An organized desk with a planner on how to get out of debt.

Debt Avalanche vs the Snowball Effect: Which Payoff Strategy Is Better?

By | Debt

The decision to focus your energy on paying off your debt is an incredible step in taking control of your finances. Once you’ve knocked out high-interest debt in particular, you’ll free up your money to then hit even greater goals for things like a down payment on a home, retirement savings, or a vacation.

To be really strategic with the funds you have available for paying down debt, consider choosing between two popular methods: the debt avalanche or the snowball effect. Not sure what those two strategies entail? Keep reading to find out what they mean and which is better for you.

What Is a Debt Avalanche?

The debt avalanche method has you prioritize your debts by interest rate. You’ll need to start by finding out all your current APRs across the accounts you want to pay off, including credit cards, loans, and lines of credit. Once you’ve identified the balance with the highest rate, you’ll funnel all your extra debt payments to that account. You’ll still need to make the minimum payments on all your other debt. Any money you can divert to extra payments, however, should be focused on that first balance with the highest interest. Once you knock that one out, you’ll then move on to the debt with the next highest rate.


The single greatest advantage to the debt avalanche strategy is that it saves you the most money in the long run. Because you’re tackling the highest interest rate, you’ll stop paying that APR sooner, regardless of what your balance is. That means you’ll start accruing less debt from a growing principal balance thanks to those high rates.

Sometimes the choice might be as obvious as a credit card with an 18 percent APR versus a car payment with a 6 percent APR. Clearly, you’ll save more money if you can get rid of that 18 percent rate faster. If you have multiple credit cards or high-interest personal loans, you may need to do some digging as to which one will save you more over time.


While it makes sense to pay down your biggest APR debt from a financial perspective, it might not be the best move from a morale perspective. It can take longer to get a win depending on how high your balance is from the start. Still, if you can stay motivated, you could end up saving a lot more money throughout your entire debt payoff process.

What Is the Snowball Effect?

There are a few key differences when considering a debt avalanche versus the snowball effect for your payoff strategy. The snowball effect has you start by paying off your smallest debt, regardless of how much the interest rate may be. After you pay down that balance, you then move to the next smallest balance.

In the meantime, you’re still paying minimum balances on all your other accounts. As you pay and focus on lower-dollar balances, you gain momentum and confidence in your ability to knock out your debt altogether.


The debt snowball effect has the power to keep you motivated to continue making progress. When comparing the debt avalanche versus the snowball effect, you might automatically assume that the best option is the first one, since you have the potential to save more in the long term. But if you lose momentum and instead give up on your debt payoff goals, you’re not doing yourself any financial favors.

Instead, give yourself the easy win with the debt snowball. Once you get the ball rolling, you’ll be inspired to keep funneling your extra dollars to paying off debt. One small victory leads to a larger victory until you’ve ultimately knocked out your debt completely.


The obvious disadvantage to the snowball effect compared to the debt avalanche is that you could potentially end up paying more cash in interest over time. If your smallest balance happens to have a low-interest rate, you’ll have more months where you’re paying on those higher rate accounts.

You really have to weigh the pros and cons of what motivates you more: saving money or having the stamina to keep making those extra payments each month. It’s an extremely personal decision and, ultimately, there’s no right or wrong answer.

Ready to start improving your credit score in order to qualify for lower credit rates? Get a free consultation with Ovation Credit to see how our credit experts can help you with the credit repair process.

Are you running away from your debt issues? Learn your rights and stay informed.

How Often Can Debt Collectors Contact You?

By | Debt

Dodging debt collector calls adds stress and anxiety to an already difficult situation. Thanks to the Fair Debt Collection Practices Act (FDCPA), debt collectors have to play by a certain set of rules. They can still call you, of course, but the tone and the quality of their calls must meet a certain standard. If you’re wondering how often debt collectors can contact you, the answer is unfortunately not quite clear-cut. While the law imposes certain restrictions on the calls, there is no set limit of the number of times they can contact you. Here’s what you need to know when you’re receiving a lot of calls from debt collectors.

Acceptable Times to Call You

How often can debt collectors contact you? Debt collectors have a window of time that’s considered fair game for contacting debtors, typically between the hours of 8 a.m. and 9 p.m. They also cannot call you an excessive amount of times each day, but unfortunately, the FDCPA does not define what counts as “excessive.” If you are receiving multiple calls a day, make a note of each call and the content of the conversation. That’ll be critical information to share if you decide to file a complaint or a lawsuit against the agency.

Harassing Is a Definite Violation

The FDCPA does specifically prohibit debt collectors from making repeated phone calls with the intent to annoy, abuse, or harass consumers. However, you may wonder how many calls are too many — and whether the collector’s behavior amounts to true harassment. It’s safe to say that if the collector is calling more than once a day — and uses threatening language — you may be dealing with one of the more unscrupulous debt collection agencies. As stressed and afraid as you might be, make sure you keep your cool and fight the urge to argue with the collector. That’ll only escalate the unpleasant behavior.

Debt Verification

To immediately stop the phone from ringing, ask the collector to send you, in writing, a statement outlining the amount owed, the name of the original creditor, and the procedures for filing a dispute if you disagree with the amount owed. While the debt collector is validating the debt — or researching your dispute, if you file one — they must cease all collection activity until the investigation concludes. That’ll buy you some much-needed time to check your own records and verify that you do, indeed, owe the debt and possibly come up with a plan to repay it.

Protecting Yourself

Here’s the good news about persistent debt collectors: You can tell them to stop calling, and by law they must abide by your request. Send the letter, via certified mail, requesting that they cease further communications with you. Take note that the debt collector could still end up turning your account over to a lawyer if the amount is substantial enough. Or they might sell the account to another agency — a common industry practice — which means you might have to start over and deal with a different set of collectors. Once you’ve sent the letter, the debt collector may only contact you to confirm that it will no longer call you, or to advise that it will be filing a lawsuit.

Know Your Rights

Debt collectors can legally call you at your place of employment, which can naturally cause even more anxiety. However, once you inform them you no longer wish to receive calls from them at work, they must stop. Also, debt collectors may not advise any of your co-workers or bosses that they are calling about a debt. Legally, they can only ask if you work there.

Filing a Complaint

Once the debt collector’s behavior crosses the line into disturbing and intimidating territory, you may have grounds for filing a complaint with the Federal Trade Commission, the governing board that oversees FDCPA violations. You can also submit a complaint to the Consumer Financial Protection Bureau, an independent consumer protection agency. Make sure to consult your state attorney general’s website, which will likely provide a summary of state-specific debt collection regulations that could bring an additional layer of protection.

Collection Woes? We’ve Got Your Back

Debt collectors can bring down your credit report, but you can recover your credit score thanks to our seasoned team of credit repair specialists. Don’t spend any more time worrying over how often debt collectors can contact you — take action today. Ovation Credit pros specialize in assisting consumers with collection account issues. Let us know how we can help you with a free consultation.


What exactly is zombie debt? Learn more about it here.

Everything You Need to Know About Zombie Debt

By | Debt

Zombie debt. It’s a witty description of a modern annoyance. Though you may enjoy hearing about a new zombie show on TV, you’re not going to enjoy hearing you have zombie debt.

Zombie debt is debt that was once written off by a company either because you were never able to pay, or the company was never able to make contact with you. Time went by, and the company eventually sold the debt to a third-party debt collector, who then started to make efforts to collect upon the money you owed.

Once buried, but now back from the dead, zombie debt can really throw a wrench in your monthly finances and disturb your evening serenity.

How Much Do Debt Collection Companies Pay for Your Debt?

Believe it or not, the norm is very low, with an industry standard of only 3%. So say you owed a company $3,000, the debt collection company probably only paid about $90 for your debt. Even if they are only able to recoup 10% of the original debt, that’s still a 7% return for very little effort on their part.

Keep this in mind.

How Old Is Your Debt?

It’s likely you don’t even remember where the debt came from, and if it’s really old, it probably doesn’t even show up on your credit report anymore. Luckily, there’s a thing called statute of limitations.

Most states have a statute of limitations of six years. Once the debt is six years old, the debtor is no longer required to pay it. The debt is still allowed to exist, but the debtor, after six years, is no longer legally required to pay upon it.

Should You Just Pay it?

Is it older than six years? If so, there is no situation where it is to your benefit to pay anything. Sure, you’ll stop getting phone calls faster, but that’s about the only perk.

What You Should Know About the Statute of Limitations and Credit Scores

Don’t take them up on any offer to settle the debt for a lesser amount. Unless you receive something in writing, once you send them a portion of the debt, the whole amount is then reanimated and the statute of limitations restarts.

Once this happens, the collection agency has every right to legally pursue you. Furthermore, the debt will reappear on your credit report.

Should you decide to the pay off the full amount, your credit score will only be hurt because you will then have late payments and bad debt added to your credit report. It’s important to dispute any errors listed on your report.

What You Need to Know About Your Rights

The Consumer Financial Protection Bureau (CFPB) has a handy website to get you up to speed on your rights as a debtor.

We recommend you read it through to assuage any of your fears. What you want to focus on is the Fair Debt Collection Practices Act (FDCPA). It boils down to the following points:

  • Debts older than six years cannot be taken to court
  • Debts older than seven years must be removed from your credit report
  • Debt collectors cannot lie to you about anything
  • Debt collectors must stop contacting your work and family after you send them a cease and desist letter

What to Do When You’re Called

Don’t spend any time on the phone with the collection agent explaining anything. Instead, ask them for the name of the company they work for and the company’s address.

Do not acknowledge that the debt is yours — any suggestion that it is can give them legal ammunition to pursue you further.

Next, send a letter disputing that the debt is yours and ask them for proof that it is. The letter must be certified and must be sent within 35 days of the initial contact. After you’ve sent your letter, do not speak to them until you receive written proof that the debt is yours.

Once you have received the information, you will be able to determine if your debt is within the statute of limitations.

Contact Us for Help

If you’re still not sure about your rights and are worried about zombie debt coming back to hurt you, feel free to contact us at Ovation Credit for a free consultation on credit repair.

We specialize in helping people repair their credit and are well prepared to help you escape zombie debt once and for all.

Looking for ways to tackle debt? Check out these top applications.

Tackle Debt with These Budgeting Tools

By | Debt

There’s no easy solution to mastering a debt problem. However, thanks to a multitude of recent advances in the industry, it’s simpler than ever to create an effective plan to budget your way out of debt. Take advantage of the low-cost and free options available to gain more visibility into your debt situation. Once you’re comfortable with using a budget, you should be able to find a system that works for you — and that will keep you accountable in your debt reduction goals. Slay your debt with our roundup of the most effective debt budgeting tools.

Money Management Apps

Your goal is to chip away at as much of your debt as you can — so it’s a good idea to look for a debt budgeting tool that’s free, if possible. Mint is one of the most popular and respected apps. Mint will request access to all of your accounts and pinpoint the areas where you may be overspending. You can then create a budget and track your spending, all within the app. What makes Mint an ideal choice when you’re trying to pay down debt is that it allows you to set goals specific to your situation — such as paying off your credit card debt or your loan debt. You will then be able to budget how much additional cash to funnel into your debt that month.

Full-Service Budget Programs

If you feel that you may need a little extra motivation to squash your debt problem once and for all, check out a full-service budgeting program. EveryDollar, the brainchild program of debt management guru Dave Ramsey, offers a user-friendly interface, easy budget creation, and the ability to access your account across multiple devices ($99 a year after a free trial). Another well-regarded option is You Need a Budget, or YNAB ($6.99 a month after a free trial). YNAB gathers your accounts, including credit cards, and highlights areas where you have overspent using credit cards. You can also create categories in your budget for debt payoff, and see your progress in real time with handy charts. The advantage of a paid budgeting program is access to 24/7 coaching and support — which can be invaluable as you work your way out of the debt cycle.


Spreadsheets have remained a budgeting mainstay through the years for a reason. If you’re having trouble creating your own ideal spreadsheet budget, check out the free templates offered by Microsoft Office. It’s a good idea to separate your expenses into fixed expenses (such as your rent or mortgage), variable expenses (like your grocery or water bill), and periodic expenses (your child’s summer camp program). Once you’ve identified the areas where you can save money, then you can apply those amounts to additional debt payments.

Debt Payoff Apps

Seeing the totality of your debt on a computer screen can be eye-opening. Numerous apps are geared specifically toward debt reduction. Examples include Debt Tracker Pro, Debt Manager, and Pay Off Debt. Generally, you enter all of your balances, interest rates, monthly payment amounts, and due dates. You can then track your progress toward paying off the debt. Some apps even suggest the debt payoff method that is likely to be most successful for you, such as the debt snowball method. Features differ among apps — and you may pay more for “premium” features, such as a recommended payment amount for each particular debt, which is offered by Debt Tracker Pro. All of these debt budgeting tools simplify the repayment process, helping you understand your finances and figure out a plan to erase debt.

The Low-Tech Route

While you won’t have the fancy bells and whistles of an app, the pen and paper method can be just as effective. Start by writing down a list of all of your debts. Include information such as the outstanding balance, minimum payment, and interest rate. Then branch out into your specific goals — such as paying off your student loan balance at the end of next year. Make it a habit to write down all of your transactions and see where you can trim some expenses to apply toward your debt. For some people, the old-fashioned approach can make the budgeting process more personal and enjoyable. You’re much more likely to stick with debt budgeting tools that work for you.

For More Help, Reach Out

The right tools to pay down debt can make all the difference. Credit repair can also help you meet your goals. For more information on how Ovation Credit can lend a hand, contact us for a free consultation.

Medical Debt Impacting Credit

Does Medical Debt Impact Your Credit Score?

By | Debt

Medical debt is no longer displayed on your credit report the same way it used to be, but it can still impact your credit if it goes unpaid for too long. With recent changes in reporting requirements, there are new rules surrounding how long you have to pay off your medical debt before it gets reported and starts impacting your credit.

Here’s what you can expect to happen to your credit once you start to accumulate any kind of medical debt.

When Medical Collections Show Up on Your Credit Report

Medical debt doesn’t show up on your credit card until it’s left unpaid and goes to collections. Early on, it’s treated like any other bill in that it’s not listed on your credit report. If it’s a large amount that you can’t pay off in a lump sum, it’s best to try and sign up for a manageable payment plan with your medical provider. However, if you don’t pay on the balance for whatever reason, your account could end up being sold to a debt collection agency.

At that point, the collection agency is likely to report your medical debt to the credit bureaus. Like many other types of negative entries, medical debt is listed on your report for seven years, unless removed by initiating a credit dispute. The seven-year period starts from the first delinquency date associated with your medical debt.

What Happens to Unpaid Medical Debt

On the plus side for consumers, there are some extra restrictions that the credit bureaus must abide by when listing medical debt. Even if the collection agency reports the debt to Experian, Equifax, or TransUnion, the credit bureau must give you a 180-day grace period to pay off your balance. That period starts from the original due date, giving you a full six months to make arrangements to pay the bills.

So even if your health care provider sold the debt three months after your due date, you still have another three months to catch up. This also gives you time to potentially ask your insurance company to help you negotiate. The claims process can be a slow and tedious one, so this extended grace period is meant to make sure your credit doesn’t tank just because your insurance company took too long to pay all or part of the balance. Once the debt makes it onto your credit report, it’s listed as an unpaid collection.

How Credit Scoring Models Weigh Your Medical Debt

If you don’t manage to pay off your medical collections debt within the grace period, it will then likely be listed on your credit report. However, your score won’t suffer as much compared to other types of debt. That’s because the latest scoring models from both FICO and VantageScore don’t weigh medical debt as much as other types of debt, particularly credit card balance. It makes sense why — medical bills don’t generally indicate a pattern of poor financial decisions.

On the downside, not all lenders and financial institutions use the most current scoring models from FICO or VantageScore. Older versions may weigh medical debt equally with other kinds. Still, as companies continue to move forward and upgrade their lending platforms, it’ll be much easier to improve credit related to medical debt.

How Credit Disputes Work for Medical Debt

It is possible to get unpaid medical debt removed from your report so that you can fix your credit score before you reach the seven-year delinquency mark. Check your records for any credit errors. If you find any discrepancies in the debt amount, payment debts, or any other information, you may be able to start a credit dispute and have the entry negated. This entails sending a letter to the credit bureau. Regardless of their findings, the investigation should be completed within 30 days. Be sure to keep copies of all your communications related to your medical debt, both with the collection agency and the credit bureaus.

If you’re trying to fix your credit related to medical debt or any other negative items on your report, it can be helpful to get professional help. You certainly can execute the dispute process on your own, but it can be an extremely time-intensive process. And if you don’t research your rights adequately, you may end up doing more damage to your credit score.

Luckily, a professional firm like Ovation Credit can help. Our team of lawyers has years of experience in the field, plus knowledge of the intricacies of credit and debt law.

Get started with a free consultation today to start the credit repair process.


Pay Down Your Debts: Top Tech Tools to Help You

By | Debt

Thanks to technology, it’s now easier than ever to keep tabs on your financial situation. The major banks and credit cards offer mobile applications, allowing you access to your balance and payment history at any time. You can check your credit score with the click of a button. As much as technology facilitates the act of buying (imagine how much less you’d spend without online shopping!), it also makes it much, much easier to pay down your debts. Check out these top tech tools to keep your debt situation under control.

Take advantage of your bank and credit card app features

It helps to download the app connected to your credit card and bank, if available, so you can instantly access your information at any time. Some apps will also notify you when a statement is available or a bill is due (in addition to regular email alerts). These apps also simplify the process of setting up auto-payment every month, so you don’t have to worry about forgetting to pay.

Check out budget and goal-setting tools

You may already choose to use a household budget app, such as the one offered by This site also offers a financial goals feature that allows you to link up your credit card and loan accounts. Once you designate paying down your debt as one of your financial goals, the site will suggest different options for repayment, such as using any available savings or making changes to your budget. This feature also provides a timeline based on the expected date when you will be free of debt.

Track your debts in app form

Debt reduction apps abound in the App Store, and you might want to try out a couple of different ones to see which interface works the best for you. Some of the most popular examples include ReadyForZero, Debt Control Free, and Debt Assistant. (A bonus is that they are all free apps.) The theory behind these apps is generally similar across the board: You link up your outstanding debts and due dates, come up with payment strategies and utilize the built-in calculators to determine the best strategy for payoff. They also allow you to zero in on your progress, which keeps you motivated when you’re trying to repair your credit.

Put money aside without even having to think about it

Some apps aim to take the stress and aggravation out of debt payoff, by doing some of the work for you. Take, for example, Digit, which will analyze your spending habits and come up with an amount to withdraw from your checking account that it thinks you won’t notice (don’t fret – the app guarantees no overdrafts). You can set goals for reaching a certain amount to pay off a debt. Once the app accumulates that amount in an in-app savings fund, you can then use it to pay down a debt.

Another app called Qoins links up to your bank account and rounds each of your purchases to the nearest dollar. It then applies the savings to your chosen debt.

Figure out the best debt repayment method

A free online service known as asks you to enter all of your debts and loans. Based on that information, the service shows you how you can tackle your debt using two options – the debt snowball (where you pay the smallest balance first, followed by the next smallest and so on) method, or the high interest rate method (in which you’ll start paying off the balances that carry the highest interest). Having such a clear, side-by-side comparison of the two debt payment strategies can help you decide which one would work best for your particular situation.

Calculate your debt-to-income ratio

You can find calculators on numerous websites that allow you to determine your debt-to-income ratio and then figure out a plan to pay down your debts in the most financially prudent way possible. Many of these services are free, but you may want to consult with a professional if you have a substantial amount of debt to pay down.

While debt payoff can be overwhelming at times, technology offers plenty of options to make the process a whole lot easier. And at Ovation Credit, we want to give you a hand. Let us know if we can help you work through any credit report issues that arise by contacting us for a free consultation.


Time to ditch debt? There’s an app for that!

Saving Money or Paying Off Debt: Which Is Better for Your Credit?

By | Debt, Save Money

When you’re working on your credit repair, each financial decision you make takes a little more forethought than usual. That’s because you can’t just look at the bottom line for your wallet, you also have to look at the bottom line for fixing your credit.

This is particularly true when you want to improve your credit while better utilizing some of your spare cash. Should you save it in the bank or use it to pay off your debt? We’ll go over the pros and cons of each option so you can figure out a plan that works for you.

Fix Credit by Saving Money

While there are certainly many reasons to pay off your debt, saving money can also have a helpful impact on the credit repair process. The main reason is that it prevents you from having to take on more debt somewhere down the line.

Think about it: if your credit cards are nearly maxed out (which is already hurting your credit score) and a financial emergency hits, what will you do with no extra cash on hand? You’ll probably completely max out the cards, or even worse, apply for new credit cards or payday loans. None of those are ideal choices.

They can, however, be avoided.

Creating an emergency fund keeps you from being forced to make more financial decisions that could harm your future further down the line. Most experts recommend a cash cushion of at least three months of expenses so that you have something to live off of in case you lose your job or have a medical problem that prohibits you from working. If you’re the sole breadwinner for your family or have several children, you might consider saving up to six months of expenses.

Yes, that sounds like a lot of cash. So if you’re just getting started saving up money, try to stash away at least $500. That amount may cover any one-off emergencies, like a sudden vehicle repair or short trip to the hospital.

Improve Credit by Paying Off Debt

Once you have a comfortable savings fund to cover an emergency (or a surprise job loss), you can focus on fixing credit through debt payoff. This can really help improve your credit score in a few different ways.

One way is that paying down debt lowers your debt utilization, which can raise your overall credit score. The more debt you have on each credit line, the more your score suffers. Once you start to pay down your debt, your credit utilization also lowers, which is a plus. In fact, your “amounts owed” can account for a full 30% of your credit score.

Also, if you have a lot of credit card debt, your credit mix can be affected, which is another factor considered part of your credit score. Typically, installment loans like a mortgage, student loan, or even an auto loan are viewed more favorably than credit cards. They’re not as risky since you have more skin in the game when it comes to paying them off. On top of that, having too much credit card debt can place a particularly large toll on your score if you don’t have much of a credit history yet. Either way, it’s a good reason to consider paying down your debt no matter how long your credit history may be.

As long as you’re not at financial risk with minimal cash reserves, paying down your debt can do wonders for your credit. The less you owe, the more you’ll begin to see your credit improve. Plus, early payoffs can lead to substantial savings in interest over the years.

Other Steps to Take for Credit Repair

Saving money and paying down your debt are both smart strategies for repairing your credit. But if you have credit errors on your credit report, your score will only go so high, even with these changes. Credit disputes are a way to get those credit errors permanently removed from your report. However, the process can be time intensive and tedious.

Ovation Credit offers a free consultation so you can find out how our credit professionals can assist you with the credit dispute process. Schedule yours by visiting our site for a free consultation and to get an idea of what negative errors could be removed from your credit report.


Holiday Expenses: Top Ways to Avoid Debt this Season

By | Debt

The holiday season is supposed to be about joy, but for many people it brings a great deal of stress. In addition to organizing and attending multiple holiday events, traveling and hosting visitors, you have to watch your budget. Otherwise, you end up with that January hangover when the bills come in.

Fortunately, you can enjoy all the season has to offer while minimizing stress about your holiday expenses. The key is to make a plan and stick with it. Try to follow some general tips as a family, so everyone is on the same page when it comes to spending money.



1. Estimate Non-Gift Holiday Expenses

Holidays typically mean decorations and food, but also higher expenses you might not think to put in your seasonal budget. Electricity and heating is more expensive because of outdoor lights, home decor and cooking. You may also give to charity at this time of year. Review your expenses from last year to help you estimate how much the holidays typically cost.

2. Identify Gift Recipients

It’s neighborly to give small gifts to almost everyone in your circle, from your child’s piano teacher to the kindly woman who lives across the street. Make a complete list of everyone you plan to remember this year. Even if a gift is only $10, when multiplied by 10 people, that’s $100–plus interest if you slap it on a credit card and don’t pay it off right away.

3. Start Saving Early

Ideally, put aside a few dollars every month throughout the year to build a fund for holiday expenses. But life isn’t ideal, so you may only start saving when the weather begins to get colder. As soon as you turn your mind to the season, start to put money away. If you anticipate coming up short, consider taking a seasonal job or revising your original holiday expenses. You still have time to make changes.

4. Start Buying Early

Check out sales as they happen throughout the year. If there’s a sale on food you’ll eat during Thanksgiving and your holiday meals, double up and put the excess in your pantry or freezer until December. If you see the perfect gift for someone on your list, buy it when it’s on sale, even if it’s several weeks before the big day. Just remember to cross that individual off your budget!

5. Research Pricing

Look online and compare retailers for those few special items. Often flash sales and internet-only deals can get you a break on in-demand items, although you may have to buy early before they sell out.

6. Budget for the Unexpected Holiday Expenses

Set aside a bit of cash for a last-minute invitation or unexpected guest. That way you can get a hostess gift or add a plate for dinner without breaking the budget. Better yet, if you never use the money from this seasonal emergency fund, you can put it toward another priority in January.

7. Use Credit Sensibly

When you’re trying to budget, credit cards are not the enemy as long as you use them sensibly. Your credit card may offer cash back or valuable rewards points. If you want to use credit for this reason, consider using the card and immediately transferring the amount of the charge out of your bank account and onto the card.

As with any debt, awareness is crucial. If you put money on a card, write it down and post it on a bulletin board at home so you don’t forget. The more you are conscious about what you’re putting on credit, the more control you have.

Enjoy the holidays the way they are supposed to be: with friends, family and good food. In terms of your holiday expenses, all it takes is a little planning and strength to stick to the budget over the season.

5 Ways to Pay Off Credit Card Debt

By | Debt

Pay Off Credit Card Debt

Paying down credit card debt is one of the best methods for repairing credit and improving your credit score. Here are easy and painless ways you can pay off your credit card debt:

1. Pay More Than the Minimum

With most minimum payments, it can take years to pay off credit card debt. Paying the minimum will not only hurt your credit score, but it will cost you a ton of money in interest. If you can afford it, you should pay more than the minimum.

If you can’t afford to pay more than the minimum, keep in mind that as you pay the principal down, your minimum payment will go down as well. However, you should keep paying the same amount you were paying before in order to pay down your debt faster. Eventually, you will be able to pay more than the minimum and repair your credit.

2. Find Extra Money

If you can’t afford to pay more than the minimum payments, try and find extra money. You don’t have to get a second job to pay down debt. For example, if your minimum payment is $40, be conscious of the fact that only $40 more per month will double your payment. You may have extra money in your budget or you may be able to earn cash. Here are some tips:

  • Fill out surveys
  • Use apps like Ibotta to get cash back from shopping
  • Use coupons
  • Try a no-spend challenge
  • Reduce your spending by just $10 per week

3. Use the Snowball Method

For multiple credit cards, the best and simplest way to pay them off is to use the snowball method. With this strategy, you pay off the card with the lowest balance first. Then, you put the money you were using for that card toward the card with the next lowest balance, and so on. Here’s a step-by-step example:

  1. You have three cards. One has a balance of $300, the 2nd a balance of $1,000, and the 3rd has a balance of $1,500. You’re paying the minimum payments on all three, but you have an extra $50 you can use toward the debt.
  2. Take the extra $50 per month and apply it toward the 1st card; then, pay minimums on the others until they are paid off.
  3. Take the extra $50, the 1st card’s minimum and the 2nd card’s minimum, and apply to the 2nd card until it’s paid off. Continue paying the minimum on the 3rd card.
  4. Apply the $50, the 1st, 2nd and 3rd card’s minimum to the 3rd card until it’s paid off.

You will be debt-free relatively quickly without having to put a lot of money toward your credit cards.

4. Make the Most of Unexpected Cash

The fastest way to repair credit and pay off debt is to pretend extra money doesn’t exist. If you get a raise, bonus, overtime payment or cash gift at work, apply it toward your credit cards. You should budget as if overtime or bonuses don’t exist. That way, when you get the money you can use it to pay off debt or build savings.

5. Pay Twice

Some credit cards calculate interest based on average daily balance. If your credit card is one of them, remember that the easiest way to pay off the balance is to pay twice per month. Before you panic, you don’t need to pay twice the minimum payment each month. Instead, take your payment and divide by half. Pay that amount every two weeks. This will reduce your average daily balance, which will reduce your interest so you can pay off debt faster.

You can repair your credit score and pay off debt by following these strategies. Credit card debt may seem daunting, but you can unbury yourself and improve your credit.


Debt after Death: 10 Things You Need to Know

By | Debt

When a loved one passes away, one of the last things you want to hear is debt collectors calling to try to take their money. Unfortunately, dealing with a loved one’s debt is a chore your family will have to take care of. Here’s what you need to know.

Debt After Death

1. Debt Isn’t Inherited

Debt does not pass on to family members. If an account is in one person’s name, creditors can’t make anyone else pay off the debt. If someone dies with debt and no assets to pay it off, the creditors take the loss.

2. Co-Signers Become Fully Liable

One common point of confusion is the responsibility of co-signers to an account. Many people don’t realize that co-signing involves much more than helping with the credit check.

When you co-sign a mortgage, credit card or other loan, you’re saying that you will pay in full if the primary account holder can’t. This includes if they can’t pay due to death, and creditors will coldly enforce this provision.

You should also be aware that some loans may contain a provision that they become payable in full immediately upon either the primary account holder’s or the co-signer’s death. This could require the survivor to refinance the loan, raid their retirement account or take a negative hit to their credit when the original loan defaults.

3. Spouses May Still Share Liability for Individual Accounts

One more exception to the debt isn’t inherited rule is spouses. Some states hold spouses liable for the other’s debt even if the account wasn’t a joint account.

One way this can happen is in community property states where any debts acquired during marriage become marital debts regardless of whose name was on the account.

Another is where courts decide who’s responsible based on who benefited from the debt rather than who signed for it. If debt benefited both spouses or the household as a whole, it becomes the responsibility of both.

4. Creditors Will Still Ask You to Pay

Just because creditors can’t make you pay doesn’t mean they won’t ask you to. Often, they’ll try to guilt you into it by saying things like it would harm the deceased’s honor or that you should do the right thing.

Not only do you not have to pay them, but by agreeing to pay in part or in full — even if you’re just trying to get them off the phone — you could be assuming legal responsibility for the entire debt. Simply tell the creditors to never contact you again, and they must honor your request.

5. Creditors Can Make a Claim Against the Estate

Debt may not be inherited, but it can reduce your inheritance. Creditors get first rights to any property in the estate up to the amount of the outstanding debt.

This applies even to family heirlooms left to a specific person in the will. For a mortgage, creditors can foreclose and take the family home.

If you want to keep a specific piece of property and the estate doesn’t have enough cash to cover outstanding debts, you will have to buy it from the estate at its fair market value.

6. Both You and the Creditors Need to Give Notice

Creditors only have a set period of time to make a claim against an estate. After that, they forfeit any claims.

At the same time, you can’t try to avoid creditors by keeping them in the dark. Depending on your state, you may need to file in probate court, notify creditors directly or take some other action. Failure to follow the rules could extend the creditors’ time to make a claim or leave you personally on the hook for the debts.

7. Don’t Use Credit Accounts

It’s illegal to use a loved one’s credit accounts to pay for things like funeral expenses even if the entire family agrees. Because the account isn’t in your name, it’s considered fraud.

Additionally, you shouldn’t use a loved one’s accounts to pay any bills they owed. Again, you technically don’t have legal authorization to do so. Instead, notify anyone you receive a bill from to cancel the account and contact the estate’s executor.

8. You Should Tell the Credit Bureaus

You should promptly notify the three major credit bureaus of a loved one’s passing. This will prevent identity thieves from trying to assume their identity and open new accounts in their name.

At the same time, the executor can request a copy of their credit report to identify debts that will need to be paid.

9. You Will Need Copies of the Death Certificate

Every time you work with a creditor or go to close an account, you will need to provide a copy of the death certificate. This lets the company know that you have legal authority to take action on the account and that your loved one isn’t faking their death to try to skip out on the debt.

10. The FDCPA Still Applies

The Fair Debt Collection Practices Act and other consumer protections continue to apply after death. If creditors harass you or lie about your responsibility for the debt, you may be able to sue them. If creditors wrongfully report your loved one’s debt on your own credit report, you have the right to have that information removed.

To protect yourself during this difficult time, you may wish to sign up for credit monitoring or other services to keep you one step ahead of identity thieves and unscrupulous debt collectors.



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