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Debt Solutions

Credit Karma: A Comprehensive Review 2021

Debt Solutions

If you are the type that pays up the bills on your credit card on time each month; do not open & close accounts frequently; always up to date with loan repayment, and stay away from negative financial terms such as being bankrupt and becoming a tax alien, your reward will be a befitting credit score.

Unfortunately, not everyone can boast of good credit habits. That is why we need to know our credit status, as well as how we can improve our credit score.

This is where Credit Karma comes in handy. Keep reading to find out how Credit Karma can help you fix some of your credit issues.

What is Credit Karma?

Credit Karma happens to be a personal finance service. It is a financial management platform that offers free credit scores and reports. There are a couple of other related services that are also provided. They are situated in Canada, the UK, and the US.

Headquartered in the US, Credit Karma was founded by Ryan Graciano, Nichole Mustard, and Kenneth Lin. They provide their customers with services like credit reports, credit scores, tax preparation, and credit monitoring.

For approximately 14 years, Credit Karma has also remained a force to be reckoned with in the fintech industry. With a workforce numbering up to 700 employees, it is obvious that Credit Karma has expanded over the years. It means they are making huge progress as a company.

Credit Karma has assisted their customers to improve their credit scores. Their services are highly sought after due to the significance of credit scores

Is Credit Karma bad for your credit?

Subscribing to Credit Karma has no direct perverse consequences on your credit score. That is why you can check your credit score on the platform, and your credit information will not be affected.

Credit Karma is a genuine website with a notable reputation. In their 14 years stint as a financial services provider, they have never had any fraudulent dealing. Therefore, it is completely safe to work with Credit Karma to know your current credit score.

Credit report checking can be categorized as either soft or hard inquiries. Anytime you perform a credit score check operation on Credit Karma, it is regarded as a soft inquiry.

Soft inquiries have no bearing on your credit. So there is no way checking your credit score on Credit Karma can negatively affect your credit.

How accurate is Credit Karma?

It is okay for you to want to know if Credit Karma’s credit scores are germane. Despite being a service that doesn’t charge their customers any fee, Credit Karma scores are 100% authentic.

How do I know this? They source their credit reports and credit scores from Equifax and TransUnion. There are three well-known consumer credit bureaus, and these two are part of them.

Whatever you see on Credit Karma ought to be genuine information about your credit score. You don’t get any contrary credit information on this platform.

The problem, however, is that Credit Karma scores may not be identical to what you see on some platforms. So the question is – who could be incorrect?

Certainly not Credit Karma! If you are having contrary credit information on other platforms, check their source.

Can You Trust Credit Karma?

Credit Karma is a trustworthy website as far as credit scores and other credit-related services are concerned. Credit information about a particular user on Credit Karma is not falsified or gotten from illegitimate and unaccredited sources.

They pull up your credit information from the databases of accredited credit bureaus. Their credit report about every user is as correct as you would guess.

They understand how important it is for you to know your correct credit score. So they give it to you as it is, so you can make reliable and well-informed decisions.

Unfortunately, not all platforms that render similar services share this same view. As such, some people end up getting misinformed when they seek their credit score from those unscrupulous platforms.

If you have a doubt about any platform that supplies such information, it has to be the other company. Not Credit Karma!

Does Credit Karma have a credit card?

Does Credit Karma issue its own credit card? Some people are still confused concerning what services they can get from Credit Karma. So let us clear the air here completely. Credit Karma is not a company that issues its own credit card. They do not issue a credit card if I understand what you mean.

However, if you are looking forward to applying for a credit card, Credit Karma is one of the best platforms you should go to first.

But wait a minute – if they don’t have a credit card, why do you need to go there? Credit Karma is where you can find thousands of credit card reviews regarding different credit card operators.

You can easily look up various credit operators on the platform and do a detailed comparison on them. This is extremely important since you need to consider several factors before applying for any particular credit card.

How to sign up for Credit Karma?

Getting registered on Credit Karma is straightforward and simpler than you can imagine. It is also worthy to note that it is safe and fast.

Please always remember that they will never request your credit card information during the registration process. If you are wondering what the process looks like, I’ve got to tell you that it’s as simple as providing the necessary information.

If you sign up for Credit Karma today, you can start enjoying all the numerous benefits as soon as possible. But even though you reside in areas where you cannot undertake the registration, there are still other benefits you can enjoy.

For those living outside the US, they can get credit advice, and search for credit cards. They can also leverage the dozens of credit card articles on the site.

To get started with the registration process, hurry now to the Credit Karma official website. You do not even need an account before you can sign up with Credit Karma.

How to get a free credit report from Credit Karma?

It is not enough to know that you can get a credit report from Credit Karma for free. You also need to know how you can make this possible. You need to know whether you qualify for it or not.

Someone who is familiar with credit reports can easily identify their credit report when they see one. But if this is your first time, you may find it difficult to understand the report.

Having said that, accessing your free credit report on Credit Karma is not rocket science. It is something you can easily accomplish with a few steps. This post is going to outline those steps for you.

Follow the steps below;

  • Login to your Credit Karma account
  • Click on your credit report pages
  • Choose your preferred credit report and click on it
  • If you want to print the report, there is a button on the right side of the webpage to enable you to print.
  • You can print directly from your browser or save the credit report

It is also noteworthy that you don’t have to pay before you can access your credit information here.

Based on the Free Credit Reporting Act, you get to enjoy a free 12months credit report. But with Credit Karma, you don’t have to wait that long. View them anytime you want.

How do I contact Credit Karma for help?

Credit Karma wouldn’t be of much help to anyone if they cannot get help from them when necessary. Right? It is okay to find out how you can reach out to Credit Karma whenever you need help.

It is unfortunate that some companies don’t see things that way. Instead, they have designed their platforms so you can never have direct access to their staff. At Credit Karma, it is exactly the opposite. You can almost get a response from them anytime you reach out.

There are two ways you can make your requests known to Credit Karma. The first option is through a phone call. There are various phone numbers you can call whenever you are having any difficulty.

The phone numbers differ according to the complaints you have. So pick the one that corresponds with the complaint you want to make.

If you are not okay with that option, you can adopt the second option. You can choose to write a letter. The letter should be addressed to the contact address on their web page. Look carefully, you should be able to spot the address without much ado.

Credit Karma understands that prompt response is the soul of any thriving business. They want to help you out as much as they can. That is why they are always willing to get back to their customers. Or anyone who wants to find out anything from them.

How to download the Credit Karma App?

You don’t always have to open Credit Karma on your laptop to access the website. In the mobile apps era, Credit Karma has also made sure you can access the platform on your mobile devices.

There is a Credit Karma application. All you have to do is download and install it on your device. Here is how to go about the download and installation process;

  • Firstly, you need to become a member of the platform before you can use the mobile app.
  • Go to Google PlayStore or Apple Store for Android and IOS devices respectively to download the application
  • Click on the download icon for both IOS and Android applications
  • Verify that your device is compatible with the app.
  • Click on install, and the app installation process will commence automatically
  • When the installation is complete, log in with your credentials.

You don’t have to make any payment before you can download this app for IOS or Android devices. It is completely costless.

You can use this app to accomplish a number of things. With the Credit Karma mobile application, you can view your credit scores for free, file your federal and state tax returns with the Credit Karma Tax, as well as explore financial relief options with their customized Relief Roadmap.

Access Credit Karma services today at your fingertips. If you are not convenient with the website, then log in through your mobile device. It is still the same.

Where does Credit Karma get your credit score?

Some people will only trust Credit Karma if they know where they are getting their credit scores from. If you are one of such people, then you are right to think that way. In fact, do not patronize any of such companies when you don’t know the source of their credit scores.

Let’s start by saying that Credit Karma normally obtains their credit scores from two of the major credit bureaus. They get their credit scores from TransUnion and Equifax. These are authentic sources if you ask anyone who knows about credit reports.

You might want to think that that is where all finance services get their credit information from. Well, I have to tell you that you will be wrong to think like that. Some of them get their credit information from other sources.

There’s a possibility of not getting accurate figures when you fetch the information outside the three major credit bureaus. And when you work with the wrong credit information, you know how devastating that can be to your reputation.

For starters, it can worsen your credit history by making a mess of your credit scores. That is why you need to take this very seriously. You can choose to use Credit Karma if you can’t go through the hassles of finding a genuine one.

How much does Credit Karma cost?

You don’t need to pay any fee before you can access your credit report on Credit Karma. Registering on Credit Karma is totally free. You just log in with your login credentials and do the needful.

And after that, you can have complete access to your credit score and credit reports. Whether you want to save or print them, you can do that without paying a dime.

During registration, you are not required to provide your credit information. Everything has been designed to be straightforward and easy on Credit Karma.

You cannot be on Credit Karma and need to pay some fees. If any fee is involved, then check well, it is not Credit Karma. It is likely that you have hit the wrong website.

Therefore, permit me to reemphasize that Credit Karma is costless. You don’t need money before you can open an account and request your credit scores. All the other services that were mentioned above are also rendered for free.

Credit Karma knows how they make their revenue. It has nothing to do with individual registration or getting their credit scores for them.

Is Credit Karma Accurate?

You have the right to doubt any credit scores you get from other platforms. But if you are getting yours from Credit Karma, then you don’t need to doubt the authenticity of their information.

Credit Karma is 100% accurate when it comes to providing credit information for its members.

They don’t falsify credit scores for their free members. Neither do they get those figures from a third party? The source credit card information is from the right corners.

Credit Karma gets its credit information from accredited sources like Equifax and TransUnion. These credit bureaus are the biggest players when it comes to getting the right credit information.

Not all financial services providers get their credit information from the right sources. It’s a sad development, but that’s the truth. So you might discover that the credit score you get from different platforms may vary considerably. And when you find yourself in that situation, you don’t know which one to believe.

If you ever find yourself in that position where you need to choose between two platforms, choose Credit Karma. That is because ten out of ten times the credit information they will serve you will always be the correct one. There is no doubt about it.

However, if you choose to do otherwise, you might not be so lucky.

Does Credit Karma ruin your credit?

Some people get the impression that their credit will be negatively affected if they do anything on Credit Karma. If you have thought that way, then you should be grateful for reading this piece.

Credit Karma does not ruin your credit score or any other credit parameter of yours. Against what many people think, Credit Karma is harmless regarding how it can affect your credit report.

You can get your credit scores through Credit Karma. Plus, they also have various tools that will help you manage your credit effectively. If there is anything Credit Karma does for you, it is to help you improve your credit score. As long as you are willing to follow their advice and utilize the tools, you will improve your credit information.

Don’t join the bandwagon of those who are criticizing Credit Karma and discouraging others from joining. It is a financial management platform that does not directly affect your credit in any way. You must have that at the back of your mind.

You don’t have to take their credit advice if you are not sure. But if you seek my opinion, I would recommend them because fourteen years is no mean feat achievement.

Is it safe to use Credit Karma?

Whenever you are on Credit Karma, you have one last thing to worry about. And that is safety. Your credit card information is completely safe on Credit Karma. To tell you how transparent they are, they do not request credit card info when you are registering.

Their services have been so arranged that your privacy is not breached in any way. All your data is securely protected from any form of unauthorized access. So you do not have anything to worry about.

Yes, they do allow third parties to advertise on their website. However, that does not necessarily mean they share your credit information with such partners. No one else has access to your information except their staff who are guided by the company’s policy on accessing such information.

If your credit score will not be hampered and your data will not be stolen, then it is safe to use Credit Karma.

Can I create a new Credit Karma account?

You can always create a new Credit Karma account whenever needed. But, you have to be informed of certain changes that might take place in the process.

Like certain information in the previous account cannot be accessed via the new account. For instance, credit report history will be missing in the new account. You will need to view your credit report under the new account to create another credit report history.

That said, it is also recommended that you contact their support before creating a new account. So, you don’t create problems for yourself eventually. Creating a new Credit Karma account is a possibility.

Can I cancel my Credit Karma account?

You can opt-out of the Credit Karma platform if you think that is what is right for you. These guys don’t have any intention of holding you against your will. And you know what? Opting out is as easy as right-clicking your profile and clicking close my account. Click on it and you will no longer be a member of Credit Karma.

Conclusion

In order to have a reputable credit report, one needs a good credit score. And you cannot be so sure of your credit score if you aren’t getting it from a reliable source.

Get your 100% genuine credit score from Credit Karma. You can also use the tools on their platform to reorganize and prioritize your spending goals. And that will ultimately translate to a better credit report.

If you are the type that pays up the bills on your credit card on time each month; do not open & close accounts frequently; always up to date with loan repayment, and stay away from negative financial terms such as being bankrupt and becoming a tax alien, your reward will be a befitting credit score.

Unfortunately, not everyone can boast of good credit habits. That is why we need to know our credit status, as well as how we can improve our credit score. Keep reading to find out how Credit Karma can help you fix some of your credit issues.

Create a Personal Budget: A Step by Step Comprehensive Guide

Debt Solutions

Do you have a personal budget?

Budgeting or financial planning is a must-do to keep track of your assets and finances. Budgeting helps in the effective management of finance. As Benjamin Franklin said, “If you fail to plan, you plan to fail”.

Setting up a personal budget is one way to safeguard yourself during a recession and in the boom. Although many people love spending and saving, just a few realize its benefits.

Preparing a personal budget or tracking daily expenses can be challenging for most people. But the benefits are limitless, once adopted.

Many people think budgeting can only be done on a laptop or computer. With a notebook, you can set up a budget.

What Is the 50, 30, 20 Budget Rules?

The 50/20/30 budget rules fundamentally operate on the idea of splitting up income and share it into certain categories. In that 50% on needs, 30% on wants, and socking away 20% to savings.

Senator Elizabeth Warren pitched the idea in her book, All Your Worth: The Ultimate Lifetime Money. So in this article, we like to write briefly about this easy-to-follow rule.

Note: The 50 30 20 budget is sometimes tagged “50-30-20”

50%: Needs

Needs are those inevitable bills that you must pay and as such are essential for your survival. These include payments such as car payments, health care, rent or mortgage payments, insurance, utilities, and groceries.

All these payments above are inevitable for your survival and so must be paid for. However, things like HBO, Netflix, Starbucks, or simply put all those extras don’t qualify as your needs.

So the idea of “50% Needs” means only 50% of your net income should be spent on your needs. And, if your spending on needs is already above this boundary, then you need to cut it down.

How you do this is by reviewing your lifestyle and see where you can downsize. For example, you may want to consider moving into a cheaper and smaller home. Or buy a modest car rather than a flashy and expensive one. Overall, you have got to look deeply into your lifestyle and adjust your spending on wants, where necessary.

30%: Wants

Wants, on the other hand, are payments you make on things that are only necessary but not absolutely essential. Good examples of these types of spending are big house, fashionable clothes, dinner and movies out, latest car, etc.

Anything you desire that if you don’t acquire it wouldn’t affect your survival should go to the “wants” bucket. You can eat at home instead of dining out, you can watch a movie at home instead of paying a fee to watch a movie in a cinema, and you can work out at home instead of going to the gym.

All in all, any money you spend on something that’s meant to give you more enjoyment rather than survival is wants.

20%: Savings

As you’re paying your bills, you shouldn’t forget to plan for savings and investments. So using this 50 30 20 as a guide, you need to earmark 20% of your net income to savings and investments.

You should consider options like putting aside money for an emergency fund in a savings account. This could also include investing in the stock market, and more.

Saving for an emergency fund is especially necessary in case something bad happens. Think about the sudden loss of a job or an unanticipated event. So save for these kinds of events. After all these, then come to your retirement and other financial goals follow.

If the emergency account gets exhausted, the first allocation of additional income should go to the emergency fund account. There is also one thing you need to understand about a loan or debt repayment. Debt repayment can also be classified under savings because any extra payments made reduce the principal and interest owed.

Considering all the points above, it’ll be very important for us to talk briefly about the importance of savings.

Also Related: How to get out of Debt and Save Money Quickly.

Why Savings Is Important

To start with, let’s look at what the statistics are like about savings in America. Here is what American savings statistics look like according to this report:

  • Americans have more than $3.9 trillion in personal savings
  • 69% of adult Americans have less than $1,000 in a savings account
  • The average household savings in America are at $17,135
  • 73% of millennials are saving money
  • The median balance of retirement accounts is $65,000
  • The US has a retirement savings deficit of $4.3 trillion
  • Black households have $29,200 saved up for retirement

Going by the facts above, we can understand why savings should be taken seriously. As put by Milan Urosevic of SPENDMENOT, it should be seen as the difference between life and death.

One of the importance of savings is to help individuals manage their net income. And to ensure that individuals have more funds on hand for emergencies and retirement.

Having an emergency fund helps during unexpected medical expenses, job loss, and other unanticipated financial needs. So the principle is once an emergency fund is nearing exhaustion, you should try and replenish it.

Also, savings are important when planning for your retirement in that you’re able to calculate how much you’ll need and how to meet the goal.

Budget
Photo by Dan Dimmock on Unsplash

How Do You Create a Personal Budget?

In this section, we’re going to discuss how to create a personal budget that works for you. So sit tight and read through as we discuss.

How to Create a Monthly Budget in six simple steps?

The first thing you ever need to get started with creating a budget is getting a template to use. This is where you’ll fill in all the figures for your expenses and income.

Another is whether you should use old-fashioned pen and paper for doing the budgeting. Well, it doesn’t really matter but it’ll be more efficient to use a budgeting app or monthly budget spreadsheet. The good thing about this is that they already contain designated fields for thing like:

  • Income
  • Expenses in different categories, and
  • Built-in formulas

We assume you’re done with the things above, so let’s move on to the 6 steps to create your personal budget.

  1. Get All Your Financial Paperwork

Gathering your financial paperwork entails gathering all your financial statements. And this includes things like bank statements, investment accounts, credit card bills, and mortgage or auto loan statements. You’ll also need your recent utility bills, receipts from the last three months, 1099s, and W-2s, and paystubs.

Why all these are important is because they provide you with information relating to your income and expenses.

  1. Calculate Your Income

Now you have got access to all the information above, you need to determine your income. Calculating your income can take two ways: one, using your net income, for people with a regular paycheck.

Two, you can calculate your income as self-employed, or for people with other sources of income. Examples of outside sources of income include child support worker income or Social Security, etc.

So you know where you belong and so should calculate your income based on what applies to you. Record whatever you get from these sources as your monthly income.

Another thing is how do you calculate your income if you’re having a variable income. That is if you’re a freelancer or seasonal worker. In that case, you should use your lowest-earning month in the previous year as your baseline income.

  1. Calculate Your Monthly Expenses

The next step is to create a list of your monthly expenses. You can get the number from your bank statements, receipts, and credit card statements from the last three months. This will give you an idea of what your spending used to be.

Some examples of expenses include things such as:

  • Entertainment
  • Mortgage payments or rent
  • Insurance
  • Childcare
  • Groceries
  • Car payments
  • Utilities
  • Personal care
  • Savings
  • Eating out
  • Travel
  • Transportation costs
  • Student loans

  1. Determine Your Regular and Irregular Expenses

Other things to consider in your expenses are those regular and irregular expenses. These are otherwise known as fixed and variable expenses.

Regular or fixed expenses are those financial obligations you pay for regularly whose amounts are fixed. Examples of such expenses include items like car payments, mortgage or rent payments, trash pickup, set-fee internet service, and regular childcare.

Another item that should also be included under this category is credit card payment. You should include credit card payment only if you pay a standard credit card payment.

As for variable or irregular expenses, these are expenses that don’t have a fixed amount each time you pay them. They tend to vary from month to month. Examples include groceries, Gasoline, entertainment, gifts, and dining out.

As you’re about gathering your fixed and variable expenses, start by assigning monetary value to your fixed expenses. And, after that, try and estimate how much you’ll spend on a monthly basis on your variable expenses.

In any case, where you can’t ascertain how much you spend in any category, use your credit or bank transactions as a baseline.

  1. Add Up Your Monthly Income and Expenses

Now, you need to get the total value for your monthly income and expenses so you see what each looks like. Where your income is higher than your expenses, it means you’re on a good start. You can put those excesses into other areas of your budget. You can put the excess fund in areas like debt repayment or retirement savings.

More so, where your income is higher than your expenses, you should consider adopting the “50-30-20” budgeting philosophy. And by this, it means half of your budget should go to “needs expenses”. While 30% should represent wants, savings and debt repayment should make up the remaining 20% of your budget.

  1. Adjust Your Expenses

So you have come to the end of the steps to creating your personal budget. You have estimated your income and expenses and you can now say which one is higher. If your income is more than your expenses, it means a good thing for you – you’re under-spending. But if the reverse is the case, you need to make an adjustment to your expenses.

To do this, you can only adjust your variable expenses. In that, you need to look at your variable expenses for an expense you can reduce in your spending. Look for those non-essential expenses that you think you are spending much on. And reduce them.

If after reducing your variable expenses, your expenses are still higher than your income, consider reducing your fixed expenses. Often time, what causes your expenses to be higher than your income is debt repayment, where the debt is significant.

In such cases, reducing only your variable expenses wouldn’t suffice, you’ll need to also reduce your fixed expenses. And then increase your income to balance your budget.

The bottom line is to ensure your income and expenses balance up. This equality of balance means your income is accounted for and budgeted towards a given goal – expenses or savings goal.

How Do You Create a Personal Budget Spreadsheet?

Have you ever wondered what a personal budget spreadsheet is?

A personal budget spreadsheet helps you determine your financial status and plan your spending for a given period. A budget spreadsheet usually covers a month or year. It’s very important to have a budget spreadsheet as it helps you organize your spending and avoid debt.

Today, most people fall into a debt default because they fail to maintain a personal budget spreadsheet. A debt default is when a debtor fails to meet his financial obligation as when due.

In a simple word, it means the debtor fails to pay his/her loan at the agreed time. To determine the time of default depends on the time agreed on by the creditor and the debtor. With a budget spreadsheet, the fund is managed and expense is allocated sufficient amount without going broke.

Now that you understand the importance of a budget spreadsheet, how do you create a budget spreadsheet?

To create a budget spreadsheet, you need the following thing;

  • Time. Just a little time, I mean.
  • You need to know how to typing, and
  • Easy-to-use browser-based Excel online software.

To get the browser-based Excel Online with in-built preformatted budget templates is easy and free. You can get the browser-based Excel online with a Microsoft account.

Using spreadsheet software isn’t as difficult as you think. But if you’ve never used it before and don’t have the clue as to how it works, don’t panic! In this guide, you’ll learn how to use a spreadsheet to create your budget in a second.

Ready to go?

Create a Personal Budget
Photo by Dan Dimmock on Unsplash

Here’s how to get started with using a spreadsheet.

Step 1: Select an App to Use

As you’re ready to create your personal budget spreadsheet, you need to pick a program to use. Fortunately, this need not be time-consuming as Microsoft Excel already offers that feature. You have two options to go about this if you choose MS Excel. Either pick paid version or the free version. You can find the free edition for iOS and Android.

There is also the free basic version that you can run in a web browser. Most times, you possibly already have the pre-installed or free spreadsheets programs on your device. You may need to check this to be sure you have one on your device.

Some examples of Spreadsheet app you can use include

  • Google Sheets. This available on Android, iOS, and web
  • Apple’s Numbers software for iOS, macOS, and web.
  • ImageGoogle Sheets. These include ready-made budget worksheets with instructions for how to use them.
  • Apache OpenOffice offers a Calc spreadsheet program for creating a budget spreadsheet
  • LibreOffice. This is a free open-source suite that can be run on Windows, Mac, and Linux systems.

You may also want to shop around the app stores for plenty of other options.

Step 2: Select a Template

Here you’ll need to select a template to use for your spreadsheet budget. Fortunately, there is an option you can use which is the spreadsheet programs for home computers.

This is a popular program that has been around for some time now. The good thing about this program is that most of them already contain a “personal budget” template. And in the template, you have things like spending categories, design, and formulas already formatted.

This makes them ready for use for you and you only need to start inputting information. And interestingly enough, the software will do the rest of the job for you.

Credit…The New York Times

So to create your spreadsheet in practice, follow these steps:

  • After you pick a spreadsheet program, select from the template library your preferred type of starter document to use.
  • Once you opened the program, select the template of your choice from the “Template” or “Project” gallery. In selecting this template, consider what best suits your needs. And then start to create your spreadsheet.

Step 3: Fill in Your Numbers

After you open a template, you’ll see cells in the spreadsheet for you to enter your own numbers. You’ll get information to enter into the cells from number 1 of 6 steps to create a budget above. So start to click into the cells, delete the sample numbers, and type in your own numbers.

Enter your monthly incomes in the designated place and then add in your monthly expenses.

Step 4: Check What You Have Got

Next is to check your results. Two things may come up in the results. First, you’ll see a line showing your current state of finance for the month. And second, you’ll see added totals in the columns for income and expenses. A statement showing the movement of cash in and out like this is known in accounting as cash flow.

Step 5: What Next?

That is all there is to know about creating a personal budget spreadsheet. So you already know how a spreadsheet works and how to use it but what next?

You can choose to keep going with your current software or move up to a dedicated App. Some of the advanced features you can get with a specialized app include sending trends and coaching.

So they really worth it but you’ll do fine using your current app. But it all your choice to make.

What Does a Personal Budget Include?

There is no general rule for what you should include in your personal budget. Because what applies to one person might not apply to another.

It all depends on individual lifestyle and spending habits. But to give you an idea of what you shouldn’t overlook when budgeting, we have compiled this list. Here are common things to include in a budget with their examples:

  • Rent. Examples include water, electricity, and heating or air conditioning.
  • Foods and groceries: These include all consumer goods.
  • Daily Incidentals
  • Irregular Expenses and Emergency Fund
  • Household Maintenance. Examples are cleaners, repairs or replacement for damaged appliances, and furniture cleaning
  • Work Wardrobe and Upkeep
  • Subscriptions. Items such as subscriptions to music services, streaming services, and online publications.
  • Guests. These include spending money on groceries, laundry, and transportation when they visit you.
  • Travel Expenses. Examples are gasoline, train, flight, etc
  • Memberships. Expenses like gym membership or Yoga studio membership fee.
  • Prescriptions: These include medicinal items such as Tylenol, Advil, Tums, and Claritin.
  • Pet Care. Examples include veterinary costs like vaccinations and checkups, grooming, and pet food.
  • Bank Account Fees. Bank fees include charges for low balances, transfers, account maintenance, and overdrafts.
  • Parking. Examples include parking when you visit an amusement park or when you’re traveling.
  • Car Registration
  • Entertainment. These include going to the movies, or attending concerts.
  • Birthdays. These include buying cake, wine, etc.
  • Holiday Gifts
  • Charitable. Examples are fundraisers for injury-stricken people.

What Is a Sample Budget?

A sample budget is a budget created by one person and used by another as a guide to creating his/her own budget.

Although the sample budget is hard to see, we have created this sample for use only as a guide.

Note that the figures used here are not general and so you should use your own figure instead.

For the purpose of illustration, we’re using a two-income family namely, Bill and Rebecca. Bill works for an engineering company and earns $2500 a month, net income.

Rebecca works part-time as a clerical officer and brings home $350 every two weeks, net income. They have two adopted daughters; the first one is in school and the second in daycare. There is one car at their disposal, which Bill drives to work. Rebecca commutes back and forth to work on public transit. They have a rent payment of $600 a month and have a loan of $3250.

In spite of their different pay time interval, they decide to adopt a monthly budget interval. To do this, they need to calculate their combined income for the month and when they’ll receive it. For Rebecca, she will get three paychecks in one month, on the 1st, 15th, and 29th.

Bill and Rebecca’s income is calculated as follows:

Income for Tim and Sally (Monthly)
Tim $2500.00
Sally — 8th of the month $300.00
Sally — 22nd of the month $300.00
Total Income: $3100.00

Their expenses are as follows:

Expenses for Tim and Sally (Monthly)

Fixed time payments
1st Rent $600.00
1st Internet $20.00
5th Car payment $130.00
6th Telephone $40.00
10th Cable $22.50
11th Car Insurance $105.00
15th Gym membership $37.50
20th Emergency Fund $25.00
25th Debt payoff $150.00
25th Retirement Savings $150.00
28th Transit pass $35.00

Irregular payment
Food $450.00
Gas $150.00
Daycare $200.00
Children’s music classes $70.00
Cleaning supplies $15.00
Total Planned Expenses: $2200.00

Gong by the numbers above, you can see that their combined income is higher than their planned budgeted expenses.

However, it’s advisable to put this extra money in an emergency fund account for unexpected or unforeseen expenses. For example, in any given month, Bill’s car may break down and need some repairs. Bill may dine out someday.

The following table shows a typical example of unexpected expenses that can occur in a month:

Unanticipated Expenses
Purchased lunches $30.00
Car repairs $95.00
Hair cuts $25.00
Total Unanticipated Expenses: $150.00

As you can see, the above gave us a vivid insight into Bill and Rebecca’s state of finance. Their total monthly income is $3100 and their monthly expenses come to $2350 (adding both planned and unanticipated expenses).

By looking at the above totals we get a clear picture of Tim and Sally’s financial situation. Their total monthly income is $4800 dollars and their total monthly expenses (for this month) work out to $4630 (found by adding their planned and unplanned expenses).

After all, expenses are paid, they have an extra sum of $750, which they can spend as they please. But they can also save it for when they may have higher expenses. Above all, they have covered all their expenses, they’re saving for retirement, and they are paying their debt.

How Do You Prepare a Budget Report?

A budget report is a report that shows your state of finances. A budget report is prepared to allow you to keep a tab on your spending. It’s prepared to ensure you’re on track to achieving your goals.

A budget report should comprise all the documents and presentations you need to answer questions pertaining to your budget.

The steps to preparing a budget report are basically the same as the ones to create a personal budget explained above. However, here are the steps to follow when creating a budget report.

  • Prepare a report summarizing your spending for the last month or quarter
  • Build a spending forecast for the next month
  • Focus mostly on the areas where you under-spending or overspending
  • Address areas that need cutting your spending or increasing your earning to stay on budget
  • Create a chart to include a keynote presentation
  • Review your materials before presenting your report
  • Review and practice giving the presentation of the report

How to Make a Budget in Excel

Need to make your budget in an Excel spreadsheet but don’t know how? If you’re looking for ways to customize your budget even more in a spreadsheet, we have got your back. Since this is a whole topic on its own, we have found a comprehensive guide for you.

Here’s how to make a budget in Excel from scratch, a comprehensive guide for you. Go ahead and have a good read.

Budget Hacks

Creating a personal budget isn’t enough if you don’t have hacks for sticking to your budget. If there’s any question we get asked often it’s about tips to living within your means and keeping to your budget.

Here are our best tips and tricks for budgeting:

  1. Cut your coat according to your cloth. In other words, let your expenses be determined by your resources.
  2. Don’t go grocery shopping hungry
  3. Keep a tab on your expenses. At the end of the month, this will help you know where you’re overspending or under-spending.
  4. Reduce your dining out or overspending on non-essentials.
  5. Talk yourself out before making a purchase.
  6. Instead of buying from the pricey store, opt for a thrift store where you can same item for a cheaper price.
  7. Keep reminding yourself of your financial goals especially when at the mall.
  8. Use cash instead of your bank app. This means when you run out of bills, you run out of money to spend. This way, you can avoid overspending.
  9. Avoid watching commercials. Get a PVR.
  10. Always rationalize before buying a non-essential item e.g. Toy.
  11. Make it a habit to always review your budget and spreadsheets regularly.
  12. Use free or cheap spreadsheets instead of expensive apps like Quicken.
  13. Think about money philosophically. Let your spending reflect who you really are. If you wouldn’t want to be called a spendthrift, reconsider. And make better purchases that reflect the good personality you’d like to have.
  14. Exercise at home instead of going to the gym.
  15. Always make an informed buying decision. Do extensive research about the price and quality of an item before buying it.

Conclusion

There you have it: Create a Personal Budget? A Step by Step Comprehensive Guide. This is the only guide you need to get started. From why savings is important and how to create a personal budget spreadsheet, this guide has covered a lot. All you need is to bookmark this page so you can keep coming back to it.

So what are you waiting for? Go ahead and start creating your personal budget to shine.

Good luck!!!

Is It A Good Idea To Get A Debt Consolidation Loan?

Debt Solutions

A debt consolidation loan is a single loan that is used to liquidate or pay off multiple loans or debts.

The act of using a single loan to offset other several debts is known as debt consolidation.

Such loans come with above-average interest rates that culminate into monthly bills that become uncomfortable for you to manage.

At that point, your loan or credit card becomes extremely difficult to manage.

Your debt management plan is what will determine whether you are going to come out of debt soon, or keep sinking into it further.

So, how can you solve your debt problems with the help of a consolidation loan?

The answers to the highlighted questions below will give you a clearer understanding of a debt consolidation loan.

Is debt consolidation a good idea?

Are you making any efforts to improve your spending habits and manage your debts?

What is your credit score like?

These are some of the factors that will determine if debt consolidation will be accessible by you or not. Debt consolidation might be okay if you:

  • Aim to pay off your whole debt with a consolidated loan.
  • Your earnings are good enough to cater to your debts.
  • You are okay with the option of paying back your loan over an extended period of time at a reduced monthly repayment amount but an increased interest rate.
  • There has been an increase in your credit score since cleared your initial loans.
  • You’ve mapped out a plan not to raise your debts.

If you don’t tick all the boxes above with a positive response, then debt consolidation may not work for you as expected.

Is it really worth it?

It is advisable to ever get a debt consolidation loan Is it something that could be detrimental to you in the long term?

How will it solve your debt challenges? You will need to look at this subject from these perspectives holistically.

Basically, debt consolidation is all about using a single loan to settle your other loans.

As such, you may just be asking yourself – So if it is another form of a loan, of what benefit will it be to you then?

A lot of people are resorting to debt consolidation loans because of its’ awesome benefits.

If you are obliged to different creditors, a loan like this will help you fix that debt sooner than you can imagine.

One of the reasons why it is recommended is because it consolidates and simplifies all your debt repayments to just one.

Do Debt Consolidation Loans Worsen Your Credit Score?

Technically and practically a debt consolidation loan is meant to improve your credit score.

Ideally, it is never intended to deteriorate your credit score. If you use the loan to settle your debts, then your credit score should start increasing as time develops.

Initially, after getting the debt consolidation loan, you might experience a decline in your credit score. That is okay. The score will improve again.

Though that is on the condition that you pay off those debts on time. Also, you are to ensure you don’t end up with more debts within this period.

This will be an additional problem. Some people get a consolidation loan and a worse credit score in the process. They didn’t pay off their debts with the loan. That’s why!

Also Related: How to get out of Debt Fast:23 Proven Ways.

What Is The Best Place To Obtain A Debt Consolidation Loan?

There are a number of places to apply for a debt consolidation loan.

It can be accessed via regular banks or even credit unions. It is also possible to get such loans via online lenders.

How Do You Get a Debt Consolidation Loan?

Before you can get a debt consolidation loan, you need to apply for a consolidation tool.

A consolidation tool is in the form of a balance transfer credit card, personal finance loan, or others.

You can obtain this via the bank or any legitimate lender. Thus, if it is a debt consolidation loan, the debts could be directly taken care of by the lender. Or the individual could be given the funds to repay their outstanding debt balance(s).

After the debt of the borrower has been refunded, he or she will only make a one-time monthly payment. With a debt consolidation loan, the borrower has the luxury of a relatively reduced monthly repayment amount.

The payable monthly amount is lesser because the repayment duration will need to be extended.

Consolidating debts equally streamline payments, as well as making it easier for finances to be managed.

What Should You Do Before You Apply for a Debt Consolidation Loan?

A debt consolidation loan will help you sort out several of your debt problems.

Do not be so high-spirited to apply for it. Instead, strive to know certain important details about such transactions.

These details are the terms and conditions. The different lenders have various terms and conditions for issuing such loans.

It is important you comprehend the terms and obligations of the lender before going ahead to apply for the loan.

For a start, seek to know their interest rates. Also, find out the duration of the loan repayment.

Regardless of whether you are getting the loan online or physically, get these sorted out first.

These are some of the things you should do before applying for a debt consolidation loan.

Benefits of debt consolidation

  • Simplifies your debt management plan since it integrates all your loans into a single, streamlined payment.
  • Could reduce a loanee’s total interest when they choose to consolidate to a 0% interest credit card balance, a secured loan, or a personal loan with a low-interest rate.
  • May reduce the monthly payment a loanee (borrower) needs to pay on their debt since the payment duration will be extended – although this could amount to a higher interest rate over the course of the payment. With fixed loan payments, borrowers are likely to terminate their debts much sooner. That is particularly when it has to do with huge credit card debts.
  • Less emotional stress – surveys have shown that people who have several debts to pay are often stressed. That is because they are mostly thinking of how those debts can be repaid.

Can I Get A Debt Consolidation Loan With Poor Credit Score?

Frankly speaking, it is difficult or almost impossible to get a debt consolidation loan with a poor credit score.

Although debt consolidation helps you improve your credit score, lenders are skeptical when you have a poor credit score.

As such, some lenders don’t like to consider people with a poor credit score as part of their scheme.

That means such lenders will not be granting your request if you have a poor credit score.

That said, there are organizations that may be willing to approve your request for a loan. But, in most cases, you may have to pay higher interest rates on the new loan.

Higher than what you had to pay on the separate debts. So while financial experts may not recommend that, the choice is yours to make.

What Type Of Loans Are Best For Debt Consolidation?

There is nothing like the best debt consolidation loan.

Just because it worked for someone else is not a guarantee that it will work for you. With that said, there is a loan type that will be best suited for your kind of person.

You need to sit down and figure out your goals to know which one will be the right fit for you. Decide whether you prefer fast funding, zero or low fees. Or you just like the idea of consolidating a huge amount of debt.

The majority of lenders give their borrowers longer time to pay back, which ultimately reduces their interest rates. For those with poor credit scores, the best thing is to go to lenders whose specialty is to offer loans to people with such credit scores.

What Credit Score Do I Need For A Debt Consolidation Loan?

Lenders don’t just give out a consolidation loan to everyone that applies. You will need to meet specific requirements before you can qualify for the loan.

One of such requirements is your credit score. There is a minimum credit score that qualifies you for this loan.

A good number of lending organizations only offer the said loan to people whose credit score is somewhere around 650. In most cases, it is around 650.

So, while that is the case, some other lenders approve debt consolidation loans for people with a lesser credit score. Some work with people whose credit score is as low as 580.

Fortunately, you can monitor your credit score with many online tools today. With such information, you can easily reshape your spending habits and every other consumer behavior you can fine-tune.

What Are The Risks Associated With Debt Consolidation Loans?

A  consolidation loan does not work like when you wave a magic wand. You need to meet the requirements for you to qualify.

There is a couple of risks associated with a loan of this nature. The most significant risk is that you stand the chance of going into more debt.

Yes, the consolidation loan lets you settle your old debts. But you should understand that you have a new debt to take care of.

That is why you would need to reduce and manage optimally your expenses. If you don’t do it that way, you will only end up getting yourself involved in more debts. Then, the very purpose of getting the loan in the first place will have been defeated.

Disadvantages

Debt consolidation has its own liabilities. Some money lenders will never tell you this. Well, below are some of the cons of debt consolidation that you need to be aware of.

  • Lenders could demand charges for the balance transfer, closing, or loan disbursement
  • Sizable collateral may sometimes be needed. For instance, a home.
  • Should not be seen as a guarantee for reduced interest rates, particularly for those with a poor credit score.
  • A longer period of repayment could cost more eventually
  • Does not necessitate borrowers to improve how they manage money. As such, there is every tendency for more debts to resurface later for the said individual.

If you are comfortable with all the points here, then you can conveniently go ahead and apply for the loan.

Conclusion

According to this post, whether a consolidation loan is ideal for you depends on certain factors.

Your current credit score, spending habits, and debt management plan are some of those factors. With these factors, you can determine if it is for you or not.

You cannot just wake up with zero debt repayment plans, and think a consolidation loan will solve all your debt problems. As a matter of fact, you would be back to where you started with that approach.

So if you think that a debt consolidation loan is perfect for you, fine! However, before you commit to any lender, know their loan terms and conditions.

How To Get Out Of Debt And Save Money Quickly

Debt Solutions

Do you want to get out of debt and save money quickly?

According to Meir Statman, a behavioral economist in a recent statement “getting out of debt is the financial equivalent of trying to quit smoking.”

It is important to understand that just like every other bad habit, good intentions alone will not be enough.

To ensure success, you need to break your underlying patterns of behavior.

Have you ever imagined what you have to go through each time you find yourself in debt or each time you allow your debts to pile up to several huge sums?

This could be disastrous on your part and most times also alarming.

According to research, being in debt does not only stress an individual physically but also mentally and emotionally.

Although every debtor is usually not in the right frame of mind and is being stressed in every area of their lives, their age other consequences that arise out of being in debt which is why it is paramount for you to know exactly the ways to get out of debt and save money quickly as outlined below.

 

1. Budget To get out of Debt fast and Save Money Quickly.

If you want to learn how to get out of debt and save money quickly, you must cultivate the habit of budgeting.

This should be the first thing to do, drawing up your budget and knowing exactly what is needed, necessary and what is not too important in your list.

You can do this by gathering all your bank and credit card statements, sitting down, and making a budget based on what is available.

Organize what you are paying out monthly into categories and handle them as listed.

Dave Ramsey, the author of the New York bestselling book, “The Total Money Makeover: Classic Edition: A Proven Plan for Financial Fitness,” said, “A budget is telling your money where to go instead of wondering where it went.”

2. Reduce Your Interest Rates.

Another way to get out of debt and save money quickly is to reduce how much you pay on interest.

To do this, you can start by calling your current credit card companies to explain to them that you intend to transfer your balance to another issue except they reduce their rate.

This is because all credit card companies run promotional programs with low-interest rates that help individuals.

They will be more than willing to put you on one of those programs that will help reduce your debt all you need to do is ask.

3. Pay off Debt with the Highest Interest rate First.

Every debtor is a prisoner of the lender.

This is because you are always distressed each time you come across your lender or each time you know you have some cash to pay to someone.

As the case may be, there is a sure way of making all this go away and this starts by paying off the debt starting from the ones with the highest interest rate.

You can list them in other to figure out which among them have the highest interest rates.

If this is done right, you will realize that at the end of the day, you will be left with little or no debt to pay.

Why it is important to pay off debt with a high-interest rate is because they consume the larger part of your income leaving you with no savings if not taking care of.

4. Pay more than the Minimum Balance Required.

To ensure your debt is paid off, you need to pay more than your minimum balance on your credit card statements each month.

This is because “Paying the minimum – usually 2 to 3 percent of the outstanding balance – only prolongs a debt payoff strategy,” according to Prabhakar.

Whether it is a credit card debt, personal loans, or student loans, the best way to pay them off sooner and have some savings is to make more than the minimum monthly payment budget or making the payment on a weekly basis.

Doing this will not only help you save on interest throughout the life of your loan, but it will also speed up the payoff process. “Strengthen your commitment to pay everything off by making weekly, instead of monthly, payments.” Or if your minimum payment is $100, try doubling it and paying off $200 or more.

   5. Use the Debt Snowball Method.

This method works like magic, if you really want to pay off all your debts, this means paying more than the minimum monthly budgets on your credit cards and other debts.

Using the snowball method will sure speed things up, build momentum, and help you realize some savings.

How it works

The steps involve listing all of the debts you owe from smallest to largest. Use your excess funds at the smallest balance, while making the minimum payments on all your larger loans.

Once the smallest balance is paid off, start putting that extra money toward the next smallest debt until you pay that one-off, and so on.

6. Close any Account that is No Longer Needed.

If you have any unused credit cards from lenders with whom you’ve had a long relationship, it will boost your credit score. On the other hand, having too many will harm it.

According to research, 3 credit cards are what works best, and try to never spend more than 50% of the available credit on any of the cards.

Mary Hunt, the award-winning and bestselling author of more than 23 books, author of “Debt-Proof Living: How to Get Out of Debt & Stay That Way“ said, “Contrary to the financial pressure and stress we might feel from time to time, generally the problem is not that we don’t have enough money.

The problem is that we don’t know how to manage what we do have.”

This will keep your score at its highest. Also, you should consider closing all your store cards, if you need to make a purchase then use your credit card and pay it off at the end of the month.

7. Get a cool off and leave those cards at Home.

Most times we spend unnecessarily because we are always with our credit cards.

If you are such a person and you want to know how you can get out of debt and save money, then I will suggest you leave those cards at home sometimes to avoid excess spending.

While leaving them at home, you should also ensure you don’t keep them where people can easily see them.

Jerrold Mundis in his book titled “How to Get Out of Debt, Stay Out of Debt, and Live Prosperously“: Based on the Proven Principles and Techniques of Debtors Anonymous” extensively discussed most of these issues and it is best you get some ideas from him also.

Debt

 8. Sell off Unwanted Items.

This is another good method for you to pay off your debts and also make some savings.

There are lots of items we keep in our houses that are not needed by us as an individual but lots of people want that item but are looking for it at a cheaper rate.

So it is advised to use this opportunity to sell those items off and make some cash which will also help you pay off those debts.

Search through your home, look for items you can sell-off. Karimi said “Do some research to make sure you list these items at a fair and reasonable price,” “Take quality photos and write an attention-grabbing headline and description to sell the item as quickly as possible.” Any profits from sales should go toward your debt.

   9.  Change your Habits.

Every debt owed comes as a result of habit. This can be the habit of excess spending either on things required or on unnecessary things. According to Hamm “Your daily habits and routines are the reason you got into this mess.”

You can spend some time thinking about how you spend money each day, week, and month and see how you can cut down on excesses.

10. Try to Understand Your Loans and Make Plans.

If you are going to get out of debt and save money quickly, you have to understand your loan pattern and also create an accurate repayment method that will help you get rid of it as fast as possible. You can do this by using a repayment calculator.

Plug the information about your loan into a repayment calculator or use your loan servicer’s online account tools. Learn how much you need to pay per month in order to pay off your loan within a specific amount of time.

   11.   Nicely ask for Loan Repayment Money for Gifts.

This will go a long way in helping you also in your debt payment.

To do this you can nicely tell your friends and family that instead of giving you the traditional birthday, holiday, and graduation gifts, you’d rather receive funds that will help subsidize debts and go into paying down loans.

12. Give yourself some Credit and Reward Yourself.

According to Bakke “The only way to completely pay off your credit card debt is to keep at it and to do that, you must keep yourself motivated.”

Do not see yourself as being in punishment while paying off your debts because that won’t help you pay it off any faster. So at some point give yourself some rewards and stay motivated. Just make sure to reward yourself within reason.

Beverly Harzog, author of; The Debt Escape Plan: How to Free Yourself From Credit Card Balances, Boost Your Credit Score, and Live Debt-Free, said ” There is no correct way to pay off debt, contrary to what you hear in the media.

The objective here is to put yourself in the best position possible for success”.

Save money

13. Use Your work Bonuses to Pay off Debt.

Paying off debt is not that easy, this is why you have to make a great effort to get out of it. At this point, you can also try putting in your work bonuses to help with the payment.

If you receive a job bonus around the holidays or during the year, try to allocate part of it towards your debt payoff plan. It’s more important to fix your financial situation than own the latest car.

14. Get a Part-Time Job.

During the holiday period or other seasons, there are lots of part-time jobs that spring up. You can scout for and get some part-time jobs which can help in minimizing expenses on your major income.

If you’re willing and able, you could pick up one of these part-time jobs and earn some extra cash to use toward your debts. Whether you want to pay off debt or save money, this is a good approach that can help you achieve that.

15. Always Spend less than you Plan to.

Most times, we make wishes and plans bigger than our paycheques, the popular saying, “You can have almost anything you want; you just can’t afford everything you want,” is true.

Due to the fact that people want what they can’t get, they have been forced to spend more than they earn and this leaves them in huge debt.

Suze Orman, New York bestselling author of, “The Money Book for the Young, Fabulous & Broke“. said, “Remember to remember your power – everything you’ve learned with these steps to financial freedom – and put it all into practice every day, because, in the grand scheme of life, you’ll never really know how things are meant to turn out until they turn out.” Suze Orman, The 9 Steps to Financial Freedom: Practical and Spiritual Steps So You Can Stop Worrying.

If you want something, don’t buy it unless you have the money. More also, if you can be satisfied with less than you would ideally want, even temporarily, you can use the money you save to pay down your debt.

By the time your debt is paid off, you’ll probably have adjusted to your new priorities, and you can use the money that you are saving to put towards other financial priorities.

It’s my hope that my article on how to get out of debt and save money quickly has helped you in your quest to get out of debt and saving money.

Image courtesy of Stuart Miles at FreeDigitalPhotos.net

How Does Debt Consolidation Work?

Debt Solutions

Debt consolidation is the act and process of taking out one loan to pay off many other loans and bills like credit card bills or student loans.

The main aim of debt consolidation is to basically reduce the total amount of loan repayment through interest rate reduction.

Many debt consolidation companies, programs, and services have argued the benefits and advantages of debt consolidation when one is in a cycle of debt. But the question is:

Is debt consolidation really useful in helping people get out of their debt problems?

While I agree that debt consolidation can help debtors solve their debt problems, many debtors really have much difficulty getting out of their debt problems even after they consolidate their debts.

Why is that so??

Think about it – Most of these debt consolidators are in debt problems because they spend on credit and are used to spending more than they can afford to.

As such, they eventually run into debts in the long run since they are always spending more than they earn every month.

After debt consolidation, these debt consolidators will have their credit card balance clear and a single monthly loan payment (with an extended repayment period).

With a lighter loan repayment amount, most of these people will begin to relax and usually overspend on their monthly budget again in the near future.

By doing so, they will eventually run into debts again. Thus, it is not surprising to see many people who have had consolidate their debts before to run into debt problems again.

How does one get out of debt?

Debt consolidation is a tool to help debtors get out of debt problems. Unfortunately, many have used it to increase their debt problems as mention above.

The only surefire way to get out of debts is really to adjust your spending habit and commit to a disciplined lifestyle. If you ask me, the get out of debt formula is really simple: It’s either to earn more money or to spend less money.

There are several types of help available for unsecured debt consolidation. You can choose to take out a debt consolidation loan to lower your rates and payments.

You may also choose to use a debt consolidation program, letting a third-party deal with your creditors. And finally, you can turn to a credit counselor to help you find the best plan for your situation.

Debt Consolidation Loans

A debt consolidation loan is any type of loan you take out for the purpose of paying off other creditors.

Ideally, you want to find a loan with a lower interest than what you are currently paying on your bills.

However, even if you don’t lower your rates, you can lower your monthly payments by choosing a long-term loan. The drawback, of course, is paying more in interest charges.

You can choose from a secured loan, usually backed by your home or an unsecured loan. Secured loans, including a home equity loan, second mortgage, and line of credit, will have lower rates and the tax advantage of writing off your interest payments.

However, if you don’t have a home, you can still find relatively low rates with a personal loan.

Debt Consolidation Programs

You can also work with a debt consolidation program to lower your rates and consolidate your bills.

This third-party agency will negotiate lower rates with your creditors for a small fee. You also only make one monthly payment, letting the agency pay your bills from that sum.

Some non-profit agencies also specialize in helping those with six or more months of late payments.

Before you sign up with these types of programs, be sure you have researched several agencies. Compare payback dates, fees, and estimated monthly payments.

Credit Counseling

If you are confused about your options or just don’t have a plan for getting out of debt, consider visiting a credit counselor.

As a non-biased person, they can explain your financing options. They can also discuss with you’re the pros and cons of each option, helping you find the best program for your unique situation.

Besides helping you to consolidate your bills, they can also help you develop a monthly budget and long-term financial goals.

How to Reduce Debt: 7 Proven Strategies

Debt Solutions

How to reduce debt is searched for one ninety-six million times.

As debt continues to increase in many households across America.

Families each year are finding themselves looking for ways to reduce their overall household debt.

For some, this may be easier said than done. Debt reduction requires a lot of hard work and dedication.

Especially when you are used to spending money left, right and center.

Those that are serious and committed to reducing their debt will eventually reap the rewards of being debt-free.

Reading my simple seven tips will give you many ideas, about how you can reduce your debt.

 

1. Cut back.

When you start to cut back on spending, you will find corners that you can cut throughout the month, to help you pay off your debts.

Simple things such as being aware of all the electricity you use.,

Turning off lights that are not needed as you leave a room will help reduce your light bill, therefore, you save a little more money to reduce your debt.

Once you become aware of your spending habits and start cutting back, you will start to notice more ways to cut back each month.

2. Budget.

Budget your income. List all your monthly bills and their due dates.

Apply them to your budget, as well as other household needs, for example, groceries, gas, etc.

Allow yourself only so much money per month to spend on extras.

Sticking to your budget will show self-control and determination for reducing your debt.

3. Limit the use of your Credit Cards.

If you cannot pay cash for it, then do not buy it.

If you must charge something, make sure that you can pay the balance in full when your next credit card bill comes in.

Never charge on your credit card to only pay the minimum monthly amount.

You will never get that maxed-out credit card paid off that way.

The importance of paying your credit card balance in full, cannot be stressed enough.

4. Get rid of your Credit Cards.

Are you determined to reduce your debt, cutting up your credit cards will help?

If you do not have them, you cannot use them. If this is too big of a step for you, at least get rid of the unnecessary ones.

Keeping only one or two, low-interest-rate cards for emergencies only is a good idea.

Remember if you cannot pay cash for something, then you probably do not need it.

5. Pay off your Debts.

If you have already acquired some debt you need to pay off, now is the time to get started.

Decide which debt is your smallest and start with that one. Pay on it as your budget will allow.

Once you have gotten your smallest debt paid off, you will have a feeling of satisfaction and know that you can pay off your debts.

Then move to the next smallest debt, when you are paying them off one by one, it is easier to do, without feeling overwhelmed.

Before you know it, all your debts will be paid, and you will feel great about knowing you paid them off.

6. Debt Consolidation.

Debt consolidation is another option to look at for reducing your debt.

Consolidation companies will call your creditors for you and make payment arrangements for your debts.

Many companies will get you one low monthly payment to pay each month until all your debt is paid off.

7. Financial Counseling.

Make an appointment with a financial counselor to help you reduce your debt.

Some people find, having someone else point them in the right direction as you seek to reduce debt.