Credit card debt problems and solutions

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Credit card debt has created problems for every other individual you know. However, there is hope for people who are determined and persistent in their efforts on paying off debt and leading a debt free life. When it comes to paying your credit card debt each month, pay more than the minimum amount listed on your account. Only by paying more each month, you will be able to either pay off your credit card debt or at the least have your debt in check so that it does not grow further and pose problems down the line for you. If possible, use your credit card only for major purchases. Pay up for cash for all your other expenses. Try saving money and live a thrifty life-style and save hundreds of dollars each month which can be used to pay off your credit card debts.



Student loan and debt elimination
A crucial point to be borne in mind by students is this: student loans cannot be eliminated under any circumstances. Student loans are not grants; they are just financial assistances to cover education costs and they have to be repaid under any circumstances once the education is over. Even filing for bankruptcy does not work in this case. It is just too long a process to be worth the effort.
... Read debt consolidation article



Credit card debt problems and solutions
You're burdened with crushing debt and at the end of your rope. There's got to be a way out. You go to the door every day, expecting bad news. Your minimum credit card payments are eating up most of your paycheck every two weeks. You can't go to dinner, go on a trip, or save for your kid's education, and it just keeps getting worse. You're using your credit cards for living expenses now. This really sucks!

Many people are finding themselves in this situation; the "Credit Card Death Spiral". As the nation's credit card burden continues to climb, the number of people facing this credit nightmare is increasing at a frightening rate. It happens for many reasons and is depressing and debilitating. Credit card companies have relaxed the initial requirements to get a card in the last few years. The change is allowing people with marginal credit scores to get a number of credit cards. In addition, many of these cards have higher credit limits than in the past. This combination has encouraged many consumers to take on much higher levels of debt than in the past.

In addition to the relaxation of credit card requirements, lenders are changing the way they do business once a consumer has the card. In the past banks and other credit card issuers would not let you charge over your credit limit. This has changed. Now, many financial institutions will accept a charge even if it puts the account over the credit limit. When the account goes over the limit, they charge a hefty fee, raise the card holder's rate, or both. Many credit card issuers are doing this and it can raise rates on a credit card to over 40%!

Here's one common scenario. You have a card with a 12% rate and a $5,000.00 credit limit. Your card's current balance is $4,475.00 and you're picking up some clothes and school supplies at a back to school sale. You visit a few stores and pick up some items. Like most people, you don't have your exact account balance memorized. Your last purchase takes you a just few dollars over your limit. The charge is approved anyway.

Imagine your surprise when you get your next credit card statement. Your interest rate has been raised to 30% and your minimum payment, which had been $88.00, is now $168.00.

To really pour salt in your wounds, the bank has added a $39.95 charge for exceeding your credit limit. It gets much worse. Not only does the 29% interest rate apply to the purchases you just made, it applies to your credit card's entire balance!

This type of scenario occurs hundreds of times every day. If left unchecked, you'll enter the "Credit Card Death Spiral" that many times ends in bankruptcy or, at least, a horrible credit picture. There are ways to escape this chain of events. One choice for many is through a debt consolidation loan.

A consolidation loan consolidates the borrower's debts by paying off the smaller loans with one larger loan. This type of loan typically uses equity in the borrower's home as collateral for the loan. Having a secured loan enables the interest rate to be much, much lower than the unsecured credit card loan. The lower rate creates one payment that is substantially lower than the total of the previous credit card payments.

Steve Faber writes about a variety of topics from business to home theater systems.

For more on how to escape the Credit Card Death Spiral see The Debt and Loan Consolidation Guide

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Credit card debt payoff plan you have been waiting for

Does this Sound like You? There are 100 shopping Days left until Christmas and your Credit Card Balance is Higher now then it was in the beginning of the year. You may have thought of using your home and getting a debt consolidation loan, A Debt Consolidation Loan without a solid Long Term financial plan is a Recipe for Disaster. A One way ticket to Credit Card Purgatory

The Debt Consolidation Loan

Most credit cards require a Minimum Monthly payment of 3% to 5% of the Outstanding Balance. On a 10,000 Balance that is $300 to $500 Monthly. On a $20,000 Balance that is $600 - $1,000 Monthly. The Interest on your Credit card payments would not be Tax Deductible,

If you Refinance your House and Consolidate your Bills even at an interest rate of 6% you would only pay $60 a Month for $10,000 or $120 a Month for $20,000 (For many homeowners this would be tax deductible)Your Monthly Savings will be between $240 and $880 a Month. The Key to a Good Financial plan is to use this extra $240 to $880 a Month to build a Failsafe, your Economic Life Preserver. (If you don't own a home and still have fairly decent credit you might be able to get a signature loan from your bank or credit union.)

If you currently have a mortgage paymet based on an interest rate of 3% or Higher you may want to look at refinancing your House using a Loan where the payments are fixed for 5 Years based on a 1.95% interest rate. On a 200,000 Loan this can often mean an additional $400 a month or more in savings.

Let's Assume you save $700 a Month with a Combination of the above 2 Methods.

1 - Emergency Savings

You would want to keep at least 2 Months worth of Bills (3 Months would be Better) in a Savings or Money Market Account. Bills would include Rent or Mortgage, Utilities, Medicine, Food and Insurance Premiums. You need to make this account a Priority. Place at least $300 a Month into this account until you have reached your Goal of 2 Months Worth of Bills or $5,000 whichever is Higher. After you Reach Your Goal Continue to place $50 - $100 in this Account until you have reached Double your Goal. (4 Months worth of Bills or $10,000 whichever is higher) Once you have reached Double your Goal you no longer need to place money in this account.

Some People will just Borrow an Extra $5,000 and place it directly in there Emergency Account.

2 - The Debit Card

After you have established your Emergency Savings you will want to establish a Debit Card Account. Open a Bank account and get a Debit Card. Deposit $100 or More Monthly into this account until your balance reaches $1500. Now If you have an Emergency car Repair, Home Repair, Dr Bill or any other type of unexpected expense use your Debit card rather then a Credit card. Your Goal should be to maintain this account at $1,500 to $3,000

3 - The Credit Card

Most people don't need to rip up all there credit cards they just need to manage them better. Cancel all but 1 or 2 of your credit card accounts. Credit Cards are an Important Part of Life, An unexpected car repair or Dr. Bill can be handled very easily with a credit card (If you don't have enough money in your debit card account). With the exception of an Emergency never charge more in any month then you can Pay in full when the bill comes. Pay off all new Charges in full within a week of getting the Bill.

4 - Insurance Needs

Insurance needs would be things like Life insurance, Health Insurance and Long Term Care Insurance. Contact an Insurance professional to discuss your needs. If you don't have any Life or health insurance look into low cost options like term Life and Discount health care until you have extra funds to go for the higher cost options (After your emergency account is established) Life insurance can often be combined with retirement planning see step 5.

5 - Retirement Savings

Use at least half your savings from your bill consolation loan to fund an IRA for you and your Spouse. Speak with your Accountant to see your IRA Funding Limits. In 2005 people who qualify could place up to $4,000 a Year into an IRA or Roth IRA. People over 50 who qualify can place up to $4,500 in an IRA or Roth IRA. For more information and phase out rules you can view the IRS publication here http://www.irs.gov/publications/p590/. If you don't qualify for an IRA or you already have it funded look into other options like Universal Life and annuities.

6 - Some Girls (or Guys) Just Need to Have Fun

Everyone Needs and Enjoys to have a good time. Don't get so hung up on getting that emergency fund or building a retirement nest egg that you don't have fun. Budget something fun a few times monthly. Movies, Bowling, The Zoo a trip to the water park, a Nice dinner whatever it is. Even if it is only $10 or $20 a Month in the beginning when things are tight. You can always add $50 a month for a vacation fund later.

7 - The Budget Review

Once or twice a year review your budget. See how your Emergency and Retirement funds are doing. Look over your credit cards and make sure you are paying those bills in full.

If your situation changes for better or worse. You would want to do a review. Things that may trigger a review. A Salary increase or Decrease. An Added Expense like a Car Payment. A Major change to an expense, Much higher Gas Bill or Mortgage. Car Payment is Paid in Full. A child starting college or private school.

By combining a Bill Consolidation loan with the above 7 Step Financial plan you are taking the required actions to help insure you won't find yourself in credit card Hell Again.

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Mike Makler has been Marketing Online Since 2001 When he Built an Organization of over 100,000 Members

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Credit card debt problems and solutions
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