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Debt Management by Negotiation Credit Card Debt Management
Many times people will look at a credit card and see only the ease and convenience with which they can painlessly get the things that they want. When asked to list their debts, people will list their mortgage payments, their car payments, and other installment loans, and not list their credit cards.
The fact is that the balance on a credit card is the amount of the debt (NOT THE MINIMUM MONTHLY PAYMENT)...and that debt only increases each time an interest charge or a late charge is added. Paying only the minimum on a credit card balance will mean that it will be many years before that debt is paid off.
It is astounding, but a great many people have no idea what the interest rate that is charged by their credit card companies or whether that interest rate is simple or compound interest. (It's compound...and it is well above the national interest rate.)
Too many households in America carry far too much credit card debt. Seventy-five percent of households, in a recent study of American spending habits, are carrying a substantial amount of credit card debt. (Only 41% of American households have saving accounts.)
Now, don't misunderstand me...I am not knocking credit cards. I have a few of my own and I use them almost every month. Credit cards are practically as essential as an automobile in today's world, and if one does business or shops on the Internet, a credit card is indispensable. I also pay the balance before the credit card companies can charge a penny of interest.
Paying interest means that everything that you buy on a credit card cost you more than it would have cost if you had simply paid cash or written a check for it.
The best rule is to pay as you go. Use your credit cards, but pay balances before interest is added.
See Also:
Debt Consolidation Loan
| American Version of Debt Management Debt Management Experts
People who work as debt management experts go to school for that sort of thing. Many spend four years or more getting college degrees that identify them as experts in the money and debt management fields. And they are experts, there's no doubt about it.
The best of the debt management experts and debt management teachers, however, are those who have learned to manage their personal finances and their personal debts, and then passed that knowledge along to their children.
Those who actually do it are the experts, and they are the ones that we need to learn from to avoid having to visit with a well-educated debt management expert because we have gotten ourselves into financial hot water.
As I look around at expert debt managers (those who successfully manage their own finances) I find that they have many things in common. They don't all do things exactly the same way, of course, but the structure in which they manage their finances is basically the same.
1. They save first. Those people who know how to save very rarely get into financial trouble. Sure, they can. Life can throw some pretty hard curve balls....the loss of a job or a major illness. But unless their financial trouble is caused by an outside force they will not get themselves in debt up to their eyeballs.
2. They live within their means. They do not base their spending upon what their friends have. The neighbors might buy a new car, but that will have no bearing upon whether they do or not.
3. They all have budgets. Not only do they have budgets, but they live within the constraints of that budget. They do not make impulse buys. If asked, they could tell you how much is spent each month on food, shelter, clothing, utilities, and transportation. |
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Debt Consolidation Loans - Yes or No?
| The Virgin Consumer and Debt Management Debt Management Wiggle Room
Yes! If you are ever going to gain control over your finances, you are going to have to make a budget and learn to live within it. There aren't any other options for successful debt management.
You wouldn't start building anything without plans, would you? Even building a model airplane requires following a plan. Building a house always starts with drawing up the plans for the construction. There is an old saying that applies here: “Those who fail to plan, plan to fail.” Without a financial plan (a budget), you are certain to find yourself in debt up to your eyeballs and no visible way out.
Now, let's discuss the making of a budget. You cannot have every last penny of your net income allotted for providing for necessities and paying installment loans. That will not work. You must leave yourself some wiggle room. Stuff is going to happen. There WILL BE unexpected and unbudgeted expenses every single month. You can bet on it...you had BETTER bet on it.
There will be, without any doubt whatsoever, expenses that you will overlook when making your budget. They may seem like small items that aren't very important, but they have a way of multiplying.
For example: you suddenly realize that the inspection sticker on your car or truck is about to expire. There really isn't much of a choice about getting it renewed, is there? Will the vehicle pass inspection without two new tires? Are those in your budget?
It has been my experience that "miscellaneous" is usually the largest single expense in every workable budget that has ever been created. You need to allow room for unforeseen expenditures. When making your budget, be sure to leave yourself some wiggle room. Do not budget every single penny of your net income. |
Related Topics: Services for Debt Management,
Debt Management by Negotiation, Five Secrets of Debt Management
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