Paying Off Debt 101

What is the simplest way to pay off my debt?

This is a common question most people ask a financial adviser, banker or themselves.

Unfortunately and fortunately there a number of simple ways to pay off your debt. The reason I say unfortunately and fortunately is that it gives everyone hope. Because if there were only one way and you just never could do that one way you would always be in debt.

Simple way #1 is to consolidate all your bills into one payment. Usually you would save some money. Then at that point you should continue to make the same payment.

For example let’s say before the consolidation loan you were paying $900 on all your bills. After the loan your new payment would be $700. The simplest thing to do is to continue to pay $900 on the new loan. This way you will be accelerating the pay off of you bills.

Another reason a bill consolidation loan in good is that usually you are lowering your overall interest rate since some bills will be higher and some lower than your new interest rate.

Simple way #2 is to start paying extra on one bill. This is commonly called Debt Stacking. With simple way #2 you continue to make minimum on all your bills except one. Take all the additional money you are paying on other bills or what you can afford and pay that on one bill. Usually this extra money should go on the lowest balance, not the highest bill or the highest interest rate.

What we are attempting to do with a debt stacking plan is to free up more money the fastest or quickest way possible. This is not accomplished by paying on the highest balance since most likely it would take years to pay off instead on months on a smaller balance.

That’s all for now. Check back again for additional simple ideas to pay off your debt.

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Your Magic Wand for Debt Elimination

What if you could wave a magic wand and all your debt is gone? Wouldn’t that be nice? A little wave, maybe a couple words and all your debt is gone. What type of vacations could you now afford if you had zero debt? Would you be able to send your kids to a better school or college?

It is important to take a look at what credit card debt is NOT allowing you to do. If you had an extra $500 a month would this help with your lifestyle or retire earlier? Let’s take a look at a plan that could save you a lot of money: The Debt Stacking Magic Wand

There is one magic wand and that would be to form a debt plan. Now if you did have a magic wand that’s probably what it would produce. BAM. A debt freedom plan that would show you step by step how to elminate debt quickly and effectively.

One of the best plans is a debt stacking plan. All you do is attack one bill at a time. It could be a department store card, a Visa or MasterCard or a car loan. Whatever bill you look to payoff first the most important part is to only pay the minimum on the rest of the bills.

Usually the best bill to attack first is the one with the lowest balance since it can free up more money quicker than higher balances. Some people think paying off the highest balance makes the most sense since they are paying the most interest on that bill. However, usually the smaller balances will have a longer pay off period than some larger balances.

I know this doesn’t seem logical, but trust me it works. A true debt stacking plan would involve paying more than the minimum on one bill. Hopefully you can pay more than $100 a month towards a plan. Keep paying the $100 extra on that first bill until it is paid off. Then take the $100 plus the minimum on that bill you were paying, say it was $40.

On the next bill you would take the entire $140 plus its’ minimum payment, say $55 . On this bill you would pay a total of $195 until that balance is elminated. Keep doing the same with the rest of the bills.

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The Two Choices We Face by Jim Rohn

Each of us has two distinct choices to make about what we will do with our lives. The first choice we can make is to be less than we have the capacity to be. To earn less. To have less. To read less and think less. To try less and discipline ourselves less. These are the choices that lead to an empty life. These are the choices that, once made, lead to a life of constant apprehension instead of a life of wondrous anticipation.

And the second choice? To do it all! To become all that we can possibly be. To read every book that we possibly can. To earn as much as we possibly can. To give and share as much as we possibly can. To strive and produce and accomplish as much as we possibly can. All of us have the choice.

To do or not to do. To be or not to be. To be all or to be less or to be nothing at all.

Like the tree, it would be a worthy challenge for us all to stretch upward and outward to the full measure of our capabilities. Why not do all that we can, every moment that we can, the best that we can, for as long as we can?

Our ultimate life objective should be to create as much as our talent and ability and desire will permit. To settle for doing less than we could do is to fail in this worthiest of undertakings.

Results are the best measurement of human progress. Not conversation. Not explanation. Not justification. Results! And if our results are less than our potential suggests that they should be, then we must strive to become more today than we were the day before. The greatest rewards are always reserved for those who bring great value to themselves and the world around them as a result of who and what they have become.

To Your Success,
Jim Rohn

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Receive Free Credit Card eBook Today

I am giving away for free my book “How to Beat Banks & Credit Cards at the Money Game.” Visit my site http://www.debtstrength.com to receive this great book.

If you have credit card debt and want to learn how to beat banks at the money game this is the book for you.

I take you through what goes into your credit score and how you can improve your score. I have worked with thousands of clients over the years and have found some common mistakes people make regarding their credit score.

I want to help you lower the amount banks earn from your mortgage, credit cards and car loans. Congress thinks that the new rules they passed are going to help, but not for another 9 months.

Even after the changes we still owe over $960 BILLION on credit card alone. That was BILLIONS, almost a TRILLION DOLLARS.

Take advantage of this special offer today. I have sold it regularly for $17, but I want to get this information in your hands.

Thanks

Teddy Danfield

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Fixed Rate Credit Cards: Do They Exist?

Over the years I have many clients tell me about this great fixed rate credit card at5.99% or lower. They didn’t want to put credit card in mortgage since they had this low rate on their credit card. I would tell them that at any point a credit card company can change their terms even if they weren’t late.

Well jump forward to the present time and I told them the truth. Many major credit card companies from Citi, Chase and Bank of America are now raising rates on people who had low promotional rates. Most of the rates are going from single digits to double digits of 12% or higher.

Why are banks doing this to good paying customers? The banks claim it is to reduce their financial exposure from clients. How does that make sense when their customers payments have to increase to make up for the higher interest rate? It simply is a way to make more money.

Remember, currently banks can borrow money from the Federal Reserve at almost 0%. Now they are lending the money at over 10x the rate they have to pay back. Keep in mind banks make money from lending people your money. This is Finance 101: Customer deposits money to banks. Banks loan money to people and earn interest. Banks pay customer very little interest or in this case the Federal Reserve.

A news article said that Wells Fargo earned over $4 Billion dollars this last quarter. Why or How? They could borrow money for almost free from the Federal Reserve and lend it at 5%, 8% , 12% or more. It is very easy to earn a lot of money from interest.

If you owe any money to a credit card company or bank you owe it to yourself to buy my book, “How To Beat Banks & Credit Cards At the Money Game.” It is almost free considering how much money you will save over the years. I have had clients implement the ideas in my book and save over $40,000 or more in finance charges. Most of my clients had a goal of being debt free and most have accomplished that goal.

If you are sick and tired of being taken advantage of by banks and credit cards you need to do something about it TODAY not tomorrow.

Hope this helps.

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Grace Period & Credit Cards

Grace Period in its simplist terms would be how soon interest starts building on purchases. A Grace Period of 0 days would mean interest starts the next day after the purchase. So if you bought a new pair of pants today for $100 there would be interest owed by the time you receive your statement. If you only paid the $100 there still would be a balance.

For easy math let’s say your interest is 12% which means over 12 months you would pay $12 in interest on the $100 purchase. Once again this assumes you continue to owe $100 for the entire year. In this example you would have $1 of interest on the pair of pants you bought. This is an example of a Grace Period of 0 days. Most credit cards have more than 0 days.

A good Grace Period would be at least 20 days for new purchases. Where do you find the Grace Period on a new account application? It would be found on the back of your application. There is a universal box which shows or explains the details of the credit card. One box discloses the Grace Period for that credit card.

The longer the Grace Period the better for you the customer. I have seen this vary from company to company. I’m sure you have credit cards that you have no idea of the Grace Period on most cards. An easy solution is to contact your credit company for that information. They should be willing to let you know the number of days you have for new purchases. If not, you may want to find a new credit card.

I hope this helps when you are reviewing your credit card applications. Grace Period is usually something no one looks at since they are usually most concerned about the interest rate.

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Credit Card Same As Cash

Over the years same as cash purchases has become very popular. Same as cash offers come from appliance, computer, furniture and home improvement stores. What you need to review with these offers is how soon do you have to start making payments.

I have seen offers where payments are deferred for up to two years. Many people think this is great since you don't have to make any payments for two whole years. However, interest is building on the balance.

For example you purchase a new furniture set from you local furniture store for $1,500. The offer states NO payments for two years. The only problem is the interest rate is probably 19.99% or higher. What this means to you the consumer is that you better pay off that entire $1,500 before that 24th month. If not, the new balance will be $1,500 plus the accrued interest. This can quite significant if you haven't made any payments the previous two years.

With deferring your payments for two years the local furniture store or actually the finance company is hoping you won't pay off the balance in two years. The interest charged is how the finance company will earn their money.

The second type of same as cash offer would be no interest for two years as long as you make a monthly payment. How this offers differs from the first is that some type of minimum payment is required to continue the offer. If you happen to miss a payment the offer may no longer be valid. Whether or not missing a payment will cause such a scenario is based on the company. Always read the fine print.

The monthly payment requirement is actually a good feature since you are required to build some type of payment in your budget. Over the same as cash offer you would be lowering your balance. Just like the first offer the interest will continue to accrue on the unpaid balance.

Same as cash offers are very good ways to save some money on finance charges, but you must have knowledge of what happens after the offer expires. If you happen not to pay off the entire balance by the end of the offer period the accrued interest will be added to your balance.

Let's use the same $1,500 I used previously. Suppose you paid only $1,300 on the $1,500 after the two years. According to most same as cash offers ALL the interest built up over the previous 24 months is added to the remaining balance of $200. This amount can be pretty large and the reason why the finance company made the offer in the first place.

The finance company realizes a certain will pay off the entire balance and some will not. You need to make sure you are not one of the one's left with a balance. To make sure this does not happen to you definitely should divide your balance by the number of months you received the same as cash offer and subtract two months. For example the offer is for 24 months you would divide your balance by 22 months. The reason should be obvious. You don't want to come to the 24 month with a large balance still due.

I hope this helps you when you are looking at making a purchase of a new TV, computer or furniture.



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Credit Card Payments

Why do credit cards seem to take so long to pay off? I've met with clients who are stunned that it can take over 15 years to pay off a simple $4,000 balance. They feel by paying a $10 to $15 more than the minimum should cut the pay off date significantly. It does only about 15 years.

What you as the consumer need to do is look at each month's statement and review how much of your payment goes to interest and principal. You may astonished that only $20 or $25 of your $75 amount actually goes to the balance or principal.

Credit card companies really like all their customers who only pay the minimum every month. If you happen to be one of the minimum payers out there, your balance will pay off in about 35 years. Not good.

Another way we increase our pay off dates is to continue to use the credit card for monthly purchases. I had a client each month charge their satellite bill on a Visa and they wondered why the balance wasn't getting any lower. They were charging an additional $125 a month, but only paying $200 a month. When I reviewed several bills I noticed the balance was increasing since the $125 charge and the interest was actually more than the payment. Not good.

What made this even worse was they had the money to pay each month it was just out of convenience they used their Visa. Now they pay out of their checking account with a direct debit.

You can save a lot of money just following some simple steps, but steps we are not taught in school or by our parents. I go over many great tips in my book you can purchase at debtstrength.com The cost of the book can be recouped just by implementing only one idea.

Once again knowledge is power. Increase your Debt Strength today.




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Believe It's Possible by Vic Johnson

This is a great article by Vic Johnson

"Belief is the basis of all action, and, this being so, the belief that dominates the hearts or mind is shown in the life." - Above Life's Turmoil

You will rarely attempt something you don't believe possible and you will 'Never' give 100% of your ability to something you don't believe in.

Some years ago I was listening to a friend speaking to a business audience. She quoted a teaching by David Schwartz from 'the Magic of Thinking Big' that rocked my life. She said, "The size of your success is determined by the size of you belief." Now that was the first personal development book I ever read and I've read it at least 20 times since. I'm sure that I had heard that concept many times before that night. But it impacted me so much that I wrote it down and must have looked at it a hundred times or more in the thirty days after that.

I spent the next few months focused on strengthening my belief in myself and in what I wanted to do. I took to heart what Wayne Dyer wrote in You'll See it When You believe It: "Work each day on you thoughts rather than concentrating on your behavior. It is your thinking that creates the feeling that you have and ultimately your actions as well." So I worked each day on my beliefs by constantly affirming myself using written and verbal affirmations. The years since have been an incredible rocket ride.

One of the best known stories about the power of belief is about Roger Bannister, the first person to run a mile in under four minutes. Before his accomplishment it was generally believed that the human body was incapable of such a feat. But as soon as he had done it, scores of others accomplished the same thing. Thousands have done so since and today it's not uncommon for it to be done by a talented high-schooler. Did the human body change so that this could be done? No. but the human belief system did!

Nightingale-Conant says Napoleon Hill is considered to have influenced more people into success than any other person in history. And his most quoted line from Think and Grow Rich describes the power of belief: "Whatever your mind can conceive and believe, it can achieve." Just believing that statement, truly believing it deep down inside, is a bold step toward living your dreams.

Lisa Jimenez, in her great book Conquer Fear! Writes, "change your beliefs and you change your behavior. Change your behaviors and you change your results. Change your results and you change your life."

And that's worth thinking about.

By Vic Johnson

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Credit Card Debt

We currently owe $957 Billion or more on credit cards. One of the best ways to eliminate credit card debt or any kind of debt is through debt stacking. I have made several posts about debt stacking in the past.

I have several resources you can use to set up your very own debt stacking plan.

1. I the book "How to Beat Banks and Credit Cards at the Money Game"
2. Is a finance program you can use to set up a debt stacking plan.

Both are excellent to help you accomplish your financial goals through debt stacking.

How to use debt stacking? It is very easy you take all the money you are paying on your credit cards or bills over the required minimum. Most people usually pay $20 to $50 extra on a couple bills to attempt to get out of debt.

The little secret is that this is not very efficient. It will work, but not as well as debt stacking. I was with a client once and they paid off one car and wanted to use the extra $300 to pay off the other car. However, this car still had a balance of $12,500. They had several credit cards with a with less than $2000. Debt stacking looks to free up money by paying down lower balances first. By following a plan like this can increase the amount to pay on other bills.

The best way to do this is to purchase a software product to accomplish a debt stacking plan. The amount you pay is minimal considering the amount of interest you will save on your credit cards, sometimes $20,000 or more.

The program will show exactly how much you are currently paying by following your plan. What makes this program unique is that it will take the extra money you were paying and give you an exact plan for you to follow.

I have used a program similar to this one and it is almost exactly the same. The only difference is that is won't charge you a single dime to update the plan. Follow this link to the program. CLICK HERE


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Profits Are Better Than Wages

My mentor, when I was 25 years old, dropped a phrase on me that changed my life forever when he said, "profits are better than wages. Wages will make you a living, profits can make you a fortune." You know it is a bit difficult to get rich on wages, but anybody can get rich on profits. Profits change your whole attitude, even if you start part-time. Whether it's part time on your entrepreneurial business, network marketing company or service business.

It can be a landscape business in the summer or hanging Christmas lights in the winter. It can be training, consulting or tutoring. It can be your hobby such as painting, writing, crafts, woodworking, computers or cooking. But once you start investing even part time effort into your own business, you will find how much more exciting it is to get up in the morning and go to work on your fortune, even if you're only spending a few hours a week doing it.

How empowering it is to be able to go to work on your fortune every day rather than going to work to pay the rent. Now - it is noble to go to work to pay the rent, but if you could also parcel out part of your time - go to work to make your fortune. Your whole attitude changes; your spirit changes. It is in your voice. It is in your face. It is in your gestures. And then you can say, "I am now working full-time on my job and part-time on my fortune because I found a way to make profits." Wow!

And I will know what you mean.

To Your Success,
Jim Rohn


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Credit Card Rate VS Investment Rate

With the stock market in a shambles and your retirement account hurting you may want to take a look at your credit cards to increase your rate of return.

What do I mean by that?

Well, quite simply you have something that does have a guaranteed rate of return. Unfortunately for you it does not benefit you. That guaranteed rate is on your credit card. Think for a minute, what is the current rate on your credit card? Do you have a credit card at 16.99% who is getting that rate? Simple, your credit card company.

Your credit card is the only guaranteed rate of return you have in your control. At this time you definitely should look at ways to eliminate some of your credit card debt. The stock market will come back at some point in time, hopefully pretty soon.

That being said if you want to have more to invest in the future you need to take steps today to position yourself for that opportunity. Imagine for a moment not having to pay that $150 credit card payment and instead put that money into an IRA for your future.

Why should you continue to pay your credit card companies a guaranteed rate of return? I'm sure you'd like to guarantee yourself a 16.99% rate of return wouldn't you? You need to look at my book for some real techniques to reduce your interest cost.

Once again at this time it would be wise to start reducing your credit card debt and then you will have more money to invest later.

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Credit Card Minimum Payments

I was reading a news story today regarding how some credit card companies are increasing the minimum payment percentage. Historically most credit card companies have required at least a 2% of your current balance as the minimum payments. Some such as Chase are going to increase the percentage to 5% of the current balance.

Now this is good and bad. The good part is it will eliminate the 30 years to pay off a credit card and save a lot of interest. Most credit cards if you pay the way they set the payment schedule could take up to 30 year to pay off a small $3,000 balance. That's the good news.

The bad news is if you are currently living paycheck to paycheck you may not be able to make the payment. For example, say you owe $5,000 times 2% would be $100. The new payment would be $5,000 times 5% equal to $250.

I'm not sure how many people could afford an extra $150 today or any time without some planning ahead of time. If all of a sudden you open your next bill and you see your new minimum payment doubled or tripled it would probably effect your budget.

As I said in my book that being debt free is key to reaching your financial goals. However, not if you did not plan for such a large increase. This is definitely something you need to be aware of on your next couple statement. Chase is a large company and I can see more credit card companies following their lead.




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Enterprise Is Better Than Ease

I really like this article by Jim Rohn


If we are involved in a project, how hard should we work at it? How much time should we put in?

Our philosophy about activity and our attitude about hard work will affect the quality of our lives. What we decide about the rightful ratio of labor to rest will establish a certain work ethic. That work ethic - our attitude about the amount of labor we are willing to commit to future fortune - will determine how substantial or how meager that fortune turns out to be.

Enterprise is always better than ease. Every time we choose to do less than we could, this error in judgment has an effect on our self-confidence. Repeated every day, we soon find ourselves not only doing less than we should, but also being less than we could. The accumulative effect of this error in judgment can be devastating.

--- FORTUNATELY, IT IS EASY TO REVERSE THE PROCESS ---

Any day we choose we can develop a new discipline of doing rather than neglecting. Every time we choose action over ease or labor over rest, we develop an increasing level of self-worth, self-respect and self-confidence. In the final analysis, it is how we feel about ourselves that provides the greatest reward from any activity. It is not what we get that makes us valuable, it is what we become in the process of doing that brings value into our lives. It is activity that converts human dreams into human reality, and that conversion from idea into actuality gives us a personal value that can come from no other source.

So feel free to not only engage in enterprise, but also to enjoy it to it's fullest along with all the benefits that are soon to come!

To Your Success,
Jim Rohn

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Credit Card: Why We Still Need Them

I have read a lot of articles lately on how people have to get rid of credit cards because they are the cause of so much financial ruin. I agree that credit card debt is a main cause for financial disaster for many families. However, we still need to have credit card debt.

For one thing if you want to travel usually you need to have a credit card just to reserve a hotel room or car rental. Now this could be a debit card tied to Visa or MasterCard, but you still need to have some type of credit card.

When I worked as a loan officer we usually liked to see on open credit card and one open installment loan. If someone applied for a loan without any open credit card or loan they were currently paying on they may not receive the best rate. Lack of credit history can really hurt someone when they are making a major purchase such as a home or car.

As I stated in previous postings about the importance of reviewing your credit report before making any major purchase. Usually you should obtain a credit report at least two or three months prior to purchase.

Credit cards can also help give us a buffer for unexpected car or home repairs. Most people do not have an extra $1000 or $2000 for a car or home repair. If you do not have any credit this can make getting approved for a loan when you need the money.

It is always good to have at least one or two credit cards available for emergencies. So if you are totally against credit cards you still need to have one for unexpected expenses.





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Keys to Finding Your Genius

Change Your Beliefs. It is up to you to do the work of changing your beliefs. And when you do you will be opening up new worlds - literally! Win the thought battle, which will help you keep negative beliefs out and positive beliefs and thoughts in. Feed your mind with information that will change your belief. But also ask yourself if you are doing that with belief. The truth is that you have an amazing mind with a capacity for learning that is beyond your comprehension. You must believe this. And when you do, you will be unlocking the potential of your mind!

Get the Right Knowledge. Words--if they are not true--are meaningless. I hear children say, "I read it in a book." But is it true? Just because someone says it or writes it, doesn't mean it is true. As learners, we want to get the right knowledge, not just information or opinions. It is our job to seek out information and knowledge and then test it and run it through our minds to see if it is true, and if it can be rightfully applied to our lives in order to make them better and help us succeed. We need to weigh and measure what we learn in order to gain the right knowledge. And when we do, we will be unlocking the potential of our mind!

Become Passionate about Learning. This will take some work, but the only way to do it is to begin learning about things that have an immediate impact in your life. When you learn about a new financial concept that helps you earn money or get out of debt, that will get you fired up. When you learn about a way to communicate that helps you sell more product, that will energize you. When you learn about how to interact with your family in a healthy way and your relationships get better, that will inspire you! Become passionate about learning. And when you do, you will be unlocking the potential of your mind!

Discipline Yourself Through the Hard Work of Study. Learning will take work. Until someone comes up with modules that can plug into your mind and give you instant access to knowledge, you are on your own, and that takes work. The process of learning is a long one. Yes, we can speed it up, but it is still a process of reading, listening, reviewing, repetition, applying the knowledge, experiencing the outcomes, readjusting, etc. Simply put, that takes time. Slowly but surely, when you discipline yourself, you gain knowledge and learn. And when you do, you will be unlocking the potential of your mind!

Learning is possible, no matter what your age. You are never too young or too old. Your mind was created to learn and has a huge capacity to do so. This week, make a commitment to unlock the potential of your mind!

Jim Rohn

One of Jim's Best Products For accomplishing goals
http://oneyear.jimrohn.com?kbid=10123


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New Product to Reduce Credit Card Debt

I just found this great new book to help eliminate debt in three to five years. I received product last week to see if it was really any good. Information seems to be very good.

The best part of the program is the debt stacking excel spreadsheet. Just plug in your current balances, rate and payments then the program will show exactly how much interest you will pay and the pay off date. I go over this in my book at one of the best ways to eliminate debt.

Debt stacking is not something your lender will show you since they are in the debt business. The cost of the program is wiped out by the money you will save in interest, potentially up to 100x the purchase price.

That is only a part of the program, but the best part in my opinion. Debt stacking is how I saved clients thousands of dollars of money.

Go to this link for more information http://tinyurl.com/csxo3f


Combine this program and my book would give an awesome one, two punch on eliminating debt and put more money back in your pocket.

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The High Road Principle

Great Article from John Maxwell

The High Road Principle

By Dr. John C. Maxwell

"It's nothing personal; it's just business," is a commonly heard phrase in the workplace. However, I tend to disagree with anyone who tries to impersonalize business. At its heart, commerce is a human enterprise, founded upon relationships between people.

Most of us spend a majority of our waking hours in our business or at work, and our vocations endow our lives with meaning or purpose. When we devote ourselves to profession, we're giving a piece of who we are to our work. In that sense, business is deeply personal.

In the workplace, as in the rest of life, relationships get messy. Sooner or later, we will be mistreated. A boss will unjustly fault our performance, a partner will fail to honor an agreement, or a co-worker will cut us down in a meeting. Since business is personal, those instances hurt us, and unless dealt with correctly, they can derail us. As a leader, we have to commit to taking the high road when others, intentionally or unintentionally, wrong us.

Four Tips For Travelling the High Road

1) It's Not What Happens to You, but in You That Really Matters

During the Civil War, Confederate General W.H.C. Whiting envied rival general Robert E. Lee. Consequently, Whiting spread vicious rumors about Lee in an attempt to smear his character. Lee had the opportunity to get even, though. Jefferson Davis, President of the Confederacy, was considering Whiting for a promotion, and he consulted Lee's opinion of the general. Without hesitation, Lee endorsed and commended Whiting. The officers who witnessed the exchange were astonished. Afterward, one of them asked Lee if he had forgotten all of the slander Whiting had spread about him.

"I understand that the President wanted to know my opinion of Whiting, responded Lee, not his opinion of me." Lee did what high road travelers do. He refused to be dragged into a game of bickering and petty jealousies by treating another person with respect, even when that respect seemed unwarranted.

2) High Roaders See Their Own Need for Grace, Therefore They Extend It to Others

Let's face it; we all screw up from time to time. Each of us has quirks that we know can be annoying, and bad moments when we're not so pleasant to be around.
People who take the high road recognize their humanness, know that they need to be extended grace, and accordingly are more likely to extend it to others.

3) High Roaders Are Not Victims; They Choose to Serve Others

People who take the high road don't do so because it's the only available option. They don't do it by accident either: the high road goes uphill and takes more effort to travel. Instead, high roaders choose their path as a conscious act of service to others. By taking the high road, they drain animosity and bitterness out of relationships, serving to keep them open and productive.

Interestingly, in serving others, higher roaders benefit themselves, too. As the author of Proverbs wrote, "It is a man's glory to overlook an offense." When we maturely respond to a slight by showing forgiveness, we display admirable character that elevates us in the eyes of others.

4) High Roaders Set High Standards for Themselves Than Others Would

Abandoned as an infant, author James Michener never knew his biological parents. Fortunately, he was taken in and raised by a widow, and he adopted her surname. However, each time James published a book, he received nasty notes from one member of the Michener clan. The relative chastised James for taking on the Michener name, which this person felt the novelist had no right to use.

Despite being berated, Michener did agree with one statement his relative had made, "Who do you think you are, trying to be better than you are?" As James Michener professed, "I've spent my life trying to be better than I was, and I am a brother to all who share the same aspiration."

When we conduct ourselves according to the highest standard, we are less likely to become defensive and take the low road when others attack us. Once you've done all that you can, then you can let the noise of detractors roll off your back like rain.

Summary

In leadership, as in life, others will behave unkindly toward you. When ill-treated, don't retreat into a defensive mode or strike back in anger. Instead, take the high road and discover how rising above offenses frees you from petty arguments and adds to your reputation.

About

John C. Maxwell is an internationally recognized leadership expert, speaker, and author who has sold over 16 million books. His organizations have trained more than 2 million leaders worldwide. Dr. Maxwell is the founder of EQUIP and INJOY Stewardship Services. Every year he speaks to Fortune 500 companies, international government leaders, and audiences as diverse as the United States Military Academy at West Point, the National Football League, and ambassadors at the United Nations. A New York Times, Wall Street Journal, and Business Week best-selling author, Maxwell was named the World's Top Leadership Guru by Leadershipgurus.net. He was also one of only 25 authors and artists named to Amazon.com's 10th Anniversary Hall of Fame. Three of his books, The 21 Irrefutable Laws of Leadership, Developing the Leader Within You, and The 21 Indispensable Qualities of a Leader have each sold over a million copies.

Universal Default & Your Credit Card

One great feature for the credit card companies is Universal Default. The same feature is completely and totally terrible for the customer. I can't say this with enough negative adjectives.

What is Universal Default? A sterile definition is we (credit card company) look at your general credit profile to determine the current rate for you our customer. Can you define general credit profile?

Certainly

When a credit card has Universal Default as a feature it means we (credit card company) look to see how you have been paying your bills to other companies. If they determine you have not been paying some other bills on time they reserve the right to increase your rate to the default rate.

What this actually means is if you are late on say your Visa with ABC Credit Card, but never late
on your MasterCard XYZ Credit Card, the XYZ can increase your rate to the default rate. It does not matter that you were on time with XYZ. Being late on one bill means you have been late on ALL YOUR BILLS!!!

This doesn't seem right or fair does it? Well, at one point a couple years ago nearly 60% of all credit cards had this feature. Presently some have ended Universal Default. However, you should call your credit card company to see if any credit cards you have still have this feature.

I am willing to bet there is still a good percentage still has this feature. Make sure you review any credit card applications for Universal Default. Regardless of rate you should avoid any card with Universal Default since you never know if you'll miss a payment or two and risk having your rate increased on a card you never were late.

Remember debt knowledge will increase your debt strength.

Visit http://debtstrength.com

Lowering Credit Card Limits

I've been reading how more and more companies have been lowering credit card limits. I belong to a forum on credit card debt and it seems to very common nowadays.

In the past I would never have a client lower their credit limits because it can hurt their credit score. Now, instead of customers lowering credit limits, it is actually the credit card company.

Why is a lower limit bad? Well it hurts your credit utilization. Credit utilization is the part of your score that looks at your available credit vs. amount you owe on your credit card. For instance suppose you had a credit card with a credit card limit of $5,000 with a balance of $500. This would help your score.

Now if the credit card company lowered your limit to $1,000 this would lower your score. If you don't believe this will happen to you think again. Many people who pay their payments on time are having this happen to them.

I'm not talking about people with poor credit. This is happening across the board regardless of pay history or credit limits. You need to contact your credit card company if this happens to you. You want to request that your credit limit be restored.

If it's not restored you may want to pay off credit card and potentially look at closing account as a last resort.

Hope this helps.

Pick up my new book, "How to Beat Banks & Credit Cards At the Money Game" at my website http://debtstrength.com

I want you to improve your debt knowledge and therefore your debt strength

Visit http://debtstrength.com

Truth About Credit Card Debt

Credit card debt is hurting so many people. It is the main reason why so many Americans won't be able to retire when they want. More and more people are starting to use a credit card for everyday purchases such as; gas, groceries and dining out at fast food restaurants.

Currently we owe over $957 Billion in credit card debt. All of that debt in earning interest for all the banks and credit card companies. The banks are the one's who actually own most of the major credit card companies we use everyday.

One tip I use to not use my credit card is to pay cash for everything. When I go to the grocery store I use cash. I even attempt not to use my debit card which is tied to my checking account. It is too easy to spend more money than I intend to when using any kind of credit card.

How many times has your spouse used the debit card tied to your bank account and did not tell you? This can create many household arguments which can easily be avoided by paying cash. I had a client use a credit card for buying gas when it was $4 a gallon (thankfully now $2). They did this out of convenience. Besides did you really like forking out $100 to fill up your gas tank?

Well after about 6 months of both spouses using a credit card for gas they had close to a $5,000 balance. Now at first they did have the intention to pay off the balance each month. They earned over $140,000 a year so money was not an issue. It did become an issue when all of a sudden they owed over $5,000 on credit card debt.

At that point they stopped charging gas and started paying cash. On the credit card debt they started to pay $500 a month to eliminate the bill as soon as possible.

It is very easy to build up credit card debt when you start using it for everyday purchases. If need be start carrying around only one credit card with say a $500 limit. A low limit charge card should cover any routine expenses if you happen not to have enough cash.

You are not going to beat the credit cards at the Money Game. You can use some techniques to your advantage.

Visit http://debtstrength.com and take a look at my book "How to Beat Banks & Credit Card at The Money Game"

Fixing Credit Card Mistakes

A common complaint I have heard from clients is regarding late payments posted by the credit card company. The first advice is to contact the credit card company about the late payment to see if they can not report it late. Note: They do not report instantaneously to a credit bureau.

Usually it takes about 1 or 2 months for them to report. For example right now we are in the month of March. If you pulled your credit report most of your creditors still have not updated your report since January. There is a lag between the time you sent in your payment and the time it shows on the credit report.

That being said let's say you were late with a payment and it does show on your credit report as a late payment. What should you do?

First thing is to get a payment to them and try to get current as quick as possible. If you missed one payment you do have to pay two payment the next month. Just because you made a payment will not make your account current. You have to make this month's payment as well as the payment you missed and late fee possibly.

For example let's say you owed $150 as your minimum payment and you did not make the payment. Next month you will have to pay at least $300 and possibly the late fee. I know some creditors require you to pay the missed payment plus any late fee. You want to make sure you know the rules so your account will show current on your credit report as soon as possible.

Once your account is current, attempt to stay current as long as possible or when the account is paid off. A recent late payment will hurt your score more than a late payment, which is two years old. When a creditor reviews your account they will see a missed payment, but then how soon you were able to get the account current and stay current.

Teddy Danfield
Visit http://debtstrength.com

Grace Period On your Credit Card

Grace Period? What is Grace Period? The easiest definition of Grace Period is how quickly will the interest meter start running on new purchases. I've seen some credit cards have 20 to 25 day Grace Period and some with 0.

Let me give you an example of 0 day Grace Period. If you go to the store today and buy a new pair of shoes for $100 when will the interest start. Answer today. If your buy something today on March 6 and your bill is due on March 26 you will be charged interest on the $100 from today until March 26 when your payment is received.

In this example your balance will not be paid off since there would be 20 days of interest owed on the $100.

The best advice I can give someone is to look for the longest Grace Period when applying for credit cards. Most offer a 20 day Grace Period. This is a key factor when you are using a credit card you intend to pay off every month.

I had some clients use a credit card for all their purchases of groceries, gas and other purchases during a month. When they would receive their bill they paid the entire balance off. Why did they do this since they had the cash? It was tied to a airline mileage club. Each year they usually received 3 or 4 free tickets by using the card to their advantage.

They did not care about the interest rate since it was 16.99% since they never carried a balance. Is this good for everyone? NO. You need to have the discipline and the income to do something like this every month.

Read more tips in my book "How to Beat Banks and Credit Cards At the Money Game" I want to help people increase their debt strength knowledge since that is the best way to become debt free and financially independent. Go to http://debtstrength.com


Teddy Danfield

Small Purchases Add Up

Paying your bill at a store and then using same store credit card for more purchases. This is one of the most common mistakes I see people and I was very guilty of this offense.

Let me paint you a picture. Your bill is due at say Target or Kohl's and you forgot to send the bill. You decide that's ok, I'll just go and make the payment at the store. Now your trapped since going to the store can potentially lead to more purchases.

After making your $50 payment there are some sale items you decide you need to purchase. Going through the store you discover a couple items you also need to buy. Finally at the register you discover you don't have any cash to pay your $75 bill. No problem just use your credit card you just paid the $50.

Does this sound familiar? It should because accepting payments at the store is a great way to guarantee repeat business.

I don't know how many times myself or wife have gone to a store to pay a bill then walk out with more stuff.

If you have a goal of becoming debt free do yourself and favor. Pay your bill online or send it in the mail. Make up a calender for due dates for your credit cards. This also may force you to pay off your bills when you realize how many credit cards you pay each month.

Being debt free is going to be such a joy. I have one goal and that's to have only one bill. Uncle Sam. I'll gladly pay my taxes if I have no car, home or credit card payments.

http://www.debtstrength.com

Establishing or Re-Establishing Credit

When I worked as a loan officer people in their early 20s had the most difficult time being approved for credit. The most common reason was due to lack of credit history.

To build or rebuild credit some of the easiest places to be approved for credit are department stores. Stores like Target, Dillard's, Best Buy, Old Navy. A store where you are not looking to buy thousands of dollars of merchandise.

Most stores will give someone young a credit limit of $300 to $500. Now the key to building credit is to charge something for maybe $50 to $100. The important step is not to pay off the balance right after you receive your first bill. Some people ie your parents will tell you that you should pay off the credit card in full each month to build your credit. They falsely believe showing that you never carry a balance is good.

However, they do not realize most creditors do not report for two or three months after an account is open. Charging $100 and then paying off the balance the next month never establishes a balance and therefore thecreditor will not report any activity to the credit bureau.
Not good.

No matter what any tells you this is what you need to do to establish a credit history.
1. Buy something $50 or more
2. Pay minimum payment even if only $10 each month
3. NEVER MISS A PAYMENT!!!
4. Pay minimum for three or four months
5. Then pay off balance after fourth month
5. Will show 4 on time payments on your credit report
6. You just established a credit rating!!!! Very GOOD

Now after doing this and you decide to charge something again for $100. NOW you should follow your parents advice about paying off your credit cards every month.

My book is now complete!!! Finally. Go to www.debtstrength.com to purchase.

Teddy Danfield

Contacting Credit Card Companies

During tough economic times it is best to be proactive than reactive. I know many credit card companies have programs which can lower rates if there is a legitimate reason. A legitimate reason isn't I think you charge too much lower my interest.

A legitimate reason is lower pay due to less hours, very common today. I had a client who worked on commission and went from earning almost $90,000 a year to about $70,000 a year due to poor economy. He started to miss payments and he went to default rate of 26.99% or higher on some cards.

I had helped him refinance his home about two years earlier and he asked me for advice. I told him to call his creditors since he did have a real reason for being behind on cards. Some lowered their rate to 2% or 3% for 6 months at a time. He would have to call again after the 6 months to reapply.

This helped him get caught up and actually lowered his balance. After the 6 months he was able to get his budget under better control and hasn't been late since.

Advice is to contact lenders to see what programs they have for you. Some may be jerks and not help, but at least you know. That's what my client found out. One creditor told him to apply somewhere else or transfer his balance to another card. Not real helpful.

One of Worst Credit Card Features

As I wrote in my post on Friday regarding the little box on back of credit card applications http://debtstrength.blogspot.com/2009/02/little-box-on-credit-card-offers.html.

One feature you need to avoid is one called two-cycle billing. Two-cycle billing is how your credit card company calculates interest on your balance. There are two ways: 1. Two-cycle billing and 2. Average Daily Balance.

The later is the best option for you the consumer. In the past Discover card was a company that used Two-Cycle Billing the most.

How does Two-Cycle Billing work? The credit company looks at your running balance over two cycle billing period meaning 60 days. They charge interest on your balance over a 60 day period of time. For example say you owe $1,000 on a credit card and pay $700 on month. When they calculate your interest they still use the $1,000 as an amount to charge interest the next month.

Average daily balance calculates your actual balance only 30 days or time between statements. If you owed $1,000 and paid $700 the next month you would pay interest only on the $300 balance.

Today, more and more companies are going away from two-cycle billing. However, you need to look carefully at the little box to see how interest in calculated.

When I had a client bring in any applications I always threw away any that had Two-Cycle billing regardless of interest rate. Yes they are that bad.

Only apply for cards with average daily balance.

Upcoming book "How to Beat Banks & Credit Cards at The Money Game." Subscribe to stay updated on release. Should be this week. Making final edit and uploading to site.

Little Box on Credit Card Offers

We all have received credit card offers promising: You're Pre-Approved for a 5.99% or Pre-Approved for up to $10,000.pri

Well this big bold print is supposed to make us act just like Publisher's Clearing House announcing we could be a winner. We all know that isn't true, but we still send in hoping to win that million dollar prize. They do include a page on rules and possibility of winning, the "fine print"

Now credit card companies do the same and they have rules page with "fine print." Where do you find the rules page? Right on back of the application.

It is a small box broken down into segments. It describes the terms and conditions otherwise known as rules.

They all look the same. It discloses: Fees, Interest Rate, How long rate is good for, Default rate or Maximum Interest Rate, How interest is calculated.

This is a must read before applying for any credit card. "What the bold giveth, the fine print taketh away" Always remember that saying because it will save you money and trouble later.

The government regulates what must disclosed on each credit card application. Always turn over the application to see its' rules and terms.

Hope this helps.

Teddy.Danfield@debtstrength.com

Examining Credit Card Offers

It is important to examine any credit offer. I had one client bring in an offer which was pre-approved for a credit card. Now this person did not have good credit and they were attempting to re-establish their credit.

The offer was for a $1,000 credit limit with a competitive rate of 14.99%, not bad for someone with bad credit. The problem were the fees to start. My client was ready to apply for the credit card, but wanted me to review. I went over the disclosure part of the agreement.

This credit card had nearly $250 just in fees to get started. Now the customer did not have to come up with fees. The fees would be included in the new balance. Meaning once the application was processed she would owe $250 right away. For her to receive the credit card she indirectly would have to pay $250 just to have the ability to use the card.

This was not a good offer to help re-establish her credit.

I will go over a couple other tips to look out for when applying for credit cards. These tips can benefit someone with perfect credit if you just look at the interest rate.

Mortgage Refinancing

When someone goes to refinance any loan they need to look at costs associated with the loan. There is no such thing as a loan with no costs.

Most refinances puts the costs of the loan in the loan itself. For example let's say your home is worth $100,000. You want to borrow $85,000 to pay off your present mortgage and some credit cards. So the total amount being sent to creditors would be $85,000. However, the cost of the loan which is usually between 1% to 5% of borrowed amount.

When you go to the loan closing you will see the amount you have to pay back is higher than $85,000. As stated above your new loan balance will be $85,850 to $92,250. Possibly higher depending on the bank or mortgage company.

What are all the costs with a loan? Certain items can't be avoided like Title Insurance, Appraisal Fee and Recording Fees.

In my next couple posts I will go over each costs and what should be an average cost in different areas disclosed on your Good Faith Estimate.

Check back tomorrow for further details.

Other Credit Card Sites & Blogs

I'm sure this is not the only blog or site you come to for credit card advice. I visit other sites to see what others are saying or doing.

One thing that amazes me with some sites is they promote themselves as a site to help you get out debt then have ads to apply for credit cards. What is up with that?

You go to their site for information on how to eliminate debt and they are offering you a way to get more debt. I think this is terrible and one of the main reasons why you will never see any credit card offers on my web site.

As I stated in previous posts I am working on a book which will help you eliminate debt. It is taking a little longer because there is a lot to be said about getting out of debt. The book should be done by first week of March. It will be available at debtstrength.com.

In any economy getting out of debt is very important key to your success. I have never read a book or article that states to become financially successful you need to stay in debt.

In fact, most state the opposite is your key to success. Another topic I am interested in writing is a book about putting yourself in a position to retire by eliminating debt within 5 years of retirement.

This will be an excellent book for all of you Baby Boomers who don't believe they can retire due to amount of debt and low retirement accounts.

I do believe it is possible, but it take discipline on your part to eliminate as much debt before retirement. Carrying a large house, car and credit card payments is a great way to NOT retire. Need for a plan is essential. This book should be done in March.

Look forward to getting both books completed and out to you very soon.

Credit Report Errors

I want to thank all my RSS subscribers. I now have 184 people subscribed to my blog. In only one month I think that's great!! Let your friends know about this & forward to them.

Today's topic is one of my favorite topics regarding credit report errors. Whenever I did a debt seminar, credit report errors was the most asked or actually the one where I had a lot of examples.

I had one person state that he always has difficulty being approved for loans because he is a Jr. His dad has a lot on medical bills and they usually would end of on his. This is common when father & son have the same name. The best advice I could give in that case is to put some type of consumer statement if this seems to be a problem. It may not remove any incorrect information from your report, but at least you have something in your report regarding this error.

Another common error would be having accounts still show open even though you haven't used in years. This happens a lot with department store cards. Usually someone opened an account for some special promotion to save money. The customer then pays off balance, but the account stays open of years. Best thing for someone to do is to review their credit reports annually and if old accounts are actually closed.

I have had people review their credit reports and myself to see the number of old accounts no longer in use still open. Accounts you should look at closing would be department store accounts. They do not really help that much for anyone with established credit. They probably could be lowering your score.

The best action someone can do is to at least review all three credit reports annually. See if there are any errors and attempt to fix the errors. Do this by contacting credit card company and request to close the account or ask how the error happened.

Hope this helps

Tips to Improve Your Credit Score

Nowadays having a good score effects more than just loan approval.

When you go to rent an apartment your landlord will obtain a credit report on you and if you have a low credit score he will charge you more per month.

A future employer will also review your credit report. This may be a deciding factor if your hired because you could be competing against someone with the same qualifications with the only difference is your low credit score.

Let's take a look at how to improve your credit score.

First you have to know what your credit score is which can be obtained from any of the credit bureaus.

Second obtain your credit report and look for errors.

Third if you have been behind on bills make plans to get current. Contact your lender to see if they have any plans which will help you get current.

Fourth don't apply for any new credit cards if not needed. Remember inquiries can lower your credit score. Note: You can review your own credit report without any penalty

Fifth thing do is pay down your credit cards since higher balances can hurt your credit score

Sixth thing to do is look to consolidate all your credit card debt into an installment loan. Rate may be higher than some credit cards. Why should you do this? Well, credit card debt is viewed more negatively than the exact same balance with an installment loans.

I will go in more detail in my upcoming book on improving your credit score.

Hope this helps people out there.

Teddy Danfield

Top 10 Credit Score Mistakes

Here is a list of Top 10 Credit Score Mistakes people make.

1. Missing Payments
2. Closing All Unused Credit Cards
3. Credit Card "Surfing"
4. Not Knowing Rates & Fees
5. Not Valuing Credit Rating
6. Too Many Inquiries (Applying for A lot of Loans In 30 to 60 Days)
7. Not Contacting Lenders in Tough Economic Times
8. Increasing Balances to Credit Limit
9. Having Too Little Available Credit
10. Missing Payments On Utility Bills

Please send any other Top reasons I should have included.

Wrong Names in Credit Reports: Who's to Blame?

It is reported that over 70% of credit reports have errors. One common error is incorrect first or last name.

Your first name can be incorrect for several reasons. The most common is probably your fault. What is it? What are you doing?

Well, it is quite simple. Not going by your given name. Guys start going by less formal name. Instead of applying by given name of Theodore, start applying with Ted, Teddy or Theo. Ladies with name of Jennifer, start using Jenny, Jenni, or Jen or even Jenn with two ns'

All of theses can be considered aliases. Even worse someone with bad credit who goes by Teddy and same last name could end up on your report. This can take some time to correct if it occurs.

A more common mistake for men is being a Jr. or Sr. or even II or III. This can be bad for younger son or grandson due to fact older could have bad credit or just a lot of credit. This can make it difficult to get approved since you would have to go through your report and determine which loan is yours' and your dad's or granddad's.

LESSON: Always apply with formal name especially if your a Jr. or Sr. Make sure name is correct on application then on any loan forms. Men be kind to your child and don't make him a Jr. or Sr. or II or III. It may be nice and sentimental to name a child after someone. The problem occurs years later and can be quite a hassle for son and even dad.

Not Saving Only Spending

I just read an article in the Wall Street Journal regarding US savings rates. It showed how we used to save almost 8% annually.

Over the 1990s that amount declined down to 1%. Now through the 2000s it is -1%.

As we continue to spend more of our our money we earn and save less it is going to be very difficult on Baby Boomers looking to retire. If you are spending more than 100% of your take home pay now you will never be able to retire.

We, us need to get a handle on our spending and attempt to pay down our debts (mortgages, cars and credit cards).

When I worked in the finance field we assumed people would need about 70% to 80% of take home pay. I feel this amount will be too low for many people. Social Security only pays someone about $1,500 a month right now. Don't expect that amount to increase that much over time. On average it has increased about 1% to 3% a year.

My recommendation to everyone is pay down your debt and then start saving money in your work 401k plan or IRA or Roth IRA if you qualify.

In the future taxes will most likely to increase, but if you have eliminated most of your debt it probably won't effect your standard of living in retirement.

LESSON: Develop a plan to eliminate as much debt as possible over the next two to three years. Following a simple plan could eliminate a lot of your credit card debt

Credit Scores: What to do to Improve

With the current financial situation in the U.S. having a good credit score is worth more than gold. The reason is that it can allow someone access to much needed money when circumstances turn bad.

Obviously, most people say when I need credit I can't get it, but when I don't need it is when I can get it. Kind like the "Old Catch 22."

The best advice I can give someone right now is to check your credit reports and buy your credit score at myfico.com. At this time you want to make sure everything is correct on your report.

You definitely don't want to apply to refinance your home & find out some old medical bill you thought was covered by your insurance is now in collections. This one little blemish on your report could mean being approved or declined.

Before any purchase review your credit reports. I have had clients declined due to misinformation on their credit reports. The main item had to be medical collections damaging their credit scores.

In my book How to Beat Banks & Credit Cards at the Money Game, I go over in more detail.

Credit Card Companies Lower Limits

Just read an article where it stated that more and more credit card companies are either lowering credit limits or closing cards.

I mentioned in this is an earlier post regarding credit scores.

By closing credit cards it is hurting them in two ways. One, it the ability to have available credit when needed. The second, is that it can lower your credit score.

The reason it can lower your credit score is that part of the your score is tied to amount owed on credit cards. For instance if you had a credit limit of $10,000 with a balance of $3,000 this probably would help a score. Now if your limit was lowered to $4,000 it can hurt your score since you don't have as much available credit.

In my book I discuss this in more detail.

All major credit cards were starting to implement even without you the consumer aware they are closing or lowering your limits. They are supposed to notify you by mail within 30 days, but sometimes that doesn't happen. In addition, if you receive a letter you may not pay any attention to the letter.

Just attempting to make you aware of this change.

LESSON: Credit card companies are more in control of your card than you. At any point they can lower your limits even if you always paid on time.

Using Debt Stacking to Pay Down Bills

One of the best ways for someone to pay down bills is to use debt stacking. This will then lead to paying off your bills entirely.

I reviewed this in an earlier post, but I think it is good to continue further with this important tip.

Debt stacking will not give relief from someone barely able to make payments. In that situation someone should look at a bill consolidation loan.

Debt stacking is for someone making their payments plus paying extra each month on their bills. I have usually met with people who say they pay an extra $200 on their bills.

Most times the $200 would be spread out on several bills. Some people pay the extra $200 on the bill with largest balance since they really want to get rid of that $8,000 credit card.

However, if they reviewed all their bills and concentrated on the lower balance cards first it would actually free up money quicker.

Most people believe paying the minimum payment on a credit card with a $700 balance and a payment of $30 is the way to go. They decide to take all their extra money and pay it on the largest balance since it will have the highest interest charge.

However, in three for four months the $700 balance would be paid off and then they could pay $230 on the next balance.

What you want to do is continue to pay out the same amount each month, but only pay the minimum payment on the rest of your bills.

Most important tip is not use the credit cards if you are debt stacking. By continuing to use your bills will never get paid off.

LESSON: Concentrate on lower balance credit cards first before paying off larger balances.

Reviewing Your Credit Report

Yesterday we reviewed several reasons to review your credit report. I also noted where to obtain your free credit reports.

Another reason to review your reports is regarding closed accounts and how they were closed.

Let's say for example your were occasionally 30 days behind on a credit card bill. This has happened to many of us in today's economy. The important fact you have to remember is how your final payment is posted.

If you made your final payment to close out the account, but you were still 30 days behind on the bill it will still show 30 days late.

How is this possible? Well you did make your final payment, but the previous payment was late. So if you owe $200 on a credit card and you are 30 days behind on your minimum payment of say $50. Your best option is to pay something close to paying off credit card, say $175.

Then when you make your final payment of $25 plus interest you will at least close the account current.

This is huge when factoring your credit score since now the account is current versus be R2, which means 30 days behind.

LESSON: If your behind on credit card get current before making final payment on card or loan. This little fact can increase or decrease your credit score.

Importance of Reviewing Your Credit Report Annually

Everyone should review their credit reports annually. This means husband and wife, not just one spouse. The main reason both will not have same accounts on your credit reports.

I don't know how many times spouses are shocked about how different their reports are from each other. When taking a loan application I always would know when one spouse would ask, "do you have to pull both of our reports?"

This question was always a tip off that one of them had some credit card account that the other did not know about.

This is why both should review their credit report every year since sometimes mistakes are made.

Remember, humans are the people inputting information into your credit report. If that hit a number 3 instead of 5 you can become someone else.

If you do find an error contact the credit bureau with the wrong information. Another point to remember is that each credit bureau does its' own research independently. So one may show a credit card balance and the other two a zero balance.

Final tip is the only free place to get your credit report is annualcreditreport.com. The FTC approves of this site.

More information on credit reports in upcoming book.

LESSON: Review credit reports annually

Applying for Credit Cards

Let's take a look at applying for new credit cards. Since my past couple posts have received such a high hit rate. I think this must be of some interest.

A little saying I like regarding credit card applications.

"What the bold print giveth, the fine print taketh away."

Not sure who said it, but he had to be a genius.

We have have received these great credit card offers. 5.99% FOR BALANCE TRANSFERS AND NEW PURCHASES. This sounds like a pretty good offer.

What you must do is flip over the offer sheet and read the "FINE" print. There is a box on the back broken up into several different areas. The federal government requires this for every credit card application.

This sets the terms and conditions. Such as how long is this 5.99% in effect? What will the rate adjust to after introduction rate? What are the annual fees? How is interest rate calculated? (Average Daily Balance or Two Cycle Billing) Word to the wise always get Average Daily Balance NEVER Two Cycle Billing.

In my upcoming book I will have an example of credit card application.

What is the Grace Period for new purchases?

These are the type of questions that are answered on the back of the application.

LESSON: If you receive an application and the rate or terms seem too good to be true, beware of credit card. ALWAYS LOOK FOR FINE PRINT.

Hope this helps.

FICO & Department Stores

Another way to hurt your credit score is through department store credit cards. You know the ones that are offered at the cash register.

You have teenager Susie at the register ask, "Would you like to save 10% today on your purchase?" You look at your purchases of $150 and decide sure why not have $15. However, Susie just hurt your score by doing two things.

One, she did an hard hit or credit inquiry on your credit report. Two, you just opened a new credit line.

Now how much did this damage your score? The only honest answer is not sure. However, it did not help your credit score if you already have credit.

As you will learn there are times it does help to apply for store department store cards. Such as you are young with no credit. It can be an easy way to build up a credit report. More on that in another posting.

Getting back to Susie and your new credit card you should say "no thank you" 9 out of 10 times.

Meaning usually it does not help only can hurt. This fact has been stated by many other leading experts in regards to credit reports and credit scores.

LESSON: Don't apply for department store cards. Won't help you, but probably will hurt you in the long run.

FICO SCORES CONTINUED

Yesterday I was talking about what went into your credit score. We had payment history, length of credit history, amounts owed, new credit and types of credit in use.

Today, I want to discuss length of payment history. Obviously the longer your payment history the better your potential score. This assumes you have a good payment history. If you have been late in the past get current and stay current.

One mistake I have seen people make is closing all their credit cards after a bill consolidation loan and maybe leave one open line.

Conventional wisdom would be that since I no longer have all theses credit cards my score should go way up or least up.

Well that may be entirely true. Let's say you have major credit card not a store credit card for 8 or 9 years. You never missed a payment everything on time. However, this is one of the credit cards you decided to close after consolidating your bills.

Now the next newest credit card is only one year old. In effect you wiped away 8 years of good credit payment reporting. Now if you happen to miss a payment it hurts your score.

Let me use a school example:
You take a 100 question test and you miss one question your score is 99%, very good.
Next you take 10 question test and you miss one question your score is 90%, still good.
Next you take a 5 question test and you miss one question your score is now 80%, good.
Next test is 2 questions and you miss one question your score is now 50%, not good.

This is what can happen by closing all your credit cards when you consolidate all your bills into a home equity loan or even one credit card.

LESSON: Try to keep one old credit card even if terms not good. Still use it for something small and pay a little interest. This can help with keeping a longer payment history.

Please send any questions you may have regarding debt and I'll try to answer to my best ability.

FICO Scores

Yesterday I wrote regarding Experian may no longer allow people to buy their credit score.

Most people are clueless what a FICO score is or how it's calculated. If you walked down any street in America and asked "hey what's your FICO".

Most likely you'll get blank stares or if your in the wrong neighborhood probably punched since they'll think your cussing at them in some strange language.

But it is a very important question you need to at least have some knowledge of how it's calculated.

Now each company (TransUnion, Experian, and Equifax) has their own secret recipe kind of like Col. Sanders secret herbs and species.

However, we as consumers do know what is included. Let's take a look.

1. Payment History - How have you been paying. Have you made payment late before or always on time. Accounts for 35% of score
2. Amounts Owed - What do you owe on all your credit cards and other loans? If you are maxed out it effects your score. Accounts for 30% of score
3. Length of Credit History - How long is your credit history? Only new credit or do you have older open credit. Accounts for 15% of score
4. New Credit - How many new accounts have you recently opened? Accounts for 10% of score.
5. Types of Credit in Use - Two types of credit: Revolving (credit cards) or Fixed (Home, Car). The more revolving credit you have it can lower your score. Accounts for 10% of score.

As you can see there are a number of different variables and the reason why each credit bureau can have their own recipe.

In my upcoming book I will give tips on how to improve and what can lower your score. Sign my RSS feed to stay updated

LESSON: Learn your FICO score as soon as possible

Experian and Credit Scores

Just read that Experian is going to stop allowing people to buy their credit score (FICO) in February.

This is a huge announcement since before 2003 no one could even get their credit score. You only found out if you were approved or declined. Most banks and lenders never told you what your score was they would say you are A or B based on score.

Since three credit bureaus report your score and depending on your lender they can choose which one to use. Some you a combination and some only use one or two. If this is approved you, the customer, will limit your knowledge by 33%.

How would you like to receive 33% less pay?

Hopefully, Experian will change their minds, but don't hold your breath.

Another reason this is huge is that TransUnion or Equifax may decide to follow Experian's lead.

This was a tool I used when I worked with clients to attempt to get them approved. I would advise them to pull their report and score prior to buying anything significant such as a home or car.

If their score was just below B or A quality they could choose to wait until score would improve or apply anyway. Knowledge is power. If Experian or any of the other credit bureaus won't allow you to see your actual score it may cause you to pay more or not be approved.

LESSON: Make sure you can see your actual credit score

Credit cards continue to earn money

Just read that Visa earned $574 Million in last quarter of 2008. This compared to $424 Million in last quarter of 2007.

See even in tough times credit card companies are still earning money. Obviously people are still using their cards. They are also not paying much of their balance off each month.

I remember seeing a stat that only 38% of people paid their cards off each month. I'm sure that stat has decreased meaning more and more are carrying balances each month.

We need good solid advice on how to payoff these credit cards and keep more money in your pockets.

This is my goal in my upcoming book. Please subscribe to my blog so you can be informed when book is complete.

LESSON: Even in tough times credit card companies still earn a profit from YOU and ME.

Ways banks keep you in debt

Banks and credit cards always have special offers. Like transfer your balance and receive 1% for life of balance. OR All new purchases only 6.99%.

One of the things I've seen is most credit cards would like you to transfer most of your balances to one card. This gives several advantages.
1. If you miss payment they can increase your rate
2. More difficult to transfer a large $14,000 balance to another card
3. Can change terms after initial offer

What they also do is continue to increase your available credit. However, with the current credit environment some are starting to lower your available credit. This can hurt in several ways. One you now would have less purchasing power. More importantly it can hurt your credit score.

I will go in further detail in my upcoming book regarding banks and credit cards.

LESSON: Always read offers and make sure you fully understand how long initial rate lasts. Then make sure you find out what new terms will be if they are available.

Money Today

I'm sure everyone is reading in papers across US and even the world about foreclosed homes. This is a very dramatic situation for most families. Many are still working, but just can't keep up with bills this situation could have been prevented.

Some probably lost jobs and can't make the payment this situation is more difficult since losing a job usually isn't your fault.

Not being able to afford higher payment could have been prevented very easily. When I worked as a loan officer I lost quite a few loans to my competitors since they had a "lower rate" than my loan.

However, I knew most of these loans had an adjustable rate, but the customer did not care. They wanted the lowest possible payment and could care less how that happened. Well jump ahead three, four years later and now the rate is going higher than my rate. Now I can't do anything to help since they may be behind on a payment or have little or no equity.

A lot of these adjustable loans were interest only loans. Which means you are only paying interest and nothing on principal of the loan. So you borrowed $400,000 three years ago and you still owe at least $400,000, possibly more if you missed any payments.

This is not a good situation if you want to refinance your home since most banks will no longer do 100% financing. In fact the company I worked for now requires at least 90% equity and sometimes 80% before they will approve the loan.

This could have been prevented since the customer could have locked in a fixed rate which was usually only .5% to 1% higher than the adjustable rate. They also would have at least paid something on the principal.

With the current mortgage crisis it is easy to play arm chair quarterback and say "see banks screwed the customer" OR "see the customer was stupid and should have known what they were buying."

Personally I'm split probably about 60% of blame goes to bank or mortgage broker since they should have educated customer about ups and downs of loan. I came across quite a few "loan sharks" who would say anything to close loan and flat out lie.

However, customers were blinded by rate and payment. That's all they thought about.

Once again not all banks or mortgage brokers took advantage of people, but there were enough. Remember the Law of Large Numbers.

You do enough of any activity and eventually you'll get a certain outcome whether it is good or bad. Your children hang around bad kids and eventually they will become bad kids.

LESSON: Use the three day review of loan which government gives to look at loan documents. In future posting I'll go over which one's to look at. Only about 4 pages, the 50 you receive at loan closing.

Multiple Rates On Credit Cards Continued

I want to continue discussing multiple rates. This is an area I see mistakes made. One time I had a client have a 0% credit card, but she had to make at one purchase for $75 a month to continue rate.

Now she did have a balance originally of around $12,000 and paid down balance to around $7000. The only bad thing she had a balance of $900 from purchases which had a rate of 12.99%. She didn't think that was all that bad since she was paying any interest on the $7000 balance.

It did seem that she was getting ahead, but the thought I had was how many people are not that disciplined to follow this cards rules. She may have been 1 out 1000 who actually was getting ahead with these terms.

Having to make a purchase to keep rate and terms is bad thing. Since you have two things working against you.

1. Having to charge at least $75 a month

2. Missing a payment then getting a higher default rate. I have not discussed default rates yet, but we'll get to that later.

This just seems to be a card waiting for trouble for the consumer. A real good money maker for card since they at least earn interest on new purchases.

LESSON: Always read the fine print on credit cards. Know the rules or lose

Multiple Rates On Credit Cards

We all have credit cards and we look at the bottom of statement and see all these multiple rates. Rates for balance transfer, new purchases and cash advances.

What are all these rates?

Well they are how credit cards make money. Let's take an example to explain.

You transferred a balance of $4,000 from one card with a higher rate to one with a rate of say 0% for life credit card or balance paid off.

Your first thought is this is a great card with a low fixed rate of 6%. Then one day you go to your local department store and charge $500 of clothes on your new 6% credit card which is much lower than the 21% department store card.

Once again you think you did a great thing by using this credit card.

Well friends let's fast forward to when you receive you next bill. This is what you will see:

Balance Transfer Balance of $4,000 Interest Rate 0%
New Purchase Balance of $500 Interest Rate 12.99%
Cash Advance Balance $0 Interest Rate 22.99%

You send in your regular payment of $200. Guess where that entire payment goes to? Two guesses?
1. Payment goes to Balance Transfer balance?

2. some goes to Balance Transfer and some to New Purchases?

Answer the entire payment goes to 0% Balance and the New Purchase Balance continues to accrue interest until the Balance Transfer is paid off.

A little rule most credit cards have is that your entire payment goes to your lowest interest rate and ZERO goes to any other rate.

I have seen so many people make this mistake of using a credit card they transferred a balance to get a lower rate.

LESSON: Whenever you transfer a balance for a lower rate make sure you review what the New Purchase Rate on the card.

If the New Purchase Rate is higher than the Balance Transfer Rate do not use for ANY new purchases. Hope this helps.

Using Credit Cards

A common mistake I find people make is using credit cards for everyday purchases (groceries, gas, restaurants) and not paying off each month. Questions: The gas you bought last month are you still using? Are still eating your meal from Applebee's?

Don't get me wrong using your credit card for everyday purchases is OK since some receive some type of incentive (airline miles, cash back). However, when you start carrying a balance from previous purchases your balance starts to build up.

I had one client use a credit card to buy gas when filling the tank was $60 or more. After doing this for a year or so they had a balance of over $6,000. The couple made good money it was just more convenient to buy gas that way. The mistake they made was not paying off balance every month like they intended.

What they started doing were two things:
1. They stopped using credit card and pay cash for gas
2. They started paying $300 or $400 a month instead of minimum

Anyone can do this it just takes a plan and discipline.

I hope this helped some people out there.

How to debt stack your bills

DEBT STACKING
Debt stacking is one of the best ways for someone to eliminate debt quickly. However, it does take discipline. Debt stacking involves gathering your bills together and looking at the following items:

1. Balance
2. Interest Rate
3. Minimum Payment
4. Your Actual Payment

What debt stacking involves is taking any of your actual payments that are higher than your Minimum Payments and applying that money to one bill.

For example, let’s say you have four credit cards that you pay $25 extra on each for a total of $100. What a debt stacking program will do is determine which balance will be paid off first and take the entire $100 to that bill. Important is that you continue to make only the minimum on the rest of the bills.

Oh and one more extremely important note:
ANY CREDIT CARD YOU ARE DEBT STACKING SHOULD NO LONGER BE USED!!!

If you use this credit card debt stacking will not work. My suggestion is keep one credit card with a low balance and high enough limit to pay for any unseen repair, purchase or anything for that matter.
OK back to debt stacking.

You will make your minimum payment plus the additional $100 until that bill is paid off. Let’s say the minimum payment is $30. You would pay $30 + $100 = $130 on the first bill.

Once that bill is paid off take the entire $130 to the next bill on the list and continue until the last bill is paid off. I used this with many clients and some even kept next to their computer so they could review list when paying their bills.

They would just mark one bill off then another. One suggestion I usually give is to reward yourself once you have paid off a bill.

This is especially important for anyone struggling to stay ahead. Like the above example instead of taking the entire $130 to the next bill maybe keep $40 of that money and go to dinner or buy something for your family.

Just like any weight loss program they always tell you to reward yourself so you can appreciate your success. I’ve had families go what I consider “hardcore” by following plan for one year, but never rewarded themselves and then fell back into old spending habits.

I believe this was due to not rewarding themselves since they were still living paycheck to paycheck.

LESSON: Reward yourself when you eliminate a bill.