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Managing debt
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Debt Consolidation Loans for Unmanageable Debts
It is really cumbersome to manage multiple payments every month. Moreover, there is a probability of missing one or more payments as you may lose track while maintaining so many debts in a month.
Debt consolidation is an effective as well as efficient means to solve your debt and credit problems. Many banks and private lending companies have contacts with various credit card companies. ... Read debt consolidation article
Bad Credit Home Loan To Get You Out Of Debt
A "bad credit home loan" can help you climb your way out of debt and get you started back on the road to upstanding, good credit. There are many lenders who are willing to make bad credit home loans to you - a loan based on your equity in your home even if your credit has slipped or isn't as perfect as it could be. By taking out a bad credit home mortgage or home equity loan, you can consolidate a... Read article
Managing debt
CHICAGO (MarketWatch) -- Every school year, college students are inundated with credit-card offers almost as soon as they set foot on campus. The pitches are hard to ignore for teens living on their own for the first time. "In college, (credit) is an equalizer," said Bridget Smith, editor of the LendingTree.com's Knowledge Center. It doesn't matter if a student's family isn't as wealthy as her roommates' family -- a credit card can dress them in the same trendy clothes, she said.
Panicked parents of University of Illinois freshman usually start calling Angela Lyons for advice by November, after a couple of their student's card statements have been received and the charges start to add up. Lyons is an assistant professor of economics at the university and has done research on the topic of student debt.
Parents, even those who are well off, may have initially agreed to allow their scholar use of a joint account, but soon realize they can't keep up with the expenses their student is accumulating, she said.
But the problem of excessive undergraduate credit-card debt may be showing signs of improvement, said Marie O'Malley, vice president of marketing for Nellie Mae. Nellie Mae is a wholly owned affiliate of Sallie Mae, a major provider of education funding.
According to a Nellie Mae study of undergraduates who applied for student loans, 76% began the 2004 school year with a credit card. In 2001, 83% began the year with a card. In 2004, the average outstanding balance on undergraduate credit cards was $2,169, down from $2,327 in 2001.
O'Malley sees the trends at least stabilizing when the survey is repeated, probably in the 2007-2008 school year.
Decreased card ownership and shrinking balances could have something to do with more financial education hitting campuses. In the late 1990s and early 2000s, the availability of credit for college students escalated, she said, prompting elected officials, schools and lenders to roll out programs aimed at educating students on how to use credit responsibly.
The popularity of debit cards, which pull funds directly out of a bank account, also may have played a role in guiding students to more responsible spending, she said.
Lyons' research on the topic, however, indicates that student borrowing seems to be increasing overall -- whether it's via credit card or private student loan. "A lot (of students) have maxed out on their federal loans and are turning to private loans now," she said. Lyons also fears higher interest rates on student loans will make it tougher for current students who will begin repayment in several years.
Time for a chat
All of which underscores the importance of parents discussing responsible credit habits with their child before he or she becomes buried under a mountain of debt.
Five points to hit in a financial heart-to-heart:
Keep a budget: Planning expenses will help keep spending under control, Smith said. Lyons also advises parents sit down with their kids and work out a four-year financial plan, including how much students can afford to borrow and how their career choice will position them to repay their loans in the long run. Pay bills on time: For a student who does use a credit card, staying current with bills is important in building a good credit history. The credit history is essential in securing loans for large purchases including automobiles and homes; prospective employers and landlords also might run credit checks on an applicant. Careful with that card: Universities are becoming popular scenes of identity theft, Lyons said. Some students are too lax with the protection of their account numbers -- whether they share an account number with a friend to make an online purchase or leave a statement unattended in their dorm. Students and parents also need to be vigilant about reviewing statements for suspicious charges.
Get a good deal: The best way to use a credit card is to pay it off each month. But for students who anticipate carrying a balance, get the card with the lowest rate -- regardless of the introductory rate it offers, Smith said. Parents can help students understand other terms of the card as well, including late-payment penalties and whether there's a universal default clause that will up the interest rate if a bill isn't paid on time -- even if the late payment went to another company. Cards with low limits also can be beneficial in keeping student charges in check, Lyons said.
Don't defer the interest on student loans: If possible, make interest-only payments while still in school and it could save thousands of dollars in finance charges, Smith said. Interest folds into the principal after graduation, she added, setting up a student to pay interest on the loan's interest.
Credit can be a friend
For many students, a blemish-free credit history can begin with a student loan instead of a credit card, O'Malley said. And while timely payments of credit-card accounts can help a credit history begin to sparkle, delinquent payments can send it down the toilet.
"You think your G.P.A. is really important -- in the longer term, your credit score is more important," Smith said.
Speaking of G.P.A., research shows that students with higher credit-card and student-loan debt also often suffer with lower grade-point averages and sometimes physical and mental health problems, Lyons said.
The best way to get students started in the right direction: Teach them financial responsibility from a young age, she said. Students who remember saving money early on and have "vivid memories of seeing their parents financially engaged" are often the most financially savvy young adults.
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Share debt with a mortgage mate
WANNABE first-time homebuyers are becoming very inventive in their bid to get their feet on the real estate ladder. Finding a mortgage mate on the internet is the latest trend to arrive in Australia.
The website http://www.co-buywithme.com works a lot like internet dating, with first-timers posting their details online in a bid to find someone to share their debt. The free site, which started in Britain a few months ago, asks participants to list their profile, choose three locations they want to buy in, and indicate deposit and income. People can use it to buy a house to share, or a joint investment property.
But Smart Money financial guru Noel Whittaker is quick to jump in with a warning.
"In your excitement to get into the action, you can leap into the first available deal without fully thinking it through," he said.
"Maybe it will go well but if it does, you will be part of a fortunate minority.
"The problem is that people's situations are always changing. The single person with no thought of marriage may be walking down the aisle tomorrow, the high-income earner may be unemployed tomorrow.
"The more people you have involved in your financial affairs, the more chance there is of things going wrong. People's situations are never static and your partner could put you in a situation where you have to sell assets at a bad time.
"Your best partner is the bank because all they want is their interest."
UK-based creator of the site, Theo Michaels, has heard these kinds of warnings before.
"I understand where this kind of caution is coming from," Mr Michaels said.
"Buying a house with a stranger you met on the net is a new concept. Did you ever think that people would fall in love and marry someone they met on the net? Times have changed.
"But it does pay to be wary. This is not a quick-fix way to get into the real estate game. It pays to take your time.
"It is true that people's circumstances change but isn't that true of marriages or anything in life? We take legal precautions to minimise the risks and it certainly is not for everyone. But there are success stories."
The site recommends a co-purchase agreement written by a solicitor, and that co-buyers have income protection insurance and exchange credit rating reports.
But Mr Whittaker cautioned that lenders do not treat both parties equally if they foreclose. "They will sell any assets they can get their hands on and then sue whichever of you they choose for any debt left over. That's invariably the one with the highest income or the most assets."
As the process ticks along overseas, we will have to wait to see if Australians embrace the idea.
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Managing debt
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