Credit Card Interest, A Financial Curse

Recently I closed down my last credit card and paid the balance off. I specifically asked if the account was closed and that the account was paid in full. “Yes” the customer representative said. I was very happy to close down yet another credit card. Several days later I received a written confirmation that my account was in fact closed. Two days later I received an email announcing my “new” statement was ready for this closed account. Bewildered, I went online and pulled up the account. Unbelievable! There was a statement with $128 worth of just interest with a $10 minimum payment due. I was so annoyed by this situation that I called the credit card company and asked the representative that was unfortunate enough to answer. “Can you please explain why I am getting another bill from you after you confirmed that my account was closed on the phone and in a letter sent to my home?” The representative proceeded to shamelessly explain that it was the interest due from the last statement to the day I closed the account. “Why was I not told about this when I asked to pay the account off and closed it?” “I don’t know sir.” By this time I was out of control. It is rare that I lose control. This situation put me over the edge. “That is crap.” I yelled into the phone. “Nobody told me I owed additional interest. I was told the account was closed and so I am not paying this bill.” “As a courtesy, I can wave this interest.” said the representative. “Good, because I am not going to pay it.” I yelled again. I slammed down the phone. I am not recommending that you deal with situations like this; however, don’t just accept that you are going to pay interest for the rest of your life.

Debt Consolidation

Yesterday I talked about finding the service, “LowerMyBills.com.” After contacting the website, I was contacted by four debt consolidation (mortgage) brokers. The path I chose was to leverage the equity in my house to fix my interest rate and lower the average interest rate I was paying per credit card. I picked one of the four brokers who had a plan that I liked. Key things I was looking for were: 1) Fixed rate 2) 2nd mortgage, not an equity line (although there is nothing wrong with an equity line of credit) 3) Low rate (2nd mortgage rates are higher typically) 4) 15 or 30 year 5) Minimal closing costs 6) No origination point or discount points I got a deal with Citibank, which is ironically one of the credit cards I shut down while consolidating the business debt. Citi had a deal with a low interest rate, fixed 30 year mortgage, no closing costs – not even the appraisal. I closed in two weeks. The closing notary came to my office and I closed right there. My checks were overnighted 5 days later (3 days right of rescission). My cards are paid off, the debt is one payment (about $400 dollars less a month worth of payments). I can pay $400 more in principle if I want to. I lowered my average interest rate by about 4% -5%, which is considerable. While having a second mortgage is not ideal, it was the best choice for me. I really did “lower my bills” and now I can concentrate on paying off the second mortgage and can do so faster. I had several things in my favor. I never was late on a payment, so my credit rating was excellent. This got me the good rate primarily. It was imperative that I get rid of the credit card debt for several reasons. A few of them you may not be aware of. I will talk about that next time. You will learn to hate credit card debt as much as I do after you learn what the credit companies can do to you. I feel your pain, Mad about Debt

Lower My Bills

Many of my regular readers know that I surfaced from the deep waters of financial distress in 2004. My first failed business attempt left me with a considerable personal debt. Instead of taking greedy VC money, we obstinately defied the millionaire mindset and struck off on our own assuming all of the risk that was associated with it. The result was contacting a service called LowerMyBills.com out of an act of desperation. Just the name “lower my bills” appealed to me in everyway. When you get financially desperate, your mind shifts. This was not a bad shift, however. After consulting the website, LowerMyBills.com, I was presented with many options for dealing with the crushing debt that hung over my family. If you have credit card debt and you are considering debt elimination, debt consolidation, or just screaming “get me out of debt”, then I would recommend trying this service first. For some of you, it will not be the answer. If it is not, tune in tomorrow when I dig deeper into what I think is your next step. The key to debt reduction is taking the highest road possible. Again, last resort is to declare bankruptcy. There are many, many other strategies to get yourself above water before you resort to the “B’ strategy. George Bush has made bankruptcy harder on Americans, and rightfully so. If you want really pursue all options with lenders, I strongly suggest you consider debt consolidation or reduction through a service such as LowerMyBills.com. I feel your pain, Mad About Debt

Eliminate Debt

So how do you eliminate credit card debt? How much credit card debt do you have? Is it possible? Your credit card debt will be eliminated one way or another. You can: 1. Pay your minimum balance until you are dead. 2. You can be sued into bankruptcy by a credit card company. 3. You can pay more than the minimum amount and catch up slowly. 4. You can consolidate your total credit card debt or a portion of it. 5. You can use a debt elimination company to reduce your overall debt by 50% or more. None of the options are great. However, if you have considerable credit card debt that is getting you into trouble, you may have to resort to other options than just paying the minimum payment. You can google debt consolidation calculator and you will learn about that option. You can hire a company to go to your creditors and negotiate the total amount you owe down by as much as 75% in extreme cases. No matter what you do, try all solutions before you decide to declare bankruptcy. That should be your last resort! Period. I am going to write about many issues facing those people who are faced with a consuming amount of credit debt. As always, feel free to email me with comments or questions at: debt@beatyourowndrum.com I know your pain all too well.