Monthly Archives: January 2016

download (13)INCREASE YOUR SOURCES OF INCOME: This scheme is as old as the time of the development of commercial. Making more money is not easy, but when you widen your business outlets, there is bound to be a rise in incomes. There is no compulsion in any particular type of business you engage.

However, you must seek some understanding of the endeavor before dabbling in. Liken the scenario to the difference in the volume of water received when a single tap is opened to that when about four or five are opened simultaneously. More incomes translate to higher spending capability and less or no indebtedness. Surplus incomes enhance savings.

REDUCE WASTEFULNESS: There is no other habit as bad as wastefulness. Over spending and extravagance are other habits tantamount to it. Experts say that debt occurs, often, as a result of being wasteful. You should use just enough and desist from being extravagant. Save the rest for future usage. There is wisdom in that.

To reduce or avoid debts, do not over spend. Do not go to buy what you do not need, at least, for the immediate and the foreseeable future. Put the excess money into saving.

SET PERSONAL FINANCIAL GOALS AND MAKE BUDGETS: Who ever fails to plan; plans to fail. Set realistic financial goals and spending plans. Learn to make budgets in line with your income and make all possible effort to abide by it. Being within a specific budget regime helps you prevent unnecessary spending.

Goals are meant to be achieved, although, some could be hard, but at the least you will know that you have given it a trial. It helps you become more focused and determined. Budgets mean you will do just what is necessary. When there are excesses, you can save and forestall running into debt.

KEEP TAB WITH YOUR PROGRESS: There should be a feedback mechanism in your planning and budgeting scheme. Do checks and balancing regularly and periodically. It affords the opportunity to evaluate your progress. Practice, as it is usually said, makes perfection.

If you are faithfully interested in riding yourself of debts and improving your positive balance sheet, you must monitor the adherence to your budgets and the focus on your goals. Take decisions that will make adherence easier and realizable.

BE REALISTIC; KNOW THAT THERE COULD BE CHALLENGES: Life is not a bed of roses. Wishes are, certainly, not horses. That is the reason why beggars are possibly unable to ride. There are obstacles and challenges that could stand in your way against adhering to your scheme.

The main reason is that other unavoidable responsibilities can spring up. There are ups and downs littering the paths of life. That is the more reason for making realistic budgets that can take care of all possible exigencies. You should anticipate and be ready for life's ups and downs. There may be some emergency funds set aside to take care of these.

GET KNOWLEDGE; BE KNOWLEDGEABLE: Make effort to acquire knowledge in whatever necessarily available means. Modern economic situations demand learning in constancy. Read books, listen to lectures and talks, and ask questions about issues and topics that bother you.

Acquiring wealth and sustaining it need financial knowledge and understanding. Although it is not yet a serious in this part of the world, yet it is a good way to managing your finances; get a financial adviser. You could get rightful directions on what to do with your finances, boosting your savings and avoiding debts.

download (12)Have you ever tried to focus on accomplishing five different tasks at the same time? Or three? How did you end up performing them? Were you satisfied with the outcomes?

I am a linear kind of guy. When I try to do two things at once, both suffer. They take longer to accomplish than if I worked one from start to finish and then tackled the second project. If you have ever heard the phrase "the sum of the whole is greater than the sum of the parts", this describes my multitasking skill!

Paying off debts can be the same. The commercial I hear on the radio about "put an extra $10 towards each of your loans" sounds good. After all you are paying back some extra principal. But when you do this with a car loan, two credit cards and a store loan, you do not see any progress.

I always recommend to my clients that they pick ONE debt to throw their weight against. Pay the minimums on everything else and put the extra principal towards that one account. Highest interest rate, lowest balance, I do not care. I want my clients to see BIG progress against a bill.

When I was in the midst of my debt, I was paying extra towards each debt. And I was getting more and more frustrated. Why? Because I was not seeing any real progress. The extra $50 or $100 towards our car loan did not look like much compared to the $10,000 balance. But when we began to pay $500 extra each month towards our $2000 orthodontist balance, we saw big decreases FAST.

My motto is "Know Debt + KNOW Debt = NO DEBT". The results you see from seeing that one debt drop quickly keeps your heart in the game (KNOW Debt). This supports your brain (Know Debt) and the two working together will get you to NO DEBT.

Think of the sun. When it shines down on you, you feel warmth. But when you shine it through a magnifying glass, you have the power to burn things!

Or think about boiling water on your stove. If you put a pot of water out in the sun, the water gets warm but only tepid. Put that same pot on a stove and the water begins to boil rapidly.

Focus your extra money on one debt at a time. You will remain excited about your plan towards debt freedom because you will see and feel positive progress. The intensity of that magnifying glass will burn through your debts in no time!

download (11)When you read the forums on personal finance, debt and credit help, lots of people advise you should demand the collection agency remove your account from your credit report as part of the negotiation. This is called "Pay For Delete".

In theory this sounds great. Pay less than what you owe and have all traces of this debt removed from your credit report. There are even dozens of sample letters available online to help you work the magic and make the collections account disappear. But how often does it really occur?

It occurs much less frequently than those forum posters make it sound like! According to Allie Johnson at CreditCards.com, only about 10% of collection agencies will agree to a Pay For Delete. So for every successful story of a Pay For Delete there are nine other stories of rejection.

Why such a small percentage of success? Let's look at this from the standpoint of the credit bureaus and the collection agencies. The collection agencies are paid members of the three credit bureaus (Equifax, Experian and TransUnion). All members of the credit bureaus promise contractually to report accurate credit information. Whether positive or negative data.

If you were a member of a credit bureau and you were considering loaning money to someone, wouldn't you want to know the whole story about the person wanting to borrow your money?

The credit bureaus expect 100% honest reporting from their members. When a collection agency deletes negative information falsely (technically a Pay For Delete is a lie) it risks its membership being terminated by the credit bureaus. No collection agency wants that to happen.

Then why do some Pay For Deletes occur? The agency needs to collect money to remain in business. They either are splitting whatever they collect with the original creditor (an assigned debt) or they paid money and bought the debt from the original creditor (a purchased debt). In either case money needs to come in to keep the doors open!

So if you have a large debt (say $2000), the agency might risk an angry call from the credit bureaus if you were to pay them $1000. After all, cash talks! But if you have a $100 debt, it is doubtful that any agency would risk its membership if you offer $50 for the Pay For Delete.

Your chance for a successful Pay For Delete can increase if you can prove that you never got the bill. For example if you have a medical bill which was mailed to an old address and you can prove you were at a new address when the bills were sent out, then there is a legitimate reason for the collection agency to delete your account from the credit bureaus once you pay.

Pay For Delete was a popular trade many years ago but is very rarely accepted today. Collection agencies and creditors are required to remove inaccurate data from credit reports. But they are not required to remove accurate, negative data from credit reports.

 

download (10)(Disclaimer: I am not an attorney. Do not accept this as legal advice.)

I do not know about you, but I have lived in three states since I obtained my first credit card. Since moving out of California three days after graduating from high school, I have lived in Oregon, Washington, back to Oregon, back to Washington, back to Oregon again and then finally to Idaho.

I imagine many of you have lived in multiple states during your adult life.

When you miss your first credit card payment (or any other debt), two things happen. First, when you reach thirty days late, the credit card issuer reports you as 30 days late to the credit bureau(s) it belongs to.

Second, the Statute of Limitations clock begins to run. The SOL in each state sets the time limit in which a court proceeding can be brought against someone in a criminal or a civil case.

If you never pay that credit card, then the issuer or the collection agency which takes the account over can sue you for the amount up until the end of the Staute of limitations timeframe. For example here in Idaho, a credit card account falls under the definition of a written contract, which has a five year SOL. So if I missed a payment which was due on June 4, 2016, I can be sued for it up to June 4, 2021.

But what if I move during back to Oregon? Oregon has a six year SOL for credit cards. Did I just hose myself for another year? If I was to be sued in Oregon during that sixth year, I would argue the SOL had expired under the Borrowing Statute.

Most states have a borrowing statute law on their books. The borrowing statute allows the court to "borrow" the statute of limitations law from the state where the debtor lived at the time of the debt being incurred. This is designed to prevent creditors and other plaintiffs from "shopping" states to file their lawsuits in the state with the most lenient SOL law.

Back to my scenario, the suit would be filed in Oregon because it has the longer SOL. I would argue in my defense that the debt was time-barred because I had

  • Lived in Idaho when the debt occurred, and
  • Oregon's Borrowing Statute requires the Idaho SOL to prevail.

Of course the final decision would belong to the judge so this argument is not a guarantee! But if you ever find yourself in this situation, check to see if your state has a Borrowing Statute which can be argued in your favor. You just might avoid having a judgment issued against you.