Financial Crisis 101: What To Do To Survive

A financial crisis can strike anytime. This is not being a pessimist. It is simply being realistic. You want to be prepared for any event because emergency situations can get you into debt. Take for example the 2008 recession. Nobody expected that a lot of jobs will be lost. Managers were not exempt from losing their positions. In fact, a lot of executives had to swallow their pride and ended up doing blue collar jobs just to have an income to support their families. Their lifestyle and accumulated debts added to the difficulty of the financial crisis.

When these financial situations strike, here is nothing that you can do but to try and adapt. You may want to berate yourself for failing to save enough emergency fund but that would be useless at this point. In fact, it will be a waste of your energy to do so. What you have to focus on is how you will survive this moment in your life and implement the right money management tips to stretch your savings as long as possible.

Fortunately for you, there are things that you can do to help you get over the situation. As soon as you can see that a financial crisis is in the horizon, you may want to do the following:

• Take a look at your savings account. You want to know how much money you have and how long it will last you. This is one of the first things that you need to do – especially when your crisis is brought about by a job loss. You want to find out how long you can last without having any additional income. It will put the sense of urgency in you in finding another means to get some cash coming in.

• Choose a debt relief program. Almost all households in the country are in some form of debt. If you already know that a crisis is about to hit you, make sure that you read about your options to get out of debt. You want to minimize the amount of money that you will waste on interest – especially when you know that you will be living on a smaller income very soon. It is important for you to eliminate this debt – if you can.

• Prepare a frugal budget. You also need to do this as soon as possible. You want to save as much money as you can while you still have money coming in. Strip your budget of the expenses that you think are not necessary. Anything that you can cut back on must be removed. If you have a hefty amount of emergency fund, it may be possible for you not to follow this budget yet. But if you do not have enough, then you should implement it immediately.

• Do not buy anything expensive. If you planned on buying a home or a new car, you may want to postpone it for now. Even if you already saved up for the down payment, do not use it. You can add that to your emergency fund.

Of course, you want to start looking for new sources of income to replace what you have lost. Not only that you want to pay attention to the things happening around you. That way, you can gauge how long it will be before the crisis will pass.

What Are The Usual Complaints Against Credit Counseling Agencies

One of the differences between debt consolidation and credit counseling is the presence of a debt expert. With credit counseling, you get to hire a credit counselor who will help you with your difficulties with debt. That is not present in debt consolidation loans.

While enlisting the help of professionals is a good idea, you should understand that it does pose some risks. Unfortunately, not all credit counseling agencies that offer debt management services are legit. You need to learn how to spot the scammers from the not so you can protect yourself from getting scammed out of your hard earned money. If you are not careful, you could end up in a worse situation that when you started with the credit counselor.

Given that, here are three important complaints that are usually filed against credit counseling agencies. These are all in violation of the Telemarketing Sales Rule or the TSR and is implemented by the Federal Trade Commission (FTC).

Charging upfront fees. This is one of the first things that will tell you if a company is legal or not. No legitimate company will charge you with upfront fees because this is in direct violation of the TSR. So if a credit counselor is trying to get an upfront fee before acting on anything, you know they are not after your best interests.

Misrepresentation of services and products in advertisements. Another popular complaint against credit counseling agencies is when they promise to give you certain services and end up giving you something else. These are the companies that feeds you with promises that are not like what they will give you in reality. They use these false advertisements just to get you to sign up with them. This is not allowed by the law. You have to make sure you read the details of your contract before signing or paying them anything.

Failure to be transparent when it comes to processes, charges and fees. When you are inquiring with a credit counselor, they are mandated by the law to provide truthful information about the company, the processes and the fees involved. They cannot oblige you with anything to receive this information. It should be given freely, with no obligation to sign up with them. This is how you make a smart decision about the debt relief program you will use and they should not hinder you by keeping information from you. Not only that, this is your protection to ensure that you will not be charged with anything that was not discussed prior to the signing of the contract.

If you think that the credit counselor is in violation of any of these three, feel free to file a complaint yourself. You can do so through the FTC.gov website, the Better Business Bureau (BBB.org) and the office of the State Attorney General near you. These are the places where debt relief complaints are filed.

Remember that you need to be careful because scammers prey on the desperate. Although you may be feeling quite desperate right now, it does not mean you have to rush through things. Make the right choices from hereon and you will never have to repeat any debt relief program ever again.

How To Negotiate Your Debt With Creditors

Do it yourself debt relief is not easy. You need to be careful about how you do it because it could end up costing you more than what you can afford to pay. Debt negotiation is usually best left in the hands of a more capable professional but in some cases, this is not a luxury that we can afford. The service fee may not be big but for someone who is trying to pay off a lot of debts with limited resources, it can be significant.

This is usually why some people muster the courage to negotiate their own debts with their creditors. It may be hard, but it is not impossible.

Here is where we hope to help you out. There are a lot of rules when it comes to debt negotiation but 3 of them stand out among the rest.

Do your research

First of all, you want to do your research. What you lack in experience and expertise can be compensated with adequate research. Apart from the process of the debt relief program, you need to research the laws that will help you too. Things like the FDCPA (Fair Debt Collection Practices Act) is a good place to start. You can read about it through the Federal Trade Commission or the FTC.gov. The idea is to identify the laws that details your rights as a consumer. You need this information because debt negotiation involves haggling. You want to make sure that you know when the creditor is bluffing or not. When you have the information that you need you can plan your strategy.

Be sincere, patient and consistent

The next important rule is to be sincere, patient and consistent. You want to be sincere because if the creditor finds out that you are only trying to get out of paying what you really owe, then they will not be cooperative. But if you are sincerely in a financial crisis, you just have to be patient while negotiating with the creditors. In most cases, you will be negotiating to lower your debt and that means less profit for the creditor. You should expect that they will not agree immediately. But if you are patient, it will all work in your favor. Just make sure that you are consistent in your story and never agree to a payment that you cannot afford.

Document everything

When you have reached an agreement, you may want to put everything that you have discussed or agreed on in writing. You want to make sure that you agree on the same thing and that the creditor will not go back on their word once you have lived up to you side of the bargain. Every important detail must be stated in the document and it should be signed by a person of authority in the creditor’s office – or at least an authorized collector.

The task of negotiating your debts is not an easy task to accomplish but with the right knowledge, you can make it happen. Just make sure that you learn your lesson this time and make better financial choices in the future.

Dealing With Holiday Debt

So Christmas day has come and gone. Our bellies were full with the feasts we ate. Our hearts were filled with joy as we spent quality time with loved ones. But our wallets are empty for all the expenses that we had to make to ensure that the season is a memorable one.

Not to be a downer or anything but this is what a lot of consumers are probably going through. Despite the good cheers and the wonderful feeling of gift giving, it all becomes tainted when we are faced with the reality of holiday debt.

But here’s the truth. You do not have to be in any debt to enjoy the season. While the expenses will surely be bloated come November and December, it does not have to lead us in debt. If you are feeling the reality creeping in as you wait for your credit card statement to arrive, then you know the lesson that you need to learn here. The early bird does not only get the worm, they also stay out of debt.

If you are already in debt, do not fret. There are ways for you to get over that and there is no use trying to stress yourself out because of it. Hold on to that fleeting joy that you felt during the season and follow these tips to get yourself out of holiday debt.

First of all, you have to identify your debts. Start by computing how much holiday debt you accumulated. This will help you come up with a target amount. If anything, it will help you create a debt payment plan. If you already have existing debts prior to this holiday debt, it is ideal that you do not mix them. Try to pay this off as soon as you possibly can.

The second task that you have to do is to increase your disposable income. This is the extra money that is left after your basic needs are spent. There are two ways that you can increase your disposable income.

One is to cut back on your expenses. The holiday feast should have resulted in a lot of leftovers. Utilize them and brown bag your lunch to work. If you live near your office, try to bike or walk to the office. After all, you need to burn all those calories that you gained while devouring all the feasts you encountered.

The other way to grow your disposable income is to earn more money. You do not have to go far because you can increase your income by taking on online jobs. You can do freelance writing or you can upload the best holiday photos that you took so they can earn you extra money on photo sharing sites. Feel free to upload the food and the happy faces of your family and friends – as long as you tell them about it first.

You can also browse through the gifts that you got this season. If there are some that you think you will not use, then sell them. It might seem callous but if you know that it will just acquire dust, then just be practical about it. You remove the clutter and you will benefit from the profits of that sale.

You do not have to completely ruin your holiday memories by the debt that you acquired. Just make sure to never put yourself in the same situation again.

How To Get Debt Payments Without A Regular Job

Being in debt is okay. After all, there are good debts that can propel you to financial success if you learn how to use it correctly. In fact, debt only becomes a problem when you can no longer afford to pay off your credit balance.

In most cases, we get into trouble when we lose our source of income. Our reckless borrowing were made with the confidence that we will never run out of income to pay it back. But here’s the thing: nobody is indispensable. One moment you are earning a six figure income and the next, you are unemployed. If th3e unexpected happens, what can you do? More specifically, what can you do about your monthly debt payments now that you do not have a regular job?

While the panic may be creeping up right now, you need to keep your head above the emotions tumbling inside you. It is okay to feel the pain and disappointment over you current predicament but do not dwell on it. You need to come up with something to keep yourself from falling over the edge completely.

The first thing that you have to do is to look at your finances. Check your savings and see how much you have in your account. Calculate how long it will last to tide you and your family over. This way, you know how much breathing space you have left. If there is not, then it is okay. It simply means you have to act a lot faster.

The next step is to look at your budget. You need to strip down to the bare necessities – at least until after you have another source of income to sustain it. If you have some savings, you do not have to be so drastic with your changes. But if you failed to prepare an emergency fund, then you need to be brutal about all your cutbacks. Eating in restaurants is out of the question. Using your car can also be scrapped if it means the public transportation will cost less. It also means buying in bulk once a month to save on gas. These little savings will really mean a lot as you try to stretch your money. Make sure that you consider your debt payments here to see how much you can afford to pay every month.

The third step, obviously is to look for a means to earn money. It doesn’t have to be permanent – as long as it will generate you some income to add to your savings. You can use your hobby to create products that you can sell. You can go to outsourcing sites like Odesk.com or Elance.com to do some freelancing jobs. There are many things that you can do to get a temporary source of income. You can even wait tables if you are up for it.

The fourth step is to look for a debt relief program that can help you pay for your debts. There are options like debt settlement that works to give you debt reduction. You will negotiate with your creditors and make the understand that you are in a financial crisis. You will then offer to pay only a portion of your debts and whatever is not covered will be forgiven.

Unemployment can lead you to despair especially when it comes to your debts. But if you are resourceful enough, you do not have to fear anything.

Using The Holidays To Earn More Money

The holidays are almost upon us and while kids are jumping for joy because they will be receiving gifts, adults are not as enthusiastic about it as they used to. While no expense is enough to dampen the holiday cheer, the impending costs to make the joyful season enjoyable is in our minds.

Fact is, we need to boost our budget for this season and the prospect of using credit for it is not altogether a happy thought. But even as you need to pay for a lot of things like gifts and the shared feasts, you only have to earn more money to help finance this once a year spending. But how can you achieve this?

Fortunately, the seasonal spending also comes with a once a year chance to increase your income. If you want to know how to make money during this time, then we encourage you to read on. There are many things that you can do that will feed off the needs of the holiday consumers. You do not have to resign to holiday debt in order to afford all of the things that you need to buy. You just have to exert some effort into it.

Here are some of the things that you can do.

• Gift wrapping service. All those gifts need to be wrapped and you can use your weekends to do this for your clients. You can even offer to pick up and deliver the gifts as part of the service. You can do it at home after you arrive from work or during the weekend.

• Shopping service. Whether it is for gifts or groceries, you can help your clients buy the things that they need without sacrificing their time. If you have very good taste when it comes to gift buying, this should be a great way to earn extra money.

• Baking. Giving cakes and pastries as gifts is increasingly popular today. You can batch a batch of cookies or cupcakes – as long as you can deliver it immediately, this can be a great product to sell. Package them in creative containers and it can be an immediate gift for family and friends.

• Create hand made Christmas cards (or create digital ones). If you have the creativity in you, feel free to use it to create these seasonal cards.

• Approach retailers to lend a helping hand. Another way to earn more is to have yourself hired by retailers. The holidays is a time when a lot of consumers flock their stores and they will need all the help they can get. Why not you? Go ahead and apply. You might even enjoy discounts on items that you can use as gifts for your own family and friends.

If you are resourceful enough, you can find the means to finance all your holiday needs. You do not have to put yourself through debt if you do not have to. Enjoy the season and do not let your limited funds dampen the holiday cheer.

Declined Debt Consolidation Loan? Read This

Deciding to use debt consolidation loans to help you out of debt is a great choice. Applying for a loan that is big enough to pay for your multiple obligations will help you simplify your payment scheme. The idea is to use this loan to pay the other debts that you owe. That is how you consolidate your other debts and put it under one lender. There is no debt reduction and you still get to pay for everything that you owe. Only this time, the monthly payments will be lower because you have stretched the payments over a longer term.

But here’s the thing: what if your loan is declined? What should be your next step?

Your plans may seem like going up in smoke at the moment and you may be unsure of what to do to get yourself out of debt. Well good news is, there are other debt solutions that can effectively get you out of debt. But before you look into that, here are some things that you may want to do first.

• Know the reason behind the decision. Find out why the lender declined your loan application. If it is your credit score, you have the right to ask where they got the report from so you can check out for yourself. If it turns out that the entry on your credit report that made them decide to disapprove your application is false, then you can work on correcting that entry. Then the lender can probably reconsider their decision.

• Work on the problem that caused your loan’s disapproval. Now that you know why you got declined, you can work on that. If it really is a bad credit score that robbed you of your debt consolidation loan, then focus on improving that by paying your dues on time. Make some sacrifices so that you can get approval on the next loan that you will apply to.

• Increase your income. Sometimes, the reason why lenders do not want to approve of your loan is because you do not have enough income to pay off the loan. Increasing your income might help solve this.

When you have done these and it still seems like you will not get an approval for a debt consolidation loan, then it may be time to look for another debt solution. Or if you think that it will take you a long time to correct the reason why you got declined, then don’t waste any more time to check out your other options.

If you want to stick with consolidating debt, you have debt management to turn to. This program involves a credit counselor that will help you create a debt management plan or DMP. This plan will contain your proposed low monthly payment that the creditor will have to agree to. When they do, you will send a single payment to the credit counselor who will send the payment to your various creditors. Although you have to pay a minimal amount for the service, you get the benefits of a debt consolidation loan.

3 Options To Earn More For Debt That Will Not Burn Your Out

When you are in a financial crisis, one of the things that you want to do is to get out of the problem. Oftentimes, this crisis involves too much debt that your income cannot afford to pay in full. Since debt is evidence that your expenses are greater than your income, you obviously need to earn more even as you cut back on the unnecessary spending. While cutting back will give you savings, it may not be enough for your future needs. So why not try to earn more right now? Use your financial problems as your motivation to work harder.

But the thing about putting in more time in your work is that you will be in danger of burning yourself out. If you have to earn money to pay off your debt obligations, make sure that it will not be at the cost of your health. You may want to consider finding a second job or another source of income that will not burn you out.

Here are three options that will give you more income without exhausting yourself.

Getting an online job. The best thing about an online job is you do not have to step out of your home to earn more. There are work at home jobs that can be done over the Internet and they pay great money. If you are a writer, you can get projects and write for clients. You can make designs or develop websites. You can manage emails or coordinate travel bookings. These can be done online and you get to stay close to family. If you feel tired, you can lie in your bed to rest. You don’t have to travel to go to work. It will be very convenient for you.

Passive income. A passive income business is a great way to earn more without tiring yourself too much. The idea for a passive income source is you will only work on it or invest on it in the beginning. Then, it will continue to earn you money even if you only make minimal input on it. For instance, a rental place should be a good  idea. If you have an extra room at home or you can convert your garage into a studio apartment, have it rented and put the extra money into your debt payments. Taking beautiful photos then uploading it on photo sharing sites can also earn you money. It may not be a big amount but it will add up someday. Writing an ebook and selling it online is also another option. As long as people are paying to get what you created, you will keep on earning.

Earn from a hobby. The thing about earning from your hobby is it will not feel like work at all. Since you love doing it, you can perfect the skill that you love to do and earn from it. If you love to bake, this is something that you can earn from. If you love playing an instrument, you can offer to give out lessons. There are so many hobbies that you can actually capitalize on.

Although these three will still require you to exert some effort, you will not feel as burnt out as you would if you got a traditional job.

How To Shift From Debt Consolidation To Debt Reduction

Debt consolidation is a great way to get out of debt – especially when all you ever needed to do is to restructure your debt payments. Some people do not really have problems making payments because they have enough income to support it. They just needed to consolidate multiple credits so they can monitor the progress of every monthly payment made. The best thing about this is, it takes care of your credit score as you work on getting yourself out of debt.

But that is just it. This debt solution is only effective for those who have the finances to afford their debt payments. In case you do not, then you cannot afford this debt solution. You may have to shift your debt relief efforts from consolidation to reduction.

Debt consolidation will help lower your monthly payments but that is because you will stretch your current balance over a longer payment period. You will still end up paying for everything that you owe. With debt reduction, you will really ask the creditor to forgive a portion of your debts so you end up paying a smaller amount.

So how do you make a shift if you already enrolled in the debt consolidation program (also known as debt management)? Here are the steps that you have to follow.

First is to inform your credit counselor. Since the program involves a credit counselor, you may want to inform them before you do anything. They are a going to help you with a couple of things.

• Figure out why the debt consolidation program is not working.

• Help you analyze your finances to try and make it work.

• Advise you of the next best thing that you can opt for as a debt solution.

Getting the professional advice of a sincere credit counselor will confirm if the debt reduction solution is the right path for you.

The next step is to ask the credit counselor if they offer debt reduction in the form of debt settlement. If they do, you can opt to hire their services. At least, they already know your debt and financial situation. But in case you want to do the settlement on your own, then you will have to terminate the service of the credit counselor entirely.

The step that follows will involve the actions from the credit counselor. They will have to inform your creditors that you have decided to stop your debt management plan. They will either let the creditor know that they will no longer represent you or that they will now work on debt settlement instead of debt consolidation.

Regardless of  whether you will pursue debt settlement with the counselor or by yourself, request for a report that lists the debt payments already made to the creditors during the debt management program. This is so you can plan your debt settlement program depending on where your balance currently stands.

After all of these, make sure that you will stick to your payments this time. If you will pursue debt settlement on your own, do your research to know what to expect in this new program. Try to make it work this time so you will not waste time by shifting to another debt relief program.

Should You Get Rid Of Your Credit Cards Entirely?

It had been an ongoing dilemma for consumers to get rid of their credit cards. After the economic crisis of 2008, we all realized how bad credit card debt really is. A lot of us decided to just simply get rid of the purchasing tool altogether. As we paid off our debts, we vowed to never use the card again. Although it was tough, some of us managed to do it. In fact, a lot of the Millennials, seeing how it affected both their parents and grandparents, decided to not bother with the card. They refused to apply for one and we are all wondering how this will affect their lives.

Living without credit cards may seem like a good idea but you have to think about a couple of things first. There are reasons why these cards are preferred by a lot of people. For one, it helps you build up your credit score. Of course, your student loans may be on your credit history already but it is hardly enough to make your credit report adequate. You may find that you still have a low credit score despite your efforts to make every student loan payment on time.

The great thing about credit cards is it allows you to use credit time and again without the need to reapply for it. This is how you build up your credit score. It also enables you to enjoy cashless transactions that basically safeguards your cash from thieves. When you lose your card, you can simply call your creditor to alert them of the theft. They will give a notice to all merchants to ask for additional identification in case someone tries to purchase with it. That is a protection that you will not get from cash.

If you think about it, the problem with credit card debt does not really stem from the actual tool itself, but from the way we have decided to use it. If you only learn how to utilize it properly, then it may not be such a destructive financial tool.

Here are tips on how you can use your card without it leading you to debt.

• Budget what you will spend. The problem with credit card spending is the fact that it is difficult to control. But if you put it on your budget and you plan how you will spend it, you can keep yourself from overspending.

• Pay your dues on time. Do not let late penalty fees grow your debt unnecessarily. Try to keep your debt from growing by simply following the rules and sending in your payments on time.

• Pay the balance in full within the grace period. This is another trick to keep your purchase price from growing beyond its real value. Do not let the finance charge be added to your debt by paying the balance in full before the due date.

• Refuse any intention to increase your interest rate. Some people do not know that they are allowed to refuse any interest rate increase from creditors. If you get this notice, just say no to them. They can choose to cancel your account but that is the least likely option that they will follow. You will either negotiate with them or agree to keep your old interest rate.

If you know how to use your card, you don’t really have to be afraid of it. You can keep one or two of them without being put in too debt.