Archive for 'Debt Management'
Spending What You Do Not Have
Posted on 08. Jul, 2010 by admin.
Has there ever been a time when the expression “You can’t spend what you haven’t got” had any truth to it at all? In fact since time immemorial it has always been possible to spend what you haven’t got.
Even if you went back to ancient Rome you would find that money lending was big business, and money lenders were mentioned in the bible. Even in much earlier civilisation money lending was a normal part of the culture. In ancient Egypt credit was common. Although most arrangements were informal and were what today we would call gentlemen’s agreements, when more than small sums were involved proper legal documents were prepared by scribes and IOUs were produced which often were written on pieces of pot.
In the early days of credit, it seems that monetary loans were made interest free and it was not until much later that interest charges became common. Once they were, then interest charges tended to be very high, in fact punishingly so. Rates of 10% a month or 200% a year were common in ancient Egypt. Secured loans were also common and Pawn Brokers were common in ancient Rome.
The way in which people who have found themselves unable to repay what they had borrowed have been dealt with have thankfully changed over the years. When Shylock in Shakespeare’s Merchant of Venice said “The pound of flesh which I demand of him is dearly bought, ’tis mine, and I will have it” he was not having a laugh. He was demanding of the bankrupt Antonio compensation for the fact that Antonio had defaulted on his loan.
Debt management, certainly in its current form, is a more recent innovation. It is a way that allows people, with unsecured borrowings which they are finding difficult to repay, to cope with their debts. With debt management it is possible to freeze interest rates and reduce repayment rates. It was too late to help Antonio, but it is not too late for you.
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Energy Debts add to Household Burden
Posted on 15. Mar, 2010 by admin.
Britain has endured its coldest winter for thirty years and it has cost so much to keep warm that increasing numbers of people cannot afford to pay their energy bills. The total amount of money owed to the energy companies is £728 million and 6.6 million households are in debt to them, and nearly half of these owe more money than they did a year ago.
For some people the impact of additional energy debts is the final straw which pushes them over the barrier where they are no longer able to repay their total debts. For many that is when the real troubles begin. Missed payments mean extra charges and interest, overdrafts exceed agreed arrangements and swinging bank charges are added to the total debt burden, the brown envelopes pile up and phone calls begin.
This phenomenon is known as the debt spiral. Debts bring on more debts which themselves bring on even more debts until there seems to be no possible end to it all and no way out. But there is always a way out, and the sooner that one seeks help, the sooner will a solution be found.
There are many approaches for getting out of debt, for instance there are IVAs, debt consolidation loans, and debt management solutions. With debt every case is unique and it is important that anyone offering advice takes the time to understand all about an individual’s particular circumstances.
Fortunately there are people who understand about debt, about how people get into debt and even more importantly understand ways in which people can get out of debt. One such organisation is Gregory Pennington whose website is http://www.gregorypennington.com/. Here you can find out all about different ways to approach debt, how to manage it and how to get out of it. Advice is offered free of charge and confidentially.
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Managing Multiple Debts
Posted on 20. Jan, 2009 by admin.
Managing debt for the most part is quite simple. You know how much you owe and you know when and how much you must pay back. In the case of personal loans, it’s very easy as you have a fixed amount you must pay back each month and for the most part, cannot pay any more or any less than this amount. Credit card debt is a little tougher to manage as you have the minimum payment to make and can then, if you so choose, pay back additional funds onto the card to decrease the overall debt. A little tougher, but still relatively straight forward. With this in mind, it’s hard to imagine why people have so many problems with debt management. I guess to explain this, it needs to be broken down into two parts. The first problem people have with debt management is that they cannot afford to pay back the debts each month. In this situation, all you can really do is either extend the term of the loan over a longer period or better still, consolidate the whole lot into one single, long term, low monthly payment that you should have no issue with paying.
The other major debt management issue comes for people who can quite easily afford to make all their monthly payments, but are still losing money by not paying off the right loans and debts at the right time. For example, some people who have multiple debts will try to clear their personal loan at 5% APR BEFORE they attempt to clear their 20% APR credit card. This is obviously the wrong way of going about it. Successful debt management is not just about knowing how much you owe and when to pay it, it’s also about knowing what money is going where and the specifics of each loans. Organise your debt so you know how much money is being paid off towards interest and how much interest you’re paying. Clear the debts with the highest interest first. This might seem obvious, but people opt for clearing lower interest loans first just because the amount owed it lower. This is a huge mistake.
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Monthly Budgeting Is The Key To Debt Management
Posted on 02. Jan, 2009 by admin.
There are tons of articles out there that discuss the successful management of debts, some more detailed than others and some that simply do not tell you specifically what you need to do - just what you shouldn’t. For me, it successful debt management comes down to two words, monthly budgeting. All of our debts, be it credit card, loan or mortgage come out month to month and all of our income that services those debts comes in month to month also, so this is where debt management needs to start. By budgeting each month, specifically knowing which debt payments are coming out and how much income is coming in, we can first see if there is a problem and secondly, we can see if we can spare even more money to use towards our debts.
If there is a problem, your monthly budgeting will reveal it. If the amount of funds you allocate towards your debts from your income is less than or equal to how much you have to pay back each month, the minimum payment, you need to do something about it - either consolidate or extend your loans to allow for lower monthly payments. If you have funds spare each month, then you need to start allocating those funds towards clearing your debts. Especially if the debts are on credit cards as they are notoriously high interest. Always pay off your credit cards first. Loans are structured in a way that your minimum payments pay back the debt itself, credit cards are not. Your minimum payment on your credit card is near enough all interest so if you want to be free of debt, you almost certainly need to be making more than the minimum payment.
If you follow the above and work out what you need to pay and when, you will be able to manage your debts more effectively and realise when there is a problem, if there is one at all.