10 Ways to Manage Debt and Avoid Bankruptcy

(This is a guest article by Karen Schweitzer*)

Bankruptcy filings are climbing and are expected to total 1.5 million before the end of the year. If the economic crisis has you considering bankruptcy as well, there are several things you can do now to manage your debt and avoid being forced into filing bankruptcy like so many others.

Adopt a barebones budget. If you haven't done so already, you need to trim all of the fat from your budget. This includes, but is not limited to, cable TV, satellite services, cell phone or landline accounts, cigarettes, morning coffees, hobbies that cost money, and expensive nights out. If you don’t need it to survive, you don’t need it right now.

Sell assets. It can be painful to part with your prized possessions, but it is one of the quickest ways to raise money when you are in deep financial trouble. If you have a major asset, such as a house or car, that isn't secured by a loan, it has to go. Small assets can also be sold via eBay, classifieds, and other marketplaces. Take all of the money you make and apply it toward your debt.

Ask about hardship programs. Credit card companies, banks, and other creditors often have hardship programs for people who are having difficulty paying their bills. These programs offer lower interest rates, payment deferments, or reduced payments. Your creditors may or may not offer such a program, but you will never know unless you ask.

Work with your creditors. If you work closely with your creditors, you may be able to negotiate a non-bankruptcy workout agreement. This agreement will accomplish the same thing as a Chapter 13 filing, but you won't have to file bankruptcy and destroy your credit in the process.

Refinance. If you have student loans, car loans, or a mortgage loan, you may want to consider refinancing. A refinance may not cost you anything (unless it is a mortgage loan) and could significantly lower your payments if you are currently paying a high interest rate.

Request write-offs. This doesn't always work, but it is worth exploring. If you have old debts, you can contact the creditor or collection agency that holds the debt and ask if they can provide written proof that the debt exists. If they cannot, you can ask to have the debt written off entirely.

Settle your debts. Settling debt isn’t always the best financial avenue. However, it is definitely worth considering if you are on the verge of bankruptcy. If you have old debts (debts that have been sent to a collection agency or charged off), you should contact the company that holds it and ask to settle for a lesser amount. If you have a lump sum of money to give them, they may be willing to write off as much as 50 to 60 percent of your debt.

Seek help from a government agency. If you are in a really tight spot, you can contact local, federal, or state agencies for help. These agencies will be unable to assist you with certain types of debt, such as credit card debt, but they can help with the basics, such as rent, heat, electricity, or food bills.

Get credit counseling. The new bankruptcy law requires individuals to get credit counseling before filing bankruptcy. If you are thinking about filing bankruptcy, you should go ahead with the counseling. It may help you get lower payments, lower interest rates, and a better handle on your debt so that you can avoid filing altogether.

Increase your income. Although it can be difficult in a downtrodden economy, you should make every effort to increase your income so that you can pay down your debt naturally. This may mean asking for more hours at work, taking a second job, or finding ways to make extra money online.

*About the author: This is a guest post from education writer Karen Schweitzer. Karen is the About.com Guide to Business School. She also writes about online school for OnlineSchool.net.

*Image Credit: Photograph by phxpma [via Flickr Creative Commons]

The Seven Biggest Used Car Buying Pitfalls (and How to Avoid Them!)

(This is a guest article by Paige Green*)

Whether it’s your first car or you’re tenth, we are all prone to some rather basic mistakes when it comes to making the decision to buy. After all, a car is emotive and appeals to some basic primal need we seem to have for things that are shiny and go very fast. (Historically, our great great grandparents were probably suckers for a speedy horse with a well groomed coat). Unfortunately for our ancestors, they probably didn’t have the same access to information that we currently do, so there was nothing they could do if their prize pony turned out to be a training nightmare. Learn how you can avoid the pitfalls of car financing and purchase by arming yourself with information.

Seven Ways NOT to buy a Car

Falling in Love and getting blindsided

Your perfect vehicle, it looks great, drives like dream and you’ll be the envy of all your peers – if you have your heart set on the car of your dreams – STOP! This is one of the most obvious traps of car buying, especially if you’ve spotted the love of your life in a dealership parking lot. Becoming blindsided and committed to a particular vehicle without first determining the implications of the purchase can mean you’ll be drowning in heavy debt or be bound to particularly unfavourable terms.

Not doing your Research

The decision to buy a car is not a light one and before you step into a dealership or start considering internet auctions, you need to do your research and find out what sort of vehicle will suit your needs. Consider your lifestyle requirements as well as your budget and financing options. Don’t forget to account for the future, if you’re not sure what your situation will be like in five years, you might not want to commit to a vehicle that’ll lock you into a particular style of living for the long term.

Buying and Borrowing out of your Budget

If you’re looking at financing options, it’s tempting to borrow up and “get something you really want”. Remember that defaulting on your monthly payments will seriously affect your credit standing and will have a substantial impact on any future financing. Remember to also consider depreciation costs and other factors that will affect the final value of your vehicle and your assets.

Not looking into finance

When you walk into the lot, the dealer usually offers you instant dealer finance to help you with your purchase which always seems tempting since there’s no lengthy and nervous waiting time that comes with bank loans or the unsettling and embarrassing possibility of rejection. The problem is that without doing your research and considering all of your car financing options, you can end up paying exorbitant fees and higher rates in the long run.

Not test driving

As internet auctions become more prominent, it’s sometimes too easy to just purchase a vehicle based on the owner’s description and not actually doing an in person inspection, especially if the seller is out of state etc. It’s hard to get the information you really need to ensure that a car’s performance measures up to the promised description.

Not Doing a Thorough Inspection

Do your own check for oil (you want to make sure it’s clear and not dirty) and look for any signs of water damage as this could lead to expensive problems in the future even if the vehicle is running great now. When buying a used car, it’s best to consider getting the vehicle inspected by a professional mechanic. For a few extra bucks, it’s worth it to hire a mobile inspector to visit the site and do a quick on the spot check to make sure the car is in good working order. Alternatively, bring along a friend who knows about vehicles.

Not Getting a History Check

By running the Vehicle Identification Number (located on the driver’s side dash or in the door jamb) through vehicle check, you can obtain the full history of your car and find out if it’s been in any accidents or has any outstanding debt attached to it. Don’t take a seller on his or her word, but arm yourself with the necessary information to be a wary buyer.

*About the author: Paige Green hails from the Land Down Under and is an expert at driving on the left side of the road. She waits eagerly for Lemon Laws to be introduced there and also writes for Australia’s leading experts in car finance.


*Image Credit: Photograph by Jeremy Brooks [via Flickr Creative Commons]

10 Things You Should Know Before You Get an Auto Loan

(This is a guest article by Karen Schweitzer*)

Car dealers are working very hard to make sure that auto sales rebound over the winter season. And while it may seem like the ideal time to buy a new car, there are a few things you should know before you get an auto loan:

1. You Will be Subjected to a Credit Check

Although there are some car dealers who are willing to finance buyers without a credit check, most will not. If you get a loan through the dealer or through a bank, you will be subjected to a credit check. Lenders will evaluate your debt-to-income ratio as well as your credit score before deciding whether or not to give you a loan.


2. You May Need a Co-Signer

If you have bad credit or worse (at least in a lender's eyes) no credit, you may need someone to co-sign for your loan. Your co-signer doesn't have to be married to you or related to you, but the chosen individual will need decent credit. If you do decide to go this route choose carefully. The co-signer's credit score will impact the interest rate on the loan. The co-signer will also be responsible for the loan, late charges, penalties, and late fees if you default on the loan.


3. Loan Rates Will Vary

Like other loan rates, auto loan rates will vary from lender to lender. If one lender quotes you an interest rate of 5.25%, it may not be the lowest rate you are eligible for. Be sure to check with at least three different lenders before signing on the dotted line.


4. Loan Terms Affect Monthly Payments and Overall Costs

The average auto loan term ranges somewhere between 36 and 72 months. The longer the term is, the lower your monthly payments will be. A longer term may seem attractive initially, but it is important to remember that if you go this route you are likely to pay more in interest than you would with a shorter term. In other words, the longer your loan term is, the more the loan will cost you in the long run.


5. Zero-Percent Financing Isn't Always Available

A lot of auto dealers and manufacturers advertise zero-percent financing on new cars and trucks. They do this to get buyers in the door. It isn't necessarily a gimmick, because some people do qualify for this sort of financing. However, most people will not. Buyers need exceptionally good credit--a score of 700 or more--to be eligible for incentives like this.


6. Gap Insurance May Be Necessary

The average car is a depreciating asset. This means that the car will decrease in value as soon as you buy it and will continue to do so as long as you own it. If you pay too much for the car, don't make a down payment, or get saddled with a bad interest rate, you could end up owing more on the car than it is worth. This could leave you in serious trouble if you wreck the vehicle or need to sell it quickly. If you are worried about this happening, you can purchase gap insurance, which covers the difference between what you owe on the car and what it is worth.


7. Extended Warranties Can Be Financed

Nearly every auto dealer will try to sell you an extended warranty when you buy a new vehicle. The decision to purchase a warranty is a personal one and should be considered carefully. Before you make a choice, you should know that extended warranties can be financed. You should also know that financing an extended warranty will up your monthly payments as well as the total amount you pay over the life of the loan.


8. Some Lenders Charge Prepayment Penalties

A lot of people like to apply extra money to their auto loan each month to reduce the interest paid throughout the term of the loan. If you are one of those people, you will want to make sure you're lender does not charge any sort of prepayment penalty.


9. An Auto Loan Can Improve or Demolish Your Credit

An auto loan can be very beneficial for people who have bad credit or a limited credit history--if payments are made on time. Late payments or defaults will have the opposite effect and can leave your credit score in ruins.


10. You Can Refinance Later On

If you do end up with a higher interest rate than you'd like or loan terms that are not favorable, you can always refinance your loan later on. You may have to pay an application fee or another small lender fee, but the cost of refinancing will be minimal.

*About the author: This is a guest post from education writer Karen Schweitzer. Karen is the About.com Guide to Business School. She also writes about online degree programs for OnlineDegreePrograms.org

*Image Credit: Photograph by rev [via Flickr Creative Commons]

10 Simple Steps to Improving Your Credit Score

(This is a guest article by Mike Acheson*)

Most financial institutions use credit scores to help decide whether to lend you money or not. It is very important to have a good credit score if you are looking to apply for a personal loan, credit card, or a mortgage. It can be the single determining factor for many banks and credit card companies.

In the US, the average credit score is somewhere around 650-675 but most banks consider anything above 700 to be a good score. Luckily, there are a few simple steps you can take to improve your credit score.

The first step is to search the Internet to find a free credit report - there are a number of websites that offer this service such as Equifax and Experian.

After you have your report, follow these 10 easy steps to improve your credit score:

1. Learn how to read your report – It’s important to know how to read the report and to ensure you have accurate information about your starting score. After you have a clear idea of where you’re starting from, you can improve your score from there. Some people already have a good score and don’t need to make any improvements.



2. Find errors – While reviewing your report, make sure to take note of all your applications for credit and to ensure they are accurate. If there is information that doesn’t belong to you or if there are any other errors make note of this.



3. Addressing the errors – Once you identify a problem you will want to notify the major credit report companies immediately to get them to amend your report. By law, they are required to look into your claims within a month. If the information you provided is correct they will change your report to address any concerns you had.



4. Pay any overdue bills – It is important to pay all your missed loan repayments or any bills you may have from an overdrawn credit card. This is crucial. After these bills have been paid, not only will your credit report improve but also you will have the satisfaction of having paid these outstanding bills.



5. Communicate with your creditors – Contact your creditors after sending your payments so that they can update your information immediately – otherwise it can take a few weeks.



6. Stop relying on credit – Taking on credit is a dangerous path for most people – your debts can spiral out of control quite easily. If you’re trying to improve your credit score then don’t take out any more credit. It’s as simple as that. Credit cards and loans will only make the problem worse.



7. Ask about payment plans – Many creditors accept payment plans with their debtors. The main purpose is to allow you to catch up on your remaining bills but it also helps you gain control of your finances and to create good spending practices. Living within a budget can be a rewarding challenge.



8. Adjusting the frequency of your payments – When paying back debts, divide your monthly payments into weekly or twice-weekly payments. This will make your bank records show that you have made extra voluntary payments. The computers will register extra payments, which can increase your credit score significantly. This method of repayment also helps you not fall behind on your payments in the future. If you pay off all your debt then you wont have to worry about any of this.



9. Self-Debt Management – It’s likely that a debt management company will take a lot of your money but you can often set up your own plan to help pay back your debt. Search the Internet for do-it-yourself debt management strategies and start budgeting. With a little hard work you can pay off your debt in no time and have a sparkling credit report. It’s not easy but it can be done.



10. Don’t be tricked – A lot of companies and websites promise instant credit repairs and improvements but they are often trying to take advantage of you.

The best thing you can do is work on your credit score at a pace that works for you. You might not be able to make all your payments right away but chip away at your payments and you will see your credit score improve – all it takes is hard work and a little foresight. Good luck.

*About the author: This post was written by Mike Acheson, who writes about debt and life cover in Canada.

*Image Credit: Photograph by kevinzhengli [via Flickr Creative Commons]

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5 Ways to Lower Your Auto Insurance Premiums

(This is a guest article*)
With auto insurance being mandatory for all drivers, simply canceling coverage is out of the question. But paying for premiums that could be lower when you’re just starting to make some dough isn’t smart either, especially since student loans and other expenses loom. Auto insurance premiums can be especially daunting if your parents were taking care of them while you were in school. Fortunately, there is hope for the struggling grad and you may be able to hold on to more of your hard-earned cash.

1. Do smart comparison shopping

Before you decide to stick with your current insurer, do some comparison shopping with at least three other companies. Considering how easy it is to get quotes and access policies on the internet, you can’t really afford not to spend some extra time and effort. In your search, not only does price matter but quality of service is important also, since there is no use in paying premiums every month to a company who won’t provide you with decent service. Check to make sure that the company is financially stable, so that when you need them the most, you’ll know they have the resources and financial power to do so. Check the financial health of companies with Standard and Poors and other consumer organizations. Also check with your state department of insurance and other consumer sites for complaints about insurers in your state. Ask trusted family members and friends who they have policies with and what their experiences have been like. Another resource is your friendly mechanic, who deals with insurance companies all the time, and can give you some insight on which companies handle claims the best.


2. Look for multi-policy, and other discounts

Some companies will offer account holders a discount if they have more than one policy with them. If you have renters insurance with the same company, it doesn’t hurt to ask if they offer a discount if you have auto and renter’s insurance with them. There are a multitude of other discounts that may apply to you also. Some of them may apply if you have been a long-time customer, or have had no accidents or violations in three years. If you don’t do a lot of driving, you may be eligible for low annual mileage discount. It doesn’t hurt to ask about these discounts you may not know about.


3. Limit coverage on older cars

If your lugging a car that is very old or isn’t worth much, you may not even need collision or comprehensive coverage and assume the losses yourself. Collision coverage takes care of damages of your vehicle in a collision and comprehensive coverage covers damages from events not related to collision such as natural disasters, theft, and other events that you couldn’t be responsible for. Know the replacement value of your car by checking with dealers or with Kelley Blue Book and if paying premiums for the value of your isn’t worth it, then consider axing the coverage all together and just paying for the mandatory liability insurance. Be sure to have enough money set aside in case of an accident, theft or other damages.


4. Raise your deductible

Doubling your deductible can lower your premiums significantly. For instance, raising a $500 deductible to a $1000 one may be able to save you 20 to 40 percent. It means more out of pocket money for you in case of an accident, so be sure to have the deductible amount in a savings account and don’t touch the money otherwise.


5. Maintain a clean driving record

Avoiding reckless driving is the foundation to keeping your premiums low. Keep that in mind when you find yourself distracted on the road, and fix your behavior immediately.

Plus if you are driving safe and are attentive on the road, you more likely to stay out of accidents and avoid paying those deductibles in the first place. Taking defensive driving classes may also qualify you for discounts so check with your insurer to see which classes apply. Also, consider safety first if you will be purchasing a new car, since cars with certain safety features such as anti-lock brakes, airbags, and anti-theft devices get lower rates.

*About the author: This article was written by NetQuote. NetQuote provides low-cost leads from most of the major insurance providers in the auto insurance industry.

*Image Credit: Photograph by net_efekt [via Flickr Creative Commons]

15 Free Online Accounting Courses for Self-Learners

(This is a guest article by Karen Schweitzer*)

Getting a quality education in accounting doesn't have to mean spending several months in a classroom and several thousand on tuition. There are many free online courses that allow you to learn in your spare time and at your own pace. Here is a list of 15 free online accounting courses from top-notch colleges, universities, and educational institutions:

Financial Accounting - The Massachusetts Institute of Technology (MIT) provides a variety of free courses for self-learners including this Financial Accounting course. The free online course features 19 lectures in PDF format as well as other study materials.

Introduction to Accounting - This course from the U.S. Small Business Administration (SBA) features an introduction to accounting. Students taking this course can gain a basic understanding of accounting and learn how to keep accurate books and financial statements.

Influences on Accounting Regulation - The Open University offers a six-hour masters course that discusses the national practice of financial reporting in the UK. The course is broken up into two sections, the evolution of regulation and jurisdiction rules.

The Accounting Process - This NetMBA course provides an overview of the accounting cycle. The course covers everything from beginning transactions to closing books.

Managerial Economics - This Utah State University course discusses the essential principles of managerial economics. The course's 17 weeks of lecture notes are presented in audio format.

Accounting for Advanced Accruals - SimpleStudies.com provides this online accounting course that explains accounts receivable and notes payable. Along with courses, this site also provides online exercises and an accounting dictionary.

Management Accounting and Control - This free MIT course provides an introduction to accounting information, performance, and control. The course is intended for those looking to become management consultants.

Principles of Financial Accounting - The University of Alaska offers this free accounting course to give students an understanding of accounting principles and terms. The course is presented through slide presentations, assignments, and practice exams.

Fundamentals of Personal Financial Planning - This eight-module course in financial planning from the University of California-Irvine introduces students to the principles of accounting, investing, and taxation.

How to Prepare a Loan Package - This SBA course, which is the first in a series of online training courses for aspiring accountants and entrepreneurs, provides an in-depth look into creating and understanding a loan package. Upon completion of this self-paced course, learners receive a Certificate of Completion from the Small Business Administration.

Introduction to Strategic Management - Capilano University features this 15-week course to provide self-learners with an understanding of business analysis and business management. Course materials include presentations and assignments.

Introduction to Microeconomics - This Utah State University course focuses on the fundamentals of economics in the marketplace. Course offerings include fifteen assignments and four examinations.

Introduction to the Context of Accounting - This course from The Open University offers an overview of accounting and its origins. The four-hour advanced course provides learners with a clear idea of what accounting really means.

Taxes and Business Strategies - Students who take this free online accounting course from MIT will study tax planning and tax strategy for businesses. The course provides PDF lecture notes, assignments, and other downloadable course materials.

*About the author:Guest post from education writer Karen Schweitzer. Karen is the About.com Guide to Business School. She also writes about online classes for OnlineClasses.org.

*Image Credit: Photograph by laurenmarek [via Flickr Creative Commons]

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What is Finance

Finance is the science of funds management. The general areas of finance are business finance, personal finance, and public finance. Finance includes saving money and often includes lending money. The field of finance deals with the concepts of time, money, risk and how they are interrelated. It also deals with how money is spent and budgeted.

One facet of finance is through individuals and business organizations, which deposit money in a bank. The bank then lends the money out to other individuals or corporations for consumption or investment and charges interest on the loans.

Loans have become increasingly packaged for resale, meaning that an investor buys the loan (debt) from a bank or directly from a corporation. Bonds are debt instruments sold to investors for organizations such as companies, governments or charities. The investor can then hold the debt and collect the interest or sell the debt on a secondary market. Banks are the main facilitators of funding through the provision of credit, although private equity, mutual funds, hedge funds, and other organizations have become important as they invest in various forms of debt. Financial assets, known as investments, are financially managed with careful attention to financial risk management to control financial risk. Financial instruments allow many forms of securitized assets to be traded on securities exchanges such as stock exchanges, including debt such as bonds as well as equity in publicly traded corporations.

Finance is also the science and art of determining if the funds of an organization are being used properly. Through financial analysis, companies and businesses can take decisions and corrective actions towards the sources of income and the expenses and investments that need to be made in order to stay competitive.

Central banks, such as the Federal Reserve System banks in the United States and Bank of England in the United Kingdom, are strong players in public finance, acting as lenders of last resort as well as strong influences on monetary and credit conditions in the economy.