Top 8 Causes of Debt in the USA

23 06 2011

People today are getting themselves into more and more debt.  This growing problem is especially bad in America.  Here are 8 top causes of debt.

  1. Spending money before you have it
    Credit cards make this very easy to do.  It can be tempting to buy something when you have a credit card which will allow you to buy something before you have the cash in hand.  The trick about credit cards is that every month you don’t pay off the bill in full; the money remaining accumulates interest.  Credit card charges rack up very quickly and before you know it, you owe your card company more money than you actually spent. Banks also raise interest rates as soon as a payment is late making it even harder to pay off the debt.
  2. Little or no savings
    One of the easiest ways to avoid going into debt is to have savings.  Life always has unexpected costs that will throw you into debt if you are not prepared for them.  Sometimes there are unexpected costs that are pressing and cannot be postponed like a pipe breaks in your home flooding all the floors, or your car dies and you need to buy a new one.  These are not things that can wait, so saving for a rainy day is important. 10 % of your paycheck should be put aside for unexpected events.
  3. Divorce
    With more than 50% of Americans being divorced, this is an important thing to consider.  Divorces are not really something you can plan for financially.  Its just one of those unexpected costs that happens in life.
  4. Medical Expenses
    Even with health insurance, medical bills can still pile up.  Most doctors and hospitals accept credit cards as a form of payment.  This is because the professionals want their payment at the time of service to ensure they receive it.  This unfortunately is one of the things that add to credit card debt.
  5. Gambling
    The thought that you can go into a building with little money and walk away with tons is intoxicating to some.  People these days love to gamble, whether it is because of the thrill or because they are just desperate for money.  The reality of it is most people end up leaving with negative money.  Gambling addictions are by far some of the worst, especially when it comes to staying out of debt.
  6. Poor Money Communication
    It is crucial to communicate about spending and saving with your spouse and/or children.  If one of you is someone who spends lots of money it is important to know this and anticipate a larger bill at the end of the month.  When dealing with shared accounts this is one of the most important things to do. Consider setting aside time to discuss financial philosophies and priorities before it becomes a problem!
  7. Poor Money Management
    Basic things like balancing a check book and keeping track of your spending are very important to get in the habit of doing.  These little tricks will help you realize where most of your money is going and allow you to cut back on unnecessary spending. If you pay everything online then visit your online accounts once a month to keep yourself informed about your accounts.
  8.  Reduced Income
    The current state of our economy has been the cause of   people losing   jobs or possibly experiencing pay cuts.  If this happens it is important to cut back on spending, unless you have a reserve of cash to subsidize yourself. If you are receiving less money you need to spend less money. 




Communicating to Influence

26 05 2011

Communication skills are an essential part to influencing others.  In order to encourage prospective clients, your boss, or even your coworkers, that your thoughts and ideas are important, a number of aspects need to be considered when communicating.  Most of human interactions are nonverbal.  Here are some tips for consciously improving your communication. 

1.  Body Language and Tone of Voice:

Your mood is visible through your voice and posture.  When you are feeling good, your speech tends to be more animated and you appear more confident in your self and therefore your message.  To appear more confident even when feeling blue make a conscious effort to animate your voice and raise your posture.    

2. Bad or Distracting Habits:

Nervous habits can be distracting and therefore detrimental to your message.  Things such as finger fidgeting, touching your face or hair, or jangling coins in your pockets all are distracting attention away from your message.

3. Be an Active Listener:

If you can listen and interpret what your listener really wants, you will be able to arrange your words in a way that fits to his or her needs.

4. Be Confident but NOT Arrogant:

You want to come across strong and confident. You want to be confident that you know your message, but overconfidence can come across as egotistical.  Pay attention to your vocabulary and energy levels during your presentation to avoid crossing this line.

There are many aspects of communication.  Learning and adapting your communication style is an important step in enhancing your influence over people.  Verbal and non verbal communication can either make or break your message.





What Your Credit Score Means

7 04 2011

A survey conducted by the Consumer Federation of America found that only 1/3rd of Americans know what their credit score means.  Credit scores are essential in qualifying for a mortgage, car loan, and a bad credit score can even prevent you from being getting a service like internet. 

A credit score tracks how you incur debt and pay your bills.  A high score shows you are responsible and will pay off loans.  High scores not only help you get lower interest rates on credit cards, mortgages, and car loans, but also for renting an apartment, getting a job, getting utilities.  Businesses that may extend you credit, look at your credit report to decide whether to lend to you or not and how much and at what interest rate.

You can find your score for a small fee from Equifax (800)685-1111, Experian (888)397-3742, or Trans Union (800) 916-8800.  If you are applying for a mortgage you can get your score for free from your lender. Annualcreditreport.com will give you access to a free credit report every year from each of the three major credit reporting companies.

Your score will fluctuate whenever you pay a bill on time or late, apply for a new credit card, or take out a loan.  It attempts to predict what your credit behavior will be like in the future. A creditor looks at the information on your credit report and predicts the creditworthiness based on outstanding debt, payment history, late payments, and age of your accounts.  The total number of points received suggests how likely you are to pay back a loan or pay bills on time.

To improve your score you should pay your bills on time, reduce outstanding debt, avoid having a creditor check your report, do not add new balances, stop applying for credit, keep one or two credit cards that you have had the longest and cancel the rest.  If you do this it will take some time to change, but over time your score will go up.

If there is something wrong with your credit report you should dispute it.  The credit reporting agency is required to investigate all disputes. With the increase in identity theft, you want to protect your information from people who may open a credit card or utility using your information that can damage your credit rating.

A score of 760 or above is considered an A grade and will receive the best interest rates. Above 700 is a B, between 600 and 700 is a C, and below 600 is a D or an F and will lead to higher interest rates.  Establishing good credit is important for future purchases you may wish to make.





Paying Off Your Debt

31 03 2011

Whether you accumulated consumer debt, or business debt, paying off your loans or credits is important for your financial health.  Although, you may fall into hard times and money is short, you still need to prioritize your bills.  Below are a few steps in getting organized and prepared to pay off debts.

  1. Create a list of what you owe.  Put a list of all your debts and bills in order of the balance owed.  Then prioritize your repayments by importance and the interest rate accumulating on the debt.  You should pay down the highest interest rate first.
  2. Eliminate Credit Cards.  Pay off your credit cards and then either cancel the account or use it responsibly.  Do not charge more than you can afford.
  3. Make a spending plan.  Track the amount of money that is coming in and how much you are spending.  Make sacrifices by giving up a luxury or two in order to pay off more of your debt.
  4. Pay more than the minimum.  By paying more than the minimum required each month, you will pay off your debts quicker and in return you will save money on interest that is accumulating on outstanding debt.
  5. Before declaring bankruptcy , borrow against your 401K, home equity, or life insurance, but be careful because that must be repaid too.
  6. Renegotiate terms with your creditors.  Let them know that if you are unable to work out a lower payment plan, or receive a lower interest rate, you will have to file for bankruptcy.  Most creditors will not want to experience a total loss on the debts owed to them.
  7. If overspending is a continuous problem get help.  It can be a difficult habit to kick, but it is important to have control of your spending to stay out of financial trouble.

Remember, it is important to be responsible and pay off your debt in order to save your credit score.  A low credit score can result in a world of trouble if you ever need a car or business loan, or want to take out a mortgage to purchase a house.





Small Business Loans for 2011 Unlikely: Businesses turn to Collections for Cash

3 12 2010

Cash is needed in order for any business to operate.  In the past it was easier for Banks to lend money in order for the business to continue operating but since banks have tightened up giving loans to small businesses, many have been forced to max out their credit cards carrying further debt into 2011. Businesses will continue to need economic relief. The question is “where will it come from?”

 

Fico claims that banks as Lenders may not be able to meet the credit demands of small businesses seeking relief in the future.  59% of those surveyed expect small businesses to request a higher amount of credit over the next six months, but less than 37% expect lenders to increase the amount of credit given to those small businesses.

 

According to Standard & Poor’s Data, only four companies last month received leveraged loan covenant relief for a total of $883 million in leveraged loans.  This is the lowest amount of relief given since February 2008.

 

S&P expects covenant relief activity to be high in the beginning of 2011 as checks due to lender agreements from 2008 and 2009 are paid.  But as the year goes on, businesses may not be able to get relief from banks.

 

Until problems in mortgage portfolios are solved and private sector employment grows, the gap between credit demand and credit supply is unlikely to close. Along with this, the number of failing banks is increasing as well.  In 2010, 141 banks failed, making it the worst year ever, and this list is expected to continue to grow.

 

With banks unable to loan money, small businesses will seek other ways to generate cash to operate.  THERE IS A SOLUTION.  Businesses can rely on Commercial Collections professionals to recoup lost cash flow from customers who have not paid. Although times continue to be hard professional B2B collection agencies have the tools, the staff and the expertise to put your receivables on the TOP of their bills to be paid.

 

Caine & Weiner reported that out of the businesses surveyed, 57.5% plan to place accounts for collection in order to generate cash and the sooner the better. Credit and Collection managers also plan to reduce credit lines given to clients and to initiate collection sooner in order to protect their accounts receivables and generate money as banks are unable to offer financial relief in the upcoming year.

 

The bottom line is that businesses can no longer continue to be their customer’s bank and CFO’s; Controllers and Credit Managers must be more proactive in 2011. It can be argued that revenue generation is the most critical function of a company.  However, that revenue must be converted into cash.  Cash is the lifeblood of any company.  Every dollar of a company’s receivable must be managed and collected.





International Debt Collection

19 11 2010

With the growth of a global economy, more and more companies are able to advertise and sell their products and services in other countries as well as their own.  Global economies also lead to the expansion of debt collections into foreign countries. When doing business in a different country, you need experience and knowledge of the countries government and laws, trade restrictions and requirements, and the differing currencies and credit reporting criteria.

Debt Collection Agencies collecting from or for companies outside the United States need to consider a few factors:

1. Language – Working with people from different countries often presents a language barrier.  It is important to have a translator for communication.

2. Time Zones – Working across time zones presents communication challenges and time constraints regarding when you can talk with someone in the opposite time zone.

3. Foreign Partner Relationships – Gaining the cooperation and a positive attitude while working with a foreign country will build a quality relationship between the client, collection agency, and debtor.

4. Laws – It is important for a debt collection agency to understand their country’s laws and the other country’s laws and policies regarding credit, collection, and the court systems.

At Butler Robbins & White Global Revenue Recovery, we are able to collect foreign debt with our unique research.  We may be able to transfer a judgment to a foreign country. We are sensitive to the different cultures we work with and offer an extended arm, so companies are able to interconnect with the United States.

Let us help you! Email us today at RKluge@brwcollect.com