Debt consolidation - Get the Red Out

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Get Your Credit Card Payments Under Control
Credit cards can be a nice convenience but they can also get you into a lot of trouble. If you have charged your cards up to the limit and are now having a hard time paying the bills you are not alone. Statistics show that the average credit card debt for each household in the U.S. is $4,800 per month. Also, there were 1.3 million credit card holders declaring bankruptcy in the year 2003.

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Credit card debt - How to repair credit after bankruptcy
Ah, credit card debt. You've asked yourself the question many times, "Will I ever get credit again?" The answer, although seemingly complex, is quite simple: Yes. You can have another chance at re-establishing your credit. Filing bankruptcy is the first intelligent step taken to wiping out accrued credit card debt. The next step you'll have to take is to repair your credit report. In order to do t... Read debt consolidation article



Debt consolidation - Get the Red Out
If you're finding your debt payments are increasing but your salary is stuck in place, you're not alone. Millions of Americans are making the mistake of living a lifestyle that's not in synch with their take-home pay. Unfortunately, when that paycheck doesn't increase, a natural tendency is to purchase more items on credit to keep pace with the Jones's. It makes for an ugly cycle, but one you pull yourself out of by following a few simple tips:

1. Less is more. The first thing you should consider is spending less. Easier said than done, but the reality of the situation is that you are spending too much if you don't have the cash to pay off your balance at the end of the month. Tempting as it may be, you should only reach for the plastic if you're absolutely certain that you can pay off that credit card bill in full at the end of every month. If you don't get a handle on your spending debts, your debts will put a stranglehold on your bank account.

2. Defeat your debt one card at a time. If you owe balances on several credit cards, pay them off one at a time. Make at least the minimum payments on each balance every month, but plan on paying much more than the minimum amount on the card with the smallest balance. Once the lowest balance card has been paid off, start making larger payments on the card with the next highest balance. With each card that you pay off, you'll pick up momentum and be in a better position to pay off the other cards.

3. Refinance debt. If at all possible, renegotiate the interest rates you are being charged by credit card companies. Some companies will lower your rate, especially if they sense that the higher rate could cause you to default on your loan. If your credit card company refuses to drop their high rates, consider transferring your funds to a card with a lower rate. You may want to mention to your current credit card provider that you plan on making a move away from them if they will not give you a lower rate. A little leverage can go a long way.

Paying off your debt can help you in many ways. Once you pay off your debt, you'll be in a better position to make purchases based on what you can afford. Getting out of debt will improve your standard of living as you shake free of those credit card balances and use your newfound cash flow to build wealth.

While you're currently in the same boat as many Americans, at least you're not up a creek without a paddle. Follow the steps above, and instead of trying to swim upstream, you'll be going with the cash flow.

Frank Liz; (c)2005; All Rights Reserved.

Frank Liz is the founder and president of http://www.AmericanNoDebt.com. His goal is to help people preserve and control what they have and what they make in the future, but of course it is his nature since he was born in poverty to teach people to make money. "Learn the secrets that most people will never know about getting out of debt fast and building your life savings." Click here to learn how easy it is.

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How to avoid the debt spiral

Credit card debt is the ball and chain that hinders many consumers from reaching financial happiness. The biggest problem is that many people who have hefty credit card debts have no idea just how much money they're paying in interest every month - they're in a "debt spiral" from which it's very difficult to recover.

Credit card companies charge borrowers rates that far exceed what you get when you invest your money. For example, if you have a savings account, you are probably earning less than 3% interest on your money. Unfortunately, if you have a credit card, you are likely paying 12%, 15%, 21% or more on the money you've borrowed. It's perfectly legal for creditors to charge those amounts, but it can put you deep in the hole in a hurry.

How about those 0% credit card offers you read about? There are some creditors allowing consumers to make purchases with no interest rates. However, as interest rates have increased over the past two years, the 0% rate has fallen by the wayside. Most are now limited to the first six months of payments on your outstanding debt (called a balance transfer). At that point, a new rate of 17% or more kicks in. To add insult to injury, if you are late on payments, you not only lose the 0% rate, but you can be charged 24 or even 29% on your unpaid balance.

All of these practices - once again, perfectly legal - will send you into a debt spiral. The $3,000 you borrowed can soon cost you $10,000 or more in interest payments over the years. You may be able to make the minimum payment but you are doing little, if anything, to pay off the original $3,000 borrowed. All you are really doing is paying money to cover your interest charges - nothing else.

There are ways to lower your rate. First of all, check your credit card statement and see what the interest rate is being charged to your account. If it is much higher than what you used to pay, you may have had the rate jacked up without your knowledge. Consider calling your credit card provider and asking for a lower rate. If they won't give you a lower rate, see if you can get another card where they offer a fixed, lower rate. They may be offering one of those 0% balance transfer rates mentioned earlier. If you pursue this option, make sure that once you get the new card and your balance has been transferred, notify the old credit card provider that you are canceling your now paid off of account.

If you cannot get a new card or transfer your money to a lower paying account, you can start reducing your debt by paying off the biggest amount owed first. For example, if you have three credit card debts of $1,000, $3,000, and $7,000, make the minimum payments on the last two cards, but make much larger payments on the first card - the one with the lowest balance. Once the first card is paid off, then start making larger payments on the second card until it is paid off. Finally, when the second card is paid off, make big payments against the third card. Providing you don't continue to add to your credit card balances, you'll be out of debt sooner than you'd expect.

If some of these options are difficult to understand, a trained debt professional can help you. The most important step is to realize that you need to take action on reducing some of those outstanding balances. And the sooner you get out of the debt spiral, the sooner you can begin building wealth and a much happier life.

Frank Liz; (c)2005; All Rights Reserved.

Frank Liz is the founder and president of http://www.AmericanNoDebt.com. His goal is to help people preserve and control what they have and what they make in the future, but of course it is his nature since he was born in poverty to teach people to make money. "Learn the secrets that most people will never know about getting out of debt fast and building your life savings." Click here to learn how easy it is.


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Debt consolidation - Get the Red Out
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