Getting Rid of Credit Card Debt

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Debt Consolidation - Overcoming it
Debt is one of the major worry for many people. Many Americans are head to toes under debt and their numbers is on a rise. In such a scenario, debt consolidation has become a major escape route for everyone. People with multiple debts often use debt consolidation as a way of consolidating their debts. Debt consolation is necessary not just to pay off your debts but also to help you negate bad cred... Read debt consolidation article



Consolidate Credit Card Debt - Eliminate Debt
According to national surveys, the average household carries a credit card balance of approximately $8,000. Because of high finance fees, many people find that it is difficult to reduce their consumer debts. While bankruptcy is a tempting option, it is important to explore other alternatives for eliminating debts.

Benefits of a Debt Consolidation Loan

One approach for elimina... Read debt consolidation article



Getting Rid of Credit Card Debt
This method is simple, but requires some discipline.

First, you have to stop any new spending on your cards.

Second - you'll need to examine all of your spending. You'll need to know how much extra money you'll be able to put towards paying off your cards.

Credit card companies generally determine the minimum payment to be 2 - 2.5% of the outstanding balance. So if you owe $1,000, for example, your minimum payment will be 20 - $25 per month.

Some part of that $25 goes to the interest on the balance, some to pay off the actual balance. How much goes where depends on the interest rate. Your credit card statement will give you the exact numbers.

Let's say that $20 of the $25 goes to the actual balance. To pay off $1,000 at $20 per month will take 50 months. Just over four years. You'll also have paid $250 in interest alone.

Here's how you pay them off:

Look at the interest rates on all your credit cards. Take the one with the highest rate. That's the one you're going to work on first and we'll call it card #1.

After examining your spending you may have found some money to put towards your payments. All of this extra money to pay off your card debt goes to this one card. The idea is to pay as much extra to card #1 as you can. Until it's paid off.

Pay the minimum balances on all the other cards until card #1 is done.

Then take the card with the next highest interest rate and add to its payment the total of the payment you were making to card #1. In other words, send the regular monthly payment you used to send for card #1, plus any additional amounts that you used to pay on card #1, plus the monthly minimum for card #2- all to card #2. Do this until card #2 is done.

Then take the total you were paying to cards #1 and #2 and add that to the payment on card #3, and so on.

Here's an example:

Let's say you have four, maxed out, credit cards. Each with a balance of $5,000 ($20,000 total.)

Say the minimum payment on each card is $100 (yours may be different) making your monthly minimum payment total $400.

Now let's say you have $500 per month to pay these off, which you found through analyzing all your spending.

Card #1 has the highest interest rate and you'll send $200 per month to that card and pay the minimums ($100) on each of the others.

And you're not adding any new spending.

The extra $100 you're sending in to card #1 goes to the actual balance of the card, not the interest. This will let you pay that card off a lot faster. You might be able to kill this card in two years, instead of 5.

Eventually, card #1 is dead. The entire payment, $200, that you were making to card #1 gets added to the payment on card #2, for $300 total. ($100 minimum plus the extra $200 from card #1.)

The balance on card #2 will be less than $5,000 since you've been making your minimum payments all along. Adding the $200 from card #1 to the payment of $100 that you've been making to card #2 will make this card go away much faster than the first card did.

When card #2 is gone you take the $300 per month that you were paying to #1 and #2 and add it to the payment on #3, which will now be $400/month.

When #3 is done you repeat the procedure for card #4, but now you're sending the whole $500/month to that one card.

Obviously this system will take years, but at the end of that time you have:

* Four dead cards (hopefully you cut most of them up,)

* Spending and budgeting discipline earned from going through the whole process, and

* $500/month to put into a savings account or where ever.

Good luck!

Greg has a degree in biology so, naturally, went into teaching martial arts. Now he builds websites on whatever topic happens to be of interest. For more articles on easing your credit card debt, visit Credit Card Debt Help.

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Home Equity - Foreclosure Are Often Not Necessary

While driving around your community, you may have seen signs posted on telephone poles that offer "foreclosure help." These seemingly generous offers to help financially troubled homeowners who are in danger of losing their homes to foreclosure are actually scams. Typically, the "help" comes in the form of an offer to buy the home for a reduced price from the homeowner. The scammer offers to pay off the homeowner's existing debt and to rent the home back to the homeowner until they can afford to buy the home back. The scam comes after the owner signs the paperwork and the offer to rent the home to them abruptly disappears, leaving the scammer with an inexpensive house and the homeowner without a house or a place to live. Fortunately, the current booming real estate market has made it possible for financially troubled homeowners to avoid foreclosure on their home and the scammers.

Foreclosure usually occurs after a homeowner fails to make his or her mortgage payments for a period of several consecutive months. Lenders are often willing to accommodate minor financial troubles from their borrowers, but sometimes, they have no choice but to evict the homeowner and sell the home. This is usually done at a public auction, as lenders place more importance on getting money back quickly than in getting the highest price the property can yield. While the national foreclosure rate has been fairly steady, it has been increasing in several states, notably Texas and Florida. While losing a home due to lack of payment is generally financially catastrophic for homeowners, the current market has offered many financially troubled homeowners a simple way out - they can sell the home.

The price of homes nationwide has skyrocketed in the last few years, and in many markets, values have doubled or ever tripled. Many homeowners now have huge amounts of equity in their homes and that equity often exceeds the amount owed on the primary mortgage. That may be little consolation to a homeowner who has just lost his or her job, but the homeowner now has another option besides watching the bank sell the home from under their feet. The homeowner can now sell the home, pay off the mortgage and often pocket some cash at the same time. In most markets, this can be accomplished rather quickly, before foreclosure proceedings take place. The debtor will no longer have a place to live, but the debt will be repaid, and he or she will often have quite a bit of cash left over. This is certainly a better option than either dealing with a scammer or losing the home to foreclosure.

Anyone with financial troubles that prevents them from making their house payments should consult with their lender first. Lenders aren't really interested in removing people from their homes unless it's absolutely necessary. Still, it is comforting to know that the current market may provide a somewhat more attractive alternative that may actually yield some cash.

©Copyright 2005 by Retro Marketing. Charles Essmeier is the owner of Retro Marketing, a firm devoted to informational Websites, including End-Your-Debt.com, a Website devoted to debt consolidation and credit counseling information and HomeEquityHelp.net, a site devoted to information on mortgages and home equity loans.


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Getting Rid of Credit Card Debt
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