Control High Interest Debt

By Ridwan

Your net worth is your assets minus your liabilities. Liabilities are debts. The more debts you owe, the lower your net worth will be. Plus whenever you have debts, you also pay for the interest, that’s why you lose more.

For practical reasons, it’s understandable why people sign up for loans. Take for example, buying a car or a home, it’s hard to shell out cash here and there. That’s why debt is a tool that when used wisely can benefit the borrower. However, the borrower must comprehend that a debt is still a debt and must be paid in due time – with interest.

When people don’t manage their money well, they get in financial trouble. It’s a cycle. They run short of cash, that’s why they borrow. Then they’re not able to stick to a budget so they can’t pay the debt.

Reasons why people get into serious debt are:

- Unemployment
- High cause of medical bills
- Settling divorce finances
- Spend-aholic or could not control spending
- Wasn’t able to save
- Not in the know on financial and credit matters

When talking about health, prevention is always better than cure. That’s the same with your money, better to save for a rainy day.

Here are some tips:

Make a budget and do your best to stick to it. When it’s payday, have an amount allotted for the bills that have to be paid as soon as possible. This includes setting aside some for credit card debts.

1. Save 10% of your salary for emergency. You don’t know what could happen the next day, next week or next month.
2. When you have a choice of buying a purchase for a lower and practical price, then go for that one. Think, think, think before investing on something.
3. If you have to borrow, research on the loan. Study the interest rate and the penalty fees. Then after borrowing, make a budget of how much you can save so that you can pay when called for.

It is common understanding that when you take out a loan, you repay the principal. The principal is the amount that you borrowed plus the interest.

You can control your credit card debt by looking at the interest rates of any loan you’re considering to sign up for before doing so. Interest rates vary and it is practical that you get one where you wouldn’t lose as much.

As much as possible, have at least one or two credit cards. Too much credit cards in your wallet can indulge you in buying something you don’t really need. You just buy it because you know you can. However, you’re not sure if you can pay off your debt when the occasion arises.

If you want to cut down on high credit card bills, you can:

- Pay cash instead
- Limit yourself on charging. Record it and do your best to not exceed that amount. You must always, always keep track.
- Choose the credit card which offers the lowest interest rate and has no annual fee.
- Just because you’re getting a free gift or a discount on a purchase, you’ll sign up for that credit card. This is their marketing strategy for possible customers.
- Most importantly, pay bills on time. This is for you to avoid late charges, plus additional interests.

Just bear this in mind: if you don’t pay on time then it would be reflected on your credit history. This could result to you having a hard time borrowing the next time. Banks and other credit lenders check your credit history before they grant your loan. Creditors look at the recent two-year history and those who have credit record that contains a lot of late payments, delinquencies or defaults may not be able to get the loan.

To put it simply, in order for you to invest, the best advice we could give is to choose the right loan.

Look for the lowest interest rate. The interest that you save can be spent on other investments.

Studies show that by increasing your monthly payments, it can shorten the payment term on your loan. The longer you wait, the higher the interest you’re paying. Besides, signing up for a shorter payment term equals less agony when it comes to coming up with the money to pay the debt.
The key is maximizing your net worth by minimizing your liabilities and maximizing your assets. Know how much you have and strategize on how you can increase it without losing much of it just to pay fo

Beat Debts With Debt Management

by: Gracie Bishop

Debt management deals with the technique of keeping debts in manageable levels and eliminating them in the long term. It plays a vital role in curbing multiple debts resulting from nonpayment of credit cards, medical bills, personal loans, store cards, overdrafts, etc. A number of tools like debt consolidation loans, debt counseling, etc are used in debt management.

Debt counseling as a way of Debt Management is effective for smaller debts. It is a means of controlling spending habits and requires greater participation of the individual himself. One of the culprits responsible for uncontrolled spending among people is credit cards. Credit cards let people to buy now and pay later which results in unlimited spending. The user knows the credit incurred only when the bill arrives.

At this stage, debt management advices people to restrict expenditure proportionately to income. As credit cards charge very high interest rates, it is suggested that the number of credit cards in use should be reduced. Also individuals must supplement their income to support additional expenditure.

Debt counseling services thus advise borrowers on how to remain debt free in future. It also advises on how to plan expenditures to have enough money in hands to pay any debts. So while applying for debt management, it should be ensured that the agency approached, offers counseling also.

Individuals struck deeper in debt should take debt consolidation loans to eliminate debts incurring high interests. Debt consolidation loans condense multiple loans into a single loan having one single monthly payment. This reduces the overall interest paid, thus saving a lot of money. Also instead of dealing with multiple lenders, one has to deal with a single lender which saves time.

Numerous companies provide debt management services giving advice and actively involve people in controlling and eliminating debts. Whatever be the mode of debt management, at the end every thing depends on the borrower to keep within his limits and get out of the debt mess.

About The Author
Gracie Bishop is associated with UK Debt Consolidations. His articles helps you to find debt consolidation loans even if you have poor credit history. For more information about Debt Management, debt consolidation loan, credit card debt consolidation, personal debt consolidation loans, loans, unsecured debt consolidation loans visit on http://ukdebt consolidations.co.uk/

Tips on Preventing Debt

By Ridwan

Tips on Preventing Debt.

The only time people go to the doctor is when there’s a problem. Working out regularly, taking vitamins and visiting the physician regularly are the best ways to prevent sicknesses. These steps prove that the proper precautions can help patients from ending up in a hospital bed.

Prevention in another form can also be applied to the consumer. Instead of getting sick, the individual can work on a budget to avoid getting into trouble and paying off debt.

The first thing anyone should do is to write down the list of expenses. This can be done weekly or monthly which should includes the amount spent on gas, rent, utilities and clothing.

Next, the person must determine which of these are luxuries and which are necessities. The objective of this exercise is to check how much is earned in a month compared to the amount that is spent.

Should this be more than what the employee is earning, then some cutbacks needs to be made. This should be stripped down only to the essentials so that there is money available in case of emergencies.

Before buying anything, the individual must always ask if this is really necessary. If not, then this is one thing the consumer can walk away from without feeling any regrets.

Sticking to this is very difficult if the person has always lived a lavish lifestyle. The reality is that there isn’t that much money around so it will be a good idea to just put up with it until maybe the salary increases or a better opportunity comes knocking at the door.

The only way to know if the plan is working is by writing down all the expenses made daily and comparing this with the original list done a few months ago. If some money has been saved, then it is effective.

The cash should be deposited in the bank or invested in stocks so that this will grow and earn some extra income.

People need money to survive every single day. This is to put food on the table, clothing to wear, gas for traveling and payment for utilities.

Regardless of the amount of dollars earned monthly or in a year, the person must still know how much money is on hand and where it is spent. This is because it is only through budgeting that debts of small or large amounts can be prevented.