15 Debt Quotes to Watch Out

Debt

1. What can be added to the happiness of a man who is in health, out of debt, and has a clear conscience? -Adam Smith 

2. Rather go to bed supperless, than rise in debt. -Benjamin Franklin 

3. A man in debt is so far a slave. -Ralph Waldo Emerson 

4. Live within your means, never be in debt, and by husbanding your money you can always lay it out well. -Andrew Jackson 

5. Debt is the worst poverty. -Thomas Fuller 

6. You cannot spend your way out of recession or borrow your way out of debt. -Daniel Hannan 

7. Debt is dumb. Cash is king. -Dave Ramsey 

8. Debt is like any other trap, easy enough to get into, but hard enough to get out of. -Henry Wheeler Shaw 

9. Homelife ceases to be free and beautiful as soon as it is founded on borrowing and debt. -Henrik Ibsen 

10. One can pay back the loan of gold, but one lies forever in debt to those who are kind. -Malcolm Forbes 

11. What can be added to the happiness of a man who is in health, out of debt, and has a clear conscience? -Adam Smith 

12. A promise made is a debt unpaid. -Robert W. Service 

13. Debt is beautiful only after it is repaid. -Russian Proverb 

14. Credit is a system whereby a person who can not pay gets another person who can not pay to guarantee that he can pay. -Charles Dickens 

15. Some debts are fun when you are acquiring them, but none are fun when you set about retiring them. - Ogden Nash

Six Habits That Can Land You Deep in Debt

Debt is the worst  poverty (Thomas Fuller)

If you’ve ever been in debt, you know just how soul-crushing and stressful it can be. When you’re deep in debt, you have to plan your life around it. And if your dollars are stretched too thin, you may have to sacrifice other financial goals to keep up with those monthly payments.

Unfortunately, a lifetime of debt is something Americans know too well. According to Federal Reserve figures, the average household carried a credit card balance of $7,281 in 2015. And if you exclude the households with no debt, the average outstanding balance surges to $15,609.

Digging Your Own Debt Hole

That kind of debt usually doesn’t happen overnight. While some people wind up in debt through no fault of their own, the vast majority of those who are in debt end up there after years — or even just a few months — of poor money management.

Here are some unfortunate money habits that can lead to a mountain of debt over time:

Impulse Spending

According to a 2014 study of 1,000 adults administered by CreditCards.com, three out of four people openly admitted to shopping on an impulse. Those who responded positively said they purchased things when they were excited (49%), bought stuff out of boredom (30%), shopped when they were sad (22%), made impulse purchases out of anger (9%), and made unplanned purchases when they were intoxicated (9%).

While an occasional impulse purchase may not break the bank, constant overspending may be cause for worry. And if you make a habit of putting those unplanned expenses on credit, impulse spending can cause you to spiral deep into debt over time.

Eating Out All the Time

According to Commerce Department data released this year, restaurant and bar sales overtook grocery store spending nationally in March 2015. Yes, you read that right: For the first time, we are spending more on dining out than we are on groceries — and with disastrous consequences for our pocketbooks.

While eating out is only problematic if you don’t plan for it (and can’t truly afford it), a little goes a long way. And if you’re prone to put that restaurant meal on a credit card, this habit could do a lot more than eat up your expendable income; it could cause your credit card bills to surge over time.

Going Sans Budget

Even though budgeting is nothing more than a plan for your money, the dirty “b-word” gets a bad rap. Unfortunately, going without a budget is one of the easiest ways to wind up in debt. After all, how can you be aware of how much you’re spending if you aren’t actually keeping track?

Unfortunately, a fairly recent Gallup poll shows that only one in three Americans creates a detailed monthly budget or spending plan. When you consider that unfortunate statistic, it’s really no wonder so many of us are deep in debt.

Going Without an Emergency Fund

What happens when you have an unexpected medical condition that keeps you away from work? An emergency home repair? An expensive legal situation you must take care of?

If you don’t have an emergency fund, you might be tempted to rely on credit in the short term. And unfortunately, using credit as a crutch can come back to bite you. If you rack up debt due to an emergency and don’t have a plan to pay it back, you could easily wind up in debt for the foreseeable future.

Embracing Lifestyle Inflation

If you’re growing in your career, you might enjoy a hefty raise or annual bonus. What you do with that raise can have an equally important impact on your finances over time.

If you save that raise each year and learn to live on last year’s income, for example, you could have a lot of money stashed away by retirement. But if you allow your expenses to creep up as you earn more, you will always wind up living at the edge of your means.

That’s why many people refer to lifestyle inflation as the ultimate net worth killer; if you constantly spend all that you earn, your annual bonuses and raises won’t actually help you grow rich over time.

Making Minimum Payments on Credit Cards

If you’re making the minimum payment on your credit card, you should brace yourself for a lifetime of debt. With credit cards carrying APRs anywhere from 4.9% to 24.99%, your small revolving balance could grow a lot faster than you ever anticipated.

Remember how the average indebted household carried $15,609 in credit card debt in 2015? That kind of debt doesn’t happen to those who make a habit of paying their credit card balances in full each month. No matter what, making the minimum payment on your credit card is a surefire way to land deep in debt.

The Bottom Line

While good financial habits can help you avoid debt and grow your nest egg over time, bad habits can lead to a lifetime of monthly payments — and even financial ruin.

Recognizing toxic habits early — and doing something about them — is the best way to squash bad habits and replace them with behaviors that will help you in the long run.

10 Terrible Loans You Should Consider Only as a Last Resort

We've all been taught that most types of debt are bad news. But some loans are such egregiously awful financial instruments, we think they deserve special mention.

Below are 10 of the worst loan options available. They feature many things in common, such as exorbitant interest rates or enticements to make you spend and borrow more. These loans so bad, you should only consider them as an absolute last resort.

1. The Payday Loan. Payday lenders present themselves as a friendly, helpful, and practical solution to running out of money before the end of the month. You've seen the claims on storefronts, and you've probably heard the commercials by now: "Money as soon as tomorrow!"

What payday lenders really are, according to Sen. Elizabeth Warren, "a credit product that can impose substantial costs on imperfectly informed and imperfectly rational borrowers." Warren decried payday lenders or cash advance companies in a paper "Making Credit Safer," which noted that a typical $30 fee on a $200 loan amounted to a nearly 400 percent annual interest rate. These companies make 90% of their profit on customers who roll their loans over, paying again and again for the money they've borrowed.

The Consumer Federation of America is so concerned about the long-term debt cycle which frequently traps borrowers that it set up a site to warn potential consumers of the risks of payday loans. Or maybe the Confessions of a Former Payday Loan Junkie will convince you.

2. The Car Title Loan. Car title loans are a notoriously awful option. The deal is, you borrow money at a high-interest rate (typically 300 percent), and the loan is usually due in full in 30 days. As security, you sign over the title to a paid-for vehicle. That's a very bad idea, says the Consumer Federation of America.

"Car title lending risks repossession of major family asset," the organization warned in a paper that cited the forfeiture of thousands of vehicles in various states through these loans. The loan amount is generally a fraction of the car's market value.

3. The Tax Preparer Loan. Because of a regulatory crackdown, the big tax services have quit offering classic refund anticipation loans, where they would give you the money the IRS owes you weeks ahead of time in exchange for a hefty cut. But some of those same companies are now offering personal lines of credit with double-digit interest rates and a swarm of fees. Steer clear.

4. The Credit Card Cash Advance. Credit card cash advances seem appealing because you already have a relationship with your credit card, so there's no paperwork to fill out; they're instant, and there are no embarrassing face-to-face conversations involved. You've probably even gotten those "convenience checks" along with your credit card bill, or seen the logo of your credit card network on an automated teller machine.

Those perks come at a steep price: high fees and interest. The average fee is $10-$20, and the interest rate you'll pay ranges from 1 percent to 7 percent above your credit card rate. The only time you should even consider taking a cash advance is if your car breaks down out of town and the mechanic won't take a credit card. "It ought to be a last resort," David Jones, president of the Association of Independent Credit Card Counseling Agencies, told CreditCards.com.

5. The Casino Loan. Many casinos offer interest-free, fee-free lines of credit that can only be used to gamble. The only reason you should ever take advantage of such an offer is if you have the cash in your checking account and you prefer not to carry it. "Never borrow money while gambling. Chances are good that you'll lose it, making a bad situation even worse," advises part of the "Casino Gambling for Dummies" Cheat Sheet.

Like other lenders, casinos generally have the ability to put a lien on your home if you don't pay, setting the stage for a bad day at the tables to spin into a very bad year -- or even a terrible decade.

6. The Installment Loan. Similar to the payday loan, the installment loan gives the borrower a small amount of money -- often $1,000 -- on short notice at a high-interest rate. But unlike payday loans, which are often due in full in just a few weeks, installment loans can be stretched over six months or a year.

These loans have skirted some of the scrutiny regulators put on payday lenders, but have landed consumers in much the same trouble. Take Naya Burks of St. Louis, who ended up having $5,300 taken from her paychecks after she defaulted on a $1,000 installment loan from AmeriCash. Those payments did nothing to chip away at the loan balance, which instead grew week by week because of the 240 percent interest rate, eventually ballooning into a $40,000 debt.

7. The Private Student Loan. Student loans may be a fact of life for many scholars nowadays but think hard before turning to a private lender instead of federal programs. "While federal student loans offer options to avoid default through several loan modifications and alternative repayment programs, lenders and services of private student loans generally do not," the Consumer Financial Protection Bureau warned in its annual student loan report. Private student lenders may also prevent you from selectively paying off higher-rate loans first, complained the blog, Money Ning.

8. The Pawnshop Loan. If you live in a big city, you've probably passed pawn shops, which take jewelry, cameras, and other personal property as loan collateral, and keep the goods if the loan isn't paid in time. The New York City Department of Consumer Affairs warns that in addition to charging high-interest rates, these shops often charge service and storage fees, driving the true interest rate sky-high. Many people end up paying more than the market value of their property to the pawnbroker, but can't pay all they owe and end up losing the property, anyway.

9. The Overdraft Loan. Your bank may have encouraged you to opt-in to "overdraft protection," a program that allows you to write a check or withdraw funds from an ATM even if you have no money in your checking account. Tim Chen, CEO of NerdWallet, says you should never do this.

When your bank provides this "protection," it charges you a fee -- about $35 -- for that transaction and every other transaction on your account until the balance is above $0. In the end, you could end up paying even higher rates for that overdraft loan than you would be borrowing from a payday lender, Chen warns.

10. The Lotto Winner Loan. Most of us will never be in the position to be victimized by this kind of loan, but if you ever win the lottery, watch out. The public radio program This American Life explained that these lenders go after people who have won jackpots to be paid out gradually over the years. They buy the winnings for an upfront payment, often pressuring the winners to sign off on a sum that is just a fraction of their winnings. Fortunately, now that most states offer a lump sum option, these lenders are no longer prevalent.

Credit blacklist for 170,000 PTPTN defaulters unless repayments made, ministry says

Graduates who have defaulted on their National Higher Education Fund (PTPTN) loans will enter Bank Negara’s bad credit list next year unless they start repaying the RM1.2 billion borrowed from the government, Education Minister II Datuk Seri Idris Jusoh said today. Idris said these 170,000 PTPTN defaulters will be given a grace period of three months to avoid being listed in the Central Credit Reference Information System (CCRIS) – which could affect their chances of securing car and housing loans.

“When we announce the implementation of that move later, we will give a period of three months for the borrowers to discuss and then make payments before their names are listed in the CCRIS,” Idris was quoted saying by Bernama today.

In explaining Putrajaya’s revival of its plan to blacklist defaulters, Idris said that some borrowers had taken advantage of  PTPTN’s flexible policy and refused to make any repayments.

“We have the borrowers’ details and know that some of them have lucrative salaries but do not come to PTPTN at all within three years to discuss or make any payments,” he was also quoted saying.

Earlier today, Berita Harian reported that PTPTN will list defaulters in the CCRIS from next year onwards in order to regain the funds.

The 170,000 defaulters are said to owe a total of RM1.2 billion which they borrowed in the 1998 to 2010 period.

Many students borrow from the PTPTN but the fund is itself teetering under the burden of unpaid loans and has resorted to blacklisting defaulters so that they cannot leave the country.

In February this year, Malay Mail Online reported PTPTN saying in a recent statement then that as many as 468,592 borrowers have defaulted on their loans amounting to RM3.3 billion as of November 30, 2013.

The fund said that as of end of November it has issued study loans to 2.34 million people, totalling RM53.23 billion.

On August 21 last year, the Cabinet scrapped Putrajaya’s plan to list PTPTN defaulters in the CCRIS blacklist after the proposed move was roundly criticised across the political divide – including Youth and Sports Minister Khairy Jamaluddin.

Just a day before Putrajaya shelved the controversial proposal last year, Pakatan Rakyat leaders had threatened to kick off a nationwide protest campaign if the government continued with the CCRIS move.

The CCRIS is where information on borrowers to the Credit Bureau is stored. Credit data from financial institutions is automatically kept and processed in the CCRIS and subsequently synthesised into credit reports, which will, in turn, be made available to institutions upon request.

An individual with a bad credit report would automatically face trouble when applying for future loans with these institutions.

Source: https://www.malaymail.com/news/malaysia/2014/10/09/credit-blacklist-for-170000-ptptn-defaulters-unless-repayments-made-ministr/760437

10 Effective Ways of Debt-Free People

First a story:

Appreciate what you have!

One day . . . a wealthy family man took his son on a trip to the country so he could have his son see how poor country people live.

They stayed one day and one night in the home of a very humble farmer.   At the end of the trip, and when they were back home, the father asked his son, "What did you think of the trip?"

The son replied, "Very nice dad."

Then the father asked his son, "Did you notice how poor they were?"

The son replied, "Yes."

The father continued asking, "What did you learn?"

The son responded, "I learned that we have one dog in our house, and they have four.  

Also, we have a fountain in our garden, but they have a stream that has no end.  

And we have imported lamps in our garden . . . where they have the stars!  

And our garden goes to the edge of our property.   But they have the entire horizon as their back yard!"

At the end of the son's reply, the father was speechless.  

His son then said, "Thank you, Dad, for showing me how poor we really are."

Isn't it true that it all depends on the lens you use to see life?

One can ask himself what would happen if we give thanks for what we have instead of always asking for more.

Learn to appreciate what you have. Wealth is all in one's point of view.

Author unknown

Debt-free people are masters of money. They make the best of what they have to enjoy a care-free and debt-free life. Here are their wise ways of managing their personal finance:

1.      Smart use of credit cards: They only keep credit cards that are free for life. They just want to take advantage of credit cards to earn reward points or pay less with cash-back offers. They totally avoid credit and pay promptly and fully every time.

2.      Pay themselves first: They understand that the source of their wealth is from their savings accumulated over time with compound interest. It is their habit to incorporate an amount for savings as part of their “expense” budget. They will do it by way of auto-transfer or they will set aside an amount regularly and consistently.  

3.      Read and learn: They are hungry for knowledge and the latest happenings in the financial world. They want to be on top of things to preserve their wealth. They learn and explore ways to invest their hard-earned money for maximum gain at risk levels they can tolerate. 

4.      Live within their means: They know that their financial resources are limited; they choose to live within their means to avoid their fund being depleted. Their lifestyle is tailored according to what they can afford and not how they want to live according to the standard of others.  It means they spend less than what they earn and so there is no debt to be incurred.  

5.      Have an emergency fund: They have ready cash to meet unexpected expenditures such as paying for a major repair of their house or car. They also foresee the uncertainty of job security and they are ready for it financially for a period of time.   

6.      Invest for retirement: They know that they need a replacement source of income when they are no longer capable of earning a living. They invest their savings regularly while they are still at work and slowly build a stream of passive income for their golden years.     

7.      Monitor their spending and net worth: They use a spreadsheet to record and monitor their spending and compare it with what they have budgeted.  They review their net worth once a year to measure their effectiveness in accumulating wealth.

8.      Simple lifestyle: They are practical people with practical needs because they appreciate what they have. They don’t follow their neighbors and spend unnecessarily to match other people’s way of life.

9.      They are in control: They are patient people and impulse spending is not their way. They think first and spend later and not to allow money to control them.

10.  They have an ultimate goal: Financial freedom is their financial mission. They want to live a financially independent life. They want to be self-supporting. They do not want to live a miserable life at the mercy of others.    

Finally:

A man in debt is so far a slave. - Ralph Waldo Emerson

Effective Ways to Avoid Debt

According to the general manager (operations), Azman Hasim, of Bank Negara Malaysia’s Credit Counseling and Debt Management, there are three reasons why people over-borrowed – greed, lifestyle, and unavoidable circumstances. How do you take steps to avoid unmanageable debts?

Greed

• Gambling: Gamblers are no winners or else there will be no gaming outlets or they will be out of business. Don’t get involved.

• Get rich quick schemes: There is no way to make a quick and easy gain in a short time with your money. Don’t believe in such schemes. Even a solid business venture needs time and hard work to grow.

• Invest for the short term: The stock market is bullish and you decide to make a killing. You use your savings and even borrow more money from a financial institution. Initially, it looks good but a terrorist attack somewhere in another corner of the earth triggers a market slump. You decide to hold on but it is a downward slide all the way and it is too late to salvage the huge loss. It is a situation of investing too much, too short a time for too quick again and at the wrong time. You are now in debt. Investment is for the long term. 


Lifestyle

• Wants: Your wants are unlimited but your resources are limited. Every day you see new gadgets, new cars, TV in 3D, and many more. Advertisements are luring you to spend and spend and your neighbors are trendsetters. Can you control yourself to spend less than your means? 

• Credit cards: The fastest way to get into debt is to spend on your wants on credit, pay the minimum amount, and incur interest at the highest rate. If this is not enough, get advances from your credit cards to spend even more. Can you manage your credit cards without getting into debt?


Unavoidable circumstances

• Accidents and illnesses: Accidents on the road can be prevented when you drive with care. Illnesses can also be avoided when you look after your fitness and health. You can also take up insurance coverage to cushion the blow of an accident or a critical illness. An emergency fund is more effective to meet such unforeseen circumstances. 

• Jobless: The smart way is to acquire more skills so that you will be more valuable in the workplace. In case of retrenchment, you are the last one to go. In the event that you are jobless, an emergency fund will get you through a difficult period until you get a new job.

The key to avoiding debt effectively is your preparedness and discipline.

Source: Effective Ways to Avoid Debt

7 Effective Ways to Manage Your Debt and Boost Your Creditworthiness

A man in debt is so far a slave. ~Ralph Waldo Emerson 


Standard and Poor's has downgraded the U.S. credit rating for the first time ever from AAA to AA+. S and P said it lowered the rating because the deficit reduction plan Congress passed on Tuesday did not go far enough to stabilize the country's debt situation.


On a personal level, how do you manage your debt and avoid erosion of your credit rating? Here are 7 simple ways to do it:

1. Monthly repayments to be included in your budget: It is imperative to factor in all loan repayments into your monthly budget because it is not an optional item. You have to plan for it and you work on your plan. 

2. Timely payment: Do not be late to make your monthly payments. If you do, it will impact your credit rating negatively. You don’t go to work late, right? 

3. Do not skip a single payment: It is a very serious matter to skip even one payment. You are sending a signal to your creditors that something is not right and you are in financial trouble. It will negatively affect your credit rating even further. It’s like you are missing in action for one day and everyone is worried about you.

4. Avoid incurring more debt: At this critical stage, avoid getting into any more debt than you can possibly manage. The most important thing is to get rid of all debt as soon as possible. Curb your wants. 

5. Cut spending: While you are in debt, go for an austerity drive. Look into your spending pattern and cut unnecessary items such as entertainment. 

6. Look for new income streams: It is also wise to look for additional sources of income. Can you turn your hobby such as photography to be a freelance photographer?

7. Be responsible: The worst thing you can do is to jeopardize your credit rating by not communicating with your creditor when you are unable to meet payments. Go and negotiate with your creditors to reduce the monthly payment, waive a few monthly payments or reach a mutually agreeable solution. 

What can be added to the happiness of a man who is in health, out of debt, and has a clear conscience? ~Adam Smith

Source: 7 Effective Ways to Manage Your Debt and Boost Your Creditworthiness

8 Reasons Why You Have Unmanageable Debts

The following are the reasons why people seek help from the Credit Counseling and Debt Management Agency of Bank Negara in Malaysia:


1. Poor personal financial management 26%
2. Huge medical expenses 25%
3. Credit card misused 15%
4. Failed in business 13%
5. Out of a job 11%
6. Other reasons 6%
7. Death of a breadwinner 2%
8. Mistakes in investing 2%


Three words describe the debt situation: greed, lifestyle, and unavoidable circumstances.
However, there are effective ways to avoid debt:


Poor personal financial management: A budget is a key to personal finance. The aim is to allocate your income in such a way as to meet all your monthly expenses and include an amount for savings. The whole idea is to live within your means and avoid debt.

Huge medical expenses: The first step is to take preventive measures by keeping fit and maintaining robust health. Eating a balanced diet, exercising regularly, and having sufficient sleep are essential for your well-being. The next step is to take up adequate medical insurance coverage. In case you are seriously ill or as a result of an accident you can reimburse your medical expenses and get compensated for your loss of income while you are in a hospital or recuperating at home 

Credit card misused: It is a credit card, but its main purpose is not for you to purchase items on credit. It is only for your convenience and nothing else. It means you must pay fully and promptly upon receiving the monthly credit card statement. You avoid paying interest on the outstanding amount when you do not pay just the minimum amount and you also avoid late payment charges. When you are in debt, it is very difficult for you to get out of debt. That is the reason why so many people seek help for debt management. 

Failed business: There is always an element of risk in any business venture. The prudent thing to do is not to put all your money into it. Set aside a contingency fund in case your capital is wiped out in a failed business attempt. 

Out of a job: Take steps to secure your job. One effective way is to acquire more skills. In fact, employers are looking for staff with multi-skills to reduce costs. With more skills, you are more valued at the workplace and less likely to be laid off.

Other reasons: One of the things that you should not do for your good friend is to be a guarantor for his or her loan. When someone applies for a loan and the financial institution asks for a guarantor, it means the loan applicant is not qualified for the loan. As a guarantor, you are more likely to end up servicing the loan.

Death of a breadwinner: An accident can happen at any time. The wise thing to do is to get sufficient insurance coverage against death due to accidents and critical illnesses. The proceeds can then allow family members to carry on living without financial difficulties. 

Mistakes in investing: The mistake is about greed. Instead of investing for the long term, you want a huge gain in a short time because the stock market is on an upward trend. Apart from your own savings you also get a personal loan from a bank and dump all your money in the stock market. However, a terrorist attack somewhere triggers a market slump. You continue to hold on to your portfolio, but there is no sign of recovery and you have suffered a huge loss and owe the bank a substantial amount. 


Live within your means, never be in debt, and by husbanding your money you can always lay it out well. But when you get in debt you become a slave. Therefore I say to you never involve yourself in debt, and become no man's surety. If your friend is in distress, aid him if you have the means to spare. If he fails to be able to return it, it is only so much lost.

Andrew Jackson

Source: 8 Reasons Why You Have Unmanageable Debts