Spare Dollars

Help For Student Loan Debt

Jeff W — Wed, 01 Sep 2010 15:57:59 +0000

Help For Student Loan Debt

If you ‘re like the average college graduate, you’ve paid a steep cost to earn your bachelor’s degree. According to some studies, the typical college graduate has accumulated more than $20,000 in student loans.

This is never an easy debt to pay off. But when the national unemployment rate stands near 10 percent – which is where it’s been for months now – all this student loan debt represents even more of a burden. After all, it’s not easy to pay off that debt if you can’t find a job.

There is hope, though, if you’re overwhelmed with student debt. First, check for your loan’s grace period. Most student loans, at least those backed by the federal government, come with a grace period of about six months. This period kicks once students graduate. During it, you won’t have to make a single student-loan payment.

Of course, if you don’t land a well-paying job before the grace period ends, then it might be time to look at Plan B.

That’d be an income-based repayment program. Under such programs, college graduates who are struggling financially can apply to make much smaller student loan payments each month. Usually, the program allows graduates who haven’t found a solid job to make a loan payment that equals no more than 10 percent of their income. This can provide some sizable financial relief for struggling graduates.

To apply for the program, graduates will have to call the company that services their loan. It’s definitely a call that you should make if you haven’t landed a job. The program even comes with a bit of forgiveness, though you have to be in financial distress for some time: After 25 years, whatever amount of your student loans that you haven’t paid off will simply disappear. Yes, it will be forgiven.

Today’s college graduates are burdened with a historic amount of debt. Not only do they have to contend with student loan debt, many also graduate with a significant amount of credit card debt. Some studies indicate that undergraduates generate an average of more than $3,000 worth of credit card debt while working toward their degree. Add that to the already overwhelming amount of student loan debt that graduates face, and it’s no wonder so many students never want to step out into the real world.

No one wants to struggle with student loan debt. But those graduates who are should at least know their options. There are financial safety valves out there. Graduates just need to take advantage of them.

Help For Student Loan Debt

The Impact Of Debt On Getting A Mortgage

Jeff W — Wed, 01 Sep 2010 01:42:39 +0000

The Impact Of Debt On Getting A Mortgage

When lenders are looking at applications for mortgages, they consider a client’s credit history. Moreover, they consider the debt to mortgage ratio which determines if a borrower is likely to default on the loan. If you have many debts, the interest rates that the lender will offer will be higher compared to the ones that are offered for those borrowers who have no debt. The origination fees are also higher if you are in debt and you are looking for a mortgage. The debt that you have can also affect the down payment that you are required to put on the mortgage.

If you are looking for a mortgage and you are deep in debt, one of the best things you can do to avoid the high interest rates is to get out of debt as soon as you can. One of the best ways to get out of debt fast is by using debt consolidation services. During debt consolidation, all your debt payments are combined into one and you are able to make a single payment at lower rates. When it comes to debt consolidation part of the debt can be forgiven and the repayment terms can also be extended. Lower debt payments make it easier for you to make a down payment on the mortgage.

It is still possible to get a mortgage even when you have a lot of debt but this will depend on the monthly payments that you can afford to make. The lender will look at your monthly income and then determine if you can pay a minimum of $1000 each month for your mortgage. A large down payment makes it easy for you to get a house.

If you have filed for bankruptcy in the past, most lenders will advise you to wait for at least two years before you can apply for a mortgage because this makes it easier for you to get financing. This two year period also gives you time to make several payments on time so that they can be included in your credit report. This is very important because the lenders will look at the payments that you have made and whether they were made on time. You need to have at least 3% to 5% of the entire mortgage to put down when you apply.

If you find it difficult to come up with the down payment yourself, you can ask your family to help you out. Once your new home has been financed, it is easy to take out a second or third mortgage on it in order to pay back the money that you borrowed from your family.

For those who find it difficult to borrow money from family to get a mortgage, you can also get help from various programs that assist individuals to come up with down payments for a mortgage if they are debt. In some cases, you can use programs that offer grants and this is an advantage because you do not have to pay the money back.

The Impact Of Debt On Getting A Mortgage

Debt After Death: What Happens to Your Debt when You Die?

Jeff W — Wed, 01 Sep 2010 01:39:24 +0000

Debt After Death: What Happens to Your Debt when You Die?

Is someone responsible for your debts when you die? One of the most common questions that debtors have is what happens to that debt when they pass away. The common mistake is that people assume once they die that their debt is forgiven. Nothing could be farther from the truth. If there are surviving family members, your creditors can be held liable for the debt you left behind when you passed away. What you need to know is that your creditors don’t usually go after your survivor’s hard earned money. They typically go after your property or estate money in order to settle the debt.

Although this does not directly hurt your surviving family members by taking the money from them, it may prevent them from obtaining what you left them in your will or their inheritance. Fortunately, a number of states in the US have now placed limits on the amount of property and/or estate monies that a creditor can take. Despite these limitations, there are some cases in which these creditors will still try to obtain what you still owe them.

The only way in which creditors will forgive the debt is if there is no money or property as well as any other assets that they can take. However, in some rare cases, they may pursue the surviving family members in order to collect the balance you left behind when you passed away. This is typically happens whenever joint debt or joint property is involved. Since many married couples today have joint checking and/or savings accounts, it becomes possible for the surviving spouse to be held legally responsible for that debt, even if the debt was generated by the deceased.

How you can prepare

If the surviving spouse is financially unable to pay off old debts and handle the daily expenses of life this can create major problems and stress for them. Unexpected deaths are nearly impossible to prepare for, but there are certain things that you can do in order to be prepared financially should this happen. When you have debt, you need to discuss this with your family members by telling them what you owe and who you owe it to (creditors).

Not only does this make them feel that they are a part of your financial planning, it also enables them to start preparing for their own futures. If you become terminally ill, it is wise that you and your spouse (if there is one) start working on getting your debts paid off. Just be aware that if you decide to leave your assets to your children, other family members, or both that creditors will stop at nothing to get the money that is owed to them.

One of the best ways to avoid having your family members in and out of meetings with attorneys and creditors is to use your savings to pay off as much of your debt as possible. It can get pretty confusing when it comes to figuring out what happens with your debt when you pass away. However, you should still be aware of the above and plan ahead for it.

Debt After Death: What Happens to Your Debt when You Die?

Bad Credit Personal Loans

Jeff W — Wed, 01 Sep 2010 01:29:52 +0000

Bad Credit Personal Loans

Be careful with bad credit personal loans. You hear the expression “be sure to read the fine print” day in and day out. This is especially true when you are applying for credit, especially if you are trying to obtain a bad credit personal loan. Despite the fact that you may be currently getting turned down, don’t despair. Bad credit loans are available. It’s just a matter of finding the right lender that is willing to work with you.

Many banks or lending entities actually target people with bad credit and advertise this on a regular basis. Be aware of the fact that banks who offer bad credit loans will typically charge higher fees and interest rates which will enable them to be more profitable in the long run. Until you have improved your credit history by maintaining your monthly payments, banks and lenders that offer bad credit loans may be your only option.

Significance of having bad credit

If your FICO or credit score is 620 or lower, lenders label you as having bad credit. Unfortunately, the majority of the lenders who are willing to work with you are either internet-based lenders or some type of payday advance entity. If you can avoid going the payday advance route, you should because most of them are a trap and charge exorbitant fees to renew these loans every payday.

Features and requirements

Banks and lenders that offer loans to individuals with bad credit have certain features about the way they operate and usually impose additional requirements compared to traditional financial institutions. You need to be a minimum of 18 years of age and have a verifiable monthly income of $800 although some banks require $1,000 in monthly income. You may also be required to have an active checking or savings account and absolutely NO outstanding payday loans.

Key considerations

This is the part about always reading the fine print on any loan application and documents related to the loan. Banks that are high risk lenders usually charge origination fees and up to three times the normal rates of interest of the traditional lenders. Look for a prepayment penalty clause in the fine print because these are very common with lenders who offer bad credit loans. The bottom line is that no matter how tedious the task is, ALWAYS READ THE FINE PRINT!

Additionally, lenders that offer bad credit loans may include loan insurance fees, but usually you are given the option of having loan insurance or not. Another thing you want to be aware of is whether or not the bank’s fees and rates are tier-based. For instance, a loan of $2,000 may have lower fees and interest rates than a loan for $1,999. So that $1 difference can make a significant difference in the size of your monthly payment.

On a final note, if you are searching the internet for a bad credit loan, watch out for the fraudulent websites and the scam artists as they prey on those individuals who are searching for financial help with their situation.

Bad Credit Personal Loans

Five Credit Card Debt Solutions

Jeff W — Wed, 01 Sep 2010 01:24:56 +0000

Five Credit Card Debt Solutions

Nothing puts more stress on American families than being in debt to the point that they are struggling monthly to make ends meet. Recent American Banking Association statistics show that the average family in the US is carrying approximately $8,000 in credit card debt. Additionally, when you consider the pitfalls of having credit cards and using them, there really is no way to responsibly handle and use them. Naturally, the biggest disadvantage to having credit cards is that they are so easy to use and run up their balances.

If you have found yourself in a situation where your credit card debt is getting to the point that it is overwhelming and stressing you and your family out, here are 5 credit card debt solutions to consider if this is the case.

Start paying with cash – we call this step “going green”. Just remember that if you have high interest credit cards with large balances, making the minimum monthly payment accomplishes nothing. Stop using those credit cards and start paying cash for everything. In fact, and we know this is difficult, we recommend that you just cut them up and forget about having more than one or two at the very most to be used for emergencies only.

Think about robbing your piggy bank – if you have a savings account, you should consider what you can afford to take out and apply to your credit card debt. Despite the fact that the economy is unstable and there is ongoing market volatility, stop thinking about hanging on to your money because of job insecurity. Instead, consider the fact that if you are only earning a few percent interest on your savings account yet paying 15% to 20% on your credit cards, you’re throwing away your hard earned money.

Consider a second job – again, this may be a hard pill to swallow, but you may have no other choice if you want to avoid filing bankruptcy. If there is less money coming in each month than what is going out, your debt is only going to keep compounding. Find a way to increase that monthly income so that you can apply more to your debt.

Look into a payment protection plan – should you be concerned about losing your job or if you know this is an eventuality, then you should contact all of your creditors to see if they have a payment protection plan. Paying a few extra dollars a month now will ensure that your payments will be made for a while when you are out of work and looking for another one. It will help to protect your credit rating, but most payment protection plans do have a time limit to be aware of.

Try consolidating your credit cards – you can lower your overall debt by using a single low interest credit card to start paying off the higher interest ones. Either look for a lower interest credit card or inquire with one of your current creditors to see if they offer a balance transfer option.

Five Credit Card Debt Solutions

Does Debt Settlement Work?

Jeff W — Wed, 01 Sep 2010 01:21:54 +0000

Does Debt Settlement Work?

Debt settlement is a process in which you negotiate with creditors in order to pay less for your debts, eventually discharging them (paying them off). This typically happens with credit cards but is not exclusive to those types of debts. Usually, the creditor will require that you pay the settlement in one of two ways, either as a lump sum payment or paid off over a short period of time – less than a year in most cases.

The bottom line with debt settlement is that it is a way in which a person can relieve some of their debt load. In the past, unless the creditor had declared bankruptcy, credit cards rarely settled on a debt like this. But times have really changed. Credit card companies have changed their mentality and now reason that getting something is better than not getting anything at all.

Advantages and disadvantages

The obvious advantage of debt settlement is that you can drastically reduce the amount you owe, sometimes by as much as 70%. This enables you to get the debt paid off and avoid declaring bankruptcy. Debt settlement plans also enable you to create realistic goals when breaking down your plan. This enables you to stay motivated towards paying your debts off in a timely manner.

There are some disadvantages with debt settlement that you need to be aware of. First and foremost, once a settlement has been reached, you may have to make a lump sum payment shortly after the agreement has been made. If you don’t have the funds available to do this then debt settlement is not the right option for you. Occasionally, your creditors will let you pay the debt off in increments over a short period of time (see above), but usually once they settle, they want the entire amount quickly.

Another disadvantage is that the payment of the debt may be reported to your credit report as “paid/settled”, which is a negative because it tells other creditors that you didn’t really pay the debt in full. Until this particular debt is completely removed from your credit file, it will remain as a negative mark on your credit report which will affect the attitudes of future creditors should you apply for credit again.

Is debt settlement worth pursuing?

If your debts have gotten so overwhelming that you may be considering bankruptcy, debt settlement may be a way in which you can get out from under this by reducing the amount that you currently owe. If your credit has already been ruined or if you aren’t concerned about it getting ruined, and you have some money stashed away, debt settlement is a good option for you to pursue.

In order to start the process, contact your creditors and see if there is any way for them to reduce the amount owed if you can come up with the full payment in quick fashion. You can wait for them to call you, which they will do once you are late on a payment, so this is up to you.

Does Debt Settlement Work?

Credit Cards for Bad Credit

Jeff W — Wed, 01 Sep 2010 01:12:38 +0000

Credit Cards for Bad Credit

When your credit history gets dinged by late payments on your bills, you might be thinking that aren’t any viable options for getting a credit card. Over the past 12 to 24 months, many US consumers have seen their credit scores drop because of the economic downturn that we have been experiencing in this country. If you’re in this type of situation, don’t despair because there are credit cards for bad credit available to many consumers.

There are basically 3 types of credit cards that you can apply for and oftentimes be approved for when you have bad credit. These are:

Pre-paid credit cards – just as the name implies, you get out of this credit card what you put into it. It’s similar to a checking account in that you deposit funds into this type of credit card account.

Secured credit cards – these types of credit cards require that you deposit funds into a separate type of account (usually a savings account) which is used to secure your credit card account.

Unsecured credit cards – a regular type of credit card requiring no securing deposit into another interest-bearing account. The worse your credit score is, the lower your spending limit will be with an unsecured credit card.

What to watch out for

It can be pretty challenging when you start applying for credit cards when you have bad credit. Many people are unaware of the things you need to watch out for. Here are three aspects to be aware of when you are looking for credit cards for bad credit:

Bonuses and perks offered – first of all, many banks will advertise bonuses or perks to entice you into signing up for one of their credit cards. Although they may offer airline miles or even cash back bonuses, they typically have higher annual membership fees and interest rates.

Deposits required – deposit amounts will vary from one bank to the next. Depending on your situation, the deposit required may only be a few hundred dollars. However, it could also be as much as a few thousand dollars. So you want to do your research.

Conversion features – most of the time this feature allows you to convert from a secured credit card to an unsecured one after your payment history is maintained positively for several months. Interestingly enough, most banks that issue credit cards for bad credit don’t tell you this because they don’t want you to know that option is available.

There are some instances where you may be declined when you apply for credit cards for bad credit. Most of these instances are related to how bad a person’s credit history has gotten. In the worst case scenario, you always have the option of a pre-paid credit card. Most of the time, you get approved for these without the credit history check that secured and unsecured credit cards require. Additionally, you want to make sure that information you provide on your application is as accurate as possible.

Credit Cards for Bad Credit

Debt Reduction Software

Jeff W — Thu, 15 Jul 2010 14:00:01 +0000

The title may seem a bit out of the ordinary but in fact, there really is software that can help you reduce debt. Believe it or not, there is a wide variety of software available on the market that can help you in reducing your debt effectively.

Most importantly, there is actually a lot of software out there free of charge (there are still those that cost though so look out for them if you don’t want to pay a dime for the help). That means you can get help reducing your debt without having to pay anything for it. These software programs have been designed to help you take control of your finances by helping you organize your budget while at the same helping you use your money realistically and responsibly.

One of the best things about these software programs is that you don’t have to do the math yourself, you simply input the relevant information into the proper categories and it does the work for you. When you enter information as your expenses, it is deducted from the total amount automatically. You can enter deposits, which are added automatically as well. This is beneficial as you won’t mess up on the addition or subtraction as this is where many households run into money troubles due to bad math.

These programs will have a debt related account where you can input all the necessary information regarding your debt accounts. The total amount that you owe will be the intitial negative starting balance. When you make a payment, simply enter it into the system into the decrease or related column and it will be subtracted from the total amount owed.

A Few Debt Reduction Software Programs

One of the best free software out there is found at Billster.net. It is a free program service that allows for you to properly keep track of your monthly expenses, debt as well as income.

Wesabe.com allows you to share and receive information from other individuals who have been in the same financial situation as yourself. The actual service helps you in understanding your financials.

If you are already familiar with Microsoft Excel, then this one would be ideal for you. It is called PearBudget – it is a free spreadsheet for Excel that assists you in debt reduction based off of financial information entered into the system.

Yodlee.com is primarily a web-based program service that can help you plan for future purchased such as a car, home, or other expensive purchases. It is an excellent account compiler that brings all of your accounts together in one place, easy to find and read. You can now use this program to assist you in making a financial budget.

Mint.com (very similar to the above Yodlee in terms of account aggregation) is a great choice as well as they actually work with many financial institutions and credit card companies throughout the country, which will help you with the accounts that you currently have, possibly saving your hundreds of your hard-earned dollars.

Best Debt Relief Options

Jeff W — Thu, 15 Jul 2010 01:53:30 +0000

Our country is full of people in debt because we love to spend money that we don’t have. Once in debt, we regret our actions and want to get out of debt as quickly and painlessly as possible. There is no one that can disagree to that statement.

However, many people don’t want to take the actions and those few steps forward to rid themselves of their debt. If you are one of those people then you really should consider debt relief options as ridding yourself of the debt that you have incurred can really give you a true peace of mind and ease your stress. If you are someone that is ready to look at some of the most popular debt relief options then you are in the right place as I’m going to discuss with you some of those in this article.

When it comes to debt relief options, there are several that you have to choose from. You just need to choose the right one that suits your own needs as well as your financial needs. Pretty much there are five options. You can continue making your regular monthly payments that have originally been agreed on. You can opt for debt consolidation, debt management (or credit counseling), and debt settlement. The fifth and final option is bankruptcy.

The creditors will obviously want you to stick with the first option as interest rates will continue to be charged because of late payments. It really isn’t the most suitable option for anyone – you’ll be making minimum monthly payments for a long period of time and could possibly never see relief.

Normally when you opt for debt consolidation, you are paying very high interest rates and you have a loan that is the length of a mortgage loan – 15-20 years. While this may be the best choice for some; others it is not. Keep in mind that you practically have to borrow money for this to work and isn’t that how you originally got in this place to start with? My personal opinion is that you are only creating another problem for yourself.

Credit counseling is very popular among residents in the United States. You simply consult a debt management company and they’ll consolidate all of your debt into one monthly payment. That monthly payment is given to the debt management company rather than your creditors. This is an option chosen by many but isn’t always the best option for them in the long-term.

Debt settlement is a popular option among many that owe debt. You are able to settle with your creditors or negotiate a pay-off balance. This balance is a certain percentage of your full balance of your debts. This is probably the best option (at least in my eyes). You’ll find this is the shortest-term payoff that you can find and is probably the most suitable for your financial needs.

Your last resort should always be bankruptcy…never should this be the first debt relief option on your list. You will have to deal with personal and financial consequences. You should try to avoid bankruptcy at all costs – try all other options before making the decision to use this one.

How To Stay Debt Free

Jeff W — Thu, 15 Jul 2010 01:50:08 +0000

If you have already reached the point in your life where you have paid off all of your debt successfully then you must take certain measures to ensure that you stay debt free. You can’t just expect it to happen. Think about it…did you expect to get so far in debt in the first place? Probably not – no one expects it. It just happens. Why? We keep buying things such as furniture, cars, houses, etc. with loans rather than cash. It all just keeps building up until it is too much for us to be able to afford thus causing us to be in debt.

So, now that you have paid off your debt, you need to live debt free. This is not as easy as it sounds. In addition, if you thought paying off your debt was hard, this is going to be just as hard if not harder for some.

One of the most important things in order to be able to live debt free is to not spend more than you make each month. In other words, don’t go out and get a new credit card because you can. Don’t go out and finance a new flat screen TV because you are able to. This is what got you in debt in the first place, remember? Instead, save a certain amount (one that you can afford of course) each month and once you have reached the amount of that flat screen TV, purchase it outright with cash.

Determine how much of your income you need for your household expenses such as utilities and groceries. You should also include your mortgage payment and car payment here if you have it. Any monthly payment should be factored in. Take a look at what’s left. You need to put some of this back for savings – either in a safe, somewhere within the house that is secure, or in a savings account. I’m not saying put it all there and don’t splurge on anything. Just be responsible with your spending. Don’t spend money on something because you want it – only get things you need. My personal advice would be to save 30-50% of what’s left after you pay your monthly bills – the rest is up to you.

Why should you save? You never know when there might be an emergency. You may need to get to the doctor for an unexpected illness or you may run into car trouble and need to replace a major part on your vehicle. This money that you have saved up can really come in handy during these circumstances.

Remember, living debt free after you pay off debt is hard. It’s not an easy thing believe me but it can be done. You just have to stick to your plan, be consistent, and be determined to do what’s right for you and your family.