As the season gets closer, the stress that comes with the shopping seems to intensify. Part of the stress of the season can be alleviated by making the decision ahead of time to follow a few guidelines.

 For starters, as you set out to do your holiday shopping, start with a budget as well a specific list. Base your budget on what you can realistically afford. Hopefully, you have taken the time to find where you can purchase the items on your list for the most savings. Compare prices, and you will probably find the exact same item is sold for less at a particular store.

 Buying gifts and the act of giving is a wonderful and loving thing to do. The feeling of giving can be exhilarating, and sometimes it makes it hard to not “go the extra mile” in giving. But the giving needs to be tempered with the discipline to not go beyond your means and to stay within what you can afford. With some planning, you can figure out how to give without charging and going over your budget. No one expects you to spend more than you have, and they probably wouldn’t feel good about a gift they knew was costing more than you could afford.

 Setting a budget and planning ahead will help prevent last minute buying. When it is all said and done, you’ll be glad you stuck with your budget.

 Don’t forget that some of the most appreciated and memorable gifts are often the simplest ones. Gifts that are given with special thought and caring can be the best gifts anyone ever receives. A photograph, a book, homemade cookies, or a handmade accessory make wonderful gifts.

 And probably the most precious gift you can ever give anyone is yourself. During this holiday season, make time to share yourself-your time, your attention, your love. That is the greatest gift of all.

Best wishes for the holidays,

Debra

www.DropYourDebtFast.com

To begin with, having a lot of debt causes stress. When you’re carrying debt, a good amount of your thinking is preoccupied with figuring out how you are going to make the payments and worrying about making ends meet. Face it. Being in debt takes up lots of energy, and that is energy that could be used in other, more productive ways. Studies show that debt is also hard on relationships largely because of how the stress changes how you relate to others. Financial problems are often cited as one of the main reasons why couples divorce. If for no other reason, this justifies getting your debt paid off.

The second reason that now is a good time to deal with your debt is because you will have more money freed up to use in other ways. All of the money that you are currently paying in interest is going into someone else’s pocket when it could be going into your pocket. That money could go into savings or be used to buy cash for something you need instead of buying it with credit. One other advantage of having more money available is that your debt to income ration will improve which will result in your credit score going up. This can save you money on interest, for example, if you plan to buy a home. Many employers are starting to look at potential employee’s credit scores before hiring, so this is another way improving your credit score could be beneficial.

Another good reason to pay off your debt is because of the uncertainty of the current economy. Right now, with the high unemployment rates and ballooning national debt, one of the smartest moves you can make is to have as little debt as possible. When you are indebted to the credit card companies, you are at their mercy. They can change the terms of your agreement as long as they notify you within a certain time frame, and you can be sure that they will look out for their own profits first. In other words, they don’t have your best interests in mind. Don’t take the chance of being caught off guard with changing terms or conditions that leave you in an even worse situation.

Once you make the commitment to get out of debt, your first step should be to sit down with all your statements and calculate exactly what you owe. Making a list of everything you owe is a good starting point.

But don’t stop there. Make a commitment to go all the way to become 100% debt free. I know you can do it. How do I know? Because I did it, and I know you can too.

If you want to know what I did to get out of debt in a short time, you might want to check out my guide, Drop Your Debt Fast: A Guide to Getting Rid of Debt.  My guide explains exactly what I did to become debt free once and for all. Visit my website, www.DropYourDebtfast.com to find out more and to sign up for my free monthly newsletter.

 She explained that she lived on a fixed income of around $1500 a month. She said that she no longer had enough money for food for the month so she was using her credit card to buy groceries. She kept repeating, “I have to eat, I have to eat”. There was no doubt she was distraught about her situation.

 Once she gave some more details about her situation, I got a better picture of  her predicament. I found out that she owned her home so she had no mortgage or rent payment going out. When talking about her home, she repeatedly told me, “I don’t want to lose my house”. She seemed really concerned about her rising utility bill and explained that until recently, her utilities were partly subsidized by the government.

 Then I went on to ask if there was anything she could cut back on that would let her have some extra income for food. She said there wasn’t and explained that she had cable, but couldn’t give it up because otherwise she would only get three channels. She became quite defensive about her cable even though I didn’t even directly ask about it.

 Suzy saw no way out of her circumstances, and that became obvious after a few minutes into our conversation. As she repeatedly put it, “There is nothing I can do”.

 But it seems to me that she can’t keep using her credit card to buy groceries because eventually she won’t have the money for the credit card payment. So something is going to have to change. I don’t know all the details of her situation, but it seems clear that she will eventually have to make some decisions.

 She is fortunate that she owns her home and doesn’t have to make a mortgage payment. This might be what allows her to make some changes in her situation. Perhaps she could downsize and save on utilities and taxes. Maybe she could even sell her home and move to an area with a lower cost of living since she isn’t tied down to a job.

 I am not saying these are easy decisions to make or even appropriate ones for her circumstances. They may not even be realistic solutions for her, but it seems clear she can’t keep going on spending more than she has each month. The fact is that if she doesn’t do something to change her situation, someone else who doesn’t have her best interest in mind, will make a decision for her.

 Sometimes, even though it may be difficult, we have to make some hard decisions in order to change our situation.

 The letter began by explaining that the new federal laws were resulting in some changes to the current credit card practices. These changes, they went on to say, would benefit the consumer. Several examples were cited such as there would be a new way of calculating monthly payments so that the payment is applied first to the charges with the highest interest rate.

 As I read further, I came to the section on changes to the annual percentage rate on purchases. That got my attention. Buried in a few paragraphs was the information I was half expecting-my interest rate was going up to 14.99%. They went on to explain that my rate was based on the prime rate plus 11.74% (I wonder how they arrived at that figure?). A few sentences later, they told me that my rate would never fall below 13.99% and would never go above 24.99%. I didn’t exactly find that comforting.

 I recall reading a month or so ago that the credit card companies were going to raise interest rates prior to these new rules going in to effect.  In other words, this was one last opportunity for them to raise rates for no particular reason.

 This rate increase has nothing to do with my payment history, my balance, or anything like that. I make my payments on time and was carrying a minimal balance on this card. This is just simply an example of the credit card company making more money off the consumer.

 So, I paid off the card in full and will only use it if I know I can pay off the full amount when I receive the bill each month. I have no intention of paying 15% interest.

 Around the first of the year, I was listening to a radio program with well known guests who were making economic forecasts for the upcoming year. One particular guest  who studies trends and then formulates forecasts (and has been very accurate in the past), was strongly recommending for everyone to get out as well as stay out of debt this coming year.  I couldn’t agree more. Make 2010 the year you dump your debt for good!

 I had no intention of paying the higher interest rate so I called my credit union to ask about the interest rate they charged on their card because I recalled an email from them that offered what sounded like a better rate. Fortunately, they offered to issue me their credit card at a rate that was over 4% lower than the other card. Since I still occasionally use a credit card, I decided to take their offer.

 In order to get approval for the new card, the bank had to check my credit report.  The woman checking my report said everything looked good, but asked if I knew that I had an outstanding American Express charge for $1. I was surprised to hear that because I haven’t had an American Express card since 1984!

 I had ordered my credit report in December to check, but I hadn’t noticed the American Express information. The first thing I tried to do was call the credit reporting agency, but since my credit report was over 90 days old, I couldn’t get through the automated system. So, I quickly got on line and ordered an updated credit report. Sure enough, there it was- American Express $1. Furthermore, the right hand column stated this would be on my credit report until 2018!

 Before going through the work of filing a dispute with the reporting agency, I decided to call American Express directly and see if I couldn’t get this straightened out. If they thought I owed them a dollar I would certainly send them a buck to get this off my report. I was able to get through to a  customer service person who was very helpful. The woman on the other end explained that the $1 on my credit report was a mistake. She explained that they had recently updated their security codes, and for some reason, information was being imported to reports that should not be passed on. She assured me that she would remove the charge but explained it could take up to 90 days to be removed from my credit report.

 Even though this was a small mistake, it could have been much bigger. What if a couple of zeroes had been added on to the $1 making it a $1000 mistake? I wouldn’t even have known about it if I hadn’t applied for the lower interest card.

 One of the first steps in the process of cleaning up your finances is to get a current copy of your credit report, and go through it to make sure everything is accurate. If you haven’t done this, don’t you think its time? You can get your free credit report once a year from www.annualcreditreport.com. Make sure you get a copy of all three of your reports, and go over each one to make sure the information is correct. This is even more critical if you are considering applying for a home loan or any other purchase that requires credit.

What this means for the credit card companies is that their profits are shrinking. When credit card holders don’t make payments, credit card companies don’t get paid. As you might guess, they don’t like that.

As a result, the credit card industry is coming up with other ways to get their money. And, since they are not getting it from those card holders who aren’t paying, they’re finding ways to get their money from those who are continuing to pay.

One of the things they are doing to lessen the risk of more defaults is cutting credit card limits on cards. Even more concerning is that sometimes the credit limit is cut below what a cardholder owes. For example, if you owe $3000 on your card and your limit is $4000, your limit could be cut to $2500! If this is the case, your account would be frozen-no more credit.

In fact, close to half of the credit card companies recently cut back on credit card limits.  Believe it or not, this is legal. At least it is legal until this summer when the new credit card rules go into effect.

Credit card companies are also raising interest rates. If you are a card holder who is considered at “high risk” for defaulting on your payments, you can almost bet you are in line for an increase in your APR (annual percentage rate). You can fall into this high risk category by simply being late on a payment such as a car payment or mortgage payment.

So, my suggestion to you as a credit card holder is “Buyer Beware”.  The next time you take out that credit card to buy something, take a minute to think about it. Try asking yourself a few questions such as: Am I close to my credit limit? Can I afford this if my interest rate suddenly goes up next month? Is there a way I can pay cash? Am I able to pay this charge off in full with my next payment?

We are living in uncertain economic times. Whether they call it recession or depression, this is not a time to overuse credit. The best thing you can do is make a plan to pay down your credit cards as quickly as possible. You can no longer depend on the credit being there or of the terms that you’ll be obligated to in order to pay it off.

In my next newsletter, I’ll share some strategies I used to pay off debt. Stay tuned.

To Your Prosperity,

Debra

www.DropYourDebtFast.com

Around the first of the year, I decided to order a copy of my credit report. Since over a year had passed since my last request, I knew I was eligible again for my free annual credit report.

The main reason I ordered my current credit report was to check to make sure that there was no inaccurate information, or mistakes, that had made their way into my report in the past year. Believe me, this can happen. All it takes is for someone to transpose a number on your social security information or type in an incorrect letter in your name. Even though such errors are not intentional, they can have a negative impact on your credit score just the same.

These errors can be corrected, but unless you know they are on your report in the first place, there isn’t much you can do about it. That is why I think it is important to take the time to order your credit report and go over each item. If you find an error, you can take the steps to get it removed. This may take a little time and communicating with the credit agency. Since your credit score is determined by what appears on your credit report-whether right or wrong-it is up to you to make sure the information is correct. In other words, in terms of your credit score, what you see is what you get.

I should point out that I actually ordered all three copies of my credit report. There are three primary credit reporting agencies (Equifax, Experian, and TransUnion). The credit reports from each of these agencies may include different information so it is a good idea to get each report. By the way, they may have different credit scores too.

If you’re looking for a quick way to order all three copies of your free credit reports as well as your credit score, you can simply click the following link.

http://www.credit.com/r2/credit-reports/af=p66192&c=10984-521d774b3f&ag=deb109″><img

Otherwise, you can contact www.AnnualCreditReport.com and order your credit reports.

One of the many benefits of cleaning up your credit report is that you can save money in interest by raising your credit score. If you are considering buying a new home, refinancing, or purchasing any large ticket item that will require financing, you’ll definitely want to take a look at your credit report.

To Your Prosperity,

Debra

www.DropYourDebtFast.com

Even if you don’t have the cash to pay off your debt immediately, you can still take steps that will help you pay your debt down faster. One thing you might consider is a balance transfer.

A balance transfer might be just what you need to lower your interest rate so you can apply more of your hard earned dollars to the principal. If you shop around, you’ll probably be able to find a credit card company offering a lower rate than what you’re currently paying. You might even be able to find a 0% balance transfer rate for new customers like yourself.

Once you find a lower interest rate offer, there are some factors to consider before you sign the dotted line. First off, watch out for what is known as a “teaser rate”. This is a low introductory rate that only lasts for a short time and then jumps to a higher rate. This could leave you with a higher rate than you have now. Make sure you find out how long the low rate lasts.

Another thing to look for is whether there is a balance transfer fee or transaction fee. The standard balance transfer rate is 3% even though some credit card companies charge more. Make sure you know exactly what the balance transfer will cost you.

You need to be aware that some credit card companies process balance transfers as cash advances. You definitely don’t want that to happen because cash advances usually don’t have grace period which means that the principal is accruing interest daily. So, be sure to ask how they process the balance transfer.

Balance transfers can be a smart financial move that can help you pay off credit card faster and pay less interest if you do your homework. Just make sure you avoid all the possible pitfalls outlined above.

Oh, and one more thing. If you are able to transfer your entire balance from one card to a lower interest card, make sure you cut up the first card and close the account. That way you won’t be tempted to start using that card again, and you’ll really make some headway toward dumping that debt.

If you’re interested in finding out more about the system I used to eliminate 100% of my debt, check out my Drop Your Debt Fast guide at www.dropyourdebtfast.com

Credit card debt is almost looked on as a fact of life anymore. Having it is the norm rather than the exception. Like most things that become commonplace, having credit card debt is no big deal. Right?

Well, maybe and maybe not. The answer is not as simple as it seems because there are many factors to consider. Each person’s particular circumstances are different, and what is excessive debt for one person might not be for someone else. A person might not have what seems like too much debt, but if they suddenly lose their job, that debt might look very different.

Even though there are different ideas and opinions about how much debt is too much, there are some guidelines to help you make that determination. The Consumer Protection Agency has come out with eight indicators to determine if you are at risk of having too much debt. The following indicators will help you to know if you are nearing the debt danger zone.  You may be in the debt danger zone if you:

·        Have to use your credit card to pay for necessities like food or gas

·        Have a savings account that is depleted with no prospect of adding to it

·        Have only been able to pay the minimum balance on your credit cards over the last six months

·        Are juggling several credit cards to keep up with debt payments

·        Are over 50% of your credit card debt limit

·        Have been using your credit card for cash advances to live from  month to month

·        Are paying an increasing amount of your debt obligations with credit cards

If you’re experiencing firsthand a few or more of these, you’re not alone. Many people who are struggling to pay off credit card debt are also struggling to pay their car payments and the monthly mortgage payment.

If you’ve determined you’re in the “debt danger zone”, your next step should be to ask yourself what you’re going to do about it. Consider your options and take action.

The result of this increased use of credit cards is that individual credit card balances are growing as well. That means that the required minimum monthly payment, which is based on a percentage of the balance, is going up and putting even more strain on that already squeezed monthly budget.

Understandably, this is why more and more consumers are falling behind on their monthly payments. Credit card companies don’t like this because it impacts their bottom line…profit. Late last month, American Express issued a warning that their customers were falling behind on their payments. This got the attention of the Wall Street people who came out with their own warning saying that credit card companies may have to lower their projected earnings for 2008.

What followed was a move by some of the credit card companies to take action to lower their risks. First, they reduced the maximum amount of credit extended to an individual (Washington Mutual and Wells Fargo recently cut credit limits by up to 10%). In addition, they raised credit card interest rates and began cutting back on the number of balance transfers they would allow.

The credit card companies were strategic in the way they approached this because they targeted those individuals who they thought were most at risk for default. For the most part, they focused on individuals who: 1) Recently made large purchases relative to their credit limit, 2) Live in California, Arizona, or Florida (the states hardest hit by the credit crisis), 3) Own a small business in the real estate industry.

Hopefully, you don’t fall into any of those categories and weren’t impacted. Even if that seems to be the case, I suggest you might want to double check your credit card limit before making any big purchases. Credit card companies have thirty days to notify you of any credit limit cuts. That means you might use your credit card for a purchase without realizing your limit has been lowered. You could end up being hit with extra charges and fees for exceeding your limit.

As the credit card companies continue to struggle to maintian their profit margin, you can probably expect to see credit get tighter and more expensive. You’ll proably also see more restrictions placed on the issuing of credit. As you can tell from their latest actions, credit card companies can “change the rules” to protect thtemselves whenever they think they need to. Just keep that in mind the next time you reach in to pull out that plastic.

If you are interested in eliminating your debt for good, check out Debra Moore’s Drop Your Debt Fast guide at www.dropyourdebtfast.com.