Some statistics to consider

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Anthony Mosley
8 years ago
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1 Overcoming Debt

2 Some statistics to consider Average credit card debt per household - $15,788 (May 2010) College loans alone now total almost $830 billion (said another way, $830,000,000,000!) Credit card penalties estimated at $20.5 billion in 2009 National default rate on credit cards almost 28 percent Home foreclosure rate worst since Great Depression 2

$830,000,000,000!) Credit card penalties estimated at $20.

3 Objectives How did we get here? Good debt or bad Cost of credit Trouble signs Managing debt problems Managing your spending and savings Strategies to reduce or eliminate debt 3

4 How Did We Get Here? Credit card offers were easy to come by Great stock market run during 80 s and 90 s Home values appreciated Education expenses Medical expenses Putting off the inevitable 4

5 Good Debt or Bad Debt? Long-Term Benefits Mortgage Education Automobile Secured, lower rates Short-Term Benefits (but long time to payoff) Credit Cards Store Cards Unsecured, higher rates 5

6 The Cost of Credit The most powerful force in the universe is compound interest Albert Einstein Principal: $3000 Rate: 15% Payments: $100 Total Payments: $3,784 It cost you $3,784 to spend $3,000! 6

7 Trouble Signs? You can only make the minimum payment each month You have late payment penalties You are using your credit card to pay regular expenses (groceries, gas, etc.) Your total debt payments exceeds 35% of your take home pay (not including your home mortgage) 7

8 Managing Debt Problems Contact your creditors first Try to work out a repayment plan you can handle Follow up in writing Consider a qualified Credit Counseling Agency ( - Debt Management Plan ( DMP ) 8

Follow up in writing Consider a qualified Credit

9 Managing Spending Create a Spending Plan Fixed Expenses Housing Utilities Car payment Insurance Groceries Discretionary Expenses Travel Dining Out Entertainment Shopping Sports/hobbies Club fees Cable/phone services 9

Groceries Discretionary Expenses Travel Dining Out

10 Manage Your Savings Pay yourself first Create Emergency fund - determine appropriate size of fund - set aside as savings, not investment Set aside money to reduce debt 10

11 Get Out of Debt! Freeze credit card spending Reduce discretionary spending Re-direct that spending to increase monthly payments Payoff one card Parlay increased payments to next card 11

12 Can You Reduce Spending by $50? Credit card #1 - $1000 balance, 10% $50 payment Credit card #2 - $3000 balance, 15% $100 payment Credit card #3 - $5000 balance, 18% $100 payment Cutting back on discretionary spending allows us to save an additional $50 a month that will be used to pay credit card #2 12

balance, 15% $100 payment Credit card #3 - $5000 balance, 18% $100 payment

13 Impact on Credit Card #1 Original $50 monthly payment on $1000 balance 22 months, $98 interest Add additional $50 from reduced discretionary spending ($100) 11 months, $48 interest Payoff time cut in half! 13

14 Parlay Your Payments! Credit Card #2 - $3000 balance was lowered to $2269 over 11 months it took to repay Card #1 Add the amount of Card #1 payment to this monthly payment ($100 + $100 = $200) Payoff in 13 months, interest expense reduced to by $220! 14

15 Finish it up! Roll $200 from previous payments towards card #3, total of $300 Current balance - $4284 Card paid off 17 months later In 3 ½ years, you have eliminated $9000 of credit card debt! 15

16 And the winner is... You! Reduced interest payments by $2,327 Cut payoff period in more than half (from 94 months to 41 months) And, most importantly, you are now debt free! What if you could save more than $50?! 16

17 Getting Out of Debt Review The economy will change for better and for worse adopt good habit for any season Credit costs money minimize your interest expenses Don t wait too long before getting help if you are experiencing problems dealing with your debt payments ( Take time to understand your spending and savings habits and goals. Are they in sync? Find a strategy to get out of debt! 17

you are experiencing problems dealing with your debt payments (www.nfcc.

18 LifeCare Resources Finance Web Service Credit & Debt Library Personal Finance Library Interactive Calculators Savings Amount, Amount Saved, Savings Rate, Spending Rate, How Much Can I Borrow? HTML Articles Related Web Sites LifeCare web site Audio Tips and Podcasts Budgeting Basics, Money Management: Goals and Action Plans On Demand Webinars Save $5000 This Year, Make Money Not Excuses, How to Improve Your Credit Score LifeCare Guides Personal Budgeting Worksheet, 66 Ways to Save Money, Knee Deep in Debt 18

com Audio Tips and Podcasts Budgeting Basics, Money Management: Goals and Action Plans On Demand Webinars Save $5000 This Year, Make

19 Overcoming Debt

Debt Management. Dealing with Personal Debt

Debt Management. Dealing with Personal Debt Debt Management Dealing with Personal Debt Apprisen. All rights reserved. 8/24/2015 1 Setting Financial Goals Building a Strong Foundation Conduct a realistic self-assessment-think about what you want