Archive for January 18th, 2008
Debt reduction starts with knowing your expenses
Let’s evaluate those expenses. There are two types of expenses - Fixed and Variable. We can dramatically alter the monthly expense bill and reduce your debt by determining which expenses to cut back on
Fixed Expenses- these are the bills that you pay that arrive every monthly or quarterly. You pay for essential services like electricity, and telephone. You may opt out of these expenses if your debt is serious but it is not recommended. You’ll need the telephone to do research and assist you lower your debt. You’ll need electricity as a basic requirement of living.
These bills are going to keep coming. The secret is to minimize them. Write your own check list to see how you can minimize each of your fixed expenses.
Electricity-Can I make sure lights are turned off when not needed? Can I change the bulbs to lower cost usage types? Do I need the refrigerator running on high? Is the TV on needlessly? Do I have to boil the kettle ten times a day? Cover pots with lids to prevent up to two-thirds of potential heat loss. If available, use the no-heat fan or air dry setting in your dishwasher.
Don’t bother pre-rinsing dishes that contain only a normal amount of residue. Pre-rinsing uses up additional hot water. Dry two or more loads in a row, so that the second one benefits from the heat already in the machine. Don’t over-dry clothes. Use the machine’s moisture sensor if it has one. Try using the cool-down cycle, which uses heat already in the machine to finish drying. Set a goal to save 10% of your energy. This is not only good for the environment but means 10% reduction in utility payment.
Telephone- Do I really need to make a call? Are there any special plans my service provider can give me? Is it cheaper to use the telephone after hours? Can I make the call from work? Should I pre-pay my phone service?
Food- Are there any specials being advertised? Can I buy in bulk? Should I consider a food voucher from a welfare agency? (Only temporary)
The next type of expense you should be aware of is the variable expense. These expenses can be avoided.
Variable Expenses- These expenses are associated with everyday choices we make in purchases. They are usually not essential items, but are part of our current life style. Again make a list of these expenses and ask yourself these questions
Do I really need this item? (Newspapers, Video’s/DVD’s,)
Is there a cheaper item available somewhere else? (Coffee)
Can I go without until my debt problem is over? (Alcohol)
These measures are only temporary. Unless you commit to undertaking some changes in your expenses on a temporary basis, you will have your debt for a much longer time period than you need to.
Cut down on convenience. Change your own oil. Wash your own car. Bar-B-Que instead of hamburgers out for little league. Shampoo your own carpet. Look at all areas of your life. If you want to save, start here.
Share a newspaper or get Sunday only. If you take a Sunday paper, do you need another Sunday paper? How many cable premium stations, movies, and “pay events” do you have? How many do you need?
Bring/bag your lunch instead of buying.
Go through your last 6 months bank statement and find out where and how much you spent. What can you change?
The average person spends 112% more on a credit card than they would if paying cash. Never go to a Mall (or anywhere else) with a credit card without knowing EXACTLY what you are after— use a list.
Compulsive buying items are gold mines for a retailer and are right at the checkout stand. Get in the habit of putting your hands in your pocket or at least off everything else when approaching the checkout.
Late fees cost money. Pay bills on time.
Do not carry cash in your pocket. Cash spends itself. If you have to go through the trouble of cashing a check or withdrawing from the bank, you might think twice about the purchase.
Happy Expense Reduction!
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January 18th, 2008
Credit card debt can sneak up on you. You miss a payment or make a couple of late payments, and before you know it, your minimum monthly payments add up to several hundred dollars a month and your creditors are threatening to sue you over credit card debt.
Credit card holders who are afraid they are going to get sued over their credit card debt have at least three alternatives available to them: they can declare bankruptcy, they can use a credit counseling service, or they can reduce their credit card debt by cutting back on expenses and applying the savings to their balances.
Is Bankruptcy For You?
If your credit card debt is overwhelming and your circumstances make it virtually impossible for you to repay the debt, bankruptcy may be an option for you. Consult with an attorney specializing in bankruptcy to find out if filing bankruptcy would reduce or eliminate you credit card debt. At a minimum, filing for bankruptcy may fend off a creditor who is threatening to sue you over credit card debt. Filing for bankruptcy may also buy you some additional time to pay off your credit card debt by allowing you to restructure all your debts and reestablishing the minimum amount you pay to each creditor.
Bankruptcy is a drastic step that can have a negative impact on your credit rating for many years to come. You should not consider declaring bankruptcy until you have consulted a bankruptcy attorney and carefully weighed all your other options. Explore all your options!
Is Credit Counseling For You?
If you are concerned that you may be sued over credit card debt, one alternative to bankruptcy is to consult a credit counseling service. A counseling service will assess your income and your debts and approach your creditors on your behalf to make alternative payment arrangements. You make one monthly payment to the credit counselor, and the credit counseling service pays your creditors for you, per the agreement they made for you.
Making payments through a counseling agency may mean that your credit report reflects late or delinquent payments; however, these ratings are not as detrimental to your credit and do not last as long as filing for bankruptcy.
Cutting Back On Expenses
Before you consult a bankruptcy attorney or a credit card counseling service, make an honest assessment of your monthly expenses and see what you can cut back on. If you are making a car payment, consider whether you could do without a car for a year or so. By applying you monthly car payment and auto insurance premiums to your credit card bills, you can substantially reduce your credit card debt in a relatively short period of time.
Communicate with your creditors. If they know you are serious about not getting sued over credit card debt, and that you are willing to sacrifice your personal convenience by giving up your car for a year to pay your credit cards off, they are more likely to work with you than to sue you over credit card debt.
For credit card information please visit Reduce Credit Card Debt
John Stevenson holds an MBA in Finance from the Simon School of Business.
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January 18th, 2008
As per the CardWeb.com, Americans owe $2 trillion in non-mortgage debt; this equals around $19,000 per household. The average American credit card debt is about $785 billion that equals to $7,500 per household. The numbers are growing at a record pace and people are exhausting their savings, selling off their investments to become debt free, but they are still running huge debts. In such a scenario, it seems extremely difficult to live debt free. Though difficult but living a life with no debts is not unattainable.
The route to become free from debt is long, but still with the debt reduction options like making steady payments, debt consolidation or debt settlement you will see a light at the end of the tunnel. Apart from the mentioned debt solutions, a change in life style and borrowing attitude will also assist you in attaining a debt free living.
Enrolling oneself with the debt negotiation or debt management firms is not the only way to become debt free. You can get rid off all your debts on your own with the help of the mentioned debt free steps.
Payoff the major debts first: Pay off the balance that has the highest annual percentage rate first. When that is paid off, start focusing on the debt that has the next-highest interest rate.
Stay away from creating new debts: When you in the midst of overwhelming debts, do not create a new debt.
Create a feasible spending plan and try to increase your income: Reduce your expenses with the help of a spending plan. It’s advisable to make a list of items you are planning to purchase so that you have the prior knowledge of the amount you will be planning to spend. This is important as impulsive shopping can make you fall deeper in debt. Developing a plan in accordance with your monthly income and expenses will help you in setting apart a good amount of money for paying off your debts.
Avoid using credit cards: try to make payments in cash and checks.
This article is written by Jason Holmes, a community writer of Debt consolidation care. Jason Holmes has been writing on debt settlement, debt consolidation, credit card debt, debt consolidation loans and various other financial aspects.
January 18th, 2008
