College is insanely expensive, we all know that. It might seem easy to just take out some student loans to pay for your tuition because you can just pay it all back later, right? [Read more…]
Looking To Go From Debtfree to Homeowner, Here’s What To Consider
Homeownership in 2020 is a monumental financial decision. Years ago, buying a home wasn’t as difficult because debt wasn’t as big of an issue as it is today. Most younger generations have to battle student loans, car loans, and credit card debt on a large scale. For example, the average graduate of a four year university in the United States owes on average between $27,000 and $33,000 in student loans. With this many people struggling with debt as it is, homeownership might seem like a fantasy instead of a reality.
However, this isn’t the case. While the road from “debt-free to homeowner” might be a rocky one, it is certainly possible. Here are some tips to get you there.
Target High Interest Debt First
The higher the interest on the loans you owe is, the more you’ll have paid cumulatively once the loan is paid off. Additionally, high interest loans also tend to come with higher monthly payments. There are a few ways you can tackle high interest debt. First, have you considered refinancing? Refinancing is when a bank or lender essentially pays off your loan and provides you with a new one at a lower interest rate. This can both lower your monthly payment and help you pay off the loan faster.
Another way to target high interest debt is to pay as much towards it whenever you have the opportunity to. Put tax returns, bonuses, and gifts towards that loan or debt. It might not feel like it’s making a difference at first, but down the road, it will drastically affect how much money you would have paid in interest.
Create a Savings Plan
When creating a savings plan for purchasing a home, consider both how much of a house you can afford and how long it will take you to save up for a down payment. The amount that you can afford will depend on how much money you’re making/will be making, how much you owe in loan payments and bills each money, and how much you’re able to save for a down payment. Use these factors to calculate when you’ll be able to afford a house. After all of your bills and payments are made for the month, put a portion of your earnings into a savings account and the other portion towards debt. While most financially savvy people will suggest putting the larger portion towards debt, we suggest doing what is right for your financial goal.
Budget, budget, budget
If you want to buy a house down the road, now is the time to put in the work. Pay very close attention to your spending habits by creating a monthly budget. Track your bills, monthly payments, saving, and spending either with a budgeting software, a spreadsheet, or even a pen and paper. Once all is said and done, go back and find ways to cut spending. This can include getting a better rate on car insurance, lowering your internet bill, cutting out buying coffee or lunches, or really anything that you don’t need to spend money on. You’ll be saving up for your dream home before you know it!
Our Debt Free Family wants to provide those both young and old with real life advice on how to conquer debt and live a financially stable life. We hope you enjoyed this post and invite you to visit regularly for more posts and advice.
What To Do If Debt Is Accrued By Identity Theft
It is recommended you check your credit score at least once a year. However, those of us on debt freedom journies may check it more often. What happens when you look at your report and find something you don’t recognize? What if there is a debt on your report you didn’t authorize? Here’s what to do if debt is accrued by identity theft.
What To Do If Debt Is Accrued By Identity Theft
You’ve noticed something out of the ordinary on your credit report. First thing’s first, breathe. You will want to keep a level head and get all of the information on how to move forward clearly. Identity theft could cost countless dollars if not handled correctly, so you want to be sure to do it right.
File an identity theft report with the Federal Trade Commission (FTC). Next, you’ll want to place a minimum of a one-year (up to seven years) fraud alert on your credit report. This way, you’ll be alerted to any and all activity on your behalf.
Once you’ve reported the activity and moved forward with monitoring your credit, take the steps necessary to remove incorrect information. If needed, dispute the fraudulent accounts and request that creditors stop reporting them. To do this, send copies of proof of identity theft, which you will receive from the FTC.
If a debt collector is harassing you during this time, you also have the right to block them from contacting you (if all else fails).
Credit Monitoring Best Practices
Of course, you want to avoid identity theft altogether, if possible. It is a good idea to employ some credit monitoring best practices. For instance, services like Credit Karma and many credit card companies offer free credit monitoring. Many will also alert you if there has been a change. Sign up for alerts so you can be aware if there is anything abnormal taking place.
Additionally, it is always important to stay on top of what kind of scams are circulating at the time. Don’t fall victim to schemes aiming to destroy your credit and finances by being uneducated about them.
Lastly, if you do find anything out of the ordinary on your credit report, call the company right away and discuss what your next steps should be. The sooner you take action against identity theft, the better.
Readers, do you have any identity theft nightmare stories you’d like to share? Comment below! I’d love to feature you on the blog.
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Options for Handling Tax Debt
No one wants to think about paying taxes. The idea of owing money can lead to tax anxiety. It can be even worse if you think you owe money for back taxes. You see a new tax bill coming up, and you still owe money from previous years. The stress of it can feel suffocating.
As much as it can be stressful, tax debt is a problem you need to face head-on. Trying to push it to the side will only make matters worse. There is also a lot you can do to manage the situation if you just pay attention to it. If you are responsible and do your best, there is usually a lot you can do to clear your back taxes.
What are your options for handling tax debt? Read on to find out! [Read more…]
What is True Financial Freedom and How Do I Get It?
My goal is to help you take control of your money, so you can pay off debt and work toward true financial freedom.
But what is true financial freedom?
Financial freedom can be somewhat of an elusive idea. Let’s define it so we know where we’re headed.
When my husband Mike and I decided that we needed to be more intentional with our spending, I dove in to learn as much as I could about personal finance.
I realized that there are actually three stages to financial freedom.
The three stages are financial security, financial independence, and financial freedom.
Economic Security
Economic security is defined as “the condition of having stable income or other resources to support a standard of living now and in the foreseeable future.”
What does this mean?
This means that one feels reasonably secure that his or her current income stream(s) will continue so that they can maintain their current lifestyle.
When I was growing up, I was the only child of a single mom. Money was tight, and we lived paycheck to paycheck. My mom worked two jobs for most of my childhood, and as the end of each month neared, we would frequently have to put off grocery shopping. When the last day of the month rolled around, we would go shopping in the evening so that my mother could write a check knowing that it would not be cashed until after her paycheck had hit her account the following day.
I always knew that money was a stressful subject for my mom. She never wanted to disappoint me, and she always wanted to provide the best for me. Because I was a good student in school, we had high hopes that I would one day break free from the weight of living paycheck to paycheck.
As I transitioned to adulthood, I longed for the day when I would feel financially secure.
From 2006 to 2008, I paid off the credit card debt that I had accumulated from college through my mid-twenties. Slowly but surely, I began to feel more secure in my financial situation. I was earning enough money in my job to cover my expenses and save up for our wedding in 2009, but I knew I still wanted more.
What I wanted was financial independence.
Financial Independence
According to Wikipedia, “financial independence is generally used to describe the state of having sufficient personal wealth to live, without having to work actively for basic necessities. Financially independent people have assets that generate income that is greater than their expenses.”
Financial independence takes it up a few notches from financial security.
My interpretation is that someone who is financially independent has enough income-producing assets such that they could quit working for a prolonged period of time and still be able to maintain their standard of living.
Therefore, to achieve financial independence, one must have several pieces of their financial puzzle in place.
Financially independent people have the following:
- a fully-funded emergency fund,
- little or zero debt, and
- income-producing assets, such as stake in a business or investments in real estate and/or stocks.
Currently, my husband Mike and I are working toward financial independence, but ultimately we aspire to become financially free.
Financial Freedom
Financial freedom signifies that one has accumulated enough wealth or income-producing assets (likely, a combination of both) such that they never need to work again.
(It is important to note that while financially free people do not need to work to survive, many will continue to do so because they have found work they love.)
Financial freedom builds on the three aspects of financial independence listed above and takes them a step further.
Here are the three pillars of financial freedom:
- Financially free people maintain their fully-funded emergency fund.
- Financially free people have no debt. Why would they need debt when they are building wealth? Debt is just a weight on their bottom line.
- You have probably heard of the benefits of diversifying your investments. Well, wealthy people diversify their income streams. Income streams may include a day job, owning and running businesses, and having multiple investments including real estate and stocks.
According to the authors of The Millionaire Next Door
“If your goal is to become financially secure, you’ll likely attain it…. But if your motive is to make money to spend money on the good life,… you’re never gonna make it.”
― Thomas J. Stanley
My husband and I are working toward true financial freedom so that we can live the life we have always dreamed about. We are not concerned with acquiring a lot of material possessions, but we long for the day when we can travel the world and give generously to others in need.
If my husband were to lose his job for whatever reason right now, we would be scrambling to figure out how we would make our mortgage payment for the next few months. Thinking about that possibility is extremely stressful.
For that reason, the only logical and responsible path for our financial future is to pay off our non-mortgage debt as quickly as possible so that we can increase our emergency fund and then focus on paying off our mortgage early. Once our mortgage and other debt are paid off, imagine how quickly we’ll be able to save and invest.
We are no longer settling for the status quo of living paycheck to paycheck with unneeded stress. We are taking responsibility for our financial situation.
We are looking forward to the day when we no longer have any debt payments, we are sitting on a fully funded emergency fund, and we are able to maximize our retirement savings. That is when we’ll be on our way to true financial freedom.
The Complete Guide to Getting Out of Debt
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In total, Americans owe about $986 billion in credit card debt alone. For mortgages, the average borrower in the US has $236,443 in housing-related debt. Student loans also pack a punch, leaving the average borrower owing around $39,351. With so much debt piling up, many households are desperately trying to reduce their balances and eliminate their debt. If you want to conquer your credit cards, ditch your mortgage, free yourself from student loans, and otherwise remove creditors from your life, here is a look at the steps you can take to get out of debt.
Create a List of Your Debts
Before you take any steps beyond making your minimum payments, you need to understand your debts. Create a list that includes all of the lender names, debt types, interest rates, minimum monthly payments, and remaining balances.
As you compile the information, you should end up with a table that looks like this:
| Lender Name | Account Type | Interest Rate | Minimum Monthly Payment | Remaining Balance Owed |
| Bank of America | Auto Loan | 6.25% | $336.21 | $18,112.36 |
| Wells Fargo | Mortgage | 5.5% | $925.00 | $174,536.14 |
| Capital One | Credit Card | 17.9% | $181.40 | $7,256.18 |
| Best Buy | Store Credit Card | 25.9% | $64.67 | $2,586.88 |
| Sallie Mae | Student Loan | 6% | $168.16 | $23,472.01 |
| Credit Union | Personal Loan | 12.9% | $50.47 | $1,499.98 |
After gathering those details, you also want to total up your monthly payments to see how much you owe every month as well as your total balance owed. Using the example above, the total minimum monthly payments would be $1,725.91, and the total balance owed would be $227,463.55.
The idea is to get an incredibly clear picture of what companies you are paying, how much you are directing toward debt payments each month, and how much you owe.
If you are worried that you are overlooking a debt, head to AnnualCreditReport.com and request a free copy of your credit reports. The website is officially supported by the government, and you can get a copy of each of your reports from every major bureau every year at no cost. Then, you can review the reports for information about your creditors, including who you owe and other details.
Know Your Rights
If you have fallen behind on your debt payments, you might be stuck dealing with debt collectors. If so, it’s important to understand that all debt collectors have to follow certain laws.
Review the details of the Fair Debt Collection Practices Act if you want the most in-depth understanding of your rights and the various rules. If you want a solid overview using simplified language, the Federal Trade Commission’s Debt Collection FAQs is a good place to start. Along with information about what is and isn’t allowed, you can find out how to report a debt collector who violates the laws.
It’s important to note that individual states may have additional regulations regarding debt collection practices. In many cases, your state’s attorney general’s office can provide you with further details about your rights under your state’s laws. You can find contact information for your state attorneys general office through the USA.gov State Attorneys General search page.
Make Sure You Actually Owe on the Debts
There are instances where a person is subjected to billing or collection efforts even though the debt isn’t actually theirs. A company or debt collection agency might say that you need to pay when, legally, that isn’t the case.
At times, these attempts to get you to pay for a debt aren’t nefarious. In some cases, it is simply a mistake. A debt was associated with you on accident, such as through a technical error or an employee incorrectly entering customer information. If you believe one of the debts you are dealing with may fall in this category, contact the company or vendor. For additional support, you can also reach out to the Consumer Finance Protection Bureau, Better Business Bureau, or the Federal Trade Commission.
It is also possible that you have been the victim of identity theft. In these cases, someone else pretended to be you or used your personal information – such as your name, Social Security Number, and birthdate – to fraudulently open an account, making it appear that the debt is yours. If you might be the victim of identity theft, the Federal Trade Commission’s Identity Theft website can give you details about how to address the problem.
If a lender or debt collector says that you are responsible for a deceased loved one’s debt, they are usually incorrect. Debt can’t typically pass from one generation to the next if the surviving family member isn’t listed as an official borrower, such as by being a cosigner. Instead, any repayment is handled through the deceased’s estate. However, if you aren’t sure about your liability, you can consult a lawyer. Inheritance laws may vary from one state to the next, so it is wise to speak with a professional to confirm you aren’t responsible.
There are also situations where the debt was genuinely yours, but you are no longer obligated to pay it based on its age. There is a statute of limitations for many kinds of debt, and, once that period ends, the unpaid amount is time-barred. How long that time period is varies based on the type of debt and state law. If you aren’t sure if one of your debts is time-barred, contact your state attorney general’s office.
Understanding Your Interest Rates
Most people have heard debts being referred to as “high interest” or “low interest.” However, there isn’t usually a clear line that identifies what rates fall in which categories.
Since common repayment advice usually tells borrowers to focus on high-interest debts, it’s important to have some form of benchmark. One of the easiest ones is to compare the interest rate to what you could earn as a return if you invested the funds. If the interest rate is above the average return on an investment, consider it high-interest. If it is below, then consider it low-interest.
For example, the average S&P 500 return over the years has been about 10 percent. Using that example, all debts with a higher rate would be high interest. Any debts below 10 percent would be low interest.
Negotiating Principal and Interest Rates
Some borrowers are surprised that negotiating on debt principals and interest rates is an option. If you are struggling with your debt but have managed to stay current on your payments, you might have a decent credit score. If that is the case, you might be able to request a lower rate, reducing how fast interest builds up and potentially lowering your minimum payment.
If you do get any reductions in interest rates, update your debt list to reflect the new interest rates and minimum payments. Additionally, recalculate your total monthly payments and total amount owed, ensuring the information is current.
Additionally, if you can offer a substantial lump sum that is slightly below what you owe, the lender or debt collector might accept that amount as payment in full. Contact them, let them know what you can pay, and see if they will settle the debt for that amount. If so, get their commitment to closing everything out in writing before you send the payment. That way, you are protected if they try to avoid living up to their end of the bargain.
Just keep in mind that, if you settle the debt for less than you owe, there may be tax implications. You could receive a 1099-C (cancellation of debt tax notice) from the company. That means the difference between what you paid and what was owed might be considered income by the Internal Revenue Service (IRS), impacting your tax obligations. If you want to find out if the canceled debt is taxable, review IRS Topic No. 431 for additional information.
Create a Household Budget for Tackling Debt
Once you know who you owe and how much, have confirmed that you are responsible for the debts, and have negotiated when possible, you need to create a new household budget. Use your debt list as a starting point.
Next, add any more monthly expenses you have to handle. For example, this could include rent payments, utility bills, home or renter’s insurance, auto insurance, and any other recurring bills.
Then, put in details about your other living expenses that aren’t bills. For instance, groceries and fuel for your car would fall in this category.
The goal is to get a holistic view of where your money goes every month. If you spend money in one area on a monthly basis, write it down.
If your expenses exceed your income, then it’s time to make some cuts. See what costs you can reduce or eliminate. For example, eliminate cable television, reduce the number of streaming services you use, and pare down your food budget.
If you do not have a budget template, you can get one here. Here is a handy screenshot so you can see what a good budget looks like.
While you might have to live a bit uncomfortably for a while, this process will help you live within your means and pay off debt. Otherwise, you’ll need to find options for augmenting your income if you want to make serious headway.
Increasing Your Earnings to Defeat Debt
Whether you have a budget shortfall or simply want to tackle your debt as fast as possible, increasing your income is always a smart move. Begin by examining all of your household items and decide if there is anything you could sell or donate for a tax deduction.
After that, consider if you can enhance your earnings. Is getting a raise at your current job a possibility? Could you take on a second job? What about some freelance gigs? If increasing your income from work is possible, explore it.
Finally, you can also see if there is any assistance available that might allow you to pay off your debts faster. Check to see if you are eligible for government programs based on your income. Reach out to area non-profits, particularly if you might miss a rent, mortgage, or utility payment. While you might not find any options here, it is worth checking out if you are genuinely in dire straits.
Creating a Debt Payoff Strategy
Before you go beyond making your minimum debt payments, you need a payoff strategy. This will help keep you focused and prepare you to tackle your debt in the best manner possible.
There are two effective and popular strategies for paying off debt.
1) Debt Snowball. The Debt Snowball strategy was popularized by Dave Ramsey, a personal finance expert. In this approach, you focus on the debt with the smallest balance.
Essentially, you pay the minimum payment on every debt but the smallest. Next, you send every extra dollar you can toward the smaller debt. Once you tackle it, you get the mental boost of having a success. Then, you focus all of the money that was going to that debt to the new smallest debt, continuing the cycle until everything is paid off.
2) Debt Avalanche. The second option, the Debt Avalanche, concentrates on the highest interest rate debt first instead of the smallest. You make the minimum payment on every debt, only sending extra cash to the highest interest debt. Once that one is conquered, you focus on the new highest interest account. This approach is the best financially, as you’ll pay less in interest than if you use the Debt Snowball method in many cases. However, if your high-interest debts are large, you don’t get a mental win as quickly, which can be tough on your motivation.
Either approach is viable, as they both help you get out of debt. Consider if you need the mental boost of a quick win. If so, the Debt Snowball is for you. If not, then use the Debt Avalanche to save on interest.
Sometimes, it is easier to decide if you can see the difference. Luckily, you can find easy to use debt snowball and avalanche calculators that will do the math for you, allowing you to input information about your debts and see exactly how the results differ.
Keeping Yourself Motivated
Paying off your debt takes time. As a result, you need to find methods for keeping yourself motivated that don’t involve unnecessary spending.
Many people enjoy having a visual aid. For example, you might create a debt thermometer that you can color in as you pay down your balances. This can help you see how far you’ve come, making it clear that progress is happening.
Additionally, updating your balance owed on your debt list to show the lower amounts can be encouraging. You get to put in smaller balances every month, an that can help keep you motivated.
Don’t Look for Shortcuts
While nearly everyone wishes that there was some kind of shortcut that can lead to debt elimination, there usually isn’t. It takes time, work, and dedication.
While there are reputable debt management organizations out there that can help make the process more manageable, there are also a ton of scams. Any company that touts their supposed ability to work a miracle and make your debt disappear should be considered highly suspect. If you are considering a formal debt management plan, research the organization heavily to make sure it is legitimate and doesn’t charge high fees that make your tough situation worse. If you have any doubts about their credibility, walk away, and get out of debt on your own.
Similarly, while many would suggest debt refinancing or consolidation, that isn’t always an ideal road. If you don’t have stellar credit, you might get a worse interest rate than you are dealing with today. Plus, it could potentially open the door for accumulating more debt, and that could make your situation worse.
This is especially true for balance transfer credit cards. Even if you could get a 0 percent rate for a period of months, using the service typically comes with a fee (around 3 percent of the amount transferred). Plus, if you miss a payment, you might lose the promotional rate, leaving you stuck with the regular (or even a penalty) rate instead. Unless you can be genuinely diligent and pay off the entire transferred amount before the promotional period ends, it usually isn’t worth pursuing.
Helpful Resources
There are plenty of helpful resources that can make your journey easier to manage. For example, online communities can give you moral support and might share tips that can help you get out of debt. Here are a few worth checking out:
There are also tons of Facebook groups dedicated to getting out of debt. You can perform a simple search and find people who are on the same debt conquering journey, which can be very beneficial.
Additionally, there are a bunch of personal finance experts that dole out helpful advice, including:
While you might not agree with everything they say or recommend, all of those experts can help you start thinking about personal finance in a new way.
Ultimately, it is possible to get out of debt. While it does take time and diligence, it is a journey worth taking. Assess where you are, figure out where you want to be, and create a strategy that will let you get from point A to point B over time. In the end, you’ll be happy that you started on the journey and elated once you are done.
The Effects of Financial Stress on Marriage and Other Relationships
What is Financial Stress?
There is no doubt that money causes a lot of stress in this world. Financial stress (when you are unable to be financially stable) is something that effects many people but is seldom spoken about. Seven out of 10 Americans would say that finances are one of their number one concerns. Only 1 in 10 seem “carefree” about their financial situation.
If there was ever a definition of financial stress it is the last seven months (or so) of my life. I was put out of a place to stay, lived in a hotel and somehow managed to pay off $2,000 in debt and save money to move into an apartment. That being said, those seven months were some of the most trying times of my life and the financial stress definitely impacted my life in ways I didn’t even realize.
How Financial Stress Can Effect Your Life
Financial stress can impact your life in many different ways. Personally, financial stress impacted my health mostly. I was unable to eat normally and got sick every few weeks. There are many other effects of financial stress that you may not realize.
- Health: Stress of any kind can be detrimental to your health. Stress can cause anxiety attacks, heart issues, blood pressure problems, ulcers as well as a number of other health issues. If you feel like your financial stress is getting the best of you, seek professional help.
- Credit Scores: Of course your financial stress is likely to effect your credit score over time. If you’re unable to pay bills, etc. your score will start to slip. The thought of this, though, is likely to cause more stress.
- Loss: You can lose a lot when you’re going through financial stress. If you’re not able to pay bills (as mentioned above) you may start to lose things. For example, if you’re unable to pay your car note it may get repossessed.
- Mood (Depression): Financial stress can also have a huge impact on your overall mood and can even cause depression. When you become depressed you begin to let other parts of your life slip too (usually). Your job and even relationships may begin to feel the impact of your stress.
- Relationships: Your relationships may also suffer when you’re going through financial stress. Friends and family may not understand the stress you’re going through or you may not want to talk about it. You’ll also be less likely to be social because of your financial situation.
Outside of personal relationships (friendships, family, etc) financial stress is also known to have a huge impact on marriage. In fact, money is one of the number one things couples fight about.
What are the Effects of Financial Stress on Marriage?
Your spouse is someone you share everything with, which means that sometimes you’ll both have to bear some stress for one another. Financial stress can really put a strain on a marriage though. Some of the effects of financial stress are (but not limited to) anxiety, depression, alcoholism, sever health issues, eating disorders and even the inability to sleep. Each of these things can greatly effect a marriage.
All of that and you and your partner are both suffering. You both have to deal with the thought of having absolutely “nothing” or having to change your lives as you know it to better your financial future. This can lead to fights and even a feeling of loneliness (if you feel your partner isn’t communicating enough). There is good news though. You can always overcome your financial stress.
As a side note, if you are having marital problems, it makes sense to figure out how to solve them fast. I recommend John Gottman’s book The Seven Principles For Making Marriage Work. It is a really solid handbook for improving your marriage and handling stress.
How to Overcome Financial Stress
Overcoming your financial stress won’t be a cake walk but there are things you can do to relieve and even overcome your financial stress. Here’s how I did it:
- Figure out what has you stressed. If there is a credit card payment keeping you stressed out, looming debt or whatever it may be, identify the problem. Once you’ve done that you’ll be able to start to overcoming financial stress.
- Try and think positively. One of the things that pulled me through my time of financial stress was focusing and how great life was going to be once the stress was gone. Keep your head up! It will help you overcome your financial stress.
- Set realistic goals. It is easy to say “I want to pay off all my debt” but without realistic, smaller goals you won’t ever get anything done. Sit down and set some realistic goals for your financial future. Oftentimes writing these things down can help you reduce your stress tremendously. You can use this tool from Undebt.it. They provide a mobile-friendly snowball/avalanche calculator app to help you live debt free. The payment is easy-to-follow so you can finally eliminate your debt!
- Make your dollar count. When I was working on overcoming my personal financial stress I focused on trimming my budget. Everywhere I could cut something I did. Be sure you’re getting the best deals possible and trimming your budget to the best of your ability.
- Lean on someone. You don’t have to overcome your financial stress alone. Find a family member or friend you can confide in and don’t be afraid to share your goals with them and lean on them when you need to. Overcoming financial stress is difficult.
Do you have a personal story on how financial stress effected your life? We’d love to hear from you.
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Confession: We’ve Taken On A Little More Debt
This update isn’t one that I’ve been looking forward to sharing on the blog. In general, everyone here in the debt-free community is making strides to decrease their debt, no matter the cost. While I really have made some fantastic progress in our debt freedom journey, debt is sometimes necessary in today’s world. We’ve been trying to build our credit to buy a home – which requires taking on some debt. Additionally, we desperately needed a new car that fit our new family.
So, without further ado, here’s my confession and a look at the latest debt numbers.
Why We Took on More Debt
There are a number of reasons our family decided to take on more debt after we’d paid a generous amount off. First, I recently talked about how we’d like to buy a home this year. To do that, we need to have a good payment history. As you know, in the past, many of our bills went into collections before they were settled. So, keeping things current is relatively new for us.
It’s exciting because, after time, it will allow us to build the life we want. However, taking on more debt wasn’t ideal. It never is.
On top of needing to build up some credit, we also had some medical emergencies that needed to be paid for. That went on the credit card! Things are tight and that’s how it is sometimes.
We also desperately needed a new car. Our little hatchback Golf GTI was no longer cutting it, especially on road trips. Between the car seat, stroller, highchair, and any luggage we needed, the car was slammed full. If we wanted the dog to tag along, forget about it! So, we decided to upgrade to an Audi Q3. It’s nice, reliable, and something our family will be able to drive for some time. Most people will say we didn’t need to spend that amount on a car, but we’ve got a good plan for paying it off early.
A Look At The Numbers
Now, the moment you’ve been waiting for. Here’s a look at the updated numbers…
- Credit cards: $1,108 (up from $0 last year)
- Collections: $1,205
- Car loans: $34,640 (up from $16K)
- Student loans: $24,185
Two notes here – our credit card balances are higher right now due to paying for a medical emergency, as mentioned above. Additionally, I have not made any payments on my student loans as the Biden Administration is still figuring out what is going on there. Tentatively, I will have 50% of my loans forgiven, which would be fantastic. So, we are just waiting on the decision from the state of NC now.
Where the car loan is concerned, we are paying more than the required monthly payment. We will also be looking into getting it refinanced within a year or so.
Our Philosophy Moving Forward
We definitely have more debt than we did this time last year, but things have changed drastically for our family. Our new philosophy moving forward is to change with what our family unit needs. Whether that is a bigger, more reliable vehicle that is still under warranty, or it is buying our own home (hopefully later this year), we are willing to bend and change for whatever is needed.
Readers, have you ever found yourself taking on more debt when you didn’t expect to? Let me know about your experiences in the comments.
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Debt-Free and Never Looking Back: How Scott Paid Off $72,000
Last week, I had the pleasure of sitting down and chatting with Scott Maderer of Inspired Stewardship. Scott and his wife have paid off $72,000 in debt and, since then, they haven’t looked back. Seriously, no credit cards, no mortgage, nothing! Here is a look at Scott’s amazing story and how becoming debt-free helped him regain control of his life.
Scott’s Story
During our chat, I found out that Scott and his wife paid off all of their debt in just about two and a half years. Here are some highlights from the discussion…
- Scott began seeking debt freedom because he was finding himself depressed because of his finances.
- They don’t currently stick to a strict budget, but they spend next to nothing on entertainment (thanks to an extensive DVD collection, which he will talk about).
- He and his wife will never carry debt again. They don’t even have a mortgage now.
- For Scott, having a plan but being able to roll with the punches has been vital to his success.
I’ll let you give the full interview a listen below.
How Scott Really Paid Off $72,000
In one part of our chat, Scott talks about what has led him to be successful in his debt-free journey and what has kept him free of debt since. For him, there was a “never again” moment where he knew he would never want his finances to have such a stronghold over his life, especially his debts.
This is key for many people to maintain their finances after reaching their debt freedom goals. Having that moment where you realize you truly do not want to hold debt anymore and you don’t want to put yourself in that situation ever again can be life-changing.
If you would like to learn more about Scott or reach out to him about his story he has set up a special page for Our Debt Free Family readers here.
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Mastering Debt Acquisition: How to Buy Someone Else’s Debt
How to Buy Someone Else’s Debt: A Comprehensive Guide
In today’s financial landscape, buying someone else’s debt has become an intriguing investment opportunity. Whether you’re a seasoned investor or just dipping your toes into the world of finance, understanding the ins and outs of debt buying can be both lucrative and enlightening. In this article, we’ll explore the process of purchasing debt, the risks and rewards, and the websites where you can dive into this unique market.
What Is a Debt Buyer?
Before we delve into the nitty-gritty of debt acquisition, let’s start with the basics. A debt buyer is an individual, company, or group that purchases existing debts from creditors at a discount. These debts can range from performing (still active) to non-performing (charged-off or in default). Here’s how it works:
- Understanding Debt Types: Debt buyers acquire various types of loans, including credit card balances, auto loans, mortgages, and personal loans. The quality of these loans varies, from well-performing mortgage notes to unsecured, non-performing loans.
- Profit Potential: Debt buyers aim to collect more from the borrower than the purchase price, turning a profit over time. They often purchase debt for pennies on the dollar, betting on their ability to recover more than their initial investment.
- Legal Considerations: Debt buyers must navigate legal and regulatory requirements. While some may own licensed collection agencies, they often outsource collection efforts to specialized agencies.
The Ultimate Guide to Buying Debt
Due Diligence and Research
Before diving into the debt market, conduct thorough due diligence:
- Research Debt Portfolios: Explore online marketplaces like DebtCatcher, where you can find classified ads for debt portfolios. These platforms facilitate domestic and cross-border transactions, allowing you to buy debts globally1.
- Evaluate Risk and Reward: Understand the risks associated with different debt types. Some portfolios may yield higher returns but come with increased risk.
Negotiating the Purchase
- Price Negotiation: Debt buyers negotiate with creditors or sellers to determine the purchase price. Remember, you’re aiming for a favorable deal that allows room for profit.
- Legal Documentation: Ensure proper documentation, including assignment agreements and proof of ownership.
Closing the Deal
- Transfer of Ownership: Once the terms are agreed upon, transfer ownership of the debt. This involves legal paperwork and coordination with relevant parties.
Building a Successful Debt Buying Business
- Portfolio Management: Efficiently manage your debt portfolio. Regularly assess performance, collect payments, and adjust strategies as needed.
- Compliance and Ethics: Abide by legal and ethical guidelines. Debt buying comes with responsibilities, including fair treatment of borrowers.
Websites Where You Can Buy Debt
DebtCatcher
- Global Scope: DebtCatcher offers a platform for buying and selling debts worldwide. It connects buyers and sellers, allowing you to explore debt portfolios from various countries.
- No Commission: DebtCatcher charges no commission or fees on deals, making it an attractive option for debt buyers.
Debexpert
- Wide Range of Debt Portfolios: Debexpert provides access to a diverse selection of debt portfolios for sale. With the largest US network of debt buying companies, it’s a go-to platform for debt buyers.
- Types of Debt: On Debexpert, you’ll find various debt types, including Real Estate Notes, Auto Notes, Payday Portfolios, Installment Portfolios, Medical Debt, Commercial Notes, MCA Debt, Credit Cards Portfolios, Judgments Portfolios, Bankruptcies, and Student Loans Portfolios.
Triton Financial Solutions
- Unparalleled Liquidity Solutions: Triton Financial Solutions specializes in the acquisition, trade, and intermediation of consumer debt. They serve as a pivotal link between creditors, banks, fintech, and debt buyers. Their commitment to providing unparalleled liquidity solutions for creditors ensures a seamless transition of distressed assets into capable hands.
- Curated Debt Portfolios: Triton identifies and assembles high-quality, lucrative debt portfolios tailored to unique investment and collection strategies. Their comprehensive inventory includes fintech lines of credit, installment loans, payday loans, credit cards, utility debt, auto loans, and medical debt.
- Win-Win Solutions: Triton fosters mutually beneficial outcomes by enhancing creditors’ financial well-being while empowering debt buyers to invest in quality portfolios.
- Redefining the Debt Market: Join Triton in reshaping the landscape of the debt market. Whether divesting distressed assets or capitalizing on promising debt collections, Triton Financial Solutions is your trusted partner.
Conclusion: Seize the Opportunity
In conclusion, buying someone else’s debt can be a strategic move in today’s financial landscape. Remember to use relevant keywords, create quality content, and consider eye-catching visuals to enhance your article’s appeal. Whether you’re a seasoned investor or a curious newcomer, debt buying offers a unique path to financial growth. So, explore the market, make informed decisions, and seize this intriguing opportunity.
Remember, the debt market is cyclical, influenced by factors like regulations and economic conditions. Stay informed, adapt, and thrive as a passive debt investor.