With the average American saving around 3.3% it seems like getting out of debt could be difficult. However, in a recent article author Laura Rowley points out,
If savings behavior isn’t changing, consumer attitudes may be. A recent Gallup poll found 62 percent of Americans say they enjoy saving more than spending, while 35 percent reported the reverse. Back in 2006, respondents were split about 50-50 on the question. Moreover, 57 percent say they are spending less money in recent months than they used to, up from 50 percent last July. Among the newly frugal, 38 percent say this spending pattern is the “new normal,” while 19 percent say the budget cuts are temporary.
Rowley goes on to explain that the average American can significantly reduce their debt by using a small portion of their extra income to pay down their debt. In her example she points out that one home owner was able to save $23,900 over the life of the loan by paying $35.86 more a month towards his home loan.
At MoneyDesktop we are passionate about helping people get out of debt as quickly as possible. The best part is, it’s not that hard. Our software shows you where your money is going and gives you step-by-step instructions on how to get out of debt. Results like those mentioned are not uncommon for our users, so if you haven’t already, give MoneyDesktop a try for free today.
Read all of Rowley’s article on Yahoo! Finance here
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Tags: Debt, Debt Elimination, Home Loan
08.Mar.10 
Budgeting, Credit Card Debt, Debt Management, Payoff Mortgage 
Comments (0)
Maybe you’ve made a credit mistake or two, but there’s no reason to freak out. Here are the three common problems people make, as well as what you need to do to solve them.
Problem No. 1: Opening too many credit accounts. Ah, this is a common one. You may have applied for credit randomly, causing your wallet to burst with plastic. It also resulted in the ability to charge and (temporarily) live far beyond your means. Without enough cash to pay for what you wanted, those open lines of credit probably made buying what you couldn’t afford too easy.
Solution: If you have any active lines of credit left, review them and decide on a couple that you want to keep. They should be accounts with the lowest interest rates and other favorable terms. Tuck the others away in a safe place, or if you feel you can’t control overspending, close them entirely. In the future, only apply for the credit you require and won’t abuse. The average person needs just a couple of accounts — a general purpose credit card that you can use anywhere, and perhaps a retail card at a store where you regularly shop.
Problem No. 2: Letting debt escalate. A $10,000 total liability is not unusual, but it’s a hefty sum for one person to repay quickly. You know this now, but while you were using the credit cards, you needed to have kept your eye on the ball (er, bill). Certainly you didn’t get to that figure overnight, and the moment you discovered it was getting out of control you should have stopped charging and focused on repaying the balance.
Solution: When you do use credit again, you’re going to have to make sure your debt never gets out of hand again. To do that, always check your balance before charging. If you know you’ll have enough money to pay for everything you charge in full without neglecting your essential expenses, great — go for it. If not, put the card away.
Problem No. 3: Reneging on your contract. If you have arranged a hardship program through a qualified credit counseling agency, your creditors will probably report you as delinquent, since you’re not making the originally agreed-upon minimum payments. On the other hand, if you are settling the debt by negotiating the balance with a debt settlement company, you will also see credit damage because you are paying less than the total owed. It will be notated on your credit report as “settled,” which is much less desirable than “paid in full.” Why such damage? You’re reneging on a contract. When you got the credit card, you promised to pay according to their terms. When you don’t, you get dinged.
Solution: If you are using a hardship plan, resume minimum payments again as soon as possible. In the event you’re with a debt settlement company, the accounts have likely gone into collections, so you may as well continue and get the financial break. The prescription for both of these scenarios is basically the same: Wait for notation to age — after seven years, the negative information will drop off the reports (and after a couple years it will become considerably less important) and start to use credit responsibly now. By charging regularly, and paying on time and in full, you’ll establish a positive credit history as you’re waiting for time to work its magic.
Erica Sandberg’s articles and insight are featured in such publications as the Wall Street Journal, Pregnancy, Babytalk, Redbook, Bank Investment Consultant, Prosper.com, MSNMoney.com, and Smartmoney.com. An active television and radio commentator, Erica is the credit and money management expert for San Francisco’s KRON-TV, a frequent guest on Forbes Video Network, Fox Business News, Businessweek-TV, and all Bay Area networks. Prior to launching her own reporting and consulting business, she was affiliated with Consumer Credit Counseling Services of San Francisco where she counseled individuals, conducted educational workshops, and led the media relations department. Erica is a member of the Society of American Business Editors and Writers, and on the advisory committee for Project Money.
22.Feb.10 Budgeting, Credit Card Debt Comments (0)
Unless a user specifically opts into the service, effective July 1st, banks will be banned from charging overdraft fees on ATM and debit card transactions. Overdrawn checks will not be affected by this ban. As we mentioned previously, this may have a drastic affect on how many banks make money.
According to Reuters:
ATM and debit card transactions are typically discretionary purchases, the officials said. Consumers frequently use checks for bills that they want paid no matter what.
Bank regulators have been under pressure to beef up consumer protections following a financial collapse brought on in part by reckless lending practices. Lawmakers critical of regulators’ failure to rein in those practices are considering stripping consumer protection functions from the Fed and other financial regulators and entrusting them to a dedicated consumer protection agency.
This may spell the end of free checking accounts. Banks will no longer be able to cover the cost of offering checking service to consumers without some source of income. Of course, banks may just as easily find a way to force users of their accounts to opt-in to the overdraft service before receiving an account. Should this be the case, the benefit to consumers remains minimal at best.
photo credit: See-ming Lee 李思明 SML
12.Nov.09 Credit Card Debt Comments (0)
The New York Times has run an excellent article on the usurious overdraft fees charged by banks. Overdraft fees on debit cards earn banks more than all credit card penalty fees combined. For this reason, they are increasingly being relied upon by banking institutions as a strong source of income.
Unfortunately, it appears that many banks are now using these fees as their only real source of income. When a user of a debit card has a purchase that exceeds the amount of funds in its corresponding account, it results in an overdraft. The bank still pays the charge, and then charges the consumer roughly $40 in fees for every day and/or transaction that takes place until the account is again positive.
Essentially, banks use these overfrafts as a form of offering pay-day style loans at extremely high interest rates.
The article in the New York Times points out that the elimination of these fees would likely result in the immediate closure of hundreds of banks and credit unions. As a result, most flat out refuse to permit consumers to turn off ‘overdraft protection’ even for mentally handicapped or disabled users.
The Times also offers a guide to avoiding these fees suggesting that consumers find a different bank if they are unable to disable the overdraft ‘feature’ on their account. One item which the guide fails to mention, most large banks are willing to forgive a single overdraft fee as a courtesy, and may forgive even more if provided a reasonable excuse.
photo credit: B Rosen
12.Oct.09 Credit Card Debt Comment (1)
Chase has announced a new service to many of its users named BluePrint. The service allows customers to selectively finance certain purchases for longer periods of time while choosing to pay off other purchases on an accelerated schedule.
According to Bloomberg,
JPMorgan Chase & Co. is betting it can capture market share from credit-card issuers including American Express Co. by helping consumers better manage their debt.
The lender today rolled out Chase Blueprint, an online billing platform that allows 20 million card holders to finance certain purchases while paying others in full each month interest-free. Customers then choose the number of monthly installments, and Blueprint calculates the interest they can save by paying more than the monthly minimum.
JPMorgan Chase & Co. is betting it can capture market share from credit-card issuers including American Express Co. by helping consumers better manage their debt.
The lender today rolled out Chase Blueprint, an online billing platform that allows 20 million card holders to finance certain purchases while paying others in full each month interest-free. Customers then choose the number of monthly installments, and Blueprint calculates the interest they can save by paying more than the monthly minimum.
The aim of the new service is to encourage consumers to increase their credit card use in return for increased flexibility. It’s worth pointing out that using multiple credit cards allows a consumer to manage their debt in the same way, albeit requiring some micromanaging. This said, it’s wonderful that a credit card issuer is working to offer debt management tools and is hopefully a sign that other issues will soon follow suit.
photo credit: Logan Antill
15.Sep.09 Credit Card Debt Comment (1)
Some financial advisers talk about credit cards like they’re a bad thing. But, that’s simply not true. Carrying a lot of credit cards gives some substantial benefits to the holder. When you have a large revolving line of credit, your credit score won’t drop so dramatically when you carry a balance. Part of the formula for determining credit scores is comparing the balance to the amount of available credit. Carrying multiple lines of credit can also give you the freedom to choose between offers and take advantage of lower rates.
The biggest problem with keeping so many open lines of credit is that they are difficult to keep track of. Credit card companies offer incentives such as a low starting APR, betting that you’ll forget when the interest rate adjusts upwards. They may also change interest rates and due dates with only a brief notification by mail.
If you keep a lot of credit cards, one of the best financial moves you can take is to track interest rates carefully. Every month, check to see what the APR is on each credit card you carry. Transferring balances to a lower-interest credit card could save you hundreds or even thousands of dollars. (Beware of balance transfer fees, however. Those are another tricky way credit card companies surprise borrowers).
Credit cards can be a tool to help you improve your financial situation. When used recklessly or carelessly, they can easily spin out of control. But, if you’re able to manage your credit cards well, you can use them to get out of debt and avoid paying thousands in excessive interest.
Most people have so many lines of credit, they can’t name them all from memory. According to MyFico, the average consumer has a whopping 9 credit cards and 4 installment lines (mortgages, car loans, etc).
Some financial advisers talk about credit cards like they’re a bad thing. But, that’s simply not true. Carrying a lot of credit cards gives some substantial benefits to the holder. When you have a large revolving line of credit, your credit score won’t drop so dramatically when you carry a balance. Part of the formula for determining credit scores is comparing the balance to the amount of available credit. Carrying multiple lines of credit can also give you the freedom to choose between offers and take advantage of lower rates.
The biggest problem with keeping so many open lines of credit is that they are difficult to keep track of. Credit card companies offer incentives such as a low starting APR, betting that you’ll forget when the interest rate adjusts upwards. They may also change interest rates and due dates with only a brief notification by mail.
If you keep a lot of credit cards, one of the best financial moves you can take is to track interest rates carefully. Every month, check to see what the APR is on each credit card you carry. Transferring balances to a lower-interest credit card could save you hundreds or even thousands of dollars. (Beware of balance transfer fees, however. Those are another tricky way credit card companies surprise borrowers).
Credit cards can be a tool to help you improve your financial situation. When used recklessly or carelessly, they can easily spin out of control. But, if you’re able to manage your credit cards well, you can use them to get out of debt and avoid paying thousands in excessive interest.
24.Jun.09 Credit Card Debt Comments (0)
Rowley goes on to explain that the average American can significantly reduce their debt by using a small portion of their extra income to pay down their debt. In her example she points out that one home owner was able to save $23,900 over the life of the loan by paying $35.86 more a month towards his home loan.
