My Credit Card Debt Story

The Health Dangers of Looming Credit Card Debt

2014-08-12T02:56:00.000-04:00

By Eva Hilton

Buying on credit remains as popular as ever in the United States, even after the tough lessons of the 2008 global financial crisis. Over 46% of all American households have credit card debt and the average outstanding amount is $15,191. Although credit card debt declined immediately after the financial crisis hit (between 2009 and 2010), the number of indebted families rose again sharply in 2011 and remained at that higher level ever since. A lifestyle of living pay check to pay check fuels the use of credit cards, but the experience of college student debt is also one that can build a habit and a sense of normalcy of being indebted. Yet what many Americans fail to realize is that credit card debt not only has the potential to result in financial woes, but also in a wide range of health problems.

Debt and High Blood Pressure

Scientists at Northwestern University conducted a study among indebted Americans, in order to determine what health effects looming debt had on one's health. There were a total of 8,400 participants in the study, all of whom were between 24 and 32 year of age. What they discovered was that indebtedness and high blood pressure are closely linked, especially among young Americans. It was specifically one's diastolic blood pressure that appeared to increase as a result of major outstanding debt. The study focused on people who noted that their amount owing was so severe, that they would be unable to break free of it, even if they managed to sell all of their assets. Those with high debt had blood pressure levels that were 1.3% above the median. While this may not appear very significant at first glance, doctors note that levels that are just 2% higher than the mean result in a 15% higher risk of suffering a stroke than the average population. Americans in debt were also 13% more likely to display symptoms of clinical depression. With 73% of Americans noting that financial woes cause significant stress in their lives, it is clearly time to take the health risks of credit card debt seriously.

The Connection Between Debt and Drug Use

Out of control credit card debt is also strongly connected to drug abuse, according to research conducted by the Centers for Disease Control and Prevention. Depression and debt are often part of the same cycle, and one that is very difficult to break. In a comprehensive study of attempted suicide among middle-aged Americans, researchers discovered that two of the most common factors present in a majority of cases were prescription drug abuse and financial challenges. Poverty and addiction are very closely linked, with scientists at the National Institute for Drug Abuse noting that "exerting self control can become seriously impaired" when someone is addicted to drugs, and this has a major impact on one's personal spending and financial choices. Some drugs, heroin in particular, result in drastically decreased mental functions, depression, as well as medical conditions, such as heart failure and severe arthritis, which are costly to treat for people without comprehensive medical insurance. Treatments specialists who deal with heroin addicts also speak of debilitating "bone aches" and the necessity of comprehensive medical intervention, to get the patient's health and overall well-being back in order. The rise in heroin use in the United States is becoming a major concern and is fueled by the fact that this form of contraband is now cheaper than ever, with deaths related to heroin having increased by a staggering 84% in New York City between 2010 and 2012. The same study, which formed part of the National Survey on Drug Use, showed that heroin use had risen by 79% nationally.

The connect between drug use and debt is complex and reciprocal, in that the stress caused by out of control credit card debt can lead to an attempted escape from this situation through drug use, but drug addiction as well often results in serious debt, among people who otherwise would not have gotten into such financially dire situations. Yet in addition to drug use, staggering credit card debt has been shown to lead to a range of other health issues, including anxiety, depression and high blood pressure, which in turn can lead to heart disease and stroke. The culture of buying on credit and worrying about making payments later has become pervasive in western society, and while this may be convenient, it can also come back with a vengeance years later, when debtors pay not only with their wallets, but also with their health.

Living Credit Card To Credit Card: How To Break The Cycle

2013-09-02T23:16:00.000-04:00

By Maxime Rieman

Most of us have heard financial experts decry the dangers of “living paycheck to paycheck,” wherein a person’s income is so close to their expenses every month that they’re unable to put any money aside for emergencies or retirement. Of course, these gurus are right to be concerned: saving is an important habit to get into because it is an important safety net and it allows us to build wealth.

So yeah, living paycheck to paycheck isn’t ideal.

But really, I think the personal finance professionals are barking up the wrong tree. They’re right to be concerned that a lot of us are failing to save, but living paycheck to paycheck isn’t the worst monetary state you can be in. As most of us who have been in serious financial trouble know, there is a much direr financial situation you can fall into: living credit card to credit card.

Yep, credit-card-to-credit-card living is about as bad as it can get. If you’ve never experienced this type of financial lifestyle, it goes something like this: you charge up a credit card to the point that it’s just about maxed out. You probably keep your head just above water by paying the minimums on the card every month, just to be sure your credit score stays solid enough that you can get another card. Which you do. Then you charge that card up, without ever paying the balance on the first card. Again, you keep up with monthly minimums, but pretty soon you need another card. And not long after that, you can’t keep up with the minimums on the two other cards, so you use the third card to pay the other two. But now you have no more available credit, so you need another card. And so on. And so on.

Many college graduates fall into this trap. They graduate totally broke – student loan bills, rent, a car payment, and a bunch of other expenses eat up their nonexistent paychecks. But they also don’t adjust their spending accordingly, and quickly open more credit cards first to accommodate their splurges, and then to pay off the other cards. Keep in mind, in the past--even just as recently as 2007--banks were still doling out credit as generously as those free lollipops. So for many graduates, it is—well was--really easy to keep getting new cards to bail themselves out of payments that were too high on the other cards, and, of course, gain a little spending money, too.

This cycle lasts for about a year, and by then most realize that they are drowning. This is when the stress begins: stressed out about money all the time; constantly concerned about missing a payment or worse, not having enough to even pay the minimums; and sweat-inducing nightmares. For those, who are experiencing this during the Great Recession, I can only imagine your feelings of helplessness and the perpetual state of fright you must be in.

The good news is that, you can turn things around. You can go from a total money-wreck to financially savvy with some stubborn resolve, sacrifice and the knowledge that it can be done; knowing that there is an end in sight can really help on those hard days. If you’re looking to break the cycle of credit card to credit card living, try a few of the tips below:

Stop using the cards – This is probably the most important step you can take towards stopping the credit card madness. It will be painful and unpleasant, but you have to stop using your credit cards entirely, at least for a while. Freeze them, cut them up, give them to a trusted friend, whatever – just keep those cards out of your wallet and out of your hands for the time being.
Don’t open any new cards – No matter how bad the credit card withdrawal symptoms get, resist the urge to open a new card. Even if you promise yourself you’ll be responsible with this one, just say no. At some point you may be in a financial place where credit cards won’t pose a threat, but that’s not now.
Put yourself on a budget – One of the reasons you probably got into debt is that you failed to create a plan for your money, which is what a budget does. Figure out how much money you make every month, then make a list of all your expenses, including non-fixed monthly costs like gas and groceries. Decide how much you want to spend in each category, making sure to allocate a hefty amount to debt repayment. Then, stick to your plan!
Also, put yourself on a cash allowance – Since you’re not using credit cards, you’ll need a way to manage your spending money. I recommend cash. Go to the ATM every Friday; take out your spending money for the week ahead. Not only does this reacquaint you with the value of money (cash is concrete, credit cards are abstract), when it the money is gone, it’s gone. This will keep you out of trouble!
Increase your income – Once you’ve quit credit cards and set a budget, it’s time to get serious about debt payoff by increasing your income. Get a second job, baby sit, walk your neighbor’s dog, or find some other income stream. But just be sure you use the extra cash to pay off your debts – no shopping sprees allowed!

Breaking the credit-card-to-credit-card lifestyle is tough, but it is doable. Even after a month you’ll start to feel better. Keep your chin up and know that you’re working towards a brighter financial future!

Maxime Rieman is a writer for NerdWallet, a financial literacy site where you can find brokerage reviews, such as this TD Ameritrade Review, when you’re ready to start investing.

Five Signs You’re Not Trying Hard Enough To Ruin Your Life With Credit Cards—College Edition

2013-07-20T05:35:00.000-04:00

By Maxime Rieman

In these competitive times, many of us are pursuing lofty goals with a drive and determination that would make Aesop’s tortoise look woeful. After all, who doesn’t know someone who’s training for a marathon, writing a novel, or traveling the world? These days it seems like everyone is working on something big, and the bar for what constitutes “accomplished” keeps getting higher and higher.

While there are a lot of worthy aspirations out there, many Americans are working on a very specific endeavor, one that could potentially have long-lasting consequences—ruining their lives with credit cards.

Millions of people in the U.S. are destroying their credit and running up thousands of dollars in debt; they’re maxing out their cards, buying tons of junk they don’t want and can’t afford, while only paying minimums month after month. But the truth is, many of us who are trying to destroy our financial lives with credit cards simply aren’t doing enough to make sure that this goal is reached and we are not maximizing the example we’re setting for others who will soon be prey privy to the wonders of credit cards. Try as we might, we’re behaving far too responsibly with our cards and we need to put forth more of an effort to make sure that we’ll never get out from under the weight of consumer debt.

So how can you tell if you’re not trying hard enough to mess up your personal and financial life with credit cards? Here are five signs you could be doing more to reach your goal:

You’ve Never Gone Over Your Credit Limit
This is probably the most obvious symptom: if you’ve never had to pay a fee for going over the credit limit that your bank set for you, you really need to consider charging more. The interest and fees associated with going over your allotted credit could be all that’s standing between you and financial ruin, so if you’ve failed to purchase enough with your credit card to exceed that threshold, it’s time to hit the mall. A credit limit is really just a suggestion anyways.

You Don’t Obsessively Check Your Available Credit
If you feel comfortable enough to keep charging your day-to-day expenses to your card without worrying that you’ve run out of available credit, you’re definitely falling short of driving yourself into financial ruin. People who are really committed to letting their credit cards take them off a financial cliff are the ones you see in line at the grocery store obsessively checking the banking applications on their smart phones to be sure they can get out with their gluten-free pasta. Take a lesson from their desperation and make a bigger effort to eat up all of that available credit with mindless purchases. It might seem tough at first, but you’ll find that once you really make a commitment to buying useless crap, it gets easier over time.

You Can Sleep At Night
Every real credit card junkie knows that putting the goal of ruining their lives with their cards requires sacrifice, and one of those sacrifices is a good night’s sleep. If you never (or only rarely) lose sleep wondering how you’re going to pay your bills, you’re definitely not going to achieve the objective of total monetary devastation. Take it as a sign to start charging more if you’re getting a full eight hours every night, and remember that if you’re in a pinch you can always start putting your fraternity/sorority dues on your card. Do whatever it takes to get those balances up!

You’re Not Getting Random, Threatening Calls From Collections Agencies
One of the most persistent reminders that you’re really going the distance towards meeting your objective of ruining your life with credit cards is the unexpected and brash calls coming from collection agencies at all hours of the day. This is basically a commendation for not paying your bills, no matter how much the person on the other end might be encouraging you to cough up the cash. If you’ve never been awakened in the middle of the night—even though you were probably up anyways—by a bill collector threatening to tell all your future colleagues you’re a deadbeat, consider this a sign you’re being far too timely and responsible with your bill payments.

You’re Thinking About Buying A House
One of the hallmarks of financial responsibility is homeownership; so if you’re considering buying a house after college, kiss that goal of messing up your financial future goodbye. If you feel that in a few years you can take on a mortgage, you’re obviously been much too careful with your cash. Worse yet, if you actually qualify for a home loan, it’s really time to buckle down and start swiping that credit card.

Getting into a financial bind may seem hard at first, but with a dash of college-freshmen-ignorance, a pinch of giving-into-peer-pressure-and-keeping-up-with-the-Jones-Kardashians-everyone-else and a pound of prolonged-bill-opening-avoidance, you’ll achieve it in no time. Take these signs into consideration to gauge your progress periodically and remember: never let a trip to the Apple Store pass you by!

Maxime Rieman wishes being an adult weren’t so hard. Luckily, she works for NerdWallet, where she found cheap auto insurance, learned the ins and outs of credit cards and generally, how to be more financially savvy.

Americans Slash Credit Card Debt but Rack up Student Loan Debts

2013-01-24T09:38:00.000-05:00

By Eva Hilton

According to the Federal Reserve Bank of New York, the levels of credit card debt in the US have been steadily falling. In August 2012, they were observed to be at a level unseen for ten years, as was the rate of credit card delinquency. However student debt continued its upward trend along with the delinquency rate. Since household debt peaked in the third quarter of 2008, the level of student debt has risen by fifty percent. The change in the levels of credit card debt and student debt when compared to one another have been dramatic, as just over four years ago, the credit card debt total was greater than the student loan debt total by a quarter. By the second quarter of 2012, the student loan debt total was greater than the credit card debt total by a quarter, meaning that the roles had completely reserved. This means that we should perhaps be worrying more about student debts and less about credit card debts.

The Dangers of Student Loans

An article published in Forbes magazine examining the main sources of debt problems claims that one of the reasons that student debts have overtaken credit card debts is that all student loans are issued directly by the government, which asks very little about borrowers’ ability to repay the amount that is loaned or the type of education they are intending on pursuing. Obtaining credit using credit cards is less risky in a way because student loan debt is very difficult to discharge in bankruptcy. Many students are issued loans that they are never actually going be able to pay off. Critics have stated that this means that student loan debts can become a form of servitude that is impossible to break free from. There are calls for bankruptcy law reforms to address this issue along with a crackdown on exploitative for-profit colleges. Critics claim that the present expansion of debt stemming from student loans is not sustainable.

The Response

In an effort to reduce defaults on student loans, the U.S. Department of Education has tightened standards on loans issued to parents and grad students and allowed the postponement of payments during periods of hardship. The Department has also prohibited federal lending to universities if over a certain percentage of their graduates default over several years. The opinion has been expressed that this form of debt has been allowed to mount up partly due to the fact that debt prevention organisations have focused their attention elsewhere. Student loans are not seen in the same light as credit card debts. There is a stigma attached to wracking up large amounts of money on credit cards, whereas obtaining a student loan is seen as a necessary step to advance a person’s education.

Step in the Right Direction for Credit Card Debt

Bankruptcy and creditors’ rights experts Barry Chatz and Kevin Morse put the drop in credit card debt down to Americans becoming more frugal and warier about living on credit. This means that a step in the right direction has been made with regards to credit card debts. Morse and Chatz have stated that the decline shows a reasonable reaction to the current economic situation. However many are still unaware of the risks involved in obtaining student loans. Morse and Chatz claim that students should be more responsible for their decisions. At the end of the day, a student loan is a loan like any other and should not be taken out by anybody who feels that he or she is going to be unlikely to be able to pay it off.

A Loan by any Other Name is Still a Loan

Although student loans have now surpassed credit cards as a source of debt, it is still important to remain vigilant with regards to credit card use. Credit card users have made tremendous progress with regards to cutting their debts but there is a long way to go and credit card debts are still a burden upon many people’s wallets. Student loans might be viewed as necessary but they can be just as detrimental and should be treated with as much respect as credit cards. It is important to remember that a loan is a loan regardless of whether it is being used to further a person’s education or purchase material goods.

Student Debt Woes—Managing Finances and Curing Debt in the "Real World"

2012-09-10T05:49:00.000-04:00

By Aniya Wells

There are few things more terrifying than entering the world of financial responsibility for the first time. Many of us truly enter this adult world after graduating college and earning a degree towards our career. Of course, upon graduating from college and entering the world of financial responsibility, we are also faced with paying off student loan debt and landing a job in the most challenging job market in decades. It can be an extremely overwhelming time for any individual. While debt is always a stressful thing to cope with, it can be especially so for those who are completely new to the process. Use these tips and guidelines to better manage your student debt right out of college and become a fully functioning "real world" citizen.

Do Your Research

Before you can fully tackle difficult student debt it is essential that you educate yourself on your debt situation and how student loan repayment works. Yes, this may mean spending sometime outside of your college campus looking through documents and studying papers, but it's well worth it. Do your research some. Figure out what the terms of your student loan or loans are. When is the grace period of your loan over? Just how much are you going to have to pay each month? What do your interest rates look like? These are all essential questions that you need to be able to answer before you start paying off your loan. Take the time to look through your loan agreement. There may be some things in the print that surprise you and most loan agreements work to provide a general explanation of how loan repayment works.

Meet that Minimum

Once you've done your research on when you need to start paying your loan and what your minimum balance should be, the next step is actually making the payments. You should be sure to always meet that minimum balance. While this can feel completely impossible at times, try to take a close look at your finances and see where you can improve your budgeting. Many people put loan repayment as a last factor in their budgeting plans—this is the wrong way to go about things. Try to get yourself out of debt first, spend and get where you want to be in other financial matters later. It is recommended to try to meet that minimum payment amount each month along with as much extra as you're willing to spare. Even just five or ten dollars more a payment can make a huge difference in the long run.

Stay Current

Be sure that you are staying up to date and current with the news and policies concerning student loan debt. With so many young Americans finding themselves head under water the day after graduation, the government and many loan agencies are working to help the young generation. There are new government pardons and subsidies that are put in place to help out current "real world" adults dealing with student loan debt. Things can change in legislation that may affect your payments, so try to stay up to date on all things student debt.

Author Bio:
Aniya Wells particularly loves reading and writing about online education, although her interests span different niches as well, including personal finance, parenting, sustainable living, and more. Accredited online degree programs are hard to find in the online morass of scams, so Aniya's ultimate goal is to help her readers figure out the maze of online education. She can be reached for questions or comments at aniyawells@gmail.com.

My College Credit Card Debt Mistake

2012-05-18T03:50:00.001-04:00

Guest Post by Christine Kane

I have not had a credit card in over 10 years. I have chosen this path because I learned an important lesson at a young age. I was a freshman in College learning the ins and outs like how to sleep with your eyes open during lecture. When I wasn’t mastering this art form I was enjoying living the fine life with weekend road trips, new clothes, fine dining, parties and concerts.

Like most Colleges that first week of school when doe eyed freshman arrive, there are lot of on campus things to attend. Most colleges have a meeting where students can find new clubs, organizations and programs to become a part of. Roaming these halls are bankers and credit card givers.

I was approached by a charming fellow just a few years older than me. He offered me a credit card and I declined because I had heard from my family that is what I needed to do. After I said no, he persisted with his sales pitch of the credit card. Except, I didn’t realize it was sales pitch. These words that flowed from his mouth were music to my ears. Promises of low interest rate (what’s that? I had no idea), easy to use, use it for beer, books and gas. SOLD. I signed up and signed my credit score life away.

This little piece of plastic became my study, party and shopping buddy. I didn’t really know the limit or what would happen if the limit was exceeded. I didn’t know understand that paying the minimum wasn’t good. I had no idea, because no one told me.

6 months past and before I knew it I had accumulated almost 4,000 dollars of debt. Oops. What now? I panicked and when the card stopped working and the calls started coming, I did what any 18 year old girl does, I cried. I knew had to make that dreaded phone call home to explain that their scholarly daughter had in fact made a very uneducated financial move.

After a few lectures and a few ‘pull you out of school’ threats, we all calmed down. Thank goodness I was lucky to have parents that could afford to help me out of my mistake. They took the card and paid it off. I got job and to pay them back, plus interest, of course.

My advice to parents or young college students. Educate yourself on credit cards. Parents sit down with your child and explain the basics behind it. Students avoid the smooth talking men and pretty woman with shiny cards. Don’t ruin your credit like I did. And if you are in debt, don’t be afraid to ask for help from anyone whether they are your financial adviser or parent.

Author Bio:
Christine Kane from internet service providers, she is a graduate of Communication and Journalism. She enjoys writing about a wide-variety of subjects for different blogs. She can be reached via email at: Christi.Kane00 @ gmail.com.

Small business and credit cards

2012-05-16T04:10:00.000-04:00

Guest Post by Carolyn Knight

It might seem like small businesses have no need for credit cards. They’re supposed to be making money, and they can always go out and get a loan so there’s no reason they would benefit from a credit card, right? That’s definitely not the case. Small businesses can benefit in all kinds of ways when they use credit cards the right way. If you’re on the fence about implementing credit cards in your small business read on to find out some of the advantages that will benefit you:

Best way to track spending

If you’re a business owner you know how hard it can be to consolidate your books at the end of the year. You have to go through all the receipts from your expenses for the year and match them up to make sure you aren’t leaving anything out. If you use a credit card for purchases the tracking will be quite simple. All you have to do is go through your prior statements and you’ll know exactly how much was spent and where. A credit card will make it easy to track your expenses throughout the year.

Rewards

Like consumer credit cards, you can often get some kind of reward for your purchases made on business credit cards. You can get everything from cash back to points to airline miles, depending on the card and your business needs. If you’re going to be spending money it only makes sense that you should get some of that back in the form of rewards. Business credit cards are the perfect way to get a return on the expenditures you’re going to make either way.

Track employee spending

Depending on your business, you might have employees that need to make purchases on a regular basis. If you get a business credit card you can have duplicates made for your employees and track how much they’re using the card. This will help you keep their spending under control, and it will also help you identify areas where your profits are being lost unnecessarily.

Build credit

If you’re just starting out in business it’s unlikely that you’ll have enough business credit to take out a significant loan. It’s hard to build credit if you can’t borrow, but you can achieve the same effect by using a business credit card. The barriers to entry for getting a credit card are much lower than they are with getting a big loan. Once you have your credit built up you will be able to get money in loans much easier.

Businesses can benefit from credit cards just as much as consumers. You should consider getting a credit card for your business if it would help any of the areas above.

Author Bio:
Carolyn is a guest writer on the topics of business and credit cards. She is also an expert on order management software that works with Shopify, 3dcart, and BigCommerce.

4 Tips for Helping your Partner Get out of Debt

2012-05-07T06:09:00.000-04:00

Guest Post by Maria Rainier

If there is one thing in common that almost all American adults have is that they carry with them at least some personal debt. In fact, it's very often the case that what brings us together are the hardships—financial and otherwise—that we've endured over the years. Many adults, after becoming very involved in their respective romantic relationships, decide to pool together finances. Whether this means simply living together and sharing related costs, or going as far as to take on a partner's debts, deciding to entangle yourselves in each other's finances is a huge step. Here are some things to consider before helping your partner tackle his or her debts, or vice-versa.

1. Be completely honest about your debts as soon you get serious about your relationship.

There's nothing worse than being with a person romantically for several years, perhaps even approaching marriage, when your partner suddenly discloses the enormous pile of debt they've accrued over the years. Of course, when you love someone deeply enough, you'll do anything for them. But to be fair to your partner, and for your partner to be fair to you, it's important to be as honest as possible as soon as possible so that you can begin managing each other's debts.

2. Help control each other's discretionary spending.

One of the main reasons that most adults cannot control their debts incurred before marriage is that they don't make it a priority. Once you both become privy to your respective debts, you can help each other out by making a joint budget that allows each of you to pay off more than the monthly minimum on different loans and debts. If you aren't committed enough yet to where you are actually paying off your partner's debts, you can, at the very least, help each other prioritize your debts by controlling your monthly expenses.

3. Don't jeopardize your future to help your partner get out of serious financial trouble.

Perhaps one of the main reasons that married or otherwise committed couples end up splitting is over serious financial troubles. If you go so far as to cover all or a significant portion of your partner's debts, and in the process you incur significant debt yourself, the end result will only be mountains of resentment. Of course, if you can afford to help your partner out, then by all means do so, if you feel that the commitment warrants that sort of generosity. However, if you hurt yourself financially in the process, be wary.

4. Establish a long-term repayment plan.

If you do end up paying for a reasonable portion of your partner's debts, or if your partner pays for yours, set up a repayment plan that you can stick to. For example, my brother paid for about $4,000 of his then-fiancée's student loans. This ended up being a great idea, just because now she owed him, instead of a debt company that would charge her significant amounts of interest. Now, four years into their marriage, she's paid him back completely and they are both well on their way to being debt-free.
It's terrible that finances can have a huge, mostly adverse, impact on personal relationships. But if you're careful, you and your partner can use your relationship and teamwork skills to both relieve your debt load. Good luck!

Author Bio:
Maria Rainier is a freelance writer and blog junkie. She is currently a resident blogger at First in Education where she writes about education, online colleges, online degrees etc. In her spare time, she enjoys square-foot gardening, swimming, and avoiding her laptop.

Ban Uncontrollable Spending for Good

2012-03-19T05:49:00.000-04:00

Guest Post by Lauren Bailey

6 Steps to Shopping Addiction Recovery

It is an unfortunate reality that many Americans and citizens across the world have found themselves in debt and living beyond their means. As common as this is, though, suffering from an actual shopping addiction is quite a separate issue, and it can leave hugely detrimental marks on your finances. If you have found yourself compulsively spending and you need to break the cycle, here are some easy steps to help start the process.

1. Admit you have a problem and seek the help of a counselor.
As anyone who has struggled with an addiction issue knows, the hardest part about the process is completely admitting to yourself that you have a problem that is out of your control. The next step is admitting you need help. Remember, if you could help yourself, you would have done it already! Make an appointment with a counselor or psychologist to talk about the issue and get some guidance about ways to move forward.

2. Cut up Your Credit Card
The first step to financial freedom after putting yourself in damaging debt is to give up your credit card, once and for all. Pay for purchases with cash, check or debit only.

3. Find Shopping Alternatives
The compulsion to shop is not going to simply go away because you realized you are addicted. In fact, your need to shop will probably grow the more you try to fight it. Make a list of activities that you can do in place of shopping, so you have plenty of options handy.

4. Bring a Shopping List Every Time
If you want to control what you buy, then you need to figure out exactly what you need, and only purchase those items. Make a list of items you need to purchase every time you shop, whether it is for clothing or groceries, and stick to it.

5. Change Your Lifestyle
Keeping up the same routine as you had before you started dealing with your addiction will not help your recovery process. Instead, think of this as a time to change up the way you live. Drive a different way to work, eat out at different restaurants, and add activities that you never did before to your weekly schedule.

6. Bring a Friend
When in doubt, bring a friend. Find someone you can trust to support your through your recovery process and call them when you feel the urge to shop, or when you have to go shopping and feel afraid you will overspend.

Author Bio:
Lauren Bailey regularly writes for online colleges. She welcomes your comments at her email Id: blauren99 @gmail.com.

The 3-Step Guide to Building an Emergency Fund

2012-02-27T05:08:00.000-05:00

Guest Post by Jane Smith

Tax return season is upon us. For some this is good news, but for many it means it's about time to dip into their savings to write the government a substantial check. We'd all like to get huge refunds every year, but the reality is that many people pay $1,000 or more a year after their tax returns are filed.

And though it should be a fact of life by now, tax returns always seem to take us by surprise — and then leave us fretting over how to pay the taxes we owe.

Of course, taxes aren't the only expense that would have you digging in the couch cushions (metaphorically or literally) for some extra cash. Medical bills, automotive maintenance or repairs, home repairs, and other kinds of catastrophic events, however unlikely, are always possible, which is why it is so imperative to have an emergency fund.

You've probably heard of an emergency fund before, and you probably think they're a great idea. But, if you're like the majority of Americans, you don't have one, and you find yourself stretched dangerously thin whenever something unexpected happens.

There's no way to plan around emergencies, but there is a way to prepare for one, and if you've ever been through one you'll know that the first thing they affect is your wallet.

Knowing you should have an emergency fund and knowing how to start one, however, are two very different things. Here's a brief guide to get you started, so you'll be ready for this year's tax return, or any other emergency this year:

1. Calculate your monthly spending and then multiply by six. This figure represents how much you should have in your emergency fund at all times. Essentially, you want to have enough to cover any expense you'd normally make for six months without any additional income. Imagine that you are injured or ill and are unable to work at all for a month or two. Your bills wouldn't disappear just because you weren't making money, so you'd have to have an alternative way of paying them. Having six months of income saved might seem excessive, but you know the old saying: Better safe than sorry.

2. Devise your saving strategy. There's no one way to correctly save money; as long as you're saving, it doesn't really matter how it happens. You can put it in a shoe and still be making progress if that works for you. However, if you have no idea where to begin consider making monthly deposits into a separate savings account that you never use (except in real emergencies of course). Think of it like a direct deposit to your future self. You'll thank yourself later, even if it seems unnecessary now.

3. Use sparingly and responsibly. Often times when people begin saving money they make withdrawals too frequently for things that really aren't emergencies. Use discretion and common sense when deciding what qualifies as an emergency; take out only what you need; and be sure to replenish what you take out as soon as you can.

Author Bio:
Jane Smith from background check is a Houston based freelance writer and blogger. Questions and comments can be sent to: janesmth161 @ gmail.com

Best 5 Books on Debt

2012-01-31T05:22:00.000-05:00

Guest Post by Laura Backes

Perusing the financial self-help isle at your local book store can be overwhelming. Not only because of the amount of books but the amount of debt that got you to that dreaded self-help isle. Debt is not a foreign concept, lots of Americans struggle with credit card debt but not to worry there are books that can help you, here are a few:

The Money Book for the Young, Fabulous & Broke by Suze Orman

Suze Orman is every college student’s nightmare; consider her as no nonsense financial professor teaching you lessons about post grad life. This book is to help the young professionals with a small salary and student debt. Don’t let the title fool you, this book can help those who are older as well.

Your Money or Your Life: Vicki Robin and Joe Dominguez

This self help guide not only teaches you how to get out of debt and face the real issues but it puts your life back in to your hands. In 9 steps, this book shows you how to take control and learn to live life with your money and not the other way around.

The Total Money Makeover: A Proven Plan for Financial Fitness by Dave Ramsey

The not so sensitive financial guru Dave Ramsey, helps you find the source of your debt problem, you. This book teaches you what to do and what no to do. Listen to him and you are bound to get out of debt and it may not be the easy road but remember slow and steady wins the race.

How to Get Out of Debt, Stay Out of Debt, and Live Prosperously by Jerrold Mundis

A breath of fresh air is what this book brings to the table. Based on the successful practices of national Debtors Anonymous program you are able to relate to the millions of other Americans suffering from the paycheck to paycheck living and the relentless debt collectors. An easy and simple read, a must buy immediately.

The Ten Commandments of Money by Liz Weston

This book is realizing that today’s economy isn’t the easiest, the costs are going up and you aren’t making enough. The ten financial commandments that Liz Weston goes over will help you set a budget and stick to it, look at your options for the future and how you can control your own debt crisis.

So become a book worm and start reading. You will learn a few things that will help and guide you to financial happiness. All of these books can be found at your local bookstore or online. Happy reading and happy saving!

Author Bio:
Laura Backes enjoys writing about all kinds of subjects and also topics related to internet service in my area. You can reach her at: laurabackes8 @ gmail.com.

4 Smart Ways to Use Your Income Tax Return

2012-01-27T05:14:00.000-05:00

Guest Post by Katheryn Rivas

It may be a little early in the year to be talking about income taxes and, no doubt, it's the last thing any of us want to think about at this point, but thinking ahead about these things is the first step in strong financial management. As tax return season slowly approaches, we have visions of wonderful ways to spend that money for our financial betterment. Some of us think about tucking that cash away under our mattress for a rainy day or putting it in the stock market to hopefully make a quick buck. While of these are both options, they are probably not the wisest ones. More of us dream of shopping sprees and home improvements with our tax refunds. However, there are many other ways you can utilize your tax refund that will be smarter and more productive for your financial health. Consider these four options this year.

Add to Your Life Insurance

For many of us, putting our tax return towards our life insurance is the last thing we consider. However, adding to your life insurance from this money can be a very wise plan for certain people. If you own a home or have children, your life insurance coverage should be about eight to ten times your annual income. While this may sound extreme, it is an important thing to consider. Try using your tax return towards gaining the right amount of life insurance. This is a good way to invest in the important things like your family and loved ones.

Lighten Your Debt

Obviously, using your tax return toward your debt is a smart option. If you are able to make it through the year without that chunk of money, you can probably put it toward something more productive than your spending account. Rather than continually paying the minimum amount on your credit card bill, try putting your tax return money toward that bill to pay a larger chunk of it off. Paying the minimum can cause big problems if you have a high interest rate. Those interest rates can sneak up on you and eventually cost you more money than you expect.

Get an Energy Audit

A home energy audit can help you pinpoint where it is you are losing money in your home. This audit can be an expensive thing to get done, but it can end up saving you a significant amount in the long run. Put your tax refund money towards lowering your regular energy bills and improving your home's livability and resale value.

Invest in Your Self in the Right Way

While many of us use our tax refunds to invest in ourselves in one way or another (new clothes, new furnishings, etc.), there are better ways to improve ourselves using that money. Try investing in your career by spending that money one furthering your education. You can take classes to get a higher degree or to obtain a specific certification that can put you in a new pay level at work. By investing in your education and career, you have the potential to earn more money later in your life and you will make yourself more valuable.

Author Bio:
Katheryn Rivas writes for online universities blog. She welcomes your comments at her email Id: katherynrivas87@gmail.com.

Paying Medical Bills with Credit Cards, is it a Smart Choice?

2012-01-09T05:04:00.000-05:00

Guest Post by Eliza Morgan

Those who really fear credit card debt are usually cautious when it comes to making future purchases. For example, if a couple knows they want a new TV for the living room, they'll usually save for a few months and then pay for a new TV with cash. But not everything can be so calculated, especially when it comes to your health.

Sometimes you get sick out of nowhere, and even if you're insured, getting billed for medical expenses is one of the easiest ways for someone to get into debt (or deeper debt). Think about it: one single trip to the emergency room can set you back $200 for someone with insurance. If this was an unexpected expense and you don’t have enough money in your account, what will you do? Charge it on your credit card. Depending on how quickly you can pay it back will determine how much interest you will accumulate. In fact, according to the most recent statistics, nearly 21 million Americans accrued credit card debt in 2008 due to using their cards to pay for medical bills. While health is important and unpredictable, there are some things you should consider first before using your credit card to seek temporary relief.

1. Negotiate with your Doctor/Hospital. First things first, it's always important that you speak up front that you may not be able to afford whatever procedure or test that the physician says you need. If it's an emergency situation the physician will go ahead and do the procedure, but they will be more willing to give you a discounted rate or work out some sort of payment plan (some charge interest; others do not). Either case, you are not obligated to pay any sort of out-of-pocket expenses up front so don’t be too tempted to put it on your credit card immediately. But if you discuss your financial situation from the beginning, the physician may be able to reduce your bill in some area, whether it's with the anesthesiologist if you've had surgery or with your medications.

2. Know who is more likely to Report to Credit Bureaus. If you put your medical bills on your credit card and then can't find a way to pay off your credit card bill, you will undoubtedly be contacted by a bill collector. From there, the appropriate crediting bureaus will be notified as well and your discrepancy will negatively be placed on your credit report and affect your credit score. While you do in fact want to pay off your medical bills at sometime, it's important to know that rarely do physicians and hospitals actually report to collection agencies (as opposed to credit card companies that do it almost immediately). In fact, various sources say that only.07% of medical businesses actually report their patients to bureaus. Most just write off any losses.

3. Get a Health Savings Account. Lastly, a great way to be better prepared for these kinds of unexpected medical expenses to acquire a health savings account (HSA). Most health insurance companies require a high deductible (about $1,500 for a single) to establish one through your plan but they can really be a life saver and help you be debt free. How it works: a portion of your paycheck (prior to taxes) is put into your HSA each month. You can build the money in your account tax free as well. You are then issued a debit card and can use that card strictly for paying for medical expenses, such as when paying off co-pays, medications, and remaining balances you may have on a surgery. It takes out the temptation of using a small portion of your savings for something other than medical uses. Your balance moves from year to year and works as an IRA after 65, so it can be invested.

Author Bio:
Eliza Morgan is a full time blogger. She specializes in writing about business credit cards. You can reach her at: elizamorgan856 at gmail dot com.

Ways to Avoid Credit Card Debt this Holiday Season

2011-12-12T23:05:00.002-05:00

Guest Post by Amanda Tradwick

Some of us can spend thousands of dollars on gifts during the holiday season. Many of us turn to the convenience of our credit cards to finance these giving (shopping) sprees, causing us to impulse purchase and spend much more in the long run by paying high interest rates. Even more modest holiday shopping budgets can spiral out of control when they are compounded by excessive interest rates over the year, or more, they take to pay off. Here are a few tips to help you avoid using your credit cards this holiday season and accumulating more debt:

Make a List

Start out by making a list of everyone for whom you want to buy a gift. Include family, friends, work associates, church members and anyone else you can think of who you want to give a gift. If you find that the list has become too long, you can go back through and remove some people. Creating a complete picture of your gift list will help you budget better.

Set a Budget (and Stick to It!)

Now that you know who you want to buy for, start setting a price limit for each person to come up with an overall budget. This is easier than setting an overall budget and then dividing by the number of recipients because you aren't likely to want to spend the same amount on your officemate as you are on your mother. If you find that your overall budget ends up being too high once you've set individual limits, you can go back and make a few adjustments. Setting an overall budget -- and a per-person budget -- will help you to better select gifts once you begin.

Hit the Sales

Once you have your budget, maximize its potential by shopping sales and online promotions. There are a few times a year when many retailers are known to mark down their items, most notably the day after Thanksgiving and the Monday after Thanksgiving. Shopping during this time can save you a significant amount. The period after Thanksgiving and before Christmas is also a generally good time to shop.

Don't limit yourself to these sales times! Look for sales throughout the year -- even those right after Christmas if you're able to plan that far out for the next year. Also, take advantage of online sales and specials. Many retailers offer lower prices through their online stores, as well as free shipping and gifts with purchase. Check out all your options to get the lowest prices that you can.

Leave Your Credit Cards at Home

If you don't have your credit cards with you when you shop, you won't be tempted to use them to spend more than your budget, to purchase impulse items for which you had not planned, or to get "just a little something extra." Take cash with you, or use a debit card that is tied directly to your checking account and does not have a protective credit line. Once you're out of cash, you're done buying.

Make Gifts

The easiest way to save money on your gifts and to save yourself the burden of credit card debt is to make some of your gifts. Many friends and family would prefer to receive a gift that was made with a sincere spirit or that has some sentimental value. Framed photos, favorite baked goods or even heartfelt letters all make great gifts. Be creative and make it specific to the recipient.

Saving early, making a plan and doing some smart shopping can all help you to save money this holiday season and to avoid the burden of extra credit card debt. The earlier you plan (and save), the better off you will be and the brighter your holidays!

Author Bio:
Amanda Tradwick is a grant researcher and writer for CollegeGrants.org. She has a Bachelor's degrees from the University of Delaware, and has recently finished research on grants for married college students and student grants in north carolina.

Lacey’s Credit Card Debt Story

2011-11-12T00:43:00.001-05:00

Guest Post by Lacey Cook

Hello all. My name is Lacey Cook, and this is my personal credit card debt story. I was always taught to spend my money wisely. From the age of eight, I started to save for my first car. By the time I turned 18, I had saved enough to buy a six year old car at about $8,000. I paid in full with a check, and I’d never felt so great.

After that, I went off to college, where I had some trouble keeping my finances afloat, but I made it through with the help of my parents. After graduation, I got married and started a new chapter of my life. That’s where everything started to go south. I had no student loans or credit card debt, and we’d just got a few thousand dollars for our wedding, but that wasn’t enough. He was about $40,000 in debt from student loans and credit cards, and we had no way of paying our bills. We struggled to find jobs, and we ended up having to use my credit cards to make ends meet for the first few months of our marriage.

Finally, we found jobs and started to slowly dig our way out of the hole. Everything was great, but we still wanted something more, so we decided to get a dog. We went to the pound to adopt one, and found the most adorable little puppy I’d ever seen. She was fun, yet still wanted to cuddle, and I knew she would be the perfect addition to our new little family. We spent our weekly budget for groceries on her and decided to eat bologna and mac and cheese to tide us over.

The second day after we got her, she started to look lethargic, and I wanted to make sure she wasn’t sick so I took her to the vet. Turns out, she had a very draining virus that could have killed her if we hadn’t caught it in time, and even with the treatment, she still only had about a 50% chance of survival. I handed over my credit card. Two days and nearly $2,000 later, we finally got to take her back home to nurse her back to health.

We knew, at that point, that we had to make some drastic changes in our spending to get us back out of debt. We sat down, made a list of all of our monthly expenses, and created a budget to suit our life. I started clipping coupons and stopped buying name brand items to cut down our grocery bill. We discontinued our cable bill as well and used digital rabbit ears instead. We cut down our budget so much that we were able to start paying way more than the minimum payment on our debts each month, which I know is important when you are trying to save your credit score.

We’re not out of the woods yet, but we’re getting there as fast as we can. In fact, we’ve been so successful, that we’re also able to put away a little money each month to start a retirement fund. I know you may be thinking that we shouldn’t have to worry about such things yet because we’re young and have plenty of time, but I have realized that I definitely don’t want to have to work until I’m too old to stand. The sooner a person starts to save for retirement, the sooner they can actually retire. I am determined and motivated to get out of this debt and live my life to the fullest.

Author Bio:
Lacey Cook is an author who writes guest posts on the topics of business, marketing, credit cards, and personal finance. Additionally, she works for a website that focuses on educating readers about getting their first credit card.

3 Steps to Building a Superhuman Credit Score

2011-11-11T06:52:00.001-05:00

Guest Post by Jacelyn Thomas

With the economy still weak from the recent recession (though at least recovering), it is harder to impress credit lenders than it was ten years ago. What would have passed for an above-average credit score in 2001 (680) is now considered on the lower side of average. The reason for this new, higher definition of credit-worthiness is primarily that banks are still hesitant to loan money for fear of not making that money back. They want as few liabilities as possible, so they are more stringent in their credit score requirements.

In light of the shifted credit score curve, it might be time to examine your own credit score, as well as your spending and credit usage practices, to ensure that you aren’t unfairly denied a loan for your next car, house, or business venture. There isn’t much you can do to improve the economy, or lender’s expectations, but there are steps you can take to improve your credit score, so that you will impress even the shrewdest of banks and always get the best rates.

Step 1: Know Thyself (Or At Least Thy Credit Report)

There are a number of factors that influence your final credit score: Payment history, bankruptcy, credit card debt, length of credit history, type and number of credit cards, and hard inquiries that are made when you apply for loans and lines of credit.
At any point, it is possible that one or more of the three bureaus that track your credit usage or any involved party (banks, collection agencies, etc.) could make a mistake that might negatively affect your score.

To avoid this, check your credit report every 12 months for errors. You can obtain a free copy of your credit report (though your score isn’t on free reports) from AnnualCreditReport.com; if you find any errors you can dispute them to have them resolved. But be aware: it can take up to six months to fix an error on your report, so do it early, and be patient.

Step 2: Hold Steady

Especially if you’re planning to buy a new home or car in the near future (three to six months), don’t open any new lines of credit if you can help it. Ultimately your credit score shows lenders your risk level, and will directly affect your interest rate — and applying for loans and credit cards temporarily lowers your score, so you might not get the best rate possible if you have any recent hard inquiries into your credit report.

Instead of opening new accounts or transferring balances, make the best use of the credit you have. The best way to prove to banks and other lenders that you will be a reliable borrower is to have a great revolving credit history.

Step 3: Be a Payment Superhero (Or At Least Pay Your Bills On Time)

Credit history accounts for 30% of your credit score, so it is imperative that you aren’t delinquent on any accounts you have. The fastest way to delinquency is missing payments or due dates, so make your credit card payments with superhuman punctuality, and you’ll be on your way to a superhuman score.

But not missing payments isn’t really enough. Ideally, you should be paying your entire balance in full (or at least more than the minimum amount due) every month, and should never exceed 30% of your total available credit.

You won’t be bulletproof or be able to leap over tall buildings in a single bound, but if you follow these steps, your credit score will leap up, and will be as close enough to bulletproof that lenders will trust you with their lives (or at least their money, which is all that really matters).

Author Bio:
Jacelyn writes about identity theft for IdentityTheft.net. She can be reached at: jacelyn.thomas @ gmail.com.

Credit Card Debt vs. Student Loan Debt: Which Should take Precedence?

2011-09-09T17:54:00.000-04:00

Guest Post by Mariana Ashley

With Labor Day now done and long over with, all colleges have officially commenced. That said, there are many students who will be completing their final semester/year of college. While many are looking forward to earning their diploma, many are dreading what happens shortly after graduation—repaying student loans. But the situation may seem a lot worse for graduates who have to face a double whammy: student loan and credit card debt. If you find yourself in this situation, which debt should you try to take care of first and why? To find out, continue reading below.

What Kind of Debt Gets Higher Priority?

To state it rather directly, you should always aim to clear your credit card debt before your student loan debt. This is because since your credit card is considered revolving debt as opposed to installment debt, it will impact your credit score more ferociously and more quickly than a student loan debt. That's not to say that your student loans should be disregarded. But if you have some sort of student loan grace period—which is typically around 6 months or so after graduation—you should put all of your energy to wiping out your credit card debt first before making payments to your loan. It's understandable why you may want to pay off your student loan first during the grace period, after all you typically do not acquire any interest during this time. But ultimately credit card debt will do more damage. If you find an extremely high-paying salary job and can afford to pay off both credit card and student loans simultaneously then by all means do it. But if your resources are limited, go with the credit card debt first. If your student loan grace period expires and you still have a hefty credit card balance, talk with a student loan officer immediately to figure out a way to make the smallest monthly payments possible. Sometimes doing something as simple as consolidating all of your loans can result in a small monthly payment, some as low as $50. Whatever you do, you never want your loan to get defaulted though.

Debt Collection Rights

If for some reason you cannot make timely payments on either your credit card debt or student loan debt, you can be reported to a credit card debt collection agency or the Department of Education debt collection agency respectively. By law, debt collectors (of either department) can't threaten to repossess your home, car, or anything else valuable over the phone to compensate for your debt. But they can drag you to court and sue you. Here, if a judge finds you at fault then the judge can mandate that certain items be repossessed, garnish your wages, or collect your tax refund checks to pay off your debt if you don't the money to pay it off for example. Note that credit card and student loan debt collections work a little differently however. With credit card debt, each state has a statue of limitations—which simply means there is only an allotted time for which a debt collector can hit you with a law suit. For example, in Texas it's 4 years. A debt collector can still take you to court even after the statue of limitations is up—it's up to you to show proof that the allotted time has expired if you are taken to court. While you may get out of making the court forcing you to pay up, know that your credit report will be ruined for a good chunk of your life. Good credit is needed to make most big purchases that you will make as an adult, including a home and car. A student loan debt collector does not have any restrictions however and can sue you at any time.

Author Bio:
Mariana Ashley is a freelance writer who particularly enjoys writing about online colleges. She loves receiving reader feedback, which can be directed to mariana.ashley031 @gmail.com.

Finding Options to Help Fight Off Debt

2011-08-04T00:10:00.005-04:00

Guest Post by Stella Walker

Getting into debt is scary. There is no denying that. You start to get this anxious feeling of being trapped; you have too many bills not paid off to think clearly. You know you have to do something, but you feel like you don't have a lot of options.

In actuality, there are a lot of options out there, and I'm not just talking about bankruptcy (although this is still viable in extreme cases). Half the battle is getting yourself out of this emotional and psychological slump and convincing yourself that you can be proactive about your debt and finances.

Cut off luxuries

If you can't pay your own bills, it's time to start making your own coffee and lunch and bringing it to work. You should also at least attempt to repair household items yourself. If there's no cancellation fee, cancel your gym membership and instead opt for good-old-fashioned jogging. While you're at it, cancel any other services that you don't need; if the service doesn't facilitate you getting out of debt, you don't need it.

Start a small business

While it is true that it generally does take some money to startup a small business, some business start-ups are actually extremely low cost. One extremely cheap startup is a snow cone stand. Have any secret hobbies or skills? Now is the time to put yourself out there and at least give it a shot. You'd also be surprised how cheap it is to start up an online business. You could even write a blog telling the story of your struggles with debt (like this one).

Balance Liquidation Plans

If you have a whole slew of credit cards with outstanding balances and frighteningly high interest rates, you should perhaps consider requesting balance liquidations plans from your creditors. While this doesn't allow you to charge to cards that you've liquidated, it does lower the interest rates to extreme degrees. Just be sure that you have ways to make necessary expenses without your cards.

Pay Cash

If you do wind up liquidating your cards, this is a great way to try budgeting with cash. The beauty of a cash budget is that it forces you not to overspend because you literally can't. You take out the amount of money you want to budget each week (or month) in cash, and if you find yourself getting low on cash, you just have to start scraping pennies and looking for food in the freezer until the set time that you allow yourself to take out more cash.

Use Envelopes

If you decide to limit your budget with cash withdrawal restraints, another great strategy is to organize separate budgets into different envelopes. For example, you'll have envelops for bills, clothes, groceries, etc. with a designated amount for each envelope. The idea here is that you limit a budget for each area of your life, and if one envelope empties to quickly, you have identified a possible spending problem in your household.

Author Bio:
Stella Walker is a freelance writer of free credit score where she writes about topics including credit, debt, investment, bankruptcy.

Fighting Debt Incurred Through Identity Theft

2011-06-17T04:27:00.005-04:00

Guest Post by Nadia Jones

There's no getting around how much identity theft sucks. It's deceptive, hard to spot, and it is also hindering the spread of technology. As more information is used and stored online, the threat of identity theft increases exponentially as criminals can access more ways to steal your private information.

According to the Federal Trade Commission (FTC), nine million Americans have their identities stolen each year, resulting in $631 off out-of-pocket expenses for victims due to legal fees and misappropriation of their false debt. It can take years before someone realizes they are the victim of identity theft, resulting in months or even years of the victim's time being spent towards repairing their credit worthiness and adjusting their falsely accrued debt. Remember, you are not liable for fraudulent debt resulting from identity theft. Do not pay for a criminal's debt.

Preventing and Detecting Identity Theft

Before explaining how to get rid of your fraudulent debt without having to pay the debt yourself, I think it is extremely important to detail how to prevent identity theft. Since there are so many ways identity thieves can acquire your information, protecting yourself involves a combination of a lot of little things:

Shred financial documents
Sign the backs of credit cards immediately
Don't carry your Social Security number or card with you
Don't offer personal information to anyone you don't know or trust
Be cautious of links in unsolicited emails
Use a variety of secure passwords
Keep your personal information locked and secure
Report theft or loss of key identification material (passport, license, etc.)

It is also important that you monitor your bank and credit card statements carefully, looking for any unexpected transactions or new accounts made under your name. The same applies to loans and financial aid.

Also, review your credit report annually. You area allowed a free copy of your credit report every twelve months. All you have to do is request it. To order a free annual report, go to AnnualCreditReport.com or call toll-free to 877-322-8228. Otherwise, you can consult a consumer reporting company (like Equifax, Experian, or TransUnion) which will charge about $10 for a copy of your report.

Stopping Identity Theft and Fraudulent Debt

Once you realize you are the victim of identity theft, you have to defend your reputation and credit rating by immediately filing a "Fraud Alert" on your credit reports and then reviewing your reports carefully. This will alert creditors to raise security measures before opening any more new accounts or making changes to your existing ones. Filing a fraud alert will also get you a free copy of your credit report, so you can look for accounts that you didn't open and debts on accounts that you can't explain. The consumer reporting companies all have toll-free numbers that you can call to place a fraud alert, and you only need to call one:

Experian: 1-888-EXPERIAN (397-3742)
TransUnion: 1-800-680-7289
Equifax: 1-800-525-6285

After filing a "Fraud Alert" you must do the following:

Request for consumer reporting companies to block fraudulent information.
Contact the security and fraud departments of companies where an account was opened or charged without your knowledge.
- Send them copies of supporting documents, including the identity theft affidavit.
- Ask for verification that the account has been resolved and fraudulent debts discharged.
File a police report
Report fraud to the FTC

Thankfully, the FTC has a very useful "tools for victims" site that offers sample letters, directions, and even a chart you can print and fill out to remind you what you've done and what you still have left to do.

Author Bio:
Nadia Jones blogs at online school about education, college, student, teacher, money saving, movie related topics. You can reach her at nadia.jones5 @ gmail.com.

Top Debt Relief Scams to Avoid

2011-05-02T22:16:00.002-04:00

Guest Post by Alan Winkler

Getting out of debt can sometimes be a long and arduous process under the best of circumstances. Between the complexities of debt legislation and the various competing demands of debt collectors and consolidation firms, someone working to relieve their debt has several obstacles to overcome. Unfortunately, there are nearly as many shady, untrustworthy, and downright fraudulent collection and consolidation services out there as there are honest firms that genuinely try to help consumers. In order to avoid being taken advantage of, it's important to understand some of the most common debt consolidation scams out there.

Watch Out for Hidden Fees

One of the most common forms of debt consolidation fraud is the time-tested tactic of charging numerous hidden fees. All debt consolidation firms charge a fee of some type or other in order to stay in business, but reputable firms are up front and very open regarding their fee payment structure. If you have started to notice reoccurring charges from debt consolidators that defy explanation, you might be in the grasp of scammers. In order to avoid this, check out a debt consolidation company thoroughly before beginning a business relationship with them. Companies that pressure you to sign contracts right off the bat may be trying to conceal hidden fees or service charges until it's too late for you to back out.

Consider Your Debt Plan Carefully

Debt relief plans are also ripe for exploitation. These plans set the structure for how you'll repay your debt and what the time frame for doing so will look like. Ethical debt consolidation companies provide an excellent way to plan your debt relief and satisfy creditors, but all too often, unscrupulous debt collectors with no concern for customers will offer plans that do not meet creditors' needs, leaving the customer in the lurch. This happens for a variety of reasons: the scammers may be better able to hide an exploitative fee structure in longer-term, slower payments, or they may have lured customers in with false promises of far lower interest rates that the creditors have not actually offered. These scams leave the individual in terrible trouble, as their financial situation worsens and the scammers make a profit.

Know Who to Trust

While it's not a scam, it pays to be aware of the fact that many false debt relief organizations will attempt to portray themselves as something more trustworthy. Common examples include so-called "Christian" debt consolidation firms, which prey on the trust that many feel for their co-religionists; the "non-profit" label is also frequently employed by these charlatans. The FTC has filed suit against several so-called "non-profit" debt collectors in the past few years for advertising their status as non-profits falsely in order to generate trust. Choose a debt consolidation company on their track record and user reviews, not on the basis of their attempts to portray themselves as more honest than the other guys. When it comes to debt consolidation, a little skepticism can go a long way towards keeping you safe!

Remember, the debt consolidation firm is working for you, not the other way around. Avoid companies that are too eager to talk you into a commitment, and if they're too forceful, ignore them. Many other options exist. Likewise, be sure that both you and your creditors understand and approve of the consolidator's plan. Preparations such as these can save hundreds if not thousands of dollars on top of the extreme aggravation that debt scams can cause. Get out of debt today with honest and ethical debt consolidators.

About the Author: Alan Winkler is a professional debt advisor and regular writer for Debt Consolidation Advice, a credit card debt relief blog. He also covers the debt relief industry as a whole and provides money saving tips.

How to Avoid Overspending on Your Credit Card

2011-04-26T22:33:00.010-04:00

Guest Post By Andrew Black

Your credit card debt could be piling up by now if you are into overspending. It is becoming a common problem these days as the number of so-called shopaholic people increases. Moreover, modern society has obviously made it very easy to spend much more than you should. It is about time you start aiming to clear your rising credit card debts.

If you want to obtain peace of mind, you should aim to curtail, control, and eliminate overspending. In reality, it could be harder than you think. Most of the time, consumers fail to resist the urge to spend according to their means. Overspending is a problem that leads to more financial problems. Thus, it would be best if you would observe the following tips on how to avoid it.

Prevent impulsive spending

Spending on impulse could be a habit. It is one of the main reasons cited for consumers’ overspending activities. To prevent it, try to reflect prior to buying any item. If you like to buy anything you see in a retail shop, try not to make a purchase right away. Instead, wait for a day before you actually decide to buy it. Doing so would enable you to rethink the proposition to buy and possibly find other items that could be comparatively better.

Do not go to places where there are numerous temptations to buy. Overspending is common to consumers who frequent shopping centres and retail shops. If you go to such places to overcome boredom, try to find other venues to do so. Likewise, try not to spend your lunch break strolling around retail shops. How about hanging out in a garden or a park where there could be less temptation to spend anything?

Live within a strict budget

If overspending is your problem, set a specific budget per week. Intend not to spend beyond this allocation no matter what happens. Furthermore, make sure your weekly budget is in cash, which is much easier to monitor. Keep your credit cards in a secured place and do not bring it whenever you go out so as not to face the urge to spend unnecessarily.

It would also help if you would know how much you spend. Be conscious when you buy small or relatively cheap items. For instance, do not buy coffee as frequently as you do. Review your bank accounts, payables, and credit card bills so you would determine how much you spend within a particular period. Also try to look at different types of items you purchase.

Set objectives when shopping

You could effectively avoid overspending if you would set clear objectives prior to shopping. Buy items because you really need them, not because you want them. Before deciding to purchase anything, think more than twice whether you would go on and complete the purchase. Do not try to look closer at things that do not fall within your shopping objectives.

Lastly, you could curtail overspending by avoiding spending by habit. Review your own habitual spending pattern. This way, you could determine whether you tend to buy things based on necessity or simply based on your habit. Try to find other recreational activities that would take most of your idle time from habitual spending.

Andrew has been working in the finance industry helping people to consolidate credit card debts. Andrew now likes to share advice on how to avoid debt.

No Advance Fees for Debt Relief Companies

2011-01-18T22:39:00.003-05:00

Guest Post by Robert Zangrilli

Robert Zangrilli is the CEO of Franklin Debt Relief, a debt settlement company based in Chicago, Illinois but servicing clients nationwide.

Before October 27, 2010, the common practice in the debt reduction industry was to charge to up front fees to consumers who used their services. Prior to this date, my company for example, charged its fee over the first 18 months of our client’s programs, which usually lasted 24 to 36 months. Earlier this year, however, the FTC ruled that charging fees in advance to settling a consumers’ credit card debt as a practice was harmful to consumers. Certainly this was true of many companies, especially those who collected the majority of the fees before providing any services and in fact, probably had no real intention of settling their clients’ debts.

This all changed effective October 27, 2010 when the FTC made effective an up front fee ban for debt relief services. More specifically, the FTC ruled that debt relief companies must now negotiate the term of at least one of a consumer's debts in order to receive compensation for its services. Not only must there be a written agreement of this settlement, but the consumer must agree to it and have made at least one payment to a creditor in order for a debt relief company to receive compensation for its services.

On top of these new rules regarding fees, there are also specific provisions in the new rule regarding the advertising and sales of debt relief services. First off, debt relief companies are now required to make specific disclosures to clients before enrolling them into their programs. Second, debt relief companies are prohibited from making deceptive claims about the success of their programs, including how long it will take to settle a consumer’s debts and how much a client will save. While these two new provisions may seem unimportant, these are perhaps the most significant parts of the new rule because it makes it clear what is a deceptive practice in the debt relief industry, which in turn will be used to justify FTC actions against unscrupulous actors.

I hope this article sheds some light on the protections afforded to consumers seeking debt relief services. As is true in most industries, there are still bad actors out there trying to skirt the law by setting up face-to-face meetings with consumers (the rule only sold over the telephone), so it is important that consumers continue to do their due diligence before enrolling with a company. BBB complaint record, how long a company has been in business, and TASC accreditation (the debt settlement industry’s trade organization) are both good indicators of how reputable a company is.

Harassing Creditors and the Way to Defend Yourself

2010-03-05T05:25:00.001-05:00

Guest post by Kevin Craig

As a bad debt grows, debt collection agencies seem to exert more and more pressure on the debtors in the form of creditor harassment. Although debt collection is legal, harassment by collection agencies is not! The FDCPA laws are like the cool shades that shelter the consumers’ rights and offers protection to illegal debt collection tactics. There are various types of harassment that the creditors impose on the debtors:

Debt collectors threaten to hurt.
They come to damage any personal property.
They use obscene language over the phone.
They threat to put the consumer behind the bars.
They make disturbing calls at your workplace.

It is even possible for the consumer to get a counseling from the attorneys in their state regarding their rights like-

Creditor harassment and consumer rights – (Fair Debt Collection Practices Act)
There are two different types of creditor harassment laws, the federal laws and the state laws; the federal laws are for the entire citizen, while the state laws are only for the citizen of that particular state. If both the laws are taken into account it’s the state law that is more effective. The FDCPA is designed in such a way that it can fight back the abusive creditors and if required can also put a penalty on them which might even count up to $1000.
Utilizing unfair practices in collection of debt
There are situations where the debt collectors may charge more than the original amount.
The debt collectors may ask the consumers to incur certain extra financial charges.
The debt collectors may threaten to damage personal property.
Unfair or outrageous collection activities are practiced by the debt collectors.

Notice Violation
The creditor sends a letter to the debtor addressing him as a “dead beat” which means someone who has no money to pay for his credit cards.
The creditor sends out a collection letter which signifies a court order.
Limitations of FDCPA
Firstly, the debt must be a consumer debt and not a business debt.
FDCPA does not apply to third party collection agency.
It is only the debt attorney who can suggest which law applies and when, so that he can give him the required protection as and where required.
FDCPA to save the consumers from creditor harassment
The FDCPA has been designed in such a way that it can protect human rights against creditor harassment .If the harassment is illegal, the consumers can even sue the debt collectors for any kind of damages done either to their personal property or to them. A local consumer attorney can guide the consumers as to whether the case of violation of FDCPA laws against the debt collectors is legal or not!
You can try out the following to deal with creditors

Police assistance
Complain to the trading standards
Doing full and final settlement to clear debts with a help of a debt settlement law firm.
Take creditor to Small Claims Court.

How did Jennifer get rid of her debt?

2009-12-10T03:17:00.001-05:00

Guest post by Jennifer Lohan

Getting out of debt requires great effort and when you have dependent family members, nothing can be worse than that. Jennifer faced a similar situation. Her husband passed away long ago. She is the sole breadwinner of the family and her in-laws are also living with her. She has four credit cards that she used on and off whenever she was short of cash. Since her income wasn’t sufficient to keep up with her monthly payments, she soon fell into debt. She did whatever she could to find the best debt consolidation company for her needs and at last found one. She has signed up for their debt consolidation program. For finding the best debt consolidation company, she took help of her friends, family members and useful online resources. She wanted to eliminate her debt burden once and for all. So, how did she get into the debt trap?

Falling into the debt trap

There are mainly two particular reasons that can push you into a vicious debt trap and make your finances go out of control. The first is an unexpected job loss and the second is a health condition. Hence, what would you do in this type of circumstances? Jennifer was regular with her payments till her husband suffered a job loss. The situation became worse when he died of cancer. This was truly a defining moment in her life. She finished up all her savings and also took money from friends and family members in her futile attempt to save her husband.

Jennifer’s monthly income was not sufficient to manage her debts. So she went to some creditors for credit. Furthermore, she began to use her credit cards oftentimes. For the first one or two months, there was no problem and Jennifer was regular with her payments. When the subprime mortgage meltdown took place, a number of credit card companies lowered their credit limits and modified credit card payment plans. Jennifer didn’t have any idea about this. As a result, she lagged behind her payments since she didn’t have the ability to make the minimum monthly payments.

How did Jennifer get rid of debt?

As soon as she started facing credit problems, she acted intelligently and talked to a credit counselor. Jennifer was cautious about the ill effects of filing bankruptcy since a number of her friends had gone for the same option. She didn’t let her balances pile up to a huge amount. Jennifer’s financial condition was thoroughly evaluated and the credit counselor advised that she should go for a debt consolidation program.

As Jennifer was already restructuring her finances, she didn’t wish to spend an excessive amount for a consolidation program. She selected a non profit debt consolidation company. Before signing up, she also confirmed that whether the company is affiliated with the BBB. As soon as she was confident about their trustworthiness, she signed up for the program.

The consolidation agency asked for nominal fees against their services. They carried out negotiations with her creditors and persuaded them to lower her interest rates and monthly payments. All her debts were combined into a single affordable monthly payment. A repayment plan was set up that helped Jennifer keep tabs on her monthly payments. She followed the plan sincerely and became debt free in the end.

Thank you Jennifer for this post.

The site Jennifer links to Debt Consolidation Care, Internet's first get-out-of-debt community is a fine resource of both information and people. People trained in debt law, professionals with experience in the field, people who have gone through getting out of debt and people in the process of getting out of debt. It is a place where you can ask questions and get help.

I do have a few words of caution though. When seeking help getting out of debt please beware.
Avoid actual debt consolidation loan programs.
Avoid programs that require a substantial payment up front. The program should actually cost you very little or nominal fees as stated in the post.
Avoid companies listed with the Better Business Bureau (BBB) that have substantial complaints against them. Being listed with the Better Business Bureau is not a seal of approval or measure of trustworthiness, but mounting complaints against a company listed with the BBB should be a dis-qualifier. From the BBB site.
BBB accreditation does not mean that the business’ products or services have been evaluated or endorsed by BBB, or that BBB has made a determination as to the business’ product quality or competency in performing services.
Use Common Sense. If something a company is telling you seems wrong trust your instincts. Go elsewhere, ask questions, walk away from what seems wrong and get more information. Just because your in debt doesn't mean your stupid. Take a deep breath, take charge of your situation, ask more questions. You may need help, need guidance but you don't need someone trying to profit from your pain.

How Credit Card Debt effected...

2007-06-06T04:56:00.000-04:00

...my transition to a new career.

Well by now if you have read the previous posts you are aware that I got a decent job at a University in North Carolina. Now it is time to move from Maine to North Carolina. We are about to make a trip with no idea of where we will live, but we have faith things will go smooth.

One advantage I had was that I was actually taking 3 months of leave from the Navy from July 1 to September 30th. This means that from 13 July to September 30th I will be pulling in full pay from two jobs. While this will help us in August the transition/startup costs of moving to a new area will be a challenge.

Our first stop was in Connecticut to visit relatives. Here we decided that it would be best to take out a $2,000 loan to help us in our transition. We got online with our credit union and applied for a loan. Fortunately we belong to the largest credit union in the world, the Navy Federal Credit Union. Since this credit union serves sailors around the globe they were out front in online services. The only real question was Would our entering into a credit card debt program effect our ability to get the loan? Would the fact that I was retiring from the Navy or the fact that I had yet to actually get start the new job effect our ability to get the loan?

Our next stop was New Jersey to visit family. While there we called the credit union and they answered our questions by approving the loan, we arranged to pick up the check at a local branch of the credit union serving a near-by Navy Base.

With our $2,000 buffer in place we headed to Greensboro. We checked into a local motel. Our plan is to rent for at least a year, learn the terrain, then possibly move to a new location. We hope to be able to purchase a home within 5 years.

So far being on a debt management plan didn't effect us. We got the loan from the credit union, but I had been a member for 17 years. Now we were about to rent a house in a new area with no history of a job or residence in this area. Would being on a debt management plan make this a difficult process? We were full of anxiety and worry but moved on, the week was ticking bye.

We found a small house (remember sacrifices are needed to get out of debt) to rent and had no trouble with the lease or any of the utilities. I was both relieved and surprised that we didn't run into any difficulties.

The next post I get turned down for my first loan.