Tips for Getting Out of Debt (I)
Because the facilities that exist today to access credit, and a growing trend for consumption today, the debts are a problem that afflicts many people.
There are certain debts known as “good debt” that are helpful and even necessary to grow financially, for example, debts incurred to buy a home, to start or grow a business, or to purchase an investment.
But other debt, known as “bad debt” do nothing but prevent us grow financially as well get in a state of tension, for example, debts incurred by loans or personal loans for consumption.
If you are currently many “bad debts” and the situation will become unsustainable, then we show you some tips to help you reduce your debt or out of these:
Calm down
Getting to accumulate high debt may mean for many people an overwhelming and stressful situation, but to get out of debt is to relax the first requirement.
This requires you to put you in the worst case, i.e., think about what is worst that could happen, and know that whatever happens you’ll ever a place to live or at least know that never will go to debt prison.
Only with peace of mind is possible to have the clarity necessary for thought on how to reduce debts and therefore, instead of worrying about your debts, you get to devise a plan to get out of them and put into practice immediately.
Failure to continue to acquire more debt
If you want to reduce your debts and leave, you should certainly keep digging deeper, that is, you should certainly continue to acquire more debt.
You must resist the temptation to acquire more debt for consumption, and get into the habit of buying in cash and no credit, you must learn to buy after getting the money, not buy and then get it.
If at any time you do not have enough money to buy something, simply must not do, unless it is an emergency.
Control the use of credit cards
Due to its ease of use and high interest rates they charge credit cards are probably the main cause of the problem of debt that afflicts thousands of people today.
So if you want to reduce your debts or leaving, another important tip is to learn how to control the use of your credit cards.
This implies being aware that the credit cards should be used only in cases of emergency or out of trouble, and not to be charged as food, clothing or entertainment.
Some advice about credit cards are cut all the cards except one, pay them month for them to use, and pay on time to avoid late payment charges and increased interest.
Make a plan to get out of debt
To do this, the first thing to do is to list all debts you have right now, and with each debt, noted how much the interest rate that it costs each.
Then you specify how you get the money to pay those debts, for example, allocating 10% of your total income.
And then determine how you will pay the debts, for example, if you’re starting to pay more than those that are costing you (those with the highest interest rate), or by those with the lowest balance.
Credit Monitoring to Prevent ID Theft
Financial tools like credit monitoring aids that could help in early detection of identity theft allow you to quickly respond to suspicious changes in your credit. The rise of identity theft has also sparked interest in credit monitoring services. In reality, monitoring services only help you prevent identity theft after something out of the ordinary has happened with your credit file, e.g. a balance has risen unexpectedly or an inquiry has been placed on your report.
These services range from $50 to $180 a year depending on what’s being monitored (your credit score vs. all three credit reports) and who’s providing the report. Is the benefit worth the price tag?
A False Sense of Security. Signing up for a credit monitoring service doesn’t completely protect you. When you sign up for a credit bureau’s monitoring service, you’ll only be alerted to changes in your credit report with that bureau. If an identity thief opens an account with a bank that doesn’t report to that bureau, you may not find out until debt collectors start calling you. Even 3-in-1 credit monitoring isn’t foolproof because a thief can open accounts in your name that don’t require credit checks and aren’t reported to the credit bureaus. You might not be notified if the thief uses your social security number with a different name. Credit bureaus don’t link together accounts with the same social security number and different names.
Delays in business reporting to the credit bureaus also delay the time you receive a fraud notification.
Should You Pay For Credit Monitoring? In general, you don’t need credit monitoring. You’re better off putting that money toward your debt. Sure, it might only make a dent in your debt, but every little bit counts. There may be some situations that you might spend the money for credit monitoring. If you’re going through a credit repair process, it can be cheaper to monitor your credit score through a service rather than ordering your credit score every month. Watching your credit score lets you know if what you’re doing for your credit is actually helping.
A credit monitoring service can help you keep an eye on your credit after your social security number has been stolen and the thief is opening accounts in your name. Keep in mind, however, even in this situation, there may be less expensive and even free alternatives like freezing your credit report or putting a fraud alert on your credit report.
Visa, Mastercard and American Express
American Express cards poured into the financial market in the 50s. Visa and Master Card emerged around the same time and focused on the same segment, consumer credit. If we compare to the differences between the three types of cards, we see virtually no difference between Visa and MasterCard. But between the last two American Express and differences do exist, especially in the form of operational use.
Visa and MasterCard are essentially methods of payment. Never issued cards by themselves, but they reach agreements with local stations which are entities who ultimately issued the cards. Visa and Mastercard charge a commission to local authorities for the use of the payment system. These entities in turn charge their own fees to end customers. The cardholder never pay anything directly to VISA or MasterCard.
American Express operates one yet completely different. They issue their own cards under its own name and logo. They pay directly to the establishment that made the payment, less the commission. Express Amrerican promoting their products directly to brokers. Another important difference is that the Amerian Express coverage is much lower than the other cards.
Why People Into Debt?
The reasons for the indebtedness of the people vary greatly, but point out the most important causes. Procurement of goods and services which are generally not obtainable with current income of individuals. This is called “leverage.” Acquisition of financial assets: in Venezuela is very much in fashion buying debt bonds, so some banks are financing the purchase of the same to the persons and companies involved. Inability of being unable to bear the usual costs by the income it receives: this is what we call below net cash flow negative. In these cases, it is usually resorted to the use of credit cards or personal loans.
Emergencies: Accidents, illness, unforeseen repairs to the house or in the vehicles can significantly alter the budget of many families bringing the debt.
Lack of control: some people, and without the false sense of power that gives credit cards, incurring unnecessary debts. This is reflected in regular high balances on credit cards. Existence in the country of negative real rates, this means that banks offer interest rates for instruments of deposits, less than inflation, so people know intuitively that you purchase goods and services (first through money Cash and second through debt) in order to withstand the impacts of inflation.
Reduction of lending rates of interest: Complementing the previous section, low interest rates on loans to motivate and encourage people and businesses to borrow.
Obtaining bank references: Some people apply for credit cards bank for future contingencies, such as a house purchase. It is well known that hardly a bank grants loans for a significant amount of money if the person or company has no bank, especially credit cards.
Chargeability tenure travel: Many hotels, car rental agencies, clinics, and others, it requires a credit card customer, so do not possess it can bring problems to the person at the time of travel or have an emergency.
Extraordinary circumstances: for example, Christmas, weddings, birthdays, dismissal or resignation of the work.
10 Tips of Credit Cards
The advantages of using credit cards when shopping are many. However, to get the most use of all their profits and not get nasty surprises, you should bear in mind the following tips:
1. Pay attention to notices from your credit card company. As time passed, it may happen that have changed their interest rates, and is also common to decrease, increase or eliminate the number of shares with no interest financing on some products you purchase to pay.
2. Make a quick analysis of your financial possibilities before making a purchase with a credit card! Especially if you’re on vacation! Be aware of your limitations and concerns future savings to pay the balance of the month.
3. Check the summary of account, because banks and credit institutions sometimes make mistakes that are reflected in the summaries of payment do not want to pay for something that does not already purchased or to pay off!
4. Controls the validity of your credit card, with the aim that we will not reject in any store and spend an embarrassing moment.
5. Avoid using many credit cards and not lose control of the expenses that you incur.
6. The frequency and value of purchases that are making your children or people you trust who have an extension of your card Avoid unpleasant surprises!
7. Analyzes consciousness if the services offered by the bank or financial institution, via your card is truly necessary, such as travel accident insurance or medical care.
8. Keep your card and your PIN number in a safe place, these are the pillars on issues relating to credit cards and security.
9. Prevent theft of your identity when you shop online, for example, make sure that the website will offer transactions on secure servers. Taking into account this situation, prevent others from gaining access to your credit card number or password.
10. Compare the interest of your credit cards and assesses the possibility of canceling those with high interest, even if they offer attractive rewards program! These rewards are never compared with the interest that you apply!
