Tips to Be Debt Free

Tips to Be Debt Free

Author of this guest post: Ryan Smith, a writer associated with Debt Consolidation Care Community (debtconsolidationcare.com). He has written several articles for various financial websites. He is considered to be an expert in the Debt industry and has made significant contribution through his various articles. The article has been edited for brevity, language and relevance for the Indian audience by Mr. N.

In today's fast paced life everyone is running after money. Being financially strong is the ultimate aim of all of us. However many of us face a financial crisis for at various times. And seek the help of a loan to tide over the crisis. The real problem arises when they are unable to pay their debts in time. And the dream to become debt free starts - whether from the clutches of the moneylender or the "friendly" banker. Primary reason for getting stuck: imbalance in income and expenses. Now the question arises - How can I become debt free again? Some tips: 1. Keep a balanced monthly budget: Often, we don't realize the serious consequences of not clearing their debts within time. And continue to "spend-as-usual" with our typical monthly expenses. As a result we miss deadlines for repayment. Keeping a balanced monthly budget is vital to pay off debts in time. During indebtedness one should avoid making unnecessary expenses. And continue with the newly acquired good habit even after becoming debt-free. 2. Take help from debt negotiation services: Nowadays, debt negotiation services have become very popular, due to their value addition in the best possible debt negotiations. Help can be taken from such service providers to become debt free. These companies negotiate with banks and money lenders of the client and persuade them to reduce rates of interest on a loan, restructure the debt repayment period, etc. Debt negotiation companies are held in high esteem in the United States and many European countries, and are increasingly becoming popular even in Asian nations, including India. 3. Save & invest wisely: A rupee saved is a rupee earned. Saved pennies act as a shield against getting caught in debts. The money thus saved - after meeting your routine budget of monthly expenses ought to be invested wisely. Depending on factors such as age, risk profile, etc., you should invest such savings in an appropriate option such as fixed deposits, mutual funds and shares. Obviously, before choosing the option, one should understand the risk and reward of the chosen mode of investment clearly. Summary: Spending and saving money wisely enables a person to become and remain debt free. Any loans should be for a genuine purpose and an acute financial crisis. Taking loans for unnecessary or trivial expenses is like inviting unwanted tension into one's life.

Additional thoughts of Mr. N:

• Understand the difference between good debt and bad debt. A loan taken that generates "net income" or creates an "Asset" that eventually will either generate income or save expenses is a "Good Loan". Anything else is a "Bad Loan"
• Maintain accounts. If you don't, it makes no sense whether or not you have a budget. After all, you can't monitor the budget without accounts.
• As the saying goes, "When you are stuck in a hole, stop digging" - Make sure that you don't go even deeper into debt.
• Beware of credit cards. They can be knives in the hands of a surgeon or in the hands of a murderer.

Regards,

N

---

The big bad credit card companies

The big bad credit card companies

When I find an otherwise excellently written write-up, being a notoriously lazy guy, I am always delighted to send you to the original article by giving the relevant link.

Here's one such piece from Deepak Shenoy's blog, talking about why one should not go in for an "Auto debit" option for paying off credit card bills - Read on:

• A fool & his money are quickly parted - especially by credit card companies!

A quick point - I'll go to the extent of ensuring that if I have a card from XYZ bank, I'll try to ensure that I don't use a cheque leaf from XYZ bank to pay their bill. Why should we let them know proactively the existence of a banking relationship with them that extends beyond credit cards - One never knows what well-hidden term / condition they may use to gain access to your SB account for adjusting some disputed bill / service charge on the credit card?!!??!

Some readers have asked me as to why I offer these links to other blogs and websites.

Some quick reasons:

• My blog is not an exercise to build my ego and certainly not a tool to gather any income.
• I have no qualms about giving credit where it is due, by taking you to the original author's blog / website directly. This also takes care of potential "copyright" issues.
• If you're able to move to another blog and, in the process, gain more valuable inputs, I feel that the purpose of this blog is, to that extent, quite well-served. Enjoy!

Regards,

N

---

Bad Credit Card Customer!

Don't know whether I've posted this pic before, but it is worth repeating once every few weeks for the benefit of all our readers!

Do take the hint, of course!

Regards,

N

Using Credit Cards Effectively

This Pic should tell you all you need to know about using credit cards effectively - Thanks to the friend who forwarded the same to me!






Regards,

N

Beware of Credit Card Fraudsters

Beware of Credit Card Fraudsters

Credit for this post goes to NM, an uncle of mine, who forwarded this mail to me!

There are problems enough due to credit cards - Debt traps, et al. More about them in some other post of mine.

Unfortunately, there are problems due to credit cards that ought not to occur even for spend-thrift credit-card holders. Here's a mail that talks about highlighting a few of such problems and taking care of the same.

Be sure to read Scene 3.  Quite interesting. This is a new one. People sure stay busy  trying to cheat us, don't they?

Take care!

Regards,

N

SCENE 1. 

 

A friend went to the local gym and placed his belongings in the locker. 

After the workout and a shower, he came out, saw the locker open, and thought to himself, 'Funny, I thought I locked the locker.

 

Hmm, 'He dressed and just flipped the wallet to make sure all was in order. 

 

Everything looked okay - all cards were in place.. 

 

A few weeks later his credit card bill came - a whooping bill of $14,000! 

 

He called the credit card company and started yelling at them, saying that he did not  make the

transactions. 

 

Customer care personnel verified that there was no Mistake in the system and asked if his card had been stolen..  

 

'No,' he said, but then took out his wallet, pulled out the credit card, and yep - you guessed it - a

switch had been made.

 

An expired similar credit card from the same bank was in the wallet. 

 

The thief broke into his locker at the gym and switched cards. 

 

Verdict: The credit card issuer said since he did not report the card missing earlier, he would

have to pay the amount owed to them. 

 

How much did he have to pay for items he did not buy? 

 

$9,000! Why were there no calls made to verify the amount swiped? Small amounts rarely trigger a 'warning bell' with some credit card companies. It just so happens that all the small amounts added up to big one! 

============ ========= =======

 

SCENE 2. 

 

A man at a local restaurant paid for his meal with his credit card. 

 

The bill for the meal came, he signed it and the waitress folded the receipt and passed the credit card

along.   

 

Usually, he would just take it and place it in his wallet or pocket. Funny enough, though, he actually took a look at the card and, lo and behold, it was the expired card of another person. 

 

He called the waitress and she looked perplexed. 

 

She took it back, apologized, and hurried back to the counter under the watchful eye of the

man. 

 

All the waitress did while walking to the counter was wave the wrong expired card to the counter cashier, and the counter cashier immediately looked down and took out the real card. 

 

No exchange of words --- nothing! She took it and came back to the man with an apology.. 

 

Verdict: 

 

Make sure the credit cards in your wallet are yours. 

 

Check the name on the card every time you sign for something and/or the card is taken away

for even a short period of time.  

 

Many people just take back the credit card without even looking at it, 'assuming' that it has to be theirs. 

 

 

FOR YOUR OWN SAKE, DEVELOP THE HABIT OF CHECKING YOUR CREDIT CARD EACH TIME IT IS RETURNED TO YOU AFTER A TRANSACTION! 

============ ========= ======== 

 

SCENE 3: 

 

Yesterday I went into a pizza restaurant to pick up an order that I had called in. 

 

I paid by using my Visa Check Card which, of course, is linked directly to my checking account.   

 

The young man behind the counter took my card, swiped it, then laid it on the counter as he waited

for the approval, which is pretty standard procedure.   

 

While he waited, he picked up his cell phone and started dialling. 

 

I noticed the phone because it is the same model I have, but nothing seemed out of the ordinary. ?

 

Then I heard a click that sounded like my phone sounds when I take a picture 

 

He then gave me back my card but kept the phone in his hand as if he was still pressing buttons. 

 

Meanwhile, I'm thinking: I wonder what he is taking a picture of, oblivious to what was really going

on. 

 

It then dawned on me: the only thing there was my credit card, so now I'm paying close attention to what he is doing. 

 

He set his phone on the counter, leaving it open. 

 

About five seconds later, I heard the chime that tells you that the picture has been saved. 

 

Now I'm standing there struggling with the fact that this boy just took a picture of my credit

card. 

 

Yes, he played it off well, because had we not had the same kind of phone, I probably would never have known what happened. 

 

Needless to say, I immediately cancelled that card as I was walking out of the pizza parlour. 

 

All I am saying is, be aware of your surroundings at all times. 

 

Whenever you are using your credit card take caution and don't be careless. 

 

 Notice who is standing near you and what they are doing when you use your card. 

 

Be aware of phones, because many have a camera phone these days.

 

 

JUST BE AWARE 

 

Never let your card out of your sight.....check and check again! 

 

Scary, isn't it....

Regards,

N

---

Get penalised for paying your credit card dues on time

Get penalised for paying your credit card dues on time

This one takes the cake:

• http://wealth.moneycontrol.com/columns/credit-cards/credit-cards-now-get-punished-for-paying-up-on-time-/13072/0

Obviously, if you pay your dues on time, that too on a "life-time free credit card", the banks are not likely to be thrilled!

Regards,

N

---

Handling Recovery Agents

Handling Recovery Agents

Today, we live in a world of EMIs. For the unfortunate few among us who default on loans, credit card dues, etc., we also live in a world of a dreaded species: "Recovery Agents".

My views on the matter are fairly radical and non-conventional:

• As far as possible, never take a loan - The only exceptions that I can think of are medical emergencies and low-cost loans for acquiring high-value, guaranteed income-generating assets (like a home loan, for instance - but certainly not a car loan!)
• In the unlikely event of taking a loan, stick to the mutually agreed repayment schedule, come heaven or high water. Don't ever default.
• If, for some extraordinary reason, you are unable to pay up, proactively address the issue by sitting with the lender and finding out mutually acceptable and financially feasible alternatives before the due date for the payment which you are likely to default.

Unfortunately, not many of us on this planet have such a reluctance to take loans.

For the benefit of those who do end up taking loans and more particularly for the benefit of the subset ot those who might end up facing recovery agents, here's an article which I found quite enlightening, easy-to-read AND worth learning from - Do read it definitely:

• http://www.outlookmoney.com/scripts/iih021c1_new.asp?sectionid=10&categoryid=124&articleid=7472

And, if you can, go back to take a look at my views as mentioned above and explore the possibility of following the suggestions!

Regards,

N

---

Credit card basics

Credit Card Basics

Hi friends! Lots of us have, use credit cards. Some of us (hopefully none of the readers of this blog) misuse credit cards for a variety reason and get into a debt trap. You must have seen a whole host of articles about the issue - and probably read none of them.

Happened to come across a very simple pictorial representation of the same and thought it worth sharing.

Read the link: Card primer - Most urban Indians find credit cards necessary — a necessary evil though. That need not be if users understand what the plastic money really is and how it works. Money Today magazine explains!

Regards,

N

---