6 Things You Can Do Right Now to Manage Your Credit Card Debt

How to Take Charge of Your Credit Card Debt

First Published Date: January 5, 2012 ADawnJournal.com

Credit cards are a modern-day necessity, and it’s unrealistic trying to survive without them. However, if you are unable to manage them, credit cards can take over your life. Let’s look at 6 simple things you can do right now to take charge of your credit card debt.

Stop Charging – If you have credit card debt that you can’t pay in full every month, do not charge anything on the credit card unless you have the money to pay it. This is your first step towards managing your credit card debt.

Avoid Making Late Payments – Always pay on time and never make a late payment. Late payments can affect your credit score. Pay at least the minimum if you are unable to pay the full for any given month. I have seen people not paying a 70-cents bill thinking it would not make sense to pay this small amount. They ended up paying a penalty for late payment and affecting their credit score. A small amount can drag you down a lot if it’s not taken care of in a timely manner.

Call and Ask – Call and ask your credit card companies for a lower interest rate and waive any penalty fees you may have occurred. Optimizebalance transfer offers to lower your interest on credit card.

Pay Extra Amount – Pay whatever extra amount, whether it’s a small or a big amount, you can possibly arrange to pay towards your credit card balances every month. If you look at paying addition amounts in terms of longer time frame, it will accelerate your debt-free endeavour a lot faster.

Be Aware of Credit Repair – The Consumer Reporting Act has rules regarding how long accurate information can appear in a report and no credit/fix companies have the authority to remove, erase, or change this in a consumers’ file. Beware of these companies claiming to fix your file.

Take Charge of Your Finances – Learn about managing money, investing, and building wealth for your financial future. There are many independent personal finance websites like A Dawn Journal, Canadian government websites, and U . S. government websites to help you build your financial roadmap.

5 Tips to Automate Your Finances and Manage Your Debt

Simple Debt Management Strategy

Published Date: January 19, 2012

Debt management is all about managing your finances efficiently, so you don’t fall in the trap of spending more than you have to. Money is such a thing that if you see it, you spend it. It may not be possible for some of us to stop spending unnecessarily if we have cash in hand. That’s why the best way to deal with it is to take care of your monthly recurring expenses automatically so you don’t need to worry about not paying that phone bill or occurring late charges on your rent or mortgage payment.

Here are 5 tips to automate your bills

1. Make a list of all recurring bills you pay every month. Some of these bills can be cable TV bill, Internet bill, cell phone bill, electricity bill, water bill, rent, mortgage, and so on.

2. Call each of your service providers and tell them that you would like to automate your bill payment so it comes out of your bank account automatically. You may need to complete a form and then mail or fax it back to the service provider to complete the process.

3. Automatic bill payment can be done using a credit card as well and in that case the whole process can be done over the phone – you may not need to complete and fax/mail back a physical form. However, use your credit card only if you pay your credit card in full each month. If you are trying to reduce your debt and you have had habits of not paying your credit card bills in full each month, stay away from paying bills using credit cards.

4. Make sure your bank does not have transaction limits or you are not exceeding your monthly allowed transactions, if you have a fee based bank account. I recommend no fee banking account such as President Choice No Fee Bank Account.  

5. It is possible to pay all your bills online each month once you get your bills by accessing your bank’s online banking. However, this process will cost you time every month and there are chances that you will forget to pay bills once in a while.

5 Moves That Affect Your Credit Score

What Lowers Your Credit Score?

First Published Date: October 27, 2011 ADawnJournal.com

Credit scores are very important if you are applying for a mortgage, a loan, credit card, and so on. A lower credit score will make your interest and payments higher, thus costing you more money. There are certain things you can do to avoid factors that lower your credit score. Let’s discuss them.

Making Late Payments or Missing Payments – This factor affects your credit score the most because 35 percent of your score is based on payment history. Paying on time can make the difference between an average and an excellent credit score.

Borrowing Too Much – This is the second biggest factor that lowers your credit score. Your outstanding debt counts for 30 percent of your credit score. If you have a high ratio of credit used in relation to your available limits (credit utilization ratio), it will lower your credit score. Don’t borrow up to your limits. Keep it 25 percent or less of your available limits.

Closing Too Old Credit Card Accounts – The length of your credit history counts for 15 percent of your credit score. To keep your credit score higher, do not close accounts that are too old. It is a good idea to keep a variety of credit card accounts active, especially those which are old.

Applying Frequently – If you apply too often for credit cards or other loan accounts, it will lower your credit score. Applying too many times for credit implies that you are desperate for credit and it affects your credit score. This accounts for 10 percent of your credit score.

Not Keeping A Variety of Credit Accounts – Your credit score will be higher if you have a variety of credit accounts. Having only one type of credit account will lower your score, as keeping a variety of credit accounts for 10 percent of your credit score. Keep multiple types of credit accounts active, even if you don’t use them. For example, an investment loan account, mortgage, store credit card account, regular credit card account, and so on. Sometimes a credit issuer will close your accounts if you don’t use it for a while. To keep them active, keep a very small balance and pay the minimum every month. Or, you can charge a very small amount once in a while and pay off the balance

What Is a Debt Consolidation Loan and How Do You Use It

What Is Debt Consolidation?

First Published Date : November 10, 2011 ADawnJournal.com

A debt consolidation loan is a loan to consolidate all your debts into one single loan and one payment. For example, let’s say you have four credit card balances, two retail store credit card balances, and other consumer loans for which you pay several monthly payments to each of these loan providers. A debt consolidation loan would pay all these loans and you are left with one single payment – which would be a lot less headache and a better money management option to handle your daily finances.

Advantages of a Debt Consolidation Loan

Lower Monthly Payments – If you were previously making 10 payments , making one payment will likely lower your monthly payments.

One Single Monthly Payment – You will be saving time and hassle by making one payment every month instead of many payments.

Save Money on Interest – Interest charged by your loan provider will be lower than those of your credit card or store card loans, thus saving you a lot of money on interest.

Disadvantages of a Debt Consolidation Loan

Further access to credit – A consolidation loan will free up your credit or store cards and you will have access to more credit than before. If you are not able to control yourself, you will likely end up sinking yourself more into debt.

Collateral – Your financial institution may ask you to provide some sort of collateral against your consolidation loan.

A longer term – Because you are dealing with one large payment, your payment term will be longer and it will take you more years to payoff your loan in the end.  

A Few Things to Remember

– Don’t forget that not all debts are eligible for a debt consolidation loan. An example would be your existing mortgage. Your financial institution where you are obtaining this loan from will be able to tell you what types of loans are eligible and what types of loans aren’t.

– Also, you may not be eligible to obtain a debt consolidation loan if your credit score and other circumstances do not meet the requirements of your financial institutions’ eligibility criteria.

– Don’t forget to make a list of your all outstanding loans and take this list with you when you visit your financial institution.

– Don’t take your consolidation loan before checking with a few financial institutions. If you shop a few of them, you are likely to find a better rate then just taking it from the first institution you walk into.

If you can discipline yourself to not wrap yourself up with more loans, a debt consolidation loan is worth considering and it is your first step to take control of your personal finances and walking out of debt.

Do You Need A Financial Advisor When Going Through Debt Management?

Is A Financial Advisor Right For You?

When you are going through debt management, one of the things you have to look at is how your money is being spent and whether or not it could be spent in a better way. One way you can do this is to create a budget, which is free but the temptation to break your budget is always there.

When you decide to lose weight, you will go to the gym and get a personal trainer. The purpose of the personal trainer will help you lose weight, but at the same time they will help keep you on the straight and narrow, educating you in weight loss and getting fit. From that same philosophy, you can look at getting a financial advisor to help you when you are dealing with debt. A financial advisor will work like a personal trainer. The financial advisor will meet with you and help you do several things. First, and possibly most importantly, the financial advisor will educate you on your finances. They will tell you what you are spending too much money on, what you can save money on and how you can build up a savings that will pay off your debt quickly and easily.

Like a personal trainer, the financial advisor will also keep you on the straight and narrow. When you have a budget, sometimes the desire to go off budget is there but a personal financial advisor will keep that from happening. They will watch your finances and alert you when you are getting close to reaching your budget limit.

A personal financial advisor can be your best friend but you must remember that they will be costing you money. Financial advisors do not do their business for free and it may seem counter-productive to pay someone to help you save money but financial advisors can really do a lot to help you. They are trained to understand finances and debt and to help you understand them as well.

When you are looking for a financial advisor, you may want to talk to friends and family to know who they have gone through. Trusting your personal advisor is very important because that will ensure you will follow their advice. If you are going to work with a financial advisor, do your research and find out what credentials that they have. If they have good references, they may be the best help you can have when dealing with debt management.

Don’t be afraid to talk to other clients of the financial advisor to learn how the advisor does business, how helpful they are, how open they are to questions and more. Just by doing these things, you can find a financial advisor who will help you get rid of your debt, understand your finances and get back on the road to financial recovery. Sure, you pay a bit extra for a financial advisor, but it is well worth it considering how much you can save.