Finance Blog – Loans, Mortages, Insurance

Good debt vs. bad debt

Just about everyone will have to borrow money at some stage of their lives. Most wishing to own their own property will borrow on a mortgage but even those looking to acquire a car may take out a personal loan or lease plan.

Sometimes there are great deals around that are hard to decline. Take, for example, many of the low cost credit deals offered by car manufacturers.

These are a great way to get a new car at very affordable rates of interest.

Deals like this can be classed as ‘good debt’ since they are amongst the lowest cost way to borrow one can find. Especially if you already have the cash available where you can invest in a high interest savings account and make more on the interest than you lose on the loan charge!

The key with any form of debt is making sure that the payments remain affordable even if personal circumstances change. That means if the hours available to work are reduced and the net family income drops, the payments are still affordable for at least six months.

Easy credit is now a thing of the past. The number of providers has reduced dramatically since the early ‘noughties’ and those that are in the market are looking for good quality customers.

That means borrowing whilst your credit history is in tip top condition and you have a provable source of income. Without either of these, the rates and terms on offer may be less attractive.

So, good debt can be defined as debt that is affordable and comfortably repayable within the available family income.

But circumstances in these uncertain times can change fast meaning that what was once affordable now becomes unaffordable.

When debt gets out of control it eats away at family life and relationships. Cutting spending and making savings can generate some spare income each month but more extensive action may be needed if payments are higher than free income.

If there are just one or two lenders (for example a mortgage loan and car loan) then it should be easy to speak with them and try to arrange a reschedule of the payments over a longer period of time.

Provided you are up to date with the payments then most lenders will listen sympathetically to a request for changed payments provided the proposal is sensible.

Even if you have started to miss a few payments, it should be possible to get a payment plan agreed that allows the family to live on a day to day basis without the fear of repossession or legal action.

If there are a number of debts and it is not clear how to move forward, it can pay to enlist the help of a specialist debt management company. As they deal with lenders every day and know what will be acceptable, they can help drive the best deals to get you back on track.

It may be worthwhile paying a small fee to have help sorting out your finances rather than struggling on and getting into a worse mess.

There are also a few good debt management websites that can help shed light on what is available to those with debt problems. You can read more for help on sorting out your debt problems at moneysupermarket.

Eradicating your debts on your own terms – Taking your own financial responsibilities

Credit Card Management & Consultant

Getting out of your high interest unsecured debt and staying out of debt is not an easy task. Chances are high that if you’ve misused your personal finances and your credit cards, you must have amassed a huge amount of credit card debt. Whipping your plastics during every little purchase is not the way to go if you want to remain financially fit throughout the year. But as most Americans are not much concerned about their finances, they commit the same mistake time and again. It is easy to get out of debt by seeking help of professional debt relief companies and by taking your own financial responsibilities. Have a look at some do-it-yourself steps to get back a firm grip on your finances.

• Stop increasing your credit card debt: You must be aware that credit cards may seem to be attractive options to fulfil your dreams when you’re running short of money. Credit cards are the actual reason for the entire debt burden throughout America and therefore you have to make sure that you use cash instead of credit while buying things. The more you use your credit cards, the more you will drown yourself in a sea of debt. Lock your cards and carry cash with you.

• Keep a track on your expenses: The idea of writing down what you spend is a concept that may sound baseless to most people but this is a worthy concept of dealing with your debts. Write down on pen and paper the amount of dollars you earn in a particular month and the amount that you spend from it. Avoid more debt by staying within your spending limit and by following a frugal budget. Try to distinguish between needs and wants and concentrate only on the wants.

• Negotiate with your creditors: You can negotiate with your creditors on your own instead of getting help from professional debt help companies. If you feel that the professional companies can only help the debtors pay off their debts, you’re grossly mistaken. You can also negotiate with your creditors on your own and tell them about your personal financial hardship.

• Start making the monthly payments: As soon as you negotiate with your creditors, they will ask you to make a single monthly payment to them. Make sure you manage your personal finances so that you don’t fall back on the monthly payments and hurt your credit score. If you make the monthly payments on time, you can get out of debt sooner and become debt free.

Thus, if you want to delete your financial worries, you must make sure you follow the tips mentioned above. It is always better to manage your finances on your own than rush to professional companies for help.

How to Eliminate Credit Cards

Eliminate Credit Card Debt

For a lot of people getting credit cards can be something that is great to have especially in an emergency or they really can be a huge annoyance.  It can help you when you most need it and then when you can’t afford them they can be a nightmare to pay back again.  They can actually turn your finances into a worst state than ever.

Getting a credit card is one thing trying to repay them again is something that you can rarely do even if you are making a lot of money.  The repayment interests are a lot to handle and for many of us we can’t repay them before; people realise that once they get to a certain point that they have to get rid of that debt and eliminate the credit card debts before they do anything else.  You don’t have to worry these debts are actually less hassle once you start repaying what you owe.

The one thing that you are going to need to get has to be scissors and a shredder.

Now to begin with elimination the credit card debts; the first step that you can take has to be to stop the cards.  Cancel them all completely so that you can start cutting down and eliminating the debt; wherever you have gotten the card from cancel it from there and confirm that you are the card holder so that you can cancel the debts.

You could even try hiding the card somewhere that you know will never be able to get to it again; putting it into a deposit box or even give it to a friend or family member and that stops you from using the card at all.  If you don’t want to hide it then fair enough but when you are going out then you really don’t want to go out with the credit card otherwise you are going to be tempted to spend on the card.

The best way that you can do to stop your credit cards will be to get yourself a pair of scissors and a paper shredder and cut the two up and then shred it if possible.  That way your credit card is gone and it is not coming back again; this will really help you when it comes to not relying on credit cards to help you out of a tricky spot every now and again.  It might help you to gain some responsibility over your finances.

Some tips to help you get rid of your credit cards.

You should get yourself a debt card – this is your bank card in some places, with this you buy something and the money is going to come straight off your bank account so that you are paying outright but not with money in hand but what is in your bank account.

Even if you don’t have enough money then your over-draft will cover this or the bank covers this for the moment if you have been a very loyal and good customer and know that you are going to have the funds in your account soon.

You could also use cash, this stops you from getting any overdrafts and if you don’t have the money in your purse then you won’t spend more.  This also reduced the risk of getting any kind of fraud done to you when you avoid using credit cards.

You need to get yourself a budget, something that is going to help you to limit what you’re spending every month and something that is going to stop you from over-spending on things that you don’t need.

Credit Card Protection Plans: Are They Worthwhile?

It used to be that when you applied for a credit card, you were asked to buy credit insurance as well.  You don’t hear about credit insurance as much today, but there is something else you can buy:  a credit card protection plan.  If you look at it closely, however, you’ll see that it’s pretty much the same thing as credit insurance.  These plans offer coverage to help consumers in the event that they are unable to make their credit card payments, while providing another method that credit card companies can use to profit from their cardholders.

Credit Card Protection

Before you buy a credit card protection plan, make sure you know what it covers.  The terms for these policies vary from one card to another.  Most policies cover your payments if you are disabled as the result of an injury or lose your job.  The premium for the plan is usually a percentage of your balance each month.  If you have no balance, you usually do not pay a fee for that month.

When you attempt to make a claim, you may discover that the plan doesn’t cover you as well as you thought it would.  For example, you might be disqualified because you were unemployed when you signed up for the plan or because you left your job voluntarily.  You might even discover that there is waiting period after you become unemployed, during which time you are ineligible to receive any benefits.  You might also be required to apply for unemployment benefits before you will be eligible for coverage under the credit card protection plan.

The fees for these plans are usually around 50 cents for every $100 that you owe, but they can sometimes be as high as $1.00 per $100.  These charges are added on to your credit card balance as if they were ordinary purchases, so you also have to pay interest on them.  It is also possible for them to push you over your limit and incur over-the-limit fees.

Most states do not regulate credit card protection plans, so you will not receive much help if you have trouble when it comes time to make a claim.  Many people who have paid for these plans report having issues with not being able to use the benefits that they have paid for, so be cautious about purchasing credit card protection plans for your credit cards.  You may discover that you are better off buying regular disability insurance or some other type of insurance instead of a credit card plan.

3 THINGS THAT SHOULD ALWAYS BE PURCHASED ONLINE

Shopping online

Prices can differ substantially depending on if you purchase a product or service online or in-store. In my opinion online retailers tend to be cheaper, and I think the main reason for this is that they obviously have lower overheads. So with regards to saving money, whether it be to build up your money in your ISA account, or whether your saving for something special, I thought I’d detail 3 things that I think should always be purchased online, and here they are.

Flights

There are so many options available online when it comes to flights and holidays, it makes it so easy to find a really good deal. I always purchase my holidays or flights online and most of the time I use holiday comparison sites, as they do all the hard work for you. I think that the day of the travel agent is basically over, I can’t remember the last time I went to one if I’m honest!

If you use a holiday comparison site, once you tell the website where you want to go and how long for, it will display a list of results that you can choose from. Comparing this with in-store, travel agents basically just do the same thing, unless they have any exclusive offers. Using travel comparison sites is just so easy and they can save you time and money.

Insurance

Insurance is one of those things that we simply have to purchase and for my insurance, I always shop online. There are many different types of insurance, from auto insurance to home insurance, and I’ve found that it’s always cheaper online rather than in-store.

Very similar to when comparing the prices of flights, you don’t really want to do the same search for insurance on every provider website or in every providers store, so you can use an insurance comparison website. However, don’t just check on one insurance comparison website, check two or three as one may have an exclusive deal that the other doesn’t offer.

DVD’s and CD’s

Whether you’re interested in purchasing CD’s or DVD’s, it doesn’t really matter which format, prices always seem to be cheaper online, I can’t remember the last time I bought one in a store. If you see a commercial or you see a film or CD when out shopping that you would like to purchase, then my advice would be to wait until you get home and check the major retailers online. Companies like Amazon and Play offer fantastic discounts on this sort of media, as again, they have very low expenses.

Another way to save money on DVD’s and CD’s is to check some dedicated pricing websites that compare the prices of all the major retailers for you. DVDpricesearch is a website that does this very well.

I hope this article has helped some people realise how much discount is available if you simple purchase online rather than in-store.

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