Good Debt is debt that helps you, currently or potentially, produce more. Student debt, ostensibly, will help you generate more income in your career, therefore it’s considered good debt. Corporate borrowing that helps you grow the company is good debt. Even mortgage debt is considered good debt because it stabilizes your second biggest expense, the mortgage and allows you to own a real estate asset. Most all good debt has advantageous treatment in the tax code (meaning the interest on the good debt is generally tax-deductible). So what is bad debt?
Bad Debt typically comes from consumption. It’s credit card debt. It’s auto-loan debt. This debt is not helping you produce more; it’s all consumption based. If you’re not building to produce more income or potential capital appreciation, then it’s bad debt. And, typically bad debt has no favored tax treatment (it’s not tax deductible).
The most important aspect of Level I of the game to win financial freedom has three main lessons to learn. One is to be able to budget. You’ve got to be able to create a budget and stick to it. If you can’t do that, it’s hard to get ahead in
Don’t negotiate – The terms of the debt repayment are not thought by most of the people who have debt. If you have credit debt, your credit card company must be called up by you to ask for a lower interest rate. A lot of amount can be saved by doing this simple step. Forbearance can always be asked for by you on car loans, credit cards and student loans.
Don’t think “everyone is doing it” – Never assume the fact on your own that “everyone is doing it”. It is one of the ways by which you can get into trouble. It mainly comes by seeing your friends or family in debt or by seeing people buy costly electronic gadgets or clothes by using credit cards. So, don’t get yourself into it, if everyone is doing so because it will be frustrating later on to get out from it.
Thinking of paying a debt without a plan – Most of the people think that debt can be paid off without having any plan. But it is not possible to do so. Wealth can be built and debt can be paid off by making a personalized
It is first important to have a clear understanding of the pattern of market demand. This is something that many companies are only able to accomplish after at least one to two years of operation. You, however, can learn more about these patterns and what they mean for your company by simply studying the activities of your competitors. Once you have mapped this out, you will have an idea of exactly when sales are likely to wane.
Identify pain points that you can continue addressing when your sales invariably dip for the season. This could mean having to expand your services. For instance, if you sell surf boards or paddle boards and have tons of business during the warmer months of the year, you might want to offer maintenance services during the cool season. People can bring their boards to you for the upkeep that will keep them from warping or experiencing any structural or aesthetic damages while in storage.
Be mindful of the fact that it’s currently easier than ever before to take a local company into the world market. All you really need are feasible shipping solutions and a plan for advertising your services
To see if this would truly be cost effective, there are a few things you must consider. First is how many clients or customers you have in arrears on their accounts. Compare this to the total number of customers that you have. You can then compare the two numbers. If the percentage of those in arrears is high, you may need to hire a debt collector.
You should also keep track of how many hours you spend trying to get money owed. Many people, especially those who are salaried, do not keep track of hours. However, it is important that you do. These hours add up quickly, and is not time well spent. Think of all the things you could be doing if you outsourced that work.
Once you have an idea of how many hours you spend, calculate that times your salary for those hours, or the salary of the person you put in charge of collections. You may be quite surprised at how much you spend. It may be much more than an agency would cost you.
Another thing to keep in mind is that these customers may be behind in paying you,
Some debt collectors specialize in dealing with large businesses while others deal with small businesses and households. Check in your locality for the collectors that target similar clients like the one that has defaulted. The method the agencies apply has a high likelihood of succeeding in your case.
Every state has its own regulations that cover how debt collection is done and how the agencies work. It is important to ensure that you select a firm that adheres to Fair Debt Collection Practices Act. Moreover, the firm should be bonded and licensed to work in the locality.
Sometimes the firms use very uncouth means to collect the debts. This may raise legal cases if the debtor feels that the agency has acted in bad faith. The insurance ensures that you are not held liable for hiring the agency to collect the debts. Ensure you pick a firm that has a valid errors and omission insurance. It will act as your protection if you are dragged to court.
Once you have a list of a few companies, take time to compare their costs. Different agencies use different formulas to come up with their rates. Some charge
Key Guidelines for Debt Collectors
Once you decide to pursue a debt owed, you must follow certain rules and guidelines to ensure a legal and safe attempt at collecting the debt from the debtor. To begin with, you must treat debtors with respect and in a fair manner. When contacting them, you must have a valid reason to do so and it is a good idea to avoid constant calling, which can be turned around into harassment.
Use calls for
- Providing information about the account to the debtor
- Establishing repayment arrangements
- Offering a settlement or special repayment plan
- Reviewing an existing payment arrangement status
Do not use calls for
- Embarrassment around other parties or people
- To scare the debtor with aggressive conversation
- To annoy the debtor and wear them out
Things to Avoid
It is very important that you do not create letters or make verbal conversation that can be misleading or impersonated. In other words, you cannot pretend to be someone you are not or a company that you are not with. Don’t pretend that you are part of another major organization in order to scare the consumer. You also cannot tell them you will
Why do so many people get caught in the debt trap? This is mainly because we have developed an entitlement mindset and believing that we deserve to have everything we want. We don’t even need the cash to cover our purchases, all we have to do put it on our credit cards and pay for it later. Sometimes we even ignore the needs of our families and waste money on things we don’t need instead of paying for important things like bills and groceries.
We continually hear these statements: you deserve the best, shop till you drop, just charge it, treat yourself, pay later. What sounds like a good idea ends up becoming a burden when the credit card statements come and there isn’t enough in our bank account to cover the minimum amount.
Have you ever considered how much money you spend on stuff you don’t really need? There is a huge difference between needs and wants. We might really believe that we need something when in fact, we really don’t need it, we just want it. Here is a quick list of some costly wants:
- COFFEE – If you buy 2 coffees a day costing
Rarely has any person succeeded without having goals and concomitant plans. Even when one becomes rich by hitting the jackpot, or winning a lottery, proper planning is mandatory if the fortune is to last or benefit him or her for long. Goals and plans give one direction and focus. Knowing what one wants, and taking decisive steps towards that direction, is crucial to achieving financial independence. Whether it is a home you want to build, or an academic certificate you want to acquire, or the financial future of your children you want to secure, you need a plan. The best plans are those that are documented.
The next crucial plan in managing your money is to budget for it. Once you establish your income streams and quantify them, you must create a list of your expenditure items in tandem with what you earn. Many people fail to secure their financial future by spending without budgeting. Impulse buying and unplanned long-term investments will obliterate your income. Living beyond your means hurts your prospects for the future. Once you make a financial expenditure plan, do not allow other unplanned items to encroach into it – unless you are dealing
Check Your Tariff
How much you will pay on your energy bill will depend on not just your usage; the energy company tariff you are on pays a large part in what you pay out. It is important to consider the following:
- Are you on a fixed price tariff? Very popular, the fixed price tariff locks in the price of you gas and electricity until a set time which means that you only pay the unit price you agree at the beginning of the term, regardless of how energy prices rise elsewhere.
- Have you checked to see if another company will charge you less? Using a comparison site to check what the best deal is will save you a fortune in the long run.
- Have you opted for paperless billing and duel fuel? There are many discounts available for those who go green and scrap their money bills and statements through the post as there also is for those who chose to have their gas and electricity together with one company.
Reduce Your Usage
You pay for what you use therefore making changes around your home will save you money on your monthly