What Is the Statute of Limitations on Debt?

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Debt can very much feel like a “forever” thing. In the beginning of my debt journey (which is still going on, thanks to student loans), I struggled to imagine a time when I’d be debt free. But one thing I didn’t know was that debt can have an expiration date.

The name of this expiration date is a statute of limitations. The statute of limitations dictates a time frame in which a creditor can sue you for the repayment of unpaid debt. This time frame varies per state and per debt category.

While the idea of a statute of limitations sounds straightforward, the reality of enforcing it is anything but. Every point in the process carries the potential for confusion: from when the clock starts ticking to how your state categorizes your debt to which state you can get sued in. Below is a guide to what you need to know about the statute of limitations so you can break through the confusion.

The Secret To Financial Success? Time.

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Time and Money. Two things there never seems to be enough of. And now it turns out that one may be intrinsically linked to improving the other.

How so? A recent study done by Magnify Money and Stanford professor Philip Zimbardo explores the relationship between financial knowledge and financial behavior. Surprisingly, the results don’t point to a higher level of financial knowledge equating to better financial decisions. Rather, the simple tool of time is what they found to be the key to good financial behavior.

What Motivates You To Pay Off Your Debt? Zina Shares Her Story

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Despite the common  goal of reaching zero, the road to debt free is different for everyone. With differing circumstances and even personalities, what works for one person in repayment isn’t guaranteed to work for someone else.

That’s why personalized motivators can be an effective tool against your debt. Not only do they help to fuel the (your) journey, they also connect you with the greater purpose of paying off your debt! Yes, it’s important to understand what the goal is but it’s also important to touch base with why you want to achieve it. Motivators can also add accountability and direction to your goal.

Headshot (2)That’s why we’re thrilled to share an interview with Zina Kumok, a young woman who has used personal motivators to guide (and accelerate) her goal of paying off $28,000 in student loan debt in just 3 years! She blogs about the journey on her site, Debt Free in Three and is slated to reach zero debt in November of this year. Read on to learn how she’s used accountability, prioritization, and travel goals to help her along the way!

What inspired you to pay off your debt in three years?

During my first job out of college I was often visiting my boyfriend who lived 3 hours away. I was living alone and found that I couldn’t really pay more than the minimum amount on my student loans. It killed me to think that I would have these loans for the next decade. Once I moved to the same city as my boyfriend (now fiance), I was able to put more money toward my loans. My “three-year” debt payoff plan is 3 years from the time I started paying them back (Nov. 2011 – 6 months after my college graduation).

What Is a Line of Credit?

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One of the most frustrating things about personal finance is the sheer volume of vocabulary one has to learn in order to understand their options. As if it wasn’t difficult enough to understand how everything works in the first place, you have to also memorize a multitude of terms and learn how they differ from one another. And just to add a little spice to an already complex recipe, many banks and lenders add their own spin on these terms to make their products seem more compelling. Some basic terms include…

IRA
Roth IRA
Mutual Funds
Index Funds
Money Market
CD
HELOC
Line of Credit

…and the list goes on and on. And these basic terms will look even more obscure once your bank’s marketing department gets a hold of them. Thanks to my early career in banking, I still have these terms rolling around my head when I think about personal finance. The good news is I can now share my knowledge with you! First up: Line of Credit.

How to Organize Your Environment To Stay Motivated

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Were you to wander into my apartment, there are a few things you’d probably notice right away.

  • Firstly, this girl has a lot of organized piles of stuff
  • Secondly, there are NO dirty dishes in her sink (though, there are squirrel salt & pepper shakers)
  • Thirdly… actually, she has a weird amount of squirrel related items.

Ah, quite the peek into my living space. While these facts don’t give a ton of information, I can tell you that those three observations are a pretty revealing look into the way I use my environment to help me stay motivated. Say, huh? Piles, clean dishes, and squirrels are supposed to showcase motivational cues? Sure! Here’s what I mean…

It’s taken me quite a while but I’ve realized how the environment I create around me can completely steer my focus – for better or for worse. When I’m in a place I feel comfortable in, watch out world – I’m on a mission! When I’m someplace that’s uncomfortable or chaotic… let’s just say I’m less likely to believe that I can reach for those stars. Thus, the more I organize my environment to my liking, the more likely I am to stay motivated and on task.

Topics We’re Talking About: Personalizing Your Approach to Finance

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We all know we should save more. We all know we should spend less. After all, that’s the key to financial prosperity, right? For some. But personal finance isn’t one size fits all. In order to build a solid financial foundation it’s important to define what kind of financial house you want to build! Incorporating your unique circumstances plus your strengths (and your weaknesses) into your financial philosophy will help you define your goals and establish confidence in your decisions. We’re all one of a kind – so it makes sense our financial plans will differ, too!

This week, I rounded up the top picks for posts to help you set out your own personal financial philosophy. Enjoy!

Double the Debt? Piggyback Mortgages On The Rise

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“The more things change, the more they stay the same.”

Although the global economy is cyclical, we as consumers have the ability to control our outcomes by learning from the past. Unfortunately, a recent rise in home equity borrowing shows that, for better or worse, consumers are once again feeling more comfortable using their homes as leverage for their finances. One particularly frightening type of borrowing on the rise is in piggyback mortgages:

“A type of mortgage where a second mortgage or home equity loan is taken out by a borrower at the same time the first mortgage is started or refinanced. Piggyback mortgages are frequently used to lower the loan-to-value ratio (LTV) of a first position mortgage to under 80%, thereby eliminating the need for private mortgage insurance (PMI).” – Investopedia

You might wonder why this is a problem – PMI is undoubtedly an expense that should be avoided and many homeowners choose home ownership over renting so they can have the flexibility to do this kind of borrowing. But using your home as collateral for any type of borrowing is a risky gamble – and one that could lead to underwater mortgages or, worse, loss of the home. Below we’ll talk about this latest trend and an alternative means to achieving your homeownership dreams.

Affordable Travel, Getting Your Mind Right, and Checking In: Our Best Posts from June

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We’re starting an exciting new trend at ReadyForZero, one we almost wonder why it took us so long to do. Each month we’ll share some of our most notable blog posts from the past month. While all of our blog posts have a special place in our hearts, there are a few that we think are worth a second (or third!) glance. So, if you’ve been traveling and enjoying the warm weather in June, you can still see some of what you may have missed…

Without further ado, here are some of our best posts from June 2014.

Reader Perspective Series

4 Ways I Brought Balance to My Budget

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This is a guest post by Holly, a writer and longtime reader of the ReadyForZero Blog. Below she shares 4 ways she has brought balance to her budget (and you can too).

1. Beware the monthly charges (“Oh my,” says George Takei) — The other day I sat down and decided to take a good hard look at our finances and where our money is going. One trend I noticed immediately is we have a lot of little monthly charges that really add up. I was paying $6.99 for a monthly game subscription and $9.99 for another similar site, in addition to $17.99 for a credit monitoring service. We also were signed up for Hulu Plus and Netflix for $7.99 each per month. We decided to keep Netflix, but got rid of the others. And, there were more. Taken all separately these were small amounts but when you add them all up it gives you an “OH MY” moment. I was spending almost $60.00 a month in these “small” charges. That is $720.00 a year! That’s money that could be paying another bill, going to savings, or being used for other necessary expenses. With that in mind, it didn’t take me long to use my powers of cancellation to winnow down the list of monthly services and subscriptions. Now, all these small charges are gone and I am applying that savings elsewhere.

Dough On The Side: How to Earn Extra Cash On Your Lunch Break

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This is a guest post by Matt Giovanisci of Listen, Money Matters.

My frugal co-worker Brian kept an arsenal of money-saving supplies in the office pantry: peanut butter, jelly, and a loaf of wheat bread.

An admitted late eater, he’d wander into the pantry each afternoon around 1:30, just as everyone else was slipping into post-lunch comas. Out came the supplies and, like clockwork, Brian constructed his lunch: two hearty peanut butter and jelly sandwiches.

They filled the office with the sweet aroma of childhood as he carried them, stacked on a single paper towel, back to his desk.

The taunts from co-workers were as predictable as the routine:

“Peanut butter and jelly again, Bri?”

“You’re gonna grow a peanut farm in your stomach.”

“Did your mom pack you a Thermos, too?”

“I thought you were a grown-ass man.”

Equally predictable? Brian’s response:

“It’s a seventy-five cent lunch!  I’d rather have the money in my wallet than, y’know, eight-dollar sushi in my stomach.”

This second sentence prompted indigestion on my behalf, because, you see, I had typically just finished a meal of eight-dollar sushi purchased from the corporate “marketplace” downstairs (“marketplace” being the fancy name given to the in-house cafeteria where you spend the very money you’re there, in the building, away from your friends and loved ones and hobbies and TV, dressed in dopey business-wear, to make. Nonsensical, I know), and eaten while staring at my computer screen.

Hardly a decadent dining experience.