You've heard the old adage, pay down your credit card debt each month to avoid the nasty interest rate charges and fees that result from revolving balances. But if you're like many of us, you need to carry a monthly credit card balance to pay for basic living expenses and emergency purchases. This is exactly what the credit card companies want you to do - it's how they make money! One thing you may not realize is that by simply making your minimum payments it will take you a long time to eliminate credit card debt. Moreover, what happens when this credit card debt becomes too great of a burden, when you can no longer afford to keep up with your monthly minimum payments? Or worse, what happens if you experience a period of unemployment, or are facing unexpected medical costs? The short answer is that credit card companies still want and expect you to pay back your credit card debt. Indeed often during this hardship period credit card companies will make your life worse by increasing the rates and fees on your credit card debt. The good news is that there are alternatives for you to eliminate credit card debt. Each will require patience, financial discipline, and thoughtful consideration on your part. The most important thing is to make an informed decision to eliminate credit card debt based on the factors of your particular situation.
Accelerated Repayment.
One option you have to eliminate credit card debt is to increase the monthly payments you are making on your credit cards beyond the minimum payment. To take full advantage of this strategy, you want to make the largest possible payment on the credit card with the highest interest rate, while making the minimum payments on the remaining cards. You would continue to do this until you have paid off the card with the highest interest rate, and then focus on the card with the next highest rate, and so on until all of your cards have been paid off. Of course, this alternative requires that you have the funds available on a monthly basis to make these accelerated payments. In addition, it could take quite a while to eliminate credit card debt this way.Debt Consolidation.
Another option to eliminate credit card debt is to take out or refinance a mortgage- either a first, second, or line of credit - and use those funds to pay down your credit card debt. This can be a quick way to eliminate credit card debt and save on interest costs. Remember though that you are trading unsecured debt for secured debt and the repercussions of missing a mortgage payment, like potentially losing your home, are much worse than if you miss a credit card payment. Also, you will need to have a favorable credit profile to consider this option to eliminate credit card debt.Consumer Credit Counseling.
A third option to eliminate credit card debt is to speak with a non-for-profit Consumer Credit Counseling Service (CCCS). These organizations will consult with you to determine if you qualify for a debt management plan, which typically involves making one monthly payment to them, which they then disburse to your creditors. They will also work with your creditors to waive certain fees and lower your interest rates. Keep in mind that this is not the fastest way to eliminate your credit card debt, and there are credit implications that you will need to consider. You will also need to find a reputable agency.Debt Negotiation. A somewhat less known yet viable alternative to eliminate credit card debt is Debt Negotiation, sometimes referred to as Debt Settlement. In these programs you typically save money into a trust account, and once you have saved enough the company you are working with will negotiate with your creditors for a reduction in what you owe. A big benefit of these programs relative to CCCS, for example, is that you are actually reducing the principal amount of what you owe, and not just the interest rate. Also, these programs are usually a faster way to eliminate credit card debt than CCCS. Be sure to check with the BBB to determine whether the Debt Negotiation company you are speaking with is registered and has a satisfactory rating. In addition, before enrolling make sure you understand the impact that a debt negotiation program will have on your credit, and any other risks involved.Bankruptcy.
The last option to eliminate credit card debt is to declare personal bankruptcy. In a traditional Chapter 7 bankruptcy filing you may be able to eliminate credit card debt completely, depending on your situation. Before considering this step, you must consult with an attorney who will tell you whether you even qualify, as recent laws have made it more difficult for consumers to file a Chapter 7 to eliminate credit card debt. Your attorney should also explain to you the negatives associated with personal bankruptcy, such the severe, public, and long term negative impact on your credit report. Which program you choose, to eliminate credit card debt, is up to you, but make sure you do your homework and pick the right solution and the right company that meets your personal financial and personal goals.
Saturday, February 28, 2009
Friday, February 27, 2009
Seven Selling Mistakes You Don't Want to Make!
Mistake #1 -- Pricing Your Property Too High
Every seller obviously wants to get the most money for his or her product. Ironically, the best way to do this is NOT to list your product at an excessively high price! A high listing price will cause some prospective buyers to lose interest before even seeing your property. Also, it may lead other buyers to expect more than what you have to offer. As a result, overpriced properties tend to take an unusually long time to sell, and they end up being sold at a lower price.
Every seller obviously wants to get the most money for his or her product. Ironically, the best way to do this is NOT to list your product at an excessively high price! A high listing price will cause some prospective buyers to lose interest before even seeing your property. Also, it may lead other buyers to expect more than what you have to offer. As a result, overpriced properties tend to take an unusually long time to sell, and they end up being sold at a lower price.
Mistake #2 -- Mistaking Re-finance Appraisals for the Market Value
Unfortunately, a re-finance appraisal may have been stated at an untruthfully high price. Often, lenders estimate the value of your property to be higher than it actually is in order to encourage re-financing. The market value of your home could actually be lower. Your best bet is to ask your Realtor for the most recent information regarding property sales in your community. This will give you an up-to-date and factually accurate estimate of your property value.
Unfortunately, a re-finance appraisal may have been stated at an untruthfully high price. Often, lenders estimate the value of your property to be higher than it actually is in order to encourage re-financing. The market value of your home could actually be lower. Your best bet is to ask your Realtor for the most recent information regarding property sales in your community. This will give you an up-to-date and factually accurate estimate of your property value.
Mistake #3 -- Forgetting to "Showcase Your Home"
In spite of how frequently this mistake is addressed and how simple it is to avoid, its prevalence is still widespread. When attempting to sell your home to prospective buyers, do not forget to make your home look as pleasant as possible. Make necessary repairs. Clean. Make sure everything functions and looks presentable. A poorly kept home in need of repairs will surely lower the selling price of your property and will even turn away some buyers.
Mistake #4 -- Trying to "Hard Sell" While Showing
Buying a house is always an emotional and difficult decision. As a result, you should try to allow prospective buyers to comfortably examine your property. Don't try haggling or forcefully selling. Instead, be friendly and hospitable. A good idea would be to point out any subtle amenities and be receptive to questions.
Mistake #5 -- Trying to Sell to "Looky-Loos"
A prospective buyer who shows interest because of a "for sale" sign he saw may not really be interested in your property. Often buyers who do not come through a Realtor are a good 6-9 months away from buying, and they are more interested in seeing what is out there than in actually making a purchase. They may still have to sell their house, or may not be able to afford a house yet. They may still even be unsure as to whether or not they want to relocate.
Your Realtor should be able to distinguish realistic potential buyers from mere lookers. Realtors should usually find out a prospective buyer's savings, credit rating, and purchasing power in general. If your Realtor fails to find out this pertinent information, you should do some investigating and questioning on your own. This will help you avoid wasting valuable time marketing towards the wrong people. If you have to do this work yourself, consider finding a new Realtor.
Mistake #6 -- Not Knowing Your Rights & Responsibilities
It is extremely important that you are well-informed of the details in your real estate contract. Real estate contracts are legally binding documents, and they can often be complex and confusing. Not being aware of the terms in your contract could cost you thousands for repairs and inspections. Know what you are responsible for before signing the contract. Can the property be sold "as is"? How will deed restrictions and local zoning laws will affect your transaction? Not knowing the answers to these kind of questions could end up costing you a considerable amount of money.
Mistake #7 -- Limiting the Marketing and Advertising of the Property
Your Realtor should employ a wide variety of marketing techniques. Your Realtor should also be committed to selling your property; he or she should be available for every phone call from a prospective buyer. Most calls are received, and open houses are scheduled, during business hours, so make sure that your Realtor is working on selling your home during these hours. Chances are that you have a job, too, so you may not be able to get in touch with many potential buyers.
Fight Looms Over Bankruptcy Plan in Bill to Stem Foreclosures
WASHINGTON -- Congress is readying legislation designed to step up government efforts to stem the rise of home foreclosures. But a fight looms over a provision sought by President Barack Obama that would give bankruptcy judges new authority to reduce mortgage debts.
The measure would let judges set new repayment terms for mortgage holders in bankruptcy court, and is a key part of a broader plan unveiled by Mr. Obama last week to combat foreclosures. Supporters have long argued that this is essential to broader efforts to renegotiate millions of troubled mortgages that helped trigger the country's current economic crisis.
Lindsey Graham
Many in the banking industry oppose the initiative, saying such a change would add uncertainty to the housing market, encouraging homeowners to stop making mortgage payments and file for bankruptcy rather than seek help from their mortgage servicers.
The bankruptcy provision "undercuts everyone's efforts to help the housing market," said Scott Talbott, senior vice president for government relations at the Financial Services Roundtable, a trade group. "It allows homeowners to game the system."
The housing legislation is expected to clear the House Thursday. But it faces an uncertain future in the Senate, where Republicans, even in the minority, have much greater influence in deciding details of legislation than their House counterparts. The Senate is expected to take up the bill in mid-March. Senate Republican leaders are pushing an alternative that would steer troubled borrowers to low-interest loans backed by Fannie Mae and Freddie Mac, the government-controlled housing finance concerns, among other things. And they say they will resist giving enhanced authority to bankruptcy judges.
"That provision is going to draw a lot of fire," said Sen. Lindsey Graham. The South Carolina Republican warned the proposed change would put "a lot of authority in a small group of people" and vowed Republicans would be "uniting" against the idea.
Many banking-industry groups are lobbying against the measure, including the American Bankers Association and the Independent Community Bankers of America. The Obama administration hasn't taken a formal position on the overall bill. But Mr. Obama voiced support for the bankruptcy component last week, and his backing is expected to strengthen its prospects.
A senior administration official said the president "is supportive of judicial modifications, generally." The official said the president "would like to see [the bankruptcy measure] move through the legislative process as quickly as possible."
The housing legislation would also create new incentives, such as lower fees, designed to encourage troubled borrowers to take part in an existing government program aimed at helping them refinance into more affordable loans. The bill would shield mortgage servicers that complete loan modifications from potential investor lawsuits.
The legislation reflects compromises that senior congressional Democrats reached with Citigroup Inc. on the bankruptcy issue, congressional aides said. The bill, among other things, would give lenders a chance to modify mortgages before a borrower seeks bankruptcy protection. Citigroup dropped its opposition to enhanced authority for bankruptcy judges in January.
Backers said the measure, which would require borrowers to show that they tried to contact their lender about a modification before filing a bankruptcy petition, is meant to spur early modification talks between lenders and borrowers, not clog bankruptcy courts.
Last week, lenders at a Mortgage Bankers Association servicers' meeting said as many as half of borrowers don't contact their lender before their home enters foreclosure proceedings.
The measure would let judges set new repayment terms for mortgage holders in bankruptcy court, and is a key part of a broader plan unveiled by Mr. Obama last week to combat foreclosures. Supporters have long argued that this is essential to broader efforts to renegotiate millions of troubled mortgages that helped trigger the country's current economic crisis.
Lindsey Graham
Many in the banking industry oppose the initiative, saying such a change would add uncertainty to the housing market, encouraging homeowners to stop making mortgage payments and file for bankruptcy rather than seek help from their mortgage servicers.
The bankruptcy provision "undercuts everyone's efforts to help the housing market," said Scott Talbott, senior vice president for government relations at the Financial Services Roundtable, a trade group. "It allows homeowners to game the system."
The housing legislation is expected to clear the House Thursday. But it faces an uncertain future in the Senate, where Republicans, even in the minority, have much greater influence in deciding details of legislation than their House counterparts. The Senate is expected to take up the bill in mid-March. Senate Republican leaders are pushing an alternative that would steer troubled borrowers to low-interest loans backed by Fannie Mae and Freddie Mac, the government-controlled housing finance concerns, among other things. And they say they will resist giving enhanced authority to bankruptcy judges.
"That provision is going to draw a lot of fire," said Sen. Lindsey Graham. The South Carolina Republican warned the proposed change would put "a lot of authority in a small group of people" and vowed Republicans would be "uniting" against the idea.
Many banking-industry groups are lobbying against the measure, including the American Bankers Association and the Independent Community Bankers of America. The Obama administration hasn't taken a formal position on the overall bill. But Mr. Obama voiced support for the bankruptcy component last week, and his backing is expected to strengthen its prospects.
A senior administration official said the president "is supportive of judicial modifications, generally." The official said the president "would like to see [the bankruptcy measure] move through the legislative process as quickly as possible."
The housing legislation would also create new incentives, such as lower fees, designed to encourage troubled borrowers to take part in an existing government program aimed at helping them refinance into more affordable loans. The bill would shield mortgage servicers that complete loan modifications from potential investor lawsuits.
The legislation reflects compromises that senior congressional Democrats reached with Citigroup Inc. on the bankruptcy issue, congressional aides said. The bill, among other things, would give lenders a chance to modify mortgages before a borrower seeks bankruptcy protection. Citigroup dropped its opposition to enhanced authority for bankruptcy judges in January.
Backers said the measure, which would require borrowers to show that they tried to contact their lender about a modification before filing a bankruptcy petition, is meant to spur early modification talks between lenders and borrowers, not clog bankruptcy courts.
Last week, lenders at a Mortgage Bankers Association servicers' meeting said as many as half of borrowers don't contact their lender before their home enters foreclosure proceedings.
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