The Federal Reserve reports that consumer debt decreased in June, which represents the fifth consecutive month of declining rates of consumer borrowing. This suggests both good and bad news, as some consumers voluntarily curtail spending while others are being denied credit. The Fed suggests that borrowers who are spending less and saving more contribute to economic recovery as their household budgets stabilize.
Controlling Credit Card Debt
Buying what you can’t afford with money you don’t have can lead to trouble, especially as layoffs, corporate downsizing and prolonged unemployment continue. As consumers continue to worry about the economy, they’re either deciding to go without and pay down debt, or buying power is being curtailed by lenders that “just say no” to granting or extending consumer credit. This combination of consumer and lender reluctance seems to suggest that now is as good a time as any to declare your freedom from depending on credit cards for everything from groceries to Gucci. Debt consolidation is a first step toward becoming debt free.
Debt Consolidation: Three Methods
Benefits of debt consolidation include streamlining debt management and possibly reducing finance charges and monthly payment amounts. Getting unsecured personal loans for debt consolidation can be difficult, so here are alternative methods for consolidating debt.
Credit card balance transfers: Although many credit card companies are cutting credit lines and refusing new credit, they continue to promote transferring balances from competitors’ cards. Balance transfers can help you clean up multiple small balances, but beware of transfer fees and hidden costs.
DIY Debt Consolidation: If you have problems with compulsive spending, or spend more than you can afford, you can sabotage a debt consolidation plan. DIY debt consolidation requires listing all of your debts and paying them off one by one. Continue making minimum payments on all of your debts except the debt with the highest APR, which means it’s the most costly. When the highest APR debt is paid off, you progress through your debts by “rolling over” the amount you were paying on the first debt to the second, and so on. Keep records and review them monthly. Seeing your debt decrease each month can help you avoid overspending.
Getting Debt Help: Contact a credit counseling service for help if you doubt your ability to control spending. Credit counseling services help you formulate a cash budget and can also negotiate affordable repayment plans with creditors. Credit cousneling agreements require you to close your credit card accounts, and they cannot guarantee tht you’ll qualify for new credit after your debt repayment plan is completed.
Avoiding More Trouble: Refuse unsolicited offers of debt help, and check references when seeking debt assistance. The National Foundation for Credit Counselors (NFCC) can help you locate an accredited credit counseling service in your area .
Getting your finances on track by eliminating debt can help you plan for a future that includes financial security and peace of mind.
No one plans to go into debt over receiving medical care. If you’re among the approximately 47 million Americans who lack health insurance, you may already be dealing with significant debt resulting from medical care you’ve received. Here are a few things that can help with debt resulting from doctors visits.
Review medical bills for mistakes as soon as you get them. You’d be amazed how often these statements have errors or duplicate charges. Dispute any inaccuracies to get the bill reduced. If you need help understanding your medical bills, use this guide from the American Academy of Family Physicians. Read the rest of this entry »
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Chris Rocks is the Regional Director of the National Credit Federation (NCF). NCF is a nationwide membership-based organization that assists consumers recovering from a financial difficulty and those who need a significant increase in their credit score.
Chris began his financial services career as a Financial Advisor helping young families with risk management and asset accumulation strategies. It was during that time that Chris realized that many of these young families also needed someone to guide their choices with regards to debt management.
He made the transition into the mortgage industry where he first worked as a loan originator and later the Vice President of a small mortgage company. As Chris came across clients who had suffered through financial challenges and saw the difficulty they had in re-entering our credit driven economy, he discovered there was a real opportunity to leverage his unique background and help others.
He can be contacted by visiting his personal site, GoodCreditLiving.com.
Francine L. Huff is the Publisher and Editorial Director of Super Savvy Publishing, LLC, which provides editorial and publishing services. She is a gifted author, freelance journalist, and motivational speaker who has entertained and motivated a variety of audiences through workshops, panels and keynote addresses. Francine is the author of The 25-Day Money Makeover for Women, which has inspired and motivated many readers to rein in poor financial habits, become good stewards over their money and work toward a debt-free life. She has appeared on a variety of TV and radio shows. Francine previously worked for the Wall Street Journal, where she was the spot news bureau chief, a news editor and a copy editor. She has interviewed a variety of financial professionals about financial issues and strives to present information about managing money in an easy-to-understand format that is accessible to people of all backgrounds and income levels.
Karen Lawson is a freelance writer with more than 15 years of experience working in mortgage banking and loan servicing. She holds BA and MA degrees in English from the University of Nevada, Reno. She enjoys writing informative articles about debt management and personal finance.