How To Create Your Own Emergency Fund?
August 7, 2008 5:52 am DebtHow To Create Your Own Emergency Fund?
Do unexpected car repairs, quarterly insurance payments or unexpected medical bills find you hard pressed to squeeze even one more dollar out of an already stretched monthly budget? These are inevitable expenses and sometimes can put you under a stress condition when you need the cash to pay for these emergencies and unexpected expenses. But if you learn to budget for these emergencies events and save in advance, you will be at a better position to handle them.
Like most of Americans, you may stretch your income to cover the regular monthly expenses, and always choose to ignore or not to think about the brakes that are getting spongy or the plumbing that’s beginning to make strange noises. And you end up a surge on your monthly expenses when the brakes wear off and the plumbing break out.
Planning and saving for those events can help prevent an ordinary life from turning into a crisis and can also cut down dependence on credit cards. Not having savings is a major reason people get into debt.
Here are some steps to help you get started to plan for your emergency fund, the “Saving” fund which will help you prevent financial disaster.
1. Identify your irregular expenses
Analyze your pass credit card statement and checking account registers to identify your irregular expenses occur throughout the year. Examples of these irregular expenses are property taxes, insurance premiums, vacations, car tune-ups, holidays and birthdays. List down in a piece of paper all the expenses which are not spent in monthly basis.
2. Write the anticipated amount on the calendar
In most of cases such as insurance premium and property taxes, you will know when the expenses are due to occur. And for those unknown cases such as car repair and plumping repair cost, try to anticipate their expenses and list them somewhat earlier than you actually expect them to come up. Be sure to update your calendar as you discover more expenses.
3. Plan-in the non-monthly expenses into your monthly spending
Based on the foreseen amount and anticipated amount that are captured on your calendar, plan ahead your non-monthly expenses into your monthly spending. For example, you know that your car insurance is going to due on May, set aside small amount of your money for this purpose starting on February. And when May rolls around you can transfer the expense to your spending plan and have money available to pay it. Setting aside even a few dollars each month for foreseeable expenses can prevent larger money woes ahead.
Sometimes, you may find it hard to set aside some extra money from your monthly income; but remember, repairing your car or paying your insurance is not optional expenses and you need to spend it soon or later. So you need to find a way to reduce your monthly expenses so that some money can set aside for emergency fund. You may need to track your spending; then, reduce or cut the optional expenses such as entertainment, dinner at restaurant and other impulse purchase, the money save from those optional expense can be put into your emergency fund.
In Summary
One of the mistakes people make when trying to get their finances under control is not having an emergency fund on their savings account. The problem is that if you don’t have money set aside for those unavoidable bills, you inevitably end up adding to your credit card balance to cover the difference.
The bottom line is to start today. It may be discouraging at first if you find that you don’t have enough money to fully fund your emergency fund, but you’ll begin to succeed the minute you start the process.
Cornie Herring is the Author from <a href="http://www.studykiosk.com/CreditBasics/" target="_blank">http://www.StudyKiosk.com</a>. "StudyKiosk-Credit Basics" is an informational website on credit basics, <a href="http://www.studykiosk.com/CreditBasics/DebtConsolidation/Student_Loan_Consolidation.aspx" target="_blank">debt solutions</a> and <a href="http://www.studykiosk.com/CreditBasics/DebtConsolidation/Bankruptcy_Debt_Relief_Attorney.aspx" target="_blank">bankruptcy</a>.
Qualified Debt Consolidation Leads
Debt consolidation leads are literally booming. Every day thousands of leads are passed to consumers and companies through telemarketing agents or pre-programmed software, which generates and promotes debt consolidation leads. Whenever a debt consolidation company clearly defines its potential consumers, then it is termed as ‘qualified leads’. With the increasing use of technology , companies offering debt consolidation services are more and more dependant on specialized software, which enables them to generate these leads quickly and inform ‘qualified leads’. Debt consolidation references have come here to stay. They are finding more and more takers by the day. The reason for their popularity is not difficult to see. People need money for various reasons and some time or the other has no option other than to borrow. People are spending more on shopping, housing and cars, to mention only a few. The booming world economy and increasing pay packets have resulted in consumers spending more. Today, even the young, starting out on their career are earning more and don’t mind splurging on sometimes, even on luxury items. Research points out some of the youngsters, just out of college, have sometimes up to 7 or 8 credit cards. This goes to show the changed purchase patterns and buying behaviors, which has been driven by availability of easy money. Even though one may be earning well and this gives you the confidence to go in for debt consolidation leads, one has to take an informed decision. Visiting online resources is a good way to find out in detail about the modus operandi of debt consolidation companies. You can also find out more about, for instance, the various intricacies involved in going for a debt consolidation lead. You can also discuss with your financial advisor and get to know more about these qualified debt consolidation leads. Once you are clear about at least the basics, then it makes your decision on qualified debt consolidation leads, that much more easier. Telemarketing plays a major role in the success of debt consolidation leads. In fact telemarketing debt consolidation leads are primarily responsible for the leads reaching the potential consumers. Debt consolidation companies generate leads through numerous sources. The most popular being online resources. Many companies offer these leads on their web sites, in the form of pop-ups or as banner advertisements. The debt consolidation companies pick up these leads and through their contact centers, do extensive telemarketing, passing on these leads to qualified customers. Advancing technology means that debt consolidation leads are being generated in larger numbers and are reaching an increasingly large number of people. ‘Live’ leads are generated by telemarketing agents, who are constantly in the look out for potential consumers. One is literally, bombarded by these calls from various debt consolidation companies offering the latest current lead. Such is the competition among these companies that you also have debt consolidation ‘transfer leads’, which allows the consumer to actually migrate from one company to another. You also have pre-programmed software, which does the telemarketing job for the debt consolidation companies. The entire process works like this. The automatic software finds out the generated lead and a predictive dial up calls up the consumer and ‘talks’ using a proprietary telemarketing script. The consumer can then choose for specific leads, which may suit his needs and simply hang up. His /her needs would be met by the debt consolidation companies in a matter of minutes. Such is the intense competition. Debt consolidation companies are finding increasing takers because of their ability to manage debts better. Consumers can now consolidate their repayment into one single assorted payment, thanks to the advent of these debt consolidation companies. The dept consolidation companies now negotiate with creditors for your repayment options, balance and time period for your repayment, to mention only a few. Debt consolidation has its drawbacks too. For one they actually extend the period of loan, at the same time making you pay more, over the same period of time. This is where compound interest comes into picture. Care should be taken about taking all these factors, while going in for debt consolidation. Another major disadvantage with debt consolidation lies in the fact that one is dealing with only one creditor. This can lead to difficulty in negotiation of repayments, should one face further financial problems. Debt consolidation companies usually ask for a security. This is mostly in the form of a home. One stands to lose the home, should one not repay the loan amount in time. It is therefore important that consumers make a prudent choice and calculated choice when going in for debt consolidation.
KJ specializes in helping homeowners receive competitive home loan quotes. For a free Mortgage Refinancing Advice and Quotes and to find the best mortgage rates visit www.homeandfamilybills.com
Debt Solutions - Your 12 Ways Out from Debts (Part 4)
Being in debt is no fun, especially if you are struggling to make ends meet. Because debt is a complex issue but there may be more than one solution. This article will outlines 12 common methods use by most of debtors to get rid of their debts. Among these 12 debt solutions, there may be one or more options which you can use to solve your financial problem.
6 debt solutions: Self Repayment Plan, Debt Settlement, Debt Consolidation, Debt Consolidation Loan, Credit Counseling and Cash out Refinance had been discussed in the past 3 parts (Part 1, 2 & 3), this part will talk about another 3 common debt solutions.
Retirement Benefits
If you have a 401(k), plan or certain types of pension plans, most employers allow you to borrow against your retirement account. Typical plans allow you to borrow up to half your vested balance, but not more than $50,000. You usually must pay the money back, with interest, over five years. If you don’t repay the loan, you will owe income tax and a 10% early withdrawal penalty. This type of loan offers low interest rates and is much easier to handle. Hence, you can borrow against this retirement account to settle the high interest rate loan.
There are a couple of big drawbacks which you should aware of. First, you are giving up the tax-free compounding of the money you withdraw. That could lead to a significantly smaller amount on retirement day. Also, if you leave your current employer for any reason, you will probably have to pay the loan back immediately or face taxes plus a penalty.
Credit Union
Credit unions generally have lower interest rates and fees on loans. These loans normally offer to member only. If you are not a member, check with your employer, or organizations of which you are a member and find out if you are eligible to join one.
Most loans are 1, 3 or 5 years in duration. From time to time individual credit unions will offer special loan rates so it is beneficial to check in with your local credit union regularly. The type of loans available depends on your credit union.
A credit union loan has some very special features:
- Loans are insured at no direct cost to the eligible member.
- Repayment protection insurance is available as an optional extra.
- No hidden fees or transaction charges.
- Repayments calculated on the reducing balance of the loan. This means smaller interest repayments as you repay your loan.
- Repayment terms to suit your particular circumstances.
- Flexibility -you can repay the loan earlier or make larger repayments than agreed with no penalty.
- Additional lump sum repayments accepted with no penalty
Insurance
You can borrow from the life insurance policy at a very low interest rate in order to solve your debt problems. The most advantageous thing is that, you do not have to repay this loan. Your life insurance benefits will be reduced by the amount you borrow in addition to any accrued interest.
In Summary
Borrow money from your retirement account or credit union are another 2 methods to use lower interest rates loan to pay for high interest rates debts. Whereas, borrowing the money against your insurance mean that you are lowering your protection sum to pay for your debts. Anyhow, these are another 3 methods of debt solutions for your choices.
See you on part 5 for more debt solutions.
Cornie Herring is the Author from <a href="http://www.studykiosk.com/CreditBasics/" target="_blank">http://www.StudyKiosk.com</a>. "StudyKiosk-Credit Basics" is an informational website on credit basics, <a href="http://www.studykiosk.com/CreditBasics/DebtConsolidation/Accelerated_Debt_Consolidation.aspx" target="_blank">debt consolidation</a> and <a href="http://www.studykiosk.com/CreditBasics/DebtConsolidation/Bankruptcy_Debt_Relief_Attorney.aspx" target="_blank">bankruptcy</a>.
Debt Free Financial Advice
Debt free financial advice
Debt is a way of life. Everyone has it and uses it. However what everyone should strive for is to bring their debt free day forward.
Let me explain. Your debt free day is the day when all debts are settled and you are free of the shackles of debt. Everyone has one be it your retirement day or the day you die. The trick is to bring this day forward and settle all your debts early.
Think about it, how much better it would be to have 100% spendable income each and every payday
Lets first of all cover the types of debt most people have:-
Mortgages
HP Loans
Credit Cards
Store Cards.
Mortgages are by far probably the largest debt most individuals will ever have. Used to purchase your home is the reason why this will be the biggest commitment we take on. Although this debt is backed by the security of an asset, if you ever consider working out just how much you will end up paying over the term of the mortgage, I think you will be in for a big shock.
HP Loans are usually taken out to make those purchases that are just beyond our reach in terms of the amount of money we have available in the short term. The purchase of cars or furniture for instance. Taken over a shorter term than mortgages but have a higher interest rate payable.
Credit Cards give instant access to relatively small amounts of credit and apart from the minimum monthly payment they have no set term or repayment amount.
Store Cards as above, typically used to make purchases in a specific store and are more expensive than credit cards.
This is not rocket science, we all accept that some debt is necessary, the trick is to repay it as quickly as possible and ultimately pay less in interest.
Therefore, to become debt free the trick is to pay the debt with the highest interest rate first. Simply pay the minimum on all your other debts and pay as much off on those that charge more, typically store cards first then credit cards.
With reference to your mortgage there are typically two ways to pay this off quicker. Firstly, you could set up a standing order that pays 13 payments per year. This way you make an extra payment than normal which will go towards capital and will, therefore, reduce the capital amount and ultimately the interest charged.
Not all lenders, however, allow you to do this.
Secondly, with the onset off more flexible lending terms by nearly all institutions you could merely make a one off payment as and when you can afford it which will have the same effect as above.
You will be pleasantly surprised the overall affect these simple steps have on the overall cost of your home.
There in a nutshell that s all there is to becoming debt free.
Neil Mercer is a Consultant with STE Associates Ltd which is Regulated & Authorised by the Financial Services Authority. Check out his articles at www.neilmercer.co.uk
Bad Personal Credit
Bad personal credit can really be a debilitating problem for someone trying to get by in our society. With bad personal credit you re unlikely to be able to get any loans, or credit cards, and may have loads of difficulty trying to buy a car or put a down payment on a house. A bad personal credit rating can almost be smelled by banks and businesses, and you ll find yourself being rejected from things you didn t even know you could be rejected from. Yes, you may as well face it, a bad personal credit rating is the 21st century equivalence to leprosy.
The good news is, unlike leprosy, bad personal credit is usually rectifiable. Sometimes it s a very simple matter of paying some forgotten bills, other times it may take more time, but regardless of how bad your credit might be there are likely ways you can improve it. If you ve been getting rejected from loans or credit cards lately, chances are you have bad personal credit.
The first step in repairing bad personal credit is of course identifying that you in fact have it and more importantly, why. So a good place to start is with a credit report. There are a number of websites today that offer credit reports. While some of these sites are somewhat dubious, others can provide some valuable insights into your credit history, explaining why you might have bad personal credit. Some good examples of credit report companies include Equifax and Experian.
Often times when you get a credit report you ll see that your bad personal credit is due simply to a forgotten bill or two you never paid. Many businesses trying to collect on a late bill will turn to collection agencies, which will in turn wreak havoc on your credit rating until you pay up. Although these collection agencies are always supposed to contact you first, they don t always succeed in reaching you if you move around a lot and so you may have been a target for one of these companies without ever knowing it.
Of course, some cases of bad personal credit may be more complicated than just a single forgotten bill. And even in the simple cases, some amount of credit repair may be needed after you ve settled old debts. Additionally, as I learned when I first attempted to get a credit card, having no credit history at all is the equivalent to having bad personal credit. A good way to make permanent repairs to your credit, or to establish credit in the first place, is by getting a secured credit card and being religious about your payments for it.
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