Track Your Finances with a Bill Paying Schedule

August 20, 2009 · Filed Under Being Frugal, Budgeting · Comments Off on Track Your Finances with a Bill Paying Schedule 

Have you ever had to pay a late fee because you forgot a due date? Or ever “lost” a bill in a pile of papers on your desk? Or ever caused an overdraft in your checkbook because you neglected to enter an automatic debit payment? Many of the most frugal moms can sadly say yes, that at one time or another we’ve cost ourselves money by not having our finances better organized. Well, there are ways to stop this aggravating problem! The simplest way is to create a monthly bill paying schedule.

This is especially easy if you have Microsoft Excel or another spreadsheet program on your computer. But even if you don’t, you can create a simple form to help you track monthly bills and payments so you don’t spend money on mistakes like the ones above.

To create a bill planner in Excel:

• Open the program and create a new spreadsheet.

• Title the first seven columns: Date Due, Company/Bill, Amount Due, Amount Paid, Date Paid, Check Number and Balance.

• Date Due is the date the bill must be paid to avoid late charges. If you mail a bill rather than paying it by phone or online, you may want to allow five days for the bill to reach the office.

For instance, If you have a bill due the first of the month, enter the Date Due as the 25th of the previous month, just to be sure the bill gets to the billing office on time.

• The Company/Bill column is for the name of the company you pay the bill to.

• Amount Due is the Net amount due before any late fees are added. This is the amount you hope to pay each month.

• Amount Paid may be the full amount from the previous column, or–in the case of paying only a partial bill, or a monthly installment–that amount. This is the amount paid on your account for this payment only.

• Date Paid is the date you mailed your check, or paid the bill online or by phone.

• Check Number may be the number of an actual check, a money order number, or a confirmation number if you pay by one of those methods.

• The Balance will be $0 unless you pay a partial payment or the bill is an installment loan or credit card with a carry-over amount. The more $0 balances, the better.

Once you’ve created the necessary columns, you can design the format to suit your needs. You may prefer to leave a blank column between each of the columns above, shade the headings, add lines, etc. Do whatever works best for you and makes this a comfortable form to use.

To create a bill planner manually:

• On a blank sheet of paper, draw the seven columns as mentioned above. Create the form on lined paper to make it easier to enter data.

• Draw a line between each column to help you keep the data separate and make the completed form easier to read.

• Make several copies of the form then write “Original” on a self-adhesive note and stick to the front of the original so you don’t accidentally use that one and have to recreate the form again each month.

To use your new bill planner:

• Take each bill at the beginning of the month, or as they arrive, and fill in one line for each payment due.

• Enter bills in line order by date due when possible to make it easier to track in order by due date.

• Enter only regular monthly bills such as utilities, telephone, mortgage, credit card payments, medical bills, installment loans, etc. Don’t enter items like clothing, food, gasoline, or books. You can track them on a similar sheet, but this one is for fixed monthly expenses that you have less control over.

• Check your bill planner at the beginning of every week to see what bills are due that week and what can wait until another payday. This will help you see every bill that must be paid from that week’s paycheck in order for the payment to arrive to the company on time.

Tracking your finances with a monthly bill planner doesn’t have to be elaborate, complicated or difficult. The goal is simply to write down what you owe, when you owe it, and when and how you paid it.

A bonus to using a monthly bill planning schedule is that after a couple months, you’ll begin to get a clearer picture of your overall financial situation and begin to see where you may be able to save money by paying off certain bills or eliminating other expenses.

Successful Debt Reduction Strategies for Frugal Moms

July 14, 2009 · Filed Under Being Frugal, Budgeting · Comments Off on Successful Debt Reduction Strategies for Frugal Moms 

Frugal moms know that one huge way to save money is, logically, to reduce the family’s debt. Having to pay out less money each month for credit card payments, medical bills, mortgages and other loans will allow you to spend more of your income on what you choose. It will also make your family more financially secure and allow you to invest and save more. The problem is, how to go about reducing your debt. Here are some ways to begin:

• Commit to paying off your debt.

Make a firm decision to begin today to reduce the amount of debt you owe. Work out a simple budget that shows exactly what you owe, how much you can pay each month, and when you will pay the debt off completely by following your plan.

• Start small.

While you will have to pay on all your bills each month to remain current, focus on paying off the bill with the smallest balance first. When that’s paid off, take the money you were paying on that bill, and with your regular monthly payment, pay the combined amount on the bill with the next smallest balance. Then, when that bill is paid off, take the money you were paying on both bills, and with your regular monthly payment, pay that combined amount on the next smallest balance… and so on until all your bills are paid off.

• Stop incurring more debt.

Stop using credit cards. Refrain from taking out additional loans. And stop buying anything you can’t afford or don’t really need. To have the best results, you’ll also need to learn to save money in a variety of ways. Every dollar saved is a dollar that help pay off your debt more quickly.

• Pay off your bills with the highest interest rate first.

This will typically be your credit cards, but not always. Check your monthly statement to be sure, then pay off those high interest debts as soon as you can.

• Never pay only the minimum amount due.

Financial experts agree that paying only the minimal amount on your bills, especially credit card bills, will keep you in debt the rest of your life. Sadly, that’s what finance companies want because that’s how they earn their money.

But you can get out of that debt trap by paying at least double the amount due on your credit card bill each month, triple, if possible. In addition, add $5-$10 to the principal on your mortgage and other loans each month. (Be sure to designate the amount to go toward the principal). That way, you’ll begin to see some real changes in the amount you owe on your bills and you’ll begin to truly reduce the amount of debt you owe.

• Use any extra money you receive to pay toward your debt.

You can earn additional money in many ways from having a yard sale, to getting an income tax refund, or selling some things on eBay. Whenever you earn additional income or get money you don’t need to live on, use it to pay off one of your bills rather than squandering it on something else. It may take discipline, but the reward of a debt-free life will be worth it!

• Refinance your loans if it will save interest.

After you’ve paid on a loan for awhile, talk to your financial institution to see if it would benefit you to refinance the loan. If doing so only adds more time to the loan, without saving you interest, it’s obviously not worth it. But if it would lessen the amount of time you have to pay and allow you to pay the loan off more quickly, it may be worth considering.

• Restructure your mortgage.

A friend of mine switched her monthly mortgage payments to a bi-weekly accelerated mortgage plan. This shaved seven years and thousands of dollars off her mortgage with an added payment of only $5 more each month! Check with your bank or mortgage company to see if this type mortgage could work for you.

• Consider a balance transfer account.

While this isn’t your best option, it may be worth it to find a loan or credit card with a lower interest rate that would allow you to transfer your high interest balance without additional costs. Be very careful with this, and be sure you are truly coming out better in the long run. This will only work if you have good credit and pay your bills on time.

As you can see, there are many ways to eliminate debt. Most situations will require using more than one of them, but whatever you choose, begin immediately to reduce the amount of money you owe. Your financial stability depends on it in these uncertain economic times.

Teaching Your Children to Save

June 24, 2009 · Filed Under Being Frugal, Frugal Parenting · Comments Off on Teaching Your Children to Save 

As parents, we want our children to grow into successful, well-adjusted adults who understand the value of money and who know how to manage it. But money management isn’t a skill learned by osmosis. We can’t just hope they’ll soak up what they need to earn and save money, prepare a budget, manage a checkbook, pay their bills and stay out of debt. We have to teach them. And beginning to educate our kids in money management will be most effective if we begin early, even as young as four or five.

Regardless of the age of your children, look for ways to continually help them learn the value of money and the skills they need to manage it properly.

• The Bible says that he who doesn’t work, doesn’t eat, and while you can’t neglect feeding your children, you can teach them that money is earned not simply given. Use an allowance system in exchange for weekly chores and household help. Assign age-level tasks that your child can easily accomplish and pay them an allowance based on their completion of those tasks. If they don’t do their chores, they don’t receive an allowance.

• Closely related to teaching your child that money is earned is the concept that money must be budgeted. If you spend everything you receive in one day, you won’t have anything for later in the week. A child will learn this important lesson if, when they spend their entire allowance in one day, Mom and Dad don’t give them more money until their next allowance.

While this may be especially hard for some parents, this is a very important lesson for children to learn. It develops lifelong budgeting habits that will serve your child well when she is on her own and supporting herself. If you truly want your children to learn that money is earned, force yourself to not give in to their pleas for more spending money. It won’t take long for your child to begin to make wiser spending choices in order to have money left at the end of the week.

• Understand reaping and sowing. The principle that you “reap what you sow” applies to all areas of life. Teaching a child to give – either to their church, or to a favorite charity – will help them develop a generous spirit that will last a lifetime.

• Teach them to “pay” themselves. Saving money is how we pay ourselves by providing for short and long-term goals and ensuring a safety net of ready-cash in the event of an emergency. While your child may not have an emergency, the sooner they learn this concept, they better they’ll be since it’s much harder to develop a habit of saving when we don’t practice it in our youth.

• Help them start a savings account. As soon as your child has the minimal amount required to open a savings account, take them to the bank to set up their account. This account can be used for long-term savings goals such as college, and will help them develop a lasting savings discipline.

• Help them to understand the banking process, rather than simply doing it for them. Talk to them about how to fill out the deposit forms – even if you have to fill out the form. Explain the idea of earning interest and how it will make their savings increase.

Of course, this education will have to progress as the child grows, but even the youngest child can understand that they have to “tell the bank whose money this is” on the savings form, or that they “get paid for keeping their savings in that bank.” Again, this will be excellent practice for later in life when they must manage their own finances.

• Look for the best interest rate. You probably won’t want to settle for the first savings account you find, or the one offered by your bank simply because of convenience. It’s important that money invested in savings earn the best rate it can so it can grow the fastest. This will encourage your child to save even more as they see their savings increase.

• Be sure to allow money to spend. While you want your child to understand the value of money and you want him to save, he also needs to understand the joy of having money to spend. Be sure to allow a portion to spend however he chooses.

• Encourage short and long term savings goals. College may be a long-term goal, as can a car, a senior trip or some other large item. Short term goals can include a new bike, skateboard, shoes or anything else your child can save for within a few weeks.

THere are others ways to teach our children about money, but the important thing is that you start right away. Doing so will ensure you’re raising children who will become budget-conscious adults with the abilities needed to provide for themselves and their families.

10 Best Debt-Busting Holiday Strategies for 2008

January 21, 2009 · Filed Under Budgeting · Comments Off on 10 Best Debt-Busting Holiday Strategies for 2008 

By Cindy Morus, Creator of the Pay Debt Quickly System

According to a Gallup poll, the average American family will spend $801 this year on Holiday gifts. Remember an average means that some people spend way more and some people spend a lot less. With economic times tough this year for most people, it’s a good chance to talk to your friends and family about cutting back on Holiday gift giving, seeking alternatives or even eliminating it altogether. Most people have more than enough “stuff” and that’s why they are so hard to buy for.

I’m going to be below that average number for several reasons. About 20 years ago, when the grandkids started arriving, most of my extended family decided not to purchase Christmas gifts for each other with the exception of my sister and her husband who have no kids but are generous with the nieces and nephews. Even my Mom and Dad suggested that we not exchange gifts this year due because of the hit their retirement accounts have taken.

I’ll be buying wine from Phelps Creek Vineyards for my sister and hubby (Sh, don’t tell), my son gets a ski pass and my daughter a check because she’s saving to go to London for the Spring term. That’s it for me. How about you?

And remember, the Holiday isn’t all about buying and giving! Most people want more of the spirit of the season — friendship, music, love. Don’t be so obsessed with the buying and spending that you wind up with stress, hassle and shopper’s burnout. Plan to incorporate the things that really matter in life: spending time with family and friends, being part of a community, enjoying your faith and just plain having fun.

Doing some planning now along with a shift to the spirit of the season, can make the New Year much happier since you know massive credit card bills won’t be filling your mailbox.

Here are some specific ideas. Implement one or all!

1. Make a Spending Plan and Stick To It. Decide in advance how much you’re going to spend on each person AND the total amount you plan to spend on everyone. That way, if one gift is more expensive than you expected, review the rest of your list to find reductions so you don’t exceed your overall spending plan. Don’t forget decorations, cards, stamps, wrapping paper.

It can be tough to stick to a budget when those around you are big spenders. If you want to change the gift giving pattern, do it early before people start making purchase.

2. Do Something Different This Year. Instead of buying a gift for every person, you can draw names (Have kids draw other kids and adults draw each other). One family I know always has an additional twist like buying something for the person that starts with their first name. For example, Jean might get a Jacket and Rebecca a Robe. Have a dollar limit.

You might also consider purchasing a family gift or brothers and sisters can go in on something bigger for Mom and Dad than they could purchase individually. My kids have been doing that for years because we set a low dollar limit on how much they could spend on us and each other.

A “white elephant” take away is also a fun way to spend the day and everyone gets a good laugh. Ornament gift giving can also be fun and a way to create memories for many years to come.

3. Set a Limit on the Number of Gifts. Young children get overloaded very easily with quantity so Mom and Dad might limit the number of gifts their children get. You can spread the gift giving out over several days, too, which gives them time to play with their gifts. If you do get too many, think about putting some away for a few weeks.

4. Spend time, not money. If you’re short of money, offer gifts of your time: Baby-sitting services for exhausted new parents. Painting assistance for a friend who just bought a house. Pet-sitting for traveling neighbors. Grandparents can teach grandkids a skill. I can still remember the Christmas my grandmother taught me to knit.

Organize an Appetizer potluck or Progressive dinner with your friends or family. Everyone brings or prepares something so the cost and work are spread around. And make sure everyone does their share of clean up, too!

5. Connect with your Community. Whether or not organized faith services are part of your tradition, there’s a lot going on. Here in Hood River, there are food drives, community meals, holiday concerts and performances, and lots more. It’s a good chance to get out and catch up with people you might not see but once or twice a year.

6. Gift Giving Alternatives. Donate to a cause that’s important to the recipient (check out charities at Purchase gifts that benefit others. Lutheran World Relief – one of the top-rated charities ( has lots of great ideas from critters to water to education. You might want to ask them what cause they’d like you to support.

Ask family members to consider contributing to your kids’ college accounts. That’s a gift that last for the rest of their lives.

7. Use up Store Credits and Gift Cards. This is going to be especially important because a number of stores are already slated to close their doors after the Holiday season and a lot more will probably do so before the end of 2009. Many gift cards lose value or expire over time so get them out and use them up.

8. Take Yourself Off the List. The National Retail Federation reports that the average shopper will spend $99 on themselves! You might also talk to your spouse or significant other to create a plan – maybe you could the money for something you need for the house or cars and if you’re not sure of your job prospects for next year, start a savings account.

9. Use Send Out Cards for Christmas Cards and Gift Giving This Year. Send Out Cards allows you to choose a card from over 13,000 designs and you can even upload your own photos and have a custom card. They’ll print them and send them out with a real first class stamp for about $1 per card. And you don’t have to go to the store, post office, or lick.

10. Create Your Own Family Traditions. Everything in our world is shifting and it’s a chance for you to create your own activities and traditions. The first year the kids got ski passes, I told them that’s all they would be getting. They asked “What will we do on Christmas?” and I said “Go Skiing!” I didn’t plan Christmas Day dinner and they were starving when we got home so I made Tuna Noodle casserole and that became our Christmas Day dinner tradition!

Think forward to end of the Holiday Season and how you’ll feel about the amount of time, energy and money you spent. If you don’t like the outcome, change it now. There’s no such thing as the Holiday you read about in a book or see on TV – you don’t have to be held hostage to the Super Christmas. Take a few moments now, check in with your spouse and kids and decide how you want your Holiday to turn out.

More Help from Cindy:

Trouble with debt? Eliminate your debt and save your money using the Pay Debt Quickly System. It comes with the software and strategies you need get rid of your debt without making an large payments or making any significant lifestyle changes. Click here to learn more and get started right away or sign up for her free Powerful Debt Reduction Starter Guide.

Credit & Divorce

January 21, 2009 · Filed Under Budgeting · Comments Off on Credit & Divorce 

By Cindy Morus, Creator of the Pay Debt Quickly System

Mary and Bill recently divorced. Their divorce decree stated that Bill would pay the balances on their three joint credit card accounts. Months later, after Bill neglected to pay off these accounts, all three creditors contacted Mary for payment. She referred them to the divorce decree, insisting that she was not responsible for the accounts. The creditors correctly stated that they were not parties to the decree and that Mary was still legally responsible for paying off the couple’s joint accounts. Mary later found out that the late payments appeared on her credit report.

If you’ve recently been through a divorce-or are contemplating one-you may want to look closely at issues involving credit. Understanding the different kinds of credit accounts opened during a marriage may help illuminate the potential benefits-and pitfalls-of each.

There are two types of credit accounts: individual and joint. You can permit authorized persons to use the account with either. When you apply for credit-whether a charge card or a mortgage loan-you’ll be asked to select one type.

Individual or Joint Account

Individual Account: Your income, assets, and credit history are considered by the creditor. Whether you are married or single, you alone are responsible for paying off the debt. The account will appear on your credit report, and may appear on the credit report of any “authorized” user. However, if you live in a community property state (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, or Wisconsin), you and your spouse may be responsible for debts incurred during the marriage, and the individual debts of one spouse may appear on the credit report of the other.

Advantages/Disadvantages: If you’re not employed outside the home, work part-time, or have a low-paying job, it may be difficult to demonstrate a strong financial picture without your spouse’s income. But if you open an account in your name and are responsible, no one can negatively affect your credit record.

Joint Account: Your income, financial assets, and credit history-and your spouse’s-are considerations for a joint account. No matter who handles the household bills, you and your spouse are responsible for seeing that debts are paid. A creditor who reports the credit history of a joint account to credit bureaus must report it in both names (if the account was opened after June 1, 1977).

Advantages/Disadvantages: An application combining the financial resources of two people may present a stronger case to a creditor who is granting a loan or credit card. But because two people applied together for the credit, each is responsible for the debt. This is true even if a divorce decree assigns separate debt obligations to each spouse. Former spouses who run up bills and don’t pay them can hurt their ex-partner’s credit histories on jointly-held accounts.

Account “Users”
If you open an individual account, you may authorize another person to use it. If you name your spouse as the authorized user, a creditor who reports the credit history to a credit bureau must report it in your spouse’s name as well as in yours (if the account was opened after June 1, 1977). A creditor also may report the credit history in the name of any other authorized user.

Advantages/Disadvantages: User accounts often are opened for convenience. They benefit people who might not qualify for credit on their own, such as students or homemakers. While these people may use the account, you-not they-are contractually liable for paying the debt.

If You Divorce
If you’re considering divorce or separation, pay special attention to the status of your credit accounts. If you maintain joint accounts during this time, it’s important to make regular payments so your credit record won’t suffer. As long as there’s an outstanding balance on a joint account, you and your spouse are responsible for it.

If you divorce, you may want to close joint accounts or accounts in which your former spouse was an authorized user. Or ask the creditor to convert these accounts to individual accounts.

By law, a creditor cannot close a joint account because of a change in marital status, but can do so at the request of either spouse. A creditor, however, does not have to change joint accounts to individual accounts. The creditor can require you to reapply for credit on an individual basis and then, based on your new application, extend or deny you credit. In the case of a mortgage or home equity loan, a lender is likely to require refinancing to remove a spouse from the obligation.
More Help from Cindy:

Trouble with debt? Eliminate your debt and save your money using the Pay Debt Quickly System. It comes with the software and strategies you need get rid of your debt without making an large payments or making any significant lifestyle changes. Click here to learn more and get started right away or sign up for her free Powerful Debt Reduction Starter Guide.

The PDQ Factor

January 21, 2009 · Filed Under Budgeting · Comments Off on The PDQ Factor 

By Cindy Morus, Creator of the Pay Debt Quickly System

It’s just about the beginning of a brand new year: a time to set goals, make plans, and start afresh; a time to dream of making more money, having a more beautiful body, and experiencing more love. I can’t help you with your body or your love life but I can show you some tools for making more money this year.

Have you ever heard of the PDQ Factor? Probably not, but you probably have heard of the acronym PDQ, which means “pretty darn quick” and that can be expensive: think fast food, fast cars, and fast women. This PDQ, The PDQ Factor will save you money. In fact, it can even make you wealthy over time.

To illustrate…take an empty glass and set it under the water faucet. Now turn the faucet to a single drip, or a slow trickle if you’re really impatient, and watch the glass fill up. It takes a while but it does get full. If you were thirsty, it wouldn’t have been nearly as fast as turning the faucet to full force but it was just as effective. The PDQ Factor is the slow trickle equivalent in the world of money. It stands for Pennies, Dimes and Quarters. Nickels count too, they just messed up the snappy title so we left them out; but don’t you leave them out of your investment toolbox.

Here’s an easy plan to make an extra $1000 this year. It won’t take much time or energy-really none at all. By investing just $2.74 a day-the cost of a designer coffee drink; a bad drive-thru meal; or 8 quarters, 5 dimes, 4 nickels, and 4 pennies, in just 365 days you will have an additional $1000 in the bank. Did you know that accumulating wealth is this effortless? Make a plan, stick to it and watch success sneak up on you in teen-tiny increments.

With no pain and all gain you’ve just set a financial goal; a goal that can be effortlessly reached by making a very minor tweak or two in how you live your daily life.

Break down your goal and see how many PDQ’s it takes! And don’t forget to start today!

The same thing applies to debt. If you’re struggling with debt and it feels like you’ll never see the end, you can apply the same principles.

Get More Help:

Eliminate your debt and save your money using the Pay Debt Quickly System. It comes with the software and strategies you need get rid of your debt without making an large payments or making any significant lifestyle changes. Click here to learn more and get started right away.

Credit Card Debt Reduction Circa 1992: Nothing Much Has Changed

November 18, 2008 · Filed Under Being Frugal, Budgeting · Comments Off on Credit Card Debt Reduction Circa 1992: Nothing Much Has Changed 

I discovered treasure in the doctor’s office! As I was pawing through stacks of magazines to pass the time, I stumbled upon a vintage 1992 magazine. How fun! I had a grand time devouring the way-cool fashions (fussy), the amazing hairstyles (big), and the over-the-top recipes (high fructose). Then I came across an article about credit card debt reduction. Were we really concerned back then about reducing our credit card debt? Compared to today, it all seemed so, well, loose.

In truth, 1992 may not seem particularly “vintage” with respect to clothing and hairstyles, but certainly in the credit market, 1992 feels like a century ago. I wondered how the 1992 world of debt relief differed from the 2008 version, what with the collapse in the credit industry. Certainly, the “tight credit” economy today is a much more complicated arena than the “loose credit” economy of 1992. Therefore, credit card debt relief circa 2008 has to have different strategies than credit card debt relief circa 1992. Yes? No.

Surprisingly, the process of getting and keeping your credit card debt in control hasn’t changed significantly in the past 16 years. We lived in a vastly different economic climate in the 90’s than we do today. Credit was King. So then, why hasn’t getting out of debt changed to reflect the credit market conditions of today?

The tenets of credit card debt relief remain the same for all these years because basic financial strategies never change. Spend less than you earn and save the rest. When credit cards became the norm for everyday spending, we entered a new “credit poor” world. And, after some years, we are all suffering. I suspect that in 1992 an article about debt relief didn’t get as much readership as, perhaps, the clothing and hairstyle articles. Today is a very different story. Today when people thumb their way through a magazine, they are looking for some help designing their future financial stability, and not their clothes.

Then what are the basic strategies for a family like yours to get rid of their credit card debt for once and for all? Briefly outlined, here they are, just like they were 16 years ago:

1) Cut-Up, Burn-Up, Shred-Up, or Blow-Up Those Credit Cards.

Painful as this is, Get Rid Of Those Credit Cards! I don’t know how many people try to pay off their credit card debt while clinging to their credit cards! Why don’t you try to lose weight while clinging to that donut. It makes as much sense. If it wasn’t a crucial step, it wouldn’t be The Number One Step, now would it. Begin with those ridiculously high-interest department store credit cards, and destroy them all. Yes, all of them. They’ve offered you 10% off your next purchase; figure out what the interest on that so-called “savings” is going to cost you. Not very pretty, is it.

Now lay out your major credit cards, then stop. You’ll need to keep just one major credit card, meaning a Visa, Master Card, American Express, and the like, for the purpose of booking flights, hotel rooms, and any emergencies. Of those major credit cards, which has the lowest interest rate, no annual fee, sky-miles, and other special incentives? Keep that ONE card and destroy the others. If you can’t trust yourself with one major credit card, do what the financial experts do: put it on ice. Literally, put it in water and freeze it. If you need to book a flight or have emergency maintenance done on your car, thaw it out and you’re set. Sort of eliminates impulse buying, doesn’t it.

2) Do the Household Money Math.

Take a good, long, honest look at your income. How much money do you bring into your house each month, after taxes of course. Now, map out your monthly household expenses that keep your family sheltered, clothed, schooled, and fed. Don’t forget gas for the car, insurance, medical needs, and anything you need to live. Be sure to include every expense so you don’t find yourself dipping into your “debt reduction fund” later for incidentals that you should have planned for. It’s better to plan a bit heavy on the expenses column because you’d rather have a few extra dollars to pay on your credit card debt than come up short.

Now you have your so-called “disposable income” which is what you need to know before you take your next step. This is the actual money you have each month to apply to your credit card debt. Take out your last month’s credit card statements and review the total on each credit card statement. Decide if there are any “local” store credit cards in which you would like to maintain good customer standing. Prioritize your credit cards and divide up your disposable income between them. That is the amount you are able to pay each month on each credit card. Write that figure down and make thorough notes on each statement about what you can pay and cannot pay, such as the late fees or over-charges, or 18% interest. Now, you are ready for the next step. Take a deep breath.

3) It’s Time to Call Your Creditors.

This is probably the most unnerving step for most people. However, you cannot avoid this unpleasant step because it is necessary if you want to achieve your goal of credit card freedom. It’s unrealistic to think that you can just make monthly payments on a credit card with high interest rates and gain any ground toward paying it off. If you have already tried this you know what happens. The interest escalates and your little payment gets swallowed right up, not even making a dent in the principle. It’s discouraging to say the least, and impossible.

You’ve already gone through the last month’s statements from all your credit cards when you divided up your disposable income. Review your initial notes and make any adjustments you think you may need on each of last month’s credit card statements. You want a good solid dollar amount that you can pay each month figured out on each credit card statement before you make your calls. Remember, you will also be asking for a lower interest rate and a reversal of any late fees or over-charge fees that you may have incurred as this is the only way you will be able to send that amount each month.

Calling the credit card company’s customer service number is a heart-pounding experience for most people. As a former customer service employee, let me tell you that the person you are talking to is nothing more, and nothing less, than an employee. He or she is paid to do a job for a company. Now, go ahead and call the first credit card customer service number. When you get a real person, tell them that you want to pay off your credit card, but cannot afford to make the monthly payments as they are currently set. You may want to practice this line several times; even writing it down: “I want to pay off my credit card, but I can’t afford to make the monthly payments as they are right now.” Then you will tell them how much you can afford to send them each month, but you’ll need late fees and over-charges reversed. Then ask for a reduced interest rate, and let them know that this is the only way you will be able to send them money each and every month until it’s paid off. You may not get everything you wish on the first call. They may reverse the late fees, but not the over-charges. They may not come down as far as you want them to on the interest. Do what you can. The most important thing here is for you to do your homework first. Know what you can pay each month, and negotiate the rest. Keep in mind that you can call them again as your situation changes and you want to renegotiate.

If you have received letters offering you a one time payoff for a particular credit card, ask the credit card company customer service employee if it is a legitimate offer. If it is legitimate and if you have the money, you may want to consider that as an option. One note though, the difference between the debt you owe and your actual one-time payoff to satisfy the debt may be subject to income tax. Check your state and federal guidelines before you decide. It may still be a viable option, but you want to be prepared at tax time.

Back in 1992 when credit was easy, you may not have gotten very far in negotiating with the credit card companies. In 2008 we have a whole new economic scene out there. These credit card companies are living and dying by whether or not they can get YOUR payment each and every month. They WILL negotiate, but you need to be firm and do your homework.

4) Sacrifice, Sacrifice, Sacrifice.

Don’t you just love it when you get your income tax refund or a bonus at work? It’s so fun having some “found money” to spend any way you please, isn’t it? Not anymore. I hate to be a Scrooge here, but somebody has to watch out for your frivolous ways. That’s how you got here in the first place. Now that you have a plan, every extra penny you have MUST be used to pay down your debt if you expect your plan to work. Any time you spend that extra money that fell into your lap on something other than paying off your debt, you have just also tacked interest on it. Think about it. If it doesn’t go to paying down your debt, the principle you owe on your credit cards didn’t get any smaller, so you are paying interest on that money. How many times is that same money going be spent when you pay interest to a credit card company because you still have a balance with them? Ouch! You’ll get a faster return on that found money when you use it to pay down your credit card debt.

5) Stick With Your Plan.

This may very likely be your financial plan for a long, long time, depending on the amount of credit card debt you have. We’ve all seen the commercials; “How I Got Out Of Debt In Six Months”, and we know that is simply not true. It took you some time to get in this mess, perhaps years, and it will take you some time to get out. After about the six month mark, you may feel a little restless and want to spend a bit of your hard earned cash. You may even see your credit card balances drop within a sort of “comfort level” for you after awhile. Before you decide to splurge, take a look back in time, browse through your credit card statements, and tell me what incredibly important item you see on any statement. Now, add up the interest you’re paying every month and tell me again if any of those items you purchased were so valuable that you were, and are, willing to pay two, three, or four times their value. Well, that’s what just one little indiscriminate spending spree will cost you in the end. The trick is, if you get comfortable with your money, pay even more down on your debt. Your freedom will come that much quicker. Be smart and stick to your guns.

6) Give Your Income a Boost.

This is an area of debt relief that is seldom approached. Partly because not everyone is able to easily supplement their income with another job. That’s understood. But, just raising the issue of more income is a reasonable step. There are many variables to increasing your income. If you feel worked-to-the-bone every day, it’s hard to imagine how you could earn additional money. Where will you find the time? Or energy? If you fall into this category, this option may not be for you; but wait. Are you being honest? Are there things you can, and would, give up to earn more money? Do you currently volunteer for a group that you could beg off of for awhile so you can pick up a temporary second job? Do you rush home from work to make meals for the family when someone else could get things started so you could put in some overtime? Can your household adjust to a different schedule so you could pick up extra money in a shift differential? How about some temporary work just over the Holidays, like gift wrapping? Are you a clever baker? Could you make and sell cookies at your local grocery store? Could you tutor students after school? Does an office building in your neighborhood need a weekend cleaning person? Are you currently making something that other people would buy? Take a look at your schedule. If you knew that you could do something to make extra money, and you knew that it was temporary, would you do it? I believe it’s something worth considering.

7) Carefully, Very Carefully, Check Out Debt Consultants.

The one thing that has changed since 1992 is the use of credit card debt consultants. There are hoards of companies out there today trying to sell you the light at the end of the proverbial debt tunnel. But be careful, the light could be an oncoming train, because not all debt consultants are what they appear to be. If you decide to look into using a debt consultant, interview as many as you possibly can. Ask direct questions, don’t beat around the bush. Ask how much of your money they are going to keep before they pay your creditors. If a debt consultant says things to you like, “don’t worry about that” and “it will be okay”, start worrying about that because it won’t be okay. Listen to your gut, ask people who have worked with a consultant for a recommendation, and check the Better Business Bureau. It will cost you more to hire a third party debt consulting company than it does to negotiate directly with the credit card companies. Consider first checking into non-profit debt consulting groups. Your own bank may even have consultants free of charge. Here again, you must do your homework thoroughly. You don’t want the solution to be worse than the problem!

Back to the 1992 credit card market versus the 2008 credit card market. As they say, The More Things Change, The More They Stay The Same. Handling your money comes down to the same sound economic advice that it has for centuries, and yes, your grandparents were right – Don’t spend more than you have, and save a little each week.

Are you ready to get rid of your credit card debt? Now, of course, credit was too easy for too many people for far too many years. We all fell into that, so don’t beat yourself up about it. But, do you want the credit card companies to continue to reap the benefits of that soft market when you’re struggling to meet your monthly bills? Many of us find ourselves with the difficult and long drawn-out task of getting ourselves out of debt, and staying out of debt. The methods outlined here are pretty basic; the same now as they were back a decade or more ago. We know they are tried and true. We know that if you develop a good financial plan and stick to it you will accomplish your goal of credit card freedom. Okay, now everyone, nose to the grindstone and hang in there!

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