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With me “credit” is (almost) a dirty word. I don’t take out loans. I don’t use credit cards. And (shocker here), I’m perfectly happy! I’m not the only person I know who stays away from buying on credit either. And interestingly, those I know living cash-based lifestyles tend to be the happier folks financially — less stressed out, fewer bills to worry about, less buyer’s remorse, etc.

Now I’m not going to say that a cash-based lifestyle is for everyone, and I don’t judge anyone else in a negative light because they choose to finance things. It’s just not for me. And given the state of the economy and how many people got in way over their heads in part because they couldn’t manage credit, I’d say it’s not for a lot of other people too. So today let’s look at the other side of the coin — surviving without credit, and why it’s not as bad as some people make it out to be.

Reasons People Give for Buying on Credit

People tend to give the same few reasons for why they think credit is a great thing. And not a single one of those reasons applies to everyone, including me. Here are a few:

1. Credit cards and loans give you more buying power. — To that I say, not everyone should really have more buying power. What happened to living within our means and buying what we could actually afford to pay for? That’s precisely the mentality that leads to people charging more than they can handle or buying more of a house than they can afford to pay for. Is that true of everyone? No. Some people are incredibly responsible with lines of credit. And to them, I say go for it! But sadly many are not. And they’re the ones who should re-think this reasoning. Personally when I want more buying power, I find ways to make more money. I do more than fairly well for myself and I can afford most things I want. I know not everyone is at that level right now. But I wasn’t always either. It comes down to determination and hard work, but once you get there, you might never want to look back.

2. Credit cards are convenient. — To that I say, so is your debit card. A cash-based lifestyle doesn’t mean you have to physically carry cash around with you. It just means you only spend money you actually have.

3. Credit cards are an emergency funding source. — To that I say, try building an actual emergency fund instead. You’ll be amazed at the peace of mind that comes from knowing you could get by for several months or more even in a worst case scenario like a medical disaster or losing a job. And your real emergency fund won’t charge you interest when times are already tough.

Misconceptions About the Cash-Based Lifestyle

Like I mentioned, some people can responsibly use credit, and they choose to do so. And there’s nothing wrong with that. The cash-based lifestyle that I prefer is just one option. And there are plenty of misconceptions about that option that I feel drive some people away before they really get to understand it or try it for themselves. Here is the biggest misconception I’ve come across:

You won’t be able to afford anything, or what you can afford won’t be nice.

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Not true. I know someone who’s paying $400 per month for their car payment. My cars are paid for in full — I’ve never paid a car payment in my life. That means I have hundreds of dollars in my pocket each month that she doesn’t have (meaning while her “extra” money goes to the bank to pay down the car loan I can afford to save it, buy play tickets, take weekend trips away, etc. that she would love to do but can’t). But we both have cars that we love. Given, mine’s much older, but she’s in pretty good shape and has years’ of life left in her I’d say (I’ve learned not to be the kind of person who abuses their car or who insists on having a new one every few years just to say I have a new one).

When it does come time to buy another car, I don’t plan to finance that one either. A friend’s boyfriend recently said to me that he wouldn’t want to do that because he wouldn’t want to be stuck buying a “beater.” And there’s the misconception for you. He assumed that paying for a car outright meant I’d have to buy crap. But no…. I’d simply save enough to buy the car I want, and pay for it without interest accumulating. If you plan ahead, you can buy any car outright that you would otherwise buy through financing.

Frankly I can afford to do just about anything I want with my time, while many of my credit-reliant pals cannot. It goes back to putting the emphasis on making enough money to live the life you want rather than relying on someone else to lend you the money so you can buy now and pay later. When you do that, you run the risk of “paying” for the rest of your life.

How You Can Get Started

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Now look. I know I’m “lucky” to some degree because I make a nice living and can afford to do the things I want to do. I know not everyone is in that same place right now. But I was in their shoes at one point too. I remember when credit cards had to cover basic expenses when I graduated and was looking for work (lousy job market at the time where I wanted to work, similar to the lousy job market now). And I don’t begrudge anyone the ability to do what they need to do to get by in the short-term.

But no matter how tight things seem now, there are small things you can do to get you on a more self-reliant path where you don’t have to rely on banks for financing all the time. If you’d like to move in that direction for any reason, here are some things that can get you started:

1. Re-evaluate your budget. — Look for ways you can trim expenses so you’ll have some money to set aside in a real emergency fund to stop relying so much on credit cards. For example, decrease your cable subscription, make sure you’re getting the most cost-efficient mobile phone plan, and plan your meals out in advance so you can take advantage of sales and coupons. Every little bit you can save now helps.

2. Build that emergency fund. — Put away any little bit you can into an emergency fund. First aim for a small emergency fund of $1000 — it might cover unexpected car repairs or something so you don’t have to finance them. But ultimately aim for an emergency fund that would cover your living expenses for several full months. This gives you a cushion if someone in the family were to lose their job.

3. Sell things you don’t need. — This can be a quick way to build a small emergency fund or get cash to pay off some of your existing debts. Plus, de-cluttering can be a relief in itself.

4. Look for part-time work. — If the real problem is that you don’t have enough money coming in, then start there. Take on part-time work, even if just for a few months, so you can get those debts paid down or start saving. If a traditional part-time job isn’t realistic, consider freelancing part-time if you have any marketable skills. You can do a lot of freelancing online these days — writing, design work, programming, marketing, etc. And despite the fact that you’ll see a lot of very low paying work advertised, keep looking. There’s plenty of high paying work around too if you contact companies directly. I’d know. I make my living entirely online as a freelance writer, blogger, and Web developer. Look for freelance-related sites that can give you advice on getting started.
5. Stop using your credit cards — slowly. — If you have a lot of credit cards, stop using just one of them for now, and work on paying it off. See if you feel any better when it’s gone. If so, keep working on other cards, dropping them one at a time until you’re credit-free. If you find that you really can’t live without them, well, that’s okay too. A cash-based lifestyle is definitely not for everyone. The key is to not try to go cold turkey. It’s about replacing one habit with another.

I’m not saying moving to a cash-based lifestyle is the easiest thing to do. But for many who do it, it helps to eliminate a lot of stress and it’s more than worth the initial work. For others, buying on credit will always be a part of their lives, and that’s okay too. There is no “right” or “wrong” way as long as you’re responsible. It’s just about knowing your options and choosing the one that’s right for you.

Do you think you could ever live without buying on credit? Do you already live a cash-based lifestyle. While in general the one exception to my own personal “rule” is mortgages, I have to admit that I’d like to bypass that as well when I’m ready to leave the rental world to settle down. Have you done that, or anything similar? Share your thoughts and stories in the comments.

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These days it seems like everyone is looking for a way to pay off debt without actually understanding debt and considering the best way to pay it off. Believe it or not, some debt is considered “good” debt. Debt that has long-term value combined with reasonable interest rates that you can sustain for a long period of time and still be better for it is often considered “good”. Examples of this debt include student loans and mortgages.

Other debt, the kind that offers no financial betterment over the long term and has a high interest rate that prevents you from setting enough money aside for savings is “bad” debt and should be paid off as soon as possible after it is accrued. To many this seems like an impossible task but learning how to pay off debt isn’t hard it just takes discipline and dedication.

Step 1: Determine what your debt is.

 

In order to pay off debt, you must first know what your debt is and what the interest rates are. On a piece of paper write down the names of each of the credit card companies or banks that you owe money to. Next to each, write down the reason for your debt with them, the amount of the debt and the interest rate.

Step 2: Highlight the bad debt.

Go through the list of debt that you just created and highlight in yellow all those debts that are “bad.” This will include anything that does not create long-term value to your bottom line either through a valuable asset or improved pay in the workforce and that also has a high interest rate. Then, with a green highlighter, highlight those debts which would be considered “bad” but that have a low interest rate. One example would be credit card debt that is currently enjoying a low or no interest introductory rate.

 

Photo credit: kahle

Step 3: Plan to pay off debt with high interest first.

 

Look at the debts you highlighted in yellow, choose the one that you are accumulating the most interest on and work your budget around paying higher than required payments on that debt.

As you set your sites on one debt account and make aggressive payments on it, do not neglect to at least make the minimum payments on your other debt accounts. If you do not, you could actually increase your debt and ruin your credit by accruing late and over-the-limit-fees.

Remember—your highest interest rate is not necessarily the debt account you pay the most interest on. You must consider the amount of your balances and the interest rates applied to them to determine which accounts have the most interest expense.

In general, you should pay off your high interest rate debt first. However, if you want a sense of instant gratification and you have a low interest debt that could be paid off completely with one or two aggressive payments, then you can attack that debt first. Each time you pay off one debt cross it off the list and focus on the next.

Once you have paid off everything highlighted in yellow move on to those debts highlighted in green. Be sure to cut up all credit cards so that you are not able to accrue new debt. You may be tempted to close the credit accounts all together, but that could have an adverse affect on your credit score.

Eventually, as you pay off all your bad debt you can move on to aggressively paying off your good debt so you can enjoy all the perks of a debt-free existence. At that point you’ll no longer be asking how to pay off debt, but you will be learning how to enjoy financial freedom.

You may also enjoy How Freelancers Can Plan for Retirement and 25 Businesses You Can Start From Home (With Little to no Money).

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Financial planning is the process of completing a comprehensive overview of your current financial situation, developing and determining your future goals, and then creating a workable financial management plan that puts you on the right path to actually achieving those goals.

In order to get a true, comprehensive plan with advice that helps you work toward wealth preservation and investing according to your risk tolerance and time line, you should work with a certified financial planner. However, to do a brief financial plan at home you can use this guide as well as the free, financial planning worksheet included.

Step 1: Review your current financial position.

Making an honest assessment of your current financial position is the first step in any financial planning process. To do this, complete sections 1-5 of our financial planning worksheet.

Your current financial position includes your assets, your liabilities, your net worth, and the efforts you have made to protect your net worth with insurance policies, tax-qualified accounts, trusts and a will.

Lastly, you must review your current monthly income and expenses. This will help you to determine whether or not your current income and expenses are appropriate for realizing future goals.

Step 2: Find and fix immediate issues.

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You would be amazed at the problems you can find in your monthly budget and overall financial position once you complete your financial planning worksheet. Some aspects to consider:

• Is your debt to income ratio too high?
• Do your liabilities far outweigh your assets?
• Are you under or over insured?
• Are you taking advantage of tax-qualified retirement accounts?
• Are your retirement savings diversified? (You may need a professional planner’s assistance with this.)
• Are your non-retirement savings diversified? (You may need a professional planner’s assistance with this.)
• Do you make enough money to continue saving to achieve your goals?

There are many other important points to consider in this stage and you must be ready to do a little digging to find them. For instance, on the surface you might look at your debt to income ratio and be comfortable with the amount of debt you have but when you consider the amount of interest you will be paying out over the years to cover that debt does it change how you view the ratio?

Step 3: Determine financial priorities and goals—be specific.

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In part 6 of the financial planning worksheet, you have a section for goals. Your future goals are the purpose for financial planning because the planning process allows you to review the financial decisions that you have already made, fix any problems, create a more financially efficient system and make your goals achievable.

There are 3 different types of goals to consider:

• Short-term goals: These are goals that you would like to realize within the next 3-5 years. Your age will help determine what they are. For instance, someone who is 60 may have a short-term goal of retirement whereas a 25 year old may have a short-term goal of buying a home.
• Mid-term goals: Your mid-term goals are those goals you would like to achieve within the next 5-15 years.
• Long-Term goals: Long-term goals are those goals you would like to achieve within 15 or more years.

When you write down your goals, you must be specific. Goals must have a deadline and a dollar amount in order to be planned for.

Next, you must prioritize your goals. Determine which are most important and make a commitment to focus your plan around realizing them. Prioritization is an overall activity, not something done within certain time limits so you may find that your long-term goals are much more important to you than your short-term goals.

Step 4: Determine whether your financial actions are supporting your goals and how to change.

Financial planning isn’t just about looking at your bottom line and understanding where you are in relation to where you want to be, it’s about creating a workable plan to get you from where you are to where you need to be according to your goals. This is the most difficult part of financial planning, especially if you are attempting to do so without the help of a professional planner because you might not be familiar with all the questions you should ask and all the investment and tax-efficient vehicles available to you.

Some points to keep in mind:

• Will aggressively paying off your debt help you achieve your goals?
• Do you need to cut your expenses in order to save more money?
• Are you saving money in the wrong types of accounts? For instance, if your most important goal is to create a lush retirement savings, then putting more money into a taxable brokerage account and not maxing out your IRA and 401k is a bad idea.
• If your goal is to retire in a short amount of time, are your retirement savings invested properly to help you do so? Are they invested to aggressively? Are they invested too conservatively?
• If your highest priority goal is the passage of wealth from you to your heirs, are you properly utilizing the tax-advantaged and creditor-safe trust options available to you? Have you created a will?

Step 5: Determine how to support your goals by creating your plan.

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The last step is to create your plan for effecting change. To do this:

• Make a list of the accounts you need to open to start saving properly for your plan.
• Adjust your monthly spending in order to create more room in your budget for debt repayment, savings, or higher insurance premiums.
• Open the appropriate trust accounts for tax savings and wealth preservation.
• Work with an attorney to create a will.
• Open the appropriate college savings accounts for your children.

It is important that this guide does not undermine the level of assistance a certified financial planner can give. We cannot give advice about what type of risk tolerance you have, what types of retirement accounts or investment accounts you should open, and what type of trust best suits your financial plan.

You may also enjoy How to Budget.

If you are wondering how to budget, don’t worry—you are not alone. Many people don’t know where to begin when it comes to budgeting and controlling their spending. By following the instructions below and utilizing our free budgeting worksheet, you won’t just know how to budget, you will understand why budgeting is so important to a successful financial future.

Step 1: Determine your income.

The first step in any budget is making note of income.

Using the worksheet: In Section 1 of our downloadable budgeting worksheet you will find a place to record your income. Make sure that you include all income sources.

Step 2: Record your expenses.

Next, we have to look at where your household income is going in order to better determine how to budget it. If you truly want to understand your current financial situation, then you should pull out your last 3 or more bank statements and use the spending history reflected on them to determine your average monthly spending.

Using the worksheet: Record the amounts in the appropriate category of the first column in Section 2 of the budgeting worksheet. If you have expenses that we did not include in the budgeting worksheet then use the fields marked Other to record these expenses. Be sure to type in exactly what the expense is so that you do not forget.

Step 3: Analyze the difference between income and expenses.

The difference between income and expenses is the first important point in any budget because it reveals both over-spending and under-spending issues.

Using the worksheet: At the very bottom of your budgeting worksheet, you should now see a number in the Difference between income and expenses field. If the number is red, then you are consistently spending more than you make. This often means that you have little retirement or other savings and consistently increasing credit card balances. In order to get your finances back on track, you must begin to reduce your expenses. You also have the option of finding additional income but often it is much easier to just reduce your spending.

If the number in the Difference between income and expenses field is black, then that means you spend less money each month than you make and you deserve a pat on the back. But wait—you aren’t quite done yet because spending less than you make is great but it doesn’t mean that you are spending your money wisely and building up your savings as much as you should be.

Step 4: Change your spending.

Changing your spending allows you to create more effective spending and saving patterns. It helps you fix over-spending, correct under-spending and stop digging yourself into a financial hole.

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Using the worksheet: Use the second column of Section 2 to adjust your spending numbers. The first expenses you can attack are those that are completely changeable like shopping, dining out and personal care. Often, the money spent on these categories could have better been spent reducing debt and increasing savings. If you are spending more money each month than you make then these areas are the first that you should cut or reduce.

If the cuts and reductions you are able to make in those categories do not reduce your spending enough, it’s time to review your grocery expenses. While you can’t cut food out of your budget altogether, you can research inexpensive recipes and switch to store brand items in order to reduce your spending.

The next category to review is your insurance expenses. It may be possible to reduce some of your coverage limits if you are over-insured. You can also talk to your insurance agent about increasing your deductibles to reduce your premiums but this is not a step to be taken lightly. If you raise the deductibles too high you could have trouble making yourself whole after an insurable incident and if you make your limits too low you might not get fully reimbursed for claims.

By this point, you should have some extra money in your budget so you can increase spending toward debt repayment and savings.  Your first priority should be paying off bad debt because every month that you pay interest on bad debt you are wasting money.

Once you have planned your attack on bad debt, review your retirement, college and other savings accounts and determine whether or not you are saving enough money each month. If not, manipulate the numbers on the budgeting worksheet to correct that.

As handy as this how to budget tutorial and worksheet may be, there is one thing it cannot do–make you stick to your new budget. Unfortunately, financial discipline is something that only you can control and practice. Without financial discipline your budget is just another piece of paper but with it, your budget is the key to a financially sound future.

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You must have seen several ads about how to get “free” money for your small business. Is there really free money available for your businesses?

While the government does offer grant money, it is not easy to qualify or receive as some may lead you to believe.  There are hundreds of scams out there that entice small business owners with the promise of free money, for a small fee.

These scams work by guaranteeing that you will get a small business grant or you will get all your money back.  They charge you a fee of about $50 for a packet with information on how to write your grant proposal and a list of organizations that can provide the grant you are looking for.  Unassuming business owners pay this fee and receive information with a list of organizations that don’t give any business grants.  When you try and get your money back, you find that the guarantee was just a hog wash.

Does that mean there are no small business grants?

There are, but are rare, and the information you need to find and apply for the legitimate grants is available “free” of charge. For businesses that qualify, there is a possibility of getting free grants from the county, state and city governments.  There are also some private corporations and foundations offering these grants.

Grants for Technology Startups

Businesses that stand the best chance of getting grants are technology startups. As long as they match the extremely stringent requirements, the federal government’s Small Business Innovation Research (SBIR) and Small Business Technology (STTR) programs are there to help. They award more than $2 billion in grant funding each year.

Small Technology Focused Businesses

Many state and city governments offer grants for small businesses that focus on technology. In Ohio, TechColumbus offers grants to help entrepreneurs test their ideas and see if they can actually run a business. In Philadelphia, The Ben Franklin Partnership and in Gardiner, Maine, the Maine Technology Institute are just a few of the many organizations that help local tech companies out.

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Non-Tech Businesses

Small Business Certifications – Non-tech businesses may not find it as easy as tech-focused businesses to get a grant. But it is still possible if you do the needful. The first thing to do is to check if the business qualifies for special small business certifications, such as minority-owned, woman-owned, veteran-owned business or disadvantaged business. The state and federal governments usually give preference to such business owners.

Economic Development Agencies – You can then look at the economic development agencies or similar agencies in your local area.  Many of these agencies offer government-sponsored grants in an attempt to help with the expansion of existing businesses, help new businesses get started, train employees etc. For example, workforce training grants are offered by the Central Oregon Intergovernmental Council for businesses in the counties.

Get Grant Information – The next step would be to sign up at Grants.gov and get information related to different kinds of federal grants.  It may not be easy to qualify directly, but it is certainly possible to get a part of the funding with a little innovative thinking and some networking.

Workforce Training Grants – Workforce training grants are a great source of funds. Many states have these grants and you can check out for grants within your state.  You will also be able to get more information through community colleges or workforce investment board.  Some states fund more than $10 or $20 million which helps hundreds of companies.

Foundation Grants – You can also look at foundation grants at the Foundation Center that provides you information on U.S. based foundations, public charities that give grants as well as corporate giving programs. While grants from these places are meant for non-profit organizations, you can make use of them intelligently by creating a non-profit front for your small business.  You can attach a non-profit section to your existing services or products business.  For example, a children’s theatre company can have a non-profit section that teaches after-school acting classes.

Irrespective of the grant you apply for, you must understand that the cash is usually meant for funding specific products or projects, not for companies.  If you are looking for free money, you must also be ready to fit into the requirements by making changes to your business structure as needed.

Apart from that, businesses that do obtain grants cannot spend the money as they please.  They will have to abide by the strict rules and regulations concerning how the money can be spent and the percentage of money that can be used for specific purposes. These requirements will have to be complied with.

The economy in the United States is causing great concern for everyday citizens around the world. While top level executives are walking away with millions from failed companies, investors and employees are facing hard facts about their investments, their careers and their future. When you find yourself under the axe, your career aspects are bleaker across the board and if you’re not prepared for the possibility of lay-offs, you can be a tight spot both in the short-term and long-term.

Jobs and Recessions

There is little doubt there is a huge correlation between jobs and the economy. When the economy dips, companies trim the fat on their budgets. Often, this means non profitable departments are cut along with nonessential personnel. Contractors, freelancers and others might find themselves out of work for one company where they were duplicates of actual employees who must now shoulder more work for the same salary. Freelance individuals might find also themselves with more work as companies opt to outsource work to contractors rather than pay employee benefits and salaries.

In a recession, many jobs will be lost and the jobs that remain will become more cumbersome. Some fields will remain the same or even grow, such as the medical industry, virtually undisturbed by the economic conditions. Your plan for a bad economy should reflect your career track, your skills and your initiative.

Jobseeker Qualifications

When you find yourself worrying about the economy or the well being of your particularly employer, remember that the best employees are usually the first to jump ship. Employees with contacts and skills that make them desirable in the industry are often sought after by competitors with firmer standing, and when the first sniff of trouble arrives, these employees are gone to the highest bidder.

To be one of the more desirable employees snatched up by competitors or just easy to hire for a company in a different sector, you should have:

• Clear and necessary skills
• Experience in a particular field
• Documented education and certifications
• Contacts within the industry

You should always be working to network and build contacts within the industry you choose to work in, as well as competing and complementing industries. These contacts can come in handy when you need to find a position now. The remainder of the qualifications are earned rather than created. This is where education comes into play.

Benefits of Education

While education can’t give you workforce experience, it can give you opportunities to start work in an entirely new career without the benefit of experience. If you recognize a need in your area for cable technicians, a few certifications classes can get you qualified to lay cable. While this is quite a switch from many office style careers, you don’t hear of cable technicians getting laid off. Skilled labor is hard to come by in a great economy, so it’s usually one of the best places to start your education in a bad one. You can learn a basic skill in a matter of weeks and use that skill to secure yourself a job. As you continue to learn and add skills to your initial one, you’ll be well on your way to a formal certificate or degree as well as a career in an area where you are sorely needed and unlikely to ever be asked to leave.

Education can give you an almost immediate skill as well as starting you on a new track. While you might learn a spot of welding to get you into a particular company, you can add more technical skills and management courses to your degree over time. When you finish your degree, the economy will likely have improved and you will have survived with a new career and now have a huge number of options as to how you want to use your new degree and extremely valuable experience in a particular field.

Seeking Opportunities

The most critical aspect to finding a job in a failing economy is going where the jobs are. This might mean physically moving to a new city or state, or it might mean doing research to determine what needs there are in your community for skilled and trained employees. Find an opportunity that interests you and immediately get to work earning the entry-level qualifications or adding to your current qualifications to be sure you are the most desirable applicant for the job.

In a bad economy, jobs won’t come to you – you must find them. For those who have used education to their advantage, this can be as simple as letting a few contacts know what skills and abilities you have and waiting for a conversation to start regarding a move to that company using your new skills as a catalyst for change.

Years of spending much more than their earnings have left a large percentage of Americans standing at the financial precipice. Studies show that 75% of Americans failed to pay their utility bills on time; about 39% of people who have mounting debts or bills say that they had to deplete their savings in order to pay off bills; around 30 percent of them accumulated credit card debt.

This is the worst possible situation anyone can get into – self-created, albeit unintentional. Debt is certainly not something that just happens as you go about your daily routine. Lack of knowledge on financial management in most cases leads to out-of-control debt. The partners in this financial demise are the financial giants making money out of the huge interests and fees they charge.

With the task of eliminating the mountain of debt staring on the face, most people wonder which outstanding bills to clear first. Setting up a debt plan works but it will work only if you discipline yourself to pay back the money within a specified length of time.

When in debt, it has to be done RIGHT NOW. Paying a little back is better than worrying and doing nothing about it. You will have to stick to the plan until the debt is completely paid.

Follow these steps to set up a debt payment plan:

Stop Using Credit

I cannot stress on this enough. There are no two ways about it and it has to be done if you want to get yourself out of debt.

• Stop using credit
• Do not finance anything
• Cut up your credit cards

Cutting up cards may seem extreme and tough to follow. Many financial consultants say that it is not required but if you are neck deep in debt, let me tell you, credit cards are nothing but a trap and throw you in deeper. Once you straighten out your finances, you can always get another credit card. Cancel all your accounts that you use a credit card for paying.

Set Up an Emergency Fund

You may ask why you need an emergency fund even before paying off the debts. The reason is that you are saving for unforeseen emergencies, so that you do not have to take another loan. Please do not say that you can use your credit card for emergencies; you are not going to. You are only going to save cash for any emergency. Try and keep aside at least $1000 for emergencies. Make sure not to use it for a drink or a new dress, this money is only to be used for emergency hospital visits or when your car dies or some such need.

Now that you have taken care of the emergency fund and stopped using credit, time to attack your debt with all the determination and will-power you can muster, and get rid of it. Sacrifices will have to be made to get out of a financial mess.

Taking stock of the debts on hand.

First things first! Make a note of all the details pertaining to your debts:

• All the debts on hand
• The names of the creditors
• Interest rates
• Balance owed to each
• Number of payments remaining
• Monthly payments
• Payment due date
• Amount last paid
• Date last paid
• Their addresses and telephone numbers
• Legal action taken (if any)
• If collection agency or attorney is involved, their details

Finding out how much you can pay back and by when.

It is now clear what your debts are and how much you owe creditors.

Now time to figure out how much you can pay back each creditor and how long it is going to take to clear each debt.

It is advisable to limit the credit payments to not more than 25 percent of the monthly earnings. However, if the debts are many, then you can extend it to 30 to 35 percent, as most people generally need at least 65 percent for their living expenses. If more than that is needed, you must try to increase the income and reduce the expenses.

Let us look at a few ways to increase the income for paying off debts:

• Record all the income and expenses for a month and reduce the expenses, to be able to use more towards paying off the debts.

• A good idea is to sell any assets you own, such as furniture, car, jewelry, antiques etc. If you have an insurance policy, you can try borrowing against the cash value, you could borrow against retirement funds, cash stocks or bonds that you have. IRA or retirement funds should only be used as a last resort as there is a penalty involved if you withdraw them before time.

• Try and increase the income by taking up a second job or working overtime. Unemployed family members could find jobs.

• Check at your work place to see if you can reduce the amount you contribute towards your retirement plan. You may have reduced savings over a period of time, but you will get increased earnings every month. You should know that these changes are effective for the whole year usually and you may also go into the higher tax bracket.

Setting Up a Plan to Pay Off the Debts

Once it is clear how much money you can keep aside to pay back creditors, it is time for you to decide how much you are going to pay back each creditor per month and how long it will be before all the creditors are paid off. Chart out a clear plan on how you wish to proceed.

You can decide on doing one of the following things:

• Paying off all creditors an equal amount of money every month.
• Paying off more to creditors who you owe more money.
• Paying off more to creditors who charge higher interest.
• Paying off first to creditors you owe less money to.

Studies show that the last option is the most popular. Paying off the lowest debts first is called the “debt snowball.” By paying more to the smallest debt, you are going to pay it off faster.

Let us take a look at how this works:

• Debts will be paid off from the lower to the highest.
• Pay the minimum amount on all other debts except the lowest balance debt.
• Pay all other money at the lowest balance debt.
• When the lowest balance debt is cleared, you must remember not to change the amount that is being paid to all other debts, instead all the money should now go into the debt with the next-lowest balance.

The length of time it is going to take to repay each debt depends on the debt amount and the interest rate.

Prioritizing Debt Payments

If the money is not enough to repay all loans every month, then you will need to prioritize the debt payments.

First priority debts include:

• Mortgage
• Utilities
• Rent
• Secured loans
• Insurance

Second priority:

• Finance company loans
• Credit card payments

Last priority:

• Loans taken from family members and friends

Urgent:

• If there is a threat of a court order of some sort from any creditor, then that loan should become your first priority.

This is by no means a list that holds true to everyone. Individual circumstances may call for different priorities. However, these guidelines should help in understanding what needs to be tackled first.

Chart for Debt Repayment

Chart out the debt repayment plan clearly on paper. You can write the creditor’s name in one column, total debt, original monthly payment and the amount you have decided to pay each month in columns. Do the same for all creditors. This takes away a lot of the confusion and makes it easier for you to understand what is happening.

Letting the Creditors Know

Once you have a plan in place, start being frugal in your expenses. You should not use your credit cards or take any more loans, unless in a life and death situation.

Do not hide from creditors – Another thing many people do is hide from creditors and avoid calls from them, which can lead to more trouble. Call each creditor and explain to them why you had fallen behind on your payments. Let them know your obligations and how you plan on making their payments and the amount you will pay each month. It is important to be honest. Creditors prefer receiving at least small amounts of money, and get wary when they receive nothing.
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Getting Help

There are times when nothing seems to work out and it seems impossible to manage financial problems. If you are not able to solve your financial problems alone, take the help of financial counselors who can help you with budget planning, setting up a debt payment plan and money management. There are several non-profit counseling agencies that are inexpensive. You may want to check out your local churches and credit unions to see if they provide financial counseling. You will have to find a reputed and reliable counseling service and that can be done by checking with the Better Business Bureau to see if the counseling service has any complaints against them.

You must control your spending and stick to your debt payment plan until you have cleared all the debts. If your income increases or decreases, raise or lower the monthly debt payments based on that.

The most important thing is to take action – start now. Your debt needs to be tackled right now.

Credit card debt management refers to the process of effectively managing your credit card debts in order to avoid difficult financial situations.

According to a recent survey most Americans have between five to ten credit cards even though this number has been reported to touch up to fifty. Consequently, most of them have to face a financial crisis (or worse a bankruptcy) at one point or another in their life. Although there is no denying the fact that credit cards make life easier and offer you the freedom to buy what you want even when you are in a liquidity crunch, they can tarnish your financial position if used unwisely. Thus, it is essential to have a credible credit card debt management process in place before you apply for credit cards and start making purchases left, right and center. Most of us are satisfied with making minimum monthly payments on our credit cards without giving a moment’s thought to the ever increasing interest and principal.

Strategies for Effective Management of Credit Card Debt

Following are some of some strategies that can be employed for effective management of one’s credit card debts:

1. Always Make Minimum Payments on All Your Credit Cards – Experts stress the importance of making minimum payments on all your credit cards irrespective of your financial situation. This is because the effective interest rate applicable to your credit card is increased every time you are late and you may also be charged a late fee. Every single one of your late payments is reported to the credit bureaus and will negatively impact your credit score.

2. Make Payments on Delinquent Accounts a Priority – Always treat making payments on delinquent accounts a priority. All your extra cash should be utilized to getting current on your delinquent accounts. This is because along with damaging your credit score delinquent accounts lead to late fees and ever increasing interest rates.

3. Bring Over Limit Accounts below the Critical Mark – Along with adding over limit fees to your credit card payments, current and potential creditors are warned each time you go over your credit card limit. Thus, bringing your over limit accounts below the critical mark should have high priority and all your extra cash should be contributed towards this purpose.

4. Lower High Balances – Try to keep your credit balances as close to zero as possible especially in case of balance that is close to the credit limit since high credit balances have a negative impact on your credit rating and increase your credit utilization. A low balance implies that you use your credit limit wisely and will reflect positively in your credit score.

5. Prioritize Your Credit Card Payments with respect to Interest Rates – Prioritizing your credit card payments with respect to interest rates is one of the most commonly used strategies for effective management of credit card debt. Pay off the credit card with the highest interest rates as soon as possible. It may also be a good idea to rationalize the number of credit cards you have to ensure that you do not spend more than you can pay.

The internet makes it easy to do just about anything – including applying for loans. Before banks began operating online, loan shopping was a cumbersome process. You had to visit each bank to inquire about their loan offerings and eligibility requirements. No more of that.

The first thing you need to do is figure out the type of loan you need. Since many banks only offer loans for certain purposes, knowing the type of loan you need might limit the banks to which you can apply. Some common types of loans include auto loans, student loans, and personal loans.

Requirements

Online loan requirements will vary depending on the bank offering the loan and the type of loan you are requesting. Generally, lenders have minimum income and credit score requirements. You might also be asked to secure the loan with a piece of collateral.

Most online lenders will not extend a loan to you if you have outstanding debts. It’s a good idea to get caught up on any charged-off accounts or accounts that have been sent to collections.

If you do not meet the minimum requirements you may be required to have a co-signer guarantee the loan.

Advantages Of Online Loans

One of the best things about online loans is the convenience of making the application. You can easily make an online loan application from the comfort of your own home. This makes rate shopping easier, too. Rather than having to drive from one bank to the next, you can move from one lender’s website to another’s with minimal effort.

Approval for online loans can be obtained within a matter of seconds. Many lenders are able to accept or deny your application almost as soon as you make it. If you’re afraid your application might be denied, you can deal with the disappointment in your home, instead of being forced to contain your emotions.

Disadvantages Of Online Loans

There is no person to negotiate with or explain a situation to. You can’t bargain with a computer. Neither can you explain away that unpaid medical bill from six years ago. If your online application is denied, there’s not much you can do about it. When you make an application in person, you have the luxury of being able to communicate with a person.

With online loans, there’s a greater risk of fraud and identity theft. In the offline world, it’s a lot easier to spot a scam or loan shark. The same isn’t true for online lenders. You have to take extra precaution to keep your personal information safe when dealing with an online lender.

Top Online Lenders

Eloan.com is arguably one of the largest online lenders. Their loan offerings include auto loans, student loans, mortgages, business loans, motorcycle loans, and boat loans.

Several offline lenders also provide loan services online including BankofAmerica.com and JPMorganChase.com.

When you’re choosing an online lender, check that lenders reputation and look for consumer reviews, both good and bad. Reading other consumers’ experiences will give you a good idea about the reputation of bank and help you make a wise decision about an online lender.

The foreign exchange market, Forex, is the most liquid market in the entire world. Trading happens 24-hours a day, five days a week in the major financial centers in the world across nearly every time zone. The Forex market trades in international currencies frequently throughout the day. It can be tough for individual traders to make profits and even to trade on the Forex market.

Timing

You already know the Forex is an international market that includes financial centers all over the world. You can trade any time of day during the business week. So, timing is everything. How often are you going to trade on Forex? Daily, weekly, monthly? That’s up to you to decide. The important thing with choosing your timing is that you identify profitable trends as early as possible and that you can withstand whiplashes in the trends. Pay attention to the market trends for awhile to get a feel for how things change on the market. This will help you choose your timing.

Risk

You need to decide early on how much risk you are willing to take in your investments. The Forex market is highly volatile. Know that going in. Before you make a trade, you need to have already decided how much you are willing to lose on that trade. Of course, ideally, you don’t want to lose anything, but you must be realistic. Or else you will be highly disappointed. Make sure the amount of risk you’re willing to take is a reasonable amount. This means you should never be willing to lose everything on a single trade. You’ll never make any money that way.

Trends

The ability to identify trends in the market will help you figure out how when to enter and exit. You can figure out trends by watching the market for awhile before entering. Use mathematical equations like moving averages to figure identify trends in the market. Beware of false trends that can cause you to trade at the wrong time. Never rely on a single calculation to identify any trend. Use a secondary and even tertiary method to confirm your assumptions.

Getting In & Getting Out

By now, you should have figured out the timing of your trades, the amount you’re willing to lose, and the trend signals that indicate it’s time to trade. The last step is to time your entry and exit for the trade. Your trend analysis will help you gauge your entry. As for exiting the market, you need to determine what will trigger your exit trade. Will you be looking for the price to hit a certain point? Or will you wait until the price has moved a certain points before pulling out? The choice is yours. You should always calculate your exit before entering the market. Having this figured out ahead of time helps protect you from losses.

You should tweak your system a little at a time until you have one that works exactly the way you want it to. Once you have a tried and true system of Forex trading, don’t change it.