Monthly Archives: September 2008

Author : Allen Wright

Let’s look at a typical debt consolidation scenario for someone with a car payment, a couple of credit cards, and a home equity loan We can separate these accounts into secured and unsecured debt: the car loan and the home equity loan are secured debt That means they have a physical asset that backs them up, and if you fail to make the loan payments the lender will take the asset back to pay for the loan

Secured debt is generally at a lower interest rate than unsecured debt because the risk is lower for the lender But, the risk is higher for the borrower since the penalty for not paying back the loan is losing the asset And if that asset is something vital to you or your family like your house, your car, or something else, you can be in big trouble if the bank takes it back

So once we add everything up and determine the amount of money that we have to pay out each month to maintain our accounts in good standing, we can compare that to our income and find out what the difference is And, if we took all your recurring bills into account like utilities, gas, groceries, insurance, and so on, we should be able to tell at this point how much we can dedicate to our smallest debt on top of the minimum payment

This is referred to as phased payments, where you dedicate all your spare resources to paying down your smallest debt Once that debt is payed off, you take all your spare resources PLUS the minimum payment you were dedicating towards that debt and apply it to the next smallest account

You can see where this method gets some big gains initially on your smallest accounts, and gains momentum as it goes along As you pay off some of your smaller accounts you gain access to more free cash that you use to tackle the larger accounts It’s a powerful psychological and mathematical tool that continues to achieve success at a regular rate and reinforces the good feeling you get when you pay off debt

The key to this whole process, of course, is making sure that when you go through it you have already committed to living within your means and not using credit cards anymore You are, in effect, borrowing money every month that you use credit cards and don’t pay off the balance Not to mention the interest that you’re paying Your income is being diluted by paying someone else to buy things for you It’s a dangerous cycle

Allen helps people learn more about debit consolidation programs through his website on debit consolidation advice. Continue reading →

Author : Phillip Hatley

Selling a structured settlement is not difficult but does require some research and thought on the part of the seller before committing to the structured selling process First, we must define a structured settlement A structured settlement is a legal contract between two parties to compensate one party in the contract a set sum of money paid out in installments over a given period of time Usually these contracts are formed and agreed upon between the party that is being compensated and insurance companies or other entities that are required to make the payments

Once the contract or sum is agreed upon, the party that is required to make the payments begins making payments in monthly installments Often times these payments are made over years requiring the payee to wait years for the total amount In some cases the monthly income is viewed as favorable by some In other cases, the total amount in one lump sum may work better for the payee Often, lump sum payment is not an option for the payee so they are forced to take a monthly installment payment plan over a set period of time

Selling a structured settlement to an investor or company that specializes in buying notes, or paper, is an option for people that have been awarded structured settlements In some cases, people that have structured settlements may experience financial difficulty or health issues that require them to liquidate their structured settlement quickly Loss of a job or other income streams may be lost, prompting these people to sell their structured settlement Sudden illnesses such as cancer or heart attack may cause long term disability and immediate cash is needed to meet monthly expenses as well as medical bills

There are other reasons to sell a structured settlement although not as dire as the above reasons Some people sell their structured settlements to free up cash to take a long dreamed of vacation Others sell their structured settlements for home improvements or to buy the dream house they have always wanted The reasons vary with some selling their notes to put their children through college or taking the lump sum cash investing it in other financial instruments to increase their return over time

It should be noted that when selling a structured settlement, the total amount of the settlement will not be realized Structured settlement buyers offer to buy these notes at a discount in return for lump sum cash to the payee The settlement buyer is assuming risk in buying the note with the discount reflecting the amount of risk the buyer must assume Many risk factors must be considered by the settlement buyer including the amount of the settlement and the financial worthiness of the payor Companies that make structured settlement payments are not immune to insolvency and bankruptcy, so the buyer must consider these factors before purchasing a structured settlement

Selling a structured settlement is not difficult and only a process that requires some serious thought and research Considering your needs and the reason for selling the settlement should be foremost before initiating the process of selling your structured settlement

Phillip Hatley writes about many subjects in the financial industry including futures trading and structured settlements. For more information about structured settlements, please visit his structured settlements blog. Continue reading →