70 Percent of consumers are in debt – Are you one of them?

 

The holidays are arriving. But consumers are still crying over their financial owes. As per a survey conducted by CompareCards.com, 70% of Americans are in debt and they are crying over their financial wounds. Around 31% of these people are in financial trouble due to household debt, and 20% of these consumers are worrying due to credit card debt.

 

Debt is a huge source of stress. Everyone knows about it. Debt takes an emotional toll on the people. Almost 15% of the surveyed people are worried due to unemployment, high cost of living, rents, and mortgage payments. Almost 14% of the surveyed people are tensed due to tight budgets.
The survey was conducted on 1004 consumers. But this survey reflects the general consumer debt scenario of America. Consumers have $1,074,979,918 credit card debt in the US , which is a massive amount. And, such a huge debt load is driving consumers to tears.

 

Only a debtor knows how it feels to be in debt. Sometimes, it feels overwhelming and stressful. It pushes people toward depression and anxiety. Ballooning credit card debt and student loan debt have become a point of major concern for people. And, it’s logical. It’s normal. Anyone would feel stressed.

 

#Survey result

Millennials are immersed in student loan debt.
70% of Americans are stressed out due to their debt problems.
31% of Americans are worried due to household debt.
20% of Americans are tensed due to credit card debt.
15% of Americans are crying due to inflation.
14 of consumers are distressed due to tight budgets.
Millennials are emotionally perturbed due to student loan debt.
Millennials are also worried about bringing up kids.
Women are crying due to rent and monthly mortgage payments.
Men are more concerned about their auto loans, student loans, and credit card debts

Other financial factors leading to stress and anxiety are personal loan debts, medical debts, retirement, investments in the stock market, tax, credit score, and identity theft.

 

#How to get out of debt and financial stress

Are you also shedding tears for your debts? Do you also belong to this 70% category? If so, then don’t lose your heart. There are a few tips you can use to get out of debt and depression. Here you go.

 

1. Think rationally instead of emotionally: Life is not a bed of roses. You can’t expect that there won’t be any problem in your life. If you have debts, you have to pay it off. Don’t panic or get stressed out. It’s natural to be worried when the debt amount is huge. But there are plenty of ways to get rid of debt. You’re not the only one who is in debt. Millions of people are in debt. If they can deal with it, then why can’t you?

 

2. Create a debt payoff plan: Unless you have a debt payoff plan, you can’t get out of credit card bills or student loans or auto loans or mortgage. If you have credit card debt, call your creditor and ask him to lower the payoff amount. If your track record has been good, the creditor is most likely to give you a settlement offer. The problem is most people prefer crying over their credit card debt problems instead of calling creditors.

 

If you have a mortgage and can’t make monthly payments, then ask the lender for a loan modification. Refinancing is also a good option for you.
If you have a federal student loan debt, then you can explore various repayment plans to lower your monthly payments. And, if you have auto loan debt, then refinance it if possible.

 

3. Create a budget to spend less and save more: No matter what debt repayment plan you choose, you have to pay money, even if it’s a small amount. You have to arrange the money, and for that you need to create a personal budget plan. Download a budgeting application after reading its reviews and split your expenses accordingly. Focus on reducing your luxury expenses so that you can save more in the long run. The more you save, the more you can pay toward your debts. See also: How can you make a perfect budget when you are jobless?

 

4. Get advice from the professionals: What do you do when you’re suffering from viral fever? In most cases, you consult a doctor and get the required medicines to be fit. Likewise, when you have debts and can’t pay them off, you should get advice from the certified credit counselors and debt negotiators. These people have immense knowledge on the various ways to get rid of debt. They know the root cause of your problem and also the solution. They also know how to negotiate with creditors and grab an affordable repayment plan for you. So if you’re in debt, then you should approach a debt relief company and ask for a solution.

 

However, don’t be in a hurry. Make a thorough research on the debt relief company before making the final call because scams are also rampant in the country. Read more: Clear your debts with professional help and DIY Options.

 

Final words

There are thousands of people who are going through debt problems in our country. They need both help and hope to recover from debt distress. If you’re one of them, then use the aforementioned tips to repair the broken parts of your financial house.
How To Tackle Credit Card Debt Before The Upcoming Recession!

How To Tackle Credit Card Debt Before The Upcoming Recession!

Are you having credit card debt?

If yes, then no matter what, it’s gonna be difficult to pay off! One of the prominent reasons being the incessantly high Annual Percentage Rates (APRs) of credit cards. As you know, credit cards are usually unsecured debts as you don’t need to provide any collateral. And that’s why the credit card companies levy a high-interest rate to compensate for that risk!

Eventually, you can see a substantial part of your paycheck is deducted every month to pay off your credit card debt. And you might be waiting for the time when you will receive your next paycheck. In short, you might be living paycheck to paycheck!

On top of that, the effects of the recession can add to your problem! And thereby it can be more cumbersome to pay off your credit card debt.

Yes, you heard it right!

A 2019 Bloomberg report says that there is a probability of 26% that recession will hit our country within one year!

Whereas, a 2019 Bankrate survey has found that 2 out of 5 people in our country are not ready for the recession!

So, if you are one of them, you need to pay off your credit card debt asap. And it can be one of the baby steps to prepare for any economic downturn!

Let’s start!

 

Opt for a balance transfer card

Exhausted with the high APRs of your credit cards?

Well, in that case, you can opt for transferring your outstanding balance amounts to a new credit card. It’s always advisable to opt for a balance transfer card which has a comparatively lower interest rate, preferably 0%.

But always keep in mind, most of the balance transfer cards come with 0% balance transfer fee for an introductory period. 

On the other hand, many balance transfer cards charge about 3% to 5% of the amount transferred as the balance transfer fee right from day one!

So, to avoid mistakes while opting for a balance transfer card, you should always read the terms and conditions carefully!

You can save a substantial amount of money on interest payments. Besides, you don’t need to bear the hassle of multiple loans! Thereby, it helps you to pay off your credit card debt with ease!

 

Opt for a consolidation loan

You can take out a personal loan to consolidate your multiple credit card debts into a single one. But make sure that the interest rate is lower than your existing debts.

Let’s say, you have two credit cards with outstanding balance amounts of $3,000 and $2,500. And both the credit cards have the same APR of 22%.

If you take out a consolidation loan of $5,500 with an 18% APR, you can pay off both the credit cards.

Besides, your repayment plan becomes simple as you need to make a single payment every month to pay off your debts. And the biggest advantage is, you have to pay a lower interest!

Opt for a debt consolidation program

Well, you might be stressed already being up to the neck with your multiple credit card debts. So, what if a company takes away your burden by consolidating credit card debts? And that too at reduced interest rates!

Yes, you heard it right! It might seem impossible to you! But actually, it’s possible! For that, you just have to approach a genuine debt consolidation company.

At first, they will assess your financial situation. Then they will try to negotiate with your creditors on your behalf to reduce the high APRs of your debts.

Once your creditors agree, the consolidation company will chalk out a single monthly payment plan for you, based on your debt amount and financial situation!

So, you need to make a single payment to the consolidation company every month for paying off your credit card debts. The consolidation company, in turn, will distribute the amount among your creditors.

And guess what?

You won’t have any chance to forget the different due dates of your multiple credit card bills. Thereby you don’t have to shell out more to pay late fees and all if you miss the payment deadline!

 

As you can see, by opting for any one of the ways I suggested, you can pay off your credit card debt faster and easier. Besides, you can save money too!

You can stash this money in your emergency fund. So, if there is an economic downturn, you can use that money during any exigency!

So, what are you thinking? Learn how to tackle credit card debt and get rid of your credit card debt asap!

Debt counseling, consolidation, or settlement: Which is beneficial

Debt counseling, consolidation, or settlement: Which is beneficial?

The two most feasible options for people struggling to pay off debts are debt counseling and debt consolidation. But most people feel overwhelmed when they need to choose between these two options. It is worth mentioning that each method has its advantages and disadvantages. So before you select a suitable debt relief program, it is advisable to analyze your financial situation as well as check the two options properly. Therefore, let us discuss these two options in detail to know which one will be favorable for your financial situation.

 

Credit counseling/debt counseling

What is credit counseling?

Credit counseling is a process where a credit counselor educates the debtor about various debt relief options, money management techniques, and budgeting. This process also provides guidance to debtors to eliminate debt.

The credit counseling agency assists the indebted people to get out of debt. The firm guides the debtor to manage the financial situation effectively.

 

What is the function of credit counseling?

A certified credit counselor guides the debt-stricken consumers to get out of debt.

When you opt for credit counseling, the credit counselor will formulate a budget plan after reviewing your financial situation so that you can manage your finances. He will design a repayment plan to make the owed amount affordable to pay off.

 

Effect of credit counseling on credit score

Your credit counseling session will not bring down your credit score as the effect of this program will be negligible on your credit score. The credit counselors prevent consumers from applying for new credit cards and incur fresh debt. They also prevent consumers from using a credit card in the wrong way, which can hurt the FICO score in the future.

 

Debt consolidation

What is debt consolidation?

Debt consolidation is a process of merging your multiple debts with a consolidation loan at a favorable interest rate. You can prolong your repayment plan, which will help to lower your monthly payment.

 

How can you consolidate your debts?

You can take out an unsecured consolidation loan from a bank to combine your debts. If your credit score is low, then you might not be able to get the loan on the affordable interest rate.

 

Try to opt for a secured debt consolidation loan if you are looking for low-interest loans. You can take out a loan against a security deposit on favorable terms. But, keep in mind that, if you default on your payment, then you might lose possession over your assets.

 

You can even hire services of a debt consolidation company if you are unable to manage your debts. This company can help you to get a consolidation loan at an affordable interest rate. You need to find a reputable debt consolidation company with Better Business Bureau accreditation.

 

There is yet another way to consolidate your debts, and that is by enrolling in a debt consolidation program. Here the debt counselor associated with the company will negotiate with the creditors to lower the interest rate on the principal balance. He might instruct you to skip payments so that the creditors agree to lower the repayment plan. When you skip payments, your credit score might drop initially. But once you start making payments, it will eventually increase.

 

Debt settlement

What is debt settlement and what is its effect?

If you can’t manage your multiple debts due to lack of income and the debt collectors are giving you harassing calls throughout the day, you can enroll yourself in a debt settlement plan and repay the reduced balance with ease. While there are professional companies that you can resort to, you can also take certain steps on your own. By settling your debts yourself, you can save your dollars on the unnecessary fees charged by the debt settlement attorney.

 

3 Steps to settle your debts

  • Know your lenders: You can settle your payday loan debts through settlement. If you have a dozen payday loans or a couple of them, calculate the total amount before considering further steps. Calculate the principal amount and the interest rates on each account. This will help you to understand how much you need to repay your creditors.

 

  • Know the licensing laws in the state: You should check the licensing laws so that you can understand whether you owe them both the interest rate and the outstanding balance or just the principal amount. If the lenders are legal in your state, then repay the entire amount. If the lenders are not legal, then you just need to pay back the principal amount and not the fees.

 

  • Negotiate with your lenders: To settle your debts, you need to negotiate with your creditors to reduce the total debt amount. However, negotiation can be difficult for you since you have to convince your creditors about your financial difficulties. Thus, you can enroll in a debt settlement program, when the negotiator negotiates on your behalf and successfully reduce the total debt amount.

 

Therefore, analyze your financial situation before selecting a debt relief plan as it will help you attain financial liberation. Make sure you exercise financial discipline when you take out a debt consolidation loan otherwise you might get further into debt. If you are looking for a fast debt relief solution, then credit counseling will not be a good option for you.

How You Can Get Rid Of Debt Before Christmas - 4 Tips

How You Can Get Rid Of Debt Before Christmas – 4 Tips

Although it may look like an impossible task to get out of debt before Christmas, but it isn’t so actually especially when you owe less than $10,000 to creditors. If you read this post and follow the tips mentioned here, then I’m sure you’ll be able to enjoy delicious foods and friendly banters with family without any debt problems or stress. So without wasting any time or words, here’s how to have a debt-free Christmas.

1. Take up a second job:

The thought of doing a second job after a tiring day might not be appealing to you but it can fetch you a good amount of money. Instead of watching Netflix in the evening, you can use that time to make money. Simple jobs like pizza delivery and writing articles can help you to get extra cash. Use it to pay off your debts. Focus on those jobs that give you a minimum of $200 – $400 per week.

2. Give a garage sale:

Take an inventory of what you have and throw a garage sale. I’m not saying that you should sell everything. What I’m suggesting is, sell the items that you don’t need. Try to pick up those items that have decent value in the market. Otherwise, you won’t be able to make a big amount of money. You can also choose items that you can’t sell on eBay due to shipping problems.

3. Settle your credit cards:

One of the fastest ways to get out of debt before Christmas is to settle credit cards since that allows you to pay less than what you owe. But for that, you need to save money first.

Create a budget to see how much you earn and how much you keep in your bank account. Thereafter, think about the ways to reduce your expenses so that you can keep more money in your bank account. You can use this money to settle your credit cards since creditors would expect a lump sum payment. See also: Is it possible to settle debt without hurting your credit score?

4. Opt for a balance transfer card:

A balance transfer card can help to reduce your debt load instantly. You can take out a 0% interest balance transfer card and pay off your outstanding balance on other cards instantly. Thereafter, pay off the new debt at a low-interest rate in the next 12 months. Check out – How to do the best credit card balance transfer to avoid mistakes!

What else you can do

Thousands of people are getting into debt at Christmas. Last night, when I was writing this article, I decided to check how many people go in debt for Christmas on Google. The results startled me. Nearly, 74% of Americans couldn’t budget properly for the festive season and incurred an average of $1054 of debt in 2017. As per the financial experts, if consumers make only the minimum monthly payment, then they won’t be debt-free before 2023. Adding fuel to the fire, consumers would end up paying $500 interest during the tenure.

It’s high time to stop going into debt for Christmas because that affects the overall financial planning in the next year. Remember, recession can hit the country at any time. So you should start taking steps to build a recession-proof financial life now on. And, the first step is to get out of debt before Xmas.

Do you feel that what I said is wrong from any angle? If so, then feel free to post your feedback in the comment section.

Have any ideas on how to pay off debt before Christmas? Share them with us too.

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10 Financial milestones you should hit by the age of 30

10 Financial milestones you should hit by the age of 30

“Life begins at 30” – This statement does not apply when it comes to financial planning. If you are at the age of 30, you should have achieved some financial milestones by now. Otherwise, you may not be able to live a good financial life.
If you have not yet started to plan your personal finances, you should better start over now.
You may regret at the older age about not saving enough money earlier.

So, you are now charged enough after reading the introduction of this article and want to know which financial milestones to aim at the age of 30.

Here you go:

1. A proper financial goal

Well, to achieve something, you should make the plan mindfully. If you work hard without knowing what to achieve, then your effort can go into the vain. Thus, while managing money, it is important to set goals. This helps in achieving a financial milestone easily.

2. A well-planned frugal budget

One of the most important things which are to be included in your financial planning is frugal budgeting. This helps you to save more than what you usually do and it helps you to stay within your limits. Setting a personal budget is the first step to achieve important financial milestones. So, you should formulate a budget. If you don’t have time to formulate budget on your own, you can use any of the online budgeting tools.

3. Done with unnecessary expenditures

As you budget, you are required to list all of your expenditures – fixed and variable. So, you may be able to find out if there are any unnecessary expenditures. If there is any such expenditure or any other ones that you think you can do without, better cut down on those. In addition, try to lower the usage of credit cards as this helps a lot in lowering your expenditures. Remember, to achieve something, you need to sacrifice something. Hitting financial milestones is not easy. You have to practice to save money so that you can achieve financial milestones easily.

4. Have savings in a high yield savings account

It is important to start a savings account where you can put money. Try to put money into the account each month and avoid drawing the saved money. You should follow a formula of 30:50:20 (30% of income for saving, 50% of income for necessary expenses, and 20% of income for entertainment) while saving money in a savings account.

5. Established a loaded emergency fund

Only saving money into a savings account is not enough. By the age of 30, you should have a loaded emergency fund to manage emergency expenses like job loss, accident, natural calamities, and prolong illness. If you don’t save for rainy days, you may have to take out money from your other savings including retirement fund, which can be fatal for your post-retirement financial days. So, to safeguard all your savings, you should save enough money in an emergency fund. Try to save at least 6-9 months of savings in an emergency fund: if possible, save more than that.

6. You are debt free

You should try to get out of your current debts as soon as possible. If you are in huge credit card debts, then try to get out of them. You can repay your debts on your own by following the debt avalanche or debt snowball method. You can also consolidate your debt. Remember, having a huge debt can hurt your credit score, which can bar you from taking out loans at good rates and terms. Thus, you should repay your debts to maintain your credit health. Also, once you are debt- free, you can concentrate on achieving other important financial milestones before reaching 30.

7. Have one -year’s worth of salary in retirement fund

I am not telling you to build a fully loaded retirement account when you hit the age of 30. But, you should have at least one year’s worth of salary into a retirement fund so that you can manage post-retirement costs well. Remember, when it comes to building a nest egg, the sooner you start, the better. So, if your employment has the facility of 401(k) account, then start contributing money into it. You can also save 15%-20% of your income into any retirement account.

8. Done with some wise investments

Don’t start investing unless you have ample money for them. However, if you are earning well, then you can think about the investment even before reaching the age of 30. Just check out which investment options are more lucrative and easier to understand. Ask your peer group or have a chat with an expert regarding this matter. You can also start an investment portfolio when you become an expert in it. You can invest in stocks, shares that’ll help you get income and bonds which act as a hedge against inflation and that applies for gold too. You can also go for real estate investment when you become a seasoned investor.

9. Have a good credit score

You should try to build a good credit score at the age of 30. A good credit score plays a vital role in your financial life. As I have mentioned earlier that good credit score helps to get loans at favorable terms and rates. You can also prove yourself as a responsible person towards financial matters.

10. Have a mindset to build wealth

If you have your own property, you can take out a refinance mortgage so that you can easily pay back the loan and also build the equity on your home. You can use the money to make positive improvements on your home so that you get better resale value on selling off your property after 10 or 15 years. Later you can also go for equity withdrawal, which means you can withdraw from the equity of your house that has been built. But don’t try to do it and keep your house as it is for you need to sell the house at a better price in the future.

Well, there are many other financial milestones that you can achieve by the age of 30. It depends on how much money you earn and how you prioritize your goals. However, the key is to be a financially responsible person at the very beginning of your career to achieve these important financial milestones when you hit the age of 30. Otherwise, you will not be able to establish a secured financial life for yourself.

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8 Things to learn before your first paycheck arrives after graduation

8 Things to learn before your first paycheck arrives after graduation

So, you have completed your graduation; no more classes, exams, and grades. Now you are a sincere employee of a good firm who is working hard to shine. And, you are finally ready to make your own money. So, what’s your plan to do with your first salary? The first paycheck can make you feel like the richest person in the world. However, you shouldn’t spend the entire money! Being extravagant at the beginning of your career can create financial troubles. You should understand the value of your hard-earned money.

Look at the things you can do before your first paycheck arrives to do justice with it.

1. Learn how to formulate a personal budget

It may sound boring. But budgeting doesn’t have to be a boring subject. Because it is the key to manage your first paychecks like a pro. Without a budget, you can’t manage your monthly income and expenses. A budget helps to achieve your financial goals in the long run.

How to budget your paycheck

Think about your expenses and write down in a spreadsheet. Deduct your total expenses from your monthly income. The expense shouldn’t be greater than your income. Make sure you have money in hand after meeting your basic expenses. The extra money is your future savings. You can use online budgeting software or spreadsheet to create a budget.

2.Learn the importance of paying credit card bills on time

Before you start earning money, you should learn how to manage credit cards properly. Credit cards are important; they help to build a credit score. But, you shouldn’t use them randomly.
Also, many people think credit cards are free money, which is wrong. Remember, credit cards are not free, you should pay the bills in full and within time. Otherwise, you will start accumulating a higher interest rate. Thus, you can fall into credit card debts. If you still ignore the debt, you will get collection calls for the outstanding debt. So, you should use the credit card when you know that you can afford the bill.

3. Take an oath to remain current with your monthly bill payments

Not only credit cards, but you should also pay all your monthly bills on time. So, you should try to stay current with your payments. If you’re unable to manage your expenses, then at least make a minimum payment so that you can avoid debts in the near future. These factors will help you to avoid spending the entire paycheck.

4. Learn how to spend less than what you earn

Once you start earning, you may feel like you can get anything you want. But, you shouldn’t think like that. Your paycheck shouldn’t be only for your luxurious spending. You should save money to achieve other important financial goals. Thus, try to understand the difference between need and want. It will help you to manage your first paycheck.

5. Create your own financial priority list

You can’t meet every financial goal with your first paycheck. Thus, you should create a financial priority list or financial goal list. It will help you to make progress on the goal while managing other necessary expenses using your paycheck.

For example

  • Saving a certain amount for emergency expenses in a high-yield savings account.
  • Opening a 401(k) account to save for retirement.
  • Saving money for a downpayment of home or car
  • Paying off student loan debt

6. Remember your due dates

Make it a habit to remember the due dates on your multiple credit card accounts. If you tend to forget, make sure you create some alerts in your mailbox or your cell phone so that you can see and remember that it’s time to make your minimum monthly payments. If you fail to make your payments within the due dates, you’ll most likely accrue late fees and penalties that will unnecessarily boost your monthly payments.

7. Choose a good bank

These days, you will get different types of credit cards for different purposes. For example, you can buy a travel credit card to get the benefit or you can purchase a gas credit card. Gift card, a payroll card, and store cards are also useful to earn reward and benefit.
Yes, credit cards are convenient tools; they help in many ways. But to get benefit from multiple credit cards, you have to manage them properly.
Also, you have to choose the right bank for purchasing the card that you need most.

8. Become financially educated

Understanding money is important since it has a great impact on your life. Financial literacy is understanding how to manage finances properly. Financial knowledge helps you to use money responsibly. You can learn how to budget your paycheck. It also helps you to make the right decision about spending, taxes, banking, savings, and investments.

Lastly, getting the first paycheck after completing studies can be exciting. You deserve to be pampered using your own money. However, you should be responsible when it comes to handling money even if it is your own. Once you get your first paycheck, you can pay yourself a certain amount so that you can enjoy in a way you like. After that, you should use your financial wisdom so that you can maximize every paycheck you earn.