erase credit card debt

There has been a huge increase in recent years in the number of companies that offer credit card debt solutions. This should come as no surprise given the huge increase in the number of people with credit card debt problems. A lot of people with debt problems really don’t know how to solve them and so they turn to these companies. This can be a good idea for some people, but for most it is usually just as effective and far cheaper to do it themselves.

How Debt Management Companies Help

The most common way that debt management agents help you with your credit problem is by negotiating with your creditors to reduce the amount of debt that you have. For doing this they will, of course, charge you a fee. This fee is usually a percentage of the amount that they reduced your debt by. If you have a lot of debt this can be quite expensive. It is entirely possible to negotiate with the credit card companies yourself and save some money.

What you save in money you will probably end up paying in time. It takes time to put together a proposal and negotiate a settlement with your creditors. This is why a lot of people hire a professional, they would rather pay the money then spend the time doing the work. If you really don’t have the time to work out a settlement then you probably should hire a debt management agent.

How to Reduce Your Credit Card Debt

The first thing that you will need to do is work out a plan before you approach your creditors. When you contact them you want to have a proposal already worked out that you can present to them. In order to come up with a proposal you will need to figure out how much you afford each month to pay down your debts. This is going to require you to come up with a realistic budget, one that you can stick to. Once you know this you can contact your creditors and present your proposal. They may accept it as it is or they may want to negotiate with you. Make sure that any agreement you come to is put down in writing and make sure that you keep a copy.

Research How to Reduce Your Credit Card Debt

A lot of people have figured out that they can make money by helping people deal with their credit card debt. In most cases they do provide a good service and can help you to reduce your debt. They will also charge you fair chunk of what they save you as a fee. If you do some research there really is no reason why you can’t do this yourself and save some money.

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Reduce credit card debt

When you are looking at a mounting pie of credit card bills with larger and larger amounts, you might start to think that it is impossible to eliminate the debts you have incurred. However, you will be surprised to know that it can be done with only a little bit of work. Nevertheless, you will have to be determined and do a good amount of planning to get rid of your credit card debt. Determination might be the most important trait that you can have. It is easy enough to be determined because there is so much to gain from getting rid of your credit card debt. You should consider how much easier your life will be if you are debt-free and living a comfortable life. When you realize all of the benefits, your resolve will be that much stronger.

Before anything else, you must plan on how best to eliminate your credit card debt. This is the most crucial part of the entire activity as you will have to be sure to develop a workable plan and stick with it. To have a clearer picture of what you must do, you should determine what exactly you are facing. Make a list of all the credit cards that you currently have and their corresponding APRs. When you add up all of the balances along with the APRs, you will see exactly how much credit card debt you have. Also, check to see if you have been paying any additional fees for being late with your payments and if you have defaulted on any of them.

The next thing that you will have to do is to take a look at your current financial status and then try to determine what your future is like. Take a look at all of the financial offers that you might have received to see if there is anything to be gained from transferring balances. This will help you in figuring out how much time it is going to take you to get out of debt. Also, look at how much you will be able to pay across all of your credit card debt and check to see how much you can probably pay at present. Of course, during this time, you should try and avoid late fees that will add to your credit card debt and make your financial problem more difficult to clean up.

As soon as you have all of these details, you are ready to make your personal financial plan to eliminate your debt. As long as you are organized, it would be easy to develop a plan that you can work on. Remember that you will have to be determined to stick with your plan to eliminate your credit card debt or you’ll just be putting all your efforts to waste.

Once you have succeeded in eliminating your credit card debt, be careful with your future expenses. Develop a new plan to stay debt-free and your future will be set.

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small print

One of the biggest mistakes that people make when they are taking out any sort of credit – loans, credit cards, anything, is that they don’t read the small print. People are often so happy to be getting the credit that they want that they will sign almost anything. For others it is simply not caring, trusting that they have a good deal. Others are blinded by the ’special offers’ that caused them to sign up in the first place.

But why is it such a big mistake?

The Small Print

In almost any deal that involves credit or debt you ALWAYS need to be considering the small print. We could talk generalities but it might be more illuminating to consider specifics for a second. Let us take a look at credit cards:

With credit cards you might think that you are getting a great interest rate… but that is often just a cover charge. Many credit cards offer a wonderful interest rate for the first 6 months, but after that you will revert to the ‘normal’ interest rate which is far less attractive and will, in fact, be likely to cost you money.

Many credit card companies try to hide their fees. Everyone will miss the occasional minimum monthly payment – even if for nothing less suspicious then forgetting to make the payment. Very few companies are prepared to admit just how much they will charge you for this kind of problem.

Monthly payments are something that is creeping into every day life for such things as credit cards. We’re not talking about minimum monthly payments for money that you owe, what we mean here is monthly payments for using their services. This information will usually be hidden in the small print.

What does any insurance you have on the card cover you for? Many companies will be happy to tell you that there is insurance on the card and any purchases made by it – but they are less forthcoming about what it actually covers.

Credit cards, as in this example. And debt in general, can have a lot of hidden extras. Always read the fine print before signing up – otherwise you are playing fast and loose with your finances.

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debt costs more than just money

Many people and companies just measure your problems of debt in terms of how much you owe.  Whilst that is the obvious, and worthwhile, measurement of levels of debt it does hide the true cost of debt.

Debt is more than just a figure, it is a massive part of people’s lives.  If they owe a lot of money, if they are in a lot of debt, that it can effect everything that they do.  It can play a massive part in their lives and cost them more than they think

The REAL Cost of Debt

• Sleep.  Most people who are deep in debt have trouble sleeping.  This is because they are spending all night worrying about their debts, how they are effecting their lives, how they are going to pay.  A good nights sleep is often beyond many people in debt.
• Stress.  Many people in debt stress about how much their owe and how they are going to afford repayments and the other bills at the same time.  This leads to high stress levels which can effect their personalities and their health.
• Personal relationships.  Relationships with friends and loved ones can deteriorate as the stress effects personalities and people feel frustrated and angry at their own debt levels and so lash out.
• Missed opportunities.  We can find that opportunities are very limited when we are in debt.  We lack the money to go out and have fun very often, if at all.  Any trips, or nights out, that others may be having aren’t really an option when you are snowed under with debt.
• Fiscal costs.  Fees for yet more missed payments are regular, interest builds up quickly.  Being in debt is not just an issue for right now but continues to cost you more and more money.
• Financial.  It is not just the amount of debt owed but how it fits into monthly bills.  You still need to be able to afford to eat, to have a home, debt makes this a very difficult proposition.
• Credit.  If you find you are defaulting on payments and loans you will find that your credit report gets impaired.  We rely on our credit report to get credit for everything from car finance to mortgages, so having a problem credit report can end up costing you problems in the long run.

Debt is more than just the money owed.  It effects every part of your life if you let it.  Which is why it is always vital that you take complete control of your debts, that you put a proper debt management system into place.

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money saving tips

This may sound odd but cash can actually save you money.  We live in a world of plastic, a world where almost all financial transactions are carried out by computers – and we tell the computers what to do by using little plastic cards

This is all very convenient – and these cards certainly have their place, as we’ll see later.  But they can also make things more expensive.  It turns out that spending cash can actually save you money.

Cash is Money Not Plastic

The thing about having actual money in your pockets rather than a plastic card is that it is real money.  We’re not talking about what the bank tells you etc, cold hard cash is money that is accepted almost anywhere.  You know where you stand with it.  Importantly you also know how much of it you have.

Too many people end up going over their overdraft limits and so paying fees because they forgot what money they have in the bank.  What money they have going in and out, what their money is doing.  Everything is automated for our convinced – but then so is billing us when we get it wrong.  If you use cash to pay for everything you can’t be caught out by such automation problems.

You are also far less likely to spend money you don’t have.  And remember that is what you are doing any time you use your overdraft or credit card, you are spending other people’s money on the promise that you will pay them back.  That can be dangerous.  It is all too easy to promise that you will pay back money that you later can’t afford.  With cash if you have it then you can spend it – but you can’t get in trouble with it.

By having cash in your pockets you also can limit your spending.  By only taking out as much cash with you as you need – and no means for getting more, you ensure that you can’t go over whatever budget you have set yourself.  It makes sticking to whatever financial plan you have set yourself far easier to manage.

Emergencies

Of course that is not to say the debt cards and credit cards don’t have their place – in fact they do.  If you are going somewhere you don’t know having access to your money from any cash-point can be useful if you get into any trouble… you know you can always get hold of money in an emergency.

As we said it is also convenient, never has this been more apparent than travelling abroad.  No more travellers checks or expensive exchanges – you can use the ATM’s from the country that you are visiting.

Such plastic also allows you to shop from a distance – catalogue, internet, over the phone or whatever.  You can spend the money how you want to.

But it is all that convenience that makes these plastic spending buddies so expensive in the first place.  Yes they are convenient, but you will save money by using cash.

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take control of debt

Do you know what the biggest mistake that people make with regards their finances is?  Is it that they forget to pay?  Or that they take on too much debt?  Perhaps it is that they don’t organise it to the best of their ability?

No, the biggest mistake that most people will make with regards their finances is that they bury their head in the sand when things start to go wrong.  They decide that if they ignore it they will go away, that things will get better if they pretend that bad things aren’t happening.

But the bad news is that it doesn’t work like that, finances don’t magically improve if you aren’t looking at them.  Acting like an ostrich does no one any good.  Not you, not the debt company and certainly not your family.

Get Your Head Out Of The Sand

So how does one go about improving things, avoiding this classic mistake – or rectifying it as soon as possible?  How does one get ones head out of the proverbial sand?  How how will that improve things?

To properly gain control of your finances the most important step that you can take is to know what your finances are.  You need to know what you have, and what you owe.  Your income, your expenditure, your essentials and your luxuries.  You are going to have to go through your books.

Where to start

The first thing that you need to do is understand just what your income is.  For most people this is easy.  They will either have a single income from their job, or a double income if part of a couple.  But all income needs to be considered, so if there are other streams of income than just a job pay them attention.

This could be other part time jobs, freelancing, shares, businesses owned – anything that puts money in your bank needs to be taken into consideration when doing your finances.

Next consider your essential expenditure.  Not debts right now – just mortgage/rent, food bills, heating bills, electricity bills etc.  Bills that there is no way, even with the cleverest accountant in the known universe, you would be able to get out of.

Now consider your debts.  Think of everything, car loan bills, credit card bills, other loans, etc.  Add them up and make a note.  Also think of less essential but still important bills such as phone bills, tv bills, computer etc.

Finally work out your nonessentials that you like to spend.  Nights out, drinking budgets, socialising etc.  Try work out a typical month if you can – going over old bank statements can be especially useful here.

What you now have is a general snapshot of what your finances are.  You know your income, you know your vital bills, your important bills, your useful bills and your fun outgoings.  This overview now allows you to look at what you need to do to change things.

It could be that you will realise how bad things are, how much you are spending.  It could be you will see you need to reduce bills or increase your finances.  But whatever it reveals you are better off knowing.  Burying your head in the sand won’t do anyone any good.

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