Smack Debt Consolidation Services

A passion for credit and debt cards has lead to a new medical term - debt stress. That's right. Too much borrowing on your credit can make you sick.

Credit cards have not been used as a safety net to make ends meet. However, the impact is beyond lost sleep and worry. The credit crunch has resulted in record foreclosures in recent times. The situation got out of hand and the FED jumped in to lower the interest rates.

Consumers are spending more than they are currently earning and this has resulted in debt stress. Infact, there is no surprise that debt load sits at 130% of income. With these kinds of lofty debt level, savings rate is close to zero. Consumers now put $200 billion on their credit cards in 2006. That's up from $170 billion in 2004 and way up from the $39 billion in the year 1990.

You can improve your finances quickly and get out of debt stress by learning how credit works and how to handle your credit and then get out of debt.

Whether or not you will be approved for a car loan, a personal loan or a mortgage largely depends on the amount of debts you are carrying today. You have to get out of debt so never borrow what you can't afford to pay off in a few months. That means not getting sucked into easy use of plastic. The lenders and financial institutions mail out millions of letters each year. A typical consumer has 3-5 credit cards in his wallet at all times.

The minimum payments on credit cards are way too low and consumers have a wrong belief that as long as they keep making the minimum payments, they are all right. In-fact banks make more money when you stretch your payments over longer periods of time. That's the reason the minimum payment on your credit card accounts is around 2-3%.

Net worth statement
If you want to get out of debt, you will need to do something before a financial crisis hits you. Sit down with a pen and paper and create a net worth statement. The net worth statement outlines what you owe and what you currently own. Know exactly how much money is coming in and going out each month. The important part here is to understand how much money you will have at hand each month for your expenses and to pay off your debt obligations.

Create a spending plan
Next is to create a spending plan. The spending plan will allow you to manage your expenses for the month and pay down your debt. There are no easy solutions. Hard work and perseverance is required all the way. Being well aware about how much money is coming into your bank and how much you are spending, will allow you to direct more money towards paying off debt and reducing the debt stress.

Write down your goals.
After you create a net worth statement and a spending plan is in place, list down your goals. Your goals will include
A> By when do you see yourself debt-free
B> When will you begin saving for a home
C> When will you begin saving for a car

Now track how you have been doing each month. It is very important to keep the plan in perspective and check often how you have been doing. This will help you build wealth slowly over the long term.

Stop spending
If you are determined to get rid of the debt stress, you will need to stop spending on impulsive purchases. Any extra money on the table must be used to pay off debts you currently owe.

Your net worth statement will help you identify debts with highest interest rates. Find these debts and pay them off first. If you are paying an interest of 20% on your credit card, paying off the debt will save you 20% just like that. Think about it for a moment. For many consumers, it is also wise to consolidate your debt or take a low interest line of credit to pay off all the high interest credit card debts.

Limit the number of credit cards:
Finally limit the number of credit cards you currently own. A maximum of two credit cards is all you need. Pay off the balances on both these credit card accounts in full each month and don't use them impulsively. Paying off your credit cards in full each month will avoid any debt stress in the long run and you can regain control over your finances.

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