The Debt Elimination Dilemma
By Terry Rigg

The total American consumer debt reached $2.4 trillion in 2006.

There are literally hundreds of ways to eliminate your debt. You can't turn on the TV, listen to the radio, open a newspaper
or click on a web page link without hearing or seeing the latest miracle method to get you out of debt.

Some of these methods can actually be very effective. For example, a debt consolidation loan using the equity in your
home can significantly reduce the interest you pay each month.  Others like debt settlement or debt negotiations can have a
negative impact on your credit rating. Some companies promise to help you rebuild your credit rating after settlement but this
is a slow process no matter whether they do it or you do it yourself. This method, along with bankruptcy should only be
considered if all other options fail.

Before you consider any option to eliminate your debt you need to find out why you are considering this in the first place.
Simply obtaining a loan or settling your debt is not going to solve the problem for most people.

The odds are good that once you have your debt under control you will start piling it on again. This is because most people
take these actions without a plan to prevent this from happening again.

Another important point that you should consider is that for some there is no need to go through a 3rd party for help with your
debt. It's very possible that you have all the money you need to pay your debts and other expenses and have the ability to
impact the interest rates you pay.

I'm not just talking about a budget but a real plan for what you want your money to do for you. A budget is just part of the
process. A real financial plan starts with setting your long and short term goals and working backwards from there. Every
financial decision you make should be directed toward achieving your goals.

Your budget will simply be a tool to show you what you have and what your obligations are. Most importantly, it will put you in
control of your finances so that you can make educated decisions regarding your spending and savings.

There is absolutely nothing wrong with consolidating your debt to get out from under those high interest rate credit cards. But if
you are not careful you may end up with the consolidation loan payment and even more credit card debt.

If you are dead set on using one of the debt elimination methods to reduce your payments, take the time to consider what you are
going to do differently in the future to make sure you don't wind up in the same situation, or worse in a year or so.

Terry Rigg is the editor of the Budget Stretcher web site and developer of The Complete Budget and Bill Organizer
http://www.homemoneyhelp.com/BBOdownload.html  and the Debt Elimination Summary http://www.homemoneyhelp.com/debtelimsummary.html .
To Subscribe to The FREE Budget Stretcher Newsletter and receive the online version of The Complete Budget and Bill Organizer
absolutely free just visit his home page at http://www.homemoneyhelp.com
 

Save Money Without Missing It
by: Joyce Moseley Pierce

Over the years I have had to be creative in saving money. Trying to raise three small children with a husband whose job required transferring every couple of years, it was tough to stay anywhere long enough to get beyond the moving expenses. Even though his company paid to move us from one city to another, there were always expenses associated with selling the old house and fixing up the new one.

I learned a few ways to save without really missing it because I found ways to save money I never got used to having. Here's how you can do it, too:

1. Establish a savings account. Today's savings accounts don't earn much money, and you might think that it's not worth having, but it is a good practice to get used to putting something away each payday and not living off of everything you bring home. As your balances increase, you may consider investing the funds in something that might earn you more money, but for now, just get in the practice of saving.

2. Don't use change. I don't carry much cash in my purse anyway, but I never carry change. The coins that I receive after making a purchase are thrown into a pocket in my purse and when I get home, I throw them into a piggy bank. About every three months I'll dump the coins out on the table and roll them in coin wrappers. It's amazing to me that I rarely have less than $25. It's money I never missed, so I hate putting it right back into my wallet. Instead, I exchange it at the bank for bills and put it into my emergency backpack. For those of you who don't know what an emergency backpack is, it contains essentials I might need for 72 hours if I had to leave my house in a hurry. It is always good to have at least a small amount of cash when plastic may not work.

3. Remember that bonuses and tax returns shouldn't be used for "catching up." Most of us spend all year and then depend on the extra money to help get us out of financial trouble. Have you ever had a year when the boss didn't come through with the bonus? A year when you had to PAY taxes? Then you know how devastating that can be when you have overspent all year.

We used to have our credit cards charged to the max! Each year my husband would get a bonus, or a profit sharing distribution, and we would pay the credit cards off, vowing to never get in that shape again! Because we had so much debt, there wasn't much spendable income, so as you might imagine, we used the credit cards and maxxed them out again. We finally got smart and made a commitment we would not use credit cards except for purchases we knew we could pay off each month. This meant no big ticket items, and we estimated that we could afford no more than $500 each month for the credit card payment. Ten years ago we were able to pay the cards off, and I'm thrilled to say that we have been successful with our goal. It feels so good to write that check for the total balance due every month and not have to pay any interest expenses.

3. Hide the raise! About 15 years ago I changed jobs and got a good raise along with it. I had been able to live on the salary I was making, so I decided to sign up for an automatic deposit to my savings account each payday. Instead of finding things I could buy with this extra $500 a month, I was socking it away into my savings, Funny thing was that we never missed it because it was never a part of our spendable income. It helped me feel secure because I knew if we did have an emergency, at least we had the funds available.

4. Save money from rebates. Sometimes we get checks in the mail as rebates from items we've bought. They may or may not amount to much money, but you've already paid for the item. Just take the rebate and stash it in your special account.

In order to accomplish your goal of saving money, you have to be committed to it. Decide now that you will live on your spendable income and put the rest away. You'll be surprised at the peace of mind you will feel when you start paying yourself.

Copyright 2002 Joyce Moseley Pierce 

Joyce is a freelance writer and owner of Emerson Publications.  Visit www.emersonpublications.com for lots of good family-friendly information, including information on the benefits of owning your own business.