Fresh Start Debt Free :: Free your life from debt

Myth: Make sure your teenager gets a credit card so he or she will learn to be responsible with money.
Truth: Getting a credit card for your teenager is an excellent way to teach him or her to be financially irresponsible.  That’s why teens are now the #1 target of credit card companies.

Over 80% of graduating college seniors have credit card debt before they even have a job!  The credit card marketers have done such a thorough job that a credit card is seen as a rite of passage into adulthood.  American teens view themselves as adults if they have a credit card, a cell phone and a driver’s license.  Sadly, none of these “accomplishments” are in any way associated with real adulthood.

You are not teaching your 16-year-old child to spend responsibly when you give him or her a credit card any more than you are teaching gun responsibility by letting him sleep with a loaded automatic weapon with the safety off.  In both cases, you as a parent are being stupid.  People with common sense don’t give 16-year-olds beer to teach them how to hold their liquor.  By giving a teenager a credit card, the parent – the one with supposed credibility - introduces a financially harmful substance and endorses its use, which is dumb but unfortunately very normal in today’s families.  Parents must instead teach the teenager to just say NO.

Pouncing on the College Prey

Anyone visiting a college campus in recent years has been shocked at the aggressive and senseless marketing of credit cards to people who don’t have jobs.  The results can be devastating.  Recently, two college students in Oklahoma gave up on their credit card debt and committed suicide with the bills lying on the bed beside them.

Vince signed up for multiple cards during his sophomore year at college to get the free campus t-shirt.  He wasn’t going to use the cards unless there was an emergency, but there was an “emergency” every week, and soon he was $15,000 in debt.  He couldn’t make the payments, so he quit school to get a job.  The problem was, without his degree, his earnings were minimal.  Worse than that, he also had $27,000 in student loans.  Student loans aren’t payable while you are in school, but when you leave school by graduating or quitting, the payments begin.

Vince was one scared 21-year-old with $42,000 in debt but making only $15,000 per year.  What’s scary is that Vince is “normal.”  The American Bankruptcy Institute reveals that 19% of the people who filed for bankruptcy last year were college students.  That means 1 in 5 bankruptcy filings were by very young people who started their lives as financial failures.  Do you still think it is wise to give a teen a card?  I hope not.

Check out Dave Ramsey.com for more!

By Amanda McCormick

“This message is for Amanda McCormick. Please call me back today about an important business matter. According to the law, I have to tell you that this is a bill collector.”

Everyday, I receive anywhere between 10 to 25 phone calls (depending on the day of the week and time of month) from credit card companies wanting my long-overdue payment. My original debt equaled about $3,000 accrued across five credit cards but is now approaching $10,000. This total does not include my Stafford student loan debt.

I am a junior in college and since I maxed out all five cards during the latter half of my freshman year, the interest charges caused my debt to more than triple. When I first left for school I found that, like most college towns, Tallahassee, Fla., (home of the Florida State University Seminoles) consistently comes up short when it comes to employment for students. Forget about a well paying position, one is lucky to find a job for minimum wage. So I was unemployed my freshman year due to the lack of available jobs.

After I maxed out my first card (an American Express student card complete with Seminoles décor), I applied for my second card to again compensate for lack of income. Thus, I fell deeper into debt. Card after card, the situation worsened. I found myself in well over my head as I applied for my fifth card, a Discover card with a $500 limit, at the conclusion of my freshman year.

At this point I felt as if I were out of options. I had no place to live for the summer since my current dorm at the time wasn’t available to students during that period. So I activated my fifth and final card in order to put a down payment on a summer abode.

The Free Pizza Trap

Speaking from experience, a credit card offers seemingly acceptable relief for financial strain especially considering it is so readily available to students on college campuses. Consider this scenario: Johnny, a naive college freshman, reads a flyer advertising a local pizzeria giving away free pizzas. Of course Johnny is interested.

When Johnny arrives at the shop he learns that all he has to do to receive this free pizza is apply for a Visa credit card. Johnny thinks nothing of this requirement so he signs up for one. A couple weeks pass by and Visa sends him a new credit card that is ready for activation. Johnny is so pleased that he was approved for the card that he immediately invites all his friends out for dinner!

I know many people would not act so drastically about a credit card approval but the point of this example isn’t about the card at all, it’s about the pizza. That deliciously cheesy meal was a catalyst for Johnny’s first real bad financial decision.

For starters, he did not know the interest rate of the card he applied for. In fact, Johnny did not even think about Visa again once he signed the application form. That is, until the day he received and activated his card.

A financial decision such as acquiring a credit card should be something that is well thought out. The choice to obtain credit should not be made under pressured circumstances or be induced by the chance to win a prize. Nor should the credit card be used as a last resort of temporary relief for financial hardship.

Pre-Approved For Problems

Having good credit is essential for any consumer. Bad credit creates a horrible mess that inevitably has to be cleaned up. Needless to say, I know well how fiscal distress feels. All I can say at this point is in caution: bad credit often leads to more bad credit and eventually it becomes too tiresome to answer the collection calls.

As of this date, my debt has not been eliminated. I do not claim to have the secret method to financial success and the annoyance of collection calls has not dissipated. Money management is still difficult, but at least I have enough money to pay my bills.

Although I am still stressed about every financial transaction that I make, I now know to spend my own money that I don’t have to pay back instead of borrowing from creditors. I have started making payments on the credit card debts and although the process to eliminate my debt has been slow, it is no longer stagnant.

I have found that the single most important rule for good money management is to make a budget. You need to be conscious of where you stand financially. You also need to know how much you MUST spend every month for bills and essentials. By knowing and having a firm grasp on these expenses, you can make any budget work for you.

By  Neil Faulkner

It’s often said that the longer you leave a debt problem the worse it gets but, on the other hand, by facing your debts immediately, you’ll be out of your debt problem sooner. And you will be out of them, because there is a solution for everyone. To get you started, here are a number of basic tips:

Pay your priority debts first

Unsecured loans and credit cards are priorities. The fact is that they’re at the bottom of the pile when it comes to repaying debts, which is why they’re often the most aggressive about chasing you.

Be strong

You don’t have to take harassment from creditors. You are well protected in law. If you’re harassed, let them know that it is a criminal offense to demand repayment in a way that causes you or your family fear, distress or humiliation under Section 2 of the Protection from Harassment Act 1997. You can also report them to the Office of Fair Trading under Section 40 of the Administration of Justice Act 1970. Put this in writing.

Check your benefit entitlements

You can check out what benefits and tax credits you’re entitled to.

Tell your friends you’re cutting back

Telling your friends about debts can be very hard, but it needn’t be. Most people have debts, and most have more than they let on. But if admitting debts is a step too far, you can still at least say that you need to cut right back on your entertainment budget. You can use any excuse: redundancy concerns, an unexpected bill, saving for a deposit on a house (or another house) or that you want to be able to save money to take advantage of low share prices.

Stick to this, and don’t succumb to pressure to go out all the time, and your friends will admire your discipline.

Get advice before consolidating debt

You might consolidate using credit cards, a loan, or your mortgage. You should take advice before consolidating your debt because there is usually a better and cheaper solution.

Contact your creditors immediately

Always call your creditors before things go wrong, and before they contact you. If you promise to call them, call them on time, even if you have to tell them that you can’t afford to pay what you thought

Get professional help

You must not borrow more each month to meet existing debt payments. If you think your problem is a temporary one, you should negotiate with your creditors.

Always attend court hearings

Remember that the law is there to protect you as well as your creditors. If you can’t afford to pay more than £1 per month then no judge will make you do so. You must be able to live, and you must be able to have some money for a little fun, too. Even judges recognise this!

Also, no judge is going to order the sale of your TV or DVD player (unless they’re unusually expensive).

Be totally truthful at all times

Always say what you really can afford. Don’t exaggerate or understate. It is in your interests to tell the truth to your creditors and to the court.

There are an unbelievably high number of solutions to dealing with debt, you should seek help on the millions of ways to tackle your debts, and get a plan that is tailored specifically for you.

Finally! Someone’s got it right! And that someone is New York attorney Robert Applebaum who started a Facebook group called, “Cancel Student Loan Debt to Stimulate the Economy.” Even the  Huffington Post, gave Applebaum’s cause a little momentum with this article. According to the article and the Facebook group, Applebaum wants the government to consider lending a hand to those of us drowning in college debt, which he says would stimulate the economy.  I completely AGREE!

Check out a very interesting article on MoneyNews.com. Click on the link below to check it out!

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Listen to this…..Chris Dodd is actually saying that he has been fighting Credit Card Companies for 20 years… Really, then why is the abuse still happening???

Below is a personal story that I found on milliondollarjourney.com Written by “Frugal Trader” Very Interesting, check it out!!

I got home from work yesterday to find my wife watching Oprah on TV. As I entered the family room, my wife exclaimed, “you’ve gotta see this… it’s right up your alley.”

“Oh yea?” I replied intrigued with my wife’s tone of voice.

“It’s all about money!” she explained knowing the keyword that would peak my interest.

While I’m not Oprah’s biggest fan, I do enjoy some of Oprah’s shows when they involve the topic of money. This episode featured Suze Orman and some regular folk who had some serious money/debt issues.

This particular couple were dressed well, from California, had a large family of 8, nice house and a decent gross income of $100k/year (~$5500/month take home). Sounds great from the outside, but that’s the end of the optimism, here’s what lies beneath the exterior:

• No medical insurance for the themselves OR the kids.
• $135,000 in credit card debt.
• Two mortgages totaling $658,000.
• Large mortgage with payments of $1800/month, but payments will increase to $3300/month in a few months.
• They have 3 cars, 2 of which are leased, the other one they own. The cost is $1700/month.
• Wife spends $300-$400/month at Starbucks (It was the wifes morning routine).
• $60/week on tanning and manicures
• $4k on hair extensions in the past 2 years.
• Constantly shopping.
• The wife would regularly buy brand new clothes for the kids, then have a garage sale a month later to sell the “used” items at pennies to the dollar. (This one blew me away)

As they explained their situation in detail, I literally cringed. How can one family be so irresponsible with money? Don’t they realize that they have kids to take care of? From watching the show, it seemed that the couple had very poor communication between them. As a result, the wife was practicing financial infidelity on a regular basis. The couple also had a bad case of the “keeping up with the Joneses” disease which can be contracted when living in an middle/upper class area.

Looking at the income to expenses, their mortgage and car payments take up the majority of their income. This is not including groceries (6 kids anyone?), car maintenance/gasoline costs, power/utility bills, insurance, clothes for the kids or credit card debt servicing. It’s easy to see how they have racked up $135k in credit card debt with their irrational spending habits.

How will they get out of this mess? You can be sure of one thing, it won’t be easy. Suze Orman explains (or demands) that they need to sell their house NOW before the payments go up or the house will be taken from them (I agree). She also suggested that they move out of California due to higher lifestyle and taxation costs and that both parents get part time jobs as it would provide medical benefits. Even with these drastic measures, it will take this family a long time to dig themselves out of this one, but the bright side is that they will be moving in the right direction.

My world now is about building wealth. Seeing that family on TV got me wondering about how other people view money and how the lack of money knowledge can destroy lives. The world really needs more financial education.

My Intro to Bank of America

By Courtney Sarah