The Two Step Dance Too Facing Your Mountain Of Debt

By Admin, 9 December, 2010, No Comment

The Two Step Dance Too Facing Your Mountain Of Debt Rather Than Running Scared

If you find yourself in the situation where it is not possible to repay your debts, consider the following two steps to recovery:

Step 1: In spite of avoiding your situation you’d be way better off by taking some aggressive steps to solve it. If you have already reached the point where you cannot keep up with repayments, it is VITAL that you inform your creditor about it and explain what’s going on. This is your first step to freedom and if you contact your creditors first before they contact you, you’ll reassure them you are taking your situation seriously and have taken responsibility.

Don’t delay, contact your creditors early and never ignore letters from your creditors; this kind of action can make them furious. They may even try to take you to court early before you can file a bankruptcy case. Always remember that they do not want to take any legal action, unless your lack of communication and action force them to do so! Talk seriously with them as your creditors will only be considering a court case as a final option. All court actions are time consuming, unpredictable and costly; therefore it is only the last option for them.

Step 2: Repayment is a question of mathematics and a very simple commercial decision for your creditors. You see, they know it’s better for them to take their money back with mutual commitments (lower interest rates) rather than going through court procedures. Legal procedures usually benefit nobody, except accountants and lawyers. And most lenders realize this! If they are offered a small payment schedule over a longer period, most lenders will gladly accept this option. In this case they can get their money back rather than the option of bankruptcy. There are many brokers out there who will help with situations like this and begin the negotiations.

Prepare a budget, and confirm how much you can afford to pay towards your debts each month, than contact your lenders and offer them your idea – either on your own or with the help of a credit card debt consolidation expert. If you decide you’d like help simply compile a list of all your debts and give one of your local debt consolidation experts a ring. They have their fees but will already know who to call and will save you a pile of time since they do credit card debt management all the time. They will know the fastest and best way to eliminate credit card debt and get you back into a situation you can afford.

Your attitude towards your debts and your fiscal situation can take off some unneeded pressure. Be honest with yourself and your creditors – as it will be your advantage in such cases. Never choose the option of bankruptcy, as it always has undesirable legal restrictions that could come back to bite you down the road. Above all try to have fun, 2 step a bunch, smile more than normal and no matter how big the mountain of debt just know you can beat it with small bites, one at a time!

The Tax Implications of Debt Settlement and Why Chances Are

By Admin, 2 December, 2010, No Comment

The Tax Implications of Debt Settlement and Why Chances Are You Shouldnt Care

(The author of this article is not a tax attorney, CPA, or enrolled agent, and this is not to be considered tax advice. If you need tax advice, you should consult someone who is certified in this arena.

Did you hear about Bill Gates? He decided to give away all his shares of Microsoft and start working at a car wash in Seattle. When Larry King asked him why he decided to do it, Gates admitted that he was losing too much money on the taxes. You see—by making 7 an hour, he would be in the lowest tax bracket, and if he could manage to make less than 19,000 a year, then he would not have to pay any taxes at all! Back when he was making a 1 billion annually, he was left with 500 million after taxes every year. So Gates thinks he can make more money this way.

As preposterous as the above example sounds, its exactly the same logic employed by consumers who fear the tax implications of debt settlement. For one, most people enrolled in debt negotiation programs dont have to pay taxes on their savings as is (more on this later). Secondly, why in the world would it ever even deter you from enrolling in a debt settlement program anyway? Its literally the equivalent of someone turning down a million pound salary for minimum wages because of the favorable tax implications. Consider the following scenario.

Frank owed 20,000 at 19% interest when he enrolled in a debt settlement program. When it was all said and done, Frank was able to reduce his debt down by 45% and in the process he saved 9000 off the balance alone. Unfortunately, each of his creditors reported his savings to the IRS and he was forced to tack on 9000 to his 40,000 annual income. So he was taxed like he made 49,000, which put him in the 30% tax bracket and meant he had to come up with 2700 on April 15th. Regrettably, Frank did not have the money, so he got on a payment plan with the IRS, who charged him their current interest rate, which happens to be 8 percent annually. In the end, Frank paid off the IRS in 1 year for 2916. This means that Frank in actuality only saved about 6,000 off the balance. So would Frank have been better off continuing to pay the minimums instead of settling his debts? Lets see. He saved 6,000 off the balance alone and roughly 40,000 in interest charges, which brings his net savings to 46,000. Its pretty clear that it was still in Franks best interests financially to do debt settlement.

It does not end here. Most debt settlement candidates never have to pay taxes on the debt anyway. The IRS exempts anyone who was technically insolvent at the time their debt was settled from having to pay taxes on the savings. So the next question is, what does it mean to be insolvent? According the IRS, someone is insolvent when their assets (what you own) exceed their liabilities (what you owe), and it should come as no surprise that when someone is at the point when theyre seeking debt relief, theyre probably in debt up to their eye balls and therefore are insolvent. If you owe more than the value of your assets, then all you have to do is fill out IRS form 982 along with your tax return illustrating this fact. All told it will probably take you a couple hours to do this, and if you saved 46,000 like Frank in our example, then its the equivalent of making 23,000 an hour. Unless youre Bill Gates, its probably worth it.

The Easiest Way To Eliminate Your Credit Card Debt

By Admin, 25 November, 2010, No Comment

Credit cards can offer customers the option of a quick solution to financial worries. However, many people who begin using credit cards often find it to be almost addictive. For many people who begin using credit as a means of payment for expenses, credit card debt can become a huge problem. Credit card interest is usually the cause of this. Nave customers who sign up for credit cards and do not have experience with credit cards can be easily coerced into applying for credit cards with high interest rates that will eventually lead to extreme credit card debt.

Credit card debt leads to a number of bankruptcies every year throughout the United States. With so many people falling prey to credit card debt, it must be made easier to eliminate credit card debt. Once credit card debt gets up to a certain point, payments can be huge and it may seem as though you are unable to keep up. This is why it is important to keep your credit card at a manageable rate. Once your credit card debt gets too high your payments will also rise. If you miss payments, credit card interest will cause your credit card debt to climb even if you have not recently used your credit card.

Keeping on top of payments and not using your credit card to an extent to which you will have trouble making payments on time is the ideal way to keep yourself free of credit card debt. If you are already facing a large amount of credit card debt, do not worry, there are ways to eliminate it. If you are like many other people across the United States you may be facing a number of separate credit card payments to make each month.

The best way to face multiple credit card bills is to approach one at a time rather than give yourself a number of bills to try to eliminate at once. It is best to start with the credit card that you owe the least amount of money on because it will be the easiest to pay off. Once you eliminate credit card debt for that credit card you can move on to the next and so on until you are debt free. It is best to limit your spending while paying off your debt and try to make the largest payments you can whenever possible. This will reduce your credit card debt faster than paying the minimum payment each month.

If you limit your spending in other areas you will find that it will become easier to meet your payment deadlines and even, in some cases, be able to make larger payments. However, if you cannot afford to pay more than your minimum monthly payment, settle with paying that habitually and eventually you will find yourself debt-free.

The Double Entry Method Of Book Keeping And How To

By Admin, 18 November, 2010, No Comment

The Double Entry Method Of Book Keeping And How To Know If It’s A Debit Or A Credit

Debit and credit are the two most basic concepts in accountancy. Today, almost all countries follow the double entry method of book keeping. Under this method, for every account that is debited by a certain amount, another account must be credited by the same amount. Thus, at any given point, the sum total of all debits must be equal to the sum total of credits.

For any given transaction, the account to be debited and which credited is based on certain principles of accountancy.

Broadly, the rule for debitcredit is as follows:

A)For real (or asset) accounts (e.g. furniture, cash, machinery, land, etc.): Debit is what comes in, credit is what goes out.

b)For nominal (or income expense) accounts (e.g. salary, purchase, sales, etc.): Debit is all expenses and losses, credit is all income and gains. This would include our bank chequing accounts and is why were all so used to knowing debit and credit under these conditions.

c)For personal (or individuals) accounts (E.g. Mr. Johnsons AC, Forsyth Inc. AC, etc.): Debit is the receiver, credit the giver.

Thus, for example, if a person buys furniture worth 1000 and pays for it in cash, he would apply rule (a) Debit the furniture account and credit cash ac.

Lets take another transaction. A business pays salary to their employee, Mr. Smith, amounting to 1500 by cheque. In this case, following Rule (b), salary ac shall be debited, and following rule (c), bank ac will be credited, since in accounting, the banker is treated as a personal account.

At the end of any given period the balances in all the accounts are put in a table format, called the trial balance. The debit balances are put in the debit side of the trial balance and the credit balances on the credit. Since every debit has a corresponding credit, it naturally follows that both sides of the trial balance must be equal. Any discrepancy in the same would point out that an error has taken place somewhere in making an entry.

The layman may get confused with the terms debit and credit as used by his banker. The banker will credit you for all deposits of funds in your accounts, i.e., whenever your bank balance increases, and debit you with all withdrawals. But the entries in the bank book for a business are just the opposite. In other words, when you deposit funds in your bank, you debit the bank book and when you make payments or withdrawals, you credit the bankbook. Thus the banks passbook or statement will have the same entries as your bankbook, but on the opposite sides.

So next time your accountant tells you that your bank book has been debited by 1000 be happy, for it is a deposit and not a payment!

Term Life Insurance: The differences between Term and Whole Life

By Admin, 11 November, 2010, No Comment

Term Life Insurance: The differences between Term and Whole Life policies

Life Insurance quite generally is a policy whereby you pay a company a premium so that if you die while covered your descendents receive financial benefits. Within the larger Life Insurance window there exist two broad categories of policies, Term and Whole life (Whole Life is also known by the equivalent term Universal Life Insurance). Term Life is exactly what its name implies, valid only for a certain period of time, whereas Whole life lasts the duration of one’s life.

Price Differences

Because Term Life has a structured beginning and end, typically from 1 to 30 years, it is normally quite a bit cheaper than Whole Life. That is because under Whole Life it is assured that the insurer will eventually pay out (as we all eventually die). Under Term Life, however, there is a very good chance that you will live through the period of the policy and thus the insurance company can simply take your premiums without ever having to pay out anything.

Benefits Differences

Another important distinction between Term and Whole Life is the fact that at the end of the Term Policy, the policyholder is left with nothing but his own health. On the other hand, with a Whole Life Policy the insurer often takes a portion of the premium and places it into a savings account for the policyholder. In case of emergency later in life, the Whole Life Policy Holder can access that money to meet some needs while still living. As you can imagine, the Insurance Company raises the price they charge for access to all of this.

Deciding Between the Two

So, how does one decide between Term and Whole Life Insurance? To best answer that question it is important to ask why you need the insurance in the first place. Is it because you have young children and a spouse who does not have the earning potential to get your children through college? Or is it because you work in a dangerous industry and will regularly face the prospect of death over the next few years? These are both excellent candidates for Term Life Insurance. In the first case, it is important that the provider ensure enough financial support for approximately 10 years and then the need drops off, while the second example may require a shorter 3 – 5 year Term Life Policy.

On the other hand, let’s imagine that you have a mentally handicapped person you will support indefinitely, or a spouse that has never worked at all. These may be better candidates for Whole Life as the financial need they feel responsible for extends not only to some definite period in the future, but as long as the other person is alive. Under these circumstances, paying the premium for Whole Life might be worthwhile.

Term and Whole Life Insurance fill an important void in many lives by providing some assurance that in case of an accident, loved ones will not be left stranded. It is important to remember, however, that the policies are not panaceas. The savings rate on Whole Life Policies is usually dismal compared to open market rates, and with Term, you are making payments on a product you may never use. Ultimately, the decision to purchase either of these products should involve weighing your personal risk and health, your current and expected financial situation, and alternative uses for funds you have earmarked for a policy.

Make More Money To Eliminate your Debt.

By Admin, 4 November, 2010, No Comment

How can someone stay far away from debts? You must have a plan, and if you can’t, find a coach or a financial adviser, and get a good money management plan.

First, you must eradicate bad habits:

1.Don’t spend more than you earn even if it seems difficult, it is the best way to stay away from debt for good. That is why you need to get more money, otherwise this point alone will be very difficult to apply.

2.When you have any debt, try to clear it right away. Another reason to get more money.

3.Write everything (Computer or Paper). You must keep a record of all your debt with you, and know what is going on in your account on a daily basis.

4.Give your card to your husband(or to your wife or mother -)

5.Stay away from gambling (not for everyone).

6.Don’t accumulate debts months after months.

It seems very easy, but people just fail to follow this simple plan, and the consequences are often painful… Divorce, foreclosures, bankruptcy…

So you must:

==> Change your habits

==> Choose an action plan

==> Write down this plan

==> Stay away of your credit card

==> See the interest rate as your enemy

==> Don’t go to a Debt continuation service, Christian or else

==> Learn how to know and control yourself(your emotion)

==> Earn more money

Internet is giving to everybody an easy way to start and be in business in less than one week starting from scratch. It is the solution to a lot of problem, and the best is that if it doesn’t work(I prefer to say if you did not put your heart to make it work), you just start another business the same day, and this one may become profitable.

In 2006, more and more people will start successful Internet businesses. There is a lot of opportunities to profit from.

Debt isn’t the real problem, the source of the problem is that you need more money.

I used money from my home equity loan to pay

By Admin, 28 October, 2010, No Comment

I used money from my home equity loan to pay off some of my personal debts. Can I deduct interest?

In some instances, it is possible for individuals to deduct the interest of such home equity loans on their state and federal taxes, which are, or at least should be, filed annually the Internal Revenue Service.

Despite the fact that the money can be used for reasons other than to buy, build or improve an individual’s place of residency or home, the debt for which the home equity loan is used may still allow the loan’s interest to qualify as home equity debt. No matter how the individual uses the money that they received as a home equity loan, the interest that is paid by the individual each year can be deducted on the individual’s taxes in an itemized list. However, there are limitations that have been placed on the individuals who do so when it comes to the amount of money they can deduct on their taxes in relation to the interest that they have paid on their home equity loans.

These interest amount limitations are based on the individual and are put in place regarding the amount of money the individual pays in interest on their home equity loan each tax year. A couple may deduct up to 100,000 in interest from their home equity loan each year on their taxes. An individual who is married but filing jointly from their spouse may deduct half of this amount annually, provided the individual is able to meet the other criteria and regulations set forth by the Internal Revenue Service. These individuals may only deduct a total of up to 50,000 on their taxes.

A home equity loan is very different from a home equity line of credit and it is important to note this when filing taxes since there are separate requirements and paperwork that needs to be done for each. Despite the fact that they sound similar, the two loans have different things that affect them, including interest. When individuals use their home equity loan money in order to take care of certain aspects of their home or in order to pay off some of their personal loans or debts, the money can be deducted up to the 100,000 or 50,000 limits. These limits are put into place as a generalization. Some other limitations may be put on individuals if they meet certain other criteria.

These limitations can be determined by tax professionals on a case by case basis, but it is important to note that the cap for interest deductions for home equity loans are stopped at 100,000 for couples, or 50,000 for married individuals who are filing their taxes separately. Regardless of the amount that the individual can deduct from their taxes, the interest needs to be deducted on the 1040 form, Schedule A. The interest needs to be placed under the itemized deductions.

How To Get Out Of Debt More Quickly

By Admin, 21 October, 2010, No Comment

Pay more than the required payment (make extra payments in the manner your lenders prescribe so you don’t lose out because of computer errors, etc.) focus on your highest rate debt first.

Bi-weekly payments are an excellent means to pay extra principal almost painlessly if your paydays are weekly or bi-weekly, and if there are no fees involved, and if you deal with a reputable money handler. A person who pays of the required monthly payment bi-weekly makes the equivalent of 13.051 payments in an average year. The person who does so, pays the loan off early, and pays significantly less interest especially on a mortgage loan (a person who pays a payment bi-weekly can reduce a 30 year mortgage by more than 7 years, and save many thousands of pounds in interest). If you wish to match the bi-weekly advantage, but still make monthly payments, multiply your required monthly payment by 13.05 and divide by 12. Pay that amount each month.

Highest rate debt first. If you have several debts, pay as much as you can on you highest rate debt and the minimum required payments on your other debts. As you pay off one debt, add the amount you were paying toward it to your next highest rate debt, and so on.

Often times, this technique is much more effective and efficient than refinancing even at a lower rate.

If you receive a pay raise or a bonus, apply most of it towards any debt that you have. You already know that you can live without the extra money. Put it to good use and draw down some debt.

If you have the opportunity to work some overtime, use that money to help pay off your debt. Consider taking a second job to earn some money to help pay off your credit card debt.

Clean out your closets and have a yard sale or sell on eBay. Take the profit and pay off that debt.

Cut every corner that you can. Make your lunch at home and bring it with you to work. Skip the coffee, soda or candy bar that you normally have every day.

Throw your change in a jar at the end of the day. Every month put the money in the bank and use it help pay off your debt.

Go an extra week or two without that haircut. Dont go out to the movies (or at least cut back). Cancel your cable subscriptions.

If you have a home phone and a cell phone, get rid of one (I cancelled my home phone years ago).

Look around. I am sure you can find ways to cut back and save an extra hundred or two hundred pounds each and every month. Use this to pay down that debt and get out of the hole.

How to Control Your Expenses to Eliminate Debt

By Admin, 14 October, 2010, No Comment

This sounds simple, but to control your expenses you first must understand what they are. The only way to be sure you know what you spend is to record everything. This is hard to do. Then you will need to do something even more difficult, Sacrifice and Live on a Budget.Ouch, all people including you and me hate those two words. But it will take sacrifice to get out of debt. The good news is that it will be worth it.

Every time you make a sacrifice and stay on budget you will be investing in your future. Always keep that in mind. Every step you make towards getting out of debt means you are closer to having your money work for you.

The major expenses you can control on a day to day budget are:

General Expenses It could be music equipment, car washes, computer games, anything. Any things you can figure out which are not your needs. Maybe there isnt anything you can think of, but there probably is. Maybe at least once a month, when you go to buy something on impulse, you force yourself not to do it.

Food Expenses Stop going out to eat. This will be a huge sacrifice for most, but you have to stop going out to eat;its too expensive. You need to bring your lunch to work and, if you have a Starbucks addiction, stop buying 2 cups of coffee. Many people can save 50 a month just by brewing their own coffee, another 100 by bringing their lunch to work, and another 200 by not going out to eat for dinner.

Clothing Expenses Always decide what you are going to purchase before you go into the store and stick to it. Do all your shopping at home. If you truly need a new jacket because the old one has a hole in it and its really cold outside then you can go get a jacket. But dont start looking around for the skirts and hats while you are there. Get the jacket and run!

Entertainment Expenses You like to have fun and you need to have fun. However, if you are in debt then, you need to sacrifice at least one major entertainment expense a month. Whatever it is you like to do (movies, concerts, plays, out to eat, sports, etc.) you need to reduce the frequency by at least once a month.

Gasoline Expenses As everyone is aware,gas prices have grown astronomically in recent times. For many years gas prices had been relatively level and it seems that they are making up ground ina short period of time. At 3 and more per gallon, gasoline has become a major expense for most households and needs to be specially addressed when looking at ways to control expenses. Getting a car with a good gas mileage and reduce your total driving miles can save you some significant amount of money. If you have colleagues leave close to you, then get them to carpool with you and share the gasoline expenses.

If you follow some basic rules on each of these tips on reducing debt and budgeting expenses and are willing to sacrifice you can save a good significant amount of money each month. That will put a dent in your credit card debt in no time.

Fair Debt Collection Practices Act And You

By Admin, 7 October, 2010, No Comment

If you fall behind in repaying your creditors, or an error is made on your accounts, you may be contacted by a “debt collector.”

You should know that in either situation, the Fair Debt Collection Practices Act requires that debt collectors treat you fairly and prohibits certain methods of debt collection. Of course, the law does not erase any legitimate debt you owe.

This article answers commonly asked questions about your rights under the Fair Debt Collection Practices Act.

What debts are covered?

Personal, family, and household debts are covered under the Act. This includes money owed for the purchase of an automobile, for medical care, or for charge accounts.

Who is a debt collector?

A debt collector is any person who regularly collects debts owed to others. This includes attorneys who collect debts on a regular basis.

How may a debt collector contact you?

A collector may contact you in person, by mail, telephone, telegram, or fax. However, a debt collector may not contact you at inconvenient times or places, such as before 8 a.m. or after 9 p.m., unless you agree. A debt collector also may not contact you at work if the collector knows that your employer disapproves of such contacts.

Can you stop a debt collector from contacting you?

You can stop a debt collector from contacting you by writing a letter to the collector telling them to stop. Once the collector receives your letter, they may not contact you again except to say there will be no further contact or to notify you that the debt collector or the creditor intends to take some specific action. Please note, however, that sending such a letter to a collector does not make the debt go away if you actually owe it. You could still be sued by the debt collector or your original creditor.

May a debt collector contact anyone else about your debt?

If you have an attorney, the debt collector must contact the attorney, rather than you. If you do not have an attorney, a collector may contact other people, but only to find out where you live, what your phone number is, and where you work. Collectors usually are prohibited from contacting such third parties more than once. In most cases, the collector may not tell anyone other than you and your attorney that you owe money.

What must the debt collector tell you about the debt?

Within five days after you are first contacted, the collector must send you a written notice telling you the amount of money you owe; the name of the creditor to whom you owe the money; and what action to take if you believe you do not owe the money.

May a debt collector continue to contact you if you believe you do not owe money?

A collector may not contact you if, within 30 days after you receive the written notice, you send the collection agency a letter stating you do not owe money. However, a collector can renew collection activities if you are sent proof of the debt, such as a copy of a bill for the amount owed.

What types of debt collection practices are prohibited?

Harassment. Debt collectors may not harass, oppress, or abuse you or any third parties they contact.

For example, debt collectors may not:
– use threats of violence or harm;
– publish a list of consumers who refuse to pay their debts (except to a credit bureau);
– use obscene or profane language; or repeatedly use the telephone to annoy someone.

False statements. Debt collectors may not use any false or misleading statements when collecting a debt. For example, debt collectors may not:
– falsely imply that they are attorneys or government representatives;
– falsely imply that you have committed a crime;
– falsely represent that they operate or work for a credit bureau;
– misrepresent the amount of your debt;
– indicate that papers being sent to you are legal forms when they are not; or
– indicate that papers being sent to you are not legal forms when they are.

Debt collectors also may not state that:

– you will be arrested if you do not pay your debt;
– they will seize, garnish, attach, or sell your property or wages, unless the collection agency or creditor intends to do so, and it is legal to do so; or
– actions, such as a lawsuit, will be taken against you, when such action legally may not be taken, or when they do not intend to take such action.

Debt collectors may not:

– give false credit information about you to anyone, including a credit bureau;
– send you anything that looks like an official document from a court or government agency when it is not; or
– use a false name.

Unfair practices. Debt collectors may not engage in unfair practices when they try to collect a debt. For example, collectors may not:

– collect any amount greater than your debt, unless your state law permits such
a charge;
– deposit a post-dated check prematurely;
– use deception to make you accept collect calls or pay for telegrams;
– take or threaten to take your property unless this can be done legally; or
– contact you by postcard.

What control do you have over payment of debts?

If you owe more than one debt, any payment you make must be applied to the debt you indicate. A debt collector may not apply a payment to any debt you believe you do not owe.

What can you do if you believe a debt collector violated the law?

You have the right to sue a collector in a state or federal court within one year from the date the law was violated. If you win, you may recover money for the damages you suffered plus an additional amount up to 1,000. Court costs and attorney’s fees also can be recovered. A group of people also may sue a debt collector and recover money for damages up to 500,000, or one percent of the collector’s net worth, whichever is less.

Where can you report a debt collector for an alleged violation?

Report any problems you have with a debt collector to your state Attorney General’s office and the Federal Trade Commission. Many states have their own debt collection laws, and your Attorney General’s office can help you determine your rights.