Category Archives: Guest Post

The Basics of Credit Counseling

The following is a guest post.

The process in which consumers are enlightened on the steps necessary in order to steer clear of incurred/ incurring debts is termed as Credit Counseling. Credit counseling is also the first procedure that the consumer must complete before his application for bankruptcy has to be approved. Human psychology plays a major part in the process of counseling. The consumers are subject to a series of enquiries about their lifestyles, saving habits, spending behavior, investments, finance- planning and other related information, into which the counselors get an insight; so that they may decide the order of debt- relief planning. Hence credit counseling is also called as a ‘Debt Management Plan’ or the DMP.

Through the process of credit counseling, the consumers are advised on the ways and means to avoid bankruptcy and also how to manage their finances so that the road ahead will not prove to be difficult as regards repaying of debts.

Many a time, coming to a settlement with creditors forms a part of the credit counseling process and a plan on how to manage repayment of the monetary outstanding obligations is mapped. This is done in a number of ways like reduction in the payments that are due, reduced rates of interest and also fee-reduction in some cases.

First, once the DMP (Debt Management Plan) is decided upon, the customer’s account is closed and is rescheduled for further changes. Usually, several monthly payments are merged into one single monthly payment; the value of which is generally lower (approximately by an amount of 10-20%) than that of the total of previously paid monthly installments of the customer, as per the requisition of the credit cards banks, which involves acceptance of lower monthly payment from customers in a DMP as compared to the situation had the customer been paying the account out of his own pocket.

For a customer who has a defaulted credit card account, normally, the applicable interest rate for payment is near about 30%. But when the DMP is involved, there occurs at least lowering of the yearly rates to 5-10%; if not zero percent, which is also done by certain credit banks when the situation is beyond the customer’s control. Due to this breathing space provided to their customers, the counseling agencies publicize the fact that the twenty odd years that would have normally been taken by the customers to repay the debt would now be changed to only about three to six years as the rates of interest as well as the debt amounts have been sufficiently reduced due to the DMP.

Regularization of accounts that were termed as ‘failing’ accounts before the DMP now can be made ‘current’ as a result of the credit counseling processes. For this, a number of regular and timely payments are made through the debt management plan in order to demonstrate dedication to the plan and give assurance that payments as prescribed would be made without defaults. This is called as ‘Re-aging’ or ‘Curing’ the account. While the previous defaults will not be deleted from the credit bureau’s statements, it certainly helps the customer to get another chance at creating an affirmative credit history. After a few years, the credit scores may look good, but there is always a possibility of the debt collectors taking legal action against the defaulters, as six years is the limit for the worth of a credit card debt.

Thus, in many cases, credit counseling goes a long way in reducing consumer debts and has benefited millions of people in the world that have been assailed by credit problems.

Smith Paul likes to write articles on personal finance related to the Stock Market, Credit Counseling, Debt Consolidation, Government Debt, Housing Market and U.S. Real Estate Market.  For the latest updates, visit www.profitconfidential.com

How Students Can Get a Better Deal on Car Insurance

The money drain begins even before a student steps foot on campus. Deposits for housing, tuition fees, parking permits, and dining hall dollars are just the tip of the iceberg. College students also have to budget for gas, car maintenance and vehicle insurance as well, and these charges seem to come due at just the wrong moment. Those wise enough to realize just how much car insurance can hurt their bottom line should work hard to make sure that they are getting the most for their money. The tips listed below will help students lower their car insurance costs so that the cash they save can be applied to other living expenses:

Prepare Early

Teenagers should know that they start determining their future car insurance costs when they choose their first vehicle and get on the road for the first time. For this reason, it is necessary to know the following facts:

  • Grades matter and good ones can reduce insurance costs in the future.
  • Vehicle make and model is important to insurance providers so choosing a safer, less expensive model will help control insurance costs.
  • A driving record begins the minute that a driver first gets behind the wheel so keeping a great safety record by obeying all traffic laws is important.
  • Neglecting to take driver’s training classes may be a costly mistake.

Shop Smart

 Shopping for vehicle insurance is more like other types of shopping than most consumers are aware and students should go about it in an organized manner. The following steps might result in significant savings:

  •  Students should decide just how much insurance is needed to purchase new transportation if the old vehicle is destroyed. Also, they should consider how much out-of-pocket cash they will have available to pay deductibles for any damages that their vehicle sustains. With these numbers in mind, they will be able to determine a dollar figure for the amount of insurance they wish to purchase.
  • Once the needed amount of insurance has been determined, students should use an online insurance comparison website to get a good idea of the price of this insurance offered by each of the reputable companies. Then, they should personally visit the local agent of the three companies with the lowest quotes and explain that they are searching for the best bargain. Most agents will work through all of their available company discounts and look for insurance bundling opportunities in order to earn a new client’s business or keep that of an established customer.
  • Finally, students should use the information and quoted figures offered by one agent to deal with the next. Although agents are bound by some company rules and do have to comply, they will work harder to find savings if they know that people have done their homework and have the figures to prove it.

Good planning and methodical shopping should result in lower insurance costs for years. The money saved should make paying those other college bills much easier.

About the Author: Jennifer Lewis writes for a site that help female students find financial aid for college, including chemistry scholarships and nursing grants for women.

How to Build Up a Personal Savings Account and How to Use it

The following article is a guest post.

I was only 14 when I opened up my very first savings account. It was a special type of custodial account: I was allowed to make deposits but no withdrawals (except if it was to close the account completely).

I saved and saved all summer long with one specific goal in mind — to have enough money to buy brand new clothes for my very first year in high school. With determination and discipline I reached my goal at the young age of 14 and repeated the process many times after that.

You can do the same no matter your age or motivation. All you need to successfully build up a personal savings account is a) a S.M.A.R.T. personal goal and b) a plan tailored to your unique situation.

What Is Your Goal?

My goal was very simple and reflective of my youthful mindset at that time. What is your station and life and what is your savings goal? Do you want to save enough money to buy a new car? Reduce your debt? Give someone you love a very special gift

Write your goal down on a sheet of paper or a spreadsheet and then ask yourself if it is S.M.A.R.T. — specific, measurable, attainable, relevant and timed. It is important to have a realistic, clearly outlined savings goal in mind that you can actually achieve considering your resources. For instance, setting a goal to save $1 million within the next few months to buy a yacht when you make $40,000 a year is not S.M.A.R.T. Saving $4,000 over the next 12 months to purchase a used Honda Accord is a much more balanced and achievable goal.

Create a Plan

Next you need an action plan to reach the savings goal you set. At 14 I started off by estimating the amount of money I would take home each week based on my hourly rate and hours worked per week (I was very meticulous at that age). Then I subtracted that amount from my meager expenses at the time to decide how much I could put aside each check.

So take a moment to run through your budget and figure out how much you can afford to save. Divide the total savings goal by the amount you’ll put aside each month to determine how many months it will take to reach that balance. Write down what you will save each month or pay day next to the goal you defined.

Choose a Savings Vehicle

Now that you have a goal and a plan, you need a place to store your money. You have a number of choices — you can open a traditional savings account at a local bank, a money market account (for very large balances), a direct online savings account or a certificate of deposit account. Choose the account type that offers you the best interest yield (interest the bank pays you) and the most convenience for your needs.

Direct online savings accounts often have better rates than traditional brick and mortar banks. Generally, certificate of deposit accounts (which you can open either online or at a local bank) have the highest yields. If you prefer to save at a traditional bank, open an account at a credit union for the best yields.

Use Personal Savings for Deposits Only

If you’re seriously committed to building up your savings the best rule of thumb is to make it as difficult as possible to access your cash, so apply for a “passbook” style savings account. With a passbook account you do not have a debit card, ATM card or any other method of making quick withdrawals. You must go to the bank to perform all transactions — the teller will record each transaction in a passbook or on a printed statement.

An online savings account is also helpful because you must put in your transaction requests using a computer and you also have to wait two or more days for a withdrawal to process. That gives you some time to think over your decision.

Article provided by Jon Robinson- Consumer  Financial Advocate for America’s Debt Help Organization, serving the public with authoritative information on a broad range of topics related to financial well-being.