Debt, Dollars & Sense

As an editor for the Money & Finance channel, I troll the web for information on debt management, looking for the best advice, motivating statistics, reputable programs and the like. It seems that no matter where I look, the basic steps to get out of debt are the same: Stop using cards immediately, log all that "bad" debt with interest rates and mininum payments into a spreadsheet, call creditors to negotiate lower interest rates, pay off cards with the highest interest rates first (making minum payments on the others if that's all you can swing). And if those payments can't be managed, then these general advice articles typically point consumers to credit counseling services or debt management counselors who can help determine if bankruptcy is the best option.

Don't you wonder? If there's no secret knowledge or special trick to getting out of debt, why is it so hard for people to do?

I have a few theories to share. One could start with looking at the options and proactive steps not included in the general advice above. 

Why do you believe it's so hard for people to get out of debt? What options and positive steps can consumers take that aren't often discussed? Has anyone tackled debt by using just the basic steps outlined above?

editoronmoney at 10:33:14 AM EDT Permalink | Blog about this entry |  Add to del.icio.us |  digg this This entry has 10 comments: Show Recent | Add your own

What comes after answering that age-old dilemma?
See last post

The last post showed how to decide if you should focus on paying off debt or if you should consider saving despite having debt. Now with that decision made, what is the next step to take?
1-- Jump into action
2-- Find out how others are doing it
3 -- Doing nothing is not an option

Those ready to take action please share your plan, make a declaration in the comments below. (This isn't just for my benefit or to encourage others, psychologists have found that "going public" redoubles your chances for success. Also, you can start your own money blog here.)

If you want to know how real people, not the experts, are handling saving and debt management, there are a few folks I'd like to introduce you to.

Bloggers battling debt:

- The Great Debt Payoff A family with three kids looks to hit the zero mark.
- Debt Defier This blogger seeks to pay off $20k in two years
- Blogging Away Debt A great friend for those who have serious debt to repay
- Debt Hater Single woman gets serious about debt
- Five-Cent Nickle A comparison of three ways to pay down credit card debt.

Bloggers saving for wealth:
- Boston Girl's Open Wallet One of the original pfblogs
- Follow My Money
- Journey to Financial FreedomThis blogger sets his sights on $2 million
- Financial Ladder More balance-sheet sharing

There's nothing better than surrounding yourself with the right kind of peer pressure. These are just a few of the voices in a growing network of PF blogs. Why not get connected?

For the latest professional advice:
Check out Smart Money's Top 5 Tips to Get Out of Debt
- Also see the archives on AOL's Debt Management page

Please share your own comments, links, blogs...

editoronmoney at 1:13:25 PM EDT Permalink | Blog about this entry |  Add to del.icio.us |  digg this This entry has 2 comments: Show Recent | Add your own

When it comes to paying down debt, the hardest part is facing the reality of it: that the money you're making today isn't yours; it belongs to your creditor(s).

The second hardest part is deciding what to do about that. 

It's easy to feel like you're falling behind as the stock market is going up. What if it takes four years to wipe the slate clean? That's four years without socking any money away.

Should you learn to invest? Wouldn't the profits help pay off that debt?

Why not buy a rental property? Couldn't the resale money pull you out of debt with cash to spare?

A search on this topic reveals a consensus among experts, which should give those in debt more confidence in making choices.

The bottom line: If you have bad debt, get rid of it before putting money into anything else. However, there's a big exception to this rule: don't ignore your company's 401k offering. If your employer offers a match take it. That's free and pre-tax dollars. If you have good debt (think mortgage), then investing can be a larger focus.

See the Sources: I added three articles on debt vs. saving here -- AOL Debt Management

How are you doing with your payoff? Any snags? Questions?

editoronmoney at 1:29:06 PM EDT Permalink | Blog about this entry |  Add to del.icio.us |  digg this This entry has 3 comments: Show Recent | Add your own

Readers have been inquiring about the recent rash of debit card breeches.

Hackers broke new ground by stealing debit card PIN numbers from customers of several well-known banks (Bank of America, Wells Fargo, Citibank). Previously, PIN number debit transactions were believed to be extremely secure. We now know this is not true.

However, there's no need to panic. Here's why:

You can still safely shop with your debit card by selecting the credit function rather than debit.

Your bank's security is not being hacked. These breeches are happening on the retail end.

Now that a problem has been identified, security measures will improve.

Read What Happened on the Retail End

Most banks offer zero liability for fraud, though it will take about 60 days to receive your refund. If you are a victim of identity theft and need assistance, visit the Id Theft Resource Center, a non-profit organization founded by Linda Foley, a former victim of employer fraud.

To come:

Safest Way to Bank Online

More Debt Resources

When to Save vs. Paying Off Debt

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editoronmoney at 11:18:01 AM EST Permalink | Blog about this entry |  Add to del.icio.us |  digg this This entry has 5 comments: Show Recent | Add your own

If you're brave enough to make your finances public knowledge, you could earn a professional money makeover. Many newspapers and financial publications feature these makeovers. If you don't mind showing off your money mistakes, there are two reality TV shows looking for cast members.

See Money Makeover List

It will be updated on an ongoing basis.

editoronmoney at 10:02:02 PM EST Permalink | Blog about this entry |  Add to del.icio.us |  digg this This entry has 0 comments: Add your own

If you need more incentive to get out of debt, I have a new one for you.

Just when we've established that debt is "in," Oprah decides to make getting out of it the next trend. She's officially launched America's Debt Diet, which I assume applies to, well, everyone. Folks can follow her online program for free.

Oprah's diet appears to be a larger production of USA Today's 2005 five-week financial diet, including the use of experts Jean Chatzky (AOL Money Coach) and David Bach.

·USA Today's Debt Diet: Week One

·USA Today's Financial Diet Intro

Our national savings is in the red and we're addicted to plastic. Let's hope Oprah's leadership trumps Uncle Sam's. The White House is asking Congress to extend the government's debt limit beyond $8.8 trillion. Otherwise, the United States will begin defaulting on loans.

Have you used a successful money management program? Please share your tips and e-mail questions.

Next Blog: Includes the Free Money Makeovers List!

 

editoronmoney at 4:59:35 PM EST Permalink | Blog about this entry |  Add to del.icio.us |  digg this This entry has 1 comments: Show Recent | Add your own

 

Good News!

Debt is "in." Finally, no more shame, guilt or anxiety. 

I'm not saying that you can feel good about being in the hole, but the fact is, debt is not your dirty little secret -- anymore. With Bankrate reporting consumer debt at nearly $2.2 trillion (and fast approaching the government's $8 trillion I.O.U.), who doesn't have debt?

So we're all in the same club, but togetherness won't make us wealthy -- or -- happy. Maybe it's time to change the status quo?

To learn more about our "in" crowd, read:

· Bankrate's Special on Debt
· The Next Generation Begins in Debt (blog)
· Student Debt Is the Norm

For advice on improving your financial situation, think of the best-case scenario for your situation. (Except the big lotto dream) A new job? Learning a little discipline? What's the one change you could go for that would have the biggest impact on your current situation?

Next Blog: Free Money Makeovers from the Experts
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editoronmoney at 5:25:48 PM EST Permalink | Blog about this entry |  Add to del.icio.us |  digg this

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