Lets set the record straight: debt settlement is a legitimate debt relief option for certain situations. It's not an easy way to get out of paying what you owe. It's not an easy way to reduce your debt just because you went crazy with the credit cards. But for those who are getting way behind in their payments, it's potentially a very real way to avoid bankruptcy and save you from financial ruin.

But there's a problem.

Most of the companies out there don't tell you the truth. They just try to sign up anyone with some debt. Then start charging outrageous fees. Don't explain to you how debt settlement really works. Then when the process starts causing you some pressure, you back out.

By then, they've got their money. And you've got nothing but more debt.

BUT......

It doesn't have to be that way. There are debt settlement companies that won't rip you off. But instead they will properly educate you. And will help you get real results. If you really fit the profile of someone who can benefit from settling your credit card bills.

So, how do you find honest advice about debt settlement?

As I state over and over again, do your homework!

• Ask lots of questions
• Get everything in writing before you send in any payments
• Actually read what you are signing (and ask more questions if you don't understand)
• Check references, check the BBB rating
• Shop around and compare companies & their fees
• Above all, realize that this is NOT an easy way to get out of debt and avoid paying what you owe

If you choose not to do any research, prepare yourself for a very stressful experience!

SERIOUSLY NOW - Are there really people out there who think there's some easy way to get the banks to ignore the $48,000 in debt they've built up over the last few years and just say "Hey, it's ok Bob, we'll just forget how much you owe us and let you pay if off for only $16,000 and save 66%, just because you're a nice guy". I guess so.

Sadly, stories like these don't get any good publicity. All you read about are the stories about poor old Bob from some little town who got ripped off.

P.S. Shameless plug: Here's one of the pioneers of the debt settlement industry, a true expert in the field - Charles Phelan, owner of ZipDebt.com. Read for yourself the results he's helped consumers achieve the last few years.

If you've had success with another company, let us know in the comments below. ]]> Debt Reduction Tips http://www.debt-tips.com/blog/index.php?itemid=137 Wed, 18 Aug 2010 14:48:12 -0500 http://www.debt-tips.com/blog/index.php?itemid=136 The following is a guest post by CreditShout, a personal finance blog dedicated to teaching people how to beat the card companies at their own game and save money with credit cards.

Cash back debit cards are becoming increasingly popular. With everything being accessible from the internet, the once “good credit only” exclusivity of cash back credit cards has opened up avenues of both access and appeal to cash back debit cards. With places like Paypal offering 1% cash back on every debit card purchase, it may seem as if the sky is the limit with the cash back debit card. However, upon closer examination of the reward programs offered by debit cards you will find that this isn’t always the case.

Debit Cards Versus Credit Cards

Several years ago, there was a battle of the credit cards regarding which company offered the most frequent flyer miles and which company offered the most cash back incentives for their users. It was not long before banks and debit card companies took note of this and considered jumping on the incentive bandwagon.

It has been a slow evolution for the debit card and its various incentives, yet the progression remains stable. Another cash back debit card provider is Perk Street Financial. Perk Street Financial also offers 1% cash back on all non-pin purchases. While 1% cash back on a debit card can add up in the long run, in the interim it does not seem to be worth it as compared to cash back credit cards.

Are Cash Back Debit Cards Worthwhile?

A cash back debit card may only be worthwhile as long as there are no annual fees associated with it. If by chance, there are annual fees, then you will probably end up spending more than you earn. Additionally, debit cards that are offered through a specialty retailer may have certain restrictions on how you can qualify for cash back. There may be a limit on which gas stations, air carries, supermarkets or department stores.

Credit card companies like Citibank and Discover offer their users a plethora of incentives, from frequent flyer miles (check out the Capital One Venture Rewards Card), to discounts at popular stores, freebies at coffee shops and of course, there is the idea of getting cash back. Most of the major credit card companies also have a higher cash back percentage.

Where debit cards may yield on average a 1 % cash back reward on purchases, cash back credit cards sometimes offer up to 5% cash back rewards incentives. In addition to the cash back incentives, credit card companies consistently have ongoing and varied rewards campaigns that are tailored to the average shopping habits of their customers.

Furthermore the credit card companies offer a more varied and completely customizable shopping experience. Partnered with major brands (whether those brands are retailers, computers or celebrities) the major credit card companies have a rewards system that is guaranteed to encourage their consumers to shop as much as possible.

Debit cards, on the other hand seem to only offer variance in the company that sponsors the debit card. For example, many prepaid debit cards may be sponsored by a recognizable company which might kick in a 1% cash back incentive should the consumer shop at that particular retailer.

Wal-Mart offers a prepaid debit card but it may not yield a 1% cash back reward. The brand Baby Phat which falls under the arm of a company owned by mogul Russell Simmons has a prepaid debit card called the Rush Card. While the Rush Card may not have offered cash back, it did offer discounts of up to 10% at participating stores that may be partnered with the Rush Card.

At the end of the day, the incentives offered by a credit card regarding cash back and discounts at stores are more worthwhile than those offered by the debit card companies. For more information on debit cards versus credit cards, you can contact your local bank or you can check online to see if your debit card offers rewards. ]]> General Money Tips http://www.debt-tips.com/blog/index.php?itemid=136 Sat, 7 Aug 2010 09:59:55 -0500 http://www.debt-tips.com/blog/index.php?itemid=135 Throughout my childhood and well into my adolescence, my parents struggled with debt of all kinds, especially credit card debt. Witnessing them go through such money travails, I told myself early on that I wouldn't make the same mistakes they did. Although I feel as though I would have been much better off had they not made these debt-inducing mistakes in the first place, I think, in the end, that had I not witnessed their mounting debt myself, I would not have realized what a danger credit card debt can be.

While most of my peers in college excitedly nabbed credit cards when the going got tough--as it inevitably does as a college student--I simply did without. Of course, this can be difficult when all your friends want nothing more than to go out to eat or drink constantly, but in the end, it paid off. Still, since credit cards are so tempting during those college years, when adolescents get their first taste of "freedom", I think it's absolutely critical that parents teach their children about responsible finances very early on. Here are a few tips.

1. Talk to your kids about credit cards before they go to college.
   It's better to talk often and talk early about the pros and cons of credit cards. College students aren't a particularly responsible lot, or at least not yet, so suggest to them that it's better to wait until after college, when they have the resources and presence of mind to pay them off every month.

2. Don't send your college kids money if they run out.
   It sounds cruel, but in the end, it will teach them how to budget. Determine before your kids head off to college how much money they may need for books and personal expenses. While it's okay to be a bit more flexible during your kid's first semester in college, when both of you are still trying to figure stuff out, put your foot down later. College is the time to learn the art of saving and resourcefulness, so that they'll be fully prepared once out in the real world.

3. Practice accounting of expenditures with your child.
   This is one habit that I never learned early and I struggled with later on in life. Show your child how to keep a log of every purchase they make, so that they have an accurate, instant idea of how much they've got in the bank. Relying on online statements only sets you up for over-drafting, and this is something I certainly learned the hard way.

In the final analysis, getting out of debt is tough but doable. It's far easier to never accrue debt in the first place. Even if you already made those critical mistakes for which you are paying dearly now, help out the next generation. Don't let it happen to them.

This guest post was contributed by Jena Ellis, who writes on the topics of Online Certificate Programs. She welcomes your questions and comments at her email Id: jena.ellis20@gmail.com. ]]> Debt Reduction Tips http://www.debt-tips.com/blog/index.php?itemid=135 Sun, 1 Aug 2010 09:40:29 -0500 http://www.debt-tips.com/blog/index.php?itemid=134 Or are consumers just getting more irresponsible?

Hold on a second. I'm no advocate of debt collectors using rude language, calling late at night, using scare tactics, or anything like that, as described in this story. Being a bully isn't the right approach to get people to pay up.

But it may be necessary.

Because if you're a consumer, it's easy to think that all you need to do is call the number on your TV screen and you can pay off you debt for less than 50% of what you owe! So why in the world would you give anything to some rude dude on the phone?

OK, seriously.

I promote several debt settlement and other debt reduction programs here. And all have outstanding BBB reports, and are well-known in the industry. For the right situation, debt settlement makes sense. And you can save 50%. But it's not easy, and it's not for everyone.

But the average consumer doesn't know that. Or at least they don't want to know.

So the debt collectors have to get tough, right? They have a job to do. And if enough people walk away from their debts, then we all pay. The banks raise fees. They get into shady deals like giving mortgages to people who have no business qualifying for one. They scam those who do qualify. Not always, of course. But if we as consumers don't pay our bills, then the business model doesn't work.

Again, I'm not saying that bill collectors should be allowed to harass people. Well, maybe some people like my deadbeat friend Joe (sorry, just kidding).

But I would imagine that most people who get abused by debt collectors aren't living up to their end of the bargain - like they don't pick up the phone, or make no real effort to start paying back what they owe.

So, if the debt collectors are starting to call your phone number, follow these tips:

1. Don't ignore the calls! Hey, you owe the money. The least you can do is pick up the phone and explain your situation. Then do you best to come to some agreement to pay your bills. If you ignore the calls, expect the collectors to start calling at odd hours, or call you at work, call your neighbors and relatives, or worse!
2. Be polite. Don't yell. And if the bill collector calling you gets nasty, tell them to speak appropriately or that you'll hang up. And follow through if necessary. But if you want a fight, and you want more serious action to be taken against you, try arguing and you'll get what you asked for.
3. Don't lie. If you can't pay next week, don't say you will. If you can't afford $100, ask to pay $50. If you can't afford $50, ask to pay $25. Then pay.
4. Have a plan. And do it BEFORE you start getting phone calls. Look for ways to save money. Cancel your cable TV. Get a lesser cell phone plan. Stop eating out every Friday night. Sell stuff you don't need. At least until things get better. It's you responsibility to pay what you owe. Then, you'll be in better position to work out a deal when the dreaded collections calls start coming.
5. Get everything in writing. If you do come to an agreement, ask for it in writing. Have it emailed or faxed to you if necessary, to get it fast. Even though you sometimes hear "this message may be recorded..." don't expect that to help you when the written agreement doesn't match what you agreed upon with the agent on the phone.
6. Keep records. Of every call, and write down the name of the person you spoke to, the time of the call, the content of the conversation. The more information you have, the easier it will be next time.
7. Know your rights. Read these Debt Collection FAQs: A Guide for Consumers. This way you'll know if they're crossing the line, or just doing their job.

Just realize that debt stinks. There is no easy way out, "secret method", or quick fix. But no matter what, ignoring the calls from the bill collectors WON'T make life easier for you.

Do you agree? Or have any other tips for dealing with nasty collection calls?]]> General Money Tips http://www.debt-tips.com/blog/index.php?itemid=134 Sat, 24 Jul 2010 13:10:15 -0500 http://www.debt-tips.com/blog/index.php?itemid=128 How the heck can any debt be good? To me, it can't. If we're really talking about debt. Let me explain.

The other day I saw a segment on TV talking about "good debt" and "bad debt". I've heard those terms over the years, so the concept is nothing new.

But I don't think there is ever anything that could be called "good debt".

I'm not saying its wrong to borrow money. That's how many people go to college, buy a business, and own a home. All are ok. But I don't think of that type of borrowing as "debt". I think of those as more of an investment. As in using the money to buy something that can build in value or usefulness over time.

I know, call me picky, we're just talking semantics here, right?

Wrong!

To me, debt is different than borrowing. Debt is borrowing money from a position of weakness. And buying something (that you really can't afford) without any long lasting value. Debt usually just grows and grows. And you get nothing good out of it - unless you call delaying payments as something good.

Here's a story from my day job. I work at small university. Since college is admittedly SO expensive, many students borrow money. This way they have some time to pay it back once they start their new career.

One day a graduate came in and asked if we offered any advanced majors in his field of study. He was looking to stay in college as long as he could. So he could keep delaying his payments. And this person wasn't a young student just starting out. The student was a working professional in their 50's!

So, borrowing money for school is ok. Borrowing more money just to delay payments, that's debt. And it isn't "good debt" in any way!

Calling any debt "good" just sends the wrong message, plain and simple. And gives people the idea that they can just use their credit cards or borrow money in other ways without a plan to pay them back:

"Oh, I'm buying a flat screen TV, and that's good debt because our family likes watching TV." Wrong. Wrong. Wrong!

Sure, sometimes you get a good deal with 0% financing and you can pay it back over time with no penalty, and no interest builds up. That's a little different, assuming you can actually pay it back BEFORE the 20% interest kicks in.

And if you borrow money to start a business or go to college, you are using that money to "build" something. And those are all good, too.

But I don't consider that debt, I consider that investing.

So to me, there is no such thing as "good debt". Ever.

Not that you should never use a credit card to buy a new TV. Just don't get into the habit of calling it "good debt". And don't look at borrowing for college as "good debt". Call it something else, like "investing for my future". Otherwise when times get tough, you might have a hard time drawing the line between the two. And too much good debt will simply become too much debt, and you'll come to website like this looking for help.

If you borrow money to buy extra clothing or a flat screen TV, things you WANT but don't really NEED, that's bad. You can never get any real value out of these things. And they can only get you into trouble over time.

There's no real honor being on Oprah or some local TV show trying to justify "good debt" vs. "bad debt". Debt is bad. Always.

Do you agree with me? Or am I just being too picky with the words "good" and "bad"? Let me know below. ]]> Debt Reduction Tips http://www.debt-tips.com/blog/index.php?itemid=128 Sun, 18 Jul 2010 13:41:35 -0500 http://www.debt-tips.com/blog/index.php?itemid=126 Earlier this week I saw a segment on the Today Show talking about the risks of debt settlement, and the horror story from a woman who was ripped off. So I started thinking, "why do so many people think debt settlement is nothing more than a scam?"

Sadly, the answer is obvious.

But equally sadly, it is a real, honest, viable option for some people in debt. In fact, I used debt settlement several years ago and it saved me from financial ruin do to a bad business idea.

So debt settlement is not a "scam" all by itself. The scam is those companies who are "bad apples" as described in the video.

So why is it that nearly all the publicity for debt settlement is negative?

Two reasons:

1-Companies who are not legitimate
2-Consumers who are not well educated (yes, consumers deserve some of the blame)

Let's start with #1. Are there any legitimate companies? Yes, of course. (Here are 2 settlement programs with great track records of excellent customer service.) Are there scammers? Yes!!! Just like in any business, some companies are just out there to make money, whether or not they actually help you. The key is figure out the difference BEFORE you get sign up and end up feeling ripped off.

How can you determine if a debt settlement company is legitimate?

• Check BBB records. This is very easy to do. And don't just look at the letter grade, find out how many complaints have been filed. Any more than a handful and move on to the next company.

• Ask for references. Any company that does a good job can give you references.

• Don't sign anything unless you read AND understand it. This is a "no brainer" and the most important thing to remember. Don't trust what the salesperson or debt counselor tells you. Read for yourself, and ask questions if you don't understand.

What about #2. Why are consumers to blame for some of the bad press about debt settlement?

• People DON'T do any research or shop around. There are HUNDREDS of settlement programs out there, so keep looking until you find a good one.

• If the ads sound too good to be true, then they usually are!

• People DON'T realize how debt settlement really works...

So, how does debt settlement REALLY work?

1. You must be behind in your payments. If you're already behind, then you're a good candidate for settling your debts. If not, you must stop paying. If you can pay, then pay. If not, consider stopping payments to get the leverage needed for a settlement (why would any creditor give you a discount on your balance if you are paying your bills???) You MUST KNOW THIS ONE FACT or else you'll just end up being another horror story!

2. Your creditors will call you even if you've hired a company to settle your debts. A good settlement will help you with this, and teach you what to say. DON'T ignore the calls, as this will only make things worse.

3. Your credit will take a big hit. For some people, having lots of debt is worse. And good credit is meaningless if you are drowning in debt. But your credit score will be lowered (although there are legitimate ways to repair your credit, but that's for a later discussion).

4. You must have a sum of money to pay the settlements. Some companies will help you start a savings account for this purpose. Others require you to find a way to come up with the money. If you can't come up with a lump sum, don't use settlement until you can!

5. It is a stressful process. There's no way around it. But if you know how it works and have found a quality company to help you, you WILL get through it!

Unfortunately, those companies out for a quick buck don't care if their customers know what they're getting into. So it's up to us as consumers to know what we're buying. For some people, debt settlement IS the RIGHT solution. And if they do a little digging, they WON'T get ripped off!

What do you think about debt settlement?]]> Debt Reduction Tips http://www.debt-tips.com/blog/index.php?itemid=126 Sun, 11 Jul 2010 12:10:50 -0500 http://www.debt-tips.com/blog/index.php?itemid=123 If you've ever had any money problems, then you're probably aware that they can affect your credit report. And you've probably seen the ads claiming to fix your credit problems quickly & easily.

If so, I've got two words of advice - BE CAREFUL!

For every legitimate company out there, there are several that are just out to get your money. And don't really care if they fix your credit properly or not.

Bad credit can be costly, embarrassing, and a pain in the neck.

Costly: With bad credit, you'll have a lower credit score, and therefore pay higher interest rates on credit cards and loans - if you can get them.

Embarrassing: If you've ever waited in line in a store and applied for credit to get a special deal, and been declined, you know how embarrassing that can be.

Pain in the neck: Credit problems don't go away on their, at least not quickly. It can take 7 years or more for the bad stuff to come off your credit report.

So if you've got credit problems, what can you do? And if you need help, how do keep from getting ripped off by a dishonest credit repair company?

Here are 7 tips to protect yourself from credit repair scams:

1) Know what credit repair IS & what it is NOT.
What credit repair IS:
- Removing inaccuracies from your credit report
- Removing damaging items from your credit report (yes, even accurate information can be removed, if you do it correctly, despite what many people will tell you)
- A way to fix past credit problems - not a way to keep you from making the same mistakes in the future! But hopefully you'll learn a few lessons that will help you stay on the right path
- A process that removes items one by one, not in one big step

What credit repair is NOT:
- Tricks or bribes or secret info available only to "special" people
- Anything illegal or immoral (don't let anyone tell you it is immoral to fix your credit report, it is not
- hey, the creditors and banks are far worse in the way they gouge their customers)
- Only done by lawyers or professionals (anyone can do it, trust me)
- Something that requires detailed knowledge of credit laws or financing

2) Consider doing it yourself.
It really is not that hard. But you need to know how to do it right or you could make matters worse. And be prepared for rejection, and sending letters over and over to the same places. That's where a good, inexpensive credit repair manual can help you out. You'll learn the little "tips and tricks" it takes to get rid of bad credit. Sure, you could learn on your own. But for under $50 you can save yourself a lot of time and trouble.

3) Keep in mind it doesn't happen overnight.
Even in the best cases, credit repair takes time. I did my own and it took me about 18 months to get my credit back to normal (of course, keep in mind it took a lot longer to damage it in the first place). There is no "magic potion" for fixing credit. It takes time. And effort. And knowledge. But it can be done, with a little bit of all of those qualities. The faster someone promises to fix your credit, the more you should be skeptical.

4) Check the company's references and BBB report.
If you're hiring a company to help you, ask for references. Go online and check out their Better Business Bureau (BBB) report, and see how many complaints have been filed. Or worse, if they have no BBB report. You can never be too careful. The people you will talk with will be trained salespeople, who's only job is to get you to sign up and pay. So take your time, and "do your homework" before you sign up.

5) Get everything in writing and read it carefully.
This is true when hiring anyone. But especially with any kind of debt reduction or credit repair. Make sure to get the agreement BEFORE you agree to sign up and READ it carefully. Even if it's written in fancy legal language that is hard to read. This is your contact, which will protect you if anything goes wrong.

6) Don't let anyone tell you that you need a "new" credit file.
This can only lead to trouble. No matter how bad your credit, DON'T fall for this scam. They'll either try to get you a second social security number (which is illegal), steal your current social security number (which of course is also illegal) or do something else that will cause you a lifetime of headaches!

7) Read the Credit Repair Organizations Act
To learn what these repair companies can and can't do. Just so you know, it's also written in fancy legal language so it may be hard to understand. But being an educated consumer is always a good thing

Of course there are many legitimate credit repair companies and manuals out there that can be a big help to someone in need of credit repair help. The key is to do your homework so you find one of the good ones and avoid the scams!

Need Help Fixing Your Credit?

Here's the credit repair manual
we recommend:
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37 Days To Clean Credit

The other day I came across an interesting video on motivation. It's not brand new, but the concepts are so amazing that it's worth watching more than once.

It's mostly about motivation in the workplace. But the ideas work for just about anything in life. The more motivation you have - and the more of the right kind of rewards you'll get - the more likely you are to successfully reach your goals

Here's the video. While you are watching it, think of how you can use the "candle problem" to help you solve your financial problems.

Motivation video

Pretty interesting, isn't it?

So here are some questions to ask yourself:

- What is your goal? And be specific. Is it getting out of debt? Staying out of debt? Saving up a certain amount of money? Retiring with a certain amount of money? Saving up for a big purchase?

- What obstacles are holding you back? How can you use the "candle problem" to get what you want financially?

- How can you overcome these obstacles? What types of rewards can you give yourself, so you can reach your goal?

For some people, goals are hard to define. If that sounds like you, then get a piece of paper and write down your goals right now! Be very specific. Don't just say "I want to get out of debt". Try writing something like "I want to pay off all 6 or my credit cards or all $15,300 of debt I owe".

For others, goals are way too strong a commitment. If that sounds like you, that's okay. Start small, like paying off one credit card. Or reducing your debt by $1,000 in the next six months. Then make a commitment to yourself to achieve it. Then on to the next goal.

For others, they know their goal and are committed, but don't have the right motivation to keep working towards their goal. If that sounds like you, then break down your goals into smaller steps AND write down specific rewards for each step you complete.

You can get yourself out of debt. If you believe strongly enough. And go about it the right way. All it takes is the right motivation, and a good plan for getting out of debt. ]]> Debt Reduction Tips http://www.debt-tips.com/blog/index.php?itemid=118 Fri, 4 Jun 2010 15:23:40 -0500 http://www.debt-tips.com/blog/index.php?itemid=116 Wow, that's a tough question. One I struggled with a few years ago. And one I see discussed occasionally on various blogs, and asked on various message boards, especially Yahoo Answers.

For those who don't know, debt settlement is a process where you negotiate with your creditors to pay off your credit card debts for less than you owe.

But should we even think of money in moral terms? If so, is borrowing money moral? Lending it at high interest rates? Giving credit to people who probably shouldn't have it?

There are lots of ways to think about this. So let me lay out both sides of the debate:

Debt settlement is morally WRONG:

• You borrowed the money, you should pay it back. All of it. As you agreed to.
  (OK, this is a good argument).

• Many debt settlement companies are scams, or will rip you off.
  (This is true. But there are plenty of good, honest companies out there. And even if it is true, that doesn't mean the process is morally wrong, just that some of the debt settlement programs that offer services are dishonest. So this is not really a good argument.)

  Many people are looking for an easy way out.
  (True. In all areas of life, not just with credit card debt. But not everyone who considers debt settlement is looking for an easy way out. People lose jobs, get hurt without health insurance, get overwhelmed and simply need help. Debt settlement is one of those options. Again, just because this is true of some people doesn't make the settlement process immoral).

Debt settlement is morally RIGHT: