How consumers see the credit crunch: “I’m screwed.”
How creditors and banks see the credit crunch: “We’re screwed.”

Debt collections and the debt collector seem like things we should avoid at all cost, but that’s not true. Sometimes going into collections and being in collections is the smartest thing you can do.

If your choice is between spending all your money and living paycheck to paycheck or preserving some of your money and paying what you can afford, then paying what you can really afford is the smarter way to go.

When your credit card account is in collections it means that you are behind on your bill and have failed to make promised payments. We are rained to think that collections is bad and should be avoided at all costs, but why?

Creditors and collectors don’t care if you put yourself in a disadvantaged position in your life. All they want is one thing, your next payment. But holding onto your money may be the best move for you and your family in troubled times.

Let’s look at a typical situation and why going into debt collections would be a smart thing to do.

Jayne and Jon have had a reduction in income but the bills keep coming. They’ve used the credit cards a bit more than they should have for food and gas but they promised themselves that things were getting better, they aren’t. This month there are just more demands for payments than money available to pay. Jayne and Jon have some cash in savings they could dip in to pay the minimums.

If their situation was unique, then maybe tapping the savings account for a one time infusion of cash might be a smart thing to do. But with no immediate solution to their reduction in income, sucking money out of savings just makes the savings lower and does not solve the problem. Soon there will be no money left in savings and the situation will not have changed. The only thing achieved is that the debt collector got a few more payments out of you and now you are flat broke.

Being behind on credit card bills will land you in collections and will hurt your credit report and lower your credit score but it won’t get you evicted or your car repossessed. And when you go into collections, what happens:

The Normal 6 Month Collection Cycle
- Polite Late Notices
- More Demanding Late Notices
- Friendly Collections Calls
- Threat of Negative Marks on Your Credit
- Less Friendly Collection Calls
- Threat of Being Sued
- Maybe Being Sued
- More Aggressive Collection Calls
- Your Account is Sold to Another Creditor
- Cycle Begins Again

The reality is that collections is most effective when you are running in fear from the collector. But it just does not have to be like that.

Rather than give over your emotional power to the debt collector, use the following approach.

1. Don’t Avoid the Collector - Always be gracious and friendly. There is no need to react to the emotional tricks and pressures they will apply to you. Welcome the call, make a friend and be polite. Ask the debt collector how their day is going and wish them well. Avoiding the collection calls only drives the collector to try to find you by calling family or neighbors. Don’t let that happen.
2. Be Completely Honest About Your Situation - If you can’t afford to make a payment on your credit card bill this month, don’t. If you promise to make a payment and then fail to meet that promise the debt collector will use that against you. It is much better to stand your ground and deliver what you can honestly be able to rather than make a promise you can’t keep.
3. Be Mentally Prepared - As long as you are mentally prepared for the worst, you don’t have to be afraid of it. The worst that can happen when your account is seriously past due is that it will be reported to the credit bureaus, will appear on your credit report, you may incur a fee or penalty and your interest rate will be raised. Much, much latter in the collection process you may be asked to appear in court and explain your situation.

As long as you are aware of these basic facts the debt collector can’t emotionally manipulate into doing something that isn’t smart for you to do. The dumbest move would be for you to keep sending payments you can’t really afford just to protect your credit report or credit score. You can’t feed your family your credit report.

Food, shelter, clothing and transportation to work should always come before making a payment on an unsecured debt like a credit card.

Get Out of Debt Squirrel Says: Don’t be a chump, learn when to not pay your bills.

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Trent over at the Simple Dollar posted an article about how to making laundry detergent and enjoying the benefits of homemade laundry detergent, namely saving money. So let’s bump frugality up a notch today and learn how to save money with home made laundry soap.

Trent said he’s been experimenting with making lots of cleaning supplies at home, but this one is by far the craziest - and the most successful. Basically, he made a giant bucket of slime that works incredibly well as laundry detergent at a cost of about three cents a load. For comparison’s sake, a jumbo container of Tide at Amazon.com costs $28.99 for 96 loads, or a cost of $0.30 a load. Thus, with each load of this stuff, he’s saving more than a quarter. Even better - he got to make a giant bucket of slime in the kitchen and his wife approved of it.

Here’s what you need:

- 1 bar of soap (whatever kind you like; Trent uses Lever 2000 because he has a ton of bars of it from a case he bought a while back)

- 1 box of washing soda (look for it in the laundry detergent aisle at your local department store - it comes in an Arm & Hammer box and will contain enough for six batches of this stuff)

- 1 box of borax (this is not necessary, but Trent says he’s found it really kicks the cleaning up a notch - one box of borax will contain more than enough for tons of batches of this homemade detergent - if you decide to use this, be careful)

- A five gallon bucket with a lid (or a bucket that will hold more than 15 liters - ask around - these aren’t too tough to acquire)

- Three gallons of tap water

- A big spoon to stir the mixture with

- A measuring cup

- A knife

Step One: Put about four cups of water into a pan on your stove and turn the heat up on high until it’s almost boiling. Always an interesting way to make your own detergent. While you’re waiting, whip out a knife and start shaving strips off of the bar of soap into the water, whittling it down. Keep the heat below a boil and keep shaving the soap. Eventually, you’ll shave up the whole bar, then stir the hot water until the soap is dissolved and you have some highly soapy water.

Step Two: Put three gallons of hot water (11 liters or so) into the five gallon bucket - the easiest way is to fill up three gallon milk jugs worth of it. Then mix in the hot soapy water from step one, stir it for a while, then add a cup of the washing soda. Keep stirring it for another minute or two, then add a half cup of borax if you are using borax. Stir for another couple of minutes, then let the stuff sit overnight to cool.

And you’re done. When you wake up in the morning, you’ll have a bucket of gelatinous slime that’s a paler shade of the soap that you used (in our case, it’s a very pale greenish blue). One measuring cup full of this slime will be roughly what you need to do a load of laundry - and the ingredients are basically the same as laundry detergent. Thus, out of three gallons, you’ll get about 48 loads of laundry. If you do this six times, you’ll have used six bars of soap ($0.99 each), one box of washing soda ($2.49 at our store), and about half a box of borax ($2.49 at our store, so $1.25) and make 288 loads of laundry. This comes up to a cost of right around three cents a gallon, or a savings of $70.

Plus, you can make slime in the kitchen - and have a legitimate reason for doing so!

See the original of this article here.

So there’s this guy, Scott, who has developed an ultimate guide to getting out of debt. Sure, I’m as skeptical as the next guy but after looking over the information I was left with a problem, it looked pretty good.

His information page actually contains a bunch of information that you don’t normally see which led me to believe that he at least knew what he was talking about.

Now the rest of the information Scott promises to share with you, take a look for yourself and see if you’re willing to get under the voer and see what you can learn.

Here is what he promises:

Here’s just a small taste of what you’ll learn in this powerful new course…

What People Usually Say About Getting Out of Debt

All day, every day, I read and hear the same pleas and wishes from people that want to get out of debt. See if any of these sound familiar to you.

“I need fast help in gettin out of debt for free.”

“We need help getting out of debt to buy first home.”

How to Get Out of Debt Fast

The only real way to get out of debt fast is to win the lottery or have someone die and leave you a lot of cash. Without borrowing money you will need a sudden injection of enough cash from some external source to make that dream happen.

So let’s get real here.

The ABC’s of Getting Out of Debt

Getting out of debt is truly not rocket science. In fact I’ve even helped people that were rocket scientists to get out of debt. Getting out of debt numerically is a simple exercise. If you need to make the numbers change all you have to do is spend less than you make and take part of the difference and use it to pay down your debt.

Oh if it only were that easy.

You see money problems are not about the amount of debt you have. They are about the choices and reasons why you got into debt in the first place.

Some people say that the debt was caused by an unexpected life event like a job loss or accident. In many cases the person was living close to the financial edge without any savings or investments and when one or two paychecks were lost, Kablam, they got in a jam.

So in that case the job loss was not the cause of the financial problem, the lack of savings and preparation was the reason that the financial problem exists. With ample savings in the bank a temporary reduction in income or unexpected expense would be annoying but not totally financially destructive.

A - Acceptance
The first step to really get out of debt is to see and accept the reality of your situation. Continued bargaining with yourself about the reality of your situation only prolongs it, not change it. The quicker you accept that you are in debt and need to pay close attention to getting out of debt and are willing to make changes to do so, that’s when you begin to get out of debt.

B - Behavior
Getting out of debt requires a fundamental behavior change on your part. You need to be ready, willing and able to change your behavior that led to your getting in debt in the first place. Take a close look at your spending. What do you spend extra money on and why?

It can be easy to locate extra money in your budget each month when you identify where money is leaking out of your pockets. For example, a daily cuppa exclusive coffee can wind up costing you $100 or more a month. And when you find your month too long by $100 it really isn’t due to not enough income, but how you elected to spend the income you do have.

I’m not saying that you need to kill Starbucks coffees out of your life, but maybe there are some cheaper alternatives for coffee or upon evaluation you may elect to stay with the designer coffee but cut it back.

If you are going out 8 nights a month to the clubs, why not do the same thing that you love to do but only go out 4 times a month instead? You’ll still have fun and cut your bar bills in half.

C - Conviction / Commitment
You must be committed to achieving your goal to get out of debt. Getting out of debt is slow and methodical work. Even if you got a debt consolidation loan you’d still have to pay it back. Nothing is going to change the month after month payments to get yourself out of debt.

The Secrets to Getting Out of Debt

The big secret that people never tell you about getting out of debt is that there are no secrets. It’s just boring, repetitive work that slowly but surely will dig you out of the hole that you’re in.

How to Legally Eliminate Consumer Debt

People often ask how to legally eliminate debt. Aside from some very basic techniques, there are no magic wands to wave to make the debt disappear in an instant. But I wanted to review some of the easiest ways t eliminate your debt to imporve you debt ratio and make you credit look better, legally.

Free Credit Report

The first step towards making your credit look better is to figure out what your credit looks like now. It may be possible to get a free copy of your credit report online. What you are looking for is to get your hands on a consolidated credit report and monitor your progress as it improves online. Equifax offers a Gold 3-1 service that will work just fine for you.

Unless you monitor your credit report you’ll never know how far you’ve come. And while you are at it, when you order your credit report also order your credit score. The gold standard in credit scores is the FICO score. And while other credit scoring models exist, the FICO score is the most widely used and recognized. The FICO site also gives you great modeling tools to see how specific changes to your financial situation will help or hurt you.

Once you order your credit score, see where you score ranks in comparison to other people.

Debt Settlement

Settling your debts can be both a wonderful tool and a horrible experience. I would suggest that you work with a professional group that can help you to do it right.

The problems with debt settlement occur when consumers try to settle their debt when they are current on their bills. If you are current, creditors generally don’t reduce or settle your debt for less than you owe as long as you are demonstrating that you can make the payment. In this case your actions speak louder than your words.

But to fall behind on your bills to access a better debt settlement means that you are going to trash your credit, probably go into debt collection and increase your stress levels. This is where most consumers get upset, they fail to understand all of this when they sign-up for a debt settlement program and then act surprised when the collection calls and bad credit come calling.

If you have cash available, and you are already behind on your bills, a lump-sum debt settlement may be a good option to try. Again, use the services of a professional debt settlement company to make sure you are really getting the best deal. Otherwise, how would you know?

The debt settlement company will typically settle the debt for 60% of what you owe. But be aware, settling your debts can create a tax liability that you’ll have to pay at the end of the year. Again, this is why working with a professional debt settlement company is the way to go.

Debt Consolidation Loan

You really can’t borrow your way out of debt, but you can rearrange the debt to lower your monthly payment. But by doing this what typically happens is the debt is extended out for a longer period of repayment the the end result is that the total amount you will repay in interest will be much higher.

The best debt consolidation loans are typically only available to people who own a home and have sufficient equity in their home to borrow against. When you do this you are really converting unsecured credit into a debt consolidation loan that is now secured with your home. If, for some reason, you were unable to make your monthly payment, instead of just getting a collection from a debt collector, you might find yourself facing eviction and foreclosure.

The small minority of unsecured debt consolidation loans actually work out or are beneficial. Most unsecured debt consolidation loans are a scam and charge high fees, even higher interest rates, and you never get approved for them. These same concerns are the ones expressed by people about payday loans. But as long as you, the consumer, are aware of what the costs are for a debt consolidation loan or a payday loan, you are adult enough to make your own choice if this is a smart move for you.

Debt Consolidation - Consumer Credit Counseling

A credit counseling program does not negotiate with your creditors to develop a program to get you out of debt. The credit counseling program simply looks at who you owe, applies the formulas the creditors give them and create a debt management plan where you make one payment to the credit counseling group and they then carve up the payment and send your creditors their little piece of the pie.

Bankruptcy

You can legally file bankruptcy to get out of debt. A bankruptcy lawyer that is licensed in your state can help you to better understand what going bankrupt is all about and how it will impact you. Even if you don’t think you want to file bankruptcy, you should still find a local bankruptcy lawyer and have a conversation with them so you can be better informed about all of your get out of debt options.

It would be a mistake to pre-judge that you won’t consider going bankrupt unless you understand more about what it will mean to you in your situation if you file bankruptcy.

Cash Out Assets or 401K or IRA Accounts

If you have cash in savings to use to pay off your debt, that might be a smart thing to do and it’s legal as well. Where people make stupid mistakes is when they borrow from their retirement accounts. The argument is that the loan only charges 5% to repay but in fact the loan costs the interest charged plus any amount your investments would have made if you left the funds in.

If you borrow money from your 401k or IRA then you may also have to pay a tax penalty. You should get good tax advice and understand how much this will cost you in penalties and taxes before you do this. You don’t want to be surprised with a huge tax bill.

Borrow Money

You can always borrow money from friends or family to get out of debt but no matter what people say, borrowing money from personal friends and family can change the dynamic of the relationship. And if for some reason you can’t repay your loan, you will be financially harming people that you love and care about. Not cool.

There are hundreds of savings accounts on the market now, catering for all sorts of savers. Before opening up a savings account you need to know the reason for putting the amount aside- whether it’s for a holiday, further studies, marriage, emergencies or simply for a rainy day. Once you’ve decided what your plans are your next job is to decide how much access you need to your money. Are you saving for a long-term project, such as a dream holiday in a year or two, or are you trying to build up an emergency fund? In addition to looking at the interest rates on savings accounts you also need to look at other factors such as minimum and maximum deposits, penalties for making withdrawals, and any notice periods that may be required in order to make a withdrawal.

If you might need to dip into it at short notice, go for an instant access account, but if you can tie your money up for a while you may be able to get a higher rate by going for a fixed-term account or a notice account.

If funds allow, you might actually opt for two accounts ñ one for long-term saving, building up a nest egg so that you donít have to rely on borrowing for big purchases ñ and another for your rainy day money. While you want to get the best interest rate possible, there is no point tying yourself in to an inflexible savings scheme and being forced to borrow at a higher rate to do essential repairs or pay unexpected bills.

At present, there are a number of banks and building societies where you can park your funds, but they will all not bring you good returns. Some of them do pay a bonus if you don’t make a withdrawal for a certain period, but if you do so, your interest rate is affected. There are others who specify a minimum amount that you need to keep in the account for it to remain alive.

If you already have a savings account that does not pay a very competitive interest rate then you should consider making a switch to a different savings account where your savings can earn more in the way of interest. The difference in the amount that you earn in interest can be staggering in some cases with accounts that have larger deposits.

Savings are very precious and should be nutured accordingly. Whether you are looking to invest a lump sum or saving regularly most banks and building societies have an option to suit your needs.

Saving Account Special Offers Waiting For You

Your identity is such a valuable commodity and something you need it in your daily life to be able to financially function. So how can a person’s identity be stolen and credit ruined? It’s actually pretty easy to do.
Identity theft is the general term used to describe the fraudulent use of your identity - in other words someone uses your name, social security number, credit card number or some other personal information for his or her use so that they can commit theft or fraud. While the name ‘identity thief’ is relatively new the practice of stealing money or getting other benefits by pretending to be a different person is thousands of years old.

It has become so common now and can strike anyone. Using someone else’s identity to obtain goods and services, posing as someone else when arrested for a crime, using someone else’s information to take on their identity or using the name of a business to obtain credit.

While you probably can’t prevent identity theft you can minimize the risk by managing your personal information and being aware of the problem.

One really good example of ‘identity theft’ which is dependent upon credit, is bank fraud. It occurs when a criminal obtains a loan from a lender by assuming another identity. He pretends to be the victim by presenting information that the lender requires in order to verify identity. This could be name, address or date of birth.

Even if the lender checks this all out against data held at a national credit rating service he will not encounter any problems or concerns as all of the information will match the victims. It is not easy for the lender to discover that identity fraud is taking place. The criminal keeps the money from the loan, the lender is never repaid and the victim is wrongly blamed for defaulting on a loan which he never knew about. Their credit status is damaged and therefore they are refused credit when applying for a loan to make a major purchase. This is the most common ways that consumers find out they are victims of identity theft.

If an identity thief is opening new credit accounts in your name, these accounts are likely to show up on your credit report. This is the best way to catch mistakes and fraud before your personal finance are ruined.

The information which makes up your credit report is gathered from many sources, such as your creditors, public record sources and collection agencies. Your credit report is a picture of how you, and you alone, have paid back debt and met other financial obligations as of the date you purchase your report. Because your credit file changes constantly, it’s important that you review your information regularly to check its accuracy.

In the UK You have the right to request a Statutory Credit Report from any of the three credit reference agencies (Callcredit, Experian and Equifax) who, under the Data Protection Act, are permitted by law to charge you £2 for each request you make. They will also ask you for your name, date of birth, full current and previous address. This will be posted to you within 7 working days of receipt of request. If you want to dispute information on a credit report received from any of the above, (after having tried to sort the problem out with the lender or other source of information, if appropriate), you can write to the credit reference agency.

In the US The Fair and Accurate Credit Transactions Act (FACTA) which was passed in 2003 is a federal law which allows consumers to request and obtain a free credit report once every twelve months from each of the three nationwide consumer credit reporting companies (Equifax, Experian and TransUnion). However, the free reports are a bit unwieldily to try to compare side by side and keep organized.

Steve says…You should check your credit report really carefully. Otherwise lenders, employers and tenants may make decisions about you based on incorrect information.

More Identity Theft Resources

• “Your Evil Twin: Behind the Identity Theft Epidemic” (Bob Sullivan)
• “The Wall Street Journal. Complete Identity Theft Guidebook: How to Protect Yourself from the Most Pervasive Crime in America (Wall Street Journal Identity Theft Guidebook: How to Protect)” (Terri Cullen)
• “Stealing Your Life: The Ultimate Identity Theft Prevention Plan” (Frank W. Abagnale)

A collection of excellent get out of random debt tools and resources.

Some Self-Help Programs From Others

• Get Out Of Debt Fast Without Bankruptcy Or Debt Consolidation. Click Here To Learn The Amazing Secrets Of How I Got Rid Of $63,000 Of Debt In Only 4 Months Without Filing Bankruptcy Or Using Any Type Of Debt Consolidation Service!
• Practical Guide To Christian Financial Freedom. Discover Practical Biblical Secrets To Becoming Free From Debt…Achieving True Financial Freedom…And Walking In Gods Blessings From This Day Forward!
• How To Get Out Of Debt Forever By Changing Your Beliefs About Money. The Most Complete Program To Date. Provides A Step By Step Plan To Get You Out Of Debt In Record Time And A Process To Help You Change Your Beliefs And Your Mindset About Money. Includes Articles From Contributing Experts.

A Smattering of Miscellaneous Books That Can Help