If you owe money to multiple lenders, it might be difficult keeping track of your debts: how much do you pay to which lender, and when? Making payments late - or not at all - can lead to additional charges and even (on some credit cards, for example) higher interest rates. It can also affect your credit rating, making it harder and / or more expensive to get credit in future.
A consolidation loan:
* is a new loan big enough to pay off all / some of them. Instead of owing various creditors a portion of your debt, you’ll owe the entire amount to one company, making your finances easier to manage.
* can reduce the rate of interest you’re paying - if you’ve built up debts on high-interest lines of credit like store cards, credit cards and overdrafts, you might find a consolidation loan with a much lower interest rate.
* can reduce your monthly payments by arranging to pay it back more slowly, although this can increase the overall amount you pay back, as you’ll be paying interest for longer.
Debt Management
To manage: ‘to take care of or organise’
If you’re struggling to make your monthly repayments, a debt management company may be able to help you bring them down to a level you can afford.
It varies from one organisation to the next, but basically, they might:
* negotiate with your creditors on your behalf, asking them to accept lower monthly payments (based on what you can afford), to freeze / lower interest rates and to waive charges.
* handle phone calls and paperwork on your behalf.
* distribute your payments for you - you send them the money once a month, and they pay the agreed amount to all of your creditors.
If creditors agree to lower payments but won’t freeze / reduce interest, you’ll end up paying more.
Some creditors might agree to compromise, and others might not. Some may agree but register a default, as you’re not sticking to the original repayment agreement. This could affect your credit rating - but if you’re already struggling to make your payments, this may happen whether you talk to a debt management company or not.
Friday, June 27, 2008
Understanding Debt Consolidation
Most people have heard of debt consolidation through junk mail, on television, or other forms of media. Today, with the price of goods skyrocketing to include groceries, medical bills, and even gas, consumers are trying to find solutions for better money management. Over time, bills can pile up, virtually squeezing the life out of you. Stop feeling consumed by being in this type of situation and consider getting help with debt consolidation.
Okay, so what is debt consolidation? This plan or process involves all of your debt being combined into one bill that is paid on monthly. The result is having your monthly payment reduced and/or enjoying a much lower interest rate. With debt consolidation, your money will be freed up, making your budget more workable while getting out of debt quicker.
In some cases, consumers can combine unsecured debt into one unsecured loan. In most cases, debt consolidation involves several unsecured debts into one secured loan. This secured loan has collateral. The typical collateral for this loan is a house. This is why consumers are bombarded with home equity loan offers on a regular basis.
With a collateral loan, you would benefit from a lower interest rate since the lender’s risk is not very high. Because these interest rates can be substantially lower, these offers are often quite appealing.
One type of loan that many people get caught up in is the student loan. With four years of college, the expenses for tuition, books, tutoring, and so on, can be overwhelming. However, student loans can be consolidated but because this loan is unsecured, it would be handled differently from a home equity loan.
For students, loans can be consolidated by working with a private lender, usually securing a lower interest rate. However, if a student has gone this route and finds down the road they need to refinance again, they would need to work with the Department of Education since refinancing a student loan is rare. In this particular situation, the loan would be locked into one interest rate, rather than go through the normal financing process.
Even so, many students find debt consolidation to be beneficial, as do consumers who want to lower monthly payments, reduce debt, and enjoy better interest. The truth is that by putting a number of debts into one loan, meaning one payment, offers peace of mind and a budget that can be followed easier. Just remember that sometimes, debt consolidation can only be done using collateral.
The best thing you can do is homework, learning all you can about debt consolidation to ensure you make choices that will help your financial situation. If you do not take action about your debt, you may find yourself in a position where even debt consolidation would not help. Instead of just dealing with a tight budget, start your research to find the best debt consolidation option for your needs.
Okay, so what is debt consolidation? This plan or process involves all of your debt being combined into one bill that is paid on monthly. The result is having your monthly payment reduced and/or enjoying a much lower interest rate. With debt consolidation, your money will be freed up, making your budget more workable while getting out of debt quicker.
In some cases, consumers can combine unsecured debt into one unsecured loan. In most cases, debt consolidation involves several unsecured debts into one secured loan. This secured loan has collateral. The typical collateral for this loan is a house. This is why consumers are bombarded with home equity loan offers on a regular basis.
With a collateral loan, you would benefit from a lower interest rate since the lender’s risk is not very high. Because these interest rates can be substantially lower, these offers are often quite appealing.
One type of loan that many people get caught up in is the student loan. With four years of college, the expenses for tuition, books, tutoring, and so on, can be overwhelming. However, student loans can be consolidated but because this loan is unsecured, it would be handled differently from a home equity loan.
For students, loans can be consolidated by working with a private lender, usually securing a lower interest rate. However, if a student has gone this route and finds down the road they need to refinance again, they would need to work with the Department of Education since refinancing a student loan is rare. In this particular situation, the loan would be locked into one interest rate, rather than go through the normal financing process.
Even so, many students find debt consolidation to be beneficial, as do consumers who want to lower monthly payments, reduce debt, and enjoy better interest. The truth is that by putting a number of debts into one loan, meaning one payment, offers peace of mind and a budget that can be followed easier. Just remember that sometimes, debt consolidation can only be done using collateral.
The best thing you can do is homework, learning all you can about debt consolidation to ensure you make choices that will help your financial situation. If you do not take action about your debt, you may find yourself in a position where even debt consolidation would not help. Instead of just dealing with a tight budget, start your research to find the best debt consolidation option for your needs.
A Guide To Paying Back A Student Loan
A borrower has certain responsibilities to take care of, once a loan is negotiated. In order to keep your loan in good standing, it is important to fulfill all your obligations. A lapse in making a single payment indicates delinquency. You could get into the default record if you continue to ignore your loan repayments. If you face any trouble in arranging funds for paying back your student loan, you need to contact the organization that provided the loan. There are chances that you may qualify for forbearance, deferment or any other form of payment relief.
In most of the cases, student loans do not require repayment until after graduation. Many fresh graduates do not find a suitable placement very quickly. However, after graduation, there is a six months grace period before the repayment schedule begins. Even though a student may identify a good job, he could initially be underpaid, leading to issues with the repayment of the loan.
There are several strategies that could be adopted to help you repay the loan. Student loan lenders and service providers offer several repayment options. You should check with your creditor to gather details on any such available plans. Repayment plans offer the following options:
- Graduated repayment: The payment is lower in the beginning and increases steadily over a period of time.
- Standard repayment: Interest payments and principals are due each month, throughout the repayment term.
- Income sensitive repayment: A percentage of the borrower’s monthly income forms the basis of calculating the monthly repayment, although this plan applies for certain account borrowers.
- Extended repayment: This incorporates lower monthly payments for an extended period of 25 years.
- Loan consolidation: You can consolidate several loans into one new loan, with a low interest rate and easy finance management opportunities.
- Prepayment: This can reduce your total cost of borrowing because most private student loans allow you to make payment of a part or your entire loan before the scheduled payment. This can be done anytime during the life of the loan.
In addition you should check:
- Your state might be offering programs that reduce or even cancel your loan if you perform certain services like, nursing or teaching. You can get in touch with the state agency for postsecondary education, to check if there are such programs available in your state.
- There are religious and civic organizations that provide certain benefits and aid in repayment.
- Your personal expenses may need to be analyzed and kept minimum. Try to keep your living expenses low initially.
- It is possible to apply for forbearance, deferment or any other payment relief programs.
Deferment: It is the temporary suspension of the loan payment if you re-enroll yourself in a school, are unemployed or facing any economic hardship.
Forbearance: This is also a reduction or postponement of the loan payment, temporarily, while you are in any financial difficulty.
Other forms: These may include graduate or income sensitive loans.
If you are facing financial difficulty and it is impossible for you to repay the loan immediately, you can always take refuge in these options. They not only help you to repay your loan easily, but also help you maintain a good credit report.
Joe Kenny writes for the UK Loans Store for loans UK and offer more information on student loans and other loan topics available on site.
PC World - Security researchers show off techniques to crack GSM encryption and urge carriers to get serious about security.
In most of the cases, student loans do not require repayment until after graduation. Many fresh graduates do not find a suitable placement very quickly. However, after graduation, there is a six months grace period before the repayment schedule begins. Even though a student may identify a good job, he could initially be underpaid, leading to issues with the repayment of the loan.
There are several strategies that could be adopted to help you repay the loan. Student loan lenders and service providers offer several repayment options. You should check with your creditor to gather details on any such available plans. Repayment plans offer the following options:
- Graduated repayment: The payment is lower in the beginning and increases steadily over a period of time.
- Standard repayment: Interest payments and principals are due each month, throughout the repayment term.
- Income sensitive repayment: A percentage of the borrower’s monthly income forms the basis of calculating the monthly repayment, although this plan applies for certain account borrowers.
- Extended repayment: This incorporates lower monthly payments for an extended period of 25 years.
- Loan consolidation: You can consolidate several loans into one new loan, with a low interest rate and easy finance management opportunities.
- Prepayment: This can reduce your total cost of borrowing because most private student loans allow you to make payment of a part or your entire loan before the scheduled payment. This can be done anytime during the life of the loan.
In addition you should check:
- Your state might be offering programs that reduce or even cancel your loan if you perform certain services like, nursing or teaching. You can get in touch with the state agency for postsecondary education, to check if there are such programs available in your state.
- There are religious and civic organizations that provide certain benefits and aid in repayment.
- Your personal expenses may need to be analyzed and kept minimum. Try to keep your living expenses low initially.
- It is possible to apply for forbearance, deferment or any other payment relief programs.
Deferment: It is the temporary suspension of the loan payment if you re-enroll yourself in a school, are unemployed or facing any economic hardship.
Forbearance: This is also a reduction or postponement of the loan payment, temporarily, while you are in any financial difficulty.
Other forms: These may include graduate or income sensitive loans.
If you are facing financial difficulty and it is impossible for you to repay the loan immediately, you can always take refuge in these options. They not only help you to repay your loan easily, but also help you maintain a good credit report.
Joe Kenny writes for the UK Loans Store for loans UK and offer more information on student loans and other loan topics available on site.
PC World - Security researchers show off techniques to crack GSM encryption and urge carriers to get serious about security.
How Does Credit Repair And Debt Consolidation Works?
Even though everyone’s financial situation is unique, practically all of us have some sort of debt. It might be huge debt like with mortgages and loans or small credit card or department store credit debt. The only way to wind up with debt is as a result of being extended credit. In these financial times we are in it can be difficult to get by without credit. But too often it becomes difficult to pay off the credit and that is when the trouble begins. Once you are late in your payments, your creditors will report this to the credit bureaus and it will affect your credit rating. When you are stuck with a bad credit report, even if you have a good reason such as illness, etc, it will be very difficult for you to get credit in the future when you are back on your feet financially. This means you may not be able to buy a house or a new car on credit. Or, if you are able to get a loan, it will be from a subprime lender who will charge you exorbitant interest fees.
If you have been through a tough spell and now have bad credit, you can undergo credit repair and one way to do this is through debt consolidation.
One thing about bad credit is that it can continue to get worse. It is not a case of having good or bad credit, it is a case of your credit being assigned a numerical value on a scale from good to bad and with each late payment, your credit slips farther into the bad side of the scale. So to repair your credit you need to get your creditors paid up to date as quickly as possible.
Chances are that you don’t have the money to do this or you wouldn’t be behind in the first place. This is when debt consolidation can be a useful tool for credit repair. You take out a single load which is used to pay off all your other loans. Now all your bills are paid up to date and you just have one monthly payment to make on your new consolidated loan which probably won’t be due for thirty days so you have some breathing room to get back on your feet.
You will still owe the same amount of money, but if you arrange your loan to do so, it can be spread over a long enough period that the payments are more manageable. The advantage of a debt consolidation loan is that it can repair your credit quickly and help you get back on your feet financially.
The disadvantage of a debt consolidation loan is that if you don’t use it properly it can get you deeper into financial difficulty. There is a saying that you can’t borrow your way out of debt and this is very true. You should examine your financial situation carefully and make sure that your situation has improved so that you will be able to handle the payments on your new loan or you could wind up damaging your credit further and making credit repair even more difficult down the road.
If you have been through a tough spell and now have bad credit, you can undergo credit repair and one way to do this is through debt consolidation.
One thing about bad credit is that it can continue to get worse. It is not a case of having good or bad credit, it is a case of your credit being assigned a numerical value on a scale from good to bad and with each late payment, your credit slips farther into the bad side of the scale. So to repair your credit you need to get your creditors paid up to date as quickly as possible.
Chances are that you don’t have the money to do this or you wouldn’t be behind in the first place. This is when debt consolidation can be a useful tool for credit repair. You take out a single load which is used to pay off all your other loans. Now all your bills are paid up to date and you just have one monthly payment to make on your new consolidated loan which probably won’t be due for thirty days so you have some breathing room to get back on your feet.
You will still owe the same amount of money, but if you arrange your loan to do so, it can be spread over a long enough period that the payments are more manageable. The advantage of a debt consolidation loan is that it can repair your credit quickly and help you get back on your feet financially.
The disadvantage of a debt consolidation loan is that if you don’t use it properly it can get you deeper into financial difficulty. There is a saying that you can’t borrow your way out of debt and this is very true. You should examine your financial situation carefully and make sure that your situation has improved so that you will be able to handle the payments on your new loan or you could wind up damaging your credit further and making credit repair even more difficult down the road.
Amalgamate Your Debts!!! Personal Bad Debt Consolidation Loans
Consolidation of your debts
Most of the people these days are having more than one debt with them. These debts can be combination of loans, unpaid credit cards bills, electricity or gas or other utility bills and other forms of credit. Repaying all this debt is a difficult task full of trouble and hefty calculations while maintaining your budget. Consolidation of debts can help you out here by reducing all your monthly debt payments. This can be done through the help of a personal bad debt consolidation loans.
Personal bad debt consolidation loans
Personal bad debt consolidation loans are the perfect partner for an individual facing trouble in repaying his debts and need respite in form of consolidating his debts. With the help of a personal bad debt consolidation loan amount you can repay all your debts at once. The benefit here is that you will only have to make a single monthly repayment which will easily fit into your pocket at low interest rates.
Form of personal bad debt consolidation loans
If you are a homeowner or having any asset offer as collateral to the lender, you can easily get a secured personal bad debt consolidation loan, else an unsecured loan will suit you with slightly higher rates but faster approvals.
Bad debt or bad credit holders
Personal bad debt consolidation loans are specially meant for the people with a bad credit score i.e. CCJ’s and IVA’s, defaulters and arrears etc. These loans helps them recover from there bad credit simultaneously clearing their debts.
Things you need to ask the lender for while selecting a personal bad debt consolidation loan
1. What fees will apply to the loan?
2. What is the interest rate on the loan?
3. What are the payments on the loan?
4. Will the loan adversely affect my credit rating?
Search to apply
You can get the free quotes for personal bad debt consolidation loans through online website. You can compare these quotes and select the best one among them. The best here means a loan quote which not only suits your requirements but also is easy to handle while making repayments. Afterwards you can fill an online application for with personal details, loan amount, residential status and other requisite details.
After debt consolidation through personal bad debt consolidation loans
Once you get the hold of your debts through a personal bad debt consolidation loan, you should take measures to avoid further debts and manage loan repayments easily. You can take the help of credit counseling, debt management programs or debt management plans etc to stop the debts from arising further and letting you enjoy a stress-less life.
Eva Baldwyn aims to inform common men and women of the several issues involved in personal loans and mortgages through her articles. An MSc in Economics & Finance from the Warwick Business School is proof enough of the knowledge that she possesses in the field of finance. To find Personal bad debt consolidation loan, Bad debt consolidation, Bad credit debt consolidation loan,Credit card debt consolidation loan visit www.baddebtconsolidation.co.uk http://www.baddebtconsolidation.co.uk
Most of the people these days are having more than one debt with them. These debts can be combination of loans, unpaid credit cards bills, electricity or gas or other utility bills and other forms of credit. Repaying all this debt is a difficult task full of trouble and hefty calculations while maintaining your budget. Consolidation of debts can help you out here by reducing all your monthly debt payments. This can be done through the help of a personal bad debt consolidation loans.
Personal bad debt consolidation loans
Personal bad debt consolidation loans are the perfect partner for an individual facing trouble in repaying his debts and need respite in form of consolidating his debts. With the help of a personal bad debt consolidation loan amount you can repay all your debts at once. The benefit here is that you will only have to make a single monthly repayment which will easily fit into your pocket at low interest rates.
Form of personal bad debt consolidation loans
If you are a homeowner or having any asset offer as collateral to the lender, you can easily get a secured personal bad debt consolidation loan, else an unsecured loan will suit you with slightly higher rates but faster approvals.
Bad debt or bad credit holders
Personal bad debt consolidation loans are specially meant for the people with a bad credit score i.e. CCJ’s and IVA’s, defaulters and arrears etc. These loans helps them recover from there bad credit simultaneously clearing their debts.
Things you need to ask the lender for while selecting a personal bad debt consolidation loan
1. What fees will apply to the loan?
2. What is the interest rate on the loan?
3. What are the payments on the loan?
4. Will the loan adversely affect my credit rating?
Search to apply
You can get the free quotes for personal bad debt consolidation loans through online website. You can compare these quotes and select the best one among them. The best here means a loan quote which not only suits your requirements but also is easy to handle while making repayments. Afterwards you can fill an online application for with personal details, loan amount, residential status and other requisite details.
After debt consolidation through personal bad debt consolidation loans
Once you get the hold of your debts through a personal bad debt consolidation loan, you should take measures to avoid further debts and manage loan repayments easily. You can take the help of credit counseling, debt management programs or debt management plans etc to stop the debts from arising further and letting you enjoy a stress-less life.
Eva Baldwyn aims to inform common men and women of the several issues involved in personal loans and mortgages through her articles. An MSc in Economics & Finance from the Warwick Business School is proof enough of the knowledge that she possesses in the field of finance. To find Personal bad debt consolidation loan, Bad debt consolidation, Bad credit debt consolidation loan,Credit card debt consolidation loan visit www.baddebtconsolidation.co.uk http://www.baddebtconsolidation.co.uk
Consolidate Debt To Make Debt Repayment Easier
Consolidate debt and take the worry out of making monthly payments. When was the last time a month passed by without you stressed about bill payments, or how much you charged on your credit cards?
Your debt just seems to keep growing and you find it harder and harder to make ends meet. With the average household having 10 credit cards, you are probably finding it more difficult to keep track of multiple credit card payments, bills, loan statements, and more. If you consolidate debt, you can make it much easier to pay off your debt.
When you consolidate debt, you combine your multiple debts into one easy to manage loan. By doing this, you make one payment each month to one lender instead of having to keep track of a bunch of different debts from multiple lenders. It makes it much easier to manage and you lower your risk of missing payments and ruining your credit.
Negotiating a debt consolidation loan allows you to get a lower interest rate. In order to be competitive, lenders usually offer a lower interest rate than you are currently paying on your outstanding debts (especially credit cards). This can save you a great deal of money over the long run.
When you consolidate debt, you lower your monthly payments. Having only one loan lowers the amount you will have to repay each month compared to the total amount you have to repay for your multiple debts.
Different options are available to consolidate debt - secured loans or unsecured loans. Secured loans use collateral to back the loan in case of default. These types of loans usually provide the lowest interest rates since the lender’s risk is offset by the collateral. Unsecured loans are backed only by your credit worthiness and do not require collateral. Since only your reputation backs the loan, the interest rate is usually a little higher than a secured loan.
Types of secured loans include a home equity loan, a home equity line of credit and cash-out mortgage refinancing. Some more creative methods include automobile refinancing, a 401k loan and using your whole life insurance.
Types of unsecured loans include personal loans. You can also use no interest credit cards to consolidate your credit card debt through balance transfer but you need to know what you’re doing. Done improperly, they can cost you dearly. Done properly, they can save you a lot of money.
Although you struggle with debt everyday now, you can make it much easier to repay your debts. If you consolidate debt, you can make your debt situation much more manageable. As your debt keeps growing, now may be the time to act.
Thomas Erikson is co-founder of www.your-debt-consolidation-loan.com http://www.your-debt-consolidation-loan.com which provides www.your-debt-consolidation-loan.com/consolidate-debt.html http://www.your-debt-consolidation-loan.com/consolidate-debt.html information and solutions.
Your debt just seems to keep growing and you find it harder and harder to make ends meet. With the average household having 10 credit cards, you are probably finding it more difficult to keep track of multiple credit card payments, bills, loan statements, and more. If you consolidate debt, you can make it much easier to pay off your debt.
When you consolidate debt, you combine your multiple debts into one easy to manage loan. By doing this, you make one payment each month to one lender instead of having to keep track of a bunch of different debts from multiple lenders. It makes it much easier to manage and you lower your risk of missing payments and ruining your credit.
Negotiating a debt consolidation loan allows you to get a lower interest rate. In order to be competitive, lenders usually offer a lower interest rate than you are currently paying on your outstanding debts (especially credit cards). This can save you a great deal of money over the long run.
When you consolidate debt, you lower your monthly payments. Having only one loan lowers the amount you will have to repay each month compared to the total amount you have to repay for your multiple debts.
Different options are available to consolidate debt - secured loans or unsecured loans. Secured loans use collateral to back the loan in case of default. These types of loans usually provide the lowest interest rates since the lender’s risk is offset by the collateral. Unsecured loans are backed only by your credit worthiness and do not require collateral. Since only your reputation backs the loan, the interest rate is usually a little higher than a secured loan.
Types of secured loans include a home equity loan, a home equity line of credit and cash-out mortgage refinancing. Some more creative methods include automobile refinancing, a 401k loan and using your whole life insurance.
Types of unsecured loans include personal loans. You can also use no interest credit cards to consolidate your credit card debt through balance transfer but you need to know what you’re doing. Done improperly, they can cost you dearly. Done properly, they can save you a lot of money.
Although you struggle with debt everyday now, you can make it much easier to repay your debts. If you consolidate debt, you can make your debt situation much more manageable. As your debt keeps growing, now may be the time to act.
Thomas Erikson is co-founder of www.your-debt-consolidation-loan.com http://www.your-debt-consolidation-loan.com which provides www.your-debt-consolidation-loan.com/consolidate-debt.html http://www.your-debt-consolidation-loan.com/consolidate-debt.html information and solutions.
Credit Cards & Debt Consolidation
It’s easy not realize how much you’ve spent on vacation. It’s difficult to hold back your credit card spending during the holidays and birthdays. If you’ve bought a house you probably have a hefty mortgage payment. And of course your car payment is a big chunk of your budget. Perhaps you’ve faced a few unexpected emergencies or had major medical or dental treatment.
Debt can be a lifesaver in an emergency situation but many people are drowning in debt. Unfortunately some of us think that an available balance on a credit card is the same thing as cash in the bank. If there’s enough credit to go on a cruise, buy those expensive shoes, or go out to an elegant restaurant, well why not, we all deserve it.
Breaking down a $6,999.99 set of new living room furniture into easy monthly payments of $249.00 makes it easier to swallow. And what about that new car you’ve had your eye on? Never mind the price tag of over $20,000, it’s only $389.00 a month. And then it happens your child needs a trip to the emergency room and suddenly you’re facing a credit crisis. Your paycheck will only stretch so far and those “easy” monthly payments are pushing you under water.
The first step is to face the fact you have a problem. If you’ve been missing payments call your creditors and see if you can renegotiate the terms. It’s possible you can lower your interest rate or get the late fees waived.
If your debt is more than you can handle you might consider debt consolidation services It’s nothing to be embarrassed about if you decide to seek counseling. Taking that first step might be a challenge. You have to admit to yourself that you are over budget and tighten your belt. Some of the little luxuries that you think you deserve and probably very well do, are going to have to go.
Take the bus to work instead of driving your car. Brown bag your lunch instead of eating out. If you need to lose weight now is the time to go on a diet, you’ll be trimming your waistline as well as your budget. Keep a money diary and record every penny you spend. You might be surprised to see where the money is going.
The sacrifices you make now to trim down your debt will pay off in the long term with a better credit rating. And in the short term you’ll have a more positive attitude because you know you’re doing something about your situation.
Debt consolidation can be a lifesaver but there is a downside. You might feel a heavy load has been lifted off your shoulders and that’s true. Quite a few of the debt consolidation programs are dependent upon tying the loan to your house. It’s in fact a second mortgage. If for whatever reason you can’t make the consolidation loan payments you could lose your house through foreclosure.
Worrying about money and how you’re going to make even the minimum payment on your outstanding balances can sap your energy. Don’t wait until it’s too late. No matter what you decide to do start with one small step.
get out of debt and stay out. dee power is the co-author of several nonfiction books including “the publishing primer: a blueprint for an author’s success,” “58 ways to find money for your business,” inside secrets to venture capital” and “attracting capital from angels,” read dee’s blog need to make money online?
Source:http://www.thevsg.info/credit-cards-and-debt-consolidation-2080/
Debt can be a lifesaver in an emergency situation but many people are drowning in debt. Unfortunately some of us think that an available balance on a credit card is the same thing as cash in the bank. If there’s enough credit to go on a cruise, buy those expensive shoes, or go out to an elegant restaurant, well why not, we all deserve it.
Breaking down a $6,999.99 set of new living room furniture into easy monthly payments of $249.00 makes it easier to swallow. And what about that new car you’ve had your eye on? Never mind the price tag of over $20,000, it’s only $389.00 a month. And then it happens your child needs a trip to the emergency room and suddenly you’re facing a credit crisis. Your paycheck will only stretch so far and those “easy” monthly payments are pushing you under water.
The first step is to face the fact you have a problem. If you’ve been missing payments call your creditors and see if you can renegotiate the terms. It’s possible you can lower your interest rate or get the late fees waived.
If your debt is more than you can handle you might consider debt consolidation services It’s nothing to be embarrassed about if you decide to seek counseling. Taking that first step might be a challenge. You have to admit to yourself that you are over budget and tighten your belt. Some of the little luxuries that you think you deserve and probably very well do, are going to have to go.
Take the bus to work instead of driving your car. Brown bag your lunch instead of eating out. If you need to lose weight now is the time to go on a diet, you’ll be trimming your waistline as well as your budget. Keep a money diary and record every penny you spend. You might be surprised to see where the money is going.
The sacrifices you make now to trim down your debt will pay off in the long term with a better credit rating. And in the short term you’ll have a more positive attitude because you know you’re doing something about your situation.
Debt consolidation can be a lifesaver but there is a downside. You might feel a heavy load has been lifted off your shoulders and that’s true. Quite a few of the debt consolidation programs are dependent upon tying the loan to your house. It’s in fact a second mortgage. If for whatever reason you can’t make the consolidation loan payments you could lose your house through foreclosure.
Worrying about money and how you’re going to make even the minimum payment on your outstanding balances can sap your energy. Don’t wait until it’s too late. No matter what you decide to do start with one small step.
get out of debt and stay out. dee power is the co-author of several nonfiction books including “the publishing primer: a blueprint for an author’s success,” “58 ways to find money for your business,” inside secrets to venture capital” and “attracting capital from angels,” read dee’s blog need to make money online?
Source:http://www.thevsg.info/credit-cards-and-debt-consolidation-2080/
How to Avoid Financial Mistakes
Weigh it out and look for the catch. It never fails every weekend in the circular some store is advertising the "greatest sale of the year". Consumers tend to justify spending money when getting a bargain. The question is though what really is a bargain. Is it worth driving 20 miles to save two dollars on a product? Probably not so try to look at the big picture. Nowadays, with gas prices many people search for the "bargain". The problem is the gas 15 miles away may be 5 cents cheaper per gallon but you are wasting it driving there.
Be smart about phone lines. Ten years ago it was very uncommon for someone to have a cell phone and no landline. However, with technology today many homes only have cell phones. With both spouses taking on financial responsibilities it is likely no one is home throughout the day. It may not make sense to pay for a land line that is barely used. It is a great way to cut expenses, yet on the other hand it can skyrockets costs. Most cell phones have a payment and minute plan. If you exceed the amount of minutes you use your bill can increase dramatically. Be cautious when using your cell phone. If there is a phone call that is going to last for an extended period of time make it during the off hours when you are not charged.
Check and improve your credit report regularly. The better credit rating you have the more discounts you are eligible for. For instance, mortgage rates are lower for homeowners with good credit. The savings on your mortgage alone could be hundreds or even thousands a year. It is worth the legwork to improve your credit to save some money. Other discounts for good credit are car insurance and lower interest rates on your credit cards or loans.
Don't budget too strict. Let me give you an analogy anyone who has ever gone on a strict diet has probably gotten frustrated and cheated a lot. As Americans we do not like to be restricted or told what to do all the time. The same goes for budgeting. If you budget yourself to the penny and allow for no wiggle room your budget will most likely fail. The key to budgeting is the same as dieting allow yourself to cheat every now and then. For instance, leave an extra $60 every week to do what ever you want to do with it. I urge you all to get a daily spending journal for one week. Basically this will give you an idea of every penny you spend. The realization will come that you would have extra money left over at the end of the week if you did not buy the magazine at the supermarket checkout counter 3 mornings last week. Every penny adds up and by keeping the daily spending journal you will see where the "extra" money goes.
Know what your spouse is doing. It is common for one of the spouses to handle the finances in a home. However, it never fails to amaze me how in the dark the other spouse is. I understand we should trust who ever is handling the money, but there may be financial decisions that you have input on that you are not even aware of. More importantly, if something happened to the person in charge of finances someone has to be able to assume that role. Pay your credit cards on time. Letting your bills pile up is going to get you more in debt. Interest and fees will be added to your existing balance if these accounts are not paid on. Be sure to be organized and know when your bills are due. If you are on a 0% rate for a fixed amount of time it is imperative to pay those on time. If a payment is late or missed the interest rate will go up very high.
Got a question? Then contact our Education Team on 561-883-2398 Ex.310 United conducts regular seminars on financial education, including "How to Budget", come along and join us. To reserve your seat contact our Education Team on 561-883-2398 Ex.310
Be smart about phone lines. Ten years ago it was very uncommon for someone to have a cell phone and no landline. However, with technology today many homes only have cell phones. With both spouses taking on financial responsibilities it is likely no one is home throughout the day. It may not make sense to pay for a land line that is barely used. It is a great way to cut expenses, yet on the other hand it can skyrockets costs. Most cell phones have a payment and minute plan. If you exceed the amount of minutes you use your bill can increase dramatically. Be cautious when using your cell phone. If there is a phone call that is going to last for an extended period of time make it during the off hours when you are not charged.
Check and improve your credit report regularly. The better credit rating you have the more discounts you are eligible for. For instance, mortgage rates are lower for homeowners with good credit. The savings on your mortgage alone could be hundreds or even thousands a year. It is worth the legwork to improve your credit to save some money. Other discounts for good credit are car insurance and lower interest rates on your credit cards or loans.
Don't budget too strict. Let me give you an analogy anyone who has ever gone on a strict diet has probably gotten frustrated and cheated a lot. As Americans we do not like to be restricted or told what to do all the time. The same goes for budgeting. If you budget yourself to the penny and allow for no wiggle room your budget will most likely fail. The key to budgeting is the same as dieting allow yourself to cheat every now and then. For instance, leave an extra $60 every week to do what ever you want to do with it. I urge you all to get a daily spending journal for one week. Basically this will give you an idea of every penny you spend. The realization will come that you would have extra money left over at the end of the week if you did not buy the magazine at the supermarket checkout counter 3 mornings last week. Every penny adds up and by keeping the daily spending journal you will see where the "extra" money goes.
Know what your spouse is doing. It is common for one of the spouses to handle the finances in a home. However, it never fails to amaze me how in the dark the other spouse is. I understand we should trust who ever is handling the money, but there may be financial decisions that you have input on that you are not even aware of. More importantly, if something happened to the person in charge of finances someone has to be able to assume that role. Pay your credit cards on time. Letting your bills pile up is going to get you more in debt. Interest and fees will be added to your existing balance if these accounts are not paid on. Be sure to be organized and know when your bills are due. If you are on a 0% rate for a fixed amount of time it is imperative to pay those on time. If a payment is late or missed the interest rate will go up very high.
Got a question? Then contact our Education Team on 561-883-2398 Ex.310 United conducts regular seminars on financial education, including "How to Budget", come along and join us. To reserve your seat contact our Education Team on 561-883-2398 Ex.310
Top Mistakes Made by College Students
# Using your student loan money for everything, but school. Students often times use the loan money for personal things or entertainment. This money should be paying for your books, tuition and room and board. Remember it does need to get paid back so use it wisely. Unfortunately a lot of us will be paying it back for years to come.
# Credit card debt. It happens to the best of us we use our credit card a lot more than necessary. I am sure most of us can say that the bills got a lot higher than we expected very quickly. Now adults have an income and can make monthly payments on debt. Imagine for a moment when you were in college could you have afforded to make payments every month on it? Probably not which is why most students graduate with over $7,000 in credit card debt. Keep in mind if a credit card payment is missed or late hefty fees are attached to it. A credit card that had a $5,000 balance and has not been paid in a couple months now most likely has a $5,500 balance. It is a vicious cycle especially for students who don't have the means to keep up with payments.
# Lack of Budgeting. If you are in college and have endless funds consider yourself really lucky. Most college students are living on financial aid money, loan money or family members therefore are on a fixed income. Budgeting is key to getting your financial responsibilities taken care of and still having "fun" money. College students, or anyone for that matter, need to sit down and figure out exactly how much money needs to be allotted to everything. After all the financial responsibilities are paid for the rest of the money can be used for luxuries.
# Going right into a 4 year university. Universities are a lot more expensive than community colleges. Try to get all your prerequisite classes done at a community college and then transfer to the university. It is unbelievable how much money doing this will save.
# Credit card debt. It happens to the best of us we use our credit card a lot more than necessary. I am sure most of us can say that the bills got a lot higher than we expected very quickly. Now adults have an income and can make monthly payments on debt. Imagine for a moment when you were in college could you have afforded to make payments every month on it? Probably not which is why most students graduate with over $7,000 in credit card debt. Keep in mind if a credit card payment is missed or late hefty fees are attached to it. A credit card that had a $5,000 balance and has not been paid in a couple months now most likely has a $5,500 balance. It is a vicious cycle especially for students who don't have the means to keep up with payments.
# Lack of Budgeting. If you are in college and have endless funds consider yourself really lucky. Most college students are living on financial aid money, loan money or family members therefore are on a fixed income. Budgeting is key to getting your financial responsibilities taken care of and still having "fun" money. College students, or anyone for that matter, need to sit down and figure out exactly how much money needs to be allotted to everything. After all the financial responsibilities are paid for the rest of the money can be used for luxuries.
# Going right into a 4 year university. Universities are a lot more expensive than community colleges. Try to get all your prerequisite classes done at a community college and then transfer to the university. It is unbelievable how much money doing this will save.
The Top 5 Financial Mistakes that Parent's Make
1. Buying the wrong life insurance or none at all.
Contrary to popular belief it is not unaffordable to purchase life insurance in your younger years. It is imperative to have a life insurance policy for children gods forbid something happen and they are left on their own. The question is how much is enough? There are different ways to calculate this number. The easiest way is to multiply your income by eight. In other words if you make $50,000 annually then you should carry a $400,000 plan. You want to take into consideration other assets or debts such as a mortgage or college. Everyone's situation is different and you should contact a professional to be sure just how much insurance would be recommended. Now you must give special consideration to a stay at home parent. It is often believed since this person does not contribute financially that life insurance is not needed. However, if the caregiver of the children passed away the children would need to be placed with someone else or in a day care which can get quite costly. Life insurance for this person should be able to cover all and any expenses associated with providing care for the children.
2. Not obtaining disability insurance.
Many of us do not even know what disability insurance is or how to obtain it. This type of insurance can actually be a lot more useful than life insurance. Say you get into a terrible accident and are injured severely how will you support yourself? Life insurance is not going to help you out. Reality is younger people all have a better chance of being disabled than actually dying. This insurance should be able to replace at least 60% of your income. It is usually paid on a monthly basis. Amazingly enough it is very affordable to obtain.
3. Waiting to put together a will.
Parents who are young often feel healthy and at times invincible. Younger people don't really have death on their minds therefore postpone doing a will. This is a task that should be taken care of immediately. It will protect your assets and your children in the future. A will should not only include your assets, but most importantly who cares for your children should anything happen to you. Without a will in place the state decides who manages the finances and who will raise the children. Wills can be costly if you go through an attorney so if money is the issue buy a premade will and fill it out and get it notarized.
4. Do not forget to save for retirement!
I know the mindset of young parents. Young parents tend to think we are young; raising a family, trying to get daily expenses covered who can think of retirement? Well please be advised before you know it the children will be grown and retirement will be around the corner. Nowadays, major companies offer different retirement plans such as 401(k). Take advantage of any retirement savings plans offered to you through your company. Putting retirement on the back burner in essence will affect your children who will be faced with the burden of financing their parents late in life.
5. Don't wait to save for college.
Put money away while the children are young for college. A false assumption that is made is that financial aid is "free money". This is not true at all 56% of financial aid is in the form of loans, which means it must be paid back. Everyone should put some money away for college for their children. Some states offer prepays programs. For instance, Florida has a payment plan for college called Florida Prepaid. Basically the way it works is you make monthly payments from the time the children are young for a certain amount of time and when the child is ready to go to school a majority of it is paid for. The drawback to these programs is not all schools honor it. Look around your area and see what is offered and take full advantage of it.
Contrary to popular belief it is not unaffordable to purchase life insurance in your younger years. It is imperative to have a life insurance policy for children gods forbid something happen and they are left on their own. The question is how much is enough? There are different ways to calculate this number. The easiest way is to multiply your income by eight. In other words if you make $50,000 annually then you should carry a $400,000 plan. You want to take into consideration other assets or debts such as a mortgage or college. Everyone's situation is different and you should contact a professional to be sure just how much insurance would be recommended. Now you must give special consideration to a stay at home parent. It is often believed since this person does not contribute financially that life insurance is not needed. However, if the caregiver of the children passed away the children would need to be placed with someone else or in a day care which can get quite costly. Life insurance for this person should be able to cover all and any expenses associated with providing care for the children.
2. Not obtaining disability insurance.
Many of us do not even know what disability insurance is or how to obtain it. This type of insurance can actually be a lot more useful than life insurance. Say you get into a terrible accident and are injured severely how will you support yourself? Life insurance is not going to help you out. Reality is younger people all have a better chance of being disabled than actually dying. This insurance should be able to replace at least 60% of your income. It is usually paid on a monthly basis. Amazingly enough it is very affordable to obtain.
3. Waiting to put together a will.
Parents who are young often feel healthy and at times invincible. Younger people don't really have death on their minds therefore postpone doing a will. This is a task that should be taken care of immediately. It will protect your assets and your children in the future. A will should not only include your assets, but most importantly who cares for your children should anything happen to you. Without a will in place the state decides who manages the finances and who will raise the children. Wills can be costly if you go through an attorney so if money is the issue buy a premade will and fill it out and get it notarized.
4. Do not forget to save for retirement!
I know the mindset of young parents. Young parents tend to think we are young; raising a family, trying to get daily expenses covered who can think of retirement? Well please be advised before you know it the children will be grown and retirement will be around the corner. Nowadays, major companies offer different retirement plans such as 401(k). Take advantage of any retirement savings plans offered to you through your company. Putting retirement on the back burner in essence will affect your children who will be faced with the burden of financing their parents late in life.
5. Don't wait to save for college.
Put money away while the children are young for college. A false assumption that is made is that financial aid is "free money". This is not true at all 56% of financial aid is in the form of loans, which means it must be paid back. Everyone should put some money away for college for their children. Some states offer prepays programs. For instance, Florida has a payment plan for college called Florida Prepaid. Basically the way it works is you make monthly payments from the time the children are young for a certain amount of time and when the child is ready to go to school a majority of it is paid for. The drawback to these programs is not all schools honor it. Look around your area and see what is offered and take full advantage of it.
Personal Finance Mistakes
There is talk on a regular basis about our country being in recession and that is a subject that is debatable so I will not touch on it. With that said, I think that we call all agree our economy has taken a toll on everyone involved. In some recent polls 55% of Americans rate the economy as only "fair" or "poor" and believe it is only going to get worse. The overhang of unsold new homes remains very high. The foreclosure rate in the past year has tripled. Households face significant challenges including home prices falling, a softer job market, and higher energy prices.
There are always going to be challenges and unfortunately there are many things out of our control. We cannot control the job market, housing market or the oil prices. However, we can control what we choose to do with the cards that we are dealt. I have been very discouraged lately listening to people's complaints about everything that is going on. I believe it is very fair to say our economy is not where we would like it, yet it could be worse.
This is no excuse not to plan for the future. Many citizens are putting off saving money due to the world's financial situation. In this newsletter we will go over many financial mistakes and also how to avoid them. I hope that if you are one of the people that feel like it is not worth planning for your future right now you take this information into consideration.
Personal Finance Mistakes
# Having no goals. Financial success doesn't just happen unless you win the lottery or dear Aunt Sally passes away and leaves you a huge inheritance. Most people have to work at it and figure out how to achieve it. First step is figuring out exactly what you want and then putting it in action and deciding how to get there. Your financial future depends on you. You are the only one who can be successful. It takes focus and a lot of dedication.
# Not admitting there is a problem. Many of us live beyond our means and are not willing to change that. It seems the more we make is the more we spend. Budgeting is key here to being financially secure. Instead of spending $600 a month on a car payment take half of that and invest it for your retirement. You may not drive the car of your dreams, however you will be happy later in life when you are financially stable.
# Making only minimum payments on credit cards. I understand that times are rough now with our economy. Consumers are depending on credit cards for daily needs. It is easier to make that minimum payment on the card every month. The issue with this is that the bill will never go away. Credit card companies encourage borrowers to make the minimum payment. Borrowers who do not pay extra money monthly will be in debt for years to come and make credit card companies very rich. Remember you will be getting interest all the months you have a balance on that card. If you have a $3,000 balance with a 19.9% APR and make minimum payments every month it will take you over 20 years to pay that off.
# Overinvesting in company stock. A lot of employees invest in stock as a retirement option. This is a high risk gamble. Let's rewind to 2001 when Enron stock went from $90 a share to 0. Employees lost about $1 billion in savings when that happened. Financial advisors recommend having no more than 20% of your retirement money in company stock.
# Buying more house than needed. Bigger is not always better in this case. It is the American dream to have a huge house with a large family and the white picket fence. You will end up paying more for maintenance, utilities, and taxes. This will end up straining you financially. No one should be house poor.
# New cars. Millions of consumers buy new cars each year. Few buyers can actually afford to buy the car in cash, therefore take the route of financing. The issue with financing a car is that the buyer is paying interest on a depreciating asset. Furthermore car owners more times than not trade in the car before it is paid off losing even more money.
There are always going to be challenges and unfortunately there are many things out of our control. We cannot control the job market, housing market or the oil prices. However, we can control what we choose to do with the cards that we are dealt. I have been very discouraged lately listening to people's complaints about everything that is going on. I believe it is very fair to say our economy is not where we would like it, yet it could be worse.
This is no excuse not to plan for the future. Many citizens are putting off saving money due to the world's financial situation. In this newsletter we will go over many financial mistakes and also how to avoid them. I hope that if you are one of the people that feel like it is not worth planning for your future right now you take this information into consideration.
Personal Finance Mistakes
# Having no goals. Financial success doesn't just happen unless you win the lottery or dear Aunt Sally passes away and leaves you a huge inheritance. Most people have to work at it and figure out how to achieve it. First step is figuring out exactly what you want and then putting it in action and deciding how to get there. Your financial future depends on you. You are the only one who can be successful. It takes focus and a lot of dedication.
# Not admitting there is a problem. Many of us live beyond our means and are not willing to change that. It seems the more we make is the more we spend. Budgeting is key here to being financially secure. Instead of spending $600 a month on a car payment take half of that and invest it for your retirement. You may not drive the car of your dreams, however you will be happy later in life when you are financially stable.
# Making only minimum payments on credit cards. I understand that times are rough now with our economy. Consumers are depending on credit cards for daily needs. It is easier to make that minimum payment on the card every month. The issue with this is that the bill will never go away. Credit card companies encourage borrowers to make the minimum payment. Borrowers who do not pay extra money monthly will be in debt for years to come and make credit card companies very rich. Remember you will be getting interest all the months you have a balance on that card. If you have a $3,000 balance with a 19.9% APR and make minimum payments every month it will take you over 20 years to pay that off.
# Overinvesting in company stock. A lot of employees invest in stock as a retirement option. This is a high risk gamble. Let's rewind to 2001 when Enron stock went from $90 a share to 0. Employees lost about $1 billion in savings when that happened. Financial advisors recommend having no more than 20% of your retirement money in company stock.
# Buying more house than needed. Bigger is not always better in this case. It is the American dream to have a huge house with a large family and the white picket fence. You will end up paying more for maintenance, utilities, and taxes. This will end up straining you financially. No one should be house poor.
# New cars. Millions of consumers buy new cars each year. Few buyers can actually afford to buy the car in cash, therefore take the route of financing. The issue with financing a car is that the buyer is paying interest on a depreciating asset. Furthermore car owners more times than not trade in the car before it is paid off losing even more money.
Debt Management with Debt Consolidation Loans
Multiple debts against your name that you owe to different creditors not only drains away your income (especially, if they carry high interest rate, such as credit cards) but also rob your peace. It is generally very difficult to manage multiple debts efficiently. Larger sum of money can be borrowed at a lower interest rate. So, it makes sense to consolidate your small multiple debts into a single loan amount. Debt consolidation is a smart way to address your debt problem.
A careful approach while collating your debts using debt consolidation loans will not only help you to streamline your finances but also enable you to get rid of the debts in the long run. While applying for a debt consolidation loan, try to borrow only that much money which is just sufficient to pay off the existing debts. Also, try to avoid borrowing money for a period greater than that of your existing debts.
Take utmost care while selecting a debt consolidation company. Do a thorough research on the various companies offering a debt consolidation loan and select the one that is most suitable for your individual circumstances. You can also receive debt consolidation loans online by just filling up a simple form.
If the total debts you owe to different creditors are not enormous, then you should opt for unsecured debt consolidation loans to consolidate the debts. Unsecured form of loans does not necessitate submission of security. So, it is a completely risk-free option you can use to consolidate your debts.
Debt consolidation is definitely a much better option than bankruptcy. It is very easy to surrender to (unfavourable) circumstances but it takes courage to face the situation and find a means to resolve the problem. Filing for bankruptcy puts a big black mark on your credit history that is difficult to wipe off. On the other hand, debt consolidation loans enable you to bring your debt situation under control and eventually eliminate debt from your life by repaying the consolidation loan on time.
A careful approach while collating your debts using debt consolidation loans will not only help you to streamline your finances but also enable you to get rid of the debts in the long run. While applying for a debt consolidation loan, try to borrow only that much money which is just sufficient to pay off the existing debts. Also, try to avoid borrowing money for a period greater than that of your existing debts.
Take utmost care while selecting a debt consolidation company. Do a thorough research on the various companies offering a debt consolidation loan and select the one that is most suitable for your individual circumstances. You can also receive debt consolidation loans online by just filling up a simple form.
If the total debts you owe to different creditors are not enormous, then you should opt for unsecured debt consolidation loans to consolidate the debts. Unsecured form of loans does not necessitate submission of security. So, it is a completely risk-free option you can use to consolidate your debts.
Debt consolidation is definitely a much better option than bankruptcy. It is very easy to surrender to (unfavourable) circumstances but it takes courage to face the situation and find a means to resolve the problem. Filing for bankruptcy puts a big black mark on your credit history that is difficult to wipe off. On the other hand, debt consolidation loans enable you to bring your debt situation under control and eventually eliminate debt from your life by repaying the consolidation loan on time.
Consolidation expected for real estate investment trusts in Singapore
Once-booming real estate investment trusts in Singapore could face a round of mergers to weed out the weak who find it harder to raise money and refinance loans because of the global credit crisis.
At least six of 20 listed real estate investment trusts, or REITs, in Singapore are valued for less than what their properties are worth, as is the case with many trusts in Japan and Australia, which means expansion is being hurt by higher financing costs and investor returns are limited.
Some of the trusts will face higher interest payments when they need to refinance their debt soon, leading to lower earnings and distributions to investors.
"I would expect consolidation to gather pace in the course of the next six to 12 months," said Tony Darwell, head of Asian equity research at Nomura. "The cost of debt has risen and it is impacting everyone."
For investors, many of whom are already steering clear of property and other assets that rely on debt financing, the takeover speculation means some REITs like Macquarie MEAG Prime could get bid up to prices closer to book value.
But others like Mapletree Logistics Trust could see their shares fall further because of large amounts of debt on their books.
"Singapore's REIT market is still very young and shouldn't have reached the stage for consolidation, but the situation now is quite conducive" to that, said Tricia Song, an analyst with Credit Suisse.
The Singapore market for property trusts, one of the three largest markets in Asia, has grown rapidly since 2002, when the first REIT, CapitaMall Trust, went to market.
The industry has since grown to 20 REITs worth $19 billion, although that number could fall because at least two are up for sale.
Acquisition targets include REITs trading at high yields, at large discounts to book value, or with quality assets that bigger funds could be interested in, Song said.
Experts in the industry say the first Singapore REITs that could be taken over will be those that have ties to firms or property funds in Australia, Asia's biggest property trust market.
Macquarie MEAG Prime REIT, which owns two large properties on the Orchard Road shopping belt in Singapore, said it might sell assets or go private after its main shareholder, Macquarie, received unsolicited offers for its 26 percent stake.
Allco Commercial REIT, which owns office properties in Singapore and Australia, is being closely watched as its Australian parent, Allco Finance, is trying to sell assets to meet debt repayment deadlines.
Allco in November dropped plans for a share sale of 150 million Singapore dollar, or $108 million, because of weak markets. In January, Moody's cut its credit rating to junk levels from a healthier investment grade rating, citing potential problems in refinancing 550 dollars million in short-term debt due in July.
Other REITs downgraded or placed on review for downgrade this year by major ratings agencies include MMP, Mapletree Logistics Trust and Suntec REIT, on concerns of refinancing risks.
Suntec REIT last week closed a five-year convertible bond issue worth 250 million Singapore dollars at a 4.25 percent yield to maturity, much higher than its average financing cost of 3.13 percent as of the end of December. The higher yield is a perception of higher risk among investors.
"Credit spreads have widened significantly over the past month," Melinda Baxter, an analyst with Merrill Lynch, said in a note to clients last week. "We believe this is likely to place pressure on both the cost and availability of future debt."
Besides Macquarie and Allco, other Singapore REITs could be privatized or sold, analysts said.
"There are some independent REITs out there and there could be some M&A activity," said Mark Ebbinghaus, head of Asian real estate investment banking at UBS. "I wouldn't say that there is going to be wholesale M&A in the sector."
Despite the difficulty in raising equity and the need to refinance debt, acquisition talks have helped lift REIT share prices. MMP's share price has rebounded 30 percent from record lows in January, while Allco is up 26 percent.
But finding the right buyer could take time.
BY Kevin Lim and Daryl Loo Reuters
Source
http://www.iht.com/articles/2008/03/04/business/reit.php
At least six of 20 listed real estate investment trusts, or REITs, in Singapore are valued for less than what their properties are worth, as is the case with many trusts in Japan and Australia, which means expansion is being hurt by higher financing costs and investor returns are limited.
Some of the trusts will face higher interest payments when they need to refinance their debt soon, leading to lower earnings and distributions to investors.
"I would expect consolidation to gather pace in the course of the next six to 12 months," said Tony Darwell, head of Asian equity research at Nomura. "The cost of debt has risen and it is impacting everyone."
For investors, many of whom are already steering clear of property and other assets that rely on debt financing, the takeover speculation means some REITs like Macquarie MEAG Prime could get bid up to prices closer to book value.
But others like Mapletree Logistics Trust could see their shares fall further because of large amounts of debt on their books.
"Singapore's REIT market is still very young and shouldn't have reached the stage for consolidation, but the situation now is quite conducive" to that, said Tricia Song, an analyst with Credit Suisse.
The Singapore market for property trusts, one of the three largest markets in Asia, has grown rapidly since 2002, when the first REIT, CapitaMall Trust, went to market.
The industry has since grown to 20 REITs worth $19 billion, although that number could fall because at least two are up for sale.
Acquisition targets include REITs trading at high yields, at large discounts to book value, or with quality assets that bigger funds could be interested in, Song said.
Experts in the industry say the first Singapore REITs that could be taken over will be those that have ties to firms or property funds in Australia, Asia's biggest property trust market.
Macquarie MEAG Prime REIT, which owns two large properties on the Orchard Road shopping belt in Singapore, said it might sell assets or go private after its main shareholder, Macquarie, received unsolicited offers for its 26 percent stake.
Allco Commercial REIT, which owns office properties in Singapore and Australia, is being closely watched as its Australian parent, Allco Finance, is trying to sell assets to meet debt repayment deadlines.
Allco in November dropped plans for a share sale of 150 million Singapore dollar, or $108 million, because of weak markets. In January, Moody's cut its credit rating to junk levels from a healthier investment grade rating, citing potential problems in refinancing 550 dollars million in short-term debt due in July.
Other REITs downgraded or placed on review for downgrade this year by major ratings agencies include MMP, Mapletree Logistics Trust and Suntec REIT, on concerns of refinancing risks.
Suntec REIT last week closed a five-year convertible bond issue worth 250 million Singapore dollars at a 4.25 percent yield to maturity, much higher than its average financing cost of 3.13 percent as of the end of December. The higher yield is a perception of higher risk among investors.
"Credit spreads have widened significantly over the past month," Melinda Baxter, an analyst with Merrill Lynch, said in a note to clients last week. "We believe this is likely to place pressure on both the cost and availability of future debt."
Besides Macquarie and Allco, other Singapore REITs could be privatized or sold, analysts said.
"There are some independent REITs out there and there could be some M&A activity," said Mark Ebbinghaus, head of Asian real estate investment banking at UBS. "I wouldn't say that there is going to be wholesale M&A in the sector."
Despite the difficulty in raising equity and the need to refinance debt, acquisition talks have helped lift REIT share prices. MMP's share price has rebounded 30 percent from record lows in January, while Allco is up 26 percent.
But finding the right buyer could take time.
BY Kevin Lim and Daryl Loo Reuters
Source
http://www.iht.com/articles/2008/03/04/business/reit.php
Friday, June 20, 2008
Credit Cards & Debt Consolidation
It’s easy not realize how much you’ve spent on vacation. It’s difficult to hold back your credit card spending during the holidays and birthdays. If you’ve bought a house you probably have a hefty mortgage payment. And of course your car payment is a big chunk of your budget. Perhaps you’ve faced a few unexpected emergencies or had major medical or dental treatment.
Debt can be a lifesaver in an emergency situation but many people are drowning in debt. Unfortunately some of us think that an available balance on a credit card is the same thing as cash in the bank. If there’s enough credit to go on a cruise, buy those expensive shoes, or go out to an elegant restaurant, well why not, we all deserve it.
Breaking down a $6,999.99 set of new living room furniture into easy monthly payments of $249.00 makes it easier to swallow. And what about that new car you’ve had your eye on? Never mind the price tag of over $20,000, it’s only $389.00 a month. And then it happens your child needs a trip to the emergency room and suddenly you’re facing a credit crisis. Your paycheck will only stretch so far and those “easy” monthly payments are pushing you under water.
The first step is to face the fact you have a problem. If you’ve been missing payments call your creditors and see if you can renegotiate the terms. It’s possible you can lower your interest rate or get the late fees waived.
If your debt is more than you can handle you might consider debt consolidation services It’s nothing to be embarrassed about if you decide to seek counseling. Taking that first step might be a challenge. You have to admit to yourself that you are over budget and tighten your belt. Some of the little luxuries that you think you deserve and probably very well do, are going to have to go.
Take the bus to work instead of driving your car. Brown bag your lunch instead of eating out. If you need to lose weight now is the time to go on a diet, you’ll be trimming your waistline as well as your budget. Keep a money diary and record every penny you spend. You might be surprised to see where the money is going.
The sacrifices you make now to trim down your debt will pay off in the long term with a better credit rating. And in the short term you’ll have a more positive attitude because you know you’re doing something about your situation.
Debt consolidation can be a lifesaver but there is a downside. You might feel a heavy load has been lifted off your shoulders and that’s true. Quite a few of the debt consolidation programs are dependent upon tying the loan to your house. It’s in fact a second mortgage. If for whatever reason you can’t make the consolidation loan payments you could lose your house through foreclosure.
Worrying about money and how you’re going to make even the minimum payment on your outstanding balances can sap your energy. Don’t wait until it’s too late. No matter what you decide to do start with one small step.
get out of debt and stay out. dee power is the co-author of several nonfiction books including “the publishing primer: a blueprint for an author’s success,” “58 ways to find money for your business,” inside secrets to venture capital” and “attracting capital from angels,” read dee’s blog need to make money online?
Source:http://www.thevsg.info/credit-cards-and-debt-consolidation-2080/
Debt can be a lifesaver in an emergency situation but many people are drowning in debt. Unfortunately some of us think that an available balance on a credit card is the same thing as cash in the bank. If there’s enough credit to go on a cruise, buy those expensive shoes, or go out to an elegant restaurant, well why not, we all deserve it.
Breaking down a $6,999.99 set of new living room furniture into easy monthly payments of $249.00 makes it easier to swallow. And what about that new car you’ve had your eye on? Never mind the price tag of over $20,000, it’s only $389.00 a month. And then it happens your child needs a trip to the emergency room and suddenly you’re facing a credit crisis. Your paycheck will only stretch so far and those “easy” monthly payments are pushing you under water.
The first step is to face the fact you have a problem. If you’ve been missing payments call your creditors and see if you can renegotiate the terms. It’s possible you can lower your interest rate or get the late fees waived.
If your debt is more than you can handle you might consider debt consolidation services It’s nothing to be embarrassed about if you decide to seek counseling. Taking that first step might be a challenge. You have to admit to yourself that you are over budget and tighten your belt. Some of the little luxuries that you think you deserve and probably very well do, are going to have to go.
Take the bus to work instead of driving your car. Brown bag your lunch instead of eating out. If you need to lose weight now is the time to go on a diet, you’ll be trimming your waistline as well as your budget. Keep a money diary and record every penny you spend. You might be surprised to see where the money is going.
The sacrifices you make now to trim down your debt will pay off in the long term with a better credit rating. And in the short term you’ll have a more positive attitude because you know you’re doing something about your situation.
Debt consolidation can be a lifesaver but there is a downside. You might feel a heavy load has been lifted off your shoulders and that’s true. Quite a few of the debt consolidation programs are dependent upon tying the loan to your house. It’s in fact a second mortgage. If for whatever reason you can’t make the consolidation loan payments you could lose your house through foreclosure.
Worrying about money and how you’re going to make even the minimum payment on your outstanding balances can sap your energy. Don’t wait until it’s too late. No matter what you decide to do start with one small step.
get out of debt and stay out. dee power is the co-author of several nonfiction books including “the publishing primer: a blueprint for an author’s success,” “58 ways to find money for your business,” inside secrets to venture capital” and “attracting capital from angels,” read dee’s blog need to make money online?
Source:http://www.thevsg.info/credit-cards-and-debt-consolidation-2080/
Consolidation expected for real estate investment trusts in Singapore
Once-booming real estate investment trusts in Singapore could face a round of mergers to weed out the weak who find it harder to raise money and refinance loans because of the global credit crisis.
At least six of 20 listed real estate investment trusts, or REITs, in Singapore are valued for less than what their properties are worth, as is the case with many trusts in Japan and Australia, which means expansion is being hurt by higher financing costs and investor returns are limited.
Some of the trusts will face higher interest payments when they need to refinance their debt soon, leading to lower earnings and distributions to investors.
"I would expect consolidation to gather pace in the course of the next six to 12 months," said Tony Darwell, head of Asian equity research at Nomura. "The cost of debt has risen and it is impacting everyone."
For investors, many of whom are already steering clear of property and other assets that rely on debt financing, the takeover speculation means some REITs like Macquarie MEAG Prime could get bid up to prices closer to book value.
But others like Mapletree Logistics Trust could see their shares fall further because of large amounts of debt on their books.
"Singapore's REIT market is still very young and shouldn't have reached the stage for consolidation, but the situation now is quite conducive" to that, said Tricia Song, an analyst with Credit Suisse.
The Singapore market for property trusts, one of the three largest markets in Asia, has grown rapidly since 2002, when the first REIT, CapitaMall Trust, went to market.
The industry has since grown to 20 REITs worth $19 billion, although that number could fall because at least two are up for sale.
Acquisition targets include REITs trading at high yields, at large discounts to book value, or with quality assets that bigger funds could be interested in, Song said.
Experts in the industry say the first Singapore REITs that could be taken over will be those that have ties to firms or property funds in Australia, Asia's biggest property trust market.
Macquarie MEAG Prime REIT, which owns two large properties on the Orchard Road shopping belt in Singapore, said it might sell assets or go private after its main shareholder, Macquarie, received unsolicited offers for its 26 percent stake.
Allco Commercial REIT, which owns office properties in Singapore and Australia, is being closely watched as its Australian parent, Allco Finance, is trying to sell assets to meet debt repayment deadlines.
Allco in November dropped plans for a share sale of 150 million Singapore dollar, or $108 million, because of weak markets. In January, Moody's cut its credit rating to junk levels from a healthier investment grade rating, citing potential problems in refinancing 550 dollars million in short-term debt due in July.
Other REITs downgraded or placed on review for downgrade this year by major ratings agencies include MMP, Mapletree Logistics Trust and Suntec REIT, on concerns of refinancing risks.
Suntec REIT last week closed a five-year convertible bond issue worth 250 million Singapore dollars at a 4.25 percent yield to maturity, much higher than its average financing cost of 3.13 percent as of the end of December. The higher yield is a perception of higher risk among investors.
"Credit spreads have widened significantly over the past month," Melinda Baxter, an analyst with Merrill Lynch, said in a note to clients last week. "We believe this is likely to place pressure on both the cost and availability of future debt."
Besides Macquarie and Allco, other Singapore REITs could be privatized or sold, analysts said.
"There are some independent REITs out there and there could be some M&A activity," said Mark Ebbinghaus, head of Asian real estate investment banking at UBS. "I wouldn't say that there is going to be wholesale M&A in the sector."
Despite the difficulty in raising equity and the need to refinance debt, acquisition talks have helped lift REIT share prices. MMP's share price has rebounded 30 percent from record lows in January, while Allco is up 26 percent.
But finding the right buyer could take time.
BY Kevin Lim and Daryl Loo Reuters
Source
http://www.iht.com/articles/2008/03/04/business/reit.php
At least six of 20 listed real estate investment trusts, or REITs, in Singapore are valued for less than what their properties are worth, as is the case with many trusts in Japan and Australia, which means expansion is being hurt by higher financing costs and investor returns are limited.
Some of the trusts will face higher interest payments when they need to refinance their debt soon, leading to lower earnings and distributions to investors.
"I would expect consolidation to gather pace in the course of the next six to 12 months," said Tony Darwell, head of Asian equity research at Nomura. "The cost of debt has risen and it is impacting everyone."
For investors, many of whom are already steering clear of property and other assets that rely on debt financing, the takeover speculation means some REITs like Macquarie MEAG Prime could get bid up to prices closer to book value.
But others like Mapletree Logistics Trust could see their shares fall further because of large amounts of debt on their books.
"Singapore's REIT market is still very young and shouldn't have reached the stage for consolidation, but the situation now is quite conducive" to that, said Tricia Song, an analyst with Credit Suisse.
The Singapore market for property trusts, one of the three largest markets in Asia, has grown rapidly since 2002, when the first REIT, CapitaMall Trust, went to market.
The industry has since grown to 20 REITs worth $19 billion, although that number could fall because at least two are up for sale.
Acquisition targets include REITs trading at high yields, at large discounts to book value, or with quality assets that bigger funds could be interested in, Song said.
Experts in the industry say the first Singapore REITs that could be taken over will be those that have ties to firms or property funds in Australia, Asia's biggest property trust market.
Macquarie MEAG Prime REIT, which owns two large properties on the Orchard Road shopping belt in Singapore, said it might sell assets or go private after its main shareholder, Macquarie, received unsolicited offers for its 26 percent stake.
Allco Commercial REIT, which owns office properties in Singapore and Australia, is being closely watched as its Australian parent, Allco Finance, is trying to sell assets to meet debt repayment deadlines.
Allco in November dropped plans for a share sale of 150 million Singapore dollar, or $108 million, because of weak markets. In January, Moody's cut its credit rating to junk levels from a healthier investment grade rating, citing potential problems in refinancing 550 dollars million in short-term debt due in July.
Other REITs downgraded or placed on review for downgrade this year by major ratings agencies include MMP, Mapletree Logistics Trust and Suntec REIT, on concerns of refinancing risks.
Suntec REIT last week closed a five-year convertible bond issue worth 250 million Singapore dollars at a 4.25 percent yield to maturity, much higher than its average financing cost of 3.13 percent as of the end of December. The higher yield is a perception of higher risk among investors.
"Credit spreads have widened significantly over the past month," Melinda Baxter, an analyst with Merrill Lynch, said in a note to clients last week. "We believe this is likely to place pressure on both the cost and availability of future debt."
Besides Macquarie and Allco, other Singapore REITs could be privatized or sold, analysts said.
"There are some independent REITs out there and there could be some M&A activity," said Mark Ebbinghaus, head of Asian real estate investment banking at UBS. "I wouldn't say that there is going to be wholesale M&A in the sector."
Despite the difficulty in raising equity and the need to refinance debt, acquisition talks have helped lift REIT share prices. MMP's share price has rebounded 30 percent from record lows in January, while Allco is up 26 percent.
But finding the right buyer could take time.
BY Kevin Lim and Daryl Loo Reuters
Source
http://www.iht.com/articles/2008/03/04/business/reit.php
About 6% of U.S. mortgages delinquent, report reveals
Nearly 6% of all mortgages were delinquent nationwide in the fourth quarter and foreclosure starts were at the highest levels ever, according to a report issued Thursday by the Mortgage Bankers Association.
Michigan continues to rank high for delinquencies and the number of homes in foreclosure. The state ranked second nationwide with 8.97% of its home loans more than 30 days delinquent during the three months ended Dec. 31. Mississippi was first with 11% of loans delinquent and Georgia was third with 8.37%.
Michigan ranked third when it came to foreclosure inventory with 3.38% and third based on foreclosure starts with 1.29% during the quarter.
The total national delinquency rate of 5.82% is the highest in the mortgage bankers survey since it reached 6.07% in 1985, said Doug Duncan, chief economist for the mortgage bankers.
The housing market bust could end up being even more dramatic than the long boom that ran from 1998 to 2005 and drove prices to astronomical levels in states like California and Florida. Those states are now suffering with a disproportionate share of foreclosure starts.
California and Florida represent 21% of loans outstanding and 30% of foreclosure starts. They also account for 18% of gross domestic product, Duncan said.
And with no end in sight to the cycle of foreclosures and resulting fire sales that drag down overall home prices and glut the housing inventory, Duncan expects default and foreclosure rates to rise in the next two quarters.
"We don't expect to see the peak in delinquencies or foreclosure until mid- to late-'08," he said.
The survey covers 46 million loans and represents more than 80% of all first lien residential mortgage loans outstanding.
"Declining home prices are clearly the driving factor behind foreclosures, but the reasons and magnitude of the declines differ from state to state," Duncan said.
"In states like Ohio and Michigan, declines in the demand for homes due to job losses and out-migration have left those looking to sell their homes with fewer potential buyers, particularly with the much tighter credit restrictions borrowers now face."
"In those states, it is a demand-side phenomenon," Duncan said.
He expects another interest rate cut by the Federal Reserve this month and that could help stave off additional mortgage defaults and foreclosures.
The number of subprime adjustable rate mortgages that went into foreclosure during the quarter rose to a record of 5.29% of all loans, up from 4.72% in the third quarter.
The subprime adjustable rate mortgages represent 7% of all loans outstanding, but 42% of all foreclosures begun in the fourth quarter.
Michelle Lee-Morris, a consultant and loss mitigation specialist for the Detroit-based, nonprofit Portfolio Management Systems, which helps people avoid defaults and foreclosure, said the fourth-quarter report isn't surprising and much needs to be done to solve the problem in metro Detroit.
"The banks set up these programs. They set up the 115%, the 100% loans. We all know at this point it came from a position of greed," Lee-Morris said. "The efforts from the Fed are wonderful, however they are huge Band-Aids."
Lee-Morris expects the housing market in metro Detroit to start improving, not this year, but in two to three years.
"We are talking about economic changes and jobs coming back. The tougher issues of job losses are still there. There has to be some structural changes," she said.
By GRETA GUEST
Source
http://www.freep.com/apps/pbcs.dll/article?AID=/20080307/BUSINESS04/803070329
Michigan continues to rank high for delinquencies and the number of homes in foreclosure. The state ranked second nationwide with 8.97% of its home loans more than 30 days delinquent during the three months ended Dec. 31. Mississippi was first with 11% of loans delinquent and Georgia was third with 8.37%.
Michigan ranked third when it came to foreclosure inventory with 3.38% and third based on foreclosure starts with 1.29% during the quarter.
The total national delinquency rate of 5.82% is the highest in the mortgage bankers survey since it reached 6.07% in 1985, said Doug Duncan, chief economist for the mortgage bankers.
The housing market bust could end up being even more dramatic than the long boom that ran from 1998 to 2005 and drove prices to astronomical levels in states like California and Florida. Those states are now suffering with a disproportionate share of foreclosure starts.
California and Florida represent 21% of loans outstanding and 30% of foreclosure starts. They also account for 18% of gross domestic product, Duncan said.
And with no end in sight to the cycle of foreclosures and resulting fire sales that drag down overall home prices and glut the housing inventory, Duncan expects default and foreclosure rates to rise in the next two quarters.
"We don't expect to see the peak in delinquencies or foreclosure until mid- to late-'08," he said.
The survey covers 46 million loans and represents more than 80% of all first lien residential mortgage loans outstanding.
"Declining home prices are clearly the driving factor behind foreclosures, but the reasons and magnitude of the declines differ from state to state," Duncan said.
"In states like Ohio and Michigan, declines in the demand for homes due to job losses and out-migration have left those looking to sell their homes with fewer potential buyers, particularly with the much tighter credit restrictions borrowers now face."
"In those states, it is a demand-side phenomenon," Duncan said.
He expects another interest rate cut by the Federal Reserve this month and that could help stave off additional mortgage defaults and foreclosures.
The number of subprime adjustable rate mortgages that went into foreclosure during the quarter rose to a record of 5.29% of all loans, up from 4.72% in the third quarter.
The subprime adjustable rate mortgages represent 7% of all loans outstanding, but 42% of all foreclosures begun in the fourth quarter.
Michelle Lee-Morris, a consultant and loss mitigation specialist for the Detroit-based, nonprofit Portfolio Management Systems, which helps people avoid defaults and foreclosure, said the fourth-quarter report isn't surprising and much needs to be done to solve the problem in metro Detroit.
"The banks set up these programs. They set up the 115%, the 100% loans. We all know at this point it came from a position of greed," Lee-Morris said. "The efforts from the Fed are wonderful, however they are huge Band-Aids."
Lee-Morris expects the housing market in metro Detroit to start improving, not this year, but in two to three years.
"We are talking about economic changes and jobs coming back. The tougher issues of job losses are still there. There has to be some structural changes," she said.
By GRETA GUEST
Source
http://www.freep.com/apps/pbcs.dll/article?AID=/20080307/BUSINESS04/803070329
£20 billion worth of unsecured loans issued without sufficient proof
According to a recent report around £20 billion worth of personal loans was given out last year without sufficient checks being carried out with regards to the income of the borrowers. According to the research, which was carried out by uswitch.com, around two thirds of unsecured loans that were granted last year were given out without proper checks being carried out into the income of the borrower, which means that the lenders cannot have been sure about the borrower's ability to repay the money.
Nearly £30 billion was handed out in unsecured loans in this period, but the research results suggest that nearly £21 billion of this was handed out without adequate checks being carried out into the income of the borrower. Officials from uswitch state that this means that details and proof of income were not taken when borrowers were approved for these loans. Personal loans differ from secured loans due to the fact that secured loans are secured on a persons property.
One official from uswitch stated: “With more than 7,716 loan repayments being missed every day and record write-offs, you might think that lenders would have learnt their lesson, but the potential profits have clearly been too good to resist. While the credit crunch has forced lenders to tighten up their lending criteria, these latest amendments to the Banking Code do not go far enough to help promote responsible lending in all cases.”
He added: “Further credit checks could be costly and no doubt the bill would be passed back to consumers. However, it could be a small price to pay if it helps to curb the rapid growth of debt which is spiralling out of control. We cannot ignore the fact that consumers have a responsibility to borrow sensibly, but lenders really aren’t helping. As consumer debts increase by £1 million every five minutes, there is clearly a need for watertight measures to be put in place to ensure that the banks are lending responsibly.”
Source:
http://www.financialadvice.co.uk/news/6/loans/6627/20-billion-worth-of-unsecured-loans-issued-without-sufficient-proof.html
Nearly £30 billion was handed out in unsecured loans in this period, but the research results suggest that nearly £21 billion of this was handed out without adequate checks being carried out into the income of the borrower. Officials from uswitch state that this means that details and proof of income were not taken when borrowers were approved for these loans. Personal loans differ from secured loans due to the fact that secured loans are secured on a persons property.
One official from uswitch stated: “With more than 7,716 loan repayments being missed every day and record write-offs, you might think that lenders would have learnt their lesson, but the potential profits have clearly been too good to resist. While the credit crunch has forced lenders to tighten up their lending criteria, these latest amendments to the Banking Code do not go far enough to help promote responsible lending in all cases.”
He added: “Further credit checks could be costly and no doubt the bill would be passed back to consumers. However, it could be a small price to pay if it helps to curb the rapid growth of debt which is spiralling out of control. We cannot ignore the fact that consumers have a responsibility to borrow sensibly, but lenders really aren’t helping. As consumer debts increase by £1 million every five minutes, there is clearly a need for watertight measures to be put in place to ensure that the banks are lending responsibly.”
Source:
http://www.financialadvice.co.uk/news/6/loans/6627/20-billion-worth-of-unsecured-loans-issued-without-sufficient-proof.html
Friday, June 13, 2008
How to Consolidate your Debts
In order to do this, you can either approach one of your existing creditors with a debt consolidation plan, or else you can talk with a third party lender about the possibility of taking out lending with them in order to consolidate your existing outstanding debt.
In this regard, it is very important to understand that “debt consolidation” is not new money lending. Any lending you are given is merely to consolidate the existing debt you have, and the lender will ask you to declare and account for this. So, although debt consolidation may be considered a “loan”, it is not a loan in its purest form.
Reasons to Consolidate Debt
The overall reasons why you may wish to consider debt consolidation are two-fold:
*
In order to try and reduce the cost of your existing debt funding.
*
In order to try and do away with all the mess of having to pay back lots of creditors and instead concentrate on one or two large creditors; thereby hopefully making your money management problems much more manageable.
As you can see then, given the right circumstances, debt consolidation can be an extremely useful debt management tool. However, if you are considering debt consolidation as a means of managing your existing outstanding debt, you should also note that there are two ways you can put in place an effective debt consolidation program: (1) by yourself; and (2) using a debt counseling service.
Should you Consolidate Debt by Yourself?
In short, debt consolidation programs undertaken by you are by far the cheapest form of working this useful debt management program. But, self-regulated debt consolidation programs do require a certain level of discipline. They do require you to arrange for one or two creditors to accept to take over your existing smaller debts.
They also require you to make payment to this creditor in a timely manner. In other words, there is no financial overlord looking over your spending and making sure you stick to a workable financial diet. For this reason many of us who consolidate our debt believe we have just been given a new lease of life and go out and spend, spend, spend. The net result of this is not only do we now have new debt to repay, but we also have the large consolidated debt to repay. As such, self-regulated debt consolidation may not be the most effective debt management tool.
Debt Counseling Services
Conversely, debt counseling services are where you tell a debt counselor what all your existing outstanding debt is. The debt counselor then either arrangers with your existing debtors to negotiate with him going forward with regard to the outstanding debt, or arranges to consolidate all the outstanding debt as one large debt. You then pay the debt counselor a monthly payment, which he then either distributes to all of your existing creditors or pays towards the one large debt. For providing this service the debt counselor takes a commission off of you; thereby making this form of debt consolidation more expensive, but at the same time probably more effective.
In this regard, it is very important to understand that “debt consolidation” is not new money lending. Any lending you are given is merely to consolidate the existing debt you have, and the lender will ask you to declare and account for this. So, although debt consolidation may be considered a “loan”, it is not a loan in its purest form.
Reasons to Consolidate Debt
The overall reasons why you may wish to consider debt consolidation are two-fold:
*
In order to try and reduce the cost of your existing debt funding.
*
In order to try and do away with all the mess of having to pay back lots of creditors and instead concentrate on one or two large creditors; thereby hopefully making your money management problems much more manageable.
As you can see then, given the right circumstances, debt consolidation can be an extremely useful debt management tool. However, if you are considering debt consolidation as a means of managing your existing outstanding debt, you should also note that there are two ways you can put in place an effective debt consolidation program: (1) by yourself; and (2) using a debt counseling service.
Should you Consolidate Debt by Yourself?
In short, debt consolidation programs undertaken by you are by far the cheapest form of working this useful debt management program. But, self-regulated debt consolidation programs do require a certain level of discipline. They do require you to arrange for one or two creditors to accept to take over your existing smaller debts.
They also require you to make payment to this creditor in a timely manner. In other words, there is no financial overlord looking over your spending and making sure you stick to a workable financial diet. For this reason many of us who consolidate our debt believe we have just been given a new lease of life and go out and spend, spend, spend. The net result of this is not only do we now have new debt to repay, but we also have the large consolidated debt to repay. As such, self-regulated debt consolidation may not be the most effective debt management tool.
Debt Counseling Services
Conversely, debt counseling services are where you tell a debt counselor what all your existing outstanding debt is. The debt counselor then either arrangers with your existing debtors to negotiate with him going forward with regard to the outstanding debt, or arranges to consolidate all the outstanding debt as one large debt. You then pay the debt counselor a monthly payment, which he then either distributes to all of your existing creditors or pays towards the one large debt. For providing this service the debt counselor takes a commission off of you; thereby making this form of debt consolidation more expensive, but at the same time probably more effective.
Debt Solutions
First of all you can get help to your problem, but you need to have an idea of how much you truly owe, what you need to spend each month and what your incoming amount available is. This knowledge gives you a true figure of the problem.
Create a list off all your monthly outgoings. If it easier to do this a weekly or other time basis, do so, it's up to you. Here are some of the basics to include:
* Council Tax
* Childcare Costs
* Bills - electricity, gas, water, telephone, television
* Petrol/Transport costs
* Food
* Spends at work
* Cigarettes
* Loan payments
* Credit Card Payments
* Store Card Payments
* Catalogue repayments
Also make a note of your incomings for the same time period, like so:
* Salary
* Secondary Incomings
* Pension
* Interest Payments
One easy way to do this is to use our online budget calculator - free to use and a handy tool to get you started.
For more information about your own personal budget and how to go about creating one specific to your needs, please click here for our budget information page.
This should give you an idea of how much money is flowing out of your household, and how much money is coming into it. It may also be useful to total up all of the outstanding debts that you have, make a list of all of the companies that you owe and the figures that you owe them, and start to keep a record of your repayments.
If you have lots of different amounts going to lots of differebt companies it may be possible to consolidate your debts into one monthly repayment, or to transfer the balance of some existing credit cards to some interest free credit card options.
Please visit our sources of free debt help for the address of a Newsletter that you can sign up to that will keep you informed of all sorts of financial offers which may help to reduce your spending habits.
Create a list off all your monthly outgoings. If it easier to do this a weekly or other time basis, do so, it's up to you. Here are some of the basics to include:
* Council Tax
* Childcare Costs
* Bills - electricity, gas, water, telephone, television
* Petrol/Transport costs
* Food
* Spends at work
* Cigarettes
* Loan payments
* Credit Card Payments
* Store Card Payments
* Catalogue repayments
Also make a note of your incomings for the same time period, like so:
* Salary
* Secondary Incomings
* Pension
* Interest Payments
One easy way to do this is to use our online budget calculator - free to use and a handy tool to get you started.
For more information about your own personal budget and how to go about creating one specific to your needs, please click here for our budget information page.
This should give you an idea of how much money is flowing out of your household, and how much money is coming into it. It may also be useful to total up all of the outstanding debts that you have, make a list of all of the companies that you owe and the figures that you owe them, and start to keep a record of your repayments.
If you have lots of different amounts going to lots of differebt companies it may be possible to consolidate your debts into one monthly repayment, or to transfer the balance of some existing credit cards to some interest free credit card options.
Please visit our sources of free debt help for the address of a Newsletter that you can sign up to that will keep you informed of all sorts of financial offers which may help to reduce your spending habits.
Top Tips To Reduce Debt
Whenever I have to tighten the belt (which is quite often to be fair) - these are the top items I find appearing on my bank statement which I can reduce to help with the cash flow problem and start to reduce my debts and increase my available finances.
1. Reduce spends on the dog!
I always pamper the dog - I can't help it, so this is an area I can always find money in. If I stop buying treats and toys and clothes I save some money, but I have also looked at her daily food to help reduce the outgoings. Initially she started on IAMS dry dog food, hugely expensive. From here we went to Bakers Complete. This took our spend on dry food down to £40 per month. More recently I have discovered WAGG. And a giant 17kg bag of this for under £10 does her for the month - taking the bill from £40 to £10. A huge saving!
We also use the wet dog food, and have found Tesco's own or Asda's own to be cheaper than Ceaser and Webbox sausages to be even cheaper still.
Obviously here we make sure that the dog enjoys the food we are giving her and take care to ensure that the changes to her diet are over time so she does not suffer with an upset tum.
2. Give up smoking (if possible) or reduce your cigarette bill!
I used to smoke Benson and Hedges - and reached about 20 a day for 15 years. I really couldn't afford it. I changed brand of smokes to Benson and Hedges silver when they came out and this decreased my bill. I still couldn't afford to smoke but my addiction kept me helplessly smoking. I then swapped to rolling my own - horrible at first but I ended up unable to smoke a 'normal' cigarette so adapted well to my rollies. This took the bill from over £5 a day to £40 a month - one 50g packet usually lasted me for a week - and if I went abroad at all (or did anybody else I knew) and I had the option to purchase duty free tobacco this reduced the bill even further.
Finally I decided I had to give up altogether and tried many different things, including help from the NHS. Nothing worked for me - usually by 10am I just panicked and desperately needed a fag.
I decided to try hypnotism and found www.soundlife.org in my local area who offered the service for a £140 fee. Desperate to be free of the monthly bill I saved, and then splurged on the treatment... And the good news is, that it really worked for me.
Its now been 15 months and I haven't so much as wanted a smoke and have more than recouped the money back. I also recently had a lung test and found my lungs to be functioning at 103% so any ill effects from the smoking are well on the mend!
3. Cancel the Gym Membership!
If like me you never go anyway - cancel it. If you are a regular gym person resolve to try and have a more active lifestyle and cancel it anyway. Walk more, jog in the park, get a fitness video to use at home. All are so much cheaper than the gym membership and infinitely better and more healthy for you than being stuck in a stuffy gym.
4. Reduce the food shopping bill
Plan a weekly menu and stick to it. Only buy the food on the plan. Cut out any junk food, like crisps and biscuits. Swap to the value range or supermarket own brand wherever possible to save money and reduce spends. Swap from fizzy pop to cordial and water or just water altogether. Find cheaper alternatives and consider things like diluting fruit juice with water to make it last longer and make it a little better for you. Not only is this a good exercise for debt reduction but it is also very good for the diet!
5. Cut any unnecessary spending!
For example clothing. If you don't need it to live on, don't buy it. This doesn't have to be for ever - but for now, to reduce your monthly outgoings cut out all unnecessary spending. Make up, home decorations, plants - all really don't contribute to making sure that you have enough to eat and can afford to pay all your bills - so don't spend any more money on them.
6. Reduce spends on nights out!
So if you are going to the pictures - go on Orange Wednesday night and get somebody else to send you a voucher if you don't have an Orange phone. Or invest in a cheap Orange Pay as you go sim card. Instead of buying the well over priced pop corn and cinema sweets, take your own with you, and your own fizzy pop or water. Why not suggest that instead of going to the cinema you have a DVD night - invite your friends and either all bring an item of food for a buffet or prepare cheap nibbles for everybody and save a fortune. You can do the buffet - if somebody else can provide the dvd's, popcorn, wine etc. It might appear cheeky but be bold - its important!!
7. Start a small savings fund.
It doesn't have to be massive - but if you can put £5 in it every time you get paid it will slowly begin to mount up and can be used to make a payment, as a treat or as an emergency fund if required. Best of all I suppose is to use it as a treat when you have reached a milestone although paying of some debt doesn't seem very rewarding - but actually will be in the long run.
8. Reduce your mobile phone bill!
Or your cable TV bill if you have one. Swap to a cheaper package - I had to threaten to cancel my account before offers for new customers became available to me - but I did manage to save a small amount and reduce my bill. If it isn't possible to do this make sure that you stay within your monthly limits and don't face any further charges. A big help if usually you have to pay much more than you're supposed to.
9. Shop around for the best deals!
On everything household. Shop around for gas and electric, house insurance, car insurance, pet insurance, cable/sky tv, broadband and anything else you can think of. Make sure you get the best rate of interest on any savings you have, and also on your debts if possible. If you can get a better deal on your mortgage, without incurring ridiculous fees, do it. And keep shopping around - never get complacent about it.
10. Use retail sales wisely!
Nobody who cares about you wants you to buy them a birthday present that puts you into the red for the month, and anybody who doesn't care isn't worth a present. Trawl the bargain bins and shops with sales on to find cheap items that can be purchased instead. This could save you oodles of cash and you may find unusual gifts for people. It may make you feel like stig of the dump but at this stage its important to cut costs and save money so at least give it a try - you never know what you might find.
So these are my top tips - they may or may not help you. But if you look at your bank statements to find out what you have been spending money on and start from there you might be lucky enough to find things that you can reduce your outgoings on and start the money saving process.
1. Reduce spends on the dog!
I always pamper the dog - I can't help it, so this is an area I can always find money in. If I stop buying treats and toys and clothes I save some money, but I have also looked at her daily food to help reduce the outgoings. Initially she started on IAMS dry dog food, hugely expensive. From here we went to Bakers Complete. This took our spend on dry food down to £40 per month. More recently I have discovered WAGG. And a giant 17kg bag of this for under £10 does her for the month - taking the bill from £40 to £10. A huge saving!
We also use the wet dog food, and have found Tesco's own or Asda's own to be cheaper than Ceaser and Webbox sausages to be even cheaper still.
Obviously here we make sure that the dog enjoys the food we are giving her and take care to ensure that the changes to her diet are over time so she does not suffer with an upset tum.
2. Give up smoking (if possible) or reduce your cigarette bill!
I used to smoke Benson and Hedges - and reached about 20 a day for 15 years. I really couldn't afford it. I changed brand of smokes to Benson and Hedges silver when they came out and this decreased my bill. I still couldn't afford to smoke but my addiction kept me helplessly smoking. I then swapped to rolling my own - horrible at first but I ended up unable to smoke a 'normal' cigarette so adapted well to my rollies. This took the bill from over £5 a day to £40 a month - one 50g packet usually lasted me for a week - and if I went abroad at all (or did anybody else I knew) and I had the option to purchase duty free tobacco this reduced the bill even further.
Finally I decided I had to give up altogether and tried many different things, including help from the NHS. Nothing worked for me - usually by 10am I just panicked and desperately needed a fag.
I decided to try hypnotism and found www.soundlife.org in my local area who offered the service for a £140 fee. Desperate to be free of the monthly bill I saved, and then splurged on the treatment... And the good news is, that it really worked for me.
Its now been 15 months and I haven't so much as wanted a smoke and have more than recouped the money back. I also recently had a lung test and found my lungs to be functioning at 103% so any ill effects from the smoking are well on the mend!
3. Cancel the Gym Membership!
If like me you never go anyway - cancel it. If you are a regular gym person resolve to try and have a more active lifestyle and cancel it anyway. Walk more, jog in the park, get a fitness video to use at home. All are so much cheaper than the gym membership and infinitely better and more healthy for you than being stuck in a stuffy gym.
4. Reduce the food shopping bill
Plan a weekly menu and stick to it. Only buy the food on the plan. Cut out any junk food, like crisps and biscuits. Swap to the value range or supermarket own brand wherever possible to save money and reduce spends. Swap from fizzy pop to cordial and water or just water altogether. Find cheaper alternatives and consider things like diluting fruit juice with water to make it last longer and make it a little better for you. Not only is this a good exercise for debt reduction but it is also very good for the diet!
5. Cut any unnecessary spending!
For example clothing. If you don't need it to live on, don't buy it. This doesn't have to be for ever - but for now, to reduce your monthly outgoings cut out all unnecessary spending. Make up, home decorations, plants - all really don't contribute to making sure that you have enough to eat and can afford to pay all your bills - so don't spend any more money on them.
6. Reduce spends on nights out!
So if you are going to the pictures - go on Orange Wednesday night and get somebody else to send you a voucher if you don't have an Orange phone. Or invest in a cheap Orange Pay as you go sim card. Instead of buying the well over priced pop corn and cinema sweets, take your own with you, and your own fizzy pop or water. Why not suggest that instead of going to the cinema you have a DVD night - invite your friends and either all bring an item of food for a buffet or prepare cheap nibbles for everybody and save a fortune. You can do the buffet - if somebody else can provide the dvd's, popcorn, wine etc. It might appear cheeky but be bold - its important!!
7. Start a small savings fund.
It doesn't have to be massive - but if you can put £5 in it every time you get paid it will slowly begin to mount up and can be used to make a payment, as a treat or as an emergency fund if required. Best of all I suppose is to use it as a treat when you have reached a milestone although paying of some debt doesn't seem very rewarding - but actually will be in the long run.
8. Reduce your mobile phone bill!
Or your cable TV bill if you have one. Swap to a cheaper package - I had to threaten to cancel my account before offers for new customers became available to me - but I did manage to save a small amount and reduce my bill. If it isn't possible to do this make sure that you stay within your monthly limits and don't face any further charges. A big help if usually you have to pay much more than you're supposed to.
9. Shop around for the best deals!
On everything household. Shop around for gas and electric, house insurance, car insurance, pet insurance, cable/sky tv, broadband and anything else you can think of. Make sure you get the best rate of interest on any savings you have, and also on your debts if possible. If you can get a better deal on your mortgage, without incurring ridiculous fees, do it. And keep shopping around - never get complacent about it.
10. Use retail sales wisely!
Nobody who cares about you wants you to buy them a birthday present that puts you into the red for the month, and anybody who doesn't care isn't worth a present. Trawl the bargain bins and shops with sales on to find cheap items that can be purchased instead. This could save you oodles of cash and you may find unusual gifts for people. It may make you feel like stig of the dump but at this stage its important to cut costs and save money so at least give it a try - you never know what you might find.
So these are my top tips - they may or may not help you. But if you look at your bank statements to find out what you have been spending money on and start from there you might be lucky enough to find things that you can reduce your outgoings on and start the money saving process.
Debt Management News
Please find here an easy to use and understand glossary of terms related to debt management.
Adverse Credit
Adverse credit is credit which is available to a person with an adverse credit history. That can be a person who has incurred defaults, or had a CCJ, or arrears placed on their record. This credit may be available at a higher interest rate than non adverse credit.
Arrears
Arrears occur when a repayment has been missed. For example a mortgage payment is scheduled to be monthly but one month the money is not available so the payment is not received by the mortgage lender - this account then enters in to an arrears status.
Bailiff
A bailiff is a person who is authorised to collect a debt on behalf of a creditor - usually appointed when a debt has been difficult.
CCJ's or County Court Judgments
A CCJ is a county court judgment. This happens when a creditor is unable to receive payment for their credit when expected despite requesting the payment. The creditor can then submit this debt to court using a claims request. This claim is then heard in court and a judgment passed to enforce payment of the debt. This will be recorded on credit rating and when paid off will be noted as satisfied. Once a CCJ has been issued, a bailiff can be appointed to collect the debt.
Credit Crunch
The Credit Crunch of 2007/2008 has involved many lending institutions reducing the amount of credit available or increasing the amount of criteria needed to be fulfilled in order to qualify for credit. Brought about by lending been seen as becoming increased risk.
Credit Rating
The credit rating system takes into account many factors and these are rated to give a score which is then used by financial institutions and creditors to assess how much credit, if any, to give to a customer. Items used to score the rating are: defaults, arrears, current credit, mortgage, overdraft, County Court Judgments, etc. Credit ratings are available from two companies, Experian and Equifax (see sections below for detail).
Creditor
A creditor is a person who is owed money i.e. they have credit available and have lent it to somebody else.
Debt
Debt is a sum of money owed - it can be in more than one place and these combined give a figure for total debt.
Debt Consolidation
Debt Consolidation is when more than one debt is brought together - usually by taking out further credit and using this to repay the existing debt. This means that in future the number of monthly payments are reduced, making it easier to assess your finances. It is possible to incur charges for this and this may also increase the level of debt.
Debtor
A debtor is a person who owes money to another company or person i.e. they are in debt.
Defaults
A default is a record on your credit rating of a missed payment. It can be recorded for any type of credit, including mortgage, store card, credit card, gas or utility bill etc.
Equifax
Equifax is one of the companies who provide credit ratings and have details of lending and payments of individuals and companies. They offer a service to the public to check their own credit rating to see any problems which have occurred. This is also becoming popular as a way of preventing against identity theft - being aware of your credit rating and history can help you to spot out of the ordinary purchases and available overdrafts against your name.
For more information please visit Equifax.
Experian
Experian is another company offering to provide credit ratings and credit history of individuals. For a small fee it is possible to request your own report and view your credit rating. For more information and details of how to request your report please visit Experian.
Insolvency Practitioner
An Insolvency Practitioner is an authorised representative who can arrange an IVA for an individual or a CVA for a company. They usually specialise within this area and will be qualified, usually as an accountant or solicitor.
IVA
An IVA or Individual Voluntary Arrangement is a legally binding agreement between a debtor and their creditors to repay their debt over a set period of time. Please view our what is an IVA section for more information.
Overdraft
An overdraft is usually provided by a bank and is an agreed amount of credit which is available when an account runs out of funds - usually based on the fact that the credit will be paid back in a short period of time.
Prime
A prime person/mortgage/lending agreement - is one with no adverse credit history or a very good credit rating. There may be no defaults, or CCJ's in the recent history of the credit rating.
Sub Prime
Sub Prime refers to an adverse credit history or non prime credit history. This is when the credit rating has some negative items against it - for example defaults, arrears, CCJ's etc all count as sub prime and can affect credit availability from some lenders.
Adverse Credit
Adverse credit is credit which is available to a person with an adverse credit history. That can be a person who has incurred defaults, or had a CCJ, or arrears placed on their record. This credit may be available at a higher interest rate than non adverse credit.
Arrears
Arrears occur when a repayment has been missed. For example a mortgage payment is scheduled to be monthly but one month the money is not available so the payment is not received by the mortgage lender - this account then enters in to an arrears status.
Bailiff
A bailiff is a person who is authorised to collect a debt on behalf of a creditor - usually appointed when a debt has been difficult.
CCJ's or County Court Judgments
A CCJ is a county court judgment. This happens when a creditor is unable to receive payment for their credit when expected despite requesting the payment. The creditor can then submit this debt to court using a claims request. This claim is then heard in court and a judgment passed to enforce payment of the debt. This will be recorded on credit rating and when paid off will be noted as satisfied. Once a CCJ has been issued, a bailiff can be appointed to collect the debt.
Credit Crunch
The Credit Crunch of 2007/2008 has involved many lending institutions reducing the amount of credit available or increasing the amount of criteria needed to be fulfilled in order to qualify for credit. Brought about by lending been seen as becoming increased risk.
Credit Rating
The credit rating system takes into account many factors and these are rated to give a score which is then used by financial institutions and creditors to assess how much credit, if any, to give to a customer. Items used to score the rating are: defaults, arrears, current credit, mortgage, overdraft, County Court Judgments, etc. Credit ratings are available from two companies, Experian and Equifax (see sections below for detail).
Creditor
A creditor is a person who is owed money i.e. they have credit available and have lent it to somebody else.
Debt
Debt is a sum of money owed - it can be in more than one place and these combined give a figure for total debt.
Debt Consolidation
Debt Consolidation is when more than one debt is brought together - usually by taking out further credit and using this to repay the existing debt. This means that in future the number of monthly payments are reduced, making it easier to assess your finances. It is possible to incur charges for this and this may also increase the level of debt.
Debtor
A debtor is a person who owes money to another company or person i.e. they are in debt.
Defaults
A default is a record on your credit rating of a missed payment. It can be recorded for any type of credit, including mortgage, store card, credit card, gas or utility bill etc.
Equifax
Equifax is one of the companies who provide credit ratings and have details of lending and payments of individuals and companies. They offer a service to the public to check their own credit rating to see any problems which have occurred. This is also becoming popular as a way of preventing against identity theft - being aware of your credit rating and history can help you to spot out of the ordinary purchases and available overdrafts against your name.
For more information please visit Equifax.
Experian
Experian is another company offering to provide credit ratings and credit history of individuals. For a small fee it is possible to request your own report and view your credit rating. For more information and details of how to request your report please visit Experian.
Insolvency Practitioner
An Insolvency Practitioner is an authorised representative who can arrange an IVA for an individual or a CVA for a company. They usually specialise within this area and will be qualified, usually as an accountant or solicitor.
IVA
An IVA or Individual Voluntary Arrangement is a legally binding agreement between a debtor and their creditors to repay their debt over a set period of time. Please view our what is an IVA section for more information.
Overdraft
An overdraft is usually provided by a bank and is an agreed amount of credit which is available when an account runs out of funds - usually based on the fact that the credit will be paid back in a short period of time.
Prime
A prime person/mortgage/lending agreement - is one with no adverse credit history or a very good credit rating. There may be no defaults, or CCJ's in the recent history of the credit rating.
Sub Prime
Sub Prime refers to an adverse credit history or non prime credit history. This is when the credit rating has some negative items against it - for example defaults, arrears, CCJ's etc all count as sub prime and can affect credit availability from some lenders.
Different Types of Debt and Credit
At this present time we have become a nation dependent on credit, and average debt per household currently stands at over £8,000 – not including mortgages. It’s no wonder that so many of us have been getting into trouble with our finances at one time or another and interest rate increases means that even more of us feels that pinch. But it’s not surprising that our levels of debt have grown. We live in a culture where we are constantly barraged by the ideal world and how we should be living and the offers of credit have also grown in number.
The stigma that the country once associated with debt, or of being in debt, has long since vanished, and now its merely thought of as ‘normal’ to have debt and to live outside of our means. We have a wide array of credit and debt options to choose from, and if one lender won’t lend to us, there are plenty more out there who cannot wait to offer us their money to spend and pay back in the future. Here are a few examples of some of the ways we can get into debt;
Credit Cards
Credit cards have certainly grown in popularity – before 1970 and the invention of the magnetic strip they didn’t exist, and now pretty much every household has one. And if you haven’t got a credit card, you will surely have been offered one before now. They can be owned and provided by the bank or a financial institution, such as Visa, or by a large company. Marks and Spencer offer their own credit cards, as do many others.
Interest rates on these cards tends not to be very favourable when compared to mortgage rates, or loans but they are so handy that it is easy for us to spend on them, vowing to either pay off the full amount at the end of the month or to spread a large payment over a few months so as not to break the bank. Used wisely, for emergencies, or to transfer balances to 0% accounts, they can help and be useful, but when spending on them gets out of hand it can all go horribly wrong, and somehow, spending on that little piece of plastic isn’t really like spending your own money. You don’t associate it with paying the money back later on its just like buying something, without having to focus too much attention on to its price – you can sort the boring stuff out later, after all.
Store Card debt
These too have grown immensely in popularity, and many stores offer them, giving their customers to purchase items from their own stores and pay back at a later date. These are loyalty building as well – if you can’t afford to buy something new to wear for a party, but need something, and then see the ideal little dress or top in the store that you have a store card for – you can treat yourself, look good for your night off, and pay for it next month, when you can afford it… Ingenious! Store cards often have a high rate of interest on debt, like the credit card, much worse than a loan rate or mortgage, and in some cases they can be even worse. New legislation means that if you are paying over 25% interest, at some point in the future, this will have to be marked on your bill so that you can tell.
HP/Finance
Offered on some large purchases – things like 0% interest free credit aren’t so bad for the time that the offer exists – but again, this kind of debt can come with a sting in the tail. Most new car finance, involves HP – buying goods on ‘hire purchase’ – this is where the finance company buys your large item for you, you get to use the product and pay them back, paying them interest at the same time. Really we all need to learn to take time out to read the small print here and not to be pressured in to anything too hasty because we must have that leather sofa or new car.
Mortgage
The mortgage is the largest debt most of us will ever have attached to us. House price increases have been thick and fast in the past few years, although we are now tipped for a decrease in house prices they far out weigh our salaries, and we have stretched ourselves to get a foot on the property ladder. Not too bad with the fixed rate deal that we have managed to get for ourselves, but not so good when that discount comes to an end and the market has changed in the mean time and we are unable to get the same rate again.
It’s nice to have a little room to breathe here – but not always possible to have. If you can’t pay your mortgage or debts secured against your house, you can lose your property through repossession. If this is a situation you find yourself in you must start talking to your mortgage lender and get help as quickly as possible. Don’t miss any payments as the repercussions of this can last for a very long time – affecting your ability to get a new mortgage in the future, or to re-mortgage your existing property.
Loans
Loans are usually offered via banks, or companies who specialise in credit – not all of them are good for you, so take care with the company you choose to get a loan from. Loans can be secured, or unsecured. This means that they can be secured against property or other assets, or not. If secured against assets such as your house and you don’t make the repayments on the loan – the company you are in debt with has the right to seize and sell your assets. This can be a disaster waiting to happen. If the debt is unsecured your home is safe theoretically but if the company can make you declare bankruptcy, anything you have can be taken and sold to pay your creditors. Loan companies, as a rule, don’t like to lose money – it makes their line of work very unprofitable! Either way you can end up with a damaged credit rating and even more debt to pay off in the long run as costs are added on to your loan amount.
The stigma that the country once associated with debt, or of being in debt, has long since vanished, and now its merely thought of as ‘normal’ to have debt and to live outside of our means. We have a wide array of credit and debt options to choose from, and if one lender won’t lend to us, there are plenty more out there who cannot wait to offer us their money to spend and pay back in the future. Here are a few examples of some of the ways we can get into debt;
Credit Cards
Credit cards have certainly grown in popularity – before 1970 and the invention of the magnetic strip they didn’t exist, and now pretty much every household has one. And if you haven’t got a credit card, you will surely have been offered one before now. They can be owned and provided by the bank or a financial institution, such as Visa, or by a large company. Marks and Spencer offer their own credit cards, as do many others.
Interest rates on these cards tends not to be very favourable when compared to mortgage rates, or loans but they are so handy that it is easy for us to spend on them, vowing to either pay off the full amount at the end of the month or to spread a large payment over a few months so as not to break the bank. Used wisely, for emergencies, or to transfer balances to 0% accounts, they can help and be useful, but when spending on them gets out of hand it can all go horribly wrong, and somehow, spending on that little piece of plastic isn’t really like spending your own money. You don’t associate it with paying the money back later on its just like buying something, without having to focus too much attention on to its price – you can sort the boring stuff out later, after all.
Store Card debt
These too have grown immensely in popularity, and many stores offer them, giving their customers to purchase items from their own stores and pay back at a later date. These are loyalty building as well – if you can’t afford to buy something new to wear for a party, but need something, and then see the ideal little dress or top in the store that you have a store card for – you can treat yourself, look good for your night off, and pay for it next month, when you can afford it… Ingenious! Store cards often have a high rate of interest on debt, like the credit card, much worse than a loan rate or mortgage, and in some cases they can be even worse. New legislation means that if you are paying over 25% interest, at some point in the future, this will have to be marked on your bill so that you can tell.
HP/Finance
Offered on some large purchases – things like 0% interest free credit aren’t so bad for the time that the offer exists – but again, this kind of debt can come with a sting in the tail. Most new car finance, involves HP – buying goods on ‘hire purchase’ – this is where the finance company buys your large item for you, you get to use the product and pay them back, paying them interest at the same time. Really we all need to learn to take time out to read the small print here and not to be pressured in to anything too hasty because we must have that leather sofa or new car.
Mortgage
The mortgage is the largest debt most of us will ever have attached to us. House price increases have been thick and fast in the past few years, although we are now tipped for a decrease in house prices they far out weigh our salaries, and we have stretched ourselves to get a foot on the property ladder. Not too bad with the fixed rate deal that we have managed to get for ourselves, but not so good when that discount comes to an end and the market has changed in the mean time and we are unable to get the same rate again.
It’s nice to have a little room to breathe here – but not always possible to have. If you can’t pay your mortgage or debts secured against your house, you can lose your property through repossession. If this is a situation you find yourself in you must start talking to your mortgage lender and get help as quickly as possible. Don’t miss any payments as the repercussions of this can last for a very long time – affecting your ability to get a new mortgage in the future, or to re-mortgage your existing property.
Loans
Loans are usually offered via banks, or companies who specialise in credit – not all of them are good for you, so take care with the company you choose to get a loan from. Loans can be secured, or unsecured. This means that they can be secured against property or other assets, or not. If secured against assets such as your house and you don’t make the repayments on the loan – the company you are in debt with has the right to seize and sell your assets. This can be a disaster waiting to happen. If the debt is unsecured your home is safe theoretically but if the company can make you declare bankruptcy, anything you have can be taken and sold to pay your creditors. Loan companies, as a rule, don’t like to lose money – it makes their line of work very unprofitable! Either way you can end up with a damaged credit rating and even more debt to pay off in the long run as costs are added on to your loan amount.
Debt consolidation from a leading UK debt specialist
There are many ways to consolidate your debts. In most cases you can consolidate your debts or outgoings into one lower affordable monthly payment.
Benefits of debt consolidation
* Replace multiple loan and credit card payments with a single monthly payment
* Reduce your overall monthly commitments
* Reduce rates on high interest credit cards, store cards, overdrafts or loans
* Easier to manage – one affordable monthly payment
* Reduce your payments without affecting credit rating
* Fixed term – knowing exactly when your debts will be repaid
Benefits of debt consolidation
* Replace multiple loan and credit card payments with a single monthly payment
* Reduce your overall monthly commitments
* Reduce rates on high interest credit cards, store cards, overdrafts or loans
* Easier to manage – one affordable monthly payment
* Reduce your payments without affecting credit rating
* Fixed term – knowing exactly when your debts will be repaid
8 Ways to Consolidate Debt
Next to winning the lottery, a debt consolidation loan is a debtors dream. With one monthly payment and a fixed monthly payment schedule, you can actually see an end to those monthly payments.
In reality, consolidating bills isn't always easy. If you have a lot of debt, it can be hard to find a consolidation loan at a lower interest rate. And if you're not careful, you can end up deeper in debt than when you started.
Your goal in consolidating your debt should be to lower your overall costs. To accomplish this there are two things to keep in mind:
1. Get the lowest interest rate possible
2. Have a plan to pay off your debts in 3 - 5 years.
Here are some of the best ways to consolidate:
Using Credit Cards
The good news about this method is that with a good credit rating, you may get a much lower rate than other forms of consolidation loans. And since credit card issuers don't require collateral, you aren't "risking the farm."
Call your current issuer to ask what interest rates they will offer you if you transfer balances from other cards over to theirs. Go for a fixed rate if you can get it, and ask them to waive any transfer fees. If you can't negotiate a low rate with your current issuer, try shopping for a new card at a site such as CardRatings.com. But be careful! Too many applications for credit in a short period of time can hurt your credit rating.
Once you do consolidate this way, be sure to set up an optimal payment plan so you can be debt-free in 3 - 5 years. Home Equity Loans
With a home equity loan, you borrow against the value of you home, minus any other mortgages. The two major kinds are:
*A Home Equity Loan - a fixed amount of money for a fixed period of time (sometimes at a fixed rate) *A "Home Equity Line of Credit" where you borrow up to a pre-approved credit limit (interest rates usually variable) and can borrow again if you still have money available.
These loans can offer attractive rates, low payments, and the interest is usually tax-deductible if you itemize. Many issuers offer no or low closing costs for these loans. Interest rates are often variable, however, and there's always the risk that you can lose your home if you can't pay.
Cash Out Refinance
Refinancing your home and taking out money to pay off bills (called "cash-out refinance") is yet another way to tap the equity in your home. If you can refinance at a substantially lower interest rate, you'll eliminate the high interest costs of the debts you pay off, and you could even come out with a lower payment than you have right now since rates are so low.
One option to consider: an interest-only loan. By lowering your monthly payment, you can free up money to use toward paying down other high-rate debt or building a retirement fund.
Make sure you understand the total cost of refinancing. Take any money you've freed up by paying off other bills and use that to create an emergency savings fund.
Traditional Debt Consolidation Loans
A debt consolidation loan is an unsecured personal loan, and the only collateral you are offering for the lenders security is you. Because lenders consider them risky loans, they're usually more expensive and not always easy to get if you have a lot of debt.
If the interest rate is too high to make it worth it and the repayment term is ten or fifteen years, you should probably consider another method of consolidation. However, if the term and interest rate are right, this can be a great way to actually save money in the end. (Check Bankrate.com for current averages). Remember, to calculate the total cost of the loan from start to pay-off.
Credit Counseling
Credit counseling agencies may help you get out of debt, though they don't actually consolidate your debt. Instead, payment plans (usually with lower interest and fees) will be worked out for all of your eligible debts. You'll make one monthly payment to the counseling agency, which will pay all your creditors.
Participating in a credit counseling program generally won't hurt your credit rating, and if you stick to the plan you can be out of debt in three to six years. But be careful which agency you work with. If the counseling agency pays your bills late, you'll pay the price since you're still responsible to the lender. It happens.
Debt Settlement
Debt settlement is another option that's become increasingly popular with consumers who have a lot of debt and can't, or won't, file bankruptcy. You stop paying your bills and instead make a regular monthly payment to the settlement company. Your creditors contact them, and not you, about your overdue bills. As your accounts fall further behind, the negotiation company will settle your balances - usually for 50% of the balance or less (including fees) depending on the debt. Most people can be out of debt in less than two years or less using these programs.
Its not perfect. Your credit rating will be hurt in the short run and you must be certain you're dealing with a reputable company or the money you pay each month could disappear. Still, for consumers who can't shoulder the burden of debt they have now, it can be a very good option.
Retirement Loans
If you have a 401(k), 403(b) plan or certain types of pension plans, you can borrow against your nest egg. (You can't borrow against your IRA.) Its easy, with no income qualifications or credit check.
The key here is to borrow against your retirement account, rather than withdraw from it early so that you don't end up paying taxes and a 10% penalty. Also, if you leave or lose your job, you may have to pay your loan back immediately or pay taxes and penalties for an early withdrawal.
These loans typically offer low interest rates, and interest is paid to you, since you are the lender. While tapping your nest egg like this can short-change your retirement, so can costly debt payments.
If you are in your 20s and 30s, you obviously have more time to rebuild a retirement nest egg, but even if you're in your 40s or 50s, you will want to weigh the cost of paying the high interest of the debts over time, versus borrowing from your retirement account. The return you get from paying off high-rate debts is guaranteed - while the stock market isn't.
Rapid Repayment
There is a mathematically optimal way to pay your debts. Choose a fixed level monthly payment, and commit to it each month. Pay as much as you can on the highest rate debt first, while payment the minimums on the rest.
I almost always suggest consumers with debt start by creating one of these plans. Many people who do so find they don't even need to consolidate to get out of debt in the next few years. They just need a plan and they can do it on their own.
About the Author and Publisher
Talbert Williams offers debt consolidation referrals and advice. For more information, articles, news, tools and valuable resources on debt solutions, visit this site: http://www.1debtfreedom.com
In reality, consolidating bills isn't always easy. If you have a lot of debt, it can be hard to find a consolidation loan at a lower interest rate. And if you're not careful, you can end up deeper in debt than when you started.
Your goal in consolidating your debt should be to lower your overall costs. To accomplish this there are two things to keep in mind:
1. Get the lowest interest rate possible
2. Have a plan to pay off your debts in 3 - 5 years.
Here are some of the best ways to consolidate:
Using Credit Cards
The good news about this method is that with a good credit rating, you may get a much lower rate than other forms of consolidation loans. And since credit card issuers don't require collateral, you aren't "risking the farm."
Call your current issuer to ask what interest rates they will offer you if you transfer balances from other cards over to theirs. Go for a fixed rate if you can get it, and ask them to waive any transfer fees. If you can't negotiate a low rate with your current issuer, try shopping for a new card at a site such as CardRatings.com. But be careful! Too many applications for credit in a short period of time can hurt your credit rating.
Once you do consolidate this way, be sure to set up an optimal payment plan so you can be debt-free in 3 - 5 years. Home Equity Loans
With a home equity loan, you borrow against the value of you home, minus any other mortgages. The two major kinds are:
*A Home Equity Loan - a fixed amount of money for a fixed period of time (sometimes at a fixed rate) *A "Home Equity Line of Credit" where you borrow up to a pre-approved credit limit (interest rates usually variable) and can borrow again if you still have money available.
These loans can offer attractive rates, low payments, and the interest is usually tax-deductible if you itemize. Many issuers offer no or low closing costs for these loans. Interest rates are often variable, however, and there's always the risk that you can lose your home if you can't pay.
Cash Out Refinance
Refinancing your home and taking out money to pay off bills (called "cash-out refinance") is yet another way to tap the equity in your home. If you can refinance at a substantially lower interest rate, you'll eliminate the high interest costs of the debts you pay off, and you could even come out with a lower payment than you have right now since rates are so low.
One option to consider: an interest-only loan. By lowering your monthly payment, you can free up money to use toward paying down other high-rate debt or building a retirement fund.
Make sure you understand the total cost of refinancing. Take any money you've freed up by paying off other bills and use that to create an emergency savings fund.
Traditional Debt Consolidation Loans
A debt consolidation loan is an unsecured personal loan, and the only collateral you are offering for the lenders security is you. Because lenders consider them risky loans, they're usually more expensive and not always easy to get if you have a lot of debt.
If the interest rate is too high to make it worth it and the repayment term is ten or fifteen years, you should probably consider another method of consolidation. However, if the term and interest rate are right, this can be a great way to actually save money in the end. (Check Bankrate.com for current averages). Remember, to calculate the total cost of the loan from start to pay-off.
Credit Counseling
Credit counseling agencies may help you get out of debt, though they don't actually consolidate your debt. Instead, payment plans (usually with lower interest and fees) will be worked out for all of your eligible debts. You'll make one monthly payment to the counseling agency, which will pay all your creditors.
Participating in a credit counseling program generally won't hurt your credit rating, and if you stick to the plan you can be out of debt in three to six years. But be careful which agency you work with. If the counseling agency pays your bills late, you'll pay the price since you're still responsible to the lender. It happens.
Debt Settlement
Debt settlement is another option that's become increasingly popular with consumers who have a lot of debt and can't, or won't, file bankruptcy. You stop paying your bills and instead make a regular monthly payment to the settlement company. Your creditors contact them, and not you, about your overdue bills. As your accounts fall further behind, the negotiation company will settle your balances - usually for 50% of the balance or less (including fees) depending on the debt. Most people can be out of debt in less than two years or less using these programs.
Its not perfect. Your credit rating will be hurt in the short run and you must be certain you're dealing with a reputable company or the money you pay each month could disappear. Still, for consumers who can't shoulder the burden of debt they have now, it can be a very good option.
Retirement Loans
If you have a 401(k), 403(b) plan or certain types of pension plans, you can borrow against your nest egg. (You can't borrow against your IRA.) Its easy, with no income qualifications or credit check.
The key here is to borrow against your retirement account, rather than withdraw from it early so that you don't end up paying taxes and a 10% penalty. Also, if you leave or lose your job, you may have to pay your loan back immediately or pay taxes and penalties for an early withdrawal.
These loans typically offer low interest rates, and interest is paid to you, since you are the lender. While tapping your nest egg like this can short-change your retirement, so can costly debt payments.
If you are in your 20s and 30s, you obviously have more time to rebuild a retirement nest egg, but even if you're in your 40s or 50s, you will want to weigh the cost of paying the high interest of the debts over time, versus borrowing from your retirement account. The return you get from paying off high-rate debts is guaranteed - while the stock market isn't.
Rapid Repayment
There is a mathematically optimal way to pay your debts. Choose a fixed level monthly payment, and commit to it each month. Pay as much as you can on the highest rate debt first, while payment the minimums on the rest.
I almost always suggest consumers with debt start by creating one of these plans. Many people who do so find they don't even need to consolidate to get out of debt in the next few years. They just need a plan and they can do it on their own.
About the Author and Publisher
Talbert Williams offers debt consolidation referrals and advice. For more information, articles, news, tools and valuable resources on debt solutions, visit this site: http://www.1debtfreedom.com
What They Don't Tell You, About Credit Card Debt Consolidation
Because credit card debt consolidation is relatively easy to do, many people try it. There is no collateral involved. There is very little paper work compared to most types of debt consolidation loans. However, there can be a lot of risk involved.
Here’s the typical scenario. When a person gets to the point that their credit card debt is out of control, they try to figure out how to simplify their financial stress. After studying the various credit card debt management services, credit card bill consolidation is usually a high consideration.
However, without any collateral, a debt consolidation loan is hard to get. This is where consolidating one’s debt with a credit card comes into play. Typically, the person transfers all of their credit card debt onto one credit card. Then, they only have to deal with one bill and one company.
The Good News
It does sound good… and there’s still more good news. Many credit card companies offer a no interest period when you transfer all you loans to their card. It’s quite common to get a twelve-month grace period. That means you pay no interest for a full twelve months. Every payment you make is strictly paying down your debt with no additional interest.
It still gets better. At the end of the twelve-month period, your interest rate is usually lower than what you were previously paying. So, with only one company to deal with, no interest and a lower interest rate after twelve months, what could you loose?
The Bad News
At the end of the twelve-month period, your interest rate will go up. It will usually be at least 10-12 percent. If you only make minimum payments during your first twelve months, you will not significantly benefit from credit card consolidation. To maximize this option, you should be able to pay much more than a minimum amount during the first twelve months.
Your real education is in reading the fine print. There are potentially some significant risks with credit card consolidation.
Carefully read and review the terms of service agreement. Be sure to focus in on the section about payment default. It usually discusses three important points.
* First, what will happen if you make a late payment?
* Second, what happens if a payment doesn’t process (go through) correctly?
* Third, what happens if you go over your line of credit?
In most of these instances, your interest free twelve-month period is immediately terminated. You will immediately begin paying interest with your next credit card statement.
However, that’s not all. The interest rate you will be charged is generally higher than the interest rate originally offered at the end of the twelve-month period. Check very carefully. The interest rate could be higher than what you were previously paying before you consolidated your credit card debt.
In conclusion, be careful. Read your terms of service very carefully. Make sure you've gotten help to learn how to overcome any bad debt management habits. If you decide to do a credit card debt consolidation loan, be sure to pay as much as you possibly can during your grace period.
Here’s the typical scenario. When a person gets to the point that their credit card debt is out of control, they try to figure out how to simplify their financial stress. After studying the various credit card debt management services, credit card bill consolidation is usually a high consideration.
However, without any collateral, a debt consolidation loan is hard to get. This is where consolidating one’s debt with a credit card comes into play. Typically, the person transfers all of their credit card debt onto one credit card. Then, they only have to deal with one bill and one company.
The Good News
It does sound good… and there’s still more good news. Many credit card companies offer a no interest period when you transfer all you loans to their card. It’s quite common to get a twelve-month grace period. That means you pay no interest for a full twelve months. Every payment you make is strictly paying down your debt with no additional interest.
It still gets better. At the end of the twelve-month period, your interest rate is usually lower than what you were previously paying. So, with only one company to deal with, no interest and a lower interest rate after twelve months, what could you loose?
The Bad News
At the end of the twelve-month period, your interest rate will go up. It will usually be at least 10-12 percent. If you only make minimum payments during your first twelve months, you will not significantly benefit from credit card consolidation. To maximize this option, you should be able to pay much more than a minimum amount during the first twelve months.
Your real education is in reading the fine print. There are potentially some significant risks with credit card consolidation.
Carefully read and review the terms of service agreement. Be sure to focus in on the section about payment default. It usually discusses three important points.
* First, what will happen if you make a late payment?
* Second, what happens if a payment doesn’t process (go through) correctly?
* Third, what happens if you go over your line of credit?
In most of these instances, your interest free twelve-month period is immediately terminated. You will immediately begin paying interest with your next credit card statement.
However, that’s not all. The interest rate you will be charged is generally higher than the interest rate originally offered at the end of the twelve-month period. Check very carefully. The interest rate could be higher than what you were previously paying before you consolidated your credit card debt.
In conclusion, be careful. Read your terms of service very carefully. Make sure you've gotten help to learn how to overcome any bad debt management habits. If you decide to do a credit card debt consolidation loan, be sure to pay as much as you possibly can during your grace period.
Clinton Campaign Facing Deepening Debt to Advisers
The financial gap between Democratic Sens. Barack Obama and Hillary Rodham Clinton has grown increasingly pronounced during the presidential primary season, and the Clinton campaign is now shouldering sizable debts to several key consultants and advisers, campaign records show.
This Story
*
Clinton, Obama Make Last Pitches To Pennsylvania
*
Washington Sketch: In This Forgotten Town, Obama Can Forget About It
*
Clinton Campaign Facing Deepening Debt to Advisers
*
The Engine Of Change
*
Clinton, Obama Duel Over Readiness
*
8 Questions About The Pennsylvania Primary
*
McCain Campaigns in 'Forgotten Places'
*
Candidates Campaign in Pennsylvania
*
Obama Says McCain is Better than Bush
*
Transcript: Election 2008: Previewing the Pennsylvania Primary
*
Transcript: Post Politics Hour
*
In the Red
*
Interactive Map: Pennsylvania Democratic Primary
*
Clinton's Final Pennsylvania Push
*
D.C.'s Superdelegate Count
*
Behind the Numbers: Unfavorables on the Rise
View All Items in This Story
View Only Top Items in This Story
Clinton entered April with about $9.3 million in cash on hand, but she also carried about $10.3 million in debt. In contrast, Obama had $42.5 million available to spend at the start of April and reported $663,000 in unpaid bills.
Clinton strategists confirmed yesterday that the disparity allowed Obama to overwhelm her with television ads in Pennsylvania, which will hold its primary today.
"There's no question that Senator Obama has outspent us dramatically," said Howard Wolfson, Clinton's chief spokesman. "He is trying to knock Senator Clinton out of this race."
Clinton's volunteer fundraisers acknowledged yesterday that they are stretching to find untapped sources, and that they increasingly have relied on the Internet, which finance co-chairman Hassan Nemazee called a "highly volatile" place to get cash. Reports filed with the Federal Election Commission last night indicate how difficult the road could become if the Internet cannot produce a steady stream of donations.
While debt owed to the firm run by the campaign's recently deposed top strategist, Mark Penn, began to accumulate a year ago, with $277,147 reported last April, his tab grew to $4.6 million by the end of March. Adviser Mandy Grunwald's consulting firm began extending services to Clinton's campaign more than a year ago, and is now owed $528,480, the report shows. The campaign owes MSHC Partners, a mail and microtargeting firm, nearly $1 million. And for three months the campaign owed $240,000 to senior adviser Harold Ickes's database firm, Catalist.
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Campaign finance experts said yesterday that large extended debts owed to professionals could create legal trouble for the campaign if they remain unaddressed.
"Anybody who extends credit to a campaign runs the risk of either losing money or violating the law," said Jan Baran, a Republican election lawyer who defended a mail house for not collecting debt from a campaign.
Clinton campaign spokesman Jay Carson said the campaign "pays its bills on a regular basis and will continue to do so." He noted that while firms such as Grunwald Communications; Penn, Schoen & Berland Associates; and Catalist are owed significant sums, the campaign also has made large payments to the firms.
Amy Weiss, a spokeswoman for Catalist, said the firm recently received $120,000 from the campaign and expects additional payments soon.
Nemazee said a victory in Pennsylvania would generate an influx of online donations, and that fundraising from major donors continues to exceed expectations.
Database editor Sarah Cohen and research editors Lucy Shackelford and Alice Crites contributed to this report.
This Story
*
Clinton, Obama Make Last Pitches To Pennsylvania
*
Washington Sketch: In This Forgotten Town, Obama Can Forget About It
*
Clinton Campaign Facing Deepening Debt to Advisers
*
The Engine Of Change
*
Clinton, Obama Duel Over Readiness
*
8 Questions About The Pennsylvania Primary
*
McCain Campaigns in 'Forgotten Places'
*
Candidates Campaign in Pennsylvania
*
Obama Says McCain is Better than Bush
*
Transcript: Election 2008: Previewing the Pennsylvania Primary
*
Transcript: Post Politics Hour
*
In the Red
*
Interactive Map: Pennsylvania Democratic Primary
*
Clinton's Final Pennsylvania Push
*
D.C.'s Superdelegate Count
*
Behind the Numbers: Unfavorables on the Rise
View All Items in This Story
View Only Top Items in This Story
Clinton entered April with about $9.3 million in cash on hand, but she also carried about $10.3 million in debt. In contrast, Obama had $42.5 million available to spend at the start of April and reported $663,000 in unpaid bills.
Clinton strategists confirmed yesterday that the disparity allowed Obama to overwhelm her with television ads in Pennsylvania, which will hold its primary today.
"There's no question that Senator Obama has outspent us dramatically," said Howard Wolfson, Clinton's chief spokesman. "He is trying to knock Senator Clinton out of this race."
Clinton's volunteer fundraisers acknowledged yesterday that they are stretching to find untapped sources, and that they increasingly have relied on the Internet, which finance co-chairman Hassan Nemazee called a "highly volatile" place to get cash. Reports filed with the Federal Election Commission last night indicate how difficult the road could become if the Internet cannot produce a steady stream of donations.
While debt owed to the firm run by the campaign's recently deposed top strategist, Mark Penn, began to accumulate a year ago, with $277,147 reported last April, his tab grew to $4.6 million by the end of March. Adviser Mandy Grunwald's consulting firm began extending services to Clinton's campaign more than a year ago, and is now owed $528,480, the report shows. The campaign owes MSHC Partners, a mail and microtargeting firm, nearly $1 million. And for three months the campaign owed $240,000 to senior adviser Harold Ickes's database firm, Catalist.
ad_icon
Campaign finance experts said yesterday that large extended debts owed to professionals could create legal trouble for the campaign if they remain unaddressed.
"Anybody who extends credit to a campaign runs the risk of either losing money or violating the law," said Jan Baran, a Republican election lawyer who defended a mail house for not collecting debt from a campaign.
Clinton campaign spokesman Jay Carson said the campaign "pays its bills on a regular basis and will continue to do so." He noted that while firms such as Grunwald Communications; Penn, Schoen & Berland Associates; and Catalist are owed significant sums, the campaign also has made large payments to the firms.
Amy Weiss, a spokeswoman for Catalist, said the firm recently received $120,000 from the campaign and expects additional payments soon.
Nemazee said a victory in Pennsylvania would generate an influx of online donations, and that fundraising from major donors continues to exceed expectations.
Database editor Sarah Cohen and research editors Lucy Shackelford and Alice Crites contributed to this report.
Organize credit card debt
If your wallet is full of plastic and your mail is full of bills, it might be time to organize your credit cards. In fact, if you are carrying quite a bit of debt, consolidating to a lower-rate card can save you a hefty chunk of change in interest charges. But done incorrectly, canceling credit cards or consolidating debt can cause more harm than good.
Do you need to consolidate?
Decide what you want to achieve with consolidation. Do you want to lower your interest rates? Do you want to lower your monthly payments? Or just stretch out the terms on your loans? If it's one of the last two, tread carefully.
"If you really want a get-out-of-debt-free card, you've got to understand how you got into the mess and fix the mess," says Wayne Bogosian, co-author of "The Complete Idiot's Guide to 401(k) Plans."
"People solving symptoms with debt consolidation are on the verge of making the problem worse," he says.
In short, don't consolidate your credit cards just to charge them all back up again.
Which cards to keep?
If you do decide it's time to reduce the number of cards you have, you should determine your credit needs. How you are using your cards will determine whether it makes sense to consolidate the balances.
Do you have multiple department store or gas cards that you never use? Are you paying a yearly fee for a credit card that allows you to earn miles? If so, do you plan to use those miles? Consider how many points you earn and if it's worth the fee you pay.
Follow these steps
Ultimately most people really need only two or three multipurpose credit cards.
To consolidate your balances onto fewer cards:
• Pay off any low-balance cards you will not be keeping, and then close the accounts.
• Transfer the remaining balances to the card with the best interest rate. Don't use this card until it's paid off. This will avoid additional interest charges on revolving purchases. Once the balance is paid, close the account.
• Choose the two or three cards you are going to keep, and be sure they have limits high enough to cover your monthly charges. Close the others, and be sure to pay these off in full each month.
How to transfer a balance
Before you transfer that hefty credit card balance, read the fine print on your credit card agreement and ask questions. Otherwise, you could end up paying fees and a much higher interest rate than you expected. Many of the answers to these questions can be found on your credit card statement. If you cannot find the answers to these questions, call your credit card company and request a copy of your credit card agreement.
Ask these questions:
1. How long does the current rate last?
2. Does the current rate apply to transferred balances or new purchases or both?
3. Does the card have an annual fee?
4. What about late fees and over-the-limit fees?
5. Are there balance-transfer fees? (Some issuers charge transaction fees as high as 4 percent. So the higher that balance, the higher the transaction fee. A 4 percent fee on a $5,000 balance would cost $200).
Read through the credit card statement a few times. A lot of the information is hard to decipher. For example, some offers waive fees for "initial balance transfers" only. These are the transfers that are authorized when the customer first accepts the card and completes the balance-transfer form.
In such cases, every other balance transfer is treated as a cash advance and is subject to cash advance fees. Cash advances are VERY expensive.
Once comfortable with the terms of the offer, be sure to fill out the balance-transfer form carefully. Incomplete information may halt or delay a transfer.
It's also a good idea to make the minimum payment on the old card while waiting for the balance transfer to take effect; that may take anywhere from two to four weeks. The last thing a person who is trying to minimize their credit card costs needs is a $29 late fee and a penalty rate.
Your credit card company may send a notice saying the balance transfer is complete. Be sure to call the old card company and verify this. Write down the name of the person you talked to, the date, the time and what was said.
To avoid any mix-ups, experts urge people to wait until the old credit card company sends them a billing statement with a zero balance. If the company doesn't send one, request it.
Then cancel the old card. You don't need it.
Dangers of consolidating credit card debt
Consolidating credit card debt is not without danger. The most immediate dangers have to do with how well you manage to make the transfers.
Watch out for these costly errors:
• Canceling a card that still has a balance. This could cause your rate on the card to shoot up, costing you quite a bit in interest rate charges. In fact, don't even let a card issuer know that you're thinking of leaving until you've paid off the balance. Some issuers will jack up your interest rate if you try to cancel while you have a balance.
• Not finding out the rate and fees for balance transfers.
• Not paying the minimum on all your cards until the transfers are officially complete. If you don't pay on one card, that nice rate on your other card could disappear -- and you will have transferred without saving a dime.
• Not paying all your cards on time. You should realize that it may only take one slip-up for a super-low rate to disappear. One late payment can result in a 9.9 percent rate to jump to a 21.9 percent rate.
• Canceling cards before you apply for a mortgage or car loan. This could actually worsen your chances of getting favorable terms. Credit-scoring models look at a number of factors when calculating your score, including the result of the following formula: The total amount of debt on credit cards and revolving accounts divided by the total amount of debt available on those accounts. This formula results in a fraction less than one. The lower the fraction the better. This means that you might want to wait until after you have received the loan to cancel your cards.
Perhaps most importantly, you need to remember that the debt, even at better terms, is still there. And you still have to be diligent about paying it off before you add to it.
In other words, remember that consolidating your debt doesn't mean you are free to charge up your remaining credit cards. If you truly want to get out of debt, use this as an opportunity to put all your credit card debt in one place, concentrate on paying it off and get rid of credit cards you don't need.
Do you need to consolidate?
Decide what you want to achieve with consolidation. Do you want to lower your interest rates? Do you want to lower your monthly payments? Or just stretch out the terms on your loans? If it's one of the last two, tread carefully.
"If you really want a get-out-of-debt-free card, you've got to understand how you got into the mess and fix the mess," says Wayne Bogosian, co-author of "The Complete Idiot's Guide to 401(k) Plans."
"People solving symptoms with debt consolidation are on the verge of making the problem worse," he says.
In short, don't consolidate your credit cards just to charge them all back up again.
Which cards to keep?
If you do decide it's time to reduce the number of cards you have, you should determine your credit needs. How you are using your cards will determine whether it makes sense to consolidate the balances.
Do you have multiple department store or gas cards that you never use? Are you paying a yearly fee for a credit card that allows you to earn miles? If so, do you plan to use those miles? Consider how many points you earn and if it's worth the fee you pay.
Follow these steps
Ultimately most people really need only two or three multipurpose credit cards.
To consolidate your balances onto fewer cards:
• Pay off any low-balance cards you will not be keeping, and then close the accounts.
• Transfer the remaining balances to the card with the best interest rate. Don't use this card until it's paid off. This will avoid additional interest charges on revolving purchases. Once the balance is paid, close the account.
• Choose the two or three cards you are going to keep, and be sure they have limits high enough to cover your monthly charges. Close the others, and be sure to pay these off in full each month.
How to transfer a balance
Before you transfer that hefty credit card balance, read the fine print on your credit card agreement and ask questions. Otherwise, you could end up paying fees and a much higher interest rate than you expected. Many of the answers to these questions can be found on your credit card statement. If you cannot find the answers to these questions, call your credit card company and request a copy of your credit card agreement.
Ask these questions:
1. How long does the current rate last?
2. Does the current rate apply to transferred balances or new purchases or both?
3. Does the card have an annual fee?
4. What about late fees and over-the-limit fees?
5. Are there balance-transfer fees? (Some issuers charge transaction fees as high as 4 percent. So the higher that balance, the higher the transaction fee. A 4 percent fee on a $5,000 balance would cost $200).
Read through the credit card statement a few times. A lot of the information is hard to decipher. For example, some offers waive fees for "initial balance transfers" only. These are the transfers that are authorized when the customer first accepts the card and completes the balance-transfer form.
In such cases, every other balance transfer is treated as a cash advance and is subject to cash advance fees. Cash advances are VERY expensive.
Once comfortable with the terms of the offer, be sure to fill out the balance-transfer form carefully. Incomplete information may halt or delay a transfer.
It's also a good idea to make the minimum payment on the old card while waiting for the balance transfer to take effect; that may take anywhere from two to four weeks. The last thing a person who is trying to minimize their credit card costs needs is a $29 late fee and a penalty rate.
Your credit card company may send a notice saying the balance transfer is complete. Be sure to call the old card company and verify this. Write down the name of the person you talked to, the date, the time and what was said.
To avoid any mix-ups, experts urge people to wait until the old credit card company sends them a billing statement with a zero balance. If the company doesn't send one, request it.
Then cancel the old card. You don't need it.
Dangers of consolidating credit card debt
Consolidating credit card debt is not without danger. The most immediate dangers have to do with how well you manage to make the transfers.
Watch out for these costly errors:
• Canceling a card that still has a balance. This could cause your rate on the card to shoot up, costing you quite a bit in interest rate charges. In fact, don't even let a card issuer know that you're thinking of leaving until you've paid off the balance. Some issuers will jack up your interest rate if you try to cancel while you have a balance.
• Not finding out the rate and fees for balance transfers.
• Not paying the minimum on all your cards until the transfers are officially complete. If you don't pay on one card, that nice rate on your other card could disappear -- and you will have transferred without saving a dime.
• Not paying all your cards on time. You should realize that it may only take one slip-up for a super-low rate to disappear. One late payment can result in a 9.9 percent rate to jump to a 21.9 percent rate.
• Canceling cards before you apply for a mortgage or car loan. This could actually worsen your chances of getting favorable terms. Credit-scoring models look at a number of factors when calculating your score, including the result of the following formula: The total amount of debt on credit cards and revolving accounts divided by the total amount of debt available on those accounts. This formula results in a fraction less than one. The lower the fraction the better. This means that you might want to wait until after you have received the loan to cancel your cards.
Perhaps most importantly, you need to remember that the debt, even at better terms, is still there. And you still have to be diligent about paying it off before you add to it.
In other words, remember that consolidating your debt doesn't mean you are free to charge up your remaining credit cards. If you truly want to get out of debt, use this as an opportunity to put all your credit card debt in one place, concentrate on paying it off and get rid of credit cards you don't need.
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