How do I get out of debt?

This question is being asked more and more these days. In fact, it appears that people have reallly taken this to heart. Appartently it looks like credit card balances have declined overall in the US. That is a good thing.

It means that we are saving more and more these days. Afterall, we are not sure what is going on with the economy, and for many it is better to save than spend.

If you are saving and are able to get out of debt, then good for you. But, for some, especially those that have bad credit, and others that have very bad credit, it may seem pretty daunting.

Well, if you are trying to figure out how to get out of debt and how to get back on track to building your credit again, have no fear.

4 Ways to Get Out of a Debt Cycle

Since the President and Congress are already taking their own steps to decrease national debt, maybe it is also time for you to do the same thing. Here are four ways that you can take to lower your debt or get yourself out of a debt cycle.

1.) Try refinancing at a lower rate
Transfer your balances from a high rate credit card to one with low charges or zero interest. But, make sure to take caution with the balance transfer fees and the rates after the expiration of the introductory balance transfer. You may also opt to borrow from home equity or retirement plan as these options usually comes with lower rates.

2.) Monitor your expenses and decide where you can cut back
You can start doing this by reviewing your credit card and bank statements for the last three months. Then, record your expenses if you can. It may also be helpful for you to keep receipts and list down your expenses to monitor your cash spending.
If you see that there’s not much room to cut down your spending, decide on what to prioritize. Begin with your basic needs such as food, housing, utilities and transportation. Remember that it is better to miss a payment to your credit card than to go through a foreclosure, repossession or eviction.

3.) Begin paying your debt
Start with high interest bearing debts and make minimum payments with the low interest ones. If you still have difficulties with this term, talk to your creditor and negotiate a payment plan. Tell them that you are trying to avoid bankruptcy. If you cannot come up with a good deal, ask a credit counseling agency to negotiate for you. As your last option, consult a bankruptcy officer. This may hurt your credit for several years but it will give you a fresh start.

4.) Focus on you budget plans
Take out a loan only for things that can increase in value or provide you with more income. These include a home, education or car. Do not get tired of tracking your expenditures so that you are able to stick on your budget. Divide your non-monthly expenses such as insurance bulls, holiday funds and vacation to a monthly amount and put it in a savings account. Finally, make sure to keep some for emergency bills by saving at least 3 to 6 months’ worth of your monthly expenses.

When you take a look at these tips for getting out of debt, you will realize that there is no secret answer or magic bullet. A great deal of the answers come from being disciplined and also budgeting and planning.

If this is new for you, know that you can do it! Start small and gradually work your way up.

If you make a mistake, do’nt be too harsh on yourself. Identify that you made the error and get back on the wagon!

Over time you will be surprised at how you were able to improve your credit score, get out of debt and save money!

Obtaining a mortgage with bad credit

Obtaining a mortgage with bad credit these days is almost impossible. Because of the poor economy, and the problems the United States experienced during the credit crunch and the housing bubble bursting, banks and lending institutions are wary of lending money to anyone that has less than stellar credit.

If you have bad credit, and are wanting to get a mortgage to buy a house, one of the first things you should condider doing is getting your credit report. Once a year you can get your credit report for free from freecreditreport.com

When you have this, you can find out what is causing your credit to be bad. There may also

be mistakes on the credit report and you can get t hem fixed. By doing this, you can effectively raise your credit score.

A few things you want to do is pay off your debt. Right now, lending institutions are lending for people that have a low debt to income ratio. That means that you have to be making more than you are spending monthly.

Take a look at your spending habits and see if you are able to have enough left over to pay a mortgage payment, and have some left over.

In general, you should be planning on spending no more than 25-30% of your monthly income on a mortgage.

If you can’t do that, you may want to reconsider trying for a mortgage loan.

One of the things I like to suggest to people is to work on improving your credit score and save money at the same time. If you do this, you will have good credit when you buy your home, and will have the money saved.

Expect to have 20-25% of the purchase price of the home ready to make a down payment.

Also note that the better your credit score is, the lower interest rate you will qualify fo

r on the mortgage. This can save you hundreds of dollars monthly. Small changes to the interest make huge impact on the paymnets.

Ask yourself this…. do you really want to add more debt to your burded if you have bad credit? Why are you looking for very bad credit loans?

Ask youself how and why you got in this position in the first place. If you have made changes and made adjustments to your life style then good for you!

But remember, part of the credit reporting system is that your report is a snapshot in time. It is always moving and changing. And, part of the reason things tend to stay on a report for years is it takes time to change.

You want to show that you have sustained change to financial institutions.

So, before going out to see about obtaining a mortgage with bad credit, think about whether or not it really makes sense.

Here is a chart showing some things that are looked at when considering credit score and your ability to obtain a mortgage with bad credit.

Image via Wikipedia

http://youtu.be/xe0BHdxSdiU

Mortgage loans for people with bad credit

Military loans for people with bad credit

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Getting a bad credit loan is one of the options of people who cannot obtain a personal loan in their times of need. A poor credit history is the main reason why people cannot take out a traditional loan. Banks and other traditional lenders do not want to run the risk of approving a loan for borrowers with a history of poor payments. With a bad credit history, an application for cash advance will be denied.

When one seeks a loan from a bank, collateral is usually required. This can be in the form of any valuable and tangible asset that can replace the value of the loan once it is unpaid. But, money advance is one of the types of loan that do not need collateral. The application is easy and the approval is quick. A money advance loan is deposited in the same day the loan is approved.

In the application process, there are certain requirements for the applicant to be eligible. The applicant must be at least 18 years of age and a legal citizen. Also, the applicant must show residency for at least three months in the city or state where the application was submitted. An existing checking account that has been valid for at least three months is also needed. There are other lenders that will request the loan to be paid using an automatic checking account withdrawal on specified dates. Any late payments may incur charges to be added to the principle loan amount.

Bad credit loan is an alternative for people with poor credit standing. This is especially helpful in emergency situations such as car repair, job loss and medical expenses. The main advantage of this type of loan is that it does not consider the credit score as a factor. Moreover, it does not require any form of collateral. Finally, it is a loan that can be easily applied for and can be quickly approved.

You can get the car that you have always dreamed of by getting a car loan from any bank. However, this is only possible if you have a good credit rating. Obtaining a car loan with bad credit can be difficult but it is not impossible.

There are many lenders who can give a car loan for individuals with bad credit rating. The important thing is to determine one’s credit score before applying for a loan. Credit scores range from 350 to 850. A score below 580 is considered poor. While the score decreases, the chances of obtaining a loan decrease. Thus, if you plan to take a loan, you have to know your current credit score to be able to determine the probability of getting an approval.

Aside from knowing your score, it is also important to know the amount of down payment you can make to get a loan approval. Paying an initial amount reduces the loan’s interest rate. Oftentimes, the amount of down payment is dependent on your credit score. The average percentage is usually 20% to 50% of the total loan amount.

There are other preparations that can be done before getting a bad credit auto loan. These include reviewing your credit report annually to be able to clean up your credit standing the soonest possible time. Another is to make timely payments of bills. The most important is to obtain a good credit standing. All these will impact the interest rates of an auto loan by significantly reducing it.

There is no assurance for approval when getting a bad credit auto loan. If you are rejected, do not worry. You can always look for other lenders that can give you a loan despite your credit standing. Lenders for people with bad credit standing can be found online. They can even give low down payment and low interest rates for auto loans despite the poor credit standing.

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A lot of people have made various attempts to fix their financial situation. However, majority of these people failed. This is because financial resolutions need a long-term behavioral change which is very difficult but not impossible to do. There are other things that can be done to fix one’s finances aside from saving and spending less. Here are three tips to try to be able to manage your money better.

First, obtain a free copy of your credit report. The legislation in 2003 entitles all Americans to an annual free copy of their credit report. Each of the three credit bureaus must provide this copy. It can be obtained via AnnualCreditReport.com.

Despite this privilege, survey shows that almost 2/3 of Americans do not order a copy of their report. Getting hold of one’s report is important because it allows you to understand your credit score. It also helps in identifying errors and disputing them so that changes can be made that will help you obtain loans and additional credit for purchasing your needs. Aside from this, credit ratings these days determine employment. If you are planning to apply for a job, you must know your credit standing to see if it will affect your job application.

Second, go through a medical exam. This is a preventive measure rather than a direct solution to a financial challenge. By going through a medical exam, health care expenses are significantly reduced. This is because minor health problems are addressed early on before the condition gets worse.

Finally, update your beneficiaries. Deaths are inevitable and there are plenty of cases wherein the insurance proceeds go to someone else. Sometimes, this is not the intention of the bereaved family member but since the update was not made prior to death, there is nothing he or she can do about it. Remember that the name indicated as the beneficiary will be the person who will be receiving the proceeds of the insurance.

This holds true even if the will of the dead family member states that it must go to his or her spouse or children. Updating of beneficiaries should be done every time a major life change such as marriage, divorce, child birth or spouse’ death occurs. Accounts that usually need beneficiary designations include the following: 401k, 403, 457 plans, retirement plans for the self-employed, individual retirement accounts or IRAs, credit union plans, disability and life insurance policies and annuities.