Reducing Debt Before Its Too Late … How To Avoid The Pitfalls Of Creeping Debt – Debt Consolidation
Reducing Debt Before Its Too Late ... How To Avoid The Pitfalls Of Creeping Debt
Deb Seeber
Reducing debt usually isnt a high priority for people until they have already gotten into trouble with overspending. Using a few basic guidelines, and debt calculations, can help you see when your debt load is getting into the danger zone.
Budgeting Guidelines
First off, creditors use budgeting guidelines when reviewing and approving credit. If your debt exceeds the financial communities recommended guidelines, then you have a higher risk of credit applications being denied.
Getting, and keeping, your debt in line with recommended budgeting guidelines, is an important step in debt reduction. Use the following recommended budgeting guidelines the same ones used by Financial Institutions to review the items in your budget:
Housing 35% - Mortgage or rent, taxes, repairs, improvements, insurance, and utilities;
Transportation 20% - Monthly payments, gas, oil, repairs, insurance, parking & public transportation;
Debt 15% - Credit cards, personal loans, student loans & other debt payments;
All other expenses 20% - Food, insurance, prescriptions, doctor & dentist bills, clothing & personal;
Investments & Savings 10% - Stocks, bonds, cash reserves, retirement, rental real estate, art, etc.
Debt Income Ratios
The second step is calculating your debt income ratio. Once you know what your ratio is, you will understand just how important debt load is to your overall financial picture. Your debt income ratio is the percent of your monthly take-home pay that goes to paying debts.
You calculate it by taking the amount needed to repay debts each month, including rent or mortgage, and divide by your take-home pay your net pay after taxes. Remember, this is "Debt" ratio, so only include actual debt repayment in the calculation.
Credit To Debt Ratio
Just because you pay off a credit card is no reason to close your account. One little known fact about the Credit to Debt Ratio is the reverse effect it has on your credit score. If you pay off a credit card, and close the account, you are actually negatively impacting your credit score.
The reason for this negative effect is in the calculation of the Credit to Debt Ratio itself. This ratio is the relationship of your debt total vs. your credit limit.
You calculate it by dividing the total credit limit of all credit cards and loan accounts by the total of the actual debt spent total. Now, if you pay off a credit card, you are reducing the actual debt, which is great, but, if you close the account, you are also dramatically reducing the credit limit you have, and usually by a higher percentage than the debt reduction.
Pay Yourself First
Essential to long-term financial success, and protecting your future, is paying yourself first. While this may seem easy to do, it happens to be the last thing most people do, instead of first. Debts and other financial obligations, money for entertainment, and other spending always seem to take a higher priority. All I can say is, STOP! Think about it, if you arent worth being paid first, then who is Always put something away in your savings, and leave it alone. It doesnt matter if its only $5 a week, just do it!
Snowball The Credit Cards
Last, but not least, is making extra payments, not just the minimum payments, on your credit cards. You have probably already seen this many times, but it just cant be stressed enough. Paying just $10 extra a month on a credit card, above the minimum required payment, can cut your repayment term in half, if not more! So, squeeze out that extra payment, however small, every month, and take advantage of the compounding effect of snowballing your debt away. The Power of Financial Knowledge
Remember, you dont have to be a financial whiz to understand whats going on with your credit and debt. Just a few simple calculations, and an eye on the future, will go a long way to help you succeed financially and keep your debt under control. Be safe, be smart, do the math!
About The Author
Article courtesy of: DebtSteps.com offers comprehensive reviews of your options for debt relief. From budgeting to bankruptcy, debt consolidation, and credit counseling. DebtSteps.com is where you can get the answers to your questions absolutely free.
Copyright 2004 DebtSteps.com, all rights reserved. Reprinted with permission.
Top 10 Marketing Pitfalls – Affiliate Programs
Top 10 Marketing Pitfalls
Stuart Reid
If you want to make it BIG in Internet Marketing you need avoid some common mistakes. Heres a list of the top ten Pitfalls that catch out beginner Marketers and many established ones too!.
The problem is you dont realise you have fallen into one of these holes until someone points it out. Marketers tend to be stubborn and suffer from tunnel vision - hopefully these may help you kick a few bad habits...
1. Procrastination
Putting things off is a killer where this career this is concerned. You NEED a plan and some kind of time management system in place. Prioritize your tasks and keep lists of everything that needs doing. And no matter how much you dont feel like doing something just get it out of the way and NEVER leave it untill the next day!
TIP: Use post-it notes. They are low-tech but work great :-
2. Striving for Perfection
Youll likely never have a "perfect" website or product but you know what It doesnt matter! Its important you get started as soon as you can and make your site "live". You can tweak things as you go along and improvements WILL come later - but if you try to get everything "right" before you start then youll never start.
TIP: Update your site daily in little ways, it saves doing everything at once and the search-engines it too.
3. Wasting Money
This one is important. Especially if you dont have money to burn! Dont get caught up jumping from opportunity to opportunity or buying everything that lands in your inbox. Youll be surprised how much you can get for free. Trust me - you dont need half the stuff you see online. Try to control your emotions and think before you buy. Write a list of pros and cons, and make sure that the product or service is essential to YOU.
TIP: Look for reviews by people without a vested interest in the product and ask questions in forums.
4. Not Spending Enough
Unfortunately you have to spend a little. It wont be much starting out, but you will need more as you grow. For a start youll need a domain, a host, an autoresponder - but these are pretty affordable these days. The bulk of your expenses will be on promotion, usually ezine ads or pay-per-click. If youre paying someone to create your product or youre buying resell rights then this is another expense but you can start with free affiliate programs.
TIP: Keep your "Internet Income" separate and re-invest. Youll be glad you did later.
5. Wrong Markets
This is a tricky one. If you are dead set on conquering a certain market you could end up on a long and expensive journey that is doomed to failure. Do some research first. A so-called "niche" market is a good find but only if this niche will spend money! Other markets, like Internet Marketing, are very busy BUT Internet Marketers spend money - and the drive to make money is a strong human emotion. Theres a lot of them around!
TIP: Find something that interests you and use a site like nichebot.com to see how many searches there are for that subject. High Traffic and Low Demand are your goal.
6. Lack of Growth
You must continuously grow yourself and expand your mind. Learning is essential. If you dont youll be stuck with the same skills and ideas and youll never even notice when you are bogged down in complacency and routine.
TIP: Put some time away each day to read a few articles and browse some sites. Learning just one new idea a day can increase your potential rapidly.
7. Doing It Alone
You can do it alone but it is harder, and without support you are more likely to fail. It doesnt have to be much. On-line forums, for example, are an amazing source of ideas and encouragement. And with other people, by forming Joint Ventures or starting your own affiliate program you can really leverage your efforts and do FAR MORE than you could ever do on your own.
TIP: Visit forums, messageboards and maillists. Lurk for a while until youre ready.
8. Going For The Small Money
You aint ever gonna get rich selling $20 items. Seriously, include some higher priced goods and services in your marketing. Youll get less sales, but more profits. You wont know if they sell until you try! But dont fall into the trap of selling any old thing because you get a high commission. Integrity is important, too.
TIP: High ticket sales work better with existing customers who you already have a relationship with. Try them as a back-end.
9. Separating Life and Work
One of the biggest pitfalls when working from home is the fact that life can enroach your activities - simply because you ARE at home. Try to separate the two and have fixed times when you work, and a set area to do it. Work doesnt have to take over your life, but neither should you let life interfere with your work.
TIP: Use a spare room or a spare corner and ONLY use it for work.
10. Be Ambitious
You wont know unless you try. Assume you can do *anything* - because you can! You may not be ready to do it yet, but dont set up mental blocks in advance. You can create your own profitable items, sell them well, and have others selling them for you. You can operate a range of websites, even host seminars, or teach others. YOU CAN.
TIP: Recognise excuses for what they are. If you need help, invest in a good self-help book.
I hope identifying these pitfalls help you look at yourself differently. Contrary to popular belief internet marketing is not an instant path to riches, but it is an achievable one.
About The Author
Stuart Reid publishes Netpreneur News and maintains NetpreneurNow.com and its Members Site. To join at no cost and immediately gain access to a ton of valuable eBooks, Reports and Tools simply visit http://www.netpreneurnow.com
webmaster@netpreneurnow.com