Category: Debt

Telltale Signs When It’s Okay To Borrow Money

On October 18, 2017

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If you have ever consulted with a financial advisor, you know that borrowing money is one of the last things you should do, especially if you are trying to build up a strong credit history or investment portfolio.

However, there are certain exceptions to this rule. If you encounter a drastic or detrimental life event, are responsible for aiding your extended family in times of trouble, or suddenly find yourself inundated with bills, you should not feel as though you have no options or means of receiving help.

With that in mind, let us take a look at some telltale signs of when it is okay to borrow money:

When you cannot afford moving costs.

If you recently purchased a home, you may be faced with a plethora of expenses you had not even taken into consideration (i.e., storage, transportation, sudden repairs or renovations, etc.). Borrowing money in this scenario can give you great peace of mind while you are getting moved and settled into your new space.

When you are hit with large medical bills.

Unfortunately, no matter how young or healthy you are, facing medical expenses is an inevitability. Thankfully, there are ways to ease the burden of big medical expenses.

Now, credit bureaus allow patients 180 days to address their medical expenses prior to putting them on their credit reports. This gives individuals enough time to sort through their options and make the most educated decision possible – all without feeling rushed or uncertain of their financial standing.

When your car requires major repairs.

A lack of reliable transportation puts a major wrench in your plan to consistently earn and save money. However, if you are in a financial bind and require assistance to get your car back in working order, borrowing money is likely your best option. This will ensure you are still able to work and will even allow you to pay off your expenses at your own pace – a definite win-win scenario.

Regardless of your reason for borrowing money, it is imperative that you remember the importance of paying off your debt in a timely manner. Otherwise, you may end up paying more due to accrued interest than you would have if you budgeted your finances to make the largest payments you could manage – within the realm of feasibility, of course.

How Collections Can Affect Your Credit

By Tom Leydiker

On August 25, 2017

In Blog, Debt, Finance

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Debt collectors, according to both the Federal Trade Commission and Consumer Financial Protection Bureau, are one of the most complained-about businesses. When you hear about “debt collectors,” the first image to come to mind is an aggressive loan shark. Even a “nice” debt collector can be a pain – yet they aren’t going anywhere anytime soon.

A debt collection is a type of financial account that’s been sent to a third-party debt collector. Hiring a debt collector is usually more cost-effective for a company than to keep spending their resources pursuing payment. Most credit card accounts get sent to a collection agency after six months of non-payment, while other businesses send them out even sooner – it varies business by business.

Debt collectors will call you and your friends, send letters, and even show up at your home to collect money – all of which is perfectly legal. If a debt collector doesn’t have your phone number or correct address, however, you may never receive notice of the debt until you see it listed on your credit report.

How does this all affect your credit?

Whenever an account is sent to a collection agency, the original creditor or the collector updates the account on your credit report. A debt collection is one of the worst types of credit report accounts. It reveals that you have become seriously delinquent on an account. This will cause your credit score to plummet, causing you to be denied for credit cards and loans in the future, particularly if it’s recent or remains unpaid.

These accounts can stay on your credit report for as long as seven years, meaning that their negative effects can haunt you for a long time. One of the best ways to lessen the harm of a collection account is to pay off the debt so that it will affect your collection less over time. Another way is to continue to pay all of your additional bills on time.

4 Steps Towards A Debt-Free Life

By Tom Leydiker

On May 4, 2017

In Debt

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For some, being in debt is something that resulted from careless spending. Frivolously making purchases for unnecessary commodities with credit cards with the mindset that you will pay it off later by making the minimum monthly payments is the quickest way that Americans get themselves into debt.

For others, debt comes more unexpectedly, perhaps through an unpredicted emergency you were not financially prepared for. Maybe your car broke down and you either had to pay an expensive garage bill or the garage deemed your car unfixable so you are now forced to purchase a new vehicle.

Whatever the cause of your debt is, it’s important that you start developing better money habits as soon possible to get out of debt and prevent additional debt – a very easy cycle to fall into and a difficult one to get out of. It is being estimated that, on average, 50 percent of households currently have debt ranging around $14,000.

Here are some ways you can prevent future debt while also implementing strategies that will help you to work towards managing your current debt:

Step #1: Create a list of all of your debts, including their interest rates.

Don’t skip over this step! Before you can start tackling your debt, it’s important to be aware of exactly how much you have. Write it down in a notebook or start making a list in a spreadsheet so that you have everything contained in one area for future reference. The three most important things you will want to take down: the total amounts you owe, the annual percentage rates (or interest rates), and the monthly minimum payments.

Step #2: Set goals as you work towards paying off your debt.

It will be beneficial for both your stress and your action plan if you can break apart your debt into more manageable portions. Find out how much money you can dedicate to paying off your debt every month and, then, you can do a rough estimate of how many months or years it will take you to pay off the total amount. Set milestones for yourself as you start contributing more money to your debt, whether it be every $1,000 you pay off or every $5,000 you pay off.

Step #3: Focus on the payments with the highest annual percentage rates first.

This is where that list you created at the beginning of the process will come in handy. As you begin paying off your debt, focus on the balances that have the highest interest rates first. Work to eliminate those first by dedicating as much money to them as you can while still being able to pay the monthly minimum payments on your other balances.

Step #4: Find additional ways to bring in income.

If you bring in additional income, that is money that you can be dedicating right to your debt. The thought of working a second job may not seem appealing, but it will only be temporary until you are debt-free again, and this will make paying off your debt go by more quickly.