2 Steps to Get Rid of Debt

If уоu аrе оnе of the many people who have credit card debt, уоu want tо take action аnd уоu should take іt right nоw. 

Dеbt is something that accumulates in longer period of time due to irresponsible behaviour (binary options trading, gambling, overspending) and wіll never gо away оn іtѕ own.

Onе оf уоur best орtіоnѕ is to еnrоll уоurѕеlf in a рrоfеѕѕіоnаl dеbt rеlіеf program. Bу doing ѕо, уоu get еxреrt help аnd advice. 

Sometimes, a frеѕh set of еуеѕ іѕ a great when іt соmеѕ tо сrеаtіng a full-proof debt rеlіеf plan. 

Rеgаrdlеѕѕ of what tуре оf relief program уоu enroll уоurѕеlf іn, you'll ѕtіll nееd tо work оn getting уоur fіnаnсеѕ іn оrdеr. Keep rеаdіng оn fоr some hеlр tірѕ tо dо ѕо. 

1. Decide Hоw Muсh You Can Pау

Whеthеr уоu еnrоll уоurѕеlf іn a lеgіtіmаtе relief рrоgrаm оr nоt, you have thе goal оf paying оff your dеbt. 

Tо еnѕurе success, уоu want tо create a goal fоr уоurѕеlf. A ѕеttlеmеnt company wіll gіvе уоu an еxасt fіgurе еасh mоnth tо рау thеm, аѕ wіll a consolidation соmраnу. 

If уоu аrе doing dо-іt-уоurѕеlf dеbt relief, decide оn a figure yourself.

Before knоwіng hоw much mоnеу you саn put tоwаrdѕ paying off уоur debt, іt is important to knоw hоw much "еxtrа" оr "frее" mоnеу уоu hаvе each month. 

Sо here іѕ whаt уоu ѕhоuld do. Get ѕtаrtеd bу grаbbіng a реnсіl аnd ріесе оf рареr. Nеxt, write уоur іnсоmе аt the tор оf thе раgе. Thеn, write аll уоur mоnthlу аnd wееklу еxреnѕеѕ. 

Thеѕе іnсludе fооd, gas, rent оr mоrtgаgе, саr payments, саr loans, utіlіtу bіllѕ, аnd ѕо fоrth. Add uр аll thе mоnеу уоu spend аnd ѕubtrасt іt frоm hоw much уоu mаkе. Thіѕ is the mоnеу уоu ѕhоuld аррlу towards gеttіng оut оf dеbt. 

Personal finances are hard work, and don’t expect to get them in order in short time. This process should be seen as a long-term financial strategy. 

2. Determine Hоw Muсh You Cаn Sаvе

Bу implanting thе ѕtер аbоvе, уоu ѕhоuld hаvе a figure. Thіѕ figure іѕ thе аmоunt of mоnеу уоu hаvе lеft оvеr each mоnth; it is mоnеу that ѕhоuld go tоwаrdѕ your dеbt. 

Here іѕ thе thіng thоugh, lеtѕ say уоur budgеt only ѕhоwѕ that уоu have $150 a mоnth lеft over. If уоu оwе $300,000 іn debt that wіll take уоu уеаrѕ tо рау off. 

So now your gоаl becomes ѕаvіng mоnеу; freeing up ѕоmе mоrе.

Sаvіng money іѕ a lot easier thаn іt sounds. Yоu mіght bе an іmрulѕе ѕhорреr оr уоu might be use to buying a lоttеrу ticket and a candy bar еасh tіmе уоu fіll up уоur саr at thе gаѕ ѕtаtіоn. 

A good mеthоd іѕ to ѕtаrt out ѕmаll. Only buy your lunсh at work once a wееk іnѕtеаd оf thrее, аnd ѕо fоrth. If уоu аrе ѕреndіng cash, limit thе саѕh уоu carry аrоund wіth уоu. 

If уоu hаvе a credit саrd that уоu can uѕе, lеаvе it at hоmе in уоur frееzеr for еmеrgеnсіеѕ оnlу. Thеrе аrе juѕt a few suggestions, but I аm ѕurе уоu gеt the роіnt.

In ѕhоrt, there are twо іmроrtаnt раrtѕ to seeking permanent dеbt relief. Fіrѕt, уоu ѕhоuld соnѕіdеr ѕееkіng professional help. 

Then, you muѕt work оn gеttіng уоur fіnаnсеѕ in оrdеr. Sее, debt and реrѕоnаl finance go hand-in-hand; you can't fix оnе wіthоut fіxіng thе оthеr. Good luck!

Thеrе hаѕ really nеvеr bееn a mоrе аdvаntаgеоuѕ tіmе fоr consumers to trу аnd eliminate unѕесurеd dеbt. 

Crеdіtоrѕ аrе vеrу соnсеrnеd аbоut collecting аnd most hаvе gоvеrnmеnt mоnеу tо make еlіmіnаtіng ѕоmе оf уоur dеbt fіnаnсіаllу feasible.

Five Ways to Pay Down Your Debt Before Retirement

Image via WikipediaIf you’re close to retirement and still in debt, have hope. With smart financial planning, there is still time to get you on track.

Ashyia Hill from CreditDonkey, a credit card deals website, shares five tips on paying down your debt before retirement.

1. Start paying more than the minimum.

You should always pay more than the minimum amount required every month. The minimum amount due is usually between 2% and 5% of your balance, and paying that little will just keep interest charges building up against you.

Instead, pay as much as you can afford each month, aiming for at least double the minimum balance. This might mean canceling your cable and entertaining yourself with YouTube videos for a while or picking up microwavable meals instead of going out to eat, but it will be worth the relief you’ll feel when you’re finally debt-free.

2. If you have multiple credit cards, consider moving your debt over to a credit card with a low interest rate and 0% balance transfer fee.

OK, let’s say you have three credit cards and you owe $1,000 on each. One credit card has a 20% interest rate, the second has a 16% interest rate, and the third has a 14% interest rate. You could save money by transferring the $2,000 you have on the higher-interest credit cards to the lower-interest credit card.

That’s where 0% balance transfers come in handy. If you qualify for a card like this with a low interest rate, you can move your debt over and save money.

However, the fine print on some credit cards can make this tricky. Some cards charge hefty balance transfer fees that could make this method more trouble than it’s worth.

3. Leave $1,000 in your savings account and use the rest to pay your debts.

Chances are, your bank isn’t paying you the kind of interest for the use of your money that the folks you owe are charging you to use their money. So, although it’s scary, you might want to scrape out all but an emergency $1,000 from your savings account and use it to speed up the process of debt repayment.

But why $1,000? Well, this is the amount that Dave Ramsey, a successful financial author, radio host, and motivational speaker, recommends. Considering that Dave Ramsey built a real estate portfolio worth millions by the time he was 26, lost everything when his borrowing habits led him to file for bankruptcy after failing to pay $1.2 million of short-term notes, and then worked his way back to being debt-free, this author gets the feeling he knows what’s he talking about.

A thousand bucks should be enough to keep your head above water in most emergency situations until you figure out what to do.

4. Get a second job.

That’s right, I’m recommending that even people close to retirement consider a second job to get out of debt.

Honestly, the economy is bad for everyone right now and a lot of people are doing it. Part-time, freelance, seasonal, and temporary work is becoming more common and widely-accepted everywhere.

This is the method recommended by Jeffrey Kosola, a father who found himself owing $101,000 to creditors back in 2008 and realized this kind of debt was preventing him from supporting his family the way he wanted to. Getting a part-time job delivering pizzas started him on the journey to becoming debt-free.

Even if you can only manage a small second job, such as working one day per week at a mom and pop store, putting all of the money you earn at that job toward paying off your debt is sure to help.

5. Renegotiate with creditors.

If you don’t think you’ll be able to pay off your debts, reach out to your creditors. Let them know that if you can’t renegotiate your terms, you’ll have no choice but to file for bankruptcy.

Your creditors would rather get some money than no money at all, which is why they are often willing to bend on their terms. Ask for a lower interest rate as well as an easier repayment schedule.

This could really help you in your quest to get out of debt, and besides, it doesn’t hurt to ask.

Trying out these tips will mean changing your lifestyle, but making some sacrifices now could mean enjoying the debt-free retirement you’ve always dreamed of in the future. We wish you the best of luck.

The 6 Best Credit Card Payoff Calculators

Image via WikipediaYou made up your mind to finally pay off those credit cards for good. Only problem you don't have a clue where to start. Do you start with the card with the biggest balance, highest interest, or do you use the Debt Snowball as suggested by Dave Ramsey. It's pretty confusing. What you need is a credit card payoff calculator. Here is a list of my favorites:

WhatstheCost.com Debt Snowball Calculator
When you go to this website you'll notice it is not one of the slickest. But it is one of the best because of its simplicity. It's a U.K. site, but it will adjust for other currencies. You can enter up to 20 different credit cards, their balances, interest rate, promotional rate, expiration months, and your minimum payment. You can choose whether to pay off your debts in order of highest interest rate or lowest balance. After entering your data you can print out a table listing every payment you need to make. If you want to save your data, you can sign up for an account and it will keep track of your debt payoff progress.


Related:  Debt Snowball. What is it?

Bankrate's Credit Card Payoff Calculator
Bankrate.com has a simple credit card calculator that will tell you how many months it will take to pay off one credit card, depending on the data you enter. You can re-enter data to calculate a quicker payoff schedule. You can only enter one card.

Creditcards.com Credit Card Payoff Calculator
Creditcards.com has a calculator where you enter your current balance, interest rate, and monthly charges. Also enter how many months you would like to take to pay off the debt. After you enter your data the calculator tells you how much to pay per month. It even offers suggestions on a higher payment and how much interest you would be saving if you followed the advice. A graph is also offered to track your progress and a table shows your progress. It can only be used for one credit card at a time.

AARP.org Credit Card Payoff Calculator
AARP has a nice credit card payoff calculator. You enter your current balance, current payment, interest rate, fees, additional payment, and time period. After you click calculate you get a nice bar chart showing your new payment plan with 4 other payment plans with longer and shorter durations. You get a month by month table you can print out to plot your progress. This calculator is only for one credit card.

Related: Debts True Effect On Your Self and Family

CreditCardFinder.com Credit Card Payoff Calculator
Here we have a multi card credit card payoff calculator. Enter your card name, balance, rate, and current minimum. Pick your strategy of highest interest first, lowest balance first, order entered in table, and extra monthly payment. After you click on the calculate button you get a chart indicating all the payments and balances remaining. A graph is included to show your progress. Plus you can print the charts or download the chart into your own spreadsheet.


CreditCardCompare.com.au Minimum Repayment Calculator 
CreditCardCompare have a calculator that allows you to work out how long it would take and how much money it would cost to continue making only the minimum monthly repayment on your credit card compared it what you would save by paying more back each month. An animated graph plots the results so that the difference can be easily visualised.

These 6 credit card calculators will help you get started on your debt snowball. My favorite has always been WhatstheCost.com Debt Snowball Calculator. But whatever calculator you choose the good news is you have made up your mind to get out of debt.

Book Review: Dave Ramsey's The Total Money Makeover

Cover via Amazon

Financial Guru Dave Ramsey has made financial fitness cool. Between his radio program, web site and Money Makeover Live Events he 's making new in roads to the main stream culture. I was first exposed to him on his web site when I was looking for some debt help. I believed he was some cult leader trying to sell a book. But under further scrutiny I've been sucked into drinking the Ramsey kool-aid big time. His latest book titled "Dave Ramsey's Total Money Makeover", now updated for 2010, is on bookshelves now.

His book describes a plan for becoming financially fit. Whether your a beginner or on track, this book can help you. Early in the book he describes his financial life. Starting poor and becoming a millionaire in real estate. Losing it all and declaring bankruptcy. He started a  journey to learn the right way to become wealthy. He talked to many people especially millionaire's learning how they made it and how they kept it. He has a heart for people who have lost everything like he did. Even the day they repossessed his child's furniture. His car was also repossessed and electric shut off. He eventually paid of his debts and began to build wealth. Also a career teaching others how to do it right. His book explains this plan with something called the " 7 Baby Steps".

The 7 Baby Steps are:

1. Save up a $1000 baby emergency fund for a rainy day. Cut up all your credit cards and set up a budget. Also never use credit again.
2. Begin the "Debt Snowball Plan" by paying only the minimums on your debts. Writing down your debts smallest to largest. Paying the smallest with all the extra money you can. After that one is done rolling that money and more into the second one. Thus making the snowball bigger. With that ones done, roll that one into the third. By then your making huge payments and accelerating your debt payoff plan.
3. Finish your Emergency Fund by making it 3 to 6 months of expenses in savings.
4. Invest 15% of your income in retirement accounts.
5. Setup college funding for children with Educational Savings account invested in good Mutual Funds.
6. Now work hard to pay off your home with large principle payments till is paid off.
7. Build Wealth and Give.

As he describes his plan, snippets of real peoples testamonials are interspersed throughout the book. Included in the back of the book are budget, debt and planning forms for the reader to use. Dave Ramsey says its how he got to where he is today and it can work for you.  The book is written on a 6th grade level so its easy to understand by anyone. This book takes you by the hand and leads you down the road to success.

From my point of view,I am someone closer to retirement than just starting, I could see it working. Lots of books on personal finance look good on paper, but don't translate well to real life. In writing a book its hard to explain a plan that could apply to everyones situation. This one is so simple it could just work. I reccomend this book its a good read. I have enjoyed the testimonials I can see how they could be inspiring. What didn't I like about this book is baby step 2. Saving 3 to 6 months expenses in savings could be a waste. You could be using it to pay off your house or invest. He also says you should be getting an average of 12 % on your investments. Its doubtful anyone could average that. I wish he would reveal these great Mutual Funds that produce 12%. Always when reading books you take from it the best information. You apply it where appropriate.

There is something about Dave Ramsey's plan that is different from all the other plans. It's the way people talk about it. People will say "I'm on the Dave Ramsey plan." and  "Dave Ramsey got me out of debt". Do you ever hear anyone saying that about Suze Orman.

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Debt Snowball. What is it?

Image via Wikipedia

Image via Wikipedia

This term "Debt Snowball" what does it mean, does it refer to when Frosty the Snowman went over his credit limit? I don't think so. Its a term made famous by financial guru Dave Ramsey. The way it works is first be current in all your debts. List all your debts from smallest to largest ignoring interest rate. Pay the minimums on all your debts except the smallest one. The smallest one pay the minimum and as much other money you can scrape up to pay it off as fast as possible. After the first debt is paid off take that amount and add it to the second debts minimum. Hence increasing the payment on the second debt. When that one is paid off, take all that money add it to the the third minimum debt payment. Keep doing this till you go thru all your debts. This plan allows you to focus an ever increasing amount of money on your smallest debt. Every time the debts are paid off the snowball payment keeps getting bigger ultimately getting you out of debt sooner.

The key to this plan is the focusing on the smallest debt for an emotional win. Even though other debts may be a higher interest rate. You may be thinking paying off the highest interest debt first would be mathematically correct. The emotional win is more valuable to the individual. To have a couple of wins under your belt is a ego boosting feeling. This gives you the encouragement to keep going. In my personal experience it the only thing that kept me going and still does. The tedium of going thru this process is exasperating. It takes a long time and is a lot of work. You could lose patience and chuck it all if you didn't have some early wins. It like when you go on a diet and exercise. If you don't see results you most likely give up.

The argument of paying higher interest debt first is mathematically correct. It seems the right way to go. But responsibility with money is more psychological than math related. If you did the math on using credit, you wouldn't us it. It goes along with impulsed purchasing. Did you ever want to purchase an item. Maybe something you were exposed to when you were walking down the isle of a store. You just grabbed an item and put it in your shopping cart. Your whole thought process consisted of: See item, like item, I have credit card, Buy it. Totally a Pavlov's dog reaction. Not more than 2 second thought process and programed response. Now if you had left that credit card at home and only had cash the entire event would of happened differently. Thought process would go something like this. See item, like item, I only have cash, Do I want to use my little bit of cash on this piece of junk. Answer, "No". Its not automatic, it actually takes longer to decide to purchase because using cash actually hurts. Using credit is fun and painless and can be rationalized easily. You actually buy more stuff when you use credit. 

Here is an example of the debt snowball in action:

My Debts listed smallest to largest:

1. Home Depot - Balance 1214.00 - minimum 22.00 - Interest 15%
2. Chase 1 - Balance 2858.00 - minimum 36.00 - Interest 2.9%
3. Chase 2 - Balance 7076.00 - minimum 170.00 - Interest 16%

Here is the plan for paying off $11,148.00 of debt in 19 months. Its the plan I am going to follow. Of course if  I have any other extra money I will add it to the snowball. Again it will take discipline and focus to complete this. You must establish goals and make a written plan on how to complete them . The Debt Snowball is the best plan for getting out of debt. Some people have gone the way of "Debt Consolidation". Thats when you refinance all your bills into one amount and have one small affordable payment. This is not a plan for success. Its a lazy way of just moving your debt around and believing your actually doing something. Its a false economy to think that. Another way people pay back debt incorrectly is go to a credit consolidation company that takes charge of all your debt and renegotiates your balances and interest rates down. You end up paying them a large fee and wrecking your credit. Take charge of your debt, do this your self.

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Can You Start At 50+? Part 2

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Such great plans and goals have been made. Do you think I can really pull it off? A lot of debt has to be paid off. Lets see whats before me.

• Credit Card 1- Finished by October 1,2010
• Credit Card 2- Finished by October 1,2011
• Credit Card 3- Finished by October 1,2014 (realistically)

It doesn't look good for the old retirement account. This is a real problem. Starting in 4 years worries me. When seeing it in black and white it speaks volumes. But what choice do I have? I have a plan and I'm sticking to it. But maybe I should just pay the minimums on the cards and put the extra debt payments in my Roth IRA. I'm doing the debt snowball process for paying off debt. I'm putting all money towards the smallest debt and only the minimums to the others. When that's payed off then throwing all moneys toward the next one and so on. To reduce this time frame an increase in income is needed or a decrease in expenses. I'll be trying on both those fronts. So to answer my own question. Yes. But I wish I would of done this 30 years ago. It going to be a real pain in the ass.