“I love you but it’s not my job to fix your finances.”
-Charlotte, Sex and the City

Charlotte says what a lot of people think. You know your finances aren’t just going to fix themselves, and it’s a rare friend or relative who’ll make the effort to sort out your financial mess for you. Thankfully for most of us there’s the Internet, and more specifically, us here at Needmoney.com. Here are 7 easy steps towards getting your finances sorted once and for all.

1. Prepare a monthly budget:

You need to review your budget and check on your bills/outgoings at least once a month as they’ll change over time. Your budget will need to be changed to accommodate these fluctuations. So that you don’t have to go into overdraft/borrow money, it’s best to make necessary adjustments by manipulating your level of expenditure on other outgoings. Try to build some flexibility into your initial budget so that it’s easier to adjust amounts later to deal with such changes.

2. Pay your bills as soon as you receive them:

If you don’t have payments pending on your overdraft or credit cards (debts you will be charged interest on), pay your bills as soon as you receive them.

Pay particular attention to bills you receive notification of electronically. It’s easy to accidentally pay them twice through carelessness, or because you’ve received duplicate notification. Also, keep an eye on automatic payments to ensure they go through and that your creditors are receiving them.

3. Get rid of debt:

Keep track of the total amount of your debt. Document pending debt, interest rates charged, and minimum monthly payments to be made. Tackle the cards with the highest interest rates first. Transfer balances from high interest rate cards to low interest rate cards.

You may be tempted to pay credit card debts off with a home-equity loan. The trap to avoid here is paying the cards off only to run up debt on them again, leaving you in a situation worse than your original one. Debt consolidation is a better option.

4. Verify your insurance cover. Make sure it’s justified and appropriate.

An insurance planner can be useful to help evaluate your needs according to your requirements. You don’t want to be paying for car, contents, or medical insurance beyond what’s really necessary. It’s also important to know exactly what you are and aren’t covered for.

5. Evaluate your retirement plan:

Take stock of your retirement plan with the following thoughts in mind:
- What is the value of my investments today?
- How much money do I save each month?
- What is the average rate of return I can generate on my investments until I reach retirement?
- What will my investment portfolio be worth at retirement based on those assumptions?

6. Use financial software to track your money:

Financial software can be highly useful and beneficial for personal money management. It will help you to keep track of your daily expenses and avoid making late payments. Pay your bills, make deposits, and transfer funds on time and avoid late fee charges.

7. Bank online:

Banking online reduces paper work and waste. It’s easy to sign up with your bank for an online account, and it will make paying bills and expenses a snap. It will also help to track your money as you can check on transactions in real time, and don’t have to wait on the post.

Are you unable to make timely payments towards your credit cards? Do you wish to get rid of them? If yes, you must immediately prepare a budget for yourself and determine ways by which you can save some amount each month to repay your bills. If your financial situation does not permit you to repay your outstanding debt balances in full, you can try to negotiate credit card debt reduction with your card issuer.

Tips to help you negotiate a credit card debt reduction

Some of the tips that will help you successfully negotiate credit card debt reduction are:

Determine your affordability: When you want to negotiate with your creditors, you must first determine how much you can afford to make as monthly payments towards each of your bills.

Explain your financial situation: You should explain your financial situation to your creditors and inform them about the hardship you are facing.

Request a lower interest rate: If you feel that you can manage your card payments if they become a little less, you must request the card issuers to lower the interest rates on your cards.

Ask for a forbearance plan: If you are facing a temporary hardship as you have lost your job or for any other reason, you can ask the card company for a forbearance plan. Under this plan, you will not have to make any payments for a certain period of time, that generally varies from 6 months to 1 year. During this time period, the interest will accrue at a lower rate.

Negotiate a settlement: If you have a very high-interest credit card and have accumulated a large amount of debt on it, you can also negotiate a settlement with your creditor. For this, you have to convince the card issuer that you are not in a position to repay the outstanding balance in full.

When you negotiate a credit card debt reduction, you must keep in mind that it will lower your credit score. It gets listed in your credit report as “paid as settled” or “paid as agreed”. So, while you negotiate, you must also request your creditors to report your account as “paid in full”.

Smart solutions to credit card debt

• Debt Settlement: Debt settlement is a process where there is negotiation with the credit card company to cut short the debt amount by 50% within 1 to 3 years. The settlement company acts as the medium between the credit card debt relief company and the debtor thereby helping to reduce the whole debt amount to its half. This is a fairly safe method as because most of the debtors witness a substantial decrease in their monthly payments.
• Credit Counseling: Credit counseling is the process where you take the help of a credit counselor who advises you how to manage your money. Reliable credit counseling organizations will help you implement a budget and offer free educational materials. The counselor will discuss your monetary problems and help you develop a customized plan for easy and quick repayment of your debts.
• Debt Management Plans: The other effective way to attain credit card debt relief is to get enrolled in a Debt Management Plan (DMP). Not everyone is entitled to a DMP but only those who have already consulted a credit counselor. You need to deposit money every month which is again used to pay your unsecured debts.
• Debt Consolidation Programs: If you are drowned in multiple credit card debts then you can easily opt for debt consolidation programs. This converts all your loans to a single loan. This generally lowers your interest rates, allows a single monthly payment and helps you pay off your dues on time.

Credit card debt relief is only available to those who seek it and work on it to resolve their financial problems. Therefore if you are knee-deep in credit card debts then take quick resort to these options so that your personal finances are not damaged further.

]]> http://www.needmoney.com/2010/05/ways-to-attain-relief-from-credit-card-debts/feed/ 0