Credit and debt management advice

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Creditors calling - Time to repair credit
When the creditors are ringing the phone off the wall you know it is time to repair your credit. The United States alone has over millions of individuals and families struggling to find a way out of debt. This is why when you go online you see thousands of web sites that say they have the solution for relieving debt. Don't be fooled! Many of the telemarketers that claim they can get yo... Read debt consolidation article



Families in debt - How to get out of debt
There is current concern from the Bank of England that British families are getting deeper into debt, however, it has been said that lenders are putting themselves at risk because people are now more willing to make themselves bankrupt.

Despite people already having significant amounts of debt, credit card companies are still prepared to lend these people money. This is a combination of... Read debt consolidation article



Credit and debt management advice
Today's consumers benefit drastically from the usefulness of credit. Credit cards are especially useful for large purchases, emergency situations, reservations, identification, and protection from fraud. Unfortunately, millions of consumers abuse credit cards beyond their financial earnings. The use of credit results in costly interest payments and late fees, impulse buying, overextended lifestyles, and the unnecessary stress from harassing telephone calls from collectors.

Do You Think You Might Have a Problem with Debt?

Below is a list that will help determine whether you are a single mother debt problems.

Over the Limit Credit Card Spending

If all of your credit card balances are greater than 80 percent of your credit limits, you should consider this a danger signal to debt.

Too Many Cards/Too Much Debt

If you can't pay off your combined credit card debt within one year, you should consider this a serious issue.

Out of Money

Many people use credit for small purchases such as food and gas. If you previously paid cash for these or other small items, but are now using credit, not debit or cash, it could be a sign that there is a problem.

High Debt-to-Income Ratio

Your debt-to-income ratio measures the amount of debt you have against the amount of income you are making. You can calculate this ratio by dividing your total monthly debt payment (excluding mortgage/rent) by your total monthly gross income (before taxes). If your debt-to-income ratio is close to or over 20 percent, this is a sign that you may have a debt problem.

Emergencies

Crises and emergency situations do occur, and sometimes people are unable to afford such things such as emergency auto repairs or medical expenses because their credit cards are tapped or the majority of their earnings are put towards debt repayments. It's always important to keep an open line of credit available for such situations.

Minimum Payments

What many people don't realize about revolving credit card bills is that making only the minimum payment can take 12 to 15 years to repay. You are not applying any significant amount toward the principal if you are only making minimum payments concluding that you may be overextended and in need of putting together a spending plan.

Using Your Credit to Make Payments on Other Cards

Taking cash advances to pay bills is not a solution for paying off debts. If you are paying one credit card with another you are actually creating more debt. You will also be faced with any cash advance fees and interest from that new line of credit.

Balance Transfers

Many creditors offer new credit cards with balance transfers available at low interest rates for only a limited introductory period. It's important to remember, though, that after the introductory period the interest rate usually skyrockets up to 19 percent or more. As well, a growing number of credit cards are associating fees with transferring balances.

Skipping Payments

If you are late with getting payments in such as your mortgage, rent, car loan, or utility bills more than once per year and are juggling bills and skipping payments, this is a definite sign that you have a debt problem.

Borrowing Money

If you are borrowing money from family and friends and unable to pay them back while struggling to pay your bills, credit counseling can teach you how to budget or advise you to go on a plan for paying off your debts.

Debt Consolidation Loans

Are you borrowing from a new source to pay off an old debt? Many people who do so obtain debt consolidation loans to pay off all their existing bills. However, once the bills are paid off, some people wind up charging on their credit cards again. This means having to pay back the loan plus the new credit card charges, which ends up driving people into further debt. Learn more about debt consolidation at Incharge.

Unsure of the Amount Owed

If you have no idea how much debt you owe on a monthly basis and keep using credit cards, your financial spending might be slipping out of your control. If you noticed that you were nodding your head up and down as you read through the list of debt problems you could be on your way to a serious problem with your finances. What to do about it as a single mother comes next. Help for Single Mother if in Debt

If you're ready to tackle your own debt pile, here's what you need to do:

Get to know your debt

Study everything relevant about your debt such as your account balances, the interest rates, if the interest is deductible, how and when those rates can change and find out if you'll face any kind of penalties for paying an account early. If youÕre not sure call your lender and ask.

Prioritize your debt

Divide your debts into two piles; deductible and non-deductible debt. Non-deductible debt is debt where you don't receive a tax break on the interest such as is credit cards, car loans and personal loans. Deductible debt includes mortgages, home-equity loans and possibly student loans depending on your income. Once you divided your debt into piles rank them from highest interest rate to lowest.

Eliminate your debt

You can start with your highest interest rate, non-deductible debt-or the non-deductible debt with the smallest balance. Either way, put as much money as you can toward your first debt-elimination target. Once you pay that account off, take the same amount of money and put it towards your next target. Keep doing this until you have no non-deductible debt left. Next you can start tackling your deductible debt, boost your investing, or both.

How to Avoid Getting in Debt

* Pay off balances by the due date to avoid interest charges and late fees
* Charging only what you can afford to pay off in one month's time
* People who are close but unable to pay balances in full each bill cycle will still be able to put a hefty sum towards paying off the credit card which will refrain them from continued charging
* If you know you can't afford it, don't buy it
Below are some proven effective ways of cutting down expenses and saving money:
* Cut down on long-distance telephone calls or make calls when rates are cheapest
* Cut down on restaurant and take-out meals. Preparing your own food
* Bring your lunch to work and pack your children's lunch. You'll save a lot. Put yourself on a lunch budget where you treat yourself one or two times per month
* Try to reduce your home-utility bills by turning off lights when you're out of the room, being conservative with the thermostat, checking weather stripping to eliminate drafts, or air drying dishes and laundry
* Use your own bank's ATM to avoid fees from other banks
* Seek out garage sales and your newspaper's classified sections for discount purchases such as toys, clothes, new and used items at a good price
* Go to matinee movies instead of the regular showings where prices are higher.
* Clip newspaper, magazine, and other print coupons
* Save on expensive dry-cleaning costs by purchasing a book on fabric care
* Use your local public library. In addition to free reading materials, many libraries offer free or reduced-price videos, audiotapes, CD-ROMs, and children's games for rental
* Practice single mother do-it-yourself repairs and maintenance around the house
* Comparison shop for clothing and household items
* Create your own greeting cards
* Avoid expensive gift-wrap. Shop dollar stores for gift bags
* Take proper care of your teeth to prevent costly dental bills
* Exercise for a healthier body and state of mind
* If you drive an automobile, learn how to change the oil rather than paying someone else to do it
* Join a co-op or food-buying club to save hundreds of dollars per year over regular supermarket prices. Call the National Cooperative Business Association at 1-800-636-6222 for a list of regional warehouses
* Buy store-brand products instead of national name brands
* Shop around for the best gas prices, and plan your errands and driving destinations to eliminate unnecessary miles
* Pump your own gasoline and use the lowest-octane suggested in your vehicle's owner manual
* If you're considering getting a dog or cat, check out local animal shelters. The small purchase cost often includes vaccination and neutering

Kelly Kennedy writes for http://www.singlemotherresources.com, a great online source for single mothers and financial advice

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Credit card debt termination scam

"Legally terminate credit card debt! You can be debt-free in 4-6 months!" Advertisements like this are for a new type of program that has spread via the Internet over the past few years. It's called "Credit Card Debt Termination," and victims are paying up to $3,500 for this bogus service. In this article, I'll review the principles behind this program and explain exactly why it's a scam to be avoided.

First, let's get our definitions straight. The scheme I'm describing here should not be confused with Debt Consolidation or Debt Settlement (also known as Debt Negotiation), both of which are legitimate and ethical methods for debt resolution. The easiest way to distinguish the Credit Card Debt Termination scam from other valid programs is based on the central claim that you really don't owe any money!

With Debt Consolidation, you pay back all of your debt balances. With Debt Settlement, you pay back a lower amount (usually around 50%) while the creditor agrees to forgive the remaining balance. However, with the bogus Credit Card Debt Termination program, promoters claim that you won't need to pay anything at all (except their outrageous fees, naturally). They make the surprising claim that you can legally wipe away your debts simply by using their super-duper magic documents. Based on some legal mumbo-jumbo, the claim is made that you really didn't borrow any money from your creditors!

In order to understand this scam, a little background is necessary. Remember the tax protest movement back in the 1970s? People were claiming that the IRS tax collection system was unconstitutional, and based on their misinterpretation of the tax code, they refused to pay taxes. The IRS came down hard on the tax protest movement, and through the court system, they blew holes in all the legal arguments put forth by the protesters. The Credit Card Debt Termination scam is a lot like the tax protest movement. In fact, among collection professionals, it's called the "monetary protest movement."

Just like the tax protest movement, there is a common theme that runs through all of the promotional materials issued by the monetary protestors. The basic idea is that our Federal Reserve monetary system and generally accepted accounting principles (GAAP) do not permit banks to loan out their own money. Therefore, according to their interpretation, the credit card banks are the ones running the scam on the American public.

Stay with me here, because the logic is pretty strange. If a bank cannot lend its own money, how does a credit card bank extend credit? The claim here is that your credit card agreement itself becomes a form of money (known as a promissory note) the moment you sign it. The idea is that the bank "deposits" your agreement as an asset on their books, and then any credit you use is offset as a liability against that asset. In other words, the core concept here is that you literally borrowed your own money from the credit card bank.

So let's say your balance with ABC Credit Card Bank is $10,000, which you borrowed against the card to make everyday purchases. The scam promoters say all you need to do is notify the bank that you want your original "deposit" back. However, you will permit the bank to offset the amount you borrowed against the amount you have on "deposit." Presto! You don't owe the balance anymore!

Now, as you can imagine, the banks don't take kindly to such tactics. Many of the consumers using this technique are getting sued by their creditors. But the scammers have more tricks available, as if the "smoke and mirrors" financial nonsense wasn't enough. One of their techniques is the use of bogus "arbitration" forums. Arbitration is of course a legitimate system that allows businesses and individuals to resolve disputes without going to court. What do the scammers do? They coach people on how to set up a fake arbitration forum, for the express purpose of making a dispute against their creditors! Naturally, the creditors will not send representatives to some non-existent arbitration forum, so the consumer gets to rubber-stamp their own arbitration award. If they get sued in a regular court, they present their bogus award to the judge in the hopes that the creditor's lawsuit will be dismissed.

There are other techniques used by promoters of this scheme, but the key point to remember is the central claim that your credit card debt does not really exist. Of course, it's all nonsense based on a misinterpretation of our monetary system, and if you step back and think about for a minute, the truth seems pretty obvious. What these scammers are saying is that the entire $700 billion credit card industry is operating on an illegal basis! Even if the legal theory used by the promoters were true (which it isn't), do you think for a moment the government would allow this giant industry to go under? That's exactly what would happen if the promoter's claims were proven true and used on a widespread basis.

The Federal Trade Commission, which has jurisdiction here, hasn't stomped on these con artists yet, but it's only a matter of time. Unfortunately, in the meanwhile, consumers are being bilked out of millions of dollars for a worthless program that will only get them into deep trouble with their creditors. If you are approached by someone offering to wipe away your debts using this system, I strongly recommend you run in the other direction while you hold on tightly to your wallet or purse.

Remember, you can eliminate your debts if you take a disciplined approach to your finances, make a budget and stick to it, and don't use your credit cards unless you can pay off new balances in full each month.

Good luck in your financial future!

Charles J. Phelan has been helping consumers become debt-free without bankruptcy since 1997. A former senior executive with one of the nation's largest debt settlement firms, he teaches consumers a do-it-yourself method of debt negotiation & settlement. Expert training via audio-CD plus personal coaching helps debtors achieve professional results at a fraction of the cost. http://www.zipdebt.com/article2


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Credit and debt management advice
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