Are You a Charge-aholic?
Most people have a credit card or two, and others have more. Although credit cards are a great way to establish a stellar credit rating, they are also a way to get in way over your head in debt. You need to know your limits, your credit card limits and if you are a charge-aholic. Discerning these factors can put you in charge of your credit card conundrum.
Video: Debt Settlement
Limits – Yours and Your Credit Card’s
In order to understand your financial situation, you’ll need to know two things – your limits and your credit card limits. For good measure, your credit card payments should never exceed 25% of your income. Your credit card balances should never exceed 25% of the credit limit set for each card. Some experts even suggest as low as 10% on each. In addition, you should never have more than two or three credit cards, total. Period. End of statement.
If you are exceeding these limits regularly, then you need to reassess the need for credit cards. No one should ever live off their credit cards. If that’s happening, then you are in need of an adjustment that will help you bring your financial welfare into focus. Credit cards can be used to your advantage, as long as you are not letting the credit cards use you.
Charge-aholic? There are signs to look for to know whether the credit cards are using you and to know if you are a charge-aholic. Answer the following questions honestly:
- Do you use credit cards every time you purchase something?
- Do you use credit cards to pay monthly recurring bills – e.g., cable, satellite, phone?
- Do you take pride when people know you’ve got that platinum Chase credit card or that clear American Express card with no credit limit?
- Are your credit cards a symbol of status for you?
- Do you want others to be impressed by the credit cards they see when you pull out your wallet to pay for your bill?
- Do you make sure others do see your credit cards when you pay your bill?
- Do you have problems saying no to things you want to buy if they are not budgeted?
- Do you have difficulty saying no to the things your family wants to buy if they are not budgeted?
- When you cut up credit cards, do you order replacements from your credit card companies?
- Are you, or have you been, over the limit on any of your credit cards?
If you answered, “Yes.” to any of the above, then you may be a charge-aholic. Yes, it is a dangerous place in which to be, indeed. There is light at the end of that tenuous tunnel, though, so read on.
New Strategy, New Vision
First of all, if your credit card payments are more than you can afford, your financial strategy is obviously not working for you. You’re gonna need a new strategy, a new vision!
You will have to rethink your approach in regards to your credit card debt. There are alternatives to addressing that debt you’ve accumulated. You should consider the following options:
- Find a 0% balance transfer credit card with a lower interest rate and maybe transfer funds.
- Negotiate a one-lump sum to pay off each of your cards.
- Bankruptcy may be a positive, viable solution.
Lower Interest Rate. You can do some research on the Internet and find all kinds of credit card companies offering 0% balance transfers and lower interest rates. Just make sure you know all fees associated with the card, and find the one with the lowest and minimal fees. Also, know what the penalties are for late or over-the-limit fees, and how much they cause your interest rate to increase. It would also be advantageous to find one that pays you back for purchases.
One-Lump Sum. Are you unable to make your monthly credit card payments, but still have available income? If so, then you may want to think about offering your credit card companies a reduced, one-lump sum. Know going into it that you won’t be considered unless you are several months behind on your payments. Another item to note is that you may have to pay taxes on the forgiven amount. The IRS typically considers forgiven debt as income.
When you present your offer, send it in writing to your credit card companies via Certified Mail Return Receipt Requested. In the body of your letter, address the following:
- Offer to pay 40% of the debt.
- Specify that you expect the credit card company to remove all negative references to that account upon payment. Make sure you note that you want that statement in writing from them before you will pay.
- Note that you want the account noted on all three credit reporting agencies as being paid off and as being closed by cardholder.
These are aggressive expectations. In today’s economy, however, credit card companies are more likely to negotiate with these terms in mind.
Video: World's Worst Credit Card?
Bankruptcy. Don’t have the credit or the bucks to do either of the previous options? If so, then you may want to consider bankruptcy. There are stringent conditions you must meet or complete prior to the courts allowing you to go this route, though. Make sure you’re well versed in the requirements. Among other things, you’ll have to prove your income does not exceed the median for your state.
There are many advantages to filing for personal bankruptcy when you’ve exhausted all your other options, and are unable to pay your debts. Some of them are that it stops all collection attempts, your debts are dismissed, and you start your financial life fresh.
Bankruptcy is not for everyone. In order to find out if this is an option that will work for you, check out some of the following companies that can assist you with your bankruptcy questions and needs.
Clear Bankruptcy
6910 Pacific St.
Suite 216
Omaha, NE 68106
(877) 833-2410
Legal Helpers
1306 E. 17th St.
Idaho Falls, ID 83404
(800) 260-1402
Total Bankruptcy
10955 Lowell
Suite 630
Overland Park, KS 66210
(877) 349-1309
Mary Linda Rushing
8500 Shoal Creek Blvd.
Austin, TX 78757-7594
(888) 743-5787
Paul F. Daley
1197 US Hwy. 1
Rockledge, FL 32955
(321) 504-9935
Michael T. Eramo
160 Sylvan St.
Danvers, MA 01923
(978) 744-2200
Darya S. Druch
1 Kaiser Plaza, #480
Oakland, CA 94612
(510) 465-1788
Scott L. Jensen
1200 SW. Main St.
Portland, OR 97205
(503) 221-1772
Ruth Nelson
7742 14th Ave. NW.
Seattle, WA 98117-4221
(206) 633-2517
Tricia S. Terry
4900 Jackson Rd.
Ann Arbor, MI 48103
(734) 663-0555
Jeffrey B. Peltz
26 Court St.
Brooklyn, NY 11242-1127
(718) 625-0800
Sarah Litchney
2365 Iron Point Rd.
Folsom, CA 95630
(877) 266-4701
Herman L. Jimerson
225 S. Meramac
St. Louis, MO 63105
(314) 862-0069
Shelley D. Krohn
2055 Village Center Cir.
Las Vegas, NV 89134
(702) 873-9500
Ben Schneider
8170 McCormick Blvd.
Skokie, IL 60076
(847) 677-3300
Send this page to a friend ...