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Reducing Debt Before Its Too Late ... How To Avoid The Pitfalls Of Creeping Debt
Reducing debt usually isnt a high priority for people until they have already gotten into trouble with overspending. Using a few basic guidelines, and debt calculations, can help you see when your debt load is getting into the danger zone.
First off, creditors use budgeting guidelines when reviewing and approving credit. If your debt exceeds the financial communities recommended guidelines, then you have a higher risk of credit applications being denied.
Getting, and keeping, your debt in line with recommended budgeting guidelines, is an important step in debt reduction. Use the following recommended budgeting guidelines the same ones used by Financial Institutions to review the items in your budget:
Housing 35% - Mortgage or rent, taxes, repairs, improvements, insurance, and utilities;
Transportation 20% - Monthly payments, gas, oil, repairs, insurance, parking & public transportation;
Debt 15% - Credit cards, personal loans, student loans & other debt payments;
All other expenses 20% - Food, insurance, prescriptions, doctor & dentist bills, clothing & personal;
Investments & Savings 10% - Stocks, bonds, cash reserves, retirement, rental real estate, art, etc.
Debt Income Ratios
The second step is calculating your debt income ratio. Once you know what your ratio is, you will understand just how important debt load is to your overall financial picture. Your debt income ratio is the percent of your monthly take-home pay that goes to paying debts.
You calculate it by taking the amount needed to repay debts each month, including rent or mortgage, and divide by your take-home pay your net pay after taxes. Remember, this is "Debt" ratio, so only include actual debt repayment in the calculation.
Credit To Debt Ratio
Just because you pay off a credit card is no reason to close your account. One little known fact about the Credit to Debt Ratio is the reverse effect it has on your credit score. If you pay off a credit card, and close the account, you are actually negatively impacting your credit score.
The reason for this negative effect is in the calculation of the Credit to Debt Ratio itself. This ratio is the relationship of your debt total vs. your credit limit.
You calculate it by dividing the total credit limit of all credit cards and loan accounts by the total of the actual debt spent total. Now, if you pay off a credit card, you are reducing the actual debt, which is great, but, if you close the account, you are also dramatically reducing the credit limit you have, and usually by a higher percentage than the debt reduction.
Pay Yourself First
Essential to long-term financial success, and protecting your future, is paying yourself first. While this may seem easy to do, it happens to be the last thing most people do, instead of first. Debts and other financial obligations, money for entertainment, and other spending always seem to take a higher priority. All I can say is, STOP! Think about it, if you arent worth being paid first, then who is Always put something away in your savings, and leave it alone. It doesnt matter if its only $5 a week, just do it!
Snowball The Credit Cards
Last, but not least, is making extra payments, not just the minimum payments, on your credit cards. You have probably already seen this many times, but it just cant be stressed enough. Paying just $10 extra a month on a credit card, above the minimum required payment, can cut your repayment term in half, if not more! So, squeeze out that extra payment, however small, every month, and take advantage of the compounding effect of snowballing your debt away. The Power of Financial Knowledge
Remember, you dont have to be a financial whiz to understand whats going on with your credit and debt. Just a few simple calculations, and an eye on the future, will go a long way to help you succeed financially and keep your debt under control. Be safe, be smart, do the math!
Moving On: Powerful Tips For Selling Your Home
Maybe youre moving to a larger home to accommodate a growing family, relocating for a new career opportunity, or purchasing a townhouse for retirement.Whatever the reason for the move, youll need to take the necessary steps to sell your home for the best possible price, within a reasonable amount of time.Where do you begin
The 3 Keys To Business Victories
No matter what business you are in there is a high chance of failure. Why Because most people dont do the research and keep the right focus needed to succeed.
Virtual Assistance; A Money Saving Opportunity For Employers.
What is a Virtual Assistant A Virtual Assistant is a highly skilled, independent entrepreneur who provides business services in a remote or virtual environment. Some have used terms like telecommuter or working from home.
Classifieds with Localized Shopping
The Mjmls Classifieds, http://www.mjmls.com, received a modest improvement, with the utilization of a new GoLocal™ Feature. After several months of, “Beta-Testing,” various localization models, the Mjmls staff decided to implement a feature allowing users to sort advertisements by State or browse on a National level, using a simple, “Dropdown-menu”.
5 Simple Steps:Earn an EASY ROTH-IRA Million!!!
So, you wanna earn a million dollars, super-duper easy How would you like the federal government to give you a big, huge tax break Wouldn’t it feel deliciously good to earn a Million Dollars of income, completely tax free How would you like to earn a million dollars of income passively, quietly, without lifting a finger Well, put your seatbelts on, folks, because in a brief nutshell, I’m going to introduce you to the financial vehicle that you’ve been looking for! Welcome to the wonderful world of investing through a ROTH IRA in 5 simple steps:
Deep Linking Strategy for Content Sites
Linking - what a mess if you dont know whats going on. Either linking is "IN" or its "OUT" according to what you read these days.
How To Incorporate The Most Powerful Marketing Strategy Ever Invented Quickly And Easily!
Without a doubt, if you asked me, Shane if there was only 1 marketing strategy that you could use on the Internet, what would it beWithout hesitation I would say joint Ventures. Joint Ventures are easily the most lucrative Marketing Strategy ever invented and if you learn to do it right, will likely be the ONLY marketing strategy you will ever need to use.
What’s Your StyleA Guide to America’s Most Common Home Styles
Styles of houses vary across the country.From the New England Cape Cod to the Victorians of San Francisco, the choices are almost endless.Knowing which style you prefer is one of the basic elements in your hunt for the perfect home.
Networking - Its Important!
Networking opportunities are everywhere. Dont let them pass you by.
Is Your Business Safe
Well, is it! Do you back up your files on a regular basis Do you have a back up plan in place What’s important to your business and what isn’t What happens if you get hurt, who will run your business Do you have customers come to your business What ifthey get hurt, are you covered What about all the equipment you have, is it covered
Your Business At Stake
The Top 20 Web Mistakes Small Businesses Make
My parents made a monster. Little did they know 30 years ago that they would get exactly what they wished for. Like W.W. Jacobs tale of "The Monkeys Paw", they got what they wanted, for better and maybe even for worse.
Private Mortgage Insurance PMI
If your down payment on a home is less than 20 percent of the appraised value or sale price, you must obtain private mortgage insurance, known as PMI, with your lender. This will enable you to obtain a mortgage with a lower down payment because your lender is now protected against any default on the loan.
The Truth About 1-900 Numbers
900 numbers have been heavily advertised over the last few years as a great way to make money. Everybody from Dionne Warwick to Don Lapre are getting in on the pay per call action
Need A Sales Boost – Try These!
The telephone is still the best and most effective way to reach people. It can help generate more sales and build your business. Unfortunately most people don’t like the telephone and don’t use it effectively.In order to become more proficient using the telephone, you need to follow some basic guidelines and then practice, practice and then practice some more.
Mjmls.com Offers a New Advertising Venue
After conducting months of research towards developing an online Marketplace, Mjmls.com initiated beta-release of a new Classified Advertising Venue http://www.mjmls.com. With several modifications to the Mjmls Website, users will now see the Classifieds as the main page at Mjmls.com. The original Web Directory, has been moved to a Sub-domain on the server, but is still available for Webmasters to promote their Site through a, “Link-Exchange”.
I Would Give Anything To …
A couple days ago I was listening to a CD by one of the most successful speakers in the industry. He has been around for many years and is considered one of the greats. He is also considered to be somewhat off the beaten path.As much as he is admired and respected by many, he is judged by just as many. The segment I found most intriguing was one about how others often say to him, “I would give anything to be a successful speaker and author just like you.”
Your Yearly Living Trust Review
Some time ago, Congress made certain changes to the estate taxes.As a result of the changes, effective January, 2004, the tax free amount increased to $1,500,000. Back in 1997 it was $600,000. This allows a married couple to leave a minimum of $3,000,000 tax free.
The Angry and Sometimes Grumpy Children of the 1950s
A bunch of us in our late 40s and early 50s got together the other night, and after the evening was over I started thinking that many of us born in the 1950s are in a crisis stage. People cant understand why we are so angry and grumpy sometimes. This article discusses some of the issues we have with society today and might enlighten others the younger set as to why we seem so disillusioned, and out of sorts at times.
Get Your Money For Nothing
Youve probably heard them all. You know, the "make $1,000 while you sleep without doing a lick of work" BS pitches. Well, let me tell you, it doesnt happen that way.
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