February 24, 2012

The Difference Between Having Credit And Having Money

One of the biggest financial mistakes people make is to confuse having credit with having money.

What's the difference?

Well, if you have money, it means you can pay cash for things you purchase. If you have credit, it means that you have the ability to buy something even if you don't have the cash, at least right now.
 There's certainly nothing wrong with using a credit card. Many cards come with perks, or allow you to get discounts at certain stores.

But many credit card companies offer cards with low interest rates or high credit limits, giving you the impression that you can spend up to your limit, and can afford to use your entire credit limit. You might become tempted to use your card whenever you want to. Because of this, you might not be aware that your credit card debt is getting bigger and bigger. Or you might not be aware that you actually can't afford to pay off the card. Then by the time you know that you are in big debt, it's too late. And you're stuck with a pile of debt far more than you can afford.

And the more cards you have, the greater the chances of making this kind of mistake!

So what can you do when you wake up one morning and realize your debt is more than you can handle? First of all, don't panic. Instead, you need to take steps to own up to this fact, and start to fix it. Here are 5 tips for getting rid of your mountain of credit card bills:

1) Accept the fact that you are in debt.

Sounds obvious, right? And some people might may say that this is useless. But the first step to fixing any problem is admitting you have one. When credit card bills come due it's much easier to pretend there's no problem. But this is simply a defense mechanism when you can't accept reality. Some people might even just put the bills aside where they can't see them to avoid reality. Sorry, but this won't help you. Running from your problems won't solve them, it will just make them harder to solve. And make you debt grow bigger and bigger. So be honest with yourself, and you'll be taking a big first step!

2) Don't hide your bills, hide your credit cards.

Stop using your credit cards and put them somewhere else where you can't easily find them. When your credit cards are in your wallet, the urge to use them becomes hard for you to resist. Especially when money is tight. So put them somewhere safe and don't use them. Stick them in a drawer, or safe deposit box. Or give them to a friend or family member (someone who you can trust and be sure they won't use them!). You can just keep one with the lowest interest rate and lowest debt in your wallet, in case of emergency. Like they say, out of sight out of mind. If you can't see these cards, you won't use them. And when you don't use them, your debt will stop growing, and you can start fixing the problem.

3) Don't buy what you don't need.

away a little money each paycheck, and start getting used to paying with cash. It's a great feeling, and will become a good habit before too long. Credit cards are not money. They are not cash. And using them too much can get you deeply into debt. So make a deal with yourself to only but what you really need, and what you can really afford.

4) Make a list of all your debts.

Seeing how much you owe will be surprising, especially if you've been running away from your debt problems. Use this list as a guide to help you start paying off your debts in order. Start with the card with the lowest balance, so you'll see quicker results and hopefully stay motivated. Make sure to make the minimum payment on each card. Then pay as much extra as you can towards the first one, until it is paid off. You won't get out of debt overnight, but you didn't get into debt overnight. But stick with this plan, and you will start seeing your progress pretty quickly.

5) Reward yourself.

If getting out of debt is all work, you won't be likely to stick with your plan for very long. Take a small amount of money each month and put it into an envelope which you can use to treat yourself to something fun. You can buy whatever you want, as long as you have the cash, and as long as you are making progress towards paying off your bills.
 
Kris Bickell runs www.Debt-Tips.com, a website that offers helpful tips & information for getting out of debt, fixing your credit problems, and saving money.
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February 17, 2012

Home Insurance Advice

Before diving head first into a home insurance policy, it is important to carefully consider the amount of coverage that is needed. Not only will people find themselves paying for unnecessary cover but will also fail to benefit from it. 

Before routing through insurance companies in hope of obtaining an affordable quote, contact an existing provider if possible. If a company is supplying an individual with cover for a different item, such as car or life, then they are likely to offer a discount for combining the two. This loyalty reward is practiced by the majority of insurer’s and should always be the first port of call.

Due to the amount of companies providing cover for properties, it is highly advisable to approach a large number before making a decision. Although gathering quotes is not considered as the most enjoyable activity, it does help to save a person money. Comparison sites will allow people to find the cheapest deal available to them, however certain aspects of the policy may vary, meaning it is much more effective to approach them directly.

Although people who pay for their home insurance are entitled to make a claim on even the smallest of items or damages, many decide not to. Those who pay for minor repairs with their own earnings believe that they are saving time and effort; however their cover is virtually ineffective. Increasing the deductible on the insurance, therefore, would be an advantage. This way, monthly payments are reduced whilst the pay-out amount is much higher.

Not all contents inside the home that are covered by the insurance will be around forever. As life goes on, so will people and their belongings. Many people fail to inform their provider of changes in circumstance. Whether that be that a person no longer lives at a property and so does not need personal injury cover or that expensive jewelery is longer owned. Many will find themselves paying for unnecessary contents cover that could have been easily avoidable.

For this reason, home owners are advised to check at least every two years that they are still receiving the best deal on their home insurance.
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February 15, 2012

How to Spend Your Student Loan

So for many of you, moving away to university is the first opportunity you will have had to be fully independent. As exciting as this seems, it is also important to point out that it will also be the first time you will have had to manage your finances alone.

college fund
When you receive your student loan, it may appear that you have lots of spare cash to spend on whatever you want. However, having the strong determination to not feed your temptation to go on a shopping spree is an excellent start to conserving your money.

During your first few weeks at university, there will doubtless be plenty of alcohol fueled parties to attend and meet new people at. Be careful that you don’t blow your whole terms budget in these initial weeks before you even begin to attend lectures. If you do, you will be left eating the leftovers of other people’s dinner plates for the rest of term.

Here is how you can spend wisely but still enjoy being a student:

What Accommodation to Choose

At most universities there will be a range of accommodation on offer, student halls, off-campus and private shared housing etc. It may be very tempting to opt of the top-of-the range accommodation with en-suite and Wi-Fi features but this will all come at a cost. In order to allow you enough loan left for general living, it might be a better idea to opt for a less fancy pad. Rooms with shared facilities can prove much cheaper. Better still, accommodation slightly off-campus can really provide you with good savings on rent.

What About my Transport?

Bus passes and rail cards can provide you with quite large discounts on your travel – especially if you plan to travel home on weekends. For travel to and from your lectures, bring a bicycle from home or invest in a second hand one. Make sure you have a good padlock though. Another alternative is to find someone who is at university during the same times as you and car share. Contributing a small amount to petrol can save you quite a bit on public transport.

I Need Software

Usually one of the single most expensive commodities of student life. It is crucial that students have the right software to aid them with their studies. Although it is usually a very expensive necessity, software for pupils does not have to be. There are a number of online student software stores that provide up to 90% discount on packages such as Microsoft Office Professional Plus 2010 that are perfect for studying at university.

As long as you always bear in mind that whatever you borrow, at some point along the line, you will have to pay back. The best attitude to adopt is this – the less you borrow, the less you owe!
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