Deep in Debt?

Deep in debt?

It’s so easy to ignore the situation and hope it will go away. You might think that you’ll skip a payment here and there and get through it. But this is very risky. Start by acknowledging that you have a serious debt problem.

Then list out all your debts. Prioritise by interest rate, not by amount.  A credit card with 20% interest goes way above a $100,000 housing loan on 8% interest.

Then call your credit card company to negotiate for a lower interest rate. If this doesn’t work, tell them you’re looking to move to another company. Rather than losing you as a customer, they would give you a better rate. But, being the prudent customer you are, you will look around for an alternative credit card provider who can provide you with a better rate. Ask for a 0% interest rate for 12 months on your balance transfer. Remember, this is business, not a class on friendship. Every dollar counts.

But before you switch your credit card debt to another card, consider going to your housing loan provider and asking them if they cam merge your current debts to your housing loan. This may be done via another round of financing. Worst case scenario, take out a personal loan with them. Since you already have a housing loan with them, ask for a lower interest rate on the personal loan. Don’t be shy to ask. You have nothing to lose. And they will want you, trust me on this. It is much better to consolidate all your debts into a low interest Personal Loan than into a balance transfer credit card unless you’re sure you can clear the debt on the balance transfer credit card within the time frame.

Consider some financial counselling, if all else fails. It’s good to get some expert help. There are government agencies providing help without the need for any payments. Use these services. Don’t be shy or angry. It’s better to bite the bullet now than to sink deeper into debt. Schools don’t teach use financial planning, so its no surprise that most of us fail in it.

More options:

Finding Extra Income

You may be feeling that nothing is working. And there is no hope.

But there is hope. There is always hope. New things can bring in new experiences, so don’t give up.

Get a part time job. I am not asking you to work at McDonalds.

What are you good at? Can you create simple websites? Can you create simple programmes? Can you cook? Can you proof read documents?

If you can do these things, head over to Craigslist.org <http://www.craigslist.org/> or Elance.com and advertise your skill. Dont charge too high. Find your neighborhood in Craigslist and offer your service there. Charge low prices in the beginning in order to get some jobs. Jobs creates referrals. Do a good job and ask for a referral. And keep a list of jobs that you have done, this becomes your portfolio.

Work part time about 3 time per week. Work more if you really need the money. Eventually, you might earn more in your part time job than you do in your full time job. More importantly, the income from your part time job is the key to your financial freedom.

Every successful person stated in this way. When the going got tough, the tough started going!

Maximize Your Money – II

1. Repair Your Old Clothes

Don’t throw old clothes. If you get to see how people in poorer countries live, you’ll learn to appreciate the clothes that you have. Sew your torn clothes and wear them. Don’t rush out and buy new clothes every other week.

2. Ask for a Rate Reduction

Ask and ye shall receive. At the risk of having NPL’s (Non Performing Loans), banks would rather lower the interest they charge you than to have you default on your debts. So don’t be shy in asking. You wont lose anything by asking. I managed to get a 200 dollar reduction in my monthly mortgage repayment, which actually allowed to me to keep paying my old rates and reduce the principal amount of the loan quicker.

3. Say NO to Starbucks and McDonalds

While the coffee from Starbucks might be slightly better than a regular Java, is it worth the USD8 that you pay for it, compared to the USD2 for a regular Java? The USD6 that you save on a daily basis comes up to USD180, which can reduce your credit card interest charges by a considerable margin. And the Big Mac from McDonalds might send you to the hospital with a cardiac arrest. Say NO to FAT. And while you’re at it, stop smoking and reduce alcohol consumption. All these will add dollars into your pocket and increase your life span.

4. Switch Your Bulbs

Switch all the bulbs in your house into energy saving bulbs. You’ll start reaping your savings within 10 months. And besides, you’re doing your bit for the environment.

5. Swap Books with Friends

Check out Craigslist for people who want to share books. Swap books with them, or friends and family. You’ll end up reading a lot more books for a lot less dollars.

Maximize Your Dollar

1. Read More, watch Less TV

Read more, books teaches you more than TV ever will, unless you’re watching the Science channel. Read books that teach you skills that can help you earn more at work.

2. Sell Your Junk

Everyone has ‘junk’ at home. What you consider junk may be something another person wants. So try auctioning the things that you don’t want or haven’t used in a long time at Ebay. No point in throwing away something when it can earn you a dollar or two.

3.  Be Loyal

If you usually shop at a certain shop or fly a certain airlines, try to stay loyal and enroll in their loyalty programme. Pile up the reward points and used them wisely. I had a friend who forgot that he had close to 300,000 points on his airlines rewards programme and allowed nearly half of it to expire. What’s the point of painstakingly accumulating those points if you’re going to forget about them? Don’t make the same mistake. If you really cant travel or redeem the points, donate them to your loved ones.

4. Buy from a List

When you’re out shopping, go with a list of things to buy and a budget. Cultivate discipline. Stick to you list and our budget and you’ll soon have your life in control.

5. Eat at Home

Eating at home is so much cheaper than eating out. It’s all right to bring friends over and cook for them.  Or ask everyone to bring a dish. You can save a lot.

More tips the next time…

Spend Less

Quickest way to save some money – spend lesser than your earn.

When push comes to shove, cut down on frivolous expenses like cable tv, or movie rentals, start car pooling, dump your Starbucks coffee for regular Java.

These cutbacks are just temporary. Their painful but temporary until you get some extra cash with you.

Learn How to Clear Your Bad Credit History in 37 Days

A bad credit card history hinders you from getting good interest rates for everything – from  your house loan mortgage to your car loan, to everything.

Learn how to clear your bad credit card history in 37 days.

The Secret

There is no secret to getting out of debt. You’ve read this in many places before but I want to repeat it here:

1. Spend less than you earn.

2. Live frugally.

3. Earn more money.

4. Manage your money wisely.

There are no other rules.

The key to breaking out of your debt is to earn more money. Living frugally and within means is your first step. But if you want to escape the cycle of poverty, polish up one of your skills and be bold enough to go out there and sell your skills. There are a lot of websites like Elance.com where you can offer your skills at a rate and people will employ you if the terms are good.