I’ve Paid For This Twice Already…

Frugal living and debt reduction tips for a better financial future. This is one family’s story.

Archive for the ‘debt reduction’ Category

Need to Get Out of Debt? Start a Business

Wednesday, September 25th, 2013

If you think that you’ll be able to get out of debt by simply paying your minimums each month, you are sadly mistaken.

Debt is by far the easiest thing to acquire, but when you’re ready to pay down your balances, it always seems to be an uphill battle. Of course, you could have avoided this situation all together my managing your credit cards better. But there’s no good in crying over spilled milk. You can’t turn back the hands of time, but you can take steps to right the matter. 

I know, much easier to say than do, especially if you don’t have a lot of disposable cash. Not that you have to accept debt. Sometimes, it’s all about a creative approach and stepping outside your comfort zone. Do you have a talent or interest? Why not turn this into a business and generate extra cash to pay down your cards. 

1. Choose something that you’re interested in

Don’t select a business simply because of how much you can make. A lucrative opportunity can certainly help you reach goals faster. But if you don’t have a strong interest in the business, you’re not likely to keep with it. 

For example, do you enjoy spending time with children? Perhaps you have education or teaching experience. A part-time home day care or maybe a tutoring business might be right up your alley. 

2. Get a marketing plan

Whatever business you decide, a good marketing plan is the best way to get your name in the public. There are several ways to promote your business – some free, some costly. Determine how much you can spend on marketing and choose approaches that fit your budget. Options might include placing flyers throughout your neighborhood, running a classified ad, cold calling businesses or maybe investing in direct mail. 

3. Use social media

The Internet can not only draw attention to your business, it offers an excellent way to interact with customers. The ability to satisfy your customers is one key to success. According to Matthew Roblez, an engineer and business leader, “Your most unhappy customers are a great source of learning.” 

Social media platforms, such as company blogs, Facebook, Twitter and other websites allow interaction with customers. You can promote and announce sales, plus receive feedback, which is an invaluable tool as you work to create a reputable brand. 

4. Don’t quit your day job

It takes time and patience for new businesses to get off the ground, and when your business finally generates consistent profit, don’t quit your job just yet. Remember your purpose – debt repayment. 

If you continue to work your day job, all income from your side business can go toward your debt. This can speed your debt eliminate efforts, letting you move on with your life sooner.

There are certainly ways out of debt, and you shouldn’t let lack of disposable income keep you from reaching your end goal. Get creative, look for ways to generate cash and be disciplined. The quicker you eliminate debt, the sooner you can enjoy peace of mind, plus a better credit score 

How to Avoid Hazard Debt

Friday, July 12th, 2013

The last few years have seen an increase in natural disasters, such as hurricanes, tornadoes, thunderstorms, wild fires, and earthquakes. These types of disasters haven’t been relative to one area or another, but they do have one thing in common – they’ve managed to destroy homes, lands, and the lives of people who have affected.

The worst part about all of this activity is the people who manage to live through it with their lives, but not much else. Certainly, the fact that they managed to live through a flood or earthquake with their lives is great–heaven sent–and we should all be thankful that we can at least say we’re living to see another day. However, once you get over the fact that you’re alive to live another day, you’ll realize that you’re living without the comforts of the home you once shared and the things within.

When it comes to rebuilding your life, it’s not unheard of for people to fall into debt faster and further than they were before. Think about it – you have nothing left and unless you’ve managed to squirrel away enough money to replace everything that you’ve lost, chances are, you’re going to start from the very bottom rung all over again, especially if you are victim to a disaster not covered by insurance. That in itself can be devastating and may leave you unprepared for what you need to do next.

So how do you avoid losing your home and everything in it?

Well, as with everything in life, you can’t always be prepared against every matter that comes along. However, when it comes to making sure that your home is truly safe, you need to get a hazard disclosure report to know the full extent of the damage that your house is susceptible to.

What is a hazard disclosure report? In terms of real estate, it’s the disclosure that an area is within a natural hazard area; realtors are legally required to disclose this information.

In the state of California, realtors are required to tell their home buyers about areas that are flood, earthquake, fire, and seismic hazards. This is true for any area that might be prone to different types of natural disasters, including hurricanes. Knowing about the area that your house sits in will help to minimize the damage that you can expect. For instance, let’s say that while house hunting you find a home that sits right in the middle of a flood hazard area; you can ask what the likelihood of a flood hitting your house could be.

This can help you decide if you want to actively purchase the home or if you want to go about flood proofing it. Just remember that if you decide to purchase a home in a hazard area, that you’ll most likely spend more safeguarding it, assuming that a previous homeowner hasn’t done so already. Just because your home is a ways from say, a wildfire hazard area, doesn’t mean it is completely out of danger.

Make sure that you are aware of just how far – or close – you might be to a hazard area. As California, Arizona, and Colorado residents are aware, summer time is worst for wildfires, with fires sometimes blazing further than anyone anticipated. Even earthquakes can have after shocks miles further from the epicenter, make sure you’re prepared for all contingencies.

Paying Off Debts –Which Ones Should be Paid First [Guest Post]

Wednesday, July 3rd, 2013

No one plans to go into debt, but many people wake up one day to find themselves in trouble. It’s an insidious problem that creeps up over time and is exasperated when an overused maxim is ignored – the devil is in the details. There are two important areas of money management that can help you keep your debt to a minimum. First are the small print details for each account that may contain snags that can compromise your efforts. Second is the way you prioritize the order of your payments.

The essential details of each financial account are included in the terms and conditions. This includes for saving accounts, where you hope to grow your money, credit accounts and other finance related agreements. While many people avoid reading the small print because they expect it to be too technical, it’s good to know federal laws have mandated that they be made clearer and easier to understand for the average American. Become educated about the effect these details could have on your finances or potentially pay the piper down the road. For example, credit card agreements generally charge a penalty for paying late. If you ignore the terms and repeatedly pay late, you’ll make little progress in getting out of debt.

The benefits of prioritizing payments may be less apparent. If you choose to make payments in an aimless way, you could end up making your situation worse, especially if you have limited funds. Planning the best order in which to pay your bills is highly personal and dependent on the types of bills you have, but there are some general rules that everyone should follow.

Number One Priority – Where You Live

Home is the center of our lives and the most important debt to protect. This should always be your first priority. Falling behind or defaulting on your mortgage or rent payments is the first step down a slippery slope that eventually ends in foreclosure or eviction, if left untended. Losing your home is one problem that is difficult to correct. Being habitually late in making payments will damage your credit score. In either case, landlords and lenders will be less than cooperative in getting you back into a new place if you find your self removed from a residence.
Two additional payments attached to homeownership that need to be included in your top priority list along side the mortgage or rent payments.
Property Taxes –An easy way to make sure your property taxes are paid is by adding them to your mortgage payment. If your mortgage holder doesn’t provide this service, pay them monthly as you do your cell phone or cable bill. Avoid waiting until the annual payment is due, unless you’ve been setting the payment aside during the year. A year’s worth of taxes is often substantial and a burden that can be eased by planning ahead. Laws set in place allow a tax lien to be imposed on your property to secure the payment of taxes. This will make selling the property impossible until the taxes have been paid in full.
Property Insurance – Not necessarily a debt, but an essential payment to protect your investment. Lenders and landlords require insurance coverage to protect their investment and property. As long as you carry a mortgage with a bank, the loan is contingent on your home being properly insured.

Asset Backed Debts

Loans that are approved based on collateral that you’ve agreed to put up is the second on the list of priorities. These include loans for real estate, automobiles and luxury items like jewelry and boats. If you fall too far behind, the lender can repossess your asset, resell it and still expect you to make good on the loan – leaving you with a bill for a product you no longer have. In the case of a car loan, there may be additional unintended consequences of not only the loss of transportation but it may put your job in jeopardy.

Income Taxes

The IRS has the authority to put a lien on your assets, if you fail to pay your taxes. So your home, the boat you love, the hunting cabin in the woods, even the money in your bank account can become the property of the U.S. Government. They also have the legal right to garnish you wages to pay your taxes. And don’t forget about your state taxes; they too will garnish you wages, take you to court and place liens on your assets to recoup the tax revenue you fail to pay.

Federal Student Loans

Most of your debts may be dissolved when you declare bankruptcy, but not student loans. It’s the one obligation that will never go away through bankruptcy. The IRS has the authority to withhold your tax refund and apply it to your student loan debt. Your wages may be garnished and you could lose out on other opportunities to use federal loans for further education or subsidized loans for housing.

Medical Bills

Unpaid medical bills can ruin your credit rating and result in your wages being garnished or a lien placed on your assets. If you’re finding it difficult to pay your medical bills, many healthcare facilities will help design a payment plan that works with your situations. If you ignore your obligation to pay your medical bills, the account may be sent to collections to attempt to get you to pay up. If that isn’t successful, you may be sued for payment.

Unsecured Debts

Unsecured debts like credit cards may be last in our list of payment priorities, but don’t be confused in thinking that this type of debt is less harmful when neglected. Always make the minimum payment or more on all unsecured debts. Miss a payment and the credit card company will attempt to coerce you to pay. Failing, they will send the account to a collection agency to try again. In the worst-case scenario, the card issuer may sue you and ask the court for permission to take your assets or garnish your wages.

A list of payments priorities will help to keep you organized and focused on what’s important but should never be seen as an invitation to avoid your responsibilities. There’s just too much on the line that can impact your financial future. Always honor your debts, even if you can only make a small payment each month.

Noreen Ruth is a writer for www.debtomg.com and multiple financial blogs and websites. She strives to provide readers with the most up-to-date information on debt management, credit services, saving money and other financial issues. Her goal is to help educate consumers about topics that may impact their ability to manage their credit/debt responsibly.

Preventing Wage Garnishment

Monday, June 17th, 2013

As you are navigating your way out of debt, one of the pitfalls you could encounter is getting behind on your payments. In the best case scenario, you can get current then work your way toward paying off that debt. But, it is also possible to get so far behind that the creditor actually takes you to court and gets a judgment against you.

If the creditor succeeds in getting a judgment then you could be responsible not only for the amount due, but for the court costs associated with the judgment. If you don’t pay the judgment, the creditor has the right to collect the money by garnishing your wages.

While a wage garnishment might pay off that one debt, it can make it very difficult for you to get on track with any other debt, and even create a domino effect where you end up falling behind on your other debts.

If you are dangerously behind on a debt and either in danger of having your wages garnished, or already in garnishment, there are ways to find relief.

Before Garnishment

Try to negotiate with the creditor. In some cases the creditor might accept a settlement that is less than the total amount due. This settlement could be a percentage of the total due, or it could be the total minus interest or fees. It really depends on what the creditor is willing to accept.

If the creditor is unwilling to negotiate with you, consider talking to a debt consolidation company or a mediator. Both debt consolidation companies and mediators can negotiate with all of your creditors to lower the amounts due.

A debt consolidation company can either loan you the money, then have you pay them back each month, or they can set up a payment plan and divide the payments amongst your creditors.

A mediator will generally negotiate for a lump sum payoff, or for a payment plan of two or three large payments to eliminate the debt.

If the creditor has already started legal proceedings, it may not be willing to negotiate with a debt consolidation company or mediator. In that case, you should consider contacting a lawyer to negotiate with the creditor on your behalf.

A lawyer can either negotiate a payment plan with the creditor, or start bankruptcy proceedings. Either process can stop all legal proceedings and stop wage garnishment before it starts.

After Garnishment

If you have already had your wages garnished, your best option is to contact a law firm that specializes in dealing with creditors. This is because once a creditor gets a court order to garnish your wages, it is almost impossible to stop it.

A lawyer can either work with the courts to have the garnishment removed, by proving it creates an undue hardship, or start bankruptcy proceedings to stop the garnishment and eliminate any remaining debt.

If you are having difficulty managing your debt, the worst thing you can do is ignore it, or let the situation continue. You are better off at least attempting to work with your creditors to reach a resolution. If you can’t reach a solution on your own, then call in a professional to help.

Even though a lawyer or a debt consolidation company might cost you money, it is significantly less than you would pay in court fees, and you’ll get to keep your paycheck intact. Additionally, by negotiating with your creditors, there’s a chance that you could settle for a lesser amount and pay off that debt. Once the debt is paid off, you’ll have extra cash to put toward paying your other debts.

Staying Afloat Financially in Times of Crisis

Thursday, June 6th, 2013

While it is easy to keep a budget and save when things go according to plan, injury and illness quickly wreak havoc on even the most well-maintained finances. Medical bills balloon out of control easily. And, if injury or illness is severe enough, time off work may be necessary. If you cannot work to maintain a paycheck as you recover, medical bills and day to day living expenses may grow to an unmanageable amount rapidly.

Emergency Fund

Though it is never easy, maintaining sound financial footing in times of crisis is possible. You will need to create an adequate savings throughout your life to safeguard against unexpected expenses. While it hurts to draw funds from your retirement savings on unanticipated expenses, having an emergency account to pull from in times of crisis helps avoid incurring heavy debts.

Social Security

You pay into social security with the intention of getting paid upon retirement. However, if you become injured or mentally ill, you may be able to claim your social security benefits early. Approval for SSDI and SSI claims vary on a case by case basis, but generally you need to prove the existence of an impairment, either physical or mental, that prevents you from working.

Life Insurance

Like Social Security, some life insurance policies will pay out in the case of traumatic injury. Check and update your life insurance policy to ensure that you are covered in case the unthinkable occurs.

Workers Compensation

If you experience injury on the job, you might be entitled to Worker’s Compensation. Worker’s comp insurance provides wage replacement in the event that an on the job injury prevents you from continuing to work.

Secondary & Supplemental Insurance

Primary healthcare insurance will cover a large portion of your medical bills, however secondary insurance companies like Aflac also provide insurance money to pay for cost of living expenses like food, rent, and utilities in the event that you are temporarily out of work due to injury. If you participate in high risk hobbies like skiing or motorcycle riding, carrying supplemental insurance can keep you afloat should you incur a severe break or knee injury.

Negotiate Bills

While medical bills easily grow out of control, most hospitals have payment programs and grants to help those who cannot pay out of pocket beyond their insurance coverage. Before condemning yourself to a lifetime of medical debt, call the hospital bursar to see if arrangements may be made to pay over time or if costs may be reduced.

Do negotiate your bill ahead of surgery if possible, or at least promptly once an invoice arrives. Late fees can easily double and triple your medical cost if bills are not resolved in a timely fashion.

Once your invoice arrives, be sure to check it for accuracy. You may be able to reduce your out of pocket costs by making certain your are not overcharged for procedures and that your medical coverages has been appropriately applied.

If the unthinkable happens and you become unexpectedly injured or ill, take care to exercise all of your financial options. Quick response and research of your financial options give you the opportunity to keep your financial situation up right even during trying times. The sooner you address your financial challenges the less likely you are to incur penalties or find yourself under water.

Take proactive steps to insure that you keep your finances in check. If you find yourself struggling to understand terms or procedures, enlist the help of a professional to help you stay on course.

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