Oprah is running a “Debt Diet” show today and yesterday. Sorry for the late notice. I work during the day but did watch the previews online. She also has a section where you can go and get help fighting your debt, click here for more details.

She breaks the process down into two parts.

Part 1
How much debt do you really have?
Track spending
Stop Spending

Part 2
Make a budget
Grow your Income
Prioritize your debts
Understand spending issues

I hope Dave Ramsey is getting paid because this is his exact step by step plan for dealing with debt.

I am really believe in the Ramsey school of thought so I am glad that Oprah is using her massive public reach to help others learn to crush your debt.

Living with debt is horrible, so any help or motivation to change your situation is welcomed.

technorati tags:Oprah, Debt, Reduction, debt, diet, Dave, Ramsey

DEBT SNOWBALL AKA (DEBT ROLL-UP)

The overview is you pay more a month than your monthly minimum. Let’s say your over all MINIMUM payment on all your debts is $700 dollars a month and you can find $100 or $200 extra dollars in your household budget to apply to your debt each month you will create a snowball effect in paying down your debt. Depending on how much extra money you can apply monthly to the debt will dictate how long it will take to pay off your debt.

If you pay just the minimum every month you are looking at a 20 year pay off term!!! However, if you apply the snowball method you are looking at an average of 2-5 year pay off period.

How it works:
You make a list of all your debts. Rank them by balance size and not interest rate. You start applying the extra money every month to the smallest balance. Once that balance is paid off you apply all the money from that debt to the next largest balance. This will create a snowball effect in paying off your debt. It is very important that you pay the minimum on all other debts to keep your accounts in good standing and not create more debt by paying late fees.

Pros:
Legally and ethically reduce your debts.
Does not destroy your credit
Helps you budget your money

Cons:
Takes time and discipline
Not quick and easy
Must create a budget
You must be really motivated!

We will address the other two methods of debt reduction soon:
DEBT CONSOLIDATION
DEBT SETTLEMENT or DEBT NEGOTIATION

I found this on MSN. It’s a cool litle tool to see where you stand in terms of your debt. On word of caution, beware of all the ads on msn.com for credit cards. Use the debt tool and get out. Best of luck!

Good debt versus Bad debt

Ok, I am very confused, when has it become good to be in debt? I must be missing something? Many financial gurus talk about bad debt; Credit Cards, and good debt Mortgage and school loans.

The theory is a mortgage is a good debt because you are borrowing money to purchase an “asset” that in theory will appreciate over time. Same with a school loan you are investing in yourself and in time your value will rise.

But the fact of the matter is there is no such thing as a good debt. I like to call it the necessary debt. Being in debt is not a good idea by definition (the state of owing something (especially money); “he is badly in debt”.

Most people can’t buy homes, cars and fund education with cash on hand. I understand that better than anyone. But simply because we need these things does not mean its good debt. And I would encourage everyone to pay their debts off as fast as possible, good or bad.

Crush your debt and live life debt free!

Controlling your debt.

You can take some very easy steps to start the process of getting your debt under control and improving your credit.

But let’s talk a little about what is good debt and bad debt. In my eyes there really isn’t such thing as good debt. Before you jump out of your seat and scream well a mortgage is a good debt… A mortgage is a necessary debt and the faster you can pay it off the better. Being in debt means you are not able to take that money and invest it in interest creating entities.

So with that lets look at a some bad debt and some necessary debt and some things you should not do.

Bad Debt:
1. Credit Cards. (Most cards have interest rates in the teens!)
2. Auto Loans
3. Personal loans
4. payday loans

Necessary debt:
1. Home loans
2. Borrowing for school

Things not to do:
1. Don’t let your spending get out of hand. Create a budget and live within your means. Hey if your grandparents did it so can you.
2. Don’t just pay the minimum on your cards. It will take you 30 plus years. It’s a credit card and not a mortgage. Go after that debt.
3. Do not go over your limit. You are just giving your Credit Card Company the authority to push your interest rate up. It’s in your terms of use. Which none of us read but really should.

Things to do:
1. Aggressively pay off your credit cards. There are two schools of thought on this one.
a. Pay off the highest interest rate cards fastest regardless of what is owed. Then take that money and apply it to the next highest interest rate card. Continue until you are debt free.

b. Pay off the card with the lowest balance first. Then take that money and apply it to the next biggest card. Continue until you are debt free.

2. Have an emergency fund. Believe me you will need it. It’s Murphy’s law when you can least afford something it will happen. The car dies; the roof is leaking, doctors bills, etc…. Folks it will happen. So be ready. I suggest at least a minimum of $1000 in the bank. Ideally you want six months of pay check in the bank. I know this is unrealistic for most people who are struggling to make just the minimum payment. So start the $1000 fund.

3. If you need help with your debt situation please face the music sooner than later. Your credit Score will thank you. Word of caution, be very wary of all the debt reduction and relief sites and programs out there. There are a lot of snakes in the grass so don’t get bit! I will write another article on what to look for and what to stay far away from.

Finally someone is talking the truth about getting out of debt! While this plan may seem simple it is actually the only method I would recommend.

Kudos to the Author for telling the truth about debt relief.

Stack Your Debts: A Simple Four-Step Plan to Reducing Your Debts
By Jamie Jefferson

Are you feeling trapped by debts you accumulated long ago?

If you are able to pay your current expenses – and aren’t sinking further
into debt – but you’re still feeling dragged down by old debts and
nagging monthly minimums, this plan is for you.

It’s a simple four-step process you can follow to help you regain control over
your finances.

Step 1 – List all of your debts, starting with your smallest debt (no
matter what the interest rate), and followed by your larger debts. In your list,
write down your largest high-interest debts (such as those from credit cards) before
your largest low-interest debts (such as lines of credit.)

Step 2 – Continue to pay the minimums on all debts and put extra money
toward the smallest balances first. When you do so, you will feel
motivated and empowered in the debt-elimination process and soon you’ll
be paying off even more of those debts, and crossing the debts off your
list, one by one.

Step 3 – Roll your payments forward. When you have paid one debt
completely, add the funds that you were paying toward that debt
to the next debt on your list. For example, if you are making $150
payments to your smallest debt, you would add that $150 each month
to the next debt on your list once the smallest debt is paid off.
When the second debt is completely paid, roll all of these payments
to the third debt until all debts are paid.

Step 4 – When all of the debts on your list have been paid off,
take the money that you had been using to pay these debts and put
it in savings or toward your investments. This will insure that you are
not creating a higher cost of living for yourself once your debts
are paid.

This simple plan can help you develop the discipline for a bright
financial future as it helps you to pay off debts fast.

Jamie Jefferson reviews a
debt elimation program here which goes more in-depth on this debt stacking
process. And you can read more debt elimination strategies on the momscape site.

Article Source: http://EzineArticles.com/?expert=Jamie_Jefferson

Is Debt Negotiation Bad?
By Paul Jesse

Educating yourself about the ins and outs of debt negotiation is a good first step. Please note that the term ‘debt negotiation’ is also known as debt arbitration or debt settlement.

For starters, a lender has little motivation to arbitrate anything less than the full amount unless the person is two to three months behind in payment.

To answer your question is debt negotiation bad? You need view it as a last-resort measure. The truth of the matter is it’s one step away from declaring bankruptcy.

Remember, your lender gave you the money or property in good faith. He or she has every right to expect that the loan be repaid in full. Morally, you should do everything that is within your power to pay your debt(s).

However, this is not always possible and despite how much you would like to repay the loan in full you just can’t – not now and not in the foreseeable future. This is where debt negotiation comes into play. It may be your only logical course of action.

And, in the case of an old debt that you’ve long since forgotten about, debt negotiation would be the best way of dealing with it. There’s no point in keeping a small blemish on report when a little negotiation can easily turn things around.

But if you find yourself overwhelmed with your current debt load, credit counselling should instead be your first action step. A credit counsellor will give you some tools and suggestions for reducing your payments.

Debt consolidation may be more appropriate. A credit counsellor will walk you through the debt consolidation process. In a nutshell, it means creating a whole new loan for a longer period of time. This would hopefully lower your payments enough so you can get back on track.

Please know however, that debt consolidation can be nothing more than a way of putting off the evitable. It really does little to correct the problem. That’s why many people come back to debt negotiation as a way of getting out of their financial problems and starting fresh start.

If you’re determined to pay of your debt(s) and turn over a new ‘financial’ leaf you may wish to contact your creditors yourself. By doing so, you may be able to negotiate a lower interest rate or a more realistic repayment plan. This is known as self arbitration.

So, is debt negotiation bad if you really need it? The bottom line answer is no. When your debt is very delinquent, negotiation is often in your best interest. If this is the case, now is the time to either consider self arbitration or seek out the help of a debt negotiation company.

Although a debt negotiation program will lower your credit score for as long a you’re in the program, you’ll also find that most debt negotiation companies require the creditor to make sure that the final credit report reflects the account is now paid in full. Therefore, once your account is settled you will no longer have a negative report.

A number of debt negotiation companies also include a credit repair service as part of their debt negotiation program. This repair service removes any negative items caused by the program. Although it is part of the program there are additional fees associated with this service.

Is debt negotiation bad? Ultimately, you’re the best person to judge whether debt negotiation is right for you or if it’s in your best interest to consider another alternative such as debt consolidation.

This is where negotiation and your question, “Is debt negotiation bad?” comes in. Debt negotiation is bad in that it means the complete destruction of your credit history.

Paul Jesse is a retired government employee and author of numerous home business and financial articles.
http://www.sheamarketing.com/student-loan-debt-consolidaion

Article Source: http://EzineArticles.com/

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