You are probably familiar with harassing phone calls at work and at home. If you are financially in bad shape and trying hard to meet your financial obligations, then how stressful can your plight further get with a series of unwanted calls? Depressing, isn’t it? It’s good news therefore that federal laws and many states prohibit harassment of collection agencies. For example, the law includes a non-exhaustive list of harassing tactics, including prohibitions on threats of violence; obscene language; causing a telephone to ring repeatedly; and placing calls without meaningful disclosure of the caller’s identity. But how can you eliminate the stress altogether? Here are some tips.
 
Notify your creditors in advance

Before a creditor refers your debt case to a collection agency, anticipate the possibility by informing your creditor of your current situation. In most cases, creditors may give some allowances to those who displayed some sense of responsibility over their situations. However, consumers must not over-promise in the negotiations.

Send cease and desist letters

If a creditor or a collection agency is causing your phone to repeatedly ring off the hook, consider sending a cease and desist letter as federal law requires collection agencies to stop collection activities once they receive a written request to stop. Just make sure to keep your own copy of the letter and use certified mail so you have proof they received it. If harassment calls persist, then your creditor is in clear violation of Fair Debt Collection Practices Act, which is immediately reportable to the Federal Trade Commission (FTC). The next best step would be to send your lawyer’s letter to these creditors.

End the harassment calls

Keep yourself in control of the abusive phone calls from the debt collectors. It is stressful enough to be hounded by them, more so if you find that you are constantly at their mercy. Don’t be afraid to end the call but be professional all the time. Make it clear to them that you will hang up if their abusive behavior persists. Tell them that unless they conduct themselves in a professional manner, you will not speak to them.

There may also be cases that an abusive debt collector is not legitimate. If you suspect that this is the case, ask them about their license. If your doubts are confirmed, immediately notify the regulator of your state.

Report complaints on billing errors, etc.

Consumers should take into account whether they have defenses to raise that would eliminate all or part of their debt. It is your right as a consumer to dispute any billing amount that you think contains an error – a right you must have been informed of by your creditor at the onset of your business relationship or within 5 days after your first communication. If the consumer then disputes the debt in writing within the next 30 days, an investigation ensues whereby the collection agency must stop any collection effort.

Make partial payments

Probably the reason you are being hounded by persistent debt collectors is because you are failing to make necessary and on-time payments. Therefore, pay whatever you can. After settling obligations on rent/mortgage, utilities, car, food, insurance and tuition fees, make a conscious effort to reduce your outstanding debts. Ideally, pay more towards higher-interest rates or higher amount debts, and less towards low-interest or low amount debts.

1) retroactive rate increases;
2) card charges for pay-by-phone payments unless it is 60 days overdue; and
3) double-cycle billing or the imposition of card charges for previous and current balances.

Despite this new rule, however, cardholders must continue to be cautious about their credit card habits. This is because just as banks are starting to control their abusive practices, other modes of collecting hidden charges from cardholders will surely spring up that can hurt consumers just as before. Therefore, it is always wise to exercise utmost vigilance in the use of credit cards.

The following are the most common credit card pitfalls credit card users should watch out for.

1.) Cash Advance Interest Charges – As much as you can, avoid making cash advances from your credit card. The interest rate for cash advances is often several points higher than the normal purchase interest rate (the rate that is associated with everyday card purchases). Cash advance rates normally range from 20% to 25%. In contrast, the average purchase rate for a standard credit card ranges from 15.88% to 17.30%.

2.) Late Payment Charges – Late payments can charge you with as high an interest rate as 27%. Yes, more and more companies are earning more from late fee income than ever before due in part to this sharp hike in late fee (more than doubled between 1992 and 2000). Not only that, credit card companies have also decreased the time between when they mail your credit card statement and when payment is due, and about 66% of these companies have totally eliminated grace periods or don’t have one at all, between the payment’s due date and the date a late fee is assessed. In the past year, 13% of Americans have been 30 days late paying credit card bills.

3.) Higher Over Limit Charges - A typical credit card purchase ends up costing 112 percent more than if cash were used. Credit card companies are taking advantage of the American’s tendency towards out of control spending. If you exceeded your limit by as little as $1, many companies will charge you with as high as a $40 over-the-limit fee.

4.) Lower Minimum Payments – Low minimum monthly payments are considered dangerous traps as they encourage consumers to pay higher finance charges over an extended period of time. More and more companies have decreased minimum payments from 5% to the current standard of 2% or 3% to attract low-income consumers.

5.) The Many Faces of APRs – Beware of the seemingly low Annual Percentage Rates (APRs) that actually increase your debt. Currently, 57% of card offers are advertised at low introductory APRs. These APRs run on the average of 4.13% and last an average of 6.8 month. A consumer is drawn to this offer because normally a higher APR triggers a more expensive loan as you pay off credit cards in gradual installments. However, credit card companies do not clearly divulge that these short-term introductory APR’s are used to hide actual APRs that are an average of 264% higher.

There are other lures such as “Fixed” APR. However, despite the term, these APRs can increase with as little as 15 days notice to cardholders.

Hidden Transaction Fees – Interest rates from convenience checks and balance transfers are usually higher than interest rates for normal credit card purchases. Even pay-by-phone and charging on foreign countries have corresponding higher fee charges. It may be stated in the credit card notice that collecting minimum fees may guarantee the credit card companies higher fee income regardless of the transaction amount but cardholders easily miss them in long and very tiny print in the terms and conditions. Lost in the fine print as well is the stipulation that if the applicant is not qualified for a premium card, the credit card company can substitute a lower-grade, non-premium card which in fact is more expensive and has less flexible terms.

All you have to do is set up your account, which takes about five minutes or less. As soon as you have added your bank, credit card, home loan and investment accounts, Mint.com will do the rest of the job – which it does so well.

Security won’t be an issue as Mint.com does not require information on your identity. A valid email address, password and zip code are the only things that separate you from a working Mint.com account.

Also, Mint.com boasts of banking security and privacy validated by VeriSign and TRUSTe.

How Mint.com works

Everyday, Mint.com automatically downloads, categorizes and graphs all of your finances. Mint.com will show you how much you spend on groceries, restaurants, parking, rentals, gas, and other purchases.
Mint then automatically analyzes and graphs your investment performance. You will also be alerted on upcoming bills, low balances and fees in a timely manner.
Simply put, every time you check your Mint account, you see a fresh picture of your financial standing, which would lead you to act if there is a need to.

As if that’s not enough, Mint.com also goes as far as searching for the best deals suited for your lifestyle, from bank accounts to credit cards, brokerage accounts, and more. In this way, Mint.com does not only help you monitor your expenses, it also helps you save.

Why use Mint.com

You don’t have to be an accountant or a money expert to be able to manage your expenses well. But if something as efficient, secure and precise as Mint.com can do this job for you, why go through the hassle yourself?

The website is so easy and safe to use, uncluttered and informative. Alerts are sent to you by email or mobile, depending on your preference. It also runs a blog which publishes relevant articles and advice on money management, debt reduction and budget control, among others. But the fact that Mint.com makes lives easier and is rich in useful features all for free is by far the best thing about it.

Today, there is a growing excitement in the market with the release of PocketMoney version for iPhone. Currently, the latest version is PocketMoney 2.2.1. Hardy Macia of Catamount Software, makers of PocketMoney, said that the 2.3 version will be out very soon.

PocketMoney and iPhone make an exceptional combination. Many former Palm OS users who have switched to iPhone are grateful that they can continue using PocketMoney. They can also migrate their Palm OS PocketMoney files or database to their iPhone.

And because the timing is perfect – being that people are compelled to monitor their expenses and control their budget more than ever before – this application proves very useful to anyone who is conscious and careful about where his or her dollars go.

PocketMoney works by helping you track your cash flow, know your net worth, and improve the overall health of your finances. While money matters can get complicated, this application has been designed to be simple and easy to use.

PocketMoney for iPhone sports new changes and features, and these are outlined in detail in a document that can be downloaded from www.catamount.com. Of note is a library of video tutorials that guide users through the features and uses of the application. The new budget feature is a personal favorite, as with others, because it gives users an overview as to how they are faring in terms of meeting a categorized budget.

The good thing about PocketMoney is that it continues to make waves and to innovate, although it has already shown excellence ever since. It remains an authority in managing finances in the palm of your hand. Regular fixes are being made on the software in response to users’ requests and preferences. The upcoming 2.3 version, for instance, will feature an automatic refresh of exchange rates.

PocketMoney is available in English, French, German, Italian, Norwegian, Portuguese, Spanish, Chinese, and Japanese languages. It is the no. 1 finance application in several countries. Users from all over the world flock to the active users forum at www.catamount.com/forums to seek answers and to discuss anything and everything about this powerful software.

PocketMoney 2.2.1 is currently on sale for US$4.99. If you want to try it first, there is a free Lite version available at iTunes Store that has all the capabilities of the full version but is limited to two accounts and two repeating transactions.

If you’re a person who’s neck-deep in debt, to tell you not to spend more than you earn is only half of the advice. There’s a stressful battle to address until you are totally debt-free. It will be a long battle that will require your utmost resolve and discipline.

Set your goals

Make a goal of being debt-free, say, in five years. Then break this goal into a series of smaller ones that will help you get there. Make realistic targets by calculating your future income vs. expense cash flow. Determine what you can give up in year 1 or year 4 and stick to it.

Prioritize spending

An urge to buy if left unchecked can go out of proportions. Before buying things, begin a habit of prioritizing. Make sure that you were able to pay first for the essentials such as food, school fees, rent, car repayments, or house payments. If you spend more on clothes and appliances that you have to resort to credit cards for your groceries or medicines, that’s when you start getting into debt trouble every month.

Reduce the amount of your debt

Without defaulting on other financial obligations, try to pay the full installment every month. Go first for the debt with the highest interest rate while make on-time minimum installments on the others. Then target to pay down the next highest interest rate debt.

Pay off what you can. See if you can even forego savings in your bank since the amount of savings income you get is dwarfed by interest rates being paid on debts. As soon as you’re debt-free, you can always revive this savings account.

Otherwise, if you consider your savings account as your emergency fund, then use any extra earnings – bonuses, overtime pay, raises – to pay down your debts.

Learn the lesson from credit cards

As soon as you’re debt-free, then stay that way by strictly adhering to your budget. Living within your means will surely keep you out of future financial troubles. Use your experience in dealing with the use of credit cards.

Curb at once the urge of charging. Leaving your credit cards at home will definitely help. Better yet, cut up all your credit cards except for one with the lowest interest rate and use that for emergency purposes only. For that credit card, try your utmost best to pay in full installment every month to avoid paying interest.

Write down all the necessary items before you go shopping, and stick to that list. Avoid using your credit card in retail outlets as they usually charge higher interest if you’re unable to pay off your monthly balance.

Be patient

Understand that as it took you time to fall neck-deep or almost buried in debt, it probably will take time as well to get out of it. Keep your resolve and never give up. The reward will always be a changed outlook and a stress-free life. It’s worth the hard work and the wait.

You may be an unsuspecting consumer and the unrelenting increase in penalty rates and in the monthly minimum payment are doing you more harm than good. Let us therefore examine the various credit cards traps that are causing tremendous financial stress to most Americans today.

1.) Late payment charges – Late payments can bump your interest rate as high as 27%. Yes, more and more companies are earning more from late fee income than ever before due in part to this sharp hike in late fee (more than doubled between 1992 and 2000). Not only that, credit card companies have also decreased the time between mailing your credit card statement and when payment is due, and about 66 percent of these companies have totally eliminated grace periods or do not have one at all between the payment’s due date and the date a late fee is assessed. In the past year, 13 percent of Americans have averaged being 30 days late paying credit card bills.

2.) Higher over limit charges – A typical credit card purchase ends up costing 112% more than if cash were used. Credit card companies are taking advantage of the American’s tendency towards out of control spending. If you exceeded your limit by as little as $1, many companies will charge you with as high as $40 over-the-limit fee. In 2000, there was only one card that charged a fee of less than $20 to consumers who exceeded their limits whereas 5 years before that, only one bank was found that charged $20 or more to over-the-limit accounts.

3.) Lower minimum payments – Low minimum monthly payments are considered dangerous traps as they encourage consumers to pay higher finance charges over an extended period of time. More and more companies have decreased minimum payments from 5 percent to the current standard of 2 percent or 3 percent to attract low-income consumers.

4.) The many faces of APRs – Beware of the seemingly low Annual Percentage Rates (APRs) that actually increase your debt. Currently, 57 percent of card offers are advertised at low introductory APRs. These APRs run on the average of 4.13 percent and last an average of 6.8 months. A consumer is drawn to this offer because normally a higher APR triggers a more expensive loan as you pay off credit cards in gradual installments. However, credit card companies do not clearly divulge that these short-term introductory APR’s are used to hide actual APRs that are an average of 264 percent higher.

There are other lures such as “Fixed” APR. However, despite the term, these APRs can increase with as little as 15 days notice to cardholders.

5.) Hidden transaction fees – Interest rates from cash advances, convenience checks and balance transfers are usually higher than interest rates for normal credit card purchases. Even pay-by-phone and charging on foreign countries have corresponding higher fee charges. It may be stated in the credit card notice that collecting minimum fees may guarantee the credit card companies higher fee income regardless of the transaction amount but cardholders easily miss them in lengthy terms and conditions. Lost in the lengthy fine print as well is the stipulation that if the applicant is not qualified for a premium card, the credit card company can substitute a lower-grade, non-premium card which in fact is more expensive and has less flexible terms.

It is a great thing that President Obama has recently signed the Credit Card Accountability, Responsibility and Disclosure (CARD) Act of 2009. Among the many stipulations accommodated by this law are the prohibitions of
1) retroactive rate increases
2) card charges for pay-by-phone payments unless it is 60 days overdue
3) double-cycle billing or the imposition of card charges for previous and current balances.

Despite these new rules, cardholders must continue to be cautious about their credit card habits. This is because just as banks will start controlling their abusive practices, other methods of collecting hidden charges from cardholders will surely spring up that can hurt consumers just as before. Therefore, it would hurt less if these consumers will be even more vigilant and prudent in the use of their credit cards in the future.

Lydia Sermons-Ward, spokeswoman for the National Foundation for Credit Counselors, said that there is a tendency for American consumers to take advantage of credit offers without really thinking through the consequences of overspending.

And how big can a consumer debt be? Below are some of the most unsettling facts about debt in America taken from Paul Banister’s “25 Most Fascinating Facts about Personal Debt.”

• Some 43 percent of American families spend more than they earn each year
• Average credit card debt among all American households is $8,400
• About 60 percent of active credit card accounts are not paid off monthly
• Personal bankruptcies have doubled in the past decade

But getting out of debt doesn’t have to be hard if you make a plan and stick to it.

Credit cards

Focus on paying off high-interest-rate credit cards. You can do this by freeing up more money each month. Simple things like making a well-discerned list before shopping and sticking to it helps a lot. Weed out unnecessary expenses. Cutting down on the frequency of shopping trips can make a difference as well.

Studies have shown that people using credit cards in fast food restaurants spend up to 50 percent more than when they pay cash. Therefore it would be a lot easier to control purchases and stick to your budget if you leave your credit cards at home and pay by check or cash. Better yet, start making it a habit to cook your own meals and bring your own lunch at work than eat out.

Mortgage debt

More often than not, lenders are open to helping their customers needing more flexible mortgage payments plans. Therefore, as soon as you’re encountering difficulties in your monthly payments, it is important that you contact the lender at once. Current laws stipulate that since lenders must take your present paying circumstances into account, the following are some arrangements they may agree to:

• Reduce your payments for a period
• Allow you a “payment holiday”
• Allow interest-only payments, if you’ve got repayment mortgage
• Extend your mortgage term in years to reduce your payments

The flexibility and helpfulness of a lender can also be influenced by your track record. Therefore, whether you are on a normal payment schedule or on a new arrangement with the lender, make a real effort in keeping up with the agreed payments as it will show them that you are serious in paying off your debt no matter how long it takes.

Student loans

Statistics have shown that the average debt per bachelor’s degree recipient grew from $10,600 to $12,400 within the 2006-2007 academic year. Add this to the fact that in the 2007-2008 school year, lenders gave out about $17 billion dollars in private student loans (a whooping 592% increase from the previous decade), students nowadays seriously need debt management skills.

If your monthly loan payments are starting to become difficult and financially heavy, consider consolidation in order to lower your monthly payments. Or, you may find out if you are eligible to defer your student loans. However, a good credit score may be required or advised since consolidation loans carry fluctuating interest rates.

Car loans

If you are paying a loan for a second car, you may consider downgrading to an older model but just as efficient car that you can buy without a loan. You may also save around 15 percent off your insurance premiums by increasing your insurance deductibles from $250 to $1000 for both the first and second cars. At the same time you’re doing it, you may scout around for lower car insurance rates.

One way to support your plan to pay off all kinds of debts is to effectively manage utilities expenses. It is said that next to monthly rent and mortgage, utilities are eating a big chunk off an average American household’s budget. Consider getting a programmable thermostat, which can cut your heating or cooling bill by approximately 10-20%. You may also replace as many light bulbs as possible with compact fluorescent bulbs (CFL’s) as they use 75 percent less energy than most incandescent lamps and last 10 times longer.

Finally, if you can bundle your phone, Internet and cable services into one package, then it can save you up to $50 month. How about that monthly savings to add to your debt payments?

Remember the B-word. Budget your monthly expenses, stick to it and pay as much as you can on your debt obligations. You’ll surely never get lost on your road towards financial freedom.

So what should they do about it?  At this point, they have a choice:  they can give up and go the file-for-bankruptcy route, or they can tread the road less traveled and ask for help from those in the know.  There are consultants for every discipline imaginable, even the discipline of getting out of debt and staying out of debt.

Presenting Debt-Assistance-Today.Com, the special service for those who have run into trouble with their creditors.  The service is actually a configuration of several organizations working under The Association of Settlement Companies (TASC).  They all have a common goal, though:  helping debt-ridden clients.

Besides empowering its clients through debt counseling, the website actually specializes in the art of debt consolidation.  This is where the consultants’ negotiation skills come into play.  Simply put, the folks at Debt-Assistance-Today.com can talk things over with your creditors and decrease your debt by over half the original amount you owe.

It doesn’t stop there, either.  Debt-Assistance-Today.Com’s eclectic team of specialists will walk you through the step-by-step process of repayment until you’re totally debt free.  Once you’ve achieved your goal, they’ll even help you learn from your mistakes so you’ll never find yourself sinking in the mire of debt ever again.

Pros: If you take a look at the sheer amount of help available on the site, it’s not difficult to see why they can claim some of their clients have achieved debt freedom within three years.  Besides the (understandably) free consultation, Debt-Assistance-Today.Com also offers informative articles.  For example, you can learn the difference between secured and unsecured forms of debt.  Two of the most informative sections, however, are the FAQs where the options available to you are explained.  One such option involves a single monthly payment.  Curious?  Read and be enlightened, ladies and gents.

If it’s indeed true that the best things in life are free, then the service definitely has some great stuff going for it.  Clients aren’t even required to own a house for collateral!

Cons: There’s not much to complain about regarding the service.  After all, who would complain against a group of folks helping you get out of debt?  If you absolutely must have something to gripe about, it’s this:  once you submit your information to the site and register, they will get in touch with you via phone or e-mail – even if you’re name is on any kind of Do-Not-Call list.

Nevertheless, it’s a small price to pay for having someone take the trouble of trying to help you get rid of a big financial burden.

Till Debt Do Us Part?

Year 2008:  the year when the U.S. – and inevitably the rest of the world – has been hit by grave economic problems.  Lehman Brothers declared bankruptcy because its real estate arm experienced extreme losses.  Foreclosure rates soared due to non-payment of mortgages and high interests.  When the going gets tough, the debt-ridden suffers.  Get rid of debt if you want a better life.

Techniques to a Debt-Free Life

There are two prescribed methods – debt snowball and debt avalanche.

In financial advisor Dave Ramsey’s debt snowball, you should pay the minimums on all credit cards, except the one with the smallest balance.  The order of payment is lowest to highest balance.  You can say, “Cool; one card down!”  This technique offers immediate, visible results.  It has a bad side, however; you suffer in paying more interests since the card with the highest balance remains not fully paid.  You would be in debt for a long period of time!

On the other hand, in debt avalanche, you are advised to pay debts with the highest interest rates first.  The setback is that it may take awhile before you get to finish paying off even one debt in full.

Between the two, however, debt avalanche is the “winning” strategy.  It is also the more efficient technique.

The Debt Avalanche Way

Transfer credit card balances with high interest rates to cards or credit lines with low interest rates.  Usually, credit cards that are new in the market offer low introductory interest rates; you can use them to your advantage.  However, you should not use such cards for anything else beside balance transfers; otherwise, you will still end up buried in debt.

Zero-percent introductory rates on balance transfers are often transitory – they can last one or 1 ½ years but if you keep on adding to your balance on that card, you will not be rid of the balance or debt which you have transferred on it before the expiration of your special rate period.  In cases where the card offers a low, for-life introductory rate, such a deal is usually applicable only to transferred debts.  If you still use your card for purchases, the credit card company will probably apply your card payments to your purchases first (i.e. high-interest balances) before they apply them to your transferred balance (low-interest balances).  In this case, you will accrue interest fees; low the interest rates on your transferred balances may be, but interest charges will still add up.

Get hold of credit report copies at least once a year and review your credit trail.  Remember, these reports affect your credit score, which affects the interest rates you will be charged in the future.

If you know a personal financial crisis is coming, let your credit card company know.  You can probably move your due date or negotiate lower interest rates.  Make a budget for expected future expenses, too.

Save for financial emergencies.  It is wise to save 10% of your take-home pay and save enough to survive without a job for around 3 to 6 months.  If you have extra money though, consider paying high interest rate accounts more than the minimum amount required.  However, it is absolutely necessary that you pay at least the minimum amount due.

As much as possible, charge only those purchases beyond $50.  Stop being so dependent on credit cards!

Pay dues on-time; mail your payments 10 days before the specified due date.  It’s much better to pay online or via phone for you will not be subject to lost mailed checks and other delivery problems that are out of your control.  If your check arrives late, you will be charged a penalty – even if it’s the post office’s fault.

Settling the debts you have accumulated is no joke.  It requires patience and determination.  You should have the drive towards a debt-free life because if you don’t, no technique will do you any good.  The ultimate solution is still in your hands.