Search results for debt reduction
-
Posted
Sep 18 2009, 07:21 AM
by
Karen Datko
Rating:
Money Blog: Smart Spending Blog - MSN Money
This post comes from partner blog The Dough Roller.
Here is one of the most frequently asked questions in all of personal finance: "How do I get out of debt?" At one level, eliminating debt is simply about following a few steps:
- Stop going into more debt.
- Spend less than you make.
- Pay off debt with the difference.
If you follow these steps, eventually you'll be debt-free. The problem is that following these steps isn't always so easy. And to make matters worse, there is a lot of "help" out there that can make matters worse. From debt-consolidation companies to books like Kevin Trudeau's "Debt Cures," which I wouldn't recommend to my worst enemy, there are a lot of promises being made that getting out of debt is easy. It's not.
In fact, tackling your debt may be one of the hardest things you'll ever do. You have to control your emotions, which can play a big part in how we make financial decisions. You have to educate yourself about everything from home loans to credit cards to credit scores. And you have to discipline yourself in the way you manage and spend money.
The fact is that controlling your spending and paying off your debt is not an easy thing to do. But the good news is that you can do it. If you want to be debt-free bad enough, you can make it happen.
To help you reach your goal of being debt-free, I've assembled a list of 23 tips and tools. If you know of others, please leave a comment at the bottom of this post.
Read More...
-
Posted
Aug 31 2009, 11:22 AM
by
Karen Datko
Rating:
Money Blog: Smart Spending Blog - MSN Money
TMZ, the news source for all things Michael Jackson, expressed amazement that MJ had terrible FICO scores.
"Here's a shocker -- Michael Jackson had an abysmally low credit score," said a story at the Web site. In 2007, TMZ says it has learned, Jackson's scores from the three major credit bureaus were 592, 524 and 575, averaging out to just under 564.
It's really no surprise, considering his well-documented ultra-extravagant spending and financial woes, including the fact that Neverland Ranch nearly slid into foreclosure. But there's a lesson for everyday people in the specifics that caused the King of Pop to have poor scores.
Read More...
-
Posted
Aug 13 2009, 02:16 PM
by
Karen Datko
Rating:
Money Blog: Smart Spending Blog - MSN Money
If you are burdened by debt, you're more likely to be overweight than someone who's debt-free, a new study indicates.
The German research, reports Christy Harrison at Gourmet.com, suggests several possible explanations, including this one: "Energy-dense foods such as sweets or fatty snacks are often less expensive compared to food with lower energy density such as fruit or vegetables."
Another possible reason is -- no surprise here -- food can be comforting when you're distressed. (And thanks to Kris at Cheap Healthy Good for the link. BTW, her favorite comfort food is Kraft mac and cheese.)
Read More...
-
Posted
Aug 05 2009, 07:27 AM
by
Karen Datko
Money Blog: Smart Spending Blog - MSN Money
This guest post comes from "vh" at Funny about Money.
Over at I've Paid For This Twice Already, "paidtwice" invites her readers to think about the relative importance of paying off debt or building savings. Which should be a person's top priority? It is, as she points out, not a clear-cut decision.
Some people say that there's "good debt" (such as home and student loans, owed on property or training that eventually returns more than you pay -- supposedly) and "bad debt" (everything else, especially credit cards). I personally would argue that there's only debt, and debt is slavery. Debt forces you to stay in the traces until you pay it off or until you die, whichever comes first. Over at Debt Kid, "Jessica W" describes experiencing the same revelation.
Freedom from debt is freedom to live as you choose. Period. If working brings you personal fulfillment, you can do it -- and a debt-free worker is one who has a great deal more disposable income (to say nothing of more options) than one who labors under the lender's lash. If you want to retire or devote your energy to low-paid but altruistic work, debt freedom will make either of those choices possible.
I've used savings -- in direct contradiction of advice from money advisers -- to pay off debt and never once regretted it. Here's why:
Read More...
-
Posted
Jul 16 2009, 06:27 AM
by
Karen Datko
Rating:
Money Blog: Smart Spending Blog - MSN Money
This post comes from Trent Hamm at partner blog The Simple Dollar.
A reader asked me if I could break down my ideas into a handful of principles. After some careful thought, I came up with a list of 14 basic rules that summarize my money and life philosophy. I'll be presenting these as a weekly series.
Rule No. 4 is: Eliminate (and avoid) high-interest debt -- about as subtle as a sledgehammer, of course. Many of you started visiting The Simple Dollar because you came to this realization on your own: High-interest debt is a terrible idea, and even low-interest debts are a terrible idea. Let's count the ways.
- The higher the interest rate, the more money you lose with nothing in return. Leave a $1,000 debt on a credit card with a 5.5% APR for a year and you lose $55. Not good. But if you bump that amount up to a level that's typical for credit cards -- say, 19.9% -- and you're up to $199 a year. Gone. Poof. Vanished.
- The higher the debt level, the more money you lose with nothing in return. So, you have $1,000 of debt on a credit card with a 19.9% APR and you lose $199 a year. Bump that up to $5,000 and you're losing $998 a year. Gone. Nothing in return.
- You're open to late payment fees, over-limit fees, annual fees, ATM fees, cash advance fees, and countless other drains on your money. If there's a way to ding you, credit card companies will figure out how to do it. A fee here, a fee there, and you're suddenly watching even more money evaporate with nothing in return.
Read More...
-
Posted
Jul 13 2009, 07:58 AM
by
Karen Datko
Rating:
Money Blog: Smart Spending Blog - MSN Money
This guest post comes from "vh" at Funny about Money.
If you're in debt, you're not alone. AARP recently published the results of a poll (.pdf file) in which respondents were asked what proportion of their monthly income their monthly debt obligation amounted to.
Nineteen percent of adults under 50 said they owed more than their monthly income. That's almost one in five Americans. We old buzzards weren't much better off: 14% of people 50 and older were in the same boat.
Among the younger set, 24% saw about three-fourths of their monthly income go to debt service, and 25% spent about half their income on debt. An incredible 26% of us dinosaurs said we spent 75% of our pay on debt.
Read More...
-
Posted
Jul 09 2009, 06:28 AM
by
Karen Datko
Money Blog: Smart Spending Blog - MSN Money
This post comes from Trent Hamm at partner blog The Simple Dollar.
Mitchell writes in:
Currently, we have around $100,000 in credit card debt and we're having a very hard time making the interest payments. How can we consolidate that debt and get a lower rate? Should we go to our credit union?
Mitchell is falling into the same trap that I see a lot of people who e-mail me falling into. To put it simply, they're just prolonging the inevitable -- putting off the necessary changes in their lives because they don't want to face it. They want to keep living their life as it is now.
I know all about this. For years, I did it myself. From 2003 to early 2006, I racked up tons of debt, and near the end of that period, I was concerned not with actually fixing the problem, but with thoughts about how I could move the pieces around to keep the game going.
My thoughts weren't directed toward the choices I was making to create that debt. I was instead thinking about how I could use tricks to not have to face those choices.
Read More...
-
Posted
Jun 17 2009, 06:01 AM
by
Karen Datko
Rating:
Money Blog: Smart Spending Blog - MSN Money
This post comes from Silicon Valley Blogger at partner blog Wise Bread.
I have a couple of friends who live by their credit cards. Unfortunately, while they both have lower-income jobs and live in survival mode, they continue to participate in a financially detrimental pastime -- shopping without remorse. They've been enjoying the good life on very modest incomes and consequently are now swimming in credit card debt with balances in the five figures.
I've gently reminded them over the years that they need to clamp down on their shopping activities and instead focus on more-affordable ways to spend their time. But they complain about how tough it is to drop a "bad" habit. I personally feel that it's harder to drop pounds than it is to drop a spending habit and cut costs, but in both situations -- whether you aim to lose weight or reduce your debt -- you'd want an action plan that works.
So how about we go through some suggestions on how to escape the clutches of credit card debt?
Read More...
-
Posted
Jun 05 2009, 06:24 AM
by
Karen Datko
Rating:
Money Blog: Smart Spending Blog - MSN Money
This post comes from partner blog The Dough Roller.
You've probably heard of "good" debt and "bad" debt. Good debt is when we borrow to buy something that generally goes up in value, like a home. Bad debt is when we borrow for anything else, like a car, a boat, a meal, a dress, a cruise, a wedding and so on.
Many teach that good debt is fine, while bad debt is not. The theory goes that good debt makes us wealthy as the value of our purchased assets goes up, while bad debt makes us poor as we struggle to pay debts for which we have little to show. In fact, it's a philosophy I've followed my entire adult life.
And it's flawed.
Read More...
-
Posted
Jun 01 2009, 05:31 AM
by
Karen Datko
Rating:
Money Blog: Smart Spending Blog - MSN Money
This post comes from J.D. Roth at partner blog Get Rich Slowly.
Some people never take control of their finances because they're afraid that doing so would require them to give up everything they enjoy. I don't believe that's true. Getting out of debt requires hard work and sacrifice, but that doesn't mean you can't have fun along the way.
Aaron recently sent the following e-mail:
You paid off $35,000 in debt in just over three years. Does that mean you were (completely) dedicated and had no frills and were dour-faced the whole time? Were you using every spare penny to pay debt? Did you give up all luxuries and all fun? Did paying off the debt consume you?
That's my greatest fear about the whole thing. What makes it worse is that I'm serious about getting out of debt -- I just don't want to be miserable in the process. Especially since I'm going to be married soon.
Any encouragement you can give would be greatly appreciated.
When a person decides to make a lifestyle change -- financial or otherwise -- there's a temptation to GO ALL OUT. With the zeal of a new convert, you leap headlong into a life of thrift, for example, giving up everything you valued before.
There's a problem with this.
Read More...
More Posts Next page »
|
