All Financial Matters

We all get into financial situations that we can’t handle from time to time. Sometimes the debt we incur is more than we can cope with and we need help. If this applies to you, then debt settlement is one possible solution. However, be aware of all that it entails in order to make an informed decision about whether it is right for your situation.

Debt settlement involves using a third party to manage the debt situation. You may have tried to talk to the creditors but to no avail. Each month that the payment is late, there is a fee. Once the fees push the balance over the credit limit, there is another fee. Things can get out of control in an as little as a few months.

Debt settlement puts you in touch with an agency that specializes in helping individuals deal with serious debts. Debt settlement agencies will review your situation to see if you qualify. Debt settlements are mainly done for unsecured debt. This includes unsecured credit cards, store charge cards, gas cards, and the like. There is nothing backing the extension of credit except your good name. Creditors have taken a risk with you as to whether you can repay any debt that you create.

Debt settlements can still affect your credit in a negative way. Creditors may report that you are entering into a debt settlement plan and other notations that can turn away future creditors. If you use a third party debt settlement agency, make sure that you understand this fact.

Once your case has been accepted, the debt settlement agent will look at several factors to determine a repayment plan for the debt. The amount of the debt is important. It needs to be beyond your ability to repay without some intervention.

The debt settlement agent will look at the interest rates being charged by the credit card company. During a debt settlement, they may be able to talk the creditor into lowering the interest rate to a more manageable one. The same goes for late fees. If late fees are a problem, the creditor may waive them in the interest of recouping some of the debt owed to them.

Working with an agency, the monthly payments agreed upon are made to the debt settlement agency. From there, they forward the payment to the appropriate creditors in accordance with the terms of the debt settlement. Your payments may include their fee for the services rendered.

Working with a debt settlement agency can keep the creditors off your back. Those annoying phone calls will stop most of the time once arrangements have been made for creditors to get their money. A few may still try to harass you, but the majority will be glad they are getting something from you.

Debt settlement agencies aren’t for everyone. Try to work out a deal with the credit card company before using a third party to do it for you. Besides the fees that may be charged to you, your credit could take a hit in the process.

When many people think of debt management, they think of rearranging their budget so that they can pay off debts. But there is more to it than that. In fact, debt management is most effective when it’s done before debts get out of hand.

Debt management simply means keeping debts down to a level where they do not present a problem. Those who have managed debt successfully can usually pay off credit card balances each month, and they often put extra money toward loans to pay them off more quickly. They do not take on more debt than they can handle, so they have no trouble paying it back.

Tips for managing debt successfully

* When going into debt for a necessity like a house or car, shop around for the best interest rates. This will keep your monthly payments lower. But that doesn’t mean that you can’t put extra money toward the payment each month and pay the loan off ahead of schedule.

* Shop around for credit cards as well. They are not all created equal. Some have higher interest rates than others, and some charge annual fees while others do not. If possible, get a card that offers cash back on purchases.

* Limit your credit cards to one or two. The more credit cards you have, the more temptation you will face. If you are managing your debt properly, you won’t need more than two cards anyway.

* Refrain from getting cash advances. These usually carry a higher interest rate than regular purchases. If you need cash in an emergency and must get an advance, paying it back as quickly as possible will minimize the charges.

When debt gets out of hand

One of the most important aspects of debt management is knowing when you’re getting into too much debt. People often do not realize that they’re in too deep until their debt has become completely unmanageable, making it much more difficult to get back on track. By recognizing when debt levels are getting too high, you can retain control of your finances.

Early signs that you’re getting into too much debt include the following:

* You are having trouble making your minimum monthly payments.
* You use credit cards to buy everyday necessities, without paying the balance in full each month.
* Your total charges each month add up to more than your total payments.
* You are approaching your credit limit.

If you find that you are heading toward too much debt, taking action quickly could save you a lot of trouble - as well as a lot of money. By recognizing the early signs of debt overload and paying debt off as quickly as possible, you could regain control over your finances before you know it.

Paying off everything we owe on our own is the preferable way to handle debt. But sometimes that’s easier said than done. Our circumstances often change, making it impossible to even make our minimum monthly payments.

Debt consolidation is a solution sought out by many debtors who are in too deep. This can be achieved by transferring all debt to a low-interest credit card, or by taking out a home equity loan. There are also debt consolidation or credit counseling services that consumers can utilize.

How do these services work?

Credit counseling consists of negotiating with a client’s creditors for lower interest and/or lower payments. Late and over-the-limit fees are often waived as well. Then the client sends the credit counseling agency one payment each month, and the agency distributes the money to creditors as agreed upon.

The pros

If you’re unable to negotiate lower rates and payments with creditors on your own, a credit counselor can usually do it for you. This will save you money and help you get your debt paid off more quickly. The credit counselor can also help you write a budget to help you stick to the payment plan while still being able to afford all of your other expenses.

The cons

One problem with credit counseling is that it sometimes does not result in a monthly payment that the client can afford. Creditors are only willing to negotiate so far, and if you owe a lot of money you may not be able to afford the best deal they will give you. If that is the case, you’ll have to either find another means of paying your debt or consider bankruptcy.

Another thing about credit counseling is that it isn’t free. Credit counseling agencies may charge monthly fees for their services, adding them on to your monthly payment. If they don’t, they have to get the money to pay their employees somewhere. That “somewhere” is usually from your debtors, as a percentage of your payment.

There is some debate as to how going through credit counseling affects your credit. It is noted on your credit report. In most cases, you can’t get new credit until you complete the program. But it could also affect you after your debts are paid off. Many lenders consider credit counseling as being similar to Chapter 13 bankruptcy.

And finally, it is imperative to check out any credit counseling agency that you are considering. Just like any other business, there are some that are not trustworthy. The Better Business Bureau is a good source of information on credit counseling agencies.

Credit counseling may be able to help you get your debts paid off. But it is important to consider the pros and the cons of entering such a program. Trying to work out a deal with creditors on your own may work, eliminating the need to get a third party involved.

It was scary enough to think of them driving a car at sixteen. Now they are heading off to college. Most parents are not worried about their teenagers getting their hands on a credit card — the plastic of choice for college students. But should they have credit cards in the first place?

It never fails. If you advice your child against something, they will want to do it even more. That goes for credit cards, too.

College students are the fastest growing untapped market. They are not fully adults but not children either. They represent millions of dollars in buying power. They qualify for loans to attend college and other financial aid.

Credit card companies often make deals with colleges to distribute applications to their students in exchange for credit cards that carry the college logo or school name. It’s too bad that those applications are not accompanied by some literature or a course in money management. When the college students qualify for those high credit limits, they don’t account for the fact that they don’t have the income to repay their purchases.

The question is not whether college students should have credit cards but instead, who should give them one. They will acquire one whether parents want them to or not. To head off disaster, parents can be the one to supply the credit card for their college student.

You can add your college student to your own credit card account. You can have a card issued to them in their name but where you can see what they purchase on the account. Set some ground rules and see what becomes of the situation. If good money management has been a part of their life up until then, the student will have a fighting chance of resisting the temptations of plastic.

Go over the statements once a month with them. This can be done over the phone if they attend school far away, or in person if they can make it home for a weekend. Keeping in touch and setting up payments adds accountability to the equation. With a credit card, they will need that from you.

Another option is to open a bank account and get a debit card. Your college student can use the debit card like a Visa or MasterCard. By adding a certain amount of money to the account each month, you are setting a “credit limit” for them. If they can manage the money in this account over a period of time, they could prove themselves ready for a credit card.

College students may not realize the importance of a good credit score, but their parents do. In an attempt to keep their credit good, help them ease into the world of plastic by providing a proving ground of your own making to test their mettle.

There are many different attitudes when it comes to money matters; some people spend what they earn in a hand-to-mouth fashion whilst some people save for a rainy day. Why is that? It’s our attitudes and thinking about money that determine our spending behaviour. That means in order to change the way you spend you also need to change your attitude towards money.

How do you view money? We all learn from an early age about money. We watch our parents and how they handle the money that they earn. Some may have had very little because Mom and Dad were low paying jobs whilst others had a lot of money because Mom and Dad had a good income.

Whatever your environment, your money views were probably shaped by those around you. This is where unhealthy views of money begin. If money was a bone of contention in your home, you will likely make every effort to avoid confrontation when it comes to money. That could lead to overspending becoming a hush-hush topic in the home.

If money flowed freely, then you could become a free spender as an adult. Even if your means are more limited than your parents’, you may continue to spend as if you had a million dollars. This type of money attitude can lead to a debt burden too big for you to carry.

Many scenarios can be drawn from childhood exposure to money. Remember Ebenezer Scrooge? He grew up with no money and it took over his life. During his adult years he shunned all other pleasures for his obsession with money. I’m sure nobody wants to end up like that.

It’s not an easy process to change your attitude towards money, but having the desire to do so is the first step. Having the determination to make a change gives you a real chance of making it happen.

It’s important you visit a financial advisor and discuss with them your money problems and your views about money. Let them know what it is you want to accomplish with your money. A financial advisor can take your money and other assets and create a portfolio for you. The portfolio includes how to invest and what to invest in.

A financial advisor may be able to help with a budget. For frugal spenders, a budget can set aside money for one’s enjoyment each month. A frugal person may not take more than one day of freedom, but it is a start. As time goes on, they will relax the reins and learn to enjoy money now and in the future.

A big spender will use a budget to curb spending. It is okay to spend, but make it special and not an everyday occurrence. Money doesn’t always flow freely unless we plan for it to do so. That requires a spender to realize that it is okay not to spend it all at once, but to save some for later.

Ask yourself, what is your money attitude? Is it beneficial or setting you back? To improve your life, why not meet with a financial expert to discuss healthy changes to your money attitude?