Is Debt Consolidation Right for You?

Debt consolidation involves taking out a new loan and using this loan to replace lots of debt. For example, if you owe $100 000 in personal loans, car loans, payday loans, credit cards, and other forms of debt, you can take out a consolidation loan for $100 000, pay off all your creditors, and start making payments on the one loan. Generally, you will pay less in interest on one large loan than on several smaller loans (some of which might have high interest rates), and this can allow you to pay off your total debt amount sooner. There are debt consolidation companies that offer these types of loans, and customers can also seek these loans out through banks.

Debt settlement offer a solution for large bills. A debt settlement company will negotiate with a debtor’s creditors to arrange settlements and will have a debtor stop paying bills until this settlement is reached and until the debtor saves up enough to pay the settlement amount. The advantage of debt settlement is that the company will negotiate with creditors and will sometimes arrange to have companies drop penalty fees and other extra fees. As well, debtors no longer have to pay lots of monthly bills which they can no longer afford. Instead, they pay one monthly sum, which goes towards the settlement amounts. Keep in mind that debt settlement and debt consolidation companies are very different — if you decide to work with a debt settlement firm, make sure they are a debt settlement company.

Debt consolidation makes the most sense for borrowers who still have good credit ratings, the discipline to pay off an existing loan before taking on new debt, and property. If you have a home with equity as well as good credit, you can often take out a consolidation loan from your bank at a very favorable interest rate. If you have poor credit and no assets, you may only qualify for a bad credit consolidation loan, which might not make repayment of your debts much easier. Whichever loan you do decide on, it is important to keep in mind that consolidation is not an instant solution. You will still need to budget to repay your loan quickly and you will need to resist taking on new debt at all costs, since new debt will only add to your total debts until you are in over your head again.

However, debt settlement companies also have their risks. Some such companies are fraudsters. They charge large sums of money but disappear or do not deliver on their promises. Also, even when working with a legitimate debt settlement company, debtors can expect to see a big drop in their credit score. Even legitimate companies charge substantial fees – often %14 or even %18 of your total debt amount. In some cases, creditors will start legal action when a debtor stops making payments and starts working with a debt settlement company. This can lead to liens against your home and wage garnishments. If your debt settlement company successfully negotiates to have some of your debts forgiven, this amount will be counted as taxable income on your income taxes. As well, debtors need to keep in mind that debt settlement can take some time. Most debtors spend about two years working with a debt settlement company to resolve their debts.…

Get Creative With Saving and Earning

When people think of earning more money or saving money, they usually think in terms of the tried and true – they imagine putting aside a few dollars into a savings account and taking on some overtime work. However, there are plenty of creative ways to improve your savings and earnings, have a little fun, and even get your finances on track faster:

1) Rent your home or part of your home. If you don’t want a tenant or roommate, rent your home on vacations for a little extra cash. No home to rent? Rent your parking space. In urban areas, your parking space can be worth a nice little extra cash each month while you’re at work.

2) Deposit spare change and small bills. At the end of each day, empty out your pockets into a savings account. You’ll be amazed how quickly this adds up.

3) Recycle bottles and cans. Recycling can net you a few hundred extra dollars a year and is great for the environment.

4) What can you sell online? There is likely something. You can sell crafts you make, the stuff you no longer need, even your time as a tutor.

5) Have garage sales. Anything you don’t need or want anymore can earn you cash and will make your home look better.

6) Help someone and earn. Teach English or a skill you have and you could make $20 or $30 an hour a few hours a week.

7) Use coupons and combine rebates with coupons or visit stores that double up your savings. Clipping can save you hundreds of dollars on your groceries a month, especially when you visit stores that double your coupon savings.

8) Seriously consider drastic moves – roommates and getting rid of a car. If you don’t absolutely need a car for work (because you can take transit), consider ditching it. An older car can cost thousands in repairs each year (not to mention insurance and gas) and funneling this towards personal loans can get you debt free fast. If that’s not an option, consider a roommate for a temporary time. It can save you hundreds of dollars.

9) Take on one odd job a month. Distributing leaflets, doing some handy work – a few hours a month can bring in hundreds of extra dollars a year.

10) Give to science. Medical researchers often pay people to take part in clinical trials and some clinics pay for blood donations.

11) Sign up for mystery shopping and focus groups. Make sure you sign with an agency that is free to join.

Be sure to check out our savings guide for more creative tips.…

Avoid Becoming the Victim of Identity Theft

Identity theft is a serious crime which can deprive you of your good credit rating. Identity thieves will generally steal your personal information (such as your name, signature, PIN numbers, and other vital data and use this information to open accounts or make charges in your name. By the time you discover the crime, it may be too late. There are several ways you can protect yourself, however:

1) Read your credit report regularly. This is the best way to protect against identity theft, since unauthorized checks on your credit and unauthorized applications for loans will show up on your report.

2) Be careful about who has your personal information. Hide your PINs, passwords, and do not offer copies of your ID casually. Change passwords and PIN numbers every few years.

3) Read your mail carefully. If you notice mail arriving at your address (especially financially-related mail) all of a sudden that does not seem to be something you were expecting, follow up on this with your financial company. Similarly, if your mail suddenly stops coming, contact the post office to ensure that someone has not been sifting your mail for personal data. Once you read mail containing personal information, make sure to shred it before tossing it away.…

Cheap Ways to Buy Real Estate

While the necessities of life may be food, clothing, and shelter, most of us tend to spend a disproportionate amount of money on shelter. Apartments in larger cities can cost thousands of dollars and even in smaller towns, it is easy to end up with a big, expensive house that seems to take up most of your paycheck. A good mortgage won’t do you much good if you’re paying too much for your home. If you are in the market for a new home and don’t want to overspend, there are plenty of ways to live well without spending a ton:

Foreclosures. Foreclosures are homes which are sold by banks or government agencies after a homeowner has defaulted on a mortgage. These homes can be sold below market value and they range from very modest homes to mansions. You can literally find foreclosures in every neighborhood. An added bonus: some government agencies and banks offer incentives and special programs for buyers to get these properties off their books, so you could end up saving even more. Keep in mind that foreclosures are sold “as is,” so you need to do your research to avoid any surprises.

FSBO (For Sale by Owner) Homes. When someone is facing huge personal debts, foreclosure, or bankruptcy, they will sometimes sell their home at below market value to get some cash to repay their loans. As with foreclosures, you will need to do your research to avoid possible problems. You will also need to work with an attorney or buyer’s agent to help you through the buying process.

Fixer Uppers. Fixer uppers are homes that need some work. How much work varies widely. There are homes that are gutted inside and some that just require a good cleaning and a coat of paint. Look for homes that require lots of cleaning and painting but no work on major things, such as foundation, electricity, roof, or other major systems.…

Common Phone Financial Scams

Although many people understand that they need to be cautious online, financial scams exist through the phone lines, too. Some of the most common scams include:

1) Financial information fishing. In many cases, these scams involve someone calling and pretending to be someone else in order to get personal information – such as your credit card number, bank account number, or other information. If someone calls and asks for any such information, hang up immediately.

2) Fake charities, loans, or businesses. Fake charities usually take your money but do not in fact use the cash to promote any legitimate non-profit. Loan scams involve you paying for “guaranteed” personal loans that never materialize. In addition, there are many fake businesses, which charge you money for useless products or for products that never arrive.

3) Fake contests. In these phone scams, someone calls you to tell you that you have won a prize. To collect your prize, however, you are often told that you must send money or give a credit card number. No legitimate prize charges you money for prizes.…

Eat Healthy Without Spending a Lot

We all know that we need to eat healthy, but many of us avoid healthy eating because we are under the impression that it costs more. After all, organic foods and free range chicken always costs more at the grocery store. You can still eat very healthy, though, by following these tips. Get in on a co-op. In farmer co-ops, you pay a set fee and a farmer delivers a batch of fresh organic produce to your door every week. Costs vary widely, but are always cheaper than a similar product at the grocery store because you are cutting out the middle man. If there are no delivery options in your area, get together with a bunch of friends, contact a farmer and arrange to buy organic items or free-range meat in bulk. Then, split the cost. This is a great way to eat well for less.

Rely less on cookbooks. Cookbooks are great, but they often push you to buy items just for a recipe, and then these items tend to go bad. How many bunches of parsley have gone bad in your fridge because you bought them for one dish and never used 80% of the bunch? Waste is costly and you’ll afford more without it. Try to make your own meals with what you have on hand and use up the ingredients you do buy.
Learn to like your freezer. Buy items in bulk when they are on sale or in season and store them for when they are expensive.

Budget for your dining. Keep track of what you spend on groceries and determine how much you can really spend on food. Then, get creative to make that amount go further.…