Tag Archives: credit card debt

The Ups and Downs of Doing a Balance Transfer

Diamond-Lighthouse-selling-credit-card-debt-couple-help

So you’ve gotten yourself into some credit card debt and you’re feeling a little overwhelmed about how to get out of it. It seems like every time you look at your balance, it’s gone up way more than you expected because of those pesky interest charges, and you’re beginning to wonder whether you’ll ever be able to get it back to zero.

But then, a beacon of hope arrives in the mail. Your bank is telling you that you can put a stop to those interest charges—at least for a little while—by putting all of that debt somewhere else. Or, maybe a new bank is telling you to bring your debt over to them by opening an entirely new account. Whether or not you should take advantage of one of those balance transfer offers depends upon the current state of your credit and the merits of the offer itself.

Diamond-Lighthouse-selling-piggy-bank-debt-drowning

If you’re interested in opening a new card, one of the negative sides is that, even though the direct mail letter may make it seem like you can basically call them and the card will appear in your hand, you still have to apply for the new line of credit. Because of that, the process can take time and you risk being denied. Daily Finance advises against applying for several lines of credit at a time because it will work against your credit score, decreasing your chances of actually getting a new credit line. However, if you are approved, your credit score could increase because your credit utilization rate (or your credit-to-debt ratio) will improve.

Using an existing line of credit may be a great way to consolidate your debt as well, especially if you already opened a new line of credit in order to complete a balance transfer in the past. CreditCards.com shares the important reminder that you may not be able to open a new line of credit because creditors could see you as a risk if you continue to carry a balance even after getting new credit. Being seen as a risk would make it harder for you to get different types of credit, such as loans for cars or a home.

Diamond-Lighthouse-selling-debt-mouse-trap-money

Regardless of whether you need to open a new account or are considering using an existing line of credit, make sure to read the fine print to find out how much it will cost. Every balance transfer will have a fee associated with it, regardless of the bank or the newness of your account, but some balance transfer offers have lower fees than others. Another consideration is the length of the zero or low interest rate promotion: some give you 18 months to pay off the amount, while others give you 24 months. USA Today makes an important point for debtors: creditors have no legal obligation to remind you of the end of your promotional rate, so it’s important to be diligent about paying off the entire amount in time or be prepared for the appearance of interest charges when the promotional rate expires.

Diamond-Lighthouse-selling-credit-card-debt-hands-help

In addition to enjoying a lower interest rate on your debt, you’ll have the added benefit of easier, streamlined payments. If you have found yourself confused by due dates and bill cycle closing dates, this may be a very real perk to help you get back on top of your debt. The phrase “consolidating debt” sounds a lot fancier than it really is: all it means is that you put all of your debt in the same account, typically using a method like a balance transfer. But, keep in mind that many balance transfer offers have a limit on the amount of debts you can transfer.

If you do a balance transfer, be careful not to forget about the debt or only pay the minimum just because you are enjoying a zero percent interest promotion. Make regular payments and remember, if you have zero debt, you won’t have to worry about finding a card with zero interest!

Amazing Tales of People Who Got Out of Debt

Diamond-Lighthouse-selling-shocked-woman

It can happen to anyone.

Everything in your life is going fine.  Good, stable job, appropriately priced living space, transportation costs under control, etc.  Then, one day, something happens.  Either it is traumatic and crushing (like becoming unemployed), something joyous (you have a baby – or, twins!), or something of such apparent inconsequence that it barely registers on your radar (…a new credit card arrives in the mail).  Whether monumental or seemingly minimal, an event occurs that steers you off your straight and sensible economic track.  Before you know it, you’re swimming, nay, drowning in debt.  Now what?

While there appears to be an unlimited resource of online articles, instructions and advice on how to climb out of the debt abyss (Solving the Credit Card Debt Enigma, Facing The Final (Bankruptcy) Chapter: 7, Divorce Yourself from Financial Woes), it’s one thing to read about how to theoretically do it; it’s another to hear from people who actually have.  Here is an assemblage of brave souls who tackled their debt head on, and the specific methods they used to remove the money owing albatross from their backs for once and for all.

Diamond-Lighthouse-selling-happy-guy-woman

You don’t have to get into Harvard to figure out that Harvard Business School isn’t cheap.  The businessinsider.com highlighted the intriguing circumstances of Joe Mihalic, a grad from said institution who left with an impressive diploma …and a student loan debt of $101,000.  After two years of making payments on this sizable loan, Joe wasn’t seeing any significant results ($22,000 paid back to the banks only saw an actual decrease of about $10,000 – because of the high interest fees).  He knew he had to makes some changes: “Joe took a two-pronged approach, decreasing his spending and increasing his revenue. He got a weekend gig as a pedicab driver, started a landscaping business with his friend, bought a flask to skimp on booze spending, got a roommate for his Austin home, temporarily stopped his 401(k) contributions, and did the usual lunch-eating, restaurant-skipping money-saving tricks. It worked. In under a year, he shaved off his entire debt-load.”

Diamond-Lighthouse-selling-happy-field-woman

In a story featured on time.com, Master Sergeant in the United States Marine Corps, Rachel Gause explained the tactics she was able to put into place to eliminate her debt (which totaled $179,625), and which allowed her to control her future expenditures.  Guase explained “I use the envelope system. Before I get paid, I do my budget. Then I have 13 envelopes—one for groceries, one for clothes and shoes, one for charity, one for dining out, one for gas, and so on. I go to the bank, take the money out, and divide it between the envelopes.  I don’t spend anything that doesn’t come out of those envelopes. Debit cards are nice, but swiping is less emotional. Cash makes me more aware of what I’m spending my money on. If I run out of money for something that month, I don’t buy it. But I’ve never run out of money for something important—now I’m more aware of how much I’m spending.”

Diamond-Lighthouse-selling-happy-guy-woman-jumping

Even if you make a lot of money, you can owe a lot too.  After a decade of healthy spending, Travis Pizel and his wife Vonnie (both of whom have high paying jobs) had collectively racked up a credit card debt to the tune of $109,000, according to the Pizel blog Enemy of Debt.  They realized the best way to combat the intimidating figure was to find a debt management plan that worked for them.  By condensing all of their credit card payments into one figure of approximately $2,500 per month, and adhering to a strict budget, they found that the new order and structure made things easier for them.  With 100k in the books, they are on the fast track to becoming entirely debt free quite soon.

College tennis star Ja’Net Adams was doing very well for herself after graduation, as reported by forbes.com.  She lost her job, however, in the dark days of 2008.  Soon after she and her husband were facing the precipice of a  $50,000 financial chasm.  Ja’Net knew she needed to land another full time job, but also was wise enough to focus on supplemental income as well.  She explained “I started coaching private tennis lessons for $25 an hour, and my husband taught basketball lessons for four or five kids at a time, at $25 per child. This earned us $500 a week.  Then I sought out easy ways to help reduce our expenses, like downgrading to basic cable, scaling back on our cell phone plans, and being conscious of how wasteful habits—like failing to turn off the lights after leaving a room—affected our utility bills. These simple adjustments saved us hundreds each month.”

Diamond-Lighthouse-selling-happy-girl-leaves-cheering

Maureen Campaiola was able to devise a three year plan to eliminate $79,500 in credit card and student load debt, states wellkeptwallet.com.  Her inspiring story involved a rollercoaster of economic ups and downs, but ultimately she came away with some extremely helpful wisdom in the debt management forum.  Here are some of the unapologetic tips that she cultivated:

“Cut up your credit cards and don’t look back. You don’t need them and you don’t need the points.

Track your income and expenses religiously. Evaluate it regularly and make adjustments to your spending plan to meet the financial demands month to month.

Be willing to make sacrifices. If you’re not willing, you won’t be successful. Sorry if that sounds harsh, but it is the truth.

Ask yourself if you need something, BEFORE you make the purchase. If you can’t honestly answer yes to that question, don’t buy it.”

If you find yourself in debt, even if the figure isn’t as astoundingly high as some of ones just listed, there are clearly a variety of steps you can take to help yourself become fully debt-liberated.  Along with the helpful suggestions supplied by the people above,  another method to reduce debt is to sell off any unneeded valuable items in your possession.  If you have diamond jewelry that fits into that category, check out diamondlighthouse.com.  We help people find the very best prices for their diamond jewelry, every day.  Whether you have a one carat sized engagement ring, or a set of diamond earrings totaling 10 carats, we will find the best price for you.  As evidenced from many of the debt eliminating stories in this post, every little bit can help.  Find out more here.

Diamond-Lighthouse-selling-happy-guy-cheering

 

-Joe Leone 

The Truth about Credit Card Debt in the United States

Diamond-Lighthouse-selling-credit-cards

As of January 2015, Americans are $882.9 billion in the hole, a 3.3% increase from the previous year.

Yet people are more reluctant to talk about credit card debt than ever, preferring normally taboo topics like politics, salary, love, and religion over credit card debt, according to a poll by CreditCard.com. The average credit card holder has 3.5 credit cards, those little pieces of plastic that have wracked the average credit card debt per household up to $15,799. (This number does not consider households that do not use credit cards. In other words, having credit cards has given the average American household the opportunity to have almost $16K in debt!) Who would want to ruin a good dinner party by talking about that?
Continue reading The Truth about Credit Card Debt in the United States

Facing The Final (Bankruptcy) Chapter: 7

Diamond-Lighthouse-selling-comic-guy-debt-ladder

akaWhen Liquid Assets Leak Out

So what exactly is “Chapter 7 Bankruptcy?”  Well…it’s not good.

The notorious yet somewhat arcane Chapter 7 is when you declare (yes, from the rooftops, in a joyous, mellifluous bellow!) personal bankruptcy, and any assets you possess are liquidated in order to settle your insurmountable debts.  This is pretty much a last resort, when you’ve sunken into a financial abyss so grave that your only hope of escape is to relinquish all your worldly possessions.  As the online legal symposium findlaw.com reports: “Bankruptcy will ruin your credit for some time to come.”  What happens is,  a legal “trustee” (this term makes them sound like someone comforting that you can confide in, but in actuality they can be viewed as rapacious reapers of all your remaining objects of worth) is put in charge of determining what you indeed do own and which of these things can be transmogrified into tangible cash.  The end result is that you may now be utterly destitute…but at least you’re no longer in debt.

Sounds like either Dante’s 5th or possibly 6th stage of hell, correct?
Continue reading Facing The Final (Bankruptcy) Chapter: 7