So, the White House released its budget projections for the 2013 fiscal year (which starts in October) (a rundown from Bloomberg here: http://bloom.bg/waLvtc) — and what strikes me first about it is that government economics are pretty different from household economics!
For instance, in this budget, the money "saved" from fighting the wars in Iraq and Afghanistan — which was being borrowed, mind you — is now being allocated to other spending. But it’s being counted as savings! That’s like borrowing money to make your car payments, selling the car, CONTINUING to borrow the money and spending it on a 2nd mortgage.
And counting it as savings.
Borrowing money to pay off more borrowed money (and calling it savings) only works for Uncle Sam, apparently.
So, this is the perfect time for me to finally bring to you what I had worked up for you about unique debt-reduction strategies for La Crosse, WI-area households and businesses.
By the way, I’m a big fan of automation — but not in all instances. Do NOT "automate" your tax preparation process with off-the-shelf software. Especially of the "free" variety. We have to clean up so many mistakes made by these products (and their users!), that I cannot, in good conscience, recommend them.
Yes, I’m obviously biased. But the facts are the facts. Take a gander at this, for just one small example: http://www.customerservicescoreboard.com/TurboTax
In the meantime, let me know if you have any pressing tax issues or questions! We exist to serve you! (608) 782-6433.
The Six Best Ways To Beat Credit Card Debt for La Crosse, WI Families
The national average credit card balance for 2011 was $6,576, down from $7,404 the previous year — and while it’s certainly nice to see improvement, I also know that any kind of debt can feel like you have Justin Tuck climbing on your back. (That’s a New York Giants reference, by the way. Google him if you must. Not a small man.)
So, you may be in a better situation … it may also be worse. So, to answer the questions we often get around here from clients facing tough times, I’ve put together a step-by-step process which we often help people work through. But as I’ve said before, feel free to call us at: (608) 782-6433 for more customized advice.
1. If you ever hope to pay off your credit card debt, pay more than the minimum payment each month.
If you only pay the minimum payment each month, your bill could continue to INCREASE, even if you completely stop using your card. This is called "negative amortization"–where you think you are paying on your debt but the additional fees and finance charges are more than the minimum payment. The bottom line is: Pay more than your minimum or you will eventually be in debt over your head.
2. Implement a regular *system* for credit card debt reduction.
With online banking and automatic payment options, there are GREAT tools for ensuring you don’t mess up because of administrative chaos. If you feel you can’t manage all your bills by pen and paper, there are several good software programs available for keeping track of your financial records.
In fact, I recommend that you automate a payment ABOVE the minimum monthly payment, just to be certain that you start getting ahead of the game. Those minimum payments are rigged against you, and the only way to get ahead is to … get ahead. I have some more thoughts on automation in a moment.
3. You can negotiate with your credit card company.
No, you do not need to be an attorney or other professional to negotiate with your credit card company (you will need patience and persistence though). The rising amount of consumer debt in this country has made creditors realize that they need to be more understanding of their customers — if they hope to get any money back. If you file bankruptcy they are only going to get pennies on the dollar, so they are willing to make deals.
4. Write letters to each of your creditors acknowledging your debt and the situation, and tell each one when you can begin repayment.
Open communication always helps. Usually credit card companies get ignored and end up sending delinquent files to a collections agency. So they’ll actually appreciate your openness in contacting them and may be more understanding of your situation. Proactively dealing with your debt problem rather than hiding will not only help your financial problem but make you feel better about yourself.
5. Keep track of what you are able to pay each creditor every month.
If you are not able to pay the full amount of your credit each month, you still should still pay something to stay on top of it. You should work off a written budget so you know exactly where you stand. Some experts suggest that you divide your monthly debt budget by the percentage each bill makes of the total and pay that amount.
Here’s an example: If you owe a total of $1,000, and one credit card is $800 and the other is $200, and you only have $100 available to pay for that month… You should pay $80 on the $800 balance, and $20 on the $200 balance. This way you are reducing each debt by the same percentage.
6. Don’t fall prey to intimidation tactics
No matter how forthcoming and honest you are, some creditors have been taught to be mean and downright nasty. Hang in there and don’t let this tactic intimidate you.
Lastly–don’t let the IRS be one of those creditors. Let us help you this tax season, and THAT will be one less creditor to worry about, I assure you!
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