Get Out of Credit Card Debt - A Prime Strategy For Paying Off Credit Card Debt

One powerful, yet simple, human characteristic that everyone has regardless of age, gender, religion or ethnic background can catapult you to financial freedom. Can you identify this critical trait?
Irrespective of any one's circumstances or where they're residing currently, following a few primary financial precepts can eventually lead to a lifestyle that most people only dream about.Let me illustrate a point by using the following example.Imagine climbing a ladder. The first step begins on the bottom rung. Each progressive step takes you up the ladder one rung at a time. It's an uncomplicated action that can take you to the top.Eliminating credit card debt can be compared to this illustration. As long as someone has a desire and a dedication to a mind-set change toward money, the step-by-step process out of credit card debt can be fairly easy. However, it does take consistent effort.Unfortunately most people have no idea where to start. They don't understand their current financial status or their needs, wishes, and goals. Without this information it's tough to prepare a road map to get out of credit card debt.The first step toward creating any solid financial plan is to acknowledge a mighty, yet simple, human trait that everyone possesses regardless of age, gender, religion or cultural background. This characteristic is the foundation of financial success. Realizing how it works allows an individual to take that initial step onto the ladder of financial success.Can you identify this crucial trait?The following message contains precious nuggets of wisdom:-I'm your permanent companion.-I can be your greatest assistant or your heaviest burden.-I will drive you ahead or force you down to failure.-I'm completely at your disposal.-Half the things you do, you might just as well give to me.-I will do them quickly and effortlessly.-I'm easily managed.-You must simply be firm with me.-Show me how you want something accomplished.-After a few practice lessons I will do it automatically.-I'm a servant to all great individuals and to all unsuccessful people as well.-Those who become successful, I made successful.-Those who become failures I made failures.-I'm not a machine although I work with the precision of one.-I work with the intelligence of a human.-You can work me for profit or work me for ruin.-It really makes no difference to me.-By taking me, training me and being strong with me.-I will put the world at your doorstep.-By taking me, training me and being loose with me.-I will take you to the depths of destruction!What am I? I am named Habit.The heart of the message is quite clear. The cornerstone for financial success begins with habits. Poor habits toward money and spending will drag a somebody down and keep them there indefinitely. Conversely, good money habits will allow someone to slowly build wealth that can eventually lead to financial independence.

How To Drive Your Vehicle Debt Free

One major reason why people remain chained to debt and never build wealth is due to car or other vehicle payments. Aside from a home mortgage payment, debt obligations for vehicles rank as a top "income eater" for most American consumers.

Here is a common scenario involving a leased vehicle. Let's say, for example, you lease a $30,000 auto for six years. Allowing for taxes and insurance, your monthly payment will be about $400. At the end of the lease period $28,800 in vehicle "rent" has been paid. Odds are that another vehicle will be leased for a new six-year term with an equal or greater amount of hard-earned dollars going down the drain. A typical statement frequently heard is, "I'll always have a car payment." These words don't have to be self-fulfilling.

The average millionaire reaches this financial pinnacle because the majority of them avoid being chained to a monthly car payment. Wouldn't you prefer having $400 eventually going into your personal savings or investment account instead of lining the pockets of a leasing company?

Here is an example of a strategy that can eliminate car payments forever:

Step One-At the end of your current lease term, purchase a quality used vehicle for $6,000. Finance it over four years. Assuming an interest rate of 6.5%, the monthly payment will be $151. Let's round the amount to $170 to account for taxes and insurance.

Step Two-Subtract the new monthly payment of $170 from the previous monthly lease payment of $400. Put the difference of $230 into a savings or money market account. At the end of four years, assuming an interest rate of 5%, your total savings will be $12,200.

Step Three-After the initial four-year period, sell your paid-for vehicle and purchase a later-model used vehicle for $10,000 cash from your savings account, leaving a balance of $2,200. Continue to save $400 per month for another four years. The entire amount now goes into your savings account. At 5% interest, the balance will grow to $23,900 before taxes.

Step Four-Repeat this strategy of upgrading to newer vehicles and paying cash every four years. You'll eventually be able to buy a car of your dreams and still accumulate a substantial savings nest egg.

Making the transition from vehicle leasing to vehicle ownership involves some discipline and persistence. Is it worth the effort? Absolutely.

Driving debt free vehicles is much easier on the pocketbook and you'll certainly enjoy great peace of mind.

Add to Onlywire

Debt Collection

Here is an article for debt-ridden consumers regarding the inside story of debt collection practices.

Six months after Rob Hruskoci closed his business, a debt collector called and demanded payment that day for the $5000 balance on his business credit card.

Read full story...

Will You Succumb To Debt? Take The Debt Test

Financial disaster caused by excessive credit card and other debt can creep into daily living with treacherous and cumulative effects. There are leading indicators that can help determine whether or not you will succumb to debt. Take the Debt Test to find your level of debt contamination.

Answer the following 25 debt-related questions. Total your YES points. Then, find your Debt Range at the bottom to determine the likelihood of succumbing to debt.

- A collection agency has contacted me about unpaid bills (10 points)
- I have one or more leased vehicles (5 points)
- I am making some minimum monthly payments on credit card debt (5 points)
- I charge purchases to credit cards that were previously paid for in cash (5 points)
- I have elected to not carry health insurance (10 points)
- I have elected to not carry vehicle insurance (10 points)
- I have elected to not carry homeowners or renters insurance (10 points)
- I worry or lose sleep over my financial situation (5 points)
- My wages are being garnished or assigned (10 points)
- I skip credit card payments in order to pay for food, shelter or utilities (10 points)
- I am behind in paying for housing, vehicle or utilities (10 points)
- I am occasionally late in paying bills or sometimes incur late fees (5 points)
- Family relationships are strained as a result of money problems (5 points)
- I borrow or transfer money in order to pay bills (5 points)
- 40% or more of take-home pay goes to pay off debt (10 points)
- I do not have at least 3 months living expenses held in savings (10 points)
- I have given thought to filing for bankruptcy (10 points)
- I have thought about starting a debt consolidation plan (5 points)
- I use or have used "cash advance" or "payday loan" services (5 points)
- I use a home equity line of credit to pay credit card debt or other bills (5 points)
- My debts are increasing while my income is the same or decreasing (5 points)
- I am in the process of or near foreclosure or property repossession (10 points)
- A money-spending plan or budget is something I do not use (5 points)
- My credit cards are at or near the spending limits (10 points)
- I don't balance my checkbook each month (5 points)

Total your YES" POINTS to determine your Point Range indicated below.

POINT RANGE:
- 0-15 Congratulations! You appear to be doing a good job of controlling your debt and managing your finances. Being debt free can eventually lead to personal financial freedom.

- 20-35 You may be headed down the proper financial path but a review by a qualified financial planner might be a good idea.

- 40-65 Your financial condition may be a concern. A financial assessment by a licensed financial planner is recommended.

- 70-95 Your financial condition could be serious. Debt counseling help is something you should seriously consider.

- 100-185 Your financial condition may be critical. Debt counseling help is essential.

Add to Onlywire

Churches Guide Followers Out of Debt

Counselors Draw Lessons from Scripture On Debt and How to Live Within Means







The following is a thought-provoking article written by Betty Lin-Fisher of the Beacon Journal that was published on Sunday, July 27, 2008:

As we continue to take a look at the subject of financial responsibility, are there lessons that can be learned from the religious community?

Many religions, including Judeo-Christian faiths, have deep roots in the idea of stewardship — that money is not owned by people, but given as a resource by God.

Because of that belief, many church leaders preach about stewardship and many churches offer classes and workshops teaching the principles. Many churches also offer free one-on-one financial counseling with trained volunteers.

The Bible teaches followers to be good stewards of their money and not to go into debt, said Michael Ammirati, a volunteer at Hudson Community Chapel who heads the one-on-one financial counseling services.

Pointing to a verse from Proverbs 22:7, ''The rich rule over the poor and the borrower is servant to the lender,'' Ammirati said that verse does not prohibit borrowing, but serves as a reminder that debt can place people in ''bondage.''

Many church-based financial counselors will help people distinguish between acceptable debt (for instance, to buy a house) and unacceptable debt (excessive debt on a credit card for discretionary items).

When money is worshipped instead of God, that's when it differs from biblical teachings.
''It's not that we shouldn't have nice things, but we shouldn't be putting those things before our relationship with [God],'' Ammirati said.

At The Chapel, Benevolence Director Colleen Koladzinski said her staff has seen an increase in people searching for biblical answers to their financial challenges, including ''how God designed us and what the purpose of money is for.''

''We've so lost sight of that. If you asked that question to even Christians, they probably wouldn't be able to tell you,'' Koladzinski said.

Read the full article...

Add to Onlywire

Debt Quicksand-Six Secrets To Dig Yourself Out

Today, many Americans find themselves in a financial crisis.

Personal bankruptcies are being declared in record numbers with one out of every 100 families experiencing this tragic legal process, according to a survey conducted by American Express.
Although the stigma has lessened, the effects can be long-lasting. Getting a job or an insurance policy can be very difficult if personal records are marred by bankruptcy.

Acquiring material possessions, taking trips to popular vacation destinations or dining out regularly at restaurants will eventually lead to faded memories. But the aftereffects of excessive credit card charges can linger for decades due to the power of compound interest. Paying three to four times the original purchase amount in fees and interest charges is a definite possibility. Making minimum payments on credit cards or other unsecured debt will eventually bury consumers in debt quicksand.

Here are six tips that can help to completely eliminate personal debt if individuals are willing to make some lifestyle changes:

-Itemize debts from the smallest balance to the largest regardless of the interest rates. List the minimum amounts due on each bill. Make the largest payment possible on the smallest debt and make minimum payments on all other consumer debt. Once Debt #1 is fully paid, apply the payment from Debt #1 to Debt #2 (plus its minimum payment). Work through each debt obligation using this strategy until all debt is fully paid. Some financial advisors would suggest reducing high interest rate balances first but the goal here is to gain pay-off victories and to keep momentum rather than being concerned with interest rates. Attempting to pay-off a large, high interest rate balance first could lead to frustration and diffuse any good intentions to eliminate debt.

-Cut up the credit cards. This will take some courage but it's necessary in order to get out of debt completely. If a plastic card is necessary, consider a debit card which acts like cash, not credit.

-Don't borrow by establishing a home equity line of credit. The inability to make these loan payments, could eventually lead to a home going into foreclosure.

-Create a money spending plan (commonly known as a budget) based on the "10-10-80" formula. The first 10% goes to charitable organizations or to a place of worship. The next 10% goes to personal savings. The final 80% is used to pay for basic living expenses. Keep in mind, that these are ideal percentages. Consider lower percentages to start if it's difficult to give or save 10%. The importance is in the order, giving, saving, and spending.

-PAY CASH for things. No cash means no purchase.

-Get debt counseling but be cautious of credit counseling agencies, debt management plans (DMP), debt settlement or debt consolidation companies. There are too many predatory "debt counseling" companies looking to make a fast buck at someone's expense. The best approach is to consult with a financial planner, preferably a CERTIFIED FINANCIAL PLANNER™ professional (CFP®). These individuals have a client's welfare as their top priority. Their fee is a small price to pay if it means getting out of debt permanently.

Making the transition from a credit card debt lifestyle to cash-basis living takes time, effort and discipline but the rewards make it worthwhile.

Digging out of a debt hole requires a change in mindset. If financially distressed individuals are willing to commit to change, the road can eventually lead to financial freedom and peace of mind.

Add to Onlywire

Insider Truths Of The Wealthy

There is a good article that contains an important belief that is common among individuals who have accumulated significant wealth.

It took me years to realize the full impact of this uncomplicated statement:

"Those who do not promote, market, and sell the value they personally possess, combined with their useful product or service will always be under the control of those who do."

Most wealthy people meet this criteria. Additionally, they typically maintain a debt free lifestyle with the ability to generate significant income despite the influences of other people, the economy, the stock market, and other external factors.

Conversely, individuals who are not self-employed possess value to an employer but they don't meet all of the criteria indicated above.

An employer, not an individual worker, determines:

• Salary
• Raises
• Eligibility for promotion
• Job responsibilities
• Work location
• Hours
• Benefits
• Other employment factors

To read the full article that also includes two common myths about personal wealth and financial freedom, click here.

Add to Onlywire