Posts tagged: credit card debt

Steps to Eliminate Your Debt

Most people are overwhelmed by their monthly expenses. The stress of this endlessly worrying about money endangers their health. There are only four steps to eliminate your debt. These are to get serious about the problem, discover what the problem is, research solutions and take action. It is that simple.

To understand what the problem really is requires tracking all expenditures for a month. This includes any money spent on anything, credit cards, cash, check book or debit cards by anyone in the household. This means gas in the car, lattes, hair cuts, school lunches, mortgage or rent payments, car payments.

At the end of the month this information is written down and totaled. Credit card bills should be listed separately with the minimum monthly payments, amount owed and the interest rate. There are two ways to address credit card debt, the first is to pay as much extra on the highest interest card as possible to pay it off faster and the second option is to put extra money towards the least amount owed to pay that off quickly.

After the monthly budget is clearly displayed, steps three is to come up ways to reduce expenses and eliminate debt. Even small children can make suggestions and work towards the good of the family. Credit cards have to be paid to maintain good credit ratings. The rent or mortgage payment has to be made to keep the house.

A creative look at the other bills may bring some solutions. By reviewing the assorted bills paid monthly like cable TV, telephone, dance lessons, lawn maintenance service and so on, solutions may be found to reduce or completely eliminate some of these.

Money saved here can be used to pay off the credit cards faster. The family can agree to rent a video and make popcorn in the microwave instead of going to the movies. The teenager can mow the lawn, replacing a lawn service. Instead of dining out at noon, everyone can brown bag it. All new purchases will be considered as a need or a want. The new red sweater is a want. Brakes on a car are a need.

Step four is just do it. Whatever plan is agreed on, it needs to be done. This can be tracked for a month or six months. Then another meeting is held, showing the progress towards the goal of eliminate debt.

Reducing spending and eliminating debt is fun once the program has begun. It becomes a healthy mindset to eliminate unnecessary spending and use that money to pay off the bills that are creating so much stress in the lives of many.

Tags: , , ,

categories Managing your Finances | admin, 12 Apr 10 | comments Comments (0)

One Way to Rein in Student Debt

It’s very easy for college students to work their way into debt. The cost of college has gone through the roof and many students have had to take out loans to pay for their education, room and board. But it’s not just the institutional loans that are responsible for the debt burden so many students find themselves saddled with. It’s their credit card debt as well.

That’s because students are literally bombarded with credit card deals from the day they set foot on campus. They’re able to acquire large amounts of credit which is not based in any way on their ability to repay it. And when you add to that the fact that few students if any have the experience and discipline to manage their budget properly, you have a recipe for a student debt disaster.

To combat this, parents need to begin teaching their college-bound kids certain money management skills as early as possible. They need to make sure each of their sons and daughters understand exactly what credit is and how dangerous it can be if it isn’t handled correctly. One way to do that is to introduce them to a student debit card.

Debit cards in general (and student debit cards in particular) are the cousins of credit cards. The main difference is that with a debit card you load up the money first and spend it down as opposed to a credit card that you spend up first and then pay down later. Other than that, they pretty much work the same way.

Students can make purchases with debit cards everywhere that they’d use a credit card. They can buy things online if they want. They can even set up automatic bill payments and draw money out of ATMs. All the same types of things they could do with a credit card.

The major benefit of reloadable debit cards though is that students can’t use them to overspend their way into debt. That’s because when their balance is zero, their card will be refused. They’ll have to reload it with more cash before they can use it again. That forces them to mind their balance and make smarter choices when they buy something.

Another little added bonus is that Mom and Dad can keep track of the spending too. That creates a higher comfort level at home while their teenager is off at school. A little extra scrutiny is a good thing.

A great time to start with a debit card is when the student is still in high school. Then, by the time they get to college, they’ve acquired some experience and built up some good financial habits. Those habits will help them keep their college debt more manageable and will serve them well long after their college days

Tags: , , ,

categories Uncategorized | admin, 15 Feb 10 | comments Comments (0)