Paying off Your Debt Without Killing Yourself

With the rising cost of college and university classes these days and the almost mandatory need to get a credit card (or two, or three) to initially establish your credit, it is almost impossible to reach your mid-20’s and not be in some sort of debt to someone. So it only makes sense that when you get that first big income rush once you have established a well paying job and a positive income flow to start paying down that debt as fast as you can. While paying off your debt is always a good idea, you need to be careful you don’t endanger your financial future to be (temporarily) debt free right this very second. Here are a few tips on how to pay down your debt and not endanger yourself financially.

First off, make a complete list of all of your debt, your interest rates and your income, as well as your savings. This will give you a complete picture of how much you owe, which accounts should be getting your attention first and how much of your savings you can put towards your debt without wiping yourself out completely. For those that are new to managing their money, it can be tempting to do the simple math of: $5,000 in debt minus $5,000 in savings equals no debt! While this equation is accurate, it also leaves you without a leg to stand on if emergencies should strike. No matter how much it may benefit you to be completely debt free, it is never, ever a good idea to completely wipe out your savings to pay off debt. A little bit here and a little bit there is a much sounder financial approach.

The second thing you should do is research the different kinds of debt you have, a credit card, car payment and student loans, and see if any of the debt comes with a pre payment fee. These fees are most common on mortgages, especially sub prime ones, but they can pop up on car payments and they are actually becoming common on credit cards, as well. Credit card companies want you to carry a balance, and when you don’t, they make less money. So some fiendish card companies have decided to start charging you a fee for NOT carrying a balance. If you have one of these cards, you should seriously consider getting rid of it and switching over to a card that doesn’t have this crazy fee. If your car payment comes with pre payment penalties, weigh the pros and cons of paying it off early. If you end up saving significantly more in interest than you would end up losing in the penalty, it is still a smart move to get rid of that car payment.

The smartest thing to do if you are young, have a nice paying job for the first time and want to get out of debt is to simply budget out your expenses and income and then try to shave off some of your expenses and take that money and pay off your debt. You should have, minimum, two months of living expenses stashed away as savings, and as tempting as it is to use that to pay off debt, it just isn’t a good idea. By budgeting wisely, you can pay off your debt and be in good financial shape for the future.

CreditMe.com is a free online credit cards review and application website. We offer credit cards selection from visa, master cards, bank of America, orchard bank, discover, American express, citicards, visa credit cards, and many others. We have quite some categories and hundreds of credit cards selection to fit your need. Compare bad credit credit card offers at CreditMe.com

This entry was posted on Friday, May 11th, 2007 and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
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How Credit Scores Affect Mortgage Applications

With a good credit score an applicant will receive prompt response from many lenders, all of them offering low interest rates and low down payment options. The loan amount offered also may be high. On the contrary a low credit score would result in a lot of rejection from various mortgage financers. Because creditors wouldn’t come forward easily to give credit to individuals that have a history of difficulty in repaying existing loans. After all, creditors take risk when they finance mortgages against the credit history of a debtor. Naturally, they will wish to remain on the safe side and pick up less risky ones that have good credit histories. A good credit score means less chance of missing on payments and therefore less risky.

But there are some real risk takers that will come forward to finance mortgages for individuals with bad credit scores. They would charge high down payments and always high interest rates though. They may also fix additional charges for every little paper work and may charge high closing rates. The loan amount offered will also be considerably less. The individual with poor credit scores will not have much choice but to accept the terms and conditions as there are no other alternatives. This is a tight situation and to avoid this you must have a good credit score.

People with bad credit may fall in to the trap of ’secured loans’. Secured loans are the ones where the loan applicant offers an asset as collateral security. The lender becomes secure about the repayment of the loan and not the borrower. Securing a loan with bad credit score becomes easy only when the applicant is willing to offer some asset as collateral security. This again is a very dangerous situation where an individual runs the risk of losing his entire collateral asset in case of failing to pay the loan installments in time. An individual should always avoid such type of a loan.

Resort properties normally require large amounts of finance which a person with bad credit may find it difficult to obtain. So it is always advisable to keep your credit score high. Incase the credit score becomes low due to unavoidable financial reasons it can be improved upon. There is no need to lose hope simply because a person has a low credit score. If the property that he intends to buy has good equity he should go out and try to obtain finances for it. There are many sub prime lenders willing to offer their services.

For a review of your credit report as it relates to a mortgage loan and a consultation on the best loans available to you, give us a confidential, no obligation and no cost call.