Credit Card Debt – The demise of an uneducated and undisciplined America
Written by Bryan Dewberry

Total US consumer debt (not including mortgage debt) reached $2.46 trillion in June 2007 (source). That number is both staggering and increasing every day. Why? Because American’s have never been educated in how to control credit card debt, they fall prey to unsolicited credit card offers, and they have little to no self-control of their spending.

I was one of those uneducated Americans back in the early 1990’s when I was newly married, had a baby on the way, and was moving around the country due to the military. Having to rely upon credit cards to make ends meet became commonplace and I quickly racked up credit card debt of monstrous proportions. Another significant factor in accumulating all this debt was just a shear lack of will power. I grew up in a family that didn’t have much so once I left home, started earning my own money, and discovered credit cards; I could start buying stuff for myself. It was this unbridled spending, coupled with a non-existent financial education that buried me in credit card debt. It wasn’t until years later, after a failed marriage and near bankruptcy, that I found a way out. Here’s how:

• First, get your spending under control. You’ll never get rid of that debt unless you can curb your spending and only purchase what you need. Forget about trying to keep up with the Jones’ and concentrate on your needs not wants. Take those unsolicited credit card offers and shred them. You don’t need another credit card and shredding them is a great deterrent to identity theft.
• Second, get educated on finances starting with a firm grasp of interest. Many people fail to understand what the true cost of a dollar is when it comes to interest and how long it’s going to take to repay that dollar. Once you understand the true cost of a purchase after factoring in interest you’ll be in a much better position to make a decision. Also, develop a monthly budget. Know how much money you have coming in and going out each month. Determine how much discretionary income you have.
• Third, stop paying just the minimum payment on credit cards. The only way to reduce the balance of the credit card faster is to pay above and beyond the minimum payment. The minimum payment is almost all interest charges with only a small portion going towards the principle balance. This is very similar to a home mortgage.
• Fourth, take one credit card (typically the one you owe the least on) and pay it off as fast as possible using step 3. The extra money you’re going to use to pay on the principle balance comes from your discretionary income. Once this credit card is paid off, take the money you were using to pay on this credit card, along with what discretionary income you can, and apply it to the next credit card. You can keep repeating this process for as many credit cards as you have. I think you can see how it starts to snowball.

Another tool I’ve discovered recently that’s helping me is the Money Merge Account Program from United First Financial. The Money Merge Account burst onto the scene two years ago and is taking the mortgage industry by storm. This program is helping homeowners pay off their homes in as little as 1/2 to 1/3 the time while potentially saving thousands in interest. By now you’re thinking, “This article is supposed to be about credit card debt.” The Money Merge Account system is much more than just an accelerated mortgage payment option. Other debts (e.g. credit card balances, personal loans, overdrafts, etc.) can be transferred to the Money Merge Account system – which means you benefit from paying less interest on many of your debts instead of expensive, unsecured rates. All of this can be achieved without refinancing your home, without increasing your monthly mortgage payment, and with little to no change in your monthly budget. I know, it sounds too good to be true, but it works. It works so well that someone is signing up to use the Money Merge Account every 21 minutes.

If you are in dire circumstances (i.e. zero discretionary income or contemplating bankruptcy), and are unsure how to begin, seek professional financial advice. Good financial advice can often be found free of charge through non-profit organizations, your work, or your church. If you’re a member of the military there are numerous programs available to you.

The tools are out there to help you get out of credit card debt. What are you waiting for?

Credit Card Debt – One of Life’s Booby-Traps
Written by Tony Currie

Credit card debt is one of modern life’s booby-traps. It is seductively available and so easy to obtain that you are encouraged to overlook all the painful parts and only concentrate on the immediate gain.

On its own, credit card debt isn’t necessarily a problem, as long as you are:

1. capable of paying it off at the end of each month
2. organized enough to pay it off at the end of each month and
3. disciplined enough not to use it for gambling or other addictions

But statistics show that most of us fail on at least one of the above, and that leads to high charges and can quickly get into a spiral of debt which starts affecting other parts of our lives, especially emotional relationships and family responsibilities.

Credit card debt is the most expensive form of debt to service. As well as the high monthly interest charges, there can be very high charges for failing to meet the monthly repayment schedule. If you are ever tempted to leave some debt on your card at a month end, you need to start reviewing your personal finances quickly and get to the bottom of why you have got to this position.

There are alternatives to credit card debt.

Bank overdrafts are the simplest (as long as you arrange these with your bank beforehand), but won’t be much cheaper. They will have the advantage that you will have to review them with your bank and that discipline should help you control your use of them.

Term bank loans are often the best option. Usually these would be used for a specific purchase (eg a car or a home improvement), but most banks would consider using them to pay off credit card debt as long as they are satisfied that you can meet the repayment schedule. Again, the discipline of the process would help in many cases to ensure that you have got control over your personal finances.

The cheapest form of debt finance is secured finance, usually a mortgage or second loan on a private property. If your home is worth significantly more than the loans you currently have secured on it, you can raise money this way and pay off the credit card debt over a much longer period.

But if your credit card debt has got to the stage that you need to consider these options, the first step you need to take is to work out a complete household budget, to see exactly where your money is being spent. Once you have done this, you can review your priorities and work out a plan to keep within your income level. This won’t be an easy thing to do, and will likely involve some very difficult decisions, but is essential to ensure your emotional and physical health.

If you have good personal discipline you can take advantage of the credit card debt industry. There are often introductory offers made to tempt you to take out new cards. Such offers usually are of three types:

1. low introductory interest rates
2. initial interest free periods
3. cashback on purchases

Sometimes you can get combinations of all three. You are particularly interested in the cards with long interest free periods.

To take advantage of the initial interest free periods, you need to be disciplined enough to still pay enough to meet the monthly full payment on your credit card debt into a high interest savings account that allows immediate access. Then, just before the end of the introductory period ends, close the savings account and use the balance to pay off all your credit card debt. Don’t forget that the interest you received on your savings account may leave you with some additional tax to pay at the end of the year!

So discipline is the key to using credit card debt to your advantage. If you remember this, you will be able to use credit card debt as a tool to save money, rather than allowing it to get out of control and destroy your lives.

Take Control of Your Credit Card Debt – Get Out and Stay Out of Debt
Written by Jason From Best Premium Card

My family hasn’t had any credit card debt in a long time. My dad always said that the only thing worse than paying bills is not being able to pay them. My grandfather said the same thing.

Credit cards can be great for convenience, and certain cards offer excellent rewards and benefits. But you need to pay your balance in full every month, and you shouldn’t let rewards cards entice you to spend more. If you’re not paying off your balance in full, your debts are slowly building up interest that make them harder and harder to pay off. If you continue on this path, your credit card debt will eventually come back to bite you in the rear.

That said, having credit card debt isn’t the absolute end of the world. I can’t find the exact statistics, but the average American IS in debt because of excessive spending on credit cards. There are a few steps you can take to slowly get rid of your credit card debt and then make sure you don’t fall back in the trap of not paying your balance in full. I’m not a financial expert and haven’t had any experience with credit card debt—this is just what I would do.

• Figure out how much money you’re currently spending each month and what you’re spending it on.
• Try to cut expenses so you can pay more than the minimum balance on your credit card/s each month. How much more you pay than the minimum depends on how much you can afford to pay, and how fast you want to get your debt paid off.
• Make sure to pay each bill promptly; your debt accumulates every day that it’s not paid off.
• Quit spending money on cards with high annual interest rates.

There are other things you can do such as consolidate your cards or take out a home equity line of credit to pay off your debt. But I don’t have any experience with these things, so I’d recommend you do a lot of research before going down this path.

Once you decide to make a change and eliminate credit card debt from your life, you’ll have to change your mindset and how you think about credit. People who manage their finances wisely see credit cards as short-term loans that should be paid off at the end of each month. If you’re using credit cards as a way to shop while not feeling like you’re spending any money, this is the wrong mindset. Take control of your credit card debt today and start making improvements one step at a time.

When you have your credit card debt under control, and are looking for a new card, there are a variety of cards with great rewards to choose one. If you’re looking for one without an annual fee, I recommend the Chase Freedom Visa Signature Card. This card gives you a $50 cash bonus after your first purchase and you can choose between cash back and points rewards—and switch between the two whenever you want. You also get triple rewards for purchases in your top 3 categories each month. No need to worry about figuring out what those categories are—Chase figures it out for you automatically.

If you’d like to read more about credit card rewards and experiences visit Best Premium Card’s Blog (http://www.bestpremiumcard.com/blog). But only after you have your credit card debt under control.

How Splurging Now Can Hurt Your Future Budget
Writtten by Woobie of EvilWoobie.com

I was a new graduate when I had my first lesson on handling credit. You know how fresh graduates are, excited to have a job, feeling high over the new pay source and splurging like money will never run out. I took it to a whole new level, I splurged my actual paycheck AND my credit limit. I was all over the mall, finding things to buy rather than considering my needs. In my mind, I can pay for everything. My newly approved credit limit is humongous, and I’m all about rewarding myself for graduating successfully, getting a high paying job and just being… great. My rationale was: the credit bill is still a month away, plenty of time left to earn back what I splurged. I went home with my purchases, feeling confident that I am doing the right thing.

A month passed and I started becoming aware of the balance in my card. The bill arrived and the numbers swam in my eyes. Did I really spend that much on crappy stuff that are now accumulating dust in my closet? I zeroed in on the minimum amount I have to pay and breathed a sigh of relief. It was affordable and there’s enough time to earn what I need to pay the whole amount during the next cycle of billing. Everything’s still cool: rent’s paid, I have enough food inside my fridge to last the week, and most of all, my credit standing was ok.

I started getting worried during the third month when I saw the interest rate of the card I maxed months ago. The amount was higher than I expected. The 3 or so percent that the credit companies charge doesn’t seem big at first, but it does now that I consider how much it’s eating up my earnings for the month. My plan to re-earn what I spent failed as I didn’t factor in my daily expenses, and the small things I need to pay for to live. The paycheck which seemed so heavy at the onset suddenly became pitifully small when I finally sat down and calculated what I need to pay for and what I actually spend everyday for my daily needs.

It took a year for me to be in the black again in terms of my credit standing. Unknowingly, I taught myself a big and valuable lesson in handling money. A credit limit is not actual cash that one can spend. By splurging it at the onset, I committed the bulk of my future earnings to paying it all back, not to mention the interest that keeps accumulating. Put it in simple terms, If I cannot control my spending, I will not be able to save anything in the next year or so.

Now, I spend for my needs in reverse. I use my card to pay for the basics, groceries, toiletries, household items, etc., and I use my actual cash to pay for luxuries. That way, I see my stash dwindling whenever I pay for something I don’t really need. I still allow myself luxuries and the occasional spa treatment, but sparingly. I never liked the feeling of pressure and regret that I wasn’t more careful.

A credit limit is not ‘invisible money’ that you and I can spend. It is not the deep well of spendable cash that we can use anytime. It is our own money, the one we earn in the future. Splurging the credit means committing ourselves to a future in debt, with not much room for anything else.

Credit Cards – A Means for Making Chronic Bad Choices
Written by Brent Crouch

According to the Federal Reserve Bank, in 1968 consumer credit card debt was $8 billion dollars. In 2007, that total exceeded $880 billion. During this same period, the rate of bankruptcy has dramatically risen as Americans have shown an insatiable desire for spending more than they make.

A lot of American families view credit card debt as a necessity of every day living. This little piece of plastic has become a modern day security blanket. In my opinion, credit cards are more resembling of a set of handcuffs than any type or form of security.

Credit cards have become a crutch for people to justify the bad choices they make. If you didn’t have this little piece of plastic that cures and satisfies all, would the choices you make be different? My guess is for most people, they would.

Credit cards provide a seemingly easy way for those that choose to live above their means. Many people find it easy to purchase more house than they can afford, plan families before they are financially able, and keep up with the Jone’s because of their reliance on credit cards. There is no longer any accountability for personal choice. Many of these people view their credit card debt as a necessity and matter of survival. While that may be the issue in some cases, I’d say in the overwhelming majority of cases it falls back to personal choice.

Avoiding Credit Card Debt

I’m not completely against credit cards. I am against people that mismanage and rely on them to live beyond their means. Personally, I have several credit cards that I use in my personal and business transactions. I pay my balances in full every month, because I simply made the choice not to use my card for anything I don’t have the money to pay for in full.

For some people having a credit card may not be an option. There are some people that will not be able to manage their spending no matter how hard they try. You wouldn’t recommend an alcoholic keep a bottle of gin under his cabinet, and for chronic over spenders, having access to a credit card may be a close analogy. If you aren’t disciplined enough to manage your spending, get rid of your credit cards now.

Credit Card Advantages

For those that can manage their spending and are committed to paying their balance in full each month, there can be some advantages to using credit cards. As more and more credit cards are competing for consumers, many have started offering cash back incentives. I have a credit card that I use for my business that I charge an average of $60,000 a month on. I always pay the balance in full each month, so I don’t pay any interest. This particular card pays me a full 1% cash back on every purchase I make. Every month, I get a check back for an average of $600 that I am using to fund my daughter’s college fund. So far, she has close to $10,000 all of which is proceeds from this cash back credit card.

Another advantage to using credit cards is consumer protection. I wouldn’t consider using a debit card that links directly to my bank account when I’m dealing with companies I don’t know very well. For me, the ability to use a credit card that has fixed limits, fraud protection, and a dispute process is a huge advantage to using a debit card.

Getting Out Of Credit Card Debt

Being up to your eyeballs in credit card debt doesn’t make you a bad person, it just makes you normal. In our world, normal is having more house than you can afford, two car payments, and credit card debt equal to twice your yearly income. So if you are saddled with credit card debt, how can you go from being “normal” to being financially stable?

A lot of people turn to debt consolidation companies. While mathematically, this may appear to be the best way out, I don’t think it makes sense for most people. Debt consolidation is a quick fix to problems that have taken you years to create. This quick fix doesn’t really fix the problem. Unless you are committed to changing your behavior, it only clears a way to get more credit cards later and create more debt.

Out of all the methods people use to get out of debt, I believe the Dave Ramsey plan is by far the best. A few years ago, I had a potential customer contact me about a product I was selling. It was clear she was looking for a “Get Rich Quick – Save All” deal and that wasn’t what I was offering. She was very forthcoming and told me she was on the verge of bankruptcy. I couldn’t in good conscious sell her a product knowing she was in a very tight spot and I wasn’t offering the “fix all method” she was looking for. Instead, I offered to send her a free copy of one of Dave Ramsey’s books titled “Financial Peace Revisited” provided she promised to read it. She agreed and I sent the book.

We spoke a few times by email and eventually lost touch. Almost 6 months later, I got this email from her that I have hanging on my office wall today.

Hi, Brent!

It’s been quite a while now, but I wanted to give you an update. I can’t even begin to thank you enough for sending me the book Financial Peace Revisited . It has absolutely changed our lives! After reading it, I got really pumped and then became one of those spouses that constantly yaps, “Well, Dave says…”

Although there is not a local radio station where I live that carries Dave’s program, I download it every night onto my ipod and listen when I’m out for my morning walk/run at 5:30 am. I know… kinda nerdy… but it definitely keeps me motivated! My parents bought us tickets for his live event in Dallas for my birthday. That was just this past Saturday. My husband and I had an absolute blast!!! He is an awesome speaker! Afterward, he did a book signing, so I got his signature as well as my pic taken with him!

My husband and I have also just started Financial Peace University at a local church. We’ve only been to two classes, but we are really excited about it. Since you sent me the book, we are on a budget… I’ve tweaked it a lot over the last few months. We have knocked out about $5,000 in debt and by the end of April we should have hopefully another $5,000 or so knocked out. I’m amazed at how much more money we “found” when we started “spending every dollar on purpose.”

I just wanted to tell you how awesome I think you are… I can never ever ever truly express my appreciation and gratitude… your act of kindness has changed my life. My marriage will benefit and our kids will absolutely 100% benefit. Thank you thank you thank you from the very bottom of my heart!

God Bless!!!

Kristine Jxxxxxxxx

I’m not down on people that find themselves in credit card debt. I am down on people that continue to use credit cards while complaining it is a matter of survival when it is really a means for them to make bad choices. The important things are credit cards can be a good tool if used wisely or your worst enemy if used improperly.