Almost all individuals in the U.S. are infected with the habit of making the indiscreet use of credit card that eventually incur them an overwhelming credit card debt. According to the U.S. Census Bureau, U.S. citizens have over $886 billion in credit card debt and the figure is expected to rise to $1.177 trillion this year.

If you are also the one among the staggering number of debt stricken individuals, then you may consolidate credit card debt. But credit card consolidation involves certain eligibility criteria and other factors, so if you cannot qualify for it, you may look for other credit card debt relief options.

Credit Counseling: If you are under the pressure of insurmountable amount of credit card debt and are unable to manage it all by your self, then it is advisable to seek help from a credit counselor.

Credit Counselors can aid you manage your finances and pay off your debt as soon as possible. They will review your fiscal situation and will discuss with you about your debt problems in order to determine a suitable solution. They will even assist you in preparing your budget and provide you with free educational workshop in order to make you aware how to manage finances.

All these help in managing the debt and achieve a long term financial goal for future. These counselors are certified and trained in the areas of consumer credit, debt management, debt consolidation and budgeting. So they can also provide you with a personalized plan to consolidate your credit card debt and solve your debt problems.

Credit card debt consolidation: Credit card debt consolidation is a debt relief solution that consolidates all your debts into a lower monthly payment. This lowers the interest rate on the outstanding balance of debt and therefore reduces the monthly payment extending the length of the loan.

Typically, to take a consolidation loan, you will have to submit collateral in order to secure the consolidation loan. Any time you default on your loan, you may lose all your assets put as collateral.

Credit repair: Credit repair is a good option if you have any erroneous information on your credit. To find that out, order your credit report from the three credit report bureaus, TransUnion, Equifax, and Experian and take a close look to find out if there is any inaccurate or incomplete information.

If there is, hire the services of a credit repair company who will correspond with your creditors and repair it for free.

However, remember, it’s not so essential to hire someone to do this; you can do it by yourself as well. Improve your credit through a constant effort and sticking to personal debt repayment plan.

Debt settlement: Debt settlement is one of the best debt relief solutions for unsecured debts, like credit card debt. Debt settlement involves negotiating with creditors in order to lower the pay off amount by upto 30 to 60 percent.

Most debt settlement companies charge fees for their services, including a fee to establish the account with the debt negotiator, a monthly service fee, and a fee for a percentage of money that has supposedly been saved.

Bankruptcy: Bankruptcy is a legal status of an insolvent person who cannot repay the debt owed to the creditors. It is designed in such a way that a portion of debt is waived off through an order of the court. On the other hand, it is also designed to allow creditors to get their designated share of debt owed by the debtors.

In conclusion, if you are finding yourself under a knee-deep credit card debt, you may consider any of the above discussed credit card debt relief solutions.

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Although it is possible to withdraw money from your 401(k) plan before you retire, it is almost always a bad idea.

Designed to give individuals control over their retirement savings, 401(k)s enable employees to set aside pre-tax earnings into personal accounts. However, strict requirements and penalties apply to early withdraws from these accounts.


If you do withdraw money, you will have to include the funds you receive as income when you file taxes, and the withdrawal may be subject to an additional 10% tax penalty (unless you are 59 1/2 years old). This penalty is added on to your tax bill after you calculate deductions, so it has a dollar-for-dollar impact.

Your employer can provide you with the details regarding your specific plan and the withdrawal options. These options allow for withdrawals in the case of certain “hardships” defined by the IRS and listed below.

“Hardship” Withdrawals

The IRS defines various hardships for which your employer may allow you to withdraw 401(k) funds prior to retiring. These may include education or medical expenses for a family member; funds to purchase, repair, or prevent foreclosure on your home; funeral costs; and certain other expenses.

Certain hardships even waive the 10% penalty tax. For instance, if you need to redeem your 401(k) due to “total and permanent “disability there is no penalty, but you must still pay taxes on the funds.

Consider Other Options

As tempting as it may be, be sure to look to all available alternatives before you rob your retirement nest!

Some plans have loan provisions. Your 401(k) may allow you to borrow as much as half of your current balance. The interest you pay on this loan goes back into your own account! A home equity loan may be a better option (although “home equity” isn’t the source of funds it once was).

If other savings or loan sources are available, consider using them before you accept the tax penalties that accompany a 401(k) withdrawal. Early withdrawals from a 401(k) should be considered as a last resort, used only when other funding sources have been exhausted.

In addition to the penalties, you’ll forfeit the benefit of potential tax-deferred growth of your retirement funds.

In many cases, you have better options.

*This article is intended for informational purposes only and should not be construed at investment advice. Please consult an accountant or other licensed financial professional before making any financial or investment decisions.

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Confused by the volume of 401k plan advice available? If so, here are a few pointers to consider:

Without a doubt, enrolling in your company’s 401(k) plan can be intimidating, as there are some quick decisions to make. For example, you may be wondering “How much should I contribute from each paycheck?” and  “Which investments are the best?”

Contributing to the stress, there is often a lot of documentation to weed through to get everything set up. The good news, though, is that once you have enrolled and begin contributing to the plan, things will go a lot more smoothly and you’ll look forward to periodic statements showing you how quickly your retirement nest egg is growing.

In the meantime, you’ll want to focus on a few key issues:

1. How much should I contribute to my 401(k)?
   
   The simplest answer is: as much as possible! However, first consider how much you require for living expenses carefully and be sure to take home enough of your paycheck to meet your everyday needs.If your employer offers a “match” – an amount that is put in to your account to match a percentage of your contribution – make every effort to put in as much as your employer will match. After all – it’s “free money!”
   .
2. Which investment option should I choose?
   .
   Don’t be embarrassed to ask your human resources department for some help. They may recommend that you contact the investment manager that advises your 401(k) options, but good information is available either way. In general, if you don’t expect to retire for many years, equity investments such as common stock mutual funds offer the greatest long term potential.
   .
   .Increasingly popular 401(k) options are “target” funds, which continuously invest your funds with an eye towards your expected retirement date. If you don’t have any appetite for investment risk, your plan will offer a very conservative money market or fixed interest option as well.
   .
3. Is my money locked up until I retire?
   .
   You should initiate your 401(k) investment with the goal of building a substantial nest egg to assist you through your retirement. However, your plan probably permits access to your funds in certain cases of financial “hardship.” As you begin to contribute to your plan, it would be a good idea to ask about the circumstances in which you can withdraw funds. Remember that even if your employer allows access to your funds, an early withdrawal will always result in certain tax obligations and penalties.

Regardless of which 401k plan advice you choose to follow – the key is to start your participation with the appropriate goal in mind: your long-term financial security.

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When you’re under financial duress, it may be tempting to look to your 401(k) balance as a source of relief. Your employer’s plan may have provisions that allow you to withdraw money for certain “hardships” such as major medical expenses.


Before you tap your 401(k), however, consider the immediate and long-term costs:

• The amount that you withdraw is added to your taxable income for the current year. The 401(k) funds you withdraw will be taxed at the highest incremental rate you pay, so it’s important to have your employer withhold enough so that you don’t get a nasty surprise at tax time.
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• The IRS tacks an additional 10% penalty on to most withdrawals. This is calculated after you have taken all income deductions, so you forfeit 10 cents for every dollar that you withdraw.  (Under some circumstances, such as “total and permanent” disability, the 10% penalty is waived)
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• At a time when government-sponsored retirement programs such as social security are experiencing fiscal challenges, you will be diminishing your potential retirement savings.

Much is made of our ability to make “pre-tax” contributions to 401(k) plans.  Contributions to your 401(k) are sheltered from current taxes. You aren’t required to pay tax on 401(k) contributions or earnings until you begin withdrawing the money after age 59 1/2. At that time, you may be in a lower income tax bracket.

The greatest benefit of a 401(k) plan, however, may be the tax-deferred gains that it allows you to accumulate over a long period of time. A $10,000 investment that compounds a 6% return for 20 years will return $32,071 at the end of the period. But a 4% return on the same investment (which might reflect your results if you had to pay taxes each year on your earnings) would only return $21,911. Investing through a 401(k) enables you to avoid yearly taxation, and the difference this makes can be tremendous!

Most experts advise 401(k) plan participants to look to all other options before considering a plan withdrawal prior to retirement.  For instance, before initiating a hardship withdrawal, ask your employer if the plan has a loan feature.  IRS rules allow loans of up to 1/2 the value of 401(k) accounts. If you can manage it, that’s a far better option than a straight withdrawal.

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This guest post is by Neil R Williams. Neil is a financial consultant by profession and a finance niche writer. He consults with clients to pay off debt and repair their credit.

He writes articles on many financial issues and problems, including debt settlement, debt consolidation, refinancing and reverse mortgages. He has been published on many financial sites and blogs.

Unfortunately, credit card debt is a way of life for many. Too often, people buy things they couldn’t otherwise afford with the help of credit cards. The problem arises when consumers become overburdened with their credit card debts and they fail to pay their outstanding balance on time. Often, they look to credit card consolidation to consolidate their debts and repay their debts more easily. The most common method of consolidating credit card debts is the balance transfer method. This way you can save a lot of money but there are some fine print traps.

Here are 4 smart tips to save money on credit card consolidation:

1. Fees on balance transfer: There are some credit card issuers who charge balance transfer fees on credit cards. The fee may be as high as 4 percent of the outstanding balance. This means the higher the balance you transfer, the higher the transfer fee will be. Beware of such extra fees on credit card consolidation through balance transfer method.
2. Teaser rate: Teaser rate is the interest rate offered during the introductory period. Make sure before opting for balance transfer, what your annual percentage rate will be after the introductory period expires. It is best to pay down the transferred balance before the teaser rate expires. Or else you may be subject to high interest rate where you will find it difficult to pay off your debt.
3. Check carefully: Your new credit card company may tell you that your balance is transferred. But it is your duty to recheck whether the balance has been actually transferred. Check with the old credit card company and ask them to give you a billing statement with a zero balance written on it.
4. Cancel old cards: There are plenty of people who have a habit of opening new credit lines. You should know that opening new credit accounts increases the risk of drowning in debt. Too many credit card accounts and outstanding debts lower the chance of your qualifying for a mortgage or a car loan. Most lenders view open credit lines as potential outstanding debt. So to save money, cancel old cards and close those accounts.

Credit card consolidation is the most common way to eliminate credit card debts. But it depends upon you on how much you can save while consolidating your credit card debts. These smart tips will help you to save those extra dollars on debt consolidation.

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Learning how to budget and save money is pretty simple. It requires an honest assessment of where you are financially and a clear vision of where you want to be. From there, it is a matter of determining how your income relates to your outflow – and finding ways to make sure the first number is always a bigger than the latter.

Notice I said figuring out how to budget and save money is “simple” – I didn’t say it was going to be “easy.”

Get Out of Debt Now! Speak Today to Counselors Who Can Help.

How to Create a Budget

The first step toward learning how to budget and save money is to figure out how much you are spending on fixed and discretionary expenses each month. Fixed expenses would include your rent or mortgage and installment loan payments; whereas discretionary expenses include items like entertainment, personal care and clothing. Also, don’t forget to factor in all those items that pop up occasionally throughout the year (i.e., veterinary expenses, car repairs, hair appointments, real estate taxes, etc..).

You’ll want to be as detailed as possible while making this list, but it can be difficult to recall everything from memory. Therefore, I normally look at a year’s worth of bank statements AND credit card statements to make sure I am on track.

(Even then, I still include a “miscellaneous” category to help plan for the unexpected. )

Then, take a hard look at how much money you are bringing in each month after taxes and other automatic deductions are removed. This part can be scary – particularly if you find what is coming in each month doesn’t fully cover what is going back out.

If you find yourself in this boat – don’t panic! You CAN reverse this trend – and you’ve already made that all-important first step by becoming aware of your situation.

Is Debt Weighing You Down? Sign-up today and get out of debt.

Tomorrow, I’ll share with you a simple Excel spreadsheet I use to keep track of my monthly budget and show you how you can create one for yourself.

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In today’s economy, it is harder than ever to find money for college. That’s why Upromise by Sallie Mae® is giving away $25,000.

Details for the Cash-for-College Sweepstakes:

Register between Sept. 1 – Oct. 15, 2009 – 5 lucky winners will each get $5,000

You’ll be automatically entered when you join Upromise, a free college savings service, and install TurboSaver®, their online savings remainder by October 15,2009.  This free tool alerts you to opportunities to earn Upromise savings when you’re online so you don’t miss out on available college savings.

For a chance to win $5,000, here is all you need do:

1. Join Upromise- a FREE service that helps you start saving automatically for college expenses with your every day purchases.
2. Install TurboSaver, the Upromise online savings reminder.

Important Note: Be sure to register a valid credit card, gas card, or grocery store card at the time of enrollment so you don’t miss out on any money-saving opportunities.  (I used a grocery card, but you can register credit cards and gas cards for even greater savings).

Remember, Upromise can also help get money back every day. The Cash-for-College Sweepstakes is just one of many ways Upromise can help with money for college bills. You can also earn money doing everyday things—shopping online, eating out, traveling, filling your gas tank and lots, lots more.

So far, Upromise members have received more than half a billion dollars for college.

Til Next Time,

P.S. Don’t forget – joining and using the Upromise service is FREE! Sign up today and start earning money towards college expenses right away.

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Your credit rating forms the bedrock of your financial life. If you are the victim of identity theft, your credit rating – and quality of life – can be ruined.


Without a good credit rating, it is difficult to buy a house, open a bank account or even get a new job.   Therefore, protecting your personal information is of utmost importance.   Unfortunately, we live in a era where the unscrupulous can easily commandeer everything from your credit and bank accounts to your actual identity.  Millions of Americans fell victim to identity theft last year  and paid a heavy price in terms of  time, money and aggravation.

It is estimated that the average identity theft victim spends nearly $1400 and 175 hours cleaning up his or her credit report.   While it is difficult to protect yourself completely, there are a number of things you can do minimize the damage, both before and after you find your personal information has been compromised.

For 5 tips to minimize the damage of identity theft, click here.

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Debt Consolidation may be a great option for you if you have a number of outstanding credit card and loan balances.

If your outstanding balances are racking up high interest fees, you could find yourself sinking deeper and deeper in debt.  In that case, debt consolidation could offer a viable way to get back on track.  Debt consolidation involves combining a number of smaller balances into one larger debt (at a lower interest rate) – thereby rolling a number of monthly bills into a single more manageable payment.  When used correctly, debt consolidation can save you hundreds of dollars each month and simplify your bill payment process.

One way to consolidate your debt is through traditional methods, such as a home equity  or other bank loan.  With the current credit crunch, these loans are more difficult to obtain than they once were.  However, if you have a good credit rating (i.e., FICO score of 700+) and you have enough equity in your home, you may be able to qualify.

A home equity loan wouldn’t be my first choice, however.  If the recent real estate meltdown taught us anything, it should be that using your home as an ATM can have serious financial consequences.  I would ONLY consider this option if you have the discipline to cut up the newly paid off credit cards and guard against running up additional balances elsewhere.

With other types of bank loans, you will still need some type of collateral in most cases.  However, some banks do offer smaller loan amounts (less than $5k or $10k) without this requirement.  The terms (length of loan and interest rates) will depend on your credit history and FICO scores.

Social lending (aka Peer Lending) is a newer and very  interesting alternative to traditional loan options for credit worthy applicants.  A variety of lending networks have popped up in recent years, with Lending Club among the most popular.  Membership is free for both lenders and borrowers and the online application process is fairly simple and straightforward.

Within these networks, borrowers can make a loan request to consolidate their outstanding debts.   Private lenders (individuals) within the network can then make offers to lend all or part of the requested amount.  With Lending Club, loan amounts range from $1,000 to $25,000 with a fixed repayment schedule of 3 years.  Once approved, funds are usually deposited into the borrower’s account in less than two weeks.

This option is not available in all states and is open to those with FICO scores greater than 660 and with a debt-to-income ratio of less than 30% (excluding mortgage).  To learn more , visit Lending Club.

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