• Posts Tagged ‘debt’

    With some Luck, You Can Put Debt Where it Belongs: In the Past

    by  • August 17, 2016 • Tagged:   • Comments

    When it comes to serious budgeting and personal finance, luck is the last thing you want to rely on. Budgeting is all about prediction, you know, and luck is – by its nature – unpredictable. But sometimes it steps in, making things take a favorable turn. It can be in the form of an unexpected raise or promotion at your workplace, or even an unexpected win. The trick is to give it a chance.

    Meet Jon Heywood

    Jon Heywood was an average man from Crewe, Cheshire, who let a TV ad convince him to give chance a… chance. He registered an account at an online gaming portal, made a deposit worth about £30, and started playing (small stakes) on a progressive jackpot slot machine called Mega Moolah. Imagine his surprise when he not only won, but hit the jackpot of a lifetime: £13.2 million (equal to about $21 million at the time). The life of the 26-year-old Afghanistan veteran has changed overnight – the win provided him with a solution to many of his issues, including the treatment of his seriously ill father.

    His win was the biggest ever in the world of online gaming, but not a single case.

    Progressive slots

    The Euro Palace Online Casino gives anyone the chance to win big playing progressive games, without a major burden on their finances. The key is, of course, moderation – having a certain amount set aside for this goal each month, and not exceeding it, no matter what. Playing at the Euro Palace will not guarantee a big win, of course – it all depends on luck. But it provides players with the possibility of rounding up their monthly budgets in the most entertaining way possible – through games. Many are playing social versions of its games already, often feeding them with small amounts to top up their accounts. The Euro Palace offers the same entertainment experience – or even better – with the added chance of real wins. Let the Euro Palace Winner’s Wall stand witness to this claim.

    Budgeting in the fun

    Each budget should have an amount set aside for entertainment. No matter if it’s a movie ticket, a dinner at a posh restaurant, or even a city break at a wonderful foreign capital, the fun has to have its place in anyone’s budget. Depriving yourself of even the simplest form of entertainment – even if it is for a greater goal, like paying off student debts or mortgages – can lead to issues like depression or burnout, which can then lead to the demotion of health and quality of life. Which will cost way more to repair in the long run.

    3 Financial Management Tactics You Can Start Using Today

    by  • June 28, 2016 • Tagged: , , ,  • Comments

    Financial management is about more than just balancing your checkbook and making sure you don’t spend more than you make. Let’s take a look at some of the financial management tactics you can start using today that can help you achieve your long-range goals.

    Before we do, let’s make an important distinction between tactics and strategy. A strategy represents a goal or big picture plan of action; tactics are actions you are going to take to achieve the goal described by a strategy. For instance, one strategy might be to own your own home. The tactics you might use to achieve the strategy could entail cutting expenses, making more money, saving up, exploring financing options, borrowing from family or friends, liquidating assets, etc. In turn, some of these tactics become strategies that entail tactics of their own (such as those you would use to make more money).

    You will need to take this type of tactical approach if you want to move from simplistic to a level of complexity in order to achieve the strategies described below. Here are three financial management strategies to consider.

    1. Reducing Your Debt-to-Income Ratio

    Your debt-to-income ratio is the total amount of money that goes out each month for mortgage, auto loan, student loans, credit cards, personal loans, business loans (for sole proprietors), etc., compared to the income you earn during the same month. As a formula, it’s expressed like this: Total Monthly Debt Payments / Gross Monthly Income. Here’s an example of how to calculate your debt-to-income ratio:

    $10,000 Monthly personal income from all sources
    $3,200 Mortgage
    $500 Car payment
    $200 Student loan payment
    $200 Business loan payment

    Debt-to-Income Ratio: 41 percent ($4,100 / $10,000)

    It’s important for you to know your debt-to-income ratio, since this ratio is often a key contributor to your credit score and impacts decisions lenders make about whether to extend credit to you personally. If you’re a business owner, your personal debt-to-income ratio can also affect your company’s credit rating and ability to obtain working capital. Bankrate.com’s debt-to-income ratio calculator can help you calculate your own score.

    The 36 percent rule suggests that your debt-to-income ratio should never surpass 36 percent. A high debt-to-income ratio (43 percent or above) might even automatically disqualify you from financing while a lower ratio makes you more attractive to financial institutions. Plus, the more you can reduce your debt-to-income ratio, the more you become less susceptible to financial problems. For instance, if your debt-to-income ratio is low, you have more ability to take a cut in pay or weather temporary job loss.

    2. Improving Your Credit Score

    Most credit score rating systems have a scale that ranges from 300 to 850, broken down into five results:

    • 750+ – Excellent Credit

    • 700-759 – Good Credit

    • 650-699 – Fair Credit

    • 600-649 – Poor Credit

    • Below 600 – Bad Credit

    Your credit score impacts your ability to obtain personal financing such as a home loan (mortgage), credit card, retail store financing, auto loan, etc. In addition, your credit score can also impact your cost of financing; for instance, a low credit score might mean financing companies offer you money at a higher rate of interest than they would offer if you had a high credit score.

    Reducing your debt-to-income ratio is one obvious tactic you can execute in order to improve your credit score. However, simply making your payments on time (or early) and making payments on debt in excess of minimum monthly payments required can also help you improve your credit score, especially over time.

    Given the number of financial data breaches where hackers have obtained personal identification information from retail and financial institutions during recent years, it’s important to check your credit score periodically. Monitoring your credit can help ensure that no one has “stolen” your identity and used it to rack up debt which can not only hurt your credit score, but even result in creditors pursuing you for repayment.

    There are several credit score monitoring services that offer the ability to check your credit scores; however, many offer “free” credit score results only after you agree to another fee or subscription. Your bank or another financial institution may also provide both credit reporting and monitoring services at no cost.

    3. Planning for Retirement

    Just because you have enough money now doesn’t mean you will always have enough money to live the lifestyle you want. Planning for retirement – those years when you are not likely to have any income except for social security – is important for everyone. You can use tools like CNN’s retirement planning estimator to see how much money you should put away into savings or investments at the age you are now, in order to retire by a specific age and maintain your lifestyle (live in the same type of home, spend the same amount on discretionary items, etc.)

    Make sure your financial management strategy goes beyond the basics. The more you understand how to optimize your financial position and avail yourself of tools that can help you find out where you are right now, the better you will be able to plan a strategy that gets you to where you want to be in the long run.

    3 Tips for Paying Off Credit Card Debt With a Personal Loan

    by  • June 21, 2016 • Tagged: ,  • Comments

    Credit cards are both a blessing and a curse. On one hand, they expand your purchasing power. On the other, you need to pay off the balance when it comes due. Paying off the bill every month is the best way to avoid being saddled with interest, but it’s not always possible. Add other purchases and the balance starts to climb. Interest compounds quickly when there are several credit cards that carry balances every month. Getting out from underneath the debt tends to get difficult, but a personal loan might be the answer. Following are some tips for using a personal loan to eliminate debt.

    Compare the Interest Rates

    Credit Card Debt

    Image via Flickr by Got Credit

    If your credit cards have interest rates in the 18-to-24% APR range, you’re paying a lot to rent that money from the lender every month. An $85 purchase comes with around $5 of interest on the higher end of that interest rate range. Not paying this off and carrying a balance means the interest compounds, putting you further into debt. The issue is made worse when the interest rate is variable, meaning it fluctuates whenever the market interest rate changes, and you never know when your interest rate, and your payment, may spike.

    A personal loan is everything a credit card is not. It has a single interest rate that gets fixed at the time the loan is initialized, and it’s usually at a much lower rate than the average credit card. This makes paying down the debt more predictable, stable, and finite in its duration. Avant, a personal loan lender, is an example of a lender who offers competitive interest on consolidation loans.

    Make Every Effort to Pay Back the Loan

    It takes fiscal discipline to take out a consolidation loan to pay off the credit cards and then avoid using the credit cards. The consolidation loan takes the debt off multiple cards and rolls it into one monthly payment. Those empty cards may sing a siren song of temptation to be used, especially for a coveted item.

    Instead of giving in and using the card to buy something, ask yourself if you really need the item. If you find it’s a must-have, use the savings you realize from not paying multiple cards every month for the purchase. Don’t use your cards unless absolutely necessary. The idea is to short-circuit the impulses that created the high balances in the first place.

    Examine the Terms of the Loan

    It’s always a wise move to examine the terms of the loan, and a consolidation loan is no different. This is especially important if you decide to use an online lender.  With an online loan application, a human being may not be immediately available to explain the terms and conditions, and you are on your own to learn about the penalties for early repayment (if any) and whether the interest rate fluctuates.

    Getting out of credit card debt with a personal loan can lift the financial burden off your shoulders, simplify your bill paying process, and save you money, but only if you use it wisely. You must remember to stay away from your now empty cards, pay off your loan, and exercise restraint going forward so that another loan isn’t needed down the road.

    Things to Note when Considering the Effects of loans on your Credit Score

    by  • February 23, 2016 • Tagged: , ,  • Comments

    It is well known that installment loans are typically a great way for people with bad credit to still acquire a loan; however, it is good to understand how these loans may affect your credit so that you can get back on track towards having good credit once again. Below are three major things to note when it comes to considering your credit future while paying off an installment loan:

    Low risk equals low score impact

    Firstly, the debt from installment loans are typically stable relative to other types of loans over time; however, the early effects on your credit score of paying the fixed rates are also more modest. The stability of the installment loan comes both with good and bad news. In fact, it is the stability of the loan itself that actually explains why the debt payoff does not significantly improve your credit because it simply never lowers the score in the first place. The logic is that when a creditor is not worried about being paid back, there is less reason to incentivize you through a score deduction. It is not un-heard of to have a score between 650 and 750 or higher despite holding a six figure installment loan. On average the recipients of installment loans actually do hold a six figure amount of this debt, and there is no indication that this is a particularly more risky.

    Prioritize making regular payments

    Installment loans are unique because the total amount you receive has far less of impact on your credit score than the overall payment history does. Your history is considered in a more holistic way which can be an advantage to many with lesser but steady income streams. This means that making those regular payments in a timely way will ensure that when your history is reviewed you end up better off than you were before.

    Have Patience

    One should not shy away from installment loans due to the worry that they will not improve your score; in fact, it is actually very likely to improve. There is no disputing the fact that by lowering your balance by paying off your installment loan, that your credit will improve overall. As long as you pay careful attention to the advice above and use a steady income to ensure timely payments, your score will begin to better, however, in a relatively slow way compared with many other loans. It is therefore important to understand the importance of patience when improving your credit through an installment loan as they often are set to mature after a few or perhaps even a dozen years.

    In general, installment loans are a very safe alternative to other options for those seeking to acquire money and improve their credit while doing so. It is important to understand that with these loans it is far more important to focus attention on the management of regular payments and a steady stream of income rather than paying off a dauntingly high balance. This is because with installment loans, a steep balance should simply not daunt you, including those with poor credit scores. Educate yourself further on the specific type of installment loan before receiving one so that you can cover the necessary steps to slowly and steadily improve your credit score.

    How to Handle a Lingering Holiday Credit Card Bill

    by  • February 11, 2016 • Tagged: , ,  • Comments

    We might be a month removed from the holidays, but for many Americans, the effects of gift-buying, travel plans, and holiday feasts are still very much present. The average American carries around $15,000 in credit card debt, and that doesn’t even begin to delve into the hefty interest rates that will also require payment. If you find yourself facing ever-mounting holiday debt, use these steps to get yourself back on the right track.

    Plan a New Budget

    Before digging yourself out of a debt hole, you have to ensure you’re not worsening it in the meantime. The best way to do this is to create a 12-month budget that will take you all the way through the next holiday season to ensure you don’t find yourself in a financial pickle again. Use an online service like Mint.com to make it easier on yourself, or enlist the help of a financial planner if you’re in need of specific guidance.

    Use the Avalanche Method

    If you’ve got multiple debts, you’ll have to make some decisions on which way you want to pay off first. While you should always be sure to pay the minimum dues on every account, you’ll also want to start getting rid of accounts completely. Many experts recommend the avalanche method, in which debtors list their debts in order of highest interest rate charge to lowest. Whatever excess money you have leftover for bills after paying the minimums each month should be dedicated to the top account on the list. Once that’s paid off, move to the next, and so on. Not only will this help you avoid terrible interest rates, it will also give you more peace of mind when you have less debt accounts to worry about.

    The Great Purge

    You may have money sitting around in your closet—literally. Make sure you purge items you no longer need and hold a garage sale to make some extra cash that you wouldn’t have had otherwise. These items aren’t limited to clothing. Consider old furniture, appliances, and any other items piling up dust. The more you can part with, the fatter your wallet will be. If items are too worn to sell, consider donating to charity. Often, you may be able to use these donations and tax deductions. You have to stop spending until you have your finances completely under control. This doesn’t mean denying yourself the necessities, but it does mean cutting out the non-essentials, like your morning coffee or gym membership that doesn’t get used. Cancel any subscriptions you don’t use or need, and check on automated payments to ensure you’re not paying for things you don’t need to be.

    Put Your Card Away

    If you have an issue with spending, leave your credit card at home. Simple and to the point. It may be convenient and get you what you need right away, but it’s only going to hurt you in the long run. Delete your credit card information from your web browsers to avoid frivolous online shopping that might be done on a whim, and always take a minute or two to determine whether or not you truly need an item, even if it’s a small expense. Don’t let the siren’s call of rewards or points inspire you to pick up that card.

    Transfer Your Balances

    Some choose to transfer their credit card balances over to a zero percent interest rate card from a company like Citicards.com. Check to be sure that you qualify for such an offer, and if accepted, pay it off as quickly as possible. You’ll need to determine whether or not the balance transfer fees will be worth this step.

    Get Some Tax Help

    If your holiday bills are piling up on pre-existing debt, and you’re worried you may find yourself in hot water with the IRS, see what a tax professional can help you work out. Using the services of a company like www.communitytax.com can help you navigate the fresh start initiatives the IRS put in place a few years back and determine which course of action is best for your individual needs. Whether it’s an offer in compromise or an installment plan, tackling your tax issues head on is the best way to deal—ignoring them could result in some serious consequences.

    If you’re dealing with a financial hangover from the holiday months, now’s the time to start tackling your debt.

    Taking On Wedding Debt Is a Bad Idea

    by  • August 21, 2015 • Tagged: , ,  • Comments

    Getting married can be a wonderful thing if you’ve got rich or generous parents and an unlimited budget to fulfill your wildest wedding dreams. But if you’re like most people, the cost of getting married can unfortunately detract from the happiness of what should otherwise be your special day.

    According to The Knot’s 2014 Real Weddings survey, the average cost of a wedding is now a whopping $31,213, not including the cost of the honeymoon. Furthermore, according to the survey, roughly  45% of couples exceed their wedding budgets in the process of getting hitched. The problem is that starting off with a wad of wedding debt is generally a bad idea, and here’s why:

    Money Problems Can Lead to Divorce

    It’s an unfortunate fact that a significant percentage of marriages end in divorce these days, and all too often, money is a major contributing factor. Money, or lack thereof, can be a huge source of stress for a newly married couple. After all, it’s hard to work on building a life together when you’re constantly pinching pennies and worrying about a nagging credit card balance. Furthermore, if the push to overspend on a wedding is really one-sided, it could lead to long-term resentment if that decision causes you financial stress down the line.

    When newly married couples get into debt, they will have to post-pone buying a house, starting a family, and other things they want to do to build a life together. Often they resort to racking up credit card debt and even taking out car title loans. “We see it happen all the time,” says a representative of Title Loans San Diego.

    Debt Can Wreck the Newlywed Stage

    For many people, the first year of marriage is a fun, carefree time. You’re getting to know each other as a married couple and aren’t necessarily ready to build a family, which means you’re free to spend time together, do fun things, and enjoy each other’s company. The problem with taking on too much wedding debt is that it can impede your ability to live it up as a couple during those first blissful 12 months. Or, to put it another way, spending too much on your wedding could mean sacrificing the ability to enjoy travel, nightlife, and other such things people tend to do before kids come into the picture.

    Wedding Debt Can Impact You Long-Term

    Taking on a load of debt to finance your dream wedding can do more than just put a damper on the newlywed phase; it can also impact your long-term financial picture as a couple. If you’re carrying a large amount of debt from your wedding, it could limit your options for getting a mortgage or car loan. Wedding debt can also impact your family building plans. If you’re saddled with debt, it could lead you to put off having children, or make affording them much more difficult.

    It’s not crazy to want a big, beautiful wedding complete with every detail you’ve always dreamed of. But it’s also important to be realistic. Yes, your wedding is an important day, but it’s also just a few hours long. Before you jump in and take on a load of debt, ask yourself whether a single afternoon of perfection is really worth years of sacrifice after the fact. Finally, remember that you always have the option to compromise. Pick the aspects of your wedding that are most important to you, spend some money on those, and go simple with the remaining details. At the end of the day, if you have the right attitude, your wedding will be the fun, fabulous affair you want it to be.

    INFOGRAPHIC: Be A Premier Performer at Tackling Debt

    by  • September 26, 2013 • Tagged:   • Comments

    The number of individuals living with debt in the UK is on the rise. As of July, the total amount of personal debt held by individuals was right around £1.426 trillion. This is partly the result of the global economic recession which caused a high percentage of redundancies but it’s also on a count of mismanaging financial resources. If you’re ready to get back in the game, and start reaching your goals then take a look at the infographic provided by Consolidated Credit. Whether you’re in need of a debt consolidation, management, or repayment plan, they’ve got the tools and resources to fast track your recovery and ease the burden of financial uncertainty. It’s a win-win game plan!

    You might even be surprised how simple the process is. Customers have seen results with as little as one phone call to their creditors in which they renegotiated their interest rates. Once again, review the infographic for step-by-step solutions to some of the most common debt problems.



    Creative Ways to Tackle Debt

    by  • March 28, 2013 • Tagged: , ,  • Comments

    Many adults find themselves swimming in credit card debt, car debt, house debt and other types of debt. This can be very stressful and you might feel like you’re walking through every day with a gorilla on your back. Whether you’re dealing with unsecured or secured debt, eliminating it from your life will make a huge difference in your financial stress. Here are some easy ways to help you pay off debt.

    Three Debt Elimination Strategies

    1.  The Budget

    Probably the most important tool and strategy anybody can use to pay off debt is the budget. For you, the word “budget” might bring up thoughts of being poor or broke. A budget is just a tool and doesn’t say anything about how much money you have or don’t have. However, if you’re in debt, you are broke. This is just a fact. Whether you can afford the payments on your car, house and credit cards or not, you’re broke.

    The best type of budget to use assigns each dollar a place to go. For example, if you make $5,000 every month (take home pay) and your bills come out to $3,500, you have $1,500 left over. This money still needs a place to go, whether it’s to pay extra on a debt, savings for retirement, entertainment or something else. Give every dollar an assignment and you might just find money within your budget you can use to help pay down your debts.

    2.  Cut Back on Savings, Temporarily

    This strategy is a hard one for many to swallow, but it will answer the question, should I save money or pay off debt? If you already have thousands of dollars in the bank, why not use some of that money to pay down some of your debts? Of course, you don’t want to use it all because you need a little cash set aside for emergencies. Some experts believe an emergency fund of about $1,000 is enough, while paying off debt.

    Just imagine how much better you will feel and how much freedom you’ll find within your budget when the car is paid off, the credit cards have a zero balance and even when you’ve paid off your mortgage. Imagine what you could do with your paycheck every month if it wasn’t already spent before you receive it. You could really start saving towards retirement, make sure your children can go to college and take that vacation of your dreams, finally.

    3.  Sell Some Stuff

    The fastest and easiest way to eliminate debt is by selling some stuff. It’s just stuff and once you get out of debt, you can start saving money to buy some more stuff. If you have a TV, vehicle or anything else (other than your house) and you owe money on it, sell it and use the cash to pay it off. Anything you don’t need to survive, can be sold to help pay down debts until you get yourself out of this hole.

    Paying off debt frees up the money you need for other things and the faster you can eliminate all your debt (except the mortgage), the sooner you can experience the peace of mind that comes with financial security. Use a budget, cut back on savings (temporarily) and sell anything you really don’t needs to free up the necessary cash to pay off your debts.

    How Debt Around the World Affects You

    by  • March 14, 2013 • Tagged: , ,  • Comments

    You make think that you are alone in your struggle to get out of debt. The fact of the matter is that you are not. People all over the world, including many in countries you may not expect, have major debt problems. Unfortunately, being in debt is a global issue that many of us share. It is problem for individuals, families and countries. The root problems that cause people to go into debt seem to be universal as well. When you look across the planet and see how so many people are dealing with the same kinds of debt issues you are, you can see that managing debt is not an easy task. When you look at things globally, it helps give you a better perspective for handling your own difficulties.

    Household Debt

    If you take a hard look at household debt, which includes mortgages, installment loans and other consumer debts as a percentage of gross domestic product (GDP), the citizens of the United States are not the world leaders of personal debt. According to Time Magazine, the average household debt in the U.S. is 87%. While that seems fairly high, it is not nearly as outrageous as Australia’s 105% household debt. Yet, ironically enough, Australia’s government debt is only 21% compared to the United States’ 80%. Other countries with a big household debt ratio were the United Kingdom at 98% and Canada at 91%. Their total government debt percentages are 81% and 69% respectively. While the percentages of household debt compared to GDP are lower than personal household debt-to-income numbers, they give a good idea of how deep the country’s citizens are in debt as a whole.

    The Australian Example

    One would think that when the government is buried in debt, its people are deeply in debt as well. Australia is a perfect example of why that is not true. The country has very conservative fiscal policies when it comes to government spending and, publicly at least, has avoided the debt plague that many other developed nations are currently facing. Of the 10 countries Time Magazine examined, Australia had the lowest amount of government debt, but the highest amount of personal debt. The government may be restraining its expenditures, but the citizens of Australia are not cutting their spending back. In fact, they seem to be bucking the government’s trend by taking bigger financial risks. Obviously, consumer behavior has a lot more to do with personal debt than government spending and borrowing.

    Fast Growing Economies

    Economists often cite India and China as two of the fastest growing economies in the world. Even though both have lower average incomes than the developed countries mentioned earlier, both also have lower household debt to GDP ratio. On the surface, you may think that they have less debt because they have less income. That is not true when you are comparing percentages. When you examine what they earn compared to how deeply they go into debt, it is still a lower proportion compared to countries where the citizens have higher income levels. In other words, they are not just spending less; they are not borrowing money for what they do spend. They are using sites like debtconsolidation.com to effectively eliminate debt and then they are not creating new debt. Their “cash and carry” lifestyle keeps them out of debt. Restricting yourself to purchasing only what you can pay cash for is an effective debt-killer.

    The Case of Norway

    Because of their fantastic social program and low poverty levels, many magazines have named Norway as one of the best places to live in the world. This may or may not be true, but the citizens of the country are not doing well managing their debt. Thanks to a massive housing boom over the last few years, people are taking on far more debt. If you look back to 2007 – 2008 when the housing market bubble burst and sent the United States economy into a tailspin, most people owed 130% of their income in debt. In late 2012, that number was 210% in Norway with no signs of dropping. Granted, if interest rates remain low and the bubble does not burst, then that figure might be manageable for the average citizen. However, if things change then many Norwegians may regret their decision to buy a home before they were out of debt just as many people in the United States did a few years back.

    Government Stimulus Packages

    Despite being the world’s second largest developed country, Japan has face economic problems of their own in recent years. In response to their own flagging economy, Japan’s Prime Minister, Shinzo Abe, is proposing stimulus packages similar to those U.S. President Barack Obama used to stimulate the economy the United States. The problem is that government stimulus packages do not always encourage wise consumer spending. For example, many people rushed out to buy homes when the U.S. gave new homebuyers a large tax credit. While that did help the housing market, it was not necessarily the best personal finance choice for consumers who rushed to take advantage of the credit without thinking about how it would escalate their bills and add to their debt. Many economists feel that stimulus programs encourage consumers to over-spend and get further into debt.

    Every country has their own economic problems in both the public and private sectors. The best thing you can do is to try to learn from their success and failures. Globalization is not just a media buzzword; it is a fact of life. Even if you do not directly notice the effects of the global economy on your own finances, you can be certain they are there. The countries that are best at dealing with debt are not necessarily the richest countries and even among the most economically advanced countries of the world, consumer debt levels vary according to personal decisions. There is no one “perfect” country that sets the right standard for accruing debt. It is up to you, as a consumer, to make the best decisions you can based on all the available information.

    Top Eight Ways to Deal with Spousal Debt

    by  • March 6, 2013 • Tagged: ,  • Comments

    Dealing with financial matters is very important for any married couple. It may make or break a relationship as the future of the family is at stake. It is the job of every couple to make sure that they are financially secure. But in certain circumstances the expenditures may go over the set limit. There are times when your spouse may not be able to control his/her spending.

    In such cases you will go into debt and might have to take a loan or other financial assistance to pay off the debt. It is crucial that you do not let such a situation arise in the first place. But if you are in trouble then there is no point in hiding. It is time you confronted the problem and looked at measures to control it. Here are some valuable tips to help you with spousal debt.

    1.     Sit Down and Talk

    Before you begin, do check out Consolidated Credit company site for best advices on managing debt. At www.consolidatedcredit.org - a debt management site – you can get the information and advice you need to help manage your debt easily and smoothly. Start by acknowledging the problem at hand. Sit down with your spouse, grab a pen and paper and analyze the bills. See where he/she is going wrong, try to talk sense and explain the reasons for amassing huge debts. Although your spouse might have gotten into the problem by themselves, it is your job to help them. Remember that you work together, so adhere to the principles of honesty and openness when you discuss financial matters.

    2.     Consider Counseling

    There is no shame in going to a counselor for help. In this situation you can hire the services of a debt counselor. Maybe your spouse will be more open to a person who excels at judging people’s opinion. The counselor can help overcome psychological fears related to debt management. It’s never too late to change your ways and you could start right now. Some people don’t see debt as a serious problem and remain in denial.

    3.     Be Positive in your approach

    Fighting or arguing won’t bring back the money your spouse lost. It will only make matters worse, so be considerate and support your partner. It’s their time of need so you need to stay positive. Keep reminding them that this problem is only temporary and he/she doesn’t need to overburden themselves

    4.     Create a Financial Plan

    A good financial plan goes a long way to helping you reach your financial goals. A lot of workshops are also held regularly to help people manage their finances, consider attending these as well. Be reasonable and give your spouse an opportunity to redeem themselves  Flexibility is important when making financial decisions, so consider their needs as well.

    5.     Take Control

    If your spouse is deep into debt and is unwilling to change his/her ways, then consider taking matters into your own hand. Take financial responsibility and make a monthly spending budget for your spouse which they must not exceed. It may be an uncomfortable arrangement, but when the going gets tough you have to take such measures. This could provide a short term solution till she gets back on their feet.

    6.     Educate your Spouse

    Assuming the fact that your spouse is not a financial expert, get them some financial education. It is important that every individual in today’s modern society has financial knowledge. You should consider buying books and taking classes for better financial management.

    7.     Separate Finances

    If you think that your spouse’s debts have put extra burden on you then consider separating finances. Remove your name from credit accounts and put major assets in your name alone. Put in place a debt reduction plan to help curb your debts.

    8.     Consider Couple’s Therapy

    Sometimes the problem is more an emotional issue than a financial one. Consider taking your spouse to couple’s therapy to discuss the issues she has been having. Maybe professional assistance is the answer to your problem.


    Spousal debt is no laughing matter. It can adversely affect the relationship between husband and wife if not managed properly. Follow these tips and you should be able to solve these issues in no time at all.

    Author’s Bio

    This article is composed by Elaine McPartland who is associated with “Consolidated Credit” as their community writer. She has an expertise in writing articles related to debt consolidation and how to pay off debts easily and smoothly. You can add her at her google+ profile. 

    Small Savings Can Lead to Big Gains

    by  • September 26, 2012 • Tagged: ,  • Comments


    Snowflake your debt away

    When we started this blog in 2006, we had a little over $18K in credit card debt. That number was probably higher since we had already started paying down that debt. Also back then, our salaries were about 35% lower than they are now. Since our main goal back then was to get rid of our credit card debt, we needed a way to get more money to put down towards the debt. These days finding little bits of money to pay down debt is know as “snowflaking,” akin to the debt snowball method. The money we found was put towards our debt, and we finally paid off our credit cards in 2007. Here’s a few ways we made a couple extra dollars each month to get rid of that debt.

    Selling old items on Craigslist or ebay

    It’s incredible the amount of crap that follows us around. When Her and I moved in together, we had a lot of redundant items. Much of our stuff was low-quality, college level stuff, like no-name appliances or less-than-ikea furniture, and was easily sold locally on Craigslist. More expensive gear, like last-generation electronics, were put up on ebay to maximize what we could get.

    Having a garage sale

    Our apartment is on a well-traveled street on the way to a well-liked brunch spot, which made it a perfect location for a garage sale. Stuff that didn’t sell via Craigslist or ebay were sold here, in addition to clothing, books, bad art, and neighbor’s miscellaneous items. We definitely needed both Her and I to help out since there were so many people poring over all of our stuff. At the end of the day, we pulled up our car, loaded up everything that didn’t sell, and dropped everything off at our nearest thrift store.

    Checking account bonuses

    Back in the day banks were offering up to $100 to open a checking account, often with a small stipulation of having direct deposit for 6 months or a minimum balance. We each would open an account, doubling the reward. One bank even gave us pie!

    Sold original crafts on etsy

    For our wedding, Her made some incredible DIY crafts. She posted them on some websites for other females to ooh and aah, but she got an unexpected response: requests from other brides to make stuff for them. After testing the waters, she setup an etsy store to gain a larger audience. It was easy money to be had that she could be doing at the same time she watched a reality TV show.

    What are some ways that you’re getting some extra cash to meet your goals?

    image: Juliancolton2


    We’ve partnered up with SavingsAdvice.com to offer you the chance of winning $5 through PayPal or as an Amazon Giftcard. It may not seem like a lot of money, but when you’re trying to get out of debt, every little bit counts. Entering is easy – all you have to do it like our Facebook Page. You can get additional entries by doing any of the other activities. That’s it! Even if that takes a minute to do, your effective rate would be $60/hour – not too shabby. The contest is open today until October 5. Good luck!


    6 Creative Debt Repayment Strategies for Your Student Loans

    by  • April 3, 2012 • Tagged: ,  • Comments

    With the already-high cost of education continuing to rise, the vast majority of students have no choice but to take on debt in order to finance their educations. Student loans can leave graduates financially crippled for years if they are improperly managed. If you need to take out a loan to pay for your schooling, it’s vital that you have a repayment plan in place long before you start to pay back the money you borrowed.

    Your student loan repayment strategy should go far beyond getting a job and making your scheduled payments. Given the amount of debt the average student has — which typically adds up to tens of thousands of dollars — it’s vital to consider all your options in order to manage your post-graduation finances and achieve overall financial health.

    Here are a half-dozen student debt management strategies that you might consider:

    1. Consolidate multiple loans. Many students take out loans from multiple sources, including government student loan programs, lines of credit and student loans through banks and other financial institutions. Managing individual payments can be time-consuming, confusing and costly, so if you have more than one loan to repay, consolidation can simplify the process. With loan consolidation, you essentially get another loan, which is used to pay back all your various creditors. Then, you are responsible only to one creditor, which can save you a lot of money in interest, not to mention a great deal of time and a lot of hassles. [ed. note: please don't do it like I tried to with a payday loan - a representative from fridayfriday.com said that "we endorse sensible lending and that students need to understand that a payday loan is not a way to consolidate debt, not even in the short term."]
    2. Purchase appreciating assets. Most students don’t think about using their loans to make investments, but if you have the capability, you can really get ahead by using some of your student loan money to finance assets that are likely to appreciate in value over the duration of your education. The classic example of this approach is to use some of your student loan money to make a down payment on a house, and live in the house as you go to school. When you graduate, your house will likely have appreciated in value to a significant degree, and you can sell it at a profit and use the proceeds to pay back your loans. If you want to explore this option, you may have to enlist the help of your parents to come up with all the money you need, not to mention the income and credit rating necessary to secure a mortgage.
    3. Know your repayment options. There are four main types of repayment schedules: standard, graduated, extended and income-dependent. A standard schedule requires fixed payments over a specified period of time (typically 10 years). Graduated payments are lower at first, then move up as you secure higher levels of income. Extended repayment plans are like standard plans, except that they are spread over a greater period of time; this will result in more interest charges, but it will also decrease the amount of your month payments, making them more manageable. Income-dependent repayment plans base payment amounts on your income and typically come with longer amortization periods.
    4. Adjust your repayment schedule. In addition to knowing your repayment options, remember that you may qualify to change them if necessary. For example, you might move from a standard repayment schedule an income-dependent or extended one if you are having a hard time meeting your monthly obligations.
    5. Consider the military. If you join the military, either during college or after you graduate, you can also qualify for unique payment postponements, deferments or even debt forgiveness. You can learn more about special options available to military servicemen and women through the Federal Student Aid website.
    6. Look into deferment and forbearance. As an absolute last resort, you can defer your student loan payments or apply for forbearance status if you meet certain income and debt load criteria. However, you should only use these approaches if you have no other option. Interest will continue to accumulate while your loans are deferred; all a deferment does is buy you some time to get your financial house in order. Forbearance can have an adverse effect on your credit rating, which can significantly inhibit your financial future.

    With post-graduation debt loads becoming a fact of life for more and more students, taking the time to create a plan will pay dividends down the road. If you properly manage your student loans, you can save a great deal of money in interest and protect your credit rating, enabling you to finance other essentials if you take care to live within your means. Above all, remember that your student loans are an investment in yourself and an investment in your future. The standard rule of thumb is that a college education translated into $1 million in lifetime earnings, so don’t let the rising costs of education prevent you from pursuing knowledge and building towards a better future. It is also a good idea to consider the idea of earning your education online. Today, online programs are just as thorough as their on-campus counterparts are, as they provide you with a high-end education that is sure to increase your earning potential. In addition, taking online courses will cost you less money, allow you to work full time while attending school, and you are eligible for financial aid once you will out the FAFSA form. When you bring all of these aspects together, it is easy to see why so many people are now taking their courses through an online university.

    This is a guest contribution from Bill Hazelton, CEO & Founder of CreditCardAssist.com, an industry leading credit card comparison site, providing tips, advice and information on balance transfers, zero interest promotional offers and the very best cash back rewards programs.  You can subscribe to his RSS feed or find him here on Google+, Facebook and Twitter.

    Is Misery Worth It?

    by  • March 21, 2012 • Tagged: , ,  • Comments

    Metro North, My Old Friend

    Metro North, My Old Friend

    Image: F. Hoffnar

    When I graduated from college in 2008, like many people my age, I graduated with debt. Thanks to my college’s stellar financial aid policy, a generous parent who believed the cost of higher education was worth it, and some substantial saving on my own part, that debt was a very reasonable amount (more than $10,000, but less than $20,000). I knew that I wanted to be rid of it as soon as possible, both to have that mental burden lifted (because I am the kind of person who is HAUNTED by finances), and because I would be unlikely to find any kind of savings vehicle that would produce a higher interest rate on the cash I had than the interest rates on my student loans.

    Because I am a little bit of a wacko, I decided I could pay this off in a year. I would be working in New York City, and while my salary would be low (hurray publishing jobs!) I would be able to live at home and save money (this is a great advantage that I know many, many young people don’t have, and I realize how lucky I am).

    I’ll say a few things about “saving money” in New York City – even the cheapest things are painfully expensive, and the easiest things are kind of miserable. I wasn’t paying rent, but I was paying about $300 in commuter expenses a month. I was living at home, but I was traveling almost two hours each way, every day, and it took its toll. I was paying off my debt, but I was skipping happy hours and lunches out to do so. After six months of this, I was worn out. After a year, I was miserable.

    I won’t go into the details of said misery, because no one wants to hear the whining of a lucky post-grad who managed to pay off her debt. But I will say that year took its toll. Yes, I’d paid off my debt, and saved up a nice-sized emergency fund for the future, and even splurged a little in-between, setting aside money for furniture for my future apartment (IKEA, of course) and a monetary gift for my sister before she went abroad her junior year of college. But there were days when I felt so beaten down, when all I wanted was to get more sleep and time to myself instead of rushing to catch a subway, then a train, then a bus; when I wished I could stay out late with friends at a bar without torturing myself over the cost or falling asleep before the night even started.

    Sometimes I wonder if the monetary savings of that year were worth the emotional and physical toll. What, exactly, is the cost of our current happiness? Is it worth it if the future payoff is great? Or should we not torture ourselves quite so much in exchange for financial payoff?

    Breaking the Financial Rules – Co-signing Loans

    by  • March 7, 2012 • Tagged: , , ,  • Comments

    Break rule

    I have no idea.

    image: Eason41

    Don’t spend more than you earn. Don’t buy too much house. Don’t forget to pay your bills on time. There’s quite a few financial rules that are floating around that we’re told to follow, or else. Just like rules in your everyday life, sometimes you need to know when breaking them will benefit you more than following them. One of the “rules” I often see is to never co-sign a loan. However, I’ve twice been a part of the breaking of this rule.

    Co-sign Me Out of Debt

    When I was in graduate school I had a plan: consolidate all of my debts so that I can get a better overall rate and more manageable monthly payments. That plan didn’t work out so well as some parts of the plan involved getting a payday loan and locking my keys in my car and myself out. Eventually I figured everything out and applied for a personal loan from the credit union associated with my university. Although I had been keeping up with the payments for my various debts, the loan officer was reluctant to give me the loan because of past missed payments. She told me that I could get a loan if I could get someone to co-sign the loan.

    After careful consideration, I decided that my brother would be the perfect sucker co-signer for my loan. He is seven years older, he had a great job, a house, and high income. I called him and asked for him to co-sign my loan, with the promise that since the payments would be deducted directly from my paycheck (which was true), so as long as I was a graduate student getting a stipend I would never miss a payment. After a heavy sigh and what seemed like a 20-minute pause before giving me an answer, he agreed.

    The loan was eventually paid off in full without any missed payments before I completed graduate school. A few years later, I told him over drinks, “See? You had nothing to worry about.” He made me buy the next round.

    Co-sign Her Out of Debt

    A few years after my first co-signing incident, Her and I were living together and had just combined our finances. Of course, I did this with great reluctance as I was also agreeing to help pay of Her’s enormous student loan debt of ~$130,000, of which was half federal student loans and the other half private student loans. The private student loans were the most egregious, with the interest rates at just under 10% with a monthly payment of around $750. Although we used a bunch of methods to decrease our balance and pay off the loans ten years sooner, it was still an enormous burden. Her received in the mail a letter from the private loan company stating that the interest rate could be lowered if she were to get a co-signer. Of course I was hesitant to agree to this, but I figured that it’s our student loan debt now, and that anything we can do to mitigate its financial effects would be good. I agreed to co-sign the loan.

    Me co-signing the loan did decrease the interest rate by a percentage point or so, but didn’t change the way we attacked the loan. Our saving grace came when we transferred $11,000 of the balance to a card at 1.99% for life and when Her’s godmother paid off the rest of the balance of $50,000. We laid those loans to rest, which freed me from my co-signer responsibilities.

    Have you broken any financial “rules?” What were the circumstances for that decision? Let us know in the comments!

    How We’ve Been Doing Financially

    by  • October 10, 2011 • Tagged: , , , , ,  • Comments

    In the past two years, we haven’t been good with keeping this blog updated. As we’ve said before, finances weren’t a primary concern for us; we treat it more like a chore. Sure money is important, but for us it remains a tool that we use in order to achieve our other goals. However, like all chores, unless we keep up with it or we’ll end up with a mess. Here are some highlights as to what we’ve been up to financially:

    • Employment: We’re still at the same jobs, and consider ourselves incredibly lucky to have them in this economy. A few friends of ours have been unemployed for quite some time now and I can only imagine the stress that they’re under while they try and make ends meet.
    • Salaries: We’ve made a pittance by sticking ads on this blog. Her’s salary has remained stagnant in the last few years, and she’s still not feeling good about it. Mine, however, has continued to increase. In fact, I have increased my salary by 100% since entering the workforce. The extra cash has made it easier to get by.
    • Retirement savings: We have both increased our employer retirement plan contributions. Her is now saving 10% of her paycheck, of which the first 6% is matched 40%. For those bad at math, the match bumps up the total contribution to 12.4% per year. I’ve increased my contribution to 7% with a 3% match, for a total contribution of 10%. After the new year I’ll probably increase mine to 10%.
    • Savings: Did you know babies are expensive? In addition to buying all sorts of baby stuff, we’ve also taken a few vacations in the last 2 years. Some of them have been “paid” for by my work, some were to lands down under. We’re on track right now to replenish our savings to 3 months of our take home salary. We thought that would be an easier target because our expenses always seem variable. We assume that we could live off of that amount of money for at least 6 months.
    • Spending: In our not making finances a priority, I’m sure that we’ve spent a little more money than we’ve wanted to. Surprise surprise, daycare is our #1 expense, at 30% of our take home pay. At a distant 2nd is rent, which is 15% of our take home pay.
    • Debt: Student loans remain. We’re still not carrying balances on our credit cards – we  pay off the credit cards every month. Still making love, not debt. Oh yeah.
    I would say that we’re been doing ok with our finances. How has the last year or two been for you?

    To Love, Honor and Financially Obliterate

    by  • July 15, 2010 • Tagged: , , , , ,  • Comments


    (photo: lionheartphotography)

    “A lot of people wonder how you know you’re in love. Just ask yourself this one question: ‘Would I mind being financially destroyed by this person?’”

    I first came across that quote hanging on my friend John’s fridge, soon after he started dating fellow friend Fahmi. Since Fahmi was on the verge of trading in her lucrative IT consulting job to head back to grad school, it wasn’t an idle question.

    Happily, Fahmi got her degree, John and Fahmi got married, and they’re now cheerfully bonded and financially stable.

    But for an illustrative example of just how literally that quote should be taken, there’s the tale of Dawn vs. The Leech.

    Dawn (not her real name) has been one of my best friends for a decade. About five years ago, comfortably before the housing boom’s peak, she and her live-in boyfriend decided to buy a house together. It was a pretty good deal: a recently foreclosed, two-bedroom place in a Western city for a tad over $100,000. Dawn had a stable job and could comfortably manage the monthly mortgage payment; her boyfriend, aka The Leech, was a contractor who could handle the house’s badly needed renovations. They bought the house on an ARM, planning to finish the upgrades and refinance the house before it reset.

    You see where this is going.

    Over the next few years, Dawn and The Leech got married and worked on the house, but the renovations never quite got done. Time management is not one of Leech’s strong suits. To finance the renovations, they tapped a home-equity credit line, which added a second mortgage to the house’s debt load.

    Then the economy tanked. The Leech wasn’t getting contract work the way he used to. At the same time, the ARM on the house reset, and the interest rate zoomed past 11%. Once-affordable payments were suddenly a big struggle. Like millions of other Americans, my friends were being bankrupted by their house. Somewhere in here a third home-equity credit line snuck into the mix.

    It’s easy to point fingers (“An ARM — what were they thinking!?”; “Never buy a house unless you have enough money saved to make the payments for uppitygazillion years without an income”; etc etc.), but as they say, hindsight is 20/20.

    Here’s where the situation gets really sticky. Dawn came up with a clever solution to the ugly financial math: move. She’d worked in NYC before moving out West, and had a job offer that would pay about twice what her local job did. With that extra cash, she could afford to keep up the house payments and also get a rental in NYC. So, after extensive discussions with Leech, she moved back East. The plan was that he would stick around for a few months, finish the house and rent it out, then join her in New York.

    It was a pretty cool plan. One that got blown to smithereens a month later when Leech moved his new girlfriend into the house. (Here’s the part I like best: He didn’t want to get divorced. He was pretty happy to stay married to Dawn, keep her on the mortgage … and live with the new chick. Logical thinking is *also* not one of Leech’s strong suits.)

    Now, all of this still could have worked out if Leech had the income to support the house he wanted to stay put in. But he doesn’t.

    Dawn — who was far nicer to him than I would have been — took a fair stab at weaning him off her financial support. They drew up an agreement under which she would keep paying into the mortgages for most of a year, while he got his act together. Which she did.

    A year later, shock of shocks, Leech was still broke. He promptly fell behind on the mortgages, obliterating his already-shaky credit rating and Dawn’s excellent one.

    So Dawn is now caught in an epically nasty situation: She’s getting divorced but is still on the mortgages for an underwater house she isn’t living in and can’t sell without the consent of the house’s co-owner, Leech. The full face value of the loans on the house sits at around $200,000. The house’s market value is maybe 75% of that.

    This has to be a pretty common situation these days, but all the researching Dawn and various lawyers have done turns up basically no good way of dealing with it.

    No lender will refinance the house notes into Leech’s name alone; it’s underwater and his credit is shot to %@$!. The best option is to sell the house, but a) that requires Leech’s consent, and b) it’s probably going to be a short sale, which won’t fetch enough to clear all the notes. The second and third lienholders have little incentive to agree to that — and even if they do, they could then still pursue a deficency judgment for the shortfall.

    So for now, Dawn is stuck taking a credit hit every month that Leech fails to make payments, and remains on the hook for a life-destroyinging giant sum of money. She’s been waiting for more than a year for one of the three lenders to finally get fed up and foreclose, but every time that seems imminent, Leech chucks the lender a small payment and manages to stave it off a bit longer.

    I know the advice, before you co-sign a whopping loan with anyone, is always to be really, really sure you know what you’re getting into. But how can you? Very few people get married expecting to get divorced, and yet, almost half of us do. Neuroscientists keep pointing out that we’re hardwired to be overly optimistic, make irrational choices, and stay in bad relationships.

    So on top of all the many, many ways we now know that buying a house can turn into a debacle, add this one: That mortgage can be more like a marriage. You might end up bound to the ball and chain till death — or something else equally unpleasant — do you part.

    A Look Back At 2008

    by  • January 9, 2009 • Tagged: , , , , ,  • Comments

    Whew, 2008 was quite a year. For us, it will forever be remembered as the year that we got married! But what else happened this year for us financially?

    To cut expenses, we cut Netflix out of our life. We also cut back on weekend trips. I was officially diagnosed with depression and learned some of socioeconomic aspects of dealing with it. After we were married, our first fight was about…money. It wasn’t as bad as the financial infidelity that Her’s brother went through.

    After much trial and error, we finally made a budget that we stick to.

    Our crazy but generous landlord increased our rent a whopping $8 per month.

    We started a Big Dreams Savings Fund with the spoils of our wedding and related showers. We’ve decided that 2009 will be a balls-to-the-wall savings year.

    The biggest news was the huge gift we received that wiped a good portion of the student loan debt. We even succeeded in not taking any more debt for the wedding and the honeymoon. As newlyweds, we’ve decided that tackling the student loans will be our first financial priority.

    This year taxes got crazy. I had a hard time dealing with them early in the year but somehow figured it out. But, at the end of this year I went back to a dumbfounded state about taxes. We didn’t know if we would have to pay taxes on the student loan gift payment, but it turns out that we didn’t have to.

    In 2008 we were light on the posts, especially the meaty financial ones. Our main focus was on the wedding and not much else. Since we now have a future together to plan for we have a lot of financial stuff to talk about in the upcoming months. Stay tuned!

    Hi-fives for Financial Stability!

    by  • May 2, 2008 • Tagged: , ,  • Comments

    In the mornings as Her and I get ready for work, we listen to NPR’s Morning Edition. This morning host Steve Inskeep was segueing into a commercial break, and said something along these lines:

    “Next up, there’s a new class divide in America. Those who aren’t having trouble paying off their debt and those who are…”

    Her: WHOO-HOO! (raising hand in air)

    Him: Whoo-hoo what?

    Her: WHOO-HOO for being able to pay down our debt! (hand still in air)

    Him: Yeah! Go us! (slapping hi-five)

    It’s the little things.

    Ten Financial Considerations For Newlyweds

    by  • January 8, 2008 • Tagged: , , , ,  • Comments

    Somehow sometime during this long engagement of ours I was signed up to receive the “Groom’s News” in my email inbox a few times a week. Along with cheerfully telling my how many days until the upcoming wedding and trying to sell me often unneeded high end trinkets and vacations, it points to articles that may be useful to newlyweds. In today’s issue was this gem: Ten Financial Considerations For Newlyweds. Let’s discuss, shall we?

    1. From the beginning, save 15 – 20% of your income. By combining households, you should reduce your expenses a lot which should allow you to save. You should save to build your cash reserves, in your 401k plans and in a mutual fund.

    This is a great tip to start off with. We’re currently saving about 10% of our gross income, and after the wedding we’re likely to increase that. It will be a balancing act with paying off student loans, though.

    2. Rather than simply keeping two checkbooks like before you were married, pool your money into one checkbook and one savings account or money market.

    We’ve spoken about how the joint checking account is working for us. We also have an allowance system to give us a little more freedom in making “guilt-free” purchases.

    3. Change all of the beneficiaries on life insurance plans, retirement and other plans at work, and IRAs to your new spouse.

    A nice reminder. We don’t have life insurance, but we do have retirement accounts and bank accounts we’ll have to check.

    4. Decide how debts accumulated by each individual prior to the marriage (i.e. student loans) will be handled.

    Since we’ve been living together and have had our finances combined for a while now, we’ve been living the “everything is ours” way of things – even debt – for a while now.

    5. Work together on budgeting and tracking expenditures.

    We’ve made efforts to budget in the past – this year we’ve implemented a new system that closely resembles the 60% solution. We’ll detail that in a later post.

    6. Discuss your approaches to handling money — is one person a spender and one a saver? Create some ground rules on handling any differences.

    Haha, it’s more like “He’s a spender, she’s a spender.” I mean, uh, we love to save money.

    7. If both incomes are needed to pay expenses, be sure to have adequate life insurance.

    We’re definitely going to have to look at adequate life insurance after we get hitched.

    8. Be sure to let each other know where important documents are kept.

    More importantly, we need to get a safety deposit box to keep all that stuff. That’s been on our to-do list for the past 2 years.

    9. Consolidate your credit cards to avoid having double the number of credit cards needed.

    Not sure if I agree with this one. We believe that we both should have individual credit. We’ve even opened some duplicate credit cards in order to take advantage of rewards.

    10. Make a list of upcoming purchases together and prioritize them. You should decide jointly how to spend your money now.

    Of course, communication is key. Her probably wouldn’t like it if I just came home with a 52″ plasma screen TV, and I don’t quite know how I’d react if she brought home a couple pairs of Manolo Blahniks.

    This list actually wasn’t that bad. It will serve as a good reminder of things to-do after we’re married.

    Managing Our Debt – A Review Of How We Live With A Large Debt Burden

    by  • December 19, 2007 • Tagged: , , ,  • Comments

    photo: iandavid

    Over at The Digerati Life, Silicon Valley Blogger muses about handling large debt loads. Her examples include two bloggers who have large amounts of debt: the always controversial Casey Serin and a newer blogger Debt Kid. She also narrates a story of a man she knew who bought a $1.5 million dollar home, but who had a bunch of contingency plans should things go financially awry.

    In our own writings, I have to admit that we can be brazenly blase about the amount of debt that we have and how we’re tackling it. I feel that we can do this because we’ve come up with our own action plan to manage our debt. When we first started this blog, we had $18,054.88 in credit card debt, and $135,966.11 in student loan debt. Many people look at those numbers and tend to freak out; we did too. Fast forward to today and we’ve eradicated all of the credit card debt, and we’re working to accelerate the student loan payment. Here’s how we’ve managed this amount of debt without waking up in cold sweats.

    1. We have relatively low rent. This was our first step for our finances after college and has been paramount to freeing up cash. Currently our housing costs are 18% of our take home income (about 10% of our gross).

    2. We used the debt snowball for debts with balances of under $1,000. We had a few cards with a few hundred dollars debt on them; each of them demanded a minimum payment every month. One of things I do like about Dave Ramsey’s debt snowball is that it frees up cash relatively early in the debt payoff. Even though it made more mathematical sense to pay off the higher balances first, when we paid off the lower balances it freed up more cash in that it was one less minimum payment we’d have to deal with.

    3. We applied freed up cash towards the higher interest rate balances. When we first started this blog, I was paying off a debt that was at 20.99%. As soon as a few of the lower balance cards were paid off, the extra cash went towards battling the debts with monster interest rates.

    4. We took advantage of great credit card deals. I managed to lower the debt of my credit cards to 0% and 2.99%; Her got all of her debt on a card with 0% interest as long as we made 2 purchases a month on it.

    5. Since we started this blog, we increased our income by at least 42%. In these two years, I received three pay raises; Her received two. We also have some income from this site. The extra cash definitely made sleeping at night easier.

    6. We have an emergency fund. Yeah, it’s not clearly defined, but we know that if there is an emergency that arises we can take money from our savings. After the wedding, we plan on having 6 months of expenses remaining in our savings accounts.

    7. Once we paid off the credit cards, we took advantage of another offer to put $11,000 on a card at 1.9%. We put exactly that amount of student loan on there, saving us a lot of cash in the future.

    8. We have not incurred any new consumer debt. We vowed to never pay another penny in credit card interest and now take advantage of rewards programs.

    9. We are a one car family. Shortly after moving to Chicago I sold my car; it was costing me a lot of money to have it in the city. With the car we do have, we minimize our expenses.

    10. We continue to look for ways to increase our income, use leverage and arbitrage to get better interest rates, and make solid decent financial decisions.

    For us, it was these actions that showed us the light at the end of the debt tunnel.

    Are you under a mountain of debt? How have you managed it? How do you let it not keep you up at night?