When faced with financial struggles or difficulties, we need to pause and take time out to reflect on what could’ve happened. We may need to re-think and evaluate our financial concerns. Here are few things that we may need to ask ourselves and it might help us resolve and get over such financial difficulties.
Have we determine our financial priorities?
When we are recovering from a personal setback, establishing financial priorities will help us focus our effort and resources. Not all of your household debts will equally impact our families. Our first payment priorities should be bills associated with our essential needs, including utilities, food, mortgage or rent, and insurance. While we may be able to find ways to save on all of these bills by cutting back and negotiating lower rates, paying them is extremely important.
Can creditor hardship programs help us with our credit card debt?
If our debt is all over and can no longer make a better option to pay, we can get professional help by asking the lender for a payment arrangement. Some lenders offer programs to help in re-structuring the debt and payment.
Victim of Identity Theft, made you in the “red” zone?
If there is a suspected fraud activities on your account, do not hesitate to call your bank to investigate. It may take some time for the results, but it will be worth the long process, financially. You can also ask for a fraud alert.
How to keep insurance coverage if become unemployed?
Things that we cannot control happens – in such cases, we need to be prepared. We can check with the insurance provider if we have the right to extend your medical coverage, usually there is. Under these rights, insurance payments will likely be significantly higher than they were when still employed, but they will be lower than similar coverage obtained on our own. Having appropriate health insurance coverage is essential because without coverage, a medical emergency could devastate our finances.
“What is voluntary and involuntary repossession, and how does it affect our personal credit?”
Some loans are secured with collateral, such as a vehicle. If the terms of a secured loan are not met, the financial institution may take back/repossess, the collateral. When the consumer takes the initiative to return the object—before the financial institution takes it—it is called “voluntary repossession.” Both types of repossession, voluntary and involuntary, affect our personal credit in the same way. The only difference is that if we voluntarily return the collateral, we could save on some fees associated with its collection. Either way, the derogatory notation will remain on our credit bureau file for certain years.
In our society, debt is a part of life. It helps us get an education, a car, a home, or expand our business. When debt is managed well, it’s a stepping stone that enables us to improve our lives and get things accomplished. But, if debt is not managed well, it becomes a stumbling block and hinder our progress than move us forward.
There are many different ways you can learn to manage debt wisely, pay off faster, or get out of debt if you desire to be debt-free.
Optimize your Debt – The Simplest Way to See if You Have Too Much Debt.
If you are wondering if you have too much debt, you probably do. However, the easiest way to figure out is, if more than half of your income goes to paying debts. If this is true for you, then you are quite possibly in over your head, and need to do something about this quickly. If you are using more than half of your income to pay debts and think you still have the situation under control, you may be fooling yourself. You are on the edge!
– Difficulty paying bills on time
– Receiving collection calls or past due notices
– Living in your overdraft or line of credit
– Losing sleep worrying about debts
– Spending more than your income allows
– Not paying credit cards in full each month
– Impulsive spending due to financial worries
– Hiding spending or debts from a partner
– Allowing bills to stack up because you can’t pay them
– A decline by your financial institution to consolidate your debts
– No budget or spending plan in place
– Feelings of hopelessness that you’ll never get out of debt
If you are experiencing some of these warning signs and wondering your next steps would be, we suggest you speak with a non-profit Credit Counselor, most of them can provide you with confidential, non-judgmental coaching about your situation for free or a minimal amount of money. Non-profit Credit Counselors can lay out all options for you and allow you choose the best option. If you know that you are on the edge, you may want to consider some options:
– Approach a Financial Counselor and seek advice.
– Create a personal budget to pay-off debts – professional budgeting help and all information provided are kept confidential.
– Creditor Approval of Debt Management Programs. Your creditors want to see you deal with your situation.
With proper planning, creditors will become receptive in giving you time to repay your debt.
When financial trouble is too much of a burden on your own, depression and negativity sets in. If you allow yourself to be a victim of your own financial problem, you lose!
It’s not too bad to seek for a professional help when you, and the people around you can no longer take the brunt out of your shoulders.
Choosing to use a professional financial planner depends on your particular circumstances. If you have the time and interest to conduct your own research – and a reasonable understanding of financial markets and products – you may choose to manage your finances on your own.
If you have more complicated financial affairs, or a particular significant financial decision, you may choose to work with a financial adviser to explain the options and present a selection of financial products that match your needs. Investment management and decisions involve many professional skills and considerations.
Choosing a financial adviser or financial planner
Approach a professional help from a licensed, qualified and experienced financial adviser/financial planner.
Make sure to check the following when you look for a financial adviser or planner:
> They must know your personal circumstances including investment objectives, investment horizon, knowledge and experience (including knowledge of derivatives), financial situation and risk tolerance (including risk of loss of capital), and carefully evaluate your risk profile before making any strategies or financial product recommendations to you.
> They should give proper explanations of why recommended products are suitable for you and the nature and extent of risks the investment product bears; should also document and provide you with a copy of the rationale underlying the investment recommendations made.
> In providing services involving derivative products, they must assure that you understand the nature and risks of recommended products and that you have sufficient net worth to be able to assume the risks and bear the potential losses of trading in the products.
> When selecting a financial adviser or planner, there are several basic questions you should ask to assess his/her suitability for planning your life goals.
- What experience and qualification does the planner have?
- What service does the planner offer?
- What is the planner’s approach to financial planning?
- Will the planner be the only person working with you?
- In what way will the planner be remunerated and much does the planner typically charge?
- Could the planner’s recommendation unduly benefit anyone else?
- Has the planner ever been publicly disciplined for unlawful or unethical actions in his/her professional career?
- Can our agreement be put in writing?
Even when you are relying on the financial advice from professionals, it is your responsibility to exercise vigilance and due diligence when choosing investment products.
To assist the financial adviser or planner to better understand your situation and recommend advice that best suits you, provide the adviser or planner with the correct and relevant information. Ask questions until you understand the rationale behind the advice. Don’t invest in products you don’t understand. Remember, think twice before committing.
Good versus Bad Debt
Before borrowing money, it’s worth knowing the difference between good and bad debt. Some things are worth going into debt for, others can leave you in a big financial mess. Here’s how to tell the difference.
What is good debt?
A good debt is a sensible investment in your financial future, should leave you better off in the long-term and should not have a negative impact on your overall financial position.
You will have a clear and specific reason for taking it out, and a realistic plan for paying it back that allows you to clear the debt as quickly as possible, in a series of regular and affordable payments.
Examples of good debt
> Student Loan – This is a good investment because university graduates typically get paid more than non-graduates and the interest rate is relatively low which can easily be repaid once employed and earning.
> Investing in your own business. It helps you develop your own business, as long as you have a sensible and realistic business plan. If your business does well, it will end up worth far more than the loan originally took out.
> Buying a car you can afford, if it is essential to enable you to get to work and earn a living.
Examples of bad debt
> A luxury holiday you can’t afford. A luxury holiday can be a trip of a lifetime, but is best avoided if it’s accompanied by a lifetime of debt. Best solution – save up for your dream holiday.
> A brand new car you don’t need. If you don’t need to buy a new car, then think twice! Don’t end up looking rich but end up down the drain.
>Borrowing money to pay bills and or other credit commitments. Seek free confidential advice, which will help you get your finances back on track.
Tips to avoid bad debt
When considering borrowing money, ask yourself the following questions. If any of the answers are ‘no’, that debt is likely to be bad.
Will borrowing this money improve my finances in the long run?
Have I shopped around to get the best deal?
Am I borrowing this money as cheaply as possible?
Will I be able to cope should interest rates rise in the future?
Will I comfortably be able to afford the monthly repayments?
Do I understand all the terms and conditions associated with borrowing this money?
Do I understand the risks and what could happen if things go wrong?
Considering all the pros and cons of borrowing, all you need to do now is assess your finances if it will be able to cover for your arranged payment schemes. Never jump into something that you cannot thread in the long run!
These tips will ease money stress so you can create a more peaceful life
Do you ever feel stressed-out about money? I don’t have statistics on how many people have financial stress, but I know you’re not alone. In this article I’ll highlight some fundamental causes of money-stress and tips on how to deal with them effectively so you can create a more peaceful life.
How to Deal With Money Stress
There’s no shortage of reasons why people are dizzy with money stress. There are various reasons of financial problems that we can’t control but it affect our wallets nonetheless. It’s important to realize that stress is nothing more than our body’s response to a situation or event. When faced with an emergency – some people freak out and other people stay completely calm and in control. The situation is exactly the same for everyone, but the way each person perceives the situation is very different. Though you may never completely eliminate stress in life, managing it can help improve relationships, health, and general sense of well-being.
> Change your language – Keep positive attitude and use positive language will reduce stress response to financial issues. Never say that you only have limited resources, whereas you can explore other avenues to earn more.
> Reframe your thoughts – How you view your finances and the manner on how you speak about them can change the way you feel. Remember that actions are always preceded by thoughts and beliefs.
> Recognize your potentials – People tend to get more stressed when they believe a situation is out of control. When it comes to money, you always have the power to make a difference, so recognize that choices exist for you to improve any financial problem.
> Stay in the present. – Financial stress comes from projecting a worse-case scenario into the future. Exaggerating a situation to the point that your heart starts pounding and your palms start sweating. Remind yourself that you’re not in the future – you’re in the present moment where you have complete control.
> Get financial help – Talking to somebody or a financial professional can help you see options and solutions to your financial problems that you might be overlooking. Working with a financial planner is a smart way to get back on track so you feel more in control and optimistic about your situation.
> Reduce your debt – If debt is stressing you out, create a spending plan so you can free up more discretionary money and pay it off ASAP. Keep the total of all your monthly debt obligations below 40% of your gross monthly income.
> Choose to build wealth – Using your money to create a secure financial future, instead of spending it on material possessions, will give you a feeling of freedom. You can reduce stress by purchasing less stuff that you and make a commitment to save and invest at least 10% of your income.