saving

5 Kinds of People Who Just Can’t Avoid Debt

January 5, 2014 by illinois

People get into debt for various reasons. Some reasons are caused by their actions where as some are beyond their control. For instance a loss of job can force you to use your credit card for surviving for a few months or if suddenly a major home repair expense arises when you are jobless. In such cases you will no other option rather than to pull out your credit card.

Whatever the reasons may be, getting in a debt is a nagging headache for everyone, or it can be even more painful. Some of these people come out of this tap and live on low debt or even debt free. However, others might not be so lucky.

If you are unable to lessen your debt balances or if you pay your debt off to be debt-free after many years, we will categorize you as one of the following kinds of people:

People Who need to maintain a status

This is a question you need to ask yourself. Do you feel that you have to buy a certain think for the sole reason that someone else has it? Well, it’s not a very comfortable question to ask yourself but your answer can make you realize why you are can’t avoid debt.

Obviously someone would always be in a higher financial status than you. If you are not that rich and you are trying to compete with others just to look good to them, you will soon end up broke or in debt and this is a never ending cycle.

People who spend beyond their capabilities

Who doesn’t wish to live in a dream home or drive in their dream car? There is no harm in trying to reach the stars. But you should accept that you can have a 6 figure lifestyle on a 5 figure salary no matter what you do. Well, if you are spending money even more than your income, you must be using your credit card for the extra payments and therefore you can’t avoid debt.

People Who want to Live the American Way

Purchasing a car or a house or getting college education normally involves the use of loans. Loans for such purposes are considered justifiable if you pay their bills within the time and don’t let them damage your FICO scores.

But when you use credit cards to buy things that are not very important, it’s just not OK. According to the information on creditcards.com, in US, an average household has $16000 in their credit card debt where at least one card is used.

You will have to change your mind set if you can’t avoid debts. It might be the American way of living but it shouldn’t be yours.

People without a savings account

People who don’t keep their savings account how do they expect to pay for any unexpected or emergency expenses? Almost half the Americans have no savings account to pay for such unplanned expenses. What if they lose their job or face a serious disease with expensive treatment or destroy their car in an accident? Such people can’t avoid debt.

And the people who are living only on their paychecks, only one wrong step can lead them to a serious financial disaster. These are the comments by Justin King who is the American foundation’s federal policy liaison.

If you salary is not able to match the inflation it is hard to live a comfortable life. All the monthly income gets covered in the basic expenses from housing to the health insurance and it doesn’t leave anything to save for future.

Well, you don’t have a control over your income but can’t you lessen your expenses? If you spare only $200 monthly, it would make $2400 yearly as your savings. It’s not a reserve that can last for several months, but it’s a good start.

People Who Don’t evaluate their Budget

When did you evaluate your budge the last time? In fact, do you even keep a budget?

Budget is not an appealing word as it defines your financial restriction. But still you should go with the flow and sit down to make their spending plan on a weekly or monthly basis. But you should have a very clear and defined plan of spending your money otherwise it is very convenient to overspend and this is when credit cards come into action.

Believe it or not, a budget is very beneficial for those who want to manage their finance and stay away from the debt trap. To be a successful person you need to be disciplined and start budgeting.

If you can’t avoid debt, prioritize your expenses and allocate the disposable income towards savings and debt first. This way you will make your financial position better.

Staying Away From Spending Temptations during the Holiday Season

November 22, 2013 by illinois

Saving and spending money do not seem to be good bedmates; I love to do both. It’s just that during the last couple of years, my desire not to spend money has overcome my addiction to spending, and my savings have enjoyed the benefits.

Apart from that, some readers wanted a post on how to stay away from spending temptations during the holiday season especially. I’ve been brooding on this topic, so here you are.

Get To the Bottom of Your Spending

Let’s handle the weighty things now, because I consider that doing things this way will put the practical ideas into their place. Not long ago, I read the novel, Lost and Found, by Geenen Roth. Along with her husband, Roth lost their savings during the Bernie Madoff disgrace, but her novel is nearly all about her passionate relations with money.

Particularly in one place in the book, Roth shows her particular preoccupation about a pair of stylish but pricey eyeglasses she badly wanted to purchase. The preoccupation is similar to her rapport with use. Interviewed by Time she gives the reason: “In the same way that we use food for emotional reasons, we use buying things to fill something that we cannot quite name.”

To Roth, Things were equal to ‘love’. Where I was concerned, Things meant I was a part of it. I recall one out-of-control spree at University extremely well; I was being paid $10 per hour, and I missed classes to go shopping for many clothes. I recall the thought: This is so insensible making its presence felt in my head, and it was probably that time that I understood what shopping was to me. To me, gaining a new wardrobe equaled me being newer and improved. I would be more independent, less needy. (It wasn’t successful.)

Here are some suggestions to avoid spending during the holiday season:

Power shop

A reader, Erica, agrees. She commented: “ I find if I walk around with something in my hand in the store, after a while, I’m over it and I can put it back.”

I think that the fact of ‘owning it’ for a short time does not change your life in any way and you can live without it. This does involve a great amount of self-discipline and may not always work.

Focus on the big picture

This worked for Dad and me too. Don’t think about your lack. Replace this thought with what you want to achieve in financial goals. I kept watching my budget each day, perused personal finance and careful living blogs, kept my plans updated and watched my money grow. Okay, I still desire things but I don’t buy as much because quitting upsets my aims.

Wait

Binge-shopping is usually not thought-out. Therefore not embarking hastily on sprees helps you make up your mind whether you need an item, or whether it is just buying to spend money. “I’ve gotten to a point of waiting a week or a month or a year.” Dad explained. “And, if I still want or think I need it then so be it, I will get it. But, usually, it turns out the impulsive thought has passed.”

Don’t go shopping with spendthrift acquaintances

A friend of mine was great to go shopping with. He always purchased and that made me feel much better about my problem. If I’m unsure and I see him buying, then I am more likely to buy too.

Keep away from shops

Companies and firms work on emotional triggers. They put a lot of effort into trying to make us buy.

Go out without money

This may be opposite to the above, but I learned to enjoy things without owning them. Go visit shops without any money. This way, you cannot buy anything, so you just have to see things as just things.

You can also see the mechanisms that go into making you buy. All the subtle tricks, and displays. It may help you resist next time.

Write out a list of what you already have.

Keep this list where you can see it. However, keeping a list showed me where my money had gone. Besides, hearing a little voice in my head saying: Hey! You really don’t need this is easily ignored. A list is not, and besides, I can see what I already have that meets my needs.

Just quit

I have improved, but I still have setbacks. If I am having a bad day or work is piling on top of me, ‘retail therapy’ really calls to me. Again, it is not bad to want things, only when it gets in the way of your well-being or saving or life-goals, then it is a nasty problem.

Follow the above tips and you will hopefully be able to avoid spending temptations during the holiday season.

Unexpected Ways to Save Money

November 14, 2013 by illinois

There are many unexpected ways to save money that a person to help increase your financial situation. All over the country, people are looking for ways to cut back on the expenses. Everything in the economy seems to be increasing price ways; it also seems that the quantity is reducing. There are many ways that a person can stretch dollars to increase your budget.

Coupons

Coupons are for all different kinds of situations, not just groceries. There are coupon services on the web that can help you to pick out the perfect coupons for just you.

There are coupons that designed for restaurants, business cards, and even buying tea. A person can even find coupons for services that they receive. Before making, any changes to services you have be sure check out the web and see if you can find any coupons. There are many discounts out there for anything from cell phone discounts to lawn care services.

There are special web services like a Chrome extension called Honey that help. This is designed to help you check for discounts and coupons on the things that you are purchasing. This extension is designed to display the valid discounts from anywhere in the world. Out dated coupons is a thing of the past with this Chrome extension.

Crafty

When people think of crafty, many think of those things of those projects and DIY endeavors. However, being crafty can be as simple as making your favorite food at home rather than buying it in the store. Making your own foods can be an unexpected way to save money.

For example, hummus is a food that is simple to make from home but can be costly to purchase in the store readymade. Hummus is putting garbanzo beans into a blender with some garlic and tahini paste. Blend the ingredients together and you will begin to have a wonderful hummus. If you find it to crumbly, all you have to do is drizzle a little olive oil into the mixture.

Barbeque sauce is another simple thing to make at home. All you need to do is combine a teaspoon of soy sauce, garlic powder, and just a small amount of pepper.

There are many places online that you can find videos that can help you to make some of the best dinners you have ever made. You are able to create a beautiful atmosphere within your home that can be better than any restaurant.

Negotiations Are Allowed

One of the unexpected ways to save money is through negotiation. There is nothing wrong with negotiating with someone to decrease how much you will be paying. When you are trying to purchase a floor model, you can also haggle for a lower price.

It is also common for places to offer price matching. This is a service that isn’t always advertised, so you might want to ask a manager to see it they will let it happen. Another part of price matching is searching out the better prices. Some of the companies even offer the ability to use online pricing as part of the price matching.

Maintenance

It is important that a person maintain the things that they do already own. Keep up the maintenance on the cars that you have. Be sure to change the oil when you are supposed to. This can extend the life of your care for thousands of miles.

Preserve your desktop computer by running a can of air through it, blowing out the particles from inside the fan as well as in the keyboard. This can help to properly ventilate your computer and even increase the speed that your computer is working at.

Refurbish

Whenever you are searching for something new, remember that you should be able to buy a refurbished version of what you are wanting. If you are in search of a cell phone, do not be ashamed of getting last year’s model. Many models of phones and tablets have not changed recently. The latest model will run smoothly, however unless you are an addicted user a refurbished device will do.

Refurbished computers will also be cheaper than those brand new versions. Many people get new computers just because and that offers the opportunity for you to get one refurbished.

Renovate, Don’t Move

When you are looking into moving because you are in need of a bigger space think about renovating the home you are in. Many times the cost of building a new home can be cheaper that purchasing a new property. Sometimes it can even be more cost-effective to rent a bigger home while you save for the perfect home to fit your family.

When you are needing to replace parts in your car use the cheapest parts first. Also, it is important to know when you have invested all you can into something.

How To Achieve Financial Stability Through Debt Consolidation

June 8, 2013 by illinois

Financial stability is downright better than financial independence. The latter is a state wherein the consumer can afford to provide for their present needs without borrowing. The former goes beyond that. To be truly financially stable, a person has to have enough to support their current expenses while at the same time, having the funds to finance any unexpected incidents that require it.

The key to achieving financial stability is to grow your savings. Of course that is easier said than done.

Being in debt while aiming for financial stability may not be the easiest feat to accomplish because you are torn between paying off what you owe and growing your reserve fund. Most of the time, you are compelled to send every penny towards your debt payments just so you can truly be free from it. However, you need to understand that your savings must be given attention too. But for that to happen, you should have more than enough to cover for both your debt payments and your basic necessities. If you have limited resources, that may be very difficult to do.

Fortunately, there is debt consolidation. While the other debt relief options like debt settlement and bankruptcy can lower your monthly payments, they will cost you a good credit score. If you want to be really safe about it, go for consolidating your debts.

But how does one achieve financial stability through debt consolidation?

The simple solution lies in the decreased monthly payment that this debt relief program can provide. By distributing your current balance over a longer payment period, the monthly contributions can be lower than the current payment scheme. That means, there will be funds freed for other expenses. Given your intent in becoming financially stable, these funds will go to your savings.

The great thing about this lowered payment is that you will not be penalized for it. You either gain the approval of the creditor for the new payment scheme (debt management) or you have paid them off and you are now following a lower scheme with another lender (debt consolidation loan).

Another reason why financial stability is more possible with debt consolidation is the fact that you will adapt a new method that requires a single payment. This means you don’t have to spend too much time on monitoring your debt payments. After all, one payment is not so hard to track. This ease and convenience will allow you to exert your efforts into other activities like finding ways to grow your income. By doing so, you are increasing your extra money. As you increase your finances, you either have more amount for your debt payments or you can grow your savings faster.

In the end, you will realize that financial stability requires taking care of both debts and savings. Debt consolidation can take care of both without a problem. Through this method, you are setting yourself up for a debt free life that does not require as much clean up as the debt relief alternatives that ruins your credit score.

Is It Possible To Save While Paying Off Debts?

May 25, 2013 by illinois

Some people think that they should choose between saving and paying off debt. Well here’s the thing – you need to do them both. No matter how small your extra money is, these two are equally important and choosing to not act on one of them could lead to financial disaster.

In all honesty, your question should not revolve around what needs to be prioritized. The more important question is, how can you save while paying off your debts? This is where debt consolidation comes into play.

Let us look at the facts here.

If you choose to save and ignore your debts, you will suffer from the high interest rates, penalty charges and even the possibility of a lawsuit. This is mostly true if you have a lot of credit card debt – which is the third biggest debt amount that consumers owe in this country. It will keep on piling up the longer you refuse to send payments to your creditors. By defaulting on your payments, you will be endangering your personal possessions from being taken away from you. For instance, secure loans like mortgage and car loans gives your lender the right to take your vehicle or foreclose your home. Ignoring your debts, not paying them off and pretending they will just go away is the worst thing that you can do.

On the other hand, if you choose to just send everything to your creditors and lenders without leaving anything for savings, you are also in trouble. Let’s say your disposable income can cover your debt payments without a problem. What if, something happens to your job to compromise your main source of income? What happens to your debt payments now? Also, how will your family survive? Or another scenario is a health condition. What if you found out that you need an expensive medical treatment? Will you put yourself further in debt just so you have the money to pay for medicines and medical care?

Both are equally important but another case in point is, what if your limited income cannot cover both your savings and your debt payments? That is how debt consolidation becomes a perfect option.

This type of debt relief option works to provide debt ridden consumers with a low monthly payment plan. You are not really reducing your debts so you don’t have to worry about the creditor not agreeing to the new payment scheme. You are merely distributing your current balance over a longer payment plan. In some cases, you end up paying more interest amount but given your limited resources, you really have no choice. If you are lucky to be granted a low interest rate on your new payments, then it will bring your monthly requirement even lower.

This lower monthly contribution will allow you to make room for your savings. The thing is, you don’t have to spend forever splitting your disposable income towards the two. As soon as you have grown your savings into an amount that can be an adequate safety net for you and your family, you can use all your extra money on your debt payments. That way, you make more significant contributions towards your debt to expedite your debt freedom. This time, if anything happens to your income or an emergency expense crops up, you don’t have to worry about defaulting on your debt anymore.

How Proper Financial Management Skills Can Get You Out Of Debt

April 25, 2013 by illinois

What people fail to realize is that debt relief is not enough to get you out of debt. You need to understand that any program will have to be partnered with proper financial management skills. Knowing and implementing these skills will also help you develop the habits that will keep you from growing your debt and stay out of any debt situation in the first place.

Probably your best bet to learn these financial management skills is to go through credit counseling. This type of debt relief program includes debt education that hopes to help individuals learn how they can avoid the mistakes that they made in the past. These are the mistakes that led them to the debt situation that they are current in. The best credit counseling agency will teach their clients the following:

First is how to make a budget. If you think about it, financial management is all about staying on top of your finances. You can do this by creating a budget. It will show your income and a detailed plan of where every money will go to. By plotting your expenses on this plan, you will be able to make sure that your limited resources will go to your priority expenses and not on impulsive buying.

It is important for you to define what should be included in your priority list. We sometimes get into a lot of trouble because we always make excuses regarding unnecessary purchases. We make a lot of flawed reasoning so we can justify spending for our wants. You need to discipline yourself so you will only prioritize your needs from now on.

You want to do this so that you can free up more of your income for your debt payments. Or if not, you can use it to build up your reserve fund – which is another skill that you have to develop.

Saving is not just your security net. It also keeps you from incurring more debt. When there is an emergency, you do not have to use your credit card or resort to borrowing from someone else just so you have the money to tide you over a crisis. You can simply pull out from the amount that you had been saving up for these types of situations.

Another habit that you have to develop is making smarter spending choices. As mentioned, what keeps us in debt are the excuses that we make to justify unnecessary purchases. Think twice before every purchase and make it a habit to stick to your budget. If there is a single doubt in your mind that a purchase is really necessary, put off buying it. While you wait, you can save up for it instead of going out of your current budget just so you can afford that particular expense. Try not to put yourself in a huge credit card debt mess if you do not have to.

All of these proper financial management skills that you will learn from credit counseling will help you grow your disposable funds so you can get out of debt faster. The best part is, you get to learn the right habits that will keep you debt free for a long time. It will lead to a whole lot of new habits actually. Just remember that debt really requires you to make certain sacrifices. You have to be ready to take them because the rewards of being debt free is so much greater than what you will have to give up.