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Debt

7 Tips for a Debt-Free Summer Vacation

By | Debt

Taking a vacation with your family should be a pleasant thing – a rare treat in a schedule that is otherwise consumed by soccer practices, school recitals and working too many hours. Don’t let debt get in the way. It is possible to have a debt-free summer vacation and still have an amazing time with these seven tips.

Travel Debt-Free

 

1. Start Small

Keep in mind that small savings can add up to big amounts. Try tucking aside a couple dollars each week. Within a year’s time, you’ll have enough money saved to afford a family vacation (if not two!). The best part about this method is that you won’t feel it in your wallet or pocketbook and it can be fun for the whole family. Imagine a family piggy bank with a savings thermometer. Even small children can get involved with contributing change to the family vacation savings.

2. Research Your Destination

Next, spend some time researching your destination. You might find that some weeks or seasons are more expensive than others. Take New Orleans for example. Try booking a vacation during Mardi Gras or one of the city’s many jazz festivals and you are going to spend comparably more for a hotel room than if you plan your trip for an off-season month. Likewise, look at the location. You could save money by staying in a high-rise hotel on the city limits, but there won’t be much to do around you and you will have to pay for transportation into the city proper. Instead, pay a little more to book a hotel along a public transportation route or reserve a room in a small city located nearby. You will likely save money on the room rate as well as parking, and your transportation costs into the city proper may not be that different.

3. Look at Hotel Locations

You might also find that you can get the exact same experience for less at a nearby spot. Hotels are often cheaper on the outskirts of popular destinations than at the center, and sometimes the savings can be significant. Choosing a hotel 25 minutes away from your target destination could save you hundreds of dollars over the course of your vacation.

4. Compare Amenities

Comparing amenities is smart as well. Variables like whether breakfast is included, the price of parking, the proximity to local attractions, the necessity of taking public transportation instead of walking everywhere and the presence of a pool or other recreation can make a real impact on your wallet. Let’s say you are considering staying at the ABC Hotel and it costs $100 per night but includes breakfast and parking. It might cost more for the room than the XYZ Hotel that is charging $80 per night, but if XYZ charges $15 per person for breakfast and $20 per night for parking, ABC is a better deal.

5. Prioritize Your Vacation Goals

You may want to take the family paragliding, visit museums, see a popular show and eat out for every meal at nice restaurants, but wouldn’t you rather come home from your vacation and not have a credit card bill to face? The same way that your time is finite, your money is too. Create a budget for what you can afford to spend on your holiday and prioritize those activities the family wants to enjoy. The tradeoff could be something as simple as eating doughnuts for breakfast instead of a fancy brunch so that you can afford ice cream and bicycle rentals later.

6. Book in Advance

Booking your travel in advance is almost always cheaper than trying to get a last minute flight or hotel reservation, but did you know that activities can be as well? Purchase your lift tickets, museum passes and tours in advance. Sometimes you may have to agree to a schedule and book a specific time, but the savings can be considerable. Plus, when you book in advance, you pay for parts of your trip as you go, which can make affording the whole thing much easier because you can see the cost outlays.

7. Think Outside the Box

Finally, when it comes to planning a debt-free summer vacation, don’t be afraid to think outside the box. There are wonderful destinations just about everywhere, as long as you aren’t afraid to think differently – and these more unusual activities, destinations and appointments can be a good bit cheaper than their more popular counterparts. Major cities have lots to offer, but so do small towns. A family vacation to a major amusement park could be lots of fun, but you could also have a good time exploring a National Park, camping on the beach or on a road trip to silly attractions. It is the same with your hotel. You don’t need a four-star suite; you could be just as happy in a cheap hotel with adjoining rooms or an Airbnb. Try coming up with more novel ideas to spend your vacation time together and see the savings add up.

Keep in mind that the purpose of your family vacation is to do things together as a family. It doesn’t matter if you fly halfway across the world or drive to the next state. What matters most is that you are together outside the distractions of everyday life. The conversation, the laughter and the memories can be had for pennies on the dollar when you abandon the idea of a large-scale vacation and focus instead on how to make your family vacation one to remember.

Sources:

Dave Ramsey, “Debt-Free Vacation Planning Advice from Dave Fans.” [Accessed: https://www.daveramsey.com/blog/debt-free-vacation-planning-advice-from-dave-fans]

Dave Ramsey, “15 Insider Tips to Enjoy a Debt-Free Vacation.” [Accessed: https://www.daveramsey.com/blog/15-insider-tips-next-debt-free-vacation]

Living Well Spending Less, “How to Plan a Debt Free Vacation,” April 22, 2017. [Accessed: http://www.livingwellspendingless.com/2016/04/22/plan-debt-free-vacation/]

Penny Pinchin Mom, “How To Plan A Debt Free Vacation,” Penny Pinchin Mom, May 2, 2014. [Accessed: http://www.pennypinchinmom.com/plan-debt-free-vacation/

Debt Collection: Dealing with a Collection Agency

By | Collections, Debt

It is never fun when a bill gets sent to a debt collection agency. But, sometimes it puts the ball in your court and gives you a chance to achieve true credit repair. Whether you just couldn’t afford to pay your debt or you didn’t agree with it, once it is “in debt collections,” there is power in your hands.

 

Your Rights Against a Debt Collection Agency

There are many things you can do and say when dealing with a collection agency. First, you have the ability to make an offer to pay off the debt for less than the full amount. This could run down as low as 10 percent but it depends on how long the collection agency has tried to get you to pay it and what they paid for it.

It never hurts to make an offer. You can also negotiate a “pay for delete,” which means you clear the debt and get it taken off your credit report. With the help of a credit repair agency, this uncommon tactic becomes much more possible. It appears that the smaller agencies are more likely to agree than the larger ones.

Making Contact with a Debt Collection Agency

The debt collection agency will likely contact you before you realize you need to contact them. Or, the creditor you defaulted on will notify you first. You can send a cease and desist letter to force an end to any communication if you do not wish to deal with the agency. You also have the right to dispute the debt through the credit bureau(s) that list it on your file.

You should always start the communication off by confirming the amount you owe and requesting a written copy of these details. If the debt collection agency reports a different balance — a credit repair company can push for it to be removed from your file.

Making an Offer to Pay Off Collection Debt

In most cases, your main course of action is making a flat offer to pay off the debt. Agencies usually pay in the 25-50 percent range when purchasing your debt from the original creditor. Keep this in mind when making your offer. Make sure to only communicate in writing and start with a lower offer to see how they counter.

What you want to avoid is making a payment plan with the agency. This is actually bad for your credit report and score. It means that you will have an entry to bump the bad debt to the top of your report every month. You want the agency to report the debt as “paid as agreed,” as soon as possible as it can take two years before the damage wears off.

Differentiating the Types of Collection Agencies

There are two types of collection agencies that exist, the ones that operate in-house and the external companies that buy your debt. You have more leverage when working with an in-house agency. In some cases, it is even possible to restore your credit line once you cover your debt which looks better on your credit report.

Always confirm whether you are dealing with a first or third-party collection agency. This will tell you how much negotiation room you have when making an offer to pay off the debt. It also indicates whether you can do a “pay for delete,” or if you are better off approaching as someone unable to pay in full. Paying for a removal normally requires you to pay 100 percent of the initial debt.

How Collection’s Agencies Report Debt

You need to be very careful with how a collection agency handles your credit report. The balance, payment date, settlement terms and everything else must be accurate and timely recorded. You can dispute the debt with the respective credit report agencies if the information supplied by the collection agency doesn’t match the details of the debt on your credit report.

Your goal is to pay off any debt you truly owe and obtain a “paid as agreed,” comment on your credit file. This results in the lowest impact possible to your credit score and looks better when future lenders pull your file. You will notice a bump in your FICO score if you pay off a debt in collections that sat for a while.

You want to avoid having it show as anything else. You should also avoid paying off very old collections debt if possible. These entries only show on your file for seven years after the last delinquency date. You make the debt a new factor in your credit score calculation if it already stopped having an impact. Just send a cease and desist to stop further communication and wait for it to drop off your report.

Conclusion

Dealing with a collection agency is not all that bad. Even when you get the odd rude and aggressive one, it’s possible to stop the harassment. The key is to keep to written communication and log each interaction you have while watching for chances to dispute the debt.

A professional credit repair service can help you deal with collection agencies. If you need help removing a collections debt or paying it off cheaper, feel free to consult with Ovation Credit Repair to learn your options (complimentary consultation).

Sources:

www.creditcards.com/credit-card-news/pay-for-delete-shady-credit-report-cleanup-1264.php

www.nerdwallet.com/blog/finance/how-to-deal-with-debt-collectors/

www.wikihow.com/Deal-With-Collection-Agencies

www.gocleancredit.com/how-many-points-will-a-collection-affect-your-credit-score/

Student Loan or Credit Card Debt Which Is Worse?

By | Debt, Uncategorized

Credit cards and student loans are two major debt lines plaguing American households today. It’s said that the average American family carries $16,061 in credit card debt and a whopping $49,042 in student loan debt.

The latter statistic is worth looking into further.

Student Loan and Credit Card Debt

How Your Student Loan Impacts Your Credit

Your student loan is as real as any credit card or loan on your credit file. It’s not anymore “forgiving” than any other type of installment debt. This means every delinquency will hurt your credit score.

The worst case scenario comes from defaulting on your student loan debts. This is something you absolutely want to avoid. It can send even the strongest credit scores down 100s of points. The road to recovery will be long, and the damage will stay on your credit report for seven years.

You can usually negotiate with your student loan provider. If you’re in financial distress, try to work out a payment plan for the near future. Even avoiding a delinquency entry on your file can save you an 80-point drop after your first 30 days of being delinquent.

Your student loan reports both good and bad. However, it’s the bad that does the most to your credit rating, while good efforts have little reward. You need to avoid the penalties to your FICO score to have a chance to repair your credit effectively.

How Credit Cards Differ from Student Loans

Credit cards are a type of “revolving” debt, which means there’s an open credit line at all times. You will be able to borrow up to your max amount so long as the minimum monthly interest payments are paid.

It’s imperative to stay up to date on your credit card debts. Defaulting will cause extensive damage to your credit. You can typically pay a very small payment to keep your card alive. Meanwhile, the minimum payment for your student loan might be a bit more difficult to sustain.

Your credit score’s second-biggest factor is your utilization rate. This is the amount of debt you carry versus the amount you’re able to borrow. The higher it is the worse it says about you as a borrower. You want to keep it low (below 30 percent) for as long as possible; your payment history is another calculation variable and it considers your previous utilization levels.

Pay Credit Cards or Student Loan First?

It’s quite the dilemma. Paying your student loan helps with offing a major outstanding debt. However, paying off your student loan will not impact your credit utilization rate for the better in any way.

If you have a substantial amount of credit card debt, it makes sense to tackle that first. Each $1,000 you knock down will have a bigger impact on our credit rating, but keep in mind if your student loan runs into default it will be all for nothing.

Your payment history still remains the number-one factor in your FICO score calculation. Thus, it’s a good idea to see how you can improve it. This would mean maintaining payments on your student loan while reducing other debts.

You want to use any extra cash to tackle your overall credit card debt. The goal is to bring your utilization rates down as much as you can. This can be done from accepting credit limit increases too – so long as you avoid using the newly available funds.

Using Tax Refunds to Pay Off Student Loans

You will not want to make the mistake of using your tax refund as a way to pay off your student loan. Everyone thinks it is hard to take care of, so using your taxes is a sensible way to get the debt under control.

The truth is, your student loan will not hurt your score if the debt remains on your balance sheet. Trouble only arises when you run delinquent or if you default the loan. This means you can leave this particular installment loan for last while focusing on paying off higher-interest debts.

You are endangering your creditworthiness by putting your tax refund to use to pay off your student loan. The large lump sum can go toward your credit cards and have a much greater impact. Remember, credit cards accrue interest month after month as you fail to pay them off; it won’t take long for your debts to pile up if these are left unchecked.

Conclusion

At the end of the day, the worst type of debt to carry is the one you fail to pay off. It’s important to prove you are a good, trustworthy borrow in every sense of the term. Therefore, you must maintain positive status with your accounts (including your student loan) even if you only pay the minimum.

If you ever feel unable to pay your student loan payments, consider one of the three payment plans they offer. You can arrange to pay as you earn, based on your income or contingent on a certain amount of generated income.

If you fail to come to a deal then missing your payment will result in a late payment entry on your credit report. The damage will be irreversible; now that you know what’s at stake, make sure you sort your debt repayments accordingly.

Sources:

http://www.myfico.com/credit-education/whats-in-your-credit-score/

https://www.nerdwallet.com/blog/average-credit-card-debt-household/

blog.ed.gov/2015/06/3-options-to-consider-if-you-cant-afford-your-student-loan-payment/

Good Debt vs. Bad Debt

By | Debt

Good Debt vs Bad Debt

If you’ve been trying to improve your credit score, you probably already know that “debt” can be a scary word. As such, you’ve likely been trying to avoid it as much as possible. But according to many credit experts, not all debt carries the same weight when it comes to how it affects your credit score. In fact, some types of debt are considered good debt — or at least not likely to harm your credit score. Here’s a look at how certain types of debt may affect your credit rating.

What Separates Good Debt From Bad Debt?

The first thing you should know is that any type of debt that is considered an investment tends to be good debt. This means if you’re taking on debt to buy an item or service that will improve your net worth in the long run, it’s likely good debt. In short, common examples of good debt include mortgages, student loans, business loans or anything that will save you money in the future.

On the other hand, bad debt won’t make you wealthier or help you save money. Most people who rack up bad debt do this by using credit cards to buy items they want and then make minimum payments on those cards so the interest continually accumulates. Basically, if you’re just using credit cards or taking out loans to buy disposable items, you’re collecting bad debt and will likely lower your credit score.

Types of Good Debt

Mortgage Loans

One of the best types of debt to take on is a mortgage because houses usually increase in value over time, unlike most other items you might buy. You will likely recoup the costs of your house and then some when you sell it, so taking on a mortgage loan is considered a good investment for most people. And even though you pay interest on this type of loan, it’s far lower than most credit cards, and you can deduct it on your taxes.

Student Loans

If the career you have in mind requires a college degree, you shouldn’t be afraid to take out student loans to pay for it. Of course, getting free money in the form of scholarships and grants is even better, but it’s not realistic for everyone to pay their entire college tuition this way. This is why student loans don’t tend to have a negative effect on your credit score, as long as you pay them back according to your payment plan once you graduate.

Business Loans

If you have a solid plan for a business, you shouldn’t be afraid to apply for a business loan to cover your startup expenses, including equipment and advertising. After all, you stand to make it all back and also support yourself if you have a stable business. This is why business loans are considered good debt when it comes to your credit score.

Expenses That Will Save You Money

Some types of debt are good because they will save you money over time, even though they cost money right now. For example, buying solar panels for your home is often considered good debt, since this addition will save you money on utility bills and improve your home’s value. Another example of taking on good debt is when you refinance via a loan with a low interest rate so you can pay off a loan that has a high interest rate. This move could save you hundreds or even thousands of dollars, so it’s usually worth taking on more debt.



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Types of Bad Debt

Credit Cards

The No. 1 type of bad debt is the credit card. The average U.S. resident who carries a credit card balance has more than $5,000 in credit card debt, so it’s not uncommon to have this type of debt. But it can easily affect your credit score in a negative way, especially since you’re probably using credit cards to buy items that are depreciating rather than increasing in value. If you have credit cards and want to improve your credit score, you should stop using them and start paying more than the minimum, particularly on the card with the highest interest rate.

Payday Loans

If you’re low on money until you get paid, it may be tempting to get cash today by taking out a payday loan. But in the end, you’ll pay much more than you borrow because the fees and interest rate can be very high. In fact, the interest rate is often three times the amount you borrowed, making payday loans bad debt. If you need money fast, your best option is to borrow from a friend or family member who won’t charge much or any interest, and then work on building up your savings account to help you in times like this. That way, your credit score won’t suffer even when you have unexpected expenses.

Overall, if you’re going to have any debt on your credit report, it’s better to have good debt than bad debt. So if you’re trying to improve your credit score, you can start by focusing on paying off credit cards and any other high-interest debt. As long as you stay current on your good debt — such as your mortgage, business loans and student loans — your credit score should start improving.

Sources:

http://www.moneycrashers.com/good-debt-vs-bad-debt/

https://www.thebalance.com/good-debt-vs-bad-debt-960029

http://www.investopedia.com/articles/pf/12/good-debt-bad-debt.asp

http://www.bankrate.com/finance/debt/good-debt-vs-bad-debt-1.aspx

The Pain Lives On –Unpaid Medical Bills and Your Credit Score

By | Credit Scores, Debt

Medical Bills Affect Your Credit Score

A serious illness or injury can not only impact your physical and mental well-being, it can also hurt your credit score. Medical bills simply can’t be avoided in many situations, and sometimes, the amount you are expected to pay is quite high. Know you’re not alone. Medical debt has continually been the leading cause of bankruptcy in the United States. It’s not unheard of for up to 20 percent of Americans to hear from medical debt collectors in a given year.

Those numbers are staggering.

If you have unpaid medical bills piling up on your financial table, it’s important to understand when and how this will affect your credit score. Here’s all you need to know.

Unpaid Medical Bills Aren’t Factored Into Your Credit Score Right Away

Generally speaking, healthcare providers don’t report payments–or missed payments–to credit bureaus, as they usually have no direct relationship with them. If you are having trouble paying off the bill, and your healthcare provider does turn the bill over to an agency, it will then be calculated into your credit score. It will negatively affect your payment history, which makes up 35 percent of your FICO® score, and your current loan and credit utilization ratio, which makes up 30 percent of your score.

So, if you have an unpaid bill, what you need to look out for–and ask about–is when that bill will be handed to a collection agency. Because then it will start hurting your credit. Note that while hospitals and healthcare institutions give collection agencies more business than financial companies, that doesn’t mean they contact the agency if you’ve missed one or two payments. You usually get a reasonable amount of time, though that isn’t always the case with certain medical providers. The hospital or medical establishment could give you anywhere from a few months to a few years to pay the bill. Thankfully, the Healthcare Financial Management Association (HFMA) and ACA International are working to establish standards for medical debt collection in an effort for more transparency and less unwelcome surprises.

In order to avoid letting an unpaid medical bill go to collections, talk with your medical provider’s finance department immediately after getting the bill. Ask about financial assistance and attempt to work out a payment plan that fits your current economic situation.

How Much and for How Long Does an Unpaid Medical Bill Hurt Credit?

Depending on your current financial situation and the amount you have left to pay on the health bill, your score could be affected by as little as a few points to 100 or more points once it’s reported to a credit bureau, according to Anthony Sprauve, a FICO.com spokesperson. That’s a lot, and that will certainly impact your ability to get affordable loans and funding from financial institutions.

There is some good news, though. If the amount is less than $100, it will be ignored by FICO®. Moreover, while an incident like an unpaid medical bill being handed over to collections will stay on your credit for seven years, the impact lessens over time. If you practice good financial habits after the incident, such as paying off credit cards in full each month and cutting down on other debt, your score will also rise back up more quickly.

Additionally, although the FICO 9 credit score is not widely used by lending firms yet, it does not weigh unpaid medical bills as heavily. Such credit scores could become more mainstream in the future. Law changes in the future from government agencies like the IRS could also place limits on a medical institution’s right to turn over bills to debt collection firms, especially nonprofit healthcare providers.

What If the Unpaid Medical Bill Was Actually Paid, And Still Reported to Collections?

Healthcare systems are far behind financial institutions when it comes to tracking payments and keeping accurate records. There is simply too much disconnect between departments and systems, and sometimes this leads to a paid bill being mistakenly tagged as unpaid, and subsequently being reported to collections. It could also lead to a wrong charge and higher bill.

This is why Congress has been working to pass medical debt acts that give patients time to address inaccuracies before credit scores are hurt. If your unpaid medical bill is already being reported to credit bureaus, and you believe there is an inaccuracy, don’t throw your hands up in defeat. Take the following steps:

  • Gather documentation that proves the services rendered to you and/or the payments you’ve made.
  • Write a dispute letter to all three credit bureaus.
  • Stay in contact with those credit bureaus and your medical provider, and be ready to submit other evidence if requested.

While it you may not win this dispute, it’s certainly worth it. If you prove you’ve paid the bill or you’ve been wrongly charged extra, you’ll get the incident waived from your credit report.



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Keep on Fighting

Even if an unpaid medical bill has already harmed your financial health, know that the pain can be ended. Start by practicing good money habits, and, if that bill is still looming over you, try to negotiate payments and/or assistance. A billing advocate or lawyer can also help you negotiate bills and perhaps lower the amount to be paid.
Also, if you wish to see a higher score on your credit report more quickly, credit repair companies can help. Ovation Credit, for instance, can help clean up discrepancies and outdated information on your credit report, which will help boost your score in no time.
Sources

http://www.theatlantic.com/health/archive/2014/10/why-americans-are-drowning-in-medical-debt/381163/

http://www.foxbusiness.com/features/2014/01/15/how-long-does-it-take-for-medical-debt-to-go-to-collections.html

https://www.wellsfargo.com/financial-education/credit-management/calculate-credit-score/

https://www.nerdwallet.com/blog/finance/medical-bills-on-credit-report/

http://www.bankrate.com/finance/credit/will-unpaid-medical-bills-hurt-credit.aspx

http://www.insidearm.com/daily/medical-healthcare-receivables/medical-receivables/aca-hfma-seek-input-on-medical-debt-collection-standards/

http://www.acainternational.org/governmentaffairs-legislation-for-medical-debt-relief-introduced-in-senate-and-house-38465.aspx

http://ovationcredit.com/

Improve Your Credit Score with Debt Consolidation

By | Credit Cards, Debt

Debt Consolidate Credit repair

Debt consolidation isn’t something that many people know about, but it can be a great way to improve your credit score and help you improve your overall credit profile. Why should you consider debt consolidation? The best reason is to better manage your credit, which can improve your credit score. For example, you may have a number of credit cards that are nearly maxed out. Having to manage multiple credit cards can cause stress and negatively impact your credit score.

How Debt Impacts Your Credit Score

According to FICO, a key element of your credit score is the amount that you owe to creditors. FICO says that 30 percent of your credit score is made up of amounts owed. Credit reporting agencies look at credit utilization as a factor in the amount that you owe. For example, using most of the credit line that you have available can reflect negatively on your credit score. If you have multiple cards that are near their limit, your credit utilization is high, and this can further deflate your credit score.

Ways to Consolidate Debt

You can consolidate debt in a few ways.

  • Balance Transfers – One option is to move balances from one or more credit cards to one that offers a zero percent interest rate or a low interest rate on transfers. You can quickly go from having multiple credit cards with high interest rates to a single card with a low interest rate.
  • Home Equity Loans – Over time, as you pay your mortgage and as the value of your home increases, you build equity. A home equity loan allows you to borrow against this equity and take out a lump sum that you can use to pay off high-interest credit cards.
  • Debt Consolidation Loans – These are loans from banks and specialty lenders and are designed specifically for the purpose of debt consolidation. Interest rates are generally lower than what you pay on credit cards, so your monthly payment may decrease.

The most important thing to remember when using any of these options is that you still owe this money, but you’re consolidating it with a single loan. The idea is to lower your interest rate, reduce your credit utilization, and get out from under the weight of managing multiple lines of credit.

Debt Consolidation, Not Settlement

Be wary of companies that offer “debt settlement” services, which differ from credit repair services. The Consumer Financial Protection warns against paying upfront fees to companies that offer to settle your debts. Debt settlement firms may request that you stop paying your creditors as a way to negotiate with lenders. This can have an immediate and detrimental impact on your credit score. A better option is to use a firm that specializes in credit score repair and works with you to fix your credit score. Ovation Credit Services provides tools to dispute inaccuracies on your credit report as well as education and advice on how to improve your score.


 

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Maintain Good Credit Habits

A debt consolidation loan means some of those previously maxed out credit cards now have credit available. After working so hard to repair your credit score, the worst thing that you can do is to start relying on these credit cards too heavily. You’ll find yourself back where you started – or perhaps worse off – if you aren’t careful about managing your money. Once again, a good credit repair service will provide education and advice on how to maintain a healthy credit score.

Ultimately, debt consolidation is a good way to remove some of the challenges and stresses of managing multiple lines of credit. It can also lower your monthly payments. Consider debt consolidation as a way to improve your credit score and your overall credit health.

Sources:

http://www.myfico.com/crediteducation/whatsinyourscore.aspx

http://www.myfico.com/CreditEducation/Amounts-Owed.aspx

http://www.consumerfinance.gov/askcfpb/1449/whats-difference-between-credit-counselor-and-debt-settlement-company.html

Avoid the Student Loan Abyss

By | Debt, Personal Finance

Learn How to Manage Your Loans Now

Perhaps the best piece of advice anyone could give to their former-self is to manage student debt better from the start. Student loans are hard to avoid all together, but there are plenty of ways to reduce the amount of debt you’ll eventually owe.

Whether you’re planning for yourself or your child, here are just a few ways to manage student debt better:

Before Debt

Before taking out a student loan try applying for any (and all) scholarships you qualify for. The application process isn’t easy, and often requires writing on your part, but they can help save you thousands in debt.

Get Organized

Multiple loans are often required to cover the cost of a four year university. It helps to get organized. To help reduce the time paying loans, create a “favorites” folder in your browser. By bookmarking your loan payment pages you can access them quickly and easily. Create an excel sheet to help keep track of usernames, login IDs, passwords and more. By keeping track of account numbers, logins and passwords you’ll never have to worry about forgetting your account details. Just make sure to password protect the excel sheet in case your device should end up in the hands of someone other than yourself.

Create a Budget

As a new member of the workforce you may not have the funds to pay your student loans. There are plenty of options for new graduates including forbearance and deferment of payments. The issue becomes mounting interest. It’s okay if you can’t make payments right away, but it’s important to figure out your finances and begin making payments as quickly as possible to reduce the amount you’ll pay overall. By creating a budget for yourself you can make timely payments, and reduce the amount you’ll owe and even rid yourself of debt sooner than the term of your loan.

Refinancing

Refinancing during the recession was near impossible, but start-up companies like SoFi now make it possible to refinance your student debt. By bundling multiple loans together you can reduce the amount you pay in interest, and even reduce what you owe each month. If you built up good credit in the years since graduating, refinancing could be a way to save on student debt.

Avoid Schemes

Don’t be swindled by would-be scammers. There are a number of fake websites dedicated to student loan “forgiveness” and student debt “settlement” that charge an upfront fee and monthly payments to help you rid yourself of student debt. Don’t fall for these scams. Do your research before taking any action against your student debt.

Automatic Payments

Many student loan lenders provide discounts to customers who set up auto-payments. You can decrease your interest rates by .25% by allowing the lender to remove funds on your due date automatically. It’s also an easy way to make sure your payments go out on time and you don’t acquire late fees. Just make sure you always have funds in your account so that you don’t overdraft.

Student debt isn’t abnormal, and it doesn’t mean the end of the world. If you manage your finances responsibly, and create a repayment plan for yourself you’ll be out of debt without financial burden.

Was this article helpful? How do you manage your student debt? Let us know in the comment section below.

Characteristics of Debt Free People

By | Debt

debt-free-peopleAre you inspired to be debt-free? Whether you’re close or far from your goal, it’s important to think about and plan the steps you need to take to get there. A good way to get you started is to look at people who are already living debt-free lives. Here are a few common characteristics that you can emulate in order to live within your means, grow your savings, and pay off your debt.

Detail-oriented. Those living with no debt are constantly monitoring their monthly statements to check for fees and charges they don’t recognize. The debt-free are less likely to waste money by forgetting due dates or overdraft fees.

Think long-term. Those living debt-free often think about their long-term financial goals rather than pursuing instant gratification. If you don’t make quick decisions, it gives you a greater amount of time to really determine if you actually need a purchase.

Not afraid to ask questions. Debt-free people aren’t afraid to ask for lower interest rates or forgiveness on a late payment. They take control of their finances.

Save. Save. Save. You should always pay yourself first; debt-free people understand this concept intimately.  Saving should be a habit you well establish. Even if it isn’t a huge amount, every little bit saved helps if you need the funds for a rainy day.

Say no. It’s tempting to always say yes to friends for dinner and drinks, even if it’s only once in a while. But saying no on occasion can turn those small expenditures into big savings. Debt free people understand this. Instead of paying to go out, look for free festivals or host a potluck.

Set goals. Setting goals helps you understand what you are saving for and how you’re doing along the way. Debt-free people understand that having attainable goals leads to future financial success.

Cash has value.  It’s easy to overspend if you never actually see your money. Debt-free people pay with cash rather than plastic as often as possible. You should do the same. Try using just cash for one week to better understand what it feels like to actually pay for things at the time you get them.

Becoming debt free is possible with time, especially if you follow the lessons here from debt free people. You might also consider credit repair options to get you on the right track sooner. Let Ovation Credit Services help you. We offer a wide range of credit repair solutions, customized to meet your unique needs.

Contact us today to see how we can help.

Joining Debt for New Couples

By | Credit Repair, Debt

You’ve met the love of your life; that special someone who makes your heart beat a little faster at just a passing glance.  Whether you are just sharing the joy of merging furniture or taking the big plunge and saying, “I do”, be sure you come down from cloud nine long enough to look far into the future and plan for reality. Financial reality.

After you settle into domestic bliss, and many nights of burned dinners, there will be monthly bills in your mailbox (or inbox).  This is the reality for which you need to prepare.  Any relationship counselor will tell you that the single issue couples fight about the most is finances.  In fact, a 2012 study published in Family Relations showed that couples who fight regularly about finances are 30 percent more likely to divorce.  Help build a better foundation by planning ahead and sorting out a plan to get debt-free (or stay debt-free) together.  Here are a few pointers to help get you started:

  1. Let’s talk. Have an open and honest conversation about what debts you both bring to the relationship.  While this can be very uncomfortable, it’s crucial you understand each other’s financial situation and plan a budget.  This will have to include a plan for paying off debt and saving money.  Understand where you are now before trying to plan your future.
  2. Understand your rights. If you get married, you are not responsible for any debts that were incurred before marriage.  After marriage, the story changes; especially in community property states where you could be held liable for 50 percent of the balance.  States recognizing common law marriage also complicate the issue.There are different situations for co-habitating couples, wherein you may be held responsible for your partner’s debt.  For example, if you co-signed a loan, you may be accountable for the remaining balance unpaid by your partner.  Consider it wise to know your rights before signing any loan documents.
  1. Expect the best, prepare for the worst. No one begins a relationship thinking of Franklin Coveys’ famous quote, “Begin with the end in mind.”  We all expect it to last forever.  But it is always best to plan for “what if.”  Have a joint bank account for household expenses and joint debt.  But also keep separate accounts for personal debt that was incurred before the relationship began.  In this way, there isn’t any co-mingling of names to make a messy ending.
  2. First comes love, then comes marriage, then comes…the debt payoff. While you are wisely planning your future, include debt payoff.  Certain things must come first.  The amount of debt you carry can affect your ability to obtain an auto loan and even a mortgage.  Paying for your children’s college can push you over the debt cliff if not managed well from early on.
  3. Lower what you’re paying on your debts. That doesn’t sound quite right, does it?  It seems as though you would want to make bigger payments to pay down debt.  But consolidating loans, refinancing, doing balance transfers to credit cards with lower interest, etc., you can help lower your debt and your payments.  Read the fine print first.  Some of these strategies can cost you more in the long run.  For example, a refinance may cost you more in fees than keeping your original loan.
  4. Don’t go it alone. Make paying off your debt a team success.  Don’t allow your finances to take over the relationship.  You and your partner can conquer your debt together.  It won’t always be easy and whether you or your partner is the one who brought the debt, it takes some patience, kindness, and support.  But together, the two of you can be finance warriors.

Learning to develop and balance a budget may be challenging at first.  Getting a grasp on your debt alone is sometimes frustrating and bringing a partner’s debt into that situation may prove to be overwhelming.  That may be just the time to contact a credit repair specialist, such as Ovation Credit, to help you understand how to get your finances under control before they take control of you.

 

Helping Grown Children with Debt and Credit Repair

By | Credit Repair, Debt

A lagging economy and a weak job market have made it challenging for young adults, especially those just starting out. Add to that the fact that many unemployed or under-employed young people with strong educational backgrounds are burdened with significant student loan debt, and it’s easy to understand why a growing number of adult children are turning to “Mom and Dad” for help with burdensome debts.

Should parents come to the rescue? It’s not a simple question and usually involves more than just writing a check. Parents who want to do the right thing should consider these commonsense tips in helping grown-up children reduce their debt and, in many cases, take advantage of credit repair strategies.

Be objective

It makes sense to assess your child’s financial situation – and your own – before jumping in and making any commitment to help. Start by asking: What is the source of the problem? Is it an unusual, one-time emergency, or a trend that needs to be addressed?

Know your own budget boundaries

Take your time. Volunteering to help is fine, but don’t make any hasty decisions. Determine your own financial boundaries, and make it clear to your adult child what you can and can’t do. Then stick to those boundaries.

Weigh the consequences of helping

It’s natural for a parent to rush in when there’s an emergency. But before agreeing to make any commitment, ask yourself: Will making payments for grown-up children be better for them in the long run? They could start thinking of you as their safety net, and put off adopting better financial habits if they’re counting on you to bail them out.

A gift, or a loan?

If you are planning to make payments for your adult offspring as a no-strings gift, that’s fine (assuming you have the resources to make that gift without jeopardizing your own financial situation). But be aware of the potential tax implications. (Gifts to individuals are tax-free up to $12,000.) If you decide to help with a loan rather than a gift, document everything. And draft an agreement that both of you sign.

Don’t overlook the importance of credit repair

Building and maintaining a high credit score is critical to future financial standing. So if there are negative items on your child’s credit report, addressing those is as important as making good on existing debts. A full-service credit repair company can also help guide individuals with practical budgeting and credit building strategies to keep future payments timely and their credit rating strong.

Regardless of a person’s age or income situation, now is the best time to do the kind of practical things that improve a credit rating. To learn more about how Ovation can help your credit score, check out these frequently asked questions and contact us today.

 

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