How to be Debt Free in 6 Easy Steps!

A debt free is life not unattainable. It may seem an impossible and frightening task but it is possible. It requires patience and discipline determination and time. Given below is a run down of 6 steps that will help you in the journey towards a life that is free of financial stress.

Step 1 – Admit that you are facing problems in
managing your finances.The first step towards debt
free life is to come to terms with the fact that your
debts have become unmanageable. Leaving bills unpaid
and ignoring the problem does nothing to wipe off your
existing debts. It only makes the situation worse.
However the fact that you’re reading this article means
you have accepted that you are in debt and you are ready
to take the next step.

Step 2 – Take an honest look at your present financial
situation. Make a list of your debts. Next to the listed
debts include the name of the creditor,the total amount
you owe, the rate of interest you are being charged and
the monthly payment you make towards this debt, if any.
It will not only give you a clear picture of your
financial standing but will also help you in choosing
an appropriate debt solution.

Step 3 – Prioritize!
Decide which bills to pay first and which ones can wait.
Concentrate on paying off the debts that have a higher
interest rate. You will save more money in the long run
by ridding yourself of these expensive loans first while
keeping up the required repayments on the others.When
making the repayment remember to pay a little more than
the minimum as minimum debt repayments only covers the
added interest. It makes no impact on the capital amount.

Step 4 – Create a realistic monthly budget for your
outgoings. List all the essential expenses and
non essential expenditures.
The non essential expenditures can be completely
cut or lowered substantially until you become
debt-free. Evaluate your monthly balance by
subtracting monthly expenses from your monthly income.
This will tell you how much money you have at the
end of the month so that you can start paying off
your debts. Do not forget to keep some money aside
for unexpected expenses. As your debt goes down,
you will see a fall in your interest charges.

Step 5 – Refuse to take on any kind of new debt.
As you already in are in debt, adding
on a new debt will increase your debt and
will hinder your progress towards being debt free.
You must decide once and for all that you will
not add any new debt and stick to it!

Step 6 – If you are not able to manage your debts on
your own then you can opt for professional credit
counseling. You will be guided by financial experts
who will help you in taking a step nearer to a
debt free life. There are options you can take such
as taking out and IVA or even opting for Bancrupcy.
Recently there are companies who offer to write off
your credit cards legally.

Banks write off £100,000

The Guardian,
Article history by Rupert Jones

A “vulnerable” man earning £150 a week managed to rack up debts of more than £100,000 across nine personal loans in what his brother claims is the latest example of irresponsible bank lending.

The 50-year-old warehouseman has a poor understanding of financial matters and had no hope of ever repaying the loans, according to his older brother, Colin Griffiths.

Following Colin’s intervention, and the involvement of Guardian Money, all five lenders have now decided to write off the loans. One of them, Sainsbury’s Bank, says the loan application should not have been approved and steps have been taken to ensure this does not happen again. But others, such as Barclays Bank, say they lent the money based on inaccurate information provided by Douglas Griffiths about his income and outgoings.

The case coincides with a new study highlighting serious failures in banks’ lending practices. uSwitch.com, the online and phone-based comparison service that helps customers find a better deal, claims almost nine out of 10 credit card borrowers were issued cards without the lender checking that they could afford to repay the debt.

Late last summer, Colin discovered that Douglas, who lives in north London, had taken out a string of unsecured loans that he could not afford to repay. In all, he had borrowed around £70,000 between July 2002 and May 2005, saying that he needed the money for home improvements. This total is made up of:

· At least two loans – £7,000 and £15,000 – from Barclaycard. It appears the £15,000 loan was taken out to repay the £7,000 one, plus provide extra cash. Monthly repayment: £407.56.

· Two loans – £25,000 and £500 – from Barclays Bank. Monthly repayment (on the £25,000 loan): £481.48.

· Two loans – £7,000 and £12,000 – from Halifax. It appears the £12,000 loan was taken out to repay the £7,000 one, plus provide extra cash. Monthly repayment: £221.66.

· £7,500 from Sainsbury’s Bank. Monthly repayment: £191.81.

· £5,000 from Liverpool Victoria. Monthly repayment: £117.97.

· £5,000 from Tesco Personal Finance. Monthly repayment: £74.92.

With many of the lenders selling him payment protection insurance too, the total debt soared well over £100,000.

However, as many of the lenders pointed out, Douglas did not help his case by telling them he earned £400 a week. In fact, his take-home pay was £125 a week at the time and is now £150-£160.

Colin acknowledges his brother is at fault but says he is the victim of irresponsible lending because he was a vulnerable man who did not understand the implications. Furthermore, he says the lenders failed to verify his brother’s affairs to properly assess whether he was able to meet the repayments.

Colin is particularly critical of Barclays because Douglas has his current account with the bank, and therefore it would have been easy to see he could not afford more than £800 a month in loan repayments to the Barclays group.

“My older brother and I have done our best to look after him. It should be the institutions’ responsibility to protect people like Douglas as well, and they haven’t,” says Colin, 62, who lives near Milton Keynes. On being told that the lenders had agreed to wipe the debts, his reaction was: “What a relief!”

Douglas Griffiths says he accepts he lacks knowledge when it comes to financial matters and has found the whole experience distressing.

After Colin took up cudgels on behalf of his brother, and then Guardian Money got involved, things started to move fairly quickly. Sainsbury’s Bank – in a letter signed by Justin King, the boss of the supermarket group – moved swiftly to rectify the matter. It said the loan application was “processed incorrectly and therefore should not have been approved”, and added that the loan had been cancelled and wiped from Douglas’s credit file.

Tesco Personal Finance says it has written off the outstanding balance, adding that, as a responsible lender, “we take the circumstances of Mr Griffiths’ case very seriously”.

Liverpool Victoria says it has also decided to write off the debt on a goodwill basis, though adds: “Our staff followed absolutely the correct procedures.” It says it had no reason to ask for written proof of income because credit searches did not turn up anything untoward, and that it acted responsibly because it declined a request by Douglas to top up his £5,000 loan.

Meanwhile, the Halifax says it suspended the loan some weeks ago, which means no interest is accruing, and adds: “We will write this amount off.”

Barclays says it is committed to responsible lending, but this is dependent on the customer providing accurate information. “Having reviewed the sales of the loans to Mr Griffiths, Barclays found that Mr Griffiths overstated his income, underestimated his expenditure and understated the level of his existing debts. Had we been in full possession of the true facts, this would no doubt have affected our decision to lend,” says a spokesman.

He adds that Mr Griffiths appeared “confident and self-assured” during the application process, but says: “We are taking steps to write off the debts.”

Bankruptcy- A last resort

Bankruptcy

Don’t consider making yourself bankrupt unless you have explored every other option. The repercussions will stay with you for a long time.

Before you consider it think about the following options:-

• Negotiate with your creditors and offer to pay a small sum off each amount you owe
• If you can’t cope alone ask for help from a debt charity such as CCCS. They will negotiate on your behalf and its free. They will come up with a debt management plan for you.
• The next step is to consider and IVA or individual voluntary arrangement. This is by no means ideal. You will pay a fee for this to a debt management company and it will cost you money you can probably ill afford. It may give you peace of mind however to know that someone else is negotiating he debt for you.
• It you can’t afford to pay anything towards the debt and you have had the agreemenets audited to see if they are unenforceable and they are not only then consider going bankcrupt.

What cause us to get into Debt? The Possible Solutions?

Debt

The British people’s personal debt exceeds 1.1 trillion pounds. They have surpassed the United States in personal debt. Mortgage payments are the cause for 82% of this debt. The uncontrolled house price inflation is the main cause for this. Next an unusually high tax rate and over the top University fees are the main culprits. Some other sources of debt could be divorce, medical expenses, not planning well enough or being put on the dole from your job. One good thing to help the British people is new consumer protection laws capping credit card fees at twelve pounds down from thirty-eight pounds.

A solution for the Scottish people is what is known as a Scottish Trust Deed. This is an alternative to filing for bankruptcy. This is an agreement between you and your creditors for three years. At the end of the time period any remaining balance is written off. This trust deed is legally binding on all of your creditors. The terms of the deed are tailored to fit your situation. Another solution for the removal of debt is to consult a debt management agency. There are many offices out there who can give advice tailored for your situation. They can be found online or locally.

One solution they can give the British people is like the Scottish Deed. It is called an Individual Voluntary Arrangement. This is a formal agreement between you and your creditors for over sixty months. In that time, you pay them what you can afford. After that period is over, the remaining debt is written off. These arrangements can help reduce your debt by seventy percent. Creditors cannot call you once this arrangement has been put in place.

Another solution they can offer is Debt Management. This is like consolidation in the United States. This involves making one payment to the agency and they take care of the bills. In some cases, you can also freeze interest rates. You will not have any more contact with the creditors as the agency will do that for you.

The last solution they can offer you is a loan or to remortgage your home. The last resort to debt elimination is filing for bankruptcy. There are two types: voluntary and involuntary. You go to court yourself to file and the district judge decides whether to grant it or not. It costs four hundred and eighty five pounds to do this. The fee may be waived if you are poor or unemployed. Involuntary is when a creditor petitions the court for your bankruptcy if you owe more than seven hundred and fifty pounds. The advantages are: you are protected from creditors, your stress levels go down; after a year, the debt left over is written off and you’ll be able to make a fresh start. The disadvantages are: your assets will be sold to pay the debts. This can include your home.

The bankruptcy is put in the local paper for everyone to see. This will affect your credit rating for six years and it will prevent you from working in certain areas of employment. The best advice any debt manager will give you is try to keep your debt at or below twenty percent of your income level.

There is another solution.

If you have credit agreements taken out before April 2007 there is a new unenforceable credit agreement claim which is becoming more and more known about here in the UK. It is possible to have your credit finance agreements –agreements such as credit cards, store cards, secured and unsecured loans, car finance agreements, and those with payment protection insurance ( PPI) ‘audited’. They may not comply with the terms of the 1974 Consumer Credit Act and if they do not they are unenforceable credit agreements. This means you can claim to have them written off. That is the balance completely cleared. For NO FEES a solicitor with handle your claim. This is on a no-win-no-fee basis so it is risk free.

10 Ways to Get and Keep Debt Out of Your Life! What is the Eleventh way?

Keep Debt Out of Your Life

1. Pay off your highest interest debt first. If you have a car loan that has a higher total of money owed to it that your credit cards, throw more of your monthly income at that first. Chances are it is a multi-year loan with a higher interest rate than your credit cards. And if you can pay that off sooner than is scheduled by paying more money towards the principal, you have a good chance of saving a lot of money that would have otherwise gone to paying interest on that loan.
2. Keep your credit card debt at a consistent level. This will require you to use your credit card less than you may be accustomed to, but it is a sound way to handle not building up more debt while eliminating debt in another area of your finances.
3. Use cash instead of credit cards. Budget in a certain amount of cash to be spent per week, and try not take withdraw more cash than that per week. By breaking it down into a weekly budget and only allowing yourself a minimal amount, you’re more likely to stick to your cash budget and not overspend.
4. Cut back on the vices. Whether its cigarettes or coffee, cut down and see how much you’ll save.
5. Put aside your spare change. You’d be surprised at the end of the year at how much that spare change will add up to.
6. Eliminate some of the expenses you already have. It might be a luxury that you enjoy but if you can do without it that money can be reallocated towards something more beneficial.
7. Don’t buy something unless you need it. It’s amazing how much money we spend on frivolous materials that are either hardly used or that we don’t even use at all.
8. Watch your energy bills. Using less electricity and gas can add up to a large amount of money saved over the course of the year.
9. Set up a weekly budget, a monthly budget and an annual budget. Be certain to check it often and see if you are staying on course. This is a way to hold yourself accountable and is likely to help you stick to your financial plan.
10. Be smart, control your impulses and make wise financial choices. They will pay off.

That is ten but what about number eleven? Read on.

If you have credit agreements taken out before April 2007 there is a new unenforceable credit agreement claim which is becoming more and more known about here in the UK. It is possible to have your credit finance agreements –agreements such as credit cards, store cards, secured and unsecured loans, car finance agreements, and those with payment protection insurance ( PPI) ‘audited’. They may not comply with the terms of the 1974 Consumer Credit Act and if they do not they are unenforceable credit agreements. This means you can claim to have them written off. That is the balance completely cleared. For NO FEES a solicitor with handle your claim. This is on a no-win-no-fee basis so it is risk free.

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