We may no longer have debtors’ prisons or workhouses and we are unlikely to get flogged if we miss a credit card payment, but the guilt and shame that we sometimes feel as a result of owing too much to too many people often feels like an even worse form of punishment.
It may not be practicable or possible to be completely debt-free in today’s society but we can work on reducing our debt and limit the damage and the guilt that severe debt problems can cause. Most of that is just common sense like living within your income but because it is simple doesn’t necessarily mean that it is easy.
We have been accustomed to instant gratification. If we see something that we like we want to have it now. We don’t want to wait until payday or save our money to buy it. We want it now. Our children learn that in their teen years or before, our teenagers believe that it is their right, and young people want to buy a house now and not wait five years for a good down payment.
It might be difficult to try and adopt a more austere way of living after having all of these life experiences and if we tried our families would probably disown us. But we can take steps to reduce our debt, some which will take effect immediately and others in the long run.
These steps include reducing our overall debt starting a little small and then working up to some bigger objectives. This might mean reducing the number of credit cards in our wallet, or actually waiting until payday to buy the new dishwasher we have been coveting. It might mean developing a budget and trying to live within it. All of these actions will slowly but surely reduce our debt.
If we want to act more quickly then one good move to consider is using a debt consolidation service. This will eliminate all of the smaller loans and credit cards that we can’t keep up with. Our monthly payments will be lower overall and we will feel a little better about our financial situation. Debt consolidation services are usually available with lower interest rates and if you have some type of income you can usually qualify.
Whether you move fast or slow in reducing your debt it will help. All you have to do is start the process and the results will take care of themselves. |
posted Oct 22, 2009 3:30 PM by esupport@budgetplanners.net
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updated Oct 22, 2009 3:31 PM
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Starting in the next year, Bank of America will charge a number of customers an annual fee, ranging from $29 to $99. Bank of America has characterized this fee as experimental. But those credit card holders who have never carried a balance or paid late fees could be among those affected.
Citigroup meanwhile has started charging the annual fees to credit card holders who don't put more than a specific amount on their credit cards, typically $2,400 a year. Other banks now are charging an inactivity fee if customers don't use their credit cards during a specific period of time. That's right, you could start to get penilized for staying out of credit card debt!
These annual fees are the credit card industry's response to credit card legislation that will, among other things, restrict the credit card companies ability to raise your interest rates on existing balances. Credit card issuers are looking for new ways to raise their income before the new rules take effect in February. During the first quarter, 27% of credit card offers included annual fees, up from 18% a year earlier.
One of the deciding factors used to calculate your credit score is what is known as the credit utilization ratio which is based on the amount of credit you have outstanding as a percentage of your total available credit. When you close one of your credit card accounts, the amount of your total available credit is smaller, which may lead to a higher utilization rate. This ratio accounts for 30% of your credit score.
If you are not carrying a balance on your other credit card accounts and the card is relatively new, closing your account is worth considering. Even now there are good deals out there particularly for credit card holders with good credit, For example the Fidelity Rewards American Express credit card pays 2% of cash back to a Fidelity account, with no limits on cash rewards and no annual fee.
If you do not care about rewards and just want a credit card that doesn't charge an annual fee consider applying for a credit card through a credit union. Many credit union credit cards charge no annual fee and offer below-average interest rates. Associations like the USAA provides products and services for military personnel and their families and also offer good deals on credit cards, according to Consumer Reports. |
posted Oct 22, 2009 3:29 PM by esupport@budgetplanners.net
A few interesting money facts can help illustrate the ways that debt consolidation can help you:
Debt Fact: In the ancient world, debt could literally enslave you - creditors owned those people who owed them money and unpaid labor was often used to help pay off a debt.
Thankfully, times have changed. Now, you can no longer be forced to work for someone to repay a debt. However, if you owe a lot of money on your debts, you may in fact sometimes feel as though you are working for nothing. If most of your paycheck is being swallowed up by your debt bills, if you have little money left over after the bills are paid, then your money is not really going to you - it is going to your creditors. Debt consolidation can help you recoup your hard-earned money. By combining your debts and by allowing you to pay one low monthly payment on your debts, you can enjoy your paycheck again. With debt consolidation, you do not have to feel beholden to your creditors. Instead, you can start taking steps to dig yourself out of debt.
Debt fact: the average customer sees more than 3,000 ads and marketing messages each day.
It seems like an incredible number, but it is not so incredible when you consider that many marketing messages today are designed to be subtle and “hidden.” The fact is, though, that all these messages encouraging customers to buy more do have an impact on debt. Simply, more North Americans get into debt to buy the advertised items that they crave. This can lead to a dangerous financial situation. There is nothing wrong with loving to shop, but if your shopping habits have gotten you into debt that you cannot easily repay, then you may wish to consider debt consolidation. Debt consolidation can make your debts more affordable so that you can get out of debt. Plus, a good debt consolidation company can provide you with a counselor who can go over your financial habits with you and can give you solid advice about making better financial decisions.
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posted Oct 22, 2009 3:28 PM by esupport@budgetplanners.net
Some lenders are starting to tighten up on credit applications for lower income earners, including credit card applications which is a reversing of the democratization of credit that began in the 1970s, the Wall Street Journal reports.
This financial crisis is forcing some lenders to become increasingly cautious with the more risky borrowers. Banks sometimes view low income earners earners as credit risks because their increased level of debt can get relatively high compared to their income and assets. In June 2009, banks were closing credit card accounts by an increasing rate of 14 to 15 percent annually, with the concentration mostly on credit card accounts held by low earners.
This reverses a trend toward increasing levels of credit for low income earners that began back in the 1970s. Between 1989 and 2007, the number of US households within the bottom 40 percent of incomes that held a monthly credit card balance increased from 21 percent to 35 percent. The balances on these credit cards increased some 180 percent, adjusted for inflation, for the bottom 20 percent incomes and 80 percent for the next fifth, according to the Journal report.
According to the Federal Reserve, overall the consumer credit level fell by $12 billion to $2.463 trillion in August. Revolving debt which included credit card debts, decreased $9.9 billion to $899.4 billion. |
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