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Monthly Archives: September 2018

Debt Reduction

They were so ingrained that debt was something I expected to have and since I expected it, it happened. But eventually, I learned that most debt was not helping me and my family. Debt was keeping us broke and keeping us from enjoying the good things in life. It was also the driving force keeping me in the work force long after I wanted to retire. I was a slave to the creditors because I did not have a good handle on managing money and debt.

Growing up with people who expected to be in debt probably did not help me much, but the only person that I can really blame is me. I was not dumb by any means, just uneducated when it came to managing debt.

After I decided to turn things around, I learned two things that helped keep me motivated. The first thing was if you have money, debt is something you never need. The other thing was that anyone can get out of debt. It takes hard work and common sense, not debt consolidation, debt management companies or bankruptcy.

It just takes commitment, some sacrifice and time. If you are willing, you can become debt free. It won’t happen overnight. But then, your debt was not created overnight either. It took a lot of time and a lot of mistakes along the way.

I mentioned mistakes, because I believe that most hard working people get into debt because of mistakes made in planning or lack of planning for the future. And most hard working people will continue to work even after they should be retired and living the good life just to pay for the debt.

So, how do you get out of debt? That is the real question and there are any number of people who have made a business of answering that question. But the fact is, most people are willing to work hard and try to avoid the quick fix because it is their nature to pay their debts. Another part of the problem is that people have difficulty learning from their mistakes and they are doomed to repeat those mistakes and stay in debt. It is also a lesson that is easily passed on to our children.

The first absolutely necessary thing to becoming debt free is to accept responsibility for your financial situation. No one else caused you to accept credit as a way of life. The second most essential thing you need is a plan and maybe a little bit of guidance. If you are building a house, one of the first things you get is a plan and you might want to understand how the house is supposed to go together. Your financial house is no different. Without a plan, you just make the same mistakes over and over again.

Financial Freedom

The reason for this ridiculous amount of nation-wide debt is simple: we have no idea how to save and are really good at spending. We come by it honestly – I mean, have you heard how much debt that our government is in currently? Something to the tune of nineteen trillion dollars. Based on that statistic, I would say that it is no wonder Americans are having such heavy financial struggles! Perhaps the worst part about this whole collaborative debt-mess is that the majority of Americans not only expect to accrue debt, but they’ve settled with that reality as fact, chosen to accept it as a part of life, and are making no conscious efforts to avoid it!

The good news, however, is that living with financial debt is not a requirement, nor should it be something to settle with. There are several steps that you can take today to begin paying off your debt and walking in financial freedom. Dave Ramsey, American businessman, author, and motivational speaker who specializes in finance, created something called the “debt snowball” to teach Americans how to get rid of their debt entirely. This method has been proven to increase the user’s internal motivation to get out of debt fully.

On first impression, this concept of the “debt snowball” may sound intimidating – after all, you don’t want your debt to snowball out of control… it’s already out of control! This method, contrary to its intimidating title, is built to keep you motivated as you pay off your debt with one simple trick: you must pay off the smallest debt first and work your way up to the largest. More information about this concept can be found on Dave’s website, but to put it simply, the steps to financial freedom are creating and maintaining a strict personal budget, putting money towards paying off those debts every single month, and starting with the smallest one first.

Choose Credit Unions

Easier to borrow

There is no need to await your loan status on tenterhooks since lending decisions are normally made locally, which means quicker turn-around time and more flexibility than loans with large corporations. Some can also offer signature loans to members who have good credit and standing.

Less chance of failure

Banks, insured by the Federal Deposit Insurance Corporation fail much more frequently than their counterparts. 44 FDIC insured institutions failed in 2011. That’s not to say credit unions have no chance of failing-9 NCUA insured institutions failed in the same year. However, there is much less chance of this happening since they are generally smaller and not as focused on profit. This means that they will loan less frequently and accept fewer risks

Lower loan rates

More often than not; these lending institutions can offer their customers lower loan rates. Last year, the National Credit Union Administration released information that confirmed that the average rate on a 36-month loan was about 2.85 percent. Compare that rate to an average 5.59 percent at banks, which is nearly twice the amount.

Run by customers

You can have confidence doing business with your credit union. Why, you ask? Because each member is also a partial owner, meaning they also have a stake in the success of the union. It is also managed and staffed by its customers on a volunteer basis. As a member, you even have the option to run for a seat on your union’s board of directors, which is not feasible at a bank.

Be Invincible to Debt Collectors

Creditors are known to be inventive when recovering their money, but the Australian law interdicts them to use misleading actions and words, to harass or coerce you, and act unconscionably towards you to accomplish their goal. Your legal rights under the Australian Consumer Law (ACL) protect businesses against aggressive creditors or collectors that might want to take unfair advantage of you. The ACL which is a cooperative reform of the Australian Government and the States and Territories, through the Ministerial Council on Consumer Affairs (MCCA) and it also ensures that this type of conduct is not tolerable towards your family members, partner or anyone else connected with you. However, there are some actions that a creditor has every right to undertake such as issuing a statutory demand, a statement of claim and judgment, a notice of winding up, a garnishee, a director penalty notice and use debt collectors as long as they do not use coercive methods.

If you are in debt and you feel that creditors are not proceeding according to the law, you can ask the help of a professional counseling company. In the worst case scenario, you will face liquidation, but you will at least be able to shake off the creditors after the company becomes insolvent. You should know your rights to make sure you will be able to recover and pay off your debts. There are many things you can use into your advantage when you feel harassed by debt collectors. For instance, you should know that in Australia a debt collector should only contact you for reasonable purposes such as demanding payment, reviewing payments plans, inspecting or recovering mortgaged goods. More than three phone calls or e-mails per week are also considered unacceptable. The ACL revised the protection of businesses in the State and Territory fair trading laws and in the Trade Practices Act 1974 (TPA). This law is enforced by two establishments: the ACCC and the State and Territory consumer protection agency.