Credit Card Debt-itis June 24, 2010

In medicine, many illnesses and diseases tend to have “itis” attached to the end of a word. Dermatitis–a condition affecting the skin…appendicitis–an inflamed appendix…debtitis–a condition that affects the mind in that the victim must spend too much money and get into debt. When attached to a common word like debt, it then indicates that there is a sickness present. And let me say that there is a sickness present with credit card debts! While many experts think that there are ways to cope with credit card debt-itis, the only way to get rid of this condition is to get rid of the credit cards. Only then can the victim really start the healing process. Get rid of the credit cards, and then follow the 3 step plan to curing yourself of credit card debt-itis.

Planning

The first part of planning is to make a list of the charges you incurred while afflicted with credit card debt-itis. At the very least, if you are in too deep because of your illness, just write down the name of the credit card and the amount you owe on that card.

Next, write down how much income you have each month. Include your salary and any other side income you get. On the other part of the paper, write down all your expenses for the month, excluding your debts from credit card debt-itis. Look at where you can fit in payments on your debt, and work these payments in. Then re-work your expenses to include your debt repayment plan.

Executing

This next step is the most painful to complete. Cures are never easy, but getting over credit card debt-itis and staying cured is very worth the pain. After the planning phase of your cure is complete, then you must actually write the checks and pay down these debts. Cures take action, and you must take action. If you stop paying down these debts, your debt-itis will come back even stronger. It is in your best interest to continue with the cure.

Evaluating

Completing the first two phases of your cure are the hardest part of the healing process. After you have made significant progress in paying down your debts, evaluate your accomplishments. Have you paid down many of your debts? Are the balances going down significantly every month? If they are, then consider the cure effective and finish up with your cure. If not, look at where else you can take money from to pay on your debts. Go back to the planning phase and start again. Credit card debt-itis will not go away on its own, and must be treated for you to get better.

Freedom At Last

You may not realize how much you are suffering from credit card debt-itis until you get free from its grasp. Tossing and turning every night, worried about your debts is a sure sign that you are suffering from credit card debt-itis, and when you are finally cured, you will find that sleep comes easily. Also, when you are free, you will also be able to breathe easier…so take the first steps today to cure yourself of the dreaded credit card debt-itis. It can only get better from here.

When Proper Budgeting is Not Enough June 9, 2010

For years, experts have warned us that if we do not budget properly, we will all go into debt and nothing we do besides budgeting can help us get out of it. But what if you budget carefully, watch where your money goes, and you are still having financial difficulties? Debts can add up for the best of us, no matter what we do. Medical expenses, car repairs, or a multitude of other repairs can put your carefully laid plans in an early grave, creating a serious problem for your finances.

Alternatives

When you find yourself buried in debt, with no way out, it can be difficult to see that there are other alternatives besides taking out a loan or defaulting on your debts.  But there are other ways to pay off your debts and repair your credit along the way. Taking on a second job can help you find the extra cash you need, which may be just a temporary solution. Once you have earned the money needed to pay off your debts, there would be no reason for you to continue working a second job.

Another alternative may be to earn money from doing odd jobs for people, such as babysitting or yard work. If you are good with a needle or thread, doing repairs or alterations can help you earn money. Or, if you are proficient in accounting or bookkeeping, advertise your services to help others with their finances.

Snowball Effect

Of course, you could just re-work your budget to include extra money to pay down your debts. One of the finance writers that I really like suggests using a “snowball effect” with your debts.  Make a list of all your debts, ranging from the smallest balance to the largest balance. In your budget, plan to make payments on the smallest amount first and pay that off. Then, take that amount of money next month to begin paying off the next smallest amount. Continue doing this until it creates a rolling ball of snow effect, saving the largest amount for the last. By that time, you should have enough leftover money to make substantial payments on the last debt, paying it off in no time. The point is to get out of debt as soon as possible, so that you do not end up paying extra fees.

Last Resort

Once you have exhausted all possible options and you see no other way out of your situation, maybe a short term or even a traditional loan may be what will help you find temporary relief. Notice that I said, “temporary”. Because of the very nature of any loan, it will eventually get you further into debt. But if having money when you need it will keep you from being homeless, then it can be a good idea.

With traditional loans, interest rates may be low, but they may be harder to be approved for. Especially if your credit score is not as high as it should be. However, this may be a good option if you need a large loan at a low rate. Another loan option is a short term, or payday loan. These loans essentially work like an advance on your salary, and are small loans. The most you can really take out is about $ 1,500 due to the nature of how they work. When you apply online for a cash advance, you will give the essential information on a secure form. After submitting your information, you should hear back from them in a few minutes, and upon approval, have the money to pay your debts in a few hours.

But be very careful with this option! The reason is that if you do not pay back your loan on time, it will be rolled over, making it much more difficult to pay back. The rollover fees, if left for an entire year, can equal to at least a 100% interest rate! Having a plan before even applying for a payday loan will help you stay out of this situation.

Bottom Line

If you came to this blog from a search engine, chances are you are responsible with money. Or at least, you are looking to get responsible with your finances. The last thing you want to do is get further into debt, right? Then get a grip and take charge of your finances. If you must use loans, make sure you are using them responsibly. If instead, you want to earn money to pay off your debts, then by all means, do it! Your financial future is your responsibility and no one else’s. The government is not in control of your finances, and neither is anyone else. If you think you can, then you can. If you think you can’t, then you can’t. It’s your choice.