Living Credit Card To Credit Card: How To Break The Cycle

By Maxime Rieman

Most of us have heard financial experts decry the dangers of “living paycheck to paycheck,” wherein a person’s income is so close to their expenses every month that they’re unable to put any money aside for emergencies or retirement. Of course, these gurus are right to be concerned: saving is an important habit to get into because it is an important safety net and it allows us to build wealth.

So yeah, living paycheck to paycheck isn’t ideal.

But really, I think the personal finance professionals are barking up the wrong tree. They’re right to be concerned that a lot of us are failing to save, but living paycheck to paycheck isn’t the worst monetary state you can be in. As most of us who have been in serious financial trouble know, there is a much direr financial situation you can fall into: living credit card to credit card.

Yep, credit-card-to-credit-card living is about as bad as it can get. If you’ve never experienced this type of financial lifestyle, it goes something like this: you charge up a credit card to the point that it’s just about maxed out. You probably keep your head just above water by paying the minimums on the card every month, just to be sure your credit score stays solid enough that you can get another card. Which you do. Then you charge that card up, without ever paying the balance on the first card. Again, you keep up with monthly minimums, but pretty soon you need another card. And not long after that, you can’t keep up with the minimums on the two other cards, so you use the third card to pay the other two. But now you have no more available credit, so you need another card. And so on. And so on.

Many college graduates fall into this trap. They graduate totally broke – student loan bills, rent, a car payment, and a bunch of other expenses eat up their nonexistent paychecks. But they also don’t adjust their spending accordingly, and quickly open more credit cards first to accommodate their splurges, and then to pay off the other cards. Keep in mind, in the past--even just as recently as 2007--banks were still doling out credit as generously as those free lollipops. So for many graduates, it is—well was--really easy to keep getting new cards to bail themselves out of payments that were too high on the other cards, and, of course, gain a little spending money, too.

This cycle lasts for about a year, and by then most realize that they are drowning. This is when the stress begins: stressed out about money all the time; constantly concerned about missing a payment or worse, not having enough to even pay the minimums; and sweat-inducing nightmares. For those, who are experiencing this during the Great Recession, I can only imagine your feelings of helplessness and the perpetual state of fright you must be in.

The good news is that, you can turn things around. You can go from a total money-wreck to financially savvy with some stubborn resolve, sacrifice and the knowledge that it can be done; knowing that there is an end in sight can really help on those hard days. If you’re looking to break the cycle of credit card to credit card living, try a few of the tips below:

• Stop using the cards – This is probably the most important step you can take towards stopping the credit card madness. It will be painful and unpleasant, but you have to stop using your credit cards entirely, at least for a while. Freeze them, cut them up, give them to a trusted friend, whatever – just keep those cards out of your wallet and out of your hands for the time being.
• Don’t open any new cards – No matter how bad the credit card withdrawal symptoms get, resist the urge to open a new card. Even if you promise yourself you’ll be responsible with this one, just say no. At some point you may be in a financial place where credit cards won’t pose a threat, but that’s not now.
• Put yourself on a budget – One of the reasons you probably got into debt is that you failed to create a plan for your money, which is what a budget does. Figure out how much money you make every month, then make a list of all your expenses, including non-fixed monthly costs like gas and groceries. Decide how much you want to spend in each category, making sure to allocate a hefty amount to debt repayment. Then, stick to your plan!
• Also, put yourself on a cash allowance – Since you’re not using credit cards, you’ll need a way to manage your spending money. I recommend cash. Go to the ATM every Friday; take out your spending money for the week ahead. Not only does this reacquaint you with the value of money (cash is concrete, credit cards are abstract), when it the money is gone, it’s gone. This will keep you out of trouble!
• Increase your income – Once you’ve quit credit cards and set a budget, it’s time to get serious about debt payoff by increasing your income. Get a second job, baby sit, walk your neighbor’s dog, or find some other income stream. But just be sure you use the extra cash to pay off your debts – no shopping sprees allowed!

Breaking the credit-card-to-credit-card lifestyle is tough, but it is doable. Even after a month you’ll start to feel better. Keep your chin up and know that you’re working towards a brighter financial future!

Maxime Rieman is a writer for NerdWallet, a financial literacy site where you can find brokerage reviews, such as this TD Ameritrade Review, when you’re ready to start investing.

4 Tips for Helping your Partner Get out of Debt

Guest Post by Maria Rainier

If there is one thing in common that almost all American adults have is that they carry with them at least some personal debt. In fact, it's very often the case that what brings us together are the hardships—financial and otherwise—that we've endured over the years. Many adults, after becoming very involved in their respective romantic relationships, decide to pool together finances. Whether this means simply living together and sharing related costs, or going as far as to take on a partner's debts, deciding to entangle yourselves in each other's finances is a huge step. Here are some things to consider before helping your partner tackle his or her debts, or vice-versa.

1. Be completely honest about your debts as soon you get serious about your relationship.

There's nothing worse than being with a person romantically for several years, perhaps even approaching marriage, when your partner suddenly discloses the enormous pile of debt they've accrued over the years. Of course, when you love someone deeply enough, you'll do anything for them. But to be fair to your partner, and for your partner to be fair to you, it's important to be as honest as possible as soon as possible so that you can begin managing each other's debts.

2. Help control each other's discretionary spending.

One of the main reasons that most adults cannot control their debts incurred before marriage is that they don't make it a priority. Once you both become privy to your respective debts, you can help each other out by making a joint budget that allows each of you to pay off more than the monthly minimum on different loans and debts. If you aren't committed enough yet to where you are actually paying off your partner's debts, you can, at the very least, help each other prioritize your debts by controlling your monthly expenses.

3. Don't jeopardize your future to help your partner get out of serious financial trouble.

Perhaps one of the main reasons that married or otherwise committed couples end up splitting is over serious financial troubles. If you go so far as to cover all or a significant portion of your partner's debts, and in the process you incur significant debt yourself, the end result will only be mountains of resentment. Of course, if you can afford to help your partner out, then by all means do so, if you feel that the commitment warrants that sort of generosity. However, if you hurt yourself financially in the process, be wary.

4. Establish a long-term repayment plan.

If you do end up paying for a reasonable portion of your partner's debts, or if your partner pays for yours, set up a repayment plan that you can stick to. For example, my brother paid for about $4,000 of his then-fiancée's student loans. This ended up being a great idea, just because now she owed him, instead of a debt company that would charge her significant amounts of interest. Now, four years into their marriage, she's paid him back completely and they are both well on their way to being debt-free.
It's terrible that finances can have a huge, mostly adverse, impact on personal relationships. But if you're careful, you and your partner can use your relationship and teamwork skills to both relieve your debt load. Good luck!

Author Bio:
Maria Rainier is a freelance writer and blog junkie. She is currently a resident blogger at First in Education where she writes about education, online colleges, online degrees etc. In her spare time, she enjoys square-foot gardening, swimming, and avoiding her laptop.

Best 5 Books on Debt

Guest Post by Laura Backes

Perusing the financial self-help isle at your local book store can be overwhelming. Not only because of the amount of books but the amount of debt that got you to that dreaded self-help isle. Debt is not a foreign concept, lots of Americans struggle with credit card debt but not to worry there are books that can help you, here are a few:

The Money Book for the Young, Fabulous & Broke by Suze Orman

Suze Orman is every college student’s nightmare; consider her as no nonsense financial professor teaching you lessons about post grad life. This book is to help the young professionals with a small salary and student debt. Don’t let the title fool you, this book can help those who are older as well.

Your Money or Your Life: Vicki Robin and Joe Dominguez

This self help guide not only teaches you how to get out of debt and face the real issues but it puts your life back in to your hands. In 9 steps, this book shows you how to take control and learn to live life with your money and not the other way around.

The Total Money Makeover: A Proven Plan for Financial Fitness by Dave Ramsey

The not so sensitive financial guru Dave Ramsey, helps you find the source of your debt problem, you. This book teaches you what to do and what no to do. Listen to him and you are bound to get out of debt and it may not be the easy road but remember slow and steady wins the race.

How to Get Out of Debt, Stay Out of Debt, and Live Prosperously by Jerrold Mundis

A breath of fresh air is what this book brings to the table. Based on the successful practices of national Debtors Anonymous program you are able to relate to the millions of other Americans suffering from the paycheck to paycheck living and the relentless debt collectors. An easy and simple read, a must buy immediately.

The Ten Commandments of Money by Liz Weston

This book is realizing that today’s economy isn’t the easiest, the costs are going up and you aren’t making enough. The ten financial commandments that Liz Weston goes over will help you set a budget and stick to it, look at your options for the future and how you can control your own debt crisis.

So become a book worm and start reading. You will learn a few things that will help and guide you to financial happiness. All of these books can be found at your local bookstore or online. Happy reading and happy saving!

Author Bio:
Laura Backes enjoys writing about all kinds of subjects and also topics related to internet service in my area.  You can reach her at: laurabackes8 @ gmail.com.

4 Smart Ways to Use Your Income Tax Return

Guest Post by Katheryn Rivas

It may be a little early in the year to be talking about income taxes and, no doubt, it's the last thing any of us want to think about at this point, but thinking ahead about these things is the first step in strong financial management. As tax return season slowly approaches, we have visions of wonderful ways to spend that money for our financial betterment. Some of us think about tucking that cash away under our mattress for a rainy day or putting it in the stock market to hopefully make a quick buck. While of these are both options, they are probably not the wisest ones. More of us dream of shopping sprees and home improvements with our tax refunds. However, there are many other ways you can utilize your tax refund that will be smarter and more productive for your financial health. Consider these four options this year. 

Add to Your Life Insurance

For many of us, putting our tax return towards our life insurance is the last thing we consider. However, adding to your life insurance from this money can be a very wise plan for certain people. If you own a home or have children, your life insurance coverage should be about eight to ten times your annual income. While this may sound extreme, it is an important thing to consider. Try using your tax return towards gaining the right amount of life insurance. This is a good way to invest in the important things like your family and loved ones. 

Lighten Your Debt

Obviously, using your tax return toward your debt is a smart option. If you are able to make it through the year without that chunk of money, you can probably put it toward something more productive than your spending account. Rather than continually paying the minimum amount on your credit card bill, try putting your tax return money toward that bill to pay a larger chunk of it off. Paying the minimum can cause big problems if you have a high interest rate. Those interest rates can sneak up on you and eventually cost you more money than you expect. 

Get an Energy Audit

A home energy audit can help you pinpoint where it is you are losing money in your home. This audit can be an expensive thing to get done, but it can end up saving you a significant amount in the long run. Put your tax refund money towards lowering your regular energy bills and improving your home's livability and resale value. 

Invest in Your Self in the Right Way

While many of us use our tax refunds to invest in ourselves in one way or another (new clothes, new furnishings, etc.), there are better ways to improve ourselves using that money. Try investing in your career by spending that money one furthering your education. You can take classes to get a higher degree or to obtain a specific certification that can put you in a new pay level at work. By investing in your education and career, you have the potential to earn more money later in your life and you will make yourself more valuable.

Author Bio:
Katheryn Rivas writes for online universities blog.  She welcomes your comments at her email Id: katherynrivas87@gmail.com.

Paying Medical Bills with Credit Cards, is it a Smart Choice?

Guest Post by Eliza Morgan

Those who really fear credit card debt are usually cautious when it comes to making future purchases. For example, if a couple knows they want a new TV for the living room, they'll usually save for a few months and then pay for a new TV with cash. But not everything can be so calculated, especially when it comes to your health.

Sometimes you get sick out of nowhere, and even if you're insured, getting billed for medical expenses is one of the easiest ways for someone to get into debt (or deeper debt). Think about it: one single trip to the emergency room can set you back $200 for someone with insurance. If this was an unexpected expense and you don’t have enough money in your account, what will you do? Charge it on your credit card. Depending on how quickly you can pay it back will determine how much interest you will accumulate. In fact, according to the most recent statistics, nearly 21 million Americans accrued credit card debt in 2008 due to using their cards to pay for medical bills. While health is important and unpredictable, there are some things you should consider first before using your credit card to seek temporary relief.


1. Negotiate with your Doctor/Hospital. First things first, it's always important that you speak up front that you may not be able to afford whatever procedure or test that the physician says you need. If it's an emergency situation the physician will go ahead and do the procedure, but they will be more willing to give you a discounted rate or work out some sort of payment plan (some charge interest; others do not). Either case, you are not obligated to pay any sort of out-of-pocket expenses up front so don’t be too tempted to put it on your credit card immediately. But if you discuss your financial situation from the beginning, the physician may be able to reduce your bill in some area, whether it's with the anesthesiologist if you've had surgery or with your medications.

2. Know who is more likely to Report to Credit Bureaus. If you put your medical bills on your credit card and then can't find a way to pay off your credit card bill, you will undoubtedly be contacted by a bill collector. From there, the appropriate crediting bureaus will be notified as well and your discrepancy will negatively be placed on your credit report and affect your credit score. While you do in fact want to pay off your medical bills at sometime, it's important to know that rarely do physicians and hospitals actually report to collection agencies (as opposed to credit card companies that do it almost immediately). In fact, various sources say that only.07% of medical businesses actually report their patients to bureaus. Most just write off any losses.

3. Get a Health Savings Account. Lastly, a great way to be better prepared for these kinds of unexpected medical expenses to acquire a health savings account (HSA). Most health insurance companies require a high deductible (about $1,500 for a single) to establish one through your plan but they can really be a life saver and help you be debt free. How it works: a portion of your paycheck (prior to taxes) is put into your HSA each month. You can build the money in your account tax free as well. You are then issued a debit card and can use that card strictly for paying for medical expenses, such as when paying off co-pays, medications, and remaining balances you may have on a surgery. It takes out the temptation of using a small portion of your savings for something other than medical uses. Your balance moves from year to year and works as an IRA after 65, so it can be invested.

Author Bio:
Eliza Morgan is a full time blogger. She specializes in writing about business credit cards. You can reach her at: elizamorgan856 at gmail dot com.

Lacey’s Credit Card Debt Story

Guest Post by Lacey Cook

Hello all. My name is Lacey Cook, and this is my personal credit card debt story. I was always taught to spend my money wisely. From the age of eight, I started to save for my first car. By the time I turned 18, I had saved enough to buy a six year old car at about $8,000. I paid in full with a check, and I’d never felt so great.

After that, I went off to college, where I had some trouble keeping my finances afloat, but I made it through with the help of my parents. After graduation, I got married and started a new chapter of my life. That’s where everything started to go south. I had no student loans or credit card debt, and we’d just got a few thousand dollars for our wedding, but that wasn’t enough. He was about $40,000 in debt from student loans and credit cards, and we had no way of paying our bills. We struggled to find jobs, and we ended up having to use my credit cards to make ends meet for the first few months of our marriage.

Finally, we found jobs and started to slowly dig our way out of the hole. Everything was great, but we still wanted something more, so we decided to get a dog. We went to the pound to adopt one, and found the most adorable little puppy I’d ever seen. She was fun, yet still wanted to cuddle, and I knew she would be the perfect addition to our new little family. We spent our weekly budget for groceries on her and decided to eat bologna and mac and cheese to tide us over.

The second day after we got her, she started to look lethargic, and I wanted to make sure she wasn’t sick so I took her to the vet. Turns out, she had a very draining virus that could have killed her if we hadn’t caught it in time, and even with the treatment, she still only had about a 50% chance of survival. I handed over my credit card. Two days and nearly $2,000 later, we finally got to take her back home to nurse her back to health.

We knew, at that point, that we had to make some drastic changes in our spending to get us back out of debt. We sat down, made a list of all of our monthly expenses, and created a budget to suit our life. I started clipping coupons and stopped buying name brand items to cut down our grocery bill. We discontinued our cable bill as well and used digital rabbit ears instead. We cut down our budget so much that we were able to start paying way more than the minimum payment on our debts each month, which I know is important when you are trying to save your credit score.

We’re not out of the woods yet, but we’re getting there as fast as we can. In fact, we’ve been so successful, that we’re also able to put away a little money each month to start a retirement fund. I know you may be thinking that we shouldn’t have to worry about such things yet because we’re young and have plenty of time, but I have realized that I definitely don’t want to have to work until I’m too old to stand. The sooner a person starts to save for retirement, the sooner they can actually retire. I am determined and motivated to get out of this debt and live my life to the fullest.

Author Bio:
Lacey Cook is an author who writes guest posts on the topics of business, marketing, credit cards, and personal finance. Additionally, she works for a website that focuses on educating readers about getting their first credit card.

Finding Options to Help Fight Off Debt

Guest Post by Stella Walker

Getting into debt is scary. There is no denying that. You start to get this anxious feeling of being trapped; you have too many bills not paid off to think clearly. You know you have to do something, but you feel like you don't have a lot of options.

In actuality, there are a lot of options out there, and I'm not just talking about bankruptcy (although this is still viable in extreme cases). Half the battle is getting yourself out of this emotional and psychological slump and convincing yourself that you can be proactive about your debt and finances.

Cut off luxuries

If you can't pay your own bills, it's time to start making your own coffee and lunch and bringing it to work. You should also at least attempt to repair household items yourself. If there's no cancellation fee, cancel your gym membership and instead opt for good-old-fashioned jogging. While you're at it, cancel any other services that you don't need; if the service doesn't facilitate you getting out of debt, you don't need it.

Start a small business

While it is true that it generally does take some money to startup a small business, some business start-ups are actually extremely low cost. One extremely cheap startup is a snow cone stand. Have any secret hobbies or skills? Now is the time to put yourself out there and at least give it a shot. You'd also be surprised how cheap it is to start up an online business. You could even write a blog telling the story of your struggles with debt (like this one).

Balance Liquidation Plans

If you have a whole slew of credit cards with outstanding balances and frighteningly high interest rates, you should perhaps consider requesting balance liquidations plans from your creditors. While this doesn't allow you to charge to cards that you've liquidated, it does lower the interest rates to extreme degrees. Just be sure that you have ways to make necessary expenses without your cards.

Pay Cash

If you do wind up liquidating your cards, this is a great way to try budgeting with cash. The beauty of a cash budget is that it forces you not to overspend because you literally can't. You take out the amount of money you want to budget each week (or month) in cash, and if you find yourself getting low on cash, you just have to start scraping pennies and looking for food in the freezer until the set time that you allow yourself to take out more cash.

Use Envelopes

If you decide to limit your budget with cash withdrawal restraints, another great strategy is to organize separate budgets into different envelopes. For example, you'll have envelops for bills, clothes, groceries, etc. with a designated amount for each envelope. The idea here is that you limit a budget for each area of your life, and if one envelope empties to quickly, you have identified a possible spending problem in your household.

Author Bio:
Stella Walker is a freelance writer of free credit score where she writes about topics including credit, debt, investment, bankruptcy.

Top Debt Relief Scams to Avoid

Guest Post by Alan Winkler

Getting out of debt can sometimes be a long and arduous process under the best of circumstances. Between the complexities of debt legislation and the various competing demands of debt collectors and consolidation firms, someone working to relieve their debt has several obstacles to overcome. Unfortunately, there are nearly as many shady, untrustworthy, and downright fraudulent collection and consolidation services out there as there are honest firms that genuinely try to help consumers. In order to avoid being taken advantage of, it's important to understand some of the most common debt consolidation scams out there.

Watch Out for Hidden Fees

One of the most common forms of debt consolidation fraud is the time-tested tactic of charging numerous hidden fees. All debt consolidation firms charge a fee of some type or other in order to stay in business, but reputable firms are up front and very open regarding their fee payment structure. If you have started to notice reoccurring charges from debt consolidators that defy explanation, you might be in the grasp of scammers. In order to avoid this, check out a debt consolidation company thoroughly before beginning a business relationship with them. Companies that pressure you to sign contracts right off the bat may be trying to conceal hidden fees or service charges until it's too late for you to back out.

Consider Your Debt Plan Carefully

Debt relief plans are also ripe for exploitation. These plans set the structure for how you'll repay your debt and what the time frame for doing so will look like. Ethical debt consolidation companies provide an excellent way to plan your debt relief and satisfy creditors, but all too often, unscrupulous debt collectors with no concern for customers will offer plans that do not meet creditors' needs, leaving the customer in the lurch. This happens for a variety of reasons: the scammers may be better able to hide an exploitative fee structure in longer-term, slower payments, or they may have lured customers in with false promises of far lower interest rates that the creditors have not actually offered. These scams leave the individual in terrible trouble, as their financial situation worsens and the scammers make a profit.

Know Who to Trust

While it's not a scam, it pays to be aware of the fact that many false debt relief organizations will attempt to portray themselves as something more trustworthy. Common examples include so-called "Christian" debt consolidation firms, which prey on the trust that many feel for their co-religionists; the "non-profit" label is also frequently employed by these charlatans. The FTC has filed suit against several so-called "non-profit" debt collectors in the past few years for advertising their status as non-profits falsely in order to generate trust. Choose a debt consolidation company on their track record and user reviews, not on the basis of their attempts to portray themselves as more honest than the other guys. When it comes to debt consolidation, a little skepticism can go a long way towards keeping you safe!

Remember, the debt consolidation firm is working for you, not the other way around. Avoid companies that are too eager to talk you into a commitment, and if they're too forceful, ignore them. Many other options exist. Likewise, be sure that both you and your creditors understand and approve of the consolidator's plan. Preparations such as these can save hundreds if not thousands of dollars on top of the extreme aggravation that debt scams can cause. Get out of debt today with honest and ethical debt consolidators.

About the Author: Alan Winkler is a professional debt advisor and regular writer for Debt Consolidation Advice, a credit card debt relief blog. He also covers the debt relief industry as a whole and provides money saving tips.