Living Debt Free & Obtaining a Secure Financial Future

Debt is something that affects debtor’s personal & family life and he or she has to suffer a lot due to economical problems. His or her life becomes critical with the burden of debt over his head especially if they are averse to using debt settlement companies. His or her family life is affected badly because they have to pay a large amount of ever fluctuating monthly income as installments to the creditors. There have been several instances when debtors have been harassed by creditor’s burdensome phone calls & the collection agencies money recovery process making it have a bearing on one’s psychological self. Let’s admit it we don’t want creditors to always knock on our doors. Debtors have to face the legal notices from the creditor’s side for money recovery. Some times when the person faces economic hardship he is not able to pay heavy installments, a debtor cannot afford to pay the installments on time and the interest keeps on increasing as they have stopped paying for installments. This force those to lead a life full of tension.

Now the question arises how to get out of this critical situation, and get out of debts? Is there any alternative for this? Yes definitely there are handful of options for getting out of debts and living a life. You would go about it a few ways, one of them being by contacting a debt settlement firm, go bankrupt or try to figure it out on your own without any help.

Some people opt for a bankruptcy path but there are lot of pitfalls of that .So don’t opt for bankruptcy if possible, seek a professional advice from a professional debt settlement consultant or a debt settlement company. They can handle your case in a very sensitive and sensible manner as they are expert & experienced in handling most unsecured debt. However going with a professional debt consolidation service that will negotiate with your creditors on your behalf and start you on a consolidation program is a better alternative. Professional debt consultants are experienced and skillful and are expert to handle even unsecured debt.

So what does actually debt settlement companies do?
They combat with your debts and manage your debt more efficiently and make you tension free. Prior to taking the actual plunge of consolidating his debts, a debtor can take assistance from a debt counseling session and find out his or her bankruptcy alternatives. A debtor can also avail the services of a debt settlement company. These companies not only guide debtors through the entire debt consolidation program but also prepare them to handle their debts more efficiently in future. A debtor in the US can opt for a wide range of available debt settlement solutions. They help reduce your debt up to 65 %. They deal with your debtors and make an agreement on your behalf. The agreement is all about your installments and your debts .They settle for the amount less then you were supposed to pay previously so that it makes you afford these installments. Moreover they propose the easy installment plan for you then what you were you were paying previously .So that you can afford to pay your installments and help you get out of debt. Actually a professional debt settlement company obtains best possible deal for you and tries to help you in every possible manner to make you debt free and help you to secure your financial future.

The 12-Step Get Out of Debt Program

At our Credit Care Blog that brings you articles and resources on debt management and debt negotiation, we strive to bring to you the best resources from the web through which you benefit and get out of your debt. One of our golden finds has been the following articles that is exceptionally well written and is being reproduced with the author's permission under GNU guidelines. Read on.

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Debt is a major problem for a lot of people these days. The problem is, even if they know they want to get out of it, they have a hard time figuring out how to start.

If you fit this description, this 12-Step program spells it out for you.

Now, there isn’t one way to get out of debt, and the best program should be tailored to each person’s individual situation. But if you feel like you just don’t know how to begin, this program is designed to give you a sort of guide — one that should be adjusted to fit your financial situation.

It’s aimed not at people who have their finances together and are just trying to pay off a credit card or two. It’s aimed at those who have trouble finding any extra money to pay off debts, who seem to find themselves getting deeper and deeper into debt, and don’t know how to stop it. In other words, it’s a bit of an emergency program.

Disclaimer: I’m not a financial advisor, and if you are in need of one, I suggest you find a qualified advisor. My only qualification is that I’ve made great strides in getting my finances under control, in starting an emergency fund, in paying all my bills on time, in not getting further into debt, and in eliminating my debt (I should be done by the end of this year). This program is based on my experiences, and on the large number of books and websites I’ve read.

The Zen Habits 12-Step Get-Out-of-Debt Program

1. Acknowledge the problem. The first step is admitting you have a problem. The first week, all you have to do is say to yourself, “I have a problem with debt. I got into this because I spend money I don’t have. But I believe that there’s a way out, and I can do this. I can control my spending, make a plan, and slowly get out of debt.” That’s a major step. Now set aside just 30-60 minutes a week to deal with your finances — make it a set day and time, and don’t let yourself miss this appointment.
2. Stop digging. If you’re in a hole, the first step is to stop digging, and that’s what you’re going to do this second week. For 30 days, see if you can stop any non-essential spending. If you have a major problem with credit cards, cut them up. If you’re not so bad with credit cards, at least put them away and don’t buy stuff online for one month. What’s essential? Obviously your bills, housing, auto, gas, groceries … that kind of stuff. Non-essential? Clothing, CDs, DVDs, books, magazines, gadgets … you know what I mean. Just 30 days. After that, you can decide how much to spend on these things.
3. Make small cutbacks. This third week, take a look at things you normally buy and see if you can cut out a few of them, or spend less on them. Groceries? See if you can buy house brands instead of name brands. Coffee? Make it yourself at home instead of buying out. Lunch? Try packing it to work instead of eating out. Add up what your cutbacks will save you this month.
4. Start an emergency fund. This fourth week, set up a savings account, if you don’t have one already, for an emergency fund. Now take the amount you saved in Step 3 (and even in Step 2 if you think you can make them last for awhile) and set up a regular automatic deposit from your checking to this emergency fund savings account for this amount. It’s important that before you start paying off debt, you have at least a small emergency fund. Aim for $1,000 at first, and you can grow that later. The reason: if unexpected expenses come up, and you don’t have an emergency fund, you will skip your debt payments to pay for the unexpected expenses. The emergency fund protects your debt payments.
5. Take inventory. OK, this is a step that we don’t like to take. But take a deep breath. You need to do this. Remember what you said in Step 1? You can do this. This fifth week, set up a simple spreadsheet. In one column, list all of your debts — credit cards, medical bills, auto loan, etc. You can leave out your mortgage, but put everything else. In the second column, put the amounts you owe for each debt. In the third, put the minimum monthly payment, and put the percentage interest in the fourth column. Total up the second and third columns to see your total debt owed and how much you have to pay, at a minimum, towards debt each month.
6. Make a spending plan. We don’t like to do this step either. But it’s not going to be as painful as we think. This sixth week, set up another simple spreadsheet. In one column, list your monthly bills (rent or mortgage, auto payment, utilities, cable, etc.) — everything that is a regular monthly expense. Then list variable expenses (things that change every month) like groceries, gas, eating out, etc. Later you should add irregular expenses (stuff that comes up once in awhile — less than once a month) such as auto and house maintenance, clothing, insurance, etc. But we won’t get into that now, as we want to keep it simple. In the second column, put down the amounts for each. Be sure to put enough for things like gas and groceries, as you don’t want to be short. Be sure to also include your minimum debt payments and your emergency fund deposit. Now, list your income sources and monthly amounts. There. You’ve got a temporary spending plan (you’ll want to add the irregular expenses later). Now, if the expenses are greater than the income, you’ll need to make adjustments until the expenses are equal to or less than the income.
7. Control spending. If you’re into your seventh week of this debt plan, you may find it hard to keep track of your spending and ensure that you’re sticking to your spending plan. Here’s the key: first do the emergency fund deposit. Then do the debt payments. Then do your monthly bills. Then withdraw the variable amounts in cash, and put them into separate envelopes. It’s old-fashioned, but it works, as you don’t have to worry about overspending. When your envelope is empty, you can’t spend anymore. Continue to cut back on non-essential spending as much as you can at this point, so you’re able to stick within your spending plan.
8. Pay bills on time. This may be a problem for a lot of people. It’s important, if you want to get out of debt, to start paying all your bills on time. If you follow the payment plan outlined in Step 7, your bills should be paid before you get to any discretionary spending categories. At this point, you want to focus on getting those bills paid on time, and making it a habit. If you have trouble remembering, try one of these methods: 1) pay bills as soon as they come in — take them to the computer and pay them online, or write out a check and prepare the envelope to be mailed the next day; or 2) set up a reminder in your calendar program to tell you when bills are due.
9. Start a snowball. Now that your finances are relatively under control, you can start a debt snowball. At this point, you should have the beginnings of an emergency fund, you should know how much you owe, you should have a temporary spending plan, you should be paying bills on time and controlling your spending. Now you can focus on paying your debt. Here’s what to do: If you can find at least $100 from your spending plan, use that to start your debt snowball. You may need to cut back on discretionary spending (as you did in Steps 2 and 3). Or, once your emergency fund is at $1,000, you can use the amount you were putting into that account for your debt snowball. If you have trouble finding $100 for a debt snowball, you need to look at what other expenses you can cut back on. OK, once you’ve found at least $100 for your debt snowball (and more would be better), take a look at your debt spreadsheet. First, order the debts from the smallest amount owed to the largest. Now, look at your smallest debt owed — you will start by paying $100 (your debt snowball) plus the minimum monthly payment on that debt each month, until the debt is paid off. When the debt is paid off, you will take the amount you were paying on it (let’s say $50 monthly payment plus the $100 debt snowball for a total of $150) and pay it to your next smallest debt, until it is paid off. Continue to pay off your debts, one at a time, until they are all paid off. Now you have a large sum you can put into growing your emergency fund, and funding your irregular expenses, and finally start investing.
10. Find larger cuts. Once you’ve controlled your finances and started your debt snowball, there are ways to increase the snowball — and hence the speed with which you get out of debt. Look at your larger expenses — are there ways you can eliminate or cut back on them? Can you sell your car for a smaller, used model? Can you find a smaller house or apartment to rent? Can you sell your house and rent a cheaper one? Can you get by with one car? Can you eliminate some services you’ve been using? Whatever cuts you make, apply that amount to your debt snowball — don’t spend it.
11. Grow your income. Another great way to get out of debt faster is to make more money. Look at ways you can make money on the side — or ask for a raise or get a better job. Take 30 minutes to brainstorm. Are there ways you can start a small business online? Sell your valuables on eBay? Start freelancing on the side? Get a part-time job? This only has to be temporary, but the more money you make, the faster you’ll get out of debt. Be sure to apply your new income to your debt snowball.
12. Track your progress. On your debt spreadsheet, be sure to update it every payday (or however often you pay debt) so that you can see your shrinking debt amount. You should be able to calculate how many months you have left before you’re completely out of debt. It may be a long ways off, but it’s within sight!
13. Bonus step: Celebrate! It’s important to celebrate, not only when you’re out of debt, but along the way as you eliminate each debt. Have fun! Make this an adventure. It can be amazingly satisfying to stop spending and gain control of your finances instead. Find free entertainment, make it a challenge to be frugal and save money and find cheap used stuff. Pat yourself on the back along the way.

Article Source: Zenhabits.net

Debt Settlement Companies

Are there substantial debts with you that you have either blocked paying on or have been paying on without much balance going down? Do you have a solution through which you can settle these debts for less than what you actually owe to the companies? Sure!! there is and that is what debt settlement companies do. A debt settlement company helps you negotiate a settlement amid 30% and 60% of what you owe on your debt balance in most cases. The catch is you have 30 days at the maximum to come up with the money to pay it off. Following few scenarios elaborate on debt settlement companies and how they may be used to benefit from.

So, when should you consider using a debt settlement company?

You need to be able to pay the debts you want to settle off in full so there are a few times that this type of company comes in handy. The great thing about this type of debt-removal method is that it covers multiple types of debt and loans, such as student loans, medical bills, credit card debt, IRS payments, bank loans, and other types of debt that you may have accumulated.

If you are refinancing your home to pay off some debts, then this is the ideal occasion and method to try to save money by having the selected debt settlement company get you a smaller balance to pay off the debts you have amassed over a period of time. Since you will have a large amount of money at your disposal with the refinance you can have them negotiate settlements for your debts and you can have them paid off fairly swiftly.

But before you make a decision to seriously select any one techniques of taking care of your debt, do your research and make your mind up accordingly about what way would be best for you. You don't want to make a rash decision that you end up regretting later. It's important you make that decision based on your capacity and capability to pay. Before you go with any one company, it's highly recommended that you do your research thoroughly on the companies being considered by you, because not all of them may be ethical, sincere and genuine. The best course of action you can take is to be as knowledgeable as possible about what you’re getting yourself into. If you make a bad decision, it could hinge you on the fine line between financial freedom and bankruptcy. More information here > Debt Consolidation

Debt Consolidation

Debt consolidation is the solution people automatically tend to think of when facing problem levels of personal debt. At first glance, it makes sense to use debt consolidation to consolidate various higher-interest balances into one monthly payment at a lower interest rate. It sounds great in theory, but even after consolidating, many people often find themselves slipping deeper into debt and are merely borrowing more money to pay off debt. They're just "buying time".

There are essentially three types of borrowing methods available. There are debt consolidation loans, balance transfers to another credit card, and home equity loans or lines of credit. While any of these methods may help some people get a handle on high interest debts, many others only find temporary relief and are right back where they started. in debt and in need of a real solution for paying it off. According to statistics, 70 percent of Americans who take out a home equity loan or other type of loan to pay off debt end up with the same or higher debt amount within two years.

Debt Consolidation Loans

Offers for these financial products may show up in your mailbox or e-mail everyday suggesting this as the solution to your growing debt problem. A major selling point of debt consolidation loans is convenience. Instead of paying multiple creditors who are charging different rates at different times of the month, you can potentially take out one big loan to pay off all your accounts.

The biggest myth about debt consolidation loans is that they're easy to get. While these loans may promise a low rate and no-hassle solution, many people in debt don't qualify for the advertised rate due to a high debt-to-income ratio or previous late payments on their credit report.

Even if you do qualify for one of these loans, it doesn't automatically translate to savings. Before you sign on the dotted line, be sure that the costs of the new, bundled loan will truly be less than what you're already paying various creditors. For many consolidation-loan candidates, their current credit woes mean they won't get the lowest-available interest rate. Plus, when there is nothing to secure the loan (such as your home), expect the lender to bump up the rate.

Home Equity Loan or Line of Credit

Home equity loans or lines of credit are often advertised as a quick and easy way to get out of debt. By leveraging your home equity, the sales pitch goes, you can get money to pay off your debt and perhaps get a tax break as well

While this option can work for some debt-burdened homeowners, borrowing against your house can backfire. Although you may be reducing your credit card payments, you now have a larger mortgage payment, for a much longer period of time. Over the life of the loan with all the additional interest, you will end up paying back your original debt many times over. With these types of loans you are converting unsecured debts into secured debts which ultimately leads to the biggest risk for a homeowner. If you run into trouble again and have difficulty making the payments on the new loan, you could risk losing your home to foreclosure!
Balance Transfers

Some people turn to low or zero interest credit cards to transfer debt. With this option, timing, discipline, and excellent credit are required.

Many credit card companies offer these rates as teasers - to lure you in to switch credit card vendors. Most of the time, these credit card companies target consumers with better credit. Just because you receive a pre-approved offer for a low rate balance transfer doesn't guarantee that the rate will be lower or that you will even be approved at all.

If you do qualify for a zero-percent or low interest rate, that promotional rate won't last forever. Most promotional rates increase significantly after 6 to 12 months which often leaves you once again with higher payments or struggling to find a new balance transfer offer.

Promotional interest rates only last if you pay on time. One late payment and the credit card company will jack up the rate. Also look for hidden fees and charges that can increase the actual cost of credit.

In most cases, the balance transfer game is a short-term fix. Many people find themselves merely transferring balances from one new card to another before each promotional rate expires. Opening new credit card accounts every six months, however, could negatively affect your credit rating. Very soon, those new credit card offers you depended on might disappear and lead to more debt.