Use Budgeting To Reduce Debt

Many Americans live their daily lives without a budget, possibly why the average American household is  over $8,000 in credit card debt. People in these difficult financial situations often say that the reason they have fallen upon hard times is because they do not make enough money. More money does not always solve the problem; more money often leads to more problems. The real solution to financial problems is planning, or budgeting.

With a little knowledge and effort, anyone can begin creating a budget to reduce their overall debt.

First, stop adding debt upon debt. It’s of the upmost importance that you quit accruing debt immediately. Use cash for your purchases, not your credit cards. If you can’t pay cash, you don’t buy it. Period.

Next, figure out how much you pay per month total for all of your expenses. This includes rent/mortgage, car payments, car/home insurance, utilities, credit card debt, other personal loan debt, food, gas, Internet, cable television, clothes, eating out, and entertainment – everything.

Now, determine your total income. Subtract this total from your monthly income total. Where do you stand? Are you comfortably in the positive, or barely? Or are you in the negative?

If you’re barely in the positive, or if you’re in the negative, it’s time to reduce your overall expenses.

What can you get rid of? Eliminate extraneous expenses. Also, shop around for better telephone rates, cell phone rates, and insurance rates. Make changes where you can.

Phone your credit card companies and try to get your interest rates reduced; sometimes they’re even willing to negate past due and over the limit fees. Consider contacting a non-profit credit counseling company. Debt consolidation or debt settlement might be a consideration for your situation. Your goal here is to reduce your overall debt from your credit lenders.

If you shift your focus from short term to a long term point of view, you will find that you will eliminate many of your wasteful spending habits. Furthermore, you may find that you are saving money for a rainy day, possibly even investing. Once your financial maturity reaches this point, you will no longer fall prey to life’s unexpected expenses. This is the only way to reach financial independence.

DMCC is a 501 (c)3 nonprofit organization committed to educating consumers on financial issues and providing personal assistance to consumers who have become overextended with debt.  Education is provided free of charge to consumers, as well as personal counseling to identify the best options for the repayment of their debt. To speak to a certified credit counselor, call toll-free 866-618-3328 or email contact@dmcconline.org. DMCC is located at 3310 N. Federal Highway, Lighthouse Point, FL 33064.

Credit Card Debt Relief Act 2010

Many Americans are struggling with out of control credit card debt. As a result, several debt relief options have been introduced to the market including debt consolidation, debt settlement, and credit counseling. The Federal Trade Commission  (FTC) recently passed provisions regulating the credit card debt relief industry, mainly targeting for-profit debt settlement companies. Many of these companies promised they could help consumers “cut credit card debt in half”. The problem was, however, that there was no guarantee for consumers, many of which had to pay large upfront fees to the debt settlement companies. Too many of these companies, instead of leaving consumers better off, push them deeper into debt, even bankruptcy.

The Credit Card Debt Relief Act 2010 prevents settlement companies from charging heavy fees even before the completion of the deal. This legislation is intended to provide significant protection for consumers who enter into a debt relief program and stop deceptive and abusive practices by debt relief providers that have targeted consumers in financial distress.

The purpose of the Act is to give consumers with over $10,000 in unsecured debt, who are facing financial hardship, a real and legitimate option for achieving debt relief. Since creditors and card issuers receive nothing in a bankruptcy filing, they are eager to work with genuine debt settlement companies to collect at least some of their money back.

Other provisions of the Act require settlement companies to specify to the defaulter exactly how long the total process will take and also the cost in such a circumstance. Moreover, the borrower can, at any point in time, choose not to continue with the program and in such a case, all his or her funds have to be refunded. The FTC debt settlement provisions also make it mandatory for the companies to inform the concerned customer about the negative effects, if any, of going for such a program.

Will these new regulations put legitimate debt management companies out of business along with the abusive, deceptive, and unfair debt companies? It’s very possible that this Act will have a detrimental effect on consumers, leaving many of them to resort to bankruptcy instead of debt management. Although the intention of the FTC is to protect consumers, it’s yet to be seen if the Credit Card Debt Relief Act will achieve the Commission’s desired result.

DMCC is a 501 (c)3 nonprofit organization committed to educating consumers on financial issues and providing personal assistance to consumers who have become overextended with debt.  Education is provided free of charge to consumers, as well as personal counseling to identify the best options for the repayment of their debt. To speak to a certified credit counselor, call toll-free 866-618-3328 or email contact@dmcconline.org. DMCC is located at 3310 N. Federal Highway, Lighthouse Point, FL 33064.

Deal With Your Debt

If you are one of the millions of Americans out of work, and your cash flow has been impacted dramatically, there are several things you should do especially if you are carrying large credit card balances.

If you know you will be going delinquent on your payments, you should stop using your credit cards immediately, except for one that you will need in case of emergency.

It’s important to contact the remaining credit card companies to let them know your situation and that you will need some relief from your payments due to your employment situation. In the current economy, there are thousands of people defaulting on their credit cards and going bankrupt. When you show that you want to do the right thing and work with the issuer to come up with a solution to your problem, the issuer generally will do all that they can to help you.

Your creditors may suggest that you work with a local credit counseling firm. This is in their interest because those companies receive a portion of their fees on an annual basis from the issuers, along with whatever fee you would be paying them for their service. Asking them for a settlement probably won’t be helpful, they generally do not do this until you are severely delinquent and they have exhausted other resources, such as consumer credit counseling.

The important thing is to get in front of your debt problem. Don’t wait until you are overwhelmed. By that time your choices become more limited, you will most likely be recieving numerous collection calls, and maybe even threatened with lawsuits.

You are more in control than you might imagine if you start early, recognize the problem and deal with it.

DMCC is a 501 (c)3 nonprofit organization committed to educating consumers on financial issues and providing personal assistance to consumers who have become overextended with debt.  Education is provided free of charge to consumers, as well as personal counseling to identify the best options for the repayment of their debt. To speak to a certified credit counselor, call toll-free 866-618-3328 or email contact@dmcconline.org. DMCC is located at 3310 N. Federal Highway, Lighthouse Point, FL 33064.