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Reduce Services To Reduce Debt

July 15th, 2006 at 12:06 am

If you're in debt, finding any amount of savings you can goes a long way to getting you headed in the correct direction. Wixx has put together an article on how reducing services can help reduce debt.

It is well worth taking the time to look at the current services you pay for and figure out a way to reduce or eliminate their costs where possible.

Debt Reduction - Small Savings

June 8th, 2006 at 05:35 am

Wixx has a new article up on small savings debt reduction showing that many people that want to reduce debt could do so at a quicker rate if they took the time to search for all those little savings.

More Tax Release News

June 8th, 2006 at 05:15 am

Lots of new tax releases, but most probably not applicable to the majority here unless you are considering buying a hybrid car or you owe the IRS money:

The IRS announced that there will be an increase in the interest rates for the calendar quarter beginning July 1, 2006. Each of these interest rates increases by a single interest point over the rate in the second quarter.

The IRS also announced that Ford and Mercury Sold 6,100+ Hybrid Vehicles while Toyota and Lexus Sold 41,000+ Hybrid Vehicles this people can continue to claim the hybrid tax credit during the next quarter if the purchase a qualifying vehicle.

Lastly, the IRS had released updated information on the special enrollment exam

Monster Debt

June 1st, 2006 at 09:14 am

While debt isn't a fun topic, it makes it a bit more enjoyable to read about when a good analogy is thrown in as with Taming the Debt Monster:

...The other scare process - the real scare process - is worse than anything Saw II or The Hills Have Eyes has to throw at you. No, the real scare process has to do with that hideous monster lurking in your life at all times.

Debt.

Debt really can be a monster when you have it weighing on your shoulders 24 hours a day, but there are ways to get rid of the monster - the first being to admit that the monster exists and it was likely of your own creation.

Take the steps to start reducing the monster's size and you'll find that it isn't near as scary as you once thought - at least in the sense that you are able to tame it when you take action to reduce it.

Debt Counselors

May 31st, 2006 at 01:20 pm

When it comes to trying to reduce debt, there is nothing worse than being taken and finding yourself worse off than when you began to try and resolve the problem. Unfortunately, there are a lot of debt counselors out there that are a lot more interested in making a buck rather than helping those in debt out.

To avoid being taken for more money, you need to do your homework if you decide to seek help from a debt counselor. Roger Sorensen puts together a few things you can do to help make sure the debt couselor you choose is on the up and up.:

Call the Better Business Bureau
Check with the National Association of State Charities Officials
Understand your contract completely
Get all oral promises in writing
Be wary of "voluntary fees"

Taking a few steps can mean a lot less hassles down the road and make sure that the debt counselor you pick is one that is there to help you rather than their own pockets.

No Spend Days

May 24th, 2006 at 04:03 am

When it comes to debt reduction, there are a variety of things that you need to do to help reduce your spending so that you can find extra money to put toward your debt. Making the effort to incorporate No Spend Days into your month can be one way to help you in reducing your debt.

While it obviously has the effect of making sure that no money is leaving your wallet that day, it will also emphasize the areas where you might be spending money without ever realizing it.

While no spend days may seem like a fairly easy activity when discussed, they are much more of a challenge to implement in real life and will show you how easy it is to part with your money without even thinking about it.

As you get better at them and succeed more often, they can truly be a benefit to your budget, debt reduction and savings. It takes effort, but even if you don't succeed at first, the process in itself should be of great benefit to your and your finances.

Getting A Loan From Prosper

February 18th, 2006 at 03:36 am

This post is from Liz from Everyday Goddess about her experience signing up with prosper.com to try and get a loan to pay off some credit card debt and I thought the information might be helpful to some of the people here:

As a personal blogger, I blog about my romantic life, my childhood traumas, my bad days and the band that's playing downtown this Saturday. I'm sure a whole lot of it seems really, really intimate. But what's truly the most intimate, what I find most difficult (read: terrifying) to blog about, is my finances.

See, I'm not in the best financial situation (read: debt-ridden). I struggle to make good choices and to learn from my mistakes. I have credit cards and loans and school debt. Sometimes, I screw up. Sometimes, I have a small financial success. And I blog about it because I'm betting that I'm not alone.

Sometimes, I blog about it because high-interest rate credit cards are evil. Oh, I've stood at the edge of the whirlpool. In fact, it's still right over there.

The trick, of course, is lower interest rates. You know, those great rates all those financially solvent people get? They make it MUCH EASIER to actually pay off debt. Ever so slowly, I've been trying to roll all my debt into lower-interest rate loans.

So I was particularly interested in prosper.com.

The premise being, individuals funding individuals. Adding a level of personal connection. Bypassing the corporate behemoths.

I decided to check it out, and I decided to give it a try. As a borrower, of course.

The first thing I did was extensively check out the site. It all seemed simple enough. Most important, I learned that the loans are all three-year loans. So you have to borrow an amount that you can afford to pay off within three years. I also did the basic site registration (just setting up a user name/password). And I learned that payments are made through automatic monthly deductions to your bank account. Cool.

Next, I explored the "groups" on Prosper. This is one of their basic concepts. That people will form groups, and overtime, groups will gain a good payback reputation and therefore earn lower interest rates. Also, groups will provide a personal connection which creates social pressure for people to pay back their debts.

That all makes sense, but I couldn't really find a group. First of all, it's not like I know anyone in any of the groups. Still, maybe if there was one for my school, or a professional organization that I belong to. But it's new, so there's not, and I'm not interested in forming my own either. Further, I thought, a good group leader would probably call me, and I didn't want to talk to anyone! A group that just accepted me without contact - probably destined to not be a good group. This is also why I didn't want to start a new group. Because to do it right, I would want to really talk to anyone before accepting them, and I don't want to deal with that.

So, I decided to stick my toe in the water on my own. Onto the real registration I went. Social security number. Driver's license. Income.

And before long, I had a big, fat "C" rating, and I was looking at my 27% debt-to-income ratio. "Wow. I totally suck," I thought.

To make matters worse, my highest financial priority is to roll a debt that is currently at 10%. There's an account opened long ago! See, it has an ex-boyfriend on it, and it's not his debt. But because my situation is much worse than it was back then, any opportunities I've had are at higher rates. They've closed the account for me, but they won't remove his name (read: his liability). So, I chip away at it every month. And I've got three more years to go.

I took my "C" rating, and my hefty ratio, and I decided to lead with that. I like to aim high.

Creating the listing was quite easy. I even went back and forth between the various steps a few times to change things. At first, I listed at 10%, but with the Prosper fee, it became more like 10.6%, so I went back and changed it to 9%, so that it's closer to 10% in actual. You're given the opportunity to add pictures, but I wasn't sure how I felt about putting a picture of myself up with it, so I used a dragonfly graphic. (I did wonder if pretty girls get better rates!) Best of all, you get to write out your request and talk about what you need and why, etc. I thought about linking to my blog - kinda like, hey, you'll know where I live - but, for this go 'round, I didn't. Honestly, it was a bit of wanting to stay more anonymous on the site. Of course, then I went and blogged about it on my not-private blog. That's personal bloggers for you!

So my dream listing is up. As of writing this, I have a nibble! And twelve days to go on my listing.

The site is brand new, and I really like that. Getting involved and jumping on and participating helps get it rolling. Plus, if I can get a loan at this early stage and start paying on it, as the site matures, I assume that my good payment habits will look good for me. I can build a history. Maybe join a group. And just like on ebay, I got my user name locked in. Yeah, baby!

Finally, it is my hope that someday I will turn the tide, and I will have the ability to be a lender on Prosper. Because it's brand new, and already it feels more like people than behemoth.

A New Way To Consolidate Credit Card Debt?

February 18th, 2006 at 03:21 am

I received an email regarding my earlier introduction post about Prosper.com and whether it would be a good place to consolidate her credit card debt:



...I have a little under $10,000 in credit card debt where I'm paying about 27% interest on three different cards. The payments are killing me and I've been trying to consolidate them at a lower rate, but because my credit rating isn't good, I can't get a lower rate card to transfer the balances to.

I saw your post about Prosper.com and I think this would be a good way for me to pay off the high interest credit cards and be able to pay a lower rate. That is what Prosper is for, right? To get loans like this...


While you need to make your own financial decisions based on your circumstances and I can't tell you what to do, there are some issues that you need to seriously consider.

While Prosper may look like an easy way to consolidate high interest loans, it's important to run the numbers to see if it will truly help out with your current problem. If it is the current monthly payments that are "killing" you, Prosper may be the last thing you want to do. Why? Because prosper offers a three year loan. Depending on the percentage your credit cards are currently requiring for the minimum payment, getting a loan from Prosper may actually increase your monthly payment even if you get a better interest rate.

Let's take the following example. If your current credit card requires a 3% minimum payment per month and the credit card balance is $9,500, your minimum monthly payment would be approximately $285. Now if you get the same loan from Prosper at 14% (highly unlikely if you have high risk debt - you would probably have to pay more), your monthly payment would be approximately $325 or $40 per month more than you currently are paying.

Before you look purely at the interest rate, it's important to make sure that the monthly payments can be met and aren't going to increase your monthly costs.