Between the Sofa Cushions and Beyond

Making Cents Of It All

spare change in the sofa cushions

You’d be surprised where you can come up with extra cash.

Beyond the sofa cushions there’s a variety of options.

  1. sell blood
  2. yard sale
  3. visit sperm bank
  4. odd jobs
  5. sell stuff on ebay, craigslist or etsy
  6. recycle scrap metal
  7. be a mystery shopper
  8. join military
  9. volunteer for clinical trials
  10. second mortgage
  11. sell annuity
  12. become a surrogate mother
  13. sell your hair
  14. use body for advertising
  15. odd jobs
  16. pan handling
  17. rent a room in your home
  18. tutoring
  19. movie extra
  20. busking

Not every suggestion will work for everyone for there might be a few new ones.

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Debt Terms

Debtor
You are debtor if you owe money to someone.

Creditor                                                                                                                                     The creditor is the person (or company) to whom you owe money. This person is known as the judgment creditor if judgment is awarded against you in court.

Interest
Interest is the fee charged by the creditor to the debtor. Interest is generally calculated as a percentage of the principal sum (borrowed amount) per year, and is generally paid periodically at intervals, such as monthly or semi-annually.

Interest rates may be fixed or floating.

In floating-rate structures, the rate of interest that the borrower pays during each time period is tied to a pre-established benchmark such as London Interbank Offered Rate or, in the case of inflation-indexed bonds, inflation.

                              debt graph means debt due-freedigitalphotos.net - Stuart Miles

 

Repayment
Loans may be structured so that the entire principal balance is due at the maturity of the loan; so that the entire principal balance is paid slowly or amortized (written off) over the term of the loan; or so that the loan is partially written off during the term of the loan and a larger “balloon payment” is due at maturity. Amortization structures (writing off structures) are common in mortgages and credit cards.

Collateral and recourse
A debt obligation is considered secured if creditors have recourse to specific collateral. Collateral may include claims on tax receipts (in the case of a government), specific assets (in the case of a company) or a home (in the case of a consumer). Unsecured debt comprises financial obligations for which creditors do not have recourse to the assets of the borrower to satisfy their claims.

Debt forbearance and forgiveness
Debt forbearance is the term which is sometimes used by creditors when they agree to allow you to change the manner in which your debt will be repaid, for example, by postponing some payments or by restructuring the manner in which repayments are made. You continue to owe all the money and you will eventually have to repay it all.
Debt forgiveness or cancellation occurs when your creditor decides not to pursue the debt. Permanent debt forgiveness is rare. Some creditors may cease to pursue the debt because they recognise that you will never be able to repay it but that does not mean that the debt is forgiven or cancelled. If your circumstances change, you may still be pursued for it.

Simple contract debt
This is a debt which arises because you have not paid for goods or services which are not covered by any special rules. For example, if you buy goods using a cheque and the cheque is not honoured, there is a simple contract debt to the seller. If you avail of the services of an electrcian and do not pay him, there is a simple contract debt to the electrician. The seller or the electrician can go to court to get judgment against you and then enforce that judgment.
A range of legislation provides that various fees and levies which have not been paid may be dealt with in court in the same way as simple contract debts.

Debt management agencies
There are a number of private commercial debt management agencies which help you to manage your debts for a fee. They are not usually regulated.

7 ways to deal with your Debt, your Relationship and your Mental Health

‘Debt rolls a man over and over, binding him hand and foot, and letting him hang upon the fatal mesh until the long-legged interest devours him’.
HENRY WARD BEECHER, Proverbs from Plymouth Pulpit

Many people in the world today are living in debt and a large percentage of them are hiding their debts from their partners.
Many debtors also admit to losing their partners or even divorcing them because of debt. This shows the seriousness of being in debt and not sharing it with your partner or even engaging them. Sometimes it helps to just share with them your current situation, they may not help a lot but a problem shared is a problem half solved.
Here are a few suggestions to help you keep on track during stressing times and also keep you sane (debt and stress go hand in hand).

1. Be honest about your debt
Communicate with your partner, and be honest while at it. Surveys carried out have found that one in four respondents wouldn’t tell their partner if they were experiencing financial difficulties. Yeah!! Don’t be a statistic – you should decide on a time when the two of you can sit down in a neutral environment and then calmly discuss your finances including all your debt. This is no time to criticize or assign blame – just assess your position financially. Debt and stress go hand in hand and this is made worse when people keep everything bottled up. Speaking out about your feelings can help you feel less lonely and release the tension built up by debt worry. It will also help deepen bonds with those you love, as you’re giving them what they need to know in order to support you.

2. Be optimistic
If you feel overwhelmed by negative feelings due to debt, it’s very important to take a break and remind yourself of the positives.
An optimistic person is also more likely to look at their relationships and focus on making each one as healthy and joyful as possible.

3. Plan how to manage joint finances                                                                             After discussing about your money situation, including full disclosure of your earnings and debt, talk about your spending patterns and your individual payment plans. Now you can discuss if and how you will pool your financial resources. Will you both pay off your credit cards and get a joint one? Will setting up a joint bank account be proper or will separate accounts suffice? If one of you owns property, will you put your partner’s name on it? (If you do, talk to a legal professional, please).

4. Set expectations about debt repayment                                                                   First things first, make sure you’re on a level ground about the importance of getting out of debt. Then come up with a payment plan that will allow both of you to pay off your debt as quickly and affordably as possible. Include factors like re-negotiation of interest rates as part of the plan.

4. Consider your dreams and obligations                                                                      Most of the times, people probably won’t agree on everything when it comes to money management, but try to find a mutual ground. Start with your priorities when it comes to spending on big ticket items, and move on to other goals you may have. E.g., one of you might want to travel while the other prefers to indulge in a hobby. However, both of you might want to pay off your student loans before taking on a mortgage. Find common ground and start from there.

5. Jot down your goals                                                                                                            This is a point that has to be stressed. Once you’ve had an honest discussion about your debt and have planned out your payment schedule, write everything down and keep track of it. You might be surprised at how satisfying it can be to watch the debt numbers come down!

6. Share the load
If you have stress in your life, it’s possible that you’re simply taking on too much and not asking those around you for help. For example, if you feel that your partner could do a little more in the house to support you, make sure you tell them in a constructive way. Yelling or guilt-tripping them will only make both of you feel worse.
Approaching the matter calmly with a more positive style (for example, “I always appreciate it when you help with the baby / do the dishes”) reminds your partner that you notice when they do nice things for you.

7. Reach out for support
“No man is an island” 16th century poet John Donne once famously wrote. Up to date, his words still ring true. Friends, family, colleagues and support groups can all give you a sense of belonging and will offer a different viewpoint to any problems you may have.
Emotionally healthy people are able to adjust to and solve problems, and in doing so they help others as well as themselves to get satisfaction out of life.
Following these steps will not only help you avoid arguments but will also set you on the road to financial freedom. Instead of worrying about the “for poorer” part, you can focus on “for richer,”  because debt can be reduced.

How to deal with Urgent Debts

If you are in debt, it is always prudent to be in contact with those you owe money to (your creditors). When you are worried, you might get afraid to contact them but they will never know you are facing financial problems. This in turn leads to them (creditors) thinking that you want to default on payment and start taking action against you.

Before you start contacting your creditors, you need to know properly know how much you owe each one of them. Then sort out which ones are most urgent.
Some debts are considered more urgent than others since lack of paying them can lead to serious action being taken against, you some of which may be court proceedings. These are known as priority debts and include things like mortgage, council taxes, rent etc. The people you owe these kinds of debts are known as priority creditors.
You will need to check how much money you got to repay your debts. The easiest way to do this is by knowing how much money you’ve got coming into your household and how much you spend.
What are these priority debts?
Some debts are more urgent than others because the consequences of not paying them can be more serious than for other debts. These are known as priority debts. Priority debts include:
Mortgage. If you don’t pay your mortgage, you could lose your home

Rent. If you don’t pay your rent, you could end up in problems with your landlord or house agents

Council Taxes. Failure to pay these may lead to a court of law using bailiffs to take your possessions.If, after this, you still have unpaid arrears, you can be sent to prison.

Electricity. If you fail to pay your electricity bills, you can have your supply disconnected

Court fines e.g. fines for traffic offences. If you don’t pay these, the court can use bailiffs to take your goods. If, after this, you still have unpaid arrears, you can be sent to prison.

Child support/maintenance. This is payable to an ex-partner or their children. This includes child support you owe. If you don’t pay these, a court can still use bailiffs to take your goods. If, after this, you still have unpaid arrears, you can be sent to prison

Income Tax. You can be sent to prison for non-payment of income tax or VAT.

You may have other debts which you think are particularly important to pay. You need to think very carefully about which debts you treat as the most important ones. You must have very good reasons, as you might have to convince a court or your other creditors why it is reasonable for you to treat these debts as more important than others.
Creditors may take further action against you if they feel you are treating another creditor more favourably, without a good reason.
Once you’ve sorted out your finances, if you can’t afford to pay anything to your priority creditors and your situation isn’t likely to get better, the outcome may be very bad. You should get advice straight away from a debt adviser. An adviser will be able to help you work out what is the best thing to do in your situation. Tell the creditor that you are getting advice and will contact them as soon as you can. Ask them to stop further action for a few weeks while you get advice.

More advice on how to deal with debts coming on my next post.

Debt can be reduced!!

 

With a little dedication and proper planning, it is possible to reduce your debts on your own. Why pay debt consultants for things you can do yourself? I’ll show you the tricks and the fastest way to reduce your debts on your own.

Step 1: Re-evaluate your debts
Collect all your financial documents and print out your credit reports to see exactly where you stand. This is an important step toward debt management and one that people are often afraid to take. On a sheet of paper, write down your balances, interest rates, and monthly amount due for each of your debts. Include your car loans, personal loans, credit cards, and other debts. You should also make note of any annual fees on your credit cards. For all of these loans, you need to focus on loans with the highest interest rates.

Step 2: Look at your budget
Once you have collected and confirmed the information about your debts, you should take a look at your monthly budget. Note down your monthly income after taxes and subtract your rent/mortgage payment from this figure and other monthly expenses such as childcare, education loan payments, insurance, utilities, and groceries. Once you have subtracted all of your expenses, calculate how much is left to pay off your debts. If this amount is too small, look for ways to reduce your spending. The more you can pay towards your debts each month, the sooner you will be debt free.

Step 3: Create a plan
Now that you know all about your financial situation, it’s time to create a plan for reducing your debts. Use your information from Step 1 and 2 to fill in the following chart. Subtract your minimum debt payments (Step 1) and monthly expenses (Step 2) from your monthly income after taxes. The remaining amount should be used to pay off the debt with the highest interest rate and the highest balance.

Example:  Your Plan
Monthly income after taxes   – $2,800 $
Minimum debt payments (1) – $1,800 – $
Monthly expenses (2)             –  $400 – $
Remaining amount goes to the debt with the highest rate and balance = $600 = $

Continue this cycle each month until the debt is paid off and then move on to the next highest rate/balance account. This may seem like an odd process, but it is the fastest way to reduce your debts. All this while, you should not add any new charges to your credit cards. Also, try to increase the amount you pay toward the most expensive debt each month. Track your progress with a chart like this:

Month 1    Month 2      Month 3    Month 4      Month 5       Month 6
Payment Goal     $600           $600          $625           $625            $650            $650
Actual Payment  $625

Month 1    Month 2   Month 3            Month 4       Month 5
Payment Goal     $600          $600         $625

Actual Payment  $625

Step 4: Start negotiations
While you are starting to follow your repayment plan from Step 3, you should contact your lenders to see if you can improve the terms on your debts. You may be able to lower your interest rates or negotiate a reduced settlement on some debts by speaking with the customer service department. It is especially easy to negotiate the terms of debts that are charged off (dismissed) by the lender or in collections already. Also think about moving some of your credit card debts to new accounts with lower interest rates. Moving a balance to a credit card with a 0% introductory rate for 6-12 months can help you save a lot on interest. Just be sure to keep each of your credit card balances below 35% of the credit limits to avoid damaging your credit score. While doing so, investigate if consolidating your debts into a personal loan or home equity loan could help too.

Step 5: Follow-through
Do your best to meet your repayment goals each month. It’s okay if the amount you put toward your most expensive debt each month varies. Just try to consistently put as much as possible toward your debts. Signing up for an automated payment system and keeping a chart of your progress on the refrigerator can help you stay on track. When you reach major milestones, be sure to celebrate your success. Before you know it, you’ll be debt free!

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