Eliminate Debt From Last Year's Gift Giving Season

The slowing economy took a turn for the better this past shopping season, as retailers reported an increase in sales compared to the same time periods of the past few years. Considering that many stores depend on the holiday gift giving season for up to 40% - 50% of their annual sales, this was welcome news.

Sadly, a majority of people were still using credit cards for a majority of purchases, increasing account balances that were already too high. For the ever-increasing online purchases, paying with cash is never an option. Now, the time has come when the reality of those higher balances appear as the credit card monthly statements arrive.

The upswing in sales is a direct result of rising consumer confidence. People believe their personal economy is going to improve. When that improvement happens, the bills will get paid. However, when someone's personal economic condition does not improve, the cycle of debt begins.

Unless a person can payoff their card balances within a few months, then the amount of spent on those 2010 gifts will grow as interest on those purchases continues to accumulate. That 00 spent on holiday gifts could balloon from 00 to 00 once those purchases, plus interest, are paid for.

The unfortunate truth is that most people never know how much money they are actually spending. Current purchases are simply added to previous balances, interest, future purchases, and future interest. When a consumer does not know the actual cost of purchased items, it becomes nearly impossible to know how those purchases fit into the gift giving budget.

How do consumers survive in 2011 when the debt begins to grow out of control? First, put away the credit cards. Use cash or debit cards. This helps you spend less than your income. If a family's monthly income is not enough to cover the monthly expenses, then that family cannot survive. Period. Difficult choices must be made on which expenses must be cut out their lives.

Secondly, eliminate the debt burden left behind. Many people continue to discover that debt elimination programs are very real. These elimination programs take advantage of consumer protection laws which have existed for many years. To accomplish this, it is again imperative that the commitment is made to live without credit cards. Just stop to imagine the saving if you were not losing money on interest payments. That's greater spending power for you.

When using cash or debit cards for your purchases, you are less likely to make that un-needed purchase when you can actually see the money disappearing from their wallet, or when there is not enough money in the wallet to begin with.

Using cash for a majority of purchases makes it easier to eliminate foolish purchases, and save money. When using cash, your conscious is clear because the decision not to buy an item is made for them, so the guilt about buying, or not buying, an item is relieved. No money in the wallet? Oh well, no new pair of shoes for me today. Walk away without the guilt of a larger debt load.

Debt Consolidation Loans With Bad Credit Offer A Solution To Financial Struggles

A chief worry occupying the mind of students is the debts that they accrue while at college, and not necessarily their studies. These debts can be considerable when tuition fees and living expenses over three or four years are combined. Managing that debt can be a big challenge, but by consolidating college loans the financial pressure can be reduced.

There is no shortage of options available to students looking to consolidate their debts, but it is important to realize that private loans and federal loans are usually treated differently. Finding a federal financial aid package that suits the needs of a student is not too difficult, and there is a good range of federal consolidation programs to choose from.

In fact, there are four programs for college loans granted by federal sources. The specifics of these plans relate to restructuring the existing loans, reducing the monthly repayments and overall making the debt more manageable.

Also, the applicant does not have to be a student, with people in mid-career who still struggle to pay off their student debt also catered for.

1. Standard Consolidation Plan

This is the most straightforward plan for consolidating college loans and is designed for recent graduates who now have a source of income. The level of income might not be very much though, so the need for aid is pretty strong.

The key element to the whole plan is that the term of the existing loan is extended to a maximum of 10 years. This means that the payments due each month are less than they would have been otherwise. This federal consolidation program also features interest charged a low fixed rate, so budgeting is made easy.

2. Extended Payment Plan

This consolidation plan is basically the same as the Standard Plan, but the difference is that the loan term limit is extended to between 15 and 30 years. This makes the Extended Payment Plan ideal for graduates who have a low income but who face large college loans.

The chief advantage of this plan is that, with such a long term, the size of the monthly repayment is made very low. This makes payments much easier to meet, greatly reducing the risk of missing one. And with low fixed interest rates making sure that the monthly costs are kept to a minimum, it is almost the perfect plan for consolidating college loans.

3. Graduated Payment Plan

For students with the pressures of study and debt repayment to face together, the availability of a federal consolidation program that allows repayments to be made in a graduated structure is great news.

This plan requires a very low monthly repayment sum, with the sum increasing in regular increments every two years. The structure is designed to reflect the financial reality of students as they move through college and into the working world. The maximum lifespan of this option is 30 years, so fully repaying college loans can still take some time.

4. Income Contingent Payment Plan

The most complicated of the four plans for consolidating college loans, the Income Contingent Payment Plan features carefully calculated repayment sums. It is not just the income of the student that is taken into account though, but also the income of their family. With family often helping out, this federal consolidation program allows for the debts they already face to be taken into account.

Basically, by keeping their family out of a tight financial corner, the amount of financial support for the student is lessened, and the college loans can be cleared in accordance with what is truly affordable.

Make Becoming Debt Free a Priority

In their quest to pay off debt, some people neglect other important goals, such as saving for significant events like buying a home, going to college, or saving for retirement. Without a well thought out debt management plan, individuals might opt to pay off the wrong kinds of debt, leaving themselves with little flexibility in times of financial need. Information and a clear assessment of your situation can help you make the best choices for your family to ensure long-term financial stability and prosperity. Understand that debt in and of itself is not bad. It is an essential tool for building wealth, reaching your financial and educational goals, and living a comfortable life. Most of us could not afford a home or finance a college education without taking on debt. Used sensibly, debt can help you survive a job loss, buy a car, or even start a business. Debt can also give you the flexibility to seize opportunities you might otherwise have to pass up.

Debt without a doubt has a place in our world today. The key to strategic debt management is differentiating between good debt and bad debt, as well as maintaining a balance. Mortgages, student loans, and borrowing to start a business are usually considered good debt. Most other debt is considered bad. Good debt can help position you strategically for the future if you don't go overboard. Bad debt usually involves short term, spontaneous purchases that give you very short-term satisfaction.

However, too much good debt can have the same negative effect as too much bad debt. Until recently, lenders have been more than happy to help finance whatever house or education dreams you might have, without regard for the practicality of repayment. People assumed, erroneously, that banks wouldn't lend more than they could comfortably afford. We know now that assumptions about the future are not always true and individual circumstances can change on a dime. The reality is that you need to know your own debt limits based on your individual situation and goals.

Ultimately, being debt free is a good thing. However, managing debt intelligently can give you the cash flow you need to grow your long-term wealth. Living debt free is not practical for most people today. But, you can manage your debt so it actually improves your financial future. To accomplish this, individuals need to pay off the bad debts first and cut the costs of the debt you keep. From now on, vow to keep your debt from getting out of hand and get smarter about all debt you acquire.

So refrain from putting those latte's and designer clothes you don't really need on your credit card. Pay those balances off as quickly as you can - always pay more than the minimum required. Only use cash for short-term purchases. Don't neglect saving for retirement and a rainy day. Pay off first your bad debts, then start on the good debt. Do all those things and one day you just might find yourself sitting in the exclusive debt free club.