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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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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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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Fortunately, holiday debt doesn’t have to loom over your head forever. By getting motivated to rid yourself of your debt and committing to take action, you can wash your hands of your holiday debt and enjoy the rest of your year.

Add up all of your holiday debt. The first step to getting rid of your holiday debt is to know exactly how much there is. Gather all of your holiday bills into one place and add them together. As scary as the number might be, rest assured that this is as big as it will get. From now on, the number will only get smaller.

Stop creating new debt. Knowing the exact amount of your holiday debt is important, but stopping its growth is even more important. Until you have vanquished all of your holiday debt commit to only spending cash or using your debit card. The key here is to spend less than you make.

Make regular payments on your debt. Take a look at your finances to determine what your monthly payment should be. Once you’ve decided what that amount is, be sure to pay that much each month. Remember that you’re not just trying to make the minimum payment. You want this holiday debt out of your life.

Find extra money to send to your creditors. Make some small sacrifices to enable you to make larger payments on your holiday bills. You don’t have to give up every little luxury in your life; just pick one or two and consistently add that money to your payments. An example might be to give up raiding the vending machine at your office every afternoon. If you regularly spend $1.50 on a soda and snack, you could expect to have an extra $7.50 for your debt payment each week. It doesn’t sound like much, does it? But at the end of the month you’ll have an additional $30 to add to your payment.

Keep saving after you’ve nixed your holiday debt. When you’ve defeated your holiday debt, plan to keep saving your monthly payment amount for the next round of holiday spending. By putting this money away now, you won’t be doomed to repeat the holiday debt cycle again next year.

Getting rid of your holiday debt can seem like an impossible task when you first get started. Take heart and remember that there are many people in the same situation as you. With a little resolve and discipline you can make your holiday debt ancient history in no time.

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1.  Rate conscious borrowers.

2.  The practical borrowers.

3.  The housing borrowers.

4.  The non-borrowers.

Not Made Of Money was placed into the non-borrowers category.  However, we did borrow money to purchase our home and have a mortgage.  The only reason we have not paid our mortgage off in full is that we do not think we will live in this house forever.  Our mortgage is at a fixed rate and we put a substantial down payment on the home when we purchased it.  We also found a lender who agreed to let us pay our own property taxes and insurance instead of collecting them through escrow.  We have a credit card that we do not use. 

So, how exactly do we feel about borrowing?  We absolutely do not believe in borrowing money.  We never wanted to be in debt, which we felt would limit our options in a lot of family life matters. 

When we got married, we made the decision that we would never incur debt.  We each came into the marriage debt free so it was easy to start from scratch.  This has served us well through the years, because we set up our financial system to be a debtless one.  Here are some of the principles we have used:

1.  We spend less than we earn.  Always have.  That means we have not had the newest stuff like DVD players, TVs, cars, etc.  We have always had what we needed and paid for things with cash. 

2.  Our emergency fund has been fully funded to weather the occasional unexpected expenses.  Then, when we have needed to pay for a car repair or medical bill, we have re-funded the emergency fund. 

3.  We’ve never bought a new car, only purchased used ones and have always paid cash.

4.  We set up a budget based on what we could afford to spend, and we stick to it.

5.  Our finances are kept up to date using the Quicken program.  

Now that I’ve discussed some of the methods we have used, I will share the benefits of living a debt free life.

1.  When we began to have children, I was able to quit my full time job and stay home with the kids.  We did not have the financial pressures to deal with because we had been living on one income all along and did not have debt to worry about. 

2.  We do not have the stresses of bill collectors or wondering where we will find the money to pay the next bill.

3.  We have been able to give financially to those in need (tithe).   

We have studied the methods promoted by Larry Burkett, and can highly recommend his book “Debt-Free Living”.  

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I am not going to say it has always been easy.  Sure, we’ve been tempted to want some of the newest gizmos, gadgets, cars, etc. but we disciplined ourselves that if we really wanted something badly we would need to save up for it and shop around for the best price.  (That’s why I post on sale prices so much)  We are teaching those same principles to our children; how to save up for what you want.  Sometimes, after saving up for an item we wanted, we would discover that we didn’t really want it after all.  

Having an emergency fund has been an important part of our financial plan.  Sure, we’ve had times the car has broken down, repairs necessitated by the hurricanes (yes all 3 of them), as well as unforeseen medical expenses, etc.   Having that emergency fund set up and fully funded allowed us to weather these financial bumps. 

We are very thankful (Thank you God) for allowing us to have the knowledge that allows us to plan our financial lives in such a peaceful manner.   We are big fans of Larry Burkett (may he rest in peace) who was an advocate for debt-free living, and wrote many easy-to-read books, training programs, and manuals on personal financial management.  He used to run the Christian Financial Concepts ministry which was later merged with Crown Financial Ministries.   

 

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1. Make a detailed gift giving list including recipient’s name, gift, and budgeted amount. This way you can gain an overall picture of what you are going to spend. Then, vow to stick with the list and not go over the budget. If you spend more money on a gift than you have budgeted, then another gift will have to cost less than the amount you budgeted. Take your list with you whenever you go shopping and cross off the items as you purchase them. Remember, the goal is to celebrate the holidays with no debt. Avoid impulse purchases as they are usually not budget friendly.

2. To save money on gifts for children, shop for toys and games at consignment stores and garage sales. Many times you can find items that have never been used, are in their original packaging, and cost a fraction of what they would cost in the store. Games are always a great gift idea for children as they have long lasting value.

3. Save money on your gift giving by making your gifts. If you enjoy cooking, make up some pre-made baking kits like your special cookie recipe. Put it in a decorative jar and use fancy ribbon and bows to make the presentation look great and include a hand-written recipe card. If you sew make a handmade blanket or pillow. Even if you are not the crafty type, visit your local craft store and see what gift ideas they have featured. Some of them require very little in the way of expertise and can be made inexpensively.

4. Shop for gifts at your local dollar store and create a themed gift basket of the items you find. You could choose a bath theme gift basket and fill the basket with different toiletries; a toy gift basket made of an assortment of dollar toys; or even a Christmas gift basket filled with some of the Christmas merchandise.

5. Be on the lookout for sales and clearance items. The earlier you start shopping, the better your finds will be. Scan those sale ads every week and check the clearance aisles frequently. I look for kid dress up costumes after Halloween when they all go on sale for 75% off.

With just a little bit of planning and the determination to stay on budget, you can enjoy a holiday season with no worries about debt in the New Year.

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This is a good book for laying out a workable plan on reducing debt.  Featuring real life stories from a special that aired on the Today show, this book helps people escape from the tentacles of debt.  The premise of the book is finding $10 per day (by decreasing your spending in other areas) that you can put towards debt reduction.  A definite workable solution. 

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I’ve been reading some personal finance blogs dealing on the topic of debt. There are quite a few blogs out there which detail the various journeys of folks climbing out of debt. I am so very thankful that we decided early on in our marriage to live a debt-free lifestyle. It has allowed us to have a lot of options in our life that we would not have had otherwise. We learned about living a debt-free life from Larry Burkett of Christian Financial Concepts (which has changed in recent years to Crown Ministries).

For us, there are many benefits to being debt free.  Here are just a few:
1. Being debt free gives me the option of staying home with the kids. (They are only little once).
2. Being debt free has allowed us to remain stress free from worrying about paying bills.
3. Being debt free has prevented “financial fights”.

Now the other side of the coin in being debt free has involved us giving up some things too.

1. Being debt free means we do not have the latest gizmos, gadgets, DVDs, cars, stereos, computers, cell phones, etc. that friends or family members have.
2. Our children do not wear designer clothes (nor do we).
3. We do not take expensive vacations.
4. We do not eat out often.

I can tell from personal experience that the benefits of the first 3 items vastly outweighs the sacrifices of the latter 4.
 

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I just finished reading this article from the Chicago”>http://www.chicagotribune.com/business/investing/personalfinance/chi-0605280025may28,1,2213253.story?coll=chi-businessyourmoney-hed”>Chicago Tribune. Basically it lists some really practical things to do if you are drowning in debt. Here are some of the ideas from their article for cutting costs so you can save up some cash.

1. Get rid of all non-essential expenses.
2. Cut those monthly expenses like cable tv.
3. Cook your meals at home.
4. Sell everything you can (as in ebay all the stuff you have).
5. Sell the car.

It is a good list of ideas, especially if you’ve never considered them before.  We implemented pretty much the above method early on in our marriage when I left my job. The cable tv was the first thing to go along with the eating out. By cutting our costs it enabled us to get a really good handle on our finances and we have been debt free ever since!  We’ve always believed in managing what we have, and not letting it manage us.  I think the living debt free has been one of the major factors in the harmony of our marriage.  After you live lean for a while, it just comes naturally.  However, it does take quite a bit of time to get to that point.

 

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