Sunday, September 30, 2007

Credit Card Debt Home Truths

Many people claim that using credit cards has its upsides - such as promotional deals included with the card, rebates and airlines' frequent flyer miles. With all these included, they tell you that you can even save more money by using your credit card!

Unfortunately, through my own learning the hard way, I can tell you that there are no positives in using credit cards. None at all! In fact, with all these in mind (specials, rebates etc) your mind will tell you to spend more, because you are saving! Credit card companies and friends will also tell you that as long as you pay on time, it never hurts to use the cards. It would be like free money!

But most people will not pay on time. They end up accumulating the credit card debt, and in due time, are paying off the interests for countless years. That is what's happening to me now.

Why Do You Spend More With Credit Cards?

When using cash, the pain of parting with the money is evident. However, with credit cards, you never see the money. All you need is a swipe of the credit card and your simple signature - and you get that designer bag easily or even a car all 'paid up'! You do not get emotionally attached to the idea of parting with any cash!

Unfortunately one of the worst situations that could result from credit card usage is the debt that one accumulates by using the credit cards as a form of business loan. I cannot imagine how many people's lives have been destroyed from that practise alone.

I have learnt that personal finance is 80% behaviour. You have to learn to be prudent in your spending, and not rely on extended loans. There is just no way you can get free money and eat it too.

Saturday, September 29, 2007

More Seniors Dying In Debt

This video highlights a new survey that shows that more seniors in the US are retiring and dying in the red - in debt. This is a worrying trend and the video reports on how it is. I certainly would not wish to end up in the same situation.

Some Credit Card Debt Help Tips

The following are some credit card debt help tips that I have been advised on and am trying as much as possible to help myself get out of debt. I am sharing it here on my blog so that you might be able to consider them for your own credit card debt situation as well.

So here goes:

1) If you keep spending with your credit card, it will be an endless loop of spending and accumulation of debt. Therefore, stop spending with all your credit cards. Put them in a freezer or simply cut them up.

2) Draw up a budget for your spending, so that you will be aware of your financial priorities. Make sure your budget is drawn up with your credit card debt in mind as well, such as including your credit card debt or bill payments.

3) I managed to call up one of my banks and renegotiated on the credit card interest rate. I told them that I would like to cancel the card, and requested for a transfer of the whole amount to another bank, unless they could help me out with the interest rate. They agreed to lower the rate by a small percentage, which still added up to a significant amount due to my debt amount and this helped me out a lot.

I have also been advised to find out more about credit card debt help services, but I believe that I would be able to wipe out my debts through my own efforts. If I do seek out this avenue or find out more information, I will share what I discover on this blog.

Monday, September 24, 2007

My Basic Method To Rid My Credit Card Debts

Before I even think of making any money online to supplement my efforts in clearing my debt, the most basic method I will be using is through my regular salary. I am fortunate enough to still have a job and a portion of what I earn each month will have to go back to paying off my credit card and credit line bills. This method is something I heard of from a friend who cleared his own credit card debt using it, and I believe it can help with my own efforts.

What I did before this:

- List down each of my credit cards' outstanding amounts in a spreadsheet to be kept track of
- List them in order of the highest amount

And this will be my fundamental method each month:

1) I pay off each credit card bill's minimum monthly amount
2) Starting with the credit card with the lowest total amount owed, I will pay off this credit card monthly with the very first minimum amount used, until the whole credit card is paid off.

For e.g. if the first minimum amount of the credit card with the lowest total amount is $100, I will continue to pay $100 each subsequent month for this card, until the whole total is cleared, even if the monthly minimum continues to become lower.

3) Once this first credit card is totally paid off, I will now add the monthly amount paid from this card to the monthly minimum amount of the card with the next lowest total amount owed. And then repeat this monthly payment until this whole credit card is paid off.

For e.g. after paying off the first card, I will add the $100 to the monthly minimum (e.g. $150) of the next card with the lowest total amount owed. The new monthly minimum to be paid for this second card would then be $250 flat until the whole card is paid off.

4) I will repeat this cycle for each card until all cards are paid off.

Now, you may ask - this process will take time, considering that minimum amounts were created by the credit card companies to fleece you of more money. Yes it is true, but considering that I don't have that big a monthly salary, this would have to do for now. On top of that, I am aiming to shorten the length of time required to pay off the massive debt, by doing the following:
  • Save on other areas in my life and expenses and use the savings to pay off outstanding amounts
  • Try my best to make some money online and whatever revenue I generate will go to paying off my debts

In subsequent posts, I will explore the methods I can try to make some money online to help clear my debts, and also how I will try to save on other areas of my life and expenses. I am no expert on how to make any money online, so any insights and thoughts are welcome!

Join Me On My Journey To Rid All Debts!

I am a man with a lack of (monetary) discipline, which has led to my submerged in an ocean of debt, just from credit cards alone. The extent of my debt is as follows:
  • 5 credit cards with money owed
  • 3 credit lines with money owed

The monetary total of my debt amounts to $24,973.48 currently.

And I now aim to clear this debt within 2 years, while avoiding further debt, by paying it off with any money I make online, as well as from my regular pay. I have to recognise the fact that I owe certain entities money, and I should clear them all, be responsible, and make sure I become financially secure and free.

I have decided to share my journey with you out there on this blog, so that I can be disciplined in my efforts, through constant reporting of my progress, and also what methods I decide to use in saving money and making money to pay off this amount.

The road to redemption will be difficult, and since I cannot wipe out the debt at one go, interest payments would have to be dealt with together.

Through this blog, I hope you, the reader and my guardian, will provide me with some encouragement, whenever I encounter any obstacles and feel at a loss or overwhelmed.

If you are a fellow friend in debt, and are as determined as I am in clearing our debts, then please do visit my blog and share your thoughts and experiences with me. Perhaps my methods would also inspire and help you in your endeavours.

Good luck to me and your support will be golden!