1. Prevent immediate disasters

The first thing to do is request payment plans or bill extensions. For example, if your biggest problem is that you’re worried about being evicted from your house or apartment, talk with your landlord. At the same time, ask for extensions on other bills, which could give you extra money to help you keep your home. Let’s presume that your rent was $650 and you’re $200 short. You might be able to postpone your phone, cable bill or cell phone bill until the next time you’re paid so that you can avoid being evicted.

2. Write down your credit card payments and when they are due

Are you missing payments on your credit cards or just making the minimum payments? This can have a disastrous effect on your debt. You might be charged a late fee that would be higher than your minimum payment. Plus, the interest you would be charged on future purchases would go to the 25% default rate. This could make it even tougher to pay off that credit card.

3. Prioritize your bills

Make a list of your bills ranging from the one you feel should be paid first down to the one you could pay last. Then create a schedule to make your payments based on your paydays. If your bills are already late, you may need to leave yourself some time to catch up. Just call the companies where you have bills and ask how much you would have to pay to get back on schedule. Tell them that you are working to catch up and going to be on a budget. Make sure you’re honest about what you can pay. If you make promises but fail to keep them, this only makes things worse.

4. Review your spending

If you haven’t been tracking your spending, you need to do so. There are all kinds of software and smart phone apps available that can help you do this. Once you have tracked your spending for at least 30 days, divide it into categories such as food, dining and utilities so you will know exactly where your money is going.

5. Reduce avoidable expenses

Maybe you don’t need as many morning coffees or go to as many movies. Review your categories to see where you could make cuts. The first cuts you make should be items that you won’t really miss. But you should then tackle the tougher items such as your automobile insurance. For example, you might be able to get a cheaper rate by switching car insurance companies.

6. Look for ways to make additional money

If you create a budget and find that it just doesn’t balance out or that you would still be barely getting by, you may need to look for additional sources of income. You might be able to work an extra shift at your job or get a second job. Best of all, you might be able to get a new, higher-paying job. You might find that there’s work that pays better but you don’t like the job. If this is the case, you may need to ask yourself if it’s better to be unhappy at work or happy being in debt.

The post Budgeting When Broke appeared first on National Debt Relief.

It’s happening here, too

We here in the US are also on the way to a cashless economy. Back in the 1970s, less than 20% of us had a credit card. Today something between 70% and 80% of all adults has at least one. If you are in a situation where you are being forced to pay with cash, it can feel like a real anachronism.

Here’s the problem

When we save money, we move today’s earnings to the future. Conversely, when we use a credit card we yank future earnings into now. But most of us don’t save a lot and are terrible at projecting future earnings. This means we end up spending a lot more than we can pay back very quickly. This makes it easy for many of us to get into trouble with debt.

We’re becoming irresponsible

Cash and coins are more difficult to handle and have a certain “reality” about them. They must be counted, organized, and and delivered to complete a transaction. Each of these actions is an inconvenience or a point of friction. In comparison, a card is only a card. All we have to do is pull it out, swipe it and we’re finished. This makes it very easy to spend whatever we want.

Credit cards can make us forgetful

Counting money is memorable because it takes time and effort. On the other hand, swiping a credit card is fast, easy and can make us forget that were actually dealing with money. As a result, we are less likely to remember details about our purchases and often will go on and buy additional stuff.

They can make us fat

When we are forced to pay for something with cash there is a hidden benefit. It makes it more difficult for us to cave into our indulgences. To put this another way, credit cards tend to weaken our impulse control. I recently read one paper where researchers had found that people using a credit card were more likely to buy unhealthy food products than when they paid cash. And unhealthy food products often lead to weight gains.

Credit card debt can easily get out of control

As noted above, credit cards tend to make us forgetful. This makes it easy to end up with big balances without even realizing what’s happening. If you’re not careful, you could run up balances so huge you would not be able to pay them off within 30 days. Once this happens and you began carrying balances forward, it’s easy to fall into debt hell because of the high interest you’ll be charged.

Most credit cards today have interest rates as high as 20% or even higher. As these interest rates are added to your balance month after month, it can get to the point where you will be able to make only the minimum payments and would never be able to get out of debt. There was an example I saw recently where if you owed $10,000 at 18% and made only the minimum payment of $150 each month, you would literally never get out of debt. And if you paid $200 a month, it would take you a bit over seven years to pay off that $10,000.

Are you a bad person?

Have credit cards turned you to a bad person? Have you become irresponsible in your spending habits, forgetful or even fat? If this is the case, you need to change your spending habits, begin saving money and use your credit cards more wisely. That way, you could turn back into a good person and get control of your finances and financial future.

The post Are Credit Cards Turning You Into A Bad Person? appeared first on National Debt Relief.

Get your loan deferred

A deferment won’t do anything to clear your student loan debt but it would give you a timeout during which you would not have to make payments. If your loan was subsidized, you would not accrue any interest during deferment. Unfortunately, if your loan was not subsidized, interest will continue to accrue. It’s also important to understand that any interest not paid during a deferment is “capitalized,” which means it will be added to your balance and you will eventually pay interest on it.

How you might qualify for a deferment

There are several ways you could qualify for a deferment. You could go on to grad school or a career school, be unemployed, suffer on economic hardship (such as joining the Peace Corps) or join the military. Click here for a complete explanation of student loan deferment eligibilities.

Apply for a forbearance

If you’re not eligible for a deferment, you might be able to get forbearance. This would allow you to skip payments for up to a year. However, interest will accrue on both unsubsidized and subsidized loans and will be capitalized. To be eligible for forbearance, you must be ill or be able to show financial hardship. There are also mandatory forbearances you could apply for if you are doing a dental or medical internship, serving in a national service position or performing a teaching service (click here to read more about forbearance eligibilities).

Income-based Repayment (IBR)

An Income-Based Repayment is one where, if you qualify, your monthly payments would be capped at 15% of your discretionary income. If you’re a recent graduate there is the new Pay As You Earn (PAYE) program, which caps payments at 10% of discretionary income. If you’re unemployed your payments could be as low as zero dollars. Plus, after 10, 20 or 25 years, your balances may be forgiven. With an IBR, if you have a subsidized loan, the government will pay up to three consecutive years of interest that is accrued but not repaid. Conversely, if your loan was unsubsidized interest will accrue.

Income-Contingent Repayment (ICR)

This program pegs monthly payments to your income, family size and the amount of debt you owe. If you have a remaining balance after 25 years, it will be forgiven.

A blessing or a curse?

Forbearance or deferment can be either a blessing or a curse. It may feel like a blessing if you can’t make your payments. But either of these could end up being a curse. While either could mean a short-term reprieve they provide no long-term relief. In fact, one person recently described forbearance and deferment as if you were putting a Band-Aid on a stab wound.

Even a bankruptcy can’t help

You could file for a chapter 7 bankruptcy and get most of your unsecured debts dismissed. But not even a bankruptcy will erase student loan debt. It is one of several types of debts that can’t be erased by a bankruptcy that includes child support and alimony, back taxes and loans obtained through fraud.

How we could help

We can’t help with student loan debts but may be able to help by settling your other unsecured debts – such as credit card debts, personal lines of credit and medical bills – which would free up money you could use to pay on your student loan debt. Contact us today to learn more about debt settlement and whether or not this could work for you.

The post What To Do About Those Student Loan Debts You Can’t Afford appeared first on National Debt Relief.

Review your credit card bills

Make sure you carefully review every credit card statement. You may find errors that are costing you big time. If you spot an error, you may be able to resolve it with just one phone call. For example, you might have eaten at a restaurant but received a bill from its parent company that has a different name.

If you find an error

If you find a genuine error, one phone won’t solve the problem. If you disagree with an item, you must dispute it in writing and within 60 days. While the credit card company is investigating your claim it can’t report it as delinquent even though you haven’t paid it. It also cannot try to collect the bill.

Unauthorized use

You could look in your wallet one day and find you’re missing a credit card. Or you might review your bill and find charges you don’t recognize. Either of these would fall in the category of unauthorized usage. Don’t panic. Your liability here is capped at $50. Plus, you can invoke your rights and dispute the item(s) with just a phone call. You don’t have to make the call within 60 days though it’s a good idea to do so – as you would want to stop the theft before someone continues to rack up charges.

Your card will be cancelled

In most cases, the credit card company will cancel your card to prevent further usage. And it’s not obligated to send you a new one. If it believes you’re a risk for some reason it could close your account or reduce your credit limit. You should be sure to discuss this with the credit card company so you will know what to expect.

Medical billing errors

Medical billing errors are probably more common these days than credit card errors. Hospitals, clinics and doctors are required to code every procedure for billing purposes and mistakes can and often do happen. Whenever you receive a medical bill you need to examine it very carefully. You could easily have been billed for a procedure you didn’t have or a medication you never received. If you have insurance make sure you read your Explanation of Benefits (EOB). It’s important to know what is and what’s not covered – especially before you have a procedure performed.

Rejected or denied?

If you file a claim with an insurance company and it comes back marked either rejected or denied, it’s important to know the difference between these terms. Rejected usually means that no one even reviewed you claim due to some mistake. This could be as simple as the wrong date of birth or a mismatch between the way the procedure was coded and how the diagnosis was coded. In any event, you should call the insurance provider and ask why the claim was rejected. On the other hand if the claim was marked denied it’s because the insurance company believes you didn’t have the necessary coverage. Again, you will need to contact your provider to learn why you were denied. If you disagree with what you’re told, you have the right to appeal.

When bills get out of control

If your credit card or medical bills have spun out of control, contact us. We’ll explain debt settlement and how it might help you. We charge nothing up front so you have nothing to lose by letting us tackle your debt problems.

The post Billing Errors Could Be Stealing Your Money appeared first on National Debt Relief.

First, recognize the problem

You may not realize how much student loan debt you have until you put it on paper. This can be especially true if you’re married. I know of one couple that didn’t realize how deeply they were in debt until they added up what they owed and realized they had a combined $27,000 in student loan debts. The same could be true if you have multiple student loans and have never added them up.

Practice strict budgeting

The first and best step toward getting rid of those student loans is to put yourself on a fairly strict budget and maybe use what’s called the “snowball” method for paying down debt. If you’re not familiar with this method, it’s where you organize your debts starting with the one with the smallest balance up to the one with the largest and then begin paying off the smallest. Once it’s paid off, you will have money freed up that can be used to pay off the one with the next largest balance and so on.

List all your expenses

Next, you should write down all of your expenses and then see where you might be able to make cuts. Most people who go through this exercise find that the easiest places to make cuts are in food, entertainment and clothing. You might also be able to reduce the cost of your cell phones and your cable or satellite service.

Implement the cash envelope system

If you find you’re having a problem staying on your budget you might try what’s called the cash envelope system. This is where you convert your paycheck into cash and then put the cash into separate envelopes by category. For example, you might have a category labeled groceries, one for rent (or mortgage payment), one labeled entertainment and so on. When you have an expense in one of your categories, you take the cash out of the appropriate envelope. When that envelope is empty, that’s it. You can’t spend any more money in that category. And yes, this is kind of a harsh way to budget but it can be a very powerful solution.

Plug the leaks

When you see where your money is going, you’ll probably see budget leaks that you could close. For example, you might be able to cut your food costs dramatically by planning your menus for the week and then buying only the food you need for your menus. You could also learn to build those menus around staple items such as pasta, beans, rice and hamburger that can be bought in bulk and used over the course of several weeks.

Earn extra income

If you’re really serious about paying off those student debts, you should be able to find ways to generate extra income. You or your partner might be able to take on a part-time job. It’s likely that you have stuff just lying around the house that you no longer need or use and that you could sell on eBay. Many people generate extra income by working garage sales and then selling the items they find on eBay. If you’re handy with tools, you might put an ad on Craigslist and do handyman jobs. The fact is that if you put your mind to it, you should be able to think of at least a dozen ways to earn extra money that could be used to destroy those debts.

The post How To Demolish Student Loan Debt appeared first on National Debt Relief.

The good news and the bad news

When it comes to eliminating debt there is good news and bad news. The bad news is that there’s no way to eliminate it quickly short of filing for bankruptcy. And even that can take up to six months. The good news is that there are other options available that take longer but that won’t leave as bad a stain on your credit report as would a bankruptcy.

Debt counseling

One popular way to get out of debt is through consumer credit counseling. You could get the counseling through a local agency or if there is not one in your area, you can easily find one online. What’s important is to make sure that it’s a nonprofit and charges little or nothing for its services.

If you choose credit counseling, you will have a debt counselor who will first review your finances, help you create a budget and then contact your creditors. He or she will work with them to get your interest rates reduced and any penalties waived. Following this, the two of you will create a debt management plan (DMP) to pay off your debts. Your counselor will present this plan to your creditors for approval. If they do approve your plan, you will have consolidated your debts in that you will send just one payment a month to the credit-counseling agency. It will probably take you five years to complete your DMP, during which time you will have to be careful to not take on any new credit and will need to stay on a fairly stringent budget.

A debt consolidation loan

A debt consolidation loan is pretty much what its name suggests. It’s a loan you get to pay off your creditors and, thus, consolidate your debts. The advantages of a debt consolidation loan is that it should have a much lower interest rate than what you are paying on your current debts as well as a lower monthly payment. The biggest downside to one of these loans is that you will end up paying more in interest because it will have longer terms – that is it will take more time to pay back the money. For example, you might be able to get a second mortgage and use the money to pay off your creditors but it could take you as long as 15 years to pay off that new loan.

Transfer your balances

A third popular way to get debt under control is by transferring the balances on your current credit cards to one with a lower interest rate. If you’re typical, your debts probably have an average interest rate of 18% or more. If this is the case, you could transfer all these balances to a card with an interest rate of 12% or even lower. In fact, there are now available what’s called 0% balance transfer cards. If you can get one of these cards, you could transfer all your balances to it and be interest-free for six, 12 or even 18 months. The other advantage of this is that during those months where you are paying no interest, all of your payments would be used to reduce your balance. If you play your cards right, you could be totally debt free before that introductory period expires.

Settle your debts

Many people are not aware of this but it is possible to contact creditors and settle debts for less than what’s owed. The con or disadvantage of this is that you must be at least six months in arrears on your payments before most creditors will discuss settlement. But if this is the case, you might be able to settle your debts for less than what you owe. Of course, you would have to have the money available to pay off any settlements you are able to negotiate. It is for this reason that many people turn to debt settlement companies such as National Debt Relief to negotiate and settle their debts for them.

The post Problems With Debt? There’s Help Available appeared first on National Debt Relief.

The differences

Without getting too technical, the major difference between a chapter 7 bankruptcy and a chapter 13 is that a chapter 7 is a “liquidation” bankruptcy while a chapter 13 is a “reorganization” bankruptcy. It’s goal is to give you time to reorganize you finances and pay off your creditors. In comparison a chapter 7’s objective is to get rid of most, if not all, of your debts to get you a “fresh start.”

You could lose assets

If you choose a chapter 7 bankruptcy, you could lose some of your assets. This is because your bankruptcy judge has the power to take over your assets and liquidate them or turn them into cash that can be used to pay off your creditors. However, that’s more in theory than in practice. Here’s why. In a chapter 7 bankruptcy you’re allowed to “exempt” some of your assets. For example, you will be allowed to exempt some amount of the equity in your home and your automobile(s). This varies from state to state. In some states you might be allowed to exempt only $10,000 of equity in your house while in others you might be able to exempt up to $50,000 in equity. Of course, if you have no equity you will be allowed to keep your home with no arguments.

Your automobile

You should also be able to keep you vehicle, again depending on how much equity you have in it. This also varies depending on where you live but a good rule of thumb is that you should be able to exempt your automobile if you have $3500 or less in equity. In case you’re wondering, equity in an automobile is the difference between what it’s worth and how much you owe on it.

Secured debts

Not even a chapter 7 bankruptcy will discharge your secured debts as well as some of your unsecured ones. Your secured debts include mortgages and car loans. The unsecured debts that won’t be discharged are student loan debts, alimony and child support, taxes owed, and debts obtained through fraud.

You may not qualify

Another important thing to understand about a chapter 7 bankruptcy is that you might not qualify for one. The way the process works is that after you file for bankruptcy, the bankruptcy judge reviews your finances and decides whether or not you should be allowed to discharge your debts. If not, you will be automatically moved to a chapter 13 and required to pay back most of your debts.

The consequences of a chapter 7 bankruptcy

While a chapter 7 bankruptcy will give you a “fresh start,” it does have serious consequences. For example, a chapter 7 bankruptcy will stay in your credit report for either seven or 10 years (depending on the credit reporting bureau). This is seven or 10 years during which time you will have a hard time getting new credit. In fact, you may not be able to get any credit at all for the first two or three years after your bankruptcy.

It could cost you 200 points

Also, it is estimated a bankruptcy will lower your credit score by 200 points. If you had a reasonably good score of, say, 650 before your bankruptcy, you would have a bad score of 450 after the bankruptcy. A score this low could keep you from getting a mortgage or auto loan and might even affect the cost of your auto insurance.

Think before you file

A bankruptcy can either be a blessing or a curse – depending on your financial circumstances. You need to really weigh the plusses and minuses before you file to make sure you’re making the right decision.

The post Ready To File For Bankruptcy? Better Read This First appeared first on National Debt Relief.

Earn less but have better credit scores

Among other things, this study revealed that woman earn 23% less than men but have credit scores that are just a bit better. Their scores average 675 vs. 674 for men. The study also reported that men use 31% of the credit they have available and that women use only 30%.

Average debt

Women, the study found, carried an average of $25,095 in debt from personal loans, auto loans and credit cards, while the average man had $26,227. Men also take out larger mortgages (an average of $187,245) than women whose mortgages average just $178,140. And men have more of an incidence of late payments at 5.7% vs. women who have an incidence rate of just 5.3%.

Interesting but not as important

Experian pointed out it’s interesting to see that women are a bit better at handling credit than men but what’s more important is the value of building a good credit history. Today more than ever, debt and how we handle credit is critical. You need to pay attention to what’s in your credit report, make sure you never miss a payment and keep your credit utilization rates low as these are the three keys to financial good health.

What’s in your credit report?

I’m sure you’re seen the credit card TV commercial that ends with the phrase, “what’s in your wallet.” That might be important but what’s even more important is what’s in your credit report. Your credit report is used to generate your credit score and a bad credit score can make it practically impossible for you to get a mortgage, an auto loan or just about any kind of credit.

Conversely, a good credit score will actually save you money in the interest rates you’re charged. Here’s what I mean. If you apply for a mortgage, a good score of 750 and above could qualify you for an interest rate of 5.780%, while a poor score of 620-659 might result in an interest rate of 7.096%. Do the math and you’ll see that this represent a difference of 1.31%, which will mean thousands of dollars over the life of the loan.

Where to get your credit report

If you’ve never seen your credit reports (you have three) or haven’t seen them for more than a year, you need to get and review them. They are available free (once a year) from the credit bureaus – Experian, Equifax and TransUnion – or you can go to the website, www.annualcreditreport.com and get all three simultaneously. While this is easier and more convenient than going to the individual credit bureaus, some people choose to get their reports one at a time every four months as a way to sort of monitor their credit reports year around.

What to look for

When you go over your report(s) you need to look carefully for errors – especially negative items that could be hurting your credit score. A recent federal study reported that one in four Americans have errors in their credit reports and that about 5% have ones so serious they could be affecting their credit scores. When you go over your reports you need to look for items such as defaults, late payments and charged off debts that weren’t yours. If you find one (or more), you can write a letter to the appropriate credit bureau and ask that the item be removed from your report. The credit bureau is required by law to contact the organization that supplied the information for verification. In the event the reporting organization can’t verify the item or doesn’t respond within 30 days, the credit bureau must delete it from your credit file, which could result in a nice boost to your credit score.

The post Did You Know Women Are Better At Handling Credit? appeared first on National Debt Relief.

1. Prioritize those bills

The first thing you need to do is prioritize your bills. Put them in order of those that are most important such as your mortgage payment or rent or an auto loan. These are the expenses that are toughest to cut. On the other hand, entertainment, cable and cell phone packages are ones where you could make cuts.

It’s easy to prioritize credit card debts. You simply arrange them by their interest rates from highest to lowest. You may find there are huge differences between the interest rates you’re paying on your credit cards. You might learn that you’re paying twice as much interest on one card as another. For example, as of this writing the Capital One Standard Platinum Card had an interest rate of 19.30% vs. the 7.40% you would pay on the Capital One Premium Prestige card.

2. Learn to negotiate

If credit card companies are constantly harassing you, you may feel that you have no recourse. But you might be able to negotiate a reduction in your interest rates. Just call the company that issued the card and ask them to lower your rate. The worst they can do is say no.

A second way to lower your interest rate(s) is to do a balance transfer. This is where you transfer the balances on credit cards that have high interest rates to one with a better rate. Almost all credit card providers have introductory offers. Many now have 0% interest balance transfer cards. If you qualify for one, you could transfer the balances on all of your credit cards to this new card and be interest free for as many as 18 months. However, be aware that many banks charge balance transfer fees of up to 3% of the total balances you’re transferring. You need to watch out for these fees as they could completely wipe out the savings you would achieve from making the transfer.

3. “Snowball” your credit card debts

When it comes time to pay off debt, the best thing you can do is “snowball” them. The way this works is that you do everything you can do pay off the debt with the highest interest rate, which will most likely be a credit card. When you have paid off that first card you will have more money available to begin paying off the second debt and so on. This is called “snowballing” debts because as you pay them off slowly month after month, your progress will get faster and faster. Every dollar you pay will lower your finance charges and free up money that you can put towards reducing your debts.

4. Stay on course

You’ll find that snowballing your debts will get more comfortable as you get more used to it. Just make sure you don’t get back into trouble. Keep paying off those debts and try to pay cash for everything possible. You may run into a financial emergency that could set you back a bit but don’t worry. So long as you stick with the program you will eventually get out of debt. It will take discipline and some sacrifices but you’ll eventually become debt-free and probably faster than you ever had ever imagined.

A better solution

f you’re six months or more behind in your credit card payments, it’s way too late to snowball them. One good alternative is to choose debt settlement. You could contact a debt settlement company such as National Debt Relief to work with your credit card issuers to get your balances reduced. This could help you become completely debt-free in 24 to 48 months and with a monthly payment you could easily afford.

The post 4 Simple Things You Can Do To Cut Credit Card Debt appeared first on National Debt Relief.

The first secret

The first secret to a successful debt management plan is to be very careful in terms of which one you choose. It is sad but true that the debt management industry is full of companies just waiting to scam people who are already having problems with debt. If you don’t choose the right program, you could end up in more trouble than before. Also, be sure that you get real credit counseling before you sign up for any DMP.

An important secret – get everything in writing

Don’t agree to anything until you see your plan in writing. Read it carefully and make sure you completely understand it. If not, contact the credit counseling agency or debt management company and ask for explanations.

The third secret – be sure you can afford your monthly payment

Once you see what your monthly payment will be, you need to think carefully about whether or not you can afford it. If it seems more than you can handle, you will need to seek other options such as debt settlement or a debt consolidation loan.

Secret #4 – keep making your regular payments

It may take a while before all of your creditors accept your DMP. If possible you should continue to make payments to them until such time as they have all approved it. If this is not possible, at least call them and let them know that you’ve signed up for a debt management plan. Then try to make as much of your payments as you can. Most creditors will work with you. But it’s essential that you talk with them. Do not stop paying on any of your debts directly until you’re positive all of your lenders have approved your DMP.

The fifth secret

The fifth secret to a successful DMP is to ensure that all of your lenders have approved your plan before you make your first month’s payment to the credit counseling agency. While the agency may assure you that all of your lenders have approved your plan, don’t take its word for it. Call all of your creditors to make sure they’ve approved your DMP.

The sixth secret – be sure to make your payments every month

It’s incredibly important that you make your payments to the credit counseling agency or debt management company every month. And you must make them on time. If not, your plan could be canceled, leaving you in more trouble than when you signed up for it.

Secret #7 – keep copies of everything

Be sure to keep copies of all your loan statements and credit card statements to ensure that they reflect what you agreed to in your DMP. For example, if your DMP included waived fees or lower interest rates from your creditors, review your statements every month to ensure that they show those concessions have been made. If not, call both the credit counseling agency and your creditor to discuss the issue.

The post The Secrets To Making A Debt Management Plan Work appeared first on National Debt Relief.