Business Marketing & Finance Resources

Unless you are a Saint, you are bound to make a mistake or two in your lifetime. The mistakes that you have made can be insignificant or it can be a life changing event. You can make a huge mistake by accumulating so much debt that you only choice out of this jam is to file for bankruptcy protection, or you can make a tiny mistake such as forgetting about your son’s first birthday. Filing for bankruptcy shelter is absolutely a life changing event and most people would not want relive this ordeal in their lifetime. If you had to file for bankruptcy protection, what led you to this financial crossroad, and what do you plan to do to fix this in the future?

Poor budgeting and not watching out what you are spending and how much you are spending can be a major contributor to those who had to file for bankruptcy shelter. Poor financial planning can take the form of many scenarios. During the real estate bubble of the 2000s, many people got into deep financial debt because they bought homes they cannot afford. Even if you are making a lot of money, for example, $10,000 of net income per month. But if you ended up spending more than $7,000 on your home related expenses, can you live off the remaining $3,000? A good rule of thumb is not to spend more than 30% of your income on housing expenses.

By not living within their means, some people find themselves in a financial hole that they had to file for bankruptcy protection. In simpler terms, this means that you are spending more than you are making. During the mid 2000s and even the time leading up to the recession of 2008, using credit cards seems so easy to everybody. People who find themselves with a mountain of credit card debt forgot that charging purchases on credit card does not mean that the debt do not need to be repaid over time. Buying things or services using credit card does not mean that you do not have to pay for it, it just lets you pay for it at a later date. It is a useful tool to help you purchase that new TV that you have always wanted. In order not to abuse the credit card use, you have to know that you can pay for this new purchase in reasonable amount of time. You will know if you cannot afford to pay for this new purchase, because you are hoping to pay for this purchase using the minimum payment on the credit card bill.

The majority of the people who had to file for bankruptcy tend to abuse their credit cards. And to make matters worst, some of these people even use the credit cards for daily living needs. Can you imagine someone who is already heavily in debt, and yet he or she has to use the credit card to buy that food or shelter for the day? Cash advance from the credit card is one way that people tend to abuse the credit card usage. Cash advance is one of the worst financial transaction one can incur in his or her lifetime. The drawback to using the cash advance from the credit card include extraordinary high interest rate which means you will have even a harder time paying back this debt. Some people will justify this action by promising that this is just a one time occurrence. Those cannot manage their finances properly tend to find this cash advance way as an “easy” way to get by from month to month.

For those who are thinking of filing bankruptcy, or have filed for bankruptcy recently, here some advice that you should adhere to (coming from a person who had gone through this ordeal):

You should only spend on what you have earned and not more
Create a budget and use it wisely so that you can follow rule #1
Saving money is the best thing you can do, just in case you will need it one day

The objective to filing bankruptcy is to give yourself financial relief from the wrath of the creditors. Filing bankruptcy is not a get out of jail free card, like the one from monopoly. You should not use it as a way to wipe out your debt so that you can accumulate debt again. Take this chance given to you and rebuild your life without the massive debt hanging over your shoulders each and every day. Look at this from the positive side at all times, instead of focusing on the negative aspects of filing for bankruptcy. If you are uncertain of what is involve in the bankruptcy filing, seek the advice of a local bankruptcy lawyer near you.

If we improve our financial situation, an important decision we make is to get out of debt.

The debts are a problem that afflicts many people today, this mainly due to that each time there are more companies that provide consumer credit, because every time there are greater opportunities to access these loans.

Some debts may be necessary such as debts incurred to buy a home or an investment, but other debts, including debts incurred for personal loans do nothing prevent people to grow financially.

If you currently have a high level of debt and want to remedy your situation, or simply want to reduce your debts and liquidate as soon as possible, then we present a method consisting of eight steps that will allow you to leave your debts:

1. Knowing your debts

The first step is to inform you good on the debts you have now.

This requires you to make a list where signs who your creditors (to whom you owe), how much pay you lack (the balance of debts), what are the costs of each debt (the interest rate they charge) the minimum payment that you require and the date on which you make payments.

This list, in the first instance, will give you an idea of the total amount that you (the sum of all your debts); your plan will pay your debts, and will serve as motivation to get out of them and planned to meet.

2. Stop buying more debt

The next step is to stop continuing to buy more debt.

If you come out of the hole in you, you should certainly keep digging, if you leave the problem of your debts, you should certainly continue to acquire.

Therefore, you must stop using credit cards, stop requesting more loans or personal loans or consumer, and stop buying on credit.

You get into the habit of buying in cash, and if you cannot buy something in cash, you just do not buy it.

3. Search biggest moneymakers

The next step is to seek higher revenues from money to help you pay your debts.

To do this, you could find a higher ground, look for better, increase sales of your business, or find new sources of income, etc…

You could also find some extra money, for example, to do some extra work, or sell some asset you own.

Another alternative might be to ask a family loan, a loan to your company or a bank loan where you charge a lower interest rate than the rate of interest that you pay your debts, for example, a loan on the value of your property.

4. Reduce costs

May seek higher money income will be a difficult task in the short term, but something that is very likely that it can do is reduce your spending.

To reduce your expenses you should always look for ways to spend less, avoid unnecessary costs, and consume less.

For example, you could try buying some used items instead of new ones, eat more often at home, always look for deals or discounts, compare prices before you buy or something, consume less power and energy, etc..

One way to help reduce and control your costs is by creating a personal budget.

5. Debt Negotiation

The next step is to negotiate your debts with your creditors.

To do this, you should contact your creditors, be honest with them, explain your situation, and seek a favorable settlement that allows you to reduce your debt or pay out more facilities.

After negotiating with them, you may be surprised at the facilities that many of them will give you either a reduced interest rate, a reduction in monthly payments (for example, by extending the term of the debt), elimination of surcharges, a freeze in payments, and even a decrease in debt (for example, to pay part cash).

6. Consolidating debts

An optional step in case you have several debts is to consolidate them.

Debt consolidation consists of being together all the personal debt (credit card balances, personal loans, etc.)

By consolidating your debt, they not only simplify your debt payments (as they would only have one monthly payment), but allows you to achieve lower monthly payments (because you can extend the term of debt) and above all, reduce your debt (as it allows you a lower interest rate with interest rates of your other debts).

To consolidate your debts, you should approach the bank and ask for a debt consolidation loan, a credit card company and request to consolidate all your credit cards into one, or any financial institution that offers this service.

7. Determine an amount for payment of debts

The next step is to determine the amount of money with which you can pay your debts.

This amount should be sufficient to cover the minimum payment on your debts, but must also allow additional payments that allow you to cancel your debts as soon as possible.

To determine this amount, you should also guide you on a personal budget, for example, you could determine that this amount is comprised of the difference between your income and monthly expenses (monthly balance), or determine that corresponds to a percentage of your total income for example, 10%.

If after doing your budget, you are unable to obtain an amount to cover the minimum payments on your debts, or you will not be enough to accelerate the cancellation of these, you should seek more revenue from money, or seek further reduce your expenses.

One tip is that if your debt level is very high, not for all of your monthly balance to pay your debts, but also devote part to the creation of a stock savings that can be used in emergencies or for future investment.

The reason is that if you spend your entire monthly balance to pay your debts, with the idea of just starting to save after you’ve paid all your debts, you will probably be several years before you start saving for the future ( which is counterproductive), and probably soon get discouraged and never get the savings.

However, if you pay your debts, while saving money, you will feel you are making progress financially.

8. Paying off debt

Once you’ve determined the amount to be used to pay your debts, the next and last step out of your debts is to start to pay them.

With the amount you intended to pay your debts, you must pay the minimum amounts (to prevent the berries), and the remaining money (which should be the highest possible), go canceling your debts, starting with those that have the highest cost, namely those with the highest interest rate.

Although an alternative is to start by canceling the debts you pay less for missing, i.e. those with a lower balance, so you can quickly get rid of small debts, and thus feel a greater motivation for the cancellation of other.

Having a credit is not a rare thing in today’s life. Many people or maybe most of the people are having any kind of credit. Having a credit is not an embarrassing thing to have. There are many kinds of credit which is belonging to many people. Why people are having such a credit. It is because often credit gives some advantages for the people. Often, it can help the people who need it. People who have credit will automatically have credit score.

This credit score is the thing which becomes as the credit report for the creditor. The credit score is used as the consideration for the creditor to give credit to the debtor. Hence, whether people are having good or bad credit score, the creditor can do the creditcheck. However, credit score of the people is the important aspect to get the other credit.
Therefore, people have to try to keep their credit score very well. Even though, having a bad score does not mean that the opportunity to get the other credit is closed. So, if you don’t have any credit report, you can find many institutions or lenders which are able to serve you with free credit report.