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debt management 101, getting started with debt management - YouTube
Channel: slideLearn
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accumulating bad debt our consumer debt
by buying things like new living room
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furniture or a new car that you really
can't afford is like living on a diet of
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in caffeine a quick fix with little
nutritional value borrowing on your
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credit card to afford an extravagant
vacation is detrimental to your
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long-term financial health when you use
debt for investing in your future we
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call it good debt borrowing money to pay
for an education to buy real estate or
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to invest in a small business is like
eating a well-balanced and healthy diet
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that's not to say that you can't get
yourself into trouble when using good
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debt just as you can gorge yourself on
too much good food you can develop
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financial indigestion from too much good
debt in this course
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getting started with debt management we
mainly help you battle the pervasive
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problem of consumer debt getting rid of
your bad debts may be even more
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difficult than giving up the junk foods
you love but in the long run you'll be
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glad you did you'll be financially
healthier and emotionally happier and
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after you get rid of your high-cost
consumer debts make sure you practice
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the best way to avoid future credit
problems don't borrow with bad debt many
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people build a mental brick wall between
their savings and investment accounts
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and their consumer debt accounts by
failing to view their finances
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holistically they simply fall into the
habit of looking at these accounts
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individually the thought of putting a
door and that beat brick wall doesn't
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occur to them this section helps you see
how your savings can be used to lower
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your consumer debt if you have the
savings to pay off consumer debt like
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high interest credit card and auto loans
consider doing so make sure you pay off
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the loans with the highest interest
rates first sure you diminish your
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savings but you also reduce your debts
although your savings and investments
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may be earning decent returns the
interest you're paying on your consumer
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debts is likely higher even if you think
that you're an investing genius and you
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can earn more on your investments
swallow your ego and pay down your
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consumer debts anyway in order to chase
that higher potential return from
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investments you need to take a
substantial risk you may earn more
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investing in that hot stock tip or that
bargain real estate but you probably
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won't
check out some of these financial tips
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to pay down your consumer debts number
one borrow against your cash value life
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insurance policy if you did business
with a life insurance agent she probably
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sold you a cash value policy because it
pays high commissions to insurance
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agents or perhaps your parents bought
one of these policies for you and you
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are a child borrow against the cash
value to pay down your debts
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number two sell investments held outside
of retirement accounts maybe you have
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some shares of stock or Treasury bond
gathering dust in your safety deposit
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box consider cashing in these
investments to pay down your consumer
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loans just be sure to consider the tax
consequences of selling these
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investments if possible sell investments
that won't generate a big tax bill
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number three tap the equity in your home
if you're a homeowner you may be able to
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tap into your home's equity which is the
difference between the property's market
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value and the outstanding loan balance
you can generally borrow against the
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real estate at a lower interest rate and
get a tax deduction subject to interest
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deduction limitations however you must
take care to ensure that you don't over
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borrow on your home and risk losing it
to foreclosure number four borrow
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against your employer's retirement
account check with your employers
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benefits department to see whether you
can borrow against your retirement
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account balance the interest rate is
usually reasonable be careful though if
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you leave or lose your job you may have
to repay the loan within 60 days also
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recognize that you'll miss out on
investment returns on the money borrowed
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number five lean on family they know you
love you realize your shortcomings and
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probably won't be as cold-hearted as
some bankers money borrowed from family
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members can have strings attached
of course treating the obligation
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seriously is important to avoid
misunderstandings write up a simple
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agreement listing the terms and
conditions of the loan unless your
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family members are the worst bankers we
know you'll probably get a fair interest
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rate and your family will have the
satisfaction of helping you out just
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don't forget to pay them back if you
lack savings to throw it your consumer
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debts not surprisingly you have some
work to do
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if you're currently spending all your
income you need to figure out how you
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can decrease your spending end or
increase your income in the meantime you
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need to slow the growth of your debt
different credit cards charge different
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interest rates so why pay fourteen
sixteen or eighteen percent when you can
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pay less the credit card business is
highly competitive until you get your
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debt paid off slow the growth of your
debt by reducing the interest rate
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you're paying here are sound ways to do
that number one
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apply for a lower rate credit card if
you're earning a decent income you're
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not too burdened with debt and you have
a clean credit record qualifying for
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lower rate cards is relatively painless
some persistence and cleanup work may be
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required if you have income and debt
problems or nicks in your credit report
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after you're approved for a new lower
interest rate card you can simply
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transfer your outstanding balance from
your higher rate card credit cards
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dot-coms website carries information on
low interest rate and no annual fee
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cards among others including secured
cards number to call the bank that
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issued your current high interest rate
credit card and say that you want to
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cancel your card because you found a
competitor that offers no annual fee and
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a lower interest rate your bank may
choose to match the terms of the
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competitor rather than lose you as a
customer but be careful with this
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strategy and consider just paying offer
transferring the balance cancelling the
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credit card especially if it's one
you've had for a number of years may
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lower your credit score in the short
term number three while you're paying
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down your credit card balance stop
making new charges on cards that have
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outstanding balances many people don't
realize that interest starts to
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accumulate immediately when they carry a
balance do you have no grace period the
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20 or so days you normally have to pay
your balance in full without incurring
[350]
interest charges if you carry a credit
card balance from month to month
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regardless of how you deal with paying
off your debt you're in real danger of
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falling back into old habits backsliding
happens not only to people who file
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bankruptcy but also to those who use
savings or home equity to eliminate
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their debt this section speaks to that
risk and tells you what to do about it
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getting out of debt can be challenging
but we have confidence that you can do
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it with this book by your side the
following list provides some additional
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tactics you can use to limit the
influence credit cards hold over your
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life number 1 reduce your credit limit
if you choose not to take our advice and
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get rid of all your credit cards or get
a debit card be sure to keep a lid on
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your credit cards credit limit the
maximum balance allowed on your card you
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don't have to accept the increase just
because you're bad
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keeps raising your credit limit to
reward you for being such a profitable
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customer call your credit card services
toll-free phone number and lower your
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credit limit to a level you're
comfortable with number to replace your
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credit card with a charge card a charge
card such as the American Express card
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requires you to pay your balance in full
each billing period you have no credit
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line or interest charges of course
spending more than you can afford to pay
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when the bill comes to as possible but
you'll be much less likely to overspend
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if you know you have to pay in full
monthly number three never buy anything
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uncredited appreciates in value meals
out cars clothing and shoes all
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depreciate in value don't buy these
things on credit borrow money only for
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sound investments education real estate
or your own business for example number
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four think in terms of the total cost
everything sounds cheaper in terms of
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monthly payments
that's how salespeople entice you into
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buying things you can't afford take a
calculator along if necessary to tally
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up the sticker price interest charges
and upkeep the total cost will scare you
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number five stop the junk mail avalanche
look at your daily mail we bet half of
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it is solicitations and mail order
catalogs you can save some trees and
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sometimes sorting junk mail by removing
yourself from most mailing lists to
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remove your name for mailing lists
contact the Direct Marketing Association
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number six limit what you can spend go
shopping with a small amount of cash and
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no plastic or cheques that way you can
spend only what little cash you have
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with you
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you
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