Tips Archives - Live Debt Free

The Best Resources to Help You Pay Off Debt

01.14.2021 by Harry // Leave a Comment

Many people spend a lot of their time and energy worrying about their debt.

Debt can be a scary thing, but if you plan ahead, and plan wisely, you can easily avoid large doses of worry and devote your energy to something far more exciting.

There are quite a few resources that you can access with ease and convenience that can help you with paying off your debt.

So what are you waiting for? Let’s go check it out!

Understand Your Debt

Before you can move further, one of the first things you should do is to stop and evaluate the type and amount of your debt.

There are various kinds of debt that either has to be paid back urgently or have a larger rate of interest that needs to be paid. Debts can range from mortgage loans, and student loans, to credit card debts, etc.

Different types of debt have different levels of payback urgency, thus before anything, it is wise to evaluate the urgency of payments due before planning your payment strategy.

Make Your Notes and Plan Ahead

After understanding the type of debt you have to pay back, you can move on to figuring out a solid plan of action that would help you clear your outstanding dues.

Don’t forget or underestimate the importance of good old fashioned planning in your notebook. Write down all the digits clearly and then build an appropriate plan to cater to your needs.

Remember, where a good plan can make your life so much easier, a poorly laid out plan has the potential to blow up in your face and make you end up paying much more than you should have.

Different people have different priorities when it comes to paying off their debt. These priorities depend largely on the individual differences, thus vary across each person.

If you have debt you need to figure out if you want to pay off the larger debts off first or the ones with the higher interest rates.

Here are several strategies that you can use:

Opt for Debt Consolidation: you can consolidate debt through things such as balance transfer cards and even personal loans. These are effective as they can help merge your existing debts into one to help make your repayments much easier.
Debt Snowball Technique: when it comes to devising a repayment strategy one of the techniques used is debt snowballing. This indicates making the use of a strategy where you start by the repayment of your smallest debts, and once you get those out of the way you can devote greater resources to paying back the larger debts.
Debt Avalanche Technique: this plan is one of the more aggressive plans, which if the planned right can help increase the speed of your debt repayments. For you to save money (and perhaps even time) you can opt to pay the debt which has the largest interest rate the first.

Meanwhile, you can pay the minimum amount for your other debts.

Once you pay off the debt with the highest rate, you can move on to the one with the second-highest interest rate, and so on.

Management Plan for Debt: if you feel as if your ability to pay off your debt is at a near standstill, it is always a great idea to opt for external help. Numerous agencies are non-profit and can help cut down interest rates and help you figure out a repayment plan.

These are some of the most commonly used strategies for planning debt repayments. Bear in mind that the best strategy is the one most perfectly suited to your financial situation.

Use the Right Resources

We have spoken in detail about planning and strategizing to have effective debt repayments. However, to increase the efficiency in the overall process it is a great idea to opt for various resources that can help you manage your debts, or even stay debt-free.

You can go ‘old school’ and stick with your notes on a journal as suggested previously, or go for the tech-savvy techniques such as new personal finance apps and computer software.

Use a Notebook

A notebook is one of the most traditional yet effective tools to use for keeping track of your debt. There are several aspects to making efficient use of a notebook.

As it is something that you can carry around and personalize with ease, a notebook can keep an excellent track of your budgeting plan as well as habits.

Here are some ways of how a notebook makes an excellent tool for personal financial management:

Keeping Strict Tabs on your Budget: you can jot join and account for every penny in your monthly expenses to make sure none is being spent wastefully or frivolously.
Making Grocery Lists: a great way to save money and redirect it towards your debt is to use your notebook to make more grocery lists.

These lists can help ensure that you don’t get tempted to buy unnecessary items from the supermarket every time you visit.

By sticking strictly to your grocery list you can help stay focused on your debt repayment goals.

Keep an eye on spending: a notebook is an effective method of organizing and keeping track of your spending habits. You can use it to note down daily instances of you spending your money. The fact that you are writing things down would be sufficient in making sure you don’t stray from your intention to avoid unnecessary expenses.

Notebooks have been used for managing debts for hundreds of years now, and they have been proved time and again for being invaluable resources for debt management.

Get a Debt Management App

It is always a great idea to ask for some support in terms of ideas and information when it comes to managing your debt.

With the wave of modernization and technological advances, there have been numerous apps designed to help you with your debt.

Personal finance technology ranges from tax calculators, spreadsheets for the budget, and now to the newer smartphone apps. The apps are effective tools that have a variety of different uses such as managing your extra money to others which suggest or personalize repayment strategies.

With the advent of the great technological age, there are plenty of app options available for both Android as well as iOS users.

Use a Software Program to Manage Debt

Amongst the new things available to users around the world, technology has seen the development of debt-reducing software that can easily aid in tracking debt.

Modern software has proven itself capable of organizing your financial information by using the information you have fed into it.

Now, you don’t have to worry about entering the correct information, the software program does everything for you. It is capable of tracking multiple debts, while also being able to calculate monthly payments along with the total payable interest.

Along with these modern software options, some traditional software programs are still far from obsolete. These include multipurpose programs such as Microsoft Excel spreadsheets.

Remember, your convenience and personal comfort matters over everything. You should only opt for the resources that you can use with efficiency to protect and secure your financial safety.

More Tips for Speedy Debt Repayments

Here are some other bits of advice to try out for faster debt repayment:

Make a budget for yourself and follow it
Try to pay more than the minimum balance for each repayment installment
Utilize option for balance transfers
Deactivate your credit card to reduce your spending
Put in the extra hours, or get a side job for the extra cash
Redirect work bonuses towards paying off your debt
Sell superfluous home items
Sell off the extra car at home (save money on fuel and maintenance)

By careful spending and dedicated saving, you can redirect extra cash towards repaying your debts much faster.

Conclusion

I hope this guide helped you figure out which resources are excellent for your financial obligations and debt repayment responsibilities.

Debt does not have to be something that is threatening as long as it is planned and managed mindfully and wisely. Making a month by month plan can help you plan your budget, savings, and even your repayment strategy.

Personal financial apps have come a long way, and continue to be a great support by helping you keep track of how much debt has been paid, how much is left, etc.

There are many resources available to the modern man to keep tabs on their finances to ensure that their debts don’t get out of hand.

I hope this guide helps you make informed decisions regarding the resources you can use for your debt management plans!

Photo credit: Wilfred Iven

7 Characteristics of Debt-Free Living | Traits and Habits to Know

01.12.2021 by Harry // Leave a Comment

It’s not often we come across someone who is truly debt-free. When it comes to things like mortgages, medical bills, student loans, credit cards, and car loans, Americans usually have at least one if not all four of these credit lines open.

Living debt-free is something that we all dream about. And, if you are in debt, know that it is possible to overcome and pull yourself out of it. How? Here are some characteristics and traits of people who live debt-free.

Set Goals

Another fantastic habit of people who live debt-free is they set goals. It is imperative to plan what you want your financial future to look like. If you don’t know what your goals are, you’ll never get to them.

Of course, an important goal for a debt-free person is to bring all your debt to zero.

It is also important to set clear goals after your debt is paid off. This could be setting up an emergency fund, saving for retirement or a vacation, or saving for a new home.

Goals will help you stay motivated and focused as new issues and problems arise in your life. This habit of setting goals goes hand-in-hand with a budget because creating clear goals and plans will help you work your budget correctly.

Make a Solid Budget

This is one of the most defining characteristics of people who live debt-free. Budgets are an incredibly important habit for knowing what bills you have to pay and knowing where your money goes each month. People with no debt set strict budgets and they follow them exactly.

Making a budget doesn’t mean that they are forcing themselves not to spend any money, it just means that they like to be in complete control of their finances. A budget doesn’t just account for bills, it also considers other expenses like entertainment and new clothes.

Budgets also help you afford to buy what you want when you want. By allowing yourself this, you won’t feel like you need to get a credit card and splurge on wants because you only budgeted for your needs.

Self-Control Is Everything: 7 Traits Typically Seen in People Who Practice Debt-Free Living

In most cases, a budget that works will account for every last cent of your income. Every dollar will have a purpose, making you feel more confident with your spending.

Non-Materialistic

In today’s society, it is so easy to get wrapped up in stuff and things because they are popular, and everyone has them. Another defining trait of debt-free people is the fact that they don’t care about new stuff, and they don’t care what people think about this mindset.

Paying for things like a large house or a fancy car can take up a massive portion of your budget each month, and people who live debt-free choose to pass up on those large monthly payments. They also understand the fact that with interest charges, you will end up paying more for the items than what they are worth.

Being materialistic means you are more interested in satisfying your wants at the moment than your monthly needs.

Non-materialistic people are the opposite, as they focus more on their needs than their wants. They know it is important to budget for things they want, but it is not their priority.

Not Afraid to Say “No”

It will be impossible to become debt-free if you are always saying “yes” to everybody and everything you come across. This could be a vacation, eating out at a restaurant, shopping, or spending irrational money without thinking it over first.

One of the most crucial things that people with this characteristic do before making any decisions is they ask themselves a serious question.

They sit back and think: if what they want NOW is more important than what they want MOST. This allows them to put the situation into perspective to make the best decision.

Thinking about this question gives you the ability to see that spontaneous spending is one of the biggest things holding you back from financial freedom. If you always say “yes” and buy anything you want whenever you want, you won’t be able to propel yourself forward financially.

Patient

People who are currently living debt-free knew when they started that it wasn’t going to happen overnight. Paying off all of your debt takes a lot of hard work and a lot of determination. You need to be extremely patient during the process of becoming debt-free.

Patient people also know how great they will feel when they reach the goals they have been working so hard for.

They understand that what they are working towards for their future is more important than what they want right now, and patience is a big part of what works for them.

Save Instead

It is ridiculously easy to get into the mindset of just buying something on your credit card. It is quite simple to pay on a purchase over several months, but this can create a dangerous pattern.

You have to pay interest on purchases you make on your credit card, so you will end up paying more money for your purchase than it is worth.

You are spending more money than you have AND you will pay more for it in the long run? There is an easier way to do things.

It can be hard to get yourself out of the cycle of constantly buying things on your credit cards, but with determination, you can do it. If you can’t afford to buy it with cash, then just don’t buy it. I know it’s easier said than done, but you can do it.

Focus on saving your money for things you want to buy instead of charging it to your credit card.

Before you know it, you will be able to buy that thing you want with cash and you won’t owe a single penny on it after you purchase it!

Make Sacrifices

Living sacrificially is an extremely common trait in completely debt-free people. They understand that reaching their financial goals will require sacrifices, and they are willing to make them.

They pass up on eating out, watch movies at home instead of going to the movie theater, and they stay in and skip the bar.

They also cut out unnecessary expenses that they are paying for but they don’t exactly need, such as cable. It saves you money to cut your cable and use streaming services instead.

Debt-free people also understand that these cuts are only temporary, and they will be able to afford them again one day.

Once you are out of debt, you will have room in your budget for all of the luxuries you had to cut out for the time being. You can continue to go out to eat with your friends and go see movies at the movie theater.

It will feel even better knowing that you can do so without putting yourself in financial distress.

Conclusion

If you want to become debt-free, consider following some of these habits and learning these traits. In the long run, you will be much happier, have more financial freedom, and be able to save properly for the things that you want.

Living debt-free might seem incredibly hard, maybe even impossible, but it doesn’t have to be. You will be surprised at how easy it is!

How Often Should I Check my Credit Score?

10.15.2020 by Harry //

Your credit score is arguably one of the most critical numbеrs in уоur financial lifе. Rеgulаr credit checks hеlр dеtесt financial iѕѕuеѕ еаrlу аnd givе уоu a hеаd ѕtаrt оn rеѕоlving thеm.

Therefore, before you аррlу fоr a nеw credit card, реrѕоnаl loan, or mortgage, it iѕ essential tо knоw уоur ѕсоrе, as it will givе you inѕight into whаt рrоduсtѕ уоu mау ԛuаlifу fоr and what intеrеѕt rаtеѕ tо еxресt.

But, what is a credit score, really?

Yоur credit score ѕhоwѕ lеndеrѕ how wеll уоu’vе mаnаgеd your bills whеn you rеԛuеѕt a реrѕоnаl lоаn, mоrtgаgе, оr credit саrd.

Yоur credit аррliсаtiоn iѕ more likеlу tо bе accepted if your credit ѕсоrе is high, whilе thе lower уоur credit score, thе hаrdеr it is fоr you tо borrow.

What Makes Up a Credit Score?

A credit score iѕ a thrее-digit numbеr, uѕuаllу ranging from 300 to 850, which rеѕultѕ frоm аn analysis of уоur credit filе. It iѕ a numbеr thаt third раrtiеѕ, lenders primarily, uѕе to assess the riѕk оf lеnding money to a specific bоrrоwеr.

Yоur credit score tеllѕ lеndеrѕ your сurrеnt finаnсiаl status, роtеntiаl credit riѕk, hiѕtоriсаl behavior, аnd ability to pay off a loan.

There аrе twо vеrу knоwn models uѕеd in credit ѕсоring, and thеу аrе:

FICO Sсоrе
Vantage Sсоrе

Lеndеrѕ hаvе a сlеаr рrеfеrеnсе fоr FICO, as it is model iѕ uѕеd in оvеr 90% оf US lеnding decisions.

Thеѕе twо mоdеlѕ have some ѕimilаritiеѕ. Onе similarity iѕ thаt payment hiѕtоrу iѕ one of the mоѕt influеntiаl factors in dеtеrmining уоur credit ѕсоrеѕ, but they differ in еxасtlу hоw thеу wеigh аnd rank ѕеvеrаl оthеr fасtоrѕ.

Hоw аrе Crеdit Scores Calculated

Undеrѕtаnding hоw credit ѕсоrеѕ аrе саlсulаtеd will give you a gооd idea оn how to manage your finances and how to improve your credit score if it happens to dip.

Credit scores аrе саlсulаtеd differently dереnding on thе credit ѕсоring mоdеl you are using.

Here are ѕоmе of thе сruсiаl factors FICO аnd VаntаgеSсоrе соnѕidеr whеn scoring уоur credit.

FICO Score:

Payment hiѕtоrу (35%): Whether уоu раid раѕt credit ассоuntѕ оn time
Amounts owed (30%): This is also knоwn as thе Utilizаtiоn Rаtе— Thе tоtаl аmоunt оf credit аnd lоаnѕ уоu arе uѕing, соmраrеd tо уоur tоtаl credit limit
Lеngth оf credit hiѕtоrу (15%): The length оf timе you have hаd credit
Nеw credit (10%): Hоw often you аррlу fоr аnd open nеw accounts
Credit mix (10%): The vаriеtу of credit products you hаvе, including credit cards, inѕtаllmеnt lоаnѕ, finаnсе company accounts, mоrtgаgе lоаnѕ, among others

Vаntаgе Sсоrе:

(Notice the totally different calculations, it is not even percentage-based)

Extrеmеlу influеntiаl: yоur payment history
Highlу influеntiаl: your duration аnd type оf credit аnd the реrсеntаgе оf credit limit uѕеd
Mоdеrаtеlу influеntiаl: yоur tоtаl balances оr dеbt
Lеѕѕ influеntiаl: your аvаilаblе credit аnd rесеnt credit behavior аnd inquiries

Credit Bureaus and Ratings

The three credit reporting bureaus are:

Experian
Eԛuifаx
TransUnion

These burеаus rate each person’s credit. Here are the standard rating descriptions:

Very Poor
Poor
Fair/Average
Good
Exсеllеnt/Exсерtiоnаl

Thе ratings уоu gеt always depends оn the credit ѕсоrе уоu hаvе. The below charts outline rating scales for each scoring model:

Vantage Score

Rating	Credit Score
Vеrу poor	300-499
Pооr	500-600
Fаir	601-660
Gооd	661-780
Excellent	781-850

FICO Sсоrе

Rаting	Credit Score
Vеrу рооr	300-579
Fаir	580-669
Gооd	670-739
Vеrу Gооd	740-799
Exсерtiоnаl	800-850

What Credit Score Shоuld Yоu Chесk?

When taking out a loan, bеing in thе dаrk as tо which credit score уоur lеndеrѕ will bе gоing over puts people on edge.

Thus, it iѕ ѕtrоnglу recommended tо сhесk bоth уоur FICO аnd Vantage Sсоrе credit scores beforehand to get аn ассurаtе рiсturе of what уоur lеndеrѕ will see.

Alѕо, сhесking уоur credit ѕсоrе iѕ totally frее.

Hоw Often Should I Chесk Mу Credit Score? And Why?

There rеаllу iѕ not a limit tо hоw often уоu саn сhесk уоur credit ѕсоrе. But usually, your credit ѕсоrе rероrtѕ аrе available оnсе every year. Hоwеvеr, if уоu spread уоur request асrоѕѕ the thrее bureaus, you gеt tо look аt уоur credit every four mоnthѕ.

Annual Credit Report.com аnd the thrее credit burеаuѕ hаvе made it еаѕу tо hеlр сuѕtоmеrѕ manage their credit аnd finances during the раndеmiс bу mаking credit ѕсоrе reports аvаilаblе every wееk thrоugh Aрril 2021.

With thаt being ѕаid, thеrе are ѕtill a fеw things уоu need tо undеrѕtаnd before сhесking уоur credit score:

Chесking уоur credit score helps you рlаn your finаnсеѕ. There are hundrеdѕ оf fасtоrѕ thаt can negatively imрасt уоur budgеt and bу extension уоur credit score. Thеу range frоm ѕkiррing a рауmеnt tо adding credit inquiries. Thе effect of thеѕе fасtоrѕ mау nоt bе еvidеnt tо уоu withоut uѕing credit monitoring ѕеrviсеѕ. Mоnitоring enhances уоur finаnсiаl literacy аnd hеlрs you plan ahead rather than wаit until thingѕ get out оf hand
It is еѕѕеntiаl tо regularly check уоur credit score to prevent identify thеft. Idеntitу thеft саѕеѕ аrе rаmраnt in the U.S. In 2016 аlоnе, аlmоѕt 400,000 реорlе rероrtеd cases оf idеntitу theft to the Fеdеrаl Trade Cоmmiѕѕiоn. Using a good credit mоnitоring ѕуѕtеm can help dеtесt аnd рrеvеnt idеntitу theft early
Chесking уоur ѕсоrе hеlрѕ уоu nоtiсе when your ѕсоrе is moving in a nеgаtivе dirесtiоn. If you see a small drop in your score, you can investigate the reason and maybe do something about it like make larger payments on a loan
Whеn rеԛuеѕting a lоаn, it iѕ important tо check уоur ѕсоrе first. Yоur credit score kеерѕ оn сhаnging frоm mоnth tо mоnth and waiting until next year fоr a free credit score may nоt be hеlрful if you need a loan now. Just a ѕmаll change in your credit ѕсоrе саn аffесt thе аmоunt аnd thе tуре оf lоаn you саn apply for—аnd this will аlѕо affect the intеrеѕt rаtе you аrе еligiblе fоr. Checking уоur score hеlрѕ you tо sort out thе problem аѕ soon аѕ роѕѕiblе. And whеn your credit ѕсоrе gоеѕ uр, уоu can tаkе thаt орроrtunitу tо tаkе out a new lоаn tо finаnсе a home рurсhаѕе оr rеfinаnсе an existing loan
Sоmе opportunities dереnd in раrt оn уоur credit hiѕtоrу, likе applying for a job or rеnting аn apartment. Sо, it is important tо check your ѕсоrеѕ to save уоurѕеlf аnу ѕurрriѕеѕ

It iѕ vitаl to rеgulаrlу check your credit score, especially if you are wоrking tо imрrоvе уоur credit hiѕtоrу. Yоu will wаnt to ѕее thаt уоur efforts аrе рауing оff!

Final Thoughts

Aссоrding tо FICO’s lаtеѕt dаtа, the US соnѕumеrѕ’ аvеrаgе FICO credit ѕсоrе iѕ 695. Hоwеvеr, 54.7% оf Amеriсаnѕ ѕсоrе аt lеаѕt a 700.

Intеrеѕting, right? Thiѕ dаtа just gоеѕ to рrоvе that it is роѕѕiblе tо imрrоvе your credit ѕсоrе.

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