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How To Reduce Your Spending

Pair of scrissors cutting the word SpendingIs your most important goal to get out of debt or to buy a new car? Would you like to buy a house or a vacation home or send your kids to college? Regardless of what your goals are, you need to know how to cut your spending so you can put away more money to realize them.

It all begins with goal setting

It’s tough to know how much you need to put away every month until you’ve defined your goals. Let’s suppose one of your short-term goals is to get out of debt and that you currently owe $5,000 on three different credit cards. If you want to pay off all that debt in two years, you will need to make payments of about $208 a month. This means you will need to cut your expenses by that much or more.

Reducing your spending

Now that you know how much you need to decrease your spending, the next step is to make a budget that will get you there. You may want to use an online budgeting tool or smart phone app such as Mint.com or You Need A Budget. In either event, you’ll want to track your expenses for two to four weeks so you can see where your money is going. Once you do that, it’s time to sharpen your pencil and start making cuts.

The low hanging fruit

You’ll find that some of your expenses such as your rent or car payment will be difficult to reduce short term. But there are areas where you should be able to reduce expenses almost immediately. They’re what I call the long hanging fruit. For example, how much do you spend a month on groceries? I’ll bet you can cut that by at least 20%. There is any number of books available on Amazon and Barnes & Noble that could teach you how to eat more frugally.

Another area where you should be able to reduce expenses is in entertainment. How often do you eat out, go to movies, or just hang out with friends at a club or bar? Chances are you could save as much as $100 a month just by cutting back on entertainment.

Check out your other categories

Take a hard look at every category in your budget. I’m willing to bet there are other areas where you could easily reduce your expenses. How about clothing? Do you really need to spend an average of $150 a month on clothes? Probably not. How about your cell phone plan? Could you get by with fewer minutes and less data? I have an AT&T plan that gives me the minimum amount of data. The way I can make this work is by using my iPhone to access the web as much as possible via a Wi-Fi hotspot so that I’m not connecting through AT&T. Another area where you might be able to decrease your expenses is your auto insurance. Go to a site such as esurance.com and get some competitive quotes. You might be surprised at how much you could save just by switching companies.

I admit that learning how to decrease expenses can be tough and not much fun. But if you just keep reminding yourself about the goals you’re working towards, you should find it a bit easier.

How to decrease your debt

If you feel like you’re sinking into a quagmire of debt, you should know that there is help available. There is a company that can probably decrease your debt by 50% or more and help you become debt free in just 24 to 48 months. You can get more information by calling our toll-free number or by filling out the free quote form on this page.

Six Nasty Truths About Your Personal Finances

arguing coupleTimes have been tough for many families for the past six years – or since the housing market meltdown of 2007. This is why so many people are now paying much closer attention to their personal finances. If you are a member of this group, you may come across some truths that you simply don’t want to accept. The reason for this is because it means taking more responsibility and making the hard decisions you would just as soon leave to others.

The six nasty truths

  • You can’t have everything you would like to have
  • Financial institutions are not your friends
  • No one will teach you about personal finances
  • You may be your own worst enemy
  • You need to stop watching TV
  • Personal finance isn’t tough

You can’t have everything you would like to have

Just about every third commercial on TV will tell you that you can “have it all.” It’s like your parents probably told you that you could be anything you wanted to be. Unfortunately, neither of these is true. If you’re 5’6″ tall and not very well coordinated, you will never be a professional basketball player. Similarly, you can’t have everything you want. If you want to stay out of debt – which is a very good thing – you will need to make some very hard choices in terms of how you spend your money. You will either have to give up some things you want or max out your credit cards and spend years as a slave to your debts. You may not be happy to read this, but the sooner you understand this the better.

Financial institutions are not your friends

The credit card companies and even investment firms are there for one reason and one reason only – to make money off of you. Despite what they might tell you, they really don’t have your best interests at heart and will charge you any fee they think they can get away with. For example, your bank may add what it calls ” courtesy overdraft protection” to your account, which can cost you hundreds of dollars. If you have a fixed-rate credit card, don’t be surprised if you get the mail one day and learn that your interest rate has changed. You must constantly look out for your own best interests and not let those financial institutions nickel and dime you to death.

No one will teach you about personal finances

If this were the best of all possible worlds, our schools would teach us about personal finances. But most schools don’t. For that matter, even your parents might not have told you much about handling your finances. This means that if you’re like most people you will need to learn the basics of money management yourself. A good first step would be to go to your public library and check out a few good books. Some of the best of these are, The Total Money Makeover by Dave Ramsey, Smart and Simple Finances for Busy People by Jane Bryant Quinn or The Wealthy Barber by David Chilton. If you don’t read some of these books and make a concentrated effort to learn more about personal finance, you will learn by trial and error, which can be a very expensive way to learn.

You may be your own worst enemy

If you find yourself deeply in debt or your finances simply aren’t what you wished they were, you can’t blame some outside source. Look in a mirror. The person staring back at you is the person who was responsible for your problems. You need to accept what you’ve done and then do what’s necessary to get your personal finances back into order. This includes getting your credit score, [Read more...]

6 Smart Tips For Dealing With Debt Collectors

Debt collector hollering into micIf you’ve ever fallen into the clutches of a debt collector we don’t have to tell you how frustrating and infuriating this can be. A really evil debt collector will stop at nothing to collect from you. He may be calling you day and night or even at work. He could be threatening to sue you, to discuss your debt with your friends and family or even worse. What’s behind this is a secret of the debt collection industry. It’s that debt collectors are almost always paid on a commission basis. In other words, their earnings depend on how much they can extort from you. If they can’t successfully bully people into paying their debts, they could literally earn nothing that month. So, their entire focus is to move money from you to them using any means possible.

Tips for dealing with debt collectors

  • Don’t panic and don’t say much
  • Know your rights
  • Dispute the debt in writing and ask for verification
  • Be prepared to negotiate
  • Try to have the debt removed from your credit reports
  • Keep good records of all phone calls

Don’t panic

Stay calm when you receive that initial phone call. No matter how threatening the collector might sound and no matter what he says about your debt, try to stay cool and don’t say very much. Just listen and take notes. The more you talk, the more ammunition you may be giving the collector. Let him do almost all the talking. Be polite and don’t panic. This might not even be a debt you really owe as the collector has it by mistake.

Here’s a video with some good tips about what to do the first time a debt collector calls.

Know your rights

A few years ago our Congress passed the Fair Debt Collection Practices Act or FDCPA. This act limits what debt collectors can do and spells out what they are not permitted to do. For example, they are not allowed to.

  • Call repeatedly to harass you
  • Call you prior to 8 a.m. or after 9 p.m. unless you agree
  • Contact you at work if you have not given permission for this
  • Misrepresent the amount you owe Claim falsely to be an attorney or a law enforcement official.
  • Use obscene or abusive language.
  • Speak with anyone but your attorney or you about your debt.
  • Falsely claim to be the representative of a credit bureau
  • Intimidate you by threatening to sue unless the agency actually plans to take legal action
  • Threaten to garnish wages or seize property unless they really intend to do it

If the collector violates any of these restrictions

In the event that the debt collector violates any of these rules, you could file a complaint with the office of your state’s attorney general. If it gets really bad, you could hire an attorney and sue the debt collection agency for up to $1000, plus your lawyer’s fees and court costs.

Ask for verification

Here’s another secret of debt collection. Debts can be sold and resold numerous times. Most lenders will wait six months hoping that you’ll pay your debt. If you don’t, they will then bundle it up with a bunch of other debts owed by other people and sell it to a collection agency. In most cases, they only get pennies on the dollar. For example, your $500 debt might be sold for less than $100. The collection agency that purchases your debt could turn around and sell it to yet another collection agency that then sells it to a third agency.

This means the first thing you must absolutely do when contacted by a debt collector is dispute the debt in writing and ask for verification. You should send your dispute letter Return Receipt Requested so that you can prove the collector received it. Once you do this, the collection agency has 30 days to respond to you in writing with a description of the amount you owe and the name and address of the original creditor. If it fails to respond and continues to harass you, you could get an attorney and sue the firm.

Be ready to negotiate

Remember what we said in an earlier paragraph about debts being sold for pennies on the dollar? If the collector can verify your debt and you can’t prove it isn’t yours, you can at least negotiate. If your debt was for $500, you might start by offering $100 to settle it. It’s unlikely that the collector will settle for that amount but it opens the door to paying less than you owe. A third secret of the debt collection industry is that most collectors have a quota. As it gets closer and closer to the end of the month, your collector may be feeling pressure to reach his quota and, thus, more willing to negotiate.

Ask to have the debt removed from your credit reports

Video thumbnail for youtube video How To Get A Charged Off Item Removed From Your Credit ReportIf you can dispute the debt or if the collection agency can’t fully verify it, you might offer to pay it off if the collector agrees to have it removed

Keep good records of all phone calls
and messages

If you are able to reach a settlement, make sure you get everything in writing. Don’t rely on an oral agreement. Whenever you talk with the debt collector, take good notes about everything that was discussed. Keep all your notes and any correspondence in a file where you could refer to it in the future should there be some disagreement as to who said what or what the two of you agreed to.

6 Options For Stopping Foreclosure

If you are like many Americans and are having a tough time keeping up with your mortgage payments, it’s important that you understand the foreclosure process so you won’t lose your home.

Home For Sale Sign in Front of Beautiful New HomeThe steps to foreclosure

  • The first 30 days – these 30 days are called a grace period and your lender will do nothing. But you may be assessed a fee for having made that payment late
  • 60 days late – this is where alarm bells go off in your lender’s offices. You will most likely receive a letter or telephone call reminding you that you’re late and need to bring your payments up to date.
  • 90 days late – if you miss three months of payments, your lender will probably get serious and begin the foreclosure process using one of the two types of actions listed next. (Note: While all states permit judicial sales, only 29 permit power of sale foreclosures.)
  • Judicial sale – this type of foreclosure must go through the courts
  • Power of sale – can be done solely by the mortgage holder

Judicidal sale

In the event your mortgage holder chooses to do a judicial sale, it must first file suit with your court system. You’ll then receive a letter from the court demanding payments. You then typically have 30 days to respond with a payment if you want to avoid foreclosure. If you do not make the requisite payment, a judgment will be entered at the end of the time period for making payment. Your lender can then request that your house be sold at auction.

Power of sale

The way this foreclosure process works is that your lender will serve you with papers demanding that you pay. Several months after this, there will be a deed of trust drawn up that will convey your property to a trustee temporarily. The trustee will then sell your home for the lender at a public auction.

Deficiency judgment

If your home is sold for less than what you owe on your mortgage, you will most likely be issued a deficiency judgment. This will require you to make up the difference. For example, if you owed $180,000 on your home and it sold for $165,000, you might be be issued a deficiency judgment for the $15,000, which you will ultimately be required to pay the lender.

The best way to prevent foreclosureWoman talking on the cell phone

The best thing you can do to keep your home from going into foreclosure is to communicate with your lender. It’s likely that your mortgage holder will be willing to work with you as a foreclosure is also bad for it. The odds are that your lender will work with you on a personal level, taking your circumstances into account. In fact, if you are only two or three payments behind, your lender will probably send you what’s called a “loan workout package” to help you catch up with your loan. It will consist of information, forms and instructions related to your ability to make payments.

Other options

In addition to communicating with your lender, you do have several other options.
FHA – if where you work or live is in an area that has been declared by the federal government to be a natural disaster area and you’re headed to foreclosure, the FHA (Federal Housing Administration) has relief plans that can help you. As an example of this, you should be able to get up to three month’s relief from your mortgage payments to give you time to work out your situation.

  • Forbearance – this is where your mortgage holder agrees to let you suspend your payments for some period of time if you agree to another option for satisfying the amount of your loan.
  • Reinstatement – where you pay the outstanding amount in one lump sum.
  • Mortgage modification – these have become very popular recently due to the federal programs called HAMP (Home Affordable Modification Program) and HARP (Home Affordable Refinance Program). HARP can be especially helpful if you’ve kept up with your mortgage payments but are “underwater” on your mortgage. If you are employed but struggling to make your mortgage payments, the HAMP program might be able to lower your monthly payments. Here’s a brief video that explains how you could qualify for this program.

  • Sell your home–the final and ultimate way to avoid foreclosure is to sell your home. You could then pay off your loan and move on. You might have to rent for a while or if you netted some money from the sale of the house you might be able to use it as a down payment on a smaller, less expensive house with a cheaper mortgage.

The effect on your credit score

If your house does go into foreclosure, this will definitely have a negative effect on your credit report and credit score. However, it will not damage it beyond repair. Your credit score is based on a number of different factors and foreclosure will be only one of them. If you had a relatively good credit score before your home went into foreclosure, you might have a surprisingly decent score afterwards. Of course, you should still go to work and do what you can to repair your score.

Are Your Ready For Obamacare?

Life Milestones That Should Consider Your Personal FinancesAre you aware of the fact that the Quality, Affordable Health Care For all Americans Act or as it’s most commonly called, Obamacare is almost here. October will see the opening of the first-ever health insurance exchanges. For example, where we live there is a a “marketplace” that will open in October called Connect for Health. When people access it, they will be able to apply for insurance and see all of the health plans available in our state. These exchanges or marketplaces should also be able to tell you if you qualify for free or low-cost coverage available through Medicaid or the Children’s Health Insurance Program (CHIP). You’ll find out if you can get lower monthly premiums for private insurance plans and see if you would qualify for lower out-of-pocket costs.

No one law can solve all problems

You might remember Speaker of the House Nancy Pelosi saying about the Act that “We have to pass the health care bill so you can find out what’s in it.” So now, four years later we’re beginning to see what’s in the Act. While it will be good for some people, it does include some not so pleasant surprises.

You may not be able to keep your current health care insurance

While President Obama promised that you would be able to keep your health care plan, this may not be totally true. Some insurers are telling policyholders that their health care plan is being eliminated. This is due to the fact that insurers are getting rid of some of their plans and replacing them with others designed to meet the requirements of health care reform. You should be able to keep your existing policy as it may have been “grandfathered” and is exempted from the new requirements. So while you could keep that policy you may decide not to. This is because you may he offered better coverage for less money.

Bare-bones coverage

If you work for a big company that has a lot of low-income workers and who are currently uninsured, you may find that you’re being offered really bare bones coverage. These companies are typically big retailers and restaurant chains. Many are set to offer “mini-med” or bare-bones coverage to avoid the Obamacare penalty of $2000-$3000 per employee for not offering qualifying coverage. The good news is that this “employer mandate,” which was to take effect January of next year has been shelved until 2015.

The tax on “Cadillac” plans

Obamacare includes a 40% excise tax on high-cost or what are called “Cadillac” health care plans that will take effect in 2018. This tax will be assessed on individual plans that cost more than $10,200 and family plans that cost more than $27,500 a year. The problem with this is that it’s likely to have an effect on a number of innocent workers who have fairly ordinary health plans but that cost a lot because of the size of their company, job location and other factors. What this tax may do is create a big incentive for employers to turn towards cheaper and less-generous coverage so that more costs are shifted onto their workers.

Would you like to be an entrepreneur?

Historically, health insurance has tended to keep employees locked to jobs. The reason for this is because the non-group insurance market – or insurance for individuals – has been very dysfunctional. On the other hand, Obamacare should create an affordable, stable and adequate non-group market so people may feel freer to walk away from their corporate jobs and become entrepreneurs.

Young people will benefityou've made a wise decision

Most young adults will benefit from healthcare reform as they will be eligible for federal subsidies that should make quality health insurance affordable. This can be especially true for unmarried, lower-earning people. It is estimated that there are 21 million young people now uninsured and most have low-to-moderate incomes. The majority of them will be able to purchase affordable coverage with assistance through the new state exchanges or marketplaces. This will begin with early enrollment in October. Another positive of healthcare reform is that young people will be able to remain insured under their parent’s health care plan until they turn 26. In fact, it is thought by many experts that young people will be the biggest beneficiaries of Obamacare.

How the subsidies will work

If you learn through your health insurance exchange that you’re eligible for a subsidy, here’s how this will work. You will be given a choice of taking the maximum subsidy or a lesser amount. If you believe that your income will increase in the coming year, you might decide to take less than the maximum so you won’t have to pay the government anything back at the end of the year. Regardless of which amount you choose to take, your subsidy will be paid to your insurance company by the federal government every month. For example, if your insurance premium is $600 a month and you’re eligible for a subsidy in the amount of $400, the government will send the $400 directly to your insurance company. You will be required to pay the $200 difference.

It’s not simple

The Quality, Affordable Health Care For all Americans Act is not a simple piece of legislation. There are varying numbers as to its size but most agree that it’s the least 1400 pages long, plus there may be as many as 20,000 pages having to do with regulations. In any event, it’s a very complex piece of legislation and not easy for us ordinary people to understand. If you work for a company, you may have already been briefed as to how Obamacare will affect you. If not or if you’re an independent worker, you may have to wait until your state’s insurance exchange (marketplace) opens to see and understand your options.

Other new taxes

Obamacare includes other taxes not related to insurance policies. Here’s a brief video that explains them.

When Do Debt Collectors Have To Give Up?

woman kneeling over billsIf a debt collector is harassing you, we don’t have to tell you how ugly this can be. An unethical  collector can harass you night and day or even at your job. He can call you at all hours and threaten to have your wages garnished, to sue you, to notify your employer or family members or even worse. While there is a law titled the Fair Debt Collection Practices Act (FDCPA) that bars debt collection agenxies from using these kinds of practices, many of them just ignore it. In fact, the Federal Trade Commission has sued numerous debt collection agencies for engaging in these practices so you know that it’s real.

What the FDCPA prohibits

Among other things, the Fair Debt Collection Practices Act prohibits debt collectors from:

  • Saying you will be arrested if you don’t pay your debt;
  • That they’ll seize, garnish, attach, or sell your property or wages unless they are permitted by law to take the action and intend to do so
  • They will take legal action against you, if doing so would be illegal or if they don’t intend to take the action.
  • Use threats of violence or harm;
  • Publish a list of names of people who refuse to pay their debts (but they can give this information to the credit reporting companies);
  • Use obscene or profane language; or
  • Repeatedly use the phone to annoy you

If you are being harassed

If a debt collection agency  is harassing you, send it what’s called a “cease and desist” letter demanding that it stop contacting you. You can find a sample cease and desist letter by clicking here. When you send your letter to the debt collection agency make sure you send it registered and return receipt requested so that you can prove that you sent the letter and that the agency received it. Once it does so, it can contact you only one more time – to either verify it won’t be contacting you again or that it will be taking some specific action such as suing you. If this doesn’t stop the collector, you could file a complaint with your state’s attorney general’s office or hire an attorney and sue the debt collection agency. However be forewarned that many of these collection agencies are headquartered offshore so are pretty lawsuit proof.

The ghosts of debts passed

Did you know that debts are sold over and over again? Your original creditor may have sold your debt to a debt collection agency that sold it to another debt collection agency that sold it to yet another debt collection agency and so on.

Make the agency validate the debt

The FDCPA also requires debt collection agencies to validate any debt they try to collect from you. In fact, the first time a debt collection agency calls, you should ask it to verify the debt. The collector then has 30 days to provide verification in writing, which should include:

  • The name of the original creditor to whom the debt is owed
  • The amount of the debt
  • The date you defaulted on the debt
  • That the agency is legally entitled to collect the debt

You have 30 days to dispute the debt’s validity. In the event that you don’t dispute it within 30 days, the debt collection agencywill assume that the debt is valid. On the other hand, if you do dispute its validity within the 30 days, the agency must send you verification of the debt. If the agency does not respond within 30 days or if it can’t verify the debt, it must stop trying to collect from you. It must also stop trying to collect the debt once you dispute its validity – until it responds to your letter of dispute.

Four key issues

Your original creditor may have forgiven or charged off your debt. So what happens with third-party debt collectors? If they continue to try to pursue you and the debt is still within your state’s statute of limitations there are four key issues.

Statutes of limitations

Every state has a statute of limitations on debts. In the case of credit card debts it might be six years. For other debts, the statute of limitations might be eight or even 10 years. If it’s an old debt, it’s important for you to learn whether or not the statute of limitations on it has expired. If so, the debt collection agency cannot sue you. It can harass you for money but can’t take you to court.

Charge-offs

If your creditor has charged off the debt, it means that it doesn’t expect that it’s going to get its money back. However, your debt has not been forgiven. It’s still considered collectible.

Debt forgiveness

If a creditor forgives your debt (this is often part of a debt settlement process) it is totally forgiven and the debt collector should not try to collect from you.

Credit reporting

It doesn’t matter whether your debt is forgiven, charged-off or past the statue of limitations. It will still be reported and will affect your credit score for seven years. While your creditor may have forgiven the debt, the three credit bureaus never forget.

Old debts can be confusing

Be sure to keep in mind that if a debt was charged off by your creditor this does not mean that it’s forgiven. Many creditors will pursue old debts until they have exhausted all of their legal options. Assuming that your state’s statute of limitations has not expired, a debt collector will probably contact you. In this event, you need to come up with a plan for paying what you owe or face the danger of winding up in court. Here’s a video that explains two good ways to pay off debts.

What happens if a debt collector sues youJudge in robe sitting at bench looking serious

If you are sued by a creditor or a  collector make sure you show up for your court date. If you don’t, the collector or creditor could get what’s called a “summary judgment” and have a lien placed on one of your assets. For most people this would mean a lien on their homes. When you sell your home, the first thing that would happen is that the lien would be paid off. So if you owed, say, $1000 and thought you had netted $10,000 on the sale of that house, you might have an unpleasant surprise when your check is for just $9000

Advice For Sticking To A Budget

How To Convince The Whole Family To SaveCreating a budget for yourself or your family isn’t really that tough. There are numerous smart phone apps and software programs that make this about as difficult as slipping on a sheet of ice. For example, the smart phone app Mint will track your spending then divide everything into categories. The software program You Need A Budget will not only help you create a budget but has four simple rules that could help you become debt free. Other smartphone apps that would help you develop a budget include Expensify and Easy Envelope Budget Aid.

The importance of having goals

Before you create your budget, it’s important that you estabish both short-and long-range goals. For example, a short-term goal could be to buy a new car, while a long-term goal might be your kids’ education. The reason why it’s important to have goals is because without them, it’s almost impossible to stay on a budget. But if you have written goals and can see you’re making progress towards achieving them, this can be a great motivator to help keep you on track.

Where to make cuts

Okay, you’ve tracked your expenses for the month, you’ve organized them into categories and presto! You have a budget. However, next comes part two – deciding where you can make cuts. Most people find the easiest categories to reduce spending are food, clothing, eating out and entertainment. However, if you put your mind to it there’s probably no category where you couldn’t make cuts. In fact, you should go over every category at least twice looking for places where you could cut your spending. You just might be surprised at how much money you could save if you put your mind to it. If you need help in cutting your budgeting here’s a video with 10 good tips for finances and budgeting.

Sticking to that budget

Many people learn that the even harder part is to stick to a budget. Here are some tips that could help you live according to your budget.

  • Post your budget in a visible place. Put it somewhere where everyone in your family can see it – maybe on your refrigerator or a bulletin board in your family room.
  • Make a note of every dollar you spend, every time you use your debit card, go to an ATM machine and every check you write. Get out your budget and refer to it regularly to make sure you’re staying on track. There will undoubtedly be times when you overspend in some area. Just relax and reduce your spending in another area to compensate for it.
  • When your kids ask for things that are not in the budget, remind them why your family is working to spend less. If your kids are teens, they might even be able to earn the money they need for the things they want.
  • Keep that smart phone app (or a notepad) with you at all times and continue to write down everything you spend money on. Keep all of your receipts, too. At the end of the month, you will need this information to evaluate how well you are doing in your budgeting.
  • Remind your family why you’re budgeting Get out that sheet of your short- and long-goals. Remind them why they’re saving money now – for their college educations or that new car.

If you’re overspendingIs A Frugal Budget Really Helpful

If you overspend of if your total spending was more than you had budgeted, try to figure out why this happened. The reasons for this could include:

  • When you developed your budget you over looked an important living expense or debt
  • Your budget isn’t realistic. If your budget is too Spartan, it may be impossible for you and your family to live on it.
  • You didn’t try hard enough to live according to your budget. If you want to make your budget work, it takes a 100% commitment from everyone in your family.
  • You had an unexpected expense that month. Maybe you had to work late at the office so that this increased your childcare expenses or maybe your car broke down.
  • There were expenses that increased through no fault of your own. For example, the cost of gas went up or maybe your insurance premium increased.
  • You saw a drop in your income. Maybe your sales commissions wasn’t what you thought it would be, you had to take a cut in your pay or a client failed to pay you that month.

Your budget should be a game plan

If you find that you’re overspending in some categories and under spending in others, don’t be afraid to make changes. Your budget should be more like a game plan than a restraint. It should change as your life and your finances change — we hope for the better. The good news is that if you do stick to that budget, you’ll get your debts paid off quicker. Plus, the day will come when you’ll be able to add some extras to that budget – such as things you had to give up for now. You may also be able to start saving more money so that you’ll have an emergency fund that would tide you over next time you have one of those unexpected expenses.

Don’t give up

The important thing is to never give up. Sticking to a budget isn’t easy, especially when you have a family that needs to buy into it. You may have to become something of a nag for the first few months – constantly reminding your family members how much you’ve budgeted in certain categories and why it’s important that they stay on budget. But if you don’t give up, you will succeed and your life will get much better.

How To Keep Debt Collectors From Wrecking Your Credit

Surprised young womanDo you have bills in your credit report that have gone to collection? For that matter, have you even seen your credit reports lately. You have three of them, one from each of the three credit-reporting bureaus – TransUnion, Equifax and Experian. You can get all three of your reports at the site www.annualcreditreport.com or individually from the three bureaus.

Look for these items

When you review your credit reports, be sure to look for these items

  • Charge offs
  • Late payments
  • Debt collections
  • Foreclosures
  • Liens
  • Bankruptcies
  • Tax liens

What you will learn from reading this article

Here are six things you will learn from this article.

  • The importance of learning who you really owe
  • Why you need to contact your original creditor(s)
  • The four types of collection accounts and which you should pay off first
  • Deciding what to do about the others
  • Why you need to know your states’ statue of imitations
  • The truth about debt repair companies

If you have collection accounts

If you find that you have collection accounts the first thing you need to do is figure out whom you really owe. Older accounts may have changed hands several times. Your original creditor might have sold the account to a debt collection agency that, in turn, sold it to yet another collection agency. When this occurs, you can actually get letters and calls from half a dozen or more agencies – about basically the same debt.

Contact your original creditor

If you have an old collection account, you need to contact your original creditor to learn whether or not they had placed it with a collection agency. Your original creditor is the company to which you first had the debt – a cell phone company, a hospital, a credit card issuer, a bank and so forth.

If you learn that your creditor has sold the account, be sure to get the name of the collection agency they sold it to. If you are dealing with several accounts, make a list of all the accounts you have been able to identify, including the name of the original creditor, the name of the agency, the current balance and the date you defaulted on your debt with the original creditor. Don’t call a bill collector without first grabbing a pen and paper. Be sure to take detailed notes. You want to make sure the bill is accurate. Write down people’s names, extensions and where they are located. That way you will know with whom you talked in the event you need to do a follow-up. File these notes along with any correspondence and copies of your credit reports. You will need to keep this file for a long time – just in case.

For more good information about handling calls from debt collectors be sure to watch this video.

The four types of collection accounts

Collection accounts can be divided into four types:

  • Those bills you know you owe and the amounts are correct
  • Accounts you don’t remember at all and are not sure you actually owe the money
  • Debts that have changed hands
  • Debts where you don’t agree with their existence in the first place

Pick the low hanging fruitHands, hand with pen writing check

The first group or those where you know you owe the bill and the amount is correct are “low hanging fruit.” You should pay them off first and in full. As you might guess, the debt collector will be very happy to hear from you.

Deciding about the others

This is where it gets trickier. If you find a debt you don’t recognize, you should request verification in writing from the collection agency. The law mandates that a debt collector send you a letter telling you what you owe and proving it has the right to collect the debt. They must send this “verification letter” this within five days from the time it first contacts you. If you legitimately feel you don’t owe the debt, you can let the collection agency know this, and for it to not contact you again. If you have proof of why the debt is an error, you can ask the collection agency to quit reporting it to the credit-reporting bureaus. You will need to include documentation proving your side of the story – if you have it. For example, if you were erroneously billed for an item you bought online and returned to the vendor, you should have some kind of receipt proving that you did return it.

Check your state’s statute of limitations

If it’s a really old debt, you should contact your state’s attorney general’s office and ask what’s the statute of limitations on debts.In the case of credit card debts it’s usually four or six years but could be longer. If you find that the statute of limitations has expired on your debt, you can use this as a defense against any lawsuit. However, keep in mind that if you make even a small payment on a debt and the statute of limitations has expired, this could start the clock ticking again. As a result, you could be opening yourself up to a lawsuit at a later date.

Watch out for debt repair scams

There are numerous companies on the Internet offering what’s called debt repair. Avoid them at all costs. These companies can’t really do anything that you couldn’t do yourself. They would go through your credit reports looking for errors and then dispute them. However, it would be easy for you to do this yourself. All three of the credit-reporting bureaus have online forms where you can dispute what you think are erroneous items. If you have documentation proving your claim, the credit-reporting bureau must delete the item from your file. If you review your credit reports and simply can’t make heads or tails out of them, you might then want to hire an attorney to help. But keep one important thing in mind: It is impossible to get negative items removed from a credit report if they are legitimate. Like it or not, you’ll have to wait seven years for them to fall out of your credit file. There’s just no other answer.

How To Live Debt Free On A $30,000 A Year Income

couple worrying about financesWhat is your household income? I saw one survey recently that the average American household has a median income of $46,326. Since this is a median income, it means that half of American households have less than that $46,326. If your household income is less than that or if it’s as low as $30,000 a year, could you live debt-free? The simple answer to this is “yes” but it requires some careful planning. Here are 11 tips that could help.

  • Have a budget
  • Live beneath your means
  • Pay cash for everything
  • Save for a rainy day
  • Don’t eat out
  • Avoid getting caught in the “now”
  • Prioritize your errands
  • Use less of … everything
  • Use rewards points

Why budget?

There is just no way around the fact that if you’re living on $30,000 a year or even that $46,326, you need to have a budget. The easiest way to do this is to have a spreadsheet with your monthly income versus your expenses. You will need to update this weekly along with your check register and make sure that your register balances. As difficult as it might be, you have to stick to your budget without exception.

Being accountable

In order for this to work you have to look at your financial picture and be honest about it no matter how bad it might be. If you want to stay out of debt you have to make a commitment and stick to it.

Living beneath your means

The fastest way to get into trouble with debt is to live beyond your means. No matter how tempting it might be to buy that fancy, new car or that 50-inch HDTV you just have to resist the temptation. Instead of buying new clothes, you might have to learn to do your clothes shopping at Walmart, Target or even from a thrift store. I have a friend who’s driven his Jeep Grand Cherokee nearly 200,000 miles so just because your odometer is turning 100,000 doesn’t mean you need to trade in your car.

Pay cash for everything

There’s a very simple way to stay out of debt. It’s to pay cash for everything. Here’s a video about a family who does just that.

The importance of saving

Even if you’re on a very tight budget, you need to find ways to save at least $50 a month. You should put that into a savings account with the highest yield you can find so you will begin earning interest. While $50 a month isn’t much, you’d have $300 after six months, which could help you get through that unexpected automobile repair or some other emergency.

The danger of getting caught in the “now”

Getting caught in the “now” means doing things that feel good now or that would be fun now – such as going to that concert where the tickets are $80 apiece. If you truly want to stay out of debt you need to look to the future and not to the now. If you want something you need to save for it instead of buying it in the “now.

Shop smart

One of the things you definitely would need to do is learn the power of coupons. With a little spadework you should be able to find coupons that will save you money on almost everything you eat. I saw one article recently where a woman was able to buy $100 worth of groceries for $20 – thanks to coupons. You should also look for store specials and BOGOs ( buy one, get one). If you get a newspaper, your Wednesday section should be just full of great, money-saving coupons. Barring that, you can go online and find them. You should actually shop with a calculator and then add up each item as you put it into your grocery cart to ensure that you stay on budget.

Do all your errands one day a week

You can save a lot on gasoline and reduce the wear and tear on your car if you group all of your errands and do them on one day per week. Be sure to start out at the point that’s farthest away from your home and then work your way back. For that matter, you might actually be able to walk to the store, which would help you save even more money.

The power of rewards points

Did you know that you could get a debit card that comes with rewards points? There is one card from Chase that pays one dollar for every four dollars you spend. This can be a great way to earn and save even when living on a tight budget.

Good tips for everyonesave money sign

Even if your household income is well above $30,000 a year, you could use these tips to save money and help you stretch your income. Living frugally can even become a challenge or a game where the whole family pitches in with suggestions for cutting costs. If you live alone you could still make it a game where you challenge yourself to cut your costs by a certain percentage. You would then reward yourself every time you met your challenge. This wouldn’t have to be a big reward – it could be something as simple a dinner out or a new computer game.

5 Money Saving Tips For Back-To-School Shopping

mother, father and daughterIt’s definitely that time of year. Millions of kids across America will soon be starting elementary, middle and high school, not counting another several million who will be starting or returning to college. The way things work these days you could be out more than a hundred dollars just buying school supplies. We know because we just spent more than this getting our daughter ready to return to middle school. Plus, there’s the several hundred dollars more you’ll be spending for clothes, backpacks, locker shelves and on and on. So, what could you do to keep that spending under control? Here are five tips that should help you save money.

  • Spend smartly
  • Show your teen how to make his or her money go further by using discounts
  • Challenge your child to save even more by going onto Facebook or Twitter to find promotional codes and coupons
  • Put off any technical upgrades until after the holidays
  • Go to websites such as PromotionalCodes.com, CashCard.com and DealNews.com to look for discounted electronic gift cards

Follow the three golden rules

There are also three golden rules followed by almost all savvy shoppers. The first is to sit down and catalog your needs. Make a list of what you will need to buy and then make sure you stick to it. Research has shown that 57% of school supply shoppers regularly spend more than they had planned.

Second, forget brand loyalty. If your child is demanding a certain clothing brand or store and you give into it, you’re likely to miss out on markdowns or sales that you could get from competing merchants.

And third, do your homework. Spend at least an hour online comparison-shopping before you begin visiting stores. This alone could save you as much as $100.

The beauty of discounted gift cards

Did you know that you can save as much as 35% by buying discounted gift cards? There are websites such as CardCash.com and GiftcardRescue.com were you could find some really good savings. As an example of this, PlasticJungle’s affiliate CashCard.com was offering (at the time of this writing) Abercrombie cards at 3% off, Aeropostale at 8% off, American Apparel at 20% off and American Eagle also at 20% off. While saving 3% at Abercrombie may not seem like much of a deal, these kinds of savings do add up.

Got gift cards you don’t really need?Hand holding batch of credit cards credit card debt

You could  make some extra shopping money by selling unwanted gift cards at sites like CashCard.com. For example, if you had an Ann Taylor gift card in the amount of $100 that you didn’t need, you could sell it on Cash Card.com for $65. And you could get nearly $75 for a $100 Bath and Body Works gift card.

Buy last year’s model or a refurbished unit

If your child absolutely has to have a new laptop this year, you can save money by buying last year’s model or by choosing a refurbished unit. Refurbished laptops are often ones that were returned for some reason so they can’t be sold as new even though they’re in perfect condition. Other types of refurbished units are ones that have been completely overhauled so to be in near-new condition. I’m writing this article on a refurbished Samsung 27-inch monitor I bought nearly one year ago for about half of what it would have cost new. I’ve also seen refurbished MacBook laptops in excellent condition, again for about half of what you would pay for a new one.

Good places to find refurbished laptops, monitors and so forth are PriceGrabber.com and Amazon.com. Apple itself sells refurbished units though it tends to charge more than comparable laptops available on Amazon.com or PriceGrabber.com. Dell has an online outlet store where it sells its Inspiron laptops at discounted prices and Walmart has a department with refurbished HP laptops where it’s currently offering a 15.6-inch Pavilion laptop for $318 – which should fit almost anyone’s budget.

Get email alerts

You can also sign up yourself or your teenager to get email sale alerts from his or her favorite retailers. The website SaleLocator.com can be used to track down back-to-school promotions by store in your area or even by specific item.

How to save on books

If your child is in a class where the required reading includes classics such as Mark Twain, Shakespeare or Charles Dickens, you can save a bunch by getting them free through Amazon.com or the Gutenberg Project (http://www.gutenberg.org/). Gutenberg currently has 42,000 free books that can be downloaded as ePub books, Kindle books or read online. It also has another 100,000 free books available through its partners, affiliates and resources.

Two words no teen or preteen wants to hear

Teenagers never want to hear the words “clothes” and “budget” strung together. However, it’s important you sit down with your child and discuss his or her needs and then develop a clothes budget. This may require some negotiations with give and take on both sides. However, if you can arrive at a budget number on which the both of you agree, you will eliminate many of those arguments that begin with the words, “But I really need to have this (fill in the blank).”

More back-to-school shopping tips

Watch this video for some good tips about organizing and buying back-to-school supplies form an actual freshman in high school.