There are over 1.4 million Americans on active military duties all over the world. Ask any military personnel around about their credit score, they’ll tell you they have bad credit. If you are not in the military circle you will be surprised, but it’s common knowledge in the military. You will probably think like many others that being a military personnel, there are a financial protection and coverage. Sorry to disappoint you, there’s none. As a military personnel, getting out of the negative credit pit can be difficult as a consequence of financial inactivity for a while.
Don’t just aim for good credit rating for military eligibility, there’s more after getting into the military you’ll be fighting for. Positive credit rating will help make other areas of your life easier from mortgages, car interest rate to insurance. You need to effectively manage your credit score even while at the war front. Your credit score has to be at it best by avoiding late payment. Ensuring that no one is using your identity and getting you into the red zone, or an unauthorized credit check. You can still be in control of your credit even while away, you just have to do the following;
Place Military Alert on Your Credit
You are eligible to one year of free credit while on active duty. This is where to start with your credit. Even though there’ll be need by businesses to confirm your identity, it’s worth it in the end. Contact any of the three credit bureaus; TransUnion, Equifax or Experian. You will have to present a government-issued identification relating you to the military for this important request.
Free Credit Freeze From 2018.
Remember you heard it here first. From 2018, the credit bureaus will be granting a credit freeze for eligible members of the United States Military personnel. Don’t lag behind, this is the best thing that could happen to your credit if you are eligible. With this new policy in place, you will be to pace, remove and lift from your credit files security freeze at zero cost. You don’t have to be a victim of identity theft to utilize a security freeze. With this in place, before your credit details can be accessed by any individual there will be an express approval originating from you.
Choose a Financial Executor
You will be away long for long periods and that’s why you need to have appointed a trusted family member or friend to take charge of your finances during your absence. In any event of a substantial financial event that might take place in your absence, you may need to grant someone the power of attorney. Decide the time limit and power limit of the attorney.
There’s life after military duties. Your credit score may limit the rest you deserve after giving your all to your nation. Maybe your credit score has already been damaged, you will need a credit repair service. Contact Fresh Start Credit Repair to breathe a new life into your credit.
Some people believes age is just a number, but your credit score is more than just a number. More like the most important set of digits of your life other than your social security number. Your credit score determines more than just your ability to secure credit; a bad credit score can make you jobless or even homeless. Lenders are often scared of taking on individuals with bad credit score, leaving them with a burden of paying abnormally high-interest rates on credit.
You cannot even imagine the stress you will be subjected in trying to purchase a home or leasing an apartment. Often times, the credit score of individuals is checked before a lease is signed. Aside from securing suitable housing, a good credit score will come handy with paying utilities. In any event you have a low credit score or you are aiming to take it to a comfortable zone, we’ll be suggesting free DIY tools that can make this herculean task easier;
Check Through Your Credit Reports
You are entitled to a free credit report annually according to the Fair and Accurate Transactions Acts (FACTA). There are three credit bureaus; Transunion, Equifax, and Experian. You should request your credit report from each of these credit bureau. With your credit report with you, peruse through the report looking at the identifying information which will contain your name, address, and social security number. Look out for the creditor information, this is the most important section in your credit report.
Attention must also be paid to collection account in the credit report. All the account in collection will be listed and outlined, including the contact information of the reporting agency. Another section of the credit report is the public records which will state tax liens, bankruptcy claims, and late payments. Lastly, you will see the agencies and organizations that have requested your credit report at the public section.
Make Use of Dispute Portals
Using this tool, you can dispute every inaccurate information found on your credit report. The three credit bureaus have access to a dispute portal on their website through which you can request for corrections. These dispute portals have different but related requirements for accessing the portals.
Credit Simulator Can Tell You Where It Seems Wrong
With this tool, you can ascertain what your credit looks like under wide range scenarios. You can check how opening or closing an account, changes in your credit habit and a change in credit card debt. Most importantly, a credit simulator is mostly concerned with how negative scenarios can hamper your credit scores. Credit simulators rely on carefully calculated formulas which will help in determining the best scenario to get your credit scores into a safe haven.
Identity Theft Protection Can Save You Hassles
Identity theft is not new, but it’s now on the rise. With your name and social security number, fraudsters can perpetrate evil that could lead to a colossal damage of your credit score. The use of an identity theft protection tool, will make you aware of an unauthorized use of your personal and contact information such as social security number is used. With real-time notification, the actions of identity thieves will be cut short before the damage is done.
Monitoring Alerts Will Provide Real-Time Data
Technology has made so many aspects of our lives easier especially in the area of finance. Any form of change to your credit report. This tool will enable you stay abreast of any change to your credit.
However, there are a lot you can achieve with this tools. The most potent route to having a better credit score is to consult professionals who will give your credit rating a fresh start.
As a point of entry, two categories of people will benefit hugely by using secured credit cards; those planning to repair credit and the newbies to credit. Some people refer to secured credit cards as last resort but there are actually immense benefits offered. From the name, you must already have a clue to what we are talking about here; a credit card that a lender secures with a collateral. In simple terms, you deposit a certain amount and the creditor lends you credit in like sum. You will wonder why you will want to have such in place? No credit means bad credit score remember? But with a secured credit card you are playing safe and smart.
A survey of most lenders shows that the opening deposit starts between $200 to $500, in any case you default in paying your credit, the deposit will be used to offset such. You should know this though, your credit limit will be increased by the lender in the long run if you are not late with your credit payment. With a regular payment reported by the credit card issuer to the credit bureaus, you are on your way to having a positive credit score that can allow you have more credit options.
In any case, you have no history or bad credit rating, secured credit cards have it advantages which you can benefit from. One reason why many people suggest secured credit cards is the ease of your rebuilding your credit options. Yes! Secured credit cards is a sure way of going from the negatives of credit score in order to be eligible for traditional credit options later.
So also, if you are planning to cut low on your spending, secured credit cards as provided by Fresh Start Credit Repair allows you to have control over this. One aspect of secured credit cards is the lower spending limit, you will have a spending limit on your secured credit cards that prevents you from impulse buying and unnecessary spending. You must also know that secured credit cards have lower fees. Unsecured cards often have a double of the fees of the secured credit cards, you will rarely be charged at the standard credit card rate.
One other sweet benefit of secured credit card you will not believe is the interest rate. Some lenders allow you to earn interest on your deposit for secured credit cards, this alone should cover the low fees that will be charged.
In essence, the ultimate aim of using a secured credit card is graduating to the unsecured traditional cards. You will end up having a traditional credit line with regular payment of your credit as at when due. With a secured credit card, you will have more spending power, this can also be useful in any case of emergency as you can rely on the cards without hurting your credit score.
At Fresh Start Credit Repair, we are poised at helping your repair your credit and providing you with a secured credit cards. Contact us today, we are just a call away.
Getting is credit report is quite easy and free. The issue is understanding your credit report without consulting anyone. If you don’t, it’s not a crime. You may not be aware of the means of getting a credit report, this guide will help in acquiring one and knowing what to check. According to law, you are entitled to a free credit report each from either of the three credit report annually. To get your free credit report, just visit AnnualCreditReport.com for a free copy by providing your full name, address, social security number and date of birth.
To understand your credit report, you need to look at the three reports from the three credit bureaus. Looking at just one will be a fruitless endeavor, with the three at hand, you are making the task easier. Don’t assume you will have the same information on it all, creditors provides information to whichever bureau they want due to voluntary nature of the credit report system. You should not just ask for a credit report from that your friend working in a bank, you will definitely find it difficult to comprehend. A direct copy from the credit bureaus are customer friendly.
No need to talk further about the personal details; quite self-explanatory. Just a breakdown of who you are, what you do and where you live.
In your credit report, you will see four sections; personal details, credit history, public records, and enquiries. Your credit history is the most important section you should be concerned about for the sake of your credit. This is where you’ll find the items that will prevent you from getting any loan approved and give you a negative credit report. In case you’ve ever had a credit turned over to a collection agency by your credit company, this is where you’ll find it. This is the most negative thing that can ever happen to your credit.
Your credit history will reveal your credit; mortgages, car loan and department credit cards. The essence of reading through your credit report is to be able to calculate and ascertain your credit score. Be aware that your credit score is determined by five specific factors that you should know. Your payment history is the first and is weighed at 35% of the today score; the punctuality of your payment will lead to higher score. However, payment history is rendered into lower scores due to bankruptcies, late payment and delinquencies.
Another determinant of your credit score is your debt to credit ratio. This is reached by weighing your credit debt against your credit limit, this factor accounts for 30% of the credit score. You should also be aware that the duration of your credit and the management of your financial history is not left out of the formula. That is the main reason why you should never close your old accounts, it will amount to 15% of the credit score.
Opening of new credit lines and seeking for answers to opening new credit account is also used in calculating the credit score. This criteria forms a basic 10% of the credit score; spread your enquiries for new credit over a long period to arrive at a positive credit rating. Lastly, the number of credit facilities you utilize is a great credit score builder. Lenders want to be sure you are performing well in other line of credit other than theirs, this is also another 10% of the credit score.
When it comes to credit, just know you are being watched. The credit bureaus and your creditors are watching you closely. Don’t turn a blind eye towards your credit, request for your credit report from all the three bureaus annually and correct every inaccuracies.
Having adverse accounts reflect on your credit report is rather detrimental to getting a better credit score. It could be extremely frustrating seeing negative information on your credit report. You just want it to go away. You probably would have seen lots of ads make claims like “We can erase your bad credit-100% guaranteed”. These are ads from professionals. You can also do it yourself actually. To help your way to a better credit score, here are some tips to getting adverse accounts removed from your credit report. You will agree with me that a better credit report is a key to getting approved for credit cards. Therefore take advantage of these tips and get a credit repair as fast as you can.
• Start with a Credit Dispute Letter
By law, the FCRA (Fair Credit Reporting Act) allows you to dispute any item that you find questionable. Write a detailed dispute letter using this advanced credit dispute letter template. Send the letter to the credit bureau. Once the bureaus receive a dispute, they contact your creditor. Creditors are given 30 days to verify the account. In a situation where the account cannot be verified, it must be removed from your credit report.
• Write a Goodwill Letter
Disputing the negative entry might not work. Don’t worry. The next step to take is to write the creditor or collection agency. Ask them to remove the negative entry out of goodwill. Writing a goodwill letter is basically to explain your situation to the creditor. This would work faster if you’re a current customer because they would want to keep your business.
• Negotiate “Pay For Delete”
If you have charge offs, the best way to get them removed is to negotiate with the creditor. Many times, they might have already sent the account to a collection agency. However, some might be willing to negotiate. Offer to pay the unpaid debts if they agree to delete the negative entry from your credit report. Don’t do this over the phone. Removal is more successful when you get everything in writing.
• Have a Professional Remove the Negative Entry
You might not be comfortable handling your credit repair yourself. If you are the type of person who would prefer a professional handle it, hire a professional credit repair form to get it fixed. They usually get adverse accounts removed a lot quicker. They can delete all kinds of negative items from your credit reports, including: bankruptcies, foreclosures, repossessions, charge offs, judgments, tax liens, collections, late payments and more.
In reality, you will need a professional to get this done for your quicker and better. Doing it yourself without the right knowledge will not help your credit, be ready to involve a professional firm.
You may be living with bad credit without knowing or you are unsure of your credit status. There are some signs to look out to remind you of the urgent need for credit repairs. If you have any of the following issues, you are in dire need of credit repair.
Denied Credit Card Application.
Being denied a credit card is not a normal occurrence. Credit card companies are always ready to grant your applications, but if they don’t, you are in an unfavorable credit zone that deserves urgent attention. The credit card company will provide the reasons for the denial via an adverse letter notice. Note that if your application was denied as result of the information in your credit report, there is a need to get it fixed.
Utility Bills not in Your Name
Don’t be shocked if you are denied credit when your electricity and other bills carry a different name. You need a credit repair if you cannot request for utilities in your own name. Carefully look through your credit report to know the items that contribute negatively to your credit score. A knowledge of it will help in repairing your credit.
Nobody is ready to Risk co-signing a loan for you
You don’t have to be told of how bad your credit score is when this occurs. Your inability to convince any of your friends, family, and even colleagues to sign a loan application is a clear evidence of bad credit status. Repairing your credit status will make you independent, you don’t need anyone to sign any loan application henceforth.
Debt Collectors are Contacting You.
Do you need to be told what this insinuates? You are already in the bad books of your creditors, they have given up on you to pay your credit without being pushed. If you allow your credit status degenerate to this level, you are pushing your credit score into the end of the red zone. This will further limit every available option of applying for credit as this collection accounts are registers on your credit reports.
Prospective Employers Points to Your Credit Score as Reason for Not Employing You.
Qualifications and skills are essential, but your credit report is another criteria that will be consulted by employers in recruiting you. Even if you care able to clinch a job by luck, your chances of promotion is slim.
You need a credit repair if you are being rejected by an employer due to the credit report.
Card Issuers Block Your Cards
You should not be worried if only one card is blocked, but you need to be evidently worried if multiple cards are closed down without your consent. Put a call across to the issuers, you will be told of your bad credit status which is beyond their limit.
Obviously, you need than just a call but a credit repair.
You Have Fear of Checking Your Credit Report
Do you see yourself always running away from checking your credit report? Then you know your credit are not at it best. You are definitely running away from reality on the status of your credit. You need credit repair and the sooner you start, the better for your financial health.
Look through your financial report over the last couple of years, a revelation of things you don’t like remembering and low credit score will emerge. Just like 77% Americans with credit issues, you definitely aren’t alone! The credit score most individuals have for themselves has been lingering since the period of the global financial meltdown and recession. Your credit score will be a justification of the possibility of getting credit and the rate you will be offered. The worst of it all is a shocker you don’t like to know; your insurance premium and employability will be hampered by your credit rating. No need crying foul over spilled milk. What you need to do is to chart your way out of the credit zone.
You will probably say in your mind right now that it’s “easier said than done”. All hope is not lost nonetheless. This is the perfect time to follow Fresh Start Credit Repair principles to a better credit score which we refer to as the 3R’s. You will need to carry out a:
1. Repair on your credit,
2. Rebuild the damage and
3. Restructure your spending for the future.
Careful adherence to these principle will take you out of a “possible” bankruptcy to a clean state of financial health.
Your credit is damaged already. Just imagine what happens if you build on defects or damaged building. Start the repair by looking out for errors in your statement. You must have certainly made series of mistakes, but it will be unfair to pay for the mistake of someone else. You should work out a payment plan if you are having issues with meeting up with your payment obligations. Another way to repair your credit score is by contacting your credit companies if they can remove records of late payments. Consider the payment of your bills straight from your checking account by a direct allotment.
You can only have a positive credit record with credit seasoning. Simply put, you build a good credit with established credit or credit that has been in good standing for at least 6 months. Enquire at your bank if you will be allowed to open a secure credit card account. With this, you will able to deposit the amount of the limit in an account. After few month of timely payment, you can move to an unsecured card. Start with departmental store cards, they are easy to get. Within 6-12 month of regular and on time payment, you should apply for a regular bank credit card. At this point, you should have a better credit score.
Any mistake will take you back into the dark pit of debt. Since you must have a positive payment record, clear off a sizeable portion of your credit card immediately (under 25%) and do not close down that account. For sake of emphasis, do not ever close down settled accounts, especially those you’ve been running over a long time. At this point, avoid any inquiry for new credit. This will throw your credit rating off-balance. Remember if you get it wrong here, you will have to start all over.
Photo Credits: Pixabay.com
Medical debt is financially and emotionally tasking; more so than most other types of debt, but there are ways to manage it before it gets out of hand. All you need is the right attitude and the relevant information to work your way right through it.
Medical debt almost always follows an unexpected injury or illness, and bills can be overwhelming when you’re trying to focus on your health. Even if you have health insurance, a brief stay in a hospital can leave you with large and burdensome bills. Chronic or serious health conditions can wipe out your savings swiftly and put you in debt for years to come.
In addition, legal complications resulting from medical debt can severely the financial well-being of your family. Medical debt is fast becoming one of the leading causes of consumer.
But if you’re in medical debt, you’re far from alone. One study found 40 percent of American adults have had problems repaying medical debts.
Dealing with Medical bills
When tackling medical debts, you may have to deal not only with doctors and hospitals, but also with your health insurance company and even an army of debt collectors. Some medical establishments are quite aggressive about collecting debts and may even sue you or try to convince you that you can’t seek further medical treatment if you owe them money.
When you receive your bill, you must first make sure it’s accurate. Look for overcharges, or charges for care and services you didn’t receive. If you find any errors, contact the billing office to have them fixed promptly.
Remember that your bill may be negotiable. Speak with your services to try to work out a lower total; your provider may be able to cut fees, for example.
You can also try to work out a payment plan with your doctor or hospital. In a way, you’ll be agreeing to make on an unsecured debt just like credit card debt. You’ll be responsible for monthly payments of a certain amount, and you may be charged predetermined fees of interest.
How can medical bills damage your credit?
Many patients don’t realize how easy it is fir a medical bill to damage their credit. They don’t understand that:
- Even if you are making payments on a medical bill, it may be sent to collections. (It’s a common misconception that if you pay something, they can’t send the debt to a collection agency. That’s not true.)
- Medical bills sometimes turn up in collections before the patient even gets a bill. At that point, the damage may have been done.
- Collection accounts are usually damaging, regardless of whether they are medically related. (More on this in a moment)
- Paying the collection agency may not fix your credit. In most cases, those accounts are reported for 7.5 years and are not often very damaging – paid or unpaid. (See the caveats below)
- The size of the debt is not as important as the status of the debt. In other words even a relatively small bill that winds up with a bill collector can harm your credit scores.
It is critical that you review your credit reports annually and monitor your credit scores on a regular basis. (Think of it as a checkup for your credit health) you can get a free credit report summary and score, update monthly, at Credit.com. One survey by Credit.com found that 10%of those who reviewed their credit reports discovered a collection account they didn’t know about.
Will a Medical debt in collections Really Hurt My Scores?
You have many different credit scores, not just a single one. (Even among FICO scores, there are many different versions.) The newest version of the FICO score, FICO 9 — ignores paid collection accounts, and medical collection accounts carry less weight under that model. Vantage score 3 also ignores paid collection accounts of all types.
But most lenders still use older versions of credit that do not give medical collections any special treatment. For that reason, you should assume that if you find a collection account on your credit report, it will likely be viewed negatively when you apply for credit, insurance or employment.
So what can you do?
Before one of this bill winds up in collections, to the extent possible, try to be very proactive about your medical bills. Even if you have good health insurance, don’t assume everything will be taken care of. Review your EOBs (Explanation of Benefits) carefully and contact the provider and/or your insurance company quickly if it’s not being taken care of.
If you are contacted by a collection agency about a medical bill, ask them not to report it if you pay it right away (assuming you believe you owe the bill). Some won’t report the bill is resolved quickly.
Again: Having a collection account updated as “paid” generally does not help your scores, unless a lender is using one of the newer credit score versions. So aim for removal of the item if possible. Some agencies will work with you, others won’t.
When you feel unfairly treated
If you feel the situation is highly unfair — you never got the copy of the bill, for example — you can try two things. One is to file a complaint with the Consumer Financial Bureau. The other is to contact the original provider and try to get them you pull it back from collections so you can pay them directly. If they do, the accounts will usually no longer be reported.
If you are contacted by a collection agency and you don’t believe you owe the bill, you have the right under the federal Fair Debt Collection Practices Act to ask the collection agency to validate the debt. You also have the right under the Fair Credit Reporting Act to dispute with the credit reporting agencies reporting the account.
First things first: don’t get discourage. It would be easy to stash away your medical bills in a drawer, or sit them far back on a shelf to collect dust, but the fact is that these bills won’t disappear. And most importantly, you are much, much more likely to receive financial assistance if you work with the provider before the bill is sent to a collection agency.
Luckily, there are many steps that you can take to help your situation and potentially even lower your outstanding bills!
Set up a payment plan
Regardless if you were able to negotiate a longer overall balance or not; providers know that a huge medical bill broken down into small, manageable payment is much more likely to be paid off; so call the provider and ask if they can set up an interest free payment plan. It’s important to speak to the right person and let them know of your situation; and that you’re trying to pay off your debt but lack the income to do so right away.
Tip: Keep in mind that someone who is simply sympathetic to your situation can’t help you – be sure to speak to someone higher up in the billing department directly for the most assistance.
The bottom line is that medical emergencies are never planned, but are always costly. Lucky for you, there are countless resources are available to help you negotiate and even lower your bill; as well as ET up payment plans. Don’t let your bills overwhelm you. As dim as the situation may seem, you can work your way out of it!
Wondering what credit repair is all about? Credit repair is a process of correcting inaccuracies, redundancies and unverifiable information on your credit report, generally you could say that this process is aimed at fixing past mistakes or rather a bad credit report which was disoriented for whatsoever reason. Guess you are already thinking if it is possible to fix a credit report? Well, my answer is a yes and it is no magic neither are the claims to clear your debts. Most often reports sent by credit agencies could come with errors, studies have shown that report 79% of credit report sent have form of error or the other, another has shown that 1 in 5 reports sent have errors in them that could be systematic or some sort of mix up. These when accumulated over a period of time could accumulated into very large sums (even up to hundreds of thousands of dollars pending significance of the found error and how long it has been). These and others factors bring us to the need for a credit repair.
And are you by chance also wondering if it is legal? Of cause yes, it is legal to do a credit repair. Credit repair leverages on the accuracy, fairness of a credit report as well as if it can be substantiated which is in line with the law. Summarily the Federal Fair Credit Repertory Act (FCRA) promotes the accuracy, fairness and privacy of information in the files of consumer agencies but you know, the truth is, many consumers do not know of these rights and privileges that ought to be respected. Let’s suppose there is an item is found on your credit report sent by the credit bureau that cannot be verified, then it must be removed.
How can this be removed? Through the process of credit repair. First and foremost, the credit report has to be thoroughly checked for any abnormalities then and if found, a dispute letter for the abnormal or unverified item is created and sent to the credit bureau for confirmation which could take a period of 30 days (45 days for special cases). This whole process could be tedious and the waiting period could also be frustrating but you must be persistent because it is worth it when you see the outcome and the effect of the result on your credit score. If items are not removed from client credit report, you will have to send follow up letters to the credit bureau reiterating the dispute and reason behind it. One may have to send these follow up may have to be send several times. This process like I said earlier the to and fro process could be tiresome but with the help of a credit repair company such as Fresh Start Credit Repair (FSCR) the whole stress of writing and following up will rest on FSCR. In this case, all you will be needing will sending duplicates copies of necessary document (documents relating to the dispute) which will be needed in the event that the dispute reaches a law court.
Many of us really do not know how credit bureaus calculate credit scores since there are several different lines of credit variations, but I will like to say that they are calculated based on 35% payment history, 30% amount owed, 15% length of credit history, 10% inquires/recent decision and 10% types of credit used, and without a the help of professional that has a full knowledge of this, and how to go about it will be very difficult to comprehend the credit report at FSCR all the professional help needed on how to calculate your credit scores and help you fix all errors on your credit report.
Looking at the procedure of credit repair, the process and how tasking and demanding it is, why don’t you try a credit repair today to make sure that your credit report is perfect? Why not leave it in the hands of a good credit report company that knows the law and also how credit scores are calculated and handle, why not visit us at FSCR and plus the fact that we will give you an opportunity to get free legal advice on how to go about your credit report and repair. Just give us a call and that report of yours fixed.
Today’s internet scene is awash with information on how to retire early and with ease; and it has fast become the dream everyone hopes to experience. The plan is to be able to save enough while you are still working to be able to enjoy that dream retirement, it is quite simple. But if you have some credit or debt issues, you may still find yourself in a mess.
Before you become the next victim, please be aware that debts and credits can rob you of every penny you have saved and turn your retirement into a living nightmare. For obvious reasons, you need to address all issues that have to do with your credit report and records of debts.
Carrying Debt into Retirement
In earlier times it was unheard of for anyone to work throughout his/her youth and then retire in debt, as a matter of fact it was unimaginable, but in more recent times it seems to be happening on a consistent level and that is of no coincidence, something has obviously changed. People no longer care about the concept of retiring debt free and that is largely due to the fact that the level of resentment related to it has dropped massively; therefor proving that the rise of debt among retirees is directly proportional to the consequences/resentment attached to it.
According to the CFPB statistics surveying 2001 to 2011, the mortgage debts owed by Americans aged 65 and above has risen to 35% at an average of approximately $43,400 to over $79,000 within the decade, and obvious signs show that there will be an increase.
What these statistics represents is that people are no longer very careful to live debt-free, they now don’t even care to retire free of debts. To imagine that you will labor all your productive days and then live your old age in debt; it used to be a taboo, but not anymore!
One thing that can considerably lower retirement options is mortgages. Normally, you are meant to have a wide range of options as your retirement closes in on you but, taking a mortgage may affect that, leaving you with very few options. For instance, selling your home for the purpose of cutting down expenses, that might prove difficult, because you’ll have to get extra funds from elsewhere which might end up being your savings, considering the fact that, that will leave you indebted to something you won’t enjoy, that’s not advisable. You may just have to buy another house that is equivalent to your previous house.
Debt Means You’ll Need More Retirement Income
When you are in debt, you can’t actually claim to be earning the full worth of your pay because a certain percentage will be deducted on a regular bases to cover for the debt. So while taking your mortgages makes sure you have calculated the full implications it will be having on your retirement portfolio.
Retiring with debt will mean that you would have to live below the budget that you had crafted out initially, if it’s a huge budget you shouldn’t have much problems with that, but if it not, you might be in for some trouble. As a retiree you are already subjected to a restricted budget and no longer have the privilege of ostentatious spending, and believe me when I say you do not want to make that worse by carrying debts over to your retirement.
That will have a major impact on the amount of money that you’ll need to have saved for retirement. For instance, if you had planned to have the recommended safe withdrawal rate of 4% of your retirement portfolio each year, to make sure you never run out of money, and have budgeted for an income of $4,000 per month, that means you will need to save up an arithmetic of $4,000 X 12 months, divided by .04, which will result in a portfolio of $1.2 million ().
On the other hand, if you happen to require a monthly income of only $2,800 – which is enough to take you by (without any debt of course), meaning that you will only need to save up a the equivalence of ($2,800 X 12 months, divided by .04, which will give you a retirement portfolio of $840,00). Which are less than the previous option and much better also; considering the fact that you will be saving the sum of $360,000 less for your retirement portfolio. Making the job of saving for retirement much more easier and feasible
Credit Problems Can Limit Your Retirement Options
A lot of times people tend to retire solely to the financial aid of what they have saved up which in its own way is quite advisable and very advantageous, it might also not be sufficient. As humans we can only be able to give an attempt in presuming what the future holds, but we can never really give an accurate prediction of what will happen. So, assuming that the money you have saved up will be enough for you might just end up being a flawed assumption. It is for this reason that people are advised to make other investments that will bring forth some returns much later in the future just in case their savings fail them.
The problem with saving for your retirement can be complicated. If you do not happen to be very wealthy, allowing you to save up a huge chunk of money you will only enable you to buy the basic things that you’ll need; it will be incapable of making huge purchases like a new car, house or whatever might cost you a few thousand bucks, else you will get broke. Forcing you to take other loans or mortgages, this may end up spinning off to become a burden to your family due to your inability to pay; that is if you are lucky enough to be granted one. That is could be difficult especially in the post-Mortgage Meltdown world, where mortgages are harder to get in general. With credit problems, it can be
One more problem is should you decide to move into some kind of high class housing arrangement. If credit qualifications are required, your application for residency may be rejected.
Fix Your Credit and Debt Problems Before You Retire
So to what good is all this talk if you are not given to solution to avoiding these ugly occurrences? If you are working hard to accumulate enough money to be able to retire; you should also mind the fact that you are in debt. Make advances towards improving your credit profile in order to settle your debts. Make sure that you acquire assets; especially real estate and other fixed assets so as to reduce the pressure you will face later on in your retirement years.
If you fear that you are not equipped enough to make take this steps or that you do not have the time to plan them; acquire some professional help. Besides as you get older, options become fewer, and your intellectual abilities dimes. So if you plan to lower your expenses and expand your options; it’s best to address credit and debt problems well ahead of retirement; it’s the only way.