The Smart Way Out of Debt!

With the way our world has changed you need to know what the best way to take care of debts is. There are many companies preying on the teachings of how to get out of debt and some are good, but others are not and could even be scams. There are good ways to get out of debt and bad ways. Here are a couple things to avoid and one great solution for your debts.

First, if you are not unemployed with over $100,000 of unsecured debts, then bankruptcy should not even cross your mind. This is the way out that those that are weak and cannot keep their word choose. It does not teach you anything about managing your money and it just gives you a way out that is way too easy to be worth the time and money you will spend to file your bankruptcy.

Second, when it comes to how to get out of debt you need to avoid any of the credit counseling agencies as well. These are good for the individuals that do not mind selling everything they own and moving into a very cheap home to get out of debt. They will show you how to manage your money some, but this is not good for your credit and in the long run there are better options.

Last, if you want the best way for how to get out of debt you need to look online and find a debt relief agency that will work with those that have at least $10,000 in unsecured debts. They will give you a free consultation and they will also help you get out of debt within 36 months or less. They will work with your budget and negotiate with your creditors to get you lower payments, rates, and balances.

Article Source: http://EzineArticles.com/?expert=Jared_McDermott

CREDIT CARD DEBT AND YOU: Under-30s under siege

THOSE under-30 are the leading age group for people declared bankrupt due to credit card debt. This startling finding reveals the other dimension to the general problem of credit card debt which has now reached RM23.3 billion.

“Out of the 3,548 people declaring bankruptcy by credit card, 1,774 belong to those aged 30 and below,” said Datuk Abdul Karim Abdul Jalil, director-general of the Department of Insolvency Malaysia. That works out to a staggering 50 per cent.

There are a number of reasons for the phenomenon but no serious study of the matter has yet been conducted , said Abdul Karim.

He added that applying for a credit card is easier these days. There are instances where you do not need to submit your pay slip to apply for one.

With credit cards easily obtained, it’s important that the right people should be the ones who are eligible for them. These cards should be made applicable to those who have the capability to pay.

Besides that, the public should also be educated on how to better manage credit finances so as not to end up in debt, Abdul Karim said.

“We’ve already witnessed what the credit crunch has done to a country as powerful as America. We should take precautions to make sure the same thing does not happen to Malaysia.

“It is often said that money is the root of evil, but now, we can also easily say that enjoying the luxury of credit is the root of bankruptcy.”

RM24b not small money

IS RM24.4 billion big money? This is the amount of credit card debt owed by Malaysians, according to Bank Negara Malaysia’s statistics as at end of March 2009, reported by Bernama last week.

The report, however, stated that the credit card debt in the country has not yet reached a critical level, according to the Credit Counselling and Debt Management Agency (AKPK). This is because up to that period, loans via credit card accounted for only 6.1 per cent of the total financing by banking institutions.

However, Malay Mail took a closer look at how much RM24.4 billion is worth by looking at the country’s 2009 budget allocation, and we find that RM24.4 billion is certainly worth “something”.

The budget allocation for 2009 stood at RM207.9 billion. Out of this amount, RM7.6 billion was allocated for transport, RM3.2 billion for public utilities, RM17.8 billion for social services (including education and health), RM7.3 billion for pensions and gratuities, RM4.1 billion for security, RM33.8 billion on subsidies, RM 27.7 billion on economic services and RM13.5 billion for debt service charges.

So, in comparison, it is quite evident that the RM24.4 billion is not an insignificant amount.

Avoiding Bankruptcy - How To Avoid a Financial Problem

Bankruptcy may seem like a quick and relatively easy fix to a big problem, but it isn't. First, it can haunt your financial life for a decade or more, keeping you from owning a home, buying a new car, or even living the life you really want.

Maybe you're debt is beginning to weight you down. It's not to late t change some bad habits and reverse your financial woes. How can you avoid bankruptcy? Here's a good place to start:

Get Control of Your Spending:
Less than 43% of Americans today have more than $1,000 saved for a rainy day. Living paycheck to paycheck is a dangerous, considering that emergencies happen every day. Cars break down; people get hurt and miss work; unexpected pregnancies force women out of the workforce, and more. If you're struggling to pay your bills now, imagine the chaos an unexpected layoff would cause.

Sure, not everyone has the ability t save a large chunk of their salary, but almost everyone can put $5, $10 or even $15 a week away in a savings account. The key to living under your means, and avoiding bankruptcy, is creating a workable spending plan (ok, a budget), and stick to eat. First figure out the things that are essential; place to live, food to eat, a way to get to work, etc. Now, this doesn't mean that you need to live in an $1800 a month condo if you make $23,000 a year. It means finding an apartment or home that you can afford; a reasonably priced car (or take the bus), and regular old jeans, not the designer kind.

Remember, the point here is to spend less than you make, and that will mean sacrifice of some type. How much sacrifice depends on how far over your income your spending has become. Once you've figured out your necessity spending, then you can take a good hard look at your non-essential spending habits and limit that to what you can reasonably afford and still be able to have enough left to pay down your current debt and save for an emergency.

So, how much should you be spending? Most experts agree that a sound-spending plan should consist of the following ratio:

-35% of your net pay for housing costs (rent, utilities)
-15% for transportation ( car payments, gas, maintenance, insurance)
-15% for debt (credit card payments, student loans, personal loans, etc)
-10% toward savings
-25% for everything else (clothes, food, fun)

Following this ratio should allow you to live a comfortably debt-free life, freeing you of he worry of bankruptcy in the future.

Debt Consolidation:
Ok, so maybe it's too late to prevent financial trouble - you already have it. How can you stave off bankruptcy in order to get your financial house in order? If you own your home, and you're able to handle the payments, causing your home equity to consolidate your entire debt into one long-term loan may be the answer. Be careful though. Until you break the spending cycle that got you into trouble in the first place, this is only a temporary solution that can ultimately mean the loss of your home if you continue to wrack up debt after the consolidation is complete. If, however, you're prepared to pare back your expenses and attack your debt head on, then this may be a great way to buy a little time and keep creditors in check.

Debt Settlement:
Sometimes, even the equity in your home is gone and the well is simply dry. Creditors hate bankruptcy since they either never reclaim any of what you owe them, or get pennies on the dollar through payment options. So, once bankruptcy has become an option, contact your creditors and see if there's a possibility you can settle some of your debt in order to help you avoid bankruptcy altogether. Many are more than happy to forgive up to 60% of your current debt if they are guaranteed they'll get the last 40% in a timely manner. Be prepared, however, to prove your case. Face it, you haven't been very responsible thus far with your spending, or your bills, so they'll need a little convincing that things have changed and that you are indeed working hard to make things right.

Credit Counseling:
Oftentimes, people get into financial trouble simply because they don't know any better. Credit counseling can be a wonderful resource to help you get your spending under control, learn to live on a budget and handle debt settlement and consolidation for you. Just be sure that you choose a reputable service that has a proven track record.

While bankruptcy may seem like the best solution when creditors are calling every hour of the day or night, but, bankruptcy can often be avoided with a little ingenuity and some hard work.

Bankruptcy may seem like a quick and relatively easy fix to a big problem, but it isn't.