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Did you know that the fastest way to get out of debt is to increase your income? That simply allows you to put in more for debt payments and thus lower your balance faster.

One of the reasons why you are in debt is because your income is not enough to pay for the lifestyle that you are currently leading. While you may think that you can always lower your expenses, it may not be enough. You can only lower household costs up to a certain level. Although making better spending choices is a must, even your best efforts may still fall short if you combine your bare basic necessity needs and your debt payments.

So even as you begin a debt relief program, you have to consider how you will increase your income too. You may have gotten the best debt relief company in the industry but even they can only do you so much. Combining their program with an increase of earning will expedite your debt freedom achievement.

If you will increase your income, you have to consider how you will do it. You do not want to burn yourself out too much physically and mentally. Fortunately, there are three options for you to get additional income as you continue to work your day job.

One of them is by getting a passive income business. This means you only have to invest and work on the business at the beginning - and it will keep on generating your income even after you have stopped. Sometimes, it will require you to put some human input but that may be too spaced apart that you don’t really feel like its work.

Another great option for supplemental income is using your hobby. There are many things that you can do. If you know arts and craft, you can create products and sell them online or in the weekend market. The same can be done if you love carpentry, sewing, painting and even shopping. There is a need for a personal shopper and if your taste is good, you may find it to be an interesting second career. Cooking and baking are also something that you can earn from. Offer to bring lunch for your officemates or sell to them cookies and pastries that you have baked over the weekend. You can advertise your services as a caterer for small and intimate gatherings.

Lastly, you can get a second job online. The best thing about this is you can work at home. If you know how to write, this can be a career for you since a lot of web content and article writing is needed by online businesses. You can also be a graphic designer or a web developer/designer. If you know programming and you can learn how to create applications like games, this is a fast rising online career.

The key is to explore your options and be open minded about how you can increase your income. While you are at it, make sure you put in some funds toward your savings. That will help finance any emergency situation without compromising your usual funds for basic expenses and debt payments.

 
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Credit scores are more than just numbers - it is an important measurement of your financial health. It is viewed by lenders, bank officers, investors, employers and even property managers or landlords. The purpose of your credit score is to provide insight as to how responsible you are when it comes to financial matters - especially debt. It shows if you are honest, disciplined, organized and have a sense of personal responsibility.

Your credit score is based on your credit report. It gets the following details with the respective rank of importance: payment history (35%), debt amount (30%), credit history (15%), new accounts (10%) and types of credit accounts (10%). If you are always late on your payments, you can expect that your credit score will suffer greatly.

What you need to know is that your credit history can improve and you can do it in a matter of months to a year. It will not be an immediate jump to a high score but more of a gradual one. So to make sure that your credit score is in good shape, here are some suggestions that you can implement in your financial life.

If you have a lot of debts, you need to pay them off. Know that the key here is your performance more than the amount. Make sure you send payments on time and you will not default on any of your dues. Remember that payment history and debt amount constitutes to around 65% of the credit score. If you pay your debts diligently, you will increase these two and it will help you with your score immensely.

As you pay off what you currently owe, keep your debt balance low. It will not help your case if you continue to take in more debt. If possible, keep your debt level to zero. If you really have to apply for a loan because you want to buy a house or start a business, make sure that your current debt is low or better yet, non existent.

When you apply and get approval for financial assistance, you need to make sure that you will keep up with your payments. Also, if you don’t have to, try not to close any of your old accounts. The older an account is, the better it will be for your score. However, if you know that having more than one credit card may endanger you to spend them and thus put yourself under a lot of debts, then cut them off and retain only one card. If you are diligent in paying off that card, you can expect that your score will eventually rise.

Taking care of your credit score is a tricky task to accomplish but with practice, you should do just fine. Make sure you check on your credit report regularly so that you can report any discrepancy or unauthorized use of your account - which actually implies that you had been a victim of identity theft.

 
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A lot of us are quite scared of communicating with creditors. That is probably because we have a strong sense of responsibility about our debt. We are ashamed to talk to them especially when we know that we had been late on our payments.

Defaulting on payments does not necessarily mean that you had been reckless with your spending. Sometimes, you are forced to use your debt payment fund for more important expenses like those for your health.

Being sick is a valid reason to be late on your debt but that does not exempt you from the late penalties and other charges associated with it. However, you can work on making things less destructive. This is an unexpected circumstance that nobody wanted - in the same way that some people do not want to miss payments because they got laid off from work.

So if you find yourself intentionally defaulting on payments because of your sickness, here are some of the things that you can do.

First of all, you need to call your creditors. Despite how you view them, creditors appreciate sincerity in their clients. Just pick up the phone or send them a letter to let them know that a sickness is causing you financial difficulties. This crisis is making you miss your payments. Explain the situation and express your sincere intent on paying back what you owe. Acknowledge that the crisis does not take away your responsibility for the debt but at the same time, let them know that you simply cannot afford your current debt payment requirements.

Do not be afraid to tell them the details of your illness. Be prepared to show a document from your physician to prove your claims - especially any future medical treatments that will indicate how long you have to pay medical expenses that you are currently financing.

Creditors usually have programs in place that will place you in a special payment plan that you can afford. Or, you can opt for a third party debt relief service life debt management or debt settlement. All of these are effective in getting you a lower payment plan so you can pay off both medical expenses and your current debts.

Create a budget for your finances so you know how much you can afford to keep paying your debts. Be honest with yourself and never promise to pay more than what you can really spend. Defaulting on the new payment plan may get the ire of your creditor so try not to disappoint them. Make sure they understand that your medical expenses will come in first.

When you have ironed out your plan for your debts, you want to keep from taking in more debt. In this particular case, you don’t want to accumulate medical debts. Research on charitable organizations and government programs that can help people with your specific medical condition. You can also approach local churches to see if they can provide you with financial or other forms of support to help you maximize your limited finances.

In case the creditors do not want to give you leniency, you may want to look for a debt relief company who can assist you in negotiating your debts. Your best option is to have your balance reduced so that you can get out of debt faster.


 
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Credit cards can be difficult to control. In most cases, people who are in debt usually have these plastic cards as one of the culprits. These cards were created to entice us to buy things and avail of professional services that are beyond our current financial capabilities. Even when you cannot afford it at the moment, you can always swipe your card to get what you want. While the whole concept obviously does not promote the best financial habit, there are ways for card holders to stay away from credit card debt.

First and foremost, if you have existing credit card debt, you need to pay them off. There are debt relief options that you can use like debt consolidation and debt settlement. Choose your option based on how much you can afford to pay towards your credit card debt. Ignoring your debt is a very bad idea because it is notorious for accumulating very easily because of the high interest rate and the finance charges. Work on your debts and pay off what you owe.

When your current credit card debt is paid off, you don’t really have to cut them all of. If you wish to get rid of the high interest rate cards, you can do so but if you know how to use your cards properly, the interest rate will not matter at all.

After using a credit card to pay for something, you usually have a grace period between the date of purchase and the due date of the billing statement right after. If you pay for the purchase in full within this time frame, you don’t have to worry about the interest rate. That means, you really just pay for what you got - no additional fees. This habit will not only help you keep payments to a minimum, it will also show that you are a responsible credit holder.

Another way to use your credit card wisely is to limit its use. Ideally, you should only use your card for emergencies. If that is the case, make sure you define just exactly what an emergency is. Will it be strictly for health reasons only? Try not to use it for basic expenses because that will be very hard to control.

When you use your cards double check the print out before signing. Encircle the amount to check if it is the right amount. Keep your copy so you can double check the billing statement once it comes in. If there are any discrepancies from what you remember, investigate and report it to the credit card company.

If you have to use it for expensive purchases, set up a payment plan to make sure that your balance will not grow further. Keep that plan as short as possible. Also, keep the price from going more than 30% of your card’s limit.

Hopefully, these rules will help you get the best rewards for your credit cards. It is very important to practice smart spending habits and try not to be deluded into thinking that you can pay for things that are actually more than what you can actually afford.

 
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Taking care of one’s finances is all about making the right choices. And to make the right decisions, you need to know what is good for your finances and what is destructive.

Unfortunately, looking at how society have evolved, the norm may not necessarily be supportive of proper financial management. There are a couple of lies that you may be telling yourself that could lead to your financial ruin. Even if everyone you know is practicing it, that does not mean it is correct. So here is a list of wrong assumptions that you may be telling yourself. See if these apply so that you can correct them and save yourself from making bad financial decisions.

First of all, some people think that saving for retirement can be put off for later. There is no such thing as saving too early. In fact, the earlier you start, the more secure future you will have. You don’t even have to think of it as your retirement money. Think of it as your emergency or reserve fund. This will literally save you from a lot of future disasters. When an emergency expense is needed, you don’t have to borrow money or rely on your credit card to help get you out of a tight spot. You can dip into your savings and save yourself from all the interest rate and overall stress associated with debt.

Another lie that is quite common for people is basing their purchases on what they can afford. For instance, just because you can afford to buy a luxury car, it doesn’t mean you have to. Even if you qualify for a million dollar home, it does not mean you should buy one. If you really want to make wiser spending choices, make sure you only buy based on what you need - not how much you can afford. If you only need something that costs less, then put the extra money on your savings. That is the wisest move that you can make.

Society has put so much importance on material things. Although it can really help make your life convenient, all of that will be overpowered by the debt payments that you have to keep up with. If you want to buy something expensive and is clearly just to appease your ego, then make sure you pay for it in cash. Be more confident about yourself and remove the notion that your money will define your success. You may be surprised that some of the self made millionaires in the country have simple needs.

You don’t really have to live a frugal lifestyle in order to say that you are making the right financial decisions. You just have to make sure that your spending is not ruled by expensive price tags. Keep in mind what you just need and stick to that. You do not have to possess the priciest items to prove your self worth. Live within your means and grow your savings - that is how you can be deemed as a financial success.

 
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A lot of financial problems result from poor financial decisions. Being in debt or having a limited income are only among the few problems that are troubling the average American today. One thing’s for sure, if you want to get out of this predicament, you have to do something about it.

For most Americans, debt is the primary reason for their financial hardship. Their limited income is wasting away on debt payments that they find it hard to stay motivated because they are not really enjoying the fruits of their labor.

Fortunately, there are debt relief options that you can use to help you out of your debt problems. However, it is important that you approach the whole thing smartly. You don’t just choose an option because it gives you the most saving or it gets you out of debt faster. There are various considerations that you need to analyze before you make a decision.

First of all, you need to analyze your finances. That is how you be smart with your debt. To be able to solve your debt, you need to know the problem first. This can be done by creating a budget plan. You need to list down your income and expenses so you can see if you are overspending. That is one of the causes of debt - spending more than what you can really afford.

Through your budget, you will know how much you can afford to pay off your debts. By removing the expenses, you should be able to see your disposable income. Knowing this amount is very important because you get to choose the right debt relief option.

For instance, if your income is enough to cover the minimum payments of your debt or only has a very slight deficit, then debt consolidation programs will be a great option for you. If the deficit is big and you need a reduction on your overall debt balance, debt settlement is the best option. If you can barely meet your basic necessities because your income is so small or you have no income to begin with, then you may have to resort to bankruptcy.

Another way to be smart with your debt relief option is by knowing your priorities and what you want to accomplish beyond your debts. Those in debt tend to focus too much on getting out of it and in the process, they end up choosing the wrong debt relief option. For instance, with bankruptcy, there is a possibility of having your debts discharged in a matter of months. However, it will have some grave effects on your credit score. So if your priorities include putting up a business in the next few years or buying a house, you need to take care of your credit score to accomplish that. That means your choice will have to be either debt consolidation or debt settlement. You just have to grow your income to be able to afford either of the two options.

Think about all your choices and make your selection based on your financial capabilities and your financial goals. This will ensure that you will make smart decisions about your debt relief option.

 
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Most businesses owe money in one way or the other. It can be through the start up loan that helped turn the business idea into a reality. It can be through the payables that are scheduled to be paid off in 30, 60 or 90 days after the purchase had been made or the service given. Whatever it is, debt will always be something that entrepreneurs should know how to handle.

In some cases, a severe economic turn, a bad investment or a drastic change in the market’s perspective can jeopardize the financial state of a small business. This could leave the business owner with more debt and overhead to pay compared to the revenues coming in. If this is the scenario, what are the options of the small business to get out of debt?

One of the first options that entrepreneurs consider is debt financing. It simply implies that the small business will get financial aid, either from a bank or any financial institution that is in the business of doing such transactions.

Some finance experts will say that a debt taken to help grow one’s personal wealth is a smart debt to take. If it will help you business survive a financial crisis and keep it away from bankruptcy, then it is worth a shot. To help you decide if this is the right course, here are some benefits to debt financing.

The first and probably the best thing about this small business debt relief is you get to stay as the owner of your company. If you will not file for bankruptcy, you keep the company open and you have the chance to revive your profits. You retain full control in your business.

Another benefit is you stay as the primary decision maker when it comes to where the money you loaned will be spent. You can decide to solely spend it on your payables or you can set it aside for your monthly overhead. Or you can split it between the two. Of course, that will have to be thought out carefully in your debt relief plan and not just something that you decide on a whim.

Yet another reason for you to consider debt financing is the fact that your accountability to the lender will only be temporary. As soon as you finish paying off the loan amount, your transaction ends. The lender will have no interest as to what the loan have done to your company. If it led to a hefty amount of profit or got your business to skyrocket its profits, all those will be on you. Only you and the company will enjoy the fruits of that debt financing.

Lastly, this type of small business debt relief will allow you to boost the credit rating of your company. At least, this will happen if you pay off your debt diligently. Despite the huge amount of debt, if you are able to keep up with your payments, that will lead to a good financial history for the business. That means you can get a good deal out of another loan in case your business will need it again.

 
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Medical debt is another type of credit that most people are burdened with. Health care is not cheap and the rising costs to treat an illness can put anyone in debt.

In truth, being in debt is not always because of bad spending habits. Some people made all the right choices in terms of their finances. However, when tragedy struck, it turned out that they lacked in one area: saving.

As any doctor will tell you, prevention is better than cure and the same can be applied even to your finances. Instead of putting yourself in debt when a significant amount is immediately required, you have this financial net to fall back on.

This is especially true for those who are suddenly faced with a medical emergency. It can be quite stressful when you know that you do not have the money to finance your treatments. But that can be solved or averted if you only learn how to save up for it. You can invest in a health coverage or insurance so you have something to use when you or a family member contracts an illness.

Medical debt is a serious problem that Americans are facing today and while saving is one way to solve or prevent it, there is another option. If you find yourself deep in medical debt and you still think you will incur more, here are a couple of options that is available for you.

One of them is debt settlement. While debt management can help with this, it usually requires you to stop incurring debt. If this is not possible because you are still undergoing treatments, debt settlement can be a viable option. You can use your medical condition to prove that you are in a financial crisis and you need help through debt reduction. You can send a letter to your creditor, discussing why you are late on your payments and indicate that you are open to discuss how you can still make payments despite your limited resources. Negotiate to pay only a percentage of your current balance and have the rest of your debt forgiven.

You can also look for government backed aids to help you make ends meet as you continue to incur medical debt. Research on the Internet for charitable organizations who can help with the type of illness that you have. They can give you medical aid in the form of free consultations and medical services. They can also provide you with financial support and even medicines.

There are also cheaper alternatives in terms of health care. This will minimize the chances of you putting yourself in debt. Research and ask for various alternatives to heal any ailments that you may have.

Also, make sure that every billing statement that you get is carefully scrutinized. There are times wherein people are billed for services and medication that they did not get. Check the quantity and question any entry that you do not understand. This will ensure that you will only be paying for what you received.

More than anything, saving is still the best way to solve your medical debt problems. Not only that knowledge will be your greatest ally so make sure you are aware of your options.

 
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There is no foolproof way of getting out of debt. All of the debt relief options have successes and failures. The failed attempts have varying reasons that can include being in the wrong program or inability to commit to the program. This is why it is important that you know the risks involved in every debt solution so you can prepare for them and make sure that you will be part of the success statistic.

One of the most frowned upon solutions for credit problems is debt consolidation loans. It is not that the concept is flawed. Financial experts do not make it a first option because it has a lot of potential to go wrong. But if you know what they are, you should be able to avoid them easily.

So what are the risks involved in debt consolidation loans?

First is the risk to grow your debt. This is how debt consolidation through a loan works. If you have mostly credit card debt, you want to make significant payments on your debt without having to pay so much on fees and interest rates. You will achieve this by getting a loan that has a low interest rate. The loan amount that you will target should be big enough to cover all your credit card balance. When your loan is approved, you pay off your credit card debts, thus having them all revert to zero balance.In most cases, people get tempted to reuse their cards simply because the balance is low. They are deluded into thinking that their debts are not so big when all they actually did was to shift the debt around. If you are not careful with your credit card, you may end up growing what you owe.

Another potential risk is losing a valuable asset. There are two ways for you to get a low interest loan: a good credit score or a collateral. These two will make you a low risk borrower. If you do not have a good credit score, you may resort to using a valuable personal asset to lower the interest on your loan. This is probably alright if you have a steady income but if that is suddenly compromised, you may lose the collateral that you used on your loan.

Lastly, there is a risk that you will not really learn your lesson. As important as it is to get out of debt, you want to make sure that you will not land in the same situation again. That being said, you need to identify why you got into debt and how you will ensure that it will not happen again. This is not part of the debt consolidation loan program as it only concentrates in paying off what you owe. It is only upon your own personal effort that you can successfully stay out of debt. Be sure to practice the right financial management skills that includes smart spending habits, savings and budgeting. These are the keys to prolonging the debt freedom that you worked so hard to reach.

 
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Debit cards are becoming popular nowadays because of the negative publicity that debts are giving credit cards. Anyone who intends to make wise financial choices are encouraged to give up the latter for the bad spending habits that it promotes. It allows consumers to purchase items that they cannot afford at the moment. By relying on a future income that may or may not come, they are risking a future filled with debt obligations. Instead of enjoying the fruits of their labor, they have to send it to creditors for products that may have already lost their appeal.

Apart from the ability to buy things without waiting to save up for it, another appeal of credit cards is the safety of not bringing cash. Well if this is the major appeal for you, debit cards can serve that purpose very well.

Debit cards allows you to purchase items without having to carry cash. But unlike the other type of card, you need to put money in it before you can swipe it. In essence, you stock the card with cash before it can be used for any purchase. If you run out of money in your debit card, it becomes worthless until you put more funds in it.

Another benefit of these cards involve reward points. Most stores offer debit cards to loyal patrons to encourage them to make constant purchases. These are coupled with reward points that consumers can redeem later on.

While all of these are appealing, one question remains to be answered: will debit cards help you stay debt free?

The answer to that is yes. You can say that it will keep you from acquiring debt. That is a given fact because you cannot spend more than what is currently on your account. Unlike credit cards, you are actually using money that you have at the moment. You may not be handing over physical cash, but you are spending cash that you own already - just stored in a safe place. That in itself, is one way to implement a cash only purchase without endangering actual money from being snatched from you.

Debit cards also allow the elimination of any fees and interest rate for every purchase that you make. There are fees when using a debit card but this is usually shouldered by merchants and retailers. This is also a great option for people who do not have their own bank accounts (unbanked) or those who have limited access to traditional banking services (underbanked).

While all of these are beneficial, you need to consider if debit cards actually teach us proper financial management skills. In most cases, they do. It is true that parting from actual cash is more difficult and this make you think twice about spending it. This may not be as strong as spending through debit cards but the bottom line is they help you live within your means. As mentioned, you only spend the amount that is on your account.

You just have to be careful about the debit card that you will use because there may be hidden charges that you do not know of. Read through the fine prints to understand if there are fees every time to deposit money, check your balance and so on. Some cards charge a monthly service fee. While the combination of these costs may not be as significant as a credit card, you should be aware of them nevertheless. Make sure your account is FDIC insured to protect the money you will place there.