Jul 22, 2013
Many people continue to suffer under the weight of their student education loans, home mortgages and payday loan. The dismal state of the economy makes life even more challenging, but thanks to debt consolidation, many people have obtained some form of relief that has allowed them to stabilize their lives with minimal worry and anxiety.
Debt consolidation refers to the process by which all your current debts are brought under one program for a singular payment plan. It requires you to get the assistance of a debt consolidation professional to analyze your debt situation. Once the professional advisor or company evaluates all the options that are available for you, they prepare a plan and present it to you as a consolidation loan. The debt consolidation company negotiates with your creditors, on your behalf, in order to arrive at the lowest possible payoff amounts. They also look for alternative ways to reduce your interest obligation for some of your existing loans as a way to reduce the overall costs associated with loan ownership.
The consolidation loan takes over your credit from multiple companies that have different interest rates, charges and monthly deadlines to give you a single payment that has a lower interest rate and one set of fees. You will now have to abide to one due date, and deliver one payment, which makes it easier for you to manage your debts.
Besides reduced interest rates and easier loan management, there are other benefits of debt consolidation in resolving your credit issues. For instance, when the debt consolidation program takes over your cumulative credits, it negotiates with your creditors to do away with all interest and other charges that have accumulated over time. This can reduce your debt considerably, especially if you make monthly payments of only the minimum amount required.
Getting the right debt consolidation program can also accelerate your freedom from debt and allow you to make savings at the same time. The reduced overall debt amount and favorable interest rates can allow you to repay your debt within less time and also keep some aside for future expenses.
The consolidation company that you chose to work with will also save you from the continuous harassment of creditors, with their collection calls, since they alert the latter that they are your representative or loan provider. Lastly, the debt consolidation program provides a way for you to make timely payments, which eliminates the chances of delayed payments or charged-off accounts that give you a bad credit report. As such, you build a good credit report that raises your credit score.
Jul 18, 2013
Today, we wanted to discuss in some small detail credit counselling, beginning naturally enough with the question: what exactly is credit counselling?
How does credit counselling work? Credit counselling services have been available to people in the UK and the United States for decades.
Typically, a credit counsellor will provide a free consultation and they are going to discuss with you your budget, your cash flow and your ability to meet your necessities, your monthly obligations, power, rent, mortgage, car, gas, things like that and then come up with a plan to pay off your unsecured creditors, medical bills, credit card debts, as well as pay day loans to firms like Omniloans or other sums due to instant payday lenders like Alphaloans.co.uk etc.
One of the main tools that they have to get your payments lower is interest rate concessions that are prearranged. There is real no negotiation that goes on. They have relationships and communication ongoing with most of your creditors and because of that they can come up with an estimate, sometimes in just one phone call if you are prepared with all the information that you need about your debts, your obligations, your creditors and your income.
Tht is how simple it can sometimes – not always - be to put an end to all those sleepless nights worrying about money. With one call an experienced counsellor can come up with a proposal that they will be able to submit to your creditors and if they all agree then put you on what they call a debt management plan. That debt management plan has many benefits - one is you are only going to pay a certain amount every month, it’s set, it’s not going to fluctuate. Paying just one payment each month means it is so much easier to deal with your finances and the chances opf missing a payment, with the consequent implications for your credit report, are much reduced.
The amount of any such payment is going to be lower than what you are paying now because of those interest rate concessions. So let’s assume that you are paying on average across your credit cards 20% interest. On average credit counselling services will seek to get that reduced to around 8%, or around forty percent of the original sum due, so that is where the payment break comes in. You are going to be able to apply or amortize the pay off amount on all your debts over what is generally a 4 to 5 year period working with a credit counselling agency. It is a very non-confrontational approach to having a debt pay off plan.
A debt management plan gives you a predictable amount of money that you have to come up with every month within your budget and it gives you a predictable timeline to get out of debt. It doesn’t have a lot of impact on your credit score, but it impairs your ability to get credit while you are on one. That in many ways is no bad thing because as you are working through your current obligations, the last thing you want is to add to them. You are usually on an agreement for 4 or 5 years, so you there will be a kind of gap in your credit history unless you have a mortgage and car that you are making payments on while you are in still paying your other debts through your management plan.
Because you are not taking on new credit or using new obligations it may have a marginal effect on your ability to get new credit, but you can bounce back from a credit counselling services program credit wise really, really quickly once you complete one. When it comes to credit counselling services or agencies, most of them are non-profit. There are about 300 of them around the the US.
One of the reasons that credit counselling is as successful as it is, is because you’re going to have to qualify so when you talk with a credit counselling agency you are going to have to fit a certain kind of criteria and that means that one: you can afford even the reduced payments if your budget and your cash flow and your income suggest that you can’t a credit counsellor should probably not enroll you in one. You also can’t make too much money so in other words your banks, your creditors are only going to agree to reduce your interest rate and put you on one of these special payment plans when they can see that it’s the only way you are going to succeed.
To close off this post we want to prepare you for what kind of criteria just from a money perspective on a monthly basis you need to be prepared to meet if you enroll in a credit counselling service. In general you are going to have to come up with roughly 2% of your combined balances that are enrolled in the plan. So, for example, if you have 5 credit cards and in all total 20,000 dollars outstanding. 2% of that is $400 so your first payment to the credit counselling agency second, third all the way through to your 50th or 60th payment 4 or 5 years down the line would be set at in this example - $400. If you can afford 2% of your combined unsecured debts credit cards, medical bills and the like, you definitely should reach out to a credit counselling agency and talk with them about your options to get enrolled in their program and pay off your debt.
Jul 18, 2013
As life expectancy increases, planning ahead to support ourselves in retirement is becoming ever more important.
It’s easy to assume that the state pension will be enough to support you in later life but the age at which you can claim a state pension is rising, and the amount that you receive is unlikely to be sufficient to provide a financially comfortable lifestyle in retirement. Pensions provide a tax efficient method to put money away for later life allowing you tax relief on contributions up to certain annual and lifetime limits.
Without adequate penson planning you may find yourself having to eke out a meagre existence in your later years, when you ought to be enjoying the fruits of many years hard work! You do not have to want to rely on hand-outs, or worse still, expensive forms of credit such as overdrafts, credit cards or even pay day loans providers such as Omniloans just to get by. And in any event as we have seen in recent years at some point there comes a reckoning when these debts need to be repaid.
In addition, though you will normally have to pay income tax on your pension income when you retire, you can currently choose take up to 25% of you final pot as a tax-free lump sum.
The money you put into a pension will normally be locked away until you reach the age of 55, which can help avoid the temptation to dip into your savings early, allowing your pension pot time to grow. The sooner you start saving the longer you pension pot will have to grow and enjoy the benefits of compound interest.
However, it’s important to remember that with most types of pension the final size of your pot is not guaranteed the value of your underlying pension investments can go down as well as up.
If your employer offers pension contributions through a workplace pension scheme it may be worth joining because this can add a significant boost to your own contributions. If you don’t currently enjoy access to a workplace pension scheme you may want to consider setting up a personal pension, a self-invested personal pension or a stakeholder pension of your own.
Speak to a financial advisor for tailored advice on pension savings and the options that could be available to you. Someone who has specialist knowledge about the options available and who offers free and impartial advice shoud be your first post of call.
Jul 17, 2013
If you’re looking at how to get out from under your credit card debt, it can sometimes seem like an impossible task. Well, the good news is that there are several simple easy-to-implement things that you can do to fight back against that credit card debt.
First off, and this is a really easy one to say but not as easy to do, you have to stop adding new credit card debt. And the number one thing that you have to remember is, when you receive those advertisements for sales, or those enticements for percentages off, and all the different tools that these credit card companies use, and these store credit cards use to try to get you back out there and buying, those are sometimes too tempting, but you simply have to take those and throw them away, so that you won’t be enticed into adding up more credit card debt to what you already have mounting.
And if you really don’t think you have the self discipline to resist, why not just cut your cards up? Its not particularly subtle, but it’s effective!
Now secondly, you want to pay down, as fast as possible, the smallest balance credit cards. Now I know this seems to go against the idea of always paying as much as you can to the higher interest rate loans and credit cards, and, that is true. That’s very important, too. We’ll discuss that in a moment. But if you can pay down your smallest credit card balances to where you have them paid off, then you’ll actually have more cash to incorporate into paying off those higher interest rate loans like payday loans, even from responsible lenders like Omega Loans
Then, you’ll have more cash to pay towards those higher interest rate credit cards, and pay them down even quicker. So, you need to set a goal, and then you also need to consider transferring from your higher interest rate credit cards to lower interest credit cards, as well. You can do this by, perhaps doing a transfer out from one credit card to another, or sometimes you’ll even receive these little checks in the mail that come along with your credit card statement. The one warning I’m going to have here is, you need to make sure what is your interest rate going to be after you do that transfer. Probably even better is to speak with your local bank, savings and loan, or credit union and find out what type of credit card they have that you could transfer your higher interest rate loans and credit cards to.
And do remember, as you’re paying down your credit card debt, you do not want to add additional debt. Do not open new cards and keep only one major credit card to be able to use that for emergencies only.
Jul 12, 2013
Taking out a personal loan, like any other financial decision, and regardless of whether you are applying to a bank or a company like a payday lenders,even a respectable firm like Bluesky, is something that should no be considered lightly. You should do your homework to make sure you are getting exactly what you require. When you are thinking about a loan it can often be because you find yourself a bit short of funds, albeit temporarily, which can cause you to rush in and perhaps make an ill-considered choice. You really have to resist this temptation and make sure you cover all the bases before going ahead.
First things first you need to take a look at exactly how much any loan will end up costing you over the term of the deal and make an honest assessment of whether that is a price worth paying. Simply calculate the total cost by multiplying the monthly payment by the number of instalments. This will let you see the true cost of credit, ie, the additional amount you will be paying over the term to access the funds now. If you need the loan for something essential like a repair to your car or an urgent home improvement, you may well take the view that the cost is one you are willing to pay. However, if you were thinking of borrowing money for a treat, perhaps a gift for a friend or family member, or perhaps a self indulgent weekend away for you and you partner, you may decide that it’s a little too costly for something that is not vital and decide against it, opting instead to save up for that special treat.
The point is, with the figures in front of you, you can make an informed decision, rather than relying on guesswork.
If you feel you would still like to go ahead but would prefer to reduce the cost if at all possible, then what about considering taking the loan over a shorter term? This is likely to have the effect of increasing your monthly repayment, but because you are paying the loan back over a shorter period of time, the actual amount you pay back will be less.
The other important thing to bear mind mind is to make sure you only seek a loan from a business you can rely on. Although they have received lots of terrible publicity in recent times over scandals such as mis-selling PPI and attempts to fix the inter-bank LIBOR rate, generally speaking you can rely on banks when it comes to obtaining a loan. If you are trying to access cash from somewhere else, perhaps a payday loan lender or other similar firm, you should check them out carefully before proceeding to make sure that they are authorised and that they act in a professional manner. Your local trading standards office would be a good place to check this out. You should also be able to do some research on the internet and if you find anything which causes you concern, steer well clear!