Back in my day, when I was a fresh-faced 18 year old out of high school, creditors seemed to be falling all over themselves for the chance to give to give me my first credit card, usually with a limit of up to $5000 (oh the ways I could spend that…) and some useless trinket as a sign up bonus.  Things are a little different now, the biggest change-up being that banks are no longer allowed to issue credit cards to anyone under the age of 21, unless the person applying has a cosigner or can provide proof of sufficient income.  

Now, I’m sure that probably sounded sensible to whoever came up with the idea, but back here in reality, it doesn’t make any sense at all.  Not only does it serve to stave off any experience a younger generation will have with credit cards, but with a decent percentage of your credit score (15%) made up of the length of items in your credit history, having to wait until you’re 21 to start building up your credit is like being held back two grades for no discernible reason.

So what’s a responsible teenager (responsible enough, anyway) to do if they want to get ahead in the game and start establishing credit before their 21st birthday?  Try out any or all of these simple tips:

• Get a secured credit card.  Think of a secured credit card as a set of training wheels; not quite a credit card, but more than a debit card.  You can get one from your bank after depositing some funds into the new account, and then use it just as you would a real credit card, making regular monthly payments.  Be sure to look for cards that offer lower interest rates than others; you don’t want to fall into the trap of barely paying the interest off this early in the game.

• Get a job.  If you’d rather jump head first into the pool, look for a decent part time job (or full time if you’re out of high school and want to wait a year or so before heading to college) to increase your chances of getting a credit card before you’re old enough to (legally) drink.  After all, being able to provide proof you’ve got a decent income that can be used to pay down a card balance is like doing extra credit assignments – it can only help in the long run.

• Piggyback on Mom and Dad’s card(s)!  Assuming either of your parents have credit on their own, and that it’s good, you can always try and hop onto their card and share in their good fortune.  Of course, if your parents start to slip up on their own credit, it’ll extend to you as well, so make sure your parents are better with money than you might be.

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Of course, that’s much easier to put in writing than it is into practice, and many people find themselves unable to stick to the budget they prepared for themselves for a multitude of reasons, some even beyond their control.

Here are some ways that budget you prepared to help you control your spending may not be working out as well as you had hoped, and how you can get it back on track.

• You’re spending more than you’re bringing in.  This is the most obvious and common problem people encounter, and the primary reason they set up a budget in the first place.  If you find that your net income is barely enough to keep you afloat every time the check comes in, now would be a good time to evaluate your spending priorities.  

• You’re just not sticking to it.  One of the things we always try and stress to our clients when they come to us for credit repair or debt settlement options is that the process doesn’t take place overnight; you won’t wake up tomorrow with a 720 score and lenders beating down your door to offer you the best loan imaginable.  The same applies to your budget.  You can’t expect to come up with one and then leave it to work itself out.  You’ve got to stick to it and refer to it on a weekly basis to make sure you don’t fall into any financial pitfalls.

• You’re not taking the time to get to know one another.  On the flipside of that coin, some people find that they’re budget isn’t working out for them, even after a monthly check up.  If you’re new to budgeting your annual/monthly income, it’s entirely possible – even probable – that you’ve not factored every bit of income and expense into your budget.  If you’re budget keeps coming up short, it could be because…

• You’re not adjusting it.  You shouldn’t think of your budget as a binding contract that isn’t open to negotiation.  On the contrary, you’re budget could see dramatic changes at any point in time, for any number of reasons (pay raise, job loss, marriage, baby on the way, etc.) and should be adjusted for these occasions.  If you’re not factoring these changes and others like them, into your budget, you’re only hurting yourself.

• You’re leaving out some details.  Here’s a serious slip-up most people make when setting up a budget for the first time: They forget to include every expense they make into it.  Smaller expenses are easy to overlook when creating a budget and are usually the reason you come up short when checking your spending vs. your income.  Refer to your bank statements every chance you get to make sure your numbers add up to theirs.

• You’re not having any fun.  One of the biggest detriments to setting up a budget for some people is they think it will rob them of any chance of spending money for fun.  This isn’t true at all.  Budgeting shouldn’t mean you can’t set some money aside for fun; it just means you decide ahead of time what you have to spend on what’s fun, and stick to it.

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Since the previous recessionary time period, many strategies have been formulated in order to solve public’s liability issues. One of these methods was even bankruptcy; currently the government and the lenders are trying to make people avoid bankruptcy. This is because bankruptcy is of no benefits to the creditors, debtor or the economy. Other methods that have been able to solve the issue of liability are: liability settlements, liability consolidation, tax breaks, money grants and bailout plans.

Bailout Plans:

The government has tried to solve the problems of its public and it has even helped the public in solving liability issues. The government announced the bailout plan, according to which a creditor gets back the discounted amount of money which he lost while settling the liability amount with its debtors. Now more and more creditors are allowing their borrowers to settle the debt amount.

Money Grants:

The government is providing money grants to those debtors who are still in liability issues and have no way to solve the issue. These money grants are provided, once the debtor submits the application and proposal for the money grant. Then this proposal and application are reviewed by the federal government and the decision of whether to provide money grants or not is made.

Tax Breaks:

Governments have even provided tax breaks to both the creditors and the debtors in order to encourage debtors to lend money to the debtors so the money can be invested in the economy. It has even encouraged the debtors to invest in the economy and pay their liabilities from the income they have earned.

Debt consolidation

It’s one of the methods used to solve debt issues. According to this method, all the loans acquired by a certain debtor are considered as one and a single payment is to be made by the debtor. By using this method the debtor receives a 25% discount in the interest rate charged. Now debtors make one single monthly payment instead of multiple monthly payments.

Debt Settlement:

This one of the most effective ways of reducing debt issues and is the next best alternative to bankruptcy. In other words people should consider this method over bankruptcy. According to this method a debtor bargains with the creditors and gets a discount on the amount of loan. A huge discount of up to 60 to 70% is provided so the repayment of the loan becomes easier.

Getting out of debt through a debt settlement process is currently very popular but you need to know where to locate the best performing programs in order to get the best deals. To compare debt settlement companies it would be wise to visit a free debt relief network which will locate the best performing companies in your area for free.

Free Debt Advice.

Article Source: http://EzineArticles.com/?expert=Owais_Siddiqui

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Strategies to Pay Back Credit Card Debt and Avoid Filing Bankruptcy is a post from: Bankruptcy Court Online

Recent data from the American Bankers Association (ABA) shows that, as a nation, we’re improving our on-time payment rate for our credit cards. In fact, we’ve improved in a variety of areas:

• Bank card delinquencies reportedly fell to 3.88 percent of all accounts, down from 4.39 percent in the fourth quarter of 2009. The current rate is also apparently below the 15-year average of 3.93 percent and stands as the lowest rate recorded since 2002.
• Auto loan delinquencies fell in both the direct category (from 1.94 percent to 1.79 percent) and the indirect category (from 3.15 percent to 3.04 percent).
• Home equity loan delinquencies dropped from 4.32 percent to 4.12 percent, marking the first dip in two years, according to the ABA.
• Personal loan delinquencies decreased slightly, from 3.63 to 3.61 percent.
• Property improvement loan delinquencies inched downward, from 1.63 percent to 1.40 percent.
• Home equity lines of credit delinquencies dropped from 2.04 percent to 1.81 percent.

The ABA considers loans delinquent when payments are thirty days or more overdue, so the decrease in delinquency rates suggests that more Americans are making a concerted effort to make payments on time, on a variety of loan types.

But not all of the ABA’s findings were rosy: the group also noted that several categories saw increased delinquency in the first quarter of 2010:

Marine loan delinquencies: Up to 1.93 percent from 1.63 percent
• Mobile home loan delinquencies: Up to 3.65 percent from 3.41 percent
• RV loan delinquencies: Up to 1.58 percent from 1.44 percent
• Non-card revolving loan delinquencies: Up to 1.63 percent from 1.46 percent

While some analysts point to the overall decrease in consumer delinquencies as evidence to support the theory that the economy is on the upswing, others looking at the financial landscape aren’t so sure.

Numbers from the Federal Reserve released earlier this month indicate that, overall, consumer credit decreased in May 2010, which can be read as a positive sign (because people are borrowing less and so are accumulating less debt) or as a negative sign. After all, one of the main reasons we’re taking out fewer loans and opening fewer credit cards as a nation is that lenders have tightened their standards and are less willing to offer us money.

The Fed’s numbers are especially telling when broken into their categories: while consumer debt overall decreased at an annual rate of 4.5 percent in May, revolving credit (which encompasses the vast majority of credit cards) decreased at a rate of 10.5 percent, and non-revolving credit decreased only at a rate of 1.5 percent.

The jury may be out on whether these numbers are good for the larger economy, but if you’re part of the trend of paying loans on time, keep up the good work.

Additional Resources

Credit Card Borrowing, Delinquency, and Personal Bankruptcy

Debt, Delinquency, and Consumer Spending

Even if you’re not involved in credit repair or debt relief, the ability to adequately budget affects your day-to-day and long term finances.  What’s so amazing about Mint is that they’re doing most of the dirty work for you.  You just enter in your online bank accounts and credit cards, and they’ll pull all of the vital information for you.

Most Financial Sites are Confusing

Most banking websites aren’t easy to use and credit card sites aren’t exactly helpful with trying to analyze where your money’s going.  The truth is that there’s no reliable way to examine all of my spending habits without manually entering information onto a ledger or spreadsheet.  But this is exactly what Mint is going to do for you.

Mint covers all that and more.  All you need to do is enter your credit card info, bank accounts, student loans from the federal government, even IRA’s.  Instantly you’ll have all of your account information stretching back a few years.  It’ll even organize your expenditures.  See how much you’re spending on entertainment or takeout food.

Taking a Hard Look at Your Spending

Most of our clients know that they’re credit profile isn’t exactly in tip-top shape, but what they don’t understand is why.  They know that they ran up a lot of credit card debt, but don’t even remember what they bought.  Mint is going to force you to take a look at what you’re spending your hard earned money on.

What too many people find is that they’re spending more than they’re making.  Not exactly a formula for success.  Now, it’s up to you to make the changes, some fancy internet site’s not going to do that for you.  But at least you’ll have an idea of what expenses are out of hand and need to be trimmed.

Creating a Budget

While it’s a powerful tool for analyzing spending habits, it’s even more helpful if you use Mint to put together a budget.   They’ll breakdown your spending habits month to month, set up savings goals and even tell you how much you have left in your budget for each category.

Again, just because you set up a budget using these tools, it’s entirely up to you to stick to your budget.  Don’t spend impulsively and don’t cut corners when it comes to your finances.  Create goals and utilize Mint.com to help you reach them.

Never a missed payment, never carried a balance even close to her $12,000 limit, and almost always paid off her balances in full.  According to her the bank called and informed her that she had one of two choices:

• See her interest rates go from 11% to 33%, or

• Close the account

So being responsible in her use of the one credit card that she’s opened is ultimately going to lead her to pay unreasonably high interest rates or destroy her credit profile.  She currently has an average credit score of 700 with the three major bureaus.  While not an exact science, closing this account would almost certainly put her below 600.

Why Would They Do That?

It’s simple really; the bank isn’t making any money off of her.  Banks make money through interest rates and fees.  If she pays off her purchases immediately, money’s not being made through interest.  If she’s never made a late payment or gone over her limit then the bank isn’t making money through fees.

I guess the argument from the bank’s point of view is that if she’s paying so promptly, then having to pay 33% shouldn’t really be any different from paying 11%.  But to punish someone when they should be rewarded is just a despicable practice.

A Rock and a Hard Place

Unfortunately there’s little that she can do in this situation.  If she closes the card, her length of credit history goes from over 8 years down to nothing.  The average age of your credit history makes up about 15% of your total credit score.  Even if she were to open another card to use as her primary card for convenience purposes, she’s still cutting those 8 years in half and lowering her score.

So she’ll be forced to grin and bear her interest rates tripling, or take actions that she knows will lower her credit score.  For all these new credit card and debit card laws that are supposed to be saving us from being swindled by our banks, it just seems like they’re going to find another way to stick it to us.

Obviously the nice woman I spoke to earlier isn’t alone.  Make sure you’re reading your credit card bills thoroughly.  If you’ve had something similar happen, feel free to give us a call to see if there are other possible options that don’t ruin your credit in the process.

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A Rainy Day Will Come

I spoke to someone today who was walking a fine line between prudent credit usage and being overwhelmed with credit card debt.  While he wasn’t exactly maxed out on his credit cards, he was running balances around 50% of the limit on his 2 cards and he wasn’t putting any money into savings.

Then the week from hell happened.  They say that bad things come in threes.  Well that was certainly the case for this guy.  First it was the check engine light.  Harmless enough, things like that are expected to happen from time to time.  So off to the mechanic he goes.  $860 later his car is fixed.  The payment would max out one of his two credit cards.

Then there were bugs.  Termites to be exact.  Literally within days of his car trouble, his wife found termites eating away at a tree very near their home.  He would later find that a colony was actually located in his home, eating away at the foundation.  Another $1,800 down the drain and another credit card at its limit.  And he has yet to get an estimate for possible structural damage.

Then the worst news of all came: his company, the business he’d worked at for years, was closing their doors.  That’s pretty much when the financial tailspin began.  He was the sole source of income in the house and now there were outstanding debts, a mortgage, car payments, and no income to pay for any of it.

That’s Why it’s Called a “Rainy Day” Fund

Don’t get me wrong, what happened here was the perfect storm of bad luck.  But this is why it’s so important to have money put away for when life’s unexpected events hit you in the wallet.  Even if you’re only putting away $10-$20 from every paycheck, it’ll add up.

You also want to keep your credit card balances as low as possible.  Don’t think of them as money you can pay back at a later point, but instead think of them as money that you can fall back on in the event of an emergency.

One of the major reasons that our clients are with us, whether it’s for the credit repair, the debt relief or usually both, is because they never planned for a financial emergency.  It’s going to happen to all of us.  Machines break down, people get sick, companies go out of business.  The question is, how prepared are you to deal with it when it happens to you?

The lien will remain in effect until all outstanding debt, penalties and interest is paid in full to the IRS.  However it’ll actually ruin your credit profile for at least 7 years.  The problem that most people face is that they simply tried to ignore the problem and it’s escalated to having a federal lien placed against their property.   If they’d simply talked to the government, or utilized debt relief to negotiate the debt, they could’ve avoided this whole mess.

Getting a federal tax lien released can be a real pain, so it’s obviously best to avoid it at all costs.  But if you’re already dealing with a tax lien, you’re going to want to get it released once you’ve satisfied the debt.

You’ll need to obtain the exact payoff amount that is owed to the IRS.  This amount is a matter of public record so it’s information available to you and the rest of the public.  You can get this by contacting the IRS.

Steps to Releasing a Tax Lien

Pay Off the Debt – In order to get a release of federal tax lien you need to pay off the outstanding debt in full.  Paying off your federal debt in full is the best option, but it might not be financially plausible.  If you need to set up a payment plan, negotiate something that you know you’ll be able to pay off each and every month. 

Sell the Property – You can also sell the property that holds a lien in order to pay it off.  You need to apply for what is called a Certificate of Discharge which will allow the sale to go through and the money goes to satisfy the outstanding federal debt.

File the Paperwork – Once the debt is paid off and the lien is satisfied you need to file a Request for Release of Federal Tax Lien directly with the IRS.  Don’t expect the government to do anything for you once you’ve paid the debt off.  If you don’t actively file this paperwork the lien will remain on the government’s books. 

Wait for a Reply – Once you satisfy your debt and file the proper paperwork for the Release of Federal Tax Lien, the release notice should take about 30 days to be issued.
 
Verify Everything – When you get the paperwork back and everything is complete.  Make sure that there are no discrepancies in what the IRS sent you.  You’ll also want to make sure that the listing on your credit report is 100% accurate.  If it’s not, credit repair can make sure that it is.

Without a budget though, most people end up piling up the credit card debt.  They need credit repair and debt relief when it all could’ve been avoided with some simple budgeting.

We’re always looking for tips on budgeting and on how to save money.  But when it comes to following those tips, it’s a different story entirely.  Maybe we don’t think it’ll really make a difference.  Maybe we’re just lazy.  Either way, here are some budgeting tips you won’t be sorry you followed.

Get Rid of Your Junk

If you haven’t used something in a few years, what are you holding onto it for?  Sell it.  I have family that pays hundreds of dollars a month for a storage unit.  When was the last time they were there?  Over 3 years ago.  Thousands of dollars down the drain.  They could’ve sold it and made money.  Whether you have a garage sale or sell it on eBay or one of the many other auction sites, sell those items that you no longer need and are just taking up space.

Log Your Everyday Expenses

It might seem a bit obsessive compulsive, but this will give you a clear picture of what you’re spending money on over time.  If you’re looking to save some money and trim some of the fat from your budget, this is where you’re going to find it.  If you’re serious about finding effective tips on budgeting, this journal of your spending will tell you everything you need to know.  

Drive Economically

With gas prices today you’re probably spending a lot more on gas than you need to be. Combine trips to try and save money on gas, time and wear and tear on your car.  Plus, if you’re anything like me, being out on the road just leads to me buying more “stuff.”  Stuff I probably don’t need.  

Pay Off a Savings Account

Think of it as a bill that you have to pay.  Even if it’s $10 every paycheck at least it’s something.  I know that doesn’t seem like much, but it adds up over time.  Having a little savings account can ensure that you don’t end up in debt.  When your finances take an unexpected hit, like the car breaks down, or you end up at the doctor’s office, you’ll have the money to see yourself through those rough times.  

The problem is that if absolutely anything goes wrong, loss of an income, unexpected medical or car bills, we don’t have enough money to pay it all off.  We end up needing debt relief or credit repair and are suddenly overwhelmed with credit card debt.

Anything that’s more than $1000 should probably be considered a major purchase.  So what I’m trying focus on here is how to save up for it instead of just impulsively buying.

Create a List – All the big ticket of items you plan to purchase.  Be sure to consider everything that might need replacing, like a fridge or the washer / dryer, other expensive necessities like your car, and even the things you don’t need, but want to buy.  Like that new HDTV or living room set.

Estimate the Cost – For of each item, understand exactly how much you’ll end up spending.  Ideally you want to make sure that when the time comes to make that purchase, you’ve saved enough to actually the afford it.  It’s best to overestimate to be on the safe side.

Use a Calendar – Put every item on the calendar with your ideal to-be-purchased-on date.  There are several ways to determine exactly when a purchase should be made.  Obviously, if the washing machine is on its last legs, its purchase date needs to be sooner than later.  You can’t always foresee the future, but generally you have a good idea of what’s brand new and what’s on its way out the door.

Do Some Math – Figure out how long you have to save for each item.  Each item you’re saving for becomes its own budget category.  Divide the estimated purchase price for each item by the number of months until it’ll be purchased.  You can estimate your monthly budget contributions for each item.