credit card debt http://www.wisebread.com/taxonomy/term/5884/all en-US How One Couple Paid Off $147k of Debt (Even While Unemployed) http://www.wisebread.com/how-one-couple-paid-off-147k-of-debt-even-while-unemployed <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-one-couple-paid-off-147k-of-debt-even-while-unemployed" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://www.wisebread.com/files/fruganomics/imagecache/250w/blog-images/couple-happy-snow-travel-178492223-small.jpg" alt="happy couple snow" title="happy couple snow" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Jackie Beck and her husband once &quot;owned&quot; a six figure debt. They'd borrowed for their mortgage, credit cards, education, autos, and home improvement projects. Like most of us do, they'd borrowed over time, barely noticing as their balances grew and interest accrued.</p> <p>Beck is not alone. The <a href="http://investorplace.com/2013/09/report-average-american-in-debt-hundreds-of-thousands/#.VGJM1vnF98E">average American borrower owes</a> $225,238 in consumer debt, including $15,263 for credit cards, $147,591 in mortgage debt, $31,646 for student loans, and $30,738 for auto financing.</p> <p>What set Beck and her partner apart, however, is that they set out to pay off that debt, and after a 10-year journey, they succeeded. Today neither holds a traditional job, they maintain collective annual expenses of less than $12,000, and they're free to pursue their passions. &quot;Anyone can do it, too,&quot; says Beck. &quot;You don't have to have debt. Life is a lot easier without it.&quot; (See also: <a href="http://www.wisebread.com/how-one-inspiring-saver-found-true-love-shook-off-debt-denial-and-paid-off-123000?ref=seealso">How One Inspiring Saver Found True Love, Shook Off Debt Denial, and Paid Off $123,000</a>)</p> <h2>Getting Started</h2> <p>The Beck's get-out-of-debt journey began when they decided to tackle their credit card balances. &quot;We were just really sick of being in debt and feeling like all our money went toward the credit cards and interest,&quot; says Beck. Paying off the balance on their cards took a full three years and Beck was unemployed for a lot of that time. &quot;In the beginning, it took us a long time to pay things off,&quot; says Beck. &quot;Then we figured things out and we had more money because we had paid more off. You get better at it and it gets faster.&quot;</p> <p>She'd been deferring her student loan payments but, once the credit card bills were paid, that freed up some extra cash. &quot;I'd been living for many years on very little money. I never would have been able to start paying on my student loans if I'd still had those credit card payments,&quot; she says.</p> <p>Beck viewed her student debt as a burden and she couldn't wait to get rid of it. When finally she landed a job, she was able to speed her repayment schedule. &quot;I continued to live on nothing. I put all my money toward my student loans,&quot; she says. &quot;Then it went super fast.&quot; (See also: <a href="http://www.wisebread.com/how-one-college-graduate-paid-off-28000-in-three-years-on-a-30k-salary?ref=seealso">How One College Graduate Paid Off $28,000 in Three Years on a $30k Salary</a>)</p> <h2>Maintaining Momentum</h2> <p>Beck's husband was inspired by her student loan success and together they worked to amp up their efforts. They started paying for most of their purchases in cash, foregoing credit cards altogether. Then they decided to tackle their car loan. &quot;After he saw what I did with my student loan,&quot; says Beck, &quot;he thought it would be nice to live without the car payment.&quot;</p> <p>Even with successful milestones along the way, the Becks repaid their debt at a measured pace. &quot;We spent a lot of time getting out of the debt we had gotten into,&quot; says Beck. &quot;You don't have to live like a monk the whole time. We had more money coming in and it didn't all go toward our debt. We spent some.&quot;</p> <p>The Becks increased spending somewhat over time but even so, they began to view their mission as preparation for an emergency. In the previous years they'd taken turns being unemployed, had undergone surgeries, paid expensive veterinarian bills for their pets, and even totaled a car. They'd taken out a $10,000 home improvement loan around this time, but even though the loan came with a 0% introductory rate for the first 12 months, they realized their attitude toward borrowing had shifted. They were no longer comfortable taking on new debt. &quot;Gradually we realized that debt is dangerous and that something could go wrong,&quot; says Beck.</p> <p>Ultimately, the Beck's took the remaining balance from their savings account and paid off the loan. &quot;Life doesn't work out perfectly and, when you don't have debt, it really changes what you're able to do,&quot; she says.</p> <p>By the time they were able to start tackling their mortgage, their journey had become about more than just safety. They started to view it a road to freedom. According to Beck, &quot;The fewer expenses you have, the longer you can go without a job.&quot; (See also: <a href="http://www.wisebread.com/the-freedom-of-a-debt-free-life?ref=seealso">The Freedom of a Debt-Free Life</a>)</p> <h2>Rewarding Yourself</h2> <p>For the Becks, freedom was defined by the rewards they chose for themselves after they paid off their mortgage. Beck had wanted to travel to Antarctica since she was eight years old and her husband had his eye on a new car. &quot;After the house was paid off, we spent another year saving up for those things,&quot; says Beck, &quot;and then we went and did them.&quot;</p> <p>Beck also started developing other streams of income and eventually left her day job. &quot;I created the app <a href="https://itunes.apple.com/us/app/pay-off-debt/id308554006?mt=8&amp;ign-mpt=uo=4">Pay Off Debt</a> after I paid off my student loan,&quot; she says. &quot;I thought other people might want to obsess about debt as much as I do.&quot; She also started to blog about her journey at <a href="http://www.thedebtmyth.com">TheDebtMyth.com</a>, and even bought a couple of rental properties, paying for them in cash.</p> <p>As a couple, they'd also learned to keep their collective expenses low.</p> <p>&quot;We can live on $12,000 a year if we need to,&quot; says Beck. &quot;We basically have no required bills and we're not eating ramen,&quot; she laughs. &quot;My husband got laid off a week after I quit my job. Neither of us has a [traditional] job now. People who owe a lot of money don't do things like that,&quot; says Beck, &quot;because they can't.&quot;</p> <p>The Beck's get-out-of-debt journey has changed the way they think about money altogether. Now it's common practice for them to make their purchases &mdash; even big ones &mdash; in cash. They don't carry debt and they can live their lives freely, without the burden of owing money to anyone. Beck is even thinking about a second trip to her dream destination, Antarctica. &quot;I'm totally going back,&quot; she says.</p> <p>Because she can.</p> <p><em>Are you paying off your consumer loans? What strategies work best for you? How do you stay motivated and on track? We want to hear about it in the comments below!</em></p> <a href="http://www.wisebread.com/how-one-couple-paid-off-147k-of-debt-even-while-unemployed" class="sharethis-link" title="How One Couple Paid Off $147k of Debt (Even While Unemployed)" rel="nofollow">ShareThis</a><br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/alaina-tweddale">Alaina Tweddale</a> of <a href="http://www.wisebread.com/how-one-couple-paid-off-147k-of-debt-even-while-unemployed">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-one-college-graduate-paid-off-28000-in-three-years-on-a-30k-salary">How One College Graduate Paid Off $28,000 in Three Years on a $30K Salary</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-one-young-entrepreneur-paid-off-40000-in-student-debt-by-age-24">How One Young Entrepreneur Paid Off $40,000 in Student Debt By Age 24</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/our-worst-financial-mistakes-and-what-you-can-learn-from-them">Our Worst Financial Mistakes and What You Can Learn From Them</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/depressed-it-could-be-your-debt">Depressed? It Could Be Your Debt</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/coming-to-terms-with-your-long-term-debt">Coming to Terms With Your Long-Term Debt</a></span> </div> </li> </ul> </div> </div> </div> </div> Debt Management auto loan credit card debt debt repayment debt stories life hacks mortgage student loans Fri, 14 Nov 2014 14:00:05 +0000 Alaina Tweddale 1254112 at http://www.wisebread.com 6 Ways Debt Settlement Can Leave You Deeper in Debt (Even With Trustworthy Companies) http://www.wisebread.com/6-ways-debt-settlement-can-leave-you-deeper-in-debt-even-with-trustworthy-companies <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/6-ways-debt-settlement-can-leave-you-deeper-in-debt-even-with-trustworthy-companies" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://www.wisebread.com/files/fruganomics/imagecache/250w/blog-images/couple-debt-91460038-small.jpg" alt="couple debt" title="couple debt" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Late night TV ads and radio ads promise that you can obtain debt relief, paying &quot;pennies on the dollar&quot; for what you owe to creditors.</p> <p>These ads are for debt settlement, a process designed to convince creditors to accept a lump sum payment for less than you owe them. Your account is closed and considered paid off, and you no longer have onerous debt payments. (Although the settlement might be noted in your credit report and impact your score.) (See also: <a href="http://www.wisebread.com/surprising-things-that-can-kill-your-credit?ref=seealso">Surprising Things That Can Kill Your Credit</a>)</p> <p>Unfortunately, debt settlement often comes with pitfalls that can cause you problems &mdash; even if you are dealing with a reputable company. According to a report from ResponsibleLending.org titled, &quot;<a href="http://www.responsiblelending.org/state-of-lending/reports/12-Debt-Settlement.pdf">State of Lending: Debt Settlement</a>,&quot; a debt settlement program can <em>increase</em> a successfully enrolled consumer's debt by 20% on average.</p> <p>Here are six debt settlement realities that can cause you to end up with up with more debt, instead of less.</p> <h2>1. You Have to Stop Paying Your Debts</h2> <p>In most cases, debt settlement doesn't work unless the creditor thinks that you won't repay the debt without a settlement. If you are going to convince the creditor of this, you need to stop making payments on your debt.</p> <p>Most debt settlement companies require you to make regular payments to them, instead of making payments to creditors. They keep the money in an account, and use the accumulated savings to make lump sum payments to creditors who agree to settle.</p> <p>As you might imagine, this doesn't bode well for your credit score. Additionally, as you miss payments, fees and penalties (and interest) add up. If you can't reach a settlement with some of your creditors, you are in deeper through all the costs of missing payments and defaulting.</p> <h2>2. Some Creditors Won't Work With Debt Settlement Companies</h2> <p>Not all creditors are willing to work with debt settlement companies, so the fact that you aren't making payments becomes increasingly problematic as the process continues. The creditor, instead of settling your debt, might decide to send your account to collections. This move further dings your credit score, and adds to your debt through fees, penalties, and interest accruing on all of it. (See also: <a href="http://www.wisebread.com/how-a-solid-credit-score-saves-you-money?ref=seealso">How a Solid Credit Score Saves You Money</a>)</p> <p>And, of course, as your credit score continues to drop, it's harder for you to get loans at good rates. You will continue to pay more money over time as a result of your destroyed credit &mdash; even for non-credit financial services like insurance.</p> <h2>3. Creditors Could Decide to Sue</h2> <p>In some cases, turning your account over to collections is the least of your worries. Creditors who don't negotiate with debt settlement companies might decide to sue you for what you owe instead of just turning over your debts. This can add to your debt, since you now have attorney fees and other costs related to the lawsuit.</p> <h2>4. You May Pay Hidden Debt Settlement Fees</h2> <p>The Federal Trade Commission says that debt settlement companies can't charge fees upfront. They are only supposed to charge a fee after a settlement is reached. However, there are loopholes to this rule, and debt settlement companies have no problem taking advantage.</p> <p>In order to get around the FTC's requirement, many debt settlement companies claim they have attorneys working for them. They form very loose associations with willing attorneys, and then charge you an attorney fee. So, <em>technically</em>, it's not a fee for debt settlement; it's a fee for the attorney. However, the attorney doesn't actually do any of the work in most cases. The attorney gets a bit of a kickback, and most of the process is handled by non-attorney employees for the debt settlement company.</p> <h2>5. You'll Have to Pay Tax on the Settled Amount</h2> <p>Most consumers don't realize that forgiven debts are considered income by the IRS. So, if you owe $15,000 and you settle your debts for $8,000, the IRS requires you to report the $7,000 you were forgiven as income. You don't actually have the money in hand (it was spent a long time ago), but the IRS taxes you like you do.</p> <p>Depending on how much you benefit from debt settlement, even a successful experience with a debt settlement company can result in costly tax debt. If you have a big enough settlement, you could wind up in a higher tax bracket. You might need to set up an IRS payment plan to deal with the problem, and that means more interest payments.</p> <h2>6. You May Still Have Bad Credit Habits</h2> <p>Finally, one of the problems with debt settlement is that it might not address your underlying issues with money. Sure, you might settle your debt, but once everything is taken care of, will you end up back in debt down the road?</p> <p>Many consumers go through debt settlement, but do nothing to change their overall money habits. Once their credit recovers enough that they can qualify for credit again, they start accruing debt. Even if you have gone through debt settlement, it's possible to get a credit card again fairly easily. Debt settlement can also make the process of getting rid of debt <em>feel</em> easier. If you feel as though you've dodged a bullet, you might not have incentive to reform your financial habits for the long haul. You could easily end up back in debt &mdash; and looking to use debt settlement services again. (See also: <a href="http://www.wisebread.com/12-habits-of-highly-responsible-credit-card-users?ref=seealso">12 Habits of Highly Responsible Credit Card Users</a>)</p> <h2>Bottom Line</h2> <p>There are some people who use debt settlement effectively, but the truth is that there are so many pitfalls that true success with this process is hard to come by. Instead, you are far more likely to end up with more debt than you started with.</p> <p>This is especially true if you have mixed results. When you have some creditors accept the settlement, but others refuse, you end up with additional fees and interest &mdash; not to mention the extra tax liability from the accepted settlements. You might have to borrow just to deal with the aftermath of your debt settlement!</p> <p>If you are considering debt settlement, carefully think through your options, and consider consulting a different financial professional who can help you put together a realistic plan for repaying your debts and reforming your overall finances.</p> <p><em>Have you relied on a debt settlement firm to help you get out of debt? Please share your experience in comments!</em></p> <a href="http://www.wisebread.com/6-ways-debt-settlement-can-leave-you-deeper-in-debt-even-with-trustworthy-companies" class="sharethis-link" title="6 Ways Debt Settlement Can Leave You Deeper in Debt (Even With Trustworthy Companies)" rel="nofollow">ShareThis</a><br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/miranda-marquit">Miranda Marquit</a> of <a href="http://www.wisebread.com/6-ways-debt-settlement-can-leave-you-deeper-in-debt-even-with-trustworthy-companies">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-best-0-balance-transfer-credit-cards">The Best 0% Balance Transfer Credit Cards</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-one-inspiring-saver-found-true-love-shook-off-debt-denial-and-paid-off-123000">How One Inspiring Saver Found True Love, Shook Off Debt Denial, and Paid Off $123,000</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-strategies-to-wipe-out-your-credit-card-balance">5 Strategies To Wipe Out Your Credit Card Balance</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/dealing-with-post-holiday-credit-card-debt">Dealing with Post-Holiday Credit Card Debt</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-tricks-to-save-money-with-credit-cards">10 Tricks to Save Money with Credit Cards</a></span> </div> </li> </ul> </div> </div> </div> </div> Credit Cards Debt Management credit card debt debt debt scams debt settlement Wed, 06 Aug 2014 13:00:05 +0000 Miranda Marquit 1172366 at http://www.wisebread.com The Best 0% Balance Transfer Credit Cards http://www.wisebread.com/the-best-0-balance-transfer-credit-cards <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/the-best-0-balance-transfer-credit-cards" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://www.wisebread.com/files/fruganomics/imagecache/250w/blog-images/1515167.jpg" alt="Woman with credit card" title="Woman with credit card" class="imagecache imagecache-250w" width="250" height="167" /></a> </div> </div> </div> <p>Those who live under a mountain of credit card debt quickly realize that their suffering has two components. First there is the principle, the actual amount of goods and services that was charged to their credit card. Secondly, there are the financing charges imposed each month on their balance. With each statement cycle, their average daily balance is multiplied by one twelfth of the card&rsquo;s Annual Percentage Rate (APR).&nbsp;Therefore, if you owe $10,000 on a card with an APR of 12%, you are incurring $100 in interest each month. Due to the effect of compounding interest, the finance charges incurred each month add to your balance, resulting in more interest being accrued with each passing month. (See also: <a href="http://www.wisebread.com/what-you-must-know-before-transferring-credit-card-balances">What You Must Know Before Transferring Credit Card Balances</a>)</p> <h2>How a Balance Transfer Works</h2> <p>To help relieve the burden of debt and acquire new customers, banks have long offered credit cards with a 0% promotional APR, for a limited time, on balance transfers. Applicants who qualify for a new card with these promotional rates can have their existing balance paid off by their new card. During the time that the 0% promotional rate applies, interest is not being accrued on the balance transferred; however, the amount transferred is almost always subject to a one-time balance transfer fee. This fee, typically 3%-5%, is added to the new balance. Also, cardholders are still responsible for making minimum payments on their account. New transactions may incur interest at the standard rate, although in some instances, the 0% promotional rate also applies to new purchases as well. Finally, no matter how much you are struggling with your debt, it is critical that you continue to make all of your payments on time, as only applicants with the excellent credit will qualify for most of these excellent promotional credit card offers. (See also: <a href="http://www.wisebread.com/5-best-credit-cards-for-people-with-excellent-credit">Best Credit Cards for People with Excellent Credit</a>)</p> <h2>How to Save Money With a Balance Transfer</h2> <p>First, it is crucial that those seeking a balance transfer do so as part of a comprehensive plan to eliminate their credit card debt. Such a plan should focus on maximizing their income, minimizing their expenses, and regularly paying down their entire credit card before the promotional rate expires.</p> <p>As part of an overall plan to eliminate debt, the <a href="http://www.wisebread.com/why-do-a-credit-card-balance-transfer-and-how?ref=internal">benefits of a balance transfer</a> are clear. For example, if a cardholder has an existing credit balance of $10,000 on a card with a 15% APR, that cardholder is currently accruing $125 in interest each month. If the cardholder continues to pay interest while reducing the balance by $500 each month, that person will still have accrued $1,250 of interest over the 20 months it took him or her to pay off the balance (15% interest applied to an average daily balance of $5,000 over 12 months). Alternatively, that person could accept a balance transfer offer of 21 months at 0% interest with a 3% balance transfer fee. In this case, that person&rsquo;s old balance of $10,000 will be paid off, while they will incur a new balance of $10,000 plus $300 in balance transfer fees. If all goes according to plan, at the end of the 21 months, the new balance will be paid off and the cardholder will have saved nearly $1,000 in interest.</p> <h2>Top Five 0% Balance Transfer Cards on the Market</h2> <p>Like every aspect of the credit card industry, we are fortunate to enjoy an extremely competitive market for 0% balance transfer credit cards. Here are the top offers currently available.</p> <h3>Discover it&reg; Card</h3> <p><img width="154" height="98" style="float:right;margin:0 5px 5px 10px;" src="http://content.linkoffers.net/SharedImages/Products/211101/601525.png" alt="credit card" />The Discover it card is offering a 0% introductory APR on balance transfers for 18 months (but only 6 months for purchases). After that, the APR will be 10.99%-22.99% (variable), depending on your credit. Balance transfers are subject to a 3% fee. In addition to a great 18 month balance transfer rate, the Discover it card is a great <a href="http://www.wisebread.com/5-best-cash-back-credit-cards?ref=internal">cash rewards card</a>, offering 5% cash back in categories that change each quarter up to the quarterly maximum after you sign up for 5% (1% cash back on all other purchases), as well as an online shopping portal that boasts 5-20% cash back with their over 200+ retail partners. There is no penalty interest rates, no late fee for your first late payment, and no overlimit fee. Although the Discover card is not as widely accepted as some others, customers rave about their excellent service. There are no foreign transaction fees on any of Discover&rsquo;s products. Plus, you get a free FICO&reg; Credit Score online and on your monthly statement, online, in their mobile app to help you stay on top of your credit. <strong>There is no annual fee.</strong></p> <!--<p><a target="_blank" rel="nofollow" href="http://track.linkoffers.net/a.aspx?foid=18820444&amp;fot=1015&amp;foc=1"><strong>Click here to apply for the Discover it&reg; Card</strong></a></p>--><!--<p><a target="_blank" rel="nofollow" href="http://track.linkoffers.net/a.aspx?foid=18820444&amp;fot=1015&amp;foc=1"><strong>Click here to apply for the Discover it&reg; Card</strong></a></p>--><h3>Citi&reg; Diamond Preferred&reg; Card</h3> <p><a target="_blank" href="http://www.anrdoezrs.net/click-2822544-11823375?sid=steele-846038" rel="nofollow" alt="Citi&reg; Diamond Preferred&reg; Card" title="Citi&reg; Diamond Preferred&reg; Card"><img width="154" height="98" border="0" alt="" style="float: right; margin: 0px 5px 5px 10px;" src="http://www.wisebread.com/files/fruganomics/u784/CitiDiamondPreferredVisaCard.jpg" /></a>The <a href="http://www.anrdoezrs.net/click-2822544-11823375?sid=steele-846038" target="_top">Citi&reg; Diamond Preferred&reg; Card</a><img width="1" height="1" border="0" alt="" src="http://www.ftjcfx.com/image-2822544-11823375" /> currently offers a 0% promotional APR on both purchases and balance transfers for 18 months. After that, the regular balance transfer APR will be 11.99%-21.99% (variable), based on your creditworthiness. There is a $5 or 3% balance transfer fee (whichever is greater). This card has additional benefits like Citi Easy Deals (get great online deals on brands like Gap, CVS, and Footlocker), Citi Private Pass (get access to exclusive events), and travel benefits like Auto Rental Insurance, Travel Insurance, and Lost Luggage Coverage. <strong>There is no annual fee.</strong></p> <p><a href="http://www.anrdoezrs.net/click-2822544-11823375?sid=steele-846038" target="_top"><strong>Click here to apply for the Citi&reg; Diamond Preferred&reg; Card</strong></a><img width="1" height="1" border="0" alt="" src="http://www.ftjcfx.com/image-2822544-11823375" /></p> <h3>Citi Simplicity&reg; Card</h3> <p><a target="_blank" rel="nofollow" href="http://www.tkqlhce.com/click-2822544-11413713?sid=steele-846038"><img width="154" height="98" style="float: right; margin: 0px 5px 5px 10px;" src="http://www.wisebread.com/files/fruganomics/u784/CitiSimplicityCardMasterCard.jpg" alt="credit card" /></a>Another card from Citi, the <a href="http://www.tkqlhce.com/click-2822544-11413713?sid=steele-846038" target="_top">Citi Simplicity&reg; MasterCard</a><img width="1" height="1" border="0" alt="" src="http://www.lduhtrp.net/image-2822544-11413713" /> that offers a 0% APR for 18 months on both balance transfers and new purchases. After that, the regular balance transfer APR will be 12.99%-22.99% (variable), depending on your credit. There is a $5 or 3% balance transfer fee (whichever is greater). Instead of granting the <a title="Free Travel With Credit Cards" href="http://www.wisebread.com/5-best-sign-up-bonuses-for-airline-miles-credit-cards?ref=internal">travel benefits</a> of the Diamond Preferred, this card offers no late fees or penalty interest rates, as well as services like Citi&nbsp;Price Rewind. <strong>There is no annual fee.&nbsp;</strong></p> <p><a target="_top" href="http://www.tkqlhce.com/click-2822544-11413713?sid=steele-846038"><strong>Click here to apply for the Citi Simplicity&reg; Card</strong></a><strong><img width="1" height="1" border="0" alt="" src="http://www.lduhtrp.net/image-2822544-11413713" /></strong></p> <h3>Blue Cash Everyday&reg; Card from American Express</h3> <p><a title="Blue Cash Everyday&reg; Card from American Express" alt="Blue Cash Everyday&reg; Card from American Express" rel="nofollow" href="http://track.linkoffers.net/a.aspx?foid=3050771&amp;fot=1015&amp;foc=1" target="_blank"><img border="0" alt="" style="float: right; margin: 0px 5px 5px 10px;" src="http://content.linkoffers.net/SharedImages/Products/87/530403.gif" /></a></p> <p>The <a target="_blank" href="http://track.linkoffers.net/a.aspx?foid=3050771&amp;fot=1015&amp;foc=1" rel="nofollow">Blue Cash Everyday&reg; Card</a> offers 0% Intro APR on purchases and balance transfers for 15 months. After that, your APR will be a variable rate, currently 12.99%-21.99% based on your creditworthiness and other factors. The balance transfer fee is a $5 or 3% of the amount of each transfer, whichever is greater.</p> <p>This card is also offers great cash back rewards: 3% US supermarkets up to $6,000 per year in purchases (then 1%), 2% at US gas stations &amp; select US dept stores, 1% on other purchases. Terms and limitations apply. <strong>There is no annual fee.</strong><strong><em><br /> </em></strong></p> <ul> <li>Get one year of Amazon Prime plus $50 back after you make $1,000 in purchases with your new Card in the first three months.<br /> &nbsp;</li> <li>You will receive $50 back in the form of a statement credit.<br /> &nbsp;</li> <li>Hassle-free cash back: no enrollment required, the same great reward categories year-round.<br /> &nbsp;</li> <li>Earn Cash Back: 3% US supermarkets up to $6,000 per year in purchases, 2% at US gas stations &amp; select US dept stores, 1% on other purchases. Terms and limitations apply.<br /> &nbsp;</li> <li>Cash back is received in the form of Reward Dollars that can be redeemed as a statement credit.<br /> &nbsp;</li> <li>No annual fee. Plus, 0% intro APR on purchases and balance transfers for 15 months, then a variable rate, currently 12.99% to 21.99%, based on your creditworthiness and other factors.<br /> &nbsp;</li> <li>Terms and restrictions apply.</li> </ul> <p><a rel="nofollow" href="http://track.linkoffers.net/a.aspx?foid=3050771&amp;fot=1015&amp;foc=1" target="_blank"><strong>Click here to apply for the Blue Cash Everyday&reg; Card from American Express today!</strong></a></p> <h3>Chase Slate</h3> <p>The Chase Slate card is catered specifically for balance transfers. There are no rewards for purchases or travel benefits. You get 0% Intro APR for 15 months on balance transfers. What makes this card uniquely suited for balance transfers is the<strong> zero balance transfer fee</strong> when you transfer a balance during the first 60 days your account is open. After that, the fee for future transactions is 3% of the amount transferred, with a minimum of $5. This is a great deal if all you need is a card to transfer a balance to and get a 15 month relief from interest.</p> <h3>Capital One&reg; Platinum Prestige Credit Card</h3> <p><a target="_blank" rel="nofollow" href="http://www.wisebread.com/capital-one-platinum-prestige?ref=846038"><img width="154" height="98" style="float:right;margin:0 5px 5px 10px;" src="http://content.linkoffers.net/sharedimages/products/161332/591676.gif" alt="credit card" /></a> The <a target="_blank" rel="nofollow" href="http://www.wisebread.com/capital-one-platinum-prestige?ref=846038">Capital One&reg; Platinum Prestige Card</a> offers a 0% introductory APR until March 2016 on balance transfers and purchases. After that the APR will be 10.9%-18.9% (variable), depending on your credit. There is a 3% balance transfer fee, and there are no foreign transaction fees on any Capital One products. <strong>There is no annual fee.</strong></p> <p><a target="_blank" rel="nofollow" href="http://www.wisebread.com/capital-one-platinum-prestige?ref=846038"><strong>Click here to apply for the Capital One&reg; Platinum Prestige Credit Card</strong></a></p> <p>A 0% balance transfer is not an instant solution to the problem of credit card debt. You should think of these offers as a significant push up a big mountain, but you will still have to do most of the work yourself. (See also: <a href="http://www.wisebread.com/6-hidden-dangers-of-credit-card-balance-transfers?ref=seealso">6 Hidden Dangers of Credit Card Balance Transfers</a>)</p> <p><a href="http://www.wisebread.com/topic/personal-finance/credit-cards"><strong>To the Credit Card Guide</strong></a></p> <a href="http://www.wisebread.com/the-best-0-balance-transfer-credit-cards" class="sharethis-link" title="The Best 0% Balance Transfer Credit Cards" rel="nofollow">ShareThis</a><br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/jason-steele">Jason Steele</a> of <a href="http://www.wisebread.com/the-best-0-balance-transfer-credit-cards">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-3"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/dealing-with-post-holiday-credit-card-debt">Dealing with Post-Holiday Credit Card Debt</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-dirty-secrets-of-credit-cards">The Dirty Secrets of Credit Cards</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-ways-debt-settlement-can-leave-you-deeper-in-debt-even-with-trustworthy-companies">6 Ways Debt Settlement Can Leave You Deeper in Debt (Even With Trustworthy Companies)</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-surprising-ways-to-negatively-affect-your-credit-score">10 Surprising Ways to Negatively Affect Your Credit Score</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-one-inspiring-saver-found-true-love-shook-off-debt-denial-and-paid-off-123000">How One Inspiring Saver Found True Love, Shook Off Debt Denial, and Paid Off $123,000</a></span> </div> </li> </ul> </div> </div> </div> </div> Credit Cards Debt Management balance transfer cards credit card debt interest rates Wed, 01 Jan 2014 11:36:22 +0000 Jason Steele 846038 at http://www.wisebread.com Depressed? It Could Be Your Debt http://www.wisebread.com/depressed-it-could-be-your-debt <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/depressed-it-could-be-your-debt" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://www.wisebread.com/files/fruganomics/imagecache/250w/blog-images/stress-4847397-small_0.jpg" alt="depression" title="depression" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>As of July 2013, the average American credit card debt was $15,325, and the average student loan debt was $32,041. (See also: <a href="http://www.wisebread.com/how-much-does-your-credit-card-debt-cost-you">How Much&nbsp;Does Your Credit Card Debt Cost You?</a>)</p> <p>Reading those numbers makes me think about my own lingering student loan debt, and <em>that</em> gives me a clenching feeling in my stomach.</p> <p>As it turns out, I'm not the only one who feels stressed about debt. Moreover, for some people, debt might not just cause stress &mdash; it can also lead to depression and even poor phyisical health. This month, the journal &quot;Social Science &amp; Medicine&quot; reported that, <a href="http://www.sciencedirect.com/science/article/pii/S0277953613002839">in a study of 8,400 young adults</a>,</p> <blockquote><p>...high financial debt relative to available assets is associated with higher perceived stress and depression, worse self-reported general health, and higher diastolic blood pressure. These associations remain significant when controlling for prior socioeconomic status, psychological and physical health, and other demographic factors.</p> </blockquote> <p>And that financial strife doesn't just affect our personal lives. A study released earlier this summer also noted that financial arguments early in a marriage are the <a href="http://phys.org/news/2013-07-reveals-early-financial-arguments-predictor.html">number one predictor of divorce</a>.</p> <p>Basically, if you think that your finances are causing problems beyond your wallet, you're not crazy. And the faster you get out of debt, the faster you might be on the road to better mental and physical health. Take a look at this article on how to <a href="http://www.wisebread.com/how-to-start-fighting-debt-today">start fighting debt &mdash; today</a>. Or, if you're already working on paying down your debt, check out my piece on <a href="http://www.wisebread.com/15-ways-to-pay-back-student-loans-faster">15 ways to pay back student loans faster</a>.</p> <a href="http://www.wisebread.com/depressed-it-could-be-your-debt" class="sharethis-link" title="Depressed? It Could Be Your Debt" rel="nofollow">ShareThis</a><br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/meg-favreau">Meg Favreau</a> of <a href="http://www.wisebread.com/depressed-it-could-be-your-debt">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-4"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-one-couple-paid-off-147k-of-debt-even-while-unemployed">How One Couple Paid Off $147k of Debt (Even While Unemployed)</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-best-0-balance-transfer-credit-cards">The Best 0% Balance Transfer Credit Cards</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-one-college-graduate-paid-off-28000-in-three-years-on-a-30k-salary">How One College Graduate Paid Off $28,000 in Three Years on a $30K Salary</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/dealing-with-post-holiday-credit-card-debt">Dealing with Post-Holiday Credit Card Debt</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/can-you-talk-to-your-friends-about-debt">Can you talk to your friends about debt?</a></span> </div> </li> </ul> </div> </div> </div> </div> Debt Management anxiety credit card debt depression student loans Tue, 20 Aug 2013 18:40:17 +0000 Meg Favreau 981403 at http://www.wisebread.com 6 Valid Reasons Not to Contribute to Your 401(k) http://www.wisebread.com/6-valid-reasons-not-to-contribute-to-your-401k <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/6-valid-reasons-not-to-contribute-to-your-401k" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://www.wisebread.com/files/fruganomics/imagecache/250w/blog-images/6370170341_55c3507a97_z.jpg" alt="stop sign" title="stop sign" class="imagecache imagecache-250w" width="250" height="188" /></a> </div> </div> </div> <p>You&rsquo;ve heard that you should contribute to your company&rsquo;s 401(k), almost always. Don't feel bad or question your financial judgment if you've decided to invest elsewhere. There are valid reasons to be an exception to this general rule. (See also: <a href="http://www.wisebread.com/is-it-time-to-starve-your-401k">Is It Time to Starve Your 401(k)?</a>)</p> <h2>1. Your Company Doesn&rsquo;t Match Your Contributions</h2> <p>If your company doesn't match your contributions, then 401(k) participation is not especially attractive. When I worked for large corporations, I contributed to my retirement through 401(k) plans but never received an employer match. Although I enjoyed the automatic savings feature and reduced tax liability, I didn't get <a target="_blank" href="http://www.wisebread.com/6-ways-to-get-paid-for-saving-money">bonus money from my employers for saving</a>.</p> <p>Many advisors emphasize that you should set aside enough money to get the employer match. However, <a target="_blank" href="http://20somethingfinance.com/401k-match/">they often don&rsquo;t mention that nearly half of employers don't provide this incentive</a>.</p> <p>Not getting a match shouldn't automatically dissuade you from contributing to your 401(k) plan at work. But this scenario should encourage you to consider other <a target="_blank" href="http://www.wisebread.com/choosing-a-retirement-account-whats-available-and-what-s-best-for-you">retirement account options</a>.</p> <h2>2. You Plan to Leave the Company After a Couple of Years</h2> <p>Even if you are eligible for the company match, you may not receive this money when you quit your job. Generally, you need to work for your employer for a while to become fully vested and receive the matching dollars. A notable exception is the <a target="_blank" href="http://www.dol.gov/ebsa/publications/401kplans.html">Safe Harbor 401(k) plan</a>, which requires all employer contributions to be fully available to employees regardless of tenure.</p> <p>Vesting schedules vary. Typically, you&rsquo;ll need to be an employee or participate in the plan for several years. Often, you&rsquo;ll get ownership of the match over time or at the end of a specified term (for example, you'll gain access to 20% every year for five years or get nothing for the first six years and then become 100% vested in year seven). Look at <a target="_blank" href="http://www.irs.gov/Retirement-Plans/Plan-Participant,-Employee/Retirement-Topics---Vesting">your 401(k) plan documents</a> to determine when ownership of the employer match is transferred to you. Note that you always have ownership of your contributions.</p> <p>Just as not getting a match doesn't negate the value of the 401(k), having to wait to become fully vested doesn't mean that you should definitely skip enrollment. However, it's helpful to consider your career plans and vesting schedules when making this decision.</p> <h2>3. You Want to Pay Off High Interest Debt</h2> <p>If you are carrying thousands of dollars in high interest debt, then you may want to focus on paying off loan balances at home instead of contributing to your 401(k) plan at work. Diverting money from retirement funding to debt payoff for a couple of years could make sense, especially if you are burdened financially and psychologically by credit card debt.</p> <p>Company matching percentages, loan interest rates, loan balances, <a target="_blank" href="http://www.wisebread.com/tax-brackets-explained">tax brackets</a>, and investment returns play a role in calculating what is best for your situation. For a discussion of this topic, see Philip&rsquo;s post on <a target="_blank" href="http://www.wisebread.com/funding-your-401k-when-youre-in-debt?wbref=readmore-5">funding your 401(k) when you&rsquo;re in debt</a>.</p> <p>Your goal should be to establish a habit of financial discipline, whether contributing to your 401(k) plan or paying off loans. Consider your financial priorities and inclinations; if you opt to pay off credit card balances, commit to spending less than you earn and building your retirement account as soon as your high-interest balance hits zero.</p> <h2>4. Your Employer Offers a Lousy 401(K) Plan</h2> <p>You may choose to invest on your own rather than put money in your employer's 401(k) if the plan has undesirable investment options and unreasonably high costs.</p> <p>Look at the disclosures to gain insight into the worthiness of your company's 401(k) plan. According to the <a target="_blank" href="http://www.shrm.org/hrdisciplines/benefits/articles/pages/nohide.aspx">Society for Human Resource Management (SHRM)</a>, you should receive information on mutual fund performance compared to benchmarks as well as administrative, investment, and service expenses. See this <a target="_blank" href="http://www.401khelpcenter.com/401k/401k_fee_infographic.html#.UUdOAta7N14">infographic</a> for an explanation of the differences in these types of fees. In addition, check <a target="_blank" href="http://www.brightscope.com/">BrightScope</a> ratings to see how your employer&rsquo;s plan compares with its peers.</p> <p>Certified financial planner <a target="_blank" href="http://thechicagofinancialplanner.com/2013/02/06/4-signs-of-a-lousy-401k-plan/">Roger Wohlner gives tips on the types of mutual funds that may indicate a lousy plan</a>. For example, if your choices are limited to proprietary funds associated with the plan provider, one fund family (only T. Rowe Price funds in all asset classes, for example), or expensive share classes, then your plan may not be designed for the optimal benefit of employees.</p> <p>Examine your 401(k) to figure out if your employer is offering an excellent, average, or subpar plan. Based on your discovery, you may decide to <a href="http://www.wisebread.com/how-to-set-up-an-ira-to-build-wealth">open and fund an IRA</a> to build wealth instead of participating in your company's plan.</p> <h2>5. You Need Cash to Make a Down Payment on a House</h2> <p>While you can tap your retirement funds by taking a hardship distribution or borrowing on your balance, there is a simpler way to get money for the purchase of a primary (or principal) residence. Forgo 401(k) plan contributions for the moment, save in a regular account, and earmark funds for this purpose.</p> <p>If you <a target="_blank" href="http://www.wisebread.com/tax-penalties-for-early-retirement-withdrawals">withdraw money from a traditional 401(k) account prior to retirement age</a>, <a target="_blank" href="http://www.irs.gov/Retirement-Plans/Plan-Sponsor/401(k)-Resource-Guide---Plan-Sponsors---General-Distribution-Rules">you will owe taxes on the distribution amount plus a 10% penalty in most cases</a>. Also, you won&rsquo;t be able to contribute to the plan for several months. Alternatively, you could borrow from the account; however, a loan detracts from your long term ability to save plus requires you to pay outstanding balances immediately if you leave your employer.</p> <p>So, rather than funding your plan at work, consider setting aside a certain amount to accumulate a down payment. Then, after you purchase the house, you can start (or restart) contributing to your 401(k).</p> <h2>6. You Want to Fund a Roth IRA</h2> <p>If you have a healthy balance in traditional retirement accounts (and your employer doesn't offer the Roth designated account within its 401(k) plan), you may want to skip contributions at work and put money into a Roth IRA.</p> <p>While traditional retirement plans give you a tax break now, the Roth allows you to withdraw funds tax-free when you reach 59&frac12; (or earlier in certain circumstances). Also, unlike regular IRAs and traditional 401(k)s, you can take money out of the Roth at your leisure rather than according to a certain schedule in retirement.</p> <p>To be clear, you don&rsquo;t have to <a target="_blank" href="http://www.wisebread.com/4-reasons-why-a-roth-ira-may-be-better-than-your-401k">choose between a Roth IRA and your employer&rsquo;s 401(k) plan</a> (however, there are income-based limits on Roth contributions). But if you meet income standards and have limited amounts of money to save for retirement, then you may want to stop participating in the 401(k) plan in order to fund the Roth IRA.</p> <p>Certainly, there are many reasons you should participate in a 401(k) plan, including the ease of setting aside money for your retirement on a regular and automatic basis plus the ability to save a large amount each year within this retirement account (more than $17,000 per year in a 401(k) plan versus just $5,500 in an IRA). But you shouldn't feel uneasy if you decide to take a different route, particularly for a year or two, depending on your circumstances.</p> <p><em>Have you decided not to participate in your company's 401(k) plan? Have you still been able to save for retirement?</em></p> <a href="http://www.wisebread.com/6-valid-reasons-not-to-contribute-to-your-401k" class="sharethis-link" title="6 Valid Reasons Not to Contribute to Your 401(k)" rel="nofollow">ShareThis</a><br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/julie-rains">Julie Rains</a> of <a href="http://www.wisebread.com/6-valid-reasons-not-to-contribute-to-your-401k">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-5"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/this-one-thing-will-get-you-to-1-million-tax-free">This One Thing Will Get You to $1 Million (Tax-Free!)</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-reasons-why-a-roth-ira-may-be-better-than-your-401k">4 Reasons Why a Roth IRA May be Better Than Your 401(k)</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-reasons-why-you-must-open-a-roth-ira-before-april-15">4 Reasons Why You Must Open a Roth IRA Before April 15</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-set-up-an-ira-to-build-wealth">How to Set Up an IRA to Build Wealth</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/step-by-step-guide-to-rolling-over-your-old-401k">Step-By-Step Guide to Rolling Over Your Old 401(k)</a></span> </div> </li> </ul> </div> </div> </div> </div> Investment Retirement 401(k) credit card debt loan payoff Roth IRA Mon, 25 Mar 2013 09:48:38 +0000 Julie Rains 971346 at http://www.wisebread.com How Your Credit Card Statement Is Keeping You in Debt http://www.wisebread.com/how-your-credit-card-statement-is-keeping-you-in-debt <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-your-credit-card-statement-is-keeping-you-in-debt" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://www.wisebread.com/files/fruganomics/imagecache/250w/blog-images/reading-statements-iStock_000022442853Small.jpg" alt="credit card statement" title="credit card statement" class="imagecache imagecache-250w" width="250" height="166" /></a> </div> </div> </div> <p>Since 2010, there has been an important change to your credit card statement. In addition to your minimum payment, your overall balance, and your due date, you can also now find some fascinating (if by fascinating you mean depressing) information about how long it will take you to pay off your balance if you only pay the minimum.</p> <p>While anyone with a calculator and 10 minutes could easily determine that same information, the <a href="http://www.creditcards.com/credit-card-news/help/what-the-new-credit-card-rules-mean-6000.php">2009 Credit CARD Act</a> required lenders to start providing their customers with the cold hard facts. This is because the average consumer not only says a big, fat &quot;No, thank you,&quot; to the opportunity to do extra mathematical calculations, we are also under the false impression that making minimum payments was more than enough to get out of debt in a reasonable time frame.</p> <p>And therein lies the real problem with owning a credit card. It's easy to forget that everything the bank does is geared toward making the most money possible off of each and every cardholder. Your bank is working double time to use psychological trickery in order to get you into debt, because it makes them more money.</p> <p>In particular, your billing statement is a treasure trove of traps for the unwary cardholder. Get out your latest statements and see which methods your bank is using in order to either get you or keep you in debt. (See also: <a href="http://www.wisebread.com/why-we-take-on-credit-card-debt">Why We Take on&nbsp;Credit Card Debt</a>)</p> <h2>1. The Minimum Payment</h2> <p>When you open any bill other than a credit card statement, the amount due is the same as the total due. But credit cards helpfully offer to let you pay as little as 2% of your total balance in order to satisfy your payment. They're not doing this because they're nice guys &mdash; only paying the minimum means you owe more.</p> <p>Granted, this is the sort of thing that we should all know by now. But if that were the case, 2009's Credit CARD Act would not have required inclusion of the minimum payment consequences on every statement.</p> <p>The big problem is that a minimum payment amount can affect how much you decide to pay each month. By providing you with a lowball number, your lender is using the effects of <a href="http://en.wikipedia.org/wiki/Anchoring">anchoring</a> &mdash; a cognitive bias that causes you to be heavily influenced by the first piece of information offered, even if it's clearly unrelated. For instance, <a href="http://www.communicationcache.com/uploads/1/0/8/8/10887248/considering_the_impossible_-_explaining_the_effects_of_implausible_anchors.pdf">a study examining the influence of implausible anchors</a> found that participants who were asked if Gandhi was older or younger than 9 when he died estimated his age at death to be 50, whereas participants who were given the anchor age of 140 estimated his age as 67. (He was 78 when he died, by the way.)</p> <p>The implications of anchoring are pretty clear when it comes to the bank offering you a minimum payment amount &mdash; you are more likely to pay less than you would if you were simply told how much you owed. Even if you do not take the bait in paying only the minimum, you are still more likely to pay less than you otherwise would. It's a win-win for your lender.</p> <h2>2. Available Credit</h2> <p>Every credit card statement also makes sure to inform you of exactly how much credit you still have available. This is another number that you could easily arrive at yourself &mdash; and generally without having to break out the calculator or even count on your fingers and toes. So why does your lender feel the need to share this information with you? Because of a cognitive bias called the <a href="http://en.wikipedia.org/wiki/Framing_effect_%28psychology%29">framing effect</a>.</p> <p>Basically, the framing effect explains why you can have different reactions to the same information based upon how it is presented to you. For instance, telling someone their venture has a 50% chance of success is much more likely to get them excited about going forward than telling them there's a 50% chance of failure &mdash; even though you have told them the exact same thing.</p> <p>Providing the available credit on your statement frames your debt in a very specific way. Instead of thinking &quot;I owe so much!&quot; the mere presence of the available credit amount makes you feel like your debt isn't so bad. In many cases, cardholders will see the number representing their available credit and feel comfortable going ahead with charging more. There's plenty of money left, after all.</p> <p>Of course, it's not as simple as our irrational brains make it. Not only will you have to pay back everything you've charged, plus interest, but using too much of your available credit can really <a href="http://www.wisebread.com/10-surprising-ways-to-negatively-affect-your-credit-score">negatively affect your credit score</a>. Our brains are wired to make quick decisions based on whatever information is available. So knowing that you still have $4,000 before reaching your credit limit can be enough to make you say &quot;why not?&quot; to the next spending temptation.</p> <h2>3. Convenience Checks</h2> <p>I'll come right out and say it. Convenience checks &mdash; those handy-dandy checks that arrive with your billing statement that you can use for any payments when you would normally write a check &mdash; are evil. Evil, like the fruits of the devil. You should hear Darth Vader's theme song when you open an envelope with these bad boys in them.</p> <p>Convenience checks capitalize on the fact that most consumers rarely read through fine print. Because if you did <a href="http://www.forbes.com/sites/moneybuilder/2011/12/09/the-high-cost-of-credit-card-convenience-checks-2/">read through it</a>, you would find the checks are about as convenient as a Nigerian email scam.</p> <p>First, using the checks often appears to be no different from swiping a credit card. It's drawing on your line of credit, after all. But your lender actually treats convenience checks as cash advances, no matter what you use the check for. But cash advances have higher interest rates than credit card purchases &mdash; sometimes as high as 20% or more. Yes, the information about the higher interest is available to you, but only if you go looking for it.</p> <p>In addition, you will also generally pay an upfront fee for the privilege of writing one of these checks &mdash; usually 3% to 4% of the amount you are borrowing via convenience checks.</p> <p>If you're not convinced yet, don't forget that your lender still isn't done squeezing every last drop of money out of the convenience checks. When using one of these checks, you generally do not have an interest-free grace period like you do with credit card purchases. So even if you plan to pay off your bill as soon as it arrives, you'll find that you've been accruing that additional interest from the moment your check was cashed.</p> <p>When it comes down to it, convenience checks are taking advantage of our inherent <a href="http://www.psychologytoday.com/articles/200706/the-lure-laziness">laziness</a>. It's easier to write one of these checks than it is figure out where our budgeting went wrong when rent is due and the checking account is empty. Using these checks is simpler than getting more checks from our bank when we've run out. We'll take note of the page of fine print legalese, but refrain from reading it because it's just too much to take in. In short, lenders are counting on us being lazy and uninformed.</p> <p>When you receive these checks in the mail, shred them immediately and back away slowly. You don't want to be seduced by the power of the Dark Side.</p> <h2>Beating Credit Cards at Their Own Game</h2> <p>We all know that we should be paying off our credit card in full each month. Unfortunately, that's not always possible for every cardholder. But even for those borrowers who are <a href="http://www.wisebread.com/the-best-0-balance-transfer-credit-cards">carrying a balance</a>, it is possible to avoid being played by lender tricks and our own psychology.</p> <p>First, personally keep track of how much you owe. If you know what your balance is without having to look at your statement, you're much more likely to come up with a rational payment amount without being affected by the minimum payment anchor number.</p> <p>Knowing your balance is also a good way to avoid being tricked by the framing of your available credit. You will keep your total debt in mind throughout the month, which will help to keep your focus where it should be &mdash; on what you owe, rather than on how much more you could spend.</p> <p>Finally, just don't use convenience checks. No convenience is worth their outrageous cost.</p> <p>Ultimately, it is up to cardholders to spend and pay responsibly. It is a mistake to think any lenders have your best interests at heart, even if they are cleaning up their act somewhat since the Credit CARD Act of 2009.</p> <a href="http://www.wisebread.com/how-your-credit-card-statement-is-keeping-you-in-debt" class="sharethis-link" title="How Your Credit Card Statement Is Keeping You in Debt" rel="nofollow">ShareThis</a><br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/emily-guy-birken">Emily Guy Birken</a> of <a href="http://www.wisebread.com/how-your-credit-card-statement-is-keeping-you-in-debt">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-6"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-best-0-balance-transfer-credit-cards">The Best 0% Balance Transfer Credit Cards</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/top-6-reasons-why-using-cash-only-rocks">Top 6 Reasons Why Using Cash-Only Rocks</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/dealing-with-post-holiday-credit-card-debt">Dealing with Post-Holiday Credit Card Debt</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-ways-debt-settlement-can-leave-you-deeper-in-debt-even-with-trustworthy-companies">6 Ways Debt Settlement Can Leave You Deeper in Debt (Even With Trustworthy Companies)</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-20-somethings-can-do-about-credit-card-debt">What 20-Somethings Can Do About Credit Card Debt</a></span> </div> </li> </ul> </div> </div> </div> </div> Credit Cards credit card debt credit card statements Tue, 29 Jan 2013 11:24:31 +0000 Emily Guy Birken 967479 at http://www.wisebread.com What 20-Somethings Can Do About Credit Card Debt http://www.wisebread.com/what-20-somethings-can-do-about-credit-card-debt <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/what-20-somethings-can-do-about-credit-card-debt" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://www.wisebread.com/files/fruganomics/imagecache/250w/blog-images/online-shopping-with-tablet-iStock_000019075054Small.jpg" alt="online shopping" title="online shopping" class="imagecache imagecache-250w" width="250" height="166" /></a> </div> </div> </div> <p>You've probably seen the recent headlines that say young adults are going to be carrying credit card debt to their graves. This reaction is due to a study at Ohio State University that showed that people born between 1980 and 1984 have, on average, $5,689 more debt than their parents had when they were the same age. (See also:&nbsp;<a href="http://www.wisebread.com/arguing-over-money-drives-your-kids-to-credit-card-debt">Arguing Over Money&nbsp;Drives Your Kids to&nbsp;Credit Card Debt</a>)</p> <p>To make matters worse, these young people have $8,156 more credit card debt than their grandparents had at the same stage in their lives.</p> <p>OK, everyone breathe.</p> <p>We've gone from the present to the grave pretty quickly here. This makes an assumption that today's young adults don't intend to make any changes in their lives that would reduce their debt. I don't think that's true for the majority.</p> <p>I've been around a while, and I've never heard from so many young people who are making an effort to fix their financial futures. I see a smart, savvy group who want to attain financial freedom. So let's approach this problem from that perspective.</p> <h2>What You Can Do to Decrease Debt</h2> <p>The first suggestion from most experts is to take advantage of a <a href="http://www.wisebread.com/the-best-0-balance-transfer-credit-cards">balance transfer credit card</a>. Well, that works really well if you have excellent credit. You can transfer your debt to a card that offers a zero percent intro rate and save a ton on interest expense.</p> <p>But if you're young and in debt, you might not have excellent credit. So let's talk about the steps you can take if your credit is average or below. I think the most important thing to do is to educate yourself about personal finance.</p> <p>It sounds so cliché, but stick with me a moment here. The more you understand personal finance, and especially credit, the better decisions you'll make when you think about buying something. Instead of automatically putting concert tickets on a credit card, for instance, you'll think about whether this purchase fits within your overall budget.</p> <p>The more confident you become in your ability to make sound financial decisions, the more optimistic you'll feel about paying off your debt. And that's a good thing, because you need to feel optimistic to stick with the changes you'll have to make.</p> <h2>A Few Sacrifices Can Go a Long Way</h2> <p>When I was in my mid-to-late 20s, I got into debt because I spent more than I made. My only defense is that I had never had that much money before and, well, I got a little crazy and lightheaded with the power. And then when I used my credit cards for purchases, I failed to think about some important things, like compound interest.</p> <p>It turned around for me when I started educating myself about credit and every personal finance topic I could get my hands on. And yes, personal sacrifices I made had a lot to do with turning things around. I set up a budget that only a miser could love.</p> <p>If you can't qualify for a balance transfer card and you don't have time for a second job, then often, the solution has to be personal sacrifice. You give up the <a href="http://www.wisebread.com/why-going-to-the-gym-is-a-waste-of-money-time-and-resources">gym membership</a> and run in your neighborhood instead. You give up a weekly movie with your friends or family and rent DVDs and make your own popcorn.</p> <p>So cut back on expenses and throw every penny you've got at the debt. Pay more than the minimum. Slow and steady wins the race. Trust me on this. I worked hard on my debt for two years and finally got my life back.</p> <p>Once your debt starts going down, your credit score might improve. At some point, your score might be high enough to qualify for a balance transfer card and you can pay off the rest of your debt without paying interest expense.</p> <h2>What If You Still Feel Like You're Drowning?</h2> <p>If your debt is so high that you can't make a huge dent in it within three years or so, you might want to talk with a credit counselor. I usually send folks to the National Foundation for Credit Counseling or to CredAbility.</p> <p>Initially, you'll be able to talk with a counselor and get a feel for what your next steps should be. Don't be afraid to get help if you need it.</p> <h2>Breaking the Debt Cycle</h2> <p>So how did so many young adults get into this situation in the first place? There are certainly legitimate reasons beyond your control, such as prolonged unemployment or a health crisis.</p> <p>But for many, debt happens because they don't have a solid foundation in how money, and especially credit, works. That's why I place so much emphasis on educating yourself about money management.</p> <p>It would be awesome if we all <a href="http://www.wisebread.com/13-things-to-teach-your-kids-about-credit-cards">learned money skills from our parents</a>. But according to a 2010 survey by the National Foundation for Credit Counseling (NFCC), 41% said they learned about money from their parents. So the majority &mdash; 59% &mdash; hit adulthood without being taught about personal finance by their parents.</p> <p>I really do think this is related to the debt that young adults carry. It's so much easier to go out in the world and stay debt-free when you have a solid foundation in personal finance.</p> <p>You know, I talk about credit for a living, so my kids have been exposed to money talk since they were little. But I also made a point of talking about money because of my own experience with credit card debt. I wanted to spare them the horror of that situation.</p> <p>If you have kids and you talk with them about the family budget, you're doing them a huge favor. It doesn't have to be anything formal. I like the &quot;everyday living&quot; approach. You explain money decisions you're making as it happens in life, like at the grocery store.</p> <p>If you use a credit card to pay for groceries, for instance, explain that you still have to pay the bill later when the statement comes. I took the extra step of explaining what happens when you charge more than you can pay off at the end of the month. You know, I had a lot of personal experience with that!</p> <p>And even if you think credit cards are evil, it's still your job to explain to your kids how they work. One day, they'll be alone in their own home and they'll get enticing offers in the mail. You want them to know enough about credit so they make smart decisions.</p> <p>The point here is to break the credit card debt cycle within your own family. Knowledge isn't fool-proof, but there's plenty of evidence that financial literacy leads to smarter money-related decisions. So really, teaching your kids how to handle money &mdash; and credit &mdash; responsibly is one of the most valuable gifts you can give them.</p> <p><em>Do you talk to your kids about money and credit? If so, please share your approach!</em></p> <a href="http://www.wisebread.com/what-20-somethings-can-do-about-credit-card-debt" class="sharethis-link" title="What 20-Somethings Can Do About Credit Card Debt" rel="nofollow">ShareThis</a><br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/beverly-harzog">Beverly Harzog</a> of <a href="http://www.wisebread.com/what-20-somethings-can-do-about-credit-card-debt">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-7"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-best-0-balance-transfer-credit-cards">The Best 0% Balance Transfer Credit Cards</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/top-6-reasons-why-using-cash-only-rocks">Top 6 Reasons Why Using Cash-Only Rocks</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/dealing-with-post-holiday-credit-card-debt">Dealing with Post-Holiday Credit Card Debt</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-ways-debt-settlement-can-leave-you-deeper-in-debt-even-with-trustworthy-companies">6 Ways Debt Settlement Can Leave You Deeper in Debt (Even With Trustworthy Companies)</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-your-credit-card-statement-is-keeping-you-in-debt">How Your Credit Card Statement Is Keeping You in Debt</a></span> </div> </li> </ul> </div> </div> </div> </div> Credit Cards credit card debt Mon, 28 Jan 2013 11:36:30 +0000 Beverly Harzog 967505 at http://www.wisebread.com Why We Take on Credit Card Debt http://www.wisebread.com/why-we-take-on-credit-card-debt <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/why-we-take-on-credit-card-debt" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://www.wisebread.com/files/fruganomics/imagecache/250w/blog-images/thinking-about-money-iStock_000021978806Small.jpg" alt="thinking about money" title="thinking about money" class="imagecache imagecache-250w" width="250" height="166" /></a> </div> </div> </div> <p>Why do some people rack up huge credit card debts while others are able to handle their credit responsibly?</p> <p>This is a question that puzzles everyone from psychologists to marketers to your Aunt Sheila, who wants to know why her sons are in such trouble with debt while you and your siblings are doing quite well, thank you very much.</p> <p>While the specific mechanisms behind what makes some people more debt-prone than others are maddeningly difficult for researchers to tease out, there do seem to be some personality characteristics and lifestyle factors that may make people more likely to get into debt. These characteristics can be broken down into three potential risk factors for debt: demographic and economic factors, psychological factors, and attitudinal factors. (See also: <a href="http://www.wisebread.com/party-like-its-1999-the-psychology-of-pricing">Party Like It's 19.99: The Pscyhology of Pricing</a>)</p> <h2>Demographic and Economic Factors</h2> <p>Poorer individuals are more likely to be in debt &mdash; a finding from <a href="http://www.apa.org/monitor/jun04/maxed.aspx">learned researchers</a> that I believe deserves a big collective &quot;Duh!&quot; from anyone who reads their findings. But, as obvious as that conclusion is, it's necessary for psychologists and researchers to start their investigation there in order to make certain they do not overlook anything.</p> <p>Basically, you are more likely to have credit card debt if you are low-income, young, and surrounded by others who also have debt. Having very little money means you might rely on credit in order to make ends meet. Young people are more likely to have less income, as well, which is why they are more likely to be in debt. And seeing that your friends, family, and peers all struggle with credit card debt makes it more likely for you to accept debt as a part of life. Without a model for another way to live, you'll simply follow what you know.</p> <p>Another important demographic risk factor is your relative income compared to your social sphere. If you make significantly less than your friends, you're likely to be in debt as you try to maintain a similar lifestyle &mdash; a classic case of &quot;Keeping Up With the Joneses.&quot;</p> <h2>Psychological Factors</h2> <p>This is where things get more complicated. Psychologists have been investigating the reasons why some individuals are prone to debt while others pay off their credit cards each month for many years. While experts believe that there are some factors that should be able to predict indebtedness, no studies have been able to conclusively prove it. However, their hypotheses about locus of control, sense of self-efficacy, and coping strategies being related to proneness to debt all make a certain amount of sense, even if they have not yet been proven.</p> <p><strong>Locus of Control</strong></p> <p>This <a href="http://en.wikipedia.org/wiki/Locus_of_control">psychological theory</a> refers to how individuals see their ability to control the events in their lives. People will either think of themselves as having an internal locus of control or an external one.</p> <p>Those individuals with an internal locus of control feel that they have a great deal of power over their lives. If such an individual were to flunk a test, they would blame the bad grade on not having studied enough for it. Acing a test would be considered evidence that they were well-prepared.</p> <p>An individual with an external locus of control does not feel nearly as in charge of their life. That individual doing poorly on the same test might think the test was too hard or the teacher wrote bad questions. What's truly depressing for individuals with an external locus of control is that doing well on that test wouldn't be attributed to a good job of studying. They are more inclined to think that the teacher was being too easy, or that they were simply lucky in their test-taking.</p> <p>In short, internal locus of control types think &quot;I am the master of <a href="http://en.wikipedia.org/wiki/Invictus">my fate</a>,&quot; while their external brethren are singing &quot;Nobody knows the trouble I've seen.&quot;</p> <p>Psychologists theorize that individuals with an internal locus of control are less likely to get into debt. The belief is that these internal, go-getter types will recognize that their finances are entirely within their control, so they will make proactive decisions about their money management. If they do end up in debt, they will recognize that they are responsible for the predicament, and that it is up to them to fix the problem.</p> <p>External locus of control types, on the other hand, may feel as though nothing they do matters much. They may believe that it's impossible to beat the banks at their game; that living with debt is how The Man keeps them down; and that any financial gains they experience are entirely attributable to luck.</p> <p>An excellent example in the personal finance community of someone who clearly has an internal locus of control is <a href="http://www.debtproofliving.com/MeetMary/MarysStory4/tabid/262/Default.aspx">Mary Hunt</a>. She and her family wracked up over $100,000 in credit card debt over a decade. While many people in her position would have declared bankruptcy and started over, Mary and her family decided to pay off every penny of what they owed, which meant she had to look for work outside the home and completely change her lifestyle. It took the Hunt family 13 years to pay it all off. But to Mary, it was clear she had gotten <em>herself</em> into the mess and it was up to <em>her</em> to get back out of it again.</p> <p><strong>Self-Efficacy</strong></p> <p>This is a related concept to locus of control, in that your self-efficacy measures just how competent you feel in a particular area of expertise. For instance, an automotive engineer would feel very little stress if her car were to break down while on a trip. Just give that engineer some tools and some time, and she will likely be able to either fix or diagnose the problem. The engineer has a high sense of self-efficacy when it comes to automotive issues.</p> <p>On the other hand, that same engineer might break into a cold sweat at the idea of having to manage her money. While people may have a sense of high self-efficacy in one area of their lives, they may feel out of their depth in another area. Having low self-efficacy means that you believe the task at hand is harder than it is, and you are more likely to be stressed and potentially avoid the work.</p> <p>When it comes to credit card debt, psychologists theorize that individuals with low self-efficacy are more likely to get into debt and stay there. The theory suggests that these individuals choose not to think about their financial decisions because they feel stressed &mdash; but that does not stop them from making poor decisions. In addition, they may not see themselves as up to the task of tackling their debt or the behaviors that got them there.</p> <p>Low self-efficacy is also correlated with low self-esteem. That means that individuals who do not feel competent in their lives will look for other ways to give themselves a boost &mdash; like by going shopping, for instance.</p> <p><strong>Coping Strategies</strong></p> <p>There is a reason why we call that artificial boost through shopping &quot;retail therapy.&quot; What you're doing when indulging in recreational shopping is using a coping strategy for dealing with your feelings of helplessness.</p> <p>In fact, the psychology of addiction can help us to understand why it is we head to the mall (or to the donut shop, or to the bar) after a bad day at work. According to Dr. Lance Dodes of <a href="http://www.psychologytoday.com/blog/the-heart-addiction/201010/the-psychology-addiction">Psychology Today</a>, &quot;every addictive act is preceded by a feeling of helplessness or powerlessness. Addictive behavior functions to repair this underlying feeling of helplessness.&quot;</p> <p>Basically, many individuals have created a coping strategy of shopping in order to deal with their feelings of helplessness. This is why you will sometimes see someone get so stressed over their Visa bill that they head off to the nearest Best Buy and drop $200 on new video games. Their sense of helplessness over the size of the bill is spurring them on to shop more, even though that is the worst possible course of action.</p> <p>Individuals who are not debt-prone (or addiction-prone) are more likely to find constructive coping strategies, such as exercise, crafts, or spending time with friends.</p> <h2>Attitudinal Factors</h2> <p>One last aspect of the credit card debt problem has to do with attitudes toward both debt and social standing. Individuals who regard debt as no big deal are more likely to be in debt compared to those who consider debt to be frightening, shameful, or stressful.</p> <p>In some ways, this is another &quot;Duh!&quot; conclusion. Of course you're more likely to be in debt if you don't see debt as problematic.</p> <p>However, there is more to it than just attitude. Where does that attitude come from? In fact, your attitude toward debt-tolerance is also tied to your social sphere. This can help answer Aunt Sheila's question about her slacker kids &mdash; if you grow up in a family that is in debt, and everyone you know is in debt, then <a href="http://www.wisebread.com/arguing-over-money-drives-your-kids-to-credit-card-debt">that will help to shape your blasé attitude toward debt</a>. Again, none of this is revolutionary thinking, but it can be very difficult to see if you are in the midst of it.</p> <p>It's very interesting to look on the flip side of the coin, as well. There are individuals who successfully get out of or stay out of debt, even if their peers, family, and friends all struggle with it. Why are they able to maintain a debt-averse attitude in the midst of a great deal of debt-tolerance?</p> <p>The answer might have something to do with the psychological characteristics of successful individuals. Psychologists have been studying wildly successful entrepreneurs like Bill Gates and Warren Buffett for years, trying to determine what makes them different from everyone else. According to Matthew Herper of <a href="http://www.forbes.com/2002/10/18/1018profile.html">Forbes</a>, one of these differences is the fact that &quot;entrepreneurs don't care what other people think about them. They're just happy to go ahead and do what they're doing.&quot;</p> <p>The attitude that it doesn't matter what other people think of your choices would be an important one for someone saying no to credit card debt. The pressure to conform to societal mores regarding debt can be very difficult to resist. But if you have the attitude that it doesn't matter if your friends and family think you're cheap, you can successfully and consistently avoid that pressure.</p> <h2>The Bottom Line</h2> <p>While Aunt Sheila's 30-year-old, basement-dwelling sons may have any number of factors influencing their credit card debt, psychologists believe that we are all influenced by our demographics and economics, our personal psychology, and our attitudes when it comes to our finances. None of those are easy to change, but working to <a href="http://www.wisebread.com/the-psychology-of-cash-flow">see yourself as the master of your life and your future</a>, and working to ignore societal and peer pressures, can do wonders to help you improve your finances.</p> <a href="http://www.wisebread.com/why-we-take-on-credit-card-debt" class="sharethis-link" title="Why We Take on Credit Card Debt" rel="nofollow">ShareThis</a><br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/emily-guy-birken">Emily Guy Birken</a> of <a href="http://www.wisebread.com/why-we-take-on-credit-card-debt">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-8"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-best-0-balance-transfer-credit-cards">The Best 0% Balance Transfer Credit Cards</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-one-couple-paid-off-147k-of-debt-even-while-unemployed">How One Couple Paid Off $147k of Debt (Even While Unemployed)</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/dealing-with-post-holiday-credit-card-debt">Dealing with Post-Holiday Credit Card Debt</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-ways-debt-settlement-can-leave-you-deeper-in-debt-even-with-trustworthy-companies">6 Ways Debt Settlement Can Leave You Deeper in Debt (Even With Trustworthy Companies)</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-places-to-start-your-debt-management-crusade">4 Places to Start Your Debt Management Crusade</a></span> </div> </li> </ul> </div> </div> </div> </div> Debt Management credit card debt Mon, 10 Dec 2012 11:36:33 +0000 Emily Guy Birken 959671 at http://www.wisebread.com Arguing Over Money Drives Your Kids to Credit Card Debt http://www.wisebread.com/arguing-over-money-drives-your-kids-to-credit-card-debt <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/arguing-over-money-drives-your-kids-to-credit-card-debt" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://www.wisebread.com/files/fruganomics/imagecache/250w/blog-images/sad-little-girl-iStock_000020220461Small.jpg" alt="parents arguing" title="parents arguing" class="imagecache imagecache-250w" width="250" height="166" /></a> </div> </div> </div> <p>Just in case you didn&rsquo;t have enough to worry about, researchers from East Carolina University have recently discovered yet another way we can screw up our kids. Apparently, children of parents who argue about money are more likely to be burdened by credit card debt as college students.</p> <p>This cheery information comes on top of concerns about the financial literacy of young people. According to a <a href="http://www.freakonomics.com/2009/10/19/financial-illiteracy-among-the-young/">2009 study</a> by Annamaria Lusardi, Olivia S. Mitchell, and Vilsa Curto, &ldquo;fewer than one-third of young adults possess basic knowledge of interest rates, inflation, and risk diversification.&rdquo; That level of financial illiteracy is hardly a good foundation for handling credit card debt, and yet that is exactly what is happening with college students. And according to the <a href="http://www.springer.com/about+springer/media/springer+select?SGWID=0-11001-6-1392954-0">Journal of Family and Economic Issues</a>, there is also &ldquo;growing concern among educators that more students are dropping out of school, not because of academic failure, but because of financial reasons, and credit card debt especially.&rdquo; All of this together makes it clear that we as a society need to do a better job of preparing our children for financial independence.</p> <p>But what, exactly, are we doing wrong? And how can we better prepare our kids for the temptations of credit? Here is a basic breakdown of the East Carolina University study, and some tips for increasing your child&rsquo;s financial literacy before they find themselves quitting college to pay off their credit cards. (See also: <a href="http://www.wisebread.com/7-important-lessons-frugal-parents-teach-their-children">7 Important Lessons Frugal Parents Teach Their Children</a>)</p> <h2>The Study</h2> <p>Researchers, led by Adam Hancock, developed the College Student Financial Literacy Survey, and asked 413 undergraduate students from seven different American colleges to take part. Among the topics on the survey:</p> <ul> <li>The number of <a href="http://www.wisebread.com/the-5-best-credit-cards-for-college-students">credit cards the students owned</a> and the amount they owed on each one.<br /> &nbsp;</li> <li>What kind of interactions the students had had with their parents when discussing finances.<br /> &nbsp;</li> <li>Financial knowledge of credit cards, loans, insurance, and personal finance.<br /> &nbsp;</li> <li>Attitudes toward credit &mdash; whether the students regarded credit cards as costly, safe, frightening, etc.<br /> &nbsp;</li> <li>The students&rsquo; comfort level with only paying the minimum each month.</li> </ul> <h2>The Findings</h2> <p>Of the 413 students surveyed, almost two-thirds owned a credit card, and nearly one-third had more than one credit card. The researchers found that there were three top predictors for how many credit cards a particular student had: class year, gender, and whether or not parents argued about money. In particular, juniors and seniors were almost four times as likely to have two or more credit cards than freshmen and sophomores. This finding makes sense, considering the fact that the <a href="http://en.wikipedia.org/wiki/Credit_CARD_Act_of_2009">2009 Credit CARD Act</a> was partially enacted to help prevent minors from taking on credit they couldn&rsquo;t afford. Upperclassmen are more likely to be over 21, meaning they don&rsquo;t need a cosigner to take on a credit card. In addition, women were twice as likely as men to have multiple cards &mdash; although the researchers were a little more vague on the probable reason behind this one. Finally, students whose parents argued about finances were twice as likely to have two or more credit cards as those whose parents presented a united financial front.</p> <p>These conclusions would not necessarily be troubling if the students carrying these multiple cards were able to handle their debt responsibly. However, students with more than one card were three times as likely to be carrying at least $500 in credit card debt. The bad news for parents keeps coming, because coming from a home with a lot of fights over money also doubles the likelihood of carrying more than $500 in debt.</p> <p>Arguing over money was problematic for kids from every walk of life, as well. It might seem like a reasonable assumption that money fights would be more common among lower-income families, which might also correlate with higher debt in the next generation. But the study actually controlled for wealth, and found that even kids from wealthy backgrounds were more likely to take on credit card debt if their parents argued about money.</p> <h2>OK, Money Fights Are Bad &mdash; but Why?</h2> <p>While the researchers don&rsquo;t have a specific conclusion as to why arguing over money can have such long-lasting consequences on the kids, the study&rsquo;s authors suspect that money fights are an indicator for unhealthy financial attitudes and actions. Study co-author <a href="http://business.time.com/2012/10/25/parents-who-argue-over-money-connected-to-overspending-by-kids/">Adam Hancock</a> suggests that &ldquo;kids growing up in that sort of atmosphere may be witnessing some unhealthy financial decisions. And they tend to act out those same behaviors.&rdquo;</p> <p>Another possibility for why money fights could have such lasting consequences is because they make the entire issue of finance fraught with negative emotions for everyone in the household. Kids will feel like money is something you can&rsquo;t talk about without starting a fight &mdash; so they don&rsquo;t talk to their parents about money. When they get out on their own, they may choose to handle financial issues without asking their parents for advice and seriously get themselves in trouble.</p> <p>Neither of these possible explanations completely explain why parents fighting about money could result in kids with credit card debt &mdash; and that&rsquo;s because there is only a correlation between the two factors. That means that we can say that two things seem to be related to each other, but we can&rsquo;t know for sure that one causes the other. (Remember your college statistics class? The one you slept through?)</p> <p>Basically, without a much larger study that includes many more participants and that looks into many more specifics of the fights between parents as well as other background information on the families, it&rsquo;s a little fast to assume that all parents who have arguments over money will be looking forward to Junior racking up credit card debt the moment he gets out on his own.</p> <h2>Financial Literacy at Home</h2> <p>That being said, teaching financial literacy to our children is an important part of preparing them for adulthood. Whether or not you and your spouse have occasional spats over the mortgage, the Visa bill, or how you&rsquo;re going to pay for the college Junior might drop out of, you can always use these strategies for keeping your kids money literate:</p> <p><strong>1. Include Your Child in Money Discussions</strong></p> <p>We tend to shield our children from financial conversations. After all, budgeting, bill paying, and saving can all feel like a bit of a bummer. And while there is no reason to bring your child into your financial worries &mdash; no 9-year-old needs to know that you&rsquo;re concerned about how you&rsquo;re going to pay the mortgage &mdash; that does not mean they&rsquo;re unable to handle money discussions in general.</p> <p>Start when they are small, and talk to them about why you choose one loaf of bread over another in the grocery. Help them understand that you try to save money by comparing prices, and ask for their help in figuring out what is cheaper. As they grow, include them in more of your decisions. For example, you could ask them to help you to figure out where the family can go on vacation based on the budget you have set aside.</p> <p>When money is shrouded in mystery for children, they won&rsquo;t suddenly wake up at age 18 knowing how to handle their finances. Introduce the concepts to them slowly, in the same way you teach your children to read &mdash; with age-appropriate lessons.</p> <p><strong>2. Give Your Kid an Allowance</strong></p> <p>While one of the biggest flame wars you can see on parenting websites is on whether or not to <a href="http://www.wisebread.com/five-jobs-for-children">give allowances as payment for chores</a>, financial and parenting gurus can all agree that the allowance itself is key. Having the responsibility for money each week &mdash; and making sure that you don&rsquo;t simply buy the kid anything he wants when the allowance has run out &mdash; is one of the best ways to teach budgeting skills and delayed gratification. After all, we all learn by doing, and it&rsquo;s better for Junior or Sis to learn early that cash doesn&rsquo;t last forever and that some things are a waste of money.</p> <p><strong>3. Encourage Your Teen to Get a Job</strong></p> <p>Many parents feel that their child&rsquo;s job is to do well in school, and have no other expectations of paid employment for them. Even if that is how it works in your house during the school year, it&rsquo;s a good idea for your teen to <a href="http://www.wisebread.com/great-summer-jobs-for-kids-and-adults">have a job over the summer</a>. Learning how to be a good employee, how to be responsible with a paycheck, and having some part in saving up for college or another big goal are all important lessons that come from teen employment. If they also work during the school year, then they will have a trial run at figuring out work-life balance before they find themselves on their own, which is another important financial lesson.</p> <h2>The Bottom Line</h2> <p>Even if you and your partner fight about money &mdash; and really, who doesn&rsquo;t? &mdash; all is not lost. Yes, money fights may be correlated with irresponsible credit card behavior, but you have the ultimate influence over your child. As long as you are proactive in using that influence instead of just letting your child soak up negative atmosphere, then you can rest assured that they are learning good habits from you. And by talking to them about money, you give them an opportunity to have an open dialogue with you later on if they hit a bump in the road.</p> <p>Now, for the million and one other ways you can mess up your kids&hellip;</p> <a href="http://www.wisebread.com/arguing-over-money-drives-your-kids-to-credit-card-debt" class="sharethis-link" title="Arguing Over Money Drives Your Kids to Credit Card Debt" rel="nofollow">ShareThis</a><br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/emily-guy-birken">Emily Guy Birken</a> of <a href="http://www.wisebread.com/arguing-over-money-drives-your-kids-to-credit-card-debt">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-9"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-best-0-balance-transfer-credit-cards">The Best 0% Balance Transfer Credit Cards</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/top-6-reasons-why-using-cash-only-rocks">Top 6 Reasons Why Using Cash-Only Rocks</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-5-best-credit-cards-for-college-students">The 5 Best Credit Cards for College Students</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/dealing-with-post-holiday-credit-card-debt">Dealing with Post-Holiday Credit Card Debt</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-ways-debt-settlement-can-leave-you-deeper-in-debt-even-with-trustworthy-companies">6 Ways Debt Settlement Can Leave You Deeper in Debt (Even With Trustworthy Companies)</a></span> </div> </li> </ul> </div> </div> </div> </div> Credit Cards college students credit card debt kids and money Tue, 27 Nov 2012 11:00:30 +0000 Emily Guy Birken 957810 at http://www.wisebread.com The Slow Bleed: Plugging Your Financial Leaks http://www.wisebread.com/the-slow-bleed-plugging-your-financial-leaks <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/the-slow-bleed-plugging-your-financial-leaks" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://www.wisebread.com/files/fruganomics/imagecache/250w/blog-images/6736154311_9a0a3a44ba_b.jpg" alt="piggy bank" title="piggy bank" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Financial woes can come quickly from big events like a foreclosure, loss of a job, or health problems. These misfortunes, though painful, make a certain amount of sense. Clearly A caused B and led to C &mdash; however just or unjust A, B, or C may seem. But at other times, our finances suffer death by a thousand cuts. Harder to pinpoint, we can&rsquo;t make ends meet or get ahead. We work, pay our bills, and live modest lives. (See also: <a href="http://www.wisebread.com/emergency-plan-better-than-an-emergency-fund">Emergency&nbsp;Plan:&nbsp;Better Than an&nbsp;Emergency&nbsp;Fund</a>)</p> <p>Still, something is amiss. Somewhere in the complex system of our financial lives, resources are being drained dollar by dollar. If your otherwise healthy relationship with money still leaves you coming up short, maybe you have a secret financial slow-bleed. Here are six of the most common causes.</p> <h3>1. Interest on Consumer Debt</h3> <p>Interest is more like a gusher than a slow bleed. I mention it only because paying interest is so accepted and expected that we often don&rsquo;t realize how much it can drain our wealth. Paying interest on everything from cars to cheeseburgers is insidious, and if left unchecked, it saps our resources and demands more and more of our budgets. What are you paying interest on? Were they wants or needs? Are the items appreciating in value, or depreciating?</p> <h3>2. Service Charges and Late Fees</h3> <p>We live in a world that&rsquo;s bent on collecting your nickels and dimes. It happens when we pay a bill over the phone and incur a convenience fee, when we return a DVD and pay a late fee, when we need to speak to a customer service representative and get charged a service fee, or when we bounce a check and have to cover an overdraft fee. Unnecessary fees bleed our cash and though some are unavoidable, others aren&rsquo;t. Defend your dimes and dollars and wage war on all fees that are within your control.</p> <h3>3. Lazy Money</h3> <p>Interest lost is income lost. Take a look at your savings accounts, and your <a href="http://www.wisebread.com/4-reasons-why-a-roth-ira-may-be-better-than-your-401k">401(k) and IRA investments</a>. Do you know what your average rate of return is? Is your money working as hard for you as you worked for it? Being mindful of your personal comfort level with risk, explore ways to boost the return on your money.</p> <h3>4. Contracts</h3> <p>Consumers have more power than they realize, and there are ways to score better deals on cable, cell phone plans, and other services if you&rsquo;re courageous enough to push the envelope a little. Make a few <a href="http://www.wisebread.com/how-to-get-what-you-want-on-customer-service-calls">calls to your service providers</a> and let them know you&rsquo;re shopping around for a better deal. You&rsquo;ll be surprised how quickly those air-tight contracts get a bit more breathing room.</p> <h3>5. Membership Dues</h3> <p>Unused health club memberships are the monthly equivalent to using an exercise bike as a coat rack. We join a gym (usually around January 1 of any given year) with the best of intentions. Then we start the long journey of forking over $60 a month until we come to our senses and somehow manage to wriggle out of the contract. Do you have a membership that you&rsquo;re paying for and don&rsquo;t use? Add up how much it&rsquo;s costing you per year (include interest if you don&rsquo;t pay off your credit card every month). Explore selling your membership, renegotiating your dues, or paying a penalty to get out of the contract.</p> <h3>6. Hyper-Insurance and High Insurance Deductibles</h3> <p>Ignore this section if you&rsquo;re accident prone or driving a brand-new Ferrari. Otherwise, consider this &mdash; as a product, insurance was originally designed to save folks from financial hardship and ruin. But over the past 15-20 years we&rsquo;ve begun insuring our coffee makers, cell phones, and TVs. I call this phenomenon &ldquo;hyper-insurance.&rdquo; Granted, I&rsquo;m not intimately aware of your financial situation, but I doubt that a TV tragedy is going to land you on the streets. Why are we insuring every electronic bauble we own? Is the risk/expense ratio really that compelling?</p> <p>Similarly, folks are deathly afraid of the high-deductible <a href="http://www.wisebread.com/4-tips-to-save-on-car-insurance">auto insurance policy</a>. We gladly pay more for low deductible policies and effectively buy insurance on our insurance. I know accidents can happen at any time, but take a realistic look at your driving record and accident history. Could you bump up the deductible and still be solvent in the unlikely event of a fender-bender? If so, it might be worth upping the deductible and lowering your monthly insurance bill.</p> <p>When we focus our attention on the tiny leaks in our financial lives, we acknowledge one important truth &mdash; little things add up. Fees, dues, usurious interest rates, silly insurance products &mdash; they&rsquo;re all born in a boardroom and survive only by our willingness to pay. Let&rsquo;s agree to plug the leaks, bandage the slow-bleed, and save some serious cash.</p> <p><em>Have you identified leaks in your budget? What did you do to plug them?</em></p> <a href="http://www.wisebread.com/the-slow-bleed-plugging-your-financial-leaks" class="sharethis-link" title="The Slow Bleed: Plugging Your Financial Leaks" rel="nofollow">ShareThis</a><br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/kentin-waits">Kentin Waits</a> of <a href="http://www.wisebread.com/the-slow-bleed-plugging-your-financial-leaks">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-10"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/lower-your-credit-card-interest-rate-and-reduce-your-phone-bill-immediately-and-easily">Lower Your Credit Card Interest Rate and Reduce Your Phone Bill, Immediately and Easily</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/25-painless-ways-to-save-50-this-year">25 Painless Ways to Save $50 This Year</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/common-money-saving-mistakes-that-can-cost-big-bucks">Common Money-Saving Mistakes That Can Cost Big Bucks</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-money-resolutions-you-should-skip-this-year">4 Money Resolutions You Should Skip This Year</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/80-stocking-stuffer-ideas-for-10-or-less">80 Stocking Stuffer Ideas for $10 or Less</a></span> </div> </li> </ul> </div> </div> </div> </div> Frugal Living Banking cancelling contracts credit card debt high interest savings lower bills Tue, 03 Jul 2012 10:24:08 +0000 Kentin Waits 937781 at http://www.wisebread.com Get Out of Debt? Why? http://www.wisebread.com/get-out-of-debt-why <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/get-out-of-debt-why" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://www.wisebread.com/files/fruganomics/imagecache/250w/blog-images/3017263513_6ce985841a_z.jpg" alt="woman shrugging" title="woman shrugging" class="imagecache imagecache-250w" width="250" height="167" /></a> </div> </div> </div> <p>I spend a lot of time writing about why debt is bad news. As a result, I&rsquo;ve actually gotten a lot better at avoiding debt in my own life and paying off any debt I do take on as quickly as possible. I guess I believe in my own advice. But sometimes I have to wonder &mdash; I know a few people who carry a lot of debt, and it just doesn&rsquo;t seem to faze them that much. They have a nice life, a lot of nice things, and they pay for it all in installments. Is that really so bad? If carrying debt doesn&rsquo;t bother them, why would they bother making it go away?</p> <p>It&rsquo;s a good question, and it&rsquo;s one a lot of people are faced with. After all, when life is good, why on earth would anyone want to switch to austerity mode? If you have a lot of debt, paying it off will not be nearly as fun as racking it up &mdash; and it&rsquo;ll probably take a lot longer too. But there are still some really good reasons why you should suck it up and pay it off. (See also:&nbsp;<a href="http://www.wisebread.com/how-to-start-fighting-debt-today">How to Start Fighting Debt &mdash; Today</a>)</p> <h3>Debt Is a Self-Imposed Pay Cut</h3> <p>If you carry a lot of debt &mdash; especially high-interest debt on credit cards &mdash; it costs you money each and every month. Let&rsquo;s say you have the same balance as an average American with a credit card, $15,596. At a typical 18% interest rate, you&rsquo;ll pay more than $9,000 in interest before you pay off the debt, assuming you make a minimum montly payment of 4% (which, if you don&rsquo;t aim to pay that debt down, is the most likely course of action). That&rsquo;s $9,000 for absolutely nothing. If your employer took that off your paycheck, you&rsquo;d be screaming bloody murder. So why would you do it to yourself?</p> <h3>You Can&rsquo;t Borrow a Backup Plan</h3> <p>If you&rsquo;re carrying a debt with a manageable payment, it&rsquo;s a cycle that can often be perpetuated for a very long time &mdash; pay it down a bit, rack it up a bit, and repeat. But that cycle can quickly collapse in the face of emergency. What if you lose your job, get sick, or run into a major unexpected expense? The likely result is that you&rsquo;ll fail to make your payments, and possibly default on your loan. That&rsquo;s bad news for you credit and, ultimately, its bad news for you. Not only will you be cut off from borrowing for a while, but bad credit can even get in the way of <a href="http://www.wisebread.com/when-you-should-and-shouldnt-rent">renting an apartment</a> or securing a job.</p> <h3>More Debt, Fewer Options</h3> <p>And being in debt doesn&rsquo;t just have negative consequences &mdash; it can also keep unexpected opportunities just out of reach, such as the chance to travel, invest, or start your own business. If you&rsquo;re debt free or, better yet, have some cash in the bank, you&rsquo;ll have a lot more freedom to be spontaneous and embrace life&rsquo;s good surprises while creating the financial security you need to keep the bad ones from destroying you.</p> <h3>Debt Drags You Down</h3> <p>You know that churning feeling you get in your stomach when you get your credit card statement in the mail? That&rsquo;s not indigestion; it&rsquo;s stress, and it can seriously affect your health. A 2008 poll by the Associated Press and AOL Health showed that people who were dealing with mountains of debt were more likely to report health problems such as ulcers, migraines, anxiety, depression, and even heart attacks. It&rsquo;s easy to swipe that credit card and forget about it, but there&rsquo;s always a point where a debt becomes too big to ignore. Unfortunately, by the time you feel the heat, you&rsquo;re probably already in very hot water. If you can, get out of debt before it starts to keep you up at night. By the time it gets that bad, it may already be too late.</p> <h3>Why Get Out of Debt?</h3> <p>Whether you make the move to get out debt is up to you, but don&rsquo;t fool yourself into thinking that your debt isn&rsquo;t a problem. Just like the charges on your credit card, you can only defer the consequences of carrying too much debt for so long. Eventually, it&rsquo;ll be time to <a href="http://www.wisebread.com/how-much-does-your-credit-card-debt-cost-you">pay the price</a>.&nbsp;</p> <a href="http://www.wisebread.com/get-out-of-debt-why" class="sharethis-link" title="Get Out of Debt? Why?" rel="nofollow">ShareThis</a><br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/tara-struyk">Tara Struyk</a> of <a href="http://www.wisebread.com/get-out-of-debt-why">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-11"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-best-0-balance-transfer-credit-cards">The Best 0% Balance Transfer Credit Cards</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-one-couple-paid-off-147k-of-debt-even-while-unemployed">How One Couple Paid Off $147k of Debt (Even While Unemployed)</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-tips-for-improving-or-starting-a-budget">8 Tips for Improving or Starting a Budget</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/dealing-with-post-holiday-credit-card-debt">Dealing with Post-Holiday Credit Card Debt</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/when-to-use-savings-to-pay-off-debt">When to Use Savings to Pay Off Debt</a></span> </div> </li> </ul> </div> </div> </div> </div> Debt Management credit card debt credit card interest rates emergency fund options Tue, 08 May 2012 10:00:14 +0000 Tara Struyk 927927 at http://www.wisebread.com Going Green: How to Live a (Nearly) Cash-Only Life http://www.wisebread.com/going-green-how-to-live-a-nearly-cash-only-life <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/going-green-how-to-live-a-nearly-cash-only-life" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://www.wisebread.com/files/fruganomics/imagecache/250w/blog-images/wallet_out_2.jpg" alt="Man with his wallet out" title="Man with his wallet out" class="imagecache imagecache-250w" width="250" height="137" /></a> </div> </div> </div> <p>According to <a href="http://moneyland.time.com/2012/01/03/ouch-average-credit-card-apr-now-tops-15-percent/">Time.com</a>, the current average APR on credit card debt is 15.22%. For folks who aren&rsquo;t disciplined about managing credit card debt or paying off their balances aggressively, the rate is a real eye-opener. All the cash-back rewards, airline miles, and perks in the world can&rsquo;t justify the financial hit consumers take in long-term credit use and interest repayment.</p> <p>With interest rates on the rise and credit card companies devising ever-craftier and creative ways to score a few bucks here and there, isn&rsquo;t time to consider going cash-only? In 2010, I wrote an article on <a href="http://www.wisebread.com/6-reasons-why-cash-is-still-king">6 Reasons Why Cash Is Still King</a>. Now it&rsquo;s time for a more pragmatic discussion on how to make a cash-only life work for you. Here&rsquo;s how to give a big thumbs-down to the credit card companies and go (almost) cash-only. (See also: <a href="http://www.wisebread.com/5-ways-to-give-cash-as-a-gift">5 Ways to Give Cash as a Gift</a>)</p> <h3>1. Carry Cash</h3> <p>Surprise! The first step in going cash-only is to actually get your hands on some of the stuff. It&rsquo;s still green(ish), and it still works like a charm. Take a look at your credit card statements for an average week and see where/how you&rsquo;re spending your money. Take a similar amount out in cash at the beginning of each week, and dispense it to yourself on a daily basis. Consider experimenting with the amounts a little and see if you end up spending less when you&rsquo;re spending paper vs. plastic.</p> <h3>2. Save Receipts</h3> <p>One of the convenient things about using credit is the electronic trail it leaves behind. You can easily track transactions and refresh your memory about expenditures you&rsquo;ve forgotten. But cash is a different animal. Get used to saving your paper receipts. I dump all my cash receipts in file folders divided by month/year. A shoebox and a binder clip for each month works just as well. It&rsquo;s not the sexiest way to stay on top of what you&rsquo;re spending, but it works like a charm.</p> <h3>3. Hold With Credit, Pay With Cash</h3> <p class="MsoNormal">Going cash-only doesn&rsquo;t have to mean you spurn all of life&rsquo;s conveniences or that you can&rsquo;t leverage the power of credit from time-to-time. Using your card to reserve a hotel room, rental car, or other service is quick and convenient. Just remember, when you arrive at the hotel or car rental agency, pay in cash &mdash; and get that receipt.</p> <h3>4. When You Do Use Credit, Make It Work Like Cash</h3> <p>We live in the modern world and there are times (unfortunately) when cash just won&rsquo;t work. For online shopping or other cash-adverse transactions, think of your credit card as a friend who&rsquo;s spotting you a few bucks for the very short-term. Pay him back quickly. Who says you need to wait until you get your monthly bill to make a credit card payment? There&rsquo;s nothing credit card companies hate more than getting paid back in full each month. I say, embrace the hatred and wear it like a crown.</p> <h3>5. Don&rsquo;t Trade Credit Card Interest for ATM Fees</h3> <p>Whether you&rsquo;re paying interest on a credit card or getting pinged by debit card withdrawal fees, using plastic usually means more money out of your pocket. Don&rsquo;t trade longer-term interest for shorter-term ATM fees. Withdraw cash at the beginning of each week from your bank or an affiliated ATM and let that amount of cash guide your purchasing decisions &mdash; without the need for frequent, spur-of-the-moment trips to the ATM.</p> <h3>6. Remember: Safety First</h3> <p>Cash gets attention. Sometimes that attention is good (ask for a modest discount when you pay for your next car repair using cash instead of credit &mdash; it works). But at other times, pulling out a wad of $20s isn&rsquo;t the best idea. Use your cash wisely, be smart about how much you carry at any given time, and be discreet about who sees it. Organize the cash in your wallet from lowest to highest bill, and keep anything higher than a $50 tucked away in a separate compartment.</p> <p>There&rsquo;s no question that credit cards can be a great convenience. Anyone who tells you to give up credit completely and permanently is trying to sell an idea that has a very limited real-world application. The key is to use credit responsibly and reserve its use for those occasions when cash simply won&rsquo;t work &mdash; or will work only through complex and onerous measures (with online purchases, for example). For 95% of the day-to-day stuff, try skipping the fees, <a href="http://www.wisebread.com/how-to-get-rid-of-and-avoid-late-fees">late charges</a>, and interest. Rediscover cash.</p> <a href="http://www.wisebread.com/going-green-how-to-live-a-nearly-cash-only-life" class="sharethis-link" title="Going Green: How to Live a (Nearly) Cash-Only Life" rel="nofollow">ShareThis</a><br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/kentin-waits">Kentin Waits</a> of <a href="http://www.wisebread.com/going-green-how-to-live-a-nearly-cash-only-life">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-12"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/47-simple-ways-to-waste-money">47 Simple Ways To Waste Money</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/top-6-reasons-why-using-cash-only-rocks">Top 6 Reasons Why Using Cash-Only Rocks</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/never-use-cash-for-these-11-things">Never Use Cash for These 11 Things</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/a-comprehensive-guide-to-the-envelope-system">A Comprehensive Guide to the Envelope System</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/do-you-spend-more-with-cash-or-credit">Do You Spend More with Cash or Credit?</a></span> </div> </li> </ul> </div> </div> </div> </div> Budgeting bank fees cash credit card debt Tue, 10 Jan 2012 11:24:25 +0000 Kentin Waits 856254 at http://www.wisebread.com Dealing with Post-Holiday Credit Card Debt http://www.wisebread.com/dealing-with-post-holiday-credit-card-debt <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/dealing-with-post-holiday-credit-card-debt" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://www.wisebread.com/files/fruganomics/imagecache/250w/blog-images/iStock_000011024035Smallcr.jpg" alt="" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Here we are about a month after Christmas, and the first credit card bills from the holiday season are starting to arrive. Many consumers are experiencing a little sticker shock at the extent of their overspending. According to <em>Consumer Reports</em>, shopping with credit cards during the holidays often leads to overspending by an average of 16%. This is part of the reason that the same <a href="http://blogs.consumerreports.org/money/2010/10/tightwad_tod_holiday_spending_poll_2010_bargains_shopping_gifts.html"><em>Consumer Reports </em>survey</a> revealed that 13.6 million Americans were still paying off holiday purchases from 2009 in November of 2010.</p> <p>The <a href="http://www.wisebread.com/how-much-does-your-credit-card-debt-cost-you">cost of credit card debt</a> is often a hidden expense, particularly for people who are juggling multiple credit cards. It is easy to overlook the total interest expenses when they are spread across three, five, or even seven credit cards.</p> <p>But credit card interest expenses add up quickly. Having an average monthly balance of $3,000 may not seem like much, but at a 15% interest rate, it can cost you $450 a year.</p> <p>Now is the time to assess the situation and make a plan to pay off the debt.</p> <h3>3 to 24 Months: Transfer Your Balance</h3> <p>If you know you can&rsquo;t realistically do it in two or three months, seek out a <a href="http://www.wisebread.com/the-best-0-balance-transfer-credit-cards" title="5 Best 0% APR Balance Transfer Cards">credit card that offers a 0% balance transfer</a>. With a balance transfer, you pay a small transaction fee, typically 3%, to move your high-interest debt to a card that charges no interest for anywhere from 12 to 24 months.</p> <p>During this time of no-interest repayments, all payments you send to the credit card will <a href="http://www.wisebread.com/4-places-to-start-your-debt-management-crusade">reduce your debt</a> directly. This will help you pay off the holiday debt faster than sending a minimum payment each month and paying interest all year long.</p> <p>Balance transfers are a good option for consumers with good credit, but these offers should be used with caution. Refrain from running up new debt when you transfer the balance to a new card &mdash; and focus on paying down what you already owe.</p> <h3>24 Months or More: Credit Counseling</h3> <p>If you have more than $10,000 in credit card debt and are beginning to feel like you&rsquo;ll never pay it off, using a non-profit credit-counseling service may be your best option.</p> <p>Credit counselors work with your credit card companies to come up with a repayment plan that fits your budget. Make sure to research credit counseling agencies before you sign up &mdash; not all agencies work with all credit card companies. Also, you want to make sure you choose a reputable credit counseling agency. You can use the <a href="http://www.bbb.org/">Better Business Bureau</a> to find out about consumer complaints and a company's reputation.</p> <p>Generally, credit counselors will negotiate lower interest rates on each of your credit card accounts, so more of your payments go towards debt. Legitimate non-profit credit counselors do not offer to settle your credit card debt for pennies on the dollar. Avoid companies that use this language, as these companies often charge high upfront fees and can end up hurting your credit while doing little to improve your credit card debt situation. Visit the <a href="http://www.nfcc.org/">National Foundation for Credit Counseling</a> to learn about credit counseling and search for approved companies in your area.</p> <h3>Avoid Credit Card Debt Next Holiday Season</h3> <p>As you are concentrating on paying off your post-holiday credit card debt from this holiday season, you can also prepare to avoid credit card debt for the next year! The winter holidays come the same time every year, and the best way to manage them is to prepare for them well in advance.</p> <p>Take a look at your total holiday spending for the most recent holiday season. Divide the total amount by 12 months, and you'll see how much money you should set aside each month for next year's holiday spending. Consider opening a Christmas Club account at your local bank or credit union or an online savings account dedicated to holiday savings.</p> <p>Ignoring credit card debt or only paying a fraction of your debt every month can cost you a lot of money in the long run. Consider a balance transfer credit card or working with a reputable credit counseling agency to get out of credit card debt and avoid paying high interest and fees.</p> <a href="http://www.wisebread.com/dealing-with-post-holiday-credit-card-debt" class="sharethis-link" title="Dealing with Post-Holiday Credit Card Debt" rel="nofollow">ShareThis</a><br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/debbie-dragon">Debbie Dragon</a> of <a href="http://www.wisebread.com/dealing-with-post-holiday-credit-card-debt">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-13"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-best-0-balance-transfer-credit-cards">The Best 0% Balance Transfer Credit Cards</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-ways-debt-settlement-can-leave-you-deeper-in-debt-even-with-trustworthy-companies">6 Ways Debt Settlement Can Leave You Deeper in Debt (Even With Trustworthy Companies)</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-surprising-ways-to-negatively-affect-your-credit-score">10 Surprising Ways to Negatively Affect Your Credit Score</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-one-inspiring-saver-found-true-love-shook-off-debt-denial-and-paid-off-123000">How One Inspiring Saver Found True Love, Shook Off Debt Denial, and Paid Off $123,000</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-rebuild-your-credit-in-8-simple-steps">How to Rebuild Your Credit in 8 Simple Steps</a></span> </div> </li> </ul> </div> </div> </div> </div> Credit Cards Debt Management balance transfer cards credit card counseling credit card debt holiday debt Sun, 23 Jan 2011 22:00:22 +0000 Debbie Dragon 471123 at http://www.wisebread.com 4 Places to Start Your Debt Management Crusade http://www.wisebread.com/4-places-to-start-your-debt-management-crusade <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/4-places-to-start-your-debt-management-crusade" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://www.wisebread.com/files/fruganomics/imagecache/250w/blog-images/2750890246_c4eb32e3e7_z.jpg" alt="woman and giant calculator" title="woman and giant calculator" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Even though much of the country has been working hard to bounce back in the last year, you may only now be realizing your struggle with debt. Whether an unexpected situation prompted your newfound concerns about debt or it's a problem you have been denying for a while, there is no time like the present to get your finances back on track.</p> <p>You don't have to be behind on bills to be struggling with debt. If your income is not stretching as far as it once did and you're having trouble living from paycheck to paycheck, it's time to start some financial self-analysis.&nbsp;Start by revising your financial strategies in these four areas. (See also: <a href="http://www.wisebread.com/how-much-does-your-credit-card-debt-cost-you" title="How Much Does Your Credit Card Debt Cost You?">How Much Does Your Credit Card Debt Cost You?</a>)</p> <h2>Credit Card Debts</h2> <p>Credit card rules have been changing and the minimums mean nothing anymore. If you are only making minimum payments on two or more credit cards each month, you are adding to your debt woes over the long term. There are several ways to approach credit card debt, including:</p> <h3>Start small</h3> <p>Pay off small balances to get rid of the carry-over balances. Start with the card with the lowest balance and keep moving on to the next one while continuing to pay minimums on the other cards. Some people prefer to do it the other way around, focusing primarily on the card with the highest interest rate. Whichever method works for your financial situation will help you eliminate credit card debts faster.</p> <h3>Consolidate</h3> <p>If your credit is still decent, you may be able to procure a low-interest balance transfer card. You can transfer high-interest card balances to one card, eliminating multiple payments each month, allowing you to make one larger payment. However, you must ensure you have a plan to pay off the total balance before the promotional period ends and the low-interest rate morphs into a higher, unaffordable rate.</p> <h3>Supplement income</h3> <p>Get a part-time job or <a href="http://www.wisebread.com/how-to-explore-your-antique-attic-treasures-for-profit">second income source</a> and devote all earnings to your credit card debt. The job only has to last as long as your debts do, so if you have the time to spare or a hobby to capitalize on, make the supplemental income work for you.</p> <h2>Vehicle Loan Refinance</h2> <p>If your credit is still good, you may be able to get a lower interest refinance rate on your current car loan. Only use this option if you are sure your credit will fit the criteria. Cutting down on your vehicle loan payments each month can free up some cash to put towards other bills each month. If your <a href="http://www.wisebread.com/can-t-afford-your-car-much-longer-negotiate-to-keep-it">vehicle loan</a> is just too much for you to handle, consider trading in or selling for a more reasonable, more affordable vehicle.</p> <h2>Smart Spending</h2> <p>You may not realize how much of your regular spending is based on your &quot;wants&quot; rather than your &quot;needs.&quot; Needs are the basic essentials a person or a family requires to survive. This includes food, shelter, clothing, and to some extent transportation. Wants are material items or services you are inclined to have, including a home you can't afford the mortgage on, clothing from the famous label designers, food from high-end restaurants, and luxury vehicles for your work commute. Analyze your spending habits and stop spending on your wants. Set a strict budget for your needs and follow through with it based on living within your means.</p> <h2>Other Consolidation Options</h2> <p>The goal of debt management is <a href="http://www.wisebread.com/six-steps-to-eliminating-your-debt-painlessly">eliminate all outstanding debts</a> in an effort to save more cash. If you are struggling but still financially in a position to take out a loan as a way of consolidating all your outstanding bills, it may be the fastest way for you to meet your goal. If a personal consolidation loan is not in the cards for you, consider speaking with your 401k provider about accessing some cash. If you have enough saved in the fund to eliminate all debts, it will be more effective than if only partial debt relief will be achieved. This option should be your last resort and only done after you are certain your employment is secured and you have a plan to pay back the money borrowed.</p> <a href="http://www.wisebread.com/4-places-to-start-your-debt-management-crusade" class="sharethis-link" title="4 Places to Start Your Debt Management Crusade" rel="nofollow">ShareThis</a><br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/tisha-tolar">Tisha Tolar</a> of <a href="http://www.wisebread.com/4-places-to-start-your-debt-management-crusade">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-14"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-dark-side-motivations-to-get-you-out-of-debt">10 Dark-Side Motivations to Get You Out of Debt</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/25-dumb-habits-that-are-keeping-you-in-debt">25 Dumb Habits That Are Keeping You in Debt</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-ways-debt-settlement-can-leave-you-deeper-in-debt-even-with-trustworthy-companies">6 Ways Debt Settlement Can Leave You Deeper in Debt (Even With Trustworthy Companies)</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-i-erased-70000-of-debt-and-became-an-eventual-millionaire">How I Erased $70,000 of Debt and Became an Eventual Millionaire</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/this-trick-could-help-you-finally-pay-off-your-debt">This Trick Could Help You Finally Pay Off Your Debt</a></span> </div> </li> </ul> </div> </div> </div> </div> Debt Management auto loans credit card debt debt debt elimination refinancing supplemental income Sun, 10 Oct 2010 15:00:14 +0000 Tisha Tolar 258579 at http://www.wisebread.com Top 6 Reasons Why Using Cash-Only Rocks http://www.wisebread.com/top-6-reasons-why-using-cash-only-rocks <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/top-6-reasons-why-using-cash-only-rocks" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://www.wisebread.com/files/fruganomics/imagecache/250w/blog-images/paying-with-cash-481534557-small.jpg" alt="paying with cash" title="paying with cash" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>While I am a cash-only person by circumstance (paid off the credit cards and never reopened accounts), I am so grateful that I live in a cash world. Of course, having only cash is not always convenient and does occasionally make it difficult to rent a car &mdash; but overall I am so happy to no longer be a slave to the credit card industry and the high interest rates that are overwhelming so many people around the nation.There are also so very good reasons why using only cash is completely logical.&nbsp;Here are my top 6 reasons why using cash-only rocks.</p> <h3>I have had to learn to manage my money.</h3> <p>Back when I had credit cards, I didn't think too much about what I was buying on credit. Of course I was young and not financially intelligent back in those days. Now that I only use cash, I have had to learn how to manage my money down to the penny because I have nothing else to fall back on in the way of credit. If an emergency arises, I need to know I have the cash on hand to deal with it.</p> <h3>I have a true understanding of my needs and my wants.</h3> <p>It has taken some time but I can now walk into a store of any kind and differentiate between the things I really need and those things that I just want. Before I would throw whatever in the cart and figure the credit fairy was there to cover me. Now I take time to pause in the aisle and really think about the necessity of my purchases. I have also encouraged the same kind of thinking in my whole family.</p> <h3>I understand the need to wait on big purchases.</h3> <p>Because I can no longer run out and get anything I want with a swipe of the plastic, I have to wait and save up the cash. This waiting period, highly recommended by many credit experts has really worked for me. In most cases, the stuff I really wanted because a case of out-of-sight/out-of-mind for me after a waiting period.</p> <h3>I have used my creativity for the good.</h3> <p>I have always been crafty but not necessarily frugal. Now, I love creating fun alternatives for usually expensive things, such as family trips, birthday parties and gifts, and other events that I used to pay top dollar for in the past.</p> <h3>I finally do not fear the financial future.</h3> <p>When I was overwhelmed with debt, I hated even thinking about money. Now I am excited that we will soon be debt free after a few more car payments. There are no more credit card bills hanging over my head and I have no desire to qualify for any new accounts.</p> <h3>I am able to follow my dream.<strong>&nbsp;</strong></h3> <p>Since I no longer had big debts to fear, I felt confident to follow my dream and become a writer full time. Working for myself has been the fulfillment of one of my biggest dreams and along with financial freedom, I am thrilled to earn a living doing what I want to do each day.</p> <p>It will not be easy for many to convert from a credit card life to a cash-only existence but it will certainly be beneficial for you in the long run. If you are interested in changing over to a cash-only life, take baby steps away from your credit cards. Start by leaving the plastic at home when you go to the store. Slowly but surely, you too can learn to manage your life on a cash-only basis.</p> <a href="http://www.wisebread.com/top-6-reasons-why-using-cash-only-rocks" class="sharethis-link" title="Top 6 Reasons Why Using Cash-Only Rocks" rel="nofollow">ShareThis</a><br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/tisha-tolar">Tisha Tolar</a> of <a href="http://www.wisebread.com/top-6-reasons-why-using-cash-only-rocks">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-15"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-reasons-why-cash-is-still-king">6 Reasons Why Cash Is Still King</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-best-0-balance-transfer-credit-cards">The Best 0% Balance Transfer Credit Cards</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/never-use-cash-for-these-11-things">Never Use Cash for These 11 Things</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/do-you-spend-more-with-cash-or-credit">Do You Spend More with Cash or Credit?</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/dealing-with-post-holiday-credit-card-debt">Dealing with Post-Holiday Credit Card Debt</a></span> </div> </li> </ul> </div> </div> </div> </div> Credit Cards cash credit card debt frugal living money management purchases Mon, 16 Mar 2009 14:10:41 +0000 Tisha Tolar 2932 at http://www.wisebread.com