Archive for July, 2010

July 31st, 2010

Gift Cards – Beware

Gift Cards Can Be Good

You can barely walk thru a grocery store or many other outlets without seeing racks and racks of gift cards. Are they safe and are they as convenient as promoters would have you think they are?

The Office of the Comptroller of the Currency (OCC) offers guidelines for issuance of Gift Cards. Unfortunately the OCC guidelines are nothing more that that – guidelines. They are not law. So gift card purchasing is strictly a “Buyer Beware” environment.

Gift Cards from some very conscientious sellers can be an awesome gift. They offer convenience and practicality. Gasoline credit cards, store discount cards, retail specific gift cards, prepaid telephone and credit cards and so many more can all lead to a gift giving buyers dream of convenient shopping and idea generation. They can be easily mailed and can be a very well received by the recipient. But generally gift card promotion and popularity has less to do with customer convenience and far more to do with incredible profitability.

The Retailer Simply Cannot Loose

Consider the fact that a gift card is for a specific amount. If the recipient uses the card for less than the full card amount of the gift, the balance usually remains on the card to be used for the same service or at the same location. But often times a balance remaining of less than $5 usually remains on the card and this is pure profit for the issuer. As an example a $15 gift card for a CD that costs only $13 will usually have the remaining $2 remain on the card until expiration. The thought is, what are you going to buy for $2 and the issuer knows this.

On the other hand, if the recipient uses the card for more, the additional amount of purchase is from the recipient’s pocket. For example, let’s say the same consumer from above elects to use the extra $2 for a second CD. Now the retailer has just made more money from an add-on purchase. The retailer simply cannot loose.

Additionally the consumer is obviously required to be at the establishment. The single greatest advertising cost is the cost of bringing in new customers. But gift cards are a free method of accomplishing this purpose. PR newswire on January 9, 2008 reported: “Fifty-three percent of gift card redeemers often or always spend more than the card value, and most likely over two store visits rather than one.” Not bad for simply offering a piece of plastic.

Buyer Beware!

Now let’s consider less than conscientious sellers:

  • OCC suggests the expiration date of the gift card should be on the front of the card. Is it? (Considering that a gift of money would not expire at any point, why does a gift card expire?)
  • Are any fees monthly or otherwise listed? Some cards have a $2.50 monthly fee tacked on after a certain period of time. It does not take long to significantly reduce the amount of purchase at that rate.
  • Issuers should not advertise “no expiration” if fees eat at the balance if not used immediately.
  • Cards should have some means of contacting a customer service. Does it?
  • Obviously theft of cards has to be a major concern simply because of the same convenience as stated for the consumer.

Gift cards lead the market of the 81 billion dollar pre paid industry and are expected to top 52 billion dollars in the next 5 years. That being the case, it is unlikely that gift card will disappear very soon. Hopefully what will disappear are the scams and abusive practices some promoters utilize. Gift cards are sufficiently lucrative never to need such practices.

_________________________

__________________________

The truth is the average consumer can eliminate all debt including their mortgage with the money they currently earn in an average 7.5 years. I have been teaching people how to do this for years and you can see how it is done yourself by receiving the free Debt Freedom Mini-Course via email.

You might also want to know that that eliminating all debt is like getting a 40% Tax-free Salary Increase.  If you don’t believe me, read the blog about it.

_______________

Posted in General | No Comments »

Tags:
July 29th, 2010

Where It Begins

Consider for a moment the essence of your beginning… no I am not talking about a physical act.  I am talking about you and your beginning and how infinitely small you were.  In fact you were smaller than a few molecules and yet there you were absolutely complete in everything you are and everything you would be.

At that instant your gender and color of hair shape of your eyes and tone of your skin was all there in its own completeness… all there at that very moment of your beginning. All that you are… all your genes…  and all that you would be was all contained within that protoplasm of your makeup.

Can you imagine such an implausible miracle?  And yet here we are today from that smallest of beginnings. Now if as infinitely small as we were then and if we somehow seem to conquer all of the massiveness around us and be born and to grow to become adults as we are now, how could we question conquering any desire put before us.  What could possibly be too great for us to accomplish assuming we use correct goal setting procedures.

What are you trying to do?  What is stopping you?  What would it take to overcome the obstacle?  What would we gain if we win?  Is it worth it?

If we can but fully answer the above questions and then add some rocket power, nothing can stop us.

My strongest recommendation is to read the following articles.

Behavior Motivation

5 Steps To Change Any Habit

Adding Rocket Power to Goal Setting

_________________________________

__________________________________

The truth is the average consumer can eliminate all debt including their mortgage with the money they currently earn in an average 7.5 years. I have been teaching people how to do this for years and you can see how it is done yourself by receiving the free Debt Freedom Mini-Course via email.

You might also want to know that that eliminating all debt is like getting a 40% Tax-free Salary Increase.  If you don’t believe me, read the blog about it.

Posted in Best Motivation | No Comments »

Tags:
July 27th, 2010

Bankruptcy

Does bankruptcy Make Sense Economically?

In evaluating whether or not bankruptcy makes economic sense, answer these questions:

  • Will bankruptcy discharge enough of your debts to make it worth your while?
  • Will you have to give up property you desperately want to keep?”
  • Is the cause of debt problem temporary or long lasting? Permanent disability and job loss are both     devastating.  But one will end and the other will not.
  • Creditors are human beings. They are also business people. They do not want to see bankruptcy for you. They know customer relations are their lifeline and bankruptcy is profit out of their pocket. Therefore, can they work with you to lower payments, skip a payment, change billing dates, anything?
  • Is it possible to get assistance from a  legitimate debt counselor?
  • Instead of thinking of all the debt you have or the high interest or high balance debt, think of the debt that can be paid off fastest. Is there any way to pay one debt off quickly by selling something and then use that added income to apply towards the next fastest payoff. In other words, do not try to chop down the whole rose bush. Work with cleaning off one or two unsightly limbs first and see where you are. It is far to easy to get tangled up in the thorns and not be able to envision a clean emotional environment.

Special Note: You should be aware that any cosigner automatically becomes liable for the full amount of a co-signed debt. If this is not what you intend, you should not file or you should make arrangements with the court for repayment. But even debts you do not want included (such as a loan from a friend) must be included since the court does not accept any partiality. Even if a divorce settlement divides the payment of a joint account, the second party on the account will be held liable for the debt in the case of bankruptcy.

Bankruptcy Should Be a Last Alternative

Bankruptcy should be viewed as a last alternative to managing an overburdened debt load, although for some it is the only logical alternative. Bankruptcy reduces or eliminates debt under the supervision and protection of the court.

Pre-bankruptcy credit counseling and post-filing debt education is required by law from a government-approved counseling agency.  Counseling is available by phone, Internet or person and often available in multiple languages.  But be sure it is approved by the Department of Justice, regardless.  Approved agencies are on the list at the above referenced site.

Each state has established exemptions from bankruptcy court as well as state medium income to determine eligibility of bankruptcy. Though not mandatory, a bankruptcy attorney is recommended.  If nothing else, a bankruptcy attorney should be sought for an initial consultation which quite often is free of charge.

A person or couple can declare a chapter 7  (straight litigation) which often wipes the slate clean with select exceptions. A Chapter 7 remains on a credit report for 10 years.  A Chapter 13, known as wage earners plan, debts are restructured to be repaid within 3-5 years with 10-99% of the debts being repaid. The filer gets to keep their home.  A Chapter 13 remains on a credit report for 7 years.

Keep Your Head Up!

There is one final point which should be made clear. If bankruptcy is inevitable, keep your head held high. It is not the end of the world… it just feels like it. Even bankruptcy does pass and you should never lower your head because circumstances overwhelmed you. Just learn from your experience and pass it on to others. That’s all.

____________________________

The truth is the average consumer can eliminate all debt including their mortgage with the money they currently earn in an average 7.5 years. I have been teaching people how to do this for years and you can see how it is done yourself by receiving the free Debt Freedom Mini-Course via email.

You might also want to know that that eliminating all debt is like getting a 40% Tax-free Salary Increase.  If you don’t believe me, read the blog about it.

_____________________________

Posted in Debt Assistance | No Comments »

Tags:
July 23rd, 2010

Senior Debt Problem

Chris Tapp, UK deputy director of Credit Action, said: “Retirement should be a time for some well-earned relaxation, but for all too many it is a time of financial stress… when we consider that inflation hits the over-60s hardest, pension provision is looking increasingly shaky, and we have moved away from a savings culture, we can see that the levels of debt amongst the over 60s, as well as being a serious issue now, is one which is only likely to get worse.”

Though the above was discussing senior debt issues in the United Kingdom, the same issues apply in the U.S. and the world over.

According to a study done by the New York based research firm, Demos, “The debt increase is particularly sharp during the first years of retirement… people aged 65 to 69 saw their credit card balances grow by 217%….” And according to research by bankruptcy Project at Harvard, retirees are now the fastest-growing segment of bankrupt Americans.

So why are seniors being hit so hard?  When you consider that retirement income is usually less than a working income (and often fixed), increased inflation affects purchasing even basic commodities… and it can be staggering.  Consider the increase cost of oil.  Heating oil is bad enough.  But think about the cost of vehicle operation besides just your car.  Everything must be transported and the increased cost of transporting even basic commodities has to be made up from someplace.  The only place it can come from is the consumer’s pocket. Everything you purchase has an increased cost.  That can of peas or the new sofa costs far more than it use to along with the gasoline to go purchase it.

But there is more.  The younger generation grew up with wide-open credit but the senior did not.  Many times there is a cultural difference between someone who grew up with credit cards and someone who did not.  Many seniors are bringing credit debt into their retirement with retirement dollars straining to meet the Budget.. Add to that increased late fees, over the limit fees, even back charge fees and you have a potentially catastrophic arena.

But there is also a longer life, increased health costs, deteriorating health and a credit card industry willing to open the doors of credit to nearly anyone that’s still breathing.  When you are desperate, it is not an implausible thought that a credit card might look like the solution even for basic purchases.  Unfortunately, all a credit card does is increase the inevitable.  Like everyone else, seniors are paying for today with tomorrow’s dollars… dollars that are definitely shrinking form a fixed income.

So what can be done?  The obvious answer is to plan early… the earlier the better.  But what if early planning did not occur.  Then tragically the only solutions left are the exact same solutions for every other consumer… increase income or decrease expenses.

Ahhh but therein lies the catch.  How can you increase income when it is fixed?  Often times this can be accomplished through imagination and creativity. Perhaps the senior can develop consulting opportunities or an online business.  Perhaps something can be sold.  Hundreds of additional ideas can be gleaned form online resources, written publications, and senior advisers. The point is, plans must be developed and enacted.

If increasing income is not an option then the only recourse is decrease expenses.  Call creditors and request a decrease in interest rate.  This may sound absurd but it is done every day. There are also scores of magazines offering ways to stretch your dollar.  Similarly your favorite search engine will produce more frugal sites than you can ever read.   Each of these sites informs the reader of ideas to save money and to accomplish exactly what you are already doing but for less.

Okay.  You can’t increase your income nor stretch your dollar any further than it is already.  Now you are down to credit counseling, debt management programs or debt negotiation.  I strongly encourage you to be very careful in your selection of any of these avenues.  Tragically there are many unscrupulous agencies that take advantage of opportunities especially at the expense of seniors.  Find out what the track record of the perspective firm.  What is their completion rate?  What does the Better Business Bureau have to say about them?

If the proper option has still not appeared, there is only one other recourse… bankruptcy.

___________________________________

The truth is the average consumer can eliminate all debt including their mortgage with the money they currently earn in an average 7.5 years. I have been teaching people how to do this for years and you can see how it is done yourself by receiving the free Debt Freedom Mini-Course via email.

You might also want to know that that eliminating all debt is like getting a 40% Tax-free Salary Increase.  If you don’t believe me, read the blog about it.

___________________________________

Posted in Debt Assistance | No Comments »

Tags:
July 21st, 2010

How To Curb Your Spending

The Federal Trade Commission (FTC) says, “If you or someone you know is in financial hot water, consider these options: realistic budgeting, credit counseling from a reputable organization, debt consolidation [debt negotiation], or bankruptcy. How do you know which will work best for you? It depends on your level of debt, your level of discipline, and your prospects for the future.”

The purpose of this article is to deal with a realistic Budget and offer ideas for curbing your expenses and spending.  However, I would encourage you to also look at the other options suggested by FTC.  The National Association of Certified Counselors and its Institute of Financial Counseling also endorse these same suggestions.

A Solid Spending Plan

Any hope of curbing your spending must begin with a realistic Budget or spending plan.  If you don’t know where you are going or where you have been, how can you possibly continue any journey?  Therefore mapping out how your money is spent and will be spent is a key ingredient.

  1. Begin by going to your last 12 months of check registers and categorizing all entries.
  2. Insure you have ALL your expenditures. If you always carry spare money in your wallet or purse, you need to record every dollar spent for a few weeks. I have yet to see someone do this exercise without a significant impact on his or her spending plan. This may be the most important step to getting to the facts. All non-cash purchases should be easier to track through checkbook registers or credit/debit receipts but be sure to use proper annotation. Just writing “miscellaneous” or “verseteller $20″ does little to gain facts.
  3. List your fixed expenses: Rent/mortgage, Utilities, Child care, Transportation, Insurance, Loan repayments, Allowances, Alimony or other legal issues, Savings, Other.
  4. List your variable expenses:  Food, Entertainment, Grooming, Babysitting, etc.
  5. Estimate your periodic expenses? List last years car repair, trips, medical, taxes, maintenance, gifts, etc. Now determine if this estimate is what you can expect in the future. Divide each item by 12 to have a monthly figure.

Once you are certain you have all annotations including non recurring expenses, start to adjust how much you will spend in each area to fit your particular needs. If you do not have enough to cover it all, you must either reduce expenses or find ways to increase income… it is that simple. The tough part is doing it.

Cutting Costs

Here are a number of ideas to curb your spending.

  1. There are so many resources on the Internet and in magazines for cost cutting tips, that it is impossible not to find an untold number that fit your needs.    On the Internet, use your favorite search engine and enter words such as “frugal”, “frugality”, “saving money” or similar key words.  You will be amazed at the resources available. There are always different ways to do the exact same thing and save money at the exact same time.  You simply have to locate and implement them.
  2. Call each of your creditors and ask for a reduction in interest rate.  Do not tell them your life history, but do offer a concise statement as to why it would be in their best interest to do so.
  3. Regardless of what type of debt (mortgage, car, credit card, etc.) view your monthly statement and look specifically at how much of your payment is going to interest and how much to principle.  This is a real eye opening experiences and motivates the individual to get that debt under control.
  4. Make it a habit to throw away credit offers before even opening the envelope.  Take existing credit cards and hide them or better yet, destroy them.
  5. Determine what are the “needs” in your life and separate these needs from “wants”.  Suspend ALL “wants” until debt is at least under control.
  6. Get assistance from such groups as Debtors Anonymous.  If there is a gambling or drinking problem, seek help from support groups.

_____________________________

The truth is the average consumer can eliminate all debt including their mortgage with the money they currently earn in an average 7.5 years. I have been teaching people how to do this for years and you can see how it is done yourself by receiving the free Debt Freedom Mini-Course via email.

You might also want to know that that eliminating all debt is like getting a 40% Tax-free Salary Increase.  If you don’t believe me, read the blog about it.

_______________________________

Posted in Debt Assistance | 2 Comments »

Tags: , , ,
July 16th, 2010

Secured Credit Cards

Secured credit cards can be good.

If you are unable to get a normal credit card because of poor credit, all hope is not lost. A secured credit card is different in that it utilizes funds a consumer has placed in a savings account. The secured card is protected by the savings account. Therefore the consumer is “borrowing” from his or her own account. In this way the consumer can re-establish their credit repayment history thereby exhibiting improved credit worthiness. Some secured cards even come with a conversion feature allowing an upgrade to an unsecured credit card after a successful repayment history of a pre-determined length of time.

Credit cards in general can be exceptionally beneficial to the consumer. Secured credit cards provide all the same benefits. But additionally a secured credit card offers the consumer with less than good credit an opportunity to build credit history, which is 33% of a consumer’s credit score.

My best recommendation is to check with larger banks and especially credit unions locally and ask if they offer a secured credit card program. You might also ask them if they report to all 3 credit bureaus and how often they report since one of your main concerns is rebuilding credit. Also check to see if they offer a conversion to an unsecured card and after what period of time.

Secured Credit Cards Can Be Bad

Many years ago I wrote an article saying that credit and credit cards are the agony and ecstasy of life. I have not changed my opinion. Like all credit cards, a secured credit card can make the impossible possible. But it can also drive the unsuspecting consumer into the ground or even worse bankruptcy Court. Fortunately a secured credit card will not permit you to spend more than your savings amount. However, should you fail to make on-time payments, you may find yourself not only without access to your secured account, but without future use of any secured card from any source.

When selecting a secured card, be on the lookout for excessive administrative and set up fees as well as high interest rates. There should be no application fee nor “insurance costs” unless you feel insurance is necessary. There may be an annual fee but shop around for interest rates and annual fee costs.

The Federal Trade Commission (FTC) offers the following warnings. Be aware of:

  • Offers of easy credit. No one can guarantee to get you credit. Before deciding whether to give you credit, legitimate providers examine your credit report.
  • A call to a “900” number for a credit card. You pay for calls with a “900” prefix. You may never receive a card.
  • Credit cards offered by “credit repair” companies or “credit clinics.” These businesses also may offer to clean up your credit history for a fee. [Most consumer advocates recommend against these clinics.]
  • Of special note are callers offering secured credit cards as well as offshore secured and unsecured credit cards. There are some very good offshore-unsecured creditors but most marketers of secured or unsecured offshore versions are more than likely scam artists.

Report suspected credit fraud and scams to the National Fraud Information Center (NFIC), a project of the National Consumers League. They are not available by phone but there suspect fraud form for Internet, mail, or telemarket is located at the web site above.

NFIC helps the FTC and state officials by entering complaints into a computerized database to help track and identify fraud operators.

______________________________

DID YOU KNOW:

The average consumer can eliminate all debt including their mortgage with the money they currently earn in an average 7.5 years. I have been teaching people how to do this for years and you can see how it is done yourself by receiving the free Debt Freedom Mini-Course via email.

You might also want to know that that eliminating all debt is like getting a 40% Tax-free Salary Increase.  If you don’t believe me, read the blog about it.

Posted in Credit Score and Repair | 1 Comment »

Tags: