financial management Archives - Best Debt Consolidation Loans

5 Credit Card Rules You Can Ignore During The Recession

June 25, 2020 By editor

Credit card rules are important. Following these rules will help you manage how you use your credit cards. It will help you control how you use it and make sure that it will not be abused. Your knowledge of these rules will allow you to confidently use it without endangering your personal finances.

Ideally, you have to follow these rules every time you use your credit cards. Otherwise, you might be in danger of spending too much on your cards. That can make your debts grow significantly. And if you factor in the high-interest rate, your debts can quickly reach a level wherein it will be harder for you to pay it off.

But what if you are in the midst of a crisis? Will these credit card rules still apply?

According to a survey, a lot of people were forced to use their credit cards to pay for a lot of essentials they needed in March and April of 2020. This was during the time when people were forced inside their homes to avoid being infected by the coronavirus.

Because of this, they were forced to stop going to work. For a lot of people, that meant they did not receive their monthly salary. Since they were forced to stay indoors for a time, they had to buy a lot of essentials in bulk. To make the purchase, most of them had to use their credit cards to help them preserve their cash.

This resulted in a huge increase in credit card debt. Not to mention the fact that there were a lot of credit card rules that were broken because of this.

And with the recession weakening our financial situation further, our credit card debt is bound to get worse.

Credit card rules you can stop following during a crisis

We want to make sure that we stick to the rules when it comes to our credit cards. But the reality is, there are instances when we will be forced to break those rules. Economic situations and financial difficulties can justify the need to ignore some of the credit card rules that we should be living by.

So what are these rules? Here are 5 of them.

Pay your balance in full

To keep yourself from paying the finance charges on your credit cards, make sure you pay your balance in full when the billing statement comes.

But if you are experiencing financial difficulty because of the recession, it’s okay to break this rule. A survey revealed that 17% of their respondents carry more than $10,000 worth of credit card debts. Obviously, this will be hard to pay off all at once. So it’s okay to carry a balance over to the next month. After all, you will not do this all the time. The recession will end over time. But you need to survive it first

Hold on to your cash and don’t feel guilty about using a credit card even if you can’t pay the balance in full.

Give more than the minimum payment requirement

This is one of the most common credit card rules that you need to always do. Paying only the minimum requirement of your credit card debt is not a good idea. The high-interest rate will make your balance grow significantly. This is why you have to pay more than the minimum payment requirement.

But if you are in the midst of a financial crisis, then it’s understandable if this is hard to do. You hardly have enough cash to pay for your basic needs. You will not pay more than what is needed towards your credit cards. You want to reserve as much as you can for your basic needs. And if you want to at least keep a good credit score, you need to stick to the minimum payment requirement. It will not take too much from your finances. But it will keep you from being delinquent.

Of course, if your finances will really need to be conserved, you can stop making payments altogether. But make sure that you talk to your creditor and ask for financial hardship. They will allow you to stop making payments for a time without it damaging your credit score further.

Maintain a credit utilization rate that’s lower than 30%

To keep a credit score good, you have to keep your credit utilization rate 30% or below. That means if your total credit limit is $10,000, you can only borrow up to $3,000.

Again, if you are in a financial crisis, it’s okay to go beyond this. If there is a need for you to buy the essentials that will help your family survive, go ahead, and use your card. Your survival and the comfort of your loved ones is more important than your credit utilization rate.

Stop stressing about it and focus on what matters most at this point in time.

Keep your credit score high

We all want to keep our credit score up. Having a good credit score will help open a lot of financial opportunities for us.

However, if you are in the midst of a recession, this will be harder to do. Especially if you are relying on your credit cards to pay for basic necessities. As you keep on using the card, it will not just affect the credit utilization rate. The financial crisis will cause you to miss out on payments. And according to a recent survey, a fourth of the American population are worried that missed payment will drag their credit score down. And the current crisis will end up making people miss payments.

And in light of the crisis, you have to be okay with that. You know why? Because your family’s survival is more important than a credit score. The situation is stressful already. If you think about your credit score, it will make things worse. And you need to keep a clear head if you want to figure out a way to make things better.

Don’t use your credit card as an emergency fund

A lot of people are using their credit cards as a source of an emergency fund. They do not take saving cash seriously. They know that they can always rely on using their credit card in case they need to go to the hospital. Or if they need to have their car repaired. But if you go through one crisis after another, relying on your credit cards will only lead to a huge amount of debt. This will really hurt you financially.

This is why one of the financial lessons that you should have taken seriously before the crisis is to save up for an emergency fund. This would have helped you get the cash that you needed to survive the current crisis that we are going through.

While an emergency fund would have been very helpful, the current events of 2020 would have depleted most people’s savings. After the coronavirus pandemic, we were plunged into a recession. People lost jobs and some are burdened with huge amounts of medical bills. It’s hard to survive on just your emergency fund alone.

If this is your case, then using your credit card as part of your emergency fund makes sense. Don’t keep yourself from this financial source if it will help your family survive.

2 credit card rules you should never ignore

While we’ve been discussing the credit card rules that you can bend during a crisis, there are two important rules that you should never ignore. No matter how bad things get or how much debt you accumulate, you should never stop following these rules.

Monitor your credit spending

The first is credit monitoring. Every time you use your credit card to pay for anything, you have to take note of that. If you have a spending plan, you have to make sure it’s aligned with how you use your credit card. This will allow you to track your expenses. When you are monitoring your spending behavior, you get to be more cautious about how you use your credit cards.

Since you are monitoring your credit spending, you can stay in full control over it. If you’re starting to overspend, you can do something to ensure that you will not go overboard and pull yourself into a deep debt pit.

Use credit with a purpose

The second of credit card rules that you should always follow is to use credit with a purpose. Don’t just use credit because you want to. It has to have a purpose. This will help you decide if an expense is necessary or not. If it’s not necessary, you have to skip using your credit for it. You need to reserve it for more important expenses. Like your basic necessities. Or an emergency expense that might save your life. Your credit card has a limit. You have to remember that. If you cannot control your spending and you reach that limit, you cannot use it anymore. Not to mention the fact that you cannot pay it off because of the recession. So don’t exhaust this source of funding if you don’t have to.

5 Things You Need To Do During Financial Planning

May 20, 2020 By editor

Financial planning is all about your future. Who doesn’t dream of having a great future? Even as kids, we always had this idea in our minds about what we want to happen when we grow older. How do you want to live your life in the future? If you have grand dreams, you might want to start working on these dreams right now. Because securing your future is not something that happens overnight. It takes time to build it up.

That means the more you want to have in the future, the earlier you should start planning for it.

Unfortunately, not everyone believes that they should be doing this. According to statistics, only 3 out of 10 households in the US have a long-term financial plan. The rate of households with financial plans gets better as the income rises. But when it comes to the overall average, it is not promising at all.

But what does it really mean to plan your finances in the future? What is involved in financial planning?

5 basic financial planning tasks you have to do

There are 5 things that you need to consider if you want to get serious about planning for your financial future.

Create a budget

Budgeting is actually one of the first things that you need to do if you want to plan your future. You may be thinking, “But a budget plan is used to manage your present finances. How can it help your future finances?”

Well, planning for your financial future involves saving money for various purposes. If you want to have the funds for that, you need to rearrange your present finances. That way, you can put aside money to save for your future. Without a budget plan, it would be hard to rearrange your money.

Your budget plan will tell you how much you are earning and where all the money goes. So if you have a future to save up for, you can include it in your budget. That way, it will always be funded – making sure your plans will progress.

Save for retirement

When you think about financial planning, the first thing that usually comes to mind is saving for your retirement. After all, that’s the ultimate financial plan. It is what you really need to make your future secure.

And if you pay attention to statistics, it is revealed that more than 6 out of 10 Millennials feel like they are not on track when it comes to their retirement savings. The report said that this is caused by the housing costs that Millennials have to shoulder and all the other debts they have to pay off.

While Millennials are still a few decades away from retirement, that does not mean they should take it easy. With the way inflation is rising, they need a lot of money to be able to retire comfortably. So if you really want to plan for your future, start saving for retirement now. You will really benefit from the compound interest if you start early.

Start spending wisely

If it turns out that your budget is not enough to fund your future plans, you might have to cut back on spending. It’s not just about choosing the expenses you will stop spending on. It’s more of prioritizing your expenses. What should you really be spending on? If it’s not necessary for you to survive, don’t spend on it. Or if the expense will help you improve your financial situation, don’t waste your money on it.

If you practice this, you will soon develop better spending habits. And that is what you really need to help you achieve your financial plans. Because if you think about it, financial success is not dependent on how much you earn. It’s more important for you to learn how to use your income. If you can be a smart spender, you will not be at risk of wasting your limited resources on unnecessary expenses.

Pay off debt

Financial planning also involves getting rid of the liabilities that can compromise your future. That means you need to get rid of your debts. With the mounting debts that Americans owe, this might take some time for you to complete. So you might want to get started on this task as soon as possible.

When you get rid of your debts, you can maximize your limited income and use it to increase your contributions to your future plans. That may be your retirement savings or the downpayment for your home. Anything that will help you increase your net worth is preferable than paying off the interest of your credit card debts.

Invest in an insurance

The last of the tasks you have to take care of during financial planning is to invest in insurance. Your insurance is another way for you to secure your finances – just like your retirement plan. This is a policy that you can use to protect everything that you’ve worked hard to achieve – even if you haven’t finished them all yet. In case something happens to you, your bereaved family will not be left in financial ruin.

Of course, there are many types of insurance. You can get one that will protect your ability to earn a living. Or it can be insurance for your home or your car. Make sure you choose the right insurance that will really protect you, your family, and all the assets you have worked hard to acquire over the years.

How financial planning improves your finances

Is financial planning really worth all the trouble? It seems like there are so many things for you to do to set it all up. And you have a lot of tasks to accomplish. Can you really keep up with everything?

If you want to have a great future, you need to keep a positive financial mindset and believe that you can do all of this. After all, it’s for your future self.

But beyond that, here are three ways that financial planning can improve your finances.

Encourages you to have goals

First of all, planning for the future will encourage you to set up financial goals. How? It will make you consider the future. And while you are focused on that, you will be encouraged to start setting up goals that will ensure that your future will be a good one.

Motivates you to make smart spending choices

Once you have set up all your financial goals, you will also be motivated to make smarter spending choices. That also includes being a smarter credit user. You don’t have to stop using credit. But you have to make sure that you know how to use it properly. Otherwise, it can destroy all your efforts to plan for the future. So if you want to protect your future, you will be motivated to make better spending choices.

Secures your financial future

Finally, you will also enjoy a more secure financial future. That is how financial planning can really improve your life. It’s not just your finances. You will enjoy less stress because you know that no matter what happens, you have taken care of your future self. You have set up your future to be secure through all the financial plans that you have made.

3 Tips That Will Motivate You To Achieve Complete Debt Relief

May 17, 2020 By editor

Achieving complete debt relief is something that the whole world needs. According to reports, the global debt level is smashing the debt-to-GDP ratio record before 2019 ended. And guess which countries are borrowing the most? Developed countries – with the United States and European countries leading.

So if you see that debt levels rising in the local news, don’t act surprised. The whole world seems to love borrowing. With the current coronavirus pandemic, you can expect that this will get a lot worse.

The health crisis has successfully pushed the world into a global recession. People were forced to stay at home and they cannot work. Businesses were told to close up for a couple of weeks. Some small businesses are already in danger of closing.

There’s no escaping it. And we each have to face our respective financial struggles. While it’s easy to feel scared by what’s happening around us, you can help by focusing on your own finances. And you can start with your debts.

If you want to achieve complete debt relief, you need to be ready to put in some effort. This is not something that will just land on your lap. You need to work for it. You have to approach it with a plan. And this plan will have to be well-thought-out. It should not just be the first debt solution that you encounter. It has to be the right debt relief program that is perfectly suited to your specific debt and financial situation.

But apart from your debt solution, there are also other things that you need to consider.

3 strategies that will help you achieve complete debt relief

Your finances will play a primary role in helping you get complete debt relief. But that is not everything that you need. Some people fail to realize that your mindset should also be all-in on this task.

You see, getting out of debt will be a long process. And there’s a lot of things that can happen in between. You have to be ready to face all of these so you can overcome them. Because some of the issues you will face can easily discourage you. It’s up to you to ensure that you will stay motivated.

There are 3 things that you can do to make sure your mind is in the best condition to help you get complete debt relief.

Educate yourself

The first step to secure your financial future is to educate yourself. If you know more about your situation, it will be easier for you to solve your debt issues. Start by understanding the type of debts that you owe. This knowledge will help you figure out the best way to pay off your debts.

There are so many options for you to get out of debt. All of them are effective. However, there is usually one that is perfect based on how much you can afford to pay and the type of debts that you owe.

But the education will not just stop with your debts. You have to understand how to use your money too. Your choices put you in debt. So if you want to get out of this predicament, you have to make sure you will be making better choices from now on.

Visualize your goals

Another thing that you can do to achieve complete debt relief is to have a goal. Having a goal will really give you the motivation that you need to completely pay off everything that you owe. And that goal can be more than just being debt-free.

Think about what you will do after you have paid off your debts. Will you buy your own house? Or maybe you will go on a vacation? With your debts gone, you can now afford to start your own business. There are so many possibilities after you have gotten rid of your debts. The more appealing the goal, the better. It will give you the motivation that you need to make sure you succeed in achieving complete debt relief.

Set up a support system

Finally, you should work on having a support system to help you succeed in paying off your debts. There are times when people have enough money to pay off their debts but they still fail. You know why? Because they are doing it alone. There’s nobody supporting them or encouraging them to complete the repayment plan they have started. When something happens, or if they made a mistake, no one will motivate them.

Sometimes, that is very important in helping you achieve complete debt relief. So don’t ignore the importance of having a support system. It can be one person. Or it can be a group of people that you trust and respect. Find people who love you enough to help you through this. These people should be the ones who are not afraid to tell you if you are wrong. They will force you to do the right thing when it comes to your debts.

Why complete debt relief is hard to achieve

Have you ever wondered why it’s so hard to succeed in getting complete debt relief? We all know how debt can affect our lives and future significantly. We know how it can restrict our spending ability – specifically our ability to improve our financial position.

So why is it still a huge struggle to pay it all off? There are two reasons why.

It’s convenient to use credit

The first is the fact that it’s very convenient to use credit. In fact, Americans use their credit card to buy basic necessities like their groceries. Despite the high-interest rate, they choose to use this over cash. It is said in the article that the rise in credit card use is also influenced by the way creditors made it easier to open an account. And if you add the rising cost of living, people are bound to use credit even if they don’t have the means to pay it off completely.

Sometimes, people also use credit cards for security purposes. For instance, if there is an unexpected expense, they rely on their credit card to pay for it. This is a bad idea because that can lead you to have a huge amount of debt. And since credit cards have a high-interest rate, this will really put a huge dent in your finances.

As you can see, we don’t really stop using credit even if it can threaten our finances. That’s because it’s so easy to use. And it makes our lives easier too. So even if we are in the midst of a debt relief program, we still choose to use it.

It’s tempting to use the payment on something else

The other reason why it’s hard to achieve complete debt relief is that it’s really tempting to use the payment fund for something else. When we are feeling stressed or discontent, it’s easy to look at our debt payment fund and use it on something that will make us happy. After all, we worked hard to earn our income. Why can’t we use it for our own benefit?

Of course, that reasoning is flawed and irresponsible. No matter what the circumstances are, we need to be responsible enough to pay off our debts. If you change your mindset about it, you should be able to successfully complete debt relief and enjoy being free of the burden that it brings.

Need Help With Debt?

Free Debt Relief Quote - Mobile

Need to Talk?