Have you worked hard to reduce your total debt balance only to find you are in a yo-yo pattern? Debts go up and down and each up exceeds the previous one, and over time your debt actually increases. To escape the debt yo-yo something must change.
Making the change, however, can be as challenging as losing weight. For example, I have lost about 500 pounds in my lifetime. Each time the scales tell me my weight is excessive, I set a goal for the pounds to lose, and select the diet. (Any diet gets results. Some diets appeal to me better than others.) My usual goal is somewhere between 20 and 30 pounds. Success! Now, the diet is replaced by my old lifestyle. Before I know it, the weight increases. I not only regain what I just lost, but I add a few extra pounds. Then, I start the cycle over again.
Debt habits follow the same pattern. The yo-yo-effect keeps an upward movement in debt balances over time. Significant debt reduction calls on solid efforts for a year or two, and balances respond downward. The good feelings of success trigger relaxing our efforts and old habits return. Debt balances again begin to increase.
How can debts move higher than the previous level? For one thing, when credit card companies see your regular payments reducing balances they will often increase you card limit or reduce the interest rate or both. Other credit card companies offer you a new card with special deals of one kind or another. Both of these approaches encourage you to increase your credit card debt; thus, the debt balances move upward.
The lesson I failed to learn from my yo-yo cycle in weight loss, which likewise applies to debt management, is to maintain a relatively level position, reduction must be accompanied by a maintenance program. This means developing new habits, not a return to old ones. Hence, you stop the yo-yo effect in managing your debt balances.
The pattern you want is simple enough. Many programs reduce debt. When you have reached your goal, establish personal policies and practices to maintain your new desirable level pattern. Escape the yo-yo!
About the Author
Lane Anderson, CPA advises individuals and couples first on reducing debt and, second, on implementing self-reliance principles and practices to manage debt effectively. To begin with, get his free copy of “5-Step Fast Start Plan to Debt Reduction” is available at http://www.debtreducingtips.com
Trying to get out of bad credit is a challenge for anyone. Sadly, some people resort to actions that only aggravate the problem instead of solving it. Students especially are prone to committing wrong actions when trying to get out of debt. If you are stuck in bad credit, what are the actions that you should avoid? Get a payday loan to pay your credit card debt. Payday loans offer a quicker way to getting cash for emergencies but paying debt shouldn’t be one of those emergencies. Yes it’s true that you’re guaranteed to get a payday loan regardless of your credit score but using it just to avoid delaying or missing on your credit card payment is unreasonable.
Why? Because you’ll be surprised at how your fees will soar especially if you fail to pay it back on your next paycheck. Don’t put yourself at risk to incurring more debts than you already have.
Taking out cash advances from your credit card. Don’t be tempted to take out a cash advance from one your credit cards just to pay your unpaid balance with your other credit card. A cash advance incurs interest right after you got the money so if you think you’re helping yourself get out of bad credit, you’re actually only digging yourself in to deeper debt. Never use your credit card to make a cash advance.
Using your retirement savings to pay off your credit card debt. You should be aware that when you take out money from your retirement fund, you won’t be able to get your money in full. You will be charged with 10 percent penalty fee for withdrawing your funds prematurely plus you will be taxed for the amount you took out leaving you with just about 65% of the original amount you withdrawn.
Obtaining a home equity loan to pay your credit card bills. Putting your home in the line is a very, very risky move especially if paying back on time is what put you in debt in the first place.
Experiences prove that there is a tendency for people to continue spending because they have a home equity loan to rely on. In the end, they found themselves stuck in more debt than they can afford to pay and even worse, they also put themselves in danger of losing their home property.
Carelessly transferring balances to another credit card. It is true that transferring over your balances to a credit card with lower interest rates can help you get off your debts more easily. But don’t be too careless about it.
Some credit cards may entice you with a 0% introductory interest but if you don’t check how much the interest would be after the introductory period expires, you may be surprised to see that this card imposes even higher interest rates than your past credit card. Study the terms and conditions first before transferring over your balances. More importantly, make sure that you can pay off the balances you transferred before the introductory period expires. About the Author Allison May is a credit consultant and a writer for Credit Creators. The resource provides consumers with valuable advice and information on credit cards for bad credit,credit cards for good credit and other credit-related issues. Its main objective is to help people build good credit.
Identity theft is one of the easiest crimes to commit for many thieves. In most cases, they never even have to come face to face with you. The risk is low for them, making your risk of becoming a victim of identity theft very high.
The U.S. Department of Justice defines identity theft as a crime in which “someone wrongfully obtains and uses another person’s personal data in some way that involves fraud or deception, typically for economic gain.” Basically, someone uses your information or credit to purchase things that they won’t have to pay for – you will.
In 2008, an estimated 9.9 million U.S. consumers were victims of identity theft, according to Javelin Strategy and Research. In order to clear up the mess left behind by the thief, the victim spent an estimated 25 hours trying to resolve the fraudulent charges and lost an additional $500 in the process.
Victims of identity theft don’t only have to deal with the damage done to their credit and pocketbooks. The emotional toll of becoming a victim of the crime can be devastating in many cases. One of the most overpowering feelings is one of simply not knowing what to do. Here is where you should start.
Contact the Credit Reporting Agencies
As soon as you realize that your identity has been stolen, you should contact the 3 major credit reporting agencies. You don’t have to contact each agency separately, the law requires the agency you call to contact the other two with your report. A flag will be placed on your account requiring any business that tries to view your credit report to verify your identity first. You will then receive 2 free reports from the 3 agencies over the next 12 months. You can reach the credit reporting agencies at:
If you have had your credit cards stolen or any unauthorized charges on your accounts, you should contact the credit card companies. Ask to talk with someone in the fraud department. Make sure that you write down when you call and the name of each representative that you speak with. The law gives you 60 days from the date you normally receive your bill to dispute any charges on your account. If you are within this time frame, your losses for unauthorized charges are capped at $50. Hopefully, your credit card issuer will work with you so that you aren’t liable for anything. Contacting your issuers as soon as possible will allow you to have new accounts set up and stop any further unauthorized charges to your accounts.
It is a good idea to keep a record of all conversations with agency, name, phone number, date, and time called. You will want to follow up all of your phone conversations with a letter that outlines who you spoke with and a summary of the conversation. Remember, if it isn’t in writing, it may not legally exist. Always mail letters using certified mail, return receipt requested.
Notify Your Bank
Closely go through your bank accounts and look for any suspicious debits or withdrawals that cannot be accounted for. If you believe that the security of your bank account has been breached, you should immediately ask your bank to close your account and notify its check verification service. This service notifies retailers and asks them to not honor checks written on this account number. If you are unsure whether or not someone is writing bad checks in your name you can contact the Shared Check Authorization Network at 800-262-7771.
You can also contact the Chex Systems at 800-428-9623 or www.chexhelp.com and ask for a free copy of your consumer report. This service is used by many banks and can help you find out if someone has opened a new checking account in your name.
Contact the Police
As soon as you have safeguarded your finances from any further damage, you should contact your local police or sheriff’s department. Make sure that you ask to receive a copy of the police report; your creditors and banks may want to see it. In many cases, creditors who have been victimized by an identity thief using your name will ask for a police report. You may also find it beneficial to report the crime to your state law enforcement agency. Be prepared to give the police copies of all the documents that prove you are a victim of identity theft. Keep all of your original documents. The Federal Trade Commission has an ID Theft Affidavit that you can fill out and submit to law authorities. It is available for download at www.consumer.gov/idtheft.
You may have to contact the police where the crime was committed, not just your local police. Be prepared to talk with law enforcement officials in other localities and states if necessary. Your local law enforcement or creditors affected should be able to tell you if you need to contact other agencies.
Other Agencies That Can Help
There may be other agencies that you need to contact given your individual situation. When in doubt, call anyway. It is amazing how having your wallet stolen can go from losing cash, to having your credit cards charged up, to having utilities being opened in your name. Having your mail stolen can lead to someone wiring money from your checking account or opening new credit cards in your name. The best way to prevent further losses is to act first.
You can contact these agencies for more help:
-Social Security Administrator’s Fraud Hotline at 800-269-0271 -U.S. Postal Inspection Service at 888-877-7644 -Internal Revenue Service at 800-829-0433 -Federal Trade Commission at 877-IDTHEFT
It will take time to repair the damage caused by identity theft. It won’t be cleared up overnight; you must be both patient and persistent. But by taking action quickly, you will prevent further damage to your credit, your finances, and your good name.
About the Author
Ryan Smith: Credit and personal finance blogger for www.spendonlife.com. Focusing on credit reports, credit scores and identity theft.
This is a trip on a tangent. It’s about getting the vacation you so desperately need and deserve. Here’s a tactic you might not have considered in the past. It involves a bit of work, but it could lead to a lucrative second income — or even a new full time career. And it’s perfect for those of you who love to travel. Yes, you could learn to become a global travel agent.
Now, before you start laughing saying that you got into trouble by overextending your reach (in location, acquisitions, good times, etc.) let me just say that the travel agents I know are really good at helping people have a good time. And that’s what I’m getting at. As a travel agent you derive a good time by helping others have a good time.
Let’s not forget the benefits of being able to book your own travel as a registered travel agent. And, it wouldn’t be worth it much if you could not take advantage of those added bonuses. Bonuses like discounted fairs, the best seats, and so on.
Have a look at their site. Let me know what you think. If you love to travel, and if you can see yourself taking a trip after you’ve made some money as a travel agent and paid down a few debts, then this might be an option for you. Check it out today — Global Travel International!
Have a look at this video, “Insider Techniques To Raise Your Credit Score FAST!” Next week, I’ll (finally!) let you in on how the December Debt Dig-Out turned out. Hint/Preview: it didn’t turn out so well, and I’ll give you all the sad details. Stay tuned.
Valery "Val" Mackie is an ordinary citizen of the United States of America (probably not unlike yourself). Her mission is to fix her credit report by January 3, 2009, while showing you how.
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Valery "Val" Mackie is an ordinary citizen of the United States of America (probably not unlike yourself). Her mission is to fix her credit report by January 3, 2009, while showing you how.
