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06.08.11 The Dirty “D” Word
Posted under: Debt, Money Management Posted by:

How often do we hear the dreaded “D” word…Debt?  It seems like every day the word debt comes up.  Whether it’s you, your friends or family, or the nation as a whole, Americans regularly spend more than they earn. It may sound impossible to stay clear or conquer debt, but some of the first steps toward a debt-free life are some of the easiest.

Debt is an amount owed to a person or organization for funds borrowed – pretty easy, right?  Debt is usually talked about negatively, but there is such a thing as good debt.  Good debt typically comes in the form of an investment that creates value.  Student loans, home mortgages, and real-estate loans are some examples that could be used as good debt.  Now, if you don’t pay off your loans and mortgages on time, then they can become bad debt.  Most bad debts come from credit cards used to buy disposable items or durable goods that lose value as soon as they are bought (i.e. clothing).

People accumulate debt in different ways and for different reasons.  Credit cards are one of the most expensive and common reasons.  Credit cards are great for establishing good credit, plus they are good to have in case you are in an emergency situation and need money fast.  When you don’t use them correctly or don’t pay them off, debt starts to amass.  Getting a credit card has become so easy today that it is tempting to snag one from your favorite department store, but when you use your card and don’t pay off your balance immediately, you are acquiring debt.  

So now that you have racked up a seemingly insurmountable amount of credit card debt, there are easy steps you can take to start climbing your way out.  If you have multiple cards, you should try to get rid of all but one or two.  The ones you are left with should only be used for emergency situations and typically shouldn’t be used daily.  Look for a low-interest card to take the place of you current card, because credit card companies are all fighting for your business and they often offer special rates for balance transfers from other cards.  Also, instead of only paying the minimum each month, try paying more each month. Every little bit helps!

Student loans are another common reason for debt among young people.  College costs, as well as graduate school costs, have steadily risen over the years.  According to a recent report from the Project on Student Debt*, college seniors who graduated last year owed an average of $24,000 in student loan debt.  WOW!! Though student loans can be considered good debt, not paying them off, as you can see, could potentially put you thousands of dollars in the hole once you enter the workplace.  You can avoid debt from student loans through a variety of financial aid options including, scholarships and grants.  Companies and organizations love to give away scholarships on a regular basis. (Check here for info on Georgia’s Own 2011 Scholarship)  Make sure you browse the net for all scholarships which you are qualified and take the time to make your application stand out above the rest. 

If you already missed the boat on scholarships and have student loans to pay back, you have to start paying back your debt.  You can reduce your debt load by consolidating or refinancing your loans.  By consolidating you student loans, you are reducing interest rates.  Interest rates are much lower now than when you probably first got your loan. 

Auto loans are another way the debt can add up fast.  Car companies everywhere are offering deals that seem really awesome on the outside, but underneath they are really debt traps.  Steer clear of auto loan debt by putting more cash down on your vehicle when you buy; your goal should be to pay with cash.  You should also look for short-term financing options so that the loan will be paid off faster.  You may have larger payments, but you actually will save money down the line.  If you have a high interest rate, you can usually refinance and get lower rate.

A simple solution to begin reducing your debt overall is to set up automatic payments for your bills.  I know how easy it can be to push away medical bills, student loans and auto loans every month.  At the end of the month, instead of deciding between paying down your debt or making a run to the mall with your credit card in hand, that decision will be much easier because your payment has already been deducted.   Debt can be scary and it may be a tough journey, but it will be worthwhile when you are able to say that you are debt free.

  

*http://www.projectonstudentdebt.org/

Financial Aid Info:

FinAid.org
Fafsa.ed.gov

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05.04.11 BALANCE
Posted under: Checking, Credit, Debt, Investing, Loans, Money Management, Saving Posted by:

So I wanted to let everyone know some exciting news from Georgia’s Own.  GOCU and i[x] are proud to announce your newest benefit of membership: BALANCE Financial Fitness Program.

BALANCE is a free and confidential money management tool to help you stay on the path to financial freedom.  Whether you’re interested in developing an easy spending and savings plan, getting out of debt, taking a look at your credit report,  or buying a home, i[x] and BALANCE can help.   They have chapters for you to look over and even provide a quiz to allow you to test your knowledge of the subject.

BALANCE also has counselors available throughout the day to answer any questions you might have.  To use the program, visit BALANCEpro.net or call 888-456-2227 to begin taking advantage of this FREE resource!

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04.21.10 Back to the Basics
Posted under: Debt Posted by:

We talk a lot about what to do if you are in debt or are trying to climb out of the hole, but I wanted to take it all back to the basics of personal finance.  Think about grandparents and older generations. Are most of them in good financial shape?  The answer for me is, yes.  One large reason that they are in better financial standing than most in our generation is likely due to the fact that they were much more frugal than we are.  They spent money on only the important things (think necessities, not keeping up with the Jones). The biggest thing that they did to help their financial health was to live within their means.  They knew that they could only buy the things they needed and only what they could afford.  So let us take a page from them and get back to the basics: work hard, save money and avoid debt as best you can. And what debt you do have, be responsible and work towards paying it off.

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04.15.10 Dump the Debt
Posted under: Debt Posted by:

Debt.  It is a dirty little word! Some of you may be in debt and the rest may be scared of it.  Don’t fear however, I have a few tips that will help you dump that debt:

  • Plan, Stan-Have a spending plan so that you can spend your money most effectively and in a way that ensures financial success.
  • Save, Save, Save- The easiest way to avoid debt is to have some money set aside for those emergency situations.  Have a small amount deducted from each paycheck into a savings account. A good savings goal is 6 months to a years worth of expenses.
  • Automatic Bill Payments- If you set up automatic bill payments, you will be sure to avoid any late fees, which could hurt your credit in the future.  Check out Georgia’s Own Bill Pay system here.
  • Don’t be Fooled- Debt settlement companies will try to come in and set up great plans for you to pay back a percentage of your debt.  A good rule of thumb is: If it’s too good to be true, it is.
  • Do not ignore your financial problems, it will only make it worse- If you feel you have done everything you can, don’t give up; contact a credit advisor who can steer you in the right direction toward free classes and workshops on setting a budget, managing your money…and much more.
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