Archive for Category 'Budgeting', page 2

Question: I am 21 years old, I am $16,000 in debt, I am working full time, and I am about to take on a second job. Right now I am having a hard time talking to creditors when they do call me, I am working very hard to pay off my debt one of my debt is almost paid off I have $280.00 to go. I thought I would never get that far.

My problem is with the bigger debt sometimes I get behind sometimes in a paycheck there is not enough money to go around to everyone. I am trying to make it easier on myself before I start back school, but it feels like I am getting no where.

I have no idea how to budget and it feels like there is no help out there.

Answer: I have two suggestions.  First, it is important to make a budget so that you can decide where to spend your money.  (You can even listen to our budgeting radio show for more tips on budgeting).

In your case budgeting may only be part of the problem.  Even if you know where all of your money goes, you may still have more debt than you can handle, and you may need a more formal solution, such as debt consolidation loan, a consumer proposal if you live in Canada, a Chapter 13 Bankruptcy if you live in the United States, or perhaps even personal bankruptcy. For more information, contact a bankruptcy trustee or a credit counsellor to review your situation and help you work through all of the possible solutions to your debt problems.

Personal bankruptcy should be treated as the final option, the last resort to deal with money problems.

If you have made a household budget to understand where your money goes each month, and if you don’t qualify for a debt consolidation loan, and if you have explored credit counselling and a debt management planand if you have looked into a consumer proposal for Canadians, or for Americans a Chapter 13 Bankruptcy , and none of those options will work, personal bankruptcy may be the correct option for you.

The key is to evaluate all other options, and then meet with a licensed bankruptcy trustee to review your options in deal. A free initial consultation will help you make an informed decision about whether or not bankruptcy is the correct option for you.

Credit counseling (which is called credit counseling in the United States, and credit counselling (with two l’s in Canada and England) typically involves using the services of a credit counsellor to negotiate a settlement with your creditors. It’s called a debt management plan, and here’s how it works:

Your credit counselor contacts each of your creditors, and works out a plan where you repay your debts, in full, over a three to five year period. Often they can negotiate a plan where your repayments are made with little or no interest, so you can repay your debts faster than if you repaid them on your own.

How do you know if credit counselling is the correct solution for you? Start by looking at your household budget to see what you can afford to pay each month. Then add up all of your credit cards, bank loans, and other debts, and divide that number by 48 (with 48 being the typical number of months in a debt management plan, although they can last for up to 60 months). If your total debts are $48,000, you would be paying approximately $1,000 per month in a debt management plan.

If you can afford that, credit counseling may be the correct option for you. If not, you may need to consider a consumer proposal for Canadians, or for Americans a Chapter 13 Bankruptcy .

Once you have made a household budget you can determine if you have enough money to repay your debts on your own. If your budget shows that you are paying a lot of money each month towards your debts, a debt consolidation loan may be the next step towards solving your money problems.

A debt consolidation loan is a loan you get to consolidate your other debts. If you owe $15,000 on five different credit cards, and are making five different payments each month, it may be possible to get a debt consolidation loan for $15,000 to repay all of your credit cards.

The two biggest advantages of a debt consolidation loan are that now you only have one monthly payment instead of five, which makes budgeting easier, and you may be able to negotiate a lower interest rate, which saves you money and allows you to repay your debts faster.

A lower interest rate is only possible if you have good credit or security, such as a car or house, or perhaps a co-signer with good credit. If you do own a home, consulting a mortgage broker is a good way to see if you qualify for a loan.

If you have good credit, consider a debt consolidation loan as a way to deal with your money problems.

There are many causes of money problems, including job loss, marriage break up, or medical problems. Sometimes money problems are caused by simply spending too much money. Regardless of the cause, there is one common starting point for dealing with your money problems: making a budget.

Budgeting is perhaps the most boring word in the English language, but to get started solving your money problems, you need a plan, and a plan starts with a budget.

A budget is simply a list of what comes in every month, and what goes out. You can read more about it, and even download a budget template, at our page about household budgeting. To make a budget, write down everything you spend for the next two weeks (a month is even better), and then add it up to see where you spend your money. Then, see if there are any areas where you can cut your expenses, or increase your income, to free up enough cash to repay your debts.

By making a budget you may be able to deal with your money problems on your own. If not, it’s time to consider other options, such as credit counselling, a consumer proposal for Canadians, or for Americans a Chapter 13 Bankruptcy .

Welcome to the new Money Problems Blog. The www.moneyproblems.ca web site started in 1999 to provide free information about how to deal with your money problems, and now receives tens of thousands of visitors every month from Canada and the United States.

Our site is based in Canada, and contains extensive listings of local credit counsellors, bankruptcy trustees and mortgage brokers.

While www.moneyproblems.ca has helped a lot of people, we have also realized that many people want to ask an anonymous question before contacting an advisor, or simply want to read constantly updated information. That’s why we have introduced the Money Problems Blog, where you can read articles written by our team of experts, and even ask questions.

We have organized the Blog into categories, so simply click on a category to find articles and questions and answers about Budgeting, Debt Consolidation, Bankruptcy Alternatives (including credit counseling, consumer proposals for Canadians and Chapter 13 bankruptcy for Americans), Credit Repair, and Personal Bankruptcy.

Thanks for reading, and we look forward to providing information and answering your questions about how to solve your money problems.