Financial Planning

It is truly sad that more people are not aware that it is very possible to settle credit card debt personally without ever having to deal with a legal representative. If the credit companies that you owe money to decide to take legal action against you, they will charge you with their no doubt costly legal fees.

It would be wise to call the credit card companies yourself and try to work out a settlement agreement with them on a personal basis. The credit card companies really don’t want the situation to progress to the point where they have to take legal action, so they will probably be willing to negotiate even if your account has been delinquent for several months.

Start by trying to adjust your interest rate and lower service charges that have been applied to your account. Once you know what the credit company is charging you, you will be more prepared to negotiate effectively with them on a settlement.

In your efforts to reach a debt settlement with the credit card company you should focus your efforts on negotiating over the interest rate and service charges first, not discussing the principal. The credit card companies make their money off the service charges and interest rates on your account, so try to make a deal that benefits you both mutually.

Next Comes the Hard Part

The money that you spent on purchases that has already been paid by the credit card company, called the principal, is the hardest aspect of your debt to negotiate over with credit card companies. They don’t want to have paid for something and not have you pay them back.

Getting your way with negotiations over the principal is not easy, so don’t feel bad if the credit card company refuses to budge. Even getting the company to adjust your interest rate or service charges is difficult. Remember that the credit card company’s goal is to get their money from you, not repossess your things.

Regardless of what agreement you reach with the credit card company, you need to be prepared to follow through with your end of the deal. If you fail to meet the terms of your settlement plan, you can expect the credit card company to take aggressive action to get their money, not a second chance.

Do you have financial problems? Then a budget is the answer if you are tired of wondering where your income went. A budget is the answer, if you don’t have savings. A budget is also the only solution to getting out of credit card debt.

You can purchase a 6-column ledger or use an electronic ledger in recording your expenses and income. Or purchase budget software. While an electronic ledger (like Excel) functions by keeping your financial records and doing your computations, budget software programs will do much more.

Here are several features your budget software should have, to effectively help you keep track of expenditures and record your savings.

1. The budget software should with a worksheet, show you where your funds go, and provide you with the exact amount of your current financial situation.

2. The budget software should have in addition to the more common ledger title columns, make available the option for you to create your own personalized account titles. This makes it more accurate, and enables you to keep track of daily expenses, of your saving accounts, payments for insurance, auto, utilities payments and even entertainment expenses.

3. The budget software should allow you to compare the financial differences between the budget you set against actual expenditures. It would be great if this feature were accompanied by a reminder feature that tells you, you’re overspending.

4. The budget software should provide you the option of creating and tracking individual accounts, should you wish to set one for you and your spouse, or your children. You can use this to monitor each child’s expenses.

5. The worksheet visuals of the budget software should be easy to understand.

6. Usage of the budget software must be user friendly and have help menus that are built in the program.

After you’ve read the company brochures, and spoken to the sales staff, request for a demonstration. Personally test the budget software, to make certain you have ease of use. Ask the company they provide product updates at discounted prices.

Make sure that the budget software vendor have an efficient customer support and after sales services. Request for list of their clients and talk with these people. Ask to be sure that you can reach them on the net, by phone and email. List their physical address, should you need to drive by their shop.

You need to be honest, committed and disciplined in making and keeping a budget. If you do, you’ll be able to get the most out of your income in spending along with saving wisely.

Unless people make a personal budget for themselves they will never be successful in their journey towards financial freedom. A budget is like the training wheels on a bike and works as a finance tool that helps keep people on the right path. For most it is necessary to keep a personal budget for their entire life but for others a budget is not needed after they get a feel for how their money is being spent and where it is going. Setting up a budget is the simplest and most basic building block in a persons quest for financial freedom. I can almost guarantee that you will not be successful on your journey toward financial peace without setting up your own budget.

Usually when people hear the dreaded B word (budget) they often run for the hills and they often try to avoid a financial adviser that suggests that they make a budget. People are often very scared of the work involved in making a personal budget but I am here to tell you that it is not really that bad. Resistance in establishing a budget often happens because people see a budget as some type of trap that restricts their freedom and forces them to change the way they live. The truth about budgeting is often quite the opposite. Usually those that do not set up a budget are the ones that have a ton of credit card debt and are restricted by the large debt payments they are required to make each month.

When you setup a personal budget you are simply setting up a plan to spend your money with intent as opposed to spending it aimlessly. The idea is to plan everything out so that you do not end up spending more money than you make. A personal budget usually seems restrictive at first but once you follow it for a few months it will help you to move away from your reliance on credit cards and it will actually give you more freedom.

Once you establish your budget you should expect it to take 3-5 months to get things right. In the beginning it is likely that you will make mistakes in your budget and forget about expenses. After 3-5 months you should be able to work through this and your budget should be almost a mirror image of your actual spending.

After establishing an accurate budget the next step is to stick to the plan. Most people tend to fail here. Anybody can write out a budget plan but the hard part is actually sticking to this budget each and every month. If you can stick to your budget I promise that you will be more financially free.

I hope that you now understand the importance of establishing a personal budget for yourself. Without it you cannot begin to pay off your debts and save money because you have no way to track and properly allocate your income.

My suggestion is that you do yourself a favor and grab a note pad and a pen and start working on your own personal budget. It is simple and completely freedom.

I have been in the credit card debt relief industry for just about 10 years now and have been in the financial industry for over 20 years. The point of this article is to give people a heads up on debt relief companies also known as debt settlement or debt negotiation companies. I will give you the pro’s and con’s of this process and what to watch out for when interviewing a company to help you get out of debt. Before I go on I want to let you know that this will be a rather long article and by the end of it my goal is to have you understand how the debt negotiation/settlement process works in case you don’t already know and I would like you to understand the tactics of companies out there that do not truly have your best interest at heart.

First I would like to state that the process of debt negotiation as your means of consumer debt relief is not for everyone, some people are better suited for bankruptcy and others do not have the correct mindset to go through this process.

I would like you to first understand what debt negotiation is and how it works. The goal of a debt negotiator is to obtain a debt settlement for you on the current debt amount you owe your creditor. So for example you may owe one particular creditor $10,000 so the goal of the negotiator would be to have you end up paying back say $6,000. The two main benefits of going through this process are to save money on what you currently owe your creditors and to save time. By just paying the minimum payment with even a modest interest rate you will be looking at 30 or more years to become debt free, with a sound debt negotiation program you will be out of debt within 2-3 years or sooner depending on your current financial situation.

Now you must understand these are great benefits but as with anything in life there are drawbacks, nothing is perfect and this consumer debt relief procedure is no different. For starters your creditors will not be willing to negotiate a debt settlement at all if you are current with your monthly minimum payments. They would prefer you to stay on their credit treadmill for the next thirty years and pay them back over four times the balance in interest alone. So you must fall behind on your payments to put the creditors into a position where they will be willing to settle. Once you stop paying them the ball game changes completely and they will then be willing to talk in terms of negotiating a settlement.

So obviously for some people the beginning of this process will have a negative effect on their credit score. For those who are already falling behind then the negative effect will be no different than it already is. Unfortunately for some people this will be the deterring factor that keeps them from going into debt settlement making them a slave to their creditors for the next thirty years. The good news is that this negative effect does not last forever, in fact once the settlements start coming through your credit score will begin to rebound and go back up. The reason being over 30% of your credit score according to MyFICO is based on how much debt you owe. But if you are stuck in a bad debt situation even if you are current with your payments your score is probably not all that good in the first place, and besides when stuck deep in debt your focus should be on how to get out of debt as quickly as possible, not on your ability to accrue future debt.

Now by falling behind on your debts you must understand that these creditors are just not going to roll over and play dead, they will be calling to try and collect the debt. For some this is not a problem at all, for others it is, that is why I stated above this process is not for everyone and the consumer must be in the correct mind set. From my years of helping people there is no rhyme or reason to how many calls you will receive some clients of mine barely get calls while others get them almost everyday. Something to keep in mind too is that no company has the power to legally stop the calls, so any company that tells you they can is flat out lying.

As you can see like I said earlier there are pro’s and con’s, but if you can accept the con’s you will be quickly on the road to financial freedom and will save a lot of money in the process. Now to get to the meat of the matter and why I named this article “consumer credit card debt relief scams”.

We here in America over the past couple of years have been experiencing a very negative downturn in our economy. Thus putting many consumers in a compromising position financially, leaving boat loads of people stuck in credit card debt. So naturally this opened up a much larger market for debt negotiation. Many fly by night companies have been popping up all over the country, many of which are ex mortgage brokers who sold people bad loans and helped them get into this sticky position in the first place. Now I use the word scam which can take on a few meanings, while yes there are some companies out there that are flat out scams and have no intent on doing any work for you at all, most of the times that is not the case. Instead many companies simply do not give people all the facts on how debt negotiation works nor do they truly put them on a plan for success, which I will explain in a minute.

One common issue that most consumers have with debt settlement companies is they do not fully tell them about how the process works, instead they sugar coat things and just preach about the great benefits. I have spoken to countless amounts of people who have signed up with companies and were under the impression that they were going to stay current with their creditors and will never receive any calls. So needless to say this became a huge problem once they began.

Another major problem a lot of these companies have is deceiving people into the kind of savings they will be getting on their debts. Some companies will say they will save you 70% of what you owe. Now while they may get settlements that low what their opting not to tell you is how much you will be saving after you have A) paid them their fees, and B) paid back the creditors. Honest companies will tell you what your true savings will be. If you will save somewhere between 40-50% of what you owe including their fees and paying the creditors than that is pretty darn good. Plus many of these companies will try and guarantee a certain amount of savings, if you hear this run for the hills. NO one in this industry can guarantee a certain amount that is why it is called DEBT NEGOTIATION! They are negotiating to get a settlement for as low as they can get.

Then there are the companies who will let you pay whatever you can to get on their program. These are the worst because they do not truly have your interest at heart and know they are setting you up to fail and not succeed. You must understand to achieve the type of savings I stated above this process should take no more than three years, preferably two or less. And the bottom line is some people simply cannot get it done in that time frame and should realistically be looking into bankruptcy. What these unscrupulous consumer debt relief companies will do is put you on a program for 4 or more years and basically accepts whatever payment you can afford. Knowing full well you are not going to be saving much of anything and will more than likely fail off the program, all they care about is getting the fees and that is it. An honest company will diligently review your budget with you and make sure this is something that you can manage, as well as fully explain to you both the benefits and drawbacks of doing this. And let you make the conscience decision as to whether this is the best consumer debt relief method for your situation.

Another very good way to evaluate a company is to make sure they are registered with the BBB (Better Business Bureau) and that they are in good standings with very few complaints. And if there are complaints make sure they were resolved to the clients liking.

If you are determined to get out of credit card debt, you will find that it is more than possible. The first thing you should do is get a free quote. But why just get one when you can attain many debt consolidation quotes to decide on the best one. Most companies that deal with debt consolidation will give a free price quote to new users of their services. If you look, you will find that there are free debt consolidation quotes and ones that they will charge you for, both coming from reputable companies. Keep looking for the free quote that comes from one of these reputable companies.

Do your Homework to Find out a Company’s Reputation and Success Rates

Do your homework before contacting a company for their services. Search through the companies policies and other reports. If you have to, visit a consumer forum online to find out what other people are saying about their services.

Reputable Companies Love to Answer Your Questions

Another good source of information is a government regulatory agency. If the company you are researching is not listed with this agency, don’t consider it any further. Good companies will be listed with the government agency and will welcome any questions that you may have for them. They expect to be asked about their reputation and are normally proud to tell you about it. Additionally, you might be able to acquire a better rate if you also use there debt consolidation services as well.

Don’t Let Teaser Rates Suck You In

Don’t fall for the attractive interest rates that many companies try to lure new customers with, make sure they can back up what they say before agreeing to do business with them. There are so many companies available online for free credit card debt consolidation loans that you will need to be careful to only choose the good ones to work with. This will either be the first step to your financial freedom or the beginning of the end for your financial history, so remember to choose wisely.