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Saturday, July 19, 2014
Thursday, July 10, 2014
7 Characteristics of Debt-Free People
Family #1 manages to pay off $40,000 in debt in two years on a $35,000
annual income. Family #2 makes $100,000 a year but can't seem to make
the slightest dent in the same amount of debt.
Why is that?
Obviously, the second family has a spending problem. They make plenty of money—more than enough to pay off that debt in two years. But they have so much money going out, they can't keep their head above water. Whether it's in the form of an overbearing mortgage, credit cards, a hefty car payment or just making poor choices like eating out every night, their debt keeps them from making progress.
So all of their income gets sucked up by other stuff, which leaves them making minimum payments on their debts and never gathering any momentum. It's a difficult, stressful way to live.
At some point, people who become debt-free decide that enough is enough. Their old lifestyle wasn't working, and they're ready to make some serious changes. It's like they have a personality change, but that's not what really happens. All they are doing is rediscovering aspects of their personality that have always been there.
So what are some of these traits of people who get debt-free?
They are wise.
People who decide to ditch debt for good realize that debt isn't a tool. While their FICO score may go down, their net worth goes up. They treat debt like it's a skin disease—which isn't a bad idea. Don't you wish you could wipe away debt with a little Benadryl cream?
They are patient.
Someone who really wants out of debt can walk right past the shoe aisle or the flat-screen TV aisle without blinking. Why? Because they know all of that stuff can wait. Impulsive, impatient purchases are debt's best friend.
They are confident.
People who are getting out of debt don't care what others think. You know you're on the right track when your broke friends are making fun of you. Getting out of debt can require drastic lifestyle changes, which means you'll never succeed if you aren't mentally prepared and confident in your decision to find financial peace.
They are goal-driven.
No-brainer, right? Getting out of debt is a goal in itself, so of course people who want to get out of debt are goal-oriented. But the catch here is that these people do more than just set goals—they map out how they plan to get there. That's what Dave's Baby Steps are all about—small goals that lead to the one giant goal of being debt-free!
They are responsible.
Getting out of debt takes a sense of responsibility and maturity—two traits that match up well with patience. And maturity has nothing to do with age. Some 50 year olds still treat money the same way they did when they were 20. They just have more of it now. When you're responsible, you want to get out of debt as fast as possible so you can begin saving, putting money into a college fund, investing, and paying off the mortgage early.
They are not materialistic.
Becoming debt-free isn't about stocking a garage full of cars and living in an eight-bedroom house. The purpose is to change your family tree for generations to come, helping others along the way. Materialism can affect any of us—rich or poor. It's all about how much importance we place on stuff.
They are willing to make sacrifices.
Eating out. Cable. Going to movies every week. These are the types of things that might have to go while you're getting out of debt. But keep in mind: Budget cuts are just temporary. When you're debt-free, you can begin slowly adding those things back into your lifestyle.
The bottom line? You have to be motivated and do something about it over time.
If you want to get out of debt, you can get out of debt—no matter how much money you owe. Even if you don't think you're particularly strong in all of these characteristics, you'll be amazed at how your perception of “wants” and “needs” will change once you start the Baby Steps.
When you're motivated, passionate and even a little angry, you're more than willing to do whatever is needed to find financial peace. Everything else will take care of itself.
Source: http://www.daveramsey.com/blog/7-characteristics-of-debt-free-people
Why is that?
Obviously, the second family has a spending problem. They make plenty of money—more than enough to pay off that debt in two years. But they have so much money going out, they can't keep their head above water. Whether it's in the form of an overbearing mortgage, credit cards, a hefty car payment or just making poor choices like eating out every night, their debt keeps them from making progress.
So all of their income gets sucked up by other stuff, which leaves them making minimum payments on their debts and never gathering any momentum. It's a difficult, stressful way to live.
At some point, people who become debt-free decide that enough is enough. Their old lifestyle wasn't working, and they're ready to make some serious changes. It's like they have a personality change, but that's not what really happens. All they are doing is rediscovering aspects of their personality that have always been there.
So what are some of these traits of people who get debt-free?
They are wise.
People who decide to ditch debt for good realize that debt isn't a tool. While their FICO score may go down, their net worth goes up. They treat debt like it's a skin disease—which isn't a bad idea. Don't you wish you could wipe away debt with a little Benadryl cream?
They are patient.
Someone who really wants out of debt can walk right past the shoe aisle or the flat-screen TV aisle without blinking. Why? Because they know all of that stuff can wait. Impulsive, impatient purchases are debt's best friend.
They are confident.
People who are getting out of debt don't care what others think. You know you're on the right track when your broke friends are making fun of you. Getting out of debt can require drastic lifestyle changes, which means you'll never succeed if you aren't mentally prepared and confident in your decision to find financial peace.
They are goal-driven.
No-brainer, right? Getting out of debt is a goal in itself, so of course people who want to get out of debt are goal-oriented. But the catch here is that these people do more than just set goals—they map out how they plan to get there. That's what Dave's Baby Steps are all about—small goals that lead to the one giant goal of being debt-free!
They are responsible.
Getting out of debt takes a sense of responsibility and maturity—two traits that match up well with patience. And maturity has nothing to do with age. Some 50 year olds still treat money the same way they did when they were 20. They just have more of it now. When you're responsible, you want to get out of debt as fast as possible so you can begin saving, putting money into a college fund, investing, and paying off the mortgage early.
They are not materialistic.
Becoming debt-free isn't about stocking a garage full of cars and living in an eight-bedroom house. The purpose is to change your family tree for generations to come, helping others along the way. Materialism can affect any of us—rich or poor. It's all about how much importance we place on stuff.
They are willing to make sacrifices.
Eating out. Cable. Going to movies every week. These are the types of things that might have to go while you're getting out of debt. But keep in mind: Budget cuts are just temporary. When you're debt-free, you can begin slowly adding those things back into your lifestyle.
The bottom line? You have to be motivated and do something about it over time.
If you want to get out of debt, you can get out of debt—no matter how much money you owe. Even if you don't think you're particularly strong in all of these characteristics, you'll be amazed at how your perception of “wants” and “needs” will change once you start the Baby Steps.
When you're motivated, passionate and even a little angry, you're more than willing to do whatever is needed to find financial peace. Everything else will take care of itself.
Source: http://www.daveramsey.com/blog/7-characteristics-of-debt-free-people
Truth About Bankruptcy Foreclosure
There’s not enough money at the end of all the bills you have to pay.
You need one more paycheck to make ends meet. Costs of living keep
going up and your monthly paycheck isn’t keeping up with the price of
gas, the cost of food and everything else you value in your life. You
can’t save anything because all your money goes to paying bills and
supporting yourself and/or your family. And then . . .
One day you receive a piece of paper in the mail called a “Notice of Default” or a process server hands you a “Lis Pendens.” Either way, both are bad news because they mean your lender has initiated foreclosure proceedings against you (in either a non-judicial or a judicial foreclosure state respectively) because you owe back payments — typically three months worth. . . or more.
And then you start thinking, “Maybe I could cheat fate by filing for bankruptcy. That will wipe out all my debts. I can stop the foreclosure, keep the house, and the lender can’t do anything about it.” Well, think again!
If you file for personal bankruptcy under Chapter 7 a so-called “automatic stay” is placed on all your creditors, including the foreclosing lender, by the court. HOWEVER, the stay is only a temporary fix to the situation.
Chapter 7 never permanently stops home foreclosure. It only gives you relief from unsecured creditors like credit cards and prevents certain creditors from pursuing collection action against you. It does NOT discharge debts such as taxes, child support, alimony or student loans, nor can it give you relief from other secured creditors — like your lender — whose debt is secured by the home you’re living in.
In fact the “automatic stay” is only effective so long as the court wants it to be in place. At any time the court can grant your lender’s motion for “relief from the automatic stay.” Once the court grants that motion the foreclosure against your home can proceed to conclusion.
One viable exception does exist, however, by filing for a Chapter 13 bankruptcy. Under Chapter 13 you are allowed to sit down with your creditors and arrange a payment plan to pay back what you owe them over a given length of time and usually on a lower payment schedule. Once accepted, the creditors, like your lender, must abide by the terms of the plan.
Call it financial reorganization or a workout plan, any way you look at it Chapter 13 is a good way to save your home from foreclosure, and can indeed stop foreclosure so long as you continue to make the payments agreed to under the plan until all debt owed is totally paid off.
In essence, then, through a Chapter 13 debt reorganization plan you can cure the default and save your home. However, you must realize up front that not everyone qualifies to file for bankruptcy. There are certain threshold qualifications that must be met which were tightened up when the U.S. Bankruptcy Code was revised a few years ago.
Additionally, there are court costs to be paid, AND, of course, the homeowner must hire an attorney who is going to want to get paid too!
Source: http://www.realtytrac.com/real-estate-guides/foreclosure-prevention/truth-about-bankruptcy-foreclosure/
One day you receive a piece of paper in the mail called a “Notice of Default” or a process server hands you a “Lis Pendens.” Either way, both are bad news because they mean your lender has initiated foreclosure proceedings against you (in either a non-judicial or a judicial foreclosure state respectively) because you owe back payments — typically three months worth. . . or more.
And then you start thinking, “Maybe I could cheat fate by filing for bankruptcy. That will wipe out all my debts. I can stop the foreclosure, keep the house, and the lender can’t do anything about it.” Well, think again!
If you file for personal bankruptcy under Chapter 7 a so-called “automatic stay” is placed on all your creditors, including the foreclosing lender, by the court. HOWEVER, the stay is only a temporary fix to the situation.
Chapter 7 never permanently stops home foreclosure. It only gives you relief from unsecured creditors like credit cards and prevents certain creditors from pursuing collection action against you. It does NOT discharge debts such as taxes, child support, alimony or student loans, nor can it give you relief from other secured creditors — like your lender — whose debt is secured by the home you’re living in.
In fact the “automatic stay” is only effective so long as the court wants it to be in place. At any time the court can grant your lender’s motion for “relief from the automatic stay.” Once the court grants that motion the foreclosure against your home can proceed to conclusion.
One viable exception does exist, however, by filing for a Chapter 13 bankruptcy. Under Chapter 13 you are allowed to sit down with your creditors and arrange a payment plan to pay back what you owe them over a given length of time and usually on a lower payment schedule. Once accepted, the creditors, like your lender, must abide by the terms of the plan.
Call it financial reorganization or a workout plan, any way you look at it Chapter 13 is a good way to save your home from foreclosure, and can indeed stop foreclosure so long as you continue to make the payments agreed to under the plan until all debt owed is totally paid off.
In essence, then, through a Chapter 13 debt reorganization plan you can cure the default and save your home. However, you must realize up front that not everyone qualifies to file for bankruptcy. There are certain threshold qualifications that must be met which were tightened up when the U.S. Bankruptcy Code was revised a few years ago.
Additionally, there are court costs to be paid, AND, of course, the homeowner must hire an attorney who is going to want to get paid too!
Source: http://www.realtytrac.com/real-estate-guides/foreclosure-prevention/truth-about-bankruptcy-foreclosure/
Friday, July 4, 2014
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