Debt Archives - Page 3 of 5 - Personal Finance (MB)

Getting Out of Debt the Right Way

May 8, 2019August 24, 2013 by Money Beagle

The following is a featured post:

If you’re in debt, you’ll probably be all too aware of the stress that goes with it. And, unfortunately, the bigger the debt the greater your stress is likely to be. It’s no wonder then, that so many people who feel as though they are trapped by debt, often turn to questionable and sometimes dangerous ways to try and alleviate their financial worries. This could mean anything from taking out additional loans to pay off existing debt, to turning to unlicensed lenders who charge excessive rates of interest.

These types of choices are ultimately very destructive to ones personal finance situation. They may help you to clear some of your debt in the short term, but in the long term you will most likely find yourself in more financial woe than you were before. So instead of panicking and making bad decisions, here are three good ways to start tackling your debt problems the right way

Pay Debt Away But Keep New Debt At Bay

May 10, 2019May 20, 2013 by Money Beagle

One of the things I love most about being a personal finance blogger is reading stories about other people who have reduced or eliminated their debt.

Our debt is pretty simple:

A mortgage – We re-financed our original 30 year mortgage (set to pay off in 2037) with a 15-year mortgage in late 2011. This will put us on pace to pay that off in 2026.
A student loan – My wife has one outstanding student loan. It is a private loan with a rate lock of just over 2% and a payment under $100 per month. It’d be nice to pay this off early but we’re not changing our current strategy to do so. Additional cash flow would have to open up.
Credit cards – None. We use credit cards simply to earn cash back rewards
Car – None. We have two cars, both fully paid off.

It’s great as I see a lot of bloggers write about paying down debt, paying off debt, or discussing their personal debt payment strategies. For the most part, they’re usually pretty good.

However, there is one thing that I usually see left off, and that’s to have a ‘No New Debt’ provision, and a plan to reach it.

If you start off with $100,000 in debt, work hard, and pay off half of it, that’s awesome! What if you have $10,000 in debt, and you pay it all off. That’s great, too!

And, with most debt payment stories, that’s often the ‘end’, so to speak.

What it doesn’t address is to make sure that number never goes higher. In other words, if you pay off half of that $100,000 debt, you should make sure to do everything possible to avoid having that number go higher.

Tips for Getting a Personal Loan When You Are Retired

May 16, 2019March 1, 2013 by Money Beagle

Living on a fixed income is not always easy. Unfortunately, retirees often encounter unexpected situations that they do not have enough money in their savings account to cover. It might be something simple like an appliance breaking, or it could be a medical emergency. While older people tend to have good credit scores, they also have a limited monthly income, which may worry lenders. If you need to apply for a personal loan, here are some tips to increase your chances of being approved.

Figure Out What You Can Afford

If you do not already have one, create a budget that shows your income and your expenses. For one thing, it will help you figure out how much of a loan payment you can afford. Secondly, it will also give you something to present to the lender that shows that you will be able to repay the loan. Even if you find out you can afford to borrow more money than you thought, only borrow as much as you need. Do not go any further into debt than you have to.

A New Car Is Little More Than A Drag On Your Net Worth

May 16, 2019February 19, 2013 by Money Beagle

I got a call from our credit union the other day. I used to do all my banking at this credit union until we got married, when we decided to combine our finances, and this led us to consolidate checking and saving services into a nearby bank, meaning that the credit union accounts largely became dormant.

Still, I kept the account active with a little bit of money because for several reasons:

Does Anybody Really Like Debt? Envision Debt Freedom!

May 17, 2019January 4, 2013 by Money Beagle

Debt is one of those things that you will almost certainly have to deal with at one point or another in your life. And, if you’re like most people, it will be something you have to deal with throughout life. Can you envision debt freedom or are you resigned to having debt?

Mortgages, credit cards, student loans, auto loans, the list of things that can add to your debt, are endless.

Good debt vs. bad debt

I’ve seen it said where some debt is considered good because it is tied to something that provides positive value. The two types of debt most commonly associated with this are mortgages and student loans.

Mortgages

A mortgage is tied to an asset that typically appreciates in value over time. Obviously what happened with housing prices recently is a glaring exception, but for the most part, homes will appreciate in value over time. So, if you buy a house for $200,000, take out a $160,000 mortgage, the idea is that the house appreciates in value while you pay off the mortgage. With the numbers I just listed, you would start off with $40,000.

Don’t Fall Into A Spiral Of Debt

May 17, 2019October 26, 2012 by Money Beagle

Paying high interest on credit cards is never a good strategy to building wealth and achieving positive personal finance goals. What is a high rate? These days, 25% is probably considered high.

If you find yourself in a high interest situation, hopefully you are trying to do something about it. Some people continue paying on the debt, hopefully whittling away the debt. Others try to take advantage of balance transfers for lower rate cards.

Regardless of your intent, getting out from underneath a high interest loan is key, because any dollar paid in interest is a dollar you no longer have. Reducing those dollars spent will help put them in your pocket instead.

One of the things that can come up that can really throw a monkey wrench in getting away from high interest credit cards is a situation in which you may not be able to pay even your minimum payment. This can have a long lasting effect on your credit as a late payment can cause your rates to go up even further and could add additional late fees to your account. In certain cases, say if your paycheck is coming a day or two later, it could make sense to look at a short term loan.

Keep in mind timing. Paying the loan off in a couple of days is costly, but can sometimes be less costly than a late fee.

Why Aren’t People Talking About These Early Mortgage Payoff Considerations?

May 17, 2019September 10, 2012 by Money Beagle

One of the more popular topics in the personal finance blogging realm of late has been whether it is advantageous to pay off your mortgage early. I’d say about half of the people out there believe that it’s a good idea, with the other half in the camp of ‘don’t bother’.

Some of the common things that are usually discussed are:

Rate of return – Most who look from a pure numbers standpoint argue against paying your mortgage off early when considering that you could be investing that ‘extra payoff’ money and getting a higher rate of return.
Interest savings – Every dollar you pay off saves interest for the remaining life of the mortgage. Few argue that this is a bad thing, but again, it comes down to whether that savings could be offset by a higher ‘return’ elsewhere.
Personal feelings – Few would argue that there’s a weight placed on getting rid of this debt. How important this is depends on each person and is something that only each person can decide.

These are all important considerations, but if you’re thinking only of these, you’re missing out on some very important things you should be thinking about. Consider these:

Apply for Student Loans: Use a Financial Aid Advisor for Federal and Private Student Loans

May 17, 2019September 1, 2012 by Money Beagle

Consider Using a College Financial Aid Advisor for Federal and Private Student Loans

Financing higher education can be overwhelming, especially if you are going through the process for the first time. Everything from your family’s financial status to your education plans will play a role in determining how much college financial aid you are eligible for in the way of grants, scholarships and federal and private student loans . If you are applying for student loans and other types of tuition support for the first time, consider building a relationship with a financial aid advisor who is familiar with the process.

The Role of an Financial Aid Advisor as you Apply for Education Loans

Your financial aid advisor will be there to guide you through the entire college financial aid process, from financial planning through application and award acceptance. They can help you make sure that you are taking full advantage of federal college financial aid options by correctly filling out your Free Application for Federal Student Aid (FAFSA) and making sure you remain aware of important student loan deadlines. Additionally, they can help you to understand you options for private student loans if needed.

It’s Not Just Big Things That Can Lead To Financial Problems

May 17, 2019May 17, 2012 by Money Beagle

Many people associate the onset of financial problems with a big event.

A job loss. A major health issue. A catastrophe.

These are all major events and could very well lead to financial troubles. However, it’s not just the major things you have to watch out for and prevent against.

In fact, it’s quite the opposite. I’m guessing that a majority of people in financial trouble got that way without having any major things. Instead, it was just a culmination of little things that added up without them knowing.

My Work Computer

Let me use my work laptop as an example.

I started here in 2006 and was granted a brand new laptop. As with all computers, it worked great but within a few years was showing it’s age. It had gone through a couple of batteries, it was getting slower, had a cracked edge around the outside of the case, and just other general problems that come about from a device that’s used all the time.

How To Get Free Debt Consolidation

May 20, 2019April 24, 2012 by Money Beagle

If you are looking to consolidate your debts, you may have been disheartened to see the many types of fees involved and the high cost this would add to your existing debt. However, if you look hard enough and get creative enough, there are some ways to get free debt consolidation. It just takes a little time and patience.

Do It Yourself Debt Consolidation

You first free option for debt consolidation is to try and do it yourself. You may not be able to do this based on your credit scores or other consideration, but you should give it a try.

The object of debt consolidation is to get a lower interest rate and single payment for all your debts. You could find this yourself by either: looking for a credit card that offers balance transfers and low APRs, or even looking at getting a home equity line of credit. Both of these options can offer lower rates, and you can do it yourself.

Second, you could look at getting a loan from a peer-to-peer lending site like Prosper or Lending Tree. Both of these sites offer loans from other individuals, so you can usually get a loan for just about anything, regardless of your credit score. The only risk here is that the interest rate may not be lower than your existing debt.