Dont Save Money - Pay off the debt

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Debt consolidation - Information and tips on consolidating debt
Millions of consumers across the globe are searching for a way out of debt. Credit card bills, loans, and other unsecured debts have left many people unable to meet their monthly expenses. If you have found yourself in this position, don't feel alone. High interest rates and late charges can make paying down your credit card balances nearly impossible. Debt consolidation companies can help you pay... Read debt consolidation article



Credit and debt management advice
Today's consumers benefit drastically from the usefulness of credit. Credit cards are especially useful for large purchases, emergency situations, reservations, identification, and protection from fraud. Unfortunately, millions of consumers abuse credit cards beyond their financial earnings. The use of credit results in costly interest payments and late fees, impulse buying, overextended lifestyle... Read debt consolidation article



Dont Save Money - Pay off the debt
No, that's not a misprint. Even though falling interest rates are good when you want to get a loan, they are bad for people with savings accounts.

In this economy your best investment, the best place to put your money is into paying off debts. Think of it as investing in your debt because that is exactly what you are doing.

If you put $1,000 into a bank savings account earning 2%, at the end of a year you will have $1,020.

If you carry a $1,000 balance on a credit card with a 19% interest rate, and you pay the minimum monthly payments, at the end of one year you will have paid $190 in interest.

If you get $1,000 in a tax refund, small inheritance or from somewhere else you now have a choice to make. You can earn 20 bucks in a savings account or save $190 by paying off that credit card. Keep in mind that your 20 bucks is taxable income so you'll be left with $15 or so after taxes.

Do you need a savings account for emergencies? That savings account may be causing those emergencies! Think about it this way...

If you are earning money in a savings account at 2% and paying anything over 2% on your debts you are sliding backwards financially and you'll never get ahead. It's basic mathematics.

If you earn 20 bucks for five years in your savings account you'll have $100. If you pay $190 in interest on your $1,000 credit card after five years you will have paid $950 in interest charges.

In other words you have wasted, lost, burned or flushed $850 by having a savings account. ($950 - $100 = $850) OUCH!

What can you do? Pay off that credit card and use that as your emergency fund. It's not the best way to do it but it's better than earning 2% and paying anything over 2%.

So, while the stock market is on it's roller coaster and the economy is challenged your best investment, bar none, is your debts! Get them paid off!

Leo J. Quinn, Jr. owner of http://www.LeoQuinn.com is a financial educator from the Albany, NY area. For over eight years he has been helping thousands of people get control of their finances and get out of debt in a fraction of the normal time. He has a special offer for readers of this newsletter at http://www.1shoppingcart.com/app/adtrack.asp?AdID=132551

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Debt Free and Carefree living

Are you still clearing a mountain of debt amassed last Christmas or even during last year's summer holiday?

For those of you who make financial plans, who budget and save, you can skip this article. For those who get a little carried away, who regularly spend more than they can afford, this article is for you.

Money worries affect us to the core of our beings - especially when such worries are generated by a lack of this resource. (Yes, having money also brings worries albeit of a different kind).

It is so very easy to spend more than we have, indeed it has become a way of life to many. Each month Peter is robbed to pay Paul. Our salary cheques are spoken for as soon as they hit our banks. People find themselves unable to clear their credit cards each month and then are forever playing catch up with high interest payments.

What can be done? The first thing is to face the situation. A full financial inventory is required listing everything you own of value, savings, bank accounts and other assets and matching that against everything you owe. Make sure you know what your monthly income is against your monthly outgoings. It is essential that you have the full picture before planning your next move.

The severity of your financial situation will dictate your next move. If your assets exceed your liabilities it may be as simple as arranging a loan from a responsible lender, such as your regular bank, and using this to settle the high interest credit card debt leaving you with one manageable monthly payment. We'll talk about the way forward after you have taken this step in just a moment.

If it is not possible for you to obtain a consolidation loan you will need to manage your existing debts responsibly. The first thing to do here is check the interest rates being charged and shop around for better deals. It will be possible to transfer balances across to new lenders - provided your credit record has not been blemished by irregular and late payments or defaults.

At all costs it is important to take advice from a qualified person before entering into any arrangements with "alternative" lenders.

And, of course, there is the worse case scenario that when you do your financial audit you find that you have insufficient assets and insufficient income to meet your debts. The important thing to remember is that your problem will not go away. Ignoring bills and reminders will only make your situation worse. If your position is such that you are going to struggle to make the minimum payment, let your lender know. Contact them before they contact you and, on the whole, you will find them to be understanding and helpful. Put together a repayment plan that you can meet and send this to your creditors for agreement.

When you have done all you can to improve the immediate situation you must begin to repay the debt. The debt bearing the highest interest rate is to be repaid first, (this is your number one priority debt) with minimum payments only being made on other outstanding accounts. To protect your credit rating it is essential that at least minimum payments are made, on time, each month.

Once your number one priority debt is cleared you focus on making the same additional monthly repayments to the next most expensive account and continue with this until all debt is cleared.

Smart individuals will retain at least one credit card and use this each month, leaving their salaries on a high interest earning deposit account, only withdrawing funds when the card balance is due to be cleared. They live on borrowed funds for up to six weeks at a time whilst earning interest on their own funds. Clever.

However, you may find it easier at first to put all credit cards away until such time as you have mastered a new way of being around money.

Getting yourself clear of debt could take months or years depending on the level of indebtedness and the amount of disposable income you have to make repayments each month. Once you are debt-free the secret is not to find yourself in this situation again.

It is important to understand how the debt amassed. Do you not earn enough to sustain your current lifestyle? Are you spending more money than you need on mortgages, rent, utilities, groceries? Do you take the time to look at prices and shop around? What can you cut out of your life which has a cost and which is not essential? When you go on a spending spree, what need is this meeting? How else can you get this need met? It may be that your cost of living is high because of your working hours e.g. when working long hours it is easier to pick up a take away than to prepare a meal. It may be that you will want to consider seeking qualified help if over-spending is a behavioural problem or addiction.

Just making the effort to get out of debt is rarely enough. Real work is required to change your relationship with money to prevent the same situation recurring in the future. Building a new relationship with money and "things" is part of a personal growth and development path which we are each ready to follow at different stages in our lives. Some learn to handle money very young - others never do.

Donnie Harrison is a personal coach and professional mentor who works with individuals building professional practices, especially in the healthcare sector. Further information from http://donnieharrison.com


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Dont Save Money - Pay off the debt
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