What Else?

Trying to get the credit card companies to lower your rate and/or payment is sometimes difficult and not always possible but it is worth the effort to find out. They may not give you the information you want. Just know this. Every credit card company has a selection of programs to help their customers get the debt paid. They are just reluctant to share. They would rather have all of their interest and other charges you are paying because you are in default with them.

Credit card debt is crippling and depressing. No one wants it and the sooner you get out from under it the better your personal finances will be.

Fixing The Bad Debt

Let's say you have 6 different unsecured debts. They might be major credit cards store credit cards or signature loans. There are several ways we can deal with these debts. Not paying them is not an option. Just remember that you probably didn't get into this situation quickly so you will not get out quickly either.

Here is a viable option that will require some work. With your credit cards you can contact the institution in question and see if its possible to negotiate a lower interest rate. I have found that this is some times quite difficult but they do have more programs to help deal with your situation than you might think. They may ask you to make a certain amount of a payment for 3 or 4 months and then after you have completed this they may change the conditions on the card. If this happens do exactly what they ask and don't miss. Once you have done this they may lower your interest rate and may even lower your payment. While all of this is going on DO NOT use the card for any purchase. They probably won't let you but don't be tempted.

What Is Next?

We have identified the need for some sort of organization in our finances and have suggested a budget.

Put your personal finances on sure footing by identifying your good debt/ bad debt.

Know what your mortgage cost are which includes principle, interest (the rate of interest), insurance, and taxes. What is it costing you to maintain your home?

Get your bad debt under control. Identify each item and know what you are paying each month.

Next you need to sort out what it is going to take to get rid of this bad debt. This will be the topic in our next entry.

Good Debt/ Bad Debt Continued

So... What is bad debt. A debt becomes bad when we are unable to or choose not to pay the whole amount owed when the statement arrives and continue to add to the balance with more charges. The most obvious culprit being CREDIT CARD DEBT.

I've heard it said, "We buy things we don't need with money we don't have to impress people we don't like".

There is nothing more satisfying than saving for something, buying it and taking it home knowing that you don't owe a dime for it.

When we buy something with credit cards and don't pay the WHOLE balance when it comes due we create debt that will ultimately not go away.

This is where the trouble starts. Then we buy more thus adding to the balance. The credit card companies are in business to make money and lots of it. So in reality they prefer that you only pay the minimum balance which in some cases doesn't even cover the monthly expenses charged to the account. Some credit cards have very high over limit, late and other charges associated with them.

Now when we get into trouble with multiple credit card accounts the burden becomes overwhelming.

Our personal financial plan must include the steps it takes to rid ourselves of this type of debt.

Good Debt/Bad Debt

Just like the title says there are two kinds of debt. The debt we have to have and the debt we wish we never had.

There is debt that is necessary to moving forward in your personal financial strategy. The big one of course is the mortgage. Not very many people can afford to pay cash for a house. In order to buy a house then a mortgage is necessary. The best start in our mortgage management is to SHOP AROUND! Find a reputable broker who represents a large number of mortgage companies. Make sure you ask lots of questions. For instance, rate of interest and actual monthly payment. You need to know what other expenses there are like insurance cost, expected utility costs, and property taxes. These all factor in to the monthly carrying costs for the home.

Then there is debt we wish we didn't have. This usually comes from major name credit card debt, personal loans, store credit cards.

We'll talk more about this topic next time as we continue to look at our personal finances.

Want To Buy A House?

As we continue our discussion about personal finances, we are now going to address the greatset need for credit of all. The single largest purchase/investment most people will ever make is that of a home. A great deal of planning and preparation is required.

Knowing how much home you can afford is the first step. Visit with a mortgage professional to determine how much you can borrow. This will get you pre-approved for a specific amount. From that information you can shop for a home in the price range you already know is suitable for you. You will also have your mortgage in place. However, not all mortgages are created equal.

Beyond the question of credit worthiness, you need to ask questions about term length, interest rate, payment amount, and closing costs.

Don't be afraid to shop around for the best interest rates. There are many ways to do this. Mortgage brokers, and online sites are two very good ways to find good mortgage information.

More on The Budget

Now that the ledger has been drawn out, it's time to make the entries. Enter every amount of income and every expense for a month. Ideally you should do this for 3 months to show a trend. Taking the time to do this will give you an accurate picture of your personal finances.

From here you can begin to examine your regular expenses such as utilities, mortgage payment, food, credit card debt, car insurance, home insurance, personal insurance, right down to spending money, clothing and ANYTHING else you spend money on.

The goal is to get our personal finances under control. When the month is over, is there anything left?

After you have done this over one month, you can begin to itemize the areas of concern. You will begin to ask questions about you mortgage rate, your credit card debt, your utility company rates.