November 18, 2011

Avoid Debt: Forget about the Joneses

Who hasn’t felt the need to 'keep up with the Joneses'?

Whereas social status once depended on your family’s name or title, the global rise in consumerism has also given rise to much greater levels of social mobility. Whatever your view on increased consumption, one of the negative aspects of it is that with so many different products on the market, we become increasingly likely to define ourselves in comparison to how much more or less our social peers purchase than us. It doesn’t even seem to matter what social sphere we belong to, as the desire to be socially accepted or to create social envy among peers impacts everyone. Not only can this social one-upmanship lead to unhappier lives, but by needing to spend more money in order to be socially accepted, we are also running the risk of spending more than we can afford. The price of ‘keeping up with the Joneses’ can be an expensive one that can lead us to debt.

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So why is continuously striving to 'keep up with the Joneses' so dangerous?

Firstly, you’ll never win. There are always more ‘Joneses’ out there. If it isn’t your next door neighbor, it will be other parents from the school run or your colleagues from work. And with increasing glottalization, now we have to keep up with everyone that we see on the TV and internet too.

Secondly, consumerism is a drug. Although we all need to make purchases in order to survive, if they are for the wrong reasons – for example due to a feeling of social inferiority – you are entering dangerous financial territory. Perhaps your neighbors drive more expensive cars or perhaps you are going through a divorce. Whatever inadequacy you are feeling is not going to be solved by purchasing consumer goods. And it is a perilously slippery slope if you can’t afford it.

Finally, and perhaps most importantly, there is very little proof to suggest that consumerism is in any way linked to happiness. Perhaps the greatest consumerist society is the USA, and rarely does the USA come out top in terms of studies of global happiness. Indeed, if you read scientific studies such as the Happy Planet Index (HPI), it would appear that countries such as Costa Rica place much less value on consumption and often contain much happier people. Why is this?

It may well be that frugality is actually a much better recipe for happiness than trying to ‘keep up with the Joneses’. What we really should value most in life – things like family, friendship, trust, love, compassion – do not come from money. Although money and what it buys may often seem to provide us with liberation, if we give it too much importance then our spending can spiral out of control and lead us into debt. So the next time you feel compelled to make ‘that’ purchase, you may want to ask yourself why you ‘need’ the product, and to remember the old adage that “the best things in life are free”.

This is a guest post by Mark, written on behalf of ClearDebt.  The ClearDebt site offers advice on personal debt and credit card debt.
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November 7, 2011

How to Negotiate Your Debt Repayment Settlement

Debt settlement is still a business transaction. You could have it your way through effective negotiation. Do you have a debt that you have not been repaying for the past several months or years? Have you fallen into a loan default? For sure, you want to clear your name, repay to settle the debt, and set your credit record straight.

Debt Repayment Settlement

Before you get into any debt repayment settlement discussion, be reminded that effective negotiation is a key to getting a good deal. Your lender/creditor at this point would only want one thing: to collect your balance or a part of your overall accumulated debt. Do not worry if your debt has gotten bigger due to interest payments and penalties. Lenders would always be willing to lower your debt settlement. That is much better than not collecting any repayment at all.

Getting into negotiations

Have you heard about ‘statute of limitations’? Lenders or their debt collection agencies are given a limited period to collect every debt. If the required collection period has passed, they could no longer use legality to secure any payment. The borrower would not be obliged to repay the debt, which would be categorized as collectible. It would be best if you could determine the statute of limitations set in your city, state, or country.

If you have discovered that the statute of limitations has already passed or is nearing, do not hesitate to let your lender know it. Remind them that it would definitely be to their advantage if negotiations could be finalized and debt would be settled before the time is up. You would be surprised at how lenders could turn desperate just to collect payment from you. Thus, the ball is in your hands.
At this point, you are ready to finalize the settlement amount. You could start by asking cancellation of all penalties and late fees. You would find that after deducting those costs, your remaining balance would be significantly trimmed. Do not stop there. The lender could still be pushed to the limits. Ask to slash your remaining debt by up to 50%. This is where negotiations could really take a shape.

Credit score deals

When negotiating to settle your debt, do not forget to take into consideration your credit rating. As you know, your credit score is tarnished until the lender clears your name and marks the debt as ‘paid.’ You could make your lender clear your name and your credit history as well. Ask them to do so as part of the settlement.

Once the lender agrees to all your terms, be sure to have every detail in writing. Do not make any payment or settlement unless a copy of the negotiation or finalised settlement deal is handed to you. Review the content to make sure all aspects of the negotiations have been noted. This way, you could be sure the lender would clear your credit standing even if you have negotiated for a very practical and cheap debt settlement.

Andrew has been working in the debt management industry and has been writing on debt relief and credit card debt for the last 3 years
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