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How Smart Spending Can Help Your Debt Consolidation Efforts

April 13, 2019 By editor

Smart spending is an effective strategy to make debt consolidation easier. You have to admit that to some extent, your spending habits led you into your current debt situation. This is why you need to make some spending changes if you really want to succeed in managing your debts properly. If you look at where you spend your money and you analyze it carefully, you might be surprised at how much money you are really wasting.

Like if you analyze the channels in your cable subscription, you might be surprised that you are spending more than $1,000 each year on channels you do not watch. We all thought that getting a bundle or package with the cable company will help us save. But if you look closely at what that package holds, you will realize that you are actually spending on a lot of things that you do not need. And every time you do that, you are wasting money.

You need to correct this financial habit – especially when you are in the midst of a debt relief program. Not only will it help make your debt consolidation efforts a success, but smart spending can also keep you from landing in another difficult credit situation.

3 ways smart spending can make debt consolidation easier

You need to realize that making smarter spending choices is just a result of proper financial management skills. If you really want to be a financial success, you should not just rely on earning more. You have to make sure that you can manage your finances properly. You can start by implementing proper spending habits.

In particular, this positive financial habit can assist you in making debt consolidation a lot easier. There are three ways that this is possible.

Maximizes your income

First of all, if you practice smart spending, it can maximize your income. It is harder to increase your income just because you have payments to meet after you consolidate debt. However, it is possible to maximize your income by lowering your spending. The lower you spend, the higher the amount that can be used on something else – like your debt payments.

Increases your monthly debt payments

Since your income is maximized, you can increase your monthly debt payments. This will help you achieve a shorter repayment period in debt consolidation. The higher the monthly payments, the faster you can get out of debt. In effect, it will also help you save on what you pay towards the interest. If the debt consolidation strategy you have chosen successfully helped you lower the interest on your debts, you will save so much more.

Keeps you from acquiring more debt

Finally, smart spending will keep you from acquiring more debts. When you develop this habit, you will think twice before you go through with an expense. This cautious behavior can effectively lower your spending. This lowers the chances of overspending. When that happens, it will be less likely that you will land yourself in debt. Since you are in the midst of a debt consolidation program, you will not be adding to your balance. This will make it easier for you to completely pay off your debts.

How to control spending while consolidating debts

While the benefits of smart spending are clear while you are completing a debt consolidation program, the real challenge is how you can implement this in your life. Some people are natural spenders. This means they are more inclined to spend rather than save their money.

If you are more inclined to spend, then you are a natural spender. But do not worry, there are a couple of tips that you can use to help you control your spending urges and tools that will help you make smart spending decisions.

Always have a budget plan

Whether you are in the midst of a debt consolidation program or you are currently living in financial abundance – you will always need a budget. This is the most basic tool that can help you improve your financial position or reach your goals and dreams. If you want to be free from debt, you need a budget plan because it can control your spending. It ensures that you will make the right decisions when it comes to your finances. It will give you an idea of whether you can afford something or not.

Keep all the change

This will not just help you control your spending, it can also help you save money. For instance, you can commit to saving every quarter that you get your hands on. When you get home, put this in a coin bank or a sealed jar. Do this every day. You will find yourself learning to be more cautious of the money that passes through your hands. The quarter may not be a lot but if you continue to save, it will soon grow significantly.

Avoid eating out

Did you know that if you avoid eating out, it can help you become a millionaire in the future? At least, that is what Greg Shepard, the CEO of a cleaning service, Emily’s Maids, said. Even if his net worth is already high, and he owns a thriving business, this CEO still makes his own lunch and brings it to work. He made the change back in 2001 and whatever he saved he used to invest. Although the amount he saved is a mere $10 to $15 a day, he believes it will soon grow to be a million thanks to compound interest. Consider this before you eat out every day or order take out.

Stop being an impulsive buyer

Another tip that will help you with your spending is to stop being an impulsive buyer. Think before you buy anything and always consult your budget plan. If you are in the midst of a debt consolidation program, you need to stay away from online shopping for now. It can pose a huge temptation to spend a lot of money. There is a higher chance that you will buy something on a whim.

There are other ways for you to be effective at smart spending. This is a great strategy to get out of debt faster. And if you continue with this habit, it will help you manage your finances better.

Financial Mindsets That Can Lead You Into Mountains Of Debt

March 26, 2019 By editor

There are financial mindsets that can lead you to success. And there are those that can lead you to accumulate a lot of debts. You have to make sure that you have the right set of mindsets so you will not jeopardize your financial position by mistake.

But how will you know which mindsets to develop? The answer to that is financial literacy. Apparently, poor financial literacy and lack of money management skills cost consumers a lot of money. Based on the study of a diverse group, it was estimated that their lack of financial knowledge cost them an average of $1,230 in 2018. If you calculate this based on the 240 million adults in the US, that means it cost Americans a total of $295 billion in one year.

That is a whole lot of money to be wasted just because you do not know what you are doing. If you really want to improve your personal net worth, you need to work on improving what you know about money. A good place to start is developing the right financial mindsets.

Financial mindsets that can destroy you

When you have the right mindset, it is easier for you to achieve financial success. Your mindset can help you develop financial habits that will lead to better money management. We all know that to be considered a financial success, you need to know how to manage your money wisely. It is not about how much you are earning. You can earn a 6-figure income and still be a financial failure. You can earn much less than that and find it easier to be successful. The key is in financial management.

To accomplish that, you need to start with the right mindset. Here are the financial mindsets that you have to avoid if you want to stay away from destructive financial issues like mountains of debt.

Living without a plan

There are so many types of plans that you can use to help manage your money. These include budget plans, financial plans, and even a spending plan. Some people might think that this is a waste of time. But if you want to be organized, you need a plan. Having one will help you have an overview of your finances. Through your plans, you can make better decisions about your money.

Aiming for unnecessary improvements

There are a lot of financial mindsets that will quickly lead you to debt. This is one of them. We deserve to improve our way of life – but it has to be necessary before we do it. Sometimes, we are quick to make a lifestyle upgrade after a small increase in income. If it is not necessary, you do not have to buy a new car. You do not have to live in a bigger house. Stick to what is just necessary and focus on a higher quality of life and future. It is better to be financially secure than living in a house that is much too big for you.

Being careless about the “good debts”

We all know that there are good and bad debts. The good debts are those that can help increase your net worth. These include student loans, mortgage, business loans, etc. Although this is something that can help you improve your financial position, you should not be irresponsible about it. Only borrow what you need – nothing more. And you should also make sure that you have a repayment plan. Even a good debt can ruin your finances if you are not careful with it.

Using credit cards as an extension of your wallet

Among the financial mindsets that are destructive, this is another one that you need to prioritize. This is a quick way for you to get yourself into a deep debt mess. If you want to avoid it, you need to stop thinking that your credit card is an extension of your wallet. Even if your name is on it and you are allowed to use it for purchases, that is not your own money that you are using. Every time you swipe that card, you are borrowing from the creditor. You have to pay it back and plus high interest. Unless you are sure that you can pay the balance in full at the end of the month, keep your credit card purchases to a minimum.

Failing to take steps to improve financial security

Financial security is an underrated way of avoiding debt. When you are financially secure, it means you can face a crisis without putting your finances in danger. One of the best ways to do that is to save enough emergency fund. This will give you the money you need for unexpected expenses. You do not have to borrow money for it. Make sure this is one of the financial mindsets that you will develop.

Another thing that you can do to improve financial security is to save up for your retirement. It is best to start as soon as possible. The earlier you start, the more you can benefit from compound interest. It will help grow your retirement fund quickly and make you more secure financially.

Avoiding money talks

This is a controversial financial mindset that a lot of people are struggling with. Some couples do not feel comfortable talking about money – even with their significant other. According to reports, 88% of Americans find it hard to discuss money. It has to be noted that these are the same people who believe that it is important to discuss money matters. Apparently, the only generation that seems to be warming up to the idea is the Millennials.

Consolidate debt to help pay it off

In case you are too late in developing these financial mindsets, that is okay. In case you already have a lot of debts, you can still improve your financial future. You just have to consolidate your debts to make it easier to pay it off.

There are a couple of ways that you can consolidate all your debts. You need to learn how to analyze your financial situation so you can find the best debt solution that you can afford. Here are some of your options to consolidate debt.

Debt management

This involves a credit counselor who will help you create a debt management plan. This is a plan that will be patterned according to how much you can afford to pay off. This should make it easier for you to commit to. Once you have agreed to the plan, it will be presented to your creditors and lenders. If they approve, you will give a single monthly payment to the credit counselor who will take charge of distributing the money to your creditors.

Debt consolidation loan

This involves borrowing a loan that is enough to pay off your multiple debts. You need a good credit score so you can have a low-interest rate on the loan. Once you have the loan, you can pay off all your other debts. This will leave you with only one loan to pay off. Hopefully, this restructuring of your debts will make it easier to completely pay off.

Balance transfer

This involves a new credit card account that is offered with a 0% interest rate. You will transfer all your debts to this account. Every payment you make will only be paid towards the principal amount – since you have a 0% interest rate. Take note, though, that this is only temporary. The 0% rate is only for a certain period so make sure you pay as much as you can to take advantage of the savings you can get from this arrangement.

How To Consolidate Debt When You Are Broke

March 17, 2019 By editor

Is it possible to consolidate debt while you are broke? Some people think that it is better to ignore their debts if they are short on cash. It is the first thing that they remove from the list because they feel like it is not a necessity.

It is true that debt is not as important as food, shelter, and other basic necessities that are vital for you to survive. However, if you ignore, it can do more damage in your life. It is never wise to ignore debt regardless of your financial situation. You need to to make a decision on what to do about it – even if it is something as severe are declaring bankruptcy.

But before you file for bankruptcy, you might want to step back a little to analyze your current financial situation first. You need to figure out if you are really broke or you are just overspending. It is easy to mix the two.

With the cost of living rising higher than the wages, it is not surprising that a lot of Americans are feeling broke. But if that feeling will cause you to ignore your debts, you have to reconsider if you are really broke or not. If you are feeling “broke” after you have spent your money on monthly expenses, you might be in a better financial position than you thought. It is possible that you are just overspending your money. If this is the case, you can still afford to pay off your debts and still survive comfortably. You just have to analyze how you spend your money.

Steps to consolidate debt when short on cash

If you are short on cash but you want to deal with your credit obligations, you can opt to consolidate debt instead. Here are the steps that you can follow to get started on this debt solution.

Create a new budget plan

Obviously, your old plan did not work. If your budget plan was working well, you will not be in this situation. You would not have accumulated a lot of debt because you would be aware of how much you can afford each month. Overspending will be unlikely to happen. But since you landed in debt, that means your budget plan is not working. Create a new one and make it a bare-basic budget plan. This will help you achieve debt relief faster. You will only focus on the basic necessities so you can use the rest to get yourself out of debt.

Calculate how much debt payments you can afford

Once you have created a new budget plan, you need to focus on how much you can set aside for your debt payments. Look at your expenses and see where you can save money. Since you created a bare-basic budget plan, you should be able to determine the funds to use when you consolidate debt. This is an important piece of information that will help you identify the debt solution that you can use to achieve debt freedom.

Choose a debt consolidation strategy

Based on your debt payment fund, you can now figure out the best way to consolidate debt. The great thing about debt consolidation is that you can restructure your debt payments. You can choose to lower your monthly payments so it will not feel so restricted. While there will be no debt reduction, you can get a new credit account that has a lower interest rate and lower monthly payment requirement. This should make it easier to keep up with your payments so you can slowly but surely get out of debt.

Stop using debt

Admittedly, this might be hard to do for most Americans. According to statistics, debt has become a major burden for a lot of Americans. 7 out of 10 have credit card debts. While a lot of them are actively making an effort to lower their debts, it is still very tempting to keep on using it. But if you really want to achieve debt freedom, you have to learn how to curb that feeling. You should stop adding debt to your balance because it will make your efforts harder.

Find ways to increase your income

If you really feel like you are broke, one way to solve that is to increase your monthly cash flow. This can be done in many ways. You can go to your employer to ask for a raise. Or you can ask for extra hours at work to earn more. You can also set up a passive source of income. Going online to look for a side gig is also a popular option. There are so many options available to increase your income. With what you are earning, you can use it to pay for your dues after you consolidate debt.

What to do if you are really broke?

Of course, the above-mentioned steps will only work if you are not really broke and just overspending. But if you are really broke, what can you do? There is still a way for you to survive your debts despite your current financial situation.

Definitely, debt consolidation is not for you. What you need is something that will reduce your balance. To do that, you need to consider doing the following tips.

Talk to your creditors

First of all, you need to speak with your creditors – and lenders if you have loans too. You want to tell them about your current financial situation. Assure them that you are willing to pay your dues but your current finances may not be able to afford to pay for everything. If you are truthful and sincere, they should be able to appreciate your initiative to do something about your debts. Other people will probably just run away from their debts. Approach them with an idea of how much you can afford to pay your debts. You can work on a repayment plan from there.

Opt to settle debts

If you cannot consolidate debt because you need a debt reduction, you should opt to settle them instead. This is something that you can discuss with your creditors and lenders. Debt settlement is the best way to avoid bankruptcy if you really do not have enough funds to pay for all your debts. This involves negotiating your debts so they will allow you to pay only a portion of what you owe. Whatever will not be paid will be forgiven. See if you can talk to your creditors to see if you can arrange this for your credit accounts.

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