Say "bah, Humbug!" To Holiday Debt

Ah, the holiday season! Turkey and dressing, pumpkin pie, Santa hats, jingle bells, and lots and lots of eggnog make the season a delight. But all fun and reindeer games aside, you have to be careful to make sure you don?t wind up as poor as Tiny Tim! Americans can spend as much as $1,000 a year on gifts for family and friends. That is a big chunk of money that can hit you pretty hard come January, but only if you don?t plan ahead. There are some tips and tricks you can do to keep your holidays bright and debt-free this year.

Before the holidays arrive, do some careful plotting and planning. A few hours spent in preparation can mean less money spent on gifts. You don?t have to be Scrooge, you just have to be smart.

Decide how much you are willing to spend, and stick to it.

Pretend you are spending cash. How much can you afford out of pocket this month? If you cannot afford it right now, consider that you cannot afford it at all.

Budget non-gift and after-Christmas items too.

Remember to include other things you buy over the holidays--cards, stamps, candles, a tree, decorations, and food galore. Plus, plan ahead to save some money for next year by taking advantage of after-Christmas sales. It is all part of your holiday spending, so plan for it in your holiday budget.

Make a list of everyone you will be buying gifts for, and estimate how much you want to spend on each person.

Include the smaller gifts for teachers or your mailman. Include the price of cards and stamps, because Christmas cards count as gifts when it comes to your budget. Then, add it up and compare the total to your budgeted amount. Make the necessary adjustments. Your brother-in-law may only get socks this year.

Cut down your list.

This may sound harsh, but look closely at who you are buying gifts for. When saving money is an issue, it is ok not to give gifts to everyone you know.

Be creative.

Determine if maybe some people wouldn?t be happy with a nice card or maybe some home-baked cookies. Remember, the holidays aren?t about presents, but about good will towards man. Good will comes in many forms and does not always need wrapping paper. If you have a skill or a hobby, use it: needlework, knitting, art, poems. Burn a CD, make a photo album, or offer to plant their garden.

Carry your shopping list with you.

Take every opportunity to shop. Start early and try to get things before the rush, before highly sought, hard-to-find items go up in price, and before you can?t find what you need. This gives you a chance to comparison shop. It also takes away some of the stress and reduces your risk of overspending just for the sake of getting shopping over with.

If a store offers free gift-wrap, go for it!

It'll save you time and money on buying wrapping paper, tape, bows, and cards and struggling with it all yourself.

Have willpower.

Stick to your estimates and you won?t go over budget. ebay is a wonderful shopping tool if you remember to start early enough to account for shipping time. Find the right item, bid your budget price and leave it. If someone outbids you, don?t get into a bidding war, just bid on something else within your price range.

Increase your income for the season.

During the holidays there are lots of ways to make a little extra money. Many stores hire part-time workers for the holidays. Since it is a party season, babysitting is in high demand. Be imaginative. You could be the Official Gift Wrapper in your neighborhood and wraps gifts for friends and neighbors for a small fee.

Use your Credit Cards.

Yes! If you stick to your budget and only spend what you are able to pay for in the next 30 days, then yes, you CAN use Credit Cards. The key is to use them as you would cash. Using your credit card is not a way to buy things you can?t afford, it is a way to organize your spending and possibly get some rewards and discounts along the way.

Make the credit card companies compete for your business.

It may be the holidays, but you can dig in your heels and play hardball. Call your credit card bank and tell them you won?t be using their card for your holiday purchases unless they sweeten it up for you. You want a little sugar and spice to make using that card a better deal. You can ask for 0% interest, or double your gas points or flyer miles. Anything to make using your credit card more worthwhile. Banks will usually be willing to strike a deal with you, so long as you try. It can?t hurt to ask.

Use specialized Credit Cards, but carefully.

Many of the stores where you will be buying your holiday gifts offer their own Credit Cards. They tend to have ridiculously high interest rates. However, they may give you discounts of 10%, 15%, sometimes even 20%! So, you could actually go ahead and use a store credit card to make the purchases and get the discounts, since you are paying these off when the bill comes due the interest rates should not be a problem. If you do get into a pinch and can?t pay them off right away, then transfer your balance to your lower-rate credit card before any interest is added to the higher-rate one. You need to be on the ball with this trick, but it saves you money.

It is important to keep in mind that every new credit card you apply for will lower your credit score. So if you're saving up for a mortgage or a large loan, you'll want to avoid applying for additional credit.

Come the start of January, your main concern is going to be getting ready for the new year, and you won?t want post-holiday money troubles making things worse. The Ghost of Christmas Past starts visiting even before you put the tree in the trash. Be sure to have a Happy New Year by being money-wise from the start:

When you get your credit card bill, pay it in full right away.

Remember, you considered it just like using cash. Once it is spent, it is spent. You may consider prepaying the credit card company once you know how much you've spent. You don?t have to wait for the bill to come in. You know you owe it. So keep the money from burning a hole in your pocket by getting it out to the credit card company as soon as possible.

Hit the sales.

Remember that budget you made for after-Christmas items? Use it now. Wrapping paper, Christmas cards and decorations will be discounted as much as 75%.

Go back to your old budget.

he holidays were about spending and being generous and indulging in delights, but now it is time to go back to your money-saving ways. You just had lots of fun, and got lots of treats, so now return to buying only what is necessary.

Start planning for next year.

Help get over the post-Christmas let down by beginning to plan for the next one. One way to avoid a huge Christmas bill is to buy presents throughout the year. Whenever you see a present that ?would be perfect for so-and-so? or a great sale with good gift items, take advantage of the opportunity. The average consumer spent $672 in Christmas expenses for 2003. If you spread that out, and purchase a couple of $20 or $25 gifts every month, the bill doesn?t hurt quite as much. Plus, you'll avoid the Christmas rush.

Start a Christmas fund.

Those quarters, nickels and dimes make a great Christmas fund. For your everyday purchases, instead of paying with exact change, pay with bills. You'll be jingling by the end of the day, but you'll easily have a dollar or more in loose change in your pocket. A dollar a day in change is an extra $365 you'll have for Christmas Day.

Last January, when you were struggling with all your holiday debt and trying to get the mulled cider stains out of your carpet, you probably mumbled to yourself, ?Next year will be different!? It can be. A few hours spent planning, plotting, creating, and caring can save you lots of money come January, and can make 2008 start off happy and holiday-debt-free.

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The Benefits Of Envelope Method Budgeting

While it has an unusual name, envelope method budgeting is perhaps one of the simplest ways to get yourself into the habit of following a budget.

The first stage is to work out how much you have to keep aside each pay period for all your different bills (pretty much like any other budget). For example, if your internet bill was $40 a month and you got paid weekly, you would have to put aside $10 from each pay to cover that bill. Once you've figured out how much you are setting aside, you then get an envelope for each major bill or expense category and write the name of the expense on the front. When you get paid, you simply put the amount you worked out per pay period into each envelope, and then set the envelopes aside.

You can have as many or as few different envelopes as you want. At the most basic you might create one for food, one for "fun", one for your various utilities, one for irregular expenses (like car servicing) and one for unexpected expenses. Or you might have separate envelopes for every bill you get - phone, electricity, gas, internet, etc. How many envelopes you have is up to you. The important thing is that you put the money in the envelope, and then put the envelope aside.

The only time you access the money in the envelope is when you want to pay that bill. For example, when going grocery shopping you would take the food money envelope with you, and pay for the groceries with that money (and only that money). It would be up to you to keep track of your total while shopping in the store, and make sure that you don't try to spend more money than you have with you. While this may seem limiting at first, after a short while having that fixed limit in place should feel comforting.

The benefits of envelope method budgeting are simple. Because you only have the money in the envelope to spend, it is extremely difficult to spend extra money and break your budget. True, you can choose to just take money out of another envelope to buy extras that you haven't budgeted for. But this makes it an obvious physical act when you want to break the budget - you can no longer just hand over your plastic to spend you money, you have to go and actually get the money out of an envelope.

A second benefit is that you always know exactly how much you have to spend. Instead of having to think to yourself "do I have $10 or $20 left for food this week?" every time you need to buy groceries, you can simply see the amount left by looking in the envelope.

Of course, there is one important note about this method (besides remembering to do it!) As it will involve you having cash sitting around your home, be sure to keep the money in a hidden and secure location (and no, the freezer is neither hidden nor secure). The last thing you want is for someone to break in and steal your money!

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About Your Money And Bills

If you are like most you have a job that pays you money for the things you need like your bills and all of the other things that you need to make it through. With everything around you going bad a lot of you are now having to worry about if your job is going to stay or go. In some of these cases you might not be given a lot of time to find another. With the way things are in this country right now finding another job might be almost impossible. This might be because not only are you looking into this job there might be several hundred others as well.

Right now there are so many people out of work that if one does show up your change of getting this job might seem like the chance of you becoming President tomorrow. This problem as gotten so bad but it has not hit rock-bottom yet. You are told that something has to hit rock-bottom before it even starts to become any better. The main problem with this is that by the time this happens you will have lose everything you have. You might even find yourself on the streets or living off of your friends.

If you happen to move in with your friends this can only hurt the friendship you might have. With you having no money and really no chance of getting this money you might need to help these friends you will not really want to stay here for long. It is pretty bad to think that all the bills you make will be there no matter if you have this money or that job. If you plan on going out and buying something you might want to think really hard before you buy. If you happen to find one that might not cost so much it might be better for you in the long run.

You can never go and look ahead to make sure that everything will stay the same with anything even the security of the job you have today so try to keep from making unneeded bills. You might even go and buy whatever you want with only cash. If you do this with all that you buy no one will be able to come up to you and say we are here to take it back. This is the best and safest way to buy anything right now as one never knows what might happen next.

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Why Credit Repair Is Needed

Credit Reporting is a Massive Job

The credit bureaus currently compile, sort, and sell credit data on over 200 million Americans. Before this data is compiled by the credit bureaus it has to be generated by countless creditors such as credit card companies, auto loan, and mortgage servicers. Each of these creditors has their own system of processing and recording your payments. The amount of data being managed is staggering. It is not surprising that there are errors made.

Credit Reporting Errors are Common

Over seventy percent of all credit reports contain errors. It is easy for the credit bureaus to make mistakes. But there are also significant errors that are generated by the creditors themselves. From the initial data entry that is done by human hand, to the software that sorts and manages that data it's a long distance from the check that you write to pay your bill to the notation of that payment on your credit report!

Does it Matter?

Even if you have perfect credit there is a very high probability that your credit report contains errors. Errors such as accounts that do not belong to you, understated high credit limits, and even derogatory information often go unnoticed. And if these errors have no impact on your life it may not really matter. But if you have had credit problems in the past the entire picture changes.

When it Matters

If you have had credit problems in the past the likelihood that your credit report will contain errors is considerably higher than it would be if your credit were perfect. This is an unfortunate reality that occurs for several reasons. Creditors manage derogatory accounts differently than normal on-time accounts. Once you are out of the normal reporting stream errors tend to multiply. Creditors frequently assign different account numbers to problem accounts. This often results in duplicate accounts as well as the inaccurate reporting of payment history.

A Terrible Cost

Errors on the reports of people who have had previous credit issues are potentially very costly. In many cases these consumers have marginal credit scores to begin with. The presence of errors may easily drop these individuals into a lower credit class. This situation occurs in a horrible number of cases and is terribly unjust. Consider the case of someone who has had credit issues in the past and is now trying to improve and rebuilt their credit. In addition to the legitimate derogatory information that appears on their credit report they are likely to be burdened with reporting errors that seriously overstate their poor credit history. These errors in turn drive their credit scores lower that they would otherwise be.

A Widespread Problem

When this person applies for a loan they end up paying a premium interest rate. Higher interest rates translate into higher payments. This situation may easily impact not only the revolving accounts that they apply for but their auto loans and their mortgage as well. Adding it all up these credit reporting errors create an untenable and unjust situation for the very consumers that can least afford it. These are not abstract thoughts. We have been helping people with credit repair for a long time and have seen thousands whose lives have been affected in exactly this way.

No Easy Fix

Is there a remedy? Consider again the monumental amount of data that is being managed by the credit bureaus in the process of generating credit reports. And consider also the number of diverse creditors each with their own data management systems all of whom have to interface with the credit bureaus in this process. It is likely that the presence of reporting errors will continue to effect consumers for a long time to come.

Your Rights

What can be done? Both the Fair Credit Reporting Act and the Fair and Accurate Credit Transactions Acts deal directly with the seriousness of the problem. The onus has been placed on the credit bureaus to report as accurately as possible. The Fair and Accurate Credit Transactions Act requires the credit bureaus to provide one free credit report per year to consumers specifically for the purpose of allowing consumers to pro-actively monitor their reports for errors.

Can You Do This Yourself?

You can undertake the process of credit repair on your own. It is important that you educate yourself. There is ample information available on the internet. Take your time and do your homework. Without being fully aware of proper methods your efforts are almost guaranteed to result in frustration. As an option you should consider hiring a reputable credit repair company to do this work for you. Legitimate credit repair companies are very affordable and are experts in the process. Consider your options. Take action. With the right efforts these issues can be managed.

Copyright ? 2007 James W. Kemish. All Content. All Rights Reserved.

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Budgeting: Create And Maintain A Budget

The first step to avoiding the troubles of financial debt is to create and maintain a budget. It's not as intimidating as it sounds, don?t worry.

First off, create a list of all your monthly income and also a list of your monthly expenses. When determining income, list all sources including alimony, child support, side jobs, etc. In calculating expenses, be sure to include housing, food, transportation, utilities, entertainment, etc. To gain an accurate reflection of actual expenses, sit down each night and write down expenses, just make sure to save receipts. Determine if your income covers all of your expenses. If the answer is no, then some expenses need to be reduced.

Adjust expenses. If it is a small discrepancy, it may mean reducing some minor expenses like entertainment or cell phone plan. If the deficit is larger, you may need to downsize your vehicle or living arrangements. If your income covers all of your expenses, you still may want to trim some of the excess fat off your spending habits. This can free up extra money for things such as vacations or college funds for your children.
Additionally, consider if you need to add new categories. Some areas that are often overlooked are debt reduction, emergency savings funds, and retirement savings. An emergency fund ensures there is an adequate amount available to cover unforeseen events (car emergency, etc), should it arise. This will eliminate the need for using credit which can quickly damage your budget.
There are several advantages to sticking to your budget. Firstly, most people have set financial goals that they would like to reach in the future. Sometimes it may be a trip, a brand new car, or a college education. A budget can help people save money to make these goals a reality. Additionally, many people are crushed under heavy consumer debt. Without a disciplined pattern of spending, it is virtually impossible to make much headway in reducing debt. A personal budget will provide the necessary framework to begin eliminating these inflated account balances.
If executed properly, a budget will allow a person to simultaneously meet their expenses, place money into savings, and pay back outstanding debts. Therefore, it is anyone's best interest to create and implement a budget.

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The Seven Deadly Credit Repair Sins

Credit Repair Sin #1: Sticking Your Head in the Sand

Have you been through a period of financial stress? Is your credit a mess? It can be difficult to look at the damage, but ignoring your credit report is the number-one worse thing you can do. Did you know that late payments, charge-offs, and collections are almost guaranteed to generate errors that will depress your credit scores even further? It's ironic that shortcomings in the credit reporting system create a bias against the very consumers who can afford it the least. Fortunately there is good news. It is never too late to stand up for your rights. Take a deep breath and start your credit repair effort today.

Credit Repair Sin #2: Canceling Your Cards

So you decided to start a credit repair program, cut up your Credit Cards, and make everything right. Right? Sorry. Wrong. As righteous as the plan sounds, there is a flaw. The FICO scoring model puts so much weight on open accounts that even as you remove erroneous items from your credit report your score will go nowhere; it may even fall. If you have open Credit Cards, don?t close them. Switch gears and get into management mode. Get the balances down, make your payments on time and watch your scores go up.

Credit Repair Sin #3: Failing to Rebuild

It's common to emerge from a time of financial stress with no open accounts. Many people in this situation begin a credit repair effort and decide to postpone applying for new credit until their report looks better. Who wants to be denied? Why not just wait? Well, there is a reason. As mentioned above, without open accounts your credit repair effort is likely to do little for your credit scores, and you will be no closer to being lender-ready than you were before. You need to rebuild! Just get a couple of secured Credit Cards. You won?t be denied and you will be on your way to building truly usable credit.

Credit Repair Sin #4: Maxing Out Revolving Balances

You are doing everything right; you cleaned up your credit, you opened new accounts, and you are paying your bills on time. So, why isn?t your credit score cooperating? You may blame an old paid collection or some old public record for keeping your score in purgatory. But you are wrong! It's just your darn credit card balances. The newest version of the FICO credit score model adjusts your score dramatically depending on the ratio between your balance and your credit limit. If you want to optimize your score keep the balance under 20% of the limit. Just try it and watch the credit repair magic happen!

Credit Repair Sin #5: Ignoring Collection Letters

Got a collection letter? It is tempting to throw it away. But throwing it away won?t make it go away. And if you throw it away you will have missed a golden opportunity to exercise a powerful legal right that exists for just 30 days from the time the collector sends the letter. For those 30 days the Fair Debt Collection Practices Act requires collectors to comply with your request to provide proof of their right to collect and an accounting from the original creditor proving the dollar amount is correct. If they cannot do this they must cease all collection efforts and not report the collection to the credit bureaus.

Credit Repair Sin #6: Not Knowing Your SOL

Statutes of limitation (SOL) limit the time a debt may be collected through the court system. The SOL is different for each state and may be found easily on the Internet. The SOL may be as little as two years for some debt types in some states. If a collector cannot get a judgment they cannot enforce collection. They can ask nicely, or they can threaten, but the threats have no substance. Did you know the Fair Debt Collection Practices Act gives you the right to send a letter to a collector asking them to cease all communication? This is a handy credit repair tool. After all who needs the stress? If you are harassed by a collector beyond the SOL you can send a Cease Communication Letter and they will go away.

Credit Repair Sin #7: Flying Solo

One of the big mistakes people make with credit repair is going it alone. Credit repair is a lot like fixing an automobile. If you need an oil change you can do it yourself and probably don?t need a repair manual or a mechanic. But if you really need a tune-up you better know what you are doing. You wouldn?t just pop the hood and start taking the engine apart. Would you? Credit repair can produce awesome results if done properly, so please do the right thing for yourself and buy a book or consult a credit repair professional.

Copyright ? 2007 James W. Kemish. All Content. All Rights Reserved.

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Easy Credit Repair For Optimal Results

The Benefits are Amazing

The content of your credit report can have an enormous impact on the quality of your life. Your credit score will determine the cost of your mortgage, your automobile payments, and your Credit Cards. An improvement in your credit score could potentially save you thousands of dollars per year.

Overcoming Your Fear

It is normal to experience a degree of fear when the time comes to look at your credit report. Perhaps you have had some credit issues in the past. No one likes to be reminded of those times. I have spoken to thousands of people about their credit over the years. The majority of those people have felt some resistance to looking at their own reports. I understand! The credit bureaus can be intimidating. But like so many other things in life, once you get started it's not so bad.

Getting Started

Reviewing, repairing, and maintaining your credit is not complicated. The key is to approach the project in an organized manner. You have three credit reports. They must each be examined in detail. Many people make the mistake of looking only for obvious derogatory information like late payments or collections. Every item on your credit report can have an impact on your credit score. You will be looking at everything. I suggest that you have a pen and paper nearby. You will also need to have your Credit Cards handy.

Step by Step

Everyone has his or her own way of organizing a task. You will develop a system of your own over time. Whatever works for you is fine as long as you cover all of the essential categories of information that can impact your credit scores. These essential categories are the account opening dates, current balances, high credit limits, and pay history. As you review these items keep any eye out for errors such as accounts that don?t belong to you, accounts referencing an incorrect Social Security number or address, and duplicate accounts.

The Essential Details

Account opening dates, current balance, and high credit limit need to be examined carefully. The FICO scoring formula places great importance on these items. Your account opening dates are used in the FICO formula to determine the age of your credit. The older the better. Simply look at your credit card. Most Credit Cards indicate the original opening date somewhere on the face of the card. The relationship between your current balance and your high credit limit has a major impact on your score. If you don?t know these numbers just call the toll free number on the back of your card. Please don?t ignore this step.

Write Down Every Single Error

Make notes. Credit repair is all about the details. Don?t let a thing slip by. And please don?t ever assume that the credit report is correct. If you find a discrepancy chances are that you are correct. Every one of the categories listed above can have an impact on your credit scores. No error should be ignored. You might think a small innocent looking error like a duplicate account will not have a negative impact as long as there are no late payments showing. You would be wrong. The extra account will overstate your debt and may very well factor into the FICO scoring method to your detriment.

Organizing Your Disputes

Each error that you find on your credit report will need to be disputed with the individual bureau that is reporting the item in question. Your credit report will come with instructions for submitting your dispute. You should follow those instructions carefully. And, whatever you do, keep it simple. It is important to limit your verbiage to the bare minimum. If you make the mistake of writing a nice letter to the credit bureau, as well meaning as you might be, your dispute is likely to be ignored. It does not sound friendly, but please try to understand that the credit bureaus have to process an amazing amount of mail.

Stay the Course

About thirty days after your initial disputes you will receive replies from the individual credit bureaus. It is not uncommon to get an unsatisfactory answer. They might respond by indicating that they contacted the creditor who verified the information to be correct. Don?t be discouraged. This initial response is built into the system. Simply send a second dispute telling the bureau that you are not satisfied with their response and that you would like them to provide documentation. It is very likely that you will get satisfaction on this second dispute. The credit repair process can take time, but with patience your efforts will produce real financial results as well as the satisfaction of knowing that you have done the right thing for yourself.

Copyright ? 2007 James W. Kemish. All Content. All Rights Reserved.

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