The other day I was reading through the Money section on MSN.com and saw yet another headline bashing debt settlement. Here it is:

Debt cut in half? Don't count on it

Like most articles, you'll learn all about the horror stories of people who paid lots of money and got little service. And you'll learn all about the radio and TV ads promising you "the dream" - getting out of debt without any effort.

Of course, there is no magic cure for debt. And there is no magic cure for stupidity. Duh.

So why does debt settlement get such a bad reputation, that makes the whole process seem like just another financial scam?

It's the companies themselves. They're the reason for articles like these.

Because despite what these stories like to tell you, debt settlement is not unethical. It's not illegal. It can help you get out of debt faster. And in many cases it can save you 40-60% of your credit card balances.

But it is NOT a miracle cure for debt. And it's not right for everyone. But those stupid companies out for a quick buck don't tell you the entire story. And the stupid people who sign up with these companies don't do their research, don't read the fine print before signing, and don't educate themselves about a process they don't know anything about.

So, if you're thinking about debt settlement, do yourself a favor - be a good consumer. Read our article 5 tips for finding an honest & reliable debt settlement company. And read our reviews of 3 top debt settlement companies.

You wouldn't hire a financial advisor to invest your money without doing your homework, would you? And you wouldn't hire a contractor to fix your house without checking references, would you? Well, I hope not.

So don't go signing up for debt settlement without knowing what the heck you are getting into!

P.S. Thanks to Mighty Bargain Hunter for listing this post in the latest Carnival of Debt Reduction.

How well did your parents teach you about money?

As a parent, sometimes I struggle with finding the best way to teach my kids (ages 15, 12, and 7) about money.

- Should I lay down the law and tell them when they can spend their money, make good decisions for them, and keep them from making costly mistakes?
- Or should I let them spend their money on whatever they want, even if it's junk I know they'll regret buying before long, and let them learn "the hard way"?

Whenever they earn money or get money from a birthday, we do make them put about half of it in their bank accounts. So they are not given the freedom to blow it all.

But I never took the time to write down a "kids lesson plan" for handling money. As the kids get older these lessons become more important (and harder for us to explain). I always had an idea how I wanted to teach the kids about money. But darn it, I never wrote down these lessons for all to see.

So I'm doing it now. Here kids, is the "lesson plan" that you should follow for handling your money:

1. Don't spend what you don't have. Credit cards are very convenient. But they make it WAY too easy to spend money you don't actually have. And before long, BINGO - you're in debt!
   
2. And don't buy what you don't need. Much easier said than done. Because, everything we want "we really need, Dad, come one." So write out a "wish list", and when you have enough money to buy something on your list, cross it off and then start saving for the next one.
   
3. Need more money? Then find a way to make more. Simple. Get a job. Sell stuff. Beg. Borrow. Whatever it takes (legally, of course)
   
4. Saving is important. Do it regularly. And have it done automatically, if you can (like being deducted automatically from your paycheck). Save as much as you can. And don't stop just because life gets tough - or you'll have a tough time starting up again later.
   
5. How you save is even more important. Don't do anything too risky, unless you can afford to lose the money. Just ask Bernie Madoff's clients!
   
6. Following your dream is great - but it doesn't always pay the bills. So dream big. But don't let yourself go broke while you're doing it.
   
7. Learn how to shop around and compare prices. It's easy these days, just hop on your computer, do a little research, or check out Craigslist and eBay. And find the cheapest price for whatever it is you want.

That's it. Hope these lessons help you become wealthy!

P.S. And make sure to give back to others less fortunate than you are whenever you can! Like they say, "what comes around goes around!"

And thanks to Green Panda Treehouse for including us in last week's carnival!

I just read an article on MSN Money about debt settlement. Surpringly, Unlike in most mainstream news articles, debt settlement was not "bashed" as a horrible option for consumers with debt: When debt settlement makes sense

But once sentence caught my attention. The writer Liz Pulliam Weston stated that "Bankruptcy is cheaper; debt settlement is faster".

So I started thinking:

- Is this true?
- And why is debt settlement often seen as an inferior option to bankruptcy?

It's hard for me to answer the first question, since I don't know much about bankruptcy. But I've never though of bankruptcy as the "cheap" option for getting out of debt. And even if it is, I think most people think of bankruptcy as the "final" option. Only to be used if all other options fail. And one with a very serious stigma (something like "Hey, you filed for bankruptcy? Loser!") So it may cost less in terms of money, but it still carries with it the feeling that it is the last resort.

The second question is much easier to answer. To file bankruptcy, you must meet with an attorney. And attorneys (depsite all the lawyer jokes you've heard) are respected. On the other hand, debt settlement can be handled by an attorney, but it is not a requirement. And with all the horror stories you hear about debt settlement, the press - even "expert" financial writers - jump to the conclusion that debt settlement is EVIL. Even though it is certainly not (it's just that since so many people who choose to hire a settlement company DON'T know what they are getting into and are NOT properly educated by the company! So when the process gets a little stressful - which is normal - the people panic and say they were ripped off. Maybe they were. OR maybe they were not and just didn't know how the process worked.)

Bottom line - if you're so deep in debt that you're even reading this, then check out both. Do your research. Ask lots of questions. Compare costs. And then decide whether you want to save money - or save time!

What do you think? test

So, the government has stepped in once again to protect us. This time from credit card abuse. Perfect timing, right in the middle of the holiday season. Haven’t heard the news yet? Here are highlights of the new credit card rules.

So all of this is great news, right? After all, the credit card companies can’t impose their silly junk fees on us consumers any longer without proper cause or warning. When I first heard the news , I thought it was great. But now I’m not so sure.

Why not? Because, like with everything the government does to protect us, their solution is less than perfect:

- Because the new laws don’t take effect until 2010!
- Because not all of the bogus junk fees are covered
- Well, just because – if the government is involved I’m a little skeptical
- Here's a good article explaining why the new rules are NOT as good as they seem

Sure, it’s a step in the right direction. But is it good enough? Why not make the changes immediate? And why not cover all the crappy fees?

Maybe they can't create a perfect solution. After all, the credit card companies (otherwise known as banks, just so we don't kid ourselves here) need to make a profit. So they can't agree to get rid of all the fees.

And maybe we should protect ourselves. And not get so deep in debt. And not keep buying things we can't afford.

But I just have this feeling that once again, some politician was behind this. And despite helping us a little with these new rules, that the banks are still getting rich off of us. VERY rich.

So, what do you think - are the new credit card rules a blessing – or a joke? Let me know what you think below!

Got a good tip for getting out of debt? Saving money? Making your life (or someone else's life) a little better? Earning a few extra bucks? Living on a tight budget?

Money is tight for lots of people these days. And we need all the help we can get.

No tip is too small, because every little bit helps. Tell us how you:

• save money on monthly bills
• cut out expenses
• pay your bills when money is tight
• use your credit card less frequently
• or anything else that helps you with your finances

So don't be shy, share your good ideas with others. Just comment below (you can even do it anonymously) and let us know your favorite money-saving tips!

Feeling a little stressed about debt? Then here's the cure - check out these incredible videos, the Top 5 Most Inspirational Videos on YouTube. If you think you've got it tough, check out the kid in video 2. Or listen to the message from the "last lecture" in video 1. Pretty amazing stories.

Sadly, the professor in the "last lecture" Randy Pausch just passed away recently. I'll bet he touched more lives and inspired more people AFTER getting cancer than most people ever do.

Makes you think, doesn't it? How many people do we touch each day, as we muddle through our daily lives? For me, I spend far too much time worrying about what I DON'T have in life - and far too little time being thankful for what I do have. And far too little time lifting the spirits of those people around me.

So I thought I'd share these videos with you. Hope you enjoy them. Let me know which one you liked the best.

Feel free to send these to someone you know who could use a little "pick me up" in the lives today!

And give a "free hug" to someone in your life!

Top 5 Most Inspirational Videos on YouTube

A few weeks ago I decided to shop around for cheaper car insurance. I told myself I wouldn't switch unless I saved myself at least $100. Otherwise it would be too much work to switch for such little savings.

I get those letters in the mail all the time advertising big savings. But I figured that when I shopped around last time, I got the lowest rate I could find, so I didn't think I'd save anything this time.

Imagine my surprise when I saved myself $516 ($43 a month). Not bad at all!

The downside is that I used an online quote service (NetQuote) so I got about 3 online quotes, about 6 different emails, and another 3 phone calls.

So the whole process took me about 3 weeks to contact the various companies (I skipped a few) and then compare.

But $400 bucks is worth a little work.

When you compare, make sure the company you choose has a good financial rating, which you can find through A.M. Best, and offers good customer service.

How much money did you save? Leave a comment below and let me know:

Is it wrong to walk away from your mortgage ... just because you can’t afford the payments?

Let’s say you have a mortgage that you can’t afford any longer. You’ve got an adjustable rate mortgage. And when the rate keeps “adjusting” up over and over again, your payments get to be too big. You contact your mortgage company and they offer no help. After all, you should have known your rate could go up, causing your payments to go up with it. Would you simply walk away, losing the house - but sparing yourself the misery every month of struggling to pay your mortgage?

Seems like some people do walk away:
Homeowners Who Just Walk Away

In an ideal world, none of this would happen. But life’s not always fair. And it’s certainly not always easy.

But is it right for these people to just walk away? And abandon their house along with their mortgage? What else are they supposed to do?

More importantly, what would YOU do if it happened to you?

Post your thoughts below:

I know, I know, when money’s tight you have to do some strange things to survive financially. But there’s a BIG difference between eating mac & cheese every night … and buying a new big screen hi-def TV to watch while you eat your mac & cheese!

So you owe it to yourself to correct as many of these mistakes as possible – as quickly as possible – in order to get yourself back on track:

1 - Playing by the creditors rules
Ever wonder why you are paying 19.99% interest on your credit cards? Because it’s a lot easier to pay than to call them up and ask for a break. And because it’s a lot easier than shopping around for a new credit card with a lower rate (if you do this, make sure to cut up the old card – you don’t need to cancel the old account, for credit score purposes, but you don’t want to add to your debt, just lower your interest).

2 - Not paying yourself first
These days setting up a savings account is very easy. Just go online, search for “online savings account”, find the highest interest rate, and set up an automatic withdrawal every month. Even if it’s just $25 or $50 a month, at least it’s a start. And before long you’ll have your own emergency fund (see below).

3 - No rainy day emergency fund
Without an emergency fund, it seems like every expense is an emergency – and then finds it way onto your credit card. You need to find a way to put aside 1-2 months worth of expenses into a bank account that you only use for emergencies (and getting that big screen hi-def TV is NOT an emergency!)

4 - Keep spending what you don’t have
Sure, when you need to spend more than you make just to buy groceries, life is tough. But then you need to look really deep (deep inside your heart AND deep inside your checkbook) for ways to cut your expenses. Do you really need cable TV more than you need food? Rather than driving to the mall, how about driving to the consignment store to shop for clothes? See, you get the idea - if you just try hard, you can find ways to save money.

     

» Click here to read more

Even though I've been using the Bank On Yourself program for over a year, it still didn't make complete sense to me.

Most articles I've read that bash BOY say things like "use insurance to insure yourself not for saving" and "use investments like mutual funds" for investing and saving.

So even though I pay my premium every month, and I know it works, it still didn't quite sink in.

Then last week I got an email from Jeffrey Reeves, the author of "Money for Life...In Good Times And Bad". He sent me a copy of his book, I read through it in a few hours - and then it all made perfect sense!

When you borrow money from a traditional bank (or finance company, credit card, auto dealer, retailer - you get the idea) you pay them the principal AND the interest. And at the end, assuming you every pay off the debt completely, you have the product ... and that's it.

But when you create your own bank, at the end you have paid yourself the purchase price - and the interest (and NOT the bank or lender) so you end up WAY ahead!

Of course, it takes a while (and the right set-up) to get your bank to the point of having enough money to make this work. So it's no "miracle cure" for all your money problems.

But each time you "bank on yourself" you're making yourself richer and NOT the banks! So you should definitely check out this book.

It costs $29.95 - but if you're thinking about banking on yourself, it's worth every penny! Jeffrey's been giving financial advice for over 30 years, and makes a great case for being your own bank - and tells you exactly why and how to do it (which was the best part for me!)

Here is the book: Money For Life...In Good Times And Bad

What do you think about this idea of "banking on yourself"?