Author Topic: How To Become Debt Free  (Read 6097 times)

Offline Mark Austin

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How To Become Debt Free
« on: May 29, 2010, 05:57:15 PM »
How To Become Debt Free

In this report we are going to discuss how to successfully manage your money and become debt free. Let's start with a few basic tips that will get you started on your journey to financial freedom.  We all know that keeping yourself out of debt can be challenging as well as frustrating, especially in today's tough economy.

It requires hard work and commitment, because you have to learn how to make positive changes to your spending and saving practices. It can be difficult for anyone to make these types of changes and it will take time to learn how to properly manage your money and your debt.

When it comes to effectively managing your money and being debt free there are certain steps that you can take to help make the process easier. The first thing you should do is develop a plan and then set out to follow it as closely as possible. Today we are going to go over a few tips that will help you create an effective plan and stick to it!

The first thing that you should do is to evaluate your overall financial situation. You must know how much income and debt that you have. You also need to understand how much interest that your debt is incurring. These amounts will help you to formulate a plan and set your goals. If your plan is to become free from all debt, you have to fully understand your debt first.

One simple thing that you can start doing right away is to pay more than the monthly payment due on some or all of your credit accounts. Many people go under the assumption that by paying the minimum monthly payment on their credit cards that they are doing everything that they can to reduce their debt. When in fact won't get rid of the debt and in some cases, your debt can continue to rise. That is why it is important to try and make an extra effort to pay at least a small amount more than the minimum amount due on your monthly payments. The more you can afford to pay a month, the better off your finances will be.

You must budget out your paycheck. You need to budget for payments such as rent payments, car payments, and insurance payments. You should also budget out a specific amount for gas and groceries. After you have accessed these needs, you can budget in the amount of money that you want to pay on your debt. This will help to keep your current finances secure.

When you are creating a plan to manage your money and your debt you will want to start saving money as well. A solid savings account can help prevent your debt from spinning out of control. While you may not be able to contribute a lot to your saving account every paycheck, the account will eventually grow into a stable and reliable account.

Trim down some of your spending habits. Most people have a habitual spending habit that will drain a big amount of their money every month. Think about a specific spending habit that you have. Some people go out to eat a few days a month. Others need their cup of coffee from their favorite coffee shop every day before work. Try adding up these extra spending habits and you may be surprised to discover how much they cost you. Taking these extra expenses out will help you to set aside that money to your savings account or to pay off your debt faster.

When you set out to take control of your money it is very important for you to evaluate your overall financial situation before you create your plan. This will allow you to understand your situation fully and when you understand the situation, you can plan for monthly expenses. This plan will help you effectively manage your money, your debt and plan for your financial future.


Develop A Solid Money Management & Debt Reduction Plan

More and more people find themselves in debt and incredibly stressed over it these days. To get rid of this stress you have to create a solid plan for managing your money and getting out of debt. The simple fact is without a good plan chances are you're not using your money in the most effective way.

As we discussed earlier, before you begin, you'll need to figure out how much income you have and how much debt you owe. Start by figuring out how much of your income it will take each month just to cover your basic expenses and the minimum payments on each credit account you have. This will show you how much you absolutely have to set aside to keep your bills current.

One of the next things you need to do is determine which lines of credit have the highest interest rates and which ones you have had the  longest. By eliminating the highest interest credit accounts first, you'll save more money and reach your goals faster. If the interest on your credit line is high, that means you are paying them a lot of money that doesn't get put toward your principal. If you have extra money, even a small change each week that you can pay towards these lines of credit along with the minimum payment, you will pay them off faster and pay them less money in interest. Many people don’t realize what an important step this is when it comes to getting out of debt.

Keep in mind when you are developing a financial plan that it involves reducing your balances as quickly as possible. Just paying the minimum amounts isn't going to help you achieve your goals quickly. You'll also need to be disciplined and don't be tempted to apply for any new credit while you're working through your debt reduction plan. This also means not charging new purchases to credit.

Equally important is finding a way to reduce your expenses, even a little. When you're spending less on your expenses, you have more money available to put towards paying down your debts faster.

While paying extra money may seem like a big task, it is really beneficial. It gets more of your debt paid off and also helps you to improve your credit score. Even paying a little bit of extra money to a credit line is always reported to credit bureaus, and reflects very well on your score. So if your credit score isn't great, this is a good way to increase it a bit.

Another important point in your getting out of debt plan is learning to re-allocate your income and prioritize your spending differently. Resist the urge to go out any buy something else you have been wanting. Create a plan to save enough money to buy those things in cash, or use lay-away. This is an interest-free option so you know you're only paying the amount of money on the ticket price instead of having interest added to the purchase cost.

By creating a getting out of dept plan, you are doing yourself a huge favor. This is a great way to take control of your credit and keep your finances from getting out of control.


Stick To Your Financial Plan

As we have discussed before, a solid plan for managing your money is the best way for you to reduce and eliminate your debt. This plan will help you to stay on track and will help you reach your goals and eliminate your debt. It can be difficult to stay on the path to financial freedom and there will be times when you stumble, but it is important that you do everything that you can to get back on track. Here are a few tips that can help you stay focused and stick to your financial plan.

Set attainable goals
It can be easy to set lofty goals. Often people will set goals to help them reduce debt in an incredibly short period of time. These goals are simply too unrealistic to reach. When you make your plan be sure to set realistic goals. These attainable goals will help keep you on track. Goals that are unreachable will only make harder on you in the long run and you may end up disappointed and disheartened.

Check your progress often
You need to check in with your goals as often as possible. By checking in, you can know if you are on track to meet your goal for that specific time period. You may be well ahead, or far behind, of your goal. Checking in can help you to readjust your plan as time goes on.

Talk to a financial counselor
If you are putting a plan into place, talk to a financial counselor. The counselor will be able to help you with your plan. They will give you tips as to the best goals for that plan. The financial counselor should be able to direct you to the right path for managing your debt quickly and efficiently.

Set up a support system
Friends and family members can help you to stay on your management plan. Tell them about your financial plans. Ask them to help you stay on track. They can offer encouragement when you meet your goals. They can also offer warnings when they notice that your financial habits are not in line with your plan. A support system can help you to stay focused and motivated as you reduce your debt.

Watch your spending
If you are following a plan for managing your money and your debt, you have to make a conscious effort to spend less. When you spend less, you can put the money towards your debt. Spending too much only will slow down your overall success.

You want to make certain that you are doing everything possible to manage your money and reduce your debt. Remember, your plan is your tool for success. By setting attainable goals and checking on your progress, you are constantly analyzing that plan. This will help you are stay focused and on track.


Several Important Facts About Credit Cards

When it comes to credit cards and credit card debt there are many misconceptions that surround them. These misconceptions can hurt you as you work towards paying off your debt. Knowing the facts about how credit cards work will help you to better understand your debt and what you can do to eliminate that debt once and for all. Let's go over a few basic myths about credit card debt that can help you take control of your financial future.

Interest rates change
Interest rates are not set in stone. While you may enjoy a low interest rate now, that interest rate could jump without notice. While laws are being passed to change the rules regarding interest rate changes on your credit card debt, they can still change at any time and leave you deeper in debt when they do. By sticking with monthly payments and by religiously paying down your debt, you can avoid these interest rate changes.

*side note*
To illustrate this point, I'll share a quick story with you. I have a friend who always pays his bills on time, but somehow managed to misplace one of his credit card statements. He eventually realized his oversight and paid the bill, but he was several days late with his payment. As a result his credit card company raised his card interest rate from 11.4% to 29.9%.

Minimum payments are not enough
As I have mentioned before, many people believe that the minimum payments that they are making will be enough to pay down their credit card balance. They don't realize that on many of their credit cards the interest charges every month can actually add up to more than the minimum payment due. The fact is that if you are only paying the minimum payments due on your credit cards, you may be getting deeper in debt than you realize.

Debt continues to go up
More often than not when people are dealing with debt, they tend to go into more debt. They will open up new credit cards to help pay off their old credit cards. Eventually, they realize that they have dug themselves deeper into a hole.

Did you know that credit card debt continues to go up and is rising by at least 1% every year?  It is increasing more on the personal level. Slowly but surely, the average household debt is rising. According to a Nilson Report from April 2009, the average credit card debt for USA households has jumped from $10,737 to $10,779; an increase of over $40 in less than a year, from 2007 to 2008.

More people are going into debt than ever before
As a nation, America has almost $1 Trillion in credit card debt alone. This number continues to grow and just in the past year over 700,000 people obtained one or more new credit card accounts. This means that over a half a million people went into credit card debt in the last year.

Credit card debt is easy to fall into, especially when you find yourself facing financial hardship and as debt continues to rise for individuals, and for society as a whole, preventing yourself from creating new debt as you work to overcome your current debt is harder than ever before.

That is why it is vital that you create a solid plan to manage your money and stick to it as closely as possible. If you can cut down on spending and increase your payments even in small amount it will help you avoid the issues that come along with credit card debt Knowledge is power and by know the facts you can take the best possible approach for your financial future.


Financial Factors Used To Calculate Your Credit Score

When it comes to managing your money and reaching your financial goals your credit rating is extremely important. Having a good score opens doors for you and an unsatisfactory score will slam them in your face. Your credit score actually represents the risk that the lender assumes in order to loan you money and determines how big your loan can be. So what are the factors that help calculate credit scores?

Payment history
The record of payments you have made to all of your creditors is the biggest factor (35% of your score) that's taken into consideration when figuring out your credit rating. It doesn't take much to lower your rating. Even late payments take their toll. Of course, missed payments and defaults on debts will make a bigger mark. Any bad marks on your credit report will stay there for seven years, with generally no exception. Even if you've paid off the debt, it will most likely not be erased from your report until the 7-year period is up.

Credit card usage ratio
Your credit card usage ratio (30% of your score) compares the amount of credit you have available to you to the amount you are using. Your score is better (higher) if you are not using all of your credit. If you think that paying off an account and closing it is a good idea, think again. That could actually drop your score in this department. The best solution is to have several accounts open and not use all of them. This is viewed upon as an advantage by potential lenders.

Credit history length
How long you have been using credit is another issue when it comes to how to calculate credit scores--it accounts for about 15% of the total. Again, if you remember that your credit score is what lenders are looking at to determine your loan eligibility, you can understand why this is important. They tend to view someone who has long credit history and a few marks against him/her as more favorable than someone with a short, perfect credit history. This is a good reason to have your child start making credit history early (and in a responsible way with your guidance).

Credit variety
This makes up about 10% of your score. Believe it or not, it helps your score if you have many types of debt (credit cards, mortgage, car loans, etc).

Your stability
This includes how long you've been at your job, how solid the job is and how long you've been living at your current address. If you've been at your address for less than three years, this is viewed as less than stable.

Now you know what factors are used to calculate credit scores. Understanding them is important because it allows you to take action on certain aspects that you have the power to change. Hopefully you can use these guidelines to establish good credit or bring your current credit score up a notch or two.


Basic Budgeting Tips

A budget is basically a money plan, just like we have discussed before, you must create a plan for managing your income, reducing your debt and outlining your financial goals. Having a budget will help you to establish and regulate your income, set and achieve your financial objectives, and make good decisions as to how you want to manage your money. The main idea behind creating a budget is so that you can put aside a certain amount of money for expected as well as unexpected costs.

The initial step you should take when it comes to planning your budget is to determine your long term income and define your fixed expenses like car payments, housing, insurance, etc. You will also want to keep track of your expenditures thoroughly for a month or two, so you can completely understand where your money is going. By keeping track of your “spending patterns”, you can quickly identify solutions and create an effective budgeting.

For instance, when you have a steady monthly income of $4,000, you should subtract all of your monthly bills from that income. Then other bills can be assessed and then subtracted from your income as well. The balance that remains after all fixed costs are deducted can then be used for your household budget.

Rather than allocating money for miscellaneous like gas, clothing, entertainment and groceries, financial planning will allow you instead to use proportions or percentages of it. The idea is to formulate goals and plans, then stick to them as closely as you possibly can.

Here are some basic tips on how to create and effective budget:

Use common sense when it comes to managing your money. Your attitude is essential. Decide on a plan and recognize the significance of reducing expenditures. Remember that it is going to involve a lot of sacrifice.

Know your situation. Start by making a list with your earnings on one side and your expenditures on the other side.

Know the difference between luxuries and necessities. Write down what expenses that you consider luxuries then red use the list by half. You will be amazed at how much you can save.

Practice being frugal and keep in mind that you don't have to give up everything that you enjoy to save money. Just pick and choose things that are really important and learn how to have fun without spending a lot. For instance; rather than going shopping, play with the child at the beach or at the park.

Budgeting is an effective and fundamental tool that is vital when it comes to managing your money and by following a few simple rules you can effectively learn how to manage money, reduce your debt and reach your financial goals.


How To Cut Costs & Reduce Your Debt Load

The simple fact is that if you are trying to effectively manage your money and reduce your debt, you have to spend less money. It's basic common sense, the less money you spend the more you can put towards eliminating the debt that you have collected. (hmmm ... try telling that to our national governments!)

While some people will go to extremes to spend less money, these drastic measures are often unnecessary. In fact it is the small changes that you make that will have the most impact on your finances. Most people don't realize how much money they spend on low cost items everyday and that by trimming little expenses they can reduce their spending without feeling like they have to make big sacrifices to reach their financial goals.

These small savings can have a big impact when you apply them to your debt over time. Here are a few quick ideas that will help you decide how and where you can trim down your spending and reach your financial goal faster.

Set up automatic payments
If you are trying to reduce excess spending the first thing you can do is remove temptation, by setting up your bank account to withdrawal automatic payments for your regular monthly bills. This way you will know that the money is already spent and you will never miss a payment.

Make your morning coffee at home
Most people don't realize how fast their drive through morning coffee costs can add up. Let's say you purchase a $4 mocha latte every day on your way to work. 5 days equals out to $20 per week and adds up to $80 every month. That is a grand total of 960 every year just for coffee. This one small change could decrease your debt by nearly $1000 every year. Find one of your unnecessary rituals, and calculate the money that you could save.

Tech down a little
1000 channels and there is still nothing on. Try cutting out the premium movie packages on your cable bill. Have extra minutes and texts left over on your cell phone every month why not switch to a smaller plan. By cutting down on your texting by a small amount, and limiting some of your channels, you can save a decent amount of money. Much like the morning coffee, over time, this method could make a noticeable dent in your debt.

Stick to the list
Start writing down your grocery list. Write down all of the things that you plan on buying at the grocery store. When you go to the store do your best to stick to the list. This can help you curb excess spending at the grocery store. People tend to ignore the smaller amounts that they spend every day. They don't think about the $4 coffee that they purchase five times a week. They ignore the extra minutes and text messaging on their phones, and the premium channels on their cable bill.

Take some time and keep track of your little purchases for a week or two and then sit down and decide where and how you can cut back on your extra spending.  Small changes can add up to big savings over time and they can be used towards reducing your debt.


Improving Your Credit Score

The average credit score for most Americans is estimated to be about 690. If you don't know your credit score and are planning on purchasing something that requires a loan, it's probably a good time to find out how you rank in terms of credit. While it is commonly (and mistakenly) believed that having debt is "bad", the truth of the matter is that debt itself isn't bad, it is the way that you manage your debt that can get you either a good or bad credit score.

Whether you are below or above the average credit score, there are a number of things that you can do to improve your score and a number of things that you should avoid if at all possible. In order to raise your score, first make a commitment to paying your bills on time. If you are having trouble paying all of your bills, the one that you need to pay no matter what (even at the expense of others) is your mortgage. Missing a mortgage payment is a much bigger blow to your credit than a missed or late credit card or utility bill payment.

Next, consider opening up new lines of credit for a rainy day. Do not go credit crazy and open up a bunch of accounts at once. But every 6 months or year you can apply for a new credit card and not use it. This raises your unused credit amount and also your score. If you are maxed out on all of your credit lines, this brings down your score.

Once factor that goes into your score is how many different types of credit you have. If you are balancing a mortgage, car loan, and several credit cards, this shows that you can manage various forms of credit and that fact weighs in positively on your credit score. Keep in mind that longevity is also important. The longer you can go on paying your bills on time, opening up new credit lines (while not using them) and balancing a variety of credit accounts, the better your score will be.

Just to recap on what you need to avoid in terms of maintaining good credit status or improving below-average status:

- Do not delay or skip a mortgage payment.
- Do not make requests for new credit lines all at one time.
- Do not close down credit accounts, even if you are not using them. Leave them open to show that you are not using all credit which is available to you.

If you are in the average credit range, you shouldn't have any trouble getting any type of loan. However, you will not be paying the best interest rate on your loan. A person with a credit score of 520 will pay almost four percent more on interest than someone in the highest ranking credit bracket. That is a significant difference. And if you are in the lower bracket, think of how much you will save by working to bring your score up. Being among the above average credit scores is definitely attainable if you make a solid plan for managing your money and your debt.


Should You Use A Credit Repair Specialist

Perhaps you have been turned down for new credit or you want to raise your credit score so that you can qualify for a home loan.  For what ever reason sometimes we feel as if we can't properly manage out debt. Well the simple fact is that you don't actually need a specialist.  You can repair your own credit with a little bit of time and effort.

As we have discussed before, the first thing you need to do is find out where your stand financially and what problems you are up against.

Get a copy of your financial records from all three of the credit bureaus and see what information is held on file.  Is it accurate?  There are often mistakes on file and these can be rectified by contacting the individual companies. You only need to contact the bureau if the finance companies refuse to correct the errors. The bureau will require written proof of the mistake and copies of all correspondence regarding the case.

If there are no mistakes and your credit record has been affected by poor financial management, now is the time to start sorting it out.  If you have existing facilities you need to contact each individual creditor and make a new arrangement to repay your debts or else offer a lump sum settlement to close your accounts.

If you have old accounts on record that have been cleared in full but not closed, you need to sort this out. One factor that influences your score is the number of open facilities available to you and these dormant accounts may count against you.

Also be very careful about applying for new lending facilities. Numerous applications will count against you as it will appear that you are desperately seeking new finance.  Always check your records first, make sure you have completed the application form accurately before applying for new borrowing to increase your chance of success.

Your new lender will not just look at your credit history.  He will also look at how long you have lived in your current address, been in your job, qualifications and the number and type of dependents you have.

You should then apply for a secured credit card. This type of facility requires you to lodge the cash equivalent to your limit with the institution.  But you can use the card in the normal way and every month when you repay the card in full, your credit record will improve. But you must make sure that the company makes reports to the bureaus as not all do.

You also need to be careful that you do not have to take out expensive insurance cover and watch the annual fees as they vary considerably from one lender to another. It is steps like these that a credit repair specialist will suggest you take but will charge you a fee for giving you advice. You need all the cash you can get in order to repay your existing debts and get a handle on your finances.

One last tip is to open a savings account and begin a habit of saving regularly as this will also help your case. It doesn't matter if it is only a small amount every month. What counts more is that it is regular and consistent.


What If You Are In Too Deep?

There are some people who must deal with debt that they have consistently gained over the course of time. There are others who must deal with a unexpected event that puts them in sudden debt. Needless to say, a huge amount of debt is difficult to deal with regardless of how it was accumulated.

You may be thinking to your self, "Well, this is all good info - but I'm so far in debt that I'll never get out ..."

If that is your situation, then it is important for you to consider all the options for debt management.  You may be wondering whether or not you should use a credit repair specialist.  Let me just warn you - be careful. Not all credit repair companies are legit. In fact, the majority will make all sorts of exaggerated claims about their services & take your money for services they cannot provide.

I do have a possible solution for you though.

I happen to know an honest, legit debt reduction company (run by an honest man) who might just be able to help you. The companies name is Hoffman, Brinker & Roberts (you can see their site here)  and it's run by Mark Brinker.

They specialize in debt reduction - what they do is they'll negotiate with your credit card companies to reduce the overall balance that you owe. I personally know a guy (well, he happens to be a close friend) who lost his business & as a result he run up a large sum of debt. After much research, he contacted Brinker. They negotiated a deal with his credit card companies and saved him 68% on his balance owed.

Needless to say, my friend speaks very highly of Hoffman, Brinker & Roberts and he mentioned to me that they have an informative video about debt settlement. If you are considering this option, then you should watch their video. You can view that video here. I normally do not endorse companies, but I strongly endorse Hoffman, Brinker & Roberts.


Get To Know The Three Major Credit Reporting Agencies

Commonly known as credit bureaus, credit reporting agencies collect all kinds of information that is relevant to your "credit life" and sell it to businesses and consumers. There are many types of these agencies, but the three most recognized are Experian, Equifax and TransUnion. Almost all creditors and lenders will report their information to one or more of these 3 credit score agencies.

Equifax is the largest and longest-running credit bureau and its headquarters is located in Ireland. Experian is also headquartered in Ireland and began operating in the States after its purchase of TRW Information services in 1996. TransUnion is the smallest of the three companies.

One of the factors that Equifax, Experian and TransUnion all have in common is that they maintain their own bureau credit reports which are compiled from the consumer credit histories collected from lenders. This is one of the reasons that credit reports may vary depending on the bureau that issues the report. Not all creditors submit their data uniformly to each bureau.

Another common concept is that each of the 3 credit score reporting agencies also has its own credit score. But while Equifax and TransUnion both use the FICO score algorithm to calculate their scores, Experian uses its own scoring model software. Most people recognize the FICO scoring model: over 90% of banks and other financial institutions use this to gain insight into a person's credit worthiness.

If you're questioning the power of the these types of agencies, you'll be happy to know that the government has a federal law (called the Fair Credit Reporting Act--FCRA) that protects consumers from unfair credit reporting business practices. The Federal Trade Commission (FTC) supervises the enforcement of this law.

One stipulation of the FCRA is that it allows consumers to request a free copy of each of their credit bureau reports one time per year. You can make your request for your credit report at: AnnualCreditReport.com.

But you are not allowed free access to the credit scores themselves this is not stipulated by the Fair Credit Reporting Act. You can pay to view your credit score and some promotions will offer a one-time access for free as long as you purchase something else. Good practice would be to periodically check your credit report to make sure all the information is correct. It's a good way to prevent fraud which can, of course, be very damaging to your credit profile as well as a means to better managing your finances.

Just by knowing what your credit score is puts you ahead because being aware of your status can help you to prevent your score from dropping. Most financial institutions and even some employers use credit scores to evaluate risk. Knowing your credit score is equally as important. Because many financial institutions use scores as risk indicators, preventing a low assessment of your score can open doors of opportunities for a better lifestyle. Find out what yours is from any one of the 3 credit score credit bureaus.


Simple Strategies To Prevent Credit Card Fraud

With today's technology, it's becoming more and more difficult to protect yourself from credit card fraud. It seems as soon as an effective method to protect information is developed criminals find a new way to get around the safeguards. When you use credit cards you will always have some level of risk, but the good news is that by following some simple strategies you can greatly decrease those risks.

Here are some simple things you can do to protect yourself and prevent someone from racking up debt in your name.

Make sure you check your credit report at least yearly, and make sure you check all three reports since there can be different information on each one.  If you notice something unusual contact the credit bureau immediately.

Shred all of your documents, particularly credit card statements and credit card offers you receive in the mail.  Also, contact any companies who are sending you card offers in the mail and request that they stop sending them to you. All it takes is one thief to grab a credit card offer out of your mailbox and activate the card and you can have  a very hard time sorting it all out and getting that fraudulent activity off of your credit report.

Also, don't take your trash out at night.  You may find it hard to believe but thieves will actually steal your trash bags and look through them for any type of personal information.

Don't carry a lot of credit cards with you, only carry the ones that you use the most often, or better yet, don't carry a card with you at all unless you are going to go shopping.

Don't sign your name on your credit card. That really doesn't offer you any protection since a thief can see how you sign your name and copy it.   A better alternative is to sign the back of your card with 'Request ID' or something like that, then a cashier has to ask for more identification.  It might be a little more time consuming but in the long run this simple step could help save your credit score and your good name.

Never give out your credit card number, or any personal information, to anyone on the phone unless you are the one that made the call. There is technology available that allows anyone to program any name or number they want to show up on your caller ID.
 
Just because your caller ID is showing the name of your local bank, it doesn't mean it's your local bank.  It could just as easily be a scammer who is using the technology to make their phone number show up as the phone number of your bank. If you're ever in doubt, play it safe, end the call and call your bank back yourself.

Too many people take fraud too lightly.  It seems that just because the bank or credit card company doesn't hold you responsible for fraudulent debt that people don't care.  Well they should.  The bank is not going to pay all those fraudulent charges themselves, even if they don't charge you for them directly, they are charging you, and all of us, by having increased fees.  Preventing credit card fraud is easy to do and will benefit all of us.


Why You Should Open A Savings Account For Your Children
 
As parents it is our responsibility to care for the needs of our children. We usually think of things like providing them with food, clothes, a warm safe place to live and an education. One thing that often gets overlooked though is helping them learn how to handle their finances. A great way to get them started on the right foot would be to open savings accounts for children.

By opening this account you will be helping your child out in several different ways. The first, and most obvious, is that you will be saving money that will help them pay for college, or a first car.  The earlier you start the less you will have to put aside each month to reach your desired goal.  It won't add up quickly, but it will add up.

Another huge advantage to encouraging smart financial habits from an early age is that when your children leave home they will have the knowledge they need to make smart financial decisions. It seems hard to believe, but the truth of the matter is that many children start to get in financial trouble at college. Credit card companies will camp out on college campuses and encourage students to sign up for credit cards.  If the child don't have a sound financial education, and most don't, they will get in over their heads very quickly.

Their credit can be ruined before they're even old enough to drink! By teaching your child how to balance their spending and saving habits from an early age they can avoid the traps that have ruined the financial future of so many before them.

Make sure to teach your child that it's not just about hoarding or saving. You have to also teach them that they can have fun with their money too, as long as it's done responsibly. Nothing feels better than taking that hard earned paycheck and making a purchase. It's also important that your child learn how to make smart purchases. You can teach them how to be savvy shoppers.

You don't want your child to grow up being a cheapskate or money miser any more than you want them to grow up to be a frivolous spender. Balance is the name of the game when it comes to managing finances. So to make sure your child has a good education in reading, writing, math and finances, help them out when you open a savings account for your children while they are still young. The will have a lifetime of financial security to show for it.


“Keep away from people who try to belittle your ambitions. Small people always do that,
but the really great makes you feel that you, too, can become great.”
~ Mark Twain

Offline Donald

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Re: How To Become Debt Free
« Reply #1 on: July 10, 2010, 05:08:01 PM »
An excellent topic Mark. As someone whose debt went out of control recently through a business that didn't work and ended up going for bankruptcy. For those who are in debt and if it's manageable read Marks report carefully and digest. Regarding my debt there was too much to manage, there was only one way out and that was bankruptcy. Obviously every case is different. We went for advice at a local Citizens Advice Bureau (UK) and we discussed the situation. ( I assume each country has there own form of CAB.) It was decided to go down the bankruptcy route. It was embarrassing for a while, I don't know why but it was.

I got all the debt papers together and went to see our adviser. He did all the paperwork, all we had to do was sign the papers and pay £100.00 each. The paperwork was then sent to the Accountanat in Bankruptcy. After a couple of weeks my wife was declared bankrupt and a few weeks later I got mine through.

Let me tell you what a relief that was. A millstone that was round my neck was gone. Don't get me wrong, you did feel some guilt  because creditors would not get paid. I did feel for the smaller businesses I had been dealing with.

Remember, BANKRUPTCY is a last resort. If you can clear your debts over a period of time, do so. At the moment I can only earn a certain amount. If you exceed that amount you have to start paying back some of your debt. After one year you can be discharged from bankruptcy and you can start again although it will remain on your credit file for a number of years.

One other thing the day after you have been declared bankrupt, bills that come in after that date have to be paid. You cannot say that you are bankrupt, only debts before that date count. My problem at the moment is I cannot find a job. I have to watch before I struggle to pay bills again.

Good luck to those who are struggling. I hope you get into the black asap. Remember bankruptcy is a last resort. If you are in difficulty go to your nearest debt advisory service.


samoyin

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Re: How To Become Debt Free
« Reply #2 on: September 14, 2010, 08:55:53 AM »
Great Write up, really helpful. I guess taking action will solve the problem of financial crisis.

Thanks

ContentWriter

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Re: How To Become Debt Free
« Reply #3 on: September 14, 2010, 12:27:58 PM »
 ::P

A belated but hearty welcome to you Sam!

~Karen
Your Go to Gal

Offline KarenMcG

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Re: How To Become Debt Free
« Reply #4 on: September 24, 2010, 10:26:44 AM »
Hi Sam ::P

:welcome: to RRW.

It's nice to meet you.

Karen


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Re: How To Become Debt Free
« Reply #5 on: September 24, 2010, 04:23:21 PM »
Hi Sam,

 :welcome: to the forum.

Donald

Offline Jim Burney

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Re: How To Become Debt Free
« Reply #6 on: September 24, 2010, 07:58:05 PM »
Hi Sam

Welcome to the RRW forum.

Jim