Credit Cards Are Dangerous: The Psychology Of Paying With Cash

Posted March 15th, 2012 in Credit Cards by Jeremy Waller

Over the years I’ve discovered that knowing how to manage your money is only 20% of the picture. The biggest part, by far, is the mental battle.

If I could sit down with you for 1 hour, I could teach you everything you need to know to budget your money, pay off debt, invest and save for retirement. It’s not conceptually difficult.

What is difficult is living out that plan over the next year and the next 5 years and the next 20 years. Continue Reading »

Let’s Talk About Debt

Posted March 9th, 2012 in Debt by Jeremy Waller

The following is a guest post from Suzanne Coblentz. Thanks Suzanne!

No, I am not joking, I really want to talk openly about debt.  For many American’s living with economic challenges has become quite normal. Of course, most of us don’t really view the stress of mounting credit card debt as a ‘challenge’, but more of an inconvenience to be dealt with eventually…like retirement.

Paying off or consolidating debt is one of those things on our to-do lists, something we resolve to work on with the New Year etc.  But, it’s not something we actually deal with, not until we have to.

It is the lack of familiarity with their options that holds most people back from finding debt help.  It can be confusing to understand the difference between debt consolidation, debt management, debt settlement, bill consolidation, loans and more. The only well-known way to get rid of debt is bankruptcy and that is not really a solution as much as a last resort.

So let’s make this a reality.  Take a few minutes, get online and do some research.  There is a wealth of information available on; blogs, providers of debt relief services websites, and reviews sites, all talking about debt solutions or debt relief service providers.

This information is free for the taking.  Once you understand the debt lingo, you can then determine if you can do things on your own to expedite paying off your debt, if you could benefit from a debt management plan or if you are in need of more serious services like settlement or bankruptcy.  Don’t hesitate to contact these providers directly and ask questions, lots of questions, but do not feel obligated to do anything until you feel ready and until you fully understand how the plans work.

Whatever you do, just be sure to do something.  Don’t push off tackling your debt head on and giving yourself a second chance financially.  If you are ready to have a conversation about your debt, here is a provider checklist to help you evaluate different debt relief service providers.

Suzanne Coblentz

Suzanne is a CareOne Debt Relief Services community moderator and works in the Social Media department. If you have questions about CareOne Debt Relief Services please visit www.CareOneCredit.com or call and speak with one of our certified credit counselors, 1-888-888-CARE.

How to Negotiate With Creditors and Debt Collection Agencies

Posted February 26th, 2012 in Debt by Jeremy Waller

Debt sucks. And it really sucks if you can’t make your your payments each month. If your monthly payments are getting harder and harder to make, then here’s some real simple debt advice for you. Stop making the payments.

Seriously. Continue Reading »

How to Deal With Creditors When You Can’t Pay

Posted February 23rd, 2012 in Debt by Jeremy Waller
Boy Scouts

Be Prepared: Like a Debt Boy Scout

Despite the harsh lessons that were taught to us by the Great Recession, it seems that we haven’t quite gotten the message about the dangers of overleveraging – spending beyond one’s means.  U.S. consumers began 2011 by paying down nearly $33 billion in credit card debt during the first quarter of the year, according to a Card Hub credit card debt study, yet completely erased this pay down by the end of the third quarter.  While the final numbers are not yet in, we are expected to have ended the year with a net debt gain of roughly $64 billion.  Not only does this indicate a need for a priority shift when it comes to spending, but it also gives reason to wonder how one should handle serious credit card debt if overburdened by it.

Whether you are currently indebted or not, you should be aware of the possible ramifications of serious debt – expensive interest, credit score damage, and most importantly, the potential for a lawsuit – in order to either manage your debt strategically or give yourself a valuable incentive to avoid letting things spiral out of control.

The first thing you must understand is debt’s statute of limitations, as everything – from your strategy to the steps creditors can take – revolves around it.  Each state has a statute of limitations for written contracts, which dictates the length of time during which creditors can sue you for outstanding payments.  These statues last 3 -15 years, depending on the state, but here’s where things get tricky:  The clock only begins to run at the time of your last payment, which means it resets every time you pay.

Now, I don’t mention this to promote a sort of payment boycott, but rather to encourage reaching a payment plan with your creditor that will remove the threat of lawsuit and therefore make paying a less risky proposition.

Debt Management

One of the most common and effective amended payment agreements you can reach with your creditor is called debt management.  It entails the creditor waiving some fees and interest in order to lower your monthly payments to a manageable level.  Creditors do this because having some money coming in on a regular basis is usually preferable to chasing customers around and getting litigious.

The plan you arrive at must obviously be mutually beneficial; your creditor’s not going to reduce your principal, and you shouldn’t agree to anything you cannot afford.  That’s why you need to be patient, polite and willing to get creative in order to reach an agreement.  Oh, and don’t break a debt management plan because not only will you be back to square one, but you will have also reset the statute of limitations.

Debt Settlement

If you’ve got a rainy day fund or can scrape together some cash from friends and family, now’s the time to do so.  Sometimes, if you are able to pay 30% – 60% of your principal in one swoop, your creditor will waive the rest.  This is obviously tough to manage for most people with significant debt, but it will get you out of debt immediately and change the status of your accounts from “not paid” to “partially paid,” which could marginally improve your damaged credit standing.

Unfortunately, these are only first steps because they do not always work.  Your situation might be too complicated or your debt too significant for your creditor to give you a break.  At this point, you may want to visit an attorney.  No, not because a lawsuit is necessarily imminent, but rather because the option of bankruptcy should not yet be taken off the table, especially since many bankruptcy attorneys offer free consultations.

The following are your basic options when it comes to bankruptcy:

Chapter 7: Involves liquidating your assets in order to pay off what you owe.  Chapter 7 bankruptcies remain on your credit report for 10 years from the date of filing.

Chapter 13: Involves the implementation of a payment plan based on expected future earnings.  Completed, or discharged, Chapter 13 bankruptcies remain on your credit report for 7 years from the date of filing, while non-discharged payment plans stay for 10 years.

Depending on what you hear from an attorney as well as where you live, waiting out the statute of limitations could be your last, best option.  After the statue expires, your debt becomes time-barred, which is a defense that will get a suit thrown out of court.  This is more likely to be an option for people living in the Carolinas, Maryland, Mississippi, New Hampshire, Alaska and D.C. because their statues of limitations are only three years long.

If you do decide to wait, make sure not to make any payments, sign anything promising to pay in the future, or even acknowledge in writing that you owe anything to begin with because in some states this can reset the statute of limitations clock.

Ultimately, I hope you never find yourself in serious credit card debt, but it’s always good to be prepared.

The Bad Credit Conundrum

Posted December 15th, 2011 in Credit Cards by Jeremy Waller

The following is a guest post from one of our readers

Bad credit can make it difficult for someone to qualify for new lines of credit or even, in some cases, land a much-needed job, which is a worrisome catch-22. How can you go about rebuilding your credit if there aren’t any lenders willing to take a chance on you?

The good news is that credit cards for bad credit do exist and they have helped many credit scores begin that slow ascent back to healthy levels.

How Do These Types of Credit Cards Help?

Commonly referred to as “bad-credit credit cards”, the types of cards for which consumers with poor credit can qualify do not have those tempting 0% introductory offers, nor do they come with incredibly low interest rates.

Bad-credit credit cards will generally have higher interest rates because they are used as a means of rebuilding credit. Borrowers with bad credit are considered riskier than those with great scores, so any type of loan will come with higher interest rates regardless of the financial product. The best thing to do is to shop for these credit cards online by using comparison tools to get the best interest rate and credit card terms for your situation.

Even if the interest rate is higher than you would like, you can easily avoid paying interest, which actually helps improve your score faster. The simplest way to do this is to only charge amounts to your card that you can afford to pay off at the end of every month before the interest has a chance to accumulate. Not only will you avoid interest, but your pristine repayments will be reported to the credit bureaus, bumping up your score.

Never charge more to your credit card than you can comfortably afford to pay in full each month. Maintaining this strict habit for as little as six months may allow you to qualify for mainstream lower-interest rate cards.

An alternative is a secured credit card, which requires a certain amount of money down as a security deposit in order to establish a borrowing limit. The borrowing limit is essentially the security deposit, so you never have to worry about spending more money than you have and your payment history will be reported to the three major credit bureaus. Secured cards come with additional fees that will end up costing more than the security deposit, as well as interest rates, so compare products before making a final decision.

Anyone with poor credit can benefit from these types of cards. Bad-credit credit cards can boost your credit score more quickly than personal loans or other types of financial products. As long as you use the credit card regularly and pay off the balance on time, you can overcome the bad credit conundrum.

How To Reap The Full Benefits of Debt Advice

Posted December 7th, 2011 in Debt by Jeremy Waller

Sample Average Monthly Budget For a Single Person Or College Student

This following is a guest post from one of our readers.

It goes without saying that we could all use a bit of help with our debt. It also goes without saying, that if you’re looking for quality, it comes at a price. There’s a world of difference between merely browsing the web for some trivial information and getting truly professional debt advice. In fact, it could make that decisive difference between eventually having to file for bankruptcy and being able to get back into the black again. Continue Reading »

Should I Contribute to a 401(k) or Pay Off Debt?

Posted October 6th, 2011 in Debt, Investing by Jeremy Waller

Ah, the two biggest issues in the works of personal finance – saving for retirement and paying off debt. Both are incredibly important goals. Both usually take a significant amount of time and money. But which one is more important. Should 401(k) contributions take precedence over paying off debt?

First, it’s important to think about why you contribute to a 401(k) in the first place.  Continue Reading »

Find The Fastest Way To Pay Off Your Mortgage With This Calculator

Posted September 13th, 2011 in Debt, Real Estate by Jeremy Waller

A lot of people would love to know how to pay off their mortgage faster. The problem is, they don’t know where to start. I tried to show the effect of making extra payments in my post how how to pay off your mortgage in 5 to 7 years.

I know the problem with that is that it can be intimidating to hear that you need to come up with $1,000 extra per month. This would be extremely difficult for most people.

Then there’s the question of what kind of an impact it would have if you make one big extra payment – maybe applying a bonus you were given. Continue Reading »

Is it Better To Pay Off Your Mortgage Early Or Invest?

Posted September 11th, 2011 in Debt, Investing, Real Estate by Jeremy Waller

Should you pay off your mortgage or invest?

Not long ago I talked about how to pay off your mortgage early. For many people that is exactly what they would like to do. Pay off their mortgage and be debt free. The idea of not having a mortgage payment each month may excite you. But is it really better to pay off your mortgage early or invest?

A lot of people I’ve talked to don’t care if investing is better or not. The emotional benefit of being totally debt free is more important than anything. If you’re in that boat, then that’s fine. Being totally debt free is a great goal to have.

But I hope you’ll stick with me and see if it is better to pay off your mortgage early or invest the extra money in something else. Continue Reading »

How to Get Out of Debt Fast On Your Own

Posted August 27th, 2011 in Debt by Jeremy Waller

get out of debt

If you were to ask 1,000 adults what one of their biggest financial goals were I bet 95% would list getting out of debt in their top 3. In America we are loaded with debt because of our materialistic mindset. I constantly have to keep my “shiny-object” syndrome in check.

Don’t get me wrong. There’s nothing wrong with spending money. The problem is when we spend more than what we have. Flash back 3 years ago and I was in this pit. I lost a 2nd income that I had for a couple of years. I was accustomed to a certain level of spending that was fine when I had the extra income. But, I didn’t adjust my spending when I lost it leading to $10,000+ in credit card debt.

Getting out of debt is rough. I’m not going to sugar coat it. It’s an uphill battle. It’s more than just changing some numbers on paper. It takes a whole shift in your mindset. You can get out of debt fast on your own. Continue Reading »