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Would You Credit It?

February 3, 2012 Comments off

During these unstable times, more people are being forced to take a good look at their own personal financial situations and make sensible decisions about where their money is going each month. Although many people use comparison sites to choose the best deals on financial products and services, recent research has shown that almost a million people are using payday-loan companies to help them cover important monthly expenses such as their mortgage or rent payments.

A further 6 million people are using credit as a way of paying regular monthly outgoings, such as credit cards, overdrafts or loans. For many people, making use of credit is the only way they can make ends meet each month, but experts have been quick to say that this behavior could lead to further trouble.

Is a Quick Fix Really a Good Idea?

There has recently been an increase in the number of payday lenders offering substantial amounts of money quickly and easily. These types of loans can be useful for unexpected costs that may come out of the blue and leave your monthly budget stretched too far. Being able to borrow a small amount of money as a one-off can be helpful in making ends meet. However, the danger comes when borrowers start using the loans regularly.

These unsecured loans generally come with high interest rates attached and when used every month can lead to unsustainable repayments. Building up additional interest each month can leave people struggling financially.

Likewise, using credit to make your payment will incur extra interest charges, which is essentially making each monthly payment you make more and more expensive each month.

What’s the Alternative?

If, as many people are, you are struggling with debt, make sure you get some financial advice before turning to payday lenders, unsecured loans or credit as a way of covering important payments. If you are finding it hard to pay your monthly mortgage payment, talk to your lender and explain your situation.

Some mortgages allow for payment holidays. If you are having problems, these can often help you to reorganize your finances. You could use the money saved during the payment holiday to pay off other short-term debt that comes with much higher interest rates.

There are many sensible options that can help you get back on your feet without going to the extremes of building up more debt. Make use of comparison sites to find the best deals on financial products, from a better mortgage rate to credit cards with 0% interest offers. Never bury your head in the sand and hope that your debt will go away. The only way you can get out of debt is to consider all your options and take control of your life.

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How to Eliminate Debt

July 6, 2011 Comments off

eliminate debtUnless you are one of the few lucky ones who was born with a silver spoon in your mouth, chances are you will struggle with debt at one point in your lifetime. Debt has negative connotations, but it doesn’t necessarily have to be a bad thing. Getting into debt can help you obtain a college degree, buy a house, buy a car, and get yourself started in life. If you have racked up some debt for these reasons or others, you should remember that eliminating it doesn’t have to be as hard as it seems. You should also remember that you aren’t alone. According to the U.S. National Debt Clock, the average debt per citizen is approximately $46,000 and per tax payer is even higher at more than $129,000. Let’s also not forget that the nation itself is more than $14 trillion in debt, so your debt shouldn’t feel too overwhelming by comparison.

The best way to get out of debt is to start on a small scale and work your way up. Pay the minimum amount each month on your larger debts and focus on the smallest one until it is paid off. This will give you the confidence you need to pay off your larger debts and know that you can do it. The smallest debt for most people is credit card debt. Since credit card debt builds interest, it is best to start paying this off as quickly as possible and avoid using it more than you can afford to in the future. Draw out your finances and set a strict budget to determine how much extra you can sacrifice each month after all other expenses are paid. This amount could vary each month so be sure to make a different plan every month. Once your credit card is paid off you can move on to student loans, hospital bills, dental bills, mortgages, etc.

Next, try to budget your lifestyle to save money the best way you can until your debts are paid off. This will require some tough sacrifices, but in the end it will be worth it to be debt free. One way you can knock down the price tag of your lifestyle is by eating in more often and only going out for dinner on special occasions. Eating out is one of the worst ways people waste money, yet it’s also the most easily rationalized because food is an essential item for survival. However, dinner for two can end up costing a pretty penny when you add in the tip, taxes, and all those other little add-ons they get you for at restaurants. Eat cheaply and at home as much as possible to save extra cash during the month. Pasta dishes are always economically efficient and are also versatile and delicious.

Finally, sacrifice all the surplus income you receive to your debts until they are paid off. It will be hard to practice this method of money management, but it will help you pay them off quicker than you expected. Financial surpluses typically come in the form of work bonuses (Christmas or otherwise), gifts, tax returns, etc. The most important rule of financial planning and getting out of debt is to cut your expenses down to the bare minimum of what you really need. This list usually includes: food, shelter, clothing, medicine, transportation, and things of this nature. However, you will have to use your own personal discretion to save as much as possible. For example, if you can bike to work instead of driving your car, you can save tons on gas and get in some good exercise too. Don’t get discouraged. Being debt-free is a huge relief and will be worth all of the sacrifice and hard work it took in the long run as long as you are willing to do it.

Stressed About Money?

June 27, 2010 Comments off

Sometimes I think that I have an obsession with money. I work at a bank, blog about personal finance, and need money to live.  Needless to say, sometimes I get tired of thinking about money.  Thinking about the amount of money I need to save gets to be a chore, and can be stressful. I have to work hard to realize that we have enough money and that we’ll be fine.  We’re doing everything we can to live frugally and save as much money as possible.

Sometimes I feel like giving up.  We work hard at trying to live on one paycheck so that it’s easier for me to be a stay at home mom when the time comes (if we can figure out health insurance.  We were on vacation last week and I worried about how much money we were spending.  A lot of the time spending money stresses me out, even if it’s for necessities.  I hate paying a lot of money for a huge electric bill, for example.

Here are some solutions I’ve come up with to stop stressing about money.

1. Realize that no matter how much money we make, it will never seem like enough.  Learn to be happy with what we have and keep plugging away at our financial goals.

2. Follow a good budget and stick with it. This will help eliminate stress when spending money.

3. Don’t get into more debt.

4. Make Mr. Money handle the finances (kidding… only slightly!)

5. Work on increasing side income.  The more diversified we are in income streams, the better.

Those are all good ideas that will help keep me from stressing about money.

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