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3 Important Tips for Managing Credit Card Debt

March 7, 2017 debtmanagement

Of all possible debts, the worst by far is credit card debt.

The reason it’s so bad is because it’s what’s called variable debt. Other debts like a mortgage or auto loan are fixed debts. They have one payment a month and a fixed term, so you’d know exactly when you’ll have the debt paid off. For example, auto loans typically have terms of five, six, or seven years. Personal loans typically have a term of three or five years.

That old demon called compounding

Fixed debts also have fixed interest rates. As an example of this, the interest rate on a personal loan can be as low as 5.99%, though most come with higher rates. The interest rates on a 30-year mortgage are still near all-time lows. In addition, the interest on these loans is built into their monthly payments. When you make your last payment on one of these loans, that’s it. You owe nothing more.

Unfortunately, it’s different with credit card debts. While they do have fixed interest rates, your debts are compounded each month. Let’s suppose you owe $1000 on a credit card at 15% interest. At the end of the first month, when interest charges are applied, your balance will then be $1013, and so on. It gets even worse if you owe $5000 on a credit card with an APR of 16%. If this is the case and you make just the minimum payment of $125 a month, it would take you 4.8 years to pay off your balance and would cost you $2000 in interest.

Tip #1: Avoid credit card debt

The best thing you can do with credit card debt is avoid it like Ebola. If you have more than one credit card, choose the one with the lowest interest rate, and then freeze the rest in a block of ice. That way you won’t be tempted to use them. You can use the remaining one, but never charge more than you can pay off when you get your statement. This offers two benefits. The first is the obvious, which is that you won’t be running up debt. The second is if you use that credit card sensibly, you’ll have a record of your spending that you could use in budgeting.

Tip #2: Negotiate with your credit card providers

If you’ve run up a serious amount of debt on several credit cards, contact your card issuers and negotiate with them. One of the upsides of credit card debt is that it’s unsecured debt. Almost all unsecured debts can be negotiated, and credit card debts are no exception.

Four things can usually be negotiated with credit card companies. The first is your interest rates. If you have credit card debt at 19%, you might be able to negotiate it down to, say, 13%, which would mean lower monthly payments. The second thing that can usually be negotiated is to have your payments waived for a few months. This would give you time to get your balances under control or to catch up on your payments.

Third, you could negotiate to have your credit card debt converted into a fixed, monthly loan. While you wouldn’t be able to use the card anymore, you’d at least know what your monthly payment will be each month, and when you will have the debt completely paid off.

The fourth thing that you might be able to negotiate is your balance. This is the hardest by far because you need to be experiencing a serious financial emergency to get the credit card company to agree. This could be that you’ve lost your job, just went through a divorce where you were stuck with almost all the debt, or were hit with huge medical bills. And you may be required to provide documentation that proves your emergency.

Tip #3: Settle your debts

A secret that credit card companies would rather you didn’t know is It’s possible to negotiate settlements. Let’s suppose you owe that $5000 we mentioned earlier. You could contact the credit card issuer and offer to make a lump sum payment of maybe $1500 to settle the debt. Your offer probably won’t be accepted but with a little back-and-forth you might be able to settle it for $2500. Of course, you would need to have the money available to immediately send the credit card company.

In summary

If you’re struggling with credit card debt to the point where you’re several months behind, take heart. You do have alternatives that could help you better manage or even pay it off in a reasonable amount of time. The important thing is to choose a strategy and start contacting your credit card companies.

11 Incredibly Simple Things You Could do to Get Out of Debt

February 13, 2017 debtmanagement

How would it feel to be debt-free? We’re guessing you’d feel pretty darn good. There’d be no more the stress of dealing with creditors, no more trying to remember which payments to make on what day of the month, and most important, your entire paycheck would be yours – no more sharing it with your creditors.

If you’ve been trying to pay off your debts, you may have already done the big stuff like selling your house and downsizing, or getting rid of that travel trailer. But have you forgotten some of the small, simple things you could do to become debt free? Or maybe you’re stuck. You have a few ideas but just can’t get those creative juices flowing.

Well, take heart. Here are 11 almost ridiculously simple things you could do to get out of debt.

1. Begin couponing

If you have a favorite supermarket, be sure to sign up for its emails. You’ll then get a steady stream of money-saving coupons, some of which will actually be for stuff you buy on a regular basis. There are also sites like coupons.com, dailycoupon.com, retailmenot.com, zulily.com, and shopathome.com, where you can download printable coupons. Then, build your meals around them.

2. Cut that cable

If it feels like your cable bill just gets bigger every year, that’s not your imagination. America’s cable companies just keep increasing their fees. Technology has gotten to the point where there’s just no reason to subscribe to cable anymore. You could get an antenna for less than $50 that will get you all your local stations – free. Add a couple of subscriptions like Netflix, and Amazon Prime Video, and you should be able to should get all the programming your heart desires and for less than $25 a month.

3. Quit eating out

How often does your family eat out? Let us say you eat out just twice a week, and that you spend $40 on a meal. That’s $320 a month. Eat in those two days you’ve been eating out and that’s $320 a month you could use towards debt reduction.

4. Learn to love the word “no”

When it comes to saving money there’s just no word more powerful than the word “no” when it comes to your money. It’s one you need to learn to love. Make it a critical part of your vocabulary. Embrace it. It’s a word you’ll be saying very often when it comes to your spending. No matter how much you want that new blouse or that new billfold, just say “no.” Ditto 23that new fishing rod or smart phone.

5. Avoid expensive hobbies

Do you have an expensive hobby like golf? That can easily cost you $200 a month. Do you collect expensive football or baseball cards or antique greeting cards? Then, stop playing golf, or sell all those cards. Use the money to either pay down debt or to help fund your kids’ college education.

6. Sell a car

Is yours a two-car family? Maybe it doesn’t really need to be. If the payment on one of those cars is the US average of $400 a month, then sell it and bank the $400, which is really $4600 a year. We’re pretty sure that putting $400 a month towards paying off your debts would get you debt free a lot faster.

7. Freeze your credit cards

Yes, we really mean it. Freeze all your credit cards in a block of ice except for maybe one with a low limit and keep it available for an emergency. Some experts say you should shred your cards, but we prefer the block of ice method as your cards would still be there to use when you get debt-free.

8. Sell stuff

If your family is typical you have a bunch of stuff sitting in your garage, attic, or basement that’s just gathering dust. Put it on eBay or Craigslist and sell it. You might be surprised at how much you get for stuff you think of as just one step above junk. Or, even better, if you have a skill for making things, put it to use by making stuff and selling it online.

9. Merge your bank accounts

If you’re married, do you and your spouse have separate bank accounts? Merge them. There’s no reason the two of you shouldn’t be able to share one account. You’ll save money, and it will simplify your household accounting.

10. Use your local library

Do you remember libraries? They’re places where you can get books free, which is a lot cheaper than buying from Amazon.com. If your library system is like ours, you might even be able to check out, and download e-books, and then read them on your tablet.

11. Don’t invest

We understand this is a shocking one. But once you become debt free, don’t invest your new-found money in the market. Start putting 15% of your gross income into a retirement plan, instead. That could be a 401(k) if your employer offers one, or if not, a traditional or Roth IRA. Then, invest that money in something safe and sound like an index fund.

8 Tips for Radically Simplifying Your Financial Life

January 31, 2017 debtmanagement

Do you feel as if you are in control of your finances or are they in control of you? Managing your finances can feel like a lot of numbers and paperwork. You earn X amount of money, you spend Y on your rent or mortgage payment, Z on food, etc., etc.

You can make this process much easier by simplifying your finances. And this doesn’t necessarily mean always choosing whichever option saves you the most time and effort. It’s cutting out everything in your life that is between you and whatever you’re passionate about. At heart, radically simplifying your finances means exploring, learning what works for you, and getting rid of everything else. Here are eight tips that could help you seriously simplify your financial life.

Pick one financial goal and focus on it

Are you juggling a bunch of financial goals at the same time ike creating an emergency fund, saving money for retirement, for a down payment on a house, to pay for your kids’ college … and more? Stop doing this and focus on one goal at a time. If your problem is your debt, tackle it. Achieving whatever goal you focus on first will give you momentum to go on to your second goal, and so on.

Cancel your credit cards

This one may be tough but you need to cancel your credit cards, and then burn or shred all the paperwork related to them. This will reduce the risk of having your identiy stolen, you’ll have fewer financial accounts to worry about and less miscellaneous fees. Most importantly, your credit reports and your credit score should improve. If you just can’t bring yourself to cancel all your cards then freeze them in a block of ice. That way you won’t be able to use one unless you run into a true emergency.

Go paperless

Contact as many of your vendors as possible and authorize them to provide online billing. For important paperwork, scan and keep digital copies. Depending on where you bank, you may be able to download your statements in electronic form. Going paperless should also reduce your junk mail, which will be good for both the environment and your sanity.

Batch your bills

The idea here is to contact your vendors and your lenders and arrange to have all your scheduled bills due the same day of the month. You should even be able to do this with your student loans. If you have only one due date a month it will be much easier for you to remember it, and will eliminate the possibility of being late or missing a payment.

Automate everything you can

You should be able to arrange to pay your bills online – either through your vendors or via your bank. Have your paycheck direct deposited to your checking account. However, it’s best to not automatically pay all your bills. It’s better to main control of authorizing the payments each month. This way, you’d be able to review your bills and see if there are any erroneous fees or changes in your service. There is actually such a thing as too much automation.

Always budget using last month’s income

There are three reasons why this is an effective solution. First, it can solve your budgeting problems if you have irregular income. Second, it makes you feel sort of like you’re a month ahead of your bills, so that you have at least a small cushion. And it works with zero-sum budgeting. which is where you allocate every dollar to some specific category at the beginning of the month.

Create an emergency fund

This is the most important thing you can do for peace of mind. If you don’t have an emergency fund, you have no idea how much stress this will eliminate if you create one. You can think of it as just another form of insurance. Don’t worry about the interest the money earns or about optimizing it. You just want to have it there when you get hit with an unexpected financial emergency – and you will eventually get hit with one.

Cancel all your subscriptions

Subscriptions, particularly the small ones, can creep up on you. That $2.99 for American Greeting Cards may not seem like much until you add it to the $9.99 for Netflix, the Dollar Shave Club, $8.99 a month for panty hose, at al. Don’t pick and choose. Cancel all of them and then start from scratch. Be totally ruthless. Don’t re-subscribe to something, even if it’s free as as it’s just something else you’ll have to deal with.

Selling a Car on Craigslist? Here’s 5 Tips to Avoid Being Scammed

January 24, 2017 debtmanagement

Just in Chicago alone, nearly 100 people were recently scammed who sold cars through Craigslist. They ended up with no car and a rubber check.

Selling your car online is easy and convenient. However, it’s so easy that it’s become a great place for scammers. But if you take just a few precautions you can avoid getting ripped off.

Use eBayMotors

It’s easy to choose Craigslist to sell your car because it’s free and this is where most used car bargains are listed. However, it’s also where con artists do their best to pray on unsuspecting sellers. The giant eBayMotors.com also has used cars for sale or auction but it includes some purchase protection programs. They are designed to discourage almost all kinds of fraud.

In comparison, Craigslist tends to attract the undesirable types because of the “anonymity” it offers. While it does attract many positive people, it also gets scam artists that work a sting and then disappear back into the shadows.

Why sellers flock to Craigslist

We’ve all read about crimes that involved Craigslist, but sellers continue to flock to it because they see it as a way to maximize their used car’s value and to sell it quickly instead of trading it in to a dealer at a lower price. One auto enthusiast. who’s a content strategist for Edmonds.com, says he’s never been scammed. The main reason for this is that he responds only to ads that look professional, that have accurate information and include good photos.

Beyond this, here are five tips to help you keep from being scammed.

1. Check out the buyer.

How can you do this without being an FBI agent? First, talk to him or her on the telephone. Many scam artists hide behind fake email accounts that have no information about their location. Ask any potential buyer to provide their phone number and then schedule a time to talk. When you do this, the swindlers disappear very quickly.

It’s very typical these days to exchange text messages when selling a used car, but push for a quick phone call. When you talk with the potential buyer, pay close attention to your intuition. If the buyer says anything that makes you uncomfortable or makes some unusual requests, just hang up.

2. Watch for unusual financing requests

You’ve undoubtedly heard that old saying, “follow the money.” This is a case where it’s critical. Virtually all online scams include some unusual financing request. For example, in one popular scam the buyer sends you a check with an extra amount to ship the car somewhere. You pay the shipping, send the car, and then the check bounces.3. Keep your eagerness in check

The reason why a lot of scams work is because people are so anxious to close what they believe is a sweet deal. Keep in mind that genuine buyers will have questions about your car and will probably want to negotiate. If the buyer is someone out of your area, expect him or her to arrange for a mobile service to inspect the automobile.

4. Arrange to meet someplace safe

Many police departments have created “safe zones” where people can meet that are selling and buying cars. These zones usually have video surveillance, and are good places to meet prospective buyers. You should be the one that chooses where you’ll meet. You can remove a lot of the variables out of the sale by having ground rules like this. What can you do if your city has no safe zone? Arrange to meet some place that’s very well lit with a lot of people around. If you are suspicious for any reason, ask the buyer to show you a driver’s license before allowing her or him drive your car.

5. Avoid people that have too many stories

Many scam artists have stories that involve pleas for help or strange requests such as shipping the car out of the country. Some may even pose as members of the military to get you to feel sympathy and to generate patriotic feelings. Be sure that you avoid all these kinds of requests. Slow the process down, ask a lot of questions and don’t get emotionally involved in things. Keep in mind that selling a car is a business transaction and it’s important to treat the sale as if it you were a businessperson.

Four Tips for Giving Your Bills More Room to Breathe

January 9, 2017 debtmanagement

According to the site Careerbuilder.com some three fourths of us live from paycheck to paycheck. This actually includes some people who earn six figures a year.

It can be difficult to just pay your bills every month even if you earn enough money to cover your expenses.

The problem is that bills have this nasty tendency to just keep piling up. This leaves many of us close to “cash poor” for a period of time each month.

You can give your bills – and your budget – more room to breathe just by using the following four strategies.

Get different due dates

If you’re like a lot of us the biggest majority of your bills come due around the same day each month. This can take a big chunk out of your bank account so there’s not much money left to get through the rest of the month. The way to fix this is by calling your creditors and utility companies and asking for different due dates. Do this and you can spread out your bills so they will match when it is that you earn money. For example, if you’re paid twice a month you could arrange to have half your bills due in the fifteenth of the month and the rest of them at the end of the month. Or you can have them spaced out weekly – whatever best fits your budgeting.

Consolidate them

A second good strategy would be to consolidate your credit card debts and other unsecured debts (personal lines of credit, payday loans, department store cards, etc.) into one new loan with one monthly payment. This should make things much simpler and take much of the hassle out of bill paying.

Another way to achieve this is to transfer all of your high interest credit card debts to a new card with a better interest rate. If you have a decent credit score you might be able to qualify for a 0% balance transfer card so that you’d have anywhere from 6 to 21 months’ interest free and to repay the debt.

If a large part of your debts are not credit card debts and you have a decent credit rating, you should be able to get a debt consolidation loan online or from your bank or savings institution.

If you have private student loans you could pay them off with a debt consolidation loan. If they are federal student loan debts, you should check into a Direct Consolidation Loan. It will have a fixed monthly payment and a fixed interest rate, which will be based on the weighted average of the interest rates you’re consolidating, rounded up to the nearest 1/8 of 1%. It’s likely that this will be less than the average of the interest rates you’re currently paying on your federal student loans.

Get a consistent cash flow

Are you one of those people struggling to pay their bills because your weekly or monthly wages are unpredictable? This is often the case these days as so many people have minimum-wage jobs or are subject to unpredictable work schedules. If you can’t get your employer to provide you with a routine work schedule and a consistent paycheck it’s almost impossible to plan ahead and to know how much you’ll have to cover your bills – or whether you can cover them at all.

You can fix this without having to get a new employer with a new app called Even. It’s described by the New York Times as, “A device that “smooths the irregular, up-and-down incomes of hourly workers into the steady circulation of a substitute wage”. A simpler explanation is that the app will ensure that you always get at least your average pay. This will mean a consistent cash flow, which should make it much easier for you to manage your bills. Even is available for both Android and iOS devices.

Eliminate some of those “extras”

When you review your spending isn’t there some expenses you could eliminate? You’ll probably find things that don’t really add that much value to your life such as that $100 monthly cable bill, that $10 dog toy box of the month, the $40 health club membership you rarely use and so forth. When you add up all of these expenses you’ll probably see they’re taking a big bite out of your budget and causing you to stress out when the time comes to pay for the necessities of life such as your student loans, rent and auto loan payments.

Now, at the beginning of a new year, is the ideal time to review all of your spending and your cash flow and get rid of the expenses you’ve become used to paying but that you really can’t afford.

Do these four things and you should find it much easier to keep your bills current and wouldn’t that feel pretty good?