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So you’ve blown the budget, spent more than you could really afford, or life’s changing circumstances mean that you’ve accumulated more debt than you want to deal with. Sometimes it might feel like a pit that you can’t get out of, but here are three basic steps to get you back on your way to financial success: (more…)

With difficult economic times making people less likely to pay off their debts, this is exactly the kind of situation when companies will be more likely to hire third party debt collectors to hunt down their money. If you have unpaid debts and a debt collection agency gets involved, it’s useful to know what your rights are:

• You are allowed to ask them to verify your debt - that is, to prove that it belongs to you, and until they do so, no other action can be taken
• Debt collectors are only allowed to contact you between eight in the morning and nine at night.
• They are not allowed to ask your employer about any details of your work (including salary or length of service) but they do have the legal right to contact your employer to verify that you work there.
• After a particular period of time has elapsed without being able to contact you (the time varies), then a debt collector is legally permitted to use other methods to try to find you, including internet searches and contacting your neighbors, relatives or friends - however, they are not allowed to disclose anything about your debt to these people.

Want to be one of those people who successfully become debt free? There is plenty of advice on how to do that around, but less on a realistic approach to the hurdles you might find on the way - but if you can expect some of these phases to occur during your experience of becoming free of debt, you might have a much better chance of making it to your goal:

• You’ll probably start out with some enthusiasm and see some obvious ways you can save money, and actually enjoy that at first; you will start to see your debt balances shrinking.
• Chances are high that somewhere along this track, some emergency will happen that requires you to dig back into these precious savings. This will be frustrating, but you should remember that you always need to have some financial contigency for unexpected situations like illness or economic hiccups.
• About this time, you might find it hard to have the same motivation to save money and eliminate your debt that you started out with. This is the point where some people give up and return to their old habits. Recognize this and try to stick to your goals, reminding yourself of why being debt free is important to you.
• Things will get better - and once you can see that you are really close to eliminating your debt, full enthusiasm will return and you’ll get there. And then you just have to remember everything that you have learned along the way and make sure you don’t fall back into any bad financial habits.

MSN Money’s Liz Pulliam Weston doesn’t think that we’re headed into the next Great Depression, but for those who do, she offers some great tips. In fact, many of Pulliam Weston’s tips just make good sense, and help us all prepare to pinch our pennies until they’re wrung dry.

• Live like you’re unemployed: If you had just lost your job, what changes would you make? How would you live? This “austerity budget” is a great way to manage your finances, even while you’re raking in the dough. Spend money on essentials, be frugal, and shop smart. For example, if you wouldn’t keep your cable subscription during a financial crisis, shut it off now.
• Pay off your debt: I know, you’re sick of hearing about paying off your debt. But it really is a priority - while you still have a steady, monthly inflow, you need to pay off debt and eliminate those rapidly-growing interest balances.
• Keep your credit card accounts open: It may seem counter-intuitive, but keep your accounts open. This will help your credit score and give you an emergency exit in case of extreme circumstances.
• Keep your job: It seems obvious, but this means that you should do every, single thing possible to stay employed. Work harder, produce more, do whatever it takes to show the boss that you are worth every penny of your salary.

As if the credit rating system which lenders use to help decide whether or not to offer you credit - and at what interest rates - wasn’t complicated enough, not many people realize that there are actually multiple credit rating systems in operation and the credit score that you get from a report may well be different to the credit score a lender gets about you. (more…)

photo credit: pfala

A recent J. D. Roth guest post at Zen Habits might go over familiar territory of the best steps to take in paying off debt, but there’s probably always something new to learn if you’re in a position of debt and want to recover from it. The main tips that came out of this article include:

• Stop using all credit cards or financing options immediately.
• Stop any recurring payments - like health club memberships (unless you really, really use it), subscriptions, DVD clubs and so on.
• Ask your credit card companies for a better deal.
• Save up an emergency fund of at least $1,000. Put it in an account that makes it available when you need it but is not too easy to access.
• Make a plan to pay off your credit card and other debts. Rather than paying the highest interest debts first, Roth advocates the snowball method where you pay the minimum balance on everything then as much as possible into the debt with the lowest balance, so it will be finished as fast as possible.
• Spend less money - live frugally.
• Try to increase your income by selling possessions or working another job.
• Start all of these steps now - not tomorrow!

photo credit: orphanjones

If you’re concerned about having a healthy credit rating - and who wouldn’t be - some recent tips from Gerri Willis should interest you. She’s got four main pieces of advice to improve and retain a good credit rating: (more…)

credit: Omar Omar

Parenting is never easy, and in a time of growing economic crisis, teaching your child financial responsibility is even harder. So hard, in fact, that your adult child may someday come to you, asking for help out of a sticky financial situation. If that day comes, MSNBC has a few tips on how (and if) to help an adult child with debt: (more…)

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If you’re swimming in a sea of debt and you can’t see the shore, now is the time to look for help. In fact, the answer is always “now,” because the sooner you take control of debt, the faster you will take control of it. (more…)

credit: TheAlieness GiselaGiardino²³

It’s a pretty ironic outcome of a Bankrate survey that people with debts make the best savers. The results showed that 84% of Americans who had debts like car loans, credit cards or student loans (the survey excluded mortgages) are regularly saving a proportion of their income. The people who didn’t have a non-mortgage debt had a regular savings rate of only 63%.

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