Debt counseling and management - How to avoid the debt trap

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Simple Ways to Solve Debt Burden
Getting Behind

Getting behind on your debts owed can be a very frustrating and trying time for you and your family. Depending on how far behind you are, there are other repercussions, such as your credit rating, that will affect you further down the road.

Examine Why

Why did you get behind in the first place? This is a very important question in helping you understand ... Read debt consolidation article



Credit and debt counseling - Start by evaluating your expenses
Many people who seek the advice and guidance of debt counsellors are driven to them in the first place by fear and ignorance - two powerful emotions which often mask the real scale of the problems.

In many cases, what you made have been led to believe is a ''bad' level of debt, may instead need only some careful reorganisation and a new set of mortgage priorities.

Most adults... Read debt consolidation article



Debt counseling and management - How to avoid the debt trap
Avoid the Trap When You Consolidate Debt

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To consolidate debt is a great idea with a trap built into it. The technique described here helps everyone in debt, but if you have an ongoing credit card debt you desperately need this article.

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* Part I Don't get into debt. Ways to avoid it.

* Part II The big advantages of student loan consolidation

* Part III This article

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The Trap

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When you consolidate your debt, will you celebrate your freedom from credit card debt by going out and buying more on your credit card? Do you really want to live your life in debt, or would you prefer to take charge of your finances?

It's too easy to consolidate debt. If it hurts to get rid of your credit card debt you'll find it easier to resist getting into debt again.

Are you getting married? If your partner likes to live in debt, and you want to become a millionaire, who is going to give way? Most divorces are caused by money arguments. Discuss it before you marry.

You should consolidate debt if you have no ongoing credit card debt. The trouble when you consolidate debt is that the whole thing loses immediacy when you have thirty years to repay.

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List your debts

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Make a table showing all your debts, the amount still owing and how much you pay per month. Call the last column "Damage" and calculate it by multiplying your repayments by a hundred and dividing by the amount that you owe. The larger the damage, the more harm it is doing to your finances.

Imagine you had a fictitious list like this

Mortgage , $100000 , $500 , 0.5

College loan , $50000 , $333 , 0.66

Personal loan , $10000 , $100 , 1

Car loan , $10000 , $360 , 3.6

Visa Card , $4000 , $250 , 6.25

Master Card , $2000 , $200 , 10

You should realise if you consolidate debt then nearly all your monthly payments will be interest, so your debt won't shrink much. When you pay an extra $100 your debt shrinks by that amount, and you won't keep paying interest on it either.

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List your surplus

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Using the methods in part 1 to earn and economise. Work out your surplus each month after all your expenses. Suppose you can spare an extra $456 each month. If there are two of you working, try to use all of one income to get out of debt, because you won't always have both incomes.

See which damage figure is highest. That is the haemorrhage you must stanch first. In this example it is your Master Card.

Add your $456 to your monthly payment (mostly interest) of $200. You will shrink your debt by more than $456 because of paying less interest. You'll have smashed that debt in about three months.

Now your self-discipline comes into play. Don't go out on an expensive celebration! After 3 months you'll be starting to build the financial discipline to make you a millionaire.

You've been paying $656 per month that is now surplus, so you add it to your visa account. That makes your repayments $906 each month. You'll get rid of your Visa debt in a little over four months.

Now you can pay princely sum of $906 + $ 360 = $1266 per month on your car loan winning free in less than eight months... quite a lot less because of shrinking interest payments.

To cut a long story short, when you start to concentrate on your mortgage you'll have $1266 + $100 + $333 = $1699 to add to your mortgage repayment of $500 per month.

When you start making repayments of $2.2K /month your twenty year mortgage will suddenly shrink to less than four years. You'll have everything paid off before your first child is ten years old.

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Is it worth the effort?

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You may think that the big benefit is freedom from debt. The biggest benefit is the mindset that you've developed as you escaped from debt. You are now in charge of your finances... not letting the loan parasites continue to leech you of all your money.

But it gets better. An Australian kid used the above method to get out of hundreds of thousands of dollars of debt, then became a millionaire while still in his twenties. He no longer needs to work, but he has a hobby of showing people how to become millionaires.

There's just one problem. He isn't interested in helping people who can't save up $20 thousand to invest, because he says they aren't trying very hard. Now if you take your $2.2 thousand, and start saving for $20K that will take you less than ten months.

He says that mindset is everything. Now you have the right mindset and have saved up $20K...

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Get more information before you start building your millions. Get more information before you start building your millions. See parts i and ii about debt consolidation.

Better than student loans

Consolidate debt.

At 65, Ian McAllister has left his run a little late. He still intends to have a go, but wishes he had learned these ideas earlier. Read more at

http://studying-techniques.com/student-loans.html

http://studying-techniques.com/student-loan-consolidation.html

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Debt collection - Why moms have an upper hand

If you are a mom, you can be a successful bill collector. In my opinion, if you are a mom, you are superwoman and can do anything you set your mind to. Some of the things moms and bill collectors have in common are:

Teaching Being assertive and firm Being in charge of the situation Taking initiative Being organized to a fault Not taking any talking back Follow up

When you are a bill collector you need to teach debtors what, why and when certain things happen as a result of their action. Such as what will happen if they don't pay their bill. It could be reflected on their credit report, they could get dunning letters and collection calls at home or at work, they may end up in court, or with garnished wages. There are circumstances for everything we do. As a mother, you spend each day teaching this to your children.

You must be sensitive to a debtor just like a small child. I am not saying treat a debtor like a baby, but remember that a debtor is not happy about the situation that has caused you to contact them. They will be embarrassed and angry and you are the perfect person to take that out on. If you can understand this before you make a collection call, you will know that you need to help the debtor not berate them. Be sensitive to the fact that they are embarrassed and maybe do not have the funds to pay in full. Be understanding and helpful and you will collect more money. A good way to do this is to put yourself in the debtor's shoes before you ever make a call. I would say this is easy for most of us to do; we have all had situations beyond our control that may have caused us to fall behind on bills and have to make a decision on whether to go to the church to get food for our children or use the cash we have to buy food. Then when the bill collector calls and yells at you and tells you that a debt must be paid in full, how would you feel? I would feel like swearing at the person who called me and never paying them, only because they didn't even try to understand or accept a partial payment or hear my situation.

Not every debtor is in a bad situation and just can't pay. There will always be the debtors who are always past due, who are repeat customers. Once you have figured out who they are by keeping your detailed organized notes on your collection efforts, you can move to the next step with those debtors. Just like when your kids become school age children from toddlers. Social skills that we teach our children can be most helpful when making collection calls. When you walk into a room and your child is sitting there eating the dirt from the plant and the plant is tipped over with dirt everywhere, you (hopefully) resist the urge to scream, and calmly say to your child, "What happened here?" To which the child replies, "I don't know", or "The dog did it". Think about what you do, you normally stare at the child, trying to absorb this nonsense, and counting to ten so you don't flip out. Do the same in a collection call, when you call a debtor and they give you an excuse or answer that floors you, take a breath and ask a simple question. For example, you call a debtor and say, Hello, this is Michelle, and I am calling from ABC Collections about your balance due of $100 with Dr. Smith's office. I am calling to take your payment over the phone today for free. They reply, "I paid that". Then there is silence. You can then ask detailed, simple questions that will alert you as to if this is a fact and what your next step should be. You can cheerily say, "Oh Great! When did you pay that? Did you mail the payment or make it in person? Was it a check or money order? What was the check number? What was the amount you paid?" Keep it simple and you will get the results you are looking for.

You want to be in charge of the call at all times. You don't let your child talk back to you or be disrespectful, and you shouldn't let a debtor either. Once you ask a debtor a question, stop, and let the silence sit there. Remember, if you are uncomfortable with this silence, so is the debtor. Let them speak first; this is how you stay in control of this situation. No matter how long or how uncomfortable the silence is, let them break it. This is very hard, but I did it for many years and it truly works. They will tell you more than you need to know or they will hang up on you.

By having a child and deciding to raise it, you have taken initiative on creating, molding and teaching a person how to be a good, caring, honest person. Being a bill collector takes some initiative since you have to initiate most contacts, by letter and/or by phone. You have to be in charge of the situation, you have to negotiate, be a mediator at times and offer a solution. You want to create in the debtor, someone who will pay their bills or at least the bill you are trying to collect in full, or on a scheduled payment plan, without you having to contact them every day. If you have ever toilet trained a child, you know how frustrating it is, and so I have no doubt you can do this.

Being a parent we have to suddenly carry a huge bag around with everything but the kitchen sink in it. Long gone are the days of a cute, stylish, small purse. Along comes the big bag with changes of clothes, bottles, pacifiers, snacks, diapers, wipes, bibs, changing pads, toys, books, aspirin (for us), sweatshirts, shoes, Vaseline, powder, tissues and who knows what else ends up in there. We have zip lock bags to put soiled diapers in, we are ready for anything! Being a bill collector requires the same type of preparedness and organization. Be prepared for anything, because anything can happen. You have to be alert, be calm, have answers and solutions and take meticulous notes. I always pretended that every single debtor I talked to, any of the paperwork or notes I had on a call, were going to be reviewed by a judge. This caused me to always be very thorough, which brought me great success. So, when you do any collection work, just pretend you will have to provide this information in court, and you will know what questions to ask to get the information you need.

Being a woman bill collector is especially frustrating when a male debtor decides to give you a hard time, because, after all, you are a woman. My experience has been that they will laugh at you, call you nice names such as Honey, Sweetie, Dear or not so nice names that I can't type here. They will ask for the man in charge, they won't believe anything you say, and will laugh the whole thing off. Guess who is laughing in the end? Keeping your mouth shut when you get this treatment from a man who thinks he has to act this way to be a bigger man, is the best idea. Continue with your collection efforts, do everything you say you will do, and see who is laughing when they try to buy a new car in a year. Thank you Honey.

Follow up is key in any business, but especially collection work. Your main job is to make sure everyone is paying; no one wants to pay and even if they say they will pay it is up to you to call and follow up on each payment promise. When someone tells you they will pay on Friday, send a letter confirming the payment, you can even include a payment envelope, how easy for them! Call on Friday to verify the check was sent. Call on Tuesday when you don't receive the check, to get a check number and verify which day it was mailed. If it wasn't' mailed, offer to take a payment over the phone. You can always offer a solution.

Michelle Dunn has over 17 years experience in credit and debt collection. She has written 5 books in her Collecting Money Series. For more information on Michelle's services or to order any of her books please visit www.michelledunn.com & www.credit-and-collections.com


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