60 Creative and Simple Ways to Save Money
Boost your savings with these tips and tricks.
Develop better strategies for eliminating debt to save money and avoid default
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It took hard work, sacrifice and a lot of sweat.
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National League of Cities gets those in debt to pay it back by giving them time, not money
Knowing how you think about money can help you save more of it.
The higher the APR on your debt, the more you must work to eliminate it. Interest charges eat away at every payment you make. And when it comes to credit cards, high interest rates eat up over one half of each minimum payment; if your rates are over 20% that jumps to two thirds of each payment.
The best way to accelerate debt elimination is to reduce the interest rate applied to your debt. If you can, then more of each payment goes to paying off the actual debt you owe (principal). You can get out of debt faster even if you pay the exact same amount or even less each month.
Start by calling your creditors or lenders to see if they will work with you to lower your rates. For credit cards, you usually don’t have to open a new account to get a better rate – they can just give it to you. On loans, you would need to refinance to achieve a lower rate.
Debt consolidation is the process of combining multiple debts into a single monthly payment at the lowest interest rate possible. So, you get the benefit of lower rates explained in Tip One, while also simplifying your bill payment schedule. In many cases, consolidation can also lower your monthly payments.
Consolidating debt essentially allows you to pay it off more efficiently. Many debt consolidation solutions either accelerate repayment to lower total cost or lower your monthly payments or both. You can consolidate credit card debt, medical bills, payday loans, federal and private student loans and tax debt. In almost all cases, specific type of debt must be consolidated separately. So, you’d have one consolidation plan for your student loans, another for taxes and a third for credit cards.
People often get the impression that debt settlement is the fast, easy way to get out of debt. It’s not.
The only way debt settlement can be fast is if you already have the funds necessary to make a lump-sum settlement offer. If you had that, you’d probably be making payments already. So, most people generate settlement offer funds by stopping their bill payments entirely to pool the money for a settlement. That takes time.
According to lending statistics, the average settlement case equals out to about 40 cents on the dollar. You basically have to pay back 40% of what you owe. So, if you owe $30,000, then you’ll probably need around $12,000 to settle. If you don’t have that kind of cash just laying around, then settlement still takes time.
Your creditors and loan servicers are not debt collectors – and they shouldn’t be treated like them either. Even if the creditor or lender has an in-house collections department for delinquent accounts, that’s not the same as a debt collector. And it’s in your best interest to talk to these people.
Debt collectors must follow the Fair Debt Collections Practices Act; in-house creditor collections aren’t required to follow the FDCPA. Why? Largely because it’s bad business to abuse your customers. If you fall behind with a creditor or lender, it’s in their best interest to help you catch up – it’s their money and they want to get paid; they also want to keep you as a customer.
So, creditors, lenders and even in-house collection departments don’t usually harass or threaten you. Instead they want to work out a repayment plan. They may be willing to offer forbearance (read more below) or work out a repayment plan (also more below).
Until your debt is charged off by the original creditor or lender and sold to a third-party collector, don’t hide! Talk to them and make arrangements to get back on track. It’s in your best interest and it’s better for your credit and your sanity than dealing with an outside collector.
Forbearance is a financial relief option where the lender agrees to temporarily pause your payments. You can essentially “miss” payments without incurring penalties or credit damage as long as you talk to the creditor first. They agree to let you miss a certain number of payments, which can give you time to recover.
Most people only know about forbearance as it relates to federal student loans. With those, you automatically have forbearance as you go through school. Payments generally start six months after you graduate or drop below half-time enrollment. Then you can apply for forbearance if you can’t make your payments after that.
What most people don’t know is that you can ask for forbearance on almost any other type of debt. Even your mortgage lender may offer forbearance if you can’t make your mortgage payments and risk foreclosure.
So, if you lose your job or can’t work for a period of time because of a medical issue, call and ask for forbearance. Not every lender will give it to you, but even getting forbearance from a few would be better than nothing.
If forbearance isn’t an option, often creditors and lenders will work with you individually to set up debt repayment plans if you can’t afford your payments. If you lose your job or have a major life catastrophe that affects your budget, call your creditors to see if you can work something out.
Basically, you want them to agree to a reduced payment schedule for a certain period of time; it’s also beneficial if they’re willing to reduce or eliminate interest charges during that time. In exchange, you may need to agree to make “catch up” payments once you recover; they may also require you to freeze the account if it’s a credit card or open credit line.
If you can’t set up repayment plans on your own, work with a professional team. For example, if you need a repayment plan for credit card debt, you call a credit counseling agency. They can help you set up a debt management plan. Since you’re working with a third-party, creditors may be more willing to negotiate and work with you to catch up.
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