WHAT SHOULD NOT BE DONE

• Don’t make use of credit cards for everyday or regular purchases. Clothes, food or gas should be bought with cash and not by using your card. Your card should not serve as a proxy for cash, if this is done, you would soon be digging into debt. The best option is to shell out cash or use your debit card to buy items and things of daily use.
• Don’t make it a practice to make the minimum-payment only each month as this extends not only  the time period you would take to settle your debt but would also increase the total interest amount you would have to pay in the end. Therefore, for a cheaper and quicker settlement of debt-dues, you should try to pay off as much as possible each month.
• Don’t use your card to make expensive and beyond-your reach purchases. Your “Buy-now-pay- later” approach might soon land you in debt. For anything that you do not have enough funds to buy now might still be unaffordable for you even later, hence refrain from buying that on credit.
• Don’t close a card account unless you are aware how it could impact your credit. Avoid closing card accounts with outstanding balances or those that are a significant portion of your history of credit as doing so might damage the credit score.

 WHAT SHOULD BE DONE

• Satiate your needs but you need not fulfill all your whims and fancies. Use the card to buy essentials but don’t indulge in luxuries. Just because you possess a credit card or two does not necessarily mean that you should pick up anything you fancy, use it only if you need to. Be a sensible spender, not a careless spendthrift.
• Better late than never. Inform your creditor beforehand if you would be unable to pay your monthly amount on time. Do not make the mistake of keeping your creditor uninformed and then forgoing the monthly payment. Call the creditor, explain your condition, check for late fee waiver and most often than not, creditors will be willing to help you if they get to know about your dilemma.
• The total debt amount you owe is a major part of consideration of your own credit score; hence limit yourself to within 30 percent of your prescribed credit limit. The lower your balances, the better your credit score would look. To add to that, lower balances can be easier to manage.
• Bargain for a lower rate of interest if the current interest rate you are being charged is higher. The rate of interest determines the sum you would have to pay for a carry-forward balance on your card. Periodically, review the rate of interest being charged by your card company to ensure you have the best deal offered to you.

• Inflation and economic conditions (fluctuations in the consumer price index, interest rates, inflation, taxes)
• Personal spending style (rate, patterns of spending, conflict of styles within the family)
• Opportunity cost (the cost of giving up one option for another reflects personal tastes and preferences)  Revision of your original estimates is often necessary and can help in identifying your family’s priorities. 

Debt Relief Budget Suggestions

The following debt relief suggestions can help in getting the most for your family’s money:

• Develop a debt relief type system for handling money which involves everyone’s cooperation.
• Be realistic about needs, demands and what the family can afford.  Plan and purchase basics first.
• Establish a debt relief mentality of planning ahead for long-range and short-term goals.  Be prepared to take advantage of special sale prices on planned purchases when they do occur (a savings of 25 percent or more may be realized).
• Become informed about the your indivudal situation and monitor availability and prices of products, including seasonal values.
• Practice sound shopping habits with stress on the idea of debt relief and try to get the best buy. Always “buy,” never “be sold” items. Make a habit of doing pre-shopping research.
• Use and care for goods to get the maximum service with a minimum of repairs and maintenance costs.
• Use ability, talent and time to perform as many services as possible at home rather than buying these services and you should see immediate help toward your debt relief plan.
• Use credit wisely and keep credit costs to a minimum to achieve debt relief .
• Keep accurate records and avoid overpayment of income taxes.
• Don’t become addicted to such items as labels, prestige stores, specialty shops and gimmicks. Evaluate quality of product as well as price.
• Take advantage of public parks, libraries and services and use when advantageous.
• Be alert to fraud and exercise consumer rights and responsibilities in the selection, purchase and use of goods and services. It is estimated that the average consumer loses 5% of their income due to unwise consumer habits.
• Study habits of family members. Identify and eliminate waste such as buying convenience or luxury items or overbuying in quantities. Avoid spending on impulse, misusing goods and discarding useful items.  Keep accurate records of how money is used. Periodically, maybe quarterly, evaluate your progress in using money, and make adjustments.

Figure out exactly how much extra money you can put towards your highest interest rate credit card debt and begin to make that payment monthly instead of just paying the minimum credit card payment. 

1. Continue to pay the minimum on your other debts until the one with the highest interest rate is paid off.
2. After one debt is paid off, pay may begin to pay down the debt with the next highest interest rate and continue this process until you get out of debt.
3. It is very important during this process to stop using credit cards and go to a strictly cash based system until you are out of debt.
4. Once debt free, it is also a good idea to close all credit card accounts except one card — use that card as your only card and try to use it for emergencies only and make sure to pay it off monthly.

 Or you might consider this option too. 

1. Get all your credit card debts together and place them in order from smallest to largest. Then, begin to pay down your smallest debt first. By using this method, you may feel like you are getting more accomplished when getting out of debt and keep you motivated in the process.
2. Continue to pay the minimum on your other credit card debts as you normally would.  This will help keep your credit rating intact while you get out of debt and strengthen your financial situation.
3. After one debt is paid off, pay of the next smallest and continue the process. This will help you achieve debt freedom in a more efficient manner that just making minimum payments.
4. While working on the other credit card debts, stop using credit cards and go to a pay by cash system until you get out of debt or you are sure to run into other problems that will prolong the process.
5. Once you get out of debt, remember to close all accounts except for the one as mentioned earlier — use that card as your only credit card and only spend what you can afford to pay off monthly.

“Dr. Briesch’ research affirms solidly what we have already known, that debt settlement is a viable and appropriate method of helping today’s financially strapped consumers receive the much needed help they deserve,” Chris Kesterson, President of TASC, said.

Other key findings of the “Economic Factors and the Debt Management Industry” study include:

• Credit counseling fees and payments for a consumer account can exceed 29 percent of the consumer debt, levels that are “exorbitant”; and

• The debt settlement company has an increasingly higher value to customers with higher account balances and higher total debt.

The report can be found at www.consumercreditchoice.org.

Due to the rising unemployment rate and a growing number of complaints against creditors and collectors, more and more consumers are seeking the services of good debt settlement companies, like those that are members of TASC.

TASC accredited debt settlement companies are some of the best debt negotiators in the industry.  To me, it does not make much sense that when the banks need money most and are depending on the American tax payers for a “bail-out”,  some creditors, like credit card companies, are turning their backs on hundreds of millions of dollars immediately available to them to settle these accounts. I guess they would rather take more from the consumer and just sue those that can’t pay when they have fallen on hard times.

According to TASC research, an estimated $500 million in settlement funds, saved by consumers, are available to credit card companies at this time; additionally, the credit card industry charge-off rate now exceeds 10 percent! 

Further, bankruptcy filings in the United States now exceed 6,000 per day, according to a report from Automated Access to Court Electronic Records. It is very clear that debt settlement works. Any reputable debt settlement program provides the consumer with a three-year plan to get out of debt without the 10-year stain of bankruptcy on their credit report. Consumers avoiding bankruptcy ultimately helps creditors as well.

 If so, you should first consider professional debt settlement services first! Debt settlement involves negotiating with your creditors to settle your debt for amounts less than you currently owe on them! In many cases, debt settlement can provide you with an opportunity to pay off your debts quicker and provide you a way to save on the balances you already owe.

Did you know that over 40% of US families spend more than they earn? If you’re like most of us, you try not to think about how much money you owe and what that debt is really costing you. If you did, you might not sleep too well. With that being said, it is critical you get out of debt if you know what’s good for you. By not fully understanding your current financial situation you are only prolonging a growing problem. In order to get out of debt, you need to face the uncomfortable and often painful fact: it is very possible that your credit card debts may take you 30 years to pay off.

That can’t be possible you say! I only owe $6,000. I should be able to get out ouf debt in a couple of years. My credit card company would not do something so unethical to me, would they?

As a matter a fact, they would. If you took 30 years to repay your debts, you are an ideal credit card customer. If is the people that never get out of debt that are the most profitable to credit card companies! It’s important to realize that the credit card companies only allow you to make minimum payments, because it benefits them! This is not a good thing for the credit card holder. They do not do this out of generosity; this is how they make money. 

By paying only the minimum monthly payment each month, you are virtually guaranteeing that you will be a customer for life and that you will never get out of debt. If you are genuinely concerned about your financial wellbeing, you should be adamant about paying more than only the minimum balance on your credit cards each month. You must realize that if you can’t afford to pay more than the minimum balance on your card each month, you can’t afford whatever it is that you are buying.

When making a credit card payment, your funds are separated into two parts; interest and principal. Traditionally, when you only make minimum payments, most of it goes towards interest that is paid to the credit card company, which is why you never seem to be able to get out of debt. Would you pay 20,000 for an item that is priced at $10,000? If you purchase that item on a credit card that is exactly what you’re doing. If your credit card has an 23% interest rate and you only pay the minimum payment each month you will never get out of debt!

Being the president of a debt settlement company, I am often asked how debt settlement works. In order to fully understand and appreciate the process that takes place between debt settlement companies and credit collection agencies, consider the following: Creditors know that roughly 30% of the 2.0 million personal bankruptcies that occurred last year were on debt that was reasonably current. Traditionally, people survive by borrowing from one creditor to pay another. However, this process eventually fails when consumers run out of available credit lines and find themselves unable to make their minimum monthly payments.

If a consumer files for bankruptcy, it is very likely that the creditor will receive nothing of the balance that is owed to them. Therefore, a creditor is better off negotiating with a debt settlement company. Most debt settlement companies work with customers that have legitimate financial problems and honestly need assistance.

The debt settlement process usually takes between 12 to 36 months, so consumers can wait for creditors makes the sensible decision to agree and negotiate. Besides the obvious benefit of debt settlement, another benefit is the help with creditor harassment. Debt settlement companies normally contact all your creditors and inform them that you are working with a debt settlement company and that you are now being represented. This is very important in that it helps minimize or eliminate creditor calls. The standard practice is to direct all communication to the debt settlement company that you are working with. However, it is important to remain cognizant of the fact that original creditors can still contact you legally, but most will comply with such requests.

The most important part of debt settlement is to complete settlement process with your creditors and or collection agencies. In order to do this, it is necessary for a debt settlement company to have you sign a contract and a document that legally authorizes them to negotiate with your creditors on your behalf; this is known as a “Limited Power of Attorney.” During the settlement process, you will make a monthly deposit into a “settlement account” that will eventually be used for your debt repayment. As funds begin to accumulate in the account, the debt settlement company will start to negotiate with your creditors. Once a debt settlement offer has been agreed upon, you will need to send that amount, directly from your account, to the creditor. Once the payment has been made, that debt is considered settled in full. You will no longer owe anything on that debt and the account will be closed.

Alan Barnes

IAPDA Certified Debt Arbitrator

President and CEO of Debt Regret

http://www.debtregret.com

However, by not fully understanding your current financial situation you are only prolonging the problem. In order to get out of debt, you need to face the uncomfortable and often painful fact: it is very possible that your current debts may take you 30 years or more to pay off.

That can’t be possible you say! I only owe $6,000. This should be paid off a couple of years. My credit card company would not do something so unethical to me, would they? As a matter a fact, they would. In fact, if you took 30 years to repay your debts, you are an ideal credit card customer.

It’s important to realize that the credit card companies only allow you to make minimum payments because it benefits them. This is not a good thing for the credit card holder. They do not do this out of generosity; this is how they make money. By paying only the minimum monthly payment each month, you are virtually guaranteeing that you will be a customer for life and never get out of debt.

 If you are genuinely concerned about your financial wellbeing, you should be adamant about paying more than only the minimum balance on your credit cards each month. You must remain cognizant of the fact that if you can’t afford to pay more than the minimum balance on your card each month, you can’t afford whatever it is that you are buying. 

When making a credit card payment, your funds are separated into two parts; interest and principal. Traditionally, when you only make minimum payments, most of it goes towards interest that is paid to the credit card company, which is why it takes so long to pay off your debts. Would you pay $10,000 for an item that is priced at $5,000? If you purchase that item on a credit card that is exactly what you’re doing and this will not help you get out of debt. If your credit card has a 23% interest rate and you only pay the minimum payment each month you will never get ahead!

It is important to realize that no one wants to lose their house, car, paycheck, or damage their credit history. Like most financial situations, the key to true debt relief is proper financial management. Debt management involves several simple steps designed to get your finances under control; such as figuring out a reasonable budget that will allow you to make headway on your monthly bills, avoiding unnecessary interest charges and late fees, and consolidating your debts into a manageable monthly payment. 

To achieve debt relief, you will need a professional debt management specialist who can work with both you and your creditors to structure an arrangement that is best for you. With a proper understanding of financial management and a bit of discipline, it is possible to get back on track to a bright financial future. 

Alan Barnes IAPDA Certified Debt Arbitrator

President and CEO of Debt Regret

http://www.debtregret.com