Benefits of Credit Counseling

October 12, 2013 by  
Filed under Debt & Credit Tips, Featured

With the world economy on the down low, more and more individuals are getting into debt situations that are financially damaging. Credit counseling services have become more necessary than usual. Sometimes counseling can help to reverse even the worst of debt problems.

 What is credit counseling?

 Although not all financial problems are as bad as to require some form of help, sometimes counseling can help to either avoid debt pitfalls or to get out of them. Credit counseling, sometimes referred to as debt counseling, is a process through which individuals are offered professional advice and education on how to manage debts.

 How will credit counseling help you?

 In general, credit counselors will liaise with the creditors to set up a Debt Management program (DMP) which will enable you to settle your debts quickly and easily. Specific benefits of credit counseling include;

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    It will help you to repair credit. Defaulting in debt repayments will definitely have a negative effect on your credit thus hampering your borrowing power in the future. Credit counseling sets you on a path where you can pay off your debts and thus avoid hurting your credit. If your credit is already bad, you will be guided on how to set it right again.

    Credit counseling goes being financial help to help you cope with the stress that comes with financial difficulties.

    For those who have trouble with their personal finances, counseling can help you easily manage it thus avoiding poor financial decisions.

    Credit counseling helps you to achieve your dreams by properly managing your finances.

    Knowledge ~ this is perhaps the most important part of credit counseling. The knowledge gained lasts a lifetime.

 

 

Creating and Implementing a Debt Management Plan

October 11, 2013 by  
Filed under Debt & Credit Tips

A Debt Management Plan is a method that can help an individual reduce his debts by making a payment plan with a lender, gradually paying off the debt while sticking to a practical budget. In a DMP, the debtor will deposit standard resources via a credit-counseling group. In turn, the group or organization will disburse these resources to the lender so that the debtor’s outstanding debt will be paid down.

Creating Debt Management Plan

 You may be snowed under your debts but this doesn’t mean that it is the end of the world. You stay awake at night just thinking of making both ends meet; but, actually, you don’t need to. The answer is to make yourself a debt management plan and take charge of your own life. Yes, a number of companies offer this kind of service but this is also something that you can do for yourself. Here’s how:

 1. Why are you overdrawn?

 How did you end up with so much liability? Were all your procurement necessary? Do you live within your means? These questions are essential. Finding out what put you in the situation will prevent you from making similar mistakes again. You need to find ways to prevent yourself from acquiring more debts.

 2. How much is your monthly expenditure?

 Yes, this one’s sustained but knowing where your cash is going is essential so that by the month’s end, you can compare your monthly expenditure with your monthly income. Realizing that your income is going out and not coming in is a serious issue.

3. Cut your costs.

There are various ways on how you can cut your costs. For instance, you can use a generic brand or turn off certain services that you don’t really use or need. The savings you can make will be based on your monthly expenses. Take a look at your monthly expenditure and cross out those which you can actually live without or determine the ones which you can trim down.

 4. Make a budget.

 A good tool used in making budgets is the spreadsheet. First, fill in all of your expenses like electricity bill and grocery among others. Then, determine the total. It is important to have leftover cash that you can save for contingencies. The solution is to make a budget and stick to it. Avoid spending more than your monthly salary.

 5. Combine your debts.

 You have two options for this one. The first alternative, which is typically for homeowners, includes refinancing by using a percentage of your equity to pay the debt. The second one entails debt consolidation loans from the bank which lets you pay monthly.

 6. Steer yourself clear of additional debts.

 After you have merged your debts, put away your credit cards. You can simply hide them in a safe or somewhere in your house so that you don’t have the cards on hand when shopping. However, you can also shred the cards into pieces, if you want. Instead of closing all of your accounts promptly, do it gradually to avoid the negative effects on the credit score.

 Implementing Debt Management Plan

 After determining your spending problems, prepare a debt management plan that works well with your routine. At first, this may be difficult; but, when you’re debt-free in the end, everything is worth it. Hence, here are some tips that can help you stay on your course:

• Make and stick to your monthly budget.

• Take note of all your incoming and outgoing cash.

• Start paying your old debts especially the ones with the highest interest.

• Do not let yourself get on the charge card before the previous amounts are fully paid.

• If you are having a hard time managing your debt on your own, seek the help of a professional.

 

Living Free of Debt

October 8, 2013 by  
Filed under Debt & Credit Tips

Dredge Up Ideas to Reduce Your Expenses towards a Debt Free Life

 When someone suggests to you that living debt free life is possible, you may view this idea with suspicion. But in reality, it is possible and you can derive countless benefits if you succeed in this aim. The foremost benefit is that you get rid of the stress caused by debts. Secondly, your income will not be eaten away by huge interest payments. Since your disposable income will be more, you can save more. This means that you need not hesitate to grab the investment opportunities you come across. You can make excellent changes to your lifestyle also.

 Now, the question is how to live debt free. These tips may be useful:

 * If you already have debts, stop adding to your debt burden.

 * Change your mindset and learn to live a modest life. Being a spendthrift and wishing to live a “no debt” life may be an oxymoronic idea.

 * Stop using your credit cards and instead, pay all your bills only by cash or using your debit card.

 Meet your creditors and discuss with them so as to find out ways to liquidate your current debts. Agree to a convenient payment schedule but, you must stick to that schedule scrupulously.

 * Adopt all possible ways to live frugally so that you can save money. The following ideas may help you to live frugally.

 - You need not buy newspapers since you can know the news through the television or the Internet.

 - You need not use your car for going to nearby places. If you walk the distance, you will be saving on your fuel bills. Further, walking can do good to your health.

 - Instead of eating outside food, bring your home-made lunch to the workplace.

 - Stop being a couch potato. You can spend time on a part-time job.

 * Avoid using electric gadgets unless there is a necessity. When you save electricity, you are saving on your energy bills.

 * Choose wise investments for parking your surplus funds, however small they may be.

 If you try these tips and see the results, your skepticism towards the idea of living debt free life will certainly vanish.