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The
Truth About Debt...
And How to Overcome It
 Are
You an Average American?
Did you know that the average American household has
13 credit, debit and store cards? It's no wonder.
Most US households receive at least one offer of credit
a week. They always sound like the perfect answer
to your problems, too. Transfer your debt from that
really big-balance card to this new one, and you won't
have to pay any interest on it for six months! You'll
have that debt paid off before then, right? And there's
only a little balance transfer fee.
Of
course, that other one will now have a zero balance.
Doesn't that sound great? You'll want to use it for
any new purchases, because you don't want to add to
that big balance you just transferred over to the
new card. And if it turns out you can't pay it off,
well, by then you'll probably get another balance-transfer
offer from someone else. It seems like this strategy
could work forever. You might wonder, "Why doesn't
everyone do it?"
The
sad truth is this: The credit card industry collected
43 billion dollars in late-payment, over-limit,
and balance-transfer fees in 2004. They aren't very
consumer-friendly. They exist to make money from
you.
If
this situation is starting to sound familiar to you,
and you're getting a sick feeling in the pit of your
stomach, you don't need to feel alone. A Federal Reserve
study showed that 43% of US families spend more than
they earn. The only way to do that is to use credit.
And it's pretty obvious that if you use credit to
spend more than you earn, you are going to be in debt.
When
Minimum Turns Into Maximum
Of course, as long as you make the minimum payment
every month on all your cards, your credit report
will look OK. You will probably be able to get even
more cards! But is that actually good news?
Sorry
about that. The answer is No.
Did
you know that if you made the minimum payment on a
$4,800 balance on a card with a 17% interest rate,
it would take you 39 years and 7 months to pay it
off? You'd pay a total of $15,619, and two-thirds
of that would be interest. You'd be paying interest
on restaurant meals you ate decades ago, clothes you've
donated to Goodwill, and electronics from the stone
age!
 It's
Not Always Your Fault
A 2004 research study showed that most credit card
debt incurred by older Americans was due to the high
cost of healthcare and prescription medications. In
the same vein, anyone with a costly medical condition
or emergency can find themselves deep in debt. Health
insurance has caps on spending, and even if the caps
aren't reached, a 20% co-pay is common in many policies.
There are deductibles and supplies and drugs that
aren't covered. A serious illness can be devastating
to the average family's finances.
Another debt problem beginning to hit Americans this
year is that the rates on their A.R.M.s (adjustable
rate mortgages) are beginning to reset. With the federal
reserve interest rates climbing, many people's mortgage
payments have increased by 25%. If your mortgage payment
is $1200, that would mean it would readjust to $1500.
So What's a Debtor to Do?
 Some
people take equity loans on their homes to pay off
credit card debt. Of course, that means you have to
pay back the equity loan-usually by increasing your
mortgage payment-and if you sell your house, you'll
make less profit because the equity loan will have
to be satisfied. And one other thing-the interest
on equity loans is higher than it is on a regular
mortgage.
Others
turn to one of the many credit counseling agencies
advertised on TV and all over the Internet, only to
find that many are simply not ethical. With mandatory
counseling laws put in place for people considering
bankruptcy, the industry is overwhelmed. On top of
that, IRS investigations into 41 "non-profit"
credit counseling agencies in May of 2006 revealed
that they were not acting in the interest of the consumer
and were motivated by the money they could make. They
lost their tax-exempt status, and investigations into
other agencies are continuing.
Bankruptcy
used to be a last-ditch resort for people stuck in
a bottomless pit of debt. Most bankruptcies are not
the result of overspending, but occur because of huge
medical bills, job loss, or divorce. In 2005, Congress
passed laws that made it much more difficult to declare
bankruptcy. Credit counseling is mandatory but difficult
to get. Bankruptcy attorneys' fees have increased;
filing fees have increased. More money than before
must be paid back to creditors.
Is
There a Reasonable Solution?
Yes,
and it's quite simple:
To get out of debt, you need
to make more money.
 You
need a second source of income that you can
generate when and where you want to. A job that will
fit in with your family obligations and won't interfere
with the things you love to do. If you're determined
to change your financial circumstances, a home-based
business could very well be your way out of debt.
After you've got the debt monkey off your back, you
will probably find that running your own business
is so easy and so financially satisfying, you'll want
to keep at it, running your personal wealth steadily
higher. You might decide to quit your "day job."
Other people just like you are making everywhere from
modest incomes to fortunes, and the only equipment
they need is a computer and a telephone.
It's
an idea whose time is definitely now. If you're
ready to say goodbye to the worries of escalating
debt-ready to take charge of your life in a way you
never dreamed was possible-just fill out the form
below to receive free information.
Sincerely,
Rhonda
& Brian Swan
1-800-439-1160
info@SwanLifeStyle.com
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