Financial Planning

Learning how to consolidate credit card debt is one of the best things cardholders can do. Consolidation is perfect for those who are looking to better their credit for the future. There are many advantages for cardholders that take advantage of credit card debt consolidation. If you are thinking about consolidation, then there are a few things you should consider before doing so. Use these tips as a guide while you consolidate your debt.

Why Consolidate?

There are several great reasons to consolidate credit card debt. One of the best reasons is to get better rates. If you can get a better rate on a consolidation than you currently have, then there is no reason not to consolidate. Consolidating credit card debt can add up to substantial savings.

Look up all of your interest rates from each card and write them on a list. Then note the new rate you would be given. If the new rate is lower than the average of the old rate, then to consolidating your credit card debts would make financial sense for you. If there are cards that have a lower rate, then you don’t have to include them in your consolidation.

Another reason people love to consolidate credit card debt is to make their lives simple. By paying one bill, they can cut out a lot of stress and bill paying time. You should probably not consolidate your debt for this reason alone however. You don’t want to pay more in the long run just to cut out a few pieces of mail monthly. Consolidation also gives those in a credit card mess a chance to get out of it. By consolidating, they may be making lower monthly payments than they would be if they did nothing. By closing out the other accounts, their credit may also be improved.

Who To Turn To?

When considering credit card debt consolidation, you should turn to professionals for a consultation. There are many credit card companies and banks that would like to help you with your request. Make sure you do your research so that when you consolidate credit card debt, you are certain you are making a decision that is profitable to you. Make sure there are no hidden fees that come with different consolidation plans. Doing your research can help you save money for the future.

Making The Choice

If you want to consolidate credit card debt, you should first look at all of your debt in detail. Once you know what you have, it will be easier to contact professionals to help you with your consolidation. Don’t be afraid to tell them you are shopping for the best deal. You should do yourself the honor of getting the best deal out there to making your consolidation as worthwhile as possible.

Technology has really changed in the 21st Century and this is certainly true in the world of personal finance. When I started out teaching people how to create a realistic budget we used good ole’ paper and pencil. Later when my clients started buying their own computer, we were happy to use Microsoft Excel for the adding and graph components.

When Quicken came on the scene, I was a “happy camper.” Now all I had to do was enter my transactions and choose a category. Down the road they added the “upload feature” that interacted with various banks and life was looking good.

As I went from a desktop to a laptop along came pre-loaded Microsoft Money and I was hooked on that until last year when I learned about Mint.com. Can I tell you that budgeting has never been easier? The graphs along are enough to let you see your whole financial picture with a simple click. I was in total disbelief by the experience.

So here is how it works in a nutshell. You go to http://www.Mint.com and register. Then you enter your accounts by typing in the information including passwords. So if you’re one of those people who have a fear about giving a third party this information you may not want to try this. However, I did hear that Clark Howard uses this site along with another one called Wesabe.com. I tried “Wesabe.com” but did not like it as much as Mint.

After keying in the account information you can update your transactions and give them a category. The neat thing that I noticed about my transactions is that the categories assigned are usually correct and I don’t have to spend too much time putting that information in.

Then like magic it shows you all the great information and even suggests things that you can do to help your financial life even more. My clients really like this tool and so do I. Check it out, maybe you’ll start keeping a 21st century budget. Remember no writing necessary!

Investing money, can be a daunting process. The advice I give here about compounding should be taken in the right light. You know, I know, we all know that compounding makes wealth. Banks and institutional investments can bring a steady, safe and reliable return. But 6% as nice and passive as it is won’t make you wealthy if you are starting out with a few thousand dollars. Diversifying is the key.

For example, say you had $5000 to start with. The majority of it you would put into a safe, institutional investment and watch it grow over decades. You will be rich if you have all that time to wait, but it is a slow steady process, that takes 40 or 50 years to mature.

A part of the $5000, say $500 of it, you would invest in a little more higher risk but a little more lucrative return. If institutional investments offer a safe single digit compounder, this $500 you would place in something a little more lucrative.

With all investment, even the institutional money investments, there is risk that you will never see the money again. As small and remote as it is, I don’t think anyone can deny, that a bank CAN collapse. Or war break out or any number of things could happen over 4 or 5 decades that could wipe your fund clean. This is highly unlikely but it is true to say that even institutional investment vehicles have some small factor of risk.

Generally the higher the return the more risky it is. But there is risk and there is risk. Often the safest place for a high risk investment is in your own hands. Controlling the process, what ever it is you choose. every step of the way.

The problem with investment, is you lose control of your money. The best thing about investment is that it is passive and you lose control of your own money. So it is a double edged sword. By diversifying and leaving a fraction of the capital you have allocated for high risk investment, you solve this problem.

So many people get so much financial advice yet it fails them. Why? The main reason is consumers don’t understand who to trust and why. Banks sell products and they want you to buy their products so they tell you only about their products and services. Life insurance agents and brokers also sell products and want you to buy from them. Many of the above will offer free financial planning but is it to be trusted?

In most cases the depth of the’ no charge plan’ only goes deep enough to uncover one or several sales opportunities. The rest is left unaddressed. But that may not be a bad thing. Many people will only resolve a certain amount of their issues at one time anyway. So why would an adviser go any deeper? In order to get paid for their work most advisers will move on to the sale.

What the client needs to realize is that their financial plan is not finished then. It will not be finished until after they are dead and gone. In the meantime they need to be completing a brand new set of questionnaires annually to ensure that their adviser gets all their information. If they can’t make time for this they will probably not be very successful in building wealth.

The need for this annual review is as true with an adviser who is a personal friend as where he/she is only a business acquaintance. The reason for this review is to reach beyond the familiarity and get to sound advice. An adviser who is also a friend may not bring up in casual conversation the same things they will discuss when you make an appointment. You probably won’t either. So in a review you adviser learns whether you have gotten a raise that affects you tax picture, or that some family illness plays into the financial future, or any number of things that can signal ‘hidden weaknesses’ in your financial future that wouldn’t be discussed on the golf course.

Next issue gets into the sexy issues of investments and how to keep making gains even when markets go down. Many advisers don’t serve their clients well. Find out how the system is flawed and what you can do to avoid mistakes. Each issue of my newsletter or each new article will reveal some ‘hidden weaknesses’ in financial advice and people’s assumptions.

In the interest of disclosure I sell both life insurance products and investments – You never pay me anything when investing or buying insurance products – We work with major well know firms and when it comes time for you to do business any deposits or payments would be made directly to them. They in turn would pay us, just like when you buy groceries, clothes, or deal with a bank.

You’ve seen the advertisements online, “Wipe out your credit card debt! Terminate Credit Card Debt! Eliminate Credit Card Debt Legally!” Can this be true? Is there a way to erase all of your credit card debt, legally, without paying? I haven’t tried this method personally, but with a little research online, this is what I found:

They Say the Banks Are Responsible

Debt elimination companies allege that when your credit is established and your credit limit is set, the banks are the ones that sign their name and take responsibility for your credit card debt. You can think of this like a co-signer; if you don’t pay, they are responsible. They point out that this is why your credit card company can call you, report the debt to creditors, but it is unlikely that they will sue you. If this is true then why doesn’t everyone simply ignore their credit card debt and why would these companies take the chance that you will pay them back?

They Say You Can Erase All Debt Because of Hidden Laws

It is also alleged that there are policies, procedures and statutes that banks and other financial institutions are required to follow, legally, that protect you from having to pay. The debt relief companies point out that they know the laws, they have been doing this for years and they understand the loopholes. With their help, you will be able to obtain a clean credit report, and oftentimes even be able to erase the money you owe for this service. Sounds wonderful, right?

They Want You to Buy Their ‘Fix-All Program’

What I didn’t find in my research, were any companies that were assured enough to offer guarantees. Most want to sell you their sure-fire ‘erase debt legally program’, which you must pay for upfront. These super-top-secret programs will help you to become debt free without paying a dime…except the dimes you pay for the program and I’m betting that there is more money to be paid after you acquire the program.

In the end, I remember two sayings: If it sounds too good to be true, it probably is and, you can’t get something for nothing!