We are now a one income family, and finding it more and more difficult to get by monthly, much less save money for the future. We have a 403B from a previous employer that we could close and use this money to pay off credit card bills, some medical bills, and create a monetary cushion to build on.

Generally speaking, it is not a good idea to close a retirement account before retirement age, unless for emergencies. You will need to pay taxes on it, and in addition a 10% penalty. I think you should discuss this with a qualified financial counselor, giving them all the specifics of your current situation. They will guide you better once they have the data in hand. Here is a list of govt approved counselors listed by State:

http://www.justice.gov/ust/eo/bapcpa/ccde/cc_approved.htm

Hope this helps.

Republicans are posing a contract with various credit card companies, where if you join the military, your credit card debt will decrease as you serve in the military.

I dont know if this is in addition to the already absurdly high signing bonuses, and paid college tuition.

The problem here, is that even tho we have a volunteer army, we are luring low income, uneducated, and potentially now heavily in debt people. In other words, sending people to war, that the republicans dont really want in society anyway, which is why death tolls mean nothing to bush. You never hear of a rich kid joining the army, but you do see an awful lot of commercials geared towards african american and southern people <white and black, but the south is statistically the poorest part of the country>. This is not a mistake, it is designed to lure a target group of americans to join the military, and republicans, especially bush doesnt care if they live or die.

Thoughts on the Debtors Army?

I have no problem with helping someone clear Credit Card Debt, but you’re right, the INTENTION of this is bad.

Is this the fiscal responsibility that conservatives tout?

http://img250.imageshack.us/img250/5593/hiskid2dm3.jpg

I have got the intrest down to 2% and am paying a very low monthly amount due to our hardships is it possable to get them to reduce the balance

If you are in serious debt, debt settlement is a much better option than bankruptcy. (As you know, debt settlement is the process in which you stop paying your creditors for some time and save that money so that you can then negotiate with them to settle the debt for a lesser amount.) A bankruptcy will be listed and hold your credit score down for 10 years, while the delinquent payments incurred while enrolled a Debt Settlement program will be there for only 7 years (and in some instance, even less). Another important factor to remember is that a typical debt settlement program ultimately resolves your debts for much less than other debt relief options. And, unlike bankruptcy, you won’t have to sell your house or other assets in order to free yourself of your liabilities.

My sister is debt-ridden and CC companies already forwarded it to lawyers. Can she still work on it and how can she possibly eliminate all these debts?

There are ways to eliminate credit card debts and your sister can still work it out. There are many possibilities now to get rid of these credit card debts.

Check this out and see how you can give your sister the right ideas on how to do it.

Quit using your credit cards and pay them off….. works every time.

I was working a job, $12/hour and living off it, or not, and ended up $3,000 in credit card debt. I just started a better job at $18.5 an hour and need advice on how to best pay off that debt. Wait till the end of the month and use left over money? Pay at each paycheck? How much at each paycheck- a set amount or as much as I can? How do I stop from recharging? I have considered cutting it up but I want to keep it for emergencies or what not, and I’ve tried freezing and having my boyfriend keep it without success. HELP! Thank you
Also, it is all on one card- nothing to really consolidate.

To stop charging: Take the credit card out of your wallet. Get a big bowl. Fill the large bowl with water. Put the credit card in the bowl. Put the bowl in the freezer. You still have the card — but have to thaw it out before you can use it. Then you have to decide if it is enough of an emergency to thaw out the card.

If that does not work…..then you don’t want to be out of debt.

You are in debt because you chose to be. You chose to have a life style that involved debt. You refuse to make the changes to your lifestyle that are needed to get out of debt. I highly recommend Larry Winget’s book: Your Broke Because You Want to Be.

Debt is like fat. It takes time to gain it. It takes time to get rid of it. Either way, you have to work hard – make sacrifices and life’s not fun while you’re doing it.

If you are fat – it because you chose to be. You chose not to make good fat choices. You chose not to exercise. You chose not to do what it takes to get the weight off. (I know….I battle the bulge). Well. Debt’s the same way.

Stop making excuses. Stop spending. Put all extra money on the debt. Accept responsibility for your financial decisions.

Many people are telling me that regardless of that $6,000, now’s the time to buy. My plan is to systematically pay off that card while saving at the same time to have an emergency reserve should push come to shove and I’m in a financial bind. I want to go into the home buying process with only my student loan debt to worry about. Outside of paying off the card in its entirety before purchasing a home, what other options do I have? With the market the way it is and my good credit score (730-ish, debt-to-income ratio around 10%), I’m sure there are options available to help me obtain a home faster.
I should make it known that:

1) I live with my folks who aren’t charging me rent.

2) I have an open to buy of $25,000 in credit.

3) I don’t consider myself in financial trouble. I have a 401K and a T-Rowe money market account I’m making continuous contributions to.

I don’t put any stock in anyone who claims they can time the market, any market – real estate or otherwise. You are on a good path towards building up your net worth, cleaning up your debts and sound fiscal responsibility. The debt payoff and savings plans are a great idea.

Go with your gut and buy on your own schedule. The idea is to not always take the debt banks are willing to lend you, so while there are options available, they may not be in your best interest. Pay off the card and stash away your emergency fund before taking on a mortgage.

I have heard on the radio about a program that, if you have over 10,000 in credit card debt, will cut your debt in half as part of the Recovery Act. Wouldn’t something like that hurt your relationship with the card issuer

The answer to your question is: YES, there is a way to eliminate (more than) half of your credit card debt if you have over $10,000 in unsecured debt.. but it doesn’t have anything to do with The Recovery Act. That ad is most likely a marketing ploy by a debt settlement company. And yes, debt settlement will hurt your relationship with the card issuer, as well as your credit score, and debt settlement companies can’t guarantee those results. I would not do business with any debt settlement company, but not necessarily for the reasons that that most people will give you. Some will tell you that all the debt settlement companies are scams (many of them are, by the way – but there are legitimate companies as well). Others will tell you that you can do just as well negotiating the debt yourself. Still others will give you the ‘holier-than-thou’ answer of ‘stop spending money, get a 2nd or 3rd job, and put everything you make into paying down your debt’ – and they’ll say this without any knowledge of your individual circumstances. If you can manage to pay your debt as agreed, that it almost always the best option. But for some people, their current circumstances simply won’t permit that. And the fact that most credit card companies have recently raised interest rates to 20%, 30% or more (even on historically good paying customers) doesn’t help the situation. So settling debt is a perfectly legal and legitimate method of solving the problem without going the bankruptcy route – which will demolish your credit for years to come.

The reason I tell you that you should not choose a debt settlement company is because – even if you find a high-integrity, ethical company that is truly interested in helping you – there is a far superior alternative available: DEBT RESOLUTION. The concepts are similar, but Debt Resolution provides benefits that debt settlement simply cannot offer, and it does so at a better price, with guaranteed results. There is only room for a limited explanation here, but I’ll try to highlight some of the key (and extremely important) differences between debt settlement and debt resolution.

Basically, debt settlement companies operate by acting as a collection agency for the credit card company. They get involved before the creditor actually refers the account to an outside agency, collect a bundle of money from the borrower over time, take out some hefty fees, and offer the balance to the creditor in an effort to settle the account, hoping the creditor will accept 50 or 60 cents on the dollar. These debt settlement companies are just that – private companies offering a service. They do not and can not represent the borrower.

Debt resolution, on the other hand, is an attorney-managed process whereby an attorney can actually perform the negotiation with the creditor on the borrower’s behalf. This is a legal transaction that only an attorney can perform, and it means the attorney can request a settled mitigation on the borrower’s behalf. There are some critical advantages to this, which I’ll cover shortly.

Key differences between debt settlement and debt resolution:

PERFORMANCE GUARANTEE – Debt settlement companies cannot typically guarantee a settlement amount. Debt Resolution guarantees settlement at 45% of the original debt (which also includes the attorney fees). Also, with Debt Resolution, no additional fees will be requested if the debt increases after the agreement is signed. This is written right into the contract with the attorney, and is very important because once credit card payments get behind, huge fees and interest rate hikes may be applied to the account, and can significantly increase the amount of the debt. Debt settlement companies may take advantage of this by basing their fees on the account balance when the account is settled, not the original balance. And since some plans may take several years to complete, those balances (and the accompanying fees) can increase dramatically.

TAX CONSEQUENCES – Debt settlement companies generally won’t point this out to borrowers, but when a creditor agrees to a settlement, they will generally issue the borrower an IRS Form 1099 for the amount written off. As an example, if the borrower has $50,000 in unsecured debt, and the creditor agrees to accept 60%, or $30,000 to settle the account, they will send the borrower (and the IRS) a Form 1099 which shows that $20,000 write-off as income to the borrower. So even though the borrower didn’t receive any actual cash from the creditor, the borrower may still have to pay taxes on $20,000 of additional income that year. With the attorney-managed Debt Resolution program, the resolved amount is a legal agreement between 2 parties, and since no cash was provided to the borrower in the form of actual income from the creditor, THERE ARE NO TAX CONSEQUENCES.

CREDITOR HARASSMENT – Since debt settlement companies cannot represent the borrower, they cannot promise to s

I am wanting to rid myself of all debt and consolidating under one company at first sounded great. Now I’m getting "cold feet"! Should I continue on w/ them or should I "tough it out" and try and do this myself? The chief thing I like about consolidating is that THEY deal w/ headaches for me, not to mention I’m getting ONE payment as well as lower interest and "re-aging" of accounts. Any advice would be appreciated!:)

They can be very helpful just be sure that they are not for profit companies. Also check the Better Business Bureau for the one you pick before signing anything with them.

i hear radio commercials about: if u have more than $10,000.00 in credit card debt, that u can legally eliminate them, is this possible, and how?

Ask lenders for agreement to delete this items from your credit report when paying them. I recommend to get such agreement thru credit repair agency, for example this one – freecreditreport.hotusa.org

I live paycheck to paycheck, if i could knock out some credit card debt I would have more money to do the things I want. What is that fastest way to knock some of my debt down, so that I can actually save some money and enjoy life a little more?

My wife and I were in the same position and got sick of it. We make a good income but had nothing to show for it. We not only wanted to get out of debt, but really have a firm personal financial plan so that when we are ready to retire, we can walk out the door with a truck load of cash. Getting out of debt and staying out of debt is just one step (the most important one) to a good financial life. Please read a book called the Total Money Makeover by Dave Ramsey before you do anything. If you read it, I guarantee you will be stunned at all the dumb things you have done with money over the years. I read it and I felt like someone hit me in the face with a bat by the time I was done. This is a very sound, logical plan that works. It is nothing tricky. It is nothing extravagant, just stuff your grandmother would tell you to do that most of us have forgotten. You have to live on less than you make. Plain and simple huh? Stop using debt. Pay cash for everything or use a debit card. Do not buy useless things you don’t need in the first place. Don’t bu stuff you can’t afford, with money you don’t have to impress people that you don’t really care about. Get on a strict budget and stay there. Once you see how much money you bring in versus how much goes out on paper in front of your eyes, you will be blown away. Squeeze your budget to the point of choking it to death. Every extra dollar your squeeze out, send it directly to the debts and kill the debt as quickly as possible. No restaurants, bars, movies, vacations, etc until the mess is cleaned up. You will have to learn to say no to yourself and your friends.
Now this program is not easy. The hardest part is changing yourself. Money management is 20% head knowledge and 80% behavior. You have to change your attitude and behaviors in order to win. Like I said, the debt elimination portion of this is just one step in 7. Actually debt elimination is step 2. Step one is getting a $1000 emergency fund set up. This is just for emergencies only. Dinner out with friends is not an emergency. You just need to do a budget and get yourself organized. Most people do not do a budget and most of them are broke. Not really a very difficult parallel to draw here. The steps after debt elimination are to save up a full emergency fund of 3 to 6 months of expenses. Then it moves on to investing 15% of income, saving for kids college, paying off house and investing fully for retirement and the like. See, debt elimination is all part of a master plan. My wife and I have been on the plan since Nov. 08. We have not used a credit card since then and don’t need one. We do not spend money on dumb stuff we don’t need. We could take a first class, 2 week trip to hawaii with all the money we spent on DVD’s that are now in a box collecting dust in the basement. We have paid off 2 car notes and a credit card note along with or ever reducing mortgage amount. We have gotten about 20k of debt out of our lives in 10 months just by getting organized and not spending on useless crap. The biggest key is the budget. You have to tell your money where to go and not wonder where it went. Do you know where every dollar is going and how you are going to spend it next month or are you just praying that there is enough money left in the checking account to cover all the bills? Just thought I would ask.
Read the book and get a solid plan. Nothing great was ever built without a plan. It is not difficult. It takes patience and self discipline. You need to get mad at yourself enough to change how you are doing things. Where do you want to be 5 years from now? In the same situation your in now or no debt and saving for a house or retirement? The old saying is the trip of 1000 miles begins with the first step. You have realized you have a problem. The other old saying is that 90% of fixing a problem is realizing you have one in the first place. You’ve come 90% take the other 10% trip. Read the book, get a plan and win with personal finance. You will retire very well off. That is the end goal. Not where you are going to eat next week. It has worked exceptionally well for my wife and I. Please,Please, Please do yourself the biggest favor in life and get you financial house in order. There is nothing more important than that in the long run. Quit living paycheck to paycheck and start accumulating real wealth. If we can do it anyone can.
Good Luck. I wish you all the best.

Pay more than your minimum balance. As much as you possibly can!! If you have any 3% or 4% transfer deals that last for the LIFE OF THE TRANSFER – go for it. This is the best way to deal with large debt.

One thing I can say – from experience – Don’t go crazy on spending to try to create a credit history for yourself. small purchases and paying them off is all it takes. If you are already in big debt – stop using your card and just use cash – if you can’t afford what you want – then wait until you can afford it. But try to hold off and use that money towards paying the CC debt.

I opened up my first cards like 13 years ago and didn’t know what I was doing. I used to buy all kinds of stuff on them just because I was trying to help myself to grow my credit. Well I found out the long and tedious way… that this is not a good idea. After 10 long years of buckling down and being on a strict budget we are finally out of debt. I never missed payments and always remained in good standing with my creditors. After paying off the $57,000 we are now DEBT FREE! Now I use the credit card the way it was really designed for…. to not have to have cash on me at the time but to know that I can pay it off in FULL when that bill comes.

Credit is not ment for living beyond your means – it is a tool to be used wisely. So many people out there now-a-days live way beyond their means – in that they put everything on credit and then pay the minimums. If you can’t afford to buy it today with the cash in your account – then you just can’t afford it! If you adopt this attitude you will keep yourself from alot of heartache and mountains of CC debt.

Good luck & be smart about using your CC

creating a new contract to replace the first
A Novation is a new agreement and is recognized in the law. The definition of Novation from Bouvier’s 1856 law dictionary illustrates:

NOVATION, civil law. 1. Novation is a substitution of a new for an old debt. The old debt is extinguished by the new one contracted in its stead; a novation may be made in three different ways, which form three distinct kinds of novations.

2. , The first takes place, without the intervention of any new person, where a debtor contracts a new engagement with his creditor, in consideration of being liberated from the former. This kind has no appropriate name, and is called a novation generally.

Your Novation Contract substitutes a new debt (zero) and a new engagement for the one claimed by the credit card company.

EVERY credit card company uses the novation contract process. Any time you get a Notice of an update to the terms and conditions of your credit card agreement, this update is in fact an offer to enter into a novation contract (a new agreement). When you use the credit card after receiving the new update, you have agreed to the new terms. Your act of using the card is an acceptance of the new agreement. How else could they change your credit card agreement? Insurance companies use this also, such as when you have a claim for $20,000 for damage and they send you $3,000.

YOUR CARD DISPUTE AND NOVATION

You can use the same process to enter into a new agreement with a card company, under your terms and conditions, by making the company an offer, which it can accept with an act. Simply, you send the card company a check for some amount, say $25, with the stated condition that by accepting the check, it agrees to your new terms and conditions (your Novation Contract). When the card company accepts the check by cashing it, it has agreed to your new Novation Contract. And you eliminate credit card debt in a simple, legal procedure. Get out of debt by using their law to your advantage.

Your notice of debt dispute and Novation Contract is designed to do the following:

(1) Bind your credit card company to the terms and conditions of your Novation Contract which include but are not limited to:

a) the cancellation of any and all prior in-force agreements;

b) its admission that the debt and all prior agreements are now paid in full;

c) its waiver of all claimed right of arbitration against you;

d) its obligation to report the account in dispute as “paid as agreed” to credit reporting agencies;

e) its agreement to not take any collection activity against you and to inform any assignees of the account that it has agreed that the account is “paid as agreed”;

f) the requirement that it verify under oath the amount of debt you allegedly owe in any correspondence to you; and

g) its agreement that any breach of the terms of the Novation Contract by them will injure and damage you and that it will be liable for all damages;

(2) Upon notice, bind any and all collection agents of your credit card company and third party collection companies to your Novation Contract;.

(3) Establish a legal basis for a claim of zero liability for the disputed credit card account;

(4) Establish a legal basis for declaring invalid any and all allegations of debt made against you that are associated with the credit card account and sent through the U.S. mails;

(5) Establish a legal basis for claiming injuries and damages should the credit card company or any collection agency breach the terms and conditions of your Novation Contract; and,

(6) Destroy any legal basis for the credit card company or any collection agent to ignore your card dispute and Novation Contract by your:

a) choosing and using a procedure permitted and recognized by contract common law, the Uniform Commercial Code, the Fair Debt Collection Practices Act, and the Fair Credit Reporting Act;

b) establishing the card company’s obligation and third party collector’s obligation to verify under oath the amount of any debt they allege you owe;

c) removing any controversy between your demand for verification of any alleged debt and any and all presentments by third parties containing unverified allegations of debt against you; and,

d) removing any presumption that you willfully avoided a known debt.

They are not stupid. They will not accept a check that you send "with the stated condition that by accepting the check, it agrees to your new terms and conditions (your Novation Contract)." When the card company rejects the check by not cashing it, it has reject to your new Novation Contract, and it will charge you a late fee because of your failure to send a check without conditions. And they keep you in credit card debt in a simple, legal procedure.