"Will that be Cash or Credit?"

Written by A. Raymond Randall, Jr.


From Bangkok to Edmonton, credit card statements stuff mail and email boxes with payment deadlines. Every bill remindsrepparttar giver that gifts given freely do not come free. Giving and buying often exceed generosity and need as a brittle piece of plastic becomes an avaricious spoiler of hopes and dreams.

During this week, two families emailed me about credit card debt. One family lugs $12,000, and $50,000 shacklesrepparttar 112581 other. Each family wants relief; however, debt accumulation comes easily while debt relief sucker punches emotions and wallets.

Consumer debt burdensrepparttar 112582 workers of all economies. Highways jam withrepparttar 112583 doldrums, "I owe...I owe...It's off to work I go". . Truly, as an ancient proverb reminds us, "The debtor is servant torepparttar 112584 lender".

Nearly every government graphs consumer debt. The U.S. Federal Reserve's January report set U.S. consumer debt at 2 trillion dollars;repparttar 112585 highest level in U.S. history. Canadians report an all time low savings rate (when debt goes up, savings goes down). Thailand consumers pushed debt levels up 25% last year. United Kingdom families might be forced to reduce their spending or sell their homes if interest rates ratchet up just 1%.

Debt management resources can guide consumers torepparttar 112586 high ground of debt relief as many credit management companies discoverrepparttar 112587 need for debtor assistance and education. However, consider these steps before doling out more money to a credit assistance agency.

1. Manage your feelings. Take some time journaling your emotions about money by asking yourself where you learned personal definitions for fear and greed. Have some fun takingrepparttar 112588 innovative surveys found at Emode.com.

2. Push-offrepparttar 112589 weights of procrastination. Take action; do it now. This work requires sweat and concentration, butrepparttar 112590 rewards assure you of freedom and achievement.

How to avoid the pitfalls of creeping debt.

Written by Debs, DebtSteps.com


Reducing debt usually isn't a high priority for people until they have already gotten into trouble with overspending. Using a few basic guidelines, and debt calculations, can help you see when your debt load is getting intorepparttar danger zone.

Budgeting Guidelines

First off, creditors use budgeting guidelines when reviewing and approving credit. If your debt exceedsrepparttar 112580 financial communities recommended guidelines, then you have a higher risk of credit applications being denied. Getting, and keeping, your debt in line with recommended budgeting guidelines, is an important step in debt reduction. Userepparttar 112581 following recommended budgeting guidelines (the same ones used by Financial Institutions) to reviewrepparttar 112582 items in your budget:

  • Housing 35% - Mortgage or rent, taxes, repairs, improvements, insurance, and utilities;
  • Transportation 20% - Monthly payments, gas, oil, repairs, insurance, parking & public transportation;
  • Debt 15% - Credit cards, personal loans, student loans & other debt payments;
  • All other expenses 20% - Food, insurance, prescriptions, doctor & dentist bills, clothing & personal;
  • Investments & Savings 10% - Stocks, bonds, cash reserves, retirement, rental real estate, art, etc.

Debt Income Ratios

The second step is calculating your debt income ratio. Once you know what your ratio is, you will understand just how important debt load is to your overall financial picture. Your debt income ratio isrepparttar 112583 percent of your monthly take-home pay that goes to paying debts.

You calculate it by takingrepparttar 112584 amount needed to repay debts each month, including rent or mortgage, and divide by your take-home pay (your net pay after taxes). Remember, this is "Debt" ratio, so only include actual debt repayment inrepparttar 112585 calculation.

Credit To Debt Ratio

Just because you pay off a credit card is no reason to close your account. One little known fact aboutrepparttar 112586 Credit to Debt Ratio isrepparttar 112587 reverse effect it has on your credit score. If you pay off a credit card, and closerepparttar 112588 account, you are actually negatively impacting your credit score. The reason for this negative effect is inrepparttar 112589 calculation ofrepparttar 112590 Credit to Debt Ratio itself. This ratio isrepparttar 112591 relationship of your debt total vs. your credit limit. You calculate it by dividingrepparttar 112592 total credit limit of all credit cards and loan accounts byrepparttar 112593 total ofrepparttar 112594 actual debt (spent total). Now, if you pay off a credit card, you are reducingrepparttar 112595 actual debt, which is great, but, if you closerepparttar 112596 account, you are also dramatically reducingrepparttar 112597 credit limit you have, and usually by a higher percentage thanrepparttar 112598 debt reduction. Pay Yourself First

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