Drowning In Debt? Learn To Swim With These Three Steps

March 28, 2012 By

Quite a few people these days feel like they are simply drowning in debt.  They’re looking at their credit card statements each month and wondering what they’re gong to do to appease their creditors and gain a little bit of financial security and independence again.  The great news is that almost anyone can lessen their debt loads and take one more step towards solid financial ground again.  Not everyone can be a millionaire, but nearly everyone can boost their cash cushion.  Here are three steps to “help you swim when you’re drowning in a pool of debt.”

Since this swimming analogy may work as a gimmick for the article, let me first apologize to those who think it’s goofy, because it kind of is.  And two, please don’t take this as specific advice for people.  Everyone is different, and everyone should do their research and own investigating for the best path to take when paying off their debts.  Ready?  Great, let’s move along.

Swimming Lesson #1: Learn To Tread Water

The first step you’ve got to take is treading water, which in this case means not taking on any more debt.  It is easier said than done, but getting rid of the credit cards for a while and focusing on sound financial maneuvers is better than adding to the balance each month.

It is odd how many people figure that their monthly payment is, say… $100 each month.  And so they go and pay $200 figuring double payments are good, right?  Usually they are if they fit your general financial plan, but it’s not very productive if you’re adding $100 of charges to the card each month.  Instead of being out of debt twice as fast as you could be paying the minimums, you’re just setting yourself back.

Don’t add to debt as you’re actively trying to pay it off.  Stop spending on your credit cards or other lines of credit that allow you to draw against them.  Keep credit to help you buy a car at a more affordable rate, or a house, or a rainy day. 

Swimming Lesson #2: Technology Is Your Friend, Start to Doggie Paddle

If you’ve read any articles of mine, you’ll know that I’m a big proponent of making use of the different technological tools available.  Whether it be online banking to keep track of any potentially suspicious charges, or smart phone apps to track spending and take care of deposits, I’m all about it.  You need to be careful, of course, and be sure that you don’t leave passwords exposed, windows open and account numbers listed on the screen. 

As long as you are careful, then you can make use of obtaining your credit report online through a reputable source, accessing your banking information, and making sure that your payments are put onto a regular schedule that you can monitor in just a couple of moments out of each day.  If you fall behind on your checkbook’s register, you can often get access to your recent expenses online so you don’t overspend.  The list goes on and on.  Being able to track your finances so quickly and easily can be maddening for some people who obsess over such things, but once these folks get a little bit more balance to their approach, this easy access can be a wonderful thing.

As with all things, moderation when you’re using the technology based solutions is necessary, and ensuring that the steps you take are secure is necessary.

Swimming Lesson #3: You Have Got to Have a Plan, Swim Laps

In the first point, I mentioned briefly whether double payments fit into your general financial plan.  If you don’t have a financial plan, why don’t you?  Is it a cost prohibitive type of thing?  Do you not want to go to a professional to get your finances sorted out and have to show them what you make, what you spend, and what you owe?

A point that I’ve made several times from my own experiences is that unless I actually plan out a strategy of spending, saving and repaying, I’m bound for so so success and just as much stress as ever. 

However, if I do the hard work of tracking every expense, identifying the essentials like food, bills etc, then I can easily identify how much extra I can put towards saving and repaying debts.  Without getting this in order, it’s a a train wreck waiting to happen.

Get Out Of The Pool

What are your plans to get your head above water and get your finances in order?  Do you have your own plan that makes these three steps pointless and utter nonsense?  If you do, please share your secrets for the others who are struggling with getting out of debt.

 

I want to thank you for reading this article and introduce myself.  I’m Derek, and I do most of the research and writing at thedebtonator.org, where we gather and make commentary on what we hope are the most useful and interesting links to articles and other blogs about dealing with debt and personal finance issues in one location.

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Signature Loans – A How To Guide

January 27, 2011 By

The loans offered to a borrower which uses his signature as an agreement of repayment are called signature loans. Due to increasing competition among financial institutions, they come up with innovative schemes to attract more customers. One such category is the signature loan which does not require the borrower to undertake any hassle associated with the normal loans.

Signature loans are applicable to borrowers having a good credit score. The borrower does not place any asset as collateral with the money lender. Since no assets are involved, the money lender’s processing is simplified. In any normal loan method, such as a secured loan the money lender needs to investigate the asset placed by the borrower.

The investigation includes verification of the asset, the asset value analysis and the asset value based loan estimation. These procedures take normally up to 6 weeks for processing. However, the signature loans can be sanctioned within 1 to 24 hours of application.

The requirement on the part of the borrower is that he/she needs to submit is a photocopy based personal identification, income proof so that the money lender can access the borrower’s repayment capacity and bank account details from which the money lender directly deposits the loan so that it is available to the borrower.

However, the signature loans or instant loans are considered risky by most money lenders since no security of repayment is assured. The money lenders have to make careful decisions regarding loan repayment policies and schedule. The borrower has to pay a significantly higher interest rate compared to the normal loans. The amount of money that can be procured with this loan is limited.

Bad credit signature loans offer a lot of advantages for those people who need money but are ineligible for applying for a normal loan. The borrower can use such loans to pay medical bills or some shopping purposes such as the purchase of a computer.

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Where Can I Get Secured Credit Cards?

December 25, 2010 By

Instead of getting unsecured credit cards for bad credit, people have started to look into getting secured credit cards. What they have to bear in mind though is that it’s up to how they use the credit that was extended to them and making each use and payment count. This is especially true if they want to improve their credit fast.

It would also matter from what financial institution you will get a secured credit card. Provided below are some of the banks that have been given a lot of positive feedback by their own customers.

  • Digital Federal Credit Union
  • Amalgamated Bank of Chicago
  • Suncoast Schools Federal Credit Union
  • Orange County Teachers Federal Credit Union
  • Orchard Bank
  • The Golden 1 Credit Union
  • Bank of America, NA
  • Plains Commerce Bank
  • First Premier Bank
  • Wells Fargo Bank
  • Emigrant Saving Bank
  • The Harleysville National Bank & Trust Corp.
  • First National Bank of Chester County
  • Malvern Federal Savings Union

If you have already chosen a reputable bank, then you have to look into several factors when choosing the right secured credit card for you and what features you want and those you want to avoid. Below are some of the criteria provided by bankrate.com that would be useful in helping you decide what type of card you need.

  • Class
  • APR (the interest rate)
  • Annual Fee
  • Purchase Late/Over Limit Fee
  • Grace Period (time before interest accrues after a purchase)
  • APR on Cash Advances
  • Fees on Cash Advances

By the time you are done applying for a secured credit card, you will realize that you did not go through much difficulty during the process, certainly not as much as you would when you apply for things like $5000 loans. As soon as you have the card, you have to take a look at its fees and interest rates so that you will not get surprised by the time your statement of account arrives.

Having great credit is your only passport in getting rid of bank loans for people with bad credit that have exorbitant fees. If your credit is not all that great and you don’t know what it takes to improve your credit score to help you avoid the high fees that a lender will charge for those with bad credit then you may want to learn about the credit score scale and also learn about some of the things that are considered as credit repair secrets.

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Card Features Not to Use

November 5, 2010 By

Your local bank probably has given you a great rate on a secured credit card through their company.  Because it’s your local bank, they also have zero fees and maybe even hand out rewards as well.  You use it responsibly and things work out great for you.

There are the others of you out there who just received an application in the mail or email and were desperate and quickly filled it out to just get a card asap.  You received it and began to use it as a credit card for regular purchases.  The rates are usually higher and there’s quite often an annual fee attached.

Once you receive a credit card, it’s not uncommon for these companies to mail you some “convenience checks”, which is basically a cash advance.  While this is great for a larger purchase, it comes with higher fees.

For example, you decide that you need an entire bedroom set, complete with a king size down comforter during the day after Thanksgiving sale. You pay for this with a blank check and plan to pay the balance immediately.  The high interest rate begins from the moment you use the check, so by the time you get the invoice in the mail, you have already accrued a hefty payment in excess of your initial balance.  You would be better off asking your bank for a $5,000 personal loan at a lower interest.

Besides these checks, your credit card company may also send you a pin number so you can access money at any ATM.  Very convenient for you, but this also comes with a hefty fee just for using the ATM.

Lastly, another lure is the security of having balance protection in the event of job loss.  Keep in mind that this only covers the minimum payment, so you’ll be having your interest rack up on the unpaid balance and you may find yourself looking for ideas on how to make quick cash just to pay the interest.

In summary, if you must use a secured credit card, try to use one from your bank.  Make sure you have no annual fee and if you must use an ATM, you could use your bank’s ATM for no additional fee.

With proper money management and investments into things like annuities you can maintain a secure and stable money situation in your life.

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How to get a $5,000 personal loan

October 28, 2010 By

Almost all of us need $5,000 immediately. A lot of us has undergone and will undergo this need that is why you don’t have to feel bad about it. Fortunately there is something that we can do about it.

In the past years, competition have grown along with the increase in number of lenders. They are all trying to surpass one another in terms of their offers and products and in the end, the common man benefits from all these especially when he wants to get loans with no credit check overnight.

Overnight loans are usually needed for emergencies like medical expenses, unexpected car trouble, or maybe the need to travel on short notice because of a trial in the family. So long as the loan is used in the best way possible, it could work to your advantage.  More than likely you are not taking out the loan to make any long term investments in your financial future or because your buddy just gave you a tip on how to win the lottery guaranteed and you want to invest it in that.

Recognize the loan for what it is and nothing more. It’s a short term loan and the money should be treated for what it is. Overnight personal loans come with a corresponding high APR and some fees but this will only hurt your pocket if you won’t be able to pay on time. You have to make sure that before you take an emergency personal loan you will be able meet the demands of the lender as far as the due date and the amount due.  After all you can probably do without that new computer you have been wanting for a month or two more.

Remember that competition is rampant among lenders therefore make it work to your advantage. Do not sign up for the first thing offered to you but rather take the time to canvass other options that other lenders may have up their sleeves. You might also want to look into getting an unsecured signature loan. This is the only way for you to ensure yourself that you will get the best offer that is out on the market.

Every time you take a loan, always think everything over. You have to make sure that you’ll capably pay for it.

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