3 Important Tips to Get Out of Debt

In this day and age, it only takes a few financial missteps and many consumers can find themselves in trouble. The one factor that exacerbates this is debt, or, to be more precise, overwhelming debt.

For some consumers, getting out of debt simply means tightening the household budget and being more stringent on new purchases. For others, the challenge of getting out of debt can be more daunting. In either case, the best self-help plan for relieving debt is planning and discipline.

Here are 3 important tips to be practiced for getting out of debt.

• #1 : Stop increasing your debt.

If you have any credit cards that are maxed out, cut them in half. If you have more than one remaining credit card, cut them up. When you finish, you should have no more than one credit card. Also cut up any “convenience” cards, such as gas cards, department store cards, etc. You will use your one credit card ONLY to buy “must haves” (see below) until you can get your spending fully under control.

• #2 : Record your spending.

The idea of writing down what you spend is a concept most people find annoying at best and useless at worst. However, this is actually your key to getting out of debt. You’re in debt because you spent money you didn’t have. If you’re like many people, your debt didn’t come from one single huge purchase; it was trickles of spending amassed over time. Avoiding more debt starts with knowing what you are spending your money on. Each day for one month (at least), write down every penny you spend, no matter how small.

• #3 : Categorize your spending.

Categorize your monthly expenses into logical groups of “Must have,” “Should have,” and “Like to have.” “Must haves” are things that will cause harm if you don’t buy them, such as food, rent, medicine, pet food, etc. “Should haves” are things that you need, but can do without for a little while, e.g., new clothes for work, gym membership, etc. “Like to haves” are things that you don’t need, but enhance your life, e.g., magazine subscriptions, newspaper, cable tv, weekly coffee with friends, IM on your phone, etc. By doing this, you’ll have a good idea of what you spend your money on, and you’ll be able to figure out where you might need to cut back on spending. You don’t want to eliminate all of the “should haves” and the “like to haves,” but take a look at those first. One of your expenses will be paying off your debt. You will want to always pay more than the minimum required, otherwise it will take a really long time to eliminate your debt. For example, a single credit card with just a $1,000 balance and 19% interest will take about FIVE YEARS to pay off by making only the minimum payment of $26. Paying the minimum, you will spend $1556.40, with the Total Interest Paid: $556.40! Paying only the minimum payment will equate to giving them 55% more than you actually borrowed.

How To Get Out Of Debt

Step 1: Discover the Size of the Problem

One of the things that people are in serious debt do is ignore it -they don't open the mail which brings the demands for final payment or shows them the 100's of dollars they are spending on credit card interest. They are in denial. You cannot fix any problem that you are in denial over. So if your debt is a a problem to you or your family you need to face it and see the size of the problem.You need to learn how to save money - not spend it!

Find out the size of your debt:

* over due bills balances owing, payment terms, interest rates

* credit cards, store cards and similar - balances owing, minimum payments interest rates.

* car loans

* Hire Purchase payments

* house mortgage

* loans from friends and family

So this is the size of problem. Start a spreadsheet or piece of paper - for each loan take a line and note:

* the total debt

* the interest rate

* minimum payment terms and date e.g. 20th month

Step 2: Decide On your Goal

The total figure you came up with might be a little scary! Getting out of debt sounds like a good idea - but does that mean that all debt is bad? Not all debt is bad - borrowing to buying assets can be a good thing - you can out ahead financially if the asset you buy increases in value by more than the interest you pay on the loans.

Unfortunatley a lot of people are confused as to what is an asset - an asset is something that makes money. A rental property or a share portfolio are assets - they make money. A car, a widescreen TV, a gorgeous pair of Italian shoes are not assets - they not only don't make money but their value commonly drops significantly as soon as you buy them, worse some of them will cost you money to keep - such as the car. So do you want to be debt free? Consumer debt free? Once you are free of consumer debt your options to save and invest are wide open.

Step 3: Now prioritise your debts:

Top Priority Debts

Those that by not paying you are endangering your basic quality of life and your credit rating:

* your rent

* your utilities including power, telephone, water

* other utilities: broadband, pay TV,

* any bill that is stamped final demand or which has been forwarded to a debt collection agency

Lower Priority Debts

The other debts probably are in the second priority pile. These may include:

* Loans from families and friends

* credit card debt

* the mortgage on your home

The first group has to be paid and now. Contact your creditors, talk to them, agree a payment schedule and STICK TO IT.

Cancel the utilities that you don't really need: pay TV, broadband or downsize to the cheapest package. Check the fine print, you don't want to be hit with too many penalties for cancelling, but at the end of the day paying a termination fee will probably less than another 3 months of payments.

The lower priority debts. Most people seem to get into debt with credit cards, especially consumer debt. In general pay off the debts that you are paying the highest interest rate on first. However if you would like some instant gratification, take on some of the smaller outstanding amounts first so you can see clear progress.

Step 4: Analyse your Spending

You weren't born in debt! How did you get into debt - was in an unfortunate event: marriage split, loss of a job, illness. or has it just developed slowly over the months and years? If its the latter the issue is clearly that you are spending more than you earn. If your debt is the result of a one-off event then you still need to find some cash to pay of your debts and get your self back on a financially secure footing.

Buy a small notebook and carry it around for a week or 2 - write down everything you spend - everything, the paper, the milk, include anything you put on a credit or debit card too. It's OK I'm not saying do it for ever - just do it for a typical 2 week period- not when you're on holiday, not just before Christmas, just a typical 2 week period. Ideally get everyone in the household to do - or at least those that are contributing income! Now analyse your spending: you can use software or a spreadsheet or pen and paper.

Allocate your spending to some basic categories like:

* groceries

* lunch out

* takeaways

* cloths

* vehicle running expenses

* public transport

* hair dresser

* coffee out

* gym fees

Do you see a pattern - are you shocked at how much your take-away coffees are costing? Had you not realised what you were spending on lunch - whatever it is I guarantee you will find a number of items which shock you.

Step 5 Decide on an Action Plan

Reduce your regular spending

Budgeting is a bit like dieting - if you decide that from now on you are spending nothing on clothes, lunches, shoes, clothes or whatever else it is that you spend money on - it will last a week or maybe a month and then you'll have a blow out. Budgeting, just like dieting, has to be a lifestyle change, and it has to sustainable. If you live to own designer clothes then that's OK, but maybe you can limit your outfits to 3 a season rather than 5? Budgeting is the key to that age old question: how to get out of debt. If you love to go out on the town and drink and party - can you limit it to twice a month, rather than once a week? Yes you are going to have to make some changes but think about your goals and dreams not the spending reductions now!

Sell things

Can you sell stuff to pay of debt? EBay and other auction sites are wonderful places to get rid of your unwanted clothing, the glasses given as a present 5 years ago which you've never used. The toys the kids have grown out of. You not only make some cash you get to de-clutter your life as well!

Can you sell your car? It's not just the car loan that's costing you money but the insurance, taxes, registration, services and petrol! Can you reduce from a 3 car household to a 2 car household or a 2 car household to a 1 car household plus bike or scooter? You not only save money - you save the planet as well? Even if you need to keep the cars you have look at selling them paying off the loan and buying a car you can pay cash for - no more car loan ever that sounds good doesn't it?

Substitute cheaper items

Can you move to a cheaper apartment, if you rent?

Can you save at the supermarket by going to a cheaper one? Can you buy no-name brand items on the things that don't matter i.e. they all taste /act the same e.g. butter, sugar, flour, toothpaste, shampoo, toilet paper. If you like luxury foods then buy them on special, if you have the space and the cash buy items you use all the time in bulk if its cheaper. Take a calculator with you to do the sums!

Can you buy books or clothes at a second hand shop rather than new - you will probably find stuff you would never find new anyway!

Get a cheaper credit card.

Yes I am saying consider applying for another credit card! I am NOT saying use it to buy stuff on though! One of the reasons people have trouble getting out of credit card debt is the punative rates of interest charged and the low minimum payments. So increasing your payments will certainly help - but try to reduce your interest bill will help even more!

One of the reasons to protect your credit rating is that if you are still a good risk you may be able to find a new card which will allow you to transfer an outstanding balance for a low or reduced interest rate. Say you believe you can pay your card debt off in 6 months but you are currently paying 20% interest, if you can find a 0% or 5% credit transfer deal take it - and focus on reducing the debt to zero in the time frame. Whether you cut up the card or not depends on whether you can trust yourself not to get into debt again with it. Smart people don't fund their lifestyle with credit card debt - they use a credit card to reduce bank fees, earn frequent flyer points or other awards and pay it off when due - banks hate those who do that!

Extra Income

Can you go for a promotion at work? A new job? A second job? Even if for a short period of time this might be worth it - though check how much you will nett out of it after work expenses, commuting, and taxes.

Get the teenagers out working a paper-run or in a fast-food outlet - its a good way for them to learn about real-life anyway!

I said earlier that budgeting is like dieting. Its actually a lot easier than dieting - with dieting you can go for weeks without seeing any results, you give up for a weekend and all the weight comes back on! Budgeting isn't like that though - I guarantee that if you reduce your debt you will start saving. Its a snowball effect, as you reduce debt you reduce the interest you are paying which allows you more spare cash to reduce more debt.

Step 6 Putting it All Together

So now you have a list of debts A some cash from selling things Extra income coming in from you extra job Less money being spent on the necessities of life.

Now go back to you list of debts. Start with your highest priority one, how long will it take to clear it with the extra cash you have? Now once you've cleared that one, take the extra cash, plus the re-payments you were making on the initial debt (no longer needed as you cleared it ) and apply it to the next item on the list as and so on. It really does work.

Remember though no more getting into debt for consumer items otherwise you will put yourself back at the start again! Remember that getting out of debt is just a tool - the real aim is to take control of your life and fulfil your goals and dreams.

Credit Card Debt Management Can Help To Prevent A Financial Crisis

For how many years have you used credit cards? Are you facing any difficulties with the use of charge cards? Have you ever identified the mounting problems you are facing at the? If not, keep it in mind that the arbitrary use of credit cards without doubt leads to the emergence and continuation of a great financial crisis, and in a majority of incidents the entire situation gets out of hand, even before you start to realize it.

If you have ever faced, or are facing any similar type of situation it is imperative for you to keep your finances in check, and at the same time be aware of the saga of credit card debt management. If you become attentive, and go through the entire issue you will find that there are several credit card debt management programs that are free or cost little, and facilitate you to regain control of both your finances and personal life.

Therefore, talk to the manager of a credit card debt management program, he or she is the best person to help you get out of this situation. They can show you the existence of several such programs or how you can easily simplify your payments. Once you are out of this credit card mess, you will get a great option of selecting any form of payment with a low interest rate, and that will enable you to save money. It will also reduce your debt by almost half and the interest rate will be lowered to a great extent.

How does this credit card debt management appeal to you? Many experts say that the removal of any economic crisis is possible by an effective credit card debt management and the ultimate goal is making one debt-free within a couple of years.

Acknowledge and Act

How do you manage after you have caught up? For this you need excellent planning and the will to stick to the plan. The efficacy of credit card debt management lies in the fact that, before purchasing any product on credit, you or any concerned consumer should be conscious of the way you plan to repay it. With your desire for expensive products, keep in mind that you will be led to a long-term debt. Reckless buying always adds to a crisis. If you fail to manage properly, take the help of the non-profit credit and free card debt management programs. They are the best way to help you get rid of your existing financial situation.

Understanding Your Current Personal Finance Situation

It is important: understanding your current personal finance situation is something that every person needs to do. By understanding what is going on with your personal finances you will be able to better control them. This can be one of the best ways to avoid money problems and debt.

Getting started is the hardest part. It can seem almost impossible to figure out where to begin when tackling finance issues. The best place to start is to simply look at expenses and income.

As the staples of a good budget, something every person should have, expenses and income are the main financial issues a person needs to understand. To begin you should gather all the relevant information. You may want to get bills, pay stubs and anything else that could help you list out your expenses and income.

The first thing to do is to track your daily expenses. This includes eating out, shopping and gasoline. You want to include these on your expenses list. You may need to gather receipts or actually keep a log for a week to be able to come up with an accurate account of your daily expenses.

Write out a list of expenses and then write out your list of income. At this point you should concern yourself with ensuring everything is listed. If your expenses or income vary then try to get a good average. You should have expenses separated into daily expenses and monthly expenses so you can see where your money is really going. Plus this will help when you go to budget your money.

Now you can begin to look at your debt. You should make out a list of your creditors. Your list should include the creditors contact information, the balance of your debt and the interest rate.

Now you should look at your personal finance accounts. This includes things like checking, savings and stocks. You want to list them all, including their current value or balance.

After going through your expenses, income, debt and personal finance accounts you should have a fairly good idea of where your personal finance matters stand. This should be a great platform for you to build upon to get your personal finances in good order. From this information you should be able to create a budget, get debt under control and best manage your personal finance accounts. You should be able to get the big picture about your personal finance situation and to understand it completely.

PNB to offer balance of ASM units to all

It has set maximum limit of 20,000 units per account holder

KUALA LUMPUR: Permodalan Nasional Bhd (PNB) will offer the remaining 1.6 billion Amanah Saham Malaysia (ASM) units, including those initially set aside for bumiputras, for subscription by all Malaysians from July 21.

President and group chief executive Tan Sri Hamad Kama Piah Che Othman said to ensure a fair distribution to the public, a maximum limit of 20,000 units had been set per account holder during the offer period from July 21-27. The limit would be void after the offer period.

“Thereafter, investors can subscribe for the ASM units without any maximum investment limit, depending on the amount of units left.

Tan Sri Hamad Kama Piah Che Othman ... ‘Sales of the additional ASM units are based on a first-come, first-served basis.’

“Sales of the additional ASM units are based on a first-come, first-served basis,” he told reporters here yesterday.

ASM is an equity-income fund aimed at providing unitholders with a long-term investment opportunity that generates regular and competitive returns through a diversified portfolio of investments.

According to Hamad, the remaining 1.6 billion ASM units are from the 3.33 billion units launched in April.

Of the 3.33 billion units, bumiputra investors were allocated 50%, Chinese 30%, Indians 15% and other races 5%.

However, only the allocated units for the Chinese and Indian investors were fully subscribed and it has now been three months since the fund launch.

“We will continue to hold seminars and talks on the benefits of investing to encourage more bumiputra participation in our unit trust products,” Hamad said.

PNB has confirmed that excluding Amanah Saham Bumiputera, there were some 6.6 billion units that have not been taken up by bumiputra investors.

These are from unit trusts such as ASM, Amanah Saham Wawasan 2020, Amanah Saham Didik, Amanah Saham Nasional dan Amanah Saham Nasional 2.

On the 1Malaysia Unit Trust as proposed by Prime Minister Datuk Seri Najib Razak last week, Hamad said an announcement would be made soon.

Meanwhile, a PNB spokesman said it was not aware of any practices of its agents such as banks on reserving ASM units for selected customers.

“We are not aware of such practices nor do we encourage this,” the spokesman said, referring to the latest ASM annual report which revealed that in the top bracket of unitholders, there were only 296 individuals holding a whopping 264 million units.

This translates into an average of 893,068 units per person.

What Can I Do To Avoid a Personal Financial Crisis

With the current financial crisis not going away anytime soon, many are getting worried about the possible negative implication to their finances. Some will end up retrenched, some will have pay cuts, and some will not even get that increment or bonus that they worked so hard for. How we plan our finances during this crisis will depend largely on our individual situation. I have always maintained that it is not wise to have only one main source of income. For most people, their main source of income is their job. Some would focus on it during the day and even bring it home during the night. In my opinion, this is an unhealthy work style and it also distracts you from also focusing on your other sources of income. If anyone mentions that this financial crisis will not affect them or their company, they are in for a big surprise. According to IMF, this crisis is one of the worse since World War 2 and it may prolong well into 2012. As for any right minded individual, eking out a living from their job, this becomes a problem. As times gets bad, people will spend less. When people spend less, companies will earn less. When companies earns lesser and lesser, retrenchment and pay cuts are inevitable in order to maintain the percentage of profits that their shareholder demands. This is a vicious cycle where employees who are consumers themselves are forced to “tighten their belt” and reduce their expenditure. Thus, further worsening the financial crisis.
Now, what do I mean by other sources income? Like I said before, I do not encourage people to only have one main source of income, their job. In the event that they get retrenched, how are they going to pay their bills and support their family? Here are some ideas on earning extra income.

• Join MLM companies to sell their products. This is a good start to rake in some sales and earn some commission as the entry cost is cheap.
• Join insurance company on a part time basis to promote their insurance product. Insurance provides a very good passive income for every sale that you make as the customer will have to service their insurance in order to maintain it.
• Join a unit trust company on a part time basis to promote their funds.
• Sell tangible stuff online. Nowadays there are a lot of opportunities for people to become business owners through the web. Companies such as eBay or Lelong.com allow you to sell your products to customer (with a fee) through their website. Selling online allows you to reach potential global customers who you might not be able to meet if you are running a physical store in some shopping complex.
• Passionate about swimming? Simply adore cooking? Take your hobbies to a new level. Offer classes for swimming or even do some catering during the weekends.

If you are uninterested in all the above mentioned, then my final advice during this uncertain times is “Create an emergency buffer of cash”. Always have an emergency cash of at least 6 months expenses to cover for any unfortunate eventuality that might occur during this critical period. If you do not have an emergency buffer, this is a good time to start. You never know what might happen and it’s always best to plan for the worse in any financial crisis before it becomes a personal financial crisis.