Which Debt Solutions Are Most Effective?

When the only light at the end of the tunnel appears to be an oncoming train of financial devastation, debt recovery solutions may seem impossible. With so many apparent options, what is the right thing to do? The answer is easy: What works best in your situation?

While the answer is easy, it’s a process to identify the best method. Because every situation is unique, only you can decide what will pull you out of this desperate situation quickest and without a bank robbery felony charge.

Pay Highest Interest Rates First?

Some people say to start with the highest finance charge when looking to pay down debt. But what if that is your biggest debt that takes the biggest portion of your monthly budget…like your mortgage?

Even with today’s low interest rates, someone could be struggling with a high interest rate mortgage. After all, a homeowner can only refinance when the bank deems them a good risk. If finances have been bad for the past few years, there may have been no chance for refinancing.

The housing market might show signs of recovery today; however, plenty of people still suffer with a mortgage that isn’t commensurate with the value and could never sell it for what they borrowed. Repossession rates have been high.

If you don’t have a high rate mortgage, or any mortgage, you may want to start paying down debt by reducing extraneous spending and paying extra on the highest interest rate loan or credit card. This could save hundreds of pounds over the course of the loan or debt and allows for the payoff to be measured in months rather than years.

If you do have a mortgage that could stand a lower interest rate, paying off high interest credit cards or loans may increase your chances of a bank approving a refinance. It’s a win/win.

Snowball Debt Payments?

If you find yourself in a situation where your most difficult and pressing debt burden is your highest interest rate, such as your mortgage, and there is no way to pay more than you already are, you may want to consider the debt snowball method instead.

If you have a small loan or bill that you just pay a small amount each month, reduce your extra spending money and apply it to that bill. You’ll only free up a small amount once it’s paid off, but that amount can then be applied to the next bill. The concept of debt snowball is that you pay off smaller items first so that budgeted amount can be applied to increasingly bigger bills until you are able to pay large amounts on bigger debt burdens.

Time for Drastic Measures?

When finances are critical and there truly is no way to budge in any direction, it’s time for some serious action. You might find that holding a big yard sale and selling items on Gumtree or similar websites may draw in cash that is desperately needed.

If you live alone you may want to consider renting a room so you can share utility and rent expenses. If the option exists, you might want to consider giving up a costly apartment and rent something cheaper or even move back home with parents or other relatives. During this time, use other debt solution strategies to pay down debt. You can explore various debt solutions at Consolidated Credit.

Don’t Be Afraid to Ask for Help!

Out-of-control finances may seem overwhelming and depressing with no possible solution. Before throwing in the towel, consider asking for help.

Do you know someone who seems to have good money management skills? Does your place of worship offer counselling or other services that you could utilize free of charge? Does your company offer employee assistance?

Take time to seek help. Sometimes all it takes is a new perspective to generate ideas on how to tackle the problem and develop a game plan.

 

Taking Steps to Improve Your Budget

Proper budgeting should be near the top of any person’s priority list. Elaine McPartland from Consolidated Credit explains that a few simple steps are all you need to follow to keep within your means.

If you’re like millions of Americans, there’s a good chance that money is at least a little tight right now. The worldwide economic collapse caused consumers around the world big financial trouble, with unemployment, reduced hours, pay cuts and increases in costs. As a result, many consumers have turned to credit in order to try and get by until their situation improves. Slowly but surely, you fall further and further behind as your credit card bills increase with your rising balances.

In order to improve your budget, you need to make sure your financial outlook is in balance. Your income, debt, expenses and savings all need to be balanced in order to maintain a healthy financial outlook. So how can you tell if your budget is out of balance?

In general, debt payments should not take up more than 36% of your income. This includes all of your debt payments, including your mortgage. Unsecured debt, such as your credit cards, should use up no more than 10% of your income each month. Your savings should also be around 10% of your monthly income. Following that, you simply need to make sure that your other expenses don’t use up more money than what you earn.

If your debt load is high, there’s a good chance that you are struggling to stay ahead and you have little money left over for savings. In order to improve your financial outlook, you need to reduce your debt load. Short of paying off your car or selling your home, the easiest way to do this is to reduce your credit card debt load. The less credit card debt you have, the lower your minimum payment requirements each month. This can go a long way to improving your budget outlook.

In order to reduce your credit card debt load quickly, you need to implement a targeted debt reduction strategy or look into options for debt consolidation. If you have cash flow available in your budget, you can use that money to make extra payments on one credit card debt at a time until each debt is paid off. Each debt that’s paid in-full will free up more money in your budget for debt reduction. You gain cash flow and momentum in order to eliminate all of your credit card debt as quickly as possible.

If you don’t have the cash flow available or your debts are too high to use a debt reduction strategy within your budget, then you need to reduce your debt using an alternative method.  Debt consolidation allows you to consolidate multiple credit card debt payments into a single monthly payment at the lowest interest rate possible. With low interest, you save money each month on added interest charges and pay less each month to improve your budget. Since the interest is so low, you can actually get out of debt faster even though you are paying less each month.

Difference between life insurance and income protection

life insurance, insuranceNowadays there are innumerable policies which suit your particular needs. And this wide range of option often makes a layman confused as to which one to select for himself and his family’s safe future. One such common mistake is to get mixed up with life insurance and income protection. But both of these policies are quite different in their function.

Life Insurance is a policy which is formed to protect the policy holder and his family even after his death. On the other hand, Income protection is protective during lifetime only, especially in cases when you have had some sickness, accident, redundancy or if you are in need to pay your mortgage payments. It ensures that you have cash when you need it the most, assuring to secure your ability to pay expenses and bills for unexpected situations or emergencies. If seen closely, both are quite important in their own way. Thorough research is advised before investing in any of these policies.

How to Keep your credit cards safe

credit cardUsing credit cards have become very common these days. People prefer making transaction during shopping with credit cards. With the increased use of credit cards, the practice of carrying heavy cash has decreased to a very low percentage. Carrying huge cash is not a very easy task and you have to be careful every moment about it. But then while using credit cards, you should be well accustomed with few safety measures to protect your card from wrong use.

Put your signature on the strip at the back of your card immediately after receiving it. This will ensure that no one other than you uses the card. Never reveal the card number or the CVV number to anyone irrespective of the fact how much trustworthy he or she is.

Keep the contact number of the card helpdesk in handy always. If you have misplaced your card, without losing a single moment lodge an FIR with the local police station and then block your card by calling the customer help desk. Thus your card can’t be used for any illegal transaction.