This is the fourth article of the A-B-C's of credit and debt. Today is D for Don't.

Who do you turn to for money advice?

• A friend in the financial industry?
  
• Late night TV shows on money?
  
• Newspapers (online or print) like the Wall Street Journal or New York Times?
  
• Websites like MSM Money?
  
• Financial bloggers who have some real-world experience?
  
• Nobody - you learn for yourself?

When it comes to debt, it seems like EVERYONE has an opinion! Well, you know the old saying about opinions, right?

"Opinions are like a#$%^@#$, everyone has one..."

» Click here to read more

Recently, renowned NYU professor and activist Andrew Ross encouraged students to sign a petition promising to default on their student loans in solidarity against rising student debt. Associated in part with Occupy Wall Street, Ross claimed that if enough students defaulted together, it could meet the protestors’ ostensible demands of across-the-board student debt relief, free education, and other such cosmic improbabilities. If Ross understood for just a second what would actually occur if any graduate forewent their legal contract to repay their loans, maybe he would think twice about encouraging others to destroy their financial futures. For those not in the know, there are quite a few consequences when you default on your student loans. You essentially run the risk of:

What would winning the all expenses paid trip to Affiliate Summit West mean to me?

First of all, I've been doing affiliate marketing for nearly 10 years...and I've yet to "hit the big time" and be able to run my business full time. Sure, I've had some decent years. And I've had some bad ones (this one is closer to bad than decent). So hopefully this would give me that little extra push to get over the top.

Second, I'm not just some marketer pushing a bunch of junk. The sites I build are based on lessons I've learned, mostly the hard way. So I share those lessons, and the resources I've used, and in the process build a business around them. I'd love to be able to reach more people and help them get out of debt, buy their first house, or fix their back problems.

Third, I'm an eager student. For many years I sat alone and tried to build my business. Now, I'm focusing on building partnerships and learning from those who know what they are talking about (constantly buying the newest "get rich quick" program is definitely NOT the way to do this). So I would truly appreciate the opportunity to schmooze with the best affiliate marketers, and maybe even share a tip or two I've learned through the years.

Thanks for the opportunity, and good luck to whoever wins!

Debt-tips.com is written primarily for readers in the U.S. For those readers who reside in the U.K. we are offering the following article on debt options in the U.K. Here are your debt relief options in the UK:

DMP (DEBT MANAGEMENT PLAN)

A debt management plan (DMP) in the UK helps individuals to manage their outstanding debts, when they are unable to maintain their payments to their creditors. A DMP consists of an agreement between you and your lenders to make a set monthly payment. The debt management plan firm, usually called ‘providers’, negotiate with your creditors and manage the payments on your behalf. Your monthly payment is based on your disposable income. Payments are then distributed between all your creditors by your ‘providers’.

When your DMP is being set up, your creditors could agree to freeze any interest charges. However, they don’t have to agree to this. And they don’t have to agree to your DMP all. If they don’t agree, they can also continue to contact you, ask for payment – or even take you to court and declare you bankrupt. DMP applies only for ‘unsecured debt’ such as credit cards or personal loans but do not cover ‘unsecured debt’ like a mortgage, for example. The debt management plan firm usually charges you a fee for their service, while other non-profit organizations like debt charities provide their services free of charge.

DEBT CONSOLIDATION

Debt consolidation gives the opportunity to cover all or part of your outstanding debts with a single loan. In debt consolidation you take a new loan to pay off several existing debts. Debt consolidation in the UK applies only for unsecured debt; it can be a good way of taking control over your finances.

Consolidation loans can be tax deductible, however in some cases you need to put your property as guaranteed - that means a risk of losing your home. Make sure you understand fully the interest rates and possible penalties when asking for debt consolidation.

INDIVIDUAL VOLUNTARY ARRANGEMENT (IVA)

In the United Kingdom an IVA is a formal agreement between you and your creditors to pay off your debts. With the help of an Insolvency Practitioner you will set up a proposal to your creditors and an agreement will be set upon. Your arrangement will last at least five years, at the end of which time your debt will be cleared and you will no longer be making any more payments for the unsecured debt included in your IVA application.

During an IVA You make regular payments to an authorized debt specialist called an ‘insolvency practitioner’ or (IP). They share this money out between your creditors as agreed in your IVA. There is no maximum or minimum level of debt and no maximum or minimum level of repayments, except what is acceptable to your creditors. Your IVA usually ends when the agreed amount has been repaid. Costs for an IVA are included within your monthly payment. The interesting side on an IVA is that all your remaining debt will be written off at the five year mark.

BANKRUPTCY

Bankruptcy in the UK applies only for individual persons and not business entities. Bankruptcy is considered the last resort if you cannot pay your creditors. When you label yourself bankrupt you tell to your creditors that you are unable to pay your debt. Either you or a creditor can make the bankruptcy order. Once the petition is filed there are fees that have to be paid to the courts. You will be assigned a Petitioner who will gather all the information needed such as your assets and income, a list of Creditors and how much you owe each one. You make all of your payments to your Petitioner not to the creditor.

In a bankruptcy all your assets like properties could be sold to pay back your creditors. Going bankrupt is not free; Court fees are involved in the process. Your credit score will be severely damaged by this solution.

This is a guest post from iva123.co.uk which offers easy to understand information and opinions on an IVA.

This is the third article of the A-B-C's of credit and debt. Today is C for Credit.

Have you heard one of those FreeCreditReport.com TV commercials? You know, the ones with that catchy tune played by those guys in costumes? Heck, nearly every night while watching TV we hear that song. In fact, the other night my daughter started singing along, and it will be at least 4 years before she even thinks about getting a credit card (longer if I can help it!)

So I guess the average consumer probably falls for that catchy tune. Giving away something for "free" is always good for business and it probably works like a charm in this case. Here's an article on how the "free credit report" ads really work.

But what most people don't realize is that free doesn't always mean free, especially when it comes to your report.

In the last few months I've seen a huge increase in the number of articles on credit scores - not credit reports, but the score that goes along with it. The problem is that people are now starting to focus on their credit scores. Not that being an educated consumer is a bad thing. But focusing on your credit score is like focusing on the scale when trying to lose weight - it's nice to see your weight going down, but the scale only shows you what your weight is. It doesn't help you lose it!

If all you do is just keep looking at the scale, your weight won't change (in fact, if that's all you do it might actually go up!)

Same with credit scores - it shows you where you stand, but if all you focus on is your score, it won't help your credit get better!

At least with a scale you know what the number means. If you gain weight the number goes up, if you lose weight it goes down. But when it comes to credit scores, most people don't know the difference between 500 and 600 and 700 and 800. So focusing on your score is pretty much a waste of time. Wondering where to get a copy of your credit score? Here's a good article that explains how & where to get free credit scores.

So, why are people focusing more on credit scores instead of their credit report?

Because Americans like numbers. And they like funny, creative TV ads. They want their news fast. They want their food fast. They want losing weight to be easy. And they want fixing their credit to be easy. Looking at a number is easy, anyone can do that.

But looking at the number won't help your credit. Especially if you don't know what the number means!

So, here's a quick rundown on the difference between a credit report and a credit score - and what it means to you:

CREDIT SCORE:

Your credit score (sometimes called a FICO score) is determined by the credit bureaus, based on your credit history and financial data. The higher the credit score the better. For most people scores typically range from 600-800. There is no way to directly change your score. However, you can change your money habits that affect your score - the biggest one is to pay your bills on time. Here are some others:

• Reduce the amount of your debt you have
  
• Stay within your credit limits & pay on time
  
• Don't use all your available credit
  
• The longer you've had credit the better
  
• Don't keep getting more credit cards and taking out more loans
  

The hard part about understanding credit scores is that each of the 3 credit bureaus calculates its own score, so you really have 3 credit scores! There will all be pretty close, but not the same. Because your creditors don't always report your information to all 3 bureaus.

That's why you need to get a copy of all 3 credit reports (see below) so you have an accurate understanding of what you need to improve.

CREDIT REPORT:

Your credit report shows your entire credit history, and lists all of the above factors that influence your credit score. There is one official website that allows you to get a free copy of your credit report from each of the 3 credit bureaus once a year. So you can get all 3 at once, or get one every 3-4 months. So rather than paying for the "free" monitoring service that's required when you sign up for one of the credit reports from the ads, you can monitor it yourself by spreading out your requests throughout the year.

The "experts" will tell you that you can't repair your credit and you must wait 7 years for bad credit to fall off. But that's not entirely true. I had great success fixing my credit problems - it's not that hard once you know how to do it correctly.

You can pay to have this done, but if you take the time to learn how to do it you can certainly fix your own credit.

Not all that complicated, right? But can be confusing if you fall for the fancy TV ads. And focus on your credit score instead of your money habits. There's nothing wrong with getting your credit score so you know where you stand. But you can get a good idea by looking at your credit report. The more "bad stuff" the lower your score will be.

If you really want to improve your financial situation, and increase your chances of being approved for credit (and lower interest rates!!!) get a copy of your credit report, fix the bad stuff, and your credit score will go up even while you are not looking at it!

Thanks to the carnival of personal finance for including us in the "Ask the right questions" edition.

This is the second article of the A-B-C's of credit and debt. Today is B for Begin.

People ask "when is the right time to start fixing my money problems?"

Well, you should probably wait until tomorrow to get started, tomorrow is a new day. Or wait until Monday, after the weekend is over, weekends are so busy. Or even better, wait until January 1 so you get a fresh start in the new year. Well, maybe you should just wait until you get a raise or a better job so you have more money to work with. No, here's a better idea, wait a few months until you save up some more money. Or you could just until things get better, this is a bad time to get started...

Sound familiar?

When it comes to getting out of debt and fixing your money problems there is no "good time" to get started. Actually, let me say that a little differently - the "good time" to get started is RIGHT NOW. Today. If you have to, start small. But start. And I'm not just talking about thinking about getting started, or planning on getting started. You need to actually take some type of action to get started.

Not sure how to get started?

Here are some examples of goals, and ways to get started right away:

Paying off a credit card: Call the bank and ask for them to reduce your interest rate. If you have a balance transfer offer you got in the mail recently, tell them (nicely) that you'll use it if they can't help.

Fixing your credit: Get a copy of your credit report (and don't use the company in the singing TV commercials). Here's how you can get a free copy from each of the 3 credit bureaus, with no strings attached.

Start saving for retirement: Go to your local bank and open up an IRA. Find out what the minimums are invest the minimum. If you can put in more, do it, but if not start small. If you don't have enough, follow the steps below for saving for a big purchase...

Start saving for a big purchase: Get an envelope and put $5 or $10 in it. Then every time you have an extra $5 or $10 put more into it. Before long, you'll have enough saved up.

Buying a house: Call a realtor and meet with them to discuss your needs. It might take a few months to get through the entire process, but talking with a realtor will give you the info you need to start getting all your documents and finances in order.

Starting your own business: Come up with a name for your business and create a flyer. If the business is something big, and requires you to quit your job, write down a plan. If it is something you can do part-time right away, get in your car and start putting up the flyers!

Hopefully you get the idea. Reaching your goals, financial or otherwise, requires taking action. Anyone can plan. Anyone can dream. Anyone can think about. And of course, anyone can "Wait until the right time." Those people who succeed are masters at taking action. And like the old saying goes:

A journey of a thousand miles begins with a single step.

So take that first step today!

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Thanks to MoneyCactus.com for including us in the most recent Carnival of Personal Finance.

This is the first installment of our new series "The A-B-C's of fixing your debt and credit problems." Every few days we'll post another article, in alphabetical order. Today, we're starting with A for Acknowledge (obviously - sorry, I wasn't all that good at English in school).

Let's start with a question - why do people struggle with too much credit card debt?

It's not really due to a lack of money. Sure, having more money would be helpful. But there are plenty of people who make lots of money and still have too much debt. For a lot of people, the more you make, the more you spend (I'd love to be able to spend that much, but that's a topic for another day). And it's not really lack of understanding how credit cards work. If you've had a credit card for more than 30 days you know that you get a bill for what you buy. And if you don't pay the bill in full, it gets bigger from interest. And bigger. And bigger!

The real reason people struggle with too much debt is because they think that they won't get into trouble with debt. Other people have debt, not me, they'll say. Or I'll pay it off completely when the bill comes. Or I'll pay it off completely once I get paid. Notice a trend here...Excuses! Excuses! Excuses!

Well, it doesn't take long to figure out that excuses don't pay the bills.

All of these excuses are signs that a person doesn't understand that there is a problem. Like a drinker or smoker who says "I can quit any time I want" - but doesn't because they really can't - those with too much debt don't stop because they don't admit that there is a problem.

So the first step to fixing your debt and credit problems is to be honest with yourself - and realize that the real problem isn't just too much debt or bad credit. But a real problem with how you look at your finances.

Admitting that there is a problem - admitting that YOU and YOUR actions and thoughts and beliefs are the cause of the problem - is a huge (and very difficult) step.

I know, if you just had a little more money. Or if your creditors would just give a break for a month. Or if you could just get a new job making a little more money. Or if you could just win a few grand in the lottery. Or if ... STOP RIGHT THERE!

Been there, done that.

I know what those feelings are like. I know how hard it is to realize that your actions got you into trouble - and truly understand that your actions are the only way to get you out of trouble!

But once you do, it's such a relief! You feel so much in control. And even if it seems like a mountain standing there in front of you, at least you now have a fighting chance of fixing your money problems!

Stay tuned for the letter B in a few days...

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Thanks to Tom at Canadian Finance Carnival for including us in the latest carnival!

A few weeks ago I read an article on a concept called "massive daily action". I don't remember the source, but the idea has been running through my mind constantly since I heard about it.

Basically, the idea is that if you take enough steps each and every day, any goal is reachable.

Notice it doesn't say anything about the following:

1. Thinking
2. Hoping
3. Praying
4. Planning
5. Waiting
6. Procrastinating
7. Resting

It is all about taking action. Not that some of the above can't help. But while a good plan gives you a roadmap, the plan itself doesn't get you to your goal. And resting when you are tired might give you the energy you need to put in a good effort, you won't be making any progress towards your goal while you rest. And of course prayer is a big part of many people's spiritual lives, and is a worthwhile action in itself, and can bring you lots of peace of mind and goodwill. But prayer won't bring a big pile of money to your doorstep.

So, what are some examples of massive daily action?

Here's one - this blog. I decided that I would write one post every other day (I know, that's not "daily" but I do other things for my business on the off days) in order to help this blog reach more people, and hopefully help my business grow.

Here are some more:

1. If you own a service business, how about putting up 5 or 10 flyers every day for a week.
2. If you or disorganized and miss payments, how about buying a small file cabinet or organizer and creating a new folder for each bill every day until you have them all in one place.
3. If you have no emergency fund, how about putting your spare change and cash into an envelope every day, and depositing into a savings account once a week.
4. If you have trouble saving money, how about setting up some type of automatic deposit into a savings, checking, or investment account. Even $10 a week adds up, and over the course of the year will save you more than $500!
5. If you are overwhelmed by debt, how about eliminating one expense every day for a month - think of how much money you can save in 30 days!

Your goals could certainly be much more specific. And they can help you work towards any goal, not just financial ones.

Here's another example to show you how powerful massive daily action could become. Let's say you are job hunting - you could send out at least one resume every day for an entire month. I know finding a job these days is tough, so maybe you can't find enough jobs in the newspaper or online. So then why not visit one business and drop off your resume in person. Even if they don't have any jobs posted. Who knows? Maybe you will get lucky. Or maybe you'll meet someone in your travels who will help you find a job. Or will become a friend.

Massive daily action.

What does it mean to you? To me it means taking my action to an entirely new level. I've always worked hard. But I'm usually more of a planner and a thinker than a doer (or do-er, not sure which is correct).

So, how can you use "massive daily action" to help you become more successful?

OK, it's nearly a week after Black Friday so an article on holiday spending is probably too late for shopping junkies. But since I don't shop until at least December 15, there may be time to reach some of you who think like me :)

So, do you even have a plan for holiday spending?

Be honest now, nobody will know but you (well, the big guy in the red suit might find out, I think he signed up here a few weeks ago before he got busy).

My plan is the same as always - focus on quality and not quantity. And no, I'm not doing this just because I'm cheap. Fortunately, our kids don't ask for lots of junk. The realize the holidays are not just about spending lots of money and getting lots of gifts. Unfortunately, the gifts they do ask for are usually expensive. But at least we know they are getting something they really want and can really use. Which at least makes buying gifts a lot more fun.

Sadly, many people don't have a plan for buying holiday gifts. They just go out shopping, and buy whatever they find for the people on their list. This is clearly the WRONG way to approach holiday shopping. The list should include not just names, but gifts. This way you'll limit what you spend. Of course, if money is no object then a plan doesn't matter. But for the rest of us it does.

Do yourself a favor, make a list like Santa does - with name and gifts. And limit your buying to what you can REALLY afford - if you need to cut back a little now so don't end up with huge credit card bills in January your friends & family will have to understand!

So, what's your plan for this holiday season?