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Be Debt Free By 2003!
Weekly Newsletter
7-7-2002
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In this issue:
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+ Announcements
+ Introduction
+ Penn State Report On Credit Card Overuse (abridged)
+ 10 Strategies To Debt Freedom
+ Jason's Corner
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Announcements
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If you would like to submit an article or testimony, send
it to DebtFreeFor2003@yahoo.com
The "Be Debt Free Newsletter" is growing at a staggering
rate! I am proud to announce that we had over 200 new
subscribers this week! Thank you all!!
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allows you to quickly recommend this newsletter to a friend.
Website address:
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Introduction
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Just a quick note to tell you how this newsletter is
organized. The focus of this newsletter isn't just
creating "zero balances", it is more about changing our
thinking.
I know that in my life, I got into debt because
I had to have things TODAY. When it came time to pay my
bills, I only paid the minimum amount. Why?? Sure I was
in college, but I had a job that provided enough money to
cover my needs. The problem was, that as I developed poor
spending habits by using my credit cards, those habits
infiltrated every part of my life. I didn't have to make
paying bills a priority, it could always wait, I would use
the money in my bank account for other things.
This is what many of us have done, now the more responsible
people that we are now, are stuck with the bill.
That is where this newsletter comes in. Each issue will
contain 3 articles, and sometimes an introduction like this
one. The first will be targeted towards the psychological
impacts of debt. The second will be a useful article that
will help us get out of debt. The third will be a weekly
update on my progress on getting out of debt.
Thank you for your support, and I hope we are all debt free
by 2003!! -Jason Dugan
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Article 1
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http://www.psu.edu/ufs/mar28agn.html
[Penn State] SENATE COMMITTEE ON STUDENT LIFE
Report on Credit Card Overuse
(Informational)
Student credit card debt has become a growing problem among
universities nationwide, including Penn State. Many school
administrators and parents have become increasingly worried
about how much of an impact credit card debt can have on
academic performance and commitment, and have become more
concerned with what kind of role colleges should play in
educating students about the potential dangers of credit
cards. Even though the ultimate responsibility lies with the
students and parents, colleges need to recognize and help
mitigate the pernicious effects that mounting credit card
debt can have.
Take, for example, a student who was a National Merit
Scholarship Finalist and who attended the University of Texas
at Dallas on a full scholarship. Despite his/her seemingly
bright future, the student committed suicide in February 1998
under the pressure of mounting credit card debt that was
approaching $10,000. (The Philadelphia Inquirer 6/9/99)
Although this is an extreme case, it is not that uncommon.
Because it is incredibly easy for students to get credit cards,
many students take advantage of free offers and seemingly
innocent credit opportunities. Numerous college students face
not only a growing debt due to student loans, but also
substantial credit card balances when they graduate from school.
The effects of credit card debt are apparent while the student
is still attending a university. Imagine having to worry about
your grades, a part time job, extracurricular activities, and
a couple of thousand dollars in credit card debt. In addition
to the psychological effects of credit card debt, poor credit
decisions can drastically affect a person’s financial future.
Paul Richard, Vice President of the National Center for
Financial Education in San Diego, said, "Credit based decisions
have the potential to make a greater negative impact on a young
adult’s financial future than any other investment decision
they’ll ever make." Poor credit ratings can lead to difficulty
in obtaining things ranging from cell phone service to a car
loan. Also, employers are increasingly looking at credit ratings
to determine the reliability of a prospective employee.
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Article 2
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10 strategies to reduce your debt
Ten steps for digging out from debt; from consolidation to
financial advice.
By Mary Rowland
The average American pays more than $450 a year in interest
fees to carry a balance of $2,500 on two to three bank
credit cards, according to recent estimates. And credit
card companies are tacking on new fees and raising interest
rates that make it even more expensive.
If you carry credit card debt, paying it off should be your
top financial priority for two important reasons.
First, it gives you a guaranteed rate of return of as much
as 21%, depending on the rate charged by the credit card
issuer. So paying off $2,500 at 16% yields a 16% return on
that money. The fix is in.
Second, paying off debt gives you flexibility. If you're
stretched to the limit on your credit cards, you have no
margin for error; no room to maneuver if you have an
emergency. Paying down debt frees up your cash flow and
gives you the opportunity to take advantage of a compelling
career move -- or a great vacation.
10 steps to debt freedom
1. Figure out how much you owe. Gather all your credit card
statements and make a list that includes the interest rates,
total amounts you owe and minimum monthly payments. List
the cards by the interest rates they charge with the
highest rate first and so on. "A lot of people have lost
track of what they owe," says Gerri Detweiler, author of
"The Ultimate Credit Handbook."
2. Keep the two cards with the lowest rates. Cut up the
others. Write to the card issuers and close the accounts.
(One caveat: Check the terms of use before you cancel. Some
credit issuers charge higher interest rates on the
remaining balance due to people who close their accounts.
If this is the case on one of your cards, pay it off and
then cancel.)
3. If you don't have a card with an interest rate of less
than 14%, get one.
4. Resolve that you will use your cards only for essentials
over the next six months. For other purchases, use cash or
a debit card.
5. Add up your minimum monthly payments. Credit cards often
require very low minimums. Follow them and you will be
paying forever. For instance, if you owe $1,000 on a card
with a 17% interest rate, experts say it might take you 12
years and cost you $979 (in addition to the principal) to
pay it off if you make only the minimum payments.
6. Calculate how much you can pay over the minimum. Really
stretch your budget. For instance, let's suppose the
minimum payments on your credit cards total $350 a month.
What could you pay if you really stretched? How about $750?
No pain, no gain.
7. Apply all of your additional repayments to the card with
the highest rate. If two cards have the same rate, put the
additional money on the card with the largest balance.
8. Consolidate your debt. Many credit card issuers offer
introductory rates as low as 3.9% for six months. If you're
really serious about getting out of debt in a hurry,
transfer your largest, high-rate balances to a card with an
extremely low rate and pay them down aggressively.
9. Pay the minimum on your lowest rate cards until you've
paid off the balance on the more expensive cards.
10. Consider using your savings to get out of debt. Sure it
sounds harsh. But if you put together a balance sheet, your
debt would cancel out your savings anyway. If they're in
the bank, you're probably earning just over 3.2% to carry
debt at 18% or more.
Once you've paid off the balances, you've got to be serious
about staying debt-free. If you lack self-discipline,
consider using a debit card. Otherwise, pay as you go --
the entire balance on each card when it comes in.
This article originally ran on MSN Money
http://moneycentral.msn.com/articles/smartbuy/debt/1330.asp
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Article 3
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Jason's Corner
Well, this is the first week. I hope that this journal
helps me stay on track. My wife of 3 weeks, the beautiful
soul she is, took all of my credit card statements and added
them all up, something that I have been afraid to do. The
total added up to about $10,000 in high-interest, unsecured
debt. WOW. I had estimated it in my head at about $5,000
or $6,000, but never $10,000. So what do we do from here?
We have contacted a credit counseling agency, something that
we did not because of the amount of debt, but because of the
sheer number of accounts and due dates. I hope that this
will prove successful.
One thing I know, is that we will never be without. We have
faith in God, and know that he will provide. How do we
know? Because we have seen Him provide in the past. We
have literally prayed for a specific amount, and seen Him
provide that amount. I know that He will remain by our side
and that is a very comforting thought.
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Well, that's it until next week. If you would like to
submit an article or testimony, send it to
DebtFreeFor2003@yahoo.com
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