Posts Tagged ‘debt’

« Older Entries
Newer Entries »

Five Key Steps After a Layoff

Thursday, February 26th, 2009

Karen Blumenthal at The Wall Street Journal recently wrote a piece describing the need for a financial game plan the minute someone is laid off. Forming a game plan, no matter how simple, is one of the most important actions that can be taken in the wake of a job loss. Her five steps are:

1. Find a way to continue with medical coverage after the layoff.

2. Calculate your minimum monthly expenses.

3. Know your cash on hand and exactly how much is coming in month-to-month going forward.

4. Look for supplemental income opportunities.

5. Manage your 401(k).

While her advice is targeted at a general audience, she does provide insight to what someone with debt should do if they lose their job. One great idea is to form a financial plan that includes a plan for eliminating debt, since outstanding debt can hamper and complicate financial decisions. Another valuable thought is to look for additional ways to supplement your income – and then add that income towards debt reduction payments. Blumenthal suggests that someone working suspend contributions to a 401(k). With debt, this is the best advice – instead of socking away any additional money into a 401(k) or other investment or retirement account, add it as soon as possible to debt reduction payments. Finally, she recommends talking with kids about the family finances and not shying away from pulling unnecessary activities and trips. This is excellent advice, as honest communication with the kids can help to make clear family priorities in a tough economic environment, including efforts to eliminate debt. Much of the enjoyment in children’s lives can be fulfilled by substituting expensive activities with fun experiences with little or no cost.

Raj Patel writes for DebtGoal.com, a do-it-yourself system for getting out of debt and lowering your interest costs.  DebtGoal.com incorporates all of the techniques discussed in this post and can help users understand and get visibility to and manage their debt finances.

Tags: , , , , , , , , , , ,
Posted in Debt Management, Paying Down Debt, Saving | View Comments

The Cost of Debt on Your Relationships

Tuesday, February 24th, 2009

How does debt affect you?  It’s clear that it costs you money in interest, but it also puts demands on you.  Every month you face the bills coming in and you may wonder if you can pay them.  The fact that your lenders have a significant claim on your income may leave you feeling stretched financially.  What if something goes wrong and your income is jeopardized?  How can you get organized and make progress?

If you’re like most, this stress pushes its way into other areas of your life: health, work, and relationships.  One of the biggest prices we pay for our debt is in our relationships.  A 2006 study by AXA on the effects of debt on relationships, found that money problems have adversely affected the personal relationships of almost one in four (23%) of adults in Britain. Of those,

  1. 19% say they have experienced a loss of libido because of money worries, with women being more than twice as likely to let financial problems affect their sex life as men.
  2. 26% of adults who let money problems adversely affect their relationships have admitted that money worries make them spend less quality time with their children.
  3. 37% spend less quality time with their partners.
  4. 50% have more arguments and a shorter temper when they are worried about money.

Does your debt impact your relationship?  If you find yourself experience unhealthy levels of stress due to your debt, take heart…you can reduce stress just by starting with a few proactive actions:

  1. Speak with your spouse or partner about debt and how it impacts your feelings and relationship.  See this article for advice on how to discuss debt with your spouse.
  2. Get organized by listing your current debts and minimum payments
  3. Create a plan for paying down debt, including a payment schedule
  4. Create a system for tracking your monthly debt balances and payments

DebtGoal.com helps users get organized and create and track to a debt reduction plan.  Just by taking this simple step, users feel more in control of their finances and a reduction in stress.  As you work together with your spouse to reduce your debt, you will find that many of the arguments and stresses disappear and your relationship will improve.

Scott Crawford is CEO of DebtGoal.com, a do-it-yourself system for getting out of debt and lowering your interest costs.  DebtGoal.com incorporates all of the techniques discussed in this post and can help users understand and get visibility to and manage their debt finances.

Tags: , , ,
Posted in Debt Management, Debt Stacking, DebtGoal, Marriage, Saving, Uncategorized, stress | View Comments

The Cost of Debt on Your Health

Tuesday, February 24th, 2009

It’s hard to put a value on peace of mind, but a growing body of research indicates that debt has dramatic costs on our mental well-being.  In November, 2008, RTI International released a study on different types of stress and their impact on the health of a woman carrying a fetus to term. The findings were shocking:  stress derived from debt was strongly linked to the premature delivery, more so than other major causes of stress.   They reported:

“According to the research, women who reported being in debt were the most consistently at risk for preterm delivery. They were 9 percent more likely to deliver at 35 to 36 weeks of gestation, 14 percent more likely to deliver at 33 to 34 weeks, and 16 percent more likely to deliver at less than 33 weeks.”

This study joins an increasing body of research correlating high debt levels to unhealthy levels of stress.  In another study, First Command in their extensive two-year investigation of thousands of American families detailed in the report “Finding Financial Security in Uncertain Economic Times”, found those who have a financial plan are more likely to feel confidence, a sense of security, and be optimistic about their finances, among other effects. Among their findings were the following results:

  1. 40% of those who said they save the most on a monthly basis feel financially optimistic versus just 24% of those who save the least
  2. 50% of those respondents with the highest ratio of savings to debt felt financially optimistic vs. just 19% of those with the lowest ratio of savings to debt

Other studies

  1. In an April, 2006 study of women and stress, Health.com reported that the number one cause of stress among women (affecting 33% of respondents) was their financial situation.  The number one financial stress was being in debt.
  2. In an April, 2008 AOL/AP study on the effects of debt found that stress related to debt has increase dramatically over time with 44% of respondents reporting migraine headaches from debt (up from 15% in 2004) and 29% reporting severe anxiety (up from 4% in 2004).

These studies confirm what most of us know from our own experiences:  having debt can cause stress.  If you find yourself experience unhealthy levels of stress due to your debt, take heart…you can reduce stress just by starting with a few proactive actions:

  1. List your current debts and minimum payments
  2. Create a payment schedule, using snowball methodology
  3. Create a system for tracking your monthly debt balances and payments

DebtGoal.com helps users get organized and create and track to a debt reduction plan.  Just by taking this simple step, users feel more in control of their finances and a reduction in stress.

Scott Crawford is CEO of DebtGoal.com, a do-it-yourself system for getting out of debt and lowering your interest costs.  DebtGoal.com incorporates all of the techniques discussed in this post and can help users understand and get visibility to and manage their debt finances.

Tags: , , , ,
Posted in DebtGoal, Spending, stress | View Comments

Holiday Hangover? Eliminate Debt with a Plan

Monday, February 23rd, 2009

Many have racked up debt in the course of providing a celebratory holiday season last December. Whether paying off that debt is either a part of a larger amount of debt that one holds or a lone lump of debt causing stress in the back of the mind, come up with a knockout strategy to get rid of it.

Helen Anderson’s blog Credit Card Matcher provides some excellent advice. A solid plan is to apply for a zero percent credit card and have that holiday debt transferred to a plan that has a zero percent period last for one full year. Pay the debt down with monthly payments, making sure to clear it all one month before the zero percent period expires. Reevaulate your progress towards paying it off each month, making it a priority to have the debt eliminated. If after nine months it appears the debt will not clear in time before the zero percent period ends, research additional zero percent balance transfer offers and transfer it all again one full month before the zero percent period ends on the first card. Finally, cut up the zero percent balance transfer credit card to make sure you never spend on it.

Raj Patel writes for DebtGoal.com, a do-it-yourself system for getting out of debt and lowering your interest costs.  DebtGoal.com incorporates all of the techniques discussed in this post and can help users understand and get visibility to and manage their debt finances.

Tags: , , , , , , , , , , , , , , , ,
Posted in Credit Card, Debt Management, Paying Down Debt | View Comments

As Stocks Losses Loom, Don’t Throw a Hail Mary

Sunday, February 22nd, 2009

This weekend an article on personal finance caught my attention. Jason Zweig at The Wall Street Journal commented on unexpected and fleeting jumps in investments to particular stocks and funds. He views these fluxes as the outcome of individuals attempting to throw a “Hail Mary pass”: irrationally dumping as much as possible into a particular investment vehicle in the hopes that it will buck the market trend and provide returns that recoup the broader losses in one’s portfolio. Finance professor Alok Kumar at the University of Texas demonstrated through research that when income decreases, sales of lottery tickets actually increase. Part of the explanation is that people want to feel hope, and specifically hope that they can live up to the standards of their neighbors.

From a debt standpoint this approach is the worst, in part because those in debt are more likely to make these risky gambles using credit rather than funds they might have on hand. Also, when gambling, losses are more likely than gains, and the resulting losses do compounded damage to one’s financial status.  Taking an additional shot of losses means increasing the challenge of completely eliminating debt, increasing the difficulty of raising one’s credit score, and as a result making one unprepared for any financial emergency. And when financial emergencies do appear, it is those who are in debt that pay leaps and bounds more than someone who has access to legitimate savings.

Rather than bet money or get into debt making wild, last-ditch bets on beating the market momentarily, focus instead on paying off all existing debt: now matter how spectacular gains are even if you do win on the market, the interest on credit card debt eats away any ultimate gains.

1. Examine and understand all existing debt.

2. Prioritize debts from most to less pressing to pay off.

3.Set up a basic budget and determine your monthly discretionary amount; decide on debt reduction payment amounts.

4. Set up a basic plan to pay off debt.

5. Create a straightfoward way to monitor your progress month by month. Adjust contribution amounts and budget accordingly.

Raj Patel writes for DebtGoal.com, a do-it-yourself system for getting out of debt and lowering your interest costs.  DebtGoal.com incorporates all of the techniques discussed in this post and can help users understand and get visibility to and manage their debt finances.

Tags: , , , , , , , , ,
Posted in Credit Card, Debt Management, Paying Down Debt, credit score | View Comments

« Older Entries
Newer Entries »