by admin on February 17, 2012
Living a Debt Free Life
While debt can be an effective tool the right hands, it can also be crippling if you do not know how to handle it. This is what makes credit cards both a blessing and a curse in certain circumstances. If you struggle to remain debt free while using credit cards, there are a few tips that you’ll want to keep in mind.
Avoid Paying Interest
Credit card companies are set up to make money on their account holders. The way that they make the majority of their money is by charging you high interest rates on your credit card balances. If you want to get out of debt and live a debt free life, you’ll need to avoid paying interest on your credit card balances as much as possible. This can be done in one of a few different ways. First of all, try to avoid letting balances on your credit card for extended periods of time. If you can make a purchase and pay it off within the next month, you can avoid paying interest on the amount.
Another way to avoid paying interest is to continually transfer your balance around to different credit cards. Many credit cards offer 0% interest for an introductory period. This offer could net you an account with no interest for somewhere between 18 and 24 months. If you have a large balance sitting on a credit card account and you’re paying interest on it, transfer it over to a 0% interest credit card. This will allow you to pay down a large chunk of the debt without having to pay any interest.
Only Finance When Necessary
As a general rule, you should also try to avoid making purchases on your credit card unless it is absolutely necessary. Do not use credit cards to go out and eat at an expensive restaurant or to buy groceries. Credit cards should be used to make emergency purchases or as a way to make a large purchase, in most cases. For example, if you need to get your car fixed and you don’t have any money in savings, this can be a good time to use a credit card, since you have no other options. If you can avoid the temptation to use your credit card on unnecessary expenditures, you will be much better off in the long run. By avoiding extra debt, you’ll have more financial freedom and less to worry about.
by admin on January 10, 2012
Believe it or not, a bank account can really help you to manage debt if you use it wisely. While you’re in the process of repaying debt, it’s a good idea not to get into any more debt; otherwise you could be in debt for a very long time! A bank account without an overdraft could encourage you to avoid getting into more debt – and being charged interest on it.
Debt repayments are one of those unavoidable expenses in many people’s budgets. When you look at your budget for the month ahead, the money you need to spend repaying your credit card, your overdraft, loan repayments, or car finance agreements can be expensive on top of all your essential expenses like your mortgage, your utilities and Council Tax. If you don’t budget for them properly, you could end up overspending, or fall into the trap of relying on borrowed money to get by.
If you want a bank account that can help you with debts, you might decide it’s a good idea to choose a bank account that doesn’t have an overdraft and lets you pay your bills by Direct Debit. Many companies offer discounts if you pay by Direct Debit and it’s easier to budget if you always know the day a payment will leave your account.
A bank account that has these features and helps you to budget could be very helpful to people in debt. This one offers even more budgeting help: http://www.thinkbanking.co.uk/. It can separate your ‘bill money’ from the rest of your cash, only allowing you to spend what you have left over once your essential bills are taken care of.
Debt payments can be treated in much the same way as bills – you could set up a Direct Debit to leave your account on the same day every month – perhaps the day after payday. That way, you can’t touch that money because it is already ‘spent’ and you get the peace of mind that you’re keeping on top of your debt. Using your bank account this way could make managing your finances simpler.
A bank account that helps you budget for your regular debt repayments can help you avoid late payment charges, bounced payments or the possibility of further action from your lenders if you missed any payments, or fell into arrears. As long as you put enough money into your account, a budgeting bank account can help you to keep on top of every regular commitment.
Treating your bank account as a budgeting tool could even help you to make regular payments during bankruptcy, an Individual Voluntary Arrangement (IVA) or a debt management plan.