Living debt free sounds like the ultimate place to be financially, doesn’t it? No stress at the end of every month, when all those bills are due and you don’t know where the money’s coming from. No interest piling up, making the things you buy cost as much as double the actual sticker price.

Yes, it’s an attractive idea, but is it really possible, especially in today’s economy? Let’s look at a few things that you’ll need to consider about living debt free.

First, to what degree do you want to do this? Does “debt free” mean no consumer debt – credit cards, department store credit, etc. – or does it mean literally no debt at all? No mortgage, no car loans, nothing. These are two different degrees of living debt free, and one is a lot easier to reach than the other.

If you want to have no high-interest consumer debt, on credit cards and other types of loans, it’s a manageable goal. Yes, even if you are in over your head today. Getting your debts paid off and keeping them that way might seem impossible when you’re staring at the stack of bills at the end of the month, but if you’re serious about reaching that goal it can be done.

I’d like to tell you there’s some magic secret to getting all that debt paid off, but there really isn’t. The “secret” is to spend less than you make, and then use every extra dollar you can scrape together to pay off debt.

And let’s face it, if you’ve got a bunch of debt on credit cards and other types of loans, you’ve probably been doing the opposite – spending more than you have. So while it’s not complicated, it will likely be hard, at least at first. Once you start seeing the debt get paid off, you’ll probably start feeling better about it.

If living debt free means absolutely no debt whatsoever, it’s going to be a little more difficult. If you don’t want to have any mortgage debt hanging over your head, there are a couple of options:

- Save up to buy your home with cash
- Rent your home rather than buy it

Saving to buy a home with cash is a noble undertaking, but with the prices of houses in today’s market, it will likely take quite some time to accomplish.

Renting is often frowned upon by many financial advisors, since you aren’t creating any kind of equity, but the fact is it’s a better option for many people. You aren’t taking on any debt, and many of the costs associated with owning your home, such as repairs, maintenance, taxes and other such expenses, are paid by the owner so you won’t have to worry about them.

If you want to live debt free, start making a plan now. It might take some time, but even if you only manage to get partway there you’ll still be far better off than you will by doing nothing.

Insurance credit scoring mirrors consumer credit scoring. It is an actual number the insurance industry uses to determine a consumer’s premium or whether or not they will even issue a consumer a policy. Insurance credit scoring is also called credit-based underwriting, credit-based insurance scoring, an insurance score, a company placement indicator, or an insurance financial stability score.

Regardless of what your company calls this score, insurance companies are permitted to delve into your credit file under both federal and state laws. They use certain factors to determine your premium.

For example, bankruptcies, collection activity, foreclosures, tax liens and other publicly available information along with payment frequency, total number of credit lines and outstanding credit balances are used in computing an insurance credit score. To complicate the picture, each company is allowed to choose what they believe is a good score.

That means one company may believe you have a great score while another company would look at your score under a different perspective. The second company would probably charge you a higher premium.

However, not all is bleak in the world of insurance credit scoring. Insurance companies are prohibited from using the number of credit inquiries in your credit file, total amount of available credit you are not using, insufficient credit history, debt associated with buying a new vehicle of home, and the types of credit and debit cards you have in calculating your insurance score.

This type of information is just one of several factors used by insurance companies to determine policy premiums. For example, both auto and homeowners insurance premiums are based on the cost to replace your car or home, where the car or home is located by zip code and the extent of your coverage.

By extension this means if you decide to increase your liability insurance, the cost of that particular insurance policy will increase. You can cost yourself more money by increasing your limits. Therefore, you should not only ask how your insurance credit score influenced the premium but how the amount of coverage you want will increase the premium.

4 Plans To Become Debt Free Quicker

You biggest loan is probably your mortgage. Right? Most of us have a 30 year mortgage. What if you could afford to pay it off faster? I think many families can accomplish this with some proper planning.

Did you know that on a typical 30 year home mortgage loan you will pay more in interest payments than you even borrowed in the first place? That’s right! On a normal 30 year loan of $300,000 for example, you will pay back over $600,000 in total, including principal and interest.

If that does not convince you that part of a sound financial plan should include a system to eliminate your mortgage faster, I don’t know what will.

I’d like to show you 4 effective ways to make that happen.

Plan #1) Refinance your loan. You can refinance to a lower rate or even to a shorter term, if you can afford the bigger payment.

As an example, a 15 or 20 year mortgage can usually get you a lower interest rate and many times the payment will not be too much more each month.

Plan #2) Institute a Monthly Principal Reduction Plan. What I mean here is that you can send extra money each month, in addition to your regular principal and interest payment and instruct your bank to apply it to the principal loan amount to reduce the pay off amount.

This amount can be $100 or $1,000 or more. You’d be surprised. Every little bit you send to reduce the loan, will reduce the amount you have to give to the bank in interest by a lot.

Plan #3) Set Up A Bi-Weekly Payment Plan. If your mortgage company can’t do this, there our banks that will arrange to do it for a small fee, simply do an internet search.

This plan simply means that you divide your monthly payment by 2 and pay that amount every 2 weeks. So, instead of making one payment each month, you are making 2, but in half the amount.

If you add it up, you will end up making one full additional monthly payment at the end of the year. This will reduce the number of years it will take to pay off your loan and the total pay off amount in a big way.

Plan #4) Use A Software Program Married With A Home Equity Line to quickly chip away at that loan. There are several of them out there. This is a strategy that is becoming very popular in America and has been used in Australia and Europe for years.

All of the plans listed above can help you to effectively pay off your debt much faster. I personally recommend Plan #4. Home owners can be mortgage free in 1/3rd the time in many cases and not even change their monthly spending.

That means that a 30 year mortgage can be paid off in 10 years in many cases. This is huge, especially considering the 100s of thousands of dollars saved in interest.

I think this method of eliminating debt and reducing interest paid out to the banks and mortgage companies is so important to a family’s financial plan that I dedicated a whole chapter to it in my best-selling book 3 Secrets Of Millionaires.

Don’t wait for 30 years to pay off your mortgage. Keep that money for your family, instead of making the banks rich.

If there is one permanence you can count on in life, it is the regular collection of debts. For everything else, there is uncertainty. As stable as your job might be, you never know when your company may be cutting costs and retrenching its employees. Or, as sturdy as your couch might be, you never know when you might roll over and fall on your hips by accident and be unable to work for the next six months. The point is, you never know when you may be unable to pay your debts. Thus, there is credit card payment protection insurance to offer you a certain level financial security in cases when you can no longer pay your credit card payments due to loss of your job, illness, disability or accidents.

There are many types of credit card payment protection insurance plans available for different consumer needs.

1. Credit Card Disability Insurance – In credit card disability insurance, the credit card insurance company will pay the minimum monthly payment requirement of your credit card bills for you on the basis of your disability and will continue to do so within the reasonable period that you remain disabled. Each credit card disability insurance company has their criteria on what passes as a disability for them to take on your credit card bills. It is best to check these credit card insurance companies’ list of disabilities. Most consumers choose their credit card protection insurance company based on the possible disability from their respective line of work.

2. Credit Property Insurance – Credit property insurance companies can pay for the reparation or the replacement of your credit card-purchased property for a certain amount, in cases when the said property becomes broken, destroyed in fire or in weather-related casualties, or if stolen or lost. Some big credit card companies offers this type of property insurance protection to their customers as an added benefit for their membership.

3. Credit Unemployment Insurance – Credit unemployment insurance offers to pay the minimum monthly credit payment of credit bills in events of being involuntarily laid off from work or fired from work for a certain period of time or until the customer becomes employed again. However, in order for the latter case to take effect, the credit insurance company must be able to establish that the customer is doing every effort to find another job.

4. Credit Life Insurance – In a credit life insurance, the credit insurance company pays for the debts in case the debtor dies. This is beneficial to heads of families with beneficiaries. Applying for a credit life insurance can protect your beneficiaries and families from being run after by creditors in case of death of the borrower.

The credit insurance(popularly known as payment protection insurance), originally developed in USA, has witnessed a spectacular growth throughout the world. This is because of enormous presence of credit culture in the western economies and subsequent protection for the lenders & consumers against the unforeseen events such as death, disability and unemployment of consumers loosing his ability to repay the loan.

The term is primarily associated with a specific loan or line of credit that’s design to mitigate the risks of the lender. And in today’s credit happy society, its very much relevant. Apart from the lender’s point of view of safe-guarding their financial interests over the lending money, borrowers ought to confirm that their families are safe and won’t be in a debt trap.

Just imagine, you are permanently disabled and have lost your job or steady flow of income and/or any extremity has happened to your life, what would be the miseries prevail in your family? And here comes the essence of credit (protection) insurance.

Although in today’s credit happy world, this type of insurance is much common, you have to make sure that you have the proper credit plan that could adequately safe-guard you. In this case, its not only you who’s an insurable interest, creditor or lender has a legal insurable insurance on your life (as a borrower or debtor).

Credit insurance may be of three kinds, depending on the type of credit.

**Decreasing Term Coverage for close-ended installment payment system. This is normally seen in case of mortgage, automobile, consumer, educational lending where the load balance decreases with repayment at regular intervals.

**Ordinary Term Coverage for single payment loan where the loan repayment practice is in a single lump sum amount (single premium credit insurance) and the outstanding amount won’t decrease.

**Varying Amount Insurance Coverage in open-ended nature where the credit amount varies from month to month such as credit card loan. Normally the mortgage and loan-based credit insurance are more popular than varying amount credit insurance(open-ended). Make sure that at-least your loan amount must be covered by the credit insurer as a large portion of your borrowings may remain uncovered due to certain upper limit of coverages from the credit insurance company.

The important coverages are-

1. Death: In case of borrower’s death, the claim amount is paid to the creditor or lender.

2. Disability: Claim, arising out of disability, is payable as per definition or contract of insurance which is again subject to a specific waiting or elimination period.

3. Unemployment: The benefit is payable if the borrower’s lost his job, may be due to termination, lay-off, strikes, labor disputes. But the majority of credit insurance plans do not cover the conditions such as retirement, resignation or illness.

If you need to purchase auto insurance, but you have poor credit, you may be wondering how you can get affordable coverage. Most companies rely on credit scores as part of their rate calculations and acceptance criteria; however, it is possible to find no credit check auto insurance, if you know where to look.

There are two main reasons why you might need “no credit check” car insurance – first, if you have some late payments on your credit report, a company that uses credit scoring might raise your rates by as much as 25 percent. Second, if you have a bankruptcy, foreclosure, or repossession on your record, the company may decline to write your policy at all.

No credit check car insurance is typically available through “high risk” or “nonstandard” auto insurance companies. These companies are often direct writers, meaning that they work directly with customers instead of relying solely on field agents to sell their policies. They typically offer a toll free number that you can call to get a quote and purchase a policy. You may also be able to get quotes and buy auto insurance from these companies online.

There are a few things to watch out for when purchasing a “no credit check” policy through a direct writer. First, some “high risk” companies tend to have very high rates, even if you have a clean driving record. Their rating systems are geared toward insuring people who pose higher loss risks, so their rates are often not comparable to “standard” insurance companies.

Also, some “high risk” companies only offer limited coverages – for example, they may offer no more than your state’s minimum required bodily injury and property damage liability limits. In most cases, these limits are far too low to offer you any real protection against a lawsuit if you cause an accident.

If getting “no credit check” auto insurance is your only option, you may end of paying higher than average rates for a while. As long as you do not have any claims with your insurance company, though, you may be able to move to a standard company within a year, even if your credit score is poor.

If you are one of the people who have debts now-a-days, you are not alone in the battle. There are surveys that say the average person carries with him about a number of hundred dollars on his credit cards, and most of the present-day people now have loans of all sorts: mortgage, car, and even student loans. And at this present state of our economy, the first thing that should be accomplished is paying off the credit cards, but unfortunately, credit cards have interests up to the neck that paying everything off seems like a close-to-being impossible thing.

Without further ado, everyone wants nothing more that for their monthly payments to be tremendously lowered, if not totally eradicated. So here is a small list on how you can try to be debt-free quicker and faster.

It would greatly help you if you will do things to drop your rate. It is a fact that an average credit card has an interest of about 14%. And fortunately enough, many credit cards are offering features that include special and low-rate introductory premiums, 0% for the first six months, for instance. It is wise to transfer your existing balance to a low-rate card instead, so that more and more opportunities in order for you to pay on a monthly basis will be applied to your principal rather than the interest only, and this in turn will drop your balance in a fast way. It would always be smart to ask around if your current credit card company is not offering you one. Paying only half of the total balance you have, or even just the minimum amount, will mean that it will take you a longer time, years to pay your debt especially so if you have a 0% rate in interest. So, do everything to boost your payment to a degree that will allow you to settle your debts faster. Paying your debts more than the minimum amount will your best defense in paying off your balance in a short time. For instance, sending in an extra amount, say $200 or more, will help you pay the entire amount in just several months instead of years. It would also help you if you will consider and look for a debt negotiator or consolidator, especially if you suddenly find yourself needing extra help than necessary. The negotiator or consolidator you will find can help you in negotiating with the credit card companies and then eventually ask for a new debt amount, if not for a lower interest rate. If the negotiator will be successful enough, he can help you cut down the total amount you owe to some 80% or even 60% of the original amount. This will ultimately mean that you will be able to settle things faster.

Once you have accomplished these first three things that can help you, it would also be easier to be conscious enough so as to stay debt-free for the remaining years. As much as possible, do not use your credit cards until you know to yourself that you can easily pay off the monthly balance. Daily expenses can be met using cash or debit and then reserve the credit cards for great purchases like electronics or appliances.

Taking one step at a time, no matter how small they are, can also total to something great in the future. Anyway, nobody makes a huge leap in his first time to attempt to walk, right? We all have to start somewhere usually small at first, and then the big steps will follow next. What is important is that you know how you are using resources properly so that you will not be in-debt forever.

Many people struggle to pay off debts every month. This can range from buying a house that is too expensive to credit card debt that built up. This article will give you 5 solid tips on staying debt free.

The first tip for staying debt free is budgeting. You should have a set budget every month for spending and where you will spend your money. Most families do not have a budget so they do not know where they spend their money. By using a budget, you will be able to curb any bad spending habits that may start and you can save money every month. A budget is your financial map so that you can remain debt free. Without budgeting, none of the other tips mentioned in this article will be as effective.

The second tip is to develop a plan to pay down debt. The average household in America has roughly over eight thousand dollars in credit card debt. Most households only make the minimum payment. If you owe debt, think about ways to pay it down quickly. You can use your budget to identify where you can cut spending in some areas to redirect monies towards your debt. Pay above the minimum payment and start first with your highest interest rate debt and work backwards.

The third tip is to start saving every month. If you lose your job right now, it is likely you will not find one immediately due to the state of the economy. Save at least eight months worth of living expenses. This will help you to not have to rely on credit cards if your source of income is eliminated. This can help save you money if you do end up losing your job because you will not rely on your credit cards.

The fourth tip is to use bonuses or other money you were not expecting as retirement savings or to pay down debt. You can use some money to have fun but paying down debt will allow you to save interest you would have had to pay and you can be debt free in a quicker time period.

The fifth tip is related to your car. Have you paid off your car? If you have, congratulations! If not, pay it off. Once your car is paid off, set aside a car payment every month in your savings account. Depending upon how long your car lasts after you pay it off, the money that you saved from setting aside the monthly car payment can translate into a substantial down payment or paying for the whole car in cash. This will save you money by reducing or eliminating the amount of interest that you have to pay on a future car loan.

These five tips will help to save you money and remain debt free. Budgeting has to be the first key. Without a solid budget, you cannot be as financial savvy and responsible as you would like to be so you can stay debt free. A great side benefit is that people who are debt free report being happier and in more control because their finances are not controlling them.

Credit Insurance Plans have been put into a complete ban by IRDA as it was being practiced rampantly by some non-life insurers. Credit Insurance is a kind of cover or guarantee to the lender against payment default by borrowers. IRDA has ordered all general insurers to stop selling these plans until any further detailed notice is issued by them in this regard.

Since only a smallish number of loans carry credit risk protection, the decision is unlikely to increase the total credit risk of banks. The Authority has also asked for details of total exposure of the insurer under the credit insurance plans issued by them to the banks offering credit facility to the debtors. The credit insurance that is being marketed by the several insurers is better termed as credit default insurance. It’s basically a security cover which provides protection to the borrower of a loan against the inability to repay the loan.

A recent case of such a cover which resulted in a claim is that of the state-owned insurer Oriental Insurance Company selling such a cover to Paramount Airlines. The insurer provided cover to the airline’s lenders from different branches to the tune of INR 200 crores. Several state-owned lenders have an exposure to the company, which along with other troubled airlines are trying to restructure it’s debt.

Recently, some scam also came into limelight wherein unscrupulous brokers were conniving with borrowers. The broker armed with a letter from a international reinsurer saying it is willing to provide reinsurance underwriting support, along with the borrower would approach an insurance company for credit insurance cover. Reinsurance support is similar to loan syndication where deep-pocketed underwriters share the credit risk. When there used to be a claim, the insurance company discovered there were problems with the technicalities in the contract which allowed the international reinsurer to escape liability and the local insurer was left with the claim.

When compared, credit insurance is quite similar to credit default swaps which earlier brought down the international insurer AIG.

What Is Mortgage Life Insurance?

If you have a mortgage and are a home owner, you have most likely heard the pitch for mortgage life insurance. It typically comes in an envelope from your lender and might include a letter from your lender suggesting that you buy a policy.

It is important to realize though, that the insurance itself is sold by insurance companies. Even though it is called “mortgage insurance,” it is in reality decreasing term life insurance that will pay off your mortgage if you pass away.

How Are Premium Payments Planned?

Mortgage life insurance is a decreasing term policy. The policy starts with a death benefit that is equivalent to your existing mortgage balance. The death benefit reduces at the same pace as your mortgage balance. The premium payments never vary but may cease before the loan payment. Your lender may agree to include the premium payments to your monthly mortgage expense.

Is Mortgage Life Insurance Identical to Private Mortgage Insurance (PMI)?

No-mortgage life insurance is commonly befuddled with Private Mortgage Insurance (PMI), but they have little to do with one another. You purchase mortgage life insurance willingly to shelter your family from having to pay the mortgage.

Mortgage lenders require you to buy PMI to shield them (the lenders) from the probability that you will default on the mortgage.

Insurance Tip: Request for insurance agents to estimate their best price for a decreasing term policy in the same amount, period, and interest rate before buying from a sales pitch sent by your mortgage company.

What Is Credit Life Insurance And Credit Disability Insurance?

When financing some kinds of big items – automobile, furniture, audio equipment – there is a good possibility you will be presented with credit life and credit disability insurance. Credit life guarantees to pay your balance if you die. Credit disability will pay your payments if you become disabled and not capable of working.

Credit life is a decreasing term policy. The insurance premiums are typically added into the loan contract. This type of insurance is constantly voluntary and it can be rather costly. Your lender cannot require you to purchase credit life or credit disability insurance.

Although they may have some comparable elements, credit life and credit disability insurance are not the same thing as mortgage life insurance.
What Is A Life Insurance Rider?

A “rider” is something that is supplementary to the basic policy. Riders can be used to either add benefits to the policy or limit benefits previously in the policy. Common riders are as follows:

Accidental death: Double indemnity is an additional name for this rider. It means that the benefits paid by your policy will be two times the face sum of the policy if you die in an calamity.

Approximately twenty percent of policyholders perish in accidents.

The price for an accidental death rider is usually reasonably priced.

Some critics bring up the point that how the policyholder dies has nothing to do with how much money your survivors will need.

Waiver of premium: This rider allows you to cease paying premiums whenever you happen to become disabled and unable to continue working.

It is crucial to comprehend how the rider defines “disabled.” For example, the meaning could be very restrictive and require you to be so extremely disabled that you cannot do any sort of work whatsoever.

A disability policy can also defend you from monetary hardship due to a disability. Depending on the kind of policy you acquire, it could supply capital to pay for all of your living expenditures, not solely your life insurance premium.

Mortgage protection: This rider fundamentally attaches a mortgage life policy to your chief policy.

Other insured: You can insert life benefits for your spouse or children. They may have varying coverage amounts and be subject to medical underwriting, however.

Guaranteed insurability: This rider would characteristically be added to a whole life or universal life insurance policy.

It gives you the right to procure a new policy or amplify the maximum on your existing policy without having to pass another medical assessment.

The rider will most likely indicate how much you can add and at what time you can do it.

The guarantee may not persist after you reach your mid to late forties.

Accelerated death benefit: This permits you use some portion of your death benefit when you have an incurable sickness. Some policies will insert this rider without causing your premium to enlarge.

Insurance Tip: If your agent automatically includes riders when calculating your premium, request the agent to value each rider independently. You can then choose whether you think the additional benefit any rider provides is worth the added rate.