August 4, 2024 • 27 mins
What is debt and the different types, understanding debt will help to get all your debt under control. It important to know and understand what getting into before using credit or borrowing money.
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Ultimate Guide to Debt Reduction: Proven Strategies and Tactics - The Money Coach (askthemoneycoach.com)
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Charles McDonald (00:03):
Hello, I'm your host, Mr. Chuck, a retired
accountant turned truck driver,I reduce my debt in a relatively
short period of time, debtreduction to achieve financial
freedom takes commitment,confidence determination.
Understand that, what is debtand the different types,
(00:26):
understanding debt will help getall your debt under control.
It's important to know andunderstand what you're getting
into before using credit orborrowing money. And some poor
night you understand that typeof debt you're getting into. And
it comes with different levelsof costs. So let's start with
(00:51):
the very basic, so you'restruggling with your dad, maybe
you understand you have somecredit card debt, maybe some
other debt, but do you reallyknow the details of what makes
it up and all the good thingsyou need to help you understand
what's going on. And this guideI'm referring to there's a link
(01:13):
in my show notes. It's startsout with understanding debt and
its impact creating a realisticbudget devising a debt repayment
plan, cutting expenses andincrease in income making smart
financial, those are all thedifferent categories we're gonna
talk about. So understandingdebt and and its impact. That is
(01:36):
a common aspect of modern lifefor many individuals and family
it can provide a means toachieve important goals, such as
purchasing a home or pursuinghigher education. However, if my
main is carefully debt canquickly spiral out of control,
have a negative impact on yourfinancial well being. In this
(02:00):
section, we'll explore thedifferent types of debt, the
consequences of debt, and how toassess your current debt
situation. So the types of debtcredit card debt, this is one of
the most prevalent types of debtand carries the high interest
rates make it easy for balanceto accumulate quickly if my
(02:23):
paying off in full studentloans. Many individuals rely on
student loans to finance theireducation. While they can be a
valuable investment in friendyour future, they can also lead
to a significant financialburden after graduation.
Mortgages a mortgage is a loanspecially used to purchase real
(02:46):
estate. Homeownership is a dreamfor many, but it's essential to
understand the long termfinancial commitments that comes
with a mortgage auto loans.
Financing a vehicle can be aconvenient way to get on the
road. But it's important toconsider the total cost of
ownership, including interestand insurance, consequences of
(03:06):
debt, financial stress that canbe a source of significant
stress and anxiety, especiallywhen struggled to make monthly
payments or facing thepossibility of bankruptcy.
Eliminate financialopportunities. Large mountain of
debt can limit your ability toassess credit in the future,
(03:30):
making it a challenge to obtainloans for important purchases,
or even secure housing. Higherinterest payments. The more debt
you have, the more you pay ininterest over time. This means
less money available for otherfinancial goals, such as saving
for retirement or emergencies.
(03:54):
Negative impact on credit scorelate or missing debt payments
can result in a lower creditscore and make it more difficult
and expensive to borrow money inthe future. Assessing your
current situation. Now that isthe probably the most common
thanks about having too muchdebt and the debt that we talked
(04:17):
about credit cards, studentloans, mortgage auto loans,
those are the common debts thatbad everybody has. There's
personal loans, payday loans,Pawn Shop loans, and all those
are not good. They're notmentioned but there are also
other ways you can get in debt.
Assessing your current debtsituation. You got to gather all
(04:39):
your necessary information.
Collect statements and documentsfor all your debts, including
balances interest rate andminimum monthly payment. And
also note the date your paymentsdo. Calculate your debt to
income ratio. Add up yourmonthly debt payments and
(05:01):
divided by a monthly income.
This will give you a clearerpicture of how much your income
is being used to service that.
Now that's your minimum paymentsyou make not any extra payments
on the debt. And your incomeshould be your gross income,
before deductions for incometax, alimony, anything else 401k
(05:26):
Stuff like that. If you reallywant to get a handle on it,
divide your debt into your netincome, which is your into your
taxes are taken out any otherthings that are in 401k, stuff
like that, so that the more ofthe available income that you
have, review your credit report,attach a copy of your credit
(05:48):
report from a reputable creditbureau and review it for
accuracy any errors should bedisputed and correct it
properly. Consider seekingprofessional advice if your debt
situation feels overwhelming,and or you're unsure the best
course of action, don't hesitateto consult with a financial
(06:08):
counsellor or credit counselor.
They can provide guidancetailored to your specific
circumstances. If you'reoverwhelmed is the matter of you
probably don't have enoughinformation and do some research
on your own. Before you spendmoney on a credit counselor.
Maybe that might be what youneed. If you can do some
(06:30):
homework on your own and learnmore about what it is that you
think you're missing. Or if youthink you can't get it under
control for whatever reason,then go and seek a credit
counselor but you don't startout the beginning, going to see
an attorney and claiming to filebankruptcy, because they're
(06:54):
gonna make you do a budget.
They're gonna make you do thingsbefore you can file bankruptcy
to prove that you tried creatinga realistic budget, I'm not
going tracking your incomeexpenses. So if you do tracking
(07:14):
first and then create a budget,it's much easier. Identify areas
for savings, you know areaswhere you can cut back on and
save and not spend as much asyou can say more and setting
financial goals. Well it shouldbe getting out of debt or paying
off your credit cards, cuttingexpenses and the increase in
income reducing discretionaryspending. Take a quick, closer
(07:38):
look at your monthly expenses.
Identify areas where you can cutback do you really need that
expensive cable package or thatmagazine that you never have
time to read? Make a budgetstick to it that ghostwriting
lower rates Good luck on that,looking for additional sources
of income even if you just havea garage sale and get rid of
stuff you're no longer usingclean out your grass, get rid of
(08:00):
stuff. And maybe you get $1 here$1 There $5 $10 But it'll add up
you might have a couple of bucksor a couple 100 extra dollars.
It could be your down paymentfor your emergency fund. It
could be get you started.
Get you on your way. buildingemergency fund and portance of
(08:24):
emergency fund serves as afinancial safety net provide you
with a peace of mind and youhave funds available to cover
unforeseen expenses. Here aresome reasons why building an
emergency fund is importantfinancial protection. Having an
emergency fund ensures you'reprepared for unexpected events
(08:45):
like a medical emergency carrepairs or sudden job loss and
allows you to handle thesesituations without restoring too
high interest loans or creditcards. Breaking a debt cycle
without an emergency fund meforced to rely on credit cards
or loans to cover unexpectedexpenses. This can lead to more
(09:05):
debt and make it Dongo difficultto break the cycle of borrowing
and repayment. And it reducesstress. Knowing that you have
money set aside for an emergencysignificantly reduces stress
instead of worrying how you payfor unexpected expenses. You can
focus on other aspects of yourlife. And I go into all this
(09:28):
your tracking your budget, youremergency fund your debt
reduction plan. I go into thatin detail in this podcast. This
is just an overview to eitherremind you or for those new
people starting the lesson. Youhave to have a starting point.
(09:50):
And knowing and learning aboutwhat your problem is and made up
of before you get started isgoing to help you get control of
your personal finance strategiesfor saving set a goal. Determine
how much you want to save foryour emergency fund minimum 1000
(10:12):
hours, a general rule of thumbis to aim for three to six
months worth of living expenses,that's after you get your debt
under control, the rule of thumbas a minimum of $1,000 to eat
never go below, you build thatup to a maximum of 3000. He used
(10:33):
the deference, apply it to yourdebt. And if you've listened to
my debt reduction plan, heshould know that. But I am Oh,
keep saying that, becauseimportant to understand. And
poor net, you know it in yourbrain, it's drilled in there,
you'll never forget it. And youdo that the rest of your life,
(10:55):
he just don't do that, whileyou're trying to pay off that,
we're going to do that for therest of your life, you're gonna
build up and get your threemonths, maybe four or five
months or six months. And thenafter that, he can increase what
you investing in the market. Hecan increase setting money aside
to buy the things that you wantto have, whether it's upgrade
(11:20):
your home or bio RV or a boat,or whatever the case would be.
Take your hobby to the extremestravel, whatever it is you want
to do, it's a lot easier to doif you don't, or if you're not
struggling to pay their debtdown and pay off your debt.
(11:41):
Where do you keep your emergencyor not? Do you understand the
importance of emergency fundthat have strategies and start
saving, it's important to choosethe right place to keep your
funds. Consider the followingoptions. This is after your
debts under control. And youhave that three to six months.
And you'll and your local bankII just want to keep $1,000
(12:04):
Anything over that say you have20,000 for your emergency fund.
So yes, 1000 of that is going tobe in your local bank so you can
put it in and out of yourchecking account fairly easy.
After that, this is what youshould consider that other
19,000 high yield savingsaccount a high yield savings
accounts offers a higherinterest rate than traditional
(12:27):
savings. This is why your emojisfund that grow over time
provides an easy access to yourfun when needed because it's
very liquid. money marketaccounts similar to high yield
savings or money market accountoffers higher interest rate
however, might be slightlyhigher minimum balance
requirements. At 19,000. Youdon't have a worry, Certificate
(12:52):
of Deposit laws you earn a fixedrate over a specific period of
time. While the interest ratemay be higher than a savings
account, it's important to notethe funds be locked in for the
duration of the CD, meaning ourcertificate of deposit is not as
liquid the money market and thehigh yield is very liquid. The
(13:15):
money market and the high yieldinterest rates were fluctuate up
and down to C D is fx. So if yougo back in at 3% and the
interest rates go to 5% you'relocked in a three you got to pay
a penalty if you want to get outof it. So I don't recommend CDs
but it's an option for theiralter conservative people out
(13:36):
there dealing with debtcollectors. Okay, if you have a
debt problem, you got creditcards and you're probably
getting phone calls from debtcollectors. So let's talk about
this. This is important. dealingwith a debt collectors can be
stressful, intimidatingexperience radio money on credit
cards, medical bills or studentloans as important to understand
(14:00):
your rights and the handle thesituation responsible. In this
section we discuss some strategyto help you to navigate the
process of dealing with debtcollectors efficiently. Knowing
your rights when dealing withdebt collectors is crucial to be
aware of your rights as aconsumer. The Fair Debt
(14:21):
Collection Practices Act is afederal law that protects you
from harassment and unfairpractice by debt collectors.
Some key points you may have toinclude the right period traded
treated with respect andfairness. The right to request a
(14:42):
written revocation of the debt.
The right disputed debt if youbelieve it's inaccurate, the
right to request a debtcollector to cease all
communications. Communicatingwith debt collectors stay calm.
It's natural to filterfrustrated and overwhelmed
Bustan comm can help you thinkclearly and find a solution.
(15:03):
Document everything. Keep arecord of all communication with
that collectors, includingdates, times and the names of
the individuals you spoken to.
That should also include theirname, the date, the time, who
the debt collector is and whothey collect for which debt are
(15:26):
they collecting for. You may getmultiple calls from different
debt collectors trying tocollect the same debt. So Beata,
be aware of that, ask for awritten agreement if you reach a
payment agreement or settlement,request a read written agreement
that outlines the terms toprotect yourself. negotiate a
(15:47):
payment plan if you're unable topay the full amount. Try to
negotiate a payment plan thatfits your budget be honest about
your financial situation, andpropose a responsible monthly
payment, considered debtfalsification. If you believe
your debt is not yours or isn'taccurate, you can request a debt
(16:08):
collector provides proper validverification. If you believe the
debt is not yours, or is anaccurate you can request the
debt collector provides propervalidation, this can help you
confirm the legitimacy of thedebt, you may have forgotten
about some things, seekingprofessional advice. Wow, that's
(16:32):
the last resort. You don't wantto do that unless you're soonly
overwhelmed. When you're dealingwith debt collectors, they,
whoever you owe may have turnedit over to debt collector.
Recently, call them up, not thedebt collector, recall the
person you owe, and set up apayment plan directly with them.
(16:58):
That way, you're not paying thatdebt collectors fee, because
they're going to take a fee. Forall the money that you pay them,
they're going to siphon offtheir fee, and pay the rest to
who you owe. And you're going toend up paying more. If you can
get a hold of the person you owethe money first, directly to
(17:23):
that doctor, the hospital,whoever would be the original
loan company and set up apayment with them and do that
long before they get ready toturn over maybe your first
delinquent notice. Or yoursecond delinquent notice, call
them up,Don't bury your head in the sand
because it will not go away, itonly will get worse over time.
(17:46):
Call them up, tell them whatyour situation is and set up a
payment plan with them. That islower than what you owe on a
regular basis. Let's say it's acar payment of $1,500 a month,
and you're two months behind onit. You know they're gonna
(18:09):
foreclose on you call them up,tell them the situation,
whatever happened, they probablydon't care, but you tell them
anyway, Rini document all this.
Set up a payment plan for thetwo months through your past two
(18:29):
or three months that you'regonna be passed to coming up at
a minimum amount that you canpay, and then agree that you'll
start paying the form out at acertain point and time. And once
they agree to it, you have itwritten down, you have them send
you a written documentation. Sosometime in the future, they
(18:54):
turn you over to collections.
And when that debt collectorcalls you you're nice and
cordial. Ask them to identifythemselves on what debt they're
referring to. And you say, Ihave a payment plan set up with
them directly. I don'tunderstand why they turn it over
to collections. But I want youto cease and desist on contacted
(19:17):
me. Check with the creditor thatprovide you this debt. Quit
contact me cease and desist andthen hang up the phone if they
don't want to. If they call youback to say I made plans I've
got a plan set up I'm current onit. I have it in writing. Quit
(19:39):
call me cease and desist that'staken care of and you no longer
need to call me hang up againand this don't answer the phone
after that. If they keepbothering you. Contact your
state attorney general's officeabout this collection company
and tell them what's going on.
(20:00):
And now we'll contact them, andyou'll get rid of them. So
there's ways around it, youknow, it, it's gonna be a
hassle, it's gonna be timeconsuming. But we need to stay
motivated and discipline duringthe whole process of getting
your debt under control. You gotto identify what caused that?
(20:23):
Why did you get into a debtproblem? How bad is a really
laid out in front of ya and seewhat it is add it up to a
spreadsheet. When you identifyeach and individual debt, you
want to know the name of it, thedate, the payments, do the
(20:44):
minimum balance, the minimumpayment, and the current
balance. And you do that for allbecause you need to know how
much is due, when it's due andwhat the minimum payments gonna
be. Because to get thingsstarted, he got to quit paying
any extra on any debt, startpaying the minimum balance,
(21:08):
because you need that emergencyfund. And we need the minimum of
$1,000 in there. And you got toget that started. If you're
still unsure what to do, there'sbooks and articles, you can
Google online, there's lots ofthings you can do but understand
(21:28):
what your dad is, understandwhat you need to do have an
emergency fund, cut yourexpenses. And if any way
possible, you can increase yourincome, look for other ways to
make some extra cash, whetherit's a garage sale or yard sale,
(21:49):
selling that item you no longerneed. Also, he got to have a cut
back your lifestyle. He got tobe realistic, based on your
current income, what you canreally afford. Maybe at the time
you bought those two expensivecars, you could afford them. And
(22:10):
then you bought a home. Thebanker says you could afford it.
But they don't take inconsideration utilities, living
expenses, and insurance,everything else. Your personal
finances, everything, whetherit's investing your banking,
you're paying your bills, it'syour investments is your
(22:31):
retirement, it's all yourinsurance is for protection,
insurance, on your homeinsurance, on your cars,
insurance, on your life,insurance on your health, that's
there to protect you. And that'sall under the term personal
finances. It's a big broadeverything that runs through
(22:54):
your household is considered apersonal finance. I'll be back
in one moment with my finalthoughts are the articles I
referred to in my episodes, havea link in my show notes. If
you're interested in checkingout the software that I
personally use to get my democontrol. It's in my show notes
(23:16):
under shop financial, you needto copy and paste the link. And
it will take you to the website.
Any questions you can justcontact me through that
particular website. If you valuethis podcast and I like to make
a contribution, I had acontribution link in my show
notes also good. Whatever youfeel is appropriate for the
(23:38):
information I am providing. Ithank everyone for listening to
my podcast, perhaps you'refeeling overwhelmed by all your
debt didn't really know what todo. You found this podcast and
you got to learn what are thedifferent types of debt. You got
credit card debt, student loans,auto loans and mortgages. Those
(24:02):
are the four basic types. Youalso have payday loans, personal
loans that can also add to andcompound the problem. Maybe you
was like $50 short one week, andpayday was Friday and you need
to pay a bill on Thursday. Soyou went and got a payday loan.
(24:24):
But somehow it never got paidoff. And as compound so now it's
50 bucks turn into 100. Now it'sa couple 100 And you have to
keep doing it because you neverhave enough cash or quite get it
all paid off. But you got to doit because those are the most
expensive type of loans. Maybeyou took something to a pawn
(24:47):
shop to get some quick cash andwas intending to go back and get
get the item that you never did.
So you lost an item that you nowgotta go back to pay full price
for it because you pond it, andit's something that you want. So
whatever the case is, learningand understanding what that is,
(25:11):
and what it will do to yourbudget, before you borrow the
money is very important. So inorder to know that you need to
one be doing tracking, and tohave some type of budget setup,
so you can understand what yourneeds needs are the basic things
(25:32):
that you pay for on a monthlybasis. Such housing, utilities,
everything related to housing,utilities, cell phone, internet.
And then the Another category istransportation, your car
payments, car maintenance,gasoline, stuff like that. So
(25:52):
you can get back forth to workand back and forth to the store.
Food is a need because you haveto eat to survive, survive and
some clothing is a need. Becauseyou have to have clothes to go
to work, savings and yourminimum payment on your credit
cards, those are all needsanything other than that is a
want. Take care of your needsfirst. Know how much they are
(26:21):
and when they're do plan aheadand make sure you have enough
money to pay them every monthbefore you start spending a
bunch of money on once, thingshe may not need you can do
without one of those needs isputting money into that savings
account that emergency fund andbuild it up to a minimum or
(26:45):
$1,000 these are goals youshould set for yourself one by
one goal one is to pay off mydebt. Goal two is the credo
emergency fund to help me payoff my debt. Goal three is learn
and understand what I need to doto get this under control and to
(27:08):
keep it under control. So I canlive a better life less
stressful, and not to worryabout money and what to do and
how I'm gonna pay it and you'llbe glad you did. So
Hello, I'm your host, Mr. Chuck, a retired
accountant turned truck driver,I reduce my debt in a relatively
short period of time, debtreduction to achieve financial
freedom takes commitment,confidence determination.
Understand that, what is debtand the different types,
(00:26):
understanding debt will help getall your debt under control.
It's important to know andunderstand what you're getting
into before using credit orborrowing money. And some poor
night you understand that typeof debt you're getting into. And
it comes with different levelsof costs. So let's start with
(00:51):
the very basic, so you'restruggling with your dad, maybe
you understand you have somecredit card debt, maybe some
other debt, but do you reallyknow the details of what makes
it up and all the good thingsyou need to help you understand
what's going on. And this guideI'm referring to there's a link
(01:13):
in my show notes. It's startsout with understanding debt and
its impact creating a realisticbudget devising a debt repayment
plan, cutting expenses andincrease in income making smart
financial, those are all thedifferent categories we're gonna
talk about. So understandingdebt and and its impact. That is
(01:36):
a common aspect of modern lifefor many individuals and family
it can provide a means toachieve important goals, such as
purchasing a home or pursuinghigher education. However, if my
main is carefully debt canquickly spiral out of control,
have a negative impact on yourfinancial well being. In this
(02:00):
section, we'll explore thedifferent types of debt, the
consequences of debt, and how toassess your current debt
situation. So the types of debtcredit card debt, this is one of
the most prevalent types of debtand carries the high interest
rates make it easy for balanceto accumulate quickly if my
(02:23):
paying off in full studentloans. Many individuals rely on
student loans to finance theireducation. While they can be a
valuable investment in friendyour future, they can also lead
to a significant financialburden after graduation.
Mortgages a mortgage is a loanspecially used to purchase real
(02:46):
estate. Homeownership is a dreamfor many, but it's essential to
understand the long termfinancial commitments that comes
with a mortgage auto loans.
Financing a vehicle can be aconvenient way to get on the
road. But it's important toconsider the total cost of
ownership, including interestand insurance, consequences of
(03:06):
debt, financial stress that canbe a source of significant
stress and anxiety, especiallywhen struggled to make monthly
payments or facing thepossibility of bankruptcy.
Eliminate financialopportunities. Large mountain of
debt can limit your ability toassess credit in the future,
(03:30):
making it a challenge to obtainloans for important purchases,
or even secure housing. Higherinterest payments. The more debt
you have, the more you pay ininterest over time. This means
less money available for otherfinancial goals, such as saving
for retirement or emergencies.
(03:54):
Negative impact on credit scorelate or missing debt payments
can result in a lower creditscore and make it more difficult
and expensive to borrow money inthe future. Assessing your
current situation. Now that isthe probably the most common
thanks about having too muchdebt and the debt that we talked
(04:17):
about credit cards, studentloans, mortgage auto loans,
those are the common debts thatbad everybody has. There's
personal loans, payday loans,Pawn Shop loans, and all those
are not good. They're notmentioned but there are also
other ways you can get in debt.
Assessing your current debtsituation. You got to gather all
(04:39):
your necessary information.
Collect statements and documentsfor all your debts, including
balances interest rate andminimum monthly payment. And
also note the date your paymentsdo. Calculate your debt to
income ratio. Add up yourmonthly debt payments and
(05:01):
divided by a monthly income.
This will give you a clearerpicture of how much your income
is being used to service that.
Now that's your minimum paymentsyou make not any extra payments
on the debt. And your incomeshould be your gross income,
before deductions for incometax, alimony, anything else 401k
(05:26):
Stuff like that. If you reallywant to get a handle on it,
divide your debt into your netincome, which is your into your
taxes are taken out any otherthings that are in 401k, stuff
like that, so that the more ofthe available income that you
have, review your credit report,attach a copy of your credit
(05:48):
report from a reputable creditbureau and review it for
accuracy any errors should bedisputed and correct it
properly. Consider seekingprofessional advice if your debt
situation feels overwhelming,and or you're unsure the best
course of action, don't hesitateto consult with a financial
(06:08):
counsellor or credit counselor.
They can provide guidancetailored to your specific
circumstances. If you'reoverwhelmed is the matter of you
probably don't have enoughinformation and do some research
on your own. Before you spendmoney on a credit counselor.
Maybe that might be what youneed. If you can do some
(06:30):
homework on your own and learnmore about what it is that you
think you're missing. Or if youthink you can't get it under
control for whatever reason,then go and seek a credit
counselor but you don't startout the beginning, going to see
an attorney and claiming to filebankruptcy, because they're
(06:54):
gonna make you do a budget.
They're gonna make you do thingsbefore you can file bankruptcy
to prove that you tried creatinga realistic budget, I'm not
going tracking your incomeexpenses. So if you do tracking
(07:14):
first and then create a budget,it's much easier. Identify areas
for savings, you know areaswhere you can cut back on and
save and not spend as much asyou can say more and setting
financial goals. Well it shouldbe getting out of debt or paying
off your credit cards, cuttingexpenses and the increase in
income reducing discretionaryspending. Take a quick, closer
(07:38):
look at your monthly expenses.
Identify areas where you can cutback do you really need that
expensive cable package or thatmagazine that you never have
time to read? Make a budgetstick to it that ghostwriting
lower rates Good luck on that,looking for additional sources
of income even if you just havea garage sale and get rid of
stuff you're no longer usingclean out your grass, get rid of
(08:00):
stuff. And maybe you get $1 here$1 There $5 $10 But it'll add up
you might have a couple of bucksor a couple 100 extra dollars.
It could be your down paymentfor your emergency fund. It
could be get you started.
Get you on your way. buildingemergency fund and portance of
(08:24):
emergency fund serves as afinancial safety net provide you
with a peace of mind and youhave funds available to cover
unforeseen expenses. Here aresome reasons why building an
emergency fund is importantfinancial protection. Having an
emergency fund ensures you'reprepared for unexpected events
(08:45):
like a medical emergency carrepairs or sudden job loss and
allows you to handle thesesituations without restoring too
high interest loans or creditcards. Breaking a debt cycle
without an emergency fund meforced to rely on credit cards
or loans to cover unexpectedexpenses. This can lead to more
(09:05):
debt and make it Dongo difficultto break the cycle of borrowing
and repayment. And it reducesstress. Knowing that you have
money set aside for an emergencysignificantly reduces stress
instead of worrying how you payfor unexpected expenses. You can
focus on other aspects of yourlife. And I go into all this
(09:28):
your tracking your budget, youremergency fund your debt
reduction plan. I go into thatin detail in this podcast. This
is just an overview to eitherremind you or for those new
people starting the lesson. Youhave to have a starting point.
(09:50):
And knowing and learning aboutwhat your problem is and made up
of before you get started isgoing to help you get control of
your personal finance strategiesfor saving set a goal. Determine
how much you want to save foryour emergency fund minimum 1000
(10:12):
hours, a general rule of thumbis to aim for three to six
months worth of living expenses,that's after you get your debt
under control, the rule of thumbas a minimum of $1,000 to eat
never go below, you build thatup to a maximum of 3000. He used
(10:33):
the deference, apply it to yourdebt. And if you've listened to
my debt reduction plan, heshould know that. But I am Oh,
keep saying that, becauseimportant to understand. And
poor net, you know it in yourbrain, it's drilled in there,
you'll never forget it. And youdo that the rest of your life,
(10:55):
he just don't do that, whileyou're trying to pay off that,
we're going to do that for therest of your life, you're gonna
build up and get your threemonths, maybe four or five
months or six months. And thenafter that, he can increase what
you investing in the market. Hecan increase setting money aside
to buy the things that you wantto have, whether it's upgrade
(11:20):
your home or bio RV or a boat,or whatever the case would be.
Take your hobby to the extremestravel, whatever it is you want
to do, it's a lot easier to doif you don't, or if you're not
struggling to pay their debtdown and pay off your debt.
(11:41):
Where do you keep your emergencyor not? Do you understand the
importance of emergency fundthat have strategies and start
saving, it's important to choosethe right place to keep your
funds. Consider the followingoptions. This is after your
debts under control. And youhave that three to six months.
And you'll and your local bankII just want to keep $1,000
(12:04):
Anything over that say you have20,000 for your emergency fund.
So yes, 1000 of that is going tobe in your local bank so you can
put it in and out of yourchecking account fairly easy.
After that, this is what youshould consider that other
19,000 high yield savingsaccount a high yield savings
accounts offers a higherinterest rate than traditional
(12:27):
savings. This is why your emojisfund that grow over time
provides an easy access to yourfun when needed because it's
very liquid. money marketaccounts similar to high yield
savings or money market accountoffers higher interest rate
however, might be slightlyhigher minimum balance
requirements. At 19,000. Youdon't have a worry, Certificate
(12:52):
of Deposit laws you earn a fixedrate over a specific period of
time. While the interest ratemay be higher than a savings
account, it's important to notethe funds be locked in for the
duration of the CD, meaning ourcertificate of deposit is not as
liquid the money market and thehigh yield is very liquid. The
(13:15):
money market and the high yieldinterest rates were fluctuate up
and down to C D is fx. So if yougo back in at 3% and the
interest rates go to 5% you'relocked in a three you got to pay
a penalty if you want to get outof it. So I don't recommend CDs
but it's an option for theiralter conservative people out
(13:36):
there dealing with debtcollectors. Okay, if you have a
debt problem, you got creditcards and you're probably
getting phone calls from debtcollectors. So let's talk about
this. This is important. dealingwith a debt collectors can be
stressful, intimidatingexperience radio money on credit
cards, medical bills or studentloans as important to understand
(14:00):
your rights and the handle thesituation responsible. In this
section we discuss some strategyto help you to navigate the
process of dealing with debtcollectors efficiently. Knowing
your rights when dealing withdebt collectors is crucial to be
aware of your rights as aconsumer. The Fair Debt
(14:21):
Collection Practices Act is afederal law that protects you
from harassment and unfairpractice by debt collectors.
Some key points you may have toinclude the right period traded
treated with respect andfairness. The right to request a
(14:42):
written revocation of the debt.
The right disputed debt if youbelieve it's inaccurate, the
right to request a debtcollector to cease all
communications. Communicatingwith debt collectors stay calm.
It's natural to filterfrustrated and overwhelmed
Bustan comm can help you thinkclearly and find a solution.
(15:03):
Document everything. Keep arecord of all communication with
that collectors, includingdates, times and the names of
the individuals you spoken to.
That should also include theirname, the date, the time, who
the debt collector is and whothey collect for which debt are
(15:26):
they collecting for. You may getmultiple calls from different
debt collectors trying tocollect the same debt. So Beata,
be aware of that, ask for awritten agreement if you reach a
payment agreement or settlement,request a read written agreement
that outlines the terms toprotect yourself. negotiate a
(15:47):
payment plan if you're unable topay the full amount. Try to
negotiate a payment plan thatfits your budget be honest about
your financial situation, andpropose a responsible monthly
payment, considered debtfalsification. If you believe
your debt is not yours or isn'taccurate, you can request a debt
(16:08):
collector provides proper validverification. If you believe the
debt is not yours, or is anaccurate you can request the
debt collector provides propervalidation, this can help you
confirm the legitimacy of thedebt, you may have forgotten
about some things, seekingprofessional advice. Wow, that's
(16:32):
the last resort. You don't wantto do that unless you're soonly
overwhelmed. When you're dealingwith debt collectors, they,
whoever you owe may have turnedit over to debt collector.
Recently, call them up, not thedebt collector, recall the
person you owe, and set up apayment plan directly with them.
(16:58):
That way, you're not paying thatdebt collectors fee, because
they're going to take a fee. Forall the money that you pay them,
they're going to siphon offtheir fee, and pay the rest to
who you owe. And you're going toend up paying more. If you can
get a hold of the person you owethe money first, directly to
(17:23):
that doctor, the hospital,whoever would be the original
loan company and set up apayment with them and do that
long before they get ready toturn over maybe your first
delinquent notice. Or yoursecond delinquent notice, call
them up,Don't bury your head in the sand
because it will not go away, itonly will get worse over time.
(17:46):
Call them up, tell them whatyour situation is and set up a
payment plan with them. That islower than what you owe on a
regular basis. Let's say it's acar payment of $1,500 a month,
and you're two months behind onit. You know they're gonna
(18:09):
foreclose on you call them up,tell them the situation,
whatever happened, they probablydon't care, but you tell them
anyway, Rini document all this.
Set up a payment plan for thetwo months through your past two
(18:29):
or three months that you'regonna be passed to coming up at
a minimum amount that you canpay, and then agree that you'll
start paying the form out at acertain point and time. And once
they agree to it, you have itwritten down, you have them send
you a written documentation. Sosometime in the future, they
(18:54):
turn you over to collections.
And when that debt collectorcalls you you're nice and
cordial. Ask them to identifythemselves on what debt they're
referring to. And you say, Ihave a payment plan set up with
them directly. I don'tunderstand why they turn it over
to collections. But I want youto cease and desist on contacted
(19:17):
me. Check with the creditor thatprovide you this debt. Quit
contact me cease and desist andthen hang up the phone if they
don't want to. If they call youback to say I made plans I've
got a plan set up I'm current onit. I have it in writing. Quit
(19:39):
call me cease and desist that'staken care of and you no longer
need to call me hang up againand this don't answer the phone
after that. If they keepbothering you. Contact your
state attorney general's officeabout this collection company
and tell them what's going on.
(20:00):
And now we'll contact them, andyou'll get rid of them. So
there's ways around it, youknow, it, it's gonna be a
hassle, it's gonna be timeconsuming. But we need to stay
motivated and discipline duringthe whole process of getting
your debt under control. You gotto identify what caused that?
(20:23):
Why did you get into a debtproblem? How bad is a really
laid out in front of ya and seewhat it is add it up to a
spreadsheet. When you identifyeach and individual debt, you
want to know the name of it, thedate, the payments, do the
(20:44):
minimum balance, the minimumpayment, and the current
balance. And you do that for allbecause you need to know how
much is due, when it's due andwhat the minimum payments gonna
be. Because to get thingsstarted, he got to quit paying
any extra on any debt, startpaying the minimum balance,
(21:08):
because you need that emergencyfund. And we need the minimum of
$1,000 in there. And you got toget that started. If you're
still unsure what to do, there'sbooks and articles, you can
Google online, there's lots ofthings you can do but understand
(21:28):
what your dad is, understandwhat you need to do have an
emergency fund, cut yourexpenses. And if any way
possible, you can increase yourincome, look for other ways to
make some extra cash, whetherit's a garage sale or yard sale,
(21:49):
selling that item you no longerneed. Also, he got to have a cut
back your lifestyle. He got tobe realistic, based on your
current income, what you canreally afford. Maybe at the time
you bought those two expensivecars, you could afford them. And
(22:10):
then you bought a home. Thebanker says you could afford it.
But they don't take inconsideration utilities, living
expenses, and insurance,everything else. Your personal
finances, everything, whetherit's investing your banking,
you're paying your bills, it'syour investments is your
(22:31):
retirement, it's all yourinsurance is for protection,
insurance, on your homeinsurance, on your cars,
insurance, on your life,insurance on your health, that's
there to protect you. And that'sall under the term personal
finances. It's a big broadeverything that runs through
(22:54):
your household is considered apersonal finance. I'll be back
in one moment with my finalthoughts are the articles I
referred to in my episodes, havea link in my show notes. If
you're interested in checkingout the software that I
personally use to get my democontrol. It's in my show notes
(23:16):
under shop financial, you needto copy and paste the link. And
it will take you to the website.
Any questions you can justcontact me through that
particular website. If you valuethis podcast and I like to make
a contribution, I had acontribution link in my show
notes also good. Whatever youfeel is appropriate for the
(23:38):
information I am providing. Ithank everyone for listening to
my podcast, perhaps you'refeeling overwhelmed by all your
debt didn't really know what todo. You found this podcast and
you got to learn what are thedifferent types of debt. You got
credit card debt, student loans,auto loans and mortgages. Those
(24:02):
are the four basic types. Youalso have payday loans, personal
loans that can also add to andcompound the problem. Maybe you
was like $50 short one week, andpayday was Friday and you need
to pay a bill on Thursday. Soyou went and got a payday loan.
(24:24):
But somehow it never got paidoff. And as compound so now it's
50 bucks turn into 100. Now it'sa couple 100 And you have to
keep doing it because you neverhave enough cash or quite get it
all paid off. But you got to doit because those are the most
expensive type of loans. Maybeyou took something to a pawn
(24:47):
shop to get some quick cash andwas intending to go back and get
get the item that you never did.
So you lost an item that you nowgotta go back to pay full price
for it because you pond it, andit's something that you want. So
whatever the case is, learningand understanding what that is,
(25:11):
and what it will do to yourbudget, before you borrow the
money is very important. So inorder to know that you need to
one be doing tracking, and tohave some type of budget setup,
so you can understand what yourneeds needs are the basic things
(25:32):
that you pay for on a monthlybasis. Such housing, utilities,
everything related to housing,utilities, cell phone, internet.
And then the Another category istransportation, your car
payments, car maintenance,gasoline, stuff like that. So
(25:52):
you can get back forth to workand back and forth to the store.
Food is a need because you haveto eat to survive, survive and
some clothing is a need. Becauseyou have to have clothes to go
to work, savings and yourminimum payment on your credit
cards, those are all needsanything other than that is a
want. Take care of your needsfirst. Know how much they are
(26:21):
and when they're do plan aheadand make sure you have enough
money to pay them every monthbefore you start spending a
bunch of money on once, thingshe may not need you can do
without one of those needs isputting money into that savings
account that emergency fund andbuild it up to a minimum or
(26:45):
$1,000 these are goals youshould set for yourself one by
one goal one is to pay off mydebt. Goal two is the credo
emergency fund to help me payoff my debt. Goal three is learn
and understand what I need to doto get this under control and to
(27:08):
keep it under control. So I canlive a better life less
stressful, and not to worryabout money and what to do and
how I'm gonna pay it and you'llbe glad you did. So
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