How To Become A Money Management Pro

become a money management proDo have friends or colleagues at work who just seem to be amazing at money management? You know the ones we mean. They’re saving money religiously every month for retirement but still have enough money available to take nice vacations or send their kids to private schools.

Stop envying them

You don’t need to envy these people because you can become a money management pro yourself in just a few months. All it really takes is planning and some self-discipline and you could soon become the money manager that other people envy.

Where managing money all starts

The best place to start is to go off alone somewhere quiet, sit down and decide your most important goals. It could be a month-long vacation in Tahiti, a golden retirement or a second home. In fact, it doesn’t really matter what your goals are so long as you can list them. Next, calculate how much it would cost to achieve your goals and set some timelines for accomplishing them.

For those big goals like a great retirement or second home, you might want to create some smaller steps that would get you there. As an example of this, a first small step towards getting that second home would be to set up a savings account specifically for it, while a second step might be arranging to have money automatically transferred from your checking account to that account every month.

The next step in becoming a money management pro

Now that you know your goals and how much money you will need to achieve them, you might want to spreadsheet everything. You could then sit down and update it every month and see the progress you’re making towards realizing your goals. This can be a powerful motivator to keep you on track.

Create a spending plan

The reason why most people do a poor job of managing their money is that they have no plan. It simply becomes that old cycle of money in/money out – until they reach the end of the month or run out of money. If you want to be a money management pro you need to track your spending for three or four weeks. The reason for this is that you can’t manage your money until you know where it’s going.

Once you have a detailed list of your spending, you should organize it into categories such as food, clothing, entertainment, dining out, insurance, debt payments and so forth. Then start looking for what are called “leaks” or those areas where you could reduce your spending. The best places to look for leaks are food, dining out, clothing and entertainment. However, depending on your lifestyle you may find other areas where you could cut costs without having to sacrifice much.

It’s a lot to easier to do this than you might imagine thanks to the apps and software available today. We especially like Mint.com and Manilla. Mint was the Mac app store Best of 2012 and for good reason. It’s a nice, simple app that that will track your spending and then show you how much you’re spending in each of your budget categories. It includes personalized budgeting tools that can help keep you on track. For that matter, if you overspend in any category, Mint will send you an alert via email. It will also alert you if it finds a financial product that’s better than one you’re currently using (think credit cards).

Manilla is another well-regarded financial organizer designed to help you manage everything from your credit cards to magazine subscriptions. Manila keeps all your information in one place and provides reminders of bill payments. It will even monitor your travel reward points. With Manilla, you always know exactly how much money you have and how much you owe. This can be a godsend in terms of planning for upcoming bills and other expenses – and without having to paw through stacks of paperwork.

Automate everything

Smart money managers don’t spend a lot of time writing checks to pay bills or making transfers between their various bank accounts. You should do what they’ve done which is automate everything by paying your bills electronically and by arranging automatic transfers from your checking account to your savings accounts and investment accounts. That way you would never have to write another check to pay for your utilities, cable bill, automobile insurance, etc., but you would also never miss a payment. That alone could take much of the hassle and stress out of your financial life.

Review your insurance policies at least annually

Last but certainly not least take some time at least once a year to review all of your insurance policies to make sure that you don’t end up experiencing a very unpleasant surprise. You’ll want to make sure your liability limits are high enough to protect you in the event of an automobile accident and that you have all the appropriate coverage. If your family situation has changed, you may want to update your life insurance. If you don’t have term life, you should get some. It’s a great price/value and would be a great way to protect your family in the event that something happens to you.

Follow these money management tips and you’ll be on your way to better finances, peace of mind and more money in the bank.

Follow This Plan To Get Out Of Debt

plan to get out of debtAre your creditors calling you because you’ve missed, well, a few payments? Are those unopened envelopes on your desk credit card statements? Have you actually lost track of how much you owe your various lenders? Do you really want to get out of debt and get those creditors off your back?

Believe it or not, there’s a simple answer.

Just get organized and pay them off.

Sound too easy?

It really can be easy. But it all starts with getting your debts organized and facing up to them so you can get out of debt and enjoy some happy endings

Here’s a proven plan to get out of debt

Make a spreadsheet of what you owe

The best and easiest way to get your debts organized is by using a spreadsheet. If you don’t own one like Microsoft Excel, you could use Google Docs or OpenOffice.org. Both of these programs are free and include spreadsheet programs.

We suggest you organize your spreadsheet into five columns. The far left-hand column should be the name of your creditor, followed by the amount you owe, the minimum payment required, the day of the month your payment is due and if appropriate, the number of months you are behind in your payments.

There, that wasn’t so hard was it?

Now, sort your spreadsheet by your balances or the amounts you owe on your debts with least to most. You should end up with a list of your debts organized from the one with the lowest balance down to the one with the highest.

Make a budget

Okay, you now have your debts organized. Your next step is to make a budget. To do this you will need to track your spending for at least several weeks. This is much easier than you might think because there are a number of free apps available that can make this a breeze. We like Mint and DollarBird though there are many others available that will do the job. One of the reasons why we like Mint is because it will automatically organize your spending into appropriate categories such as clothing, entertainment, dining out, food, utilities, debt payments and so forth. Once you have this information in hand you should be able to find areas where you can make cuts. The objective here is to reduce your spending by at least 20% so that you will have more money available to get out of debt.

Go back to your spreadsheet

Go back to your debt spreadsheet and start paying down the debt with the lowest balance using the money you’ve freed up by reducing your spending. Once you’ve paid off that debt, you will have even more money available to begin paying down the debt with the second lowest balance and so on. People that owe as much as $20,000 have been able to pay it all off in just 27 months using this method. The financial expert Dave Ramsey, which he calls the snowball method of paying off debt, created it.

Hit the phone and negotiate with your creditors

You may also want to negotiate with some of your lenders to get concessions. As an example of this, you could contact your credit card companies and ask for a reduction in your interest rates or monthly payments or to skip your payments for a few months. While this might surprise you, credit card companies are often willing to work with you, especially if you need to catch up on your payments. They may not be willing to give you all the concessions you request but they should be willing to do something to help you get out of debt.

If you’re really in over your head

If you owe $7500 or more on unsecured debts like credit card debts, medical debts or personal loans and are a few months behind in your payments, there is another solution to get out of debt. It’s called debt settlement or debt negotiation and it’s something you could do yourself – if you have good negotiating skills and the cash on hand to pay off your settlements.

Most people are not so fortunate and choose to contract with a professional debt settlement company such as National Debt Relief. There are several advantages to this. For one thing, the professional debt counselors at companies like National Debt Relief are very skilled and are usually able to negotiate much better settlements then you would be able to yourself. Second, once you contract with a debt settlement company it will contact all of your creditors and order them to stop calling or harassing you. The same is true if you are being harassed by a debt collection agency.

Another advantage of debt settlement is that it is a form of debt consolidation. This is because once the company settles your debts you will be presented with a payment plan. Assuming you approve the payment plan you would then have just one payment to make a month and anywhere from two to four years to complete it, after which you would get out of debt and enjoy some happy endings.

Is Do-It-Yourself Debt Settlement A Hit Or A Myth?

Did you wake up this morning thinking to yourself, “Oh my, what am I going to do about all those credit card debts?” Or maybe you didn’t even have to think about them because you’re constantly receiving calls from debt collectors about your past due bills. Many people have described being seriously in debt as like being on parole from prison. You may be free to walk around but there’s always that that little voice in your head reminding you that you’re not totally free.

Is debt settlement for real?

You’ve heard or seen advertisements for something called debt settlement, which is where you pay your lenders less than you owe and they agree to forgive the rest of your debt. That can sound like a very attractive option but could you settle those debts yourself or do you need to hire a debt settlement company?

Yes, you can settle your debts yourself

debt settlement means arguing with creditorsYes, it’s a fact that you can settle your debts yourself. Thousands of people have done this very successfully and saved millions of dollars in the process. But before you decide that debt settlement would be your salvation there are some important things to understand.

First, you’ll need to make a complete and detailed list of all of your debts so that you can decide which ones to negotiate first and what you want a request from each of your creditors. Your list should include the name of your creditor, the amount you were supposed to pay each month, the debt’s interest rate and its outstanding balance.

Next, you’ll need to decide which debts to focus on first. They will probably be your “fixed” debts such as your mortgage or past due rent, your automobile loan, your utility bills, any past-do federal taxes and your federal student loans.

NOTE: you cannot settle secured debts like mortgage or auto loans. The lender can simply repossess the asset if you default.

Determine your objective

Once you’ve decided which debts to focus on first, you need to decide what you want to ask from each of your lenders. For example, you could ask your mortgage company to lower the amount of your monthly payments on a temporary or permanent basis. Or you could ask for a reduction in your interest rate or that you be allowed to make interest-only payments for a while.

If your goal is debt settlement

In the case of non-secured debts your goal might be to settle them for much less than you owe. In this case you will have to stop making payments on the debts you want to settle for something close to six months. This is because very few lenders will be willing to negotiate until you are that far behind in your payments. Second, timing becomes crucial because after six months many lenders will sell off your debts to third parties such as collection agents. Once this happens, it becomes impossible to settle with your initial lender. Instead, you’ll have to try to settle with the collection agency.

Another consideration is if you are able to successfully negotiate a settlement you will need to have the cash on hand to pay for it as in most cases this is what the lender demand. There are instances where you might be able to negotiate a payment plan. But one of the biggest bargaining chips in debt settlement is if you can offer to pay off the settlement immediately either by wire transfer or cashier’s check.

Why would a lender ever agree to this?

While you might think that it wouldn’t be in a lender’s best interest to settle with you it can be. There’s the old saying that half a loaf is better than none and this is why a lender would settle with you – that if they refuse to settle you might declare bankruptcy and they’d get nothing.

The third most important thing you need to consider in debt settlement is your negotiating skills. Do you see yourself as a good negotiator? This definitely takes certain skills and not everyone possesses them.

What if you don’t want to negotiate with your creditors?

You’ll remember that earlier in this article we posed the question, ” do you need to hire a debt settlement company?” For some people hiring a BBB accredited company like National Debt Relief to settle their debts for them would be a better option. For one thing, when you hire a debt settlement company you don’t have to be prepared to pay off your settlements immediately.

Instead, you would send funds to the settlement company, which if it were an ethical one, would deposit it in a trust account that you control. When the company successfully negotiates a settlement, you then release the funds necessary to pay for it.

A professional debt settlement company has counselors that are skilled and experienced negotiators. The odds are that one of them would be able to negotiate a better settlement then you could yourself.

Debt consolidation

Most people are unable to deposit enough money to their trust accounts to pay for all their settlements. If this turns out to be true for you a professional debt settlement company will offer you a payment plan that would allow you to completely pay off your remaining debt in two to four years – depending on the original size of your debt. This would in effect consolidate your debts in that you would have only one payment to remember and make a month instead of the multiple ones you may have been making in the past.

Debt Reduction May Be Easier Then You Think

Have you ever dreamed about being out of debt? It would be a really good feeling, wouldn’t it? Just imagine waking up in the morning knowing that no creditor will be dunning you for payment, that you can use your credit cards without worrying about how you will make your payments or being afraid that you will run out of money before you run out of month.

If you have a lot of debt, say, $20,000 or more it’s unlikely that you will be able to pay it all off very quickly. However, you could use debt reduction to at least whittle down your debt to the point where you will no longer be afraid to answer the telephone.

Credit card debt reduction takes dedication

woman looking for debt reductionIf you’re really serious about debt reduction you need to be prepared to do some hard work and be dedicated to the task. And be aware that there are no quick fixes despite the ads you might see on television or the Internet.

You need to really want it

How badly do you want to get out of debt? If you’re seriously committed to the idea of debt reduction, you should be willing to get a second job and work a few 80-hour weeks. Yes, that’s a lot of work. However, keep in mind that you got yourself into your fix. You need to take responsibility for this and do the hard work that’s necessary for debt reduction.

Assess your debts

The first, important step in debt reduction is to evaluate your debts. To do this you will need to get your free credit report from one of the three biggest credit bureaus (Experian, Equifax and TransUnion) or on the website Annual Credit Report. Then sit down and go over it carefully. This will show you exactly where you stand. While you’re doing this, be sure to also write down a list of all of your debts, their balances, interest rates and monthly minimum payments. Watch for danger signs such as missed payments, debts that have gone to collection and defaults. These are what damage your credit score the most and if you find any of these, you will need to get to work and try to fix them. Also, look for any errors in your report that could be damaging your credit score. If you find one, write a letter to the appropriate credit bureau disputing it.

The snowball method

The financial expert Dave Ramsey developed what he calls the snowball method for debt reduction. Here’s how it works. You now have a list of all of your debts. The next step is to organize it so that the debt with the smallest balance is at the top and the one with the largest balance is at the bottom. You then focus your attention on doing everything you can to pay off the debt with the smallest balance. This is where it would really help if you were to take on a second job. While that job may not pay much more than $10 an hour, this could mean nearly $600 a month after taxes that you could use to pay off that first debt. If that debt were for $1200, you’d have it paid off in just two months. If the minimum payment on that debt had been $30 a month, you would now have $630 a month available to start paying off the debt with the second lowest balance and so on. We’ve seen people that owed $20,000 and were able to pay it off in just 27 months using this method.

Negotiate with your creditors

While you’re working on paying off that first debt you should also be contacting your lenders to see if you could negotiate better terms. For example, you might be able to get the interest rate on your debts reduced or even your payments lowered. It’s possible that you could even be allowed to skip payments for a few months although this is not recommended as it just postpones the inevitable. Believe it or not, debts that have gone to collection or charged-off can be the easiest ones to negotiate. After all, the lender has already sort of given up on them and should be more willing to grant some concessions in return for a payment.

Move some of your debts if you have great to excellent credit

If you have a substantial amount of high-interest credit card debts, think about moving them to a credit card with a lower interest rate. Even better, you might be able to move all those credit card debts to a 0% interest balance transfer card. There are cards available that offer 18 months interest free. This would give you a year and a half to reduce your balance before you would be required to pay any interest at all. This form of debt reduction could actually lead to debt elimination – if you were to pay off your balance before the end of that 18-month introductory period.

Follow through on your debt reduction plan

The most important thing you can do in debt reduction is to follow through or as they used to say, keep on keeping on. If you use the snowball strategy for debt reduction, you should be able to go to your spreadsheet at the end of every month and see some real progress. This alone should keep you motivated so that you will stay on your plan and eventually get debt reduction turned into zero credit card debt.

A Close Look At Unsecured Personal Loans

Almost all of us are required to borrow money at some time in our lives – unless you are a member of that 1%. We borrow money to buy our homes and our automobiles. Sometimes we need to borrow money to pay our taxes or for college. When this time comes, we usually need to choose between unsecured personal loans and secured loans.

The main difference for unsecured personal loans

couple applying for unsecured personal loansIf you’re not familiar with secured and unsecured personal loans the major difference is that to get a secured loan you need to put up an asset as collateral. That asset could be a boat, a second home, an RV or your house. The important thing is that the loan is secured against the collateral in the event you were to default. In this case, your lender will sell the asset. If this doesn’t generate enough money to pay off the debt, your creditor could then obtain what’s called a deficiency judgment against you for the remaining amount.

An unsecured debt is the opposite of this in that it’s not connected to a specific asset. If you were to default on an unsecured loan, the borrower could only come after you and not any of your assets. As a general rule, secured loans have lower interest rates than unsecured loans because the lender is not taking as much of a risk. However, there are other factors that lenders take into consideration when setting an interest rate that generally include your credit history, the expected returns and your ability to repay.

The pros and cons of unsecured personal loans

The biggest pro of unsecured personal loans is what you’ve already read that you aren’t required to put up any asset to secure it. These loans are often called signature loans because all that’s required is for you to sign for it. This means that if you were to default on the loan you would not be at risk of losing an important asset such as your house.

In addition, unsecured personal loans generally have a simpler application process. Whether or not you get the loan is based mostly on your credit history and credit score. Plus, of course, you must have a steady and dependable source of income.

As you have read, the biggest con of unsecured personal loans is that lenders generally charge a couple of additional percentage points so that your interest rate would be higher. A second downside of unsecured personal loans is that you may not be able to get as much money as with a secured loan. The issue here again is one of risk. Lenders are professionals at assessing risk and an unsecured personal loan represents the biggest possible risk since there is no property securing it.

Unsecured personal loans generally have shorter terms than secured ones. Most lenders don’t offer unsecured personal loans with terms of more than four years as opposed to the 10 or 15 years you would get with a secured loan. This is due to the fact that there is usually less money involved in an unsecured loan. The logic here is that because the loan is for less money, there is no reason to spread it over a longer period of time

When another financial problem crops up

Finally, a problem with unsecured personal loans is what happens if you get one because you’re in trouble financially. If another financial problem then crops up when you’re in the middle of paying off that first loan, you could find yourself in even more trouble. And as a very wise man once said, you can’t borrow your way out of debt.

The most common types of secured personal loans

There are two common types of secured personal loans. They are a home equity loan and a homeowner’s equity line of credit, which is commonly called a HELOC. There are major differences between the two. One is that with a home equity loan you get the total loan amount all at once. With a HELOC, you’re given a checkbook or debit card and can then draw on the funds as needed. A second difference is that with a home equity loan you have a fixed payment at a fixed interest rate. But with a HELOC, the interest is variable and can and will go up and down monthly. Also, with a HELOC you will have a minimum monthly payment but can pay any amount each month so long as it is more than the required minimum. At the end of the HELOC, which is generally seven or 10 years, there is usually a balloon payment where you would be required to pay the full amount of your principle. Alternately, you could be required to pay based on a loan amortization schedule.

If you cannot qualify for either

If you’re in really serious financial shape you may find that you can’t qualify for a either secured or unsecured personal loan. In this case, your best option might be what’s called debt settlement or debt negotiation. This is where a company like National Debt Relief negotiates with your creditors to get your debts reduced to a fraction of what you owe. In fact, if you owe more than $10,000 and are four months or more behind in your payments then letting National Debt Relief or some other trustworthy debt settlement company settle your debts could be your best option by far.

8 Things You Need To Know About Credit Counseling

Are you’re feeling overwhelmed by your debts and have no idea as to how you could take control of your finances? We know this can be a terrible feeling. You may have tried without success to create a budget to cut back on your spending so that you would have more money available to pay down your debts. You may have asked friends and family members for advice – but nothing has worked. You still feel stuck in a pit of debt. Well, take heart. There is help available in the form of credit counseling.

1. Make sure you find a reputable one

credit-counselingThere’s probably a credit-counseling agency not far from where you live. There are also numerous ones available on the Internet. You need to make sure you choose one that’s reputable and ethical and that has certified and trained credit counselors. The best are usually non-profit agencies that charge either nothing or very little for their services. Be sure to stay away from those that have big, impressive websites and charge an arm and a leg for their services but don’t do much in return. If you work with one of these outfits, you could end up in worse financial shape and not better.

2. Understand what the credit counseling agency can do for you

A reputable credit counseling agency won’t charge you anything until it has evaluated your finances and created a plan that would help you get out of debt and avoid more problems in the future. If you have a budget your counselor will review it to make sure it’s realistic. She or he may also suggest other ways that you could cut your costs. In the event you don’t have a budget, the agency’s counselor will help you develop one.

3. You will need to provide it with a lot of information

The first time you meet with your credit counselor you need to provide information such as your household budget if you have one, a list of your debts, the amount of money due on each debt every month, the interest rate on each debt and which debts you are behind on. You should also have a list of your assets and their approximate market values and copies of your most recent tax returns and pay stubs. Your counselor will use this information to help you create a get-out-of-debt plan. This will be a sort of road map for getting out of debt and should also help you achieve your financial goals such as saving for retirement or buying a home.

4. It will help you develop a get-out-of debt plan

The second thing a reputable credit-counseling agency will do is figure out how you could keep up with your debts. For example, it might help you revise your budget to generate more cash flow – or the amount of money you have available each month to pay off your debts faster. Alternately, it might recommend that you get into a debt management plan.

5. What is a debt management plan?

If your counselor can’t find a way for you to pay down your debts by reducing your expenses or by earning more money, he or she may recommend that you participate in a debt management plan. If you agree to this, your counselor will figure out just how much you could pay your creditors where you have unsecured debts every month to get your debts eliminated in 3 to 5 years. Once your counselor has determined this, she or he will contact your creditors to see if they would be willing to allow you pay those amounts. In addition, your counselor might also ask for other favors such as eliminating any fees you’ve been charged or reducing your interest rates.

6. Understand that debt management plans have a downside

When your credit counselor finishes preparing your debt management plan, be sure to get a copy. Also, don’t sign your contract until you read and understand it, as it could include some important restrictions. As an example of this, you may be prohibited from running up new debts with your creditors or trying to get new credit until you complete your debt management plan. You probably will be required to give up all of your credit cards. Also, if you fail to make your payments or don’t adhere to your plan, it could be canceled and you might end up in worse shape than before.

7. Your credit score could be damaged

While credit counseling should not have a negative effect on your credit score, some creditors might report to the credit bureaus that you are on a debt management plan or are slow paying. Either of these could hurt your credit score a bit. However, there are statistics showing that if you complete your plan successfully this will actually help your FICO score.

8. What happens next?

When you have signed off on your debt management plan you will then pay the credit-counseling agency every month whatever you have agreed to pay, as well as any monthly fee you agreed to. Your counseling agency will then distribute the money to your creditors. Your credit counselor should send you regular updates on the status of your plan, including confirmation that each of your creditors was paid according to its terms.

Credit counseling is one debt relief program to look at, debt negotiation, debt consolidation loans and bankruptcy are others. Make sure you do your due diligence on all your available choices before you decide which option is best for your situation.