Financial Future

Over the years I’ve spent a lot of time in and around credit card account debt. My first professional job was in a customer service call center answering inquiries from credit card account customers. From there I bounced around to different areas within the company including fraud, new credit, and then on to software development. Each of these experiences provided ammunition for learning how to get out of credit card account debt – something I would use years later to get out of debt myself.

If you find yourself deep in charge card debt, consider the following tips for getting out of debt, and staying out.

Investigate legitimate debt relief programs. Thanks in large part to the recession, and a number of financial bailouts, there are some innovative ways to lower your credit card account payment. In fact, the government urges Americans to pay down charge card account bills. See if you qualify for debt relief.

Stop charging. This one seems so obvious I almost didn’t include it. Unfortunately, it is the one people usually fail to do with any conviction. The first step out of any hole is to stop digging. Debt management is no exception. Only then can you begin to devise a plan to crawl out. This step may require you chopping up your credit card accounts with a pair of scissors (keep one for emergencies), or at a minimum taking them out of your wallet and leaving them in a sock drawer at home. Whatever you have to do, stop making new charges.

Transfer balances to a low interest charge card. Start with these balance transfer offers from CreditCards.com. The lower your average annual percentage rate on remaining credit card debt, the more of a dent each payment makes in that remaining balance. Also consider a low-interest debt consolidation loan from Lending Club.

Pay debts off smallest to largest. Make minimum payments on all but the smallest one, and throw everything you can at the smallest one. The psychological advantage of scoring one or two quick wins bringing balances down to zero is worth the difference in interest charges. This is the snowball method of debt repayment made popular by Dave Ramsey in The Total Money Makeover, but many argue against the mathematics behind it. Like Ramsey says, “If you were good at math you wouldn’t have credit card account debt!”

Divide credit card minimum payments in half and pay that amount twice a month. Interest is calculated based on the average daily balance of your account for the entire month. By making a payment every couple weeks you are reducing that average balance and therefore reducing the finance charges assessed, as opposed to waiting until the end of the month to make a single payment. As an added benefit, splitting your payment into two separate payments helps smooth out the monthly budget as you will not have to come up with an entire payment once during the month, rather half that amount twice during the month (aim for around the time you receive your paycheck).

Make micro payments (commonly referred to as snowflakes) any time you receive extra cash. Send proceeds from eBay sales, garage sales, and any earnings from overtime or part time work directly to your credit card as soon as they are received. It may not seem like much, but it adds up. Besides, if you deposit the cash in your primary checking account you are more likely to spend it than to use it later in the month towards repaying outstanding debt.

Find part-time work. Sometimes this is the only option to generate cash flow over and above your normal monthly earnings. I offer this as a last resort, especially for families, because it often requires a parent being away from their family for long periods of time each day. Working a full-time job and then leaving for your part-time job makes for a long day. However, it also gives you more snow for that snowball, helping you become debt free even faster! Many times you can earn more than minimum wage retail jobs by doing something on your own. In the past I have mowed lawns, submitted articles to paying article directories, and volunteered for overtime to come up with extra debt snowball payments.

Close out your newest accounts. As balances are paid off, close out all but your oldest one or two charge cards (I hung on to only my oldest card). One of the components of FICO score calculations is length of credit history, which is negatively affected each time you open a new account. By closing these newer cards you are effectively making the average age of your credit history older. If you aren’t sure about how old your accounts are, I suggest ordering a copy of your credit report at MyFICO.com). If you are not confident in your ability to manage credit cards going forward, consider cutting up all of your cards and living on a cash basis, but only after you have a fully-funded emergency fund in place of at least five or six months of expenses.

By following the above tips you should be able to make progress towards debt freedom, however there is one key ingredient missing from the list. Anger. You have to get mad about being in debt to get out of it. You have to make it a priority. You have to be willing to sacrifice all other financial goals for a period of time to put every extra penny you can scrape together on debt.

As long as you are complacent about credit debt, it will continue to hang around forever. If you find yourself deep in charge card account debt I strongly urge you to find the proper motivation and start a debt snowball plan today. Tomorrow is just an excuse away. 

This article is brought to you by www.JemCreditCards.com – More than credit cards, we build financial stability. A great place to compare the best credit card offers including Discover balance transfer cards, Chase cards, and much much more!

As one would expect, the most important causes of credit success or failure will always be payment history and total debt owed. Although together these factors account for about 65 percent of your credit, there are several other aspects of your credit report that lenders look at to determine your credit-worthiness. Many of these factors are not obvious even to the most intuitive of minds. Here are 5 of the most overlooked factors that influence your credit.

1. The number of recent inquiries on your credit report. To most people this isn’t self-evident, but to lenders it makes perfect sense. If you have a lot of recent inquiries from lenders who are looking to determine your credit worthiness, then chances are you may be overextended and short of cash.

2. The proportion of your balances to their credit lines. If you’re maxed out on your credit card accounts, then lenders may consider it a sign of one of three things: a) you’re overextended and relying on your credit to make ends meet; b) you’re addicted to credit and overuse your credit lines; or c) both.

3. Closing charge card account accounts. Closing an account has the effect of lowering the credit limit on your credit report. Since you no longer are charging anything to that account whatever your current balance is also happens to be the credit limit. This being the case the credit scoring companies only see that a consumer is utilizing 100 percent of the credit line, thus affecting your credit negatively per point number 2.

4. Closing your oldest charge card account. Closing accounts affects your credit negatively, but since the impact is relatively minimal, it may be a necessary step to help get your finances under control. If you’re forced to make a decision about which account to keep open (assuming they have the same APR and chargess), you should always hang on to the oldest account. The length of your credit history is actually about 15 percent of your score, and having an account with some longevity can be a big boost.

5. Enrolling in a debt counseling service. The only way to maintain a positive credit picture is by paying your bills on time and in full every month. Any time you seek outside assistance in managing your finances whether through credit counseling or debt negotiation, future lenders will be inevitably turned off (more so by debt settlement than credit counseling it should be noted). Unfortunately, there is no way to get around it since your enrollment is reported to the credit bureaus by your creditors, not by the debt management company. This is a source of debate, but to be conservative, you should assume that you won’t be credit worthy until you’ve established positive credit history after completing your program. I know the last sentence sounds a bit contradictory. After all, how can you rebuild your credit history if no one will extend you credit? The answer is simple: gas cards and secured credit card accounts. These are very easy to obtain, and on top of that, you’re debt free. Some lenders will gladly extend small amounts of credit to someone who has income and no other financial obligations. Depending on the lender, it might take some time to qualify for the bigger loans, more specifically, a mortgage.

This article is brought to you by www.JemCreditCards.com – More than charge card accounts, we build financial stability. A great place to compare the best charge card offers including Discover cards, Chase balance transfer credit cards, and much much more!

Can Debt Reduction Cost You?

The savings from our debt reduction program are potentially tremendous assuming you complete the program and all your accounts are settled. By settling for less than what is owed and not just reducing the APR, settlement is an extremely cost-effective method for debt relief. Just making the minimum payments can cost as much as 3 times the balance owed before one is finally debt free. So for a $10,000 debt you end up paying $20,000 in interest alone! By negotiating the balance owed, in reality your savings constitute the reduction on the principal and the interest charges that would otherwise be paid (note:  interest does accrue on your accounts until they are settled, however). This being the case, debt settlement is a great option for consumers who are overwhelmed by their minimum payments and don’t find themselves actually bringing down their debt. That being said, however, debt negotiation is not for everyone. Three scenarios in particular stick out as examples of when our debt reduction program may not be your most cost-effective option: a) you have a high credit score; b) your debt amount is not high, c) the likelihood that you’ll be able to complete the program is low because you anticipate budgeting problems.  Please note that if you don’t fall under these categories it does not ensure that our debt reduction program will ensure you of savings.  Situations and results do vary.  The following are common situations where someone could encounter problems not realizing savings by using a debt relief service such as ours. 
Those with good credit

Why don’t people with good credit have to worry about their savings? Future interest charges may outweigh what we save you. Even though debt reduction can save you tremendous amounts of cash, it is possible that you’ll end up paying more in subsequent interest because debt settlement affects your credit score negatively and hence, the annual percentage rate of your future loan.

Needless to say, the impact of settlement on your credit is more dramatic if you have a higher score. So if you have perfect credit when you enter a negotiation program, the subsequent higher annual percentage rates that you would have been able to obtain when applying for loans may end up costing you more than we’re able to save you. This being the case, consumers with very high credit scores or low debt amounts should consider the following prior to doing debt settlement:

-How desperate is your situation? If it’s likely that the minimum payments will overwhelm you, what options are available to you? Can you refinance your home or get a home equity loan? If any of these options are available to you and you can afford it (be very careful though…you don’t want to lose your home!), then debt reduction may not be your best bet.

-When do I plan on applying for credit again? Generally, lenders look back at least the past 2 years of your credit history. Like most things, time heals the credit impact of debt negotiation, so the longer you can hold out on applying for credit, the better off you’ll be.

-If you do plan on using credit, what sort of loan will you be applying for? The cost associated with doing debt negotiation will be higher for getting a mortgage than if you apply for car loan. After all, 10% interest on a $200,000 loan is a lot more expensive than 10% on a $20,000 vehicle.

In the end, debt reduction is a great option, but the future implications of enrolling in our program should always be considered beforehand. We’re confident that we can help resolve any outstanding charge card debt, but it is important that you first understand how our program will fit into your individual situation.

Those Who Have Low Balances & Don’t Owe Much

With clients who have low balances, the reasons why savings tend not to be higher are two-fold.  For one, you have to ask yourself – is the credit impact of debt settlement worth it for this small of a debt amount?  Ultimately, this only can be answered by the client because what’s affordable for one person may not be for another because of their income or other necessary expenses.    

The other reason why low balances can be a problem is because late feess tend to inflate the balance much more on a percentage basis than larger accounts.  As mentioned previously, late chargess and interest accrue until an account is settled, but the reason why it impacts smaller accounts more is because the late chargess are usually flat, so $30 on a $600 balance will increase that account much more on a percentage basis than a $15,000 one.  This being the case, getting settlement terms that offer a deep reduction in the original balance can be difficult and therefore, you may want to consider another avenue if your accounts fit this profile. 

Those Who Cannot Afford the Program

Unfortunately, Franklin Debt Relief cannot determine whether or not you can afford our program – only you can.  Many Americans in debt problems, however, overestimate what they can afford on a monthly basis, and after enrolling in our service figure out that they can no longer manage the program payment.  Unfortunately, they lose all the chargess they paid to us up to that point because our cash-back guarantee does not apply to clients who cancel their program early.  Before choosing our service, sit down and analyze your budget and make sure this is something you can afford.  That means making sure you have enough “breathing room” in the event random expenses pop up.  If the program’s payment leaves you no flexibility or savings on a monthly basis, you should realistically assess whether to do this. 

If you’re interested in discussing whether debt negotiation is the right program for you, please feesl free to talk to one of our honest and ethical consultants at (877) 274-1260.

This article is brought to you by www.JemCreditCards.com – More than credit cards, we build financial stability. A great place to compare the best charge card offers including Discover balance transfer cards, Chase balance transfer credit cards, and much much more!

A charge card debt program is sorely needed by many Americans who have gotten into very high unsecured loan debt. Unfortunately, too many consumers have chosen to live above their income means and the result is a mountain of revolving charge account borrowed money. And if not another purchase is bought on any account and the minimum payment is made, the debt will clear just about the time term limits are voted in for members of Congress. Those mired in steep plastic card liability will find there are two ways out. One is to let a credit counseling company assist, which has its own set of problems, and the other is develop a plan oneself.

A debt counseling service exists everywhere; online with dozens of choices, or perhaps on a street in a town nearby. Many of these services are non-profits which means they started out with the intention of truly serving the public. But make no mistake, both profits and non-profits in this business make money, and even some non-profits have lost their way when it comes to genuine service for the client first. These counseling services offer a charge card debt program designed to get a client out of financial liability within five years. Every company and agency has a different name and a different looking website, but their charge card debt program is the same from company to company. After getting a lot of personal information from the client, these counseling services through negotiations with the card lenders, will cut monthly payments down to between fifty and sixty percent of the original expenditure. These lower payments are due to much lower annual percentage rates and if the client continues paying for the full five years, revolving account obligations will be wiped clean within five years.

But there are a couple of things that are a prickly reality when using a credit counseling service. First, only about thirty percent of clients who begin using the program stay with it to the end. Let’s face it; if a person needs a credit card account debt program, he has lacked the financial discipline to say no to luxury items that were outside the consumer’s income means. Examples would be eating out a lot, a large screen television, that DVD collection, really nice vacations, weekend getaways, some extra clothes or a few expensive pairs of shoes and many other things that just weren’t possible unless the plastic was pulled out and scanned. But the problem comes when a person enters into a credit card account debt program and the client must discontinue the use of charge cards. The ability to charge without prejudice was an inbred behavior and for almost seventy percent of clients, a behavior that could not be overcome.

The second even more serious drawback to credit counseling is the damage it will inflict on a person’s borrowing history and the resulting score. Since chapter thirteen bankruptcy and credit counseling have the same basic idea, that is giving the consumer a plan around the current plastic card lenders’ requirements, they both put a large black smear across credit histories that will remain for years. The result for the consumer in either case is more trouble getting future credit when really needed, such as a mortgage and much higher interest rates for the loans that can be obtained. A charge card account debt program that requires negotiations for lower payments on charge account debt will hurt the consumer in the long term. God requires that we love Him more than any other thing or person. Jesus made that very clear with these potent words: “He that loveth father or mother more than me is not worthy of me; and he that loveth son or daughter more than me is not worthy of me.” (Matthew 10:37)

But anyone can do a number of things to craft their own charge card account debt program and wrestle that debt doggie to the ground and tie it up for good. These first suggestions are not fun, not without some pain and certainly life will be different for a while during the implementation stage. Here is the first thing to do: get busy and sell a bunch of stuff! Clothes, furniture, car, boat, jewelry, electronics can be put on EBay. Listen, lawn furniture in the living room can be kind of chic. Remember that debt decay will not be removed with a root canal. Secondly, and take a deep breath, an extra job nights and weekends with every penny going to debt reduction will be a huge factor in roping in that doggie.

A credit card account debt program must include a plan of picking the card with the highest interest rate and begin working on that one first. Pay as much as possible each month on that one, far beyond the minimum payment. The other accounts can be paid with a minimum payment until that one is paid off. Then take the cash that was directed toward that account and put it on the next highest interest card. Keep following that pattern until all obligations are obliterated and during all this painful time, have a real long mind forum about materialism in general. The recent bank and stock market upheavals may be an American wakeup call to for all Americans to get to a much simpler time when a person’s character was much more valued than the neighborhood in which he lived.

This article is brought to you by www.JemCreditCards.com – More than credit card accounts, we build financial stability. A great place to compare the best charge card offers including Discover credit cards, Chase credit cards, and much much more!

If you find yourself in financial trouble, the unfortunate news is that there are no quick solutions to paying off credit card account debt. However, many financial institutions are willing to work with consumers. Banks and lenders don’t want you to default on debt, so talk to them, examine your options and take action.

Pay Down Your Balance

One way to solve credit card debt problems is to pay down account balances. This may sound like an obvious solution, but the way to achieve it if you’re struggling financially runs contrary to what many experts advise. The experts say that when you’re paying off credit card account debt, you should pay off the cards with the highest balance first.

A more practical solution to credit card debt is to pay off the cards with the lowest balance first. That way, when you finish paying off the card with the lowest balance, you can apply the cash you were paying on that card to the card with the next lowest balance. Then, when you pay that one off, you apply the cash you were paying on the two cards with the lowest balance to the card with the next lowest balance, and so on. By paying on fewer charge cards, you can reduce charge card account debt faster.

Consolidate Your Debts

Debt consolidation could be your best option for paying down significant charge card debt. When you utilize the debt consolidation approach to charge card account debt, you take out one large loan that allows you to pay off all of your charge card debt. If you’ve got high-interest credit card accounts, a debt consolidation loan is typically at a lower annual percentage rate and can save you hundreds or thousands of dollars in interest.

However, many debt consolidation loans are based on your home’s equity, either in the form of a home equity loan or refinancing your home loan to include your charge card debt. Be careful about tapping your home equity for a debt consolidation loan. Because these loans are secured by your home itself, you could face dire consequences if you can’t afford to pay and default on the debt consolidation loan. The lender could place a lien against your home, or, if you refinance your home loan, you could face foreclosure.

Enter a Debt Management Program or Debt Negotiation

Other solutions to charge card account debt include entering debt management programs or debt negotiation programs. When you enter a debt management program, you pay one big monthly payment to the program administrator, who then pays your charge card account debt. In a debt negotiation program, the administrator attempts to reduce your debt by negotiating with the lender. Be careful with these programs, however, as they can have a negative impact on your credit report.

This article is brought to you by www.JemCreditCards.com – More than charge card accounts, we build financial stability. A great place to compare the best charge card offers including Discover credit cards, Chase balance transfer credit cards, and much much more!