Your Questions About How Do I Get Out Of Debt Free

Chris asks…

How can I become debt free and more responsible in 09?

I am trying to start the new year off right. I want to get out of debt and become more responsible when paying may bills. I am in the process of paying of mybankruptcyy. Does any one have useful suggestions for me. Or a system that seems to work for them?

richmama answers:

The old tried and true…..

Unless you can pay cash for it… Dont buy it…

It will keep you out of debt, and save you a FORTUNE in finance charges…

Donna asks…

What or how is a best way to get out of complete debt?

I am at lest $20,000 dollars in debt. This includes credit card, payday loans, and a student loan. Yet! I‘m confused as to what is debt consolidation and how is works. I‘m disabled and on a monthly fixed income anyway. How does debt consolidation work? What are the pros and cons. What are my options at this point. Anybody got any suggestions-only serious and helpful answers are wanted. I just want to be debt free. Can anybody help me.

richmama answers:

You don’t mention a mortgage. Does that mean you don’t own a house? Honestly, if you own no assets and you are not working… No legitimate company is going to give you a consolidation loan right now.

The good news is, $20,000 is not that much debt, by today’s standards. It’s not impossible for you to just pay off this debt if you seriously reduce your other costs. Take a good look at your expenses and cut, cut, cut. Maybe you need to take in a roommate or cut the satellite tv. Every penny you can save, you put it toward debt reduction.

Which loan has the highest interest rate? The payday loan, I’m guessing. Continue to make minimum payments on the credit card and student loan, but throw all your extra money toward the payday loan and get it paid off first.

Once you pay off that loan, dedicate all the money you were paying toward the payday loan and start paying down your credit card. You will start to see those balances go down.

Michael asks…

How can I get out of my £115 debt?

I have a written contract with a company that takes £17 a month from my bank account and because my bank account is overdrawn the company keeps charging me. My debt is slowly sprialling out of control, I cannot find a job, Please Help what can I do to be in the debt free zone again??

richmama answers:

Can you toss this contract or end the service? It seems to be at the heart of your troubles.

Donald asks…

Tips on starting a debt free life?

hey, i‘m 16, and i‘m going to be looking for my first job soon. and i‘ve seen how hard its been for my parents with debt. and I know that many people live with debt. so I want to live as debt free as possible.

What are key rules that you would say are essential for having a debt free life? Also, if you are in debt, what are the best strategies to do to get out of debt?

hmmmm…emergency fund? that sounds like a great idea!

richmama answers:

Don’t have a debt free life because you are afraid of debt. Debt is a tool. It must be used wisely. You would not use a blender to hit nails into floorboards. You would use a hammer. Debt is like a blender. It’s good for one or two things, but not everything. Use it wisely, and you will benefit greatly.

Firstly, you should save at least 10% of your income. Firstly, this should go towards an emergency fund, which, when you’re an old boring grown up like me, stops you resorting to credit cards and personal loans in emergencies. After you have a few hundred in the emergency fund, it’s time to start investing. Don’t be afraid of investing. You should go to the library and get some books out on personal finance. At 16, you’re smart enough to understand them. And talk to your parents. They will firstly be thrilled that you’re so mature, and secondly, they might be able to give you some advice or help you start investing.

You should have a bank account for savings. When you get some cash together to invest, your first stop should be a term deposit at the bank. For small amounts, this is the best. It will give you terrible interest, but better interest than what you’ll get on a normal account. It locks the money away. I’d lock it away in blocks of $100, so if you do need it, you only have to cancel one term deposit (which means you lose the interest) and you still earn interest on the others. When you have a few thousand, you can start investing in mutual or managed funds. Go to your bank and see if they have a financial planner you can talk to once you’ve saved a few thousand dollars. They can help you invest it wisely.

Use debt to only buy things that increase in value. For example, houses, and perhaps, if you’re very careful, good quality shares. Never buy anything else with debt. Never buy cars with debt. That is for morons. Save up and buy a car. Debt can be dangerous.

While I say that, it can be useful to have a credit rating. When you’re 18, apply for one credit card. Never apply for multiple cards if you’ve been turned down. Every time you apply for a credit card, it goes on your credit history and makes it look worse. So get one card, after you’ve shopped around to find the best one for you. Use it to buy one predictable expense a week, like groceries or fuel for your car. Then, repay it as soon as possible, with an extra dollar, so that the lenders know you’re a good risk. That will give you a great credit rating, so when you’re ready to buy a house, you’ll get a good rate on your home loan and save yourself thousands of dollars.

Don’t be afraid of debt. But don’t be blase with it either. If you buy a house, save at least 20% of the purchase price as down payment, and some extra for costs like building and pest inspections, taxes, etc. When borrowing for a house, a big deposit gives you ‘instant equity’, so you own more of the house, have less to repay, and can repay it faster. The faster you repay a debt, the less interest you pay, which saves your money.

I started at your age. I invested $6000. Ten years later, it was worth $18 000. Instant house deposit. With some other savings I had, we had a 30% downpayment. We are paying our homeloan off in 5 years, which will save us hundreds of thousands of dollars in interest. It is saving us at least the same amount we paid for the house. If you pay a mortgage out to the 25 years, you pay mostly interest. You normally pay double what you have borrowed over the term of the loan. But if you repay it fast, the money doesn’t sit there and earn interest for the bank. You cheat the bank out of their interest. Better in your pocket than theirs.

If you do find yourself in debt, pay it off as fast as possible so the banks don’t make money out of you. If you have lots of debts, find out all the interest rates, and make the highest interest rate debt the priority. It needs to be paid off first, while you make minimum repayments on the others. When the highest rate debt is cleared, move that money onto the second highest, and keep doing this until you’re debt free. That is the cheapest and quickest way to clear your debts.

I’m an Australian. Our Tax Office LOVES people investing their money. If you buy shares, often the business has already paid tax on those share earnings, so when you get your earnings, you get a tax credit. It’s great. So do some reading at your library on what sorts of investments there are, and what kinds of debt there are, and then you’ll be well armed to be an adult. Don’t worry about the hard stuff like tax breaks. Just learn about the different things you can invest in, and try some. Mutual funds (managed funds in Australia) are good for beginners, because they spread your risk over lots of companies and asset classes. You can usually start with a few thousand dollars.

If you’re an Australian, the best book I can recommend is “The Barefoot Investor” by Scott Pa

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Why You Need Life Insurance

Why You Need Life Insurance – And How to Find It

Why you  need life insurance – you need it to protect your family.  Life insurance is that ultimate what if stuff – you don’t need it until you really do.   Even a non working parent needs life insurance – especially if your kids are young.  Why – ’cause if something happens to you, you’ll need someone (like a nanny, housekeeper and cabdriver) to replace all that you do.

Life insurance helps protect you when you don’t have a lot of other assets. As you get older and hopefully have more savings and wealth built up, you might find your life insurance needs are less.

Term life insurance is the cheapest and easiest insurance to get – you pay based on your age, health and other factors for a certain amount of coverage.  Assuming you die cleanly (within the limits of the policy) the company will pay your heirs the amount of coverage you paid.  The more coverage you buy, the more expensive your life insurance premium or policy will be each year.

Most term insurance expires after awhile or the premium goes up – in other words the closer you get to old age, the more expensive the insurance policy is – so if you never use term insurance, you’ve paid for nothing (the same with most insurance.)

There’s another type called whole insurance which allows you to build up a cash value of your policy – some people consider it an investment, others a scam…

But the best way to get life insurance is to find a good life insurance agent.   No matter what you do, make sure you pick a good life insurance agent.  Here are some tips on how to find one:


Why You Need Life Insurance – How to Find the Best Agent

1. Talk to your pals, neighbors and relatives about their agents. Word of mouth is always one of the very best methods for finding a top quality expert. When gathering data about agents from your buddies and loved ones, inquire whether or not they have any concerns relating to their agents’ ability to assist you.

2. Staff – Consider professionalism of the agents  staff. Whenever you initial call an agent, you’ll probably speak to the agent’s assistant or an office manager.

• Are you pleased with how the staff member responded to your questions? Did he/she seem knowledgeable and take care of your requests in a timely way?

• A very good agent will have competent office staff.

3.  Contact 3 to 5 insurance agents. This way, you’ll be able to do some comparisons among the agents to narrow your down to the agent you feel most comfortable with.   Plus you should also review their work histories and get some references.  You will then find it easier to rule out a particular agent.

• Pay special attention to each and every agent’s diligence in responding to your questions.

Why You Need Life Insurance – Does Your Agent Know the Ropes

4. Determine how much knowledge an insurance agent has. Inquire about how long the agent has been selling insurance. Ask whether or not they’ve worked for other insurance firms.

• Gather as much information concerning the agent’s history as possible.  You could always ask for a formal resume or use some informal, conversational questions  to get the information you want.

5. Professional designations  – The insurance industry has professional designations just like the securities industry, so be sure to check out an agent’s credentials. The CLU, Chartered Life Underwriter, designation shows an agent has in-depth training on determining an individual’s life insurance demands. It is a great idea to work  with agents who have this CLU designation, if feasible.

6. Focus on acquiring an independent insurance agent. This type of agent can sell many different insurance merchandise from quite a few carriers.
• To clarify, should you call a certain insurance firm and work with one of their agents, then the only sort of policy that agent can sell is 1 of that particular company’s.

• However, with an independent agent, you’ll be provided a wider choice of insurance products having a far better likelihood of discovering 1 to fit your certain demands.

7. Trust yourself when it comes to meeting agents. . If an agent says immediately that he has the  “right” policy for you, be leery.

• A excellent agent will instead listen to your wants and answer your questions. He or she will present the possibilities to you and let you make the final decisions, without insisting you pick one option over the other.

When looking for life insurance be sure to take your time – do your research and interview multiple agents.  You don’t ever want to find out why you need life insurance, but having it will make you feel a whole lot better.