Peter Payack Finance

Debt Management Pros and Cons

Anyone who knows something about debt probably knows something about debt management companies – professional firms who will manage an individual’s debts on their behalf.

This article takes a look at the pros and cons of debt management in terms of three topics close to any borrower’s heart: saving money, reducing stress levels and protecting credit rating.

Topic #1: Saving money

Pros: Monthly payments lowered. Interest frozen. Charges waived. The better their relationship with creditors, the better a debt management company’s chances of successfully negotiating for one or more of these concessions. This can save the client a considerable amount of money – not just every month, but potentially over the course of the debt management plan as well.

Cons: Lowering monthly payments means debts take longer to pay back. If interest hasn’t been frozen, they’ll also accumulate interest for longer, adding to the long-term cost. Plus, there’s no guarantee creditors will agree to any concessions, or that they’ll save the client more in the long run than the debt management company charges in fees. And since a debt management plan is an informal agreement, they’re free to change their minds.

Debt Management Solutions

LONDON, UNITED KINGDOM–(Marketwire – Feb. 17, 2009) – Responding to new figures from the Bank of England showing that the most common types of savings accounts now offer the lowest rates on record, debt management company Gregory Pennington has advised consumers that savings should still be a very important aspect of most people’s finances, and added that they should not be discouraged by low interest rates.

In February, the Bank of England made the unprecedented decision of cutting its base rate to 1% – the lowest in its 315-year history. It was a further attempt to encourage lenders to offer loans and mortgages at lower rates, as well as an incentive for consumers to spend rather than save, which would increase cash flow within the economy.

However, the decision to cut the base rate was met with some criticism from a number of analysts, who claimed that base rate cuts are no longer an effective means of combating the economic downturn. They argued that base rate cuts would only serve to disadvantage savers, since the interest rates on offer are now significantly lower than the rate of inflation – meaning that savers are ‘losing’ money in real terms.

Take the following example: if a saver puts Pounds Sterling 5000 into a savings account with a 1.5% interest rate, they will make an additional Pounds Sterling 75 interest in a year. In the meantime, a 3.1% inflation rate would mean that the average price of goods would rise at more than double that rate – so in terms of purchasing power, the savings would be worth less after a year.

A spokesperson for Gregory Pennington said that although there has been some concern raised about low interest rates, it should not prevent people from making savings.

“The way the fall in interest rates has been reported almost seems to suggest that it is no longer worth making savings, but that is not the case,” she said. “A large proportion of people who put money aside are not doing so to make more money – they are doing it because they want to save their money for a later date. In this sense, savings would even be worthwhile if the interest rate was 0%.

“Even when interest rates are high, it would take a very large amount of money to make the interest a significant incentive. We advise consumers that savings should be an integral part of most people’s finances, since they provide a financial ‘safety net’ that can be a lifeline if any financial emergencies arise.

“The only situation in which savings should not be a high priority is if the consumer is struggling to repay debts. Debt repayments should always be top priority, since debts often grow a lot more quickly than savings do. The long-term consequences of not repaying debt also tend to outweigh the benefits of saving.”

The spokesperson added that anyone in trouble with their debts should speak to their lenders, as well as a professional debt adviser, in order to discuss their options.

“In many cases, lenders will agree alternative repayment plans, or brief repayment holidays, to let the borrower get their finances back on track,” she said. “If that doesn’t solve the problem, then it may be time to speak to an expert debt adviser for a more specific debt solution.

“There are a number of ways borrowers can manage their debts, such as a debt management plan, debt consolidation loan or an IVA (Individual Voluntary Arrangement). Getting debt help from an expert adviser can help borrowers to establish the best debt solution for their needs.”

Gregory Pennington offer debt management plans as well as a range of other debt solutions. If you are worried about debt, contact one of our expert debt advisers now.

Useful resources:

Gregory Pennington homepage: http://www.gregorypennington.com/

Debt help page: http://www.gregorypennington.com/debt-help.asp

Debt management page: http://www.gregorypennington.com/debt-management.asp

Credit, Good or Bad?

So you go in to Future Shop looking for a 21 inch Television and you walk by a 52 inch Plasma TV. The Television is way over what you were going to spend but you see a sign on top saying do not pay for a year based on approved credit. What the heck it’s free to inquire. After filling out a short application you are approved and the television is yours! At the time you are excited you got a new TV and nothing else matters. About six months down the road you might be thinking this television may not have been a good idea.

If this sounds familiar you are not alone, you are like thousands of other people lured into the world of Credit. My Dad always taught if you don’t have the money at the time how do you know if you will have it later. In other words, if you can’t pay for it then don’t get it. Unfortunately I didn’t always listen to Dad and I to ended up in Debt. You almost have to go through it to really understand it because no matter what people tell you there is always temptation.

There are times when you have no choice but to borrow, most people can not pay cash for a house or a vehicle so they need money. The best advice I can give in these no choice situations is to understand the terms of the loan and always look for the lowest interest when borrowing. Also be aware that most “do not pay” deals or “0% interest” are fine BUT if you don’t have the money when it’s due the total interest for that term is charged to you. Lets say your television was $1500.00 do not pay for a year with 0% interest and you couldn’t pay at the end. The math is simple 1500/12 months is $125.00 a month and average card interest is 19%. Now take 19% on top of $125.00 and that’s $23.75 and then multiply by 12 which gives you $285.00. Your Television now costs $1785 and you may also pay a penalty for breaching the agreement. On $1785.00 at 19% you will pay interest on that. It’s amazing how long this may take you to pay off.

Now imagine if that was $5000.00 or $10,000 dollars you would be in a real mess. Take myself for example, I owed a little over $10,000 on a credit card at one point. When I went to talk to a financial assistant she told me if I kept going making the minimum payments which was all I could afford then it would take 31 years to pay that amount. After hearing that I almost fell of my chair! What a mess I had gotten in to. Now what I was faced with is how to get out of this financial crunch.

There is a Solution

The Bank was really a great help to me when inquiring about Debt strategy. What we did is took everything I owed and grouped (consolidated) it and worked things out again. The loan I got basically cleared me of everything I owed, cards, vehicles etc. and now I was only paying 1 payment a month and instead of 19-18% interest I was at 6% and believe me that was a big difference. With the excessive interest alone I was saving almost $9,000 a year based on my situation.

It has been 2 years now and I am very happy to report that we are on the right track, sure we still own money but the amount is going down. Consolidation is the key and there are a lot of great places and people that can help you. Debt is an evil I’ve seen it destroy people and families but it can be managed. If you are reading my article please remember there is hope, make a move now because each day you put it off you going deeper in to debt.

The squeeze is on for British households who now have less disposable income to spend, says the Bank of England.

Full Article

Paying off debt has become a much higher priority, as worried consumers adjust to the nation’s economic problems.
During the third quarter of 2008, according to Unbiased.co.uk, the British public paid off £1.24 of their debt for every £1 they saved. In the previous quarter, by contrast, they had actually increased their debt by 15 pence for every pound they saved.
In total, British people paid off a great deal of their total debt in the third quarter, paying off over £23 billion more than they borrowed.
“It’s an excellent idea to save for the future,” said a debt expert for Think Money. “Savings can be a huge help when people have to deal with a period of reduced income, for example, or an unexpected one-off expense.
“For people in debt, however, it often makes sense to focus on clearing that debt before building a savings account. Aside from decreasing the amount of debt ‘hanging over them’ – which is always a good idea – paying off more of their debt today means they’ll be paying less interest in future.”
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Think Money offer a range of debt solutions, including debt management, debt consolidation loans and IVAs (Individual Voluntary Arrangements). If you are worried about your debt, contact one of our expert debt advisers today.
Full Article

A quarter of the adult population – over 11 million people – are in financial trouble, according to a new survey carried out for insurance company Axa.
According to The Telegraph, 11.6 million people said that they were struggling financially. Of that number, around 1.3 million admitted that their finances were ‘entirely out of control’.
About 6.1 million people reported that they had no savings left at all, and 1.7 million said their investments had ‘all but disintegrated thanks to the credit crunch’.
A debt expert for Think Money said: “These statistics highlight the need for people to tackle their debts as soon as they can.
“There are a number of debt solutions that can help even people heavily in debt. In general, the sooner the debt problem is addressed, the better the borrower’s chance of tackling it.”
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Think Money offer a range of debt solutions, including debt management, debt consolidation loans and IVAs (Individual Voluntary Arrangements). If you are worried about your debt, contact one of our expert debt advisers today.

Full Article

As reported on Mortgage Introducer, 27% of people who were already in debt have accumulated more debt in the past three months. Around 1.8 million people are reported to have increased their debts by over 20% in that time.

Read the full article here

An interesting article here on pensioners left facing mortgage debt.

No matter how careful we are with managing our credit sometimes things can change and you may need a little help.

That’s where IVA-Machine comes in. we can offer and the best help and advice on finding a solution to help you get out of debt.

This site will provide you with all the information you need on Debt Management and Individual Voluntary Arrangements.

Debt Management

Today marks the pre-launch of Debt Consolidation Loans.me

The website takes advantange of a new top level domain .me – only very recently made available.

The top level domain .me started with an auction of the many of the best names.

The website is still in its early stages, but is expected to be fully complete by September.

What are debt consolidation loans?

According to Wikipedia:

Debt consolidation entails taking out one loan to pay off many others. This is often done to secure a lower interest rate, secure a fixed interest rate or for the convenience of servicing only one loan.