One of the hardest parts of learning to being fiscally responsible is breaking free from the payment mentality. Becoming mired down in monthly payments creates a cycle seems almost impossible to break free from. Because you always have a payment to make, you are never able to save up enough money to pay cash for your next big purchase. Then, when the time comes that you have to make a large purchase, you are forced to finance it and begin the whole cycle again.

How many times have you decided if you could afford something based solely upon whether or not you could afford its monthly payment? You didn’t stop and evaluate whether or not you could afford to spend $2,000 on a new television. Instead you considered the $50 payment. “I can do that,” you thought to yourself. Never mind the fact that you’ll be making that $50 payment for the next four or five years.

To help you learn to get away from the payments mentality here are a few things you should consider before you finance any purchase:

You should never finance something for a longer length of time than you will use it. If you typically like to change cars every four or five years, you shouldn’t take out an auto loan that extends into six years. Likewise, you shouldn’t finance the purchase of a new computer in a way that will make the payment stick around longer than the computer’s technology.

Determine how much you can afford to pay for an item without regard to the cost of its monthly payment. Everything sounds affordable when you break it up into tiny monthly payments. When shopping for a large purchase, don’t be tempted by the payment amount. Know how much you can afford to pay for the item and resolve to stay under that amount.

Financing yet another item will require you to wait even longer to rid yourself of those pesky payments. Imagine this scenario for a moment. After struggling for a year to pay off all of your debt, you’ve finally made some progress. You only have one monthly payment left. Then, in a moment of weakness, you succumb to temptation and finance the purchase of a new range. You could have bought a slightly less flashy model and paid cash, but you decided to go all out and buy the latest and greatest version of range. Now, you’re locked into another three years of payments. You’ve just derailed an entire year’s hard work.

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Paying off a loan ahead of schedule is a great feeling. It means that you now have the freedom to spend that payment amount each month however you want. You can use it to pay down other debt, or even better, save it towards something else you want or need. How cool is that?

Before you get to experience that heady feeling, however, you have to pay off that loan. Paying a loan off early is easy; you just have to pay more than you are required to pay. Okay, maybe it’s not so easy. You’ll have to have a little discipline as you make those extra payments, but you can make it simpler by using one of these techniques to make your payments.

Round your monthly payment up a little. If your payment is supposed to be $321 each month, try sending a check for $330 each month. You won’t miss the extra $9, but over time that extra money will add up.

Automate your monthly payment at a slightly higher amount. Online bill payment makes it easy to send pre-determined amounts to your lender without having to write a check. Now you won’t be tempted to keep the extra portion of your payment if money is a little tight one month.

Pledge to send windfall amounts to the lender. Rebate checks, tax returns, and garage sale proceeds are all great sources of “found” money. Since you weren’t expecting this money, you won’t need it to pay your regular expenses. If it just feels too rigid to apply your entire windfall to the lender, send half. You can do something fun with the half you keep and still make some headway towards paying off your loan.

Make payments more often than you are required to make them. Check with your lender to make sure you can make frequent payments. If you can, divide your monthly payment by four and remit that amount weekly. Since four months out of the year have five weeks in them, you’ll end up making an extra payment every year.

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The following article is a guest post by Tisha Kulak who writes for Creditorweb.com

It is often thought that bankruptcy is the best alternative to rid yourself of debt when you just can not seem to make your financial ends meet. However, new legislation in regards to bankruptcy has made it more difficult for consumers to file bankruptcy to find freedom from their debt. As an alternative to the tougher laws regarding bankruptcy, many consumers are turning to a service called debt settlement instead.

How Debt Settlement Works
Debt settlement allows a debt counselor to negotiate with the credit card companies where you have active, outstanding accounts. The counselor works with the credit card company to lower the amount of payments you make each month, reduce or stop interest charges from accumulating, and basically helps to reduce your overall amount of debt. The process of debt settlement is not as involved as are cases of bankruptcy and it often can help many consumers get back on track with their finances.

Card Companies Are Worried
While debt settlement may be a great way for consumers to get free from debt, the process does have a huge impact on the credit card companies and the industry as a whole. The credit card companies will often accept such settlement actions because they would be better off accepting some money than ending up with no monies paid back at all.

Leading to New Laws
However, the amount of lost revenue induced by these debt settlements is causing many credit card companies to worry. So much so that new laws regarding debt settlement are being passed which do not allow debt counseling agencies to market or work in their state. West Virginia is one example of a state that has passed such laws. The internet, however, makes it much easier for consumers to contact and work with the debt settlement agencies and there are essentially no regulations yet for online transactions.

Debt Counseling May Not Be Without Restriction for Long
Because so many people are applying for debt counseling services, it is being said that the credit card industry could be facing a troubled situation similar to the recent increase of foreclosures in the housing market. If the trend continues, consumers should not be surprised to see more strict regulations when it comes to the process of debt settlement similar to the bankruptcy legislation that has been passed. Consumers in debt looking for a way to cope with the rising cost of living expense and mounting debt may want to consider the benefits of utilizing a debt settlement service but it is imperative they proceed with caution. There are plenty of unscrupulous “agencies” in the country and it would be smart to do some research regarding the qualifications and legitimacy of any firm that may be soliciting your business. Many agencies are very good at assisting debtors get their finances in order and as long as you do a little homework, the right agency can really make a difference.

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Tisha Kulak is a writer for Creditorweb.com, where she writes about credit card offers, finances, credit cards, and responsible credit card use.

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