The New Generation - Drowning in Debt?

According to the Christian Science Monitor, today’s generation of young people could be the most indebted Americans in this country’s history. Americans are brought up today to believe that a college degree is a necessary element to get ahead in life. Due to the sharp rise in tuition costs most students will need loans to complete their education. The majority of new graduates will start their careers with a large amount of debt due to these student loans.

With grants being more scarce than ever before, a student will have to borrow money to pay their tuition. In most cases, the typical student will graduate owing more than $20,000 in loans and many graduates will begin their careers with temporary jobs leaving them without health insurance. If they are unfortunate enough to have health issues during this period, medical expense will be added to their mound of growing debt.

Almost all students will be tempted with introductory credit card offers. The credit card companies make it very easy. They show up on campus and all you have to do is fill out the application and the free gift is yours. These credit issuers don’t seem to care if you are employed or not. After all, you are going to school, so you must be getting money from somewhere. These usually have a low introductory rate for a short period of time. Once that rate expires, your rate will probably increase to over 50%. If you make a late payment, you may see your interest rate rise to as much as 30%.

The unstable job market is also a contributing factor in the debt of young Americans. An unemployment check does not usually go very far when it comes to covering monthly expenses. This leaves many people paying for necessities with credit cards. Debt becomes out of control very quickly when you have to use credit cards to pay for groceries and other monthly expenses.

Many young people are not used to having to live on budget. Coming off the boom years of the 1990s, students are not used to clipping coupons or cooking and eating at home. This is a generation of people that spend impulsively. These habits can be changed with some planning and forethought.

Before you can make a plan to become debt free, you need to know in detail what you owe. Start by getting a copy of credit report from all 3 credit bureaus. Transunion, Experian and Equifax, the 3 credit bureaus, all offer a free credit report annually. These reports will help you organize your debts so you can formulate a repayment plan. If you need help, there are many non-profit credit counseling agencies that will help you with budgets and repayment plans for your debt. If your debt is seriously past due or “charged off,” a debt settlement company is your best option. They will negotiate getting your balances reduced.

There are several different debt options available to help you get your debt paid off. The biggest mistake that most people make is waiting too long to face their debt and ask for help.

Credit Cards–Instant Gratification With a Lengthy Recovery

The best way to describe credit cards is “addicting”. They bring quick enjoyment that can turn into years of grief. Credit cards make it easy for a person to live beyond their means. They are also the cause of stress and depression when the monthly statement comes in the mail.

This country�s credit card debt is in excess of $735 billion, or almost $7,000 per household. Approximately 40% of revolving credit card users pay their bills in full monthly. Per capita, monthly credit card balances of those unfortunate households carrying balances is close to $12,000. If you pay $240 per month, it will take 8 years to pay the balance in full. If you pay the minimum payment, it will take even longer due to the minimum payment decreasing as the balance decreases.

Credit card companies extend you credit with the intention that you will carry a balance. They make their money, through you paying interest and fees. If you pay your balance in full monthly, you are borrowing their money interest free for 25 days.

Literally every industry in today’s society accepts credit cards. If you have a credit card you can buy a Big Mac. Businesses are making it more convenient to use a credit card than ever before. Billions of credit card offers are mailed out annually and it is hard to checkout a t a retail store without being offered something in exchange for applying for a credit card with their store.

Debt will be part of your life until you learn how to deal with the temptation of instant gratification. Before you will see your debt decrease, you will have to put yourself on a “cash only” diet and then you will have to begin aggressively paying your credit cards down. To accomplish this, it will take changing the way you think about credit and its many pitfalls, but it can be accomplished by making some lifestyle changes.

Debt Collection–Tips for Dealing with Old Credit Card Debt

The business of debt collection has become very lucrative and the collection of “old” debt is on the rise. It would be wise to know your rights when it comes to getting collection calls for old debt especially debt that is excess of seven years and no longer appears on your credit record.

1. Be aware of the statute of limitations in the state you live and in the state the debt was incurred if they are different. If it has expired, the collection agency will have limited legal options.

2. You may want to ignore the call. If the statute of limitations has expired they have very little recourse and you have a lot to lose by negotiating repayment. Repayment could cause it to be relisted on your credit report again.

3. Write them a letter and send it certified mail. Do not admit to the debt. Once they have received the letter the law prohibits them from contacting you again.

4. Know what your rights are. A copy of the Fair debt Collection Practices Act or a copy of “Money Troubles” by Leonard will familiarize you with what your legal right are.

5. Watch your credit report. If you see something on your credit report that is incorrect, you can dispute it with the credit bureau. If the reporting agency or creditor can not prove that the information is correct, it will be removed.

6. If the statute of limitations is still current, you may want to try to work out a settlement with the agency. Negotiate with them and see what you can get worked out.

Collections has become a very profitable business. Knowledge is power. You will best be able to handle your debts if you know what your rights are and where you stand.