Debt consolidation services; do you really need their help?

Open any newspaper, magazine or web page and you will find plenty of bad/depressing news about today’s economy: unemployment is higher than 10%, foreclosures are rising, healthcare and education are becoming more and more expensive and as a result many people are drowning in debt.

In order to solve there financial problems and save whatever is left of their credit rating people turn to debt consolidation services, but do you really need their help? Can they do something for you that you can’t do yourself? Is it worth paying someone else to do what you can do on your own?

What is debt consolidation and what can debt consolidation companies can do for you?

Debt consolidation is combining your debts into one large long term debt you repay over long period of time. What debt consolidation company will do for you: combine your debt, try to negotiate a lower rate, try to settle you accounts. They usually charge 10% fees for their services. After all said and done you could actually be worse off than before. It would be smarter to pay these 10% fees toward your debt.

Here is what you can do on your own:

1. Make a list of all your credit cards and personal loans; write down amounts that you owe and phone numbers for customer service.

2. Start calling them: ask for interest rate reduction, payment reduction or settlement options.

3. Explain your personal situation (loss of job, medical emergency, divorce, whatever it may be (It may be embarrassing, it may hurt your pride, but...).

4. Ask for everything in writing (new interest rate, settlement option etc…)

5. Make arrangements and stick with them.

If you can not do it on your own it is a better idea to turn to a non profit debt consolidation and credit counseling companies for help. They can also help you with money management and budgeting.

And of course, the most important thing is no new debt, change you spending habits, and live within your means.
Know your rights as an American; you are protected by Fair Debt Collection Practices Act.

http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre18.shtm  answers commonly asked questions about your rights under the Fair Debt Collection Practices Act. It prohibits debt collectors from using unfair or deceptive practices to collect overdue bills that your creditor has forwarded for collection

How to eliminate all consumer debt including mortgage and reach financial freedom

(How to create a budget and stick with it)

It seems like an impossible task to accomplish for many people living from paycheck to paycheck, but it is not if you are willing to put in the effort. It is more common sense than anything else, spend less than you earn and save and invest the rest.

The first step in eliminating consumer debt is creating a monthly budget. The second step be disciplined and patient.

In order to create a budget you need to calculate all of your income and expenses. For one month, write them down and that will give a visual and more accurate picture of your financial situation and will show where you can cut corners and save money.

Your monthly income may include:
Salary
Pension
Alimony
Child support


Your monthly expenses may consist of:

Saving account or IRA (remember always pay yourself first)
Mortgage /rent
Car payment
Homeowners/renters insurance
Health Insurance
Pet care expenses
Auto Insurance
Utility bills, such as: electricity, gas, water, phone, cell phone, cable etc.
Other financial obligations such as: students loan, credit card, personal loan etc.
Education
Food
Clothing /Shoes
Emergency fund
Entertainment
Other
You may want to add or delete items from this list if they don’t apply to your personal situation.

The majority of expenses are fixed and recurrent from month to month for a long period of time (month, years and even longer). There is not much you can do to save money there, but it is a good idea to use automatic withdrawal from a checking account to pay those bills,

There are a number of expenses such as utilities and grocery bills where you can save money. When grocery shopping always:

1. make a list beforehand (no impulse buying)
2. shop in more than one store , compare choices and prices
3. join one of the clubs such as Costco, Sam’s Club and buy bigger quantities for a better per unit price
4. while in the store check the manager's specials sections (many grocery stores now offer manager's specials with substantial savings)
5. buy store brand instead of name brand
6. use coupons

If your personal financial situation is very serious and you really need to cut corners, cancel all non-essential services such as cable, cell phones, and newspaper/magazine subscriptions.

Do not buy anything unless it is absolutely necessary until your financial house is in order.

When it comes to credit cards, try to pay extra every month, and make sure you don’t use them unless you can pay them back at the end of that month.

Don’t be afraid to give up small pleasures (eating out, going to coffee shops, buying clothes when you don’t need it etc.) because this will ultimately lead to big savings, which will bring you to your overall goal of financial freedom.

For best budget planner visit:  https://money.strands.com/

For free budget spreadsheets visit: http://docs.google.com/

 Please, Join my blog  and share your comments Thanks.

Payday loan-how to find a reputable payday loan company on the internet.

Payday loans are short-term emergency loans with extremely high interest rates and fees and they must be paid at your next pay day. (Payday loan companies have appropriate dates listed on there websites for your convenience… )

Indeed, interest rates for these loans are so high that they should only be considered in extreme situations or if no other sources (bank loans, credit union loans, peer-to-peer loans, 0% or low interest rate credit cards, loan from family or friends) are available.

Requirements for applying for these loans are very simple, very basic information is required (18 years of age, not a military member, US citizen, current address, home or mobile phone number, employment, work phone number, direct deposit of your paycheck, checking account, and a driver’s license) and no credit check is necessary.

You can find a list of payday companies on the web.
There are literally 100’s of payday companies listed on the internet.

When choosing a payday loan company on the web one should consider following:

Are fees and interest rates disclosed/ listed on their web page?

Are terms and conditions posted?

Is a phone number for customer service listed? (If there is a phone number listed, call and check if it is actually a real phone number and someone answers it)

Remember: Payday emergency loans are for emergencies only, don’t make them a habit.

Please, Join my blog and share your comments Thanks

Payday Loans danger

Payday Loans danger

Payday loans are short-term cash loans based on the borrower's personal check held for future deposit or on electronic access to the borrower's bank account. Borrowers write a personal check for the amount borrowed plus the finance charge and receive cash. Or, borrowers sign over electronic access to their bank accounts (by disclosing their checking account number and bank’s routing number) to receive and repay payday loans.

                                                                                                                     
Lenders hold the checks until the next payday when loans and the finance charge are due. To pay a loan, borrowers can redeem the check by paying the loan with cash, allow the check to be deposited at the bank, or just pay the finance charge to roll the loan over for another pay period (usually another 2 weeks).

Payday loans range in size from $100 to $1,500. The average loan term is about two-weeks. Loans typically cost from 400% up to 1000% annual interest (APR).

Payday loans trap consumers in repeat borrowing cycles due to the extreme high cost to borrow and the very short repayment term. Beside that, many borrowers are not able to cover their checks and that leads to bounced check fees from the payday loan lender and the bank. Returned checks cause negative credit ratings on specialized databases and credit reports. As a result consumers can lose bank accounts or have difficulty opening a new bank account if there is a record of "bouncing" checks used to get payday loans. Internet payday lending adds security and fraud risks to payday loans. There are many reports from borrowers about abuses and identity thefts. (Go to Google search)

Because Payday loans are so expensive the Federal Trade Commission published a list of alternatives to payday loans:

1. Consider a small loan from your credit union or a small loan company. Some banks may offer short-term loans for small amounts at competitive rates. A local community-based organization may make small business loans to people                                                                   

2. Shop for the credit offer with the lowest cost. Compare the APR and the finance charge, which includes loan fees, interest and other credit costs.

3. Contact your creditors or loan servicer as quickly as possible if you are having trouble with your payments, and ask for more time. Many may be willing to work with consumers who they believe are acting in good faith.

4. Contact your local consumer credit counseling service if you need help working out a debt repayment plan with creditors or developing a budget. Non-profit groups in every state offer credit guidance to consumers for no or low cost.

5. Make a realistic budget, including your monthly and daily expenditures, and plan, plan, plan. Try to avoid unnecessary purchases: the costs of small, every-day items like a cup of coffee add up. At the same time, try to build some savings: small deposits do help.

6. Find out if you have — or if your bank will offer you — overdraft protection on your checking account. If you are using most or all the funds in your account regularly and you make a mistake in your account records, overdraft protection can help protect you from further credit problems.

The bottom line on payday loans: Try to find an alternative. If you must use one, try to limit the amount. Borrow only as much as you can afford to pay with your next paycheck — and still have enough to make it to next payday.

To read: FTC –Consumer Alert go to: http://www.ftc.gov/bcp/edu/pubs/consumer/alerts/alt060.shtm