How to Beat the Credit Crunch Crisis

You can do your best to cope with the credit crunch by developing a few simple habits.

Read Your Billing Statement Inserts

Many of us throw away the extra paper that is included in the envelope of the credit card Bill. The truth is that creditors often inform the consumer about increase in the interest rate or other changes in the policy through these inserts. You should make sure that you at least glance at the billing inserts that are included with your statement. If your billing statement includes the notification of your interest rate and credit limit then you should make it a point to check this every month.

Transfer Your Balance

If carrying a balance on one credit card becomes extremely expensive so much so that you cannot afford it any more you may consider transferring your balance to another credit card. This may be one of your existing credit cards that has a much lower rate of interest or a new credit card that offers a promotional rate of interest. People who have an extremely good credit score can also find a promotional rate of 0% interest. You will discover that the interest rate that you get on a new balance transfer credit card will also depend on your credit score. This means that people with a better credit score will qualify for a lower rate of interest.

Building an Emergency Fund

The main purpose of building an emergency fund is to provide you with financial resources in the case of a job loss. Loss of employment is one of the prominent and very serious effects of the meltdown in the economy. Having an emergency fund will decrease your reliance on credit to meet expenditure during the time of unemployment. This will make sure that you do not overburden yourself with more debt when you’re jobless. It will also allow you to continue to make minimum payments on your credit cards so that your credit score does not suffer during the time you are unemployed.

Take professional help But Be Careful

There is no shortage of advertisements made by organizations and businesses who claim to resolve your credit crisis by offering various services like debt settlement, credit repair etc. The reality of the situation is that many of these advertisements and businesses who are behind them are scams. They will take your money without providing you with the promised service. The bad news is that they will not do your credit situation any good while the worse news is that they may make it worse. You can take the help of legitimate non-profit credit repair organizations won’t always be careful to check the credentials carefully before putting your finance matters in their hands.

Check Your Credit Score

Find out what your credit score race before making an application for a major line of credit. The benchmark off almost all creditors for a credit score that qualifies for loan has gone up. In today’s time 720 is typically considered to be a good credit score. Get a copy of your free credit report as well as your credit score in order to see where you stand. Ordering these two documents will also provide you with many helpful tips as to what you can do to increase your credit score.

Who All Are Affected By The Credit Crisis And Who Are Not

Only the people who are not involved with credit will not be affected by the credit crisis. The truth is that most of us at least use some form of credit such as the credit card. For credit card consumers who do not carry a balance on the card the effect of the credit crisis will be the least. In order to minimize the disadvantages that you might face owing to the credit card crisis such as increase in the interest rate, increase in a minimum payment etc. you should try and pay off your balance in full at the end of the month.

However, a cut in the credit limit will still hurt you even if you pay your balance in full. A reduction in the credit limit will increase the debt utilization ratio which is bad for the credit rating. A reduction in the credit limit without you being aware of it may cause you to go over the limit in your expenditure which may result in an increase in the interest rate as well as a late payment fee.

The credit crisis has also affected people who are either seeking new lines of credit or applying for credit for the first time. If you are one of those people who are done with applying for mortgage loans, automobile loans and student loans, then you are one of the lucky ones who will not bear the brunt of the credit crisis.

3 Steps to Surviving Unemployment And Keeping Your Debt Under Control

How to survive unemployment while keeping your credit and debt situation under control.

Unemployment can result in financials matter quickly flying out of your control. Using a job is never easy but being unemployed during a time when the hiring is slow means that you need to be better prepared. Searching for a new job may not be our very quick process which is why you need to employ the right tools and strategies to make sure that you get through the unemployment crisis while keeping control on your debt and credit affairs. The last thing he neediest to come under insurmountable debt or to suffer from bad credit rating. Goes these thinghehs could hinder in you being able to find a job since employers check the credit history of a potential employee. Seeing instability in your financial matters may seem to depict unstable and irresponsible characteristics.

Find another Source of Income

You should try and find a temporary source of income while you’re out there looking for a job. If there is something that you can do over the weekends to earn some extra money. Find out if you’re eligible for unemployment benefits. You may be able to file for unemployment online or over the phone. You must check your state unemployment office to find out whether you’re eligible and how you are supposed to apply. This is the time whether emergency fund that you ought to have built up will come in handy. Uses fund to meet your essential expenditures only. Uses fund sparingly because you do not know how long you are going to need it.

Curb Your Expenses

This is the crucial time very need to reassess your home budget. You will need to cut down all expenses that are not essential. At least still the time that you can figure out what your current source of income which may include the emergency fund and the unemployment benefit will support. Cutting back on expenses will help stretch the emergency fund for the longest possible period of time without you having to rely on credit cards which will only put you under more debt.

Exercise Control over Your Credit and Debt

Avoid using your credit card or taking out a new loan in order to support your free unemployment lifestyle level. You may be tempted to use your credit card to supplement for the missing income or to take out a new personal loan with the expectation that you’ll soon be able to pay it off. Do not take such a step. Put off all your expensive purchases till the time when you have been gainfully employed for at least a few months and have had the opportunity to rebuild your emergency fund again.

It is equally important to keep aim of the credit card bills and other bills as well. It is important to pay your credit card Bill by making at least the minimum payment so that your credit rating does not suffer. Damage done to the credit rating giving unemployment may cost more long-term problem for your finances in the future.

You can make it through the unemployment crisis by employing good sense and being judicious.

Should You Pay Your Taxes by Credit Card

When you can afford to pay taxes in a certain year you have the option of paying the taxes by your credit card. Many people also prefer to pay by credit card because it is convenient and quick. The other options of paying the taxes when you cannot afford to pay the tax are:

· You can pay the IRS late. The monthly late fee is 1% of the balance due, $20 on a $2000 tax balance.

· You can set up a payment plan with the Internal Revenue Service for a one-time fee of up to hundred and five dollars plus monthly interest.

· You can pay by credit card.

Before you pay by credit card you should understand that you will be subject to the terms and conditions of your credit card agreement. There are several advantages and disadvantages of paying by credit card.

The Benefit of Paying Taxes by Credit Card

The main advantage of paying taxes by credit card is that you’ll have more time to pay them off. Many charge your taxes your credit card your taxes get paid off but you can resolve the balance and continue to pay your tax beyond the April deadline. You can avail of the same facility through the Internal Revenue Service but you need to file additional forms and paperwork.

You may be able to earn rewards on a credit card that offers rewards for putting your taxes on it.

Disadvantages of Paying Taxes by Credit Card

Disadvantages of paying taxes by credit card are that you may end up paying more money as interest if you are intending to revolve the balance in the future. It is a good idea to use a low interest credit card so that your financial charges or minimum at the end of the month. There may also be certain convenience fee which is charged by the IRS on your tax Bill. It is typically 2.4% of the tax balance.

Another effect of using a credit card to pay your taxes is that the creditor might think that you are having financial trouble. This will only be the case if there is other information on your credit file pointing towards extensive use of credit as means of supplementing income. Result could be that creditor could increase the interest rate on your credit card, lower your credit limit or even cancel your credit card.

All things said and done putting your taxes on a credit card should be considered like any other purchase you make using a credit card. The balance is still subject to the credit card agreement and interest rate and other charges will be applied if you choose to revolve the balance. Any late payment will be reported to the credit bureau and you will not be able to bankrupt the tax balance ons your credit card.

Should You Share a Credit Card?

Things considered it is wiser to keep separate credit cards. If you do wish to share a credit card then you should sit and evaluate your reasons for doing so. You should have good reason for cosigning on a credit card and not do it simply because of convenience or being too lazy to put in another credit card application.

It is good and advisable for every individual to have their individual credit cards since it will always be a great tool at hand that’s not only provides ready credit when needed but is also the easiest way to build “a positive credit history.

Everyone shares a credit card every now and then with a friend or a spouse when they make a purchase on their behalf. But everybody should consider having their own personal credit card and using it responsibly because that is the best way to build a credit rating for yourself and to make yourself while for future credit approval when you need loans for home or for an automobile.

However, you must be especially careful about lending your credit cards altogether when friends ask them. This is especially true when you are staying away in a hostel in a college where having a credit card may be a bit of a novelty and other students who may not even be necessary where close to you all well known to may want to make expenses on your card such as ordering food and drinks or shopping online. Be very careful about sharing your credit card and using it on behalf of people about whom you are unsure will ever pay you back. Many students get into a high credit card debt in this manner

Learning to Stop Impulsive Credit Card Spending

Learn how you can stop using your credit card impulsively to make unnecessary expenditure.

In a common situation with the average person credit card expenditure is responsible for the largest debt that goes unpaid. The reason why credit card is reason for debt specifically is because there are several psychological factors that are attached to credit card shopping. A credit card makes you feel good during the moments that you make a purchase because it provides the elusive feeling of buying something without having to pay anything for it. The realization and the feeling of having to pay for what you have bought typically does not set in in the time that the credit card Bill arrives.

Credit card shopping also boosts impulsive credit shopping because you do not have to actually visit the store physically. In order to use your credit card to shop you merely have to log on to the Internet or use your telephone.

The first important step is to learn the cause of your impulsive credit card shopping.

Does credit card shopping provide you with a high, do you do credit card shopping when you’re upset or angry, due do impulsive credit card shopping when you’re trying to impress someone? Impulsive credit card shopping is very commonly emotional shopping and based on one particular emotion on the other. If you’re able to decipher what emotion rules you when you are tempted to use your credit card indiscreetly, you will be in a better place to put a curb on the impulsive credit card shopping.

Here Tips to Curb Impulsive Spending

Whenever you are tempted to buy anything instantly make it a point to think about it for at least a week. If you’re thinking of buying anything on your credit card then make at least $500 often purchases each you need more before deciding whether or not you can afford something extra.

Before you go out to shop plan your purchases. Make a budget and on the list and stick to it is.

Set a priority of your debt payments. For example if you priorities the payment on all the debts you owe them a Mortgage loan will come pretty high on the list. Paying that first may not leave you with enough money to make stories expenditures on clothes and shoes. If you do not priorities your payments then you may find that you spend on clothes and shoes first and then need to borrow money in order to pay off your Mortgage.

Don’t deprive yourself.

A sudden and impulsive credit card by can be a result of you strangulating your wants to much in favor of a strict budget. Keep indulging yourself slowly and in small measures so that the feeling of deprivation does not set in. Keep your self-indulgence in control though.

Shop with someone else.

It is a good idea to take someone along with you when you go shopping if that someone can help you maintain a reality check on what you can and cannot afford.

Leave your credit cards at home. It is a commonly accepted and reported fact that people tend to spend less when they’re using actual cash. Carry an exact amount of cash that you require do your shopping according to a pre-made list. Since you will not have a credit card you will not be able to go over your spending limit and the amount of cash that you are carrying.

Warning Signs for a Potential Bankruptcy

Having to file for bankruptcy is absolutely one of the worst statements that a person can make about his financial well-being. Bankruptcy is not something that happens to big business houses. It can just as easily happen to an individual. Basically bankruptcy is a state where a person or corporation is unable to pay back the debt and the money borrowed. If a person finds himself in such a situation then he may also find himself filing for bankruptcy.

These are some of the common warning signs that you may be facing a potential bankruptcy.

No Insurance

Not having insurance for your medical can prove to be disastrous. Medical bills can be extremely high and without having insurance to pay for it can quickly result in you surmounting a debt that you can’t afford to pay back. It is triggered that medical bills are factor in one out of five bankruptcy filings.

Credit Card Debt

Credit card debt is a huge factor in a why people face bankruptcy. If you have been running close to your credit limits or have been getting by by making the minimum payments every month and it probably means that you are facing financial trouble. Supplementing income by the use of credit is not a solution. Making just the minimum payments can take you 20 to 30 years to pay off the balance on your credit card. Running close to the credit limit means that you’re incurring a huge amount of debt and any single incident can mean that you’re unable to pay this balance. Running close to limit credit card balance on multiple credit cards means that you are running a huge risk of having to file for bankruptcy.

No Savings

Ideally a person should make an emergency fund that covers the living expenses for 6 to 12 months. If you have no savings you’ll have to rely on the available credit and credit cards in case of dire emergency situation presents itself such as being unemployed. Having to run a huge build on credit and out any means of paying it back put you at a higher risk of going bankrupt. It is estimated that 43% of American households have less than $1000, saved which is an alarming fact.

Tax liens, foreclosure and Repossession of Car

These are serious incidents and are a sign that you are facing severe financial trouble. Not ignore these signs and take help as soon as possible.

In order to fix a bad situation and prevent having to face the that consequences of filing bankruptcy you should avoid impulse spending

Not use a credit card unless you’re surely can afford to pay off the balance

Not sign up for too many credit cards just because you’re getting free

Take out a mortgage that you can comfortably afford to pay off

Make sure you are adequately covered by medical, homeowners and automobile insurance

Not make speculative and high-risk investments

Think carefully before cosigning for a person on their credit application

Make a monthly budget and stick to it

Stop living Paycheck to Paycheck

The advice in this column is pretty much the same as already even in how to live within your means. It is astounding how many people will reports that they are living Paycheck to Paycheck. You know you are living Paycheck to Paycheck when yourself under a constant stress of money shortage. You seem to be always on the brink of running short of money and borrowing. Any little expense that comes as a surprise will force you to rely on credit such as credit cards, payday loans or cash advances.

The problem with living Paycheck to Paycheck is that any little expense can put you under debt. Any extra expense that you need to make in a month will force you to borrow on your credit card or from other sources. Since you have spent extra in a month your next month’s income will not be enough to cover the extra charges that you have undertaken in the previous month. Which means that in order to repay the previous debt you will find yourself taking more under debt. This can be a cycle that spirals downwards and goes quickly out of control. Soon you find yourself in a place where your credit rating is trashed and you are deeply under debt with no idea how to repay it.

How to stop living Paycheck to Paycheck

The very first thing that you will need to do is try and figure out some way to cut down on existing expenses. You need to sit down and make a financial budget and compare it to your current income. Cut down on the items that are not essential and try to save some extra money. Making a budget allows you to see your expenses before actually spending them. Making a budget will be able to predict how you’re going to manage the month on your income. It will also provide an excellent insight into what expenses can be reduced.

Stop using credit cards to make general expense such as groceries, gas etc. You will spend much less if you go with a fixed budget in mind and use a certain amount of available cash to make your purchases every month. Credit card will allow you to shop for extra because it will have a higher credit limit.

If you find that even after budgeting you are tending to strain your finances resources then it is time to track back the spending that you have made. Carefully review where the money has been spent and see if anything could have been avoided or if expense on something can be reduced.

You should also consider increasing your income by working overtime or getting a second job. You can also figure out something to do over the weekends that will help you supplement your income.

You’ll be surprised at the amount of money that can be spent casually without thinking. Just the habit of buying a cup of coffee every now and then can cost you in tunes of hundreds of dollars every month. You might need to give consideration to your spending habits and change your attitude towards money. Avoiding expenses that seem innocuous when you make them can make a lot of difference to the overall total monthly budget.

How You Can Live within Your Means

The biggest reason why people faced a crisis on the economy downturned was the fact that they had been living beyond their means and relying heavily on credit. Now is the time to cut down those extra expenses and to learn how to live within your means. Here are a few simple steps that will allow you to do just that.

1) As the very start you need to know what your income is. They should include what your job brings you as a salary as well as what you earn from other sources of income such as interest on your savings etc.

2) You should always consider a part of your income that you should not touch. For example if you have investments that bring you regular and constant returns as interest you can have these automatically deposited in a separate accounts that you do not touch. You can let these funds build up as saving.

3) Start budgeting and planning. Busting is the number one important tool and it comes to managing your finances. The importance of a monthly budget cannot be understated. If you have been carrying on with your expenses without up financial plan and a monthly budget, then it is time you made one. Sitting down with the amount of money that you have available and figuring out every expense that you are going to make in the month presents you an extremely clear picture of where your finances stand.

4) Stop relying on credit. It is a commonly known fact that has been proved by research the will end to spend more when they are using their credit cards rather than when they pay by cash. Paying by credit card has the effect of dissociating the purchase with the actual cost because you do not have to pay right then. That comes later. Try and withdrawal cash from your bank or ATM to do your monthly purchases and stick to the budget you have planned. Having a certain amount of cash on hand will prevent you in going over the limit which is exactly what a credit card allows.

5) If you’re counting on making a purchase using your credit card that you will pay off in the next three months and it is better to save for the next three months and then buy it. This will allow you to save money on the extra interest that you will pay over the three months as well as reduce the risk of you missing a payment and incurring further charges which will increase the cost of the original purchase.

6) Start saving. Start working towards building an emergency fund that can be relied on during times of emergency rather than having to bank on credit cards. Ideally you should build an emergency fund that is equal and to your monthly expenditure and sustains cost for 6 to 12 months. This will come in handy during dire situations such as being unemployed. You can start gradually by building up a fund for two months and gradually going on to 3, six and 12 months.

7) Boost your income. You can figure out a way to increase your income by working overtime or getting a second part-time job. Every there something you can do over the weekend or couple of hours that will increase your disposable income.

Being in Debt Is Bad for You

Being in debt is bad you are several reasons. Being under debt is the stress which can lead to medical problems and prevent you from relaxed normal and happy life. Being in debt his expensive because whenever you take out a loan or charge your credit card you are paying hundreds or thousands of extra dollars is interest to the creditor. If you are not in debt think of what all you could do with this extra money that is going towards credit card companies and editors. You should try paying off the debt as soon as possible. The exception of costs is loans like automobile loan and mortgage loans which have to run their duration. For closing either of these loans may result in you having to pay extra charges as penalty. But even the penalty charges may be worthwhile if it save you thousands of dollars in interest.

Being in debt causes stress in personal and family life. Being in debt creates insecurity could spouse and children which can result in disagreements and unhappiness amongst the family. It is perceived that financial troubles are one of the biggest reasons for separation and divorce amongst couples.

Being in debt takes away from your future income because every time you take money on credit you’ll have to pay for it from what you earn in the future. Whether this is a good thing or a bad is a matter of how we utilize the money and credit. Buying a house today and paying for it may future income can be considered good form of credit because you get today what you want a future.

Being in debt can prevent you from doing things that you want to do today. Pay off your credit card bills so that you can utilize the money better.

Being in debt prevents you from saving and preparing for the needs of the future such as your retirement fund and your child’s education. Get out of debt and start putting that money away towards savings.

Being under debt and making the payments regularly will not harm your credit score. In fact regular payment history will work to better your credit rating. However having unpaid debt can lead to delinquent and late accounts which are bad for your credit score. Once a credit rating is damaged paying off your debt is the best way to start on the road to credit recovery.