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| Debt
Reduction
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within the
SayPlanning / SayLending network
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The
business goal of credit card companies is
to entice you to maintain a credit balance
each month |
- Understand
these basic facts:
- According to the American Bankruptcy
Institute, nearly 85-90% of bankruptcy
filings were due in part to excessive
credit card debt.
- Households receive on average 20
credit card offers per year.
- Credit card companies make money
when you become a "revolving"
credit card holder — which means
the holder maintains a balance from
month-to-month.
- Credit card companies make money
when you pay only the minimum required
amount — which minimum amount
is interest plus a small percentage
(around 0.5%) of the balance outstanding.
- Credit card companies make money
when you accept and then spend up
to the credit limit offered.
- With this in mind,
the card company's business strategy is
to get you to:
- accept their card using pre-approval
offers;
- charge out the maximum credit limit
awarded;
- pay interest-only payments each
month;
- and maintain a credit balance from
month-to-month.
Now
consider this.
If you paid just the minimum payment
on a $4,800 credit balance at the average
annual rate of 17% plus 0.5% for principal
reduction, it would take you a little
over 21 years to pay it off your balance
(considering that you did not have any
other charges).
That means paying $13,376.35 in interest
charges alone, for a total repayment
of $18,176.35 for the privilege of charging
$4,800!
No wonder that credit cards are one
of the lender's most profitable product
lines.
- Credit card debt
could be major repayment expense every
month. You may consider consolidating
and paying off credit card debt.
Calculate:
try
debt consolidation worksheet to estimate
savings
The key factor is managing your credit
card use. We have complete information
on credit card management and debt consolidation:
SayLending:
click
for credit card management
SayLending:
click
for reducing credit card debt
- Credit cards in the
hands of the right people can reduce costs
for buying a car, traveling, purchasing
gasoline, or simply taking in cash.
There are a number of rebate credit cards
that can earn you awards simply by charging
everyday expenses on the card.
Rebate Card Rules:
- On average, consumers spend 112% more
on a credit card purchases than on cash
purchases. You must limit your credit
card purchases for budgeted items only.
- Use your rebate card to purchase groceries,
clothing, utilities, fuel consumption,
and all other budgeted living expenses.
- With each purchase, deduct from your
money account the dollar amount for
the credit card purchase. Place that
money aside.
- Upon receiving your monthly statement
from your credit card company, pay off
the entire credit card balance with
the money set aside under Rule 3.
SayLending:
view
our index of Rebate Credit Cards
PDF file: download
FREE this Rebate Guide
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You
can reduce your total student loan payments
by as much as 40% or more |
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We have a
debt consolidation worksheet to illustrate
how to reduce monthly expense: click |
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Paying
down your mortgage loan can save $$$ on
interest rate costs and PMI |
If you paid $25 extra each month ($724.21),
you will payoff your mortgage in 26 years
and 8 months, saving you $20,663 in mortgage
interest.
If you paid $100 extra each month ($799.21),
you will payoff your mortgage in 20 years
and 5 months, saving you $56,312 in mortgage
interest.
- Paying an additional amount each month
will reduce your mortgage balance over
time where you can pay it off anywhere
from 1-30 years (depending on the amount
you prepay over time).
This "pay a little extra" option
allows you to budget your finances so
that you can prepay when circumstances
allow.
- The prepayment option is for homeowners
who have the discipline and budget to
prepay a little extra each month in order
to take full advantage of the reduced
cost.
You can discipline yourself to making
extra payment by using one of the automated
payment features discussed at our lending
site
SayLending: managing
your mortgage loan
- Private Mortgage Insurance is required
for all home buyers who cannot raise at
least 20% or more for the home purchase.
Lenders will make loans at lower down
payments provided that the home buyer
gets Private Mortgage Insurance (PMI).
We have more information
about PMI: click
here
- Question:
when does PMI stop?
If the value of your home increases due
to the neighborhood or home improvements,
or if you make enough payments on your
mortgage to reduce your balance to 80%
of the appraised value, you can cancel
your PMI when the lender can be assured
that the appraised value of the home has
met the 80% threshold.
That could be substantial savings each
month.
We have more information
about mortgage loan management:
SayLending: managing
your mortgage loan
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- Any time that you fail to make a payment
on time may be reported to the credit
agencies.
Your credit information is maintained
for other parties to review when you make
an application for a loan, apply for insurance,
and in some cases, seek employment.
- Some lenders may not approve your application
for credit if your report has any "1X60"
or greater on your report. Other lenders
may not give your the best interest rate
if your report shows any "1x30".
Likewise, employers who see more than
3x30, or 2x60, etc., on your credit report
may consider you at risk since your credit
history shows that you fail to meet your
credit obligations.
- That is why maintaining a strong credit
report is extremely important.
More information available:
SayPlanning: maintaining
good credit
SayLending: check
your credit report
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On
average, Americans give between 5-10% of
their total income to charity |
your local church
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