Becoming totally debt free is an unbelievable accomplishment and a great achievement for those who are disciplined to pay down their debts. Is it really smart though to become completely debt free?
Depending on your financial situation, you might be better off hanging on to some of your loans and spreading your payments over time. Take student loans for example, which are some of the cheapest forms of long term debt. If you have multiple student loans, consolidating the loans and negotiating longer repayment terms might be the prudent move over paying off the loans in full.
Here’s why:
* Up to $2,500 in interest paid on your student loans is tax deductible if you meet income requirements.
* A 10% return from an investment is greater than the 5% interest you are paying on the student loan. Reinvest your earnings back into your investment, and over time compound interest kicks in to generate massive gains.
*If you invest the money in a tax sheltered IRA or 401k instead of paying off the loan, you are investing pre-tax money, which lowers your realized income - which means you pay less income taxes. You could also take advantage of company matching programs if offered by your employer’s 401k plan.
*Student loans are the lowest forms of debt. If they are not they should be, so consolidate the loans. Focus on paying off all other loans first before even considering paying down your student loans.
If you have no other debts and are in the position to pay down a big chunk of your loan, or pay it off entirely, you are really in a win-win situation. You could choose to invest that money to help boost your wealth accumulation, or you could give yourself peace of mind by paying the debt off entirely. Either way, you are making a wise decision with your money and you have put yourself in a great position to have these options.
The same holds true with low, fixed rate mortgages. Wouldn’t it be great to have no housing expenses? Owning your home free and clear would greatly improve your personal income-to-debt balance sheet, or cash-flow. On the flipside, it is possible to invest that money to earn more money while time and compound interest make you even wealthier.
For info on consolidating your student loans, visit www.finaid.com and Sallie Mae. Money Magazine also offers a student loan calculator to determine how quickly you can pay off your student loans by making a higher monthly payment.
Millionaire Money Habit: If you are in a position to pay off your remaining low-interest loans in order to become debt-free, remember to consider the tax incentives for continuing to pay interest on your loans over time. Is being completely debt free more satisfying to you than investing the money you have to pay off the loan in order to accumulate more wealth?
Looking for the best rates for loans? Thrifty Loans has access to over 200 loan plans
Dennis Zabawa is an Leading Authority in Business Funding. Dennis is available to come and be a speaker at your next event. He has a great topic, "Why are you not wealthy?" For further information, please visit the website, www.creditiswealth.com
Wednesday, December 31, 2008
Tuesday, December 30, 2008
Stop Bill Collector Harassment
How many times have you dealt with bill collector harassment? Even when you are completely innocent and they clearly have the wrong person, they can be completely relentless. They’re rude, insulting and many times cross the line by breaking the law.
I found a way to beat bill collector harassment and get these people off your case. The details are found in the Credit Secrets Bible.
Bill collectors at times have made my life and just about everyone I know miserable at one point or another. They call you up at work and demand that you pay them for a debt that you’re really not even sure you owe. When you start to ask questions to understand the situation, they often become violently rude and are outright vulgar. They curse, threaten, lie or do whatever scare tactics they can come up with to make you pay. And there’s never any compassion or willingness to negotiate.
If you actually do owe the debt, the amount they come up with is usually inflated and can be two or three times the amount that you actually owe. How can they get away with this?
They usually do get away with it, but you don’t have to let them. First of all, as the consumer, you are protected by law. Even if you owe the money, the collector must treat you fairly and respect your privacy. The federal Fair Debt Collection Practices Act (FDCPA) sets the national standard for collection agencies, which explains that collectors cannot be deceptive, threaten to sue in order to get your money, suggest that you will be arrested, lie about the amount of money you owe, or say they will garnish wages if they can’t.
Why are Bill Collectors Harassing Me?
When a creditor does not receive their payment for several months, they sell the bad debt to a third party company, usually at a discount. The creditor gets some money, rather than a total loss, and the third party agency has an opportunity to collect the full debt and make a profit. Many times, though, they tack on loads of fees in order to make a substantial gain on the collection.The collector now has a high interest in receiving the payment, which they are willing to get at all costs. However, often times they simply have the wrong person. The data they received from the original lender may be wrong, or they may have found you by doing a background search. It’s also common for these bad loans to be sold and resold to collection agencies several times over, and eventually mistakes are made or accurate information gets mixed with misinformation. Regardless, they usually go after you with no mercy.
What Should I Do?
First, do not ignore them. Even if the debt is not yours, you want to understand the situation and clear up the misunderstanding. It could be a case of identity theft, which means you may have more problems on your hands that you’ll need to tackle right away.
Always be the one in control of the conversation by asking the questions. Get names of the collector contacting you, the agency, the amount you owe, who you owe it to, and ask these questions several times to make sure their story does not change. Be sure to clearly ask what the amount you owe is, and the breakdown of the fees, interest or any other payments. Legally, the collector can not charge you more than the actual amount you owe.
Keep a file of every conversation you have regarding the claim, and keep track of names, dates and times of the call. Request every conversation to be followed up in writing, and you do have the right to ask them to stop calling and to handle business only in writing. You may even demand they stop contacting you entirely, in which case they can legally contact you one more time in writing to outline their plan of action.
What if the Bill is Not Mine?
Do not be fooled or threatened into paying a bill that is not yours just to get the creditor off your back. Any payment you make is acknowledgment that you owe the debt, which could lead to more trouble for you down the road.
The first step is to file a dispute by using one of the debt collection letters in the Credit Secrets Bible. After you file a dispute, the collection agency must stop collection efforts and conduct an investigation on their claim. They are required by law to validate the debt by obtaining verification from the original creditor.
If they are unable to validate the claim, ask for written confirmation that the collector is not holding you accountable for the debt. Even after properly disputing the claim with the collector, the debt could be sold to another collector down the road, and you want to have this formal documentation on hand in case the bill collector harassment comes back.
Millionaire Money Habit: If you owe the debt, get it settled so you can work on repairing your credit, but that does not mean you have to take the abuse of bill collector harassment. Make sure you understand the law and let them know you expect them to abide by it.
Dennis Zabawa is an Leading Authority in Business Funding. Dennis is available to come and be a speaker at your next event. He has a great topic, "Why are you not wealthy?" For further information, please visit the website, www.creditiswealth.com
I found a way to beat bill collector harassment and get these people off your case. The details are found in the Credit Secrets Bible.
Bill collectors at times have made my life and just about everyone I know miserable at one point or another. They call you up at work and demand that you pay them for a debt that you’re really not even sure you owe. When you start to ask questions to understand the situation, they often become violently rude and are outright vulgar. They curse, threaten, lie or do whatever scare tactics they can come up with to make you pay. And there’s never any compassion or willingness to negotiate.
If you actually do owe the debt, the amount they come up with is usually inflated and can be two or three times the amount that you actually owe. How can they get away with this?
They usually do get away with it, but you don’t have to let them. First of all, as the consumer, you are protected by law. Even if you owe the money, the collector must treat you fairly and respect your privacy. The federal Fair Debt Collection Practices Act (FDCPA) sets the national standard for collection agencies, which explains that collectors cannot be deceptive, threaten to sue in order to get your money, suggest that you will be arrested, lie about the amount of money you owe, or say they will garnish wages if they can’t.
Why are Bill Collectors Harassing Me?
When a creditor does not receive their payment for several months, they sell the bad debt to a third party company, usually at a discount. The creditor gets some money, rather than a total loss, and the third party agency has an opportunity to collect the full debt and make a profit. Many times, though, they tack on loads of fees in order to make a substantial gain on the collection.The collector now has a high interest in receiving the payment, which they are willing to get at all costs. However, often times they simply have the wrong person. The data they received from the original lender may be wrong, or they may have found you by doing a background search. It’s also common for these bad loans to be sold and resold to collection agencies several times over, and eventually mistakes are made or accurate information gets mixed with misinformation. Regardless, they usually go after you with no mercy.
What Should I Do?
First, do not ignore them. Even if the debt is not yours, you want to understand the situation and clear up the misunderstanding. It could be a case of identity theft, which means you may have more problems on your hands that you’ll need to tackle right away.
Always be the one in control of the conversation by asking the questions. Get names of the collector contacting you, the agency, the amount you owe, who you owe it to, and ask these questions several times to make sure their story does not change. Be sure to clearly ask what the amount you owe is, and the breakdown of the fees, interest or any other payments. Legally, the collector can not charge you more than the actual amount you owe.
Keep a file of every conversation you have regarding the claim, and keep track of names, dates and times of the call. Request every conversation to be followed up in writing, and you do have the right to ask them to stop calling and to handle business only in writing. You may even demand they stop contacting you entirely, in which case they can legally contact you one more time in writing to outline their plan of action.
What if the Bill is Not Mine?
Do not be fooled or threatened into paying a bill that is not yours just to get the creditor off your back. Any payment you make is acknowledgment that you owe the debt, which could lead to more trouble for you down the road.
The first step is to file a dispute by using one of the debt collection letters in the Credit Secrets Bible. After you file a dispute, the collection agency must stop collection efforts and conduct an investigation on their claim. They are required by law to validate the debt by obtaining verification from the original creditor.
If they are unable to validate the claim, ask for written confirmation that the collector is not holding you accountable for the debt. Even after properly disputing the claim with the collector, the debt could be sold to another collector down the road, and you want to have this formal documentation on hand in case the bill collector harassment comes back.
Millionaire Money Habit: If you owe the debt, get it settled so you can work on repairing your credit, but that does not mean you have to take the abuse of bill collector harassment. Make sure you understand the law and let them know you expect them to abide by it.
Dennis Zabawa is an Leading Authority in Business Funding. Dennis is available to come and be a speaker at your next event. He has a great topic, "Why are you not wealthy?" For further information, please visit the website, www.creditiswealth.com
Monday, December 29, 2008
The Money Spectrum
I receive frequent inquiries from readers who visit this site who are all over the board in terms of where they are financially. Many people want to see more articles about getting out of debt and creating a budget. Others want to know how to accelerate their income and wealth accumulation.
This got me thinking about the stages people find themselves in financially. In most cases it is necessary to complete financial objectives in one stage before it is possible to move on to the next phase of the wealth accumulation process.
To illustrate this concept, I created The Money Spectrum. Obviously I’m not an artist, so please bear with the lackluster aesthetics.
If you examine the money spectrum, you will see that why the money game is not necessarily fair and how the rich get richer. While only 2% of Americans fall in the bright green categories, they own most of this country’s wealth. This makes sense though when you consider that most Americans are in the red and very little to no assets or net worth.
This got me thinking about the stages people find themselves in financially. In most cases it is necessary to complete financial objectives in one stage before it is possible to move on to the next phase of the wealth accumulation process.
To illustrate this concept, I created The Money Spectrum. Obviously I’m not an artist, so please bear with the lackluster aesthetics.
If you examine the money spectrum, you will see that why the money game is not necessarily fair and how the rich get richer. While only 2% of Americans fall in the bright green categories, they own most of this country’s wealth. This makes sense though when you consider that most Americans are in the red and very little to no assets or net worth.
What I find interesting is the money spectrum highlights one of the key factors that financial advisers stress over and over. That is to get out of debt. The bright red area where expenses exceed income is where most people fall. Also notice that there are very few stages between the red zone and the green zone, which is where you start to build wealth. That’s because the income-to-expenses ratio is the only thing holding someone back from building wealth. You cannot move forward without taking control of expenses first.
On the flip side, once the debt-zone has been broken, the ability to make more money and increase wealth accelerates dramatically. Again, demonstrating why the rich get richer. Once you have money and have developed the proper habits of using money to make money, your ability to create wealth compounds at a very fast rate. You can see why millionaires often say that their first million dollars was the toughest.
Millionaire Money Habit: According to the money spectrum, an inability to manage debt and expenses makes it impossible to get ahead financially. Take a good look in the mirror and indicate where you are on the money spectrum. Make a commitment to do what it takes to move yourself into the next stage while keeping the bright green label as your ultimate, long term goal.
Dennis Zabawa is an Leading Authority in Business Funding. Dennis is available to come and be a speaker at your next event. He has a great topic, "Why are you not wealthy?" For further information, please visit the website, www.creditiswealth.com
Subscribe to:
Posts (Atom)
