Student Loan Forgiveness Act

Tuesday, April 8, 2014

Debt-To-Income Ratio

Negotiating on unsecured debt is the surest and fastest way to improve debt-to-income ratio, credit score and peace of mind. The best way to this is to contact a company with experience in the field of negotiations.

Recurring debt has a direct effect on the debt-to-income ratio which is is the percentage of a consumer's monthly gross income that goes toward paying debts. This ratio also known as the back ratio, which indicates the percentage of income that goes toward paying all recurring debt payments, and other debts such as credit card payments, car loan payments, student loan payments, child support payments, alimony payments, and legal judgments.

In simpler terms the debt-to-income ratio directly affects a persons ability to take on new debt. If income is greater than debt then the ability to take on new debt is present. If debt is greater than income then the ability to take on new debt is eliminated. It is that simple to understand. A negative debt-to-income ratio will also have a direct impact on credit score and credit report.

The most effective way to have a healthy debt-to-income ratio is to pay off loans in the time agreed with lenders and creditors. This will allow the luxury to take on new debt. What happens when the terms agreed on for re-payment are not met? Very simple, missed payments bring on collection efforts from creditors and collection agencies and maybe even legal action further on down the road. Credit scores will be reduced and credit reports will show negative marks thus making a person a liability in the eyes of lenders. If in fact a person reaches this situation, one of the best alternatives to bring this debt-to-income ratio back to health is to negotiate on the outstanding debt. The best way to this is to contact a company with experience in the field of negotiations.

Debt negotiation is geared to eliminate large amounts of debt as quickly as possible in the least amount of time which will help improve the debt-to-income ratio. This is a better alternative than having to endure the stigma of bad credit, collection calls and correspondence. In this situation it is advisable to negotiate one or two accounts at a time starting with the account with the least debt. Accounts that can be negotiated for settlements are categorized as unsecured debt. These accounts include but are not limited to credit cards, personal loans, medical bills, repossessions, unsecured student loans, etc.. Secured accounts such as mortgages and car loans cannot be negotiated for settlement.

Once all debt is eliminated it is advisable to begin a credit repair program. Credit repair programs will do just what their name suggests. They will contact the credit reporting bureaus and show proof that all accounts have either been settled or paid in full. Many of these services are inexpensive and credit could be back in good standing in as little as six to twelve months. The ability to take on new debt will then become a reality keeping in mind the mistakes of the past.

Monday, April 7, 2014

Commercial Finance- The Mortgage Meltdown

This has impacted non-bank lenders such as private commercial finance companies that provide hard money real estate loans, purchase order financing and accounts receivable financing. Most of these firms have raised their prices and their origination standards for safety and soundness of operations.

The bottom line: Bank lending can be replaced by other sources such as commercial finance companies to some degree. Hard money, purchase order financing and accounts receivable financing will help some businesses grow during these difficult times. But for the average borrower, businessman, or business owner these are difficult economic times, caused by the mortgage meltdown, which are here to stay for several years.

Debt Consolidation To Improve Credit Ratings, Consider It

The notion of being in debt is almost a lifetime custom for a greater portion of American singles and families. Just under half of American families actually spend more than their annual earnings and as such have averaged and accrued, per household, roughly $10,000 in credit card debt. The averages are stark, but the numbers are real. And being real, raw numbers is actually in favor to those in debt as these debtors benefit from having so much due. "Benefit?" you might ask. Yes, this is so simply because real data can be manipulated, ameliorated and settled over time through various financial actions.

And of the numerous financial actions that prove advantageous for debtors, one in particular stands out for its capability to allow those in debt to take charge of their credit. This one specific option is none other than "Debt Consolidation."

The Process Is A Unifying One

Debt consolidation, in process, is one involving debtors the capability to combine assorted and unsecured debts together into one whole payment. Such debt to be included in the mix is most typically and popularly credit card debt. What does this mean for you, Mr. Or Mrs. credit card debtor? Well, keeping unity in mind, it means less of a hassle when it comes time to pay. Think about it. Through a debt consolidation company, no longer will you have to pay your credit card payments to various creditors on varying dates; rather, they pay your one lump sum payment for you.

The aim here, on part of debt consolidation companies, is to gather your debt, find ways to negotiate it's current bulk and inevitably pay it all down in a timely and methodical manner. More or less, it's a reduction process with intent to be rid an individual of debt for good.

A Reduction Process To Delete

Debt consolidation companies will take your information, analyze all accrued debt and surmise the best way to tackle a negotiation toward your creditors. Generally, the debt consolidation company you select will attempt to talk terms and whittle down your situation. They will negotiate a reduced interest rate and overall balance, not to mention a lower monthly payment. Even better, your debt consolidation company will aim for an elimination of late fees and will surmise a set term in which due debt is said to be paid and satisfied in full. All the previously mentioned actions will in turn most likely save you a great deal of money, speaking in terms of prolonged paying.

The Trick Before Healing That Credit Rating

Eliminating debt is what's being done here. But, before any erasing occurs you must first figure out how much you actually owe, calculating your gathering of various creditors' balances. List all your creditors and their corresponding amounts due. Also, list each monthly payment due for each creditor. By doing this, you will hence be able to ascertain how much you owe in total and can then determine how much of a consolidation loan payment you can afford.

And if consolidating proves advantageous in your financial scenario, it will allow you to manage yourself very well. With one payment on one due date, rather than many payments on spread out due dates, you will be timely and organized. Thus, you will hit your payment due dates, avoiding missing payments. This is essential as it will allow for a debt-free life as well as a strengthening and rebuilding of your credit record leading to a much improved overall credit rating.

Problematic Issues With Your Mortgage? Don't Shelter Yourself

It's fair to say that many a homeowner at one time or another was unable to make their mortgage payment in full or on time. Financial happenstances occur and they're quite random in nature. Thus, it's almost unpredictable to foresee bumps in the road when it comes time to make those monthly mortgage payments; anything and everything can halt an individual from making their payments.. And it's not as if homeowners who are unable t o pay their mortgages are irresponsible, it's just a matter of poor financial luck.

If you are one of these unlucky individuals you should take note that not all is lost and that there is indeed hope. It's easy to shelter yourself in your home and avoid resolving such an issue with lenders or mortgage servicers, so don't get overwhelmed.

Communicate and Open Your Door, Let Assistance Walk In

Even in the worst case scenario where a mortgage problem may seem unconquerable and too overwhelming - where at end result an eventual foreclosure could occur - know that help is literally at your front door step waiting to speak with you. Simply by talking to your lender or mortgage servicer can do wonders for your dreary situation. By speaking with these individuals you will be able to ascertain and lay out a few alternatives to avoid going through a foreclosure, one of which these mortgage lenders refer to as 'workout programs.'

As the name 'workout program' implies, their purpose is to work out your mortgage problems, and better still, hash issues out while working in tandem with you to resolve the troubles at hand. What's done here could involve a number of things; a temporary suspension of payments, overall structural alterations to make debt for more payable or an actual transfer of the property deed into the lender's hands in place of a standard foreclosure.

Be Willing To Communicate To Benefit, Or Else Suffer

What's key to making the aforementioned workout programs actually begin and work well is to open lines of communication between yourself, as a borrower, and your lenders or mortgage servicers. If communication is only one way, with lenders taking initiative, and you don't contact your lenders back to become more informed of what can be done to better your mortgage payment position you will be isolating yourself from improving your current situation. If communication is initially one-sided and remains so, both the borrower and lender will suffer. The borrower will end up awaiting their eviction notice or foreclosure announcement and the lender will also suffer, directly so through incurred costs on following through with their borrower's eviction and/or foreclosure.

Take Necessary Steps Immediately When Trouble Arises

As most lenders are unable to help those in need because their borrowers are more or less slow and not proactive or responsible with monitoring their mortgages, they are pleading with borrowers to act when they know trouble is looming. It is preferred for borrowers to contact their lenders at the first sign of mortgage payment trouble. Otherwise, after 90 days of a payment's due date, mortgages can move into foreclosure and thus leave a borrower little options. The aforementioned is so because once a borrower receives a foreclosure notice, ameliorative options are few and far between.

Important Tips for Finding Your First Home Mortgage Loan

Anyone who has gone through the process of buying their first home knows the combination of thrill and terror that can come with the experience. If you've never borrowed money for such a huge investment, feelings of confusion mixed with stress should not be a surprise. If you're a newbie home buyer, one of the most important first steps you should take is to remember that you should approach the entire home buying process with care and do your research before even looking at a house.

Here are a few tips for finding your first home mortgage loan:

Decide early on if you should apply for your mortgage with a direct lender or a brokerage company. If you choose to use a lender you could very well save some bucks since you'll avoid paying commission to brokers. But keep in mind that brokers have the knowledge and resources available to find mortgage lenders that best suit your situation. Brokerage companies will also deal with various administrative details that come with getting a home mortgage. This is usually part of what your fees include.

Do careful research and find out all about any programs that you may qualify for. If this is your first mortgage you may be able to take advantage of programs such as FHA or VA and other specialized federal loan programs depending on your location. Your mortgage lender will have detailed information on all of these different options available for you. They could be very beneficial to you with first time home buying and should not be ignored.

Another important step in the home buying process is pre-qualifying for your first mortgage. By exploring the pre-qualification process you will know from the get go exactly how much house you can afford and will be able to weed through the different homes on the market at the time. There's nothing worse than falling in love with a house and then finding out that you can't qualify for the money needed to buy it. Lenders both locally and online have free mortgage calculators that enable you to see how much you'll spend each month in payments. Take advantage of this important tool before looking for a home.

Remember, during the mortgage loan application process there's no such thing as a stupid question. If you don't understand a term or any of the jargon involved in real estate, then by all means ask your lender or broker for clarification. You'll need to know the difference in the types of interest rates and the many fees that may be charged. You can possibly avoid paying certain fees by educating yourself and shopping around.

Although buying a home seems like a daunting task, don't forget that it's just like buying anything else in life, only one of the bigger investments you'll make. Go into the process with your eyes wide open. Know what you're getting into. Do your research and you'll get a good deal. Make your first home purchase and finding your first home mortgage loan as enjoyable as possible.

Negotiate and Reduce Student Debt

Outstanding student loan debt is a severe problem for a great many graduates. Although not an enviable situation, it is possible to negotiate with your creditors and perhaps reduce or even eliminate your student loan debt. If you're uncomfortable with the negotiations yourself, it may be possible to hire a company to negotiate with creditors on your behalf. However, if you are committed to and have the ability to eliminate your debt, it's generally better to liase with your creditors yourself. If you reach the stage point where you can no longer maintain the repayments, it's imperative that you contact your creditors straightaway and explain your position.

It will help your situation greatly if you manage to email your creditors before they come knocking. Professional debt negotiating programs offer you plans, they deal with your creditors on your behalf to debt consolidation services: They negotiate with your creditors provided you have saved the minimum balance to deal with the debt. Before signing on with a debt negotiation or consolidation service, it's important to check and ensure your creditors are willing to work with the agency you plan to choose. Consider using agencies that offer genuine counseling and education, instead of simply enrolling all clients in a debt management program.

Debt negotiation is a process whereby you negotiate with your creditors to pay off your debts at a rock-bottom amount. For example, if your student loan was for $22,000, you can negotiate a payoff of $7,500. Creditors might report accounts that have been reduced, and if reported, it will stay on your credit history for seven years. Note that creditors have no requirement to negotiate with you or someone acting on your behalf and that they will often play "hard ball" at the beginning of the negotiation process.

Notwithstanding the status of your finances, there are positive outcomes for both you and your creditors. Explain to them right up front what your situation is and how you believe that things can be worked out so that everyone will benefit.

The fact that that you have appointed a debt negotiator to act on your behalf is a sign that you are a poor risk. Virtually all creditors will settle for a lump sum, instead of waiting for the balance over the next 9 years or so. Steer clear of debt elimination scams that claim consumers are not under obligation to repay their debts because creditors charge illegal interest rates. This is patently untrue.

By rapidly taking matters into your own hands, your creditors will see that you mean business and are trying to seek remedy. I bet you would not have guessed it but, asking your creditors to simply forgive some of your debt is maybe one option and is a good starting up point when negotiating your student loan. Don't expect your creditors to be push overs, however! But it does make it clear to them them that you expect some action.

Consolidation versus Forgiveness

Debt consolidation is the superior of the two when it comes to influencing your credit score. If you choose a debt consolidation company, your creditors might report delayed payment.

When your monthly bills become too much for you to handle, it makes sense to use debt consolidation or debt negotiation for working out debt and credit challenges. If bills and other heavy payments are getting you down, take action sooner rather than later to find solutions to your situation. Unrelenting financial stress and burden can lay waste to everything in it's path, not to mention the detrimental impact on your credit report. If a student loan is at the heart of the trouble, debt negotiation and/or consolidation can aid in getting you back on track and clear of debt.

Not Completing Your 1003's? Don't Expect Your Mortgage Cases To Close

People often ask me what I believe is the single biggest hindrance to a new mortgage loan officer's success. I respond without hesitation and say, "For a new mortgage loan officer to succeed they must be willing to change and adapt with the industry. They need to know what their job is and be willing to learn what it takes to succeed." Status quo and doing what they were doing a year ago will certainly doom them in today's mortgage marketplace.

The last 6 months to a year, the mortgage industry is different than it has ever been before. In fact, it is so different; many people don't understand their job anymore. I believe that as an LO, you have to have an understanding of what your actual job is and at least some basic training requirements necessary to succeed in the industry before you can set yourself up to actually be a loan officer.

Before you can hang up a sign that says, "I'm a mortgage broker or I'm a loan officer", ...thinking that because it's easy to get a license and to become a loan officer, you need to realize that in the mortgage industry it's not always easy to know what is required of you, unless you have the proper training.

It used to be straightforward to be a "loan officer" and the industry formerly would support people who didn't have a concept of what they were doing. This was because the mortgage industry simply could not hire enough people to take all of the mortgage applications. There were millions and millions of loans being written and virtually any "warm body" could write them.

The AE's helped the new LO's, their lenders helped them; when they needed help, they had someone that they could call to "bail them out".

Because two-hundred thirty-six lenders have dropped by the wayside in the last year and the market is as tight as it has been in years, most companies cannot afford to pay for AE's or Reps to do the work that the LO's should be doing.

These companies have a fraction of the mortgage activity that they use to have. Consequently, they have underwriters who are completely overwhelmed by the influx of government loans because this seems to be the product more of our lenders are encouraging.

The real problem comes when you couple the emphasis on FHA and VA government loans in the industry with LO's who are trying to submit government loan applications and think they can submit them like they did during the sub-prime era. This is unconditionally no longer the case.

So what you have are people who have no experience submitting government loans that are presenting documents to more than one lender because they may have been denied previously. Quite often the LO needs to restructure and re-submit the loan, basically because the loan officer doesn't really understand how to properly submit the 1003.

They don't understand because they were never forced to learn during the crazy days of the sub-prime marketplace.

History has thrust us into a position where our loan officers now need to know how to originate loans. LO's all over the country are sitting by themselves with a very limited support system, which is made up of fewer "support" people than it ever has had in the past.

Know Your Rights When Dealing With Collection Agencies

More than a few collection agencies engage in illegal practices when attempting to collect debts. Low-income and non-English speaking debtors are among those most often taken advantage of. Some collectors send fake legal papers and visit debtors pretending to be sheriffs. The collectors tell debtors to pay immediately or threaten to take personal property. Other collectors use vulgarity and profanity to intimidate debtors. Another favorite tactic is to harass the debtor's parents or adult children.

None of these behaviors are allowable under the Fair Debt Collections Practices Act (FDCPA) and you have the right to sue the agency and possibly even the creditor in this circumstance. Such actions give you grounds for a lawsuit, especially if they have been repeated and you have at least one witness. You could even receive punitive damages if the abuse you suffered was particularly bad.

If a collection agent violates the law in any way shape or form, you need to complain loud and clear to the proper authorities. Standing up for your rights in such a situation could result in having your whole debt canceled in exchange for dropping the matter.

There are three avenues in which to pursue a complaint about harassment or otherwise outrageous conduct on the part of collection agencies. They include the original creditor, the Federal Trade Commission, and your state Consumer Protection Agency. Your original creditor might be particularly disturbed to know about unreasonable actions taken in their name, as they can be liable. The FTC and the Consumer Protection Agency are the federal and state governing bodies in these cases.

Start with a simple letter to your creditor clearly stating the violations of the collector. In it, let them know you would be willing to fore-go further actions, including potential legal remedies, in exchange for the forgiveness of your debt and removal of all related negative entries on your credit report. This might be all the action you need to take. Most creditors don't want to risk the embarrassment and potential damage to their reputation if a case goes to court.

If you have been the victim of an overzealous collection agency, you are protected under the law. You need to document repeated violations and preferably have a witness. Sometimes just making a creditor formally aware (in writing) of the abuse, may lead to speedy resolution of your debt as the creditor seeks to make the matter go away.

Sunday, April 6, 2014

With the Cost of College and the Economy, Many Young People are Opting out of College

More and more young people today are finding themselves knee deep in student loan debt. The bad news is, if handled incorrectly, the consequences can be long term and devastating for an individual's credit. The good news, however, is that, if taken care of properly, these loans can help build, or even boost, your credit.

Young people in average to entry-level salary jobs must seek out help when in crisis, before debt piles too high for rectification. Although it may seem contradictory, now some colleges are looking to cut costs for students in above and beyond the usual financial aid recommended. It's a well-known conundrum that for the first time in American history, the student debt is at a higher rate than credit card debt, which is a staggering and unsettling fact.

Student debt around the country is at one trillion dollars and is still on the rise. One has to consider the Student Loan Forgiveness Act that President Obama put into effect fairly recently. One option is consolidating into a Federal Consolidation Loan towards Public Service Loan Forgiveness. This is one way to be eligible for loan forgiveness. Be aware though, consolidation could potentially change any current headway in your loan payment status.

The main worry for a good portion of the population is that many potential students are opting out of higher education altogether because of the cost of most colleges and universities in the United States today. Young adults find themselves in the position of choosing decades of debt or a lower overall income without a degree. Not to say that there is any shame in an occupation that does not require a degree, but there is most definitely something to be said for backing up your street smarts with a little scholarly know how.

Capitalism is dependent on a stable middle class; however, it's difficult to secure such stability with a society that is constantly bludgeoned with loads of debt. Chances are that the focus may need to be shifted towards another area of concern. The problem on a greater scale seems to be that the U.S. economy is tanking and has been for some time now. The question at hand is what our country's leaders can do about the mounting problem. At this point, there has been little in the way of concrete answers and speculation seems to be the only answers available.

Politics aside, it's a frustrating but true statement that many scholarships go untapped each year because students don't know that they exist. Many young adults rely on financial aid and loans alone, barely scraping by because they are unaware that any scholarships apply to them personally, making it crucial that students "do their homework" when it comes to applying for scholarships.

There are countless no-strings-attached funds out there in the form of scholarships that are waiting to be claimed. Students must seek out the scholarships that are often hidden under the surface layer of research, available only to those who are truly dedicated to funding their college education.

What Happens When a Second Mortgage Forecloses

In most cases of foreclosure, it is the first mortgage company that initiates the process. The second mortgage may file its own foreclosure in order to protect its interest in the property, but even this is somewhat uncommon. The second lender would much rather work with the homeowners to find a solution to avoid foreclosure entirely, if possible. However, if the homeowners are simply too far behind on the second mortgage but up to date on the first, there is a good chance that the second lender will declare foreclosure on the house.

Any lienholder can try to force a sale of the property through foreclosure, but usually only the first mortgage will get paid off through the proceeds of the sale. This is because there usually just are not enough proceeds at all for even the first lien to be paid in full, let alone extra ones after that. It just makes more sense for the second mortgage to try to work with the debtors to find a solution, since they would most likely not get anything from a sheriff sale. Especially with the declining real estate market right now, second mortgages may have loaned tens of thousands of dollars more than the home is currently worth, which guarantees they will not receive anything from a sheriff sale. County foreclosure auctions usually consist of very low bid amounts and few bidders, resulting in properties selling for far less than their current market values.

If a participant at the foreclosure auction placed a bid and won, the proceeds of the sale would be distributed like any other foreclosure, regardless of which mortgage company actually began the foreclosure process in the courts. The property taxes would be paid first, since the bureaucrats need to get their hands on the money as quickly as possible. Then the first mortgage would be paid off with as much of the proceeds as are left. Unfortunately for second mortgage companies and other junior lienholders, the winning bid at auction is usually not even enough to cover the entire first mortgage. In fact, most of the time it is one of the banks that bids on the property to ensure that they will be able to sell it after the foreclosure if there are no other bidders.

After the first mortgage is paid off in full, though, then any other liens, including the second mortgage, would be paid in order of when the lien was filed with the county recorder. If there is enough money to pay all of the second mortgage, then they get all of the rest of the money until their lien is paid in full. Then anything remaining goes to other liens or to the homeowners as their gain from the sheriff sale. If there is not enough to pay off the second mortgage (or even all of the first mortgage), then the second will not be paid off at all or in full. It will be up to the mortgage company to sue afterwards for a deficiency judgment after the foreclosure has ended (an unlikely occurrence).

Thus, just because it is a second mortgage who begins the process of foreclosure, it will not really change the order of how the liens are paid off through the foreclosure auction. Any bidder at sheriff sale, whether the bank or a third party, will still end up with a title that has had the liens on it discharged through the county foreclosure auction. And the homeowners will have to move out of the property at the appropriate time or be faced with the possibility of a forced eviction. No matter which mortgage company initiates the foreclosure, the process will move through the court system in exactly the same way.

Questions and Answers for Offset Accounts UK Consumers

What are Offset Accounts? UK consumers have been asking this question more and more in recent years.

They combine your mortgage with your current and savings accounts, and sometimes your loans and credit cards. Interest earnt on your deposit accounts is offset against your mortgage interest. Offset accounts are a useful tool for mortgage reduction because they reduce the amount of interest payable on your mortgage. For example, if you had a £100,000 mortgage with savings of £10,000 you'll only have mortgage interest repayments on £90,000 and you don't receive interest payments on the £10,000.

Why don't I receive interest on my deposit accounts?

The interest earnt on your deposit account is immediately offset against your mortgage interest repayments and is not taxed, therefore offsets are tax effective. For example, a £100,000 mortgage with an interest rate of 6% will cost you £6000 per year in interest payments with a standard mortgage. Whereas, with an offset account and savings of £10,000, you'll pay interest on £90,000 and the interest repayments would be £5400. Your £10,000 investment has saved you £600. It would be difficult to find a safe investment for £10,000 which gave you this sort of tax-free return.

Do I need to have a lot of money in savings?

Most experts advise you should have ten to twenty per cent of the mortgage loan in savings to give the best return on offsetting.

I have a significant amount of debt; will this be a problem with Offset Accounts?

Some lenders suggest you can consolidate your debts with the mortgage. However this tends to lengthen the term of the debt and it also becomes a secured loan. Have a look at your spending habits because you will need to make regular repayments and where possible to make overpayments to get the most out of an offset account – otherwise an offset may not be suitable for your circumstances.

How flexible are Offset Accounts?

Not all offset accounts are the same and it is important to research the intricate details of the loan conditions. However, most offsets have the overpayment option without incurring fees. Once a set amount of overpayments have been made, then you can normally make underpayments or have a payment holiday as the need arrives. Offset accounts are a clever way of making your money work harder for you, if your circumstances are appropriate.

How many types of UK Offset Accounts are there?

There are two different types of offset accounts: current account mortgage and offset mortgage.

Do they work in the same way?

They work in slightly different ways. With a current account mortgage, your deposit and mortgage are combined into one account and your salary is paid into the account. You have one net balance for your deposits and debts. An offset account keeps your savings and borrowings in separate accounts. The total of the savings is offset against the total of the borrowing and the interest is calculated on the net figure.

8 Steps for Getting Out of Debt

The Average American spends a great deal more than they make every year. This results in a financial pitfall to them later in life. If you find yourself digging deeper into the empty wallet there are ten steps that you can use as a crutch to help free you of the overwhelming financial burden of debt.

1. Create and follow a budget - Creating a monthly budget will help you to track where your monthly income is going. In order to do this, you should add up how much your expenses will be for the month and then add up your monthly income. Once you have calculated how the money should be spent you should have some money left over for emergencies. 2. Stop spending what you don't have - When you spend what you don't have your debt is only climbing higher. If your monthly budget disables you from making a purchase, then the purchase should wait until the money is within your reach. 3. Learn to distinguish between wants and needs - In a world filled with televisions, computer games, luxury cars and other costly trinkets, our perspective on wants and needs at times becomes distorted. A need is something that is essential to your survival. Although sometimes we think that we will not be able to function without that big screen TV, waiting until the money is in the bank and paying cash for large purchases is a better option. 4. Spend less than you earn - After you have covered all of your monthly expenses there should be a little money left over. If not, adjust your monthly budget. You never know when an emergency may arise. 5. Track your spending - Many people who are in debt are unaware of where their money goes during the month. If you carry a notebook around and write down every penny that you spend when you make a purchase, you will be able to see where your money is going. 6. Pay yourself - Building up your savings monthly will only ensure that you do not fall into debt again. It is always good to have a little extra money stashed away. 7. Use a credit card responsibly-Credit cards are convenient for record keeping and budgeting, but can be dangerous if used improperly. You should not make purchases that you can not pay off at the end of the month. 8. Use a debit card - Debit cards will not allow you to spend more than you have in your account because it draws directly from your bank account. This way you cannot spend what you do not have.

Remember that the key to escaping debt is spending less than you earn.