The Complete Debt Tips

Youhave to be some kind of sadistic to say that you like debt. Thefact of the matter is, everybody at some point in time will havesome. It is almost completely unavoidable with the price of housing,transportation, and let’s face it, GREED!!! We are a “gotta haveit now” people and sometimes it doesn’t workout the way we hadoriginally hoped. Maybe everything that has happened to you hasnothing to do with spending habits and has everything to do withfactors out of your control, i.e. medical emergencies etc. Whetheror not you have a lot or a little or you can or can’t pay
thebills. Everyone has need of a plan in one way or another.

Soyou find yourself on this website wondering if there is going to beanything here for you. After all you are the only person in theworld going through what you are going through, right? The fact ofthe matter is that there is always a solution. It may not be whatyou thought or had hoped it would be and in some cases it might beexactly what you thought. The purpose for this is to give you theinformation and materials to not only analyze your specific situationbut to understand where you fit and the options available to youbased on your needs and situation.

Soyou are loaded, you fill up your credit cards every month and justpay them off, fantastic. If that is you then if you don’t alreadyhave some rewards cards that you are using then get some. Let thecard company send you on vacation at some point. For those of you inthis situation, maybe you can learn some budgeting strategies or tipson how to save thousands of interest on your mortgage. The point ofthis is to help regardless of your situation.

Youhave to be some kind of sadistic to say that you like debt. Thefact of the matter is, payments or even pay way over the minimums. Or maybe you are the person who is lucky to make the minimum eachmonth or your budget is so tight that if you have to buy poster paperfor you child’s school project you are going to go withoutsomething to cover the difference. Or say something has come upwhether it be job loss or hours cut, anything, and you have to putall of your bills on your cards each month and you scrape by just tocover the ever increasing minimums.

Thenlet’s do something about it.

Theoptions available to you are completely dependent on your situation. Don’t think you are beyond help or above help. Here you don’teven have to ask for it. It is here if you want it.

Let’sexplain some basic truths:

*The “Banks” are on the “Banks” side, period. No man canserve two masters.

*The people that call to collect debt are not your friend. Their jobis to get money out of you, that’s it. They will use every toolthey have in their box to do that. Be nice, be mean, threaten you,whatever they can to get something out of you. This universal truthis as real as gravity.

*You can’t borrow your way out of debt.

*You can’t beat compound interest. (that doesn’t mean you can useit to your benefit)

Sowhat are the options?

*Mortgage Checking Account. This is a program that allows youto use the banks tactics against them to accelerate the pay off ofyour debt, specifically your mortgage much faster than normal. Spoken plainly, your mortgage interest is calculated off of youraverage daily balance in the account and not a fixed monthly interestrate. You can use your whole pay check to pay down your mortgage andthen live out of the account increasing your balance throughout themonth. Sounds complicated however it does work and can save you upto half the time and interest you would normally pay on yourmortgage. A great program but is limited to those who have goodcredit and equity in their home.

*Debt roll up/Debt snowball. This is a program which analyzesyour debt and put the debt a pay off order. This program iscalculated using factors like interest rate, balance, minimumpayment. If used properly will save years and thousands of dollarsin interest. The great part about this kind of program is that itisn’t credit dependent, it works, and you don’t need a thirdparty to set anything up for you. The downside is that it takes hugediscipline and you have to be able to make more than the minimumpayments on your debt.

*Debt Consolidation. This term is often misused and tied toprograms like Debt Settlement or Credit Counseling. Those programsare very different and you need to understand that. DebtConsolidation is grouping all of your debt under one “loan” andone “payment”. People can do this by getting a signature loanfrom their bank, a refi on their home basically or a loan to pay offdebt. Most people do this to try to lower payments or interest. Where you can lower payments by lowering interest rate it isn’t assignificant as you might think so the way most people lower thepayments is to extend the term. It is mathematically impossible toshorten term and lower payment. Example: 10k worth of cc debt willcost generally between $200 and $250 dollars a month in minimumpayments. What some people don’t understand is that for the mostpart credit card payments aren’t calculated on interest but onpercentage of balance. The difference in term between 9% and 15%interest rate on a credit card could be as much as 10 years howeveryour minimum payments are the same. Say your where to get asignature loan at 12% from your bank for that same 10 worth of creditcard debt. (Keep in mind every bank is different and this in no wayencompasses every bank, credit union or loan program). Most bankswill put you on a term of 36 months for that amount of debt whichwill put your payment around $350 per month so at best your only $100more than you where paying. On the flip side say you pulled someequity out of your house and got at second mortgage at 6% with a termof 20 years would put your payment at around $71.64. Great, Right? Sounds good until you look at what you are paying back at the lesser6% interest rate. You will pay over the course of 20 years$17,194.35. That’s $7,194.35 in just interest. You can’t borrowyour way out of debt!!!

*Consumer Credit Counseling/Debt Management Plan. This is theprogram where you have a company negotiate down your interest ratesand they put you on a payment that you can “handle”. There aremany companies that do this, some are non profit but almost all ofthem will be compensated by credit card companies, you, or both. This is a program that is often thought of as a way to save yourcredit because “ideally” the credit card companies will begetting a payment that is on time so they have no reason to post latepayment history on your credit report which should keep your FICOscore up. What they don’t tell you is that this is reported on thecredit report as “Third Party Management” of your finances andwill show up as DMP or CCCS. The problem with that is when you gofor loans in the future many lenders look at that like a Chap 13Bankruptcy. Can make it difficult to find financing. It is alsovery expensive because not only are you paying your debt back withinterest, you are paying a company fees along with that.

*Debt Settlement/Debt Negotiation. This is the process ofnegotiating the debt balance with the creditor, not interest or term,the debt balance. The purpose of this is to get the creditor toaccept less than what they are asking for, ideally, less than 50%. Taking interest out of the equation if you only had to pay back halfof the debt, how much quicker could you be out of debt. This programis an ethical way to avoid Bankruptcy, to get the creditor somethingrather than nothing. This kind of program you should only do if youhave no other option. You borrowed the money, pay it back if youcan. This isn’t about kicking the creditors in the teeth, it’sabout trying to find a win/win in an otherwise extremely difficultsituation. As with anything, there are thousands of debt settlementcompanies and unfortunately most are horrible, and are there to dolittle more than take advantage of a situation where people trulyneed help. There are good companies out there but they are becomingharder and harder to find.

*Bankruptcy. There are two main types of Bankruptcy, Chap 7and Chap 13. Chap 7 is a complete dismissal of your debt and a cleanslate so to speak. Chap 13 is a reorganization of your debt and isbasically a Debt Management Plan orchestrated by the court system. Since 2005 and BAPCA it has become increasingly difficult to fileChap 7 and most people are forced to file Chap 13. This may be thebest option for some of you.

Sowhat do I do?

Hereare some questions to ask and don’t lie.

*Do I have a handle on my money?

*Can I cover all of my bills?

*If I cut of all of my credit cards, can I live?

*Do I have a realistic budget?

*Do I live by the budget?

*What do I do with extra money I have? Do I save it or spend it?

*Where do I want to be financially? 30 years from now? 20, 10, 5, 1?

*If I lost my job today, how long can I go without income?

*Do I have a plan?

*Is the lack of a plan worth the stress?

*How would I feel in 5 years if I had no debt?

*What would it mean to you if you didn’t have to worry about whereyou where going to get the money to feed yourself?

*Do I have a retirement plan that isn’t a 401k?

*What do I want out of this life financially?

*If I keep doing what I am doing am I ever going to get to where Iwant to be?

*How does that answer make you feel?

Believeme if you don’t get on top of all of this, nobody will do it foryou!

Sowhat is the first step?

1^st Decide where you want to be and write down some goals. Itall starts with a goal of where you what to be. You have to knowwhere you are going. Your goals are more than where you want to bewhen you are 60+. Where do you want to be next month?

2^ndAnalyze your finances. Download and fill out the budget planner. Be honest and accurate with this because it will set the pace forthe rest of your life. What is in the past is past, do not dwell onwhat your results have been up to this point because you are notgoing to be doing it the same way. New plan and actions = NewResults. If you fail to plan you plan to fail. Nobody runs abusiness successfully without a plan. No boxer goes into the ringwith out a game plan. No Coach goes on to the field of play withoutknowing what they will do. Period… You can not predict yoursuccess without a plan.

3^rdUnderstand where you are currently, pride and delusions ofgrandeur will not change the reality of the situation. Understandyour situation, accept it and do what is required to get to where youwant to be.

4^thCommit to your plight. If you decide to take control of yourlife then do it full steam ahead, no looking back, tuck your chin andjust start swinging. A man I respect highly, a very successfulentrepreneur once told me that if you start out with a plan and doeverything you believe it will take to be successful then you have noreason to not expect that you will be successful. Be accountable toyourself.

5^thBuild your plan. Start with where you want to be and build theplan backwards from there. Know what you need to do every step ofthe way so that there are no surprises. You also need to be able toadapt. The only things guaranteed in life are death and taxes. Beflexible and if you need to modify your plan don’t throw you handsup and quit. ADAPT and move on.

6^thExecute your plan. Be unstoppable, positive and immovable. Thisis your life and it will be exactly what you make it. Make itgreat!!!