CAPC Debt Management Blog

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 If you are anything like me you have done two things this holiday season that may spell doom for you in 2008.  The first is you waited to the last minute to holiday shop and now have nothing but fruit cakes and Christmas Tree air fresheners to give to your loved ones as gifts this year (something they will certainly remember in 2008).  And second, you probably bought the offending fruit cakes and air fresheners on a credit card since you didn’t have the money to buy them in the first place.

According to a recent Associated Press analysis of credit card debt from October and November, the value of accounts at least 30 days late jumped 26% to $17.3 billion in October compared to a year earlier. And some of the nation’s biggest lenders report increases of 50% or more in the value of accounts that were at least 90 days delinquent when compared with the same period a year ago.

For most of us who relied on our favorite plastic shopping companion to fill out our Christmas lists this year that means record balances to look forward to in the New Year.  Record balances that due to mounting mortgage expenses, a weakening job market nationally and 2005 changes to the bankruptcy law (making it more difficult to eliminate consumer credit card debt), may make it almost impossible for consumers to keep on top of it in the months to come.

So what’s the average consumer with $1000’s in credit card debt to do in 2008?  Consider these five suggestions to get your debt under control in the New Year:

1. Stop Using the Cards - seems simple enough? Stop using the cards now and put a kibosh on accumulating more debt on top of the debt you couldn’t afford in the first place. Put the cards away, cut them up completely or make a promise to yourself that they will only be used again in the event of an emergency. And no, new shoes does not an emergency make.
2. Pay more then the minimum - Let’s say you are $5,000 in credit card debt with a 16% interest rate and a minimum monthly payment of $110. Did you know that just paying the minimum means it takes 25 years to pay off your debt and by the way, that $5000 debt ended up costing you $12,000 in total factoring in that extra $7,000 you just paid in interest. Yet DOUBLE your minimum payment to $210 and pay off the card in 28 months, saving you about $6,100 in interest. Read the rest of this entry »

The holiday shopping season is here and with it, its inevitable companion, debt!  Who doesn’t overspend during the holidays?  Does it make it any better if that overspending is to the benefit of another?  We tell ourselves that it’s okay if our spending during the holidays is a little “out of control” if the end-result is a happy child, friend or family member AND we didn’t spend it on ourselves.  But is this really healthy?

According to the National Retail Federation, the average consumer spent a record $347.44 per person during the recent 2007 Black Friday holiday shopping event.  This is a marked increase of 4.8% over last year.  Add to that fact that the average family of four here in the US spends between $4000-6000 during the Christmas season and you can see how debt can accumulate quite rapidly during the old holiday season.

So what can you do?  How do you give your loved ones that “Christmas to remember” without getting yourself into knee-deep debt in the New Year?  Consider these 6 tips to debt proof your life this holiday season and start your holiday season out on a solvent foot.

1.  Cut your spending:  Seems simple enough.  If you spent $2000 last year, try to spend $1000 this year.  Not that easy to do though is it.  Mom and dad must have that new top of the line juicer and who is going to buy little Johnny that PS3 if not you?  Don’t consider eliminating the purchases all together, but if you can’t find a great comparison shopping deal on the items you’re looking for, then maybe something similar and cheaper may be the way to go.  Buy mom and dad a mid-range juicer and get little Johnny a Nintendo Wii - it’s cheaper and the better system anyway.

2.  Get organized:  So how many presents do you really need?  If you’re anything like me, I tend to always be surprised with unexpected gifts that need buying on a regular basis. Uncle Larry and his 4 kids are going to be visiting this year, no kidding?  Learn from my mistakes.  Make that list and check it twice - cut some people if you have to.  Plan a budget and stick to it and find out now who is coming and what needs to be bought if anything.  As for Larry and his 4 kids, consider a fruit cake or a popcorn variety mix can.  That will work well within your budget.

3.  Give an experience:  Thing outside the box this holiday season. Give your loved ones the gift of time.  Be creative and watch your holiday expenses plummet.  Give mom and dad a weekend of your undivided attention (or if they are like my parents, offer to disappear for a week altogether).  Take little Johnny to the zoo or plan a family holiday outing to the bowling alley.  Get creative and slice your expenses in half and reduce your gift giving stress at the same time. Read the rest of this entry »

Your credit score is an important part of your financial future.  If there have been blotches on your credit score in the past, you may want to start working on fixing them before they become stains.  Take advantage of the Fair Credit Reporting Act (FCRA) to get a copy of your credit report (free!) so that you can see what your current credit situation is.  Once you know your credit situation you can determine how to best fix it.  Not sure how much your current credit cards are really costing you? Make sure you check out our free credit card payment calculator to get an idea, then take the below steps to heart.

The following 5 steps will help you fix your credit - try them today:

1. Pay Your Bills on Time:  Paying your bills on time for even 1 month can raise your credit score by a number of points.  Paying your bills on time for 12 concurrent months will raise it quite a bit higher.  Putting together a written calendar or an on-line calendar can help you remember what days each bill is due.  Some online banking systems will even allow you to set up reminds for when your bills are due, take advantage of these if you have trouble keeping track of the dates.  Writing yourself reminds or setting up auto bill pay on your bank account or credit cards will also help, make sure that you will have enough balance in the account before the auto bill pay goes into affect so that you do not rack up unexpected fees for bounced checks or lack of funds.
2. Keep Your Credit Cards in Check:  The offer of 20% off at a local store to sign up for their credit card may be hurting your credit score.  Opening these accounts to get the discount and then closing them does not always help, closed accounts stay on your credit report for a number of months and may affect your credit score.  If you do use credit cards, manage them wisely.  Having low balances will incur less fees, and will make you look more responsible. On the other hand, maxing out your credit cards can lower your score and make you look like more of a risk.
3. Don’t rely on Bankruptcy: While bankruptcy will wipe away some debt, it does not wipe it all away and can actually cost you quite a bit to file.  Filing for bankruptcy can cost you anywhere from $300-$1000, consider how much debt you will actually be wiping out before you file.  Also, filing will be a bad hit on your credit score and in some cases can drop your score a few hundred points. Bankruptcy’s can be reported in some states on your credit report for up to 10 years, so think about your future as well as your current position before you file.  Some lenders will not even touch applicants that have a bankruptcy on their file. Read the rest of this entry »