We understand all of the undeniable urges of problem spending within modern American life. Bombarded with commercials and advertisements glamorizing the many new and wonderful products - and all the new and ever more colorful and personalized credit cards with which to buy such things - it can seem impossible not to succumb to temptation and give in to foolish shopping sprees. Much of the current problem with the United States economy, more and more of the leading economists are now explaining, has been the two decades long dependence upon American spending habits to counter our failing manufacturing base and keep the stock market humming along. For this reason, a deregulation of credit card accounts and suddent explosion of credit availability was blithely dismissed and indeed subsumed into the larger culture. Credit card debt, like death or taxes, was simply something we were supposed to accept as an everyday part of life.
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Well, with the coming recession, that time is now over. Savings are the mission of the day for every citizen. Only through a disciplined program of personal savings can we help to rebuild our economy and put this country on track for the coming century. First, though, we must deal with all of the many debts - particularly credit card debts - that have accumulated over the past no matter how difficult this may at first appear, especially for those younger borrowers who have never known any other sort of existence. Let's face facts. For American consumers who have come of age since the early 1980s, living paycheck to paycheck has been simply de rigeur and one's social status can largely be determined by the sort of spending you display. From hipster youth who've charged their designer wardrobe and nightclubbing to ever expanding credit card debts or techie suburbanites that feel the need to continually buy the latest Nintendo products or flat screen consoles, debt has become an integral part of the last two generations' sense of self.
As with every addiction, this sort of thing can seem unfathomably hard to change and make right. Correcting the habits of a lifetime's never easy, and, believe it or not, the instructions of the AA self-help doctrine may be useful in altering behavior. Accepting that you have a problem with credit card debts, of course, should go without saying. They say the average American now holds thirteen credit cards, and, since you have already read this far, it seems likely that you fall on the larger side of that number. It should be of the greatest importance to leave the cards in the wallet for any purchase no matter how inconvenient resorting to physical money may appear in our new credit based society. After all, remember, the credit card companies were instrumental in transforming our culture into one in which cash purchases - bizarrely, if you think about it - are looked upon as suspicious. No fools these multinational conglomerates, they have even set forth a string of commercials that attempt to portray credit card conveniences as more effective labor saving devices for the retail community than exact change when nothing could be further from the actual truth. Their profits come from convincing the general public to maintain a steady foundation of unsecured debt and pay compound interest for ever more.
Of course, avoiding the credit cards when hectored by time (or even justifying their usage through increasingly extravagant Automatic Teller Machine fees) could be more easier said than done. For this reason, many borrowers have simply chosen to leave their cards at home. Many problem consumers have even gone so far as to hide them in hard to reach places - behind difficult cabinets, within pottery, any number of different solutions; it can be thought of as a sort of game; try making a paper mache pinata to be burst open when the debts are finally cleared away - just to avoid the lure of home shopping networks or the irresistible temptations of online purchasing. If, still, this has no real effect upon credit card sales, you may have no other alternative than to give away the cards to friends and family or even cut them up with scizzors and burn the remains. While we would hardly recommend such a procedure - out of sight and out of mind should be a decent enough solution - the most important element to successfully eliminating credit card debt remains a halt to debt spending.
Well, to be perfectly honest, proper debt relief is really more than just an end to spending. For consumer personal finances to fully be rehabilitated, there also needs to be a sudden cessation of any sort of foolish purchasing, and, to recite another tried and true adage from the self help community, this may require the borrower to distance himself or herself from problem friends and acquaintances. As we have said, there is so much more to life than merely impressing a temporary social scene or trying to keep up with the purchasing power from friends that may just have significantly greater income. For twentysomething borrowers absent familial pressures or some specific reason for their burdens, credit card debts spiral out of control almost solely because they wish to maintain a style of living that they simply cannot afford. For that matter, the succession of defaulted mortgages has similarly hit a senior set that buys boats or takes grandiose vacations because they believe that is their entitlement as Americans. It is time, as a country, to go to the mattresses, save as much money as is humanly possible in order to pay down unsecured bills, and - tough as it may seem - rid your life of those people that will not assist and expedite the road back from spending addictions.
Just because you've attempted to alter your mindset, of course, does not mean everything about your finances will suddenly be bettered. For one thing, after years of spending without regard to need or capacity, it turns out to be very difficult to accurately assess what your real budget should be. Gross annual income, these days of temporary work (even for college educated professionals), could even be somewhat tricky to figure - particularly for those small business owners or commission based salesmen who are reasonably expecting to see everything about our economy fall in the years to come. Similarly, can we genuinely say what our heating bills shall be if the price of gas continues to rise so exponentially high? The most we could ask from interested borrowers is merely to sit down and attempt to figure out a worst case scenario for both their monthly outlay for the normal utilities and their predicted earnings, presuming jobs are even maintained, so that they may go to the next step. In both cases, after all, changes can still be made. Consumers can attempt to take out second jobs or ask members of their family to consider part time employment - or, even, if they see the writing on the wall, update their resumes for a recession proof industry. At the same point, while most utilities are beyond our control, there are several obvious cost cutting techniques (sweaters around the house, turning off lights except when expressly necesarry) that should not need further explanation. And some so called utilities, like cable television or lawn maintenance services, may be able to be eliminated without undue hardship.
Once you have done the best you can to estimate future earnings for the household and - keeping in mind both the advised reductions of usage and well portended rise of costs - the future expense of utilities for the coming year, the next step is a bit more tricky. For most American consumers, much of our actual costs escape conscious thought. Growing accustomed as we are to utilizing credit cards for every single purchase and ignoring debts until they can no longer be avoided, we have found ourselves in the habit or spending without regard to need or utility or even, and this could be most damaging, memory. For this reason, it is necessary to take notes on all purchases - no matter how seemingly infitessimal - for an entire month, and, then and only then, sit down with the entire household to determine the best ways to eliminate some of the less critical spending to better focus cash outlay on the aforementioned credit card debts. Whether shopping for generic brands (almost always indistinguishable from their more high priced equivalents) or buying, depending upon the size of your family or specific needs, items from bulk discount stores, there are any number of seemingly minimal maneuvers that consumers can avail themselves of to lower expenses and funnel that money to their existing credit card debts. Even abandoning the morning coffee and poppyseed muffin on the way to the office, much as you have grown to look forward to that or any similar small pleasure, can save upwards of a thousand dollars a year. With credit card debt elimination as the ultimate motivation, it should not be that hard to tighten your belt for the near future.
There are, of course, debts to be considered besides those of credit cards and other such accounts. Secured financial obligations, those that are attached to some form of physical collateral (or, for the purposes of the American economy, even though the notion may seem counterintuitive, student loans), should also be dealt with, but, perhaps, not with the same sense of immediate danger that credit cards tend to instill. For one thing, secured debts - even those sub prime second mortgages and home equity loans that have effectively destroyed our financial markets - rarely have anything approaching the interest rates offered by the majority of credit cards. For another, at least as used to involve real estate investments, there should be some degree of appreciation seen in exchange for the debt load accumulated. That's hardly true with automobiles, famously their blue book value drops as soon as they leave the lot, but most Americans, for better or worse, cannot be expected to give up their cars: though, with the price of oil so very high internationally with no end to the raises in sight, many consumers are trading in their vehicles for used cars with better gas mileage and putting those savings straight into their credit car bill repayments. Walking, bicycling, using public transportation or other low cost means of conveyance would be ideal, of course, but we have no such illusions for the nation as a whole.
Credit cards really are the greatest burden draining the life blood from household economies, and those must be the debts that demand prioritization. Even with that said, though, there are still decisions that must be made. When calculating which debts to first tackle, the main question comes in the manner of a choice of strategies - should you try to pay off the lowest debts or the highest interest rates. Much as it may make sense to concentrate on the higher rates (since, obviously, with compound interest adding to the balance totals each day, these debts will be the most difficult to completely eradicate), your authors would instead try to take down the smallest obligations. After all, these smaller debts tend to have not inconsiderable rates themselves, and, when discussing successful debt relief programs with those borrowers that have managed to actually rid themselves thoroughly of unsecured baggage, most consumers talk about the mental relief that erasing even a single bill of a few hundred dollars can bring. It's a long struggle through the morass of consumer debts and so much of successful debt elimination must depend upon philosophical changes of behavior and a new mentality that prizes savings. Anything that can aid and reward such a mind set should be taken very seriously indeed.
While we hope these tips may be of some help to borrowers working to improve their financial situation and lower their overall personal debt loads, we also recognize the limitation of discussing household economic activity without any knowledge of the family's specific annual earnings, debt holdings, and their overall plans for the future. For this reason, much as there are many debt counseling schemes that only seek to mislead their clients for a more than healthy fee (like the Consumer Credit Counseling industry which actively collects money from the credit card companies as well as the debtors they are supposed to be aiding), there are an equal number of debt professionals who would be of great service to borrowers that need some experienced guidance to better assess the repayment solutions available. Debt settlement firms, to take one example, often may offer initial consultation for absolutely free while analyzing the potential client's suitability for the program. To be brief, the debt settlement strategy attempts to negotiate down the total amount owed from each creditor in exchange from a heightened payment plan generally between three and five years. Clearly, this requires a disciplined budgetary plan from the borrowers (as well as a leap of faith from the debt settlement company itself), but, with the potential of eliminating credit card balances by as much as fifty percent before the first payment would even be made, it certainly would be worth the time to try.
The reason that the creditors would agree to cut out such a significant chunk of the borrower's signed obligations should be obvious, as well. Whenever debt elimination is discussed, the elephant in the room is Chapter 7 bankruptcy protection. Now, as most of us know, the legislation of recent years has severely neutered what most consumers could reasonably expect from bankruptcy nowadays. Tax liens, student loans, and court assessed penalties are not even considered within the boundaries of the program (and congress has threatened medical bills and hospital costs may be next to go). High priced and essentially worthless courses for debt management must be passed before borrowers can either declare bankruptcy or enjoy the eventual discharge. Bankruptcy attorneys, more important than ever as conflicting state and federal laws complicate the system, continue to raise their own fees - no free initial consultations to be found there. Alteration of the United States Bankruptcy Code has greatly raised the probability of debtors' property seizure upon court trustee discretion, and unlucky borrowers may find their possessions sold by auction to repay creditors without any legal recourse. Furthermore, depending upon income, borrowers may not even qualify for Chapter 7 protection no matter the extent of their total unsecured debt balance!
Still and all, for an unlucky few, bankruptcy protection may be the only light at the end of the tunnel of debt elimination. For those consumers who have faced true financial calamity, there may be no other way to rid themselves of a lifetime's accumulated credit card debts. Honestly, from reading a few paragraphs on the internet, there is just no way of telling what debt solution alternative would make the most sense for you. At the same point, there's nothing wrong with begging a program of cost cutting and credit card debt elimination at your earliest convenience. Saving is so important these days, and almost nothing should be thought more crucial to eventual household security than erasing credit card debts. This is where we are as a nation and as a conglomeration of personal consumers. Do whatever you can to winnow down those credit card debts, and, over time, we can reform some manner of savings and proper budgeting to ensure our collective economic stability.
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