Debt Relief Articles

Almost all Americans carry credit card debt. Actually, over 40% of US families spend more than they earn. If you’re like most of us, you try not to think about how much money you owe and what that debt is really costing you. If you did, you might not sleep too well.
However, by not fully understanding your current financial situation you are only prolonging the problem. In order to rid yourself of unsecured debt, you need to face the uncomfortable and often painful fact: it is very possible that your current debts may take you 30 years to pay off.

That can’t be possible you say! I only owe $6,000. This should be paid off a couple of years. My credit card company would not do something so unethical to me, would they?

As a matter a fact, they would. In fact, if you took 30 years to repay your debts, you are an ideal credit card customer.
It’s important to realize that the credit card companies only allow you to make minimum payments because it benefits them. This is not a good thing for the credit card holder. They do not do this out of generosity; this is how they make money.

By paying only the minimum monthly payment each month, you are virtually guaranteeing that you will be a customer for life.
If you are genuinely concerned about your financial wellbeing, you should be adamant about paying more than only the minimum balance on your credit cards each month. You must remain cognizant of the fact that if you can’t afford to pay more than the minimum balance on your card each month, you can’t afford whatever it is that you are buying.

When making a credit card payment, your funds are separated into two parts; interest and principal. Traditionally, when you only make minimum payments, most of it goes towards interest that is paid to the credit card company, which is why it takes so long to pay off your debts. Would you pay $10,000 for an item that is priced at $5,000? If you purchase that item on a credit card that is exactly what you’re doing. If your credit card has an 23% interest rate and you only pay the minimum payment each month you will never get ahead!

For most Americans, credit card debt is a dangerous and growing problem. The average American family has more than $8000.00 in credit card debt and spends more than they earn on a annual basis. Credit cards can be useful tools when they used properly, but more and more Americans are getting in over their heads and threatening their financial futures. It is important to realize that just because you can pay your minimum payments each month doesn’t mean you don’t have a credit problem. Low minimum payments benefit the credit card company, not the consumer. The following are some of the warning signs that you have credit or debt problems:

* You are unable to put any money in savings

* You make only the minimum payments on your credit cards

* You use increasing amounts of your total income to pay off your credit card debts

* You use credit cards for things you should buy with cash, such as groceries

*You have more than two or three major credit cards and have balances on all of them

* You’re at or near your credit limit on most if not all of your credit cards

* You’re unsure of the total amount you owe on your credit cards

* You’ve taken out cash advances on credit card to pay other bills

* You’ve been denied credit due to your debt to income ratio

* You get calls from collectors about your credit cards

Now for the what might be the most popular article of this series. I personally was shocked and amazed by what I learned during my research on consumer debt. Read on and learn more about your rights.

Most Americans are worried about bill collectors calling on the telephone and harassing them. In fact, some Americans have even agreed to send money to complete starngers because they felt the stranger had some mystical power over them. Maybe they were threatened. Average people succumb to collection activity that coerces them into paying, perhaps out of fear.

How many of us simply cannot wait until the mailman shows up? Yeah right. It seems that we have a sixth sense about knowing what is in the mail. Without the use of a scanner, we seem to know which envelope contains a check, a letter from a friend, a card from Aunt Sue and a nasty letter fom a bill collector or attorney. These are letters that we fear most. For some reason we place them on the coffee table to be opened later. Maybe we wait until our spouse goes to sleep. After all, we don’t want them to know the bad news.

Sometimes we place them in a drawer for safekeeping. That’s right. We sure don’t want to lose them. Who knows, someday we might get enough courage to open them.

Here is how the collection scenario plays out. It is easier to collect money within the first 60 days because it is fresh in your mind. that is when the collection folks will put on the pressure. Believe me when I tell you that they know more about your situation than you might think. They know whether or not you have a job, whether your wife is working and whether or not you use your credit cards and whether you make mortgage and car payments. They also know how much your payments are. So when I tell you they know the odds of collecting from you, that is true.

What do you do? Well, I’ll tell you the very first thing to do. DO NOT TALK TO THE BILL COLLECTOR ON THE TELEPHONE! Inform them that you are going to notify their agency to communicate with you in writing only. This is your right under the Fair Debt Collection Practices Act. If you think that you have extra special skills on the telephone and have that desire to out-talk a collector, you might want to think again. They are trained in the art of convincing people to give them money. They also have the added incentive in that they are all on a commission basis.

They could care less if the baby is sick, or your spouse missed a few days of work. They only want what you have and that is money. Your best plan of attack in resolving these issues is to get them in writing. By doing this you can virtually turn bad debt into good credit.

In my next article I’ll address just how this turn-around is accomplished.