What's so great about credit?

I am currently reading Dave Ramsey's book The Total Money Makeover, and in an introductory section dispelling myths about debt, he really struck a chord with me. The discussion is in regards to the myth that having a credit card is necessary for building credit. Dave has this to say:

The best myth is the "build your credit" myth. Bankers, car dealers, and unknowledgeable mortage lenders have told America for years to "build your credit." This myth means we have to get debt so we can get more debt because debt is how we get stuff.

He continues to say that the one thing that may be worthy of having good credit for is getting a good mortgage. However, he says that with a properly underwritten mortgage, you can get credit based on factors like: Rental history, length of employment, a considerable down-payment, HAVING NO CREDIT AT ALL, or taking out a loan that is not too outlandish in size.

If only I could go back in time. How I would love to be a non-existent entity in the all-seeing eyes of the pigdog bureaus! Sure, the Social Security Administration would still know who I was, but reading that passage makes me hope some day to be dead in the eyes of the likes of Experian, TransUnion, and Equifax.

I don't think I could ever be wiped from those databases, knowing how they are, but the idea of having a dusty and cob-webbed record is extremely appealing to me.

As the hours have passed since reading that passage I am growing into the passionate and firm belief that credit in any form is bad. I don't care what my FICO score is. I no longer believe that it is a status symbol or sign of adulthood. Financial status is owning (with no measurable percent of it belonging to the bank) every item in your home or apartment, no matter how spartan it may appear. Financial status is walking up to a car dealership and driving away in something you will never make a payment on. A high FICO score is just a mark on the pier showing how much deeper in the red waters you can get.

In these passionate moments I feel as though I'd rather walk, starve, and shiver than swipe a credit card again.

A revisited plan:

1. Build up a $1000 emergency savings fund.

2. Get health insurance.

3. Have my smallest debt settled before October.

4. Reduce the amount I drive and spend money on dining out by 80%.

I'll leave it at the short-term for now. I'm sure there will be more revisions by the time I finish Dave's book. In the meantime, I wear the headband and tighten the belt.

Here's a real one.

I find it's very difficult to wrangle the thoughts, ideas, and emotions that I've been having concerning my situation, and the situation of the country as well. On the small scale, I cannot stand to be in debt any longer. I vehemently loathe owing money. I have decided to wage pseudo-militant guerrilla warfare on my financial standing, and my debt is the ace of spades. I am inspired by Dave Ramsey's seven baby steps. Here's the overview of my plan:

Phase one: DECLARE WAR - Reduce the need for debt. Right. Now.
*Cut expenses by ridiculously strict amounts. Easier said than done, but the idea is to do it only for a short period. My goal is a month, however I will consider it successful at 3 weeks. I mainly intend on cutting dining spending by 80%.
*Increase the income. Sell what I can (Those Nikes, Marquee letters, old VHS tapes, old game systems). Save what recycling I can. Save coins and wrap them. Make myself available to work more hours at my second job. Find odd jobs (i.e. Helping my coworker's mother in law pay her bills for $15 an hour). Call friends that owe me money and tell them to pay up. Do. Anything.
*Meet minimum payments to my creditors, plus $10.
*Save $1,000.

Phase two: RALLY THE TROOPS
*Inform family and friends. I'm proud of the cause, and I know they will support it and possibly join as well.
*Lock in to a budget. Delegate every penny of income to a destination envelope and do not deviate (switch to envelope system?)

Phase three: START SHOOTING
*Pay off smallest debts first.
*As smaller debts are paid off, combine thier payments to the payments on remaining debts. Continue until you have the Pigdog's head on a pole.

Phase four: REBUILD
* Stay locked into budget for one month and put all moneys that *were* being paid to creditors into savings.

Phase five: PREVENT RETALIATORY COUPS
*Destroy all new applications. NEVER open the envelope.

The growing issue of foreclosures by Wayne Hemrick

No doubt about it, foreclosures are on the rise. If you are a loan officer living in a blue-collar town that relies on factory jobs for its economy, then you have seen those factory jobs being sent overseas due to free trade agreements and the factories in the United States closing exponentially. This leaves former employees out of work, and is a big reason that leads to foreclosure on homes. Long-term health issues for uninsured individuals is another main cause of foreclosure.

As a loan officer, you want to offer give potential debt leads with options to foreclosure. Filing for bankruptcy can provide one way for clients to keep their houses. Another option for your mortgage refinance leads is keeping their current loan to reduce the monthly payments, and to bundle other unsecured debts into one low-cost loan payment. Prospective clients need to hear about what you have to offer, and one way to find those prospects is through debt settlement leads. Because they are facing severe consequences if they do not act, they will be keen to learn about how you can help them avoid foreclosure.

In order to make sure that you are getting your money's worth when you purchase debt elimination leads, you will need to make sure that the lead generation organization guarantees that the contact information for each lead is accurate. Having a wrong name or telephone number means the lead is unusable, and you have lost not only the money for the lead but the money you might have made on a closed deal. Reputable lead companies will guarantee the lead information is correct.

You will also want to ensure that the lead origination company has verified that the leads they offer have a large amount of unsecured debt. This type of debt, including credit card and department store card debt, cell telephone bills, and legal and medical bills, tend to have high interest rate charges. All of these, added together, can spell financial disaster for the unprepared borrower. When people are looking for a way to reduce or eliminate their unsecured debt, you are in the enviable position to offer them the help they need, so inquire as to how much unsecured debt your leads have.

The leads you purchase are only as good as the closing rate you average on them. Variables such as information accuracy and the amount of unsecured debt can affect your closing rate, so make sure that information is in your favor. Potential clients that are facing foreclosure will want to realize useful ways to hold onto their homes, and they will be glad that they contacted you, because you helped them realize their goals and maintain their home ownership under terms with which they are comfortable.

About the Author

Wayne Hemrick provides professional insights into the world of finance. His how-to articles on the subject of developing loan consolidation leads comes from extensive experience in field of mortgage refinance. Join Wayne as he shows how debt leads can vary among the many competitors within the arena of mortgage refinance.

Negative Side Effects of Debt by Debbie Dragon

For any person, debt is like this illness that never goes away, it persists and persists, never truly getting better until action is taken. The comparison works because like an illness, debt can cause a great deal of suffering and pain to those who have trouble paying their bills each more, or at all. Immunity against debt is non-existent, everyone is susceptible. Debt can go beyond simply the inability to pay bills on time, it can literally cause both physical and mental health problems.

Otherwise, honest people who are in debt have resorted to stealing, cheating, and lying in efforts to hide or eliminate their debt. The feelings it causes, it is enough to drive anyone insane. Those suffering from debit will likely feel a combination of shame, depression, embarrassment, anger, and anxiety. While physical and emotional problems occur out of massive debt, other negative side effects occur as well.

What are the other negative side effects? They include:

Bankruptcy

Although unfortunate, thousands of people daily need to file bankruptcy, seeking protection under the law. There are three types of bankruptcy, Chapter 7, Chapter 11, and chapter 13. Though it can be a long, drawn-out, and trying process, sometimes bankruptcy can actually help someone in debt get the relief and start they need to come out of debt once and for all.

Eviction

A person in debt may face eviction from their home because they have the inability to pay rent on time each month. Renters who do not pay rent each month will likely find themselves in a situation in which the property owner needs to evict them.

Wage Garnishment

To add to the lack of available money each month, creditors may sue and seek a judgment to have your wages garnished. Essentially, the judge has given your employer an order to make the payment directly out of your paycheck to the creditor you owe. This is money you will never even see, because it comes out instantly.

Foreclosure

Just as if you had trouble paying rent, if you have trouble paying the mortgage, foreclosure is a real possibility. The trouble with foreclosure is that you lose your home. This is one of the most common problems faced for those with bad debt.

Emotional Troubles

Even the happiest of people can find the pressure and embarrassment of debt too much to handle. The press is relentless, it starts with mail and telephone calls from creditors at all hours of the day or night, then it can lead to losing their possessions, such as their car, apartments, or homes.

Suicidal Tendencies

It is a very sad fact that sometimes those suffering from intense debt commit suicide because debt has caused this so many troubles in their lives. Their inability to eliminate their debt drives them to thinking suicide is the only way out.

As you can see, debt can have a real impact on a person's life. The negative effects doesn't stop there either, debt will remain on the credit rating of the person for at least seven years. Debt comes at an extremely high emotional and financial cost.

Debt starts out as a good thing, allowing us to live the life we may not otherwise be able to live. However, in some cases, it has the ability to take control and negatively influence your life.

About the Author

Destroy Debt has the advice and resources you need on debt consolidation and other financial topics.

Credit Bureaus End Piggybacking, bu Ronnica Rothe

Credit Bureaus End Piggybacking by Ronnica Rothe

Starting in September 2007, credit bureaus will eliminate "piggybacking." Those seeking to improve their credit will have to revert to using traditional methods.

The practice called piggybacking was used by those who wanted a quick way to increase their credit score. They would rely on someone with good credit to make them an authorized user on their account. This would allow the person to add that credit history to their own, boosting their score. The person who was essentially leasing out their credit would not suffer because the newly authorized card would be given to them and immediately destroyed. The one needed their credit boost would pay a fee, usually to a company would made the arrangements between the individuals which would pass on a portion of the fee to the person with good credit.

Though this practice had been legal, it was a way to gain credit history that was in fact not yours. It would give any potential creditors a false impression of what your true credit history was. This led to an increasing number of foreclosures by those who would not have otherwise qualified for the mortgage if they had not piggybacked on someone else's credit.

Since the Fair Isaac and Co. (FICO) will now be shutting down this practice, those who want to improve their credit history will have to find other legal methods to do so. By obtaining a free copy of your credit report online, you can review it for any errors. If you find errors, dispute these with the credit bureaus themselves. By making sure your credit history is correct, you avoid potential problems when applying for a credit card, car loan, or mortgage.

Another way to improve your credit history is by getting current on all your credit cards. If at all possible, reduce the balances that you carry on these credit cards as much as possible. Your credit will improve as you lower your debt level more and more.

If you were someone who wanted to piggyback on another's credit, do some research on what options are available to improve your credit and lower your debt or talk to a credit counselor to help you sort through them. They can help you find ways to pay down your debt and improve your credit and chose the right option for you.

About the Author

Ronnica Rothe is a graduate with honors from the University of Oklahoma and a current student at Southeastern Baptist Theological Seminary. She works with stopccdebt.com to help individuals get out of debt and reach their financial goals.

Debt Settlement, by Judy Howard

Beware of Dishonest Debt Settlement Companies by Judy Howard

Because debt settlement is one of the most popular ways to get rid of mounting debt, there are a large number of Debt Settlement Services available. Whether you are considering using Debt Settlement or Debt Consolidation Services to help you get out of debt quicker and reduce your monthly payments, you need to carefully consider your choice. With so many companies offering these types of services, it can be very confusing.

How to Identify Dishonest Debt Settlement Firms

Beware of firms that make big and attractive claims. Realistically, they are not interested in reducing your debt; rather they are only interested in getting money from you.

A dishonest Debt Settlement Company will typically charge you a huge initial administration fee amounting to hundreds of dollars to set up your account and then take a monthly service fee. The fees often vary depending on the company and the total amount of your debts.

Dishonest companies don't explain the details of the Debt Settlement Deal they are offering you. They don't fully explain how their program works. Before signing an agreement with them you need to really ask the right questions in order to fully understand what they are really offering you in the Debt Settlement Agreement Deal.

Do the fees justify the results you are hoping for? If your settlement does not reduce your original owed amount by at least 40% it may not be a worthwhile plan.

Research past settlements a Debt Negotiation Company has reached with other creditors. You need to be sure to check out their credentials thoroughly before signing up for any service.

You need to clear about your goals before choosing any company because there are traps for people desperate about their debts. There are genuine and reputable Debt Settlement Companies. You can find these companies online as well.

Do your homework. It will save your reputation not to mention your money.

About the Author

Judy Howard is a contributing writer for CuraDebt, one of the leading Debt Negotiation Companies.

Click here for your free debt negotiation consultation

Click here for your free commercial debt consultation

Act today to reclaim your life.