There is no question | that having some credit cards is a great way to pay for things that is more convenient and even safer than always paying cash. | And it really isn’t practical to pay with everything by check because so many purchases | would be slowed down by that method or retailers just don’t | accept them like they used to.
In many cases, having a credit | card is down right necessary. Any more buying gas involves using a credit card at the pump which saves time and effort. And because a credit card always delivers a report | to you at the end of the month in statement, it’s an easy | way to keep track of how you are spending your money.
The problem comes when you spend more on the credit card than you can repay. Unfortunately, credit card companies are not there to | keep you from living beyond your means. If you make | your payments on time and are a responsible credit card owner, they will keep increasing your credit limit so you can charge all you | | want. But when the debt level on those credit cards becomes a debt you carry from month to month, that is when credit card debt can get out of control.
You don’t need to be told that good financial management | is the key to keeping your credit card debt problem at bay. But sometimes the | bills stack up and circumstances beyond your control call on you to use | that extra credit and you end up with a credit card bill that is becoming uncontrollable. That is when you have to turn to alternate | methods to build a route out of debt and back to a firm financial footing.
One of the real culprits of getting out of debt to the credit cards you own are the high interest rates that are | often charged to service | that debt. If you have to pay 15%, 20% or more for a large credit card debt, the amount you pay in that actually brings | down the principle is so small that the time | when you can expect to be debt free is far into the future.
So the first step is to move that debt to a credit vehicle that is more manageable. There are a number of ways to do this | using resources you may already have at your disposal. Many turn to a second mortgage on their home. By working | with your mortgage company, they can advance you another | loan based on the amount of equity you have in your house and that interest rate can be capped at a reasonable level so you | can pay down that debt and not keep fighting that ever rising interest rate problem.
You can also look at your life insurance to see if you can draw a loan against that accumulated value. If you have been paying | on it for many years, a life insurance policy that carries value such as a whole life policy may have enough equity that | you can use that money to leverage your debt and retire | the credit card debt entirely. You may still have to face a regular payment to pay off the life insurance loan | but it is manageable and something you can budget against which | puts the control back in your hands.
A third option is to use a professional | debt consolidation company. This is yet another credit resource who will be making money from | the loan via interest. But this kind of agency is not a credit card | company so they will just loan you enough to retire your debt and then work with you to work down that debt while living within your | means otherwise.
Once you select the right route out of debt you | are going to use, it’s important you do not let that credit card debt climb up again. Learning good budget skills and working to keep your lifestyle within your means is | crucial to not only getting out of debt but staying that way. But with good money management, a responsible debt consolation plan | working for you and a mature approach to your | finances, you can see daylight on getting out of debt | once and for all.
Working With Your Credit Score
When you see advertisement after advertisement | on television of businesses who want you to find out your “free” credit score, that is a red flag that someone is looking to make some money off of you. The funny thing is they are not lying to you| but at the same time, you are exactly right that those companies | paying good money for television advertising are looking to make a buck off of you.
The truth is, you can actually find out what | your credit report says about you. What they are telling you | about that is true. Your credit report tells you your credit score which helps you understand how creditors see you which is| important if you go to get a new loan. But your credit report also shows a | detailed history of your past use of credit, currently open accounts and anyone | who has checked your credit score in the last year.
This is important information| for you because anyone can check your credit report anytime they want to. And if there are too many inquiries on| your credit report, that itself can drive down your score. So if you find| someone is checking your score too often, you can take action to put a stop to it.
But there are a couple things they are not telling you on those advertisements. One is that if you use their services, they will give you| the credit report for free but not the credit score. They are going to have their hand out for that little tidbit of information. But the truth that those companies will not| tell you is that you can get that score at least once a year absolutely free if you know how. In other words, those people hitting you up| on television to check your credit score are relying on the fact that (1) you | don’t know how to check it yourself and (2) you are willing to give them money| for something you can get for free if you know how.
The basic information you should| know about credit reports is that there are three agencies that maintain credit reporting and they are named| Equifax, Experian and Transunion. You can check on what each of these companies| has in their file at any given time. In addition to a lot of detail about your credit| history as we just discussed, your credit “health” will be represented in the form of a number of a “score”. That score will run between 300 and 850. The higher your credit score, the better you will be received by credit organizations| who are deciding whether to extend you a loan.
Once you have this information, you can take| action to improve how you stand on your credit history. First of all, review the credit detail in depth. You may find accounts still open that you have not used for years. Close those| accounts. If you have a credit account that is not being used, it is of not | value to you, it only runs down your credit score and there is always a danger someone will use it.
But the next step is to start being “credit smart” in how you| use credit to help see that credit score go up over the next year. The steps to do that are….
| Always pay your bills on time. Late payments| are reported to the credit bureaus and it runs your score down.
| Make more than the | minimum payments. If you only pay the minimum on each credit card you owe, that will get noticed by the credit tracking| software and make your credit score go down.
| Cut down on the amount of times your credit score is checked. Excessive inquiries into your score indicate that you are looking at getting more credit and that hurts your score.
| Close unneeded credit accounts.
| Start closing some of your credit card accounts once you pay them off.
| Don’t take out any new accounts.
Don’t let yourself get excited by the virtual nonstop advertising about your credit history. You do not need to know this information| every day. But check it a couple times a year, no sooner than once every three| months to keep tabs on what is going on with your credit history. It’s the responsible | thing to do and you can just change the channel on those noisy| commercials too.
The truth is, you can actually find out what | your credit report says about you. What they are telling you | about that is true. Your credit report tells you your credit score which helps you understand how creditors see you which is| important if you go to get a new loan. But your credit report also shows a | detailed history of your past use of credit, currently open accounts and anyone | who has checked your credit score in the last year.
This is important information| for you because anyone can check your credit report anytime they want to. And if there are too many inquiries on| your credit report, that itself can drive down your score. So if you find| someone is checking your score too often, you can take action to put a stop to it.
But there are a couple things they are not telling you on those advertisements. One is that if you use their services, they will give you| the credit report for free but not the credit score. They are going to have their hand out for that little tidbit of information. But the truth that those companies will not| tell you is that you can get that score at least once a year absolutely free if you know how. In other words, those people hitting you up| on television to check your credit score are relying on the fact that (1) you | don’t know how to check it yourself and (2) you are willing to give them money| for something you can get for free if you know how.
The basic information you should| know about credit reports is that there are three agencies that maintain credit reporting and they are named| Equifax, Experian and Transunion. You can check on what each of these companies| has in their file at any given time. In addition to a lot of detail about your credit| history as we just discussed, your credit “health” will be represented in the form of a number of a “score”. That score will run between 300 and 850. The higher your credit score, the better you will be received by credit organizations| who are deciding whether to extend you a loan.
Once you have this information, you can take| action to improve how you stand on your credit history. First of all, review the credit detail in depth. You may find accounts still open that you have not used for years. Close those| accounts. If you have a credit account that is not being used, it is of not | value to you, it only runs down your credit score and there is always a danger someone will use it.
But the next step is to start being “credit smart” in how you| use credit to help see that credit score go up over the next year. The steps to do that are….
| Always pay your bills on time. Late payments| are reported to the credit bureaus and it runs your score down.
| Make more than the | minimum payments. If you only pay the minimum on each credit card you owe, that will get noticed by the credit tracking| software and make your credit score go down.
| Cut down on the amount of times your credit score is checked. Excessive inquiries into your score indicate that you are looking at getting more credit and that hurts your score.
| Close unneeded credit accounts.
| Start closing some of your credit card accounts once you pay them off.
| Don’t take out any new accounts.
Don’t let yourself get excited by the virtual nonstop advertising about your credit history. You do not need to know this information| every day. But check it a couple times a year, no sooner than once every three| months to keep tabs on what is going on with your credit history. It’s the responsible | thing to do and you can just change the channel on those noisy| commercials too.
Weapon Against Credit Card Debt
The television advertisements and dozens of junk mail advertisements you get all make big promises. | They are real good at selling| the idea that they can get you out of credit card debt with some phenomenal program or secret | weapon that you can find only by coming to them. When you think about it, these people are pretty despicable. They are seeking to make money by | preying on people who already are deep in debt. The want to victimize the victims and in many societies, they put people in jail for that. |
Anyway, you and I both know that most of those slick | marketing productions that pitch getting you out of credit card debt through some sophisticated and costly program are a bunch of hot air. But there is a secret weapon right | under your nose that if you can set off its amazing power, it can get you | out of credit card debt and keep you there.
This secret weapon | is pretty amazing and you know we aren’t trying to market anything to you because this secret weapon doesn’t cost anything, doesn’t require you send | off for anything and you can find it right in your own | home and put it to work immediately at no cost to you. But it is also a secret weapon that is not “sexy” and it will not make you go “OOO” and “AHH” by impressing | you with its slick design.
The secret weapon is a budget. | See, we told you it wasn’t a sexy solution. But when you analyze why you have the credit card debt in the first place, putting a rock solid budget in place is the foundation of a long term solution | to your problem. The marketers can give you all kinds of fancy analysis and discussion on the cause of credit card debt in your| life that will put the blame on everything| from the foreign exchange rate to immigration to global warming. But it doesn’t do you a bit of good to point fingers about the problem. The only thing that will do you good is to give you the tools and weapons to fix it.
There is just no getting around it, | you are in trouble with your credit because you are living above your means. In other words, you are spending more than you make. This isn’t to throw a lot of blame and guilt around. There are a lot of situations that can cause you to live above your means. | You could lose your job or have an emergency| in the family that can cause you financial worries. But when the money going out is the more money than is coming in, you have a problem that will drive up your credit card debt.
To write a budget, you simply sit down and take inventory of those two factors. You inventory how much money you have coming in. Then you inventory how much money you have to pay out. This step alone is a huge | step forward toward getting your debt problem under control. A computer spreadsheet like Microsoft Excel is excellent for this kind| of family budget planning and analysis because | you can move things around and let the computer do the math for you.
Don’t make excuses about this. If you don’t| know how much a certain kind of spending costs you, dig out your receipts for the last few months and get a feel for it. But once you know your income and your bills, you can tell if there | is a gap. Then you can make plans to close that gap either by getting more income or by cutting out some bills or both.
It won’t be easy and it won’t be fun. | But if you get on a budget and stay there, you have the basic foundation for a solid family financial plan and you can move forward from there. You may go on to use some other | tools to bring your credit card debt under control such | as credit card consolidation or balance transfers. But don’t do a thing before you find that secret weapon and make it start working for you. And that secret weapon is a realizing and | reliable family budget.
Anyway, you and I both know that most of those slick | marketing productions that pitch getting you out of credit card debt through some sophisticated and costly program are a bunch of hot air. But there is a secret weapon right | under your nose that if you can set off its amazing power, it can get you | out of credit card debt and keep you there.
This secret weapon | is pretty amazing and you know we aren’t trying to market anything to you because this secret weapon doesn’t cost anything, doesn’t require you send | off for anything and you can find it right in your own | home and put it to work immediately at no cost to you. But it is also a secret weapon that is not “sexy” and it will not make you go “OOO” and “AHH” by impressing | you with its slick design.
The secret weapon is a budget. | See, we told you it wasn’t a sexy solution. But when you analyze why you have the credit card debt in the first place, putting a rock solid budget in place is the foundation of a long term solution | to your problem. The marketers can give you all kinds of fancy analysis and discussion on the cause of credit card debt in your| life that will put the blame on everything| from the foreign exchange rate to immigration to global warming. But it doesn’t do you a bit of good to point fingers about the problem. The only thing that will do you good is to give you the tools and weapons to fix it.
There is just no getting around it, | you are in trouble with your credit because you are living above your means. In other words, you are spending more than you make. This isn’t to throw a lot of blame and guilt around. There are a lot of situations that can cause you to live above your means. | You could lose your job or have an emergency| in the family that can cause you financial worries. But when the money going out is the more money than is coming in, you have a problem that will drive up your credit card debt.
To write a budget, you simply sit down and take inventory of those two factors. You inventory how much money you have coming in. Then you inventory how much money you have to pay out. This step alone is a huge | step forward toward getting your debt problem under control. A computer spreadsheet like Microsoft Excel is excellent for this kind| of family budget planning and analysis because | you can move things around and let the computer do the math for you.
Don’t make excuses about this. If you don’t| know how much a certain kind of spending costs you, dig out your receipts for the last few months and get a feel for it. But once you know your income and your bills, you can tell if there | is a gap. Then you can make plans to close that gap either by getting more income or by cutting out some bills or both.
It won’t be easy and it won’t be fun. | But if you get on a budget and stay there, you have the basic foundation for a solid family financial plan and you can move forward from there. You may go on to use some other | tools to bring your credit card debt under control such | as credit card consolidation or balance transfers. But don’t do a thing before you find that secret weapon and make it start working for you. And that secret weapon is a realizing and | reliable family budget.
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