Even When You are Working on Getting Debt Free You Still Deserve a Free Trip to Disneyland

I just saw a commercial for Disney's Give A Day. Get A Disney Day give away. Paying off debt is only part of building wealth. The other part is giving back and Disney is doing just that. Visit DisneyParksgo.com beginning January 1, 2010, and volunteer a day with a participating organization (and your service is completed and verified) you'll get a one day admission to Disneyland or Walt Disney World theme park for Free! Disney wants to inspire at least one million people to volunteer a day of service.

I love Disneyland and visit the theme park at least once a year. If you are doing well and paying off your debt you deserve a break. With the park entry at $72 a ticket it's a great way to save money on a vacation and working your way to being debt free doesn't mean you need to be hermit forever.

Start planning and make a budget. Even though your tickets are free you'll probably be looking at hotel room, possibly airline fare, food, and of course souvenirs if you have kids. So plan it out, but don't put your self back in debt just go.

If you absolutely can't afford it it still doesn't hurt to volunteer. Remember: Give back, get Back.

If Others Can Dig Their Way Out of Mountains of Debt, You Can Too!

As we've discussed previously more and more people are choosing to live a debt free lifestyle. We saw the Hildebrandt's dig their way out of $106,000 of credit card debt and begin their debt free life (aside from their mortgage). Just like the Hildebrandt's, continued stories of consumers paying off their debt are continuing to emerge.

According to the Nilson Report, a industry newsletter, the average American household has $8,329 in credit card debt. Lois and Clark have that beat tipping the scales at $193,323.79 of debt. The Hildebrandt's had $106,0000. Now we take look at Dawn Warfield.

Two years ago, Dawn Warfield was drowning in $80,000 of debt. Ten times the national average. She admits that living beyond her means and maxing out her 17 credit cards was part of the problem.

"There is always unforeseen expenses, and when you are making the minimum payments on these credit cards, when you think you can't afford to make more than that, they don't go down." said Warfield.

She had a lot going on at one point. She was going through an expensive divorce and was using her personal credit cards to finance opening her second location for her video store business. "Every month I was writing out 17 checks," she said, "And the interest rates ranged from like 6 percent to 33 percent. So it was impossible."

Warfield decided she needed to take matters in her own hands. "I was transferring balances from one card to another, and every time I got a card to a decent interest rate. I felt like one of the cards would come off the promotional interest rate, and I was just never catching up." She sold the second location of her video and stopped using her credit cards and began looking for help.

She sat down one day and called the credit card companies for all of her credit cards. She called all them one by one and asked each on to work with her and lower her interest rates. None of the would help her. They had directed her to a debt management program of a nonprofit Consumer Credit Counseling Service, which was part of Money Management International.

Together, Warfield and a credit counselor, analyzed her bills and expenses and put together a plan to lower her interest rates and get her one monthly payment.

"I don't even have to think about it, which makes it a lot easier for me, because when you have a lot of debt, it's not just financial, but it's emotional, you know, even physical," Warfield said, "You think about it all the time."

She make her payments on time now. Her payment posts to her creditors accounts and she has very low interest rates.

Warfield is on track to have all her debts paid off in five years. She has been in the program now for two years and is now $40,000 less in debt.

"I'm about halfway," Warfield said, "It hasn't been easy, but we're getting there."

If you are feeling hopeless about paying of your debt, DON'T. You can do it. Although, I was able to pay off my $60,000 of credit card debt without the use of a credit counseling agency, both Dawn and the Hildebrandt's received help from credit counseling. If you have tried to work with your creditors to no avail, contact the National Foundation for Credit Counseling. They have trained counselors who will help you asses your situation and help you develop a plan for the most realistic and logical steps for you to follow. The folks at the NFCC are the ones you can trust. Visit nfcc.org or call 800-388-2227.

Watch Dawn's story.

Never Give Up on Paying Off Your Debt

When watching the Dave Ramsey Show for the first time yesterday I was impressed at all the people calling in and telling Dave they were now debt free or how much debt they had actually paid off. I once had over $60,000 in credit card debt and paid it all back. I had to cut back and do without for quite a while. Actually, it took me five years to pay off that debt. I was newly divorced at the time and I was left with all that debt and I will admit that I did consider filing for bankruptcy. I quickly decided that bankruptcy was not an option and set the way to paying it all off. Dave also stressed several times to never give up on paying off your debt. This is something I stress to our couple Lois and Clark and everyone else out there facing mountains of debt. You can do it!

I came across another piece of inspiration yesterday after seeing an article about the Hildebrandt Family, who paid off $106,000 of debt. Aside from their mortgage, through frugality, determination, and hard work they are now debt free.

At the start the Hildebrandt's owed $89,000 in credit card debt and $17,000 to family. They had been current on all their payments, but credit card companies began raising their interest rates and ultimately caused their payments to go up hundreds of dollars a month. This is something I feel credit card companies don't understand that raising interest rates on people who are making their payments on time can eventually cause them to begin defaulting on their payments. Of course under the credit card company smackdown creditors will limited on these kinds of practices.

Last week the Hildebrandt's were awarded the Professional Achievement and Counseling Excellence(PACE) 2009 Graduate Client of the Year Award. The award is given by the National Foundation for Credit Counseling.

So how did this overload of debt happen to the Hildebrandt's? It wasn't that they a lived a lavish lifestyle. They lived in a modest 1,000 square foot home with their twin daughters and took vacations to visit their family in the mid-west. They didn't live extravagantly, but they weren't frugal either. They always bought new clothes for the girls. They did have medical expenses related to Russell's diabetes and from miscarriages Kandy had experienced. The also stayed committed to tithing, which they gave ten percent of their income to their church.

Many tried to talk them into filing for bankruptcy, but that was not for them. They were committed to paying off their debts. The couple met with FamilyMeans Consumer Credit Counseling Agency (CCCS) and were able to develop a five year plan to pay off the debt. They new if at least they weren't going to make it they were going to go out trying.

To make it happen the couple cut back on discretionary spending and began buying generic food. They also quite exchanging Birthday and Christmas presents with each other and family members.

Even with cutting back the Hildebrandt's found it difficult to make the required $2,000 a month payments to the creditors. This was half of Russell's take home pay and it was tough. Russell took on a second job in order to make the payments as agreed. He would work his primary job as a chemist during the day, get a few hours of sleep, and then clean grocery stores at night from midnight until 4:30 a.m. Catch a couple more hours of sleep and start the whole process again the next day.

The first two years of the their debt reduction process was a rough one. Working two jobs was rough for Russell. The couple also managed to get by on one car until they received a van from a family member. While the balance on their credit cards were going down, the benefits were not yet noticeable. The couple were determined to pay off their debt. When money wasn't available they simply did without.

After a few years their hard work and efforts began to show. The balances were coming down and some cards were even getting paid off. As soon as one card would get paid off CCCS would use the extra money towards other debts and pay off the credit cards even faster.

The couple had gotten pregnant again during this time and although this would mean more expenses, the birth of another child brought a positive light to a negative situation.

In the fall of 2008 just one year from paying off their remaining debt. The couple began daydreaming about a new home. Even though they wanted a new home they new paying off their debt was first priority.

Months later a real estate called the Hildebrandt's and asked them if the would be interest in a rent to own scenario. The rent would be $1,000 a month with $200 going to escrow for closing costs expenses.

In April, the Hildebrandt's used the tax credit for first time home buyers. With that they were able to swing buying the home and pay off their remaining debt six month ahead of schedule.

The Hildebrandt's are now debt free aside from their new home. Russell has also been able to quit his second job.

The Hildebrandt's still live a frugal life and have come to learn the difference between a want vs. a need. Bankruptcy seemed like an easier solution, but it wouldn't have been as satisfying. They also would not been able to buy their new home had they filed for bankruptcy.

I have done it, the Hildebrandt's have done it, and many others have done it. You can do it too! Just like everything else you can do anything you put your mind to. Just make a plan and never give up on paying off your debt.

Don't Let Debt Destroy Your Marriage

Although, I have heard of Dave Ramsey before I haven't really followed any of his financial teachings. I have always been a Suze Orman kind of guy. While reading a recent post on one of the personal financial blogs I follow regularly, "Blogging Away Debt", I looked more into Mr. Ramsey's approach. I have to say I like what he has to say and even entered his recent $999 emergency fund give away. While flipping through channels just now I come across The Dave Ramsey Show and was enlightened to hear a similar story to that of our highly in debt couple Lois and Clark.

Lois and Clark are a couple who asked what I thought they should do with their extreme unsecured debt load. Dave had a couple call in the minute I started watching the show that totally reminded me of them. The couple was even worse off with unsecured debt load of $300,000. A good $100,000 more than Lois and Clark. So I will share with Lois and Clark what David had to say to help them on their way out of their debt jam.

The first thing Dave said was they were not alone. That he had he been through the same thing before. He said the most important couple of things, even more important than anything else he was going to recommend, was that the couple get their arms wrapped around their faith and then wrap their arms around each other. He told the couple not to let the debt take their marriage. The couple admitted that their debt situation had begun to take a dramatic toll on their marriage, which I am sure from the sounds of it, that the same is happening to Lois and Clark.

The next thing Dave recommended was for the couple to start meeting with a marriage counselor now and again stated, "Do not let this mess with a fifteen year marriage". David stated that women have a security gland that spasms when their afraid. He mentioned to the wife that she is afraid in a place that her husband doesn't have. He recommend that her husband recognized that and was made aware of how she was feeling. He said the husband needed to provide her with non-sexual hugs everyday to let her know it's going to be OK. He then addressed how the husband was feeling and how his ego was probably being crushed right now. He felt her husband is not feeling like Sir Galahad right now. His armor is rusted and sword is dull. He doesn't need a barking Chihuahua barking at heels right now.

He then recommend not cashing out a 401K or anything, but they start working with their creditors. He warned them that they may not be dealing with intelligent life. That creditors tend to want repossess things and have to turn around and sell them rather than work with the debtors. But that they shouldn't be thinking about bankruptcy right now. They should ask for moratorium on their debt and ask for no payment and no interest for a year from their creditors.

He told them not to let this series of events destroy their lives. He reminded them they were go getter's and that they were high income earners before and that they will be again. One day they will be back on top and could get their debt straightened out with out having to file bankruptcy. He also told them not to give up at least not yet.

So taking that advice I want Lois and Clark to remember the following and to start looking into initiating at least some of these steps.

1. If you religious at all get plugged in. Check into some debt support groups. Most churches have small groups that may provide emotional support for your problem.

2. Check into marriage counseling and marriage support groups.

3. Don't give up. Bankruptcy should be your very last choice. Start calling your creditors and see what assistance they will offer you.

If anyone has any other suggestions chime in. Let's help this couple out.

The Couple Drowning in $190,323.79 of Debt Challenge.

I received an email from a couple who are $190,323.79 in debt. There is actually more than that, but this is strictly their credit card and auto debt, not including their mortgages. The couple has asked my input and what I think they should do.

We're going to call this "The Drowning in $190,323.79 in Debt Challenge". The couple has agreed for me to discuss their plight, but wishes to stay anonymous. So we will also refer to the challenge as the New Adventures of Lois and Clark: This Looks Like a Job for Superman. The couple will by referred to as Lois and Clark after one my favorite comic book couples.

Both Lois and Clark are business owners. According to Clark three years ago the couple was debt free other than their mortgages for their home and rental properties, plus their auto loan debt. Business had been great and they had at one time over $100,000 in savings. Not to mention credit scores in the 800's. How could this have a happened? It looks as though they had been financially responsible for quite sometime to have FICO credit scores, substantial savings, and low debt like that.

I have written many times before that I believe no matter how much debt you have it is your responsibility to pay back every penny. Do what you have to do. Get a second or even a third job, rent a room, sell things you don't need. Just whatever it takes. But these two really need to do something fast.


Here's a look at their debt:

Credit Card 1: $14,638.06

Credit Card 2: $22,542.71

Credit Card 3: $15,470.21

Credit Card 4: $22,038.19

Credit Card 5: $15,061.56

Credit Card 6: $4,993.44

Credit Line 1: $1,221.76

Credit Line 2: $10,369.99

Medical Credit: $2,987.93

Home Improvement Loan: $5,438.57

Auto Loan: $25,271.19

Money Owed to Family: $2,500


Business Credit Personally Guarantee:

Credit Card 1: $37,605.23

Credit Card 2: $10,184.95


This is a tough one as their debt surpasses their income. So they are basically bankrupt. It is generally always darkest before the dawn, but I feel if there is a will there is a way. I was once in $60,000 in debt and the debt exceeded my income, but things did turn around and I paid of every penny. I hope to encourage Lois and Clark to do the same. Let's hear from you. What do you think Lois and Clark should do? Where should they start? File Bankruptcy, Consumer Credit Counseling, Keep trying to pay it off, leave the country?

Could You Use $1,000 to Start Your Emergency Fund? Dave Ramsey May be Able to Help.

Have you started your emergency fund yet? Would a free thousand dollars help you get started?

Getting out of debt guru David Ramsey is giving away $999 a day until September 17. Fill out this form to get in on the action.

In case you don't know who he is, Dave Ramsey teaches people how to get out debt day by day via baby steps.

First on the list of baby steps: Emergency Fund. Establishing an emergency fund will provide a money reserve to help with emergencies such as car repairs or a leaking water heater.

If you haven't started your emergency fund yet you'd better get on it. In the meantime, David Ramsey's contest may be just what the doctor ordered.

How to Keep the Repo Man From Repossessing Your Car.

I have a family member willing to just have the repro man come pick up their car. I have tried to dissuade them from doing this to no avail. So here's the questions I received regarding giving your vehicle back to the bank and what I think you should do to see if you can have this embarrassing event from taking place.

I owe more than my car is worth why should I keep it?

First of all you are sounding like the people who are just having their homes foreclosed on. Homes normally increase in value, but cars can lose as much as 20% of their value the minute they drive off the lot. Bottom line though is you signed the contract. Do what you can to abide by the contract.

First try calling your lender and see if you can have the loan terms modified. Try not to have the length of the loan extended. Instead push to have the interest rate reduced. Or the lender may even agree to have a period of reduced payments.

When economic times are not so good your lender may be willing to play a round of "Let's Make a Deal." The economic crisis has been devastating for everyone including car lenders. Car lots have been overflowing with repossessed cars. The credit crisis has made it much harder for potential car buyers to get loans to buy cars. It has caused a huge decline in car sales and a huge surplus in cars with so many repos and unsold new cars. The current "Cash for Clunkers" program has helped change this a bit, but with the program now over things can revert right back to where they were. This may keep the lender from wanting to take your car and work out a deal. Anything from keeping another repo off the lot. The bank only recoups their money from selling the car. More cars means less money back in their pockets. Getting a partial payment is better than no payment.

I just want them to repossess the car. Can't they just take it?

If you don't want to try and work with the lender at least offer to give the car back rather than have it repossessed. By proactively giving the car back you will at least avoid paying the repossession fees. You will also avoid having the embarrassing scene of having your towed at work or at home. By voluntarily turning your car you turn a negative situation into a more responsible one.

Will I still owe money if I turn the car in?

Yes, you will. As I explained before the bank only gets paid when the car is re-sold. So you will responsible for what you owed when you turned the car in and what the lender can recoup when it sells the car. If you don't cover the payment you didn't live up to your contractual obligation. Whether you turn in your car or it is repossessed, not paying the balance will stay on your credit report for seven years.

What Will the Proposed New Health Care Plan Be Like?

Top 10 Indicators You Are Under The Proposed New Health Care Plan

10. Your annual breast exam is done at Hooters

9. Directions to your doctor's office include "Take a left when you enter the trailer park."

8. The tongue depressors taste faintly like fudgesicles.

7. The only proctologists in the plan is "Gus" from Roto-Rooter

6. The only item listed under Preventative Care Coverage is "an apple a day."

5. Your primary care physician is wearing the pants you gave to Goodwill last month.

4. "The patient is responsible for 200% of out-of-network charges," is not a typographical error.

3. The only expense that is 100% covered is "embalming."

2. Your Prozac comes in different colors with little M's on them.

AND THE NUMBER ONE SIGN THAT YOU ARE UNDER THE PROPOSED NEW HEALTH CARE PLAN:

1. You asked for Viagra and they give you a Popsicle stick and Duct Tape.

What Should I do If I Lose My Job? Where Can I Get Insurance?

What if I have a preexisting condition when I am laid off? Should I still get private health insurance?

In that case stick with your company plan through COBRA, but get private health insurance if you have a family. Providing your family is in good health, the cost of private insurance for them will be less than you went through COBRA for them too.

While searching for insurance also check into a health insurance broker specializing in clients who have preexisting conditions. As we have discussed before go to nahu.org to find a list of agents in your area. Every insurer has different policies. You should work with someone who will shop around to find a plan that works best for you. If you can't find a private policy, you may have to look into coverage offered by your state. State insurance can be very expensive, so you'll only want to use that as a last resort. You can find information on your state insurance department at naic.org (National Association of Insurance Commissioners).

Does Every State Offer Insurance Coverage to All Residents?

Keep with COBRA as long as you can. Unfortunately, there are many states that do not have coverage for individuals that do not qualify for private health insurance. The five states that offer guaranteed insurance all the time for all residents are: Maine, Massachusetts, New Jersey, New York, and Vermont. If you are denied private heath insurance the following states may provide coverage for you: North Carolina, (sometimes in Pennsylvania), Rhode Island, and Virginia. Check with your state insurance commissioners office to find out what you are eligible for coverage and check out your options at coverageforall.org.

The Only Job I Have Been Able to Find Doesn't Offer Health Insurance. Should I take the Job?

Take the job. Jobs are not easy to come by right now and you can't turn down an offer over health insurance. If you receive a job offer take it. Continue to look into getting your own private policy or stay on your old employers policy through COBRA. Remember you must get COBRA coverage within 60 days of being notified you are COBRA eligible. If more than 60 days has passed you will lose your option to stay with your former employers policy.

What should I do If I Lose My Job? Where Can I Get Insurance?

Well, we have said that it would get worse before it gets better. The Labor Department's report on unemployment claims shows that the jobless rate rose to 9.7 percent, up from 9.4 percent in July. Obama economic advisor Christina Romer said last week that unemployment can reach 10 percent this year and many private economists believe that it may hit 10.3 percent by next summer before things get better. So if you end up losing your job what can you do about insurance?

Where Can I Find Affordable Health Insurance?


The largest online resource for finding health insurance is Ehealthinsurance.com. If you would rather not do it online and you prefer to work with an actual agent, the National Association of Health Underwriters (nahu.org) has online search tools to help you find agents who help consumers find individual health insurance policies. Remember as you review your options that the group plan that you had with your old employer probably included a full menu and a wide range of coverage. Including mental health and maternity benefits, prescription drug coverage, etc that you may not need at the moment. Search for a policy that gives you the coverage you need to help keep the cost of your premium down as much as possible.

What If I Get Laid Off and I can't afford COBRA?


Like we discussed above shop around for cheaper insurance. But whatever you do not go without health insurance. If you think you can't afford insurance now just wait until something serious happens and you really need it. You cannot be without insurance. What if you or someone in your family becomes ill or is an accident? Ehealthinsurance.com has a Web site for people who have been laid off. There's even a calculator to help you decide which alternatives to COBRA might cost.

Should I Keep My Health Insurance From My Old Employer or Find a Private Plan?

Most of the time a private plan will be less expensive than sticking with your company plan. Any employer with 20 or more employees that provides health insurance is required by federal COBRA regulation to allow employees who are laid off to stay on the company's plan for 18 months after being laid off. There is a catch to this though. You are responsible for 100 percent of the cost, plus an additional 2 percent to cover administration costs. Keep in mind this is not just the 100 percent of your normal premium you had as an employee. This is a 100 percent of total costs, including what your employer used to pay on your behalf. It will for sure be much more expensive than what you were paying as an employee.