I Was Crippled by My Debt! Then I Was Saved By The Program

Increasing numbers of Westerners are becoming trapped in a cycle of debt, often ignoring the situation until it is almost too late; once you have admitted that there is a money problem, you can start making arrangements to clear the debts.

So the sooner you sit down and recognize that you need to do something, the quicker your debt relief will start. Debt has become a major problem in many countries but it is important to reduce debt burdens seriously if you do not want to live with less worry.

The most important thing to remember is not to panic and stay focused as this way your decisions will be clearer and more positive. Although hard, it will pay you in the long term to continue to make your monthly repayments on any loans and find other ways to save money.

The easiest way to approach this is to calculate everything you have to pay out regularly both necessities and those inconsequential items that mount up each month. One hard action you will face is to slow down or stop the use of your credit card then start using cash again and you will find yourself being more careful.

You will be surprised to learn that spare money is available which can be put to good use; saving it as part of your debt relief solution, even if it takes a while for it to be worth anything.

By reducing the amount of entertainment you have on a regular basis will allow even more money to go into your fund and your debts will disappear faster.

No-one really wants to increase their mortgage repayments but many homeowners see their only option is to refinance their home which can work but just increases the amount you pay in the long term. Before you go down this route you must think about why you want this option when there are others that can be used.

In the short term, withdrawing cash from a credit card to make a payment may seem to make sense but over a prolonged period it will just increase the debt. If re-financing your home does not work then you must consider filing for bankruptcy but this step should not be taken before you take specialist advice from a bankruptcy attorney.

Some people are able to bypass bankruptcy with the money in their individual retirement accounts (IRA) but such an act can seriously affect your financial future. Should you decide to use your IRA then be aware of how it will affect your long term financial future and you may just reconsider this as a method of debt relief.

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Get Out Of Debt

Are you in so much debt that you are having a difficult time paying all of your monthly obligations?

Many people find themselves in this situation and then they have no idea how they can get out of it. It truly is unfortunate to have arrears because you end up paying double, triple, or even more for the items you purchased simply because the interest rates are so high.

The following suggestions will help you reduce what you owe and give you a map to get out of the arrears accumulated and stay that way.

Tip #1 More Than The Minimum Payment

You have been probably paying minimum payment on all of your arrears and have found that you are not actually getting out of it by doing so, but rather staying current on your credit cards.

If you truly want to pay off what you owe then you will need to start making some sacrifices in other areas of your life and pay larger monthly payments. You want to pay at least double the monthly payment if not triple in order to get yourself back in the black.

Keep in mind, this does takes lot of effort and commitment but you can do it if you simply focus on what needs to be done. The easiest way to pay more than you are currently paying is to cut back on food costs.

Many people spend a great deal of money eating out and on convenience foods when you can easily eat a sandwich for each meal and cereal for breakfast for as little as $20 a week. Compare that to the $200 some people spend per week on food and restaurants and you will see that you really can make some big payments by eating at home.

Tip #2 Stop Spending

In order to really get out of debt you have to change your spending habits.

This means that you don't use your credit cards unless you really have to. This constitutes an emergency only like a flat tire or a medical emergency when you cannot go without it. And, the card should only be used if you don't have cash to cover the expense.

When you are shelling out money because you feel like you can't live without a certain pair of shoes or you found a great outfit on sale you will wind up having arrears. But, when you approach spending by only spending what you have in cash or on something you really need you will learn how to give up those "deals" and stay out of debt and less stressed.

Tip #3 Remove Your Name From Pre-Screened Credit Offers

Often times people apply for credit simply because an offer arrived in the mail. In order for you to not be tempted by these types of offers you can have your name removed from pre-screened offers.

This will allow you to continue your plan of not spending and paying more than the monthly payment each month without any hiccups of additional credit. And, when you don't apply for additional loan you will notice it is even easier to get yourself out of
debt.

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Household Budgets: The Secret Weapon in the War on Debt

Ah, America...land of the free, home of the indebted. According to CNNMoney.com, the average American household has almost $9,200 in debt. That's the average. Some have much, much more. Interest rates generally run in the mid to high teens, so counting interest and payments on other debt, such as mortgages, the average American is dealing with a heavy debt load.

So what can you, Mr. or Ms. Average American, do to get yourself out of this nasty situation? The first step, which may be the most uncomfortable, is the most critical: get your life under control!

And that means preparing a household budget.

A successful business prepares a budget. It attempts to anticipate funding needs going forward, and then does its best to stay within the budgeted amount for its expenditures. You probably have an advantage over most businesses in that you have great foresight in anticipating your financial needs. You know what you typically spend in a given month on various things such as food, clothing, utilities, and rent or mortgage. If you don't have an idea of what you spend on these things, take a look at your checking account registry, or your online checking account information. Your past financial dealings are right there for you to see.

It may also be helpful to use a financial tracking application such as Microsoft Money. You can find out more about Money at http://www.microsoft.com/money/. These types of applications are excellent for becoming more aware of where your money goes. A free online application that is designed specifically for improving your awareness of your spending patterns is http://mint.com. The application automatically labels many of your expenses and lets you classify expenses any way you want. One unique feature of the site is that it lets you compare your spending to the spending habits of people in any city, state, or nationwide.

Just becoming aware of how you spend your money will greatly increase your power. You will likely find yourself becoming less prone to wasting money once you develop this awareness. Once you have a handle on where you money goes, the next step is controlling where it goes. And for that, you need a budget.

The first items in your budget should be the necessities - expenses that are not optional. These would include things like your house payment or rent, electricity, water, car payments, gas so you can get to work, and food. Many financial experts recommend that you pay yourself before paying anyone else, and by that they mean you should take 10% (or however much you can afford) and put it in savings or an investment account. However, if you don't have a roof over your head or food in your stomach, then saving is a moot point. So for purposes of creating your first realistic budget, I recommend that first you take out the necessities. Necessities, of course, vary greatly from the mind of one person to the next, but think of it in terms of BARE necessities - things you absolutely have to have to survive.

If you're really, really serious about getting out of debt, you might want to take a hard look at those car payments. If you could get by with something less, and you're not "upside down" (meaning you owe more than the car is worth), it probably makes a lot of sense to sell and downgrade. It will likely save you some money on a monthly basis, and may even put some immediate cash in your pocket.

Next, take out 10% for your savings. If you can't afford 10%, allocate SOMETHING. But strive for the magic 10%. It is also recommended that you allocate another 10% for charity. This may be an item you leave off until last, but many good things happen to those who are willing to give away some part of their income with nothing expected in return.

After savings and possibly funds for tithing, factor in your debt payments. Yeah, this is when you start to feel the pain. There are steps you can take to help ease the situation, such as debt consolidation. Another strategy is to pay off your debts in ascending order of size; i.e., pay off your smallest debts first, as fast as you can. As debts are paid off, add the amounts you were spending on those debts to what you pay to service larger debts. It's a snowball effect, whereby over time you end up paying larger and larger amounts on your biggest debts in order to get them paid off faster.

Next, factor in your non-necessities. This is where you really have to take a hard look at your life. Are you spending too much money on entertainment? Alcohol? Clothes? Fancy cars (as discussed above)? If you are serious about getting out of debt, then you've got to scale down these types of expenses. Just becoming aware of how much you spend on non-necessities may shock you into action. You should budget for these types of expenses, but cut them back, and allocate the remainder for debt repayment.

The final step in preparing your budget is to write down your income, and make sure everything balances out. You can't spend more than you make (that's probably how you ran up all that credit card debt to start with). If your expenses are too high, start cutting back on the non-necessities. In the end, you'll have a nice, balanced budget.

Once your budget is in place, you've got to find a way to stick to it. One recommended strategy is to use a cash system. The problem with the way money is handled today is that it's just too easy to spend it. Just whip out your debit card. No cash required. No check book and no ledger entry required. But you quickly lose track of how much you're spending. The solution is to allocate your budget requirements into cash categories. Literally put cash into envelopes every month for various categories of expenses. You will be less likely to spend money needlessly if you literally see your pile of cash getting smaller. And you will have much more clarity about your financial situation.

If you follow these steps, it can have a profound impact on your life. You can get out of debt quicker, take control of your finances, and feel much better about yourself. It's all up to you. And it all starts with a budget.

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Home Is Where The Money Is

In today's world, practically everyone is interested in having more money. Unfortunately, for too many folks it's become necessary just to make ends meet. Locating "extra" money is not as hard as it might seem, as long as you're looking in the right places.

When most people are looking for extra money, they try to figure out how to get more. Most people will work overtime, get a part time job, check out various money making ventures and even buy lottery tickets.

However, the best place to start is by looking at how you spend the money you already have. Many people can take anywhere from 10% to as much as 30% off of their spending by cutting frivolous purchases. The way to begin is by creating, then actually using, a budget.

When asking around, I've found very few people who create and use a written budget. In reality, there is little-to-no chance of being in control of your spending without using a budget.

The best way to start a budget is to begin with your regular monthly expenses. These would include such items as rent or mortgage, car loans, credit card payments and all other bills you pay regularly each month. Then you would account for your spending on such items as food, gas, prescriptions, etc. From there, you would add in other items such as car insurance, newspaper and magazine subscriptions and anything else that you pay quarterly, semi-annually, or annually and then calculate the monthly cost for those things.

Next, you need to account for all the other spending you do each month. So, for one month write down how every penny is spent. Now, this really is not as hard as you might think. Simply carry a small notebook and pen at all times and write down each purchase you make no matter how small or insignificant it may seem. It is in tracking this kind of spending where you'll find most of your potential savings.

Look over your spending in these areas and ask yourself it you really need or use all these things your hard earned money is going to. Do you really read that magazine or does it just sit on your coffee table until the next addition arrives? Do you use readily available coupons on the things you're already buying? If you carry a balance on your credit cards, are you make your payment as soon as the bill comes in or do you wait until it's close to the "due date"? That alone is one area where people fail reap huge savings.

If you're honest with yourself, you'll quickly discover the waste in your spending habits.

Finally, do you pay yourself first? "Do I what?!?" You're read that right. You should be paying yourself first every payday. It's the smartest way to build your savings. You can even start small with the extra saving you find in your budget. In a few short months you'll get used to not spending that extra money and you'll likely find in fairly easy to increase that savings amount.

If you have a computer you can easily set up a spreadsheet keep track of all these expenses, even if you don't, a hand written budget will work just as effectively. If you stick to it that is.

Get control of your spending and you'll find the "extra" cash you've been looking for.

Tom Schaffer is an escapee from the corporate world and is pursuing a life of affiliate marketing at http://www.jerseyshoremarketing.com. A great way to get your finances under control is this: http://www.jerseyshoremarketing.com/redirect77.html