Debt Management http://www.wisebread.com/taxonomy/term/7681/all en-US 10 Things People Without Debt Do http://www.wisebread.com/10-things-people-without-debt-do <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/10-things-people-without-debt-do" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_on_roadtrip_000038793128.jpg" alt="Woman without debt on vacation spending cash" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>We live in a world where car payments, credit card bills, and other forms of consumer debt are just assumed to be facts of life &mdash; as inevitable as death, taxes, or Kanye West interrupting a music awards show. Anyone lucky or disciplined enough to buck the trend gets little exposure in media. How they did it &mdash; and the benefits they enjoy &mdash; go largely undiscussed. Maybe it's time to explore the lifestyles of the debt-free. Here are 10 things people without debt do.</p> <h2>1. They Wait</h2> <p>When it comes to spending money, patience really is a virtue. Debt-free people achieve their rare status by keeping their needs in check and carefully considering their wants. Then, they save their money, wait for great deals, and shop around for amazing second-hand bargains.</p> <h2>2. They Keep Their Egos in Check</h2> <p>Fat egos usually mean skinny wallets. Credit-fueled conspicuous consumption keeps more households in the red than mortgages and college loans combined. Those who are debt-free try to keep their egos separate from the material stuff they own and rest comfortably in the knowledge that true luxury is freedom from debt servitude.</p> <h2>3. They Spend (When the Deal Is Right)</h2> <p>Our frugal friends and neighbors get a bad rap. They're usually dubbed &quot;tightwads&quot; and quickly dismissed as a fringe group out of touch with reality. But they're not afraid to spend; they're simply selective about what and when they buy.</p> <h2>4. They Pay Cash</h2> <p>People who are debt-free know why <a href="http://www.wisebread.com/6-reasons-why-cash-is-still-king">cash is still king</a>: When you spend it you <em>feel</em> it; it's impossible to spend more cash than you actually have; and when you're negotiating on price, the green stuff gets attention.</p> <h2>5. They Negotiate</h2> <p>And while we're on the topic of negotiating, let's get something straight: The price of almost everything is negotiable. The debt-free realize this. They've learned the <a href="http://www.wisebread.com/the-7-laws-of-negotiation">rules of negotiation</a> and haggle on the price of everything from cars to cable TV. After all, paying retail and being debt-free don't mix.</p> <h2>6. They Get Great Interest Rates</h2> <p>When the debt-free choose to take on debt strategically, they tend to benefit from <a href="http://www.wisebread.com/the-best-low-interest-rate-credit-cards">lower interest rates</a>. Thanks to a history of responsible credit use, low balance-to-limit ratios, and a modest debt-to-income ratio, they have strong FICO scores.</p> <h2>7. They Avoid Incremental Expenses</h2> <p>If you haven't noticed, marketers are getting more reluctant to share actual prices with consumers. Instead, they frame big expenses in more palatable monthly terms. You can get in that $29,000 new car for only $203 a month; that new cell phone will cost you a mere $18 a month &mdash; you get the idea. But, debt-free folks know that big expenses lurk behind those tiny payments, and they understand how dozens of small cuts can quickly bleed a budget.</p> <h2>8. They Expect the Unexpected</h2> <p>I'll be the first to admit: I'm not an optimist. When it comes to the economy, my work, and the prices of things in relation to income growth, I'm a Debbie Doubter, if not a full-blown Debbie Downer. And I'm in good company. The debt-free have a <a href="http://www.wisebread.com/emergency-plan-better-than-an-emergency-fund">financial emergency plan</a> and even in the boom times, buckle up for the bust.</p> <h2>9. They Sleep Well</h2> <p>But far from a sense of powerlessness, keeping a low financial profile, being prepared for emergencies, and saving for the future builds a deep sense of security. When the debt-free drift off to sleep, they're not worried about credit card balance shuffling, how to delay payments to the very last second, or if their car might get repossessed in the dark of night. They sleep well knowing that no one has a claim on what they earn tomorrow.</p> <h2>10. They Enjoy More Freedom</h2> <p>High levels of long-term consumer debt limit our choices in life. If a dozen creditors can each take a slice of your income, there's less left for you. That means less choice about what you'll be doing next week or next year (hint: you'll be working). But others know the <a href="http://www.wisebread.com/the-freedom-of-a-debt-free-life">freedom of a debt-free life</a>. They try to keep as much of their income as possible and invest in things that generate wealth, expand their opportunities, and ultimately reduce the number of years they'll have to work.</p> <p>It's important to remember that everyone's financial situation is different and sometimes debt is simply unavoidable. But a debt-free lifestyle doesn't have to be the stuff of legend either. Real people can reap real rewards when they consciously decide to control how they spend, what they spend on, and how vigorously they attack even the smallest debt.</p> <p><em>Are you debt-free or well on your way? How does it help you live differently from your friends, family, or co-workers?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/kentin-waits">Kentin Waits</a> of <a href="http://www.wisebread.com/10-things-people-without-debt-do">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/account-in-collections-heres-how-to-fix-it">Account in Collections? Here&#039;s How to Fix It</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-erase-your-medical-debt">How to Erase Your Medical Debt</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/back-in-debt-heres-how-to-pay-it-off-for-good">Back in Debt? Here&#039;s How to Pay it Off for Good</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-freedom-of-a-debt-free-life">The Freedom of a Debt-Free Life</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-false-assumptions-about-debt-free-living">6 False Assumptions About Debt-Free Living</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Debt Management bills debt-free expenses lifestyle owing money spending Mon, 27 Apr 2015 15:00:08 +0000 Kentin Waits 1397818 at http://www.wisebread.com 8 Ways to Get Student Loan Debt Forgiveness http://www.wisebread.com/8-ways-to-get-student-loan-debt-forgiveness <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/8-ways-to-get-student-loan-debt-forgiveness" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/new_grads_000037875416.jpg" alt="New graduates considering ways to get student loan debt forgiveness" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>The cost of higher education keeps climbing. Since 2004-2005, <a href="http://trends.collegeboard.org/college-pricing/figures-tables/average-net-price-time-full-time-students-public-four-year-institutions">average college tuition</a> in the U.S. has grown by over 35% to a total of $9,500 in the 2014-2015 school year. While there are many opportunities to receive grants, scholarships, and relatively affordable loans to finance a college education, there are also a number of loan forgiveness programs that can help to erase debt after you've graduated. Here are some of the best loan forgiveness options available.</p> <h2>1. Teachers</h2> <p>Many areas of the country need high quality teachers, particularly schools with students who fall into low income brackets. If you teach at one of these schools or at educational service agencies for five consecutive years, you may be eligible for up to $17,500 worth of complete <a href="https://studentaid.ed.gov/repay-loans/forgiveness-cancellation/teacher">forgiveness on Federal Stafford Loans</a>. PLUS loans are not eligible for forgiveness under this program.</p> <h2>2. Educators</h2> <p>While the forgiveness of Federal Stafford Loans is limited to teachers, the <a href="https://studentaid.ed.gov/repay-loans/forgiveness-cancellation/charts?_ga=1.108876742.595209384.1427678197#perkins-loan-cancellation">forgiveness of Federal Perkins Loans</a> is more expansive, and broadly includes educators. Perkins Loans can be 100% forgiven if you elect to become a school librarian, an employee at a child or family-centered agency, a staff member at a Head Start program, pre-kindergarten, or childcare program, or a school speech pathologist, special education teacher, or full-time teacher. Most of these programs require you to work in a low-income school, remain a teacher for a certain number of years, and some also carry specific education requirements, such as a master's degree.</p> <h2>3. Armed Forces</h2> <p>If you are considering joining the military, there are loan forgiveness opportunities for you. Should you serve in a hostile fire or imminent danger area, you may be eligible for forgiveness of your Federal Perkins Loans. If your active service ended on or before August 14, 2008, you can receive up to 50% loan forgiveness. If your service began after or includes August 14, 2008, you may receive up to 100% loan forgiveness.</p> <h2>4. Firefighters or Law Enforcement Officers</h2> <p>Should you feel called to protect your city by becoming a firefighter, law enforcement officer, or corrections officer, you may be able to receive up to 100% forgiveness of your Federal Perkins Loans.</p> <h2>5. Nurses or Medical Technicians</h2> <p>Nurses and medical technicians across the country are in short supply. In less than 10 years, the nursing field is expected to <a href="http://www.aacn.nche.edu/media-relations/fact-sheets/nursing-shortage">increase job openings</a> by 19%. Full-time nurses and medical technicians can be awarded up to 100% loan forgiveness of their Federal Perkins Loans.</p> <h2>6. AmeriCorps VISTA or Peace Corps Volunteers</h2> <p>Many young college graduates feel a compelling call to serve in a volunteer capacity in the U.S. or overseas. If you fall into that category, there are two programs that would help you to gain up to 70% loan forgiveness of your Federal Perkins Loans: <a href="http://www.nationalservice.gov/programs/americorps/americorps-vista">AmeriCorps VISTA</a> is a volunteer program for students who want to serve in vulnerable areas in the U.S. The <a href="http://www.peacecorps.gov/">Peace Corps</a> is a storied program that pairs American volunteers with sites abroad in developing nations.</p> <h2>7. Early Intervention Services of the Disabled</h2> <p>There are many nonprofit and government organizations that seek to provide critical and early intervention services for the disabled. If you work for one of these organizations, you may be eligible to receive up to 100% forgiveness on your Federal Perkins Loans.</p> <h2>8. Full-Time Faculty at a Tribal College or University</h2> <p>The U.S. Department of Education has designated certain colleges and universities as <a href="http://www.ed.gov/edblogs/whiaiane/tribes-tcus/tribal-colleges-and-universities/">tribal colleges</a>. This means that these colleges and universities are primarily focused on educating U.S. citizens who are American Indians and Alaskan Natives. Full-time faculty members at these schools can receive up to 100% forgiveness of Perkins Loans.</p> <p>Receiving a college education today is now an expensive proposition for just about everyone. Luckily, these loan forgiveness programs provide options to finance your education while also helping you to make a meaningful and lasting impact in a community that needs your skills and talents.</p> <p><em>Have you participated in one of these loan forgiveness programs? If so, please share your experience in the comments section. </em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/christa-avampato">Christa Avampato</a> of <a href="http://www.wisebread.com/8-ways-to-get-student-loan-debt-forgiveness">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/which-student-loan-repayment-plan-saves-you-the-most">Which Student Loan Repayment Plan Saves You the Most?</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/share-your-thoughts-consolidating-student-loans">Share Your Thoughts: Consolidating Student Loans</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/student-loans-how-to-make-post-college-decisions">Student Loans: How to Make Post-College Decisions</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/college/college-resources">40+ College Resources for Parents and Students</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-creative-uses-for-a-529-plan">5 Creative Uses for a 529 Plan</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Debt Management Education & Training college education federal perkins loans federal stafford loans loan forgiveness student loans Mon, 20 Apr 2015 09:00:08 +0000 Christa Avampato 1390886 at http://www.wisebread.com Back in Debt? Here's How to Pay it Off for Good http://www.wisebread.com/back-in-debt-heres-how-to-pay-it-off-for-good <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/back-in-debt-heres-how-to-pay-it-off-for-good" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/couple_doing_taxes_000020148166.jpg" alt="Couple back in debt and learning how to pay it off" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Finding yourself back in debt after having paid it off before is a horrible feeling. I know, because I've been there. In 2012, I spent 14 months aggressively paying off <a href="http://www.huffingtonpost.com/carrie-smith/getting-out-of-debt-_b_1581507.html">$14,000 of consumer debt</a> and worked hard to become debt free for the first time in life.</p> <p>Then, in 2013 I decided to quit my job to pursue my own freelance business. This is when my financial situation became much more volatile and resulted in taking on a bit of business debt to keep things going. So when I say that it's a horrible feeling to be debt free only to find yourself back in debt, I mean it. It's not fun!</p> <p>If you find yourself in a similar place, here's the strategy I'm using to pay it off again &mdash; and keep myself out of debt <em>for good</em>.</p> <h2>Identify the Problem</h2> <p>Before you can begin to pay off debt and get back on track, it's vital that you understand <em>why </em>and <em>how </em>you're back in the situation. Creating a permanently debt-free life is much more difficult than working towards becoming free of debt for the first time.</p> <p>The mindset and lifestyle changes are vastly different. This is something I miscalculated when I first got out of debt, as I obviously didn't change my mindset or spending habits sufficiently. I'd stopped using credit cards as part of my debt payoff plan, but after about a year I thought I could handle using them again. Wrong!</p> <p>I also thought that <a href="http://www.wisebread.com/basic-tips-for-investing-in-a-business-1">investing in a new business</a> was a smart idea as it would pay off in the long run. That's all well and good, but you have to draw the line as <em>how much</em> you're going to invest in business ventures and <em>how often</em> you use credit cards as an extension of your income.</p> <p>The need to depend on personal loans or credit cards for additional cash flow proved that my new business wasn't bringing in enough income to survive on its own. Doing a thorough inventory of my spending habits to elucidate why I was back in debt again showed that I needed to not only change my mindset, but also find ways to bring in more money.</p> <h2>Try a New Plan of Action</h2> <p>Obviously, if you've gotten out of debt once you can do it again, but in order for this time to really stick, you have to change your approach and try something new. As Albert Einstein put it, &quot;Insanity: doing the same thing over and over again and expecting different results.&quot; So don't expect to follow the same plan and have it work better this time.</p> <p>My mistake was that I viewed getting out of debt as the end goal. But getting out of debt is merely step one, and <em>staying out of debt</em> while changing your mindset and spending habits is a very long-term step two.</p> <p>My new plan of action includes:</p> <ul> <li>Finding ways to level out my inconsistent income<br /> &nbsp;</li> <li>Bringing in multiple streams of income to have more of a cushion<br /> &nbsp;</li> <li>Stopping the use of credit cards and loans as an extension of income<br /> &nbsp;</li> <li>Working with an accountability partner to stay on track<br /> &nbsp;</li> <li>Living well below my means and doing monthly budget check-in<br /> &nbsp;</li> <li>Performing a cash budget challenge (or other spending challenge) on a quarterly basis</li> </ul> <h2>Decide How You Want to Live</h2> <p>There are two key parts to being debt free: staying out of debt, and living a life without using debt as a tool to get what you want. For me, that second part has been the most difficult. Your <a href="http://www.wisebread.com/13-things-you-dont-know-about-your-credit-report-but-should">credit history and score</a> is basically determined by how much debt you leverage and pay off over time.</p> <p>So if you don't want to use debt to buy things, you will have to face that fact that it won't be easy. Most banks and lenders will not understand your reasoning for paying. And there will be instances where you simply cannot buy something without using debt, so you and your family will have to come to grips with this limitation.</p> <p>As long as you define a new set of priorities and have a renewed plan of attack, you'll be able to move forward and pay off debt for good. Take comfort in knowing that you don't have to stay here, and that since you've been debt free once, you can do it again. But now you'll have more experience and lessons to fall back on!</p> <p><em>Have you ever fallen back into debt? How did you climb back out again?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/carrie-smith">Carrie Smith</a> of <a href="http://www.wisebread.com/back-in-debt-heres-how-to-pay-it-off-for-good">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-3"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-things-people-without-debt-do">10 Things People Without Debt Do</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/account-in-collections-heres-how-to-fix-it">Account in Collections? Here&#039;s How to Fix It</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/oops-i-maxed-out-my-credit-cards-now-what">Oops — I Maxed Out My Credit Cards. Now What?</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-times-when-its-okay-to-take-a-loan">6 Times When It&#039;s Okay to Take a Loan</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-seven-deadly-sins-of-consumerism-and-the-frugal-redemption">The seven deadly sins of consumerism (and the frugal redemption).</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Debt Management credit history finances owing money paying back spending habits Thu, 16 Apr 2015 11:00:09 +0000 Carrie Smith 1386121 at http://www.wisebread.com Account in Collections? Here's How to Fix It http://www.wisebread.com/account-in-collections-heres-how-to-fix-it <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/account-in-collections-heres-how-to-fix-it" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/man_thinking_000019659642.jpg" alt="Man dealing with past due account in collections" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Earlier this year, my husband received a letter stating that he had a debt in collections. We were warned that if we didn't send money soon, they'd start legal action.</p> <p>Naturally, our breathing quickened and our hearts nearly jumped out of our chests. But then I made us take deep breaths. With my background as an accountant, I knew we had options. Here's how to successfully deal with a past due account in collections.</p> <h2>Research the Creditor's Information</h2> <p>Don't stress or freak out when your receive that dreaded &quot;account in collections/payment due&quot; letter. The worst thing you can do is overreact and succumb to false information from scammers trying to get your credit information. This happens more often than you may realize.</p> <p>Before taking any action based on what the letter says, you want to <a href="http://www.wisebread.com/how-to-deal-with-collection-agencies">verify the information is correct</a>, and research the company contacting you. It's often hard to tell the difference between the legitimate letters and the fakes, as many will include bits of personal information and your account numbers. But don't let this sway you.</p> <p>A good place to start is with the <a href="http://www.bbb.org/bbb-locator/">Better Business Bureau</a>. Simply enter the company's name in the search box on their site. If the debt collector's name and information comes up in the BBB system, they're legit; but if it doesn't, you'll want to proceed with caution.</p> <p>Or consider investigating the legitimacy of a debt collections company by doing a quick online search. You'll often come across other people's stories or experiences with companies and can verify whether or not the information you've received is for real.</p> <p>Finally, consider checking your collections letter against an official account of any debts on your credit report. <a href="https://www.annualcreditreport.com/">AnnualCreditReport.com</a> is a website authorized by the federal government to give you access to your entire credit report, once a year, for free. By checking your report, you'll be able to verify whether the debt actually belongs to you, and if the right debt collection company's name is on the account.</p> <p>Make sure you save your credit report for later reference. If you notice errors, suspicious activity, or inaccuracies, you'll want to contact one of the three credit bureaus to get it solved.</p> <h2>Reach Out to the Credit Agency</h2> <p>If the debt agency's information is legit, and you've verified that you do indeed owe this amount, the next step is to contact the debt collection company directly. Call the number on the letter you received and start asking questions. Who did they purchase the debt from? What was the original balance? The balance on your statement is probably highly inflated because of late fees or other charges.</p> <p>They will likely push you into making a payment right then, but don't let them pressure you. Surprisingly, you have the upper hand in this situation because the debt collection agency paid pennies on the dollar for your debt. They will feel lucky to get any amount you're able to pay, so don't feel rushed.</p> <p>Ask them to send you this information in writing, so you can keep it for your records:</p> <ul> <li>The name of the original account holder,</li> <li>Your previous account number,</li> <li>The balance due now.</li> </ul> <p>Once you receive this information in the mail, you can negotiate a proper payment plan. You don't want this to go too long without being solved, but don't feel like you have to rush to make a payment. That's when you'll overpay. And remember that collections agencies will often accept less than the full amount owed, so don't necessarily agree to their first offer.</p> <h2>Report Them for Unethical or Illegal Behavior</h2> <p>As you go through this process, remember that you have all the control. Debt collection agencies tend to use less-than-stellar methods for getting consumers to make exorbitant payments towards outstanding debts. (See also: <a href="http://www.wisebread.com/4-annoying-things-bill-collectors-cant-do-and-how-to-stop-them?ref=seealso">4 Things Bill Collectors Can't Do</a>)</p> <p>If they start <a href="http://www.wisebread.com/dealing-with-nasty-debt-collectors">calling you nonstop</a>, verbally abusing you over the phone or with letters, or harassing family members, be sure to report them.</p> <p>If you need added protection, check out the <a href="http://www.acainternational.org/">American Collectors Agency</a>, or reach out to an attorney and a consumer-protection agency for help. You don't need to endure this process alone, and having an expert by your side will help alleviate the stress.</p> <p><em>Have you ever had to deal with a debt in collections? What other tips and tricks do you suggest?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/carrie-smith">Carrie Smith</a> of <a href="http://www.wisebread.com/account-in-collections-heres-how-to-fix-it">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-4"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-things-people-without-debt-do">10 Things People Without Debt Do</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-erase-your-medical-debt">How to Erase Your Medical Debt</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/back-in-debt-heres-how-to-pay-it-off-for-good">Back in Debt? Here&#039;s How to Pay it Off for Good</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-annoying-things-bill-collectors-cant-do-and-how-to-stop-them">4 Annoying Things Bill Collectors Can&#039;t Do -- And How to Stop Them</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/oops-i-maxed-out-my-credit-cards-now-what">Oops — I Maxed Out My Credit Cards. Now What?</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Consumer Affairs Debt Management better business bureau collections agency credit agencies owing money past due Mon, 13 Apr 2015 09:00:03 +0000 Carrie Smith 1378041 at http://www.wisebread.com Which Student Loan Repayment Plan Saves You the Most? http://www.wisebread.com/which-student-loan-repayment-plan-saves-you-the-most <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/which-student-loan-repayment-plan-saves-you-the-most" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/college_student_000013097599.jpg" alt="Female college student thinking about paying student loans" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>In recent years, the U.S. Department of Education implemented a flexible solution to help borrowers with financial difficulty repay their federal student loan debt, also known as <a href="https://studentaid.ed.gov/repay-loans/understand/plans/income-driven">income-driven repayment plans</a>. These plans calibrate monthly payments based on the individual's income. Most applicants will qualify for at least one of the three types of repayment plans. However, selecting a plan type is entirely up to the borrower, which makes it critical to understand the differences before entering into a binding agreement.</p> <h2>PAYE vs. IBR</h2> <p>The two most popular repayment plans are Pay As You Earn (PAYE) and Income-Based Repayment (IBR), because in most cases, the monthly payment will be lower than the Income-Contingent Repayment (ICR) plan. Under PAYE, borrowers make payments of 10% of their monthly income, and any remaining debt is forgiven after 20 years. Meanwhile, IBR sets payments at 15% of monthly income and forgives remaining debt after 25 years. During years when you're unemployed (or beneath the poverty threshold), your monthly payments are zero.</p> <p>Each plan determines your monthly payment based on your family's size and household income. To qualify, your adjusted payment amount must be less than it would be under the <a href="https://studentaid.ed.gov/repay-loans/understand/plans/standard">standard repayment plan</a> based on a 10-year repayment period.</p> <p>So, given that PAYE seems like the more generous option, why would anyone choose IBR?</p> <p>Simple: The Pay As You Earn plan stipulates that only &quot;new borrowers&quot; qualify. You are considered a new borrower if your loans were disbursed on or after October 1, 2011, or if you had no outstanding loan balances on or after October 1, 2007.</p> <p>The Income-Contingent plan is also open to any borrower with federal loans. There is no income requirement. But, payments will be slightly higher than Pay As You Earn and IBR plans. In some cases (such as years in which you make a high income), your monthly payment could be higher than it would be under the standard repayment plan, because they are calculated based on your annual income.</p> <p>Their key differences are:</p> <ul> <li>Any borrower with eligible federal loans qualifies for the ICR plan.</li> <li>Monthly payments for Pay As You Earn and IBR plans are lower.</li> <li>Borrowers must meet additional requirements to qualify for Pay As You Earn.</li> </ul> <p>Wise Bread's <a href="http://www.wisebread.com/the-definitive-guide-to-pay-as-you-earn-a-great-student-loan-repayment-plan?ref=seealso">The Definitive Guide to Pay As You Earn</a> has detailed information about the PAYE repayment option. <a href="http://www.wisebread.com/what-recent-grads-must-know-to-repay-federal-student-loans?ref=seealso">What Recent Grads Must Know to Repay Federal Student Loans</a> and <a href="http://www.wisebread.com/new-income-based-federal-student-loans-repayment-plan-can-you-benefit?ref=seealso">New Income Based Federal Student Loans Repayment Plan - Can You Benefit?</a> are also useful resources.</p> <h2>Federal Student Loan Forgiveness, Discharge, or Cancellation</h2> <p>We all know that student loan debt is one of the few types of debt that is rarely forgiven. It is excluded from bankruptcy filings and can be garnished from your wages if you default. However, there are several circumstances in which the federal government will grant borrowers <a href="https://studentaid.ed.gov/repay-loans/forgiveness-cancellation">forgiveness, discharge, or cancellation</a> of their federal student loans.</p> <p>Most borrowers who are interested in learning about the <a href="http://www.finaid.org/loans/forgiveness.phtml">loan forgiveness</a> program, whereby all or a portion of federal student loan debt is forgiven if you volunteer time, serve in the military or certain <a href="http://www.finaid.org/loans/publicservice.phtml">public service positions</a>, practice medicine, teach in low-income communities, or responsibly make payments for at least 20 or 25 years under one of the aforementioned income-driven repayment plans (and are still unable to repay the balance of your loans). Such circumstances include:</p> <ul> <li>Public interest loan forgiveness: Under IBR and PAYE, borrowers who make regular monthly payments and work in the non-profit or public sector for 10 years can have the balance of their student loans after that time forgiven.<br /> &nbsp;</li> <li>Everyone else's loan balances are forgiven after 20 years of consecutive monthly payments under PAYE, and 25 under IBR.<br /> &nbsp;</li> <li>Be forewarned that PAYE is facing changes, including the likelihood that only $57,500 of debt can be forgiven, so understand what you're likely to owe at the end of your repayment term. This change only applies to new PAYE borrowers, so act before December of 2015 to get grandfathered into the more generous current version of the plan, if you qualify.</li> </ul> <p>Repaying student loans can be burdensome. Make repayment less onerous by selecting the right plan for you.</p> <p><em>How are you repaying your student loans?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/qiana-chavaia">Qiana Chavaia</a> of <a href="http://www.wisebread.com/which-student-loan-repayment-plan-saves-you-the-most">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-5"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-ways-to-get-student-loan-debt-forgiveness">8 Ways to Get Student Loan Debt Forgiveness</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/share-your-thoughts-consolidating-student-loans">Share Your Thoughts: Consolidating Student Loans</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/student-loans-how-to-make-post-college-decisions">Student Loans: How to Make Post-College Decisions</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/cancel-student-loans-to-save-and-receive-an-interest-free-120-day-loan">Cancel Student Loans to Save — and Receive an Interest-Free 120-Day Loan</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-great-jobs-that-offer-college-loan-forgiveness">7 Great Jobs that Offer College Loan Forgiveness</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Debt Management Education & Training income-based loan forgiveness loan repayment pay as you earn student loans Thu, 09 Apr 2015 09:00:08 +0000 Qiana Chavaia 1370264 at http://www.wisebread.com Oops — I Maxed Out My Credit Cards. Now What? http://www.wisebread.com/oops-i-maxed-out-my-credit-cards-now-what <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/oops-i-maxed-out-my-credit-cards-now-what" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/credit_cards_000026097372.jpg" alt="Woman concerned and looking at her credit card statements" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Credit cards are simple and convenient, but they can also get you into trouble. Admittedly, I am a former victim. But as we increasingly go paperless in many aspects of life, many of us rely on debit and credit cards when buying everything from <a href="http://www.wisebread.com/5-best-gas-rewards-credit-cards">gas</a> to <a href="http://www.wisebread.com/the-best-5-credit-cards-for-groceries">groceries</a>. Plus, credit cards can also help <a href="http://www.wisebread.com/how-to-use-credit-cards-to-improve-your-credit-score">build your credit history</a>. However, if you're using credit cards on a regular basis and not paying off your bill in full every month, your balance can grow and you might max out your accounts. Then what?</p> <p>Maxed-out credit cards often indicate a spending problem or financial strain, so it's no surprise a high balance can <a href="http://www.wisebread.com/10-surprising-ways-to-negatively-affect-your-credit-score">lower your credit score</a>. Fortunately, if you immediately address the issue and adjust your spending, you can knock down those balances and <a href="http://www.wisebread.com/how-to-rebuild-your-credit-in-8-simple-steps">improve your credit rating</a>. Here are a few tips to get back on track when you max out a card.</p> <h2>1. Don't Apply for More Credit</h2> <p>Learning that your credit cards are maxed out doesn't mean you should apply for a new credit card. You must learn to use credit responsibly, or else you'll just dig a deeper hole for yourself. If you apply for a new credit card, there's a pretty good chance that you'll also max out the new account. You'll double your financial trouble and add more debt than you can possibly handle. Who needs that? Definitely not you.</p> <h2>2. Make Your Payments Every Month</h2> <p>Maxing out your credit cards can trigger higher minimum payments, and there's the risk of default if you can't afford the higher amount. Additionally, missing or sending late payments can damage your credit score and create problems with your creditors. The bank can charge late fees, raise your interest rate, or take legal action to collect what's owed. Make at least the minimum payment by the due date, and if you're going to be late, ask your creditor for an extension. (See also: <a href="http://www.wisebread.com/13-things-you-dont-know-about-your-credit-report-but-should?ref=seealso">13 Things You Don't Know About Your Credit Report &mdash; But Should</a>)</p> <h2>3. Stop Using the Credit Card</h2> <p>Some people have a cycle of maxing out their credit cards, making a small payment, and then continuing to use the card. It doesn't make sense to make a payment just so you can re-charge the same amount. This cycle keeps you stuck, and your debt won't go away anytime soon. You have to <a href="http://www.wisebread.com/7-bizarre-ways-to-stay-on-budget-that-actually-work">stop using the credit card</a> &mdash; bottom line. Cut it up or place it in a card shredder. Have fun destroying it beyond recognition. At least this way, you can make headway with each payment and eventually pay off the balance. (See also: <a href="http://www.wisebread.com/13-creative-ways-to-avoid-spending-money?ref=seealso">13 Simple Ways to Avoid Spending</a>)</p> <h2>4. Negotiate Your Interest Rate</h2> <p>If you have a good payment record, you might be able to negotiate a <a href="http://www.wisebread.com/the-best-low-interest-rate-credit-cards">lower interest rate</a>, despite the fact that you've maxed out the account. Getting a lower interest rate is one of the best ways to pay off a high credit card balance sooner. You'll pay less interest each month and have a lower minimum payment. The trick, however, is to make higher payments, so that more of your money goes toward reducing the principal balance and decreasing what you owe faster.</p> <h2>5. Transfer Your Balance to Another Credit Card</h2> <p>If your credit card company won't budge on the interest rate, see if you qualify for a <a href="http://www.wisebread.com/the-best-0-balance-transfer-credit-cards">credit card with a 0% introductory rate</a>. These cards typically offer zero interest on balance transfers and purchases for the first 12 to 18 months. You can transfer your existing balance and make higher payments during this period to pay off the card. However, this strategy can only work if you don't accumulate new debt. After transferring your balance to the new credit card, get rid of the old credit card to avoid any temptation. (See also: <a href="http://www.wisebread.com/when-to-do-a-balance-transfer-to-pay-off-credit-card-debt?ref=seealso">When to Do a Balance Transfer to Pay Off Credit Card Debt</a>)</p> <h2>6. Find Extra Money in Your Budget</h2> <p>Getting out of credit card debt is one of the toughest financial challenges many people face. Some people accumulate credit card debt because they didn't have enough income and they lived off plastic. Since paying off debt requires some amount of disposable income, you might need to put on your thinking cap and brainstorm ways to earn extra money. Where can you cut back? Cancel your gym membership, get rid of cable, only shop when necessary, don't eat out as much, look for a part-time job, or talk to your employer about overtime.</p> <p>There are plenty of ways to find extra money when you're in a bind, and I've detailed pretty much all of them over the past few years in previous posts on Wise Bread. A quick search of the site will yield plenty of practical results that you can institute today. (See also: <a href="http://www.wisebread.com/unusual-ideas-to-save-an-extra-100-a-month?ref=seealso">Unusual Ideas to Save an Extra $100 a Month</a>)</p> <p><em>Have you ever maxed out your credit cards? How did you get back on track? Let us know in comments below.</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/mikey-rox">Mikey Rox</a> of <a href="http://www.wisebread.com/oops-i-maxed-out-my-credit-cards-now-what">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-6"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-best-0-balance-transfer-credit-cards">The 5 Best 0% Balance Transfer Credit Cards</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-surprising-ways-to-negatively-affect-your-credit-score">10 Surprising Ways to Negatively Affect Your Credit Score</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-dirty-secrets-of-credit-cards">The Dirty Secrets of Credit Cards</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-things-people-without-debt-do">10 Things People Without Debt Do</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-rebuild-your-credit-in-8-simple-steps">How to Rebuild Your Credit in 8 Simple Steps</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Credit Cards Debt Management credit scores interest rates owing money Fri, 03 Apr 2015 11:00:02 +0000 Mikey Rox 1367707 at http://www.wisebread.com 4 Annoying Things Bill Collectors Can't Do -- And How to Stop Them http://www.wisebread.com/4-annoying-things-bill-collectors-cant-do-and-how-to-stop-them <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/4-annoying-things-bill-collectors-cant-do-and-how-to-stop-them" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/lady_phone_bill_000020951752.jpg" alt="Lady on the phone with bill collector" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>There are some scary and crazy debt collectors stories out there. For example:</p> <ul> <li>A California debt collector threatened a woman by claiming that they'd <a href="http://www.kmov.com/news/local/Foul-Mouth-Debt-Collectors--107059238.html">dig up her daughter</a> if she didn't pay her debt to a funeral home.<br /> &nbsp;</li> <li>A man received several racially-charged and <a href="http://abcnews.go.com/Business/man-wins-15m-vulgar-debt-collection-calls/story?id=10795674">profane voicemail messages</a> from a Pennsylvania-based collections agency.<br /> &nbsp;</li> <li>A Texas-based debt collector used scare tactics, such as threatening to <a href="http://money.cnn.com/2013/02/06/pf/debt-collection/">take away children</a>.</li> </ul> <p>You don't have to tolerate abusive behavior from unscrupulous debt collectors. Here is how to stop four annoying things that bill collectors absolutely <em>can't</em> do.</p> <h2>1. Report Late Payments to Credit Bureaus Within 30 Days</h2> <p>Missing a payment deadline is something that can happen to even the most meticulous person. When this happens, some bill collectors may start calling to scare you into believing that if you don't make the payment right away, they'll notify the credit reporting bureaus.</p> <p>You've worked hard to <a href="http://www.wisebread.com/the-5-best-secured-credit-cards">build up your credit score</a>, so the mere thought of being reported for a late payment may send shivers down your spine. There's no need to panic. As long as you make your missed required minimum payment before the 30th day after your due date, you'll prevent any creditor from reporting delinquency to any of the credit bureaus.</p> <p>While you may still be liable for a late payment fee (ranging from $25 to $35) and may be charged a penalty APR (as high as 29.99%), you can't be reported to a credit bureau before you're a full 30 days past due.</p> <h3>How to Stop It</h3> <p>If a bill collector threatens to report you to a credit bureau for anything earlier than a 30-day late payment, tell them that is a violation of federal law. The collector would be knowingly providing incorrect information. If you receive a late payment fee and penalty APR, and are in good terms with your credit card company, call its customer service line to check if they can remove both penalties.</p> <h2>2. No Harassing Phone Calls</h2> <p>While it may be funny to look up crazy calls from debt collectors on YouTube, it's definitely not fun to receive them. Debt collectors don't want you to know that you have the legal right to not answer their calls.</p> <p>Under the <a href="http://www.ftc.gov/enforcement/rules/rulemaking-regulatory-reform-proceedings/fair-debt-collection-practices-act-text">Fair Debt Collection Practices Act</a>, debt collectors can't:</p> <ul> <li>Call you between 9:00 p.m. and 8:00 a.m. in your local time.</li> <li>Contact you at unusual or inconvenient places.</li> <li>Try to circumvent your lawyer, if one is representing you regarding the debt.</li> <li>Attempt to reach you at your place of employment if no incoming calls are allowed.</li> </ul> <h3>How to Stop It</h3> <p>Request in writing that they not call you, and keep a copy for your records. When you mail the letter, ask for a return receipt. If the collectors keep on calling you, you have ammunition to file a complaint with the Federal Trade Commision. The more FTC complaints a collection agency has, the more likely that the FTC will sue the agency or, in case of egregious violations, shut it down. (See also: <a href="http://www.wisebread.com/dealing-with-nasty-debt-collectors?ref=seealso">Dealing With Nasty Debt Collectors</a>)</p> <h2>3. No &quot;Taking It All&quot;</h2> <p>Bill collectors will say anything to get your attention. The reality is much different.</p> <ul> <li>The <a href="http://www.dol.gov/compliance/guide/garnish.htm#Penalites">Consumer Credit Protection Act</a> limits the amount that can be garnished from your paycheck to the lesser of 25% of disposable earnings or the amount by which disposable earnings are greater than 30 times the federal minimum hourly wage.<br /> &nbsp;</li> <li>In cases of economic hardship, creditors may not be allowed to garnish the full 25% of your disposable earning. Certain state wage garnishment laws may impose additional limits.<br /> &nbsp;</li> <li>Your state's collection laws and exemptions may provide additional protections. For example, my home state of Hawaii has a <a href="http://www.govcollect.org/files/Hawaii_Debt_Collection.pdf">collection exemption</a> of $2,575 on vehicles and up to $30,000 on real property.<br /> &nbsp;</li> <li>The <a href="http://www.dol.gov/compliance/laws/comp-erisa.htm">Employee Retirement Income Security Act</a> protects qualified retirement accounts, such as 401(k), deferred compensation, and profit sharing plans from most bill collectors.</li> </ul> <h3>How to Stop It</h3> <p>Know your rights and find out the relevant collections laws and exemptions for your state. In cases of abusive threats from debt collectors, file a complaint against them with the FTC.</p> <h2>4. No &quot;Doomsday&quot; Dates</h2> <p>Another common scare tactic from collection agencies is to anchor to a final deadline that would trigger lots of additional fees and legal problems if not met. Debt collectors know that the clock is working against them, so that's why they want to cash in as early as possible.</p> <ul> <li>Collection agents get commissions based on how big your first down payment is.<br /> &nbsp;</li> <li>Bill collectors buy debts at discounted prices, yet want to maximize their profit margins.<br /> &nbsp;</li> <li>Debts can become too old for a collector to sue. Depending on your state's <a href="https://www.consumer.ftc.gov/articles/0117-time-barred-debts">statute of limitations</a> for credit card debt, a creditor may be out of luck as early as three years.</li> </ul> <h3>How to Stop It</h3> <p>Always negotiate. You're not required to make a big down payment or forced to accept monthly repayment plan. When dealing with any debt collector, almost everything is negotiable, including payment schedules and deadlines.</p> <p>Bill collectors are great at playing hardball, but they know that it's in their best interest to negotiate a repayment plan that you can realistically stick to. Don't be caught off guard by malicious collection agents and keep them in check.</p> <p><em>What is your craziest story about bill collectors? Please share in the comments.</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/damian-davila">Damian Davila</a> of <a href="http://www.wisebread.com/4-annoying-things-bill-collectors-cant-do-and-how-to-stop-them">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-7"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/surprising-things-that-can-kill-your-credit">Surprising Things That Can Kill Your Credit</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-deal-with-collection-agencies">How to Deal With Collection Agencies</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-rebuild-your-credit-in-8-simple-steps">How to Rebuild Your Credit in 8 Simple Steps</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/account-in-collections-heres-how-to-fix-it">Account in Collections? Here&#039;s How to Fix It</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-erase-your-medical-debt">How to Erase Your Medical Debt</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Consumer Affairs Debt Management bill collectors Collection Agencies credit score harassment Thu, 19 Mar 2015 13:00:12 +0000 Damian Davila 1347503 at http://www.wisebread.com 6 Smart Things to Do With Your Bonus http://www.wisebread.com/6-smart-things-to-do-with-your-bonus <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/6-smart-things-to-do-with-your-bonus" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/young_couple_financial_advisor_000020064711.jpg" alt="Young couple meeting with financial consultant" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>&quot;The windfall of great riches can, if mismanaged, make things worse, not better, for the recipients,&quot; said American author and professor Michael Mandelbaum.</p> <p>But you don't need a college degree to know that extra cash shouldn't be spent frivolously &mdash; that part is easy. The hard part is actually figuring out what exactly qualifies as a good way to use a small windfall. Here are six simple &mdash; and most importantly, <em>smart</em> &mdash; things to do with your bonus or commission check.</p> <h2>1. Build an Emergency Fund</h2> <p>One in four Americans has no emergency savings. If you're guilty as charged, then use your bonus check to set up your emergency fund <em>stat</em>. A good rule of thumb is that your emergency stash should cover six months of living expenses.</p> <p>When calculating your monthly expenses, go beyond just your mortgage or rent payment and include important recurring payments such as groceries, utilities, and minimum debt payments. If the final number shocks you, take that as a wake-up call about how important it is to have your emergency fund in place.</p> <h2>2. Pay Off High Interest Debt</h2> <p>By only paying the minimum on your maxed out credit cards, you're shelling out way more than you should.</p> <p>Let's assume that you have balance of about $2,461 on your credit card with an APR of 12.24%. If you make no additional charges, and each month you only pay the required minimum of $50, you will pay off the balance in &mdash; get this &mdash; 17 very long years! Even worse, you'll end up paying a total of $4,753, or nearly twice what you originally owed!</p> <p>Be smart and pay off those high interest credit cards <em>pronto</em>. (See also: <a href="http://www.wisebread.com/when-to-do-a-balance-transfer-to-pay-off-credit-card-debt?ref=seealso">When to Do a Balance Transfer to Pay Off Credit Card Debt</a>)</p> <h2>3. Max Out Contributions to Retirement Accounts</h2> <p>In 2014, workers and their employers averaged $9,670 in 401(k) contributions. While this number may seem impressive, keep in mind that the contribution limit in 2014 was $17,500.</p> <p>There is still a lot of room for improvement in our nest eggs. This year, there is even more. In 2015, the IRS bumped up the <a href="http://www.irs.gov/Retirement-Plans/Plan-Participant,-Employee/Retirement-Topics-401k-and-Profit-Sharing-Plan-Contribution-Limits">contribution limit</a> for 401(k) and profit-sharing plans to $18,000. For those age 50 and over, you are permitted to make an additional catch-up contribution of $6,000 to traditional and safe harbor 401(k) plans, and $3,000 to solo 401(k) plans. (See also: <a href="http://www.wisebread.com/5-dumb-401k-mistakes-smart-people-make?ref=seealso">5 Dumb 401(k) Mistakes Smart People Make</a>)</p> <p>Making out your contribution to your retirement accounts is also a great way to defer income taxes until retirement, when you're more likely to be in a lower tax bracket.</p> <h2>4. Start Saving for College</h2> <p>Data from the U.S. Department of Labor shows that workers with four-year college degrees have an hourly rate earning 98% higher than people without a degree. The same data shows that the gap is continuously increasing over time.</p> <p>This means that saving up for your, or your kids', college education is a smart thing to do with your commission check. A good way to save for college is via a <a href="http://www.savingforcollege.com/529_plan_details/">529 college-saving plan</a>, because in 34 states and the District of Columbia, you can receive a state income tax deduction for your contribution.</p> <p>To make sure that your higher education investment pays off, double check the market value of your or your child's college diploma. Some <a href="http://www.wisebread.com/5-college-degrees-not-worth-the-money">degrees aren't worth their cost</a>.</p> <h2>5. Get Better Banking Options</h2> <p>Your lucky windfall could unlock some better banking opportunities.</p> <ul> <li>By maintaining a larger account balance, you could qualify for a better interest rate. For example, my credit union currently offers an annual percentage yield of 0.20% for balances below $25,000, 0.25% for balances between $25,000 and $99,999, and 0.30% for balances over $100,000.<br /> &nbsp;</li> <li>Depending on your financial situation, you may not have access to free checking accounts. Make use of your bonus to pad your checking account and meet the minimum threshold for avoiding any fees.<br /> &nbsp;</li> <li>Determine if your bank can offer you a better deal with a larger account balance. If your bank can't provide you one, it's time to shop around for a better financial situation. (See also: <a href="http://www.wisebread.com/9-good-reasons-to-choose-a-credit-union-instead-of-a-bank?ref=seealso">9 Good Reasons to Choose a Credit Union Instead of a Bank</a>)</li> </ul> <h2>6. Prepare for Taxes Next Year</h2> <p>Last but not least, it can be wise to start preparing for next year's tax season<em> now</em>.</p> <ul> <li>Your year-end bonus may put you in a higher tax bracket this year. Ask your employer if he or she can defer your bonus (or at least a portion of it) in order to lower your tax bill this year.<br /> &nbsp;</li> <li>Keep in mind that most employers opt to slap a standard <a href="https://turbotax.intuit.com/tax-tools/tax-tips/General-Tax-Tips/What-is-the-Federal-Supplemental-Tax-Rate-/INF19305.html">25% withholding rate</a> (39.6% for amounts over $1 million) on bonuses and commissions. If your usual tax rate is far below that 25%, then you may already have paid enough in taxes this year. You'll need to adjust your W-4 form to decrease how much is withheld for taxes for the rest of 2015.<br /> &nbsp;</li> <li>Ask your human resources department which withholding option works best for you. Besides the standard withholding rate, the IRS allows employers to treat the bonus as regular compensation or take additional taxes only from the bonus check.</li> </ul> <p>Every year, 75% of U.S. taxpayers withhold too much tax. Don't become one of them and plan ahead. You want to enjoy as much as possible from that well-deserved bonus or commission check.</p> <p><em>What are you planning to do with your bonus or commission this year?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/damian-davila">Damian Davila</a> of <a href="http://www.wisebread.com/6-smart-things-to-do-with-your-bonus">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-8"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-inspiring-people-who-each-paid-off-over-100000-in-debt">5 Inspiring People Who Each Paid Off Over $100,000 in Debt</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/credit-cards-vs-debit-cards-a-comprehensive-comparison">Credit Cards vs. Debit Cards: A Comprehensive Comparison</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/when-to-use-savings-to-pay-off-debt">When to Use Savings to Pay Off Debt</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-create-a-financial-5-year-plan">How to Create a Financial 5 Year Plan</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-times-when-its-okay-to-take-a-loan">6 Times When It&#039;s Okay to Take a Loan</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Career and Income Banking Debt Management bonus check savings smart spendings windfall Wed, 18 Mar 2015 15:00:15 +0000 Damian Davila 1345313 at http://www.wisebread.com 6 Times When It's Okay to Take a Loan http://www.wisebread.com/6-times-when-its-okay-to-take-a-loan <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/6-times-when-its-okay-to-take-a-loan" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/couple-contract-financial-consultant-loan-iStock_000051526142_Large.jpg" alt="couple financial advisor" title="couple financial advisor" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Loans are a tricky subject in the financial world, because ideally, you'd never really need one. In the real world, however, plenty of responsible people find themselves needing loans for legitimate reasons. (See also: <a href="http://www.wisebread.com/6-times-you-should-never-take-a-loan?ref=seealso">6 Times You Should Never Take a Loan</a>)</p> <p>Whether it's an unplanned financial emergency or a necessary, major purchase, there are some situations when taking out a loan can't be avoided. Read on to understand when a new loan is actually okay.</p> <h2>1. When You Can Easily Afford the Payments</h2> <p>This might seem like a no-brainer, but when people are desperate they will sometimes assume loans with large payments they couldn't possibly afford. Before you take out any loan, create a realistic budget that includes the payment. If you can't afford it, you should probably reconsider the loan.</p> <p>Don't fall into the temptation of telling yourself that you will find <em>some way</em> to make ends meet. Instead, take care of securing any realistic extra income sources <em>before</em> you sign on the dotted line. Get a second job, line up freelance work, start selling stuff on eBay, or do whatever else you need in order to make loan repayment affordable. Just do it before you get the loan &mdash; otherwise, you're just creating more financial stress for yourself. And isn't that what the loan was supposed to solve?</p> <h2>2. When Your Purchase is Essential</h2> <p>Loans are never a good idea when you're using them to finance a lifestyle that is beyond your means. If, however, you find yourself in a place where you absolutely must have something <em>essential</em> (no, a remodeled kitchen or a tropical vacation are not essentials), and you can't afford it, a loan might be a good idea.</p> <p>Again, I'm talking basic essentials here. If you have to drive to work, you must have a functioning vehicle. If you live in a cold climate, you need a working furnace. Most of the time, these aren't purchases that can wait until you've saved the funds, and so a loan might be necessary.</p> <h2>3. When You Have Good Credit</h2> <p>If you have good credit (above a 720), you will most likely be eligible for lower interest rates on your loans. This means that you will pay less over the life of the loan and that your individual payments will be lower than they would be if your credit were poorer. And having good credit is, in itself, an indicator that you're probably capable of managing your debt effectively.</p> <p>Having good credit makes loans a lot more affordable. But once again, make sure you can make those payments! Otherwise, you'll ruin that solid credit score.</p> <h2>4. When Interest Payments Are Less Than Your Investment Returns</h2> <p>Many investors think that they should use money from their investments to make major purchases before considering a loan. While this is sometimes true, it's also possible that it'll be better financially to leave your investments untouched and get a loan to cover the purchase instead. As an example, if your portfolio generates 10% annual returns, but a loan's interest rate would be only 4%, then it doesn't make sense to lose that extra 6% in returns that your portfolio's funds are generating.</p> <p>If the rate on the loan is lower than your rate of return <em>and</em> you can make the loan payments, take the loan and keep your money invested. On the other hand, monies from your portfolio might be a smart source of cash for re-paying very high interest loans, such as credit cards. Never touch your emergency fund, though &mdash; that's the money you'll need for true emergencies, and unless you're facing bankruptcy or legal action, high interest debt isn't quite a <em>true</em> emergency that warrants depleting your safety net.</p> <h2>5. When You Can Pay it Off Early</h2> <p>Sometimes you know there's money coming in, but you just don't have it yet. If you need to make a major purchase before that money arrives, you can take out a loan and repay it as soon as the funds hit your bank account.</p> <p>But if you're taking this approach, be sure that your loan doesn't have any prepayment penalties. This strategy can work well for people who get large bonus or commission checks on a quarterly or yearly basis, so long as you don't overestimate your actual earnings.</p> <h2>6. When You Qualify for a &quot;Special&quot; Loan</h2> <p>There are a lot of &quot;special&quot; loans on the market, most offered by different government programs for things such as home-buying, education, or energy-efficiency retrofitting. These loans typically offer very favorable repayment terms which often make them worthwhile.</p> <p>For example, <a href="http://www.fha.com/fha_loan_requirements">FHA loans</a>, <a href="http://www.benefits.va.gov/homeloans/purchaseco_eligibility.asp">VA loans</a>, and even <a href="http://time.com/money/2929695/home-loan-usda-credit-rural-development/">USDA loans</a> can help people buy homes who might not have qualified otherwise. My husband and I bought our house last year using his VA loan, which saved us tons of money on the up-front costs. Without it, we'd have been hard-pressed to afford the house.</p> <p>Taking out a loan is something that a financially responsible person might never want to do. However, sometimes loans are necessary to meet our larger goals and, in the above cases, they may not be such a bad idea.</p> <p><em>What have you bought with money from a loan? Do you think that getting the loan was worth it?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/sarah-winfrey">Sarah Winfrey</a> of <a href="http://www.wisebread.com/6-times-when-its-okay-to-take-a-loan">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-9"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/stop-is-that-loan-too-big-for-your-wallet">Stop! Is That Loan Too Big For Your Wallet?</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-loan-options-for-those-with-good-credit">5 Loan Options for Those With Good Credit</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/co-signing-for-a-loan-4-things-to-consider-first">Co-Signing for a Loan: 4 Things to Consider First</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/best-of-personal-finance-credit-where-credit-is-due-edition">Best of Personal Finance: Credit Where Credit Is Due Edition</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/back-in-debt-heres-how-to-pay-it-off-for-good">Back in Debt? Here&#039;s How to Pay it Off for Good</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Banking Debt Management big purchases borrowing finances loans Wed, 11 Mar 2015 13:00:09 +0000 Sarah Winfrey 1333072 at http://www.wisebread.com Stop! Is That Loan Too Big For Your Wallet? http://www.wisebread.com/stop-is-that-loan-too-big-for-your-wallet <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/stop-is-that-loan-too-big-for-your-wallet" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_car_loan_000025294979.jpg" alt="Woman signing for a new car loan" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>It's not uncommon to find yourself in need of a loan to pay for a home, car, or other major expense. But navigating the world of lending can be a bit bewildering.</p> <p>If you're careful and sensible, it's possible to borrow money without risking your financial wellbeing. In fact, responsible borrowing can be an integral part of wealth-building. The key is to know how much loan you can actually handle easily. But, how do you determine this?</p> <h2>1. Know Your Credit Score</h2> <p>Your FICO credit score will play an enormous role in the size of the loan you can qualify for and the interest rate that you will pay. The higher the score, the better off you'll be. Everyone is entitled to <a href="http://www.consumer.ftc.gov/articles/0155-free-credit-reports">one free credit report</a> each year, so be sure to examine it if you're considering taking out a loan. A credit score above 720 usually qualifies you for good rates. Anything less than that, and you may want to consider taking steps to improve your score before borrowing. This means correcting any errors and paying down outstanding debts.</p> <h2>2. Learn About Debt-to-Income Ratios</h2> <p>The general rule of thumb regarding mortgage loans is to avoid dedicating more than 28% of your monthly take-home income to housing. This includes not just the mortgage payments, but also related taxes and fees, which can add another 2%-3% to the overall cost. So in other words, a person taking home $50,000 should avoid paying more than $1,166 per month toward their home. ($50,000 x 0.28 = about $1,166)</p> <p>There's another key factor, however, and that is your overall debt load. The 28% rule above applies to the mortgage loan itself, but financial experts advise having an overall debt-to-income ratio of no more than 36%. So if you already have other loans, you may want to take on a smaller mortgage, or paying them down before borrowing more.</p> <h2>3. What You're Approved For Is Not Necessarily What You Should Borrow</h2> <p>When you apply for a loan, a lender will usually let you know how much you are approved to borrow. It's best to ignore that number. Just because you are approved to borrow $500,000 for a home does not mean it's wise to go and borrow $500,000. It's nice to get approval, but banks found themselves in trouble a few years ago when they approved loans for amounts that were well beyond what the borrowers could comfortably afford.</p> <h2>4. Down Payments Are Key</h2> <p>If you can't afford to buy a house or other big purchase in cash, at least put down as much money as you can. This will reduce the size of the loan and the amount of interest you will pay. A larger down payment could also make you more attractive to lenders, who can offer a more generous interest rate. When buying a home, a down payment of 20% or more will usually mean you can avoid paying for mortgage insurance.</p> <h2>5. Look at Loan Length, Not Just Monthly Payments</h2> <p>All too often, borrowers will focus on the monthly payments without looking at the total cost of a loan. The great car buying advice site, Edmunds, advises to keep <a href="http://www.edmunds.com/car-loan/how-long-should-my-car-loan-be.html">loan terms under five years</a>, and reports that two additional years on a loan of a Honda Accord would add more than $3,400 in interest charges. Similarly, a 15-year mortgage on a home will save you tens of thousands of dollars over a 30-year term, even if your monthly payments are higher.</p> <h2>6. Future Income Is Not Guaranteed</h2> <p>I once heard a friend say that they planned to purchase a more expensive home than they could really afford, because they figured they'd be earning more down the road. This is a very risky approach to borrowing. A more sensible approach is to borrow based on your current financial situation, then any extra income you earn over time can go into savings or be used to pay off the debt earlier.</p> <h2>7. Don't Steal From Your Future Self</h2> <p>Are you putting away money toward retirement? Would a mortgage payment or other loan prevent you from contributing to an IRA or 401(k)? If you're making loan payments but are unable to set aside money for the future, then you may be borrowing too much. Set aside 10%-15% of your salary for retirement before seriously considering large loans.</p> <h2>8. Consider Future Expenses</h2> <p>A couple with no children might crunch some numbers and determine that they can comfortably afford a loan of a certain size, but will their monthly expenses always be what they are now? It's important when borrowing to try and anticipate future costs, especially when exploring a long-term loan. A good rule of thumb is to assume that your costs will rise yearly with inflation (roughly 2%-3% a year; add more if you expect a larger family, or a move to a more expensive area).</p> <p><em>What rules of thumb do you use to know your loan limits?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/tim-lemke">Tim Lemke</a> of <a href="http://www.wisebread.com/stop-is-that-loan-too-big-for-your-wallet">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-10"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-loan-options-for-those-with-good-credit">5 Loan Options for Those With Good Credit</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-times-when-its-okay-to-take-a-loan">6 Times When It&#039;s Okay to Take a Loan</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-strategies-to-wipe-out-your-credit-card-balance">5 Strategies To Wipe Out Your Credit Card Balance</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/worried-about-debt-tips-on-managing-your-loans">Worried About Debt? Tips On Managing Your Loans</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/freedom-from-the-day-job">Freedom From the Day Job</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Debt Management borrowing debt lending loans Fri, 06 Mar 2015 16:00:06 +0000 Tim Lemke 1320914 at http://www.wisebread.com 5 Tricks to Consolidating Your Debt and Saving Money http://www.wisebread.com/5-tricks-to-consolidating-your-debt-and-saving-money <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-tricks-to-consolidating-your-debt-and-saving-money" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/man-calculating-bills-home-Dollarphotoclub_76897987.jpg" alt="man calculating bills" title="man calculating bills" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>If you're in the red, repaying the money you owe as quickly as possible can save you big. The longer you carry a balance on credit cards and loans, the more interest you'll rack up on your debt &mdash; and the more you'll have to fork over when all is said and done. (See also: <a href="http://www.wisebread.com/snowballs-or-avalanches-which-debt-reduction-strategy-is-best-for-you?ref=seealso">Snowballs or Avalanches: Which Debt Reduction Strategy Is Best for You?</a>)</p> <p>One way of speeding up the repayment process is debt consolidation. Consolidating the various balances you're carrying on different credit cards and loans into one single amount can help you obtain a lower interest rate, which will save you money over time. It will simplify your debt repayment, making it easier to get a handle on what you owe. Read on for a roundup of your best debt consolidation options.</p> <h2>1. Execute a Balance Transfer</h2> <p>If you're carrying debt on a credit card with a high interest rate, you can save big by <a href="http://www.wisebread.com/when-to-do-a-balance-transfer-to-pay-off-credit-card-debt">transferring the balance</a>&nbsp;onto a new card with a lower rate. Some cards offer promotional interest fees as low as 0%, which can be monumental in helping you conquer your debt faster. But it's essential to have good credit in order to qualify for a card with a <a href="http://www.wisebread.com/the-best-low-interest-rate-credit-cards">low interest rate</a>. There's typically a fee in the range of 3% of your debt that you'll pay upon shifting your balance onto the new card. And be mindful that that introductory 0% interest rate won't last forever. Most of these offers expire in 15 months or less, so use that time wisely to pay down your debt quickly. (See our <a href="http://www.wisebread.com/the-best-0-balance-transfer-credit-cards">favorite credit cards for 0% balance transfers</a>)</p> <h2>2. Take Out a Peer-to-Peer Loan</h2> <p>In peer-to-peer lending, borrowers obtain a loan from individual lenders without going through a traditional financial institution. The greatest benefit of P2P loans are their interest rates, which can be as low as 7% for borrowers with good credit &mdash; this means you can save money in the long term. The two largest P2P platforms are Prosper and <a rel="nofollow" href="http://track.flexlinks.com/a.ashx?foid=1029882.227343&amp;fot=1071&amp;foc=1" target="_blank">Lending Club</a><img border="0" src="http://track.flexlinks.com/i.ashx?foid=1029882.227343&amp;fot=1071&amp;foc=1" alt="" />. Both charge fees for new loans (1% to 5% of the total loan amount at Prosper and 1.11% to 5% at Lending Club), depending on the size of the loan.</p> <p>Once you're approved, you'll receive the funds in a few business days (which is much faster than a bank loan). Another notable difference between P2P loans and those issued by banks are that they come with a fixed term for payment, meaning the borrower typically has a deadline of three to five years to pay the loan off entirely, with monthly payments to meet. &quot;Some people like the idea of having a fixed term for the payment,&quot; said Peter Renton, founder of <a href="http://www.lendacademy.com/">Lend Academy</a>. &quot;It's a kind of enforced discipline. They know they have three or five years on a loan and they will have paid off their debt.&quot; (See also: <a href="http://www.wisebread.com/should-you-use-peer-to-peer-lending-to-pay-down-credit-card-debt?ref=seealso">Should You Use Peer-to-Peer Lending to Pay Down Credit Card Debt?</a>)</p> <h2>3. Tap Into Your Home Equity</h2> <p>If you own a home, you may be able to use your home equity to consolidate your debt. The risk, of course, is that if you don't use that equity responsibly, you could find yourself facing foreclosure. But if you're careful not to overextend yourself, tapping into the equity of your home and then repaying yourself can be a very convenient way to consolidate your debt.</p> <p>First, you need to decide between two choices: a home equity loan or a home equity line of credit. The annual percentage rate (APR) for a loan typically incorporates points and finance charges, whereas the APR for a line of credit typically reflects only the interest rate. With a loan, you'll receive a payment totaling the full amount borrowed upon closing. With a line of credit, you'll be handed a checkbook with which you can write checks against your equity up to the amount of the line of credit. Home equity lines of credit or HELOCs are similar to credit cards in that interest is only charged on the amount withdrawn. In fact, most of them give homeowners as long as a decade to&nbsp;<a href="http://homeguides.sfgate.com/mean-home-loan-draw-period-49163.html">draw out the equity</a> and then another 15 to 20 years to repay it after the draw period expires.</p> <h2>4. Borrow From Your Retirement</h2> <p>This is a last resort means of debt consolidation, but if you're in dire straits, you might want to investigate <a href="http://www.wisebread.com/this-is-when-you-should-borrow-from-your-retirement-account">borrowing against your 401(k)</a>, 401(b), or pension plan at a low interest rate. The benefit of borrowing from your retirement is that it enables you to pay back your plan (generally under more favorable terms), rather than having to pay back a lender. The drawback, of course, is that you could be jeopardizing your retirement savings.</p> <h2>5. Borrow From Your Life Insurance Policy</h2> <p>Another last-ditch option is borrowing from your life insurance. You can take out a loan against it (typically up to the value of the policy), and with the proceeds, consolidate your debt. Your insurance company usually won't require you to make payments, but it's a good idea to do so anyway. Failure to repay a life insurance policy loan means your family may be entitled to nothing when you die.</p> <p><em>How have you considered consolidating your debt?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/brittany-lyte">Brittany Lyte</a> of <a href="http://www.wisebread.com/5-tricks-to-consolidating-your-debt-and-saving-money">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-11"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-one-college-graduate-paid-off-28000-in-three-years-on-a-30k-salary">How One College Graduate Paid Off $28,000 in Three Years on a $30K Salary</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-organizations-that-really-can-help-you-with-your-debt">8 Organizations That REALLY Can Help You With Your Debt</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-erase-your-medical-debt">How to Erase Your Medical Debt</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-inspiring-people-who-each-paid-off-over-100000-in-debt">5 Inspiring People Who Each Paid Off Over $100,000 in Debt</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-dirty-secrets-of-credit-cards">The Dirty Secrets of Credit Cards</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Debt Management debt debt consolidation debt repayment Fri, 13 Feb 2015 14:00:07 +0000 Brittany Lyte 1286247 at http://www.wisebread.com How One Couple Paid Off $147k of Debt (Even While Unemployed) http://www.wisebread.com/how-one-couple-paid-off-147k-of-debt-even-while-unemployed <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-one-couple-paid-off-147k-of-debt-even-while-unemployed" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/couple-happy-snow-travel-178492223-small.jpg" alt="happy couple snow" title="happy couple snow" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Jackie Beck and her husband once &quot;owned&quot; a six figure debt. They'd borrowed for their mortgage, credit cards, education, autos, and home improvement projects. Like most of us do, they'd borrowed over time, barely noticing as their balances grew and interest accrued.</p> <p>Beck is not alone. The <a href="http://investorplace.com/2013/09/report-average-american-in-debt-hundreds-of-thousands/#.VGJM1vnF98E">average American borrower owes</a> $225,238 in consumer debt, including $15,263 for credit cards, $147,591 in mortgage debt, $31,646 for student loans, and $30,738 for auto financing.</p> <p>What set Beck and her partner apart, however, is that they set out to pay off that debt, and after a 10-year journey, they succeeded. Today neither holds a traditional job, they maintain collective annual expenses of less than $12,000, and they're free to pursue their passions. &quot;Anyone can do it, too,&quot; says Beck. &quot;You don't have to have debt. Life is a lot easier without it.&quot; (See also: <a href="http://www.wisebread.com/how-one-inspiring-saver-found-true-love-shook-off-debt-denial-and-paid-off-123000?ref=seealso">How One Inspiring Saver Found True Love, Shook Off Debt Denial, and Paid Off $123,000</a>)</p> <h2>Getting Started</h2> <p>The Beck's get-out-of-debt journey began when they decided to tackle their credit card balances. &quot;We were just really sick of being in debt and feeling like all our money went toward the credit cards and interest,&quot; says Beck. Paying off the balance on their cards took a full three years and Beck was unemployed for a lot of that time. &quot;In the beginning, it took us a long time to pay things off,&quot; says Beck. &quot;Then we figured things out and we had more money because we had paid more off. You get better at it and it gets faster.&quot;</p> <p>She'd been deferring her student loan payments but, once the credit card bills were paid, that freed up some extra cash. &quot;I'd been living for many years on very little money. I never would have been able to start paying on my student loans if I'd still had those credit card payments,&quot; she says.</p> <p>Beck viewed her student debt as a burden and she couldn't wait to get rid of it. When finally she landed a job, she was able to speed her repayment schedule. &quot;I continued to live on nothing. I put all my money toward my student loans,&quot; she says. &quot;Then it went super fast.&quot; (See also: <a href="http://www.wisebread.com/how-one-college-graduate-paid-off-28000-in-three-years-on-a-30k-salary?ref=seealso">How One College Graduate Paid Off $28,000 in Three Years on a $30k Salary</a>)</p> <h2>Maintaining Momentum</h2> <p>Beck's husband was inspired by her student loan success and together they worked to amp up their efforts. They started paying for most of their purchases in cash, foregoing credit cards altogether. Then they decided to tackle their car loan. &quot;After he saw what I did with my student loan,&quot; says Beck, &quot;he thought it would be nice to live without the car payment.&quot;</p> <p>Even with successful milestones along the way, the Becks repaid their debt at a measured pace. &quot;We spent a lot of time getting out of the debt we had gotten into,&quot; says Beck. &quot;You don't have to live like a monk the whole time. We had more money coming in and it didn't all go toward our debt. We spent some.&quot;</p> <p>The Becks increased spending somewhat over time but even so, they began to view their mission as preparation for an emergency. In the previous years they'd taken turns being unemployed, had undergone surgeries, paid expensive veterinarian bills for their pets, and even totaled a car. They'd taken out a $10,000 home improvement loan around this time, but even though the loan came with a 0% introductory rate for the first 12 months, they realized their attitude toward borrowing had shifted. They were no longer comfortable taking on new debt. &quot;Gradually we realized that debt is dangerous and that something could go wrong,&quot; says Beck.</p> <p>Ultimately, the Beck's took the remaining balance from their savings account and paid off the loan. &quot;Life doesn't work out perfectly and, when you don't have debt, it really changes what you're able to do,&quot; she says.</p> <p>By the time they were able to start tackling their mortgage, their journey had become about more than just safety. They started to view it a road to freedom. According to Beck, &quot;The fewer expenses you have, the longer you can go without a job.&quot; (See also: <a href="http://www.wisebread.com/the-freedom-of-a-debt-free-life?ref=seealso">The Freedom of a Debt-Free Life</a>)</p> <h2>Rewarding Yourself</h2> <p>For the Becks, freedom was defined by the rewards they chose for themselves after they paid off their mortgage. Beck had wanted to travel to Antarctica since she was eight years old and her husband had his eye on a new car. &quot;After the house was paid off, we spent another year saving up for those things,&quot; says Beck, &quot;and then we went and did them.&quot;</p> <p>Beck also started developing other streams of income and eventually left her day job. &quot;I created the app <a href="https://itunes.apple.com/us/app/pay-off-debt/id308554006?mt=8&amp;ign-mpt=uo=4">Pay Off Debt</a> after I paid off my student loan,&quot; she says. &quot;I thought other people might want to obsess about debt as much as I do.&quot; She also started to blog about her journey at <a href="http://www.thedebtmyth.com">TheDebtMyth.com</a>, and even bought a couple of rental properties, paying for them in cash.</p> <p>As a couple, they'd also learned to keep their collective expenses low.</p> <p>&quot;We can live on $12,000 a year if we need to,&quot; says Beck. &quot;We basically have no required bills and we're not eating ramen,&quot; she laughs. &quot;My husband got laid off a week after I quit my job. Neither of us has a [traditional] job now. People who owe a lot of money don't do things like that,&quot; says Beck, &quot;because they can't.&quot;</p> <p>The Beck's get-out-of-debt journey has changed the way they think about money altogether. Now it's common practice for them to make their purchases &mdash; even big ones &mdash; in cash. They don't carry debt and they can live their lives freely, without the burden of owing money to anyone. Beck is even thinking about a second trip to her dream destination, Antarctica. &quot;I'm totally going back,&quot; she says.</p> <p>Because she can.</p> <p><em>Are you paying off your consumer loans? What strategies work best for you? How do you stay motivated and on track? We want to hear about it in the comments below!</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/alaina-tweddale">Alaina Tweddale</a> of <a href="http://www.wisebread.com/how-one-couple-paid-off-147k-of-debt-even-while-unemployed">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-12"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-one-college-graduate-paid-off-28000-in-three-years-on-a-30k-salary">How One College Graduate Paid Off $28,000 in Three Years on a $30K Salary</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/this-recent-grad-paid-off-34k-in-sudent-loans-and-launched-a-business-in-just-4-years">This Recent Grad Paid Off $34K in Student Loans and Launched a Business (In Just 4 Years)</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-one-young-entrepreneur-paid-off-40000-in-student-debt-by-age-24">How One Young Entrepreneur Paid Off $40,000 in Student Debt By Age 24</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/depressed-it-could-be-your-debt">Depressed? It Could Be Your Debt</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/our-worst-financial-mistakes-and-what-you-can-learn-from-them">Our Worst Financial Mistakes and What You Can Learn From Them</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Debt Management auto loan credit card debt debt repayment debt stories life hacks mortgage student loans Fri, 14 Nov 2014 14:00:05 +0000 Alaina Tweddale 1254112 at http://www.wisebread.com Should You Use Peer-to-Peer Lending to Pay Down Credit Card Debt? http://www.wisebread.com/should-you-use-peer-to-peer-lending-to-pay-down-credit-card-debt <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/should-you-use-peer-to-peer-lending-to-pay-down-credit-card-debt" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/young-people-consultant-153999609-small.jpg" alt="young couple consultant" title="young couple consultant" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>If you are digging yourself out of credit card debt, you might consider borrowing from a <a href="http://en.wikipedia.org/wiki/Peer-to-peer_lending">peer-to-peer lending</a> (P2P) company. Depending on your personal situation and credit profile, this approach may enable you to get out of debt faster and save money.</p> <p>There is much to consider besides the possibility of snagging a lower interest rate, reducing your monthly payments, and accelerating your payoff. Here's what you should know about getting a loan from Peer-to-Peer lender.</p> <h2>Consider the Pros and Cons of Peer-to-Peer Lending</h2> <p>There are distinct advantages and noteworthy disadvantages to credit card refinancing or debt consolidation with a P2P lender, such as <a target="_blank" href="http://track.linkoffers.net/a.aspx?foid=22959155&amp;fot=1159&amp;foc=1" rel="nofollow">Lending Club</a> or <a target="_blank" href="http://track.linkoffers.net/a.aspx?foid=22964539&amp;fot=1159&amp;foc=1" rel="nofollow">Prosper</a>.</p> <h3>Pros</h3> <p>Getting a P2P loan has several benefits that may allow you to quickly pay off credit card debt.</p> <p><strong>Lower Interest Rates</strong></p> <p>Interest rates as low as 6.03% are available through P2P lenders, depending on your creditworthiness. Even if you don't qualify for the lowest possible rate, you may be able to borrow at rates much lower than the current rate on your credit card, which could be as high as 30%. Additionally, credit cards are set up so that you're paying interest on top of your interest, since it's based on your running total balance.</p> <p><strong>Fixed Payment Schedule</strong></p> <p>Loans are fully amortized over standard loan terms of either 36 months or 60 months and your interest rate stays the same throughout the term; as a result, your loan payment is predictable and each loan is paid in full at the end of its term.</p> <h3>Cons</h3> <p>Before committing to a new loan, be sure that you are aware of all the costs, including the monthly amount due and additional fees.</p> <p><strong>Origination Fees</strong></p> <p>Loan origination fees are charged to borrowers at both Lending Club and Prosper. These fees range from 1.1% to 5.0% of the loan amount and are deducted from loan proceeds transferred to the borrower. The annual percentage rate (APR) associated with the interest rate offered to you reflects the true cost of borrowing and includes the origination fee (similar to credit card companies' <a href="http://www.wisebread.com/the-best-0-balance-transfer-credit-cards">balance transfer fees</a>).</p> <p><strong>Fixed Monthly Payment</strong></p> <p>Borrowers must make the entire loan payment every month, as opposed to a credit card balance where you can change your payment depending on your cash flow (after meeting the minimum payment required).</p> <p><strong>Late Fees</strong></p> <p>Late payment fees are the greater of $15 or 5% of the unpaid loan balance (also referred to as the unpaid installment amount). If you have a high loan balance, 5% could mean a very hefty fee (5% of $5000 is $250).</p> <h2>Compare Total Payments of Various Payoff Alternatives</h2> <p>To decide if you should use P2P lending to pay down credit card debt, start by getting a rate quote. Then evaluate the offers to see what might work best for your situation.</p> <p>Let's say you have a $35,000 balance on your credit card, an interest rate of 18.90%, and a minimum monthly payment of 4% of your outstanding balance (currently, $1,400.00). If you made the minimum payment of 4.0% for five years and then $500 per month until the balance was paid down (with the last payment to wipe out remaining debt), then you would pay $52,615.70 over 78 months.</p> <p>Borrowing through a P2P lender to eliminate the credit card balance and then repaying the P2P loan may work better for you financially. For example, you could take out a debt consolidation loan at <a target="_blank" href="http://track.linkoffers.net/a.aspx?foid=22964539&amp;fot=1159&amp;foc=1" rel="nofollow">Prosper</a>. Judging from listings on the firm's website, you may be able to snag a 36-month loan at an interest rate at 10.29% for a monthly payment of $1,134.12 if you have good credit with an &quot;A&quot; rating. You would be charged a loan origination fee of $1,400.00. Over the life of the loan, your cost to destroy your credit card debt using this method will total $42,228.42, as long as you made every payment on time and never had a late fee or other charge.</p> <p>Alternatively, you could borrow money through <a target="_blank" href="http://track.linkoffers.net/a.aspx?foid=22959155&amp;fot=1159&amp;foc=1" rel="nofollow">Lending Club</a>. Based on a rate offered to a family member, you may be able to get a 36-month loan for a credit card payoff at an interest rate of 7.69% if you have average credit with an &quot;A4&quot; rating. Your loan origination fee would be $1,050.00 and your monthly payments would equal $1091.78. In total, you would make payments of $40,354.24 to pay off your loans.</p> <p>If you decided to aggressively pay down debt with $1,400.00 monthly payments, then the credit card balance would be eliminated in less than three years using any of these options. Your total cost would vary from just over $39,000 to nearly $44,000 depending on interest charges and loan origination fees.</p> <p>Note that if your credit card rate is much higher, 29.99% for example, then the benefits of a P2P loan are significantly greater.</p> <h2>Be Realistic About Your Cash Flow</h2> <p>Crunching the numbers to determine your best course of action is a reasonable way to make a decision. In the scenario described above, paying off your credit card balance at a high rate and borrowing at a much lower rate using a P2P loan seems to make the most sense.</p> <p>But before signing up to get a debt consolidation loan, you should consider what might happen if you are late in making a payment. At both Lending Club and Prosper, late payment fees are the greater of $15 or 5% of the unpaid balance. So, if you happen to have a cash flow problem in the second year of your loan and are more than 16 days late on a payment, you'll be charged a late fee of more than $1,000. Just a handful of such fees can create significant loan-payoff woes.</p> <p>A comparable problem with your credit card company may trigger late fees and added interest charges (along with a higher interest rate), but the cost of your tardiness should be less than the P2P fees. Again, every situation is different and should be evaluated independently.</p> <p>If your financial picture is likely to change in the next three to five years, consider whether your cash flow will be able to sustain regular payments. Major life events, such as returning to graduate school, starting a family, or opening a new business, may interfere temporarily with the availability of funds. Make sure you will be able to make the monthly payments on a timely basis over the life of the loan.</p> <p>When comparing various types of credit, look at all aspects of the loan structure, <a href="http://www.wisebread.com/the-best-low-interest-rate-credit-cards?ref=inarticle">interest rate</a>, monthly payments, terms, and fees. Note that offers extended to you may look much different than those available to your friends, coworkers, or family members. Do the math and consider your entire financial picture when determining whether you should use P2P lending to pay down credit card debt.</p> <p><em><a target="_blank" href="http://track.linkoffers.net/a.aspx?foid=22964539&amp;fot=1159&amp;foc=1" rel="nofollow">Click here to check out available loan offers at Prosper.</a></em></p> <p><a title="Get a Personal Loan at a Low Rate" alt="Get a Personal Loan at a Low Rate" rel="nofollow" href="http://track.linkoffers.net/a.aspx?foid=22964539&amp;fot=1159&amp;foc=2&amp;foc2=600913" target="_blank"><img border="0" src="http://content.linkoffers.net/SharedImages/Products/220171/600913.gif" alt="" /></a></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/julie-rains">Julie Rains</a> of <a href="http://www.wisebread.com/should-you-use-peer-to-peer-lending-to-pay-down-credit-card-debt">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-13"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/whats-the-best-way-to-get-out-of-debt">What&#039;s the Best Way to Get out of Debt?</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-rebuild-your-credit-in-8-simple-steps">How to Rebuild Your Credit in 8 Simple Steps</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/debit-or-credit-which-one-should-you-choose-at-the-checkout">Debit Or Credit? Which One Should You Choose At The Checkout?</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-tricks-to-save-money-with-credit-cards">10 Tricks to Save Money with Credit Cards</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/never-use-your-credit-card-to-pay-for-these-10-things">Never Use Your Credit Card to Pay for These 10 Things</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Budgeting Credit Cards Debt Management credit dept peer-to-peer lending repayment Fri, 14 Nov 2014 10:00:06 +0000 Julie Rains 1254514 at http://www.wisebread.com How One College Graduate Paid Off $28,000 in Three Years on a $30K Salary http://www.wisebread.com/how-one-college-graduate-paid-off-28000-in-three-years-on-a-30k-salary <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-one-college-graduate-paid-off-28000-in-three-years-on-a-30k-salary" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/female-graduate-176844972-small_0.jpg" alt="female college graduate" title="female college graduate" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>The average college senior graduated with $29,400 in <a href="http://projectonstudentdebt.org/state_by_state-data.php">student debt</a> last year and the number is projected to rise by a staggering 6% per year. Even worse, a full 44% of borrowers <a href="http://online.wsj.com/articles/joel-best-and-eric-best-student-loan-debta-federal-toxic-asset-1412204612">aren't making their payments</a> for one reason or another. Despite the depressing statistics swirling around what's now been dubbed the current student loan crisis, there are still plenty of college graduates who manage to buckle down, live cheaply, and pay off their debt burdens. (See also:<a href="http://www.wisebread.com/how-one-inspiring-saver-found-true-love-shook-off-debt-denial-and-paid-off-123000?ref=seealso"> How One Inspiring Saver Found True Love, Shook Off Debt Denial, and Paid Off $123,000</a>)</p> <p>Take Zina Kumok, for example, who is just one month shy of making her last payment on what was once a $28,000 student loan balance. Through a combination of tenacity and frugal living, Kumok will pay off her debt in just three years &mdash; while bringing home an income that's just slightly higher than what she once owed.</p> <p>How did she do it?</p> <h2>The Motivation</h2> <p>Like most students today, Kumok didn't give her loans much thought while she was in school. &quot;It wasn't until I graduated and had my first job,&quot; she says. &quot;I was making $28,000 per year. It was depressing to think that for the next 10 years I would have this payment that was a large chunk of my income.&quot; Even more motivating, Kumok and her then-boyfriend and now fiancee had started talking about marriage. &quot;I didn't want to saddle him with my debt. My monthly payment was $350.&quot; (See also: <a href="http://www.wisebread.com/10-dark-side-motivations-to-get-you-out-of-debt?ref=seealso">10 Dark-Side Motivations to Get You Out of Debt</a>)</p> <h2>The Job Switch</h2> <p>Kumok's newspaper job required frequent night shifts and she was living a three hour distance from her boyfriend. &quot;I wasn't happy at the newspaper and I wanted to go back to a normal schedule,&quot; she says. &quot;I knew I wanted to switch jobs.&quot;</p> <p>Kumok was able to land a marketing and communications position in the city where her boyfriend lived and she even received a slight salary bump. (Her current annual income is slightly more than $30,000.) With a little more money coming in and lower expenses now that she wasn't traveling to see her boyfriend most weekends, Kumok was able to increase her student loan payment by an additional $300 per month. In short, instead of using her excess cash flow to expand her lifestyle, Kumok funneled the extra cash into her loan so she could chip away at her balance month by month. (See also: <a href="http://www.wisebread.com/6-simple-steps-to-discovering-your-true-salary-potential?ref=seealso">6 Simple Steps to Discovering Your True Salary Potential</a>)</p> <h2>Decreased Living Expenses</h2> <p>After their engagement, Kumok and her fiance moved in together. They also took on a close friend as a boarder. &quot;My rent went down significantly,&quot; she says. &quot;Now I split utilities and rent with two other people. That really made a huge difference. Now half my take-home pay goes toward my loans.&quot; (See also: <a href="http://www.wisebread.com/7-unnecessary-household-expenses-you-can-cut-today?ref=seealso">7 Unnecessary Household Expenses You Can Cut Today</a>)</p> <h2>Keeping Track</h2> <p>For Kumok, her fairly low income offered motivation to wipe out her debt. &quot;Every month I would go through my statement and I would see how much was going toward interest. It was so much hard earned money and I didn't have a lot of it,&quot; she says. &quot;When you're not making a lot, every little bit counts.&quot;</p> <p>Kumok was further inspired once she was able to boost her monthly payment. &quot;I was finally paying more in principal than in interest,&quot; she says. &quot;I liked seeing my interest decrease each month. I felt like I was throwing less money away.&quot;</p> <h2>Budgeting for the Fun Stuff</h2> <p>Kumok admits she finds it difficult to spend money unnecessarily when she owes so much. Even so, she was able to put money aside for a couple of overseas vacations, proving that debt repayment doesn't have to be all work and no play. &quot;It was hard for me to relax and have fun,&quot; says Kumok, who was able to take each trip on the cheap. Even so, she says, &quot;I counted my budget every day on those trips. I'm excited to travel on a budget but not feel guilty about it, once my loans are paid off.&quot;</p> <h2>And&hellip; What's Next?</h2> <p>About a year ago, Kumok started saving for retirement. &quot;Once I became eligible for my company's 401(k), I paid enough to get the match. Now I'll be boosting that contribution amount.&quot;</p> <p>She soon won't owe any money and yet she doesn't expect that much to change. &quot;I was careful for so long. I don't want to get back into the frivolous habits I had in college,&quot; she says. &quot;I'm a child of the recession, the stock market crashed when I was in college, and I'm the child of immigrants. There are plenty of horror stories around about people who didn't save or make careful choices. Those things make it hard for me to take a backseat when it comes to money.&quot;</p> <p>Being the careful sort, Kumok looks forward to starting her marriage without any debt. &quot;He helps me relax a bit so I hope we'll learn how to be responsible while still having a balance,&quot; she says.</p> <p>You can read more about Kumok's journey on her blog, <a href="http://www.debtfreeafterthree.com/">Debt Free After Three</a>.</p> <p><em>Are you paying back your student loans? What strategies work best for you? How do you stay motivated and on track? We want to hear about it in the comments below.</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/alaina-tweddale">Alaina Tweddale</a> of <a href="http://www.wisebread.com/how-one-college-graduate-paid-off-28000-in-three-years-on-a-30k-salary">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-14"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-one-couple-paid-off-147k-of-debt-even-while-unemployed">How One Couple Paid Off $147k of Debt (Even While Unemployed)</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/this-recent-grad-paid-off-34k-in-sudent-loans-and-launched-a-business-in-just-4-years">This Recent Grad Paid Off $34K in Student Loans and Launched a Business (In Just 4 Years)</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-inspiring-people-who-each-paid-off-over-100000-in-debt">5 Inspiring People Who Each Paid Off Over $100,000 in Debt</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-this-single-income-family-found-financial-freedom-in-just-27-months">How This Single-Income Family Found Financial Freedom in Just 27 Months</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-tricks-to-consolidating-your-debt-and-saving-money">5 Tricks to Consolidating Your Debt and Saving Money</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Debt Management debt debt repayment debt stories life hacks student loans Wed, 05 Nov 2014 14:00:05 +0000 Alaina Tweddale 1250695 at http://www.wisebread.com 7 Occasions When You Should Definitely Hire a Financial Advisor http://www.wisebread.com/7-occasions-when-you-should-definitely-hire-a-financial-advisor <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/7-occasions-when-you-should-definitely-hire-a-financial-advisor" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/financial-advisor-153824915-small.jpg" alt="financial advisor" title="financial advisor" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Laying out a few hundred dollars for a financial advisor can seem like money down the drain if everything is going smoothly. (See also: <a href="http://www.wisebread.com/9-signs-you-need-to-fire-your-financial-planner?ref=seealso">9 Signs You Need to Fire Your Financial Planner</a>)</p> <p>Until it isn't. Life's road bumps pop up, and good and bad things that happen can lead to financial problems or opportunities that you weren't prepared for. Here are seven occasions when a financial advisor should be called in to help.</p> <h2>1. Ruinous Debt</h2> <p>We're not talking about having payments for a credit card lapse for a month, but deep debt where you're having difficulty deciding which bills to pay and which to put off each month. This is a case where you don't want to have to pay a financial advisor &mdash; whether it's a one-time fee or percentage of assets that they manage. Instead, go somewhere such as the <a href="https://www.nfcc.org/index.php">National Foundation for Credit Counseling</a> or look for <a href="http://www.usa.gov/topics/money/credit/debt/out-of-control.shtml">local nonprofit agencies for free help</a>. At the very least, get help setting up a budget.</p> <h2>2. Career Change</h2> <p>Hopefully, this is an opportunity to earn more money and therefore put more money aside in a retirement account. A financial advisor can help you pick a retirement account that's right for you.</p> <p>Young people with the potential for increasing their assets who are starting their careers should seek a financial planner, says Eric Roberge, a fee-only certified financial planner in Boston and founder of <a href="http://beyondyourhammock.com/">Beyond Your Hammock</a>. This is especially true for a single person earning at least $75,000 a year or a couple earning $150,000 because they should have more money to invest, Roberge says.</p> <h2>3. Sudden Wealth</h2> <p>An inheritance, insurance payout, lump-sum pension payment, divorce settlement, lottery winning, or any other sudden influx of new money can burn a hole in a pocket, says Mike Sena, a certified financial planner at <a href="http://www.whitestreetadvisors.com/">White Street Advisors</a> in Roswell, GA. It can be tempting to splurge a little &mdash; or a lot. Instead, seek advice on how best to use your windfall now &mdash; and for years to come.</p> <h2>4. Death in the Family</h2> <p>The death of a close relative can be a key time to get financial help. You could face tax implications or need help with estate planning, for example.</p> <p>Roberge had a client who didn't seek his advice after her father died with a $600,000 annuity she inherited, and she took some money out of the annuity. She ended up having to pay a $40,000 tax bill, which Roberge says he could have helped her avoid.</p> <h2>5. Passing on a Family Business</h2> <p>Your parents and grandparents may want you to continue running the family business when they die, but you may not. This is a conversation that a financial advisor can help with early, says <a href="http://charleskochel.com/">Charles Kochel</a>, a wealth advisor for a fee-only Registered Investment Advisor in Arkansas. Kochel specializes in helping farmers transfer the family farm from one generation to the next.</p> <p>&quot;A major concern of a large family farm is legacy planning,&quot; he says. &quot;The issue is usually lack of communication. Multigenerational farmers assume the next generation will want to come back home, after college, and manage the farm or the assumption is that farming may prove too costly.</p> <p>&quot;A series of conversations needs to take place, often emotional and uncomfortable,&quot; Kochel says. &quot;A family meeting and ongoing proactive conversations help monitor the wants and needs of the entire legacy.&quot;</p> <p>The family will likely evolve over the years, and a financial advisor can help systemize the process and create an ongoing conversation that will move the estate planning beyond a one-time event.</p> <h2>6. Big Drop in the Stock Market</h2> <p>If your portfolio includes stocks, a financial advisor can help you come up with a financial plan, and stick to it.</p> <p>&quot;Most people think they can handle their own investments, but when the stock market drops, they start second-guessing their plan,&quot; says Tyler Gray, a financial planner at <a href="http://www.sageoakfinancial.com/">Sage Oak Financial</a> in Tulsa, OK.</p> <p>In 2008-09, for example, &quot;you had a lot of people who pulled out of the market at the worst possible time because they didn't have an advisor to help them stay disciplined,&quot; Gray says. &quot;The worst part is that many of these folks never got back in the market and have missed out on a lot of growth over the last five years.&quot;</p> <h2>7. Growing Family</h2> <p>Whether you're getting married or having children, it's best to have a financial conversation ahead of time, Sena suggests. New couples merging finances or planning for a baby and all of the costs that go into raising a child should have a financial plan.</p> <p>&quot;In general, anyone who is not meeting or exceeding their life and financial goals should work with an advisor,&quot; White says. &quot;Most of us are simply too close to our money to be objective.&quot;</p> <p>For better or worse, major life events can cause people to rethink their lives and plan for the future. Planning for a financial future should be part of many major events in life.</p> <p><em>Have you ever sought advice from a financial planner? What prompted you? Was the advice worthwhile and helpful? Please share in comments!</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/aaron-crowe">Aaron Crowe</a> of <a href="http://www.wisebread.com/7-occasions-when-you-should-definitely-hire-a-financial-advisor">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-15"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/intimidated-by-retirement-investing-get-professional-help">Intimidated by Retirement Investing? Get Professional Help!</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-reasons-to-fire-your-financial-adviser-soon">5 Reasons to Fire Your Financial Adviser Soon</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/is-this-hidden-cost-sapping-your-retirement-savings">Is This Hidden Cost Sapping Your Retirement Savings?</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-times-you-shouldnt-invest-in-stocks">10 Times You Shouldn&#039;t Invest in Stocks</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-inspiring-people-who-each-paid-off-over-100000-in-debt">5 Inspiring People Who Each Paid Off Over $100,000 in Debt</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Debt Management Investment Retirement debt financial planner financial planning investing retirement Mon, 03 Nov 2014 13:00:04 +0000 Aaron Crowe 1248279 at http://www.wisebread.com