Let’s face it, we live in a world that revolves around credit.  These days, you cannot purchase a home or car, or even be hired for some jobs, without a “good” credit score.

The problem is, most of us don’t know how to properly maintain our credit to keep it “good.” 

Once we’ve lost control of our credit, we may have to seek debt relief, sell off assets, face repossession and/or even look at declaring bankruptcy to help us recover.

No one wants to face any of these difficult choices.

Here are some simple tips to keep in mind when dealing with your credit either pre- or post-bankruptcy.

Practice self-discipline.  Some companies provide credit with the hope that you will be irresponsible and overextend yourself financially. This way, they can penalize you with large fees they get to pocket. The best way to approach credit self-discipline, is to limit your sources of credit and maintain them.  Have between 3 to 5 credit cards, including a gas card, and use them wisely. Your ability to use these cards responsibly, along with making timely payments on your rent/mortgage, cars and other regular bills, will provide you a solid foundation from which to grow your credit.

Keep your balances low but do use your credit cards.  Remember “ashes to ashes, dust to dust. If you don’t take it out and use it, it is going to rust.” Just having credit open will do nothing for your credit score. Have a card for groceries, have a card for incidentals (car repair, maintenance, appliance replacement, etc.), have a gas card and one for entertainment (dinners, dates, movies, etc.). If you’re diligent and stick to your budget, having these credit cards will help rebuild and maintain your credit score. Over time, responsible spending and timely payments will turn into a healthy credit score.

NEVER pay off your balances on credit card accounts completely.  This may seem counterintuitive, but it will hurt you in the long run. We all know credit card companies are in business to make money. If they’re not earning interest from the “money” they have lent you, you’re no longer a valuable asset to them, and they will eventually close your account. The trick is to pay down your balance until about 5-10% remains. If your debt owed is $100.00, pay $90.00 to maintain a balance on the account, thus providing your creditor with a very small interest fee to pocket.

If you stick to a budget, limit your credit sources and practice self-discipline, you will be able to recover from or avoid bankruptcy altogether.

If you’re looking for easy ways to budget money and avoid debt, then you’re on the right page. Debt is something that most people struggle with and avoiding it in the first place is the best thing you can do. In this post, we’re going to cover 5 easy ways to budget money and avoid debt. 

1. Create an Emergency Fund

Did you know that most people don’t have at least $1000 in the bank in case of an emergency? That’s scary when you think about it. What if something unplanned happens? Where will the extra money come from to cover those unexpected costs?

If we find ourselves in this situation, most of us end up using our credit cards to bail us out. We end up spending what we don’t have out of necessity.

If you have an emergency fund in place, you’ll be better prepared to handle any unexpected expenses.

2. Only Buy What You Can Pay for With Cash Instead of Credit

Buying things on credit always feels like the right thing to do until you get your bill at the end of the month. In the moment, it feels good to get what you want, but you’re putting yourself deeper in debt each time because of interest charges.

Paying in cash is the best way to go if you want to avoid debt. If you can pay for something in cash and avoid using your credit cards altogether, then that’s what you should do. If you can’t pay for it in cash, then decide if the purchase is worth the interest.

Start getting into the habit of buying things without credit. Trust me you’re going thank yourself in the future when all your credit card debt is under control.


3. Before Making A Buying Decision, Sleep on It

Impulse buying leads to debt. You want to avoid impulse buying at all costs. Sleeping on a purchase decision gives you time to think before you buy.

The next time you get the urge to buy something, try going to sleep and see how you feel about it the next day. Chances are you may not want it as bad as you did the day before.

If you still feel like you must have it, gauge whether it’s a need or a want. Do you need it, or do you want it? If it’s just a want, then you can go without it.

4. Pay More Than the Minimum

Every month your credit card statement will show you the minimum amount due. The minimum payment may look like a nice manageable number, but it’s a subtle trap to keep you in debt longer. 

Do not just pay the minimum due each month. Always pay more. Doubling the minimum amount due is a good rule of thumb to use when you’re trying to pay down the balance.

Credit cards charge you interest each month and paying the minimum will keep you in credit card debt for decades.

5. Never Miss A Credit Card Payment

Try your best to never miss a credit card payment. Sure, there are times when things happen and missing a credit card payment may seem to be the right decision. But trust me, it never is.

Missing a payment makes your next month’s payment increase because late fees are added to your bill. In some cases, missing a payment can even cause your interest rate to increase. Missed payments can also negatively affect your credit score. For these reasons, it’s best to stay on track with your payments. Whatever you do, always make a monthly payment.

Conclusion

Learning how to budget properly puts you in the driver’s seat when it comes to your money. There’s no greater feeling than knowing you have your finances under control.

The five tips discussed in this post can help you to avoid debt and take control of your finances. Start building your emergency fund now and be conscious of how you’re spending your money. Buy everything in cash when you can and beware of impulse purchases. If you have credit card debt, make your payments on time and always pay more than the minimum. Do these things, and you’ll be on the right track to financial stability in no time.

If you do find yourself in over your head and need advice on if a bankruptcy is right for you, please call Mr. Crawley at 870-972-1150 to set up a free initial consultation.

Filing for bankruptcy can be an uncomfortable thought. There’s a certain negative stigma that goes along with it, and for this reason, many people struggle with the decision to file more than they need to. Even though bankruptcy might not seem like the best financial decision, there are many benefits that you may not be aware of. Let’s take a look and clear up seven of the most common misconceptions about bankruptcy. 

1. You Don’t Qualify for Bankruptcy 

Many people don’t file for bankruptcy because they believe they will not qualify for it. That’s not true. Anyone can file for bankruptcy; however, the steps required to file will vary from case to case.

If you file for a Chapter 7, then a ‘means test’ will be conducted. A means test is used to determine a person’s financial means as they file for bankruptcy. The test takes into consideration your income and whether your income is sufficient to handle your debts. 

If you fail the means test, you can always file for Chapter 13, which will allow you to pay back what you owe over a specific time period. 

2. Filing for Bankruptcy Means You’re A Failure

It’s easy to feel like you’ve failed when you file bankruptcy. This couldn’t be further from the truth. Filing for bankruptcy means you’ve taken responsibility for your life and your financial decisions. Instead of feeling embarrassed or ashamed, feel proud that you’re taking steps toward a better financial future. 

Many people worry about others finding out about their bankruptcy. Remember, filing for bankruptcy is your business and taking care of your financial health is more important than what others think about you. Don’t let how others feel about bankruptcy prevent you from taking control of your own financial situation. 

3. You’ll Have Everything Taken Away 

No one is going to come into your home after you’ve filed for bankruptcy and take all of your belongings unless you are surrendering that property. There are exemptions based on the value of certain things in your home. The items exempted will be determined by the state of Arkansas.

4. All of Your Debts Will Be Cleared

Even though Chapter 7 and Chapter 13 bankruptcy will help a person clear of most of the debt they owe, not everything will be cleared. 

For example, a bankruptcy filing will not clear student loan debt. 

5. You Won’t Ever Be Able to Get Credit Again

Not true. 

You might be afraid to file for bankruptcy because you think you won’t ever be able to get credit again. Although a bankruptcy will appear on your credit report for up to 10 years, this shouldn’t stop you from seeking credit. Click here for more information on our 7 Steps to 720 program

It’s true that a bankruptcy may hinder your application for credit at certain institutions, but you shouldn’t allow this to stop you from trying. There are certain credit cards you can get for people who have poor credit. Then you can build it up from there. 

Proper planning is also key when establishing new credit and moving your financial situation forward. If you speak to a professional before you make any decisions, they will help you choose the best path for your specific situation.

6. You Cannot File for Bankruptcy If You’re Married 

You may think you can’t file for bankruptcy because you’re married, but the truth is, you can. Marriage has nothing to do with your ability to file for bankruptcy and shouldn’t stop you from moving forward. 

If you’re married, you can file by yourself, or you and your spouse can file together. If you have a lot of personal debt, then it may be a good idea to file by yourself. On the other hand, if you have a lot of joint accounts, then filing together may be the best course of action. 

7. You May Go to Jail 

Some people hesitate to file bankruptcy because they believe they may end up end jail. If everything you claim during your filing is truthful, then there is nothing to worry about on your part.  

Be honest and you won’t go to jail. There is no such thing as debtor’s prison.

Conclusion 

Bankruptcy shouldn’t be viewed as a “bad” thing. If you’re contemplating it, then it might be the best decision you can make for you and your family to get a fresh start. Mr. Crawley can inform you of your options and help you decide whether filing for bankruptcy is the right decision based on your situation during a free initial consultation.

You don’t have to be ashamed about filing for bankruptcy if it’s what you need to do to get your life back on track. Call us today to set up a time to speak with Mr. Crawley in person or over the phone, so you can make the right decision and preserve your credit rather than ruin it. 

Billions of dollars in student loans may be wiped out for tens of thousands of borrowers in the US because a lender didn’t keep track of the paperwork verifying ownership of the loans, according to The New York Times.

The National Collegiate Student Loan Trusts, which holds 800,000 private loans and is one of the country’s largest owners of private student loans, is at the center of the legal dispute, The Times reports.

Borrowers are failing to repay more than $5 billion of the $12 billion in private student loans held by National Collegiate, sending the loans into default. The organization has brought more than 800 lawsuits against borrowers this year alone in pursuit of repayment — and National Collegiate usually wins because borrowers either choose to settle or don’t show up in court, according to The Times.student loans, billions dismissed

When borrowers do show up to fight, the cases are not so straightforward. Disorganized or missing paperwork has made it difficult for National Collegiate to prove it does indeed own the defaulted loan it’s demanding repayment on, according to The Times. To be clear, The Times reports, the organization’s legal problems don’t include falsifying documents.

The student loans held by National Collegiate were made “more than a decade ago by dozens of different banks, then bundled together by a financing company and sold to investors through a process known as securitization,” and they weren’t guaranteed by the federal government, according to The Times.

Donald Uderitz, the founder of Vantage Capital Group, a private-equity firm in Delray Beach, Florida, is one of the financiers behind National Collegiate’s trusts, and even he appears to be confused by the missing paperwork. In 2015, he hired a contractor to audit the servicing company that bills National Collegiate borrowers each month and found that not one of 400 randomly sampled loans had the documents showing a chain of ownership.

“It’s fraud to try to collect on loans that you don’t own,” Uderitz told The Times. “We want no part of that. If it’s a loan we’re owed fairly, we want to collect. We need answers on this.”

Private student loans lack the consumer protection and manageable interest rates that come with federal student loans, now a $1.3 trillion market. Because of steep interest rates on private loans, borrowers can often end up paying hundreds — and in some cases thousands — of dollars in monthly payments.

Notably, federal student-loan borrowers have the ability to apply for loan forgiveness or a loan discharge, such as in the case of an incomplete degree from a defunct for-profit college, while private borrowers do not.

Read the full story at The New York Times »

mortgage, student loan, debtFor millions of Americans drowning in student loan debt, the prospect of getting a mortgage might seem out of reach. Last week, Fannie Mae changed underwriting rules that could make it much easier for people with student loan debt to qualify for a mortgage. Here are the details.

Who Does This Impact? 

The new rule impacts people with federal student loan debt who are currently on an income-driven repayment program. An income-driven repayment plan sets your monthly student loan payment at an amount that is intended to be affordable based upon your income and family size. Depending upon the plan, your monthly payment could be capped as low as 10% of your discretionary income. And if your discretionary income is low enough, your monthly payment could be as low as $0.

What Has Changed? 

In order to qualify for a mortgage, a borrower needs to meet certain debt-to-income (DTI) requirements. That seems simple enough. However, there was confusion regarding federal student loan debt on an income-driven repayment program. When calculating a debt burden, should the underwriter include the standard student loan payment, the reduced payment, or something in between?

The new statement from Fannie Mae makes it clear:  the reduced payment can be used, even when the payment is $0. According to Fannie Mae, “if the lender obtains documentation to evidence the actual monthly payment is $0, the lender may qualify the borrower with the $0 payment as long as the $0 payment is associated with an income-driven repayment plan.”

This is important, because the payment calculation for a student loan (10% of the discretionary income) is different from the DTI requirement of a mortgage. Many Americans could find it easier to qualify for a mortgage while in student loan debt.

Michigan-based mortgage broker Cassandra Evers told MagnifyMoney that the changes “allow a lot more borrowers to qualify for a home.” Previously, there was a lot of confusion among borrowers, lenders, and brokers, Evers said. “[The rules have] changed at least five or six times in the last five years.”

Original Source: https://www.forbes.com/sites/nickclements/2017/07/31/new-rule-makes-it-easier-to-get-a-mortgage-with-student-loan-debt/#ca48ae2173d7

 

It’s an unhappy fact of life: Sooner or later, the economy’s going to take another dive.

Sorry, but another recession is bound to happen in the next few years. And when it does, your future self is going to thank you for thinking ahead and getting ready for it.

Oh, wait, you haven’t done that? You’re totally unprepared for the next recession?

Well, don’t feel bad. Two-thirds of Americans are in the same boat, according to a new GOBankingRates survey. It found that most Americans’ finances are woefully unprepared to withstand another recession.

In the last U.S. recession, millions of Americans lost their homes, jobs or businesses. With that in mind, we’re here with six steps you can take to protect yourself from a recession and mitigate the damage it can cause you.

Recessions: Like a Bad Penny, They Keep Coming Back

Like we said, economic downturns are simply a fact of life.

Technically, a recession is when the economy declines for at least six months in a row. That typically leads to serious job losses. Our most recent downturn was called the Great Recession because it was the worst one since the Great Depression.

The Great Recession ended in 2009 — eight years ago.

Historical data shows the U.S. averages a recession every six to seven years.

So we’re probably due for another one in the next few years. Nobody knows when.

And it doesn’t matter who’s in the White House. None of this is intended to be a political statement of any kind. The fact is, these same truths would apply whether Donald Trump or Barack Obama or Hillary Clinton were president.

Here’s how to prepare for a recession:

1. Start Hoarding Your Pennies

Could you live off your savings for six months? For a year? Don’t feel bad — I know I couldn’t.

Start socking away a little cash to give yourself a financial cushion, an emergency fund in case you get laid off. Once you have an emergency fund goal in mind, figure out how much of each paycheck you’ll need to set aside to reach your goal in three months, six months, a year.

Stash and Acorns are two popular apps that offer easy, automatic ways to start saving and investing. They’re really useful for tricking your brain into saving more. You’ll invest without even realizing you’re doing it.

Stash sets up automatic stock market investments for you. It lets you invest as little as $5 into a set of simple portfolios reflecting your goals and your tolerance for risk. You can set it up to pull a specific sum of money from your bank account at regular intervals.

Once you connect the Acorns app to a debit or credit card, it rounds up your purchases to the nearest dollar and funnels your digital change into an investment account. You can have it automatically round up all your purchases, or only the transactions you choose.

2. Get a Side Gig

Losing your job would be a painful blow to your bank account unless you’re able to find new employment quickly.

That’s why it’s best to diversify your income if possible. The simplest way to do that is by starting a side gig.

You can hustle up extra money driving with Uber or Lyft on your own schedule.

Thanks to the growing gig economy, there are other ways to scratch up some extra cash nowadays. Craigslist is an easy place to sell your services under the “Gigs” section. And if you don’t trust Craigslist, check out TaskRabbit or Fiverr — to name just a few.

3. Pay Down Your Debts

Here’s why credit card balances are the devil: If you don’t pay off your balance every month, interest charges will keep eating away at your income.

Paying off your credit cards now will free up money in the future — money that will get you through hard times.

The average interest rate on credit cards these days is nearly 13%, or 16% for travel rewards cards. Instead of burning your money paying interest, take out a debt consolidation loan at a lower interest rate. An easy place to start is Even Financial, which can help you borrow up to $35,000.

If you have student loans, consider refinancing them through an online marketplace like Credible, where you can shop around for the best interest rates. That way, you can be confident the lower interest rate is worth the refinancing cost.

4. Adjust Your 401(k) or Your Investment Portfolio

When the last recession caused the stock market to plunge, Americans’ retirement savings took a beating. The nation’s 401(k)s and IRAs lost nearly $2.5 trillion in the last half of 2008 alone.

Take a look at your own 401(k) account. Are you too heavily invested in stocks? Consider your age, too. If you’re nearing retirement, put more of those funds into bonds.

Just don’t get carried away with that strategy. Before making any changes to your 401(k), keep in mind how many years you have until retirement. If you have decades of working ahead of you, keep your retirement funds in stocks so you don’t miss out on the market’s long-term growth.

To get more out of your 401(k) account, consider using an online robo-advisor like Blooom to help manage it for you.

5. Be a Superhero at Work

If a recession forces your employer to cut back, how can you position yourself to keep your job?

Non-essential employees get laid off first, so focus on making yourself indispensable. Don’t sleep on opportunities to acquire new skills or more responsibility.

6. Stay in the Hunt

Do you like your current job? Cool.

Just don’t get lulled into complacency. Be ready to look for a new job if you have to. Start with this:

  • Update your resume and your LinkedIn page.
  • Keep networking. Start networking before you need a job.

The upshot of all this: No one wants to see an economic downturn, but it’s inevitable that another one will come along. If you take these steps, you might be able to sail through the next recession in style.

Source: https://www.thepennyhoarder.com/smart-money/how-to-prepare-for-a-recession