I remember when I was a kid my parents went through a tough financial time and ended up declaring bankruptcy.  There was a span of several months where debt collectors were constantly calling and trying to get us to give up our bank account information so they could collect the debt.  Since I was just a kid I always told them I didn’t know what they were talking about (which was pretty much true anyway), but now that I’m an adult I’m more aware of the rights we have as consumers dealing with debt collectors.

The Fair Debt Collection Practices Act places a number of restrictions on debt collectors:

• They can only call you between the hours of 8:00 AM and 9:00 PM.  That means they can’t call you after the kids are in bed or before the crack of dawn.
• They must send you a written “validation notice” within 5 days of contacting you. The notice must show the name of the creditor and explain steps for you to take if you don’t believe the debt is legitimate.
• If you have an attorney representing you, the debt collectors must contact him instead of you.
• They are not allowed to harass or abuse you.  That means they can’t use profane language or threaten you.
• They are not allowed to contact you at work if you’ve informed them that it is unacceptable or prohibited by your employer.
• They cannot reveal information about your debts to neighbors or coworkers (though they contact them in an attempt to obtain location information).
• They cannot publish your name or address in an attempt to embarrass you into paying.

If you believe that a debt collector has violated any of the restrictions listed above, you can report them to the FTC and to your state’s Attorney General.

Dave Ramsey made the term “gazelle intense” common vernacular among those who follow his advice and want to get out of debt.  Gazelle intensity means to work as hard as you can to throw as much money at your debt as possible to get out of debt as quickly as possible.  Often, to do this, people must take on an extra job (or two), in addition to selling things around the house.

Gazelle intensity works because as you pay off your smallest to largest debts, you become encouraged to see that you are making progress.  It is supposed to be difficult, but the motivation is that you only need to be gazelle intense for a relatively short period of time and at the end, you will be debt-free.  However, gazelle intensity may be required for anywhere from a year to several years, depending on how large your debt is and how much money you are able to make.

While the strategy is great for your financial life, it can wreak havoc on your personal life if you are not careful.  Here are some strategies to maintain your relationship while being gazelle intense.

1. Make sure both parties agree to be gazelle intense.  Having one or both spouses work extra jobs can create problems, especially in a family with young children.  Making sure you are both dedicated to becoming debt free as quickly as possible can help avoid resentment and anger when you are both exhausted from working so hard.
2. Have a positive mindset.  Sacrifice is required when working so hard.  You may be short on sleep and energy.  Feeling sorry for yourself is easy when you are in this state.  Instead of having negative thoughts, turn them into positives.  “I am working hard to improve my life and my financial situation.  I am lucky to have the opportunity to work so hard; many people can’t find jobs.”  Remember, you and your spouse ultimately made the choice to become debt free in an intense way.  As Dave likes to say, “Live like no one else so later you can live like no one else.”
3. Be open to changing course, if necessary.  Working hard for 18 months to become debt free rather than paying the debt off slowly over 10 years is usually the smarter financial decision.  However, being debt free quickly does no good if it leaves your relationship in shambles.  If one spouse decides they can no longer handle gazelle intensity, slowing down the debt snowball for the sake of the relationship is important.  You may be able to pick up your speed again later.
4. Make time for one another.  If you are both working crazy hours, it can be hard to make time for one another.  Although it may not sound romantic, if you are both short on time, make sure to schedule time to both talk and have romantic evenings together.  You may not get to go out on the town and spend a lot of money, and you may not get to spend as much time together as you would like while you are being gazelle intense, but being together to reconnect is important.
5. Sit down together to review your progress.  Dave Ramsey says that there is always one financial geek in the relationship and one who is not so interested in the mechanics of the family budget.  Regardless, make sure you both sit down together monthly to review your debt snowball and see how much debt you have paid off.

Many people know about gazelle intensity, but not many people talk about how it may ravage your personal relationship.  There is no point being gazelle intense if you destroy your relationship in the process.  Follow the suggestions above to both eradicate your debt and maintain a loving relationship with your partner so you can emerge debt free and happy together at the end of your gazelle intensity.

This is a guest post by Darin Sewell

When it comes to fixing bad credit most people have no idea what they need to do or where to start the process. Many simply give up and do nothing hoping the problem will go away on its own, it rarely does. Others turn to credit repair companies that charge a lot of money for their services hoping they do some secret step to make a bad credit score jump overnight. But what most people do not realize is that they can easily fix their own credit, though it will not happen overnight and will take some effort and dedication. Let’s take a brief look at what is required to increase your credit score in the article below.

The Very First Step You Must Take

First, you need to get yourself in financial shape so you can make all of your bill payments on time and also save a small amount each month for emergencies because if you cannot do this then you might as well not even start. I know paying your bills sounds like a no brainer but you would be surprised how many people skip payments to pay for other things that pop up. This is where saving comes in, if you have no emergency fund when you get in trouble you are going to charge it to your credit cards. This just adds to your problems and keeps you not only in debt but also in the vicious circle of bad credit.

Where to Find These Savings

I know what you are going to say, “I have no extra money to save”. While this might be true for a small amount of people, the average person wastes a lot of money every month that they could easily save. For example, if you cut back your cell phone package or take basic cable as opposed to the ultimate package that’s money you can save. Cutting expenses like this does make living a little less luxurious but the payoff is worth it!

You Have To Budget Yourself

Once you find the extra money you need to apply to your debt and savings, sit down and budget your bills. Figure out what you will pay extra on each bill every month and stick to it. Many accounts now allow auto pay and you can set this up so the amount is automatically paid every month. This keeps you on track and your debt levels going down. To make the balances go down faster I like to attack the account with the smallest balance first. Once it is paid off take the money you used to pay towards it and apply it to the next largest account. Once you pay of two or three accounts like this your payment amounts snowball and your debt drops quickly.

The Second Half of Credit Repair

Keeping yourself on track financially is however only one part of the credit repair process, you also have to make sure your credit report is free and clear of errors and damaging information. This is the part where it can get a little tricky and where the real work comes in. This is also the part many people choose to pay to have a company do for them. This is fine, but just make sure you use a nationally known credit repair company with a good BBB rating as the credit repair industry is overrun with fraud and fly by night companies.

Where to Start the Credit Report Clean Up Process

The first thing you need to do is buy a copy of your credit report. Do not take a free copy as these do not show your scores. Instead purchase a copy of your credit report from each of the three bureaus Experian, Equifax and Trans Union. This lets you see what each of them is reporting about you, and trust me they all report different stuff!

Go through the negative accounts and look at what is being reported. Look at the balances, the credit limits, the date of late payments and anything else that you can find. Chances are something will be reported incorrectly and when it does you can dispute them with the credit bureaus with the goal of getting them removed. Also keep a watchful eye out for any items that are not yours or blatantly false information.

The credit dispute process is a very easy process to carry out and I will go over it lightly below. In a nutshell all you need to do is write a hand written letter to the credit bureaus explaining why the account is incorrect and ask them to remove the information. They will generally launch an investigation into the matter and if the lender who is reporting this information cannot verify it with documentation then the bureaus will remove it for you! The process takes about 45 days to complete for each item and it is wise to only dispute 1 or 2 items at a time or it may make you look suspicious to the credit bureaus and they will stop accepting your disputes.

What Credit Repair Really Boils Down To

Paying your debt down and paying your bills on time while removing negative items on your credit report is the core tactics to credit repair and they take time. There are no magic steps to give you a 200 point jump overnight or give you perfect credit when you have a 500 score. There are courses and software programs out there that can assist you in your efforts but none of them will give you that upper hand or eliminate the need to do the basic groundwork I have explained above.

Are you having trouble paying your bills?  Receiving calls from debt collectors?  Worried about losing your home?

You’re not alone.  Millions of people are deep in debt and struggling to stay afloat.  Whether your debt stems from the loss of a job, a family illness, or overspending…it can be pretty overwhelming.  But no matter how deep of a hole you are in, there is usually a debt solution that can help you dig out.

Let’s talk about a few of your options.

Developing a Budget.  The first step to taking control of your finances is to sit down and size up your situation.  Make a list of all of your income and then make another list of all your expenses.  If your expenses are more than your current income, you’ve got your work cut out for you.  You need to ruthlessly cut out as many expenses as you can until you get your spending in line.  You should also look for ways to increase your income (a part-time job, a side gig, etc).

Contacting Your Creditors.  Gather up a list of all your bills and make a list of all your creditors, how much you owe them, the current interest rate, and how far behind you are on your payments.  Give each of them a call and let them know that you’re having trouble making ends meet.  Explain your situation to them and try to work out a modified payment plan that reduces your payments to a more manageable level.  You’ll need to do this before the creditor hands your account over to a debt collector.

Credit Counseling.  If you don’t think you can get out of debt on your own, consider contacting a credit counseling organization.  A reputable credit counselor can help you develop a budget, teach you basic money management skills, and work out a personalized debt solution for you.

Debt Management Plan.  Depending on your circumstances, a credit counselor might suggest you enroll in a debt management plan.  In a debt management plan, you send money to the credit counseling agency each month and they use it to pay your bills for you through a payment schedule they work out between you and your creditors.  They usually try to get your creditors to lower interest rates and waive certain fees as well.  While a debt management plan might not be best for everyone, it is a viable option for people with serious debt problems.

Debt is a major problem in today’s world. It’s easy to get so far into debt that it seems like your every move is blocked by an insurmountable wall. But with the right plan, the right mindset, and a little bit of work you’ll be able to break that wall into smaller chunks and before you know it you’ll be on the other side…debt free!

The first thing you should do is sit down and size up your situation so you can figure out exactly how much debt you’re in and where all of your money is going. This is a vital step that you can’t afford to skip.

People who skip this step are missing the point…no matter how good their intentions are they will just never break the cycle of debt. You see your debt is about more than just dollar signs and interest rates. Your debt is about you. Your desires, your temptations, your weaknesses. In order to truly understand your debt you must first understand yourself.

There’s an old episode of The Honeymooners where lovable loser Ralph Kramden vows to transform himself into a success. He understands that there are certain qualities all successful people have in common, so he sits down to size himself up and he makes a list of all his strengths and weaknesses.

You’re going to do the same thing except instead of strengths and weaknesses you’re going to list all of your income and expenses. Just grab two pieces of paper and get started. On the first piece list your monthly salary and any other income you receive from interest, divorce settlements, part-time jobs, and anything else that generates income.

On the second sheet write down all of your expenses. Include your mortgage, rent, car payments, insurance, student loans, credit cards, utilities, and any other payments you must make each month.

What we’re trying to do is figure out exactly where your money is going. You need to total up all of your income and all of your expenses. Then subtract your total expenses from your total income. Hopefully you’ll have a nice amount of money left over which we can then use to form a debt reduction plan to start paying down your debt.

If your expenses are higher than your income it means you’re actually spending more than you are bringing in. This is a dangerous situation and if you don’t resolve it quickly you’ll only dig yourself deeper and deeper into debt. You need to take a close look at your expenses to see where you can cut back, and it wouldn’t hurt to pad your income a little with a part-time job until you get out of the red.

So there’s your assignment for tonight. Draw up a nice list of your income and expenses and jot down some ideas for cutting down your expenses a bit. You may be shocked when you see where all of your money is going.

Debt doesn’t usually happen overnight.  It sneaks up on people slowly.  You make a couple of bad financial decisions, spend a little more than you can afford, or run into some unexpected expenses for which you weren’t prepared.  You figure a little bit of debt isn’t the end of the world.  After all, everyone else is doing it. But the little bit of debt that doesn’t seem like much starts to grow.  More and more of your paycheck goes to interest charges and your credit card balances keep going up instead of down.

Admitting that you need help can be difficult.  Debt problems can be particularly embarrassing because we fear people will judge us.  But if you’re struggling with debt and can’t seem to find a way to dig yourself out, it may be time to consider consulting a credit counseling service.  A credit counselor can help you take control of your debt and get your financial house back in order.

What to Expect

When you go for credit counseling, you’ll have to sit down and discuss your financial situation in detail.  The counselor will want to know how much debt you have, the kind of debt, and how you got into debt in the first place.  You’ll go over your income and expenses one by one as well so the credit counselor can get a clear picture of your financial situation.

Then the counselor will make recommendations on how you can improve your cash flow.  He’ll help you create a budget and track your spending, and he will suggest areas where you can cut expenses.  The more money you can save by trimming expenses the more you will be able to use for paying down your debt.

A credit counselor may also help put you on a debt management plan, though you are not required to do so.  In a debt management plan, the credit counseling service contacts your creditors and negotiates lower interest rates.  Since your interest rate is lower more of your payment will go towards principal and you will be able to get out of debt faster.

As part of the debt management plan, you usually don’t make payments directly to your creditors.  Instead, you send your monthly payment to the credit counselor and then he pays each of your creditors for you.

Keep in mind that there are usually fees involved with using a credit counselor and using a formal debt management plan may have an effect on your credit score. But if you haven’t been able to dig yourself out on your own, it may be the best choice you have left.

To save or to repay debts… the decision can often be a confusing one – but as discussed here, the answer can be pretty straightforward.

You’re probably thinking repaying your debts is a priority, but what about saving money? Isn’t that also a good idea to help protect your finances in the future?

The fact is, saving and repaying your debts at the same time is likely to lead to you losing money, in real terms.

In most cases, the money you’re saving would be more effective if you put it towards clearing the debts you’re carrying (rather than just making the minimum required monthly payment). Here’s why:

Let’s imagine you’re carrying a credit card debt of $500 and you’re being charged 17% interest on it per year. Meanwhile, you’ve also got $500 in savings with an annual interest rate of 3%.

In 12 months, your savings balance would grow by $15, but your credit card would accrue a lot more interest than this (unless you repaid a substantial amount each month), because the interest rate is so much higher. In simple terms, you’d be spending more money on credit card interest than you’d be earning from your savings.

The interest on a typical credit card debt is considerably higher than that paid on the typical savings account, which means the debt simply grows more quickly than your savings can. For this exact reason, it would make more sense for you to repay your debts as soon as possible to avoid paying interest you could have avoided.

You can always start/continue saving once your debts have been cleared!

There are, however, a few instances in which saving may be more worthwhile than repaying your debts.

For example, if your debt has an early repayment charge, then repaying it straight away with your savings could work out to be more expensive. In this case it might be better to invest the money in a savings account – at least until the interest accrued outweighed any charges.

What’s more, if you’re carrying a debt with a relatively low interest rate, it’s possible you’ll earn more by investing in a savings account than you would save by just repaying your debt.

Finally, if you’ve decided to consolidate your debts with a loan, and have agreed to make fixed monthly payments, some lenders may not allow you to make overpayments. If you’re in this situation, opening a savings account and investing what you would have used to overpay your debts could leave you in a better financial position once your loan has been repaid.

Today I’m proud to publish a guest post written by Aloysa from The Kitchen Sink. She’s pretty new to blogging but she’s off to a great start so make sure you show her some support and check out her blog.

I grew up in a society where the word “consumerism” was used very seldom and only by a select few. This word was not understood. It was viewed as a word from a forbidden capitalistic world. I never even heard this word before I moved to the United States where my very close and intimate relationship with consumerist culture developed.

This relationship was based on my past experience. The Soviet Union stores were not glamorous or inviting. I remember dim lights, brown and grey interior colors and the gloomy faces of sales people. The customer service was non-existent. The major rule of “don’t ask, don’t tell” applied to the customer service. Clothes and shoes all looked the same: dark colors, shapeless form. Now, imagine a girl who came to the United States and saw all the goods offered to consumers with shiny smiles on the sales people’s faces. Imagine a little kid in Disneyland with free admission and endless possibilities. I made my first discovery: shopping wonderland.

Dazzling and alluring malls were calling my name, inviting me to come in and spend, spend, spend. I watched advertisements that told me I was not good enough if I don’t get a specific perfume,  jeans or shoes. Glossy magazines showed me what to wear, how to wear it, and where to get it. I discovered that shopping can be a huge pleasure; a pleasure that very rapidly and dangerously turned into a very expensive addiction that needed to be financed which led me to my second discovery: credit cards.

In the late 1990s in Lithuania owning a credit card was a novel and trendy idea with a very limited number of people who could become cardholders. It was mostly businessmen who could get a credit card. I believe the first credit cards that became available were collateralized by saving accounts. So, obviously not everyone could have one. In the U.S. I learned that credit cards are widely accessible and viewed as an essential purchasing tool. Unfortunately for me, instead of looking at credit cards as a financial tool that should be used carefully, I looked at them as my ticket into the shopping paradise.

My third discovery: almost anyone can get a credit card. I was an international student living with my parents and working a part-time job with a $6/hour pay rate. In spite of my miserable earning potential, I managed to get a credit card and my life was changed forever. I was able to feed my shopping addiction. I could never have enough clothes, shoes, handbags and so on.

Eventually I ended up having multiple credit cards. The problem with that was that I could not pay for them. My fourth and the most painful discovery: your debt will catch up with you.

What I learned from my financial discoveries ( the really hard way):

- Money buys security but not happiness. Credit is only a means of getting what we want right away. It gives us an instant gratification but then what? Then we have to pay a high price.  It can take years to dig yourself out of the hole using a debt reduction plan.

- The effect that debt has on your life is not just long-term. It has an immediate effect on the “here and now.” I still have plenty of stress, sleepless nights and worries about my credit card balances.

- Be careful where you look for financial help. Banks have very strong incentives to rip us off and overextend our funds. I got my first credit card with a credit limit of $500. I was not working, living with my parents and had almost no income.

- Educate yourself about debt. I came to the United states debt free and knowing nothing about debt management. I thought credit cards were there for me to help me get what I want now and pay later. When later came, I did not have enough money to pay off the balance so I took my time paying it off without realizing that a $100 pair of shoes in the end will cost me at least an additional $60 if not more.

- Become a smart consumer. Compare pricing, know your rights, know how much you can afford and make a simple budget.

EDIT 10/11 – This post was included in the Carnival of Money Stories hosted by FreeMoneyFinance.com!

This is a guest post written by Jason Holmes of Debt Consolidation Care.

Consumer groups have issued a new set of warnings regarding debt settlement companies. Debt settlement companies help individuals solve their debt problems for a fee. However, it is imperative to remember that not all debt settlement companies are reliable. There are some settlement companies that might be able to reduce your debt load. But using a settlement firm/company can also be a trap, and you may find yourself deeper in debt than when you started.

Debt settlement tricks and traps

Here are some of the debt settlement tricks and traps you must know:

1. No immediate relief: You’ll be required to deposit a specific amount of cash in the trust account opened by the settlement company. The representatives of the settlement company won’t even negotiate with your creditors until you have collected 50% of the debt amount. When you are trying your best to save that amount of money, the debt settlement company is deducting the fee from the trust account.

It will be more difficult for you to save that amount of money. If you have single debt, then the whole settlement process can take one year. However, if you want to settle multiple debts, then the entire process can take several years. Hence, you should ask the representatives of the settlement company about the amount of time it will take to save 50% of the debt amount after deduction of fees.

2. Extraordinarily high fees: Some of the settlement companies charge excessively high fees for their services. They might even ask you to pay an upfront fee. Normally, they should charge a fee on the forgiven debt amount. Therefore, before hiring a settlement company, you should check the fee structure. If the settlement company asks you to pay an upfront fee, then refuse it.

3. Debt collection: When you enroll in the debt settlement program, it doesn’t imply that the debt collectors won’t haunt you. When you enroll in the debt settlement program, you are asked to stop all kinds of communication with the creditors. The representatives of the debt settlement firms often don’t speak to the creditors for months and creditors are not bound to contact them. The creditors get paranoid and hire debt collectors. The creditors can even sue the debtors.

Also, the individual’s debt amount increases because of interest and penalties. This will ruin their credit score further. Therefore, you should ask the representatives whether they are keeping in touch with the creditors. Also, you can ask them whether you’ll get any kind of legal help in case you’re sued.

4. Scams: A lot of debt settlement scams are happening nowadays. Many fraud companies have emerged in the market. They will take the money from you and then vanish. This will make your debt situation worse. Therefore, before hiring a settlement company, you should check whether it is recognized by Better Business Bureau.

Jason Holmes is a regular writer with Debt Consolidation Care and is also a contributory writer with other financial sites. His expertise is woven around various aspects of the debt industry and with his e-books he tries to impart to people the different situations and simple solutions to get out of difficult situations. Some of his works include e-books like ‘Credit Score The Quintessential Therapy for a Happy Pocket’, Take Creditors and Collection Agencies to Small Claims Court’ and, My Story- From Depression To a Smile’.

If you do it right, transferring a high rate credit card balance to a lower interest rate credit card can help you save money in finance charges and reduce your debt much faster.

Some people treat balance transfers like a shell game. They keep their money flowing from one low (or sometimes zero) interest rate card to another to avoid paying hefty finance charges. This strategy can work well if you are careful.  But there are some pitfalls you will have to learn to avoid.

Verify that there are no fees for transferring your balance.  Balance transfer fees are usually waived when you are first opening a new account. Once you are a customer they will charge you a percentage of the balance transfer as a fee.  This will cut into the amount you are saving by transferring the balance.
So hurry up and transfer all of your higher balances when you first open the account. Don’t wait until later.

Don’t use the card for purchases or cash advances.  The whole idea is to take advantage of the lower rate so you can pay it off faster.  Adding more charges to it will just dig you deeper into the hole.

Be careful if you plan to continuously switch from one low-rate card to the next. Some people consider this a smart way to ‘work the system.’  But it may cost you in the end. Part of your credit score is based on the number of times you have requested credit and the number of accounts you have had open. When you later go to apply for a mortgage or auto loan you may find that all of those credit card flips have hurt your score and you no longer qualify for the best interest rates.  If that happens, you’ll be paying more in interest charges every month.