How to: Get Rid of Credit Card Debt For Good

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When you finally realize your in deep credit card debt is the time you know you need to do something, but what? What has caused you to wake up. Was it the worry and sleepless nights thinking your going to lose it all. 
 
Most American family's are in credit card debt to the tune of between $2000 and $8000. Short of winning the lottery or declaring bankruptcy, there are no short cuts to paying off your debt. But there are some ways to systematically and effectively get rid of your credit card debt. 
 
Getting out of debt on your own is possible, but it will take a little work. Step one is to stop charging more debt. This may be the hardest part of the process if your short of money and unorganized. It's time to take control. 
 
Next you must access where you financially. How much do you owe and to whom do you owe it to. Might as well throw in there all your debts like Doctor bills and personal loans. Make a list with name of debtor, balance, interest rate and minimum payment. 
 
To do this right you must also create a budget of all your income and expenses. It's time to cut back for a while in life style. I'm talking about maybe it's time to find some things to cut out of your life, but only during the time of this war on debt. Things like cable TV, eating out and other things determined by you. Remember the more money you free up, the more there will be, that can go to pay off debt. The equation is that the more income that goes to debt, the sooner you will be done. You could look into taking on more hours at work or getting a part time job so you will have more money to throw at your debts. 

                             Here's Help On  "How to Set Up A Budget"

 
Now that your organized and have the cash ready , let's attack the first debt. Remember that list you made with debts listed on it, let's get it out and determine who we will attack first. Let's find the debt with smallest balance. We are going to pay that debts minimum and as much money we can scrape together and send it to that account. You have reduced spending on other things and we are going to use that money to put on this debt. While we're doing this we keep making the minimum payment on all our other cards, no extra to those cards. We are focusing on the smallest debt only. When we are done with the smallest debt, we then go to the next smallest and attack that one with all the money we can throw at it. 
 
There are two strategy we are using here. First the focusing on the smallest balance first with everything we have. Why do we focus on the smallest balance? What if I have a balance that has a higher interest rate? You ignore it and stay with the smallest balance because you need to have some wins in this process. With some wins you feel like continuing, because you will eventually lose interest in the long process. Some wins keeps you motivated. It's like going on a diet. If you don't lose some weight you'll give up and quit. 
 
The second strategy is after completing the first balance you take all the payment from the first card and throw it on the second card. Then continue this till you pay off all your cards. You must have an intensity when doing this. It's a hard task that takes hard work. You will lose faith during this process so between the budget and focus, you will get it done. 
 
For all this to be worth it you must not use credit cards again. It's to easy to go back into debt and after all your hard work it would be a tragedy. You will continue to budget and live on less than you make. Saving for future bills and creating an emergency account for the rainy day that is sure to come. 

Whats Best Separate or Joint Accounts?

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I have had a lot of discussions about if you should have a separate or joint accounts after your married. Now, when your not married, I agree that you should keep separate bank accounts. Also separate investment accounts and separate credit card accounts. You shouldn't buy any assets together like cars. Also do not cosign a note on any purchase. This is all sensible because you never know if your going to stay together. 
 
What's different after you are married? From a relational point of view it is better to combine finances. If your young and newly wed what do you have to lose. On the first marriage you are all fresh and innocent about life and so is your spouse. There is no reason not to. What about if this is your second marriage and you have some assets to protect. Maybe you have children and you want to make sure your assets pass to them. I think it's right to keep you accounts separate. 
 
What's the plus side of combining? There will be less accounts to manage. Investments will be combined and make them easier to coordinate and plan. There is a relational aspect because you will have to talk to each other about your accounts. The act of planning and coordinating budgets, investments and paying bills together absolutely will bring you closer. Separate accounts makes this not necessary. 
 
But keeping separate accounts also has it's pluses. You have an autonomy that's important in today's culture. In the high percentage of divorce and break-ups, you have one less thing to fight about. In my personal life I have found that keeping separate accounts reduce the disagreements a lot. I spend and save differently than my wife. Many arguments have been avoided by separate accounts. In case of death, we both have life insurance and our accounts will transfer to the other. With this plan everything runs a lot smoother, for my circumstances, it works for us. Of course there is total transparency, this important in our relationship. 
 
In my first marriage we had combined accounts. At that time that was the way it was done. It worked out great for each of us. We were young and things were great. But now a days you want to play it safe. 
 
Many personal finance gurus say it's better to combine everything in marriage. I disagree because it's more important to do what works best for your particular situation. Don't just follow someones advice, do what's best for your situation. 

Credit Card Companies Are Looking for Business

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I have noticed lately my mailbox has been a little fuller with advertising for credit cards. My old canceled credit card companies are sending me offers via Email. What's going on? Can someone tell Orchard Bank to leave me alone.
 
The new credit card rules are enforce now. Maybe their profits are going down a little and their looking for new business. Or maybe they really like me or they are looking to get back some old customers. Even my old friend CITI Bank sent me two new cards from my old accounts. They must like me again because last year they canceled all 4 of my cards. Now by magic two of my accounts have come back to life. I have even gotten new replacement cards from other card issuers, even though the card hasn't expired yet. I guess they want me to remember to use them. Somethings up, wonder what it is.

I saw over at NYTimes.com the reason why. A spokesman for Bank of America stated " We see deleveraging
 of the consumer" also adding that they see a more frugal consumer and a decreasing demand for credit. It seems we are losing our taste for the wonderful credit card. 

According to the BOA spokesman they are seeing a decline in loan balances of $37 billion dollars from a year earlier with $34 billion of that from the results of charge-offs. With a net decrease of $3 billion dollars in consumer debt balances. Whats the interest on $3 billion dollars. It's quite a bit of money they are losing because of us. With $34 billion in charge-offs  they are hurting a little bit.

Other credit card companies also are complaining that U.S. consumers are by and large deleveraging and are buying less and electing to use debit cards. The use of debit cards have increased greatly and really shot up at the beginning of the recession and is accelerating. I hope America has learned something from this recession and chooses to get out of debt.

The Recession Is Over, Really?

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It's reported by the National Bureau of Economic Research committee after considering numerous economic data and concluding that several key measures of economic activity, including total output and industrial production, pointed to June 2009 as the trough of the business cycle. 
I can understand that the analysts using their guidelines and mathematical algorithms have mathematically determined the recession is over. I have a problem with that. Economists have it all worked out to a science the measurements and data necessary to call these things.

According this has been the longest recession since 1945. The latest one is the twelfth recession since then. So maybe we can trust the economists. They have been studying this for sometime with plenty of data to back them up.

But out here in the real world we see no evidence of the end of the recession even though it ended more than one year ago. I see everyday people out of work and families suffering. In my business we have real estate inventory to sell but can't.

Mark Zandi, chief economist at Moody's Analytics, claims that because of the stimulus, disaster has been avoided. Most economists claim things are getting better because their numbers tell them so. But out in the world times are still very tough. 

Sorry economists but you are wrong, but who am I do go against educated people who study this stuff everyday. I like to take the advice of the old warriors like Warren Buffet. I can't listen to desk jockeys who don't know squat about business.

In an interview of Warren Buffet He states:

"I think we're in a recession until real per capita GDP gets back to where it was before. That is not the way the National Bureau of Economic Research measures it. But I will tell you that to any - on common sense definition, the average American is below where he was before, or his family, in terms of real income, GDP. We're still in a recession. And we are not going to be out for a while, but we will get out of it."

The Oracle of Omaha is  right of course. Most Americans struggling to pay their bills feel the same way. Survey after survey shows people are worried as ever about their economic future. Members of the National Bureau of Economic Research(NBER), who officially define when recessions start and end, seem to hide in their ivory towers issuing statements that confuse most people who barely remember their Econ 101 classes in college.

Kids Need To Work

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One of our duties as good parents is to instill the work ethic in our kids. But how do we do that? In my house both mom and dad go to work everyday to their full time jobs. Teaching by example should be enough but in this world it doesn't even come close, junior is perfectly happy to see others do the work. 
 
Should there be a certain age for your child to look for work? I believe there is. Each family can determine if the child is physically and emotionally ready to go to a job. We found that around the time they got their driving permit was the perfect time. They were mature enough and were self motivated because they needed money for their own life. 
 
Also at this time they wanted to have their own cell phones. We were firm in stating they would be paying their own cell phone or they wouldn't have one. So the job was becoming more of a necessity in their minds. 
 
The amount of money they made was enough to pay the cell phone and give them some money in their pocket. We taught them to save for things they would need in the future. Now all this seems pretty straight forward but with kids there is always some way they mess up. But this exercise is a teaching experience and probably prone to disaster. 
 
Having a job when your young is good for you. Because it teachs many things. For starters, it teaches you to show up somewhere on time. To have an authority over you that's not your parent or teacher. Also that Work = Money. 
 
Now all of our children did not all respond the same, with this wonder plan of the parents. More than half of them learned to work. But some of them just never got on board with the plan. The disgruntled children had to be led kicking and screaming down the road to work. But in the long run it worked out for all. 
 
Everything about work is a lesson in life: 
 
1. Work=Money 
2. Being somewhere on time is a skill that will be used the rest of your life. 
3. You will always have an authority figure over you in some form or another. 
4. Self reliance is the only thing that will never let you down. 
5. Success only comes after many years of work. 
 
Parents devotion to teaching their children is a never ending job. But I'm seeing with the oldest one the fruit of all my teaching. Be prepared to see some bare much fruit and some to bare a little. 

Book Review: Morningstar's 30-Minute Money Solutions: A Step-by-Step Guide to Managing Your Finances

Christine Benz, who is the Director of Personal Finance over at Morningstar, has written a new book. Its called "Morningstar's 30-Minute Money Solutions: A Step-by-Step Guide to Managing Your Finances". It is a well written and practical book. The 30 minute part in the title describes how long it would to take to do the tasks she writes about in each chapter. The book is divided into 11 parts, each describing a different part of financial planning for your life. 

I find the book complete in helping a newcomer get on the road to financial organization. The chapters are laid out that you can come back to each at different times to answer question you may have at a later date. The helpful basic knowledge will help the average person to get the basic info on finances. For the average knowledgeable reader of financial books there are no new revelations. 

Even though the book states the tasks are doable in 30 minutes, I don't think they are. Only if you are already very organized. Yet if you were, you wouldn't need this book. 

There is a web site listed in the book that has worksheets and further articles. 

Here is a list of the chapters:

Part 1: Find Your Baseline

Identify where you stand, what your goals are, and how to get there.

Part 2: Get Organized

Create systems for bill paying, filing, and keeping track of it all.

Part 3: Find the Best Use of Your Money

Determine whether to pay down debt or invest, then decide where to put your money.

Part 4: Get Started in Investing

Establish emergency, short, and long-term plans, and select the right investment mix.

Part 5: Invest in Your Company Retirement Plan

Evaluate your retirement plan and choose the right type of 401(k).

Part 6: Invest in an IRA

Choose the best type of investments and conversion strategies for you.

Part 7: Invest for College

Find the right college-savings vehicle, 529 plan, or investments.

Part 8: Invest in Your Taxable Account

Identify the best investments and maximize tax efficiency.

Part 9: Invest During Retirement

Build an in-retirement portfolio and plan withdrawals.

Part 10: Monitor Your Investments

Check up on or rebalance your portfolio.

Part 11: Cover Your Bases on Estate Planning

Start your estate plan, handle beneficiary designations, and create a personal legacy.

As with all financial help books, this one is written to apply to the broad population. Its a very good start for a neophyte in financial literacy. Some readers will find that this info is enough for their money life. But, more complex situations call for professional assistance in a Financial Advisor. I believe with something as important as your money, its imperative to get a professionals advice, at least once.