Pay Down Debt or Start a Savings: Which Should You Prioritize

Getting a little extra money in your pocket is always a great feeling. Whether you’re getting a nice holiday bonus, a surprise birthday check from a family member, or just stumbled upon a way to get a little additional cash, every bit can make a huge difference in your debt relief plan. Those extra funds are great for paying down debt. If you are trying to decide whether to do that or put the money into savings, we are here to help you figure it out.

High Interest: Pay Down

If you are wondering how to pay off debt quickly, the answer is to get rid of as much interest as possible. Extra money should always go toward paying off the highest debts with the highest interest rates to help you save money over time. If you get an extra $100 for example, it will make a bigger difference on your $3,000 credit card debt with 20% interest than in your savings account.

Low Interest: Save

On the other hand, if you have low interest on an account with a low balance, the best thing you can do is save your money. In this scenario, you likely have put debt relief strategies to good use and are close to paying off your outstanding balances. Unless the extra bit of cash will completely eliminate your outstanding balance, it is a great opportunity to start building up your emergency fund or save up for a special item or a trip to reward your good financial decisions!

Multiple Debt Accounts: Pay Down

For those who still have multiple forms of debt looming over them, paying down debt it the best choice when you get some extra money. Take a look at your budget for debt repayment and see where the extra cash will help the most. If you have a lot of money owed to one account, in particular, that has a high interest rate, for example, it may be in your best interest to use that towards that one alone. Depending on how many outstanding balances you have, you may also find its better to split up the extra cash between several accounts.

Retirement Savings Plan: Save

Many employers offer a retirement savings plan where they will match your savings. It may not be exactly how to pay off debt quickly, but it will make sure that you essentially double your savings with less money. The best part about this option is that when you finally get out of debt and you are ready to retire, you will see that you have a nice backup fund that you can rely on without getting back into a sticky financial situation.

Make the Most of Your Funds

Liberty Debt Relief knows how difficult it can be to make and stick to a budget to get out of debt. Our debt relief specialists will work with you to make sure that all of your income is accounted for and that you are always well-prepared to make quick and smart financial decisions. Give us a call today at 1-800-756-8447 .

Financial Hardships that May Qualify You for Debt Settlement Help

The saying goes that when it rains, it pours, and when it comes to debt, that happens way too often. Millions of households are struggling to pay off their outstanding balances and are seeking unsecured debt relief. For those who have experienced a sudden loss of income, medical issues, or the loss of a spouse, there is financial hardship help available.

Loss of Income

These days, there are no guarantees. One of the most common reasons people need financial relief is because they lose their job unexpectedly. The company may have decided to downsize, completely close, or eliminate the employee or position for any number of reasons. When you suddenly lose your job and income, it doesn’t take long for all the bills to start racking up, which can cause a lot of stress and put you in serious trouble. But some lenders often understand that something like this is outside of your control and are willing to be flexible you while you look for other sources of income so you can get debt relief and focus on the bigger picture.

Sudden or Ongoing Medical Issues

It’s no secret that health care costs are on the rise. With the average hospital stay costing $10,000, it is no wonder people go into debt. While hospitals and health care facilities are limited in what financial hardship help they can provide, your lender will be more understanding, especially if the issue is sudden or ongoing. As long as you show them that you are doing everything you can to pay off your medical bills and regain your financial footing, they will want to help. At the end of the day, they just want to get paid too and want to work with you to make it happen.

Loss or Separation of a Spouse

When families separate, the effects can last a lifetime. Whether a married couple divorces or a spouse suddenly passes away, the mental, emotional, and financial toll can be devastating. Financially, this means that there is now likely only one breadwinner of the home, which can make paying bills or even knowing what all the bills are significantly more difficult. For those who have children, this can be exponentially more taxing. Lenders will almost always provide financial hardship help in a situation like this. While you won’t be able to have your bills dismissed altogether, they will likely be able to help with any interest, due dates, and grace periods.

Get Help When You Need It Most

Liberty Debt Relief always makes our clients our number one priority. If you are experiencing any of these financial hardships or another situation that you hope will qualify you for debt settlement help, call us today. We are happy to provide a free debt relief consultation and work with you to make sure that you get over this personal and financial hurdle in the best and most effective way possible.

5 Tips for Avoiding New Debt This Year

A new year is a new start to achieve your goals and steer your life in the direction you want it to go in. For the millions of people in the U.S. who owe money on loans, credit cards, medical expenses, or other lines of credit, a great goal to consider is avoiding getting into further debt.

With Liberty Debt Relief’s five tips to stay out of debt this year, you can join those who are working on bettering their financial situation, and life as a whole, throughout the upcoming year

1. Only Make Credit Card Purchases Based on Income

When looking at how to stay out of debt, only make purchases on your credit card that you can afford right at the moment. Consider your credit card a mirror of your bank account — if there is not enough money in your checking account to spend on the item you are looking at, then force yourself to think that there is not enough on your credit card as well. This will encourage you to limit your purchases to what you can clearly afford instead of what you wish you could.

It is also a good idea to set a credit card limit for yourself every month. Unless your income actually allows you to pay hundreds of dollars every month to a single line of credit, it is unlikely you can afford to continuously max out your card. A limit will help you avoid going over so you can pay off your balance every month and improve your credit.

2. Set a Budget for Non-Essential Spending

Avoiding debt is an extremely difficult thing to do, especially if you are known to enjoy the occasional shopping trip, night out, or regular vacations to travel the world. Even though all of those sound like great investments for your personal life, they can wreak havoc on your financial life if you are not careful. While you definitely do not have to cut out all of those pursuits completely, it is a good idea to limit your non-essential spending every month.

After writing down your essential expenses — utility bills, car payments, insurance, groceries, gas, etc. — plan a couple of ways every month you can treat yourself that do not go over your remaining money. Maybe plan to spend only $50 on new clothing, $100 on a new piece of technology, or even save up a little each month so you can take one grand vacation at the end of the year. This way, you will not go off track with your purchases and you can enjoy the things you love without paying a heavy price in the future.

3. Invest in Savings

To know how to stay out of debt, you have to know the reason you got into debt in the first place. Many people fall into a dire and complicated financial situation because they overexerted their funds and had no cushion to fall back on. By considering savings a part of your essential expenses list, however, you can create a backup fund so that any unforeseen expense, such as a sudden medical bill or emergency situation, does not put your financial health over the edge.

There are even savings accounts that actually earn you money via interest. Plus, having a healthy savings account actually motivates people to take better control of their spending.

4. Maintain Your Comfort Instead of Increasing It

For many people, a new year also brings about more opportunities in their career. Some are offered a raise, promotion, or maybe a new career move altogether that brings about a significantly higher income. The key to avoiding debt in this situation is to continue living at a level of maintenance rather than one of sudden luxury. The worst move you can make after suddenly getting a boost in income is to make extravagant purchases, move into a larger apartment or home, or start neglecting your budget.

If you are still recovering from past debts, always make it a goal to pay that debt off first before taking on any new ones. As exciting as having additional money is, it is also important to focus on putting that cash towards the most important financial obligations. Maybe get ahead on some bills, put extra money into savings, or even invest in stocks. That is not to say you cannot celebrate the accomplishment and allow yourself a little more fun every month, but make sure to stay on budget and keep your end goals in mind.

5. Focus on the Future

To stay on track and really work toward understanding how to get out of debt and stay out of it, it is important to always keep the future in mind. Sure, there are some really incredible trips, gadgets, or other purchases that could make you happy for the moment, but they also can put you at risk of going back into even heavier debts than anticipated and preventing you from enjoying those same things at a later date.

Having to worry about your finances does not have to be a permanent way of life, but you cannot move past that point and get into a situation where you can live out your dreams if you are living well above your means before it is time.

Take Control and Make This Your Year to Thrive

This is a new year to take control of your situations and push yourself toward your dreams. Do not fall victim to getting swept up in the moment and let your finances do what they please. Contact Liberty Debt Relief today and an experienced debt consultant can help you hone in on these tips and plan the ultimate year for your financial success.

What Happens to My Delinquent Debt If I Leave the Country?

When faced with sudden stressful situations, people automatically get one of two reflexes — to fight or to flee. While these situations often come in the form of physical emergencies, they also happen when financial stress occurs. If debt gets too high, some people begin to wonder what exactly happens to debt if and when you decide to leave the country. If you decide to leave the country while you owe money in the United States — regardless of how much money that is — that outstanding balance becomes a delinquent debt that can chase you for years.

If You Move On, So Do Lawsuits

Not every country is the same, especially when it comes to creditworthiness. When you move to a new place, you are agreeing to abide by their rules and customs, which includes proving you’re a trustworthy financial investment for banks, loans, and credit. Even though you get to start your financial reputation over in a new country, the one you leave behind in the United States will stay the same, if not worsen.

Those who have accrued several thousands of dollars in debt and have not made efforts to settle or manage those debts will likely face legal challenges from lenders. Unfortunately, lawsuits do not get dropped just because someone moves out of the country. If a legal battle begins, the court looking at your case may or may not make you pay the debt back. There is a good chance, however, that they can liquify any assets you leave in the U.S., as well as garnish any income you earn from a U.S.-based company.

Your Passport May Get Revoked

Delinquent debt is not taken lightly in the United States. Even if you are able to avoid paying back your debts to lenders themselves, there is a good chance that they will write off the missing payments to the IRS, who would then mark those debts as income on your taxes. If you choose to avoid paying your taxes as well as your debt, the government can actually revoke your passport, potentially damaging your visa in another country and hindering you from being able to travel further in the future.

Usually, the U.S. government only takes such action when you are $50,000 or more in debt and have not made any efforts to create a payment plan or rectify the situation. The money you owe will be considered income and you will have to either enter a payment plan or pay back the taxed amount in full. Choosing not to file your taxes or even to file but then not pay back what you owe can lead to additional thousands of dollars in penalty fees and even jail time.

A Mess Awaits in the United States

Probably the worst of what happens to your debt when you leave the country is actually what accrues in your absence. If you did not provide your forwarding information to lenders, companies, or other financial institutions, there is a good chance that you have not received any notifications regarding your debt situation. Not knowing the reality of your financial situation may provide temporary relief, but, in the end, it can just cause significantly more stress and frustration and make matters even worse.

You may return to the U.S. to find that all your assets have been seized and liquidated, your bank and credit accounts are frozen, there are dozens of notices and warnings from debt collectors and the government, or even that there is a warrant for your arrest, depending on the situation.

Co-Signers Take the Fall

For many people, especially young adults, qualifying for a loan is nearly impossible. They simply do not make enough money, do not have enough assets, or do not have the credit history necessary to prove they deserve large financial compensation. That is where co-signers come in handy. Unfortunately, those who decide to flee the country to avoid paying loans or other debts that have co-signers listed are putting their co-signers at fault for their choices.

If the lender is unable to get ahold of you, they will go after the co-signer to resolve all delinquent debt. The co-signer will then be responsible for all the penalties and fees associated with the loan and can even take a hit on their own credit reports. If they are unable to repay the amount owed, they too can have all of their assets liquidated. Even worse, all of the missed payments, fees, lawsuits, and more will show up on the co-signers history, forcing many to file for bankruptcy and preventing them from getting any loans in the future.

Choose to Travel Wisely

Financial issues never truly go away, and a serious legal implication is what likely happens to your debt when you choose to leave the country instead of facing your financial struggles head-on. Debt can be a scary thing to deal with, but with the right game plan and helpful insight, it can be wrangled under control and you can easily avoid putting yourself and any of your co-signers at risk of bankruptcy or legal disaster.

Contact Liberty Debt Relief to learn more about financial relief and to figure out your best bet for settling your outstanding debts.

Settlement vs Management: The Best Debt Solutions for You

Everyone has different kinds of debt they have accrued over the years, which means everyone needs a debt solution that caters to their particular situation. When it comes to deciding between various relief options, the answer depends on many factors. Luckily, Liberty Debt Relief has experience working with individuals in all kinds of financial situations, and we have found certain debt relief strategies may be more appropriate for certain people.

Debt Management vs Debt Settlement

In most debt settlement programs, a debt settlement consultant will negotiate with your lenders to settle for a lower amount — usually between 30 and 50 percent less than your original outstanding balance. Debt management plans, on the other hand, combine various debts from different lenders into a single balance with a lower interest rate that you then work to pay off over time. You will not necessarily have a significantly lower amount that you owe per account, but you will save hundreds or even thousands of dollars in interest as you pay the borrowed amount back.

If You Have Mostly Credit Card Debt

Creating a debt management plan may be one of the best debt relief strategies you can choose if you are primarily dealing with credit card debt or other forms of unsecured debt, such as medical expenses. Credit cards tend to have slightly higher interest rates and are usually easier to manage in longer-term repayment plans. While you will not be able to continue using your credit cards during the repayment period, you will be able to combine all of your credit card balances into one with a significantly lower interest rate, which can save you a lot of money over time. If you get some help from an experienced debt solution expert, they will also work to get any fees associated with the debts waived.

Of course, if you choose to settle your credit card debt instead, you could end up saving tons of money! There is a chance your debt consultant could negotiate certain accounts so you end up paying less than you currently owe, which is not something management programs can do for you.

If You Have Delinquent Debt

Delinquent debt is a major issue that can have severe, long-lasting impacts if solutions are not established as soon as possible by you and your lender. If you have not paid anything towards your balances in at least six months and have made no efforts to fix the situation with your creditor, then you will receive this delinquent status, which can result in severe negative impacts on you and your co-signers’ credit profiles. For those who have ended up in this situation, the best thing to do is to seek out a settlement option, as you are likely too far in the financial hole to establish a debt management plan with your lender you will be able to afford.

By choosing settlement as your debt solution, your lenders and your consultant will discuss what you can actually afford to pay without risking more delinquent charges, so that you can pay back the balance as soon as possible. In fact, this may provide some leverage during negotiations because creditors will be happy to collect a lesser amount rather than nothing.

If You Don’t Qualify for Debt Consolidation

Some people will not qualify for debt consolidation because they do not have the credit score or income necessary to secure a new consolidation loan that will lower their other debts. With debt management, that problem could be eliminated.

Once you set up a debt management plan, you will still be able to make monthly payments towards your outstanding balances. The payments will automatically be deducted from your bank account every month and late fees will be waived so that you are able to stay on top of your debt and save some money in the process.

Again, debt settlement may also be an option for those who don’t qualify. In fact, this debt solution is the most affordable because you are not required to take out yet another loan. You do pay fees to the debt settlement company for their services, but these are only charged after the services are complete. You should never be charged upfront by a debt settlement company.

If You Are on the Brink of Filing for Bankruptcy

Bankruptcy should always be a last resort, but if it comes to the point where you are strongly considering filing for it, it is far better to choose debt settlement vs debt management as part of your financial strategy. If you go through with filing for bankruptcy, not only will you take a hit for finances, so will your lenders. They will not get the money you owe them, which is why they want to do everything they can to make sure they get paid as soon as possible.

Instead of filing for bankruptcy as soon as you get the chance, talk to your creditors about your situation. They will more than likely negotiate a significantly smaller debt amount that you will actually be able to pay. If you are able to settle to an amount that better works for you, you may even be able to forego bankruptcy altogether, saving your credit and your assets.

Talk to a Specialist to Find the Optimal Debt Solution

Debt relief strategies come in all shapes and sizes to fit every person’s individual needs. To better understand whether debt settlement or debt management is better for you, the best thing to do is speak to a debt relief consultant. They will sit down with you one on one to look over your budget, analyze how much debt you need to pay, and point you in the right direction of the solution that will get you out of debt as soon as possible.

Contact Liberty Debt Relief and meet with your personal debt relief consultant today.

Tips for Becoming Debt Free While Still Celebrating the Holidays

Tis the season of giving! With that holiday spirit circulating through families and friends, it can be difficult to not show everyone how much you care about them with lots of gifts. While showing people how much you love them during the holidays is always a fun time, it can put a serious damper on your finances. If one of your New Year’s resolutions is becoming debt free, here are some great tips and tricks from us at Liberty Debt Relief to help you get a head start, while still making sure everyone on your list gets a gift they will love.

Tip 1: Know Your Budget

Anyone who has ever asked how to be debt free receives this tip as their first answer — set a budget and stick to it. If you do not already have a budget in place, take the time to look at your essential costs every month, such as rent, car payments, food, phone, utilities, insurances, and so forth, as well as your non-essentials, including leisure activities, monthly subscriptions, and more. Whatever surplus of money you have after your essentials and savings you can allocate toward your holiday spending. Whether you have $100 to spend or $1,000, the key is to make sure you do not take money away from your bill payments just for holiday gifts.

Tip 2: Stay Away from Credit Cards

Along with not dipping into the essential categories of your budget, it is also important not to get an extra credit card or loan just to help pay for presents. While it may seem worth it in the short term to be able to make as many people as possible happy during the season, taking out an extra line of credit can set you up for a bad situation in the new year and prevent you from becoming debt free. You will have to start payments in January and, if you do not have the money now, you will likely not have it within just a few weeks. Taking out an extra line of credit puts you at risk of significantly lowering your credit score (putting you into more debt) and can have a severe impact on your mental and emotional health soon after January first.

Tip 3: Limit Your List

If you are one of the millions of people who are limited in what they can spend on their loved ones during the holidays, there are plenty of alternatives available. Instead of spending $50 for each of the people on your list of 100, consider cutting down on what you get individuals. Your hairdresser, for example, does not necessarily need that beautiful coffee mug you saw at the department store. You can also get gifts for couples and families instead of individuals to save some money. If you are really strapped for cash but want to give those you are closest to a gift they can truly cherish, consider giving them gifts of time instead of value. Plan a home cooked meal and night of card games with your grandparents, bring your friends over for a game of White Elephant and holiday movies, or maybe even give out coupon books of activities that can be done throughout the new year. Not only will this create lasting memories, but learning how to better allocate funds over time can help you be debt free all year long.

Tip 4: Consider Doing it Yourself

If you really want to start off New Year’s as debt free as possible, consider going the do-it-yourself route. Not every gift has to be an expensive luxury item. You can easily save hundreds of dollars by making similar bulk gifts for all or most of the people on your list. Sweet treats are always a holiday favorite and you can easily put a cute bag of cookies or hot cocoa mix together for the ones you love for only a dollar or two per person. If you like being extra crafty, there are great items you can make, like Christmas tree ornaments, that everyone will love. Choosing to create gifts instead of buying them is always a great step forward to becoming the debt-free person you have always wanted to be so you can start off the new year stronger than ever.

Tip 5: Put Your Holiday Bonus to Good Use

Not everyone gets a holiday bonus at work, but for those who do, it can be a huge factor in how you start off the new year financially. These bonuses can generally be up to several hundred dollars. Instead of using that on additional presents or splurging on a longer vacation, bonuses are the perfect way to make payments toward credit cards, student loans, or even pay some bills in advance. Anyone looking for helpful tips on how to be debt free should always start with their budgets and see where extra funds may be better used and extremely helpful in lowering their total debt.

Tip 6: Use Those Credit Card Rewards

Similar to Christmas bonuses, credit card rewards can be a major financial asset. Many credit card companies offer cash-back promotions throughout the year when you use the card at various retailers, gas stations, and grocery stores. You could have another several hundred dollars available towards your debt. If you own several credit cards and have a lot of extra cash-back funds available, this could be the opportunity that allows you to get out of debt without taking money from your holiday budget.

No matter how you spent the previous year, the new year is the perfect opportunity to make progress toward all of your goals — including the financial ones. Becoming debt free is a huge accomplishment and by following a few simple steps, you can earn this achievement of a lifetime for a future that merry and bright.