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Is Debt Always A Bad Thing?

October 2nd, 2018 Posted in Credit and Debt
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Is Debt Always A Bad Thing? - celebrating financial freedom image

Could debt actually improve your life? Image licensed under Creative Commons.

Is debt always a bad thing? Many of us automatically assume debt is a hugely negative state of affairs, and while it’s true that unmanageable debt is frightening, it may surprise you to learn that some debt is actually positive. Often treated as a dirty word, most of us can’t avoid having some form of debt, while some try to actively avoid it.

And yet not all debt is created equal. There are some positive forms that could help you reach your goals quickly. You just have to know how to use it. Here’s how the right kind of debt can get you ahead of the financial game…

Debt Can Help You Make Money

It may sound hard to believe, but the right kind of debt really can help you to make money. The key is not to go into debt for consumer items you couldn’t otherwise afford, like that designer bag or new iPhone. Instead, use debt as a powerful tool to help you reach your life goals. Invest in an asset – like a house or apartment or even for something like doing an MBA and you’ll be channelling money into something that will pay you back. If you’re clever about the property you buy – selecting an up and coming area, negotiating a good purchase price armed with data from sites like MousePrice– then the value will rise over time. When you’re ready to sell, you will have accumulated a profit, even with the mortgage balance to settle. If you go into debt knowing that you’ll get greater value out of it further down the line then it’s a positive investment.

It Can Be Cost Effective For Purchases

Interest rates are at historic lows right now, so if you want to do something like buying a car, it’s actually better to use credit to make the purchase than dipping into savings and investments. If you have money in tax free savings like ISAs or even stocks and bonds, it doesn’t make sense to cancel out the returns you get from them in order to make a purchase. Considering your overall financial picture, you’re better off using credit to pay – especially if you lose tax benefits by liquidating an asset.

You Can Fill In Cash Flow Gaps

For those who have a portfolio career, are self-employed or starting their own business or work in a job that is highly dependent on commission, life often involves a fluctuating income. When used responsibly, short-term loans can get you through time periods where cashflow is lean – provided you use the boom times to pay them off. This regular repayment schedule will also help to build a really good credit rating, as lenders can see a history of responsible borrowing. You will then be offered better rates, reducing the overall cost of borrowing. This creates a virtuous circle of good credit that benefits your financial situation.

Debt doesn’t have to be an intimidating or shameful prospect- if you learn to use it responsibly, it can really be a force for good in your life.

  http://credit-n.ru/offers-zaim/glavfinance-online-zaymi.html

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3 Types Of Financial Crises (And How To Deal With Them)

September 26th, 2018 Posted in Credit and Debt
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None of us are immune to financial crises. Life often throws a spanner in the works, and it can throw us into a state of disarray, especially where money is concerned. It’s tough, but there are always solutions to the problem.

In this article, we will look at three types of financial crises. Some of the same rules apply for each, so follow the linked article for general coping advice in a financial crisis. However, there are extra steps you can take to alleviate the damage in the crises presented here.  While we hope you never have to endure any of the following, we hope the advice we give proves useful to you if you do.

3 types of financial crises - financial crisis wordcloud

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Crisis #1: Divorce

Not all marriages work, and this can be costly on both an emotional and financial level. You will be forced to live on a lower income when you find yourself on your own, and you may find yourself in a heated battle over possessions.

Tip: While still married, it’s always worth taking out a prenuptial agreement. This will protect your assets should divorce take place, and will afford you some level of financial security. This will ease the stress of the divorce, as you won’t have to pay court costs to regain possession of your goods should your former partner claim ownership. After the divorce, you may also want to downsize into a new property, unless this has already been forced upon you at the breakup stage. This will help you financially, as you should have less to pay on bills, and on an emotional level, moving somewhere new may also help you escape any bad memories that your current home holds.

Crisis #2: Unemployment

Suddenly finding yourself without a job can be traumatic. It doesn’t matter why you are unemployed, be it through your own fault or as the result of a redundancy, because either way, you are going to find yourself with a reduced income in the months to come.

Tip: Ensure you get the benefits you are entitled to. While being unemployed sucks, you are entitled to housing and unemployment benefit, both of which will alleviate the burden. There may be other benefits open to you, so check with your local government office for advice. The next thing to do is get back on the job ladder. Get your cv in order, and start browsing the job ads again. There is some excellent advice here to get you back into employment.

Crisis #3: An illness or an accident

Being unwell is bad enough, but there are the financial repercussions to deal with. UK readers have the advantage of free health care, so there shouldn’t be medical bills to consider, although readers in other provinces may have this burden. Being away from work can also lead to a lack of income. You might lose your job as a result of your health crisis, or you may have to live on a lower income for a while if your job doesn’t offer sick pay. Therefore in the event of an accident, it is important to speak to a car, truck or motorcycle accident lawyer on a way forward.

Tip: Again, speak to your local government office for any benefits you are entitled to. Especially when off work on a long-term basis, you will be entitled to statutory sick pay (when in the UK), and possibly other benefits as well. If you are housebound, there are ways you can generate some income too, so you may want to consider some of the money-making opportunities here to tide you over.

Finally

To prepare for a crisis, ensure you put money into an emergency fund. This will be useful if and when disaster strikes. And if you are going through a financial crisis now, follow our tips if they were applicable, and get any help you need, such as through a debt charity or your local citizen advice centre. You are going to have to budget what you have, and you will have to curb unwise spending, but there are steps you can take in any circumstance to get yourself back on your feet. http://credit-n.ru/offers-zaim/joymoney-srochnye-online-zaymi.html

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The Road To Good Credit

September 6th, 2018 Posted in Credit and Debt
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One of the things that you don’t necessarily learn at school is how to improve your credit score. Why is this important? The health of your credit score can dictate whether or not you have a difficult time acquiring a loan, a car and even a mortgage. So needless to say, understanding how to look after it is a pretty important life skill.

It’s easy to fall into the trap of thinking that because you’ve never needed to borrow money before then your credit profile must be great but this isn’t always the case. In order to build up good credit you need to be able to show lenders that you’re a responsible borrower and not a risk to lend to. I mean, if someone’s going to let you drive away in a car worth thousands of pounds, they want to make sure that you’re reliable and able to stick to the terms of your contract.

Credit reference agencies will keep a record of your credit information, and this is what lenders will use when assessing whether or not you’re going to get that car or mortgage. Having good credit will also open you up to the best deals and interest rates, so you’ll ultimately save money in the long run.

Likewise, bad credit can mean higher interest rates as you’ll generally be seen as more of a risk. It can be very worthwhile to read up on the subject, such as this guide on Stoneacre, to help you understand the pitfalls of a bad credit profile.

Understanding what can influence your score ensures that you can take the necessary steps to repair it if required. There are some simple steps you can take to make sure you keep a good credit profile, several of which are outlined in this handy infographic below.

 

The road to good credit - infographic image http://credit-n.ru/offers-zaim/zaymer-online-zaymi.html

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New study: the best & worst states at managing debt

April 17th, 2018 Posted in Credit and Debt, learning about money
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In the process of reaching your life goals, you might accumulate debt along the way. Millions of Americans carry student loans, credit card debt, and mortgages. One important factor many don’t consider is how geographic location impacts your overall debt burden.

A recent study released by Credible looked at 540,000 borrowers from all 50 U.S. states analyzing the average monthly debt payment (credit card, student loan and housing). The information about debt-to-income ratios gives us an idea about which states might provide you a financial advantage.

New study: the best & worst states at managing debt - States map image

Low Debt-to-Income States

According to the report, Michigan, Arkansas, Delaware, Kentucky, and Missouri had the lowest debt-to-income ratios. For example, Michigan residents spent just 25.3% of their monthly income on credit card, student loan, and housing payments. Michigan had the best score of all in the study.

High Debt-to-Income States

On the other end of the spectrum, Hawaii, Washington, Colorado, Oregon, and Montana had the highest average debt-to-income ratios. If you live in Hawaii, you spend an average of 36.2% of your monthly income on debt payments. That means for the average annual income of $56,889 in Hawaii, $20,593 goes towards loan payments. Hawaiians pay more debt per dollar earned than any other state in the country.

What Causes the Difference?

Are Hawaiians spend happy and residents of Michigan frugal by nature? Maybe, but the full explanation for the differences probably has more to do with macroeconomic factors in each state. In Michigan, the lower cost of living shows up as lower housing, credit card, and student loan payments. Needless to say, housing costs in the Hawaiian islands are very high.

Where You Live Affects Your Debt Load

Where you live affects your debt burden, and the data proves this point. All other things being equal, the state you live in can have a significant impact on your financial health.

Read the Credible report: Burdened by Debt: The Best and Worst States at Managing Debt. http://credit-n.ru/zaymi-online-blog-single.html

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Paying Back Student Loans

November 19th, 2012 Posted in Credit and Debt, student debt, student finances
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Student loan debt can be crippling unless you handle it the right way. If you understand your situation and know what to do, you can eliminate your debt sooner and live more comfortably without that monkey on your back.

Here’s how you can achieve this:

  • Be willing to sacrifice

Getting out of debt requires discipline. You must be willing to adjust your lifestyle to make your financial goals happen. This means evaluating and eliminating certain spending behaviors until you’re debt-free. To do this, make a budget and look for items you can eliminate. Generally, this means you will have to reduce the number of times you eat out, limit vacations and time away from work, buy clothes only when you absolutely need to and postpone buying that brand new TV or Smart Phone. While it may be hard to do at times, realize that the sacrifice you put in today will pay off big in the future.

  • Find creative ways to make more cash

One of the best ways to pay off student loan debt is to find additional sources of cash. While the economy continues to be flat, there are opportunities to make money. For starters, you can use websites like Craigslist or eBay to sell old clothes or items you don’t use. Further, you can take on small, on-the-side jobs like doing yard work, cleaning homes, or babysitting. Lastly, you could find a part-time job delivering pizzas. Ultimately, no matter how you make it happen, your hard work will pay off as you are taking the steps necessary to become debt-free quicker.

  • Pay off private loans first

Private loans tend to have higher interest rates. Many times, these rates are variable rates, meaning they may increase in a few years. You want to pay off these private loans before the interest rates increase, adding onto the already large balance, making it difficult to pay the bill.

  • Know your options

There may come a time where you suffer a hardship and will need assistance. When you encounter this, call your lender and inform them of your situation. They have options available for borrowers, which includes a temporary forbearance in some instances, which allows you to hold off making payments for a set period of time. You may also want to look into debt consolidation to reduce monthly bills. Further, with the Income-Based Repayment Plan, you only have to make payments up to 15 percent of your pay. To take advantage of these programs, it’s imperative that you communicate with your lenders. They only want to help you. If you don’t keep them updated, you can miss out on options that may be available to you.

Paying off student loan debt may seem like a colossal task, but with proper planning, hard work and sacrifice, you can make it happen. By following these steps and evaluating your finances regularly, you can find ways to cut costs and pay down these bills quicker. In turn, you can gain confidence in knowing that these small steps now will lead to a debt-free future.

Jeffery Sterner writes and blogs about personal financial well-being and issues that influence it for Debt.org, America’s Debt Help Organization.

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