My friend is a debt counselor and here is what he said he wish more people know so that there would be less people he would have to deal with!
1. Free is Expensive
Low introductory offers are great but difficult to maintain. The important thing is to see the recurring maintenance cost and not just cost of accepting the offer. Small things add up.
2. Careful when you Co-Sign
Refuse anyone who asks you to co-sign a loan for their house, car or anything. If they default, the liability is yours. Don't accept it.
3. Honor your Checks
You may face various problems if you have a habit of letting your checks bounce. This will affect your relation with the bank, your credit score and future financial dealings with various institutions. Honor your commitments.
4. Keep a Budget & Stick to it
Watch what you earn, spend and save. Make a budget and stick to it. The most eerie item of our bills is the entertainment which can be very high unnecessarily. Instead keep your monthly budget in an envelope or wallet and use it. When it's finished, stay at home.
5. Careful on Auto Leases
Leasing and nil don payment deals can be risky because you could be driving something that is worth less than you owe. Take care when you do this.
6. 1 Year Emergency
The old adage said 3-6 months of living expenses as savings was enough. But in today's more competitive world it is now and you should gun for 12 months o living expenses as savings.
7. Whose name is on the Bill?
It doesn't matter if your divorced. If your name is on the bill, you are liable to pay and it is your credit score that gets ruined if you don't. Make sure you have joint obligations transferred.
8. Balance Transfer is not necessarily a good thing
Even though transferring loan or card to another bank with lower interest rate sounds smart, it doest really mean that you are any better off. Instead pay more attention to use all spare money to pay off the loan or card with the highest interest rate. When that is paid off, work on the next one. This way, you know you are actually making progress.
9. Challenge your Bills
Do you sometimes see a charge on your credit card that seems wrong to you? If so, challenge it, there are so many other companies waiting to give you a card if you are dissatisfied with your current company.
10. Pay your Rent First
The most important thing you need is a shelter & stability. Don't use all your money to pay debts to those creditors who scream loudest. Be smart and maintain your asset and pay off others slowly.
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