A caution: All issuers allocate payments to the lowest-rate balance first. That means you’ll be wiping out the cheapest balance first. This is directly contradictory to the most common advice for paying off debt, which recommends you pay off your highest-rate balance first. Consider yourself forewarned.

Teaser Rates: 5.9 percent or even 0 percent interest sounds great. And it can be. But remember: Card issuers would not continue to offer teaser rates if they weren’t profitable. Many teaser rates just don’t last that long. Six months sounds like a long time, but by the time you’ve completed the transfer (which can take a few weeks), you may not benefit from the new rate that long. And if you don’t find a new card or negotiate a better deal, you may be stuck with a higher rate than you need.

So which do you choose: a fixed-rate, variable-rate, or tiered-rate card? It really doesn’t make a difference whether you choose a fixed-rate or variable-rate card, since neither is completely stable. So far, there have been no studies that tell whether fixed or variable-rate cards change rates more dramatically. We think it’s a matter of finding a bank that has a general reputation for charging low rates (fixed or variable) and hoping they don’t decide to suddenly change their marketing strategy. Whatever you choose, you are taking something of a chance. The exception are cards from Arkansas banks, where state law keeps rates very low. If you can get one of these cards, you know the rate will be good as long as that law’s in place!

When Your Account Changes Hands

It’s true that the big banks keep getting bigger-at least in the case of credit card issuers. Credit cards are so profitable for banks that “do it right” that many of the larger banks want to get more and more customers. Sometimes, they’ll just buy them from other issuers.

Card issuers have to give you fifteen days’ advance written notice before changing the terms of the credit card. This is also true if a bank buys another bank’s cards and raises any of the costs. In addition, individual states may have laws that cover banks located in that state.

If, for instance, your new credit card issuer is located in Delaware or New York, you will have extra protection against a sudden rate hike. Delaware and New York laws require issuers to give customers thirty days’ advance written notice before raising the rate, and also require banks to give customers the opportunity to pay off the card at the old terms and surrender the card.

Fred Wilson, whom many consider to be one of the most prolific venture capitalists ever, had a very interesting article on his blog recently. www.AVC.com

Basically he makes the case that this tumultuous economic state is going to provide some great opportunities for private equity firms and foreign buyers.

Companies like Apple, Google, Microsoft and Dell are have market caps that are now at incredibly low levels when you account for how much cash they have on hand.

Apple specifically has more than $20 billion cash and short term investments on hand. Their market cap as of today is 78 Billion. Deduct the $20 billion in cash and you have a company that’s trading at 6X cash flow. For a company that is continually gaining market share in the personal computer market, dominating the MP3 (which is actually often called iPod regardless if the audio device is one or not) player market and has just sold more than 10 million iPhone is less than a year the price seems like it’s a huge opportunity for a long term buy.

Even institutional blue chips are trading at value buy levels. Wal-Mart is trading at 10x cash flow, Comcast 6x and AT&T 4x cash flow. I know that the last thing on any American’s mind is probably about pouring money into the marketplace, but in reality things will come back to a normal level. I don’t think that these companies are at rock bottom yet. However fundamentally people will still have the same basic needs. Food, clothing, shelter, transportation, communication and entertainment. We’re going to have to tighten the belt drastically, and companies selling overpriced luxuries that many Americans indulge in (Starbucks) on a daily basis are going to feel it the most. But we will carry on, the financial crisis is serious but it’s not at a point where we can’t turn things around.

We should hope that American financial institutions will look to heavily invest in these great companies who are essentially on sale at a great discount. There’s no doubt that foreign companies will want to acquire undervalued properties and gain large positions if they cannot acquire a business outright. I’d prefer private equity investors to gobble up some of the cogs in the Fortune 500. In the 80’s the Japanese were buying up anything and everything that they could. Real-estate, large equity positions in companies and other investment vehicles. When their market took a major nose dive they were trying to unload as quickly as possible. Once we’re able to recover from our own economic crisis it’s important that in the event that another country enters into a major recession we don’t have a flood of debt or equity investments hitting the market all at once

A lot of people are concerned about our seemingly worsening economy. Millions of Americans jobs are at risk and having money to pay basic bills is the number one priority. One thing is for certain, in a down economy the rich, middle class and the poor can find ways to make money. It just comes down to one basic thing; you’ve got to hustle. It’s a fact (and part of what makes this country so great) that individuals who put themselves into something 100% are far more likely to succeed than someone who doesn’t.

When it comes down to putting food on the family (as our dear President would say) you’ve got to get creative about finding new career opportunities. Maybe you have to work harder than you ever have in your life. It might mean taking on two jobs, working crazy hours or working for far less than you’re worth. Unfortunately in this economy good jobs (with or without job security) are rare and the competition is fierce. We’re a free market society and those principals certainly extend to the job market.

It is simply supply VS demand. So how do you take advantage of this? Simple, make yourself (you, your talents) a scarce resource. Now if you’re an engineer that doesn’t mean you should go on a killing spree eliminating the competition. That will only lead to a temp job doing laundry on Death Row. What you really need to do is make yourself a valuable resource who can be a great utility player.

In sports teams are always looking for great talent. However in evaluating what their best choice might be for choosing a draft pick many things are taken into consideration. It’s not just what the biggest need (player position) is at the moment, meaning what job needs to be filled.  If your team needs a starting pitcher, a catcher, a first baseman and a third baseman you better think things through before blowing your number #1 pick on the top rated pitcher.

Wouldn’t you be better off trading that #1 pick for the 6th and 12th pick hedging your bet? Now while it’s not exactly the same, the principals around this theory are. If I have the opportunity to hire an employee at one position who I think will excel wouldn’t I be even more inclined to hire an employee who I think can excel at one position and be an asset (or even excel) at another position. Maybe employee #2 can help some of my other employees in other departments with some issues (outside of their main job description) that might arise.

So what does this all mean? Simple just make yourself as useful to a company as possible. If there were skills and jobs you performed well previously in your career (even if you weren’t so crazy about them) make sure you present that to any prospective employer. To get back to the sports analogy, I’d much rather draft a player who can play first base, third base and catcher than a short-stop. That way if something happens to one of my other players I know I’ve got this “Utility Player” who can make the quick move to that position.

So how do you become a “Utility Player”? Only you know the answer to that. You know your skill set, only you know your interests and passions. What is going to make you stand out? What would make you want to hire you over someone else?

We can stick our heads in the sand and hope that the sky clears and the good times come back tomorrow. Unfortunately the truth is that we’re probably in for a bumpy ride for the next few years. So only those willing to make that true sacrifice are going to succeed in these dismal economic times.

You know what to do. Get ready to get your hands dirty, you’ve got to want it, you’ve got to work hard, you’ve got to be a player.

Online solutions for non profit credit card consolidation

There are options like non profit credit card consolidation online and through regular services also which help in eliminating all credit card debts. All of these services have one common goal; to essentially save a consumer money.

Online credit card consolidation

There are various companies which provide online non profit credit card consolidation so that debts can be settled and the consumer can get good credit rating. These companies function through online modes and the entire process from application to the settlement of debts is done online. Contacts are made through email and personally when required. These non profit companies check the credentials of the clients like their home addresses, employment status and other verifications and then begin the process of consolidation.

Benefits of online consolidation of credit cards through non profit companies

The online option of settlement of debts and credits is a very useful option. This process is much faster than the regular consolidation companies. The verification of the company and comparison of the services offered can be done in minutes and that too in the comfort of the house or office. There are more options to choose from and the time taken for the same is very less. Moreover these non profit credit card consolidation companies also give the benefit of free services like credit counselling which helps in better management of debts. There is no fees charged for the service and the users in dire strait can avail these services to get out of debts. Consolidation of debts against the credit cards is done with the same benefits like low interest rates and monthly repayment options.

Other non profit options for settling credit card debts

Apart from the non profit credit card consolidation there are also options like credit counsellors who help in negotiating with the banks and the service providers. There are expert negotiators who settle debts for their clients and also help in reducing the amount of the debts. Through these negotiations the debts on credit cards can be reduced to almost 50% in many cases. The reduction is done because of many debtors become defaulters and don’t pay any amount of their debts. In such cases the banks have little options left except legal battles. Hence with negotiations they have the chance of getting back a good amount of their money.

Selecting an online service

While selecting an online service for non profit credit card consolidation comparison and research on the companies is required. The services should be non profit with no hidden charges in their terms and conditions. Accreditations are also a vital factor while selecting online credit card consolidation options. It is common for these services (even though they are a non-profit) to have some minimal monthly service fee. If they didn’t charge something they wouldn’t be able to afford to continue the service. In most cases the fees are minimal. Any company that asks for a service fee that seem either too high or too low should be scrutinized carefully.

Refinance options and debt to income ratio explained

The calculation of the debt to income ratio helps in getting the exact monthly debt amount and better management of debts and finances for repaying the same.

Calculating the debt to income ratio

The calculation of the ratio is done through the comparison of the amount of the debt, which does not include the mortgage payments, and other monthly costs to the gross income. In many cases the ratio can be calculated on a per month basis. If the monthly gross income of a debtor is 2500$ and the 500$ is given for the debt payment then the debt to income ratio is 20%. This ratio helps to compare the debt liabilities as per the income and the total debts and payments owed along with the monthly gross income.

The other additional costs associated with living are calculated into these ratios even if it’s not disclosed. 

Figuring out the debt-to-income ratio

For figuring out the ratio, the gross monthly income should be calculated first. The gross monthly income should be the amount prior to all the tax deductions. If a debtor is paid every alternative week then the take home money should be multiplied by 26. The result should then be divided by 12 which will show the monthly take home payment of the consumer. For those with inconsistent incomes should get the average calculation of their monthly income by dividing the net income of the previous year by 12.

What should be included in the debt to income ratio?

While calculating the debt to income ratio the income which comes from alimony and child support should be included. An average of bonuses, tips, commissions and other similar options should also be included. The earnings which come from dividends and interest on the same are also a part of this calculation. Income from other sources like government benefits should also be used in this calculation. That includes income from investments, stocks, bonds, options, 401k or the sale of an asset. However many companies will not ask you to disclose all investment or additional sources of income if they do not exceed a certain amount, typically $500 or less.

The payments of monthly debts

The monthly debt payments can be calculated by adding the minimum monthly income and the payments for all the loans like car and home loans, medical bills and credit accounts. The mortgage payment should not be included. The monthly debt payment should then be divided by the monthly take home payment so that the debt to income ratio can be generated. The ratio percentage of the same can be availed by dividing the total monthly debt payments and the total monthly take home.

Acceptable debt to income ratio

The lower this ratio is, the better the financial position of the debtor. Generally a ratio of 16 to 19 percent is considered decent. The debtors, with a ratio of 20% or higher, need to check and control their credits. The debt payment becomes less over time and so does the interest rate.