Put Your Knowledge of Debt Reduction Strategies to the Test

Debt reduction

As a loyal reader of Frugal Rules, you should know something about attacking and eliminating debt. Care to put your knowledge to the test? Health IQ’s Debt: Snowball or Avalanche? quiz checks how much you understand about debt reduction strategies, especially the snowball and avalanche methods.

Do you know the fastest way to pay down your debts? What about the debt reduction method that attracts the least interest? Did you know that sometimes debt reduction strategies don’t attract any interest at all? Taking the quiz is a great way to test what you know about reducing your debt and learn what you don’t. With only 10 multiple choice questions, you can take the quiz over your coffee break. Health IQ provides instant feedback on your answers so that you’ll know why you were right or wrong while you learn more about the snowball and avalanche methods.

Since nothing is wrong with a little healthy competition, Health IQ tells you what percentage of Americans answered each question correctly. Once you complete the quiz, you can check how your score compares to your friends and other people in your area on the Health IQ leaderboard. Taking the quiz isn’t only a great opportunity for learning; it’s also an opportunity for earning. You’ll earn Elite points for every right answer, redeemable for prizes such as donations to your favorite charities and tickets to sporting events. What are you waiting for? Take the quiz, Debt: Snowball or Avalanche? and start earning Elite points.


3 Things Debt-Free People Do That You Don’t

Things Debt-Free People Do That You Don't

Being financially independent and completely debt-free may be just a dream for a very large population of people. These dreamers are usually the ones who are giving chunks of interest money to the bank on a monthly basis.

But you don’t have to be jealous of the smart savers. Why don’t we go ahead and look into some simple habits they have and other people don’t. We might just find out the secret that is helping these savers keep a ton and break away from the bank’s jaws.

Every penny counts mentality

If you ever went shopping with one of these smart savers or you just had an opportunity to follow him on one of his shopping ventures, you know what I mean by this subheading.

People who are truly fighting for their money will know how to respect it and will not waste it buying stuff they don’t need. It is not unusual to see them following a shopping list while buying food and groceries either.

Why do you think it is important to sit down and make list before you actually go shopping?

Do a simple test.

Try going shopping without a list like you always do and save your receipt from the supermarket.

Then, on another occasion, take a minute of your time to write down everything you need to fill your refrigerator.

Don’t buy anything else than what was written down! Hold on to that receipt also and take your time to analyze how much money you spent on both occasions and how important were the items you bought.

Surprised? Don’t be! It’s those small things that can make a huge difference at the end of the day. Learn and practice to save your money and use it more efficiently.

Don’t miss out on opportunities to get money

Saving is just one side of the coin. Stashing your money infinitely and for no obvious reason won’t get you far either. Inflation will literally eat up all your money’s value in no time if you hold on to it for long enough.

Instead, pay closer attention to what’s happening everyday around you. Get familiar with financial instruments, ways of investing money, follow fluctuations of exchange rates.

Possibilities are almost infinite. Make sure to use that little extra you saved to invest it wisely and multiply it. This will significantly speed up the process of repaying your debt.

Try to negotiate

Negotiation is one of critical skills that debt-free people possess and are not embarrassed to resort to. It’s really a shame for some reason not to negotiate in the first place. It just shows you don’t respect your money enough.

If you look at financially independent people that are always negotiating. Whether they are buying groceries at the local market, searching for a better car deal or negotiating a perk they need associated with their credit card. Always negotiating…

Taken into perspective of a person who is repaying a debt and putting loads of money in the bank every month, negotiating might just mean getting better terms of debt repayment. For example, do you know what is a debt agreement? If you haven’t heard of it yet, make sure to explore that option instead of giving so much more money every month than you should.

Of course, even if you follow in all these steps nobody’s saying that you will succeed to repay all your debts in a jiffy. But if you succeed to change your mentality and set your mindset differently, you are much much closer to reaching financial freedom.

Hellen McAdams

Hellen McAdams is the chief strategist at Marketee.rs. She loves a good digital marketing strategy and isn’t afraid to ask questions everyday to keep up with the industry’s trends. If you have any comments or questions, shoot her a question at @hellen_mcadams.

10 Things that Bankruptcy Can Teach Us about Life

10 Things that Bankruptcy Can Teach Us about Life

You may find it hard to believe, but bankruptcy is not all that bad. There are many positives to this scenario, like elimination of debt completely or at least partially. Also, filing for bankruptcy can leave you with many valuable life lessons regarding finances. Here are some of the things your bankruptcy can teach you:

1. Every Little Expense Counts

Bankruptcy is just the disappointing climax to an extended saga of being in debt. Most average people go into debt because of compulsive buying habits. When you buy a new pair of Jimmy Choos, you may not see bankruptcy filings in your future. But that’s where it can ultimately lead. So, learn to spend your money very, very wisely.

2. Bankruptcy does not Equal being Broke

Being broke means you don’t have cash at hand to pay for your everyday needs, be it food or the mortgage bills. Bankruptcy simply means you don’t have the financial resources to pay your creditors. Your money could be tied up in property or stock. However, you will still have cash to meet up with everyday needs. And you should do so smartly to avoid being genuinely broke, which is what debt can lead to.

3. Documenting Finances is Very Important

If you have filed for bankruptcy, then you’d know how important it is to document every single expense, even the small ones. Documenting your expenses obsessively is not a bad thing. It will help you understand how much you need to spend each month. This is the first big step towards better money management.

4. Starting a Business Just for the Sake of Starting a Business is Bad

Most people go bankrupt because of bad business decisions. These days you hear all sorts of talk about starting businesses on the side to make extra cash. Starting a business is easy, but running one isn’t. Just because you love eating, you shouldn’t open a restaurant. So, if bankruptcy teaches anything, it will teach you how to invest your money in better business.

5. Be Cautious of “High Return” Investments

A surprising number of bankruptcies is filed each year because someone lost all their money to so-called high-return investments. High return investments are also highly risky. Most people do not consider this when they buy certain type of stock or put money into a business. Do not let the returns overshadow the risk of any business. If an investment sounds too good to be true, assume that it is.

6. Diversification of Investments is Very Important

If you invest regularly, do diversify your investment portfolio. As the common saying goes, don’t put all your eggs in one basket. This has been the cause of a number of infamous bankruptcies in the past hundred years. When you invest, make sure your money is in different industries, like stock, property and precious metals.

7. Hardships Occur During Unexpected Times

It’s easy to see on the bright side of investments and new businesses until you have to call up BLG bankruptcy. You must consider the worst outcome for all the financial decisions you make and prepare yourself accordingly. This may sound too macabre, but it’s a necessity to avoid financial calamity. Do not assume everything is going to work out. Estimate costs and expenses wisely, and you must have savings to cover for any losses incurred by investments or business.

8. Financial Education is not Just a Fancy Term

Lack of financial understanding is the main cause of debt, and later situations like bankruptcy. Financial illiteracy is more widespread than you think. It can affect the average Joe as well as a celebrity alike. Only about 40 percent of Americans can be considered financially literate, according to data gathered by FINRA. You could easily fall into the rest of the 60 percent. So, start today to educate yourself about personal finance before it’s too late.

9. Maintaining a Household Budget May Save Your Financial Life

Do not look at maintaining a household budget as a hassle. It’s relatively simple to do; you just have to note down the money you make each month, money you spend and the money you save. Doing so will prevent you from ending up nose deep in debt.

10. Everyone Must Plan for Their Future

Always assume that money can run out, no matter your income potential. That’s why financial advisors cannot stress the importance of having a plan for the future. The easiest way to plan your money for the next 5 years is to save. You need emergency savings as well as long-term savings for retirement. Savings will prevent you from having to take out short-term personal loans, a major cause of personal bankruptcy.

If you learn all the above lessons by heart, then you will be able to avoid bankruptcy in the future. Learn from your mistakes. If you do, like Will Smith or even Donald Trump, your future finances will look brighter than yesterday’s.

Personal Finance and Avoiding Debt Collection: What Not to Do

Personal finance

Sooner or later most of us will face a situation that will leave us with bills that we can’t pay. Loss of job, death in the family, divorce, illness, and emergencies happen and often it leaves us financially broken. This is when the debt collectors start calling. This is a scary time and if we have never faced these problems before, we may try to hide from them. We simply do not know what to do. We are trying our best, but our options seem nonexistent.

First, let us look at what we should not do.

Do not ignore or avoid the contact.

This is not going to work. Computers and technology are so advanced that even a novice collector can find you in little to no time. They will first access the information on your credit application. This contains your address, place of employment, relatives, other companies you do business with and your banking information. Even if you have changed addresses, this is enough information to find you. It is amazing what comes up when they do a basic and free background check online, done by a private citizen. This is nothing compared to the programs the collection companies use.

Stop the bleeding. A debt collector is not out to ruin your life. Their job is to collect money for their employer. That is how they stay in business. They would rather work with you than against you. In most cases, the collector is one of your best allies. Debt settlement is your best option. Many times they can stop additional charges from adding up which absorbs the money you send them. If you explain the situation, they have programs to help. Sometimes payments are deferred and interest payments are accepted to allow more time on the principle.

What happens next?

The calls stop?

Of course, every debtor who ever checked their call waiting is hoping that the bill collector will just give up and go away. While it could happen, the chances are slim. People think because they get a small window of time when the phone is quiet that they gave up. More often than not, they are escalating their efforts. Sometimes that means they are selling your debt to another company. For whatever reason, they feel it is better to receive a portion of the money and let your account become someone else’s headache. Enjoy your break, because your procedure just began again with a new company.

This new company buys hard to collect debts, because they have the tools and resources to collect them. They will probably come at you harder and be less willing to work with you. Your credit report takes another hit from a new collector.

They reach further

In a last-ditch effort to find you before they take the matter to legal measures, they contact people associated with you. The secretary at work tells you about a person who complained that you would not return their call. Your neighbor mentions someone calling asking for your number. Your family members get calls. This adds more stress and embarrassment to your life. Even now, it is wise to return the calls. This company is going to take the next step if you do not find a resolution. It is embarrassing, but it is just a phone call.

Legal action

Time is up. They have tried to reach you and they have tried to work with you. But your fear held you back. Now they will bring a lawsuit against you. You can fight the lawsuit, but if you owe the money and you have a broken contract, you will not win. If the lender wins in court, he can then garnish your wages and get his money directly from your employer. Your credit score takes a major hit with a judgement against you for lack of payment. Recovery from the situation could take years. If this happens enough times, by enough creditors, you may end up in bankruptcy.

Debt Got You Down?

Debt can be a huge drain on your ability to gain any ground in life. There are many different reasons that people go into debt. Maybe the financial climate has hit you hard or maybe you are simply trying to pay back student loans. No matter the cause, if you are in debt your number one goal should be to eliminate it. However, you might want to tackle your debt differently depending on the type of debt and the circumstances of your unique situation. So where are you in your financial game? Are you coming along well but you feel like you need a little help or are you in financial ruin?

For each stage of your financial path and each level of debt there is a solution but first you should evaluate your position. Take a look at this infographic by Consolidated Credit that highlights each league of debt and the possible solutions for them. Find out which category best describes your situations and which solutions might help you tackle debt.

Debt Relief Options

Debt Relief Options: The Series

credit card billMisery Loves Company 

If you are finding it difficult to pay your bills these day, know that you are not alone. If you are worried about your home being foreclosed or your automobile being repossessed, millions of your fellow Americans are in the same boat. Most people face financial troubles at some point in their lives. The reason can range from losing your job, a serious illness in the family or simply reckless spending.

Although owing a lot of money can seem overwhelming, there are steps you can take for debt relief. If you take proper action right now, your financial picture does not have to go from bad to worse. If you find yourself in turbulent financial waters, please take a few minutes to fill out the form on the bottom of this page. Our debt relief professionals will contact you with ways to extricate yourself from the web of continuous debt.

Options for Debt Relief 

Some options to start you on the road to financial freedom include:

Establishing a realistic budget
• Credit counseling
Consolidating your debt
• Bankruptcy

Which of these options may work for you depends on your level of debt, your prospects for the future and how much discipline you have.


The first thing you should do when preparing a budget is to realistically assess how much money is coming into your household each month and how much money you spend. You will need to set up a list of your fixed expenses, such as mortgage or rent payments, utilities, school loans, car payments and insurance premiums. You should then list such variable expenses as entertainment, clothing and medical bills. Writing down all income and expenses will help give you a clear picture of your spending patterns. The main idea of a budget is to insure that you have allotted the necessary funds to cover such basic needs as housing, food, insurance and medical expenses. If you are trying to pay off debt, this must also be included in your budget plan. 

Credit Counseling

You may want to consider credit counseling if you do not have the discipline to stick to a budget and are unable to work out a payment plan with creditors. There are many credit counseling organizations that are legitimate and not-for-profit. These may be found at your local college, military base, credit union, housing authority, your financial institution or local consumer protection agency. A reputable credit counseling organization will advise you on a personalized plan to manage your finances and can offer realistic avenues to debt relief. Be aware that not all debt relief organizations are free, affordable or legitimate—do your homework before signing on the dotted line.

Debt Consolidation

You may actually be able to lower your credit costs by consolidating your debts through refinancing your home with a second mortgage or equity line of credit. However, you must be careful. Since you are securing your loan with your house, if you cannot make your payments on time, you risk losing your home to foreclosure.


Filing for bankruptcy should be your last resort since the outcome is both long-lasting and far-reaching. A bankruptcy filing remains in your credit report for ten years and can make it very difficult for you to purchase a home, obtain life insurance or even get a job. However, it is a legal option that offers a fresh start for people who absolutely cannot find another way out of their debt.

Chapter 7 is known as straight bankruptcy and involves the sale of all assets that are not exempt. Exempt property may include cars, work-related tools and basic household furnishings. You must wait eight years between filings under Chapter 7 bankruptcy codes.

Chapter 13 allows you, if you have a steady source of income, to keep such property as a mortgaged house or car, which you might otherwise lose. Under Chapter 13, the court approves a repayment plan that allows you to use your future income to pay off your debts during a three-to-five year period, rather than surrender any property. When you have made all the payments stipulated in the plan, you will receive a discharge of your debts.

Both Chapter 7 and Chapter 13 bankruptcy will get rid of unsecured debt and stop foreclosures. They can also stop repossessions, garnishments, utility shut-offs and debt collection activities. Both also provide exemptions that allow you to keep certain assets.