Talk of bankruptcy has reared its ugly head again today between my wife and I. We have been doing so well over the past year and have paid off almost $30,000 of our debt so far.
All of our bills are paid on time, with the exception of our primary mortgage and our business accounts. We have been working on a loan modification for our primary mortgage and the business accounts are looking like they will be going to court. We refuse to let our house go and will ultimately default on all our other accounts if need be to prevent from losing our house. As for the business accounts, any judgement will put us over the edge and either circumstance may require us to file bankruptcy.
We did look into bankruptcy last year, but decided against it because we wanted to do the right thing. We borrowed against the cards, we took the mortgages out for our homes, we owe the money. But, why not just file bankruptcy?
Bankruptcy should only be used as last resort. Bankruptcy will ruin your credit for 10 years. Not that our credit isn't in rocky shape right now, but if we can get these last couple of things worked out it will improve quickly. In today's economy it will be highly unlikely to get any type of credit. Not that we have interest in getting any right now, but in the end it all comes down to repaying what we owe and keeping our character intact.
[This post is written and copyrighted by Financial Elite (http://financialelite.blogspot.com/ ).] Did you enjoy reading this article? You can receive free full-text articles from Financial Elite by RSS in your email inbox daily by entering your email HERE. Your email will only be used for this daily subscription, and each email will include a link you may use to unsubscribe at any time. Also follow us on Twitter.
Showing posts with label credit score. Show all posts
Showing posts with label credit score. Show all posts
Monday, February 14, 2011
Saturday, August 28, 2010
Should I Take a Settlement Offer on My Credit Card Debt?
Here's why:
First off, if you want to make a settlement offer on your credit card, you have to be seriously behind on your payments and have more than a few bucks set aside to take the settlement offer. In my case I am 7 months behind on this particular card.
The credit card company will forgive a portion of your unpaid debt if you can make a lump sum payment that covers some of the money you owe them. In my case I owe a little bit over $11,000 on my business credit card and the credit card company is willing to settle for $2,300. In this case I need to be able to pay over $600 a month for the next four months in order to take this offer. So I need to have the ability to pay the $600 + immediately. There is no getting my balance lowered to $2,350 and then making payments on it for several years. It's four month's or nothing. If you don't have the money available you can't take the settlement offer. My thought however is, if you have the money to make the settlement payments, why don't you have the money to make the lesser regular payments?
Next, if I take a settlement offer my already reduced FICO score will take an even bigger hit. A settlement basically means you didn't live up to your obligation to pay your debt in full. This will definitely impact your credit score. There is a chance however if you had a previously great credit score and have suffered a job loss or a medical emergency, not to mention if the debt isn't huge, you may be able to talk the creditor into not reporting the settlement.
Thirdly, the biggest reason I don't want to take a settlement is the tax ramifications. You have to pay income tax on the amount credit card debt forgiven.
It is law that the credit card company must provide you with a IRS 1099-C cancellation of debt form that includes the amount of debt forgiven, which in turn is money that you will owe income tax on. There is no tax break for credit card settlements. There is one exception to this rule, which is, you must be insolvent. This means the amount of your liabilities is more than the value of all your assets. If the forgiven debt is reported to the IRS on 1099-C form, you will need to attach a letter to your tax return explaining the insolvency. If not, the IRS will likely perform an automatic audit, since the 1099 doesn't match your reported income on your return. If you are going to try this, you need to be able to document that at the time your debt was forgiven, your liabilities outweighed the fair market value of your assets. I definitely would meet with my tax advisor on this one.
Needless to say, I will be taking the balance liquidation program offer. Although, it will run me about $200 a month. It's better than dealing with the IRS next year. Beside that, I caused the debt and I have a responsibility to pay it back.
(Photo via eHow)
[This post is written and copyrighted by Financial Elite (http://financialelite.blogspot.com/ ).] Did you enjoy reading this article? You can receive free full-text articles from Financial Elite by RSS in your email inbox daily by entering your email HERE. Your email will only be used for this daily subscription, and each email will include a link you may use to unsubscribe at any time. Also follow us on Twitter.
Tuesday, August 10, 2010
Financial Elite's Readers Questions and Answers is Back in Action
Why was my credit limit dropped on my credit card, when I pay my balance in full each month? Will this hurt my credit score?
-Michael
The economic crisis has given credit card companies the excuse to look for ways to reduce their risk anyway they can. You are not alone in this situation. I have many friends who have FICO credit scores as high 800 and have had their credit limits dropped. Since you pay your card in full each month the credit card companies decision probably had nothing to do with you personally, but they made the choice so they would have lower outstanding limits on their balance sheets.
If the balance you owe on your credit cards adds up to less than 10% to 20% of your remaining limits (that means all of your credit cards combined), you have no worries. Your credit score will stay intact. What may cause a problem is any limit cut to your lines of credit can cause your debt-to-credit limit to go up. If it pushes it over 25% it can cause a hit of 50 point or more to your FICO score. One option you might have is to apply for a new credit card. This in turn will give you more available credit and help reduce your debt-to-credit ratio. New credit can however, give your score a hit, but not as bad as an increased debt-to-credit ratio will.
Your other option is to just wait it out. One day things will get better and the banks will start raising their limits again. For me I am steering towards strictly using a debit card or paying cash for everything. Don't fall into the same trap I did with depending on credit to get by if something goes wrong and maxing out your cards. Keeping your high credit limits will keep your credit scores up there, but the temptation to use those credit lines can be lurking too. Since you pay your cards in full each month I am sure you wouldn't be tempted to charge up your new credit card, would you?
Do agree with my suggestion? Do you have something to add or maybe want to share your experiences? Leave a comment below and get involved.
[This post is written and copyrighted by Financial Elite (http://financialelite.blogspot.com/ ).]
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Sunday, April 11, 2010
How Do You Get Creditors to Re-age Your Account?
[This post is written and copyrighted by Financial Elite (http://financialelite.blogspot.com/ ).]
What does does it mean to re-age your credit card account? In all of my years in banking I have never heard of the term re-aging.
The fact that I have never heard of the term maybe because in my long credit history I had never ever been late on a payment until last year.
I recently set up a good majority of my credit cards with both Chase and Bank of America on what they called their Balance Liquidation Program or BLP. But yesterday I received a letter from Chase stating I now qualified for their Reage Program and I thought what does re-age mean. Here's what I found:
Re-aging a credit card account can give you a fresh start with your creditors! The creditor will give you a clean slate like nothing happened from what I am gathering. So for instance I was 7 months past due on all my accounts. If what I have found in my research is correct that would mean they would remove the 7 months of past due payments from my credit report.
I have also found that a lot of creditors won't re-age your account. So if you try this with your creditors don't be disappointed if they won't do it. Also, some creditors follow federal guidelines, which allows them to re-age your credit cards once in a 12 month period or twice every 5 years.
According to the letter I received from Chase if I fall behind on payments again I may not be eligible for this program again for 5 years.
I have no intention on falling behind on payments again, but I never thought I would ever be late on payment either. So you never know.
I probably wouldn't try re-aging my account if I were only late by a month or so, but if you are a few months behind with your payments then it might be worth it. Also, be sure you are ready to commit to the program before you start it. You don't want to get it going and then not be able to make the established payments.
If what I have found is true and Chase does remove the past due payments that were reported I am going to be tickled pink. Not only did they remove over the limit and late fees, drop my interest rate to 0.00%, and take off thousands in accumulated interest, now they are bringing my account current. Now that's what I call customer service!
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What does does it mean to re-age your credit card account? In all of my years in banking I have never heard of the term re-aging.
The fact that I have never heard of the term maybe because in my long credit history I had never ever been late on a payment until last year.
I recently set up a good majority of my credit cards with both Chase and Bank of America on what they called their Balance Liquidation Program or BLP. But yesterday I received a letter from Chase stating I now qualified for their Reage Program and I thought what does re-age mean. Here's what I found:
Re-aging a credit card account can give you a fresh start with your creditors! The creditor will give you a clean slate like nothing happened from what I am gathering. So for instance I was 7 months past due on all my accounts. If what I have found in my research is correct that would mean they would remove the 7 months of past due payments from my credit report.
I have also found that a lot of creditors won't re-age your account. So if you try this with your creditors don't be disappointed if they won't do it. Also, some creditors follow federal guidelines, which allows them to re-age your credit cards once in a 12 month period or twice every 5 years.
According to the letter I received from Chase if I fall behind on payments again I may not be eligible for this program again for 5 years.
I have no intention on falling behind on payments again, but I never thought I would ever be late on payment either. So you never know.
I probably wouldn't try re-aging my account if I were only late by a month or so, but if you are a few months behind with your payments then it might be worth it. Also, be sure you are ready to commit to the program before you start it. You don't want to get it going and then not be able to make the established payments.
If what I have found is true and Chase does remove the past due payments that were reported I am going to be tickled pink. Not only did they remove over the limit and late fees, drop my interest rate to 0.00%, and take off thousands in accumulated interest, now they are bringing my account current. Now that's what I call customer service!
We Also Suggest:
- Bank of America's Balance Liquidation Program (BLP) Still Sucks
- What's the Best Way to Pay off My Credit Card Debt If I Have a High FICO Credit Score ?
- How did This Economic Crisis Start?
- Should I Use My 401K to Pay Off My Mortgage?
- Should I Take Out a 401K Loan to Pay Off My Credit Cards?
- Follow my journey to pay off debt and subscribe by email.
- Subscribe in a Reader (RSS)
- Follow us on Twitter
- Follow us on Blogger
Thursday, April 1, 2010
Late Payments Killed the Credit Score Star
[This post is written and copyrighted by Financial Elite (http://financialelite.blogspot.com/ ).]
This year is off to a great start now that my path to financial freedom is in full swing. Now that I have established the majority of my credit card accounts on a balance reduction program my debt is really getting knocked down.
This first quarter will probably show the biggest dip in my debt do to the fact that Chase's BLP program took off approximately $9,000 in interest payments. I'll be giving a full report on the progress of my five year plan to eliminate six figures of debt in the next couple of days.
One thing I need to do is check my credit report. I haven't done this in quite a while and I am afraid to look. I once had a high FICO score of 811 and I am sure this has been decimated by the high amount of debt I have plus late payments.
I began letting my payments go late as my financial house of cards collapsed. I had warned my creditors that there was going to begin to be a problem, but no one would listen. Once things became late they listened and as previously mentioned I was able to get on the debt reduction plans.
I will be pulling my credit in the next couple of days and I will report on that as well. But what has become of my credit score?
I have two main things against me when it comes to my FICO...late payments and big balances. How do those two things come into play?
If you have a great credit score a late payment can knock down your score by as much as 110 points. An average score can be dinged an average of 80 points. So my score I am guessing has been whacked pretty hard, but getting back on track should start pushing the credit score back up.
Barry Paperno, consumer operations manager at FICO says, "This continues to be the number one reason scores are lower. In addition to being a heavily weighted part of your score, if you're late on a payment, it's going to continue to appear on your credit report for about seven years."
It's a good thing that the longer it has been since you have been late on a payment, the less it impacts your score. So as time goes on this should help my score improve. The bad part is payment history accounts for 35% of your total score.
How much of your credit is used determines for about 30% of your score. So my six figures of debt was not only costing me a fortune in interest, it has probably killed my credit raing.
Bill Hardekopf from Lowcards.com says, "The best thing to do is pay your bills on time and pay as much of the balance as possible to try and keep your debt utilization ratio down and raise your credit score."
We discussed the other day that as part of the CARD Act that went into effect in February, creditors must provide a chart on your statement of how long it will take to pay off your balance if you only pay the minimum payments. In most cases it would take you 22 years to pay off your debt. The chart also shows if you pay a little bit extra you can have the debt paid off in 3 years.
I think this is going to be a huge wake call for most people and Hardekopf thinks the same.
He says, "It was shocking. This is going to have a dramatic effect on how much people are re-paying when they see it in black and white, and will be a positive move for their credit score."
So with my cards on BLP plans and me paying extra towards my other credit cards I am expecting my score to start improving almost immediately. I'll be posting the progress on my credit score with correlation of my six figures of debt soon. Stay tuned.
We Also Suggest:
This year is off to a great start now that my path to financial freedom is in full swing. Now that I have established the majority of my credit card accounts on a balance reduction program my debt is really getting knocked down.
This first quarter will probably show the biggest dip in my debt do to the fact that Chase's BLP program took off approximately $9,000 in interest payments. I'll be giving a full report on the progress of my five year plan to eliminate six figures of debt in the next couple of days.
One thing I need to do is check my credit report. I haven't done this in quite a while and I am afraid to look. I once had a high FICO score of 811 and I am sure this has been decimated by the high amount of debt I have plus late payments.
I began letting my payments go late as my financial house of cards collapsed. I had warned my creditors that there was going to begin to be a problem, but no one would listen. Once things became late they listened and as previously mentioned I was able to get on the debt reduction plans.
I will be pulling my credit in the next couple of days and I will report on that as well. But what has become of my credit score?
I have two main things against me when it comes to my FICO...late payments and big balances. How do those two things come into play?
If you have a great credit score a late payment can knock down your score by as much as 110 points. An average score can be dinged an average of 80 points. So my score I am guessing has been whacked pretty hard, but getting back on track should start pushing the credit score back up.
Barry Paperno, consumer operations manager at FICO says, "This continues to be the number one reason scores are lower. In addition to being a heavily weighted part of your score, if you're late on a payment, it's going to continue to appear on your credit report for about seven years."
It's a good thing that the longer it has been since you have been late on a payment, the less it impacts your score. So as time goes on this should help my score improve. The bad part is payment history accounts for 35% of your total score.
How much of your credit is used determines for about 30% of your score. So my six figures of debt was not only costing me a fortune in interest, it has probably killed my credit raing.
Bill Hardekopf from Lowcards.com says, "The best thing to do is pay your bills on time and pay as much of the balance as possible to try and keep your debt utilization ratio down and raise your credit score."
We discussed the other day that as part of the CARD Act that went into effect in February, creditors must provide a chart on your statement of how long it will take to pay off your balance if you only pay the minimum payments. In most cases it would take you 22 years to pay off your debt. The chart also shows if you pay a little bit extra you can have the debt paid off in 3 years.
I think this is going to be a huge wake call for most people and Hardekopf thinks the same.
He says, "It was shocking. This is going to have a dramatic effect on how much people are re-paying when they see it in black and white, and will be a positive move for their credit score."
So with my cards on BLP plans and me paying extra towards my other credit cards I am expecting my score to start improving almost immediately. I'll be posting the progress on my credit score with correlation of my six figures of debt soon. Stay tuned.
We Also Suggest:
- Bank of America's Balance Liquidation Program (BLP) Still Sucks
- What's the Best Way to Pay off My Credit Card Debt If I Have a High FICO Credit Score ?
- How did This Economic Crisis Start?
- Should I Use My 401K to Pay Off My Mortgage?
- Should I Take Out a 401K Loan to Pay Off My Credit Cards?
- Follow my journey to pay off debt and subscribe by email.
- Subscribe in a Reader (RSS)
- Follow us on Twitter
- Follow us on Blogger
Monday, March 29, 2010
Everyone is Making Out on a Short Sale Except the Homeowner
[This post is written and copyrighted by Financial Elite (http://financialelite.blogspot.com/ ).]
Potential foreclosures are turning into short sales as the banks kick it into high gear.
According to Duane Legate of House Buyer Network, "Banks have ramped up short sale approvals. They're hiring a lot of the people who once worked in the mortgage-lending industry and moved them over to short sales.
Not that a short sale is really any better than foreclosure. Either way it hurts your credit score. On average borrowers lose 200 points from their FICO score for a foreclosure, while they lose 100 points for a short sale.
But with the banks losing 50% on a foreclosure and 30 % on short sale, why not help these homeowners stay in their home? Because everyone is getting a cut on the deal.
You may remember the slap in the face we got from Indy Mac's short sales deals and now here is another back door deal. Under the new Home Affordable Foreclosure Alternatives Program, borrowers will earn a $3,000 "relocation incentive" and servicers will get $1,500 for handling a short sale.
Investors who own the mortgage notes get $2,000 for sharing proceeds from the short sale with secondary lien holders. At the same time those second lien holders can receive up to $6,000 for releasing their claims.
More and more money is being dumped into these home programs, but is it really helping the homeowner? Leaving them homeless while everyone else is cashing in on their misfortune.
Something is fishy here.
Potential foreclosures are turning into short sales as the banks kick it into high gear.
According to Duane Legate of House Buyer Network, "Banks have ramped up short sale approvals. They're hiring a lot of the people who once worked in the mortgage-lending industry and moved them over to short sales.
Not that a short sale is really any better than foreclosure. Either way it hurts your credit score. On average borrowers lose 200 points from their FICO score for a foreclosure, while they lose 100 points for a short sale.
But with the banks losing 50% on a foreclosure and 30 % on short sale, why not help these homeowners stay in their home? Because everyone is getting a cut on the deal.
You may remember the slap in the face we got from Indy Mac's short sales deals and now here is another back door deal. Under the new Home Affordable Foreclosure Alternatives Program, borrowers will earn a $3,000 "relocation incentive" and servicers will get $1,500 for handling a short sale.
Investors who own the mortgage notes get $2,000 for sharing proceeds from the short sale with secondary lien holders. At the same time those second lien holders can receive up to $6,000 for releasing their claims.
More and more money is being dumped into these home programs, but is it really helping the homeowner? Leaving them homeless while everyone else is cashing in on their misfortune.
Something is fishy here.
Friday, June 5, 2009
Financial Motivational Quote June 5, 2009
"A check or credit card, a Gucci bag strap, anything of value will do. Give as you live."- Jesse Jackson
Why Is My Credit Score So Important?
Your credit score is the first thing potential creditors look at. Your credit score directly affects the credit cards and loans you apply for now and in the future. If your credit score is not high enough, especially today with credit standards at their tightest, you may not qualify for the credit card or loan you are applying for. Currently, you can be charged a higher rate of interest if your credit score goes down. Laws are changing in February 2010 to curb credit card company practices like this. The better your credit score the easier it is for you to obtain a loan or credit card. A good credit score can also affect everything from your insurance premiums, utility deposits, and renting an apartment.
Thursday, June 4, 2009
Financial Motivational Quote June 4, 2009
"This is my ultimate fantasy, watching QVC with a credit card while making love and eating at the same time."- Yasmine Bleeth
Wednesday, June 3, 2009
How Do I Cut Back On Expenses?
Suggestions have been pouring in on how to cut back and apply the extra found money to your credit cards. Here are the latest:
- Join a wholesale club and buy in bulk, like Sams Club or Costco. Split large quantities with friends.-
-Use a hose instead of the car wash
- Carpool
- Take the bus to work instead of driving
- East out less
- Ride a bike or walk places if possible
- Use birth control to avoid unwanted pregnancies
- Buy nothing you do not need
- Give up drinking or smoking
- Put of giving to charity until you can afford to do so
- Cut back on gift giving
- Make gifts yourself
- Cancel newspaper and magazine subscriptions
- Shop at secondhand stores
- Accept hand me downs for your children
- Save money in a special account or an envelope instead of using layaway
- Bake and cook things that you would normally buy
- Cancel any trips you have planned- and take a less expensive route- like camping
- Send e cards, instead of buying and mailing cards
If you have cut back to help pay off your credit cards tell us what you did so we can share your tips.
- Join a wholesale club and buy in bulk, like Sams Club or Costco. Split large quantities with friends.-
-Use a hose instead of the car wash
- Carpool
- Take the bus to work instead of driving
- East out less
- Ride a bike or walk places if possible
- Use birth control to avoid unwanted pregnancies
- Buy nothing you do not need
- Give up drinking or smoking
- Put of giving to charity until you can afford to do so
- Cut back on gift giving
- Make gifts yourself
- Cancel newspaper and magazine subscriptions
- Shop at secondhand stores
- Accept hand me downs for your children
- Save money in a special account or an envelope instead of using layaway
- Bake and cook things that you would normally buy
- Cancel any trips you have planned- and take a less expensive route- like camping
- Send e cards, instead of buying and mailing cards
If you have cut back to help pay off your credit cards tell us what you did so we can share your tips.
Financial Motivational Quote June 3, 2009
"We must take away from the government's credit card. With limits on both tax revenue and borrowing, the Federal government would finally be forced to get serious about spending cuts."- Alan Keyes
Monday, June 1, 2009
If I Don't Take Out A 401K Loan To Pay Off My Debt, How Can I Pay Off My Credit Card Debt? Continued...
People have been asking about taking out 401K loans to pay off their credit card debt and how to find extra money to pay off their debt. Suggestions keep coming in and we are sharing another group of tips on how to save money and put the extra found dough towards your debt.
- Have a garage sale.
- Sell items to pawn shops. Remember you may receive less than fifty percent of the item you are pawning.
- Sell items using a consignment shop.
- Turn your hobby into a money making business. Website design, cleaning, landscaping, cooking and baking, making birdhouses, whatever floats your boat. Do what you like to do and make money doing it.
- If you have children who work get them to contribute to the household.
- Place an add in free classifieds in local community newspapers to sell things.
- Sell items on eBay or Craigslist.
- Get a second job. Even small jobs can help you raise the money you need.
- Ask for a raise or more hours at work.
- Return things you bought and don't need. Get the cash back if you still have the receipt. If you don't have the receipt get store credit to but things you do need.
With the economy in it's current state you may not want to take out a 401K loan right now. If you get laid off you will have to pay taxes on the entire amount you withdrew. Instead find ways to cut back and pay off the debt slowly, but surely. It will pay off (no pun intended) in the long run.
Have you paid off credit card debt by cutting back? Let us hear from you.
Should I Take Out A 401K Loan To Pay Off My Credit Cards?
Should I Stop Contributing To My 401K If I Want To Pay Off My Credit Cards?
Should I Stop Contributing to My 401K To Pay Off My Credit Cards?
Reward Cards May Help You Save.
- Have a garage sale.
- Sell items to pawn shops. Remember you may receive less than fifty percent of the item you are pawning.
- Sell items using a consignment shop.
- Turn your hobby into a money making business. Website design, cleaning, landscaping, cooking and baking, making birdhouses, whatever floats your boat. Do what you like to do and make money doing it.
- If you have children who work get them to contribute to the household.
- Place an add in free classifieds in local community newspapers to sell things.
- Sell items on eBay or Craigslist.
- Get a second job. Even small jobs can help you raise the money you need.
- Ask for a raise or more hours at work.
- Return things you bought and don't need. Get the cash back if you still have the receipt. If you don't have the receipt get store credit to but things you do need.
With the economy in it's current state you may not want to take out a 401K loan right now. If you get laid off you will have to pay taxes on the entire amount you withdrew. Instead find ways to cut back and pay off the debt slowly, but surely. It will pay off (no pun intended) in the long run.
Have you paid off credit card debt by cutting back? Let us hear from you.
Should I Take Out A 401K Loan To Pay Off My Credit Cards?
Should I Stop Contributing To My 401K If I Want To Pay Off My Credit Cards?
Should I Stop Contributing to My 401K To Pay Off My Credit Cards?
Reward Cards May Help You Save.
Sunday, May 31, 2009
If I Don't Take Out A 401K Loan To Pay Off My Debt Where Else Can I Get Money? Continued...
People are depleting their already ravaged 401K's and retirement accounts to just get buy or pay down their credit card debt. I want you to remember that your retirement savings is extremely important and taking it out to pay off debt can one day leave you with nothing. Social security is looking like it is going to run out 4 years earlier than expected and you probably won't be with a company long enough to have a pension. So, what you put in your in your 401K or IRA might be all you have one day.
There are ways to cut back and put the difference of what you save towards your credit cards. With some these of things you might say, "I am not doing without that", but one day you might have to say, "I have to do without my medication or food" for that matter. It is better to do without certain things temporarily now than later.
- Raise the deductible on you car insurance.
- If you have insurance through your credit cards, cancel it. Insurance through credit card companies is usually over priced.
- If you feel you need life insurance, which I do recommend, shop around with local insurance agents.
- Cancel any insurance against credit card theft or loss you may have purchased. This insurance is not necessary. You are only liable for the first $50 used on a card after you report it stolen or missing.
- Reduce the minutes on your cell phone plan and try not to us the phone as much. If you consistently use more minutes than your plan allows, consider changing your plan with more minutes to avoid high charges for out of plan minutes.
- Cancel your land line and use your cell as your main phone.
- Block texting on your cell phone. Texting fees can really add up.
- Cancel you long distance service. Get a calling card.
- Turn off lights when not in the room.
- Lower the heat during the day when you are away at work and at night when you are asleep.
- Turn your thermostat down just one or two degrees when you are home.
- Turn down the thermostat on your water heater by one or two degrees.
- Do laundry with cold water instead of hot.
- Open a window instead of turning on the air conditioner.
- Cancel your cable service or reduce the number of premium channels you pay for.
- Cancel your Internet account and sign up for a free service or a company that pays you to surf or go to the library when you need to go online.
- Use a free email service like Gmail or Yahoo.
- Turn on just the light next to you instead of turning on all the lights in a room. Be sure to turn it off when you leave the room.
- Turn off computers when you are not using them.
- Turn off the water while you are brushing your teeth.
Doing some these things really sucks, but it may be necessary. At on time I had $60,000 in credit card debt. I was never late on a payment and paid back the entire amount. These were some of the very things I did to get the debt paid off. I can't imagine going back to dial up for Internet use, but if I had to do it again to preserve my credit and my retirement I would definitely do it again.
Have you paid off credit card debt by cutting back? Let us hear from you.
Should I Take Out A 401K Loan To Pay Off My Credit Cards?
Should I Stop Contributing To My 401K If I Want To Pay Off My Credit Cards?
Should I Stop Contributing to My 401K To Pay Off My Credit Cards?
Reward Cards May Help You Save.
There are ways to cut back and put the difference of what you save towards your credit cards. With some these of things you might say, "I am not doing without that", but one day you might have to say, "I have to do without my medication or food" for that matter. It is better to do without certain things temporarily now than later.
- Raise the deductible on you car insurance.
- If you have insurance through your credit cards, cancel it. Insurance through credit card companies is usually over priced.
- If you feel you need life insurance, which I do recommend, shop around with local insurance agents.
- Cancel any insurance against credit card theft or loss you may have purchased. This insurance is not necessary. You are only liable for the first $50 used on a card after you report it stolen or missing.
- Reduce the minutes on your cell phone plan and try not to us the phone as much. If you consistently use more minutes than your plan allows, consider changing your plan with more minutes to avoid high charges for out of plan minutes.
- Cancel your land line and use your cell as your main phone.
- Block texting on your cell phone. Texting fees can really add up.
- Cancel you long distance service. Get a calling card.
- Turn off lights when not in the room.
- Lower the heat during the day when you are away at work and at night when you are asleep.
- Turn your thermostat down just one or two degrees when you are home.
- Turn down the thermostat on your water heater by one or two degrees.
- Do laundry with cold water instead of hot.
- Open a window instead of turning on the air conditioner.
- Cancel your cable service or reduce the number of premium channels you pay for.
- Cancel your Internet account and sign up for a free service or a company that pays you to surf or go to the library when you need to go online.
- Use a free email service like Gmail or Yahoo.
- Turn on just the light next to you instead of turning on all the lights in a room. Be sure to turn it off when you leave the room.
- Turn off computers when you are not using them.
- Turn off the water while you are brushing your teeth.
Doing some these things really sucks, but it may be necessary. At on time I had $60,000 in credit card debt. I was never late on a payment and paid back the entire amount. These were some of the very things I did to get the debt paid off. I can't imagine going back to dial up for Internet use, but if I had to do it again to preserve my credit and my retirement I would definitely do it again.
Have you paid off credit card debt by cutting back? Let us hear from you.
Should I Take Out A 401K Loan To Pay Off My Credit Cards?
Should I Stop Contributing To My 401K If I Want To Pay Off My Credit Cards?
Should I Stop Contributing to My 401K To Pay Off My Credit Cards?
Reward Cards May Help You Save.
If I Don't Take Out A 401K Loan To Pay Off My Debt Where Else Can I Get Money?
The question of using your 401K to pay off your credit card debt is related to many topics we have discussed before including: keeping your house out of foreclosure to paying your credit cards on time. I have suggested actions such as renting rooms out or getting a second job. Having debt can be very stressful, but if you want to get out from under your mountain of debt, you may have to do things you don't want to do. You need to consider what is more stressful? Making those payments forever or biting the bullet and cut back for a while. Here are some additional ideas for finding extra money to pay towards your credit card debt. They may make small dents in your credit card debt, but they will really add up over time.
- Sell any investments you have
- Sell other assets, a boat, comic book collection, extra car, jewelry, etc. Anything that you can trade for cash.
- If you have child support payments see if you can get your obligations reduced.
- Use your tax refund or alimony payment.
- Transfer your credit card balances to a card with a low interest rate.
- If you have a card with an annual fee see if the credit card company will be willing to waive it.
- Borrower money from family or friends. But remember you need to pay them back too. You can really ruin your relationship with them over something like this.
- Get rid of your overdraft protection on your bank accounts. This will help you from getting into more debt.
- Shred any cash advance checks you have received from your credit card company. If you haven't paid the balance off when the interest adjusts, it will make things worse.
- Don't use ATM's at banks other than your own. ATM fees can really add up.
- Put away your credit cards so you are not tempted to charge on them.
- Increase the number of dependents you claim on your W-2 at work. But be careful. You can end up owing money come tax time if you listed too many dependents.
- Start a budget and watch where your money is going. You may find other ways to cut back.
- See if you qualify for assistance from a local food pantry or other charities.
- Apply for public assistance if you are out of work or disabled. This money will not be enough to pay off your debt, but it may give extra money to put food on the table.
- Some rewards cards offer cash back incentives. See if you have any cash due and put towards your credit card debt rather than spend it.
- Stop taking cash advances on your credit cards. The interest and fees will make things worse.
It's not that hard to be creative. Put your mind to it. There is always a way to cut back somewhere.
Have you paid your debt off by finding ways to cut back? Let us hear from you. Share your tips and let's give some folks some ideas.
Should I Take Out A 401K Loan To Pay Off My Credit Cards?
Should I Stop Contributing To My 401K If I Want To Pay Off My Credit Cards?
Should I Stop Contributing to My 401K To Pay Off My Credit Cards?
Reward Cards May Help You Save.
- Sell any investments you have
- Sell other assets, a boat, comic book collection, extra car, jewelry, etc. Anything that you can trade for cash.
- If you have child support payments see if you can get your obligations reduced.
- Use your tax refund or alimony payment.
- Transfer your credit card balances to a card with a low interest rate.
- If you have a card with an annual fee see if the credit card company will be willing to waive it.
- Borrower money from family or friends. But remember you need to pay them back too. You can really ruin your relationship with them over something like this.
- Get rid of your overdraft protection on your bank accounts. This will help you from getting into more debt.
- Shred any cash advance checks you have received from your credit card company. If you haven't paid the balance off when the interest adjusts, it will make things worse.
- Don't use ATM's at banks other than your own. ATM fees can really add up.
- Put away your credit cards so you are not tempted to charge on them.
- Increase the number of dependents you claim on your W-2 at work. But be careful. You can end up owing money come tax time if you listed too many dependents.
- Start a budget and watch where your money is going. You may find other ways to cut back.
- See if you qualify for assistance from a local food pantry or other charities.
- Apply for public assistance if you are out of work or disabled. This money will not be enough to pay off your debt, but it may give extra money to put food on the table.
- Some rewards cards offer cash back incentives. See if you have any cash due and put towards your credit card debt rather than spend it.
- Stop taking cash advances on your credit cards. The interest and fees will make things worse.
It's not that hard to be creative. Put your mind to it. There is always a way to cut back somewhere.
Have you paid your debt off by finding ways to cut back? Let us hear from you. Share your tips and let's give some folks some ideas.
Should I Take Out A 401K Loan To Pay Off My Credit Cards?
Should I Stop Contributing To My 401K If I Want To Pay Off My Credit Cards?
Should I Stop Contributing to My 401K To Pay Off My Credit Cards?
Reward Cards May Help You Save.
Thursday, May 28, 2009
Should I Consolidate My Student Loan After I Graduate?
Consolidating your student loans can be a good idea. The best part about it is you can put all your student loan payments into a one payment a month. This will also benefit your FICO credit score. It will also be easier to manage one payment.
The fixed consolidation rate for a Stafford loan is 6.8% as of July 1, 2006.
The fixed consolidation rate for a Stafford loan is 6.8% as of July 1, 2006.
Sunday, April 26, 2009
10 Things Credit Card Companies Don't Want You To Know. Part 1 0f 10
April has been Credit Card Question and Answer month here at Financial Elite. We are going to end the month with information provided from an article from SmartMoney about the little known rules that are costing you money and putting your credit, your identity and your family at risk.
1. "We're just waiting for you to screw up."
Many things can cause your credit card interest rate to go way up into the stratosphere, but nothing faster than universal default. You can make all your credit card payments month after month for a long time, but fall behind on your utility bills and all of a sudden you are a deadbeat and you will be charged accordingly. Interest rates can change at a moments notice, from low and reasonable to up to 35%.
Credit card companies say the reason they do this is to manage risk. Consumers groups disagree, because many people in universal default aren't deadbeats by any means. For example, you dispute a medical bill or are waiting for an insurance snafu to be resolved. If a billing clerk kicks it to collections, you're in universal default. Or let's say your credit score drops--a common event that may be entirely unrelated to your bill paying behavior. That's also likely to push your interest rate higher.
The best way to avoid this problem is to pay your bills on time. Bankrate.com, a personal finance Web site, further advises that if you have a disputed bill, resolve it before it reaches collection status.
1. "We're just waiting for you to screw up."
Many things can cause your credit card interest rate to go way up into the stratosphere, but nothing faster than universal default. You can make all your credit card payments month after month for a long time, but fall behind on your utility bills and all of a sudden you are a deadbeat and you will be charged accordingly. Interest rates can change at a moments notice, from low and reasonable to up to 35%.
Credit card companies say the reason they do this is to manage risk. Consumers groups disagree, because many people in universal default aren't deadbeats by any means. For example, you dispute a medical bill or are waiting for an insurance snafu to be resolved. If a billing clerk kicks it to collections, you're in universal default. Or let's say your credit score drops--a common event that may be entirely unrelated to your bill paying behavior. That's also likely to push your interest rate higher.
The best way to avoid this problem is to pay your bills on time. Bankrate.com, a personal finance Web site, further advises that if you have a disputed bill, resolve it before it reaches collection status.
Friday, April 24, 2009
I Haven't Paid My Credit Card Bills In Years. Why Am I Being Told I Still Owe Money?
Well, you do. But there is only so long a debt collection agency can hassle you. You need to see what your state's statute of limitations is on debt collection. Every state has a time when the clock starts running on the statute of limitations on your passed due credit card debt. This time frame begins starting with the date you failed to make a payment that was due, as long as you never make another payment on that credit card account. The best way to determine when the statute starts against your debt is to get a copy of your credit report. It shows the dates you were late and when it was reported by your creditors. So if your states statute of limitations is say five years, and your last payment was April 24, 2004, then on April 24, 2009 your statue of limitations on the debt would have run out. That is assuming you haven't made another payment on that account. Also, be aware that the statute of limitations applies to different types of debt. The statute of limitations is different on credit cards, mortgages, car loans, or personal loans. Another thing to consider is if you actually make a payment to a collection agency or even tell them you are going to make a payment your statue of limitations may start all over again.
To find statutes of limitations in your state visit fair-debt-collection.com
To find statutes of limitations in your state visit fair-debt-collection.com
Tuesday, April 21, 2009
What Do I Need To Do To Have A 720 FICO Credit Score
If you don't already have a 720 FICO credit score you are going to need to change your financial life.
The Fair Isaac, which is where the FICO credit score name is derived from, compiles three scores from the major credit bureaus: Equifax, Experian, and Transunion. Your FICO credit score actually can range from 350 to 850(the highest credit score I have seen was 825). If you can get I FICO credit score over 800, you are as good as gold. Especially today the higher the better. I have seen mortgage lenders reserving better rates for consumers with a FICO credit score of 760 or better. But if you are not ready to buy a home in prime time housing market, don't sweat it. Just concentrate at getting your score to 720. Most creditors will be willing to extend you credit.
Here is what you need to do to get that score up:
- Always pay your bills on Time. This portion accounts for 35% of your FICO credit score. If you end late on your bills. This means not only your credit card payments, but loans of any kind. Your FICO credit score will go down. Just paying at least the minimum will help your score.
- Pay down what your debt. How much you owe compared to your available credit accounts for 30% of your FICO credit score.We have discussed this before. The less you owe on your credit cards the better you look to credit card companies and other lenders.
-Keep credit cards that have a long credit history. This accounts for 15% of your FICO credit score. The longer you have your credit cards, the more data FICO has to determine your credit risk. Don't cancel your credit cards. Even if they are paid off.
-Limit your applying for credit. New credit accounts for 10% of your FICO credit score. The more you apply for credit the more nervous you make lenders. If you apply for multiple forms of credit at the same time, it will bring down your credit score.
- Have different types of credit. This accounts for 10% of your FICO credit score. Lenders like to see a few different types of credit. It shows them you are able to handle different scenarios with debt. So having a credit card and a car loan is actually better than having just credit cards.
The Fair Isaac, which is where the FICO credit score name is derived from, compiles three scores from the major credit bureaus: Equifax, Experian, and Transunion. Your FICO credit score actually can range from 350 to 850(the highest credit score I have seen was 825). If you can get I FICO credit score over 800, you are as good as gold. Especially today the higher the better. I have seen mortgage lenders reserving better rates for consumers with a FICO credit score of 760 or better. But if you are not ready to buy a home in prime time housing market, don't sweat it. Just concentrate at getting your score to 720. Most creditors will be willing to extend you credit.
Here is what you need to do to get that score up:
- Always pay your bills on Time. This portion accounts for 35% of your FICO credit score. If you end late on your bills. This means not only your credit card payments, but loans of any kind. Your FICO credit score will go down. Just paying at least the minimum will help your score.
- Pay down what your debt. How much you owe compared to your available credit accounts for 30% of your FICO credit score.We have discussed this before. The less you owe on your credit cards the better you look to credit card companies and other lenders.
-Keep credit cards that have a long credit history. This accounts for 15% of your FICO credit score. The longer you have your credit cards, the more data FICO has to determine your credit risk. Don't cancel your credit cards. Even if they are paid off.
-Limit your applying for credit. New credit accounts for 10% of your FICO credit score. The more you apply for credit the more nervous you make lenders. If you apply for multiple forms of credit at the same time, it will bring down your credit score.
- Have different types of credit. This accounts for 10% of your FICO credit score. Lenders like to see a few different types of credit. It shows them you are able to handle different scenarios with debt. So having a credit card and a car loan is actually better than having just credit cards.
Monday, April 20, 2009
Collection Agencies Keep Calling Me About My Credit Card Debt. Should I Pay Them?
First of all don't pay anyone without verifying who they are or what the debt is. Debt collection agencies will call you if you have debts to pay. Debt Collection Agencies will also pursue old debts that you never paid off, in hopes that you will pay it just to get them to stop calling and harassing you. But beware! With the economy the way it is there are plenty of scams these days. Most of the time the debts don't exist. They are the result of identity theft, clerical errors, or credit reports that have not been updated. Other debts are so old the debt collection agency no longer has the right to legally sue to collect. I have seen court orders sent to people just before the legal time period is about to pass in hopes of being able to collect. I have also seen debts sold to other collection agencies in an attempt to extend the legal time period. Starting the clock all over. Within 30 days of being contacted by them, be sure to send the debt collection agency a letter explaining you do not owe this money and request proof that the debt is legit. Make sure the letter is certified and have them send you a copy of the bill to prove that it is true. If within 30 days the debt collection agency does not provide proof of the debt, they can longer keep contacting you. Also, they cannot list the debt on your credit report. You should always review your credit report at least once a year. Visit annualcreditreport.com to get a copy of your free credit report. All of the three credit bureaus, Equifax, Experian, and Transunion, are required to provide you with one free credit report a year.
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