Tuesday, March 16, 2010

Living A Debt Free Life

0 comments Posted by pucca at 6:09 PM

Here are some helpful yet simple tips that can help anyone who is in debt to get out of it.

* Spend less than you earn.Use cash for better budgeting, and stop using debit cards and credit cards.
* Create a plan to get out of debt for better results than just sending money to your accounts randomly.
* Know exactly how much you owe, keep track of it in a spreadsheet or notebook and update it each time you make a payment.
* Establish an emergency fund as soon as possible to avoid relying on debt when an unexpected expense occurs.
* Shred your credit cards but keep accounts open (closing accounts lowers your credit score).
* Consider a non-profit debt counseling service to help you develop a plan for getting out of debt faster.
* Contact creditors to request lower interest rates or easier repayment plans.
* Get a free copy of your credit report to see if there are any errors that need to be corrected.
* Don't go into more debt trying to pay off your debts! You can't send so much to your debt repayments that you can't keep up with your living expenses.
* Look for ways to reduce expenses – the more you reduce, the more money you can pay toward debt and the faster you can become debt free. You don't have to live like a monk, but there are many living expenses and unnecessary expenses you can reduce or eliminate (even if only temporarily) to get out of debt faster.
* Learn how to entertain yourself for free.
* Plan for upcoming expenses and non-monthly expenses so you don't have to scramble to get the money all at once (car insurance premiums, property or school taxes, car maintenance, etc).
* Create and stick to a budget.
* Consider the debt snowball. Once you start rolling, it keeps on rolling unless you put it into a stop.
* Consider the highest-interest-first method of paying off debt.
* Consider the debt avalanche. Once your buried in debt, it's hard to get out of it.
* Avoid relationship problems by keeping open communication regarding finances.
* If you fall off the debt repayment wagon, get back on. It takes discipline and hard work to get out of debt.
* Learn how to reward yourself for sticking to the budget, or paying off debt, without spending a lot of money for the reward.
* You didn't get into debt overnight, understand it will take longer than a day to get out of debt, too. You have to break the cycle of debt.
* Stop borrowing or applying for credit. If you can't save for the purchase or the expense, then you can't afford to buy it.
* Don't forget the importance in saving for the future (retirement, college, etc) while repaying your debts.
* Increase your income with a part time job, a home business, programming, design, or with freelance writing jobs.

The bottomline is live frugally, live within your means . Life and succes in not about how much money your bank account has. It is not about how many cars you have, how many shoes are stuck inside your closet. It is about how you have lived your life. You're rich but you're not happy. You're rich but you're sick. You're rich but you're alone. I would rather live a happy simple life. But money is always welcome.

 

 

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Thursday, March 11, 2010

Bad Credit Vs. Good Credit

0 comments Posted by pucca at 8:55 PM

What is good debt? What is bad debt? Good debt is loaning money from the bank to start up a business. With proper management and focus, money invested would likely grow and multiply. Bad debt is purchasing the latest 3D plasma television when you just bought a new television last month.
Debt is ineveitable. Even the richest man on earth had debt once in their life. Getting in bad debt depends on the manner on how we use this owed resources.
Today debt and instant credit are part of our everyday lives. Many individuals use credit cards to spend more than they earn, and a few of these people actually build themselves a debt prison from which some never emerge. On the other hand, those who never use credit can be denied a loan or credit when they have a justifiable need or use for it. Using credit establishes a history of financial responsibility: Until you establish a credit history, your chances of qualifying for an important loan, such as a mortgage, are greatly reduced. So as I have said, credit is inevitable.
We should learn to use credit wisely. Here are some points to consider to be able to start managing our credits and debt wisely.

1. Gather recent account statements from your credit cards and other debts.- Doing this will help you identify purchases you shouldn't have made. Going over all your account statements makes you rethink. Did I really spent over 500$ at the spa last month? Cross out purchases and transactions that you think you can live without.



2. Review the interest rates and finance charges you currently pay on each account. - Owning 2 or more credit cards is not normal, but it does happen. Identify which credit cards charge you the most. Cutting of one or two of your credit cards gives you a feeling of being in control.



3. Take a fresh look at your household budget (or spending habits if you don't have a budget yet). Did you spent 300$ on ice cream last month? Know your needs and wants. Cross out grocery items you can live without. If you can't help but buy things that you want, buy them in moderation.



4. Think about your ability to stop using credit on a regular basis and what changes you might be willing to make to improve your financial outlook.

Just like what I said, bad credit and good credit depends on you. So better stop blaming the high interests your credit card has or even your underpaid job. You control your money. Do not let it control you.

 

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