Debt Free

There are five major areas where Americans get themselves into debt;

• student loans

• unsecured consumer loans such as store charge and credit cards

• mortgages

• medical expenses

• vehicle loans.

In part the mentality of immediate gratification is because everything's so damned expensive these days. Your basic new car is $12,000 to $15,000. There's a whole argument about weather the cost of consumer goods is driven by inflation alone or the higher content demanded by consumers today. You can't find a new car without power windows, A/C, 6 airbags and a CD player. Ditto for the average new home. People demand higher content and more amenities today than they did in the 1960's. The average new home in 1965 was about 1,300 square feet. Now it's about twice that. Slab granite counter tops were once exclusively the province of the rich. Now they're ensconced in every middle end suburban development in the country. Security systems, high tech wiring, built-in appliances, and garbage disposals are the norm.

So, not only do we want it now, we want more of it. Our incomes have risen dramatically. In 2004 dollars, according to the U.S. Census Bureau, household income increased from $43,232 in 1974 to $54,061 in 2004. This is impacted to an extent by the number of multiple earner families now versus in 1974. Many consumer products have gotten far less expensive as well. Remember the $1,000 VCR? Still, even with the increase in real purchasing power, American consumers struggle to keep up with their desires.

The cost increases in other areas, such as health care and higher education, has also contributed to the continued indebtedness of the average American. Looking at many American's introduction to massive debt, student loans, we find that the amount of the average student loan debt has increased substantially. In constant 2003 dollars, the average student loan debt increased from $12,100 to $19,300 between 1993 and 2003. Furthermore, the percentage of students graduating from college with debt levels exceeding $25,000 increased from 7% to over 25%. Wow, that's a big jump, but you probably knew that already!

The two key components that contributed to this increase are the increased cost of post secondary and graduate level education, and the increasing number of students seeking advanced degrees. Heaven help you if you're one of the 20% of students that get a student loan but leave school diplomaless. You're still on the hook to repay the loan, but your employment prospects are definitely not as bright as if you'd stayed in school. According to one report, the percentage of students that indicated that student loan debt had caused them to delay either having children or get married has doubled in the last decade. On balance, that may be a good thing. Get your financial house in order, then have kids. On the other hand, are you ever truly ready for the little munchkins?

Where do young people turn when they find themselves in the huge student loan predicament? Why credit cards, of course. The 2004 study of consumer finances found that, between 1991 and 2000, the level of credit card debt among those under 35 years old had nearly doubled. Obviously, not all of that increase was not caused directly by student loans, but that figure, combined with the previously cited statistics, helps illustrate the debt picture faced by many younger Americans. The Fed says that of the same group, Americans under 35, about a fourth of their income is spent to service debt. Ouch! Even worse, last year, according to the U.S. Census department, only 43% of people in that age group were homeowners. Large debt levels without homeownership do not a good combination make. If statistics were available for those under 30, the picture would no doubt be much bleaker, as fewer in that age group likely own their domicile.

More on this soon, when I'll look further into student debt, but also into the other debts that are dragging down so many Americans....

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Posted by debtblog at 02:42 PM | Permalink | Comments (0) | TrackBacks (0)

Part of the appeal of blogs is that they reflect the personal views of their creators. It matters not what those views may be or who they may offend. That too is part of the appeal. There used to be this little piece of legislation you may have heard of called the “Fairness Doctrine” That bit of legalese states that broadcasters must treat issues of public policy or importance in an “honest, equal and balanced manner”.  Although it would seem that would violate the First Amendment, they slid around that bit of prose by reasoning that the airwaves, unlike print media, the airwaves were of a “limited nature”.

Well, take a look at the Internet. That bit of info pipeline that sucks away endless hours of your week could easily be interpreted in much the same way. After all, most people don’t have a broadband modem hardwired into their brains, although I do know some people….. Anyway, you get the point. If certain elements of Congress, mainly Democrats, (those champions of the little guy, correct?) get their way, they’ll use the Fairness Doctrine to require broadcasters to present both sides of an issue. Why is Congressman Dennis Kucinich so insistent on violating our right to free speech in the name of furthering our rights? Why, indeed?

Never mind that everybody has a freakin’ channel changing button on their radios or address window on their browser. But hey, if you can’t beat Limbaugh or Hannity in the marketplace, you can probably get the congress to require the stations carrying them to balance the amount of time they are on the air with shows presenting an opposing viewpoint; too bad for the station owners that those shows have failed to demonstrate economic viability.

In 1986, the DC Court of Appeals ruled that a prior decision under President Regan’s FCC that the Doctrine was a violation of the First Amendment could stand. A year later, the FCC decided that the Doctrine did, in fact violate the First Amendment, and repealed it in the 1987 Syracuse Peace Council decision, paving the way for the huge conservative talk radio industry we know today, among other things. One of those other things happen to be the blogosphere. What if you’re running a conservative Blog, such as Michelle Malkin’s or presenting a Liberally oriented carnival, such as Carnival of the Liberals? Not too balanced, are they? Well, too damned bad, you better broaden your point of view, or turn into Hannity and Colmes.

Initially, the Doctrine would target only broadcast media. You know that it would only be a matter of time, about 10 seconds, before they start looking at blogs as well. If you’ve got a blog, look out! Oh, yes it can happen here. Which of the big bloggers has the resources to challenge this in court, if in fact those powers that be deem that it should return? Those same Democrats that are clamoring for the return of the Doctrine to protect their flank from the conservative radio talk shows would crap their pants if it was used to clamp down on something that they present a one-sided argument on, or one of their lefty blogs. Could this extend to movies as well? Talk about an Inconvenient Truth.

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Posted by debtblog at 03:15 PM | Permalink | Comments (0) | TrackBacks (1)

The propensity of banks and other financial institutions to just begin charging fees willy nilly whenever the feel they can get away with it has got some in Congress a bit riled up. I guess someone in congress got one of those letters from their credit card company too. In one of its first orders of business in the new session, the Senate Banking Committee began examining the credit card industry and their business practices. Credit card providers have been changing to a more fee oriented business model. As such, they are looking to maximize fee revenue. The firms have started to be fairly aggressive about their fee structure and when said fees are imposed.

It was only a matter of time until they began to push things a bit too far and consumers started to get a bit upset. That time is now. If you have credit cards, you've no doubt noticed some of the tactics credit card companies are using in an attempt to extract the maximum amount of cash from card holders. The committee chairman, Senator Christopher Dodd, D-Connecticut issued the following statement, aimed squarely at the credit card companies: "If you currently engage in any business practice that you would be ashamed to discuss before this committee, I would strongly encourage you to cease and desist that practice."

Strong words, but will the Senate actually back them up? Only time will tell.In an effort to get to the bottom of the situation Senators questioned execs from Chase Bank USA, Barclays Bank and Capital One Financial Corp. Cap1, in particular, has a reputation for pursuing some pretty aggressive tactics to maximize revenue, while targeting sub-prime credit card holders. Maybe those tactics, which include offering borrowers multiple low limit cards, instead of a single card with a higher limit, have finally reached the point where they're about to be reigned in by a higher power; the Senate Banking Committee.

Another tactic the committee found that is being used by several credit card providers can only be described as unscrupulous. Actually, several other descriptions spring to mind, but hey, this is a family blog. The committee found that the companies have been charging card holders interest on debt they've already paid! Nice, huh. Imagine if that happened when you went for lunch. “Sir, that burger will be $1.98.” “But I already paid for it” “Too bad, pay again, or we'll charge you for the fries too” As the problem gets worse, consumers just go deeper down the debt well. Don't let it happen to you.

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Posted by debtblog at 02:18 PM | Permalink | Comments (0) | TrackBacks (0)

Actually, a strong argument could be made that Ford could abandon its core North American and European markets while focusing on the emerging South American, Indian and Chinese markets. Their sales in North America were down almost 20% last year alone, even though they introduced an award winning pickup, the new F-150, and the hot selling new Mustang just 2 years ago. To be fair, about half of the loss comes from costs associated with the huge restructuring plan the manufacturer has undertaken in order to right the ship.

The F-150 and Mustang notwithstanding, Ford just hasn’t offered the buying public vehicles they could get excited about. They’ve failed to repeat the sales success of the dearly departed Taurus in the bread and butter family sedan category. This has cost them plenty. The new Fusion, released in the tail end of 2005 as an ’06 model has sold well and has been profitable for Ford, even more profitable on a per unit basis than the Taurus. It’s possible that the Fusion could return Ford to respectability, if not leadership, in the segment. In this product centric business, failure to deliver what the driving consumer is after will all but ensure defeat. Just ask Oldsmobile, AMC and Rambler.

So, what about China? The good news for beleaguered Ford is that sales leapt by an astounding 89% in the Chinese market in 2006. Wow! The bad news is that represents sales of less than 160,000 units, about the number of cars Ford sells in North America in a week. As the Chinese public discovers the joys of driving, and Chinese economic prosperity increases, Ford’s Chinese sales can only increase with it. If sales continue at the present rate, however unlikely that may be, Ford will eclipse its US sales in a decade. Chinese vehicle sales are projected to top 8 million units this year. For Ford’s sake, as many of those as possible should wear a blue oval.

Should Ford just turn its back on the entire North American car market? Even though they’re pouring tons of capital into retooling and building new plants, maybe they should stop pouring good money after bad. They could become a design and engineering company and leave the building to the Chinese. Ford’s building plants in China anyway. Sure, the American economy would take a huge hit if all the car-related manufacturing and supplier jobs went away, but hey, if Ford goes under, they’ll be gone anyway. At least this way Ford can keep paying it pensioners. It’s possible Ford could use some of the same suppliers they do now, so we may be able to retain many jobs at those firms.

If you, or someone you love, works at the Big, Blue Oval, you better hope ex-Boeing chief Mulally can effect a turnaround at Ford, much as he did at the Lazy B. His execution of the “Way Forward” plan is absolutely critical to Ford’s future viability. The chances of anyone reading this working at Ford is dwindling, as Ford is slashing jobs in effort to regain some semblance of profitability. Actually, working at Ford may be similar to working in the cyclical aircraft industry, where huge layoffs are common place. At least Mulally is well versed at making huge cuts.

One way Ford could keep production and sales operations in North America would be if they stick to selling trucks here, a market they’ve proven to know well. That’s possible, but that wouldn’t be a walk in the park either. The American auto makers don’t have this all to themselves anymore. Their nemesis, Toyota, has gotten into the market with the Tundra, a legit contender in the full size pickup market. It grows even bigger for 2007, promising to give Ford and GM execs even more sleepless nights. It doesn’t stop there. Nissan is at the party as well, with their Titan. Another legit contender for the full sized pickup crown, the Titan sports a big V8 with over 300hp, just like its American counterparts.

The hometown boys had better look out. There’s gonna be a brawl. At least Ford, GM, and DC haven’t been resting on their laurels; something they got caught doing in the car side of the business about 30 years ago. GM just released a new, vastly improved Silverado pickup and full sized SUV line. Weather or not the newly lowered gas prices will be enough to reignite the “I don’t really need it, but I’m buying a full sized truck anyway” market is open to debate. Let’s hope for the American auto makers sakes the Chinese love trucks as much as we do.

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Posted by debtblog at 12:51 AM | Permalink | Comments (0) | TrackBacks (0)

There are several things that the average person should seriously consider if they want to escape the clutches of deep debt caused by external forces.

1 – Check your car insurance – Make sure that your coverages are up to date and adequate to protect you in the event of an accident. With the price of cars and auto repair today, a seemingly minor collision can cost you thens of thousands of dollars. If you have the misfortune to collide with a car such as an Acura NSX or Audi A8, both of which have aluminum bodies requiring special repair techniques, a 15mph collision could wipe out the equity in your home.

The car repair induced bills you could be responsible for pale in comparison to the possible medical expenses you could be hit with. A collision victim requiring a week in the hospital, a surgery, a few specialists and some months of follow up therapy could easily wipe out $100,000 in coverage and then some. You know where the rest of those medical bills would come from. That's right, your kid's college fund, your 401K, or the equity in your home, if you're fortunate enough to have any.

The other insurance related mistake that can cost you plenty, although at a slower pace than inadequate coverage, is keeping your deductibles too low. For heaven's sake if you're the type to have $100 deductibles on your insurance policies, call your agent at once. You're throwing money away as we speak. Raise them to $500 or better. You don't want to claim anything that small anyway, it'll just cost you more when they raise your rates.

2 – Earthquake proof your house – You may or may not have earthquake insurance. In some locations it's much more expensive than others, as you'd expect. You should know, however, that most home owner's insurance policies won't cover earthquake damage, ditto for many when it comes to flood damage. You can, however, minimize the potential for your home to be substantially damaged in all but the largest earthquakes by following some simple steps. These include solidly bolting your house to it's foundation and strapping water heaters and other things so they are more or less immobile. Many new building codes require substantial metal strapping, shear walls, and metal brackets as earthquake mitigation measures, but older homes don't have such precautions in place.

Many home supply stores have classes on how to initiate these preventative measures. A few hundred or thousand dollars now could prevent tens or hundreds of thousands of dollars later. Many of the measures are fairly simple and can be completed by the average homeowner who's not deathly afraid of tools.

3 – Don't get behind on your taxes – Rule number one: Don't ever fuck with the IRS. Ever. The same holds true for your state's department of revenue. Their penalties and fees will eat you alive. It may seem you don't have the money to pay them. If that's the case you need to find a better accountant and/or re-prioritize your spending. Food and clothing can wait. If you owe the IRS substantial money, be proactive. Go see them, don't wait for them to come to you, because that's not a good day. Check into their Offer-In-Compromise program. This can allow you, in certain circumstances, to settle your tax debt for less than you currently owe. You'll need two IRS forms to initiate the process, forms 656 and 433-A (the IRS loves forms, don't they).

These are just some of the ways you can keep unexpected problems from overtaking you and plunging you deep into debt. The key is to keep informed. Like the law, ignorance is no excuse, although it sure is easier.

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Posted by debtblog at 03:08 PM | Permalink | Comments (0) | TrackBacks (0)

Given that a debt consolidation loan actually can be a valid solution for some, however, here are some problems you should avoid when pursuing the debt consolidation loan option. It actually does have some advantages, such as the convenience of only making one payment. This alone can be worth it to some, especially if it keeps you from having a late payment on one of your credit cards. You may also throw away substantially less money on interest than you would if you tried to pay off all your credit cards with minimum or close to minimum payments. Be advised however that the debt consolidation loan approach can also be fraught with peril for the unaware or undisciplined. As with many solutions, it's perfect for some, and perfectly wrong for others.

1 – You can't really get the loan you thought. Because many people who need a debt consolidation loan are deep in debt, and possibly have a late payment or three in their not too distant past, they may not qualify for the low, teaser interest rates that are being promoted in the ads. Once that is discovered it is tough for many folks to back out, even if it's still technically possible. It's like walking out of the F&I office in your car dealership, and turning your back on the car of your dreams, when you find out you didn't qualify for quite the payment terms you thought you would.

2 – Ending up in just as much, or more, debt. By some estimates about three quarters of those who get a debt consolidation loan with the intention of eliminating debt end up deeper in debt within two years. This is because of the tendency to do two things; get too large of a loan and/or fail to reform your spending habits. If you are deep in debt due to uncontrollable circumstances such as medical bills or job loss, that's a different story, but many just got there from overspending on cool, new stuff.

3 – You can actually end up paying more total interest. Because the term of the debt consolidation loan is so long, you can actually end up paying even more interest. That of course depends upon many factors, such as your total consumer debt and the interest rate on that debt. If your total payment is lower because you're getting a very favorable interest rate, that's great. However some debt consolidation loans have an interest rate that's only slightly lower than you're probably paying now. The decrease in the total payment comes because the term of the loan is so long. You need to check this out thoroughly. If the interest rate is only slightly lower and you stretch the loan out longer, you'll end up paying more interest. This is especially true if you succumb to the temptation to take out a loan that exceeds the total of your debts.

4 – You could get stuck with excessive fees . Something that can contribute to numbers 3 and 4 above are the fees that some lenders add to your loan. Watch for this. It's no use getting an interest rate that's 8 points lower than you're paying now if they are going to raise your indebtedness a substantial amount.

5 – You could lose your home. Here's the elephant in the freakin' closet. It's like your brother with a heroin addiction or your sister who's in prison because she chopped off her husband's head with an ax. Nobody wants to bring it up. As far as the loan companies go, the less the mention this fact the better. You, however, had better be damned well aware of it. The main reason you're able to get such a favorable interest rate on a debt consolidation loan is the fact that it's a secured loan. In the vast majority of the cases, the security just happens to be your treasured domicile. This where you can end up in foreclosure if you're not extremely careful. If you're in financial trouble due to chronic overspending and you fail to reform your fiscally irresponsible ways, you could be giving some foreclosure investor his kid's college fund.

A debt consolidation loan may be the perfect solution to get you back on the path to financial nirvana. It could actually help you get debt free, in time. Just go into it with both eyes open, nay, with your lids pinned to your forehead.

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Posted by debtblog at 02:11 PM | Permalink | Comments (0) | TrackBacks (0)

First of all, just because you're bypassing the whole broker idea, ostensibly to avoid paying their trading commission or fee, you should understand that you may still have to pay a fee to participate in a company's DSP. It depends upon the specifics of their plan. In most cases the plans work differently than purchasing stocks through normal broker channels. When purchasing through a broker, you can enter an order anytime you'd like, and the purchase will be executed more or less right away, depending upon the market. You get the stock at the current market price. With most brokers, you can enter a limit order, so that you can have a bit of control over the price at which you buy or sell the stock. It is usually a bit different when going through a company direct stock plan.

In most cases such plans have specific days that you'll purchase the stock. There will be certain days set up that the plan allows purchases, and the transaction will be made automatically. Many plans allow you to purchase a certain dollar amount, rather than a specific number of shares. For example, you could make a $250 purchase. If the stock is selling for $20 a share, you'd buy 12.5 shares. In addition, the price you'll pay for the stock is typically made at the market average for the time interval when you make the purchase. So, if for example, the plan allows weekly purchases, you'd pay the weekly market average price for that stock.

DSPs are advantageous because it allows you to make small, regular investments in the company of a specific dollar amount. In addition you don't have to be current company shareholder in most cases in order to begin participation in the plan. Some companies have require you to make a specific initial investment in order to participate. In many cases that dollar amount is larger than the reinvestment amount you'll be able to contribute every month or other interval.

For example, General Electric requires you to purchase a minimum $250 to begin participating in their DSP. In addition, you'll have to pay a $7.50 fee to sign up for the plan. There is also a transaction fee of $3.00 for purchases made by check, or $1.00 for purchases made over the Internet by direct withdrawal from your checking account. After the initial $250 purchase, you can set up the plan to regularly invest anywhere from $10 to $10,000 in GE stock. Other companies have similar arrangements. Check with their websites for the specific plan details.

One note, don't confuse the direct purchase program with the directed share program, even though both are abbreviated using the letters DSP. A directed share plan is a plan that allows employees of a company to buy shares of a firm as part of public offering at the public offering price. This type of plan is fantastic because if you are trying to retire consumer debt, you can still invest at reasonable prices and regular intervals, so you can build a nest egg while you're trying to get debt free.

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Posted by debtblog at 02:29 PM | Permalink | Comments (0) | TrackBacks (0)

Maybe you’re feeling that you’ve bitten off more than you can chew, and you’d just like to declare bankruptcy and start over after a nice vacation in Bermuda for a few weeks. Hell, you could just stay there and do your “Cocktail” impersonation. Sling some drinks, relax for a few years, and stay under the radar. Most, however would rather find a way to get back up on top the financial heap and put away a few bucks at the same time. This is all the more important if you’re responsible for a family. Sometimes it can be overwhelming, with all those responsibilities on your shoulders.

If you decide to forego Bermuda or the Virgin Islands to focus instead on getting your financial house in order, congratulations! You’ll thank yourself for it later. Here are a few of the things you need to keep in mind when making evaluating your credit repair options.
 

1)      Stay close to home – If your credit restoration firm is located in your state (not flustered and anxious), you’ll get two important benefits. The first is that the correspondence will be addressed and postmarked from the same state you live in. Failure to take this precaution can possibly get your correspondence marked as frivolous by the creditor. The second advantage is that you’ll be able to work more closely with them and keep things moving along so your disputes get resolved in a more timely fashion. You know the saying “Out of sight, out of mind.”

2)      Stay Informed – You need to know the tactics they’ll be using in your behalf. Failure in this regard could potentially land you in a bit of hot water with the gendarmes. You don’t want to end up keeping company with a very large man in a very small room for a few months or years. In the eyes of the law, you can be held liable for illegal credit repair tactics used to clear your credit or raise your credit score.

3)      What have you done for me lately? Well, not me, but someone. Get references from the companies you’re considering. Optimally you’ll get references from someone you know, and more importantly, trust. They don’t have to be large firms either. Often you can get fantastic, personalized service with a small company. Some people swear by the small company route. You may not spend the least money in the short run, but in the long run, you could easily come out ahead.

So, make sure you keep the fine points in mind when looking to find debt help.

P.S. - Good job, Serena in your round of 16 win down under!

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Posted by debtblog at 08:40 AM | Permalink | Comments (0) | TrackBacks (0)

Well, there are a few possibilities. Many of those who are living the so called “good life” are incredibly hard workers. You’ll notice it’s 7:30 at night, you’re heading home from the gym, and they’ve still got their Armani on. That’s because they’re just finishing another 12 hour day. Some do have spectacularly high incomes. Millions of them own their own successful businesses. However, many of those people that look outwardly successful are really just leveraged to the hilt. All the accoutrements of success they display so proudly for all to see are really just a house of cards, secured by massive debt. While these people look to be successful, in reality they are leasing the good life. Imagine the pressure they have to live with every day. It can be pretty hard to make such a big nut every month.

Here’s a sample of what it can be like for one of those “House of Cards Millionaires” -You’ve got $679 for the BMW lease and another $599 for the Lexus. Insurance for such nice rides isn’t cheap either. Add another $300 a month for the insurance. That killer house on the golf course that’s the envy of your friends and business associates is really a fine pad, but although you’ve managed to build a nice bit of equity, you still need to cover the $5,200 mortgage payment every month. Add in other necessities like electricity, gas, cable TV, insurance and Internet access, and that stellar monument to suburban architecture sucks over 6 bills a month out of your wallet.

The country club membership is de rigeur if you’re living on the back nine anyway, so add another $750 to the monthly total. If you’ve got your own business, maybe you can find a way to claim it’s a business expense, but you’d better talk to someone about business out there once in a while. Putting away a little bit for retirement and the kid’s college fund will require still more; say another $1,000 – $1,500 a month. Getting your hair done, buying food, health or tennis club memberships, cell phones, and recreation can easily add an additional $2,000 to the monthly bills. Let’s see, that’s about $12,000 a month in cash going out, before taxes, each and every month. Ouch! I hope you both work. You’ll have to gross about $18,000 a month, depending upon your tax bracket, to pay for all this stuff. You’d better not have any disruptions in your income, or look out!

Now you’re starting to see why even so many of those who you may think are living the good life are, in reality, racking up massive credit card balances like so many other folks. They’re committing one of the cardinal sins of personal finance; living beyond their means.

There is a chance, however, that they really are a successful entrepreneur. Their business paid for the new Escalade (nothing wrong here, but please, leave the dubdubs to someone else) because it has a gross weight over 6,500 lbs. Ditto the portion of the mortgage payment earmarked for the home office and “conference room”(Home Theater). Both the husband a wife are employees of the business, which pays them a handsome salary every month. To keep corporate income, and thus taxes, low they also receive a healthy bonus every quarter. Now, that’s probably more of what you had in mind when all those thoughts of the good life went coursing through your brain.

Why are some entrepreneurs successful, while others are doomed to failure, or worse, eternal near success? There are a myriad of reasons. Some businesses are founded with a great premise, others aren’t. The basic idea has to have merit, and the marketing plan must be sound, or even the most astute business person will have trouble making the business successful. There’s no denying however, that you can give two different people the same product or service, the same market, and the same financing, and they can experiencing vastly different levels of success. Why?

According to a study by the University of Alabama, successful entrepreneurs share some important characteristics. Some of these are innate, but others can be learned, and you can always work to improve any area where you need a little boost. Here the important characteristics they found that had the most impact on success in an entrepreneur:

• Drive – Successful individuals are highly self motivated.
• Follow Through – Do what you say, and make things happen.
• Staying positive – Nothing kills success like a negative attitude.
• Objectivity – Successful business owners can realistically assess risks
• They respect money – Frivolity has no place when trying to be successful
• Being proactive – Successful entrepreneurs anticipate both problems and opportunities and act accordingly. Those that only react are doomed to mediocrity.
• Communication – One of the hallmarks of success in all areas of life is the ability to effectively communicate ideas, weather in writing, electronically, graphically, or verbally. Never stop in your quest to improve the communications skills of yourself and others in your organization.
• Technical knowledge – The successful individuals were technically sound, both in the business and operational aspects of their business.

In addition, you can’t be afraid to take risks. There is a definite relationship between risk and reward in business. They key is in knowing which risks to take and how to mitigate them. Furthermore, as I noted already, many successful businesspeople are unafraid of hard work. Many work extremely hard and are rewarded handsomely for it. However, it’s even more important to work smart. Effort, correctly applied, will always be more successful. It's much better than being eternally in debt.

NOTE: This article was one of the five chosen for the Carnival of Career Intensity, Jan 20th edition. Thanks Dave 

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Posted by debtblog at 03:17 PM | Permalink | Comments (0) | TrackBacks (0)

The Mayor of Seattle advocates a, make sure you're sitting down, $4.6 billion tunnel as a replacement for the viaduct. That will really increase the public debt. Well, I guess the public coffers will never be debt free anyway. On the plus side, it would beautify the city's waterfront and open up many areas for parks and luxury development, ultimately increasing the city's tax base. On the minus side, the $4.6 billion dollar estimate is a joke. Just ask the citizens of Beantown how fast estimates of a project like this spiral into never never land once the project begins.

You can't get an accurate cost estimate on the substantial remodel of an aging single family residence, so don't try and tell me you can make it happen on an aging freeway viaduct, especially when you propose to bury it right next to a major body of water. Other estimates run as high as $11billion. Seattle could just buy a few nuclear aircraft carriers, complete with air wings, and have the fourth most powerful military on earth. Just in case everyone else in the country thinks this is a State of Washington problem alone, there are Federal dollars involved in the project too, so it affects everyone.

To further complicate matters for residents in the rest of the state, the fine Mayor of the Emerald City proposes to allow them the honor of assisting the city in paying for the project. Sensing that the Washington State's governor's recent demand that the project be put to a public vote may doom him to the less expensive alternative of a replacement viaduct, the Mayor floated a “Tunnel Lite” proposal. This tunnel is actually much less expensive than the original proposal, and that's a step in the right direction. Here's where government really shines. In attempt to pull the proverbial wool right over the taxpayer's eyes, they are claiming, with a straight face, that the new tunnel, which has 4 lanes instead of the original proposal's 6 lanes, will carry as much traffic as the original.

What??? How in the world is that remotely possible, providing everything else is equal? Reduce the size of the conduit 33%, but retain the original capacity. It sounds like they raised the estimate of the average speed that will be maintained in the tunnel and, lo and behold, out popped identical traffic capacity numbers. Never mind that the actual speed in the new, smaller tube will probably be even lower than the original proposal's, actually lowering capacity more than the lane reduction alone would suggest.

This entire viaduct/tunnel fiasco is occurring in a metro area where the governmental powers never seem to be concerned with traffic capacity, and rarely build anything for the future traffic flow. It's like pulling teeth to get any other projects approved that will approve capacity in the most cost effective manner. In many cases, they city, county, and state spend almost as much on environmental studies and mitigation as they do on the actual construction. In California you have much the same situation.

They have to get my “You're Full of Crap and Trying to Take Our Money” award.

In other news, and I'll be the first to admit I don't have all the information here, what the hell is the problem with our Federal Government, the President, and the State of Texas? Now, all you Bush haters out there don't respond with “That's where President Bush is from.” I'm actually referring to the situation regarding the two border patrol agents, Compean and Ramos, who were just convicted of shooting a poor, unarmed illegal alien drug smuggler in the ass while he was fleeing to Mexico.

I'm not a shoot first and ask questions later advocate, and I agree, what the agents did was totally wrong. Here is an area where we should actually spend more money. We should give the agents the additional range time required so that they could have improved their shooting skills, and hit the bastard in the head. That would have saved their fellow border patrol agents, or perhaps someone from the DEA, from having to confront this scumbag at some point in the future. It would also have saved taxpayers from footing the bill for a long, drawn out court proceeding, where the Border Patrol agents were convicted on the word of that solid citizen, the aforementioned illegal alien drug smuggler.

Now that the drug smuggler has been given immunity from prosecution in the smuggling operation that precipitated this whole sorry situation, he's free to return to Mexico. Now he can begin the whole process again, and you can bet he will. He should have just waited until the highway is built to Kansas City, then he could have driven a semi truck full of Mexico's finest up here.

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As you may be aware, home prices are stabilizing, or even declining in many areas. This is just a correction after the frenetic run up in real estate values seen in many areas of the country over the last three years. From Q3 2005 to Q3 2006 all areas of the U.S. experienced price erosion, but not all metro areas or municipalities followed suit. The south experienced the smallest decline in home values, at only .1%, followed by the west at .9%, the mid-west at 2.5% and the northeast at a sickening (if you already own a home there) 4.8%. Within these general geographic areas there was considerable variation. If your home was in Portland OR, for example you could expect a 12.3% value increase, while down I-5 just a bit, in Salem OR, you managed a spectacular 24.7%!

Contrast that with homeowners in Boston, MA, who saw about 4.8% of their home's value evaporate, while homeowners in another NE metro area, White Plains NY, saw their's increase by an almost identical 4.7%. All you condo flippers in the south Florida area were especially hard hit, as home values in the <Miami area took a precipitous 5.6% hit. Run up the road to the north west a bit, in Tampa/St. Pete, and you got a whopping 9.6% gain! So, as the old real estate adage proclaims, it's location, location, location.

First up, a quick summary of some housing characteristics on your home's value. This data was obtained from homes in the northeastern U.S., but is fairly consistent with other areas of the country. If you're shopping for a home, these are some things to keep in mind as well.

• An additional bathroom has one of the greatest net positive effects on your home's value. Each additional bathroom will add a robust 24% to the value of the home. The effect of an additional bathroom is less in the western U.S. than in other areas of the country. They just don't mind waiting as much out there.

• Your car will love you if it gets to stay inside every night. Your bank balance will love you too, because homes with a garage sell for, on average 13% more than those without. If you live in the south, you see a bigger jump in value than for homes with garages in other areas.

• Central AC adds 12% to the home's selling price. This feature has some geographical correlation. As you would expect, homes in the south and mid-west tend to reflect higher values from this than homes in the north.

• You get a pretty nice, 6% increase if your home has good headroom. 9 foot or higher ceilings, that is.

• Each fireplace will net you roughly a 12% selling price increase, so hit the bricks. Seems like a huge return for a relatively small investment. It sure would be much easier to add a fireplace than to raise your ceilings a foot. Interestingly, there is virtually no geographic correlation for a fireplace. That's to say that you'll get this boost in selling price no matter where your home is located. This lack of geographic correlation is not exhibited for the other variables listed. Even the value associated by additional square footage changes to some degree with your home's location.

• A basement gives a significant value boost, at 9%, but don't do your laundry down there. Having a basement laundry room will lower your homes selling price by about 2%.

• Each additional bedroom will add approximately 4% to the selling price of the home. Interesting, but how does this average change with the number of bedrooms? For example, is the value increase going from 2 bedrooms to 3 bedrooms the same 4% as an increase from 4 to 5 bedrooms. Logically, it would seem that the value gain from 2 to 3 would be much greater.

• Not only is it pretty to live on the back nine, you'll get an average 8% price increase by living near the links.
  

In the mid-west the lot size of your home had a larger impact on price than in the other geographic areas. In the other areas, lot size had about an equal impact on the home's selling price. In addition, the larger the home, the less the lot size impacts the selling price.

These are increases in selling prices determined by features. They do not directly correlate to the return one can expect by adding one or more of the features listed. In that case, the cost of the added features would have to be used in the calculations to determine if the additions created additional net value. In 2005, according to the HomeTech Information Systems data published in the Cost vs. Value Report by the NAR, those remodeling projects that had the greatest net effect on your home's price were the following:

1 – Bathroom remodel 102.2%

2 – Siding replacement – 95.5%

3 – major kitchen remodel - 91% (up a tremendous amount since 2002, when it only generated a 67% return on your remodeling dollar)

4 – Window replacement – 89.6%

Now get to work! If you are taking on a remodel project, or looking at what features should bring a higher selling price, remember that sometimes it's not all about the money, but how much enjoyment or utility you and your family may receive from the project or home feature. In addition, some projects or features, such as windows or tankless water heaters can bring substantial, long term money savings.

Good luck, and here's to getting debt free!

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Wouldn't it be great to be able to comfortably retire without the money worries typically associated with your sudden lack of employment? Many people would give about anything to know that it was already taken care of for them and they could just relax if they chose, or concentrate on enjoyable business interests or charities. Can Social Security provide this? You must be thinking this is April 1^st if you for one second believe anything close to that.

It is, however, eminently possible to achieve just that. Paul Merriman describes how you can do it in his book “How to Live it Up Without Outliving Your Money”. As with most things retirement related, it takes advantage of the principal of compounding and consistency. In one example Paul describes, he set up a retirement fund for his grandson so that at the age of 65, the grandson would be able to receive payments that would fund his retirement.

Mr. Merriman has the financial wherewithal and knowledge to pull this off, but he set some pretty ambitious goals for himself and the grandson's retirement instrument. First of all, and this is really great, NO TAXES! That's correct, he wanted no part of burdening the growth of the money with any tax liability at all. You've got to love that. Second, he wanted to make this happen with a single seed payment of $10,000 or less. Third, he wanted the money top be available in any case, no matter what happened. To top it all off, Paul wanted the retirement fund, in addition to the income it provides to his grandson, to donate at least $20 million to charity at some point in the future.

This is a pretty tall order, and yet readily achievable. How did he pull it off? Using a variable annuity combined with an irrevocable trust. Because you can give a one-time, tax exempt gift of up to $10,000, Mr. Merriman gifted his grandson that amount. After the money stayed in the grandson's possession for greater than 30 days, he was able to have the money transferred to the trust that was set up with the grandson as the beneficiary. The trust's assets, at the time $10,000, were invested in 50% U.S. equities and 50% in international equities. Assuming that the return on these followed long term historical averages, the growth would approximate 11%. This should, unless we have a repeat of the Carter '70's, more than out pace inflation.

Upon the Grandson reaching the age of 65, the trust would begin to pay out 5% of it's assets annually. These annual payments would equal about $700,000, give or take. Lest you think that's an ungodly amount of money, don't forget that inflation will have plenty of time to do its dirty work on that sum. It will only be worth $135,000 in today's dollars at the time of its disbursement. Now, this is still a pretty healthy retirement, especially combined with Social Security (I can hear you laughing now), and any other retirement instruments the grandson sets up on his own. At his death, providing he lives for 20 years after he turns 65, there should be plenty to leave to his heirs and slide the $20 million to a charitable cause.

Now most of us don't have this kind of time to grow our retirement portfolio, but this illustrates what you can do if you start early. I've seen it happen all to often when employee benefit plans are installed and younger employees opt out so they can spend more on their BMW or at the clubs. I know that you've got different priorities in your twenties, but this is your money, they are not taking it away from you when you contribute to your 401K or other retirement plan, it's just being diverted so it can grow for a while. It's going to grow for someone, weather it's the club owner or you, so it might as well be you.

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Being one who spent half my day on the computer, I decided to take a look around the net to see what I could find out. First stop, the federal government’s HUD website. There it was, right on the site’s home page; a link entitled “FHA refunds”. It couldn’t have been easier. Furthermore, about halfway down the page was this gem: “You do not need to pay another person or firm to assist you in collecting your premium refund or distributive share payment.”  All you need to do is enter your SSN or your FHA loan number and they’ll do the rest. You’ll know right away if you’re owed an FHA or HUD refund for insurance you paid, but never used.

To collect your money, you just wait a few weeks after you’ve filled out the online form. An actual paper form will arrive in your mailbox. Fill it out and your check will show up in about 6 – 12 weeks. To make it even better, you saved the finder’s fee you’d have paid someone to do that for you. If you’ve had an FHA mortgage loan, and got it after September 1, 1983, the insurance you payed will be refunded to you as long as you never defaulted on the mortgage. It can be thousands of dollars, but is usually in the hundreds, well worth your time to fill out a simple web form. If you don’t have access to the Internet (how are you reading this?), you can call 1-(800) 697-6967 to speak to a HUD representative.

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If becoming debt free or substantially debt free is your goal, that's fine as far as the big picture, but what exactly are you going to do this year to achieve it? Maybe your goal is to retire rich. First of all, you'd better define “rich”. After you've gotten that out of the way, you'll know where your target is. After all, it's hard to meet a goal you haven't really set yet.

It's been proven you can retire with over a million dollars in your investment account(s) by only saving a single dollar every day. The downside is that it'll take 65 years and, if you'd like to retire at that age, you'd better start by picking the OB/GYNs pocket as you're born, and never letting up. To make it even more tricky, you have to maintain an 8.7% rate of return and compound your savings daily. So, if your goal is to retire rich, and you've defined rich as having $1 million in liquid assets, you know it can be done.

The point is that you should have at least two things in order to reach your resolution.

1 - A well defined goal. “Get debt free” is fairly specific, while “spend less money” is not. In order to achieve any goal, financial or otherwise, you must define it first.

2 – You need a specific plan to attain the goal. It should include all the steps and the math necessary to make sure you stay on target to reach the goal you've laid out for yourself. Break the problem of reaching your goal into smaller parts and attack each one individually. You should know exactly how much money you need to contribute, when, and to which account, in order to reach your goal. You should also be well versed in the assumptions you made in order to make the plan valid. If you assumed an 8% return in your plan, but in reality, the account is only returning 6.5%, you need to make some revisions. Keep on top of it.

Happy New Year! Make that financial resolution, whatever it may be. That'll be one more tool you can use to get yourself in the financial Disneyland you wish for. After you've made the resolution, just do it, and don't stop.

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Probably not, but that brings up an interesting question. Why do some people seem to consistently overspend? What is the psychology behind such behavior? Why is the pattern of overspending so difficult to correct? Stay tuned for the next half hour, as we look into these and other fascinating questions. In truth, some overspending is driven by behavioral disorders such as gambling addictions or alcoholism. I just spent 4 days in Las Vegas for a trade show, and can attest to the fact that some people definitely gamble too much and seem unable to control it.

What about those that just plain spend too much? They’re buying those new Edlebrock aluminum heads for that ’68 Nova in the driveway, or picking up their fourth pair of Loeffler Randalls. Is it self esteem? You know that these days it seems that a lot of emphasis is placed on self esteem. Perhaps you don’t realize that when you whip out that Visa card, you’re actually spending real money. According to some experts, it seems that for some, there actually is a disconnect between associating credit cards and spending money. You’d think that would evaporate about every 30 days or so, but maybe not.

Getting back to the whole concept of self esteem issues driving consumer’s deficit spending, it’s ironic to realize that trying to bolster self esteem by spending money to acquire material positions and have fun doing things such as traveling, can actually further the very problems that contribute to the self esteem problems in the first place. Some people have low self esteem due to what they perceive as lower income than they feel they deserve or lower than others in their social circle. Spending to purchase what others are buying helps to generate a feeling of equality and raise the individual’s self esteem.

The irony here is that, by deepening the individual’s debt, they are denying themselves the very financial success that they seek in the first place. As they sink deeper into debt, they are just that much farther away from that place among their peers that they desire to emulate. Weird, huh?

As I stated in a post back in September about a budget being like a diet, you need to change your lifestyle to be successful in beating the debt death spiral. What I mean is that you need to identify the root causes of your spending habit and fix them, just as you would if you were attacking a weight or health problem by revising your diet. Here then are some of those root overspending causes you may want to take look at:

1 – Medical or psychological problem such as gambling or alcoholism

2 – Spending disconnect when using a credit card

3 -  Low self esteem

In addition, a 1993 study of consumer debt by Webley, Lea, and Levine at University of Exeter in the UK found that other psychological factors possessed by those in serious consumer debt included the following:

1 - Nonconformist, Agnostic or Atheist religious outlooks

2 – More permissive toward debt, but also were more likely to hide the fact they were in debt from others

3 – Knew more people who were in debt than did the non indebted study group and identified with them

Hopefully this will help you recognize such factors in yourself, if they exist, and change them for the better. After all, when you’re trying to get debt free, you need every advantage you can get.

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First of all, I'm writing this on a new Lenovo laptop equipped with Microsoft Windows Vista, my first experience with the new Microsoft OS. I'll let you know how I feel about it later in the week, after I've logged some more hours on it. Sadly, the machines not mine, just a loaner, but at least I'll be able to give a bit of evaluation to those of you out there.

What if you're not doing as well you'd have liked in your serarch for fgreedom from debt? Are still getting those infernal calls from the "non profit" credit counseling agencies offering their services? Did you know that non profitorganizations aren't obligated to abide by the federal do not call list? Well, it's true. They aren't. That may explain why some organizations repeatedly call you during dinner, even though you are on the list. Those bastards! Furthermore, some of these organizations are being looked at pretty carefully by the Internal Revenue Serivce. In fact, several credit counseling services that are supposedly non profit have been informed by the feds that they're losing their tax exempt status because they have repeatedly failed to abide by Federal tax exempt guidelines. In fact, last May, they revoked tax exemption from 41 such credit counseling agencies and indicated they were investigating still more. At the time, IRS commish Mark W. Everson even went so far as to term several of te industry's participants "Bad Actors".

As far back as 2003, the IRS was advising folks in need of credit counseling to be cautious, and even issued a consumer alert on the subject.Bankrate.com even listed the problems with Credit Counselors in its article on "12 Ways to Lose Money" last year. So, as I advised in my post last month on the subject, thouroughly check out any such credit organizations before you use their services. The money you save will be your own.

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1- Credit card companies are sometimes giving you less time between when you receive the bill and when it's due. This is very easy for them to accomplish. They just send you the bill a few days later. Giving you less time to get them the payment is a great way for them to increase revenue. It's the financial industry's equivalent of the tactic used by red light camera companies. Those little bastards, in the guise of public safety, have been known to actually shorten the duration of the yellow light to as little as 3 seconds. Why? To increase the likelihood you'll fail to clear the intersection before the light changes to red. Then, of course, they can mail you a profitable citation, which they make money on in a revenue sharing arrangement they have with the county or municipality. Nice, huh? Public safety? More like public (and private) profit!

As some of you may know and others may not, your credit card payment is usually considered late if it's not posted by the company before the due date. It can arrive in their P.O. Box on the agreed upon date and still earn you a late payment charge. Worse still, they can use this as a way to increase your interest rate. Permanently. Depending upon the balance you typically carry, this could end up making the $29.95 late charge seem like peanuts. Remember, if they do stick you with a rate hike, call every so often and request they lower it. Often you'll be able to make this happen, but you'll get no such reduction automatically, you've got to ask for it.

2- Tricking you into getting a different credit card than you requested. They ply you with a fantastic offer with all sorts of attractive sounding rewards attached (you'll find out these aren't as nice, or easy to achieve or redeem as they sound, but that's a story for another day). They then send you a different card, claiming you didn't meet the requirements for the card you applied for. The moral of this sad story is read th agreement carefully. Sadly, however, those tend to be akin to software EULAs, full of very fine print and seldom read completely, if at all.

3- Sometimes the CC companies will pop you with a late fee if you are beyond the TIME stated in your card's agreement. Some credit card agreements actually state that they must have the check in their dripping paws by a certain time on the due date. If this is the case for you, you should treat the due date as actually D-Day +1. Subtract a day from the due date printed on your account statement, and send your payment a day early. This is another great reason to set up your minimum payment for auto-pay. That will render this little bit of trickery ineffective.

4- Raising your card's interest rate just because they can. In many cases, they can raise your rate because they just want to increase revenue. While pretty damn nice for them, it sucks for you. This is another reason to check your statement carefully. It just happened to me. A rate on one of my cards went from went from 8.9% to 9.9% with no late payment, change in spending habits, or any other discernible reason. Thankfully, card has a very low balance on it. Make the call and demand the company change your rate back. If they fail to do so, avail yourself of one of those shiny balance transfer offers that shows up with sickening regularity in your mailbox.

Hopefully none of this will never happen to you. In today's market, I wouldn't count on it though. Be vigilant and don't be afraid to call them on their shenanigans. If you are trying diligently to get, and stay debt free, you don't need any little curves in your road to impede the process.

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Given that sliding someone a few Jacksons is less likely to facilitate getting you what you need these days, you might need a credit card or two, even if you strive to keep the balances low, or better yet, stay debt free except for the occasional card use while traveling or other spending anomaly that may crop up. The better your credit score, the more likely you'll be to get a card with favorable credit terms. In addition, when you get any other credit, such as a car loan or mortgage, you'll do so at much more advantageous terms (to you, not the lender).

Here is a technique that can work to help get you those extra points on your FICO score you're looking for. It's known as advanced credit profiling. Your FICO score, as most of you are aware, is the score used by lenders to judge your supposed credit worthiness. One of the components of your FICO score is what type of credit you have. This is known as your credit profile. The more well rounded your credit profile, the better risk you present to a prospective lender, and that is reflected in your score. Different types of credit need to be present in your profile in the correct proportions to maximize your FICO score. Refining your credit profile to more closely reflect what lenders are searching for will give your FICO a bit of a boost. How much of a boost you get will depend upon your current credit profile and how much room for improvement you have.

Other things are determinants in your credit profile as well. Lenders are very sophisticated today and look at multiple factors when determining the prospective creditor’s profile. According to Jay Peters at the Credit Secrets Bible , they even take into account things such as professional publications you may be subscribed to. While such subscriptions will not actually raise your credit score, the subscriber lists from some such publications are used by lenders as another factor to determine whom to offer credit. Your credit reporting agency information is checked against other factors to give the prospective lenders a more complete picture of your finances. Professional journal and association subscriptions and membership is just one other such factor. The makeup of one’s credit profile is a key determinant in who gets what credit offers and when.

Other information used in your credit profile, also known as your credit risk profile, are things such as your occupation, age, gender,  neighborhood, homeownership status, types of credit you have, etc. The number of variables used by some companies can run into the hundreds. Companies use sophisticated data mining software (and you thought the NSA had the good stuff) to perform the multiple cross references required to make credit risk assessments. Obviously factors such as age and gender are difficult to change, in the short term anyway. The key is to do what you can to improve your credit profile, such as make sure your credit accounts are distributed to different types of accounts. Each lender is different with respect to exactly what they are looking for with respect to your credit profile, but most will want to see some sort of balance i.e. multiple types of credit.

This may be just another tool in your box to help your credit picture and another step closer to becoming debt free.

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In some cases a great tactic to regain good credit and become debt free is to find a credit mentor. Many people won't have someone they can turn to for something so personal, or won't feel they have anyone can share such intimate financial details with. If, however, you do have such a person available, by all means, let them help you! If you've a parent, business partner, friend or relative that's financially savvy, let them show you the way to become financially solid again.

If you're really fortunate, it will be someone who's gone through the same debt problems you're experiencing now, and has come through them all to rise again.. Any time you can follow in somebody else's footsteps it's so much easier. They'll be able to relate with your troubles and relate some solutions that were successful to them. You may be able to copy their solutions or adapt them to your specific situation.

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Have you ever noticed that, no matter the credit rating of the individual, almost everyone has new credit card offers stuffing their mailbox these days. It seems even those with marginal or worse credit aren't immune from the offers of shiny, new credit cards. Have you ever wondered why? Why would a company give new credit offers to individuals who've proved their inability to handle credit cards? Ahh, why indeed! Because it fits into their business plan, that's why.

It seems that, in an effort to maximize profits, many credit card providers have turned toward a heavily fee based business model. In addition to the hefty credit card interest rates the firms charge sub prime borrowers, the lenders are trying to maximize fee derived income. What better way to increase fees than to increase the number of credit cards held by debtors? Well, actually there are ways to go even further, if you are looking to maximize profits, and that's to encourage those who are already over extended to take advantage of new credit card offers. Why? Because with new credit card offers come another round of fees, some of the most profitable being the inevitable over the limit fees that will accompany the numerous credit cards cards. Now there's absolutely nothing wrong with businesses making a hefty profit. I'm all for it. But you should be very aware of this new trend.

You might expect that with numerous credit cards you'd have enough available credit that going over the limit wouldn't be that much of an issue, but that's the beauty of this subtle system. The credit card companies carefully structure the credit limits of the accounts so that none are very large. Instead of letting the creditor have a single credit card with a $7,500 limit, they'll give them a single card with a $1,500 limit, and then follow it up with a few more. In the end, the borrower will have five credit cards, instead of only one. This way it multiplies the opportunity for the company to generate fee based revenue. In addition, five cards much harder to manage than a single card, so those who are a bit disorganized, as many sub-prime borrowers tend to be, are more likely to be late on a payment. You know what late payments mean. That's right, more fees for the credit card companies. In addition, they will use that opportunity to further increase the interest rate the customer pays.

Some companies don't offer credit cards to sub-prime borrowers. According to one source, Chase and CitiGroup indicate they don't maintain the practice of giving multiple cards to such consumers. One who is guilty of the practice, and has actually elevated it to a fine art, is Capital One. The Cap will send out offers to sub-prime borrowers until every hill in the country is completely denuded. Some debtors have as many as five or six such cards.

If these offers keep ending up in your mail box, send them straight to the shredder. You want to avoid, at all costs, a situation where you fall behind on your credit card payments and are using one high interest credit card to pay off another. Hopefully you can recognize this little business tactic before you get sucked in, and manage to resist sending back the new card offer. Remember, straight to the shredder. Put your credit cards on auto pay for the minimum payment to help avoid credit card management problems that lead to late fees. If you're trying to get completely debt free, you definitely don't need more credit cards. What is in your wallet anyway?

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