It’s no joke.  There really is such a thing and it could be costing you a lot of money.  Behavioral economists have studied the spending habits of Americans and come to the conclusion that many of us have a dissociative spending disorder.

Dissociative means a partial or complete disruption of the normal integration of a person’s conscious or psychological functioning.  It is a process that severs the normal connection to a person’s thoughts or can disrupt normal cause and effect thinking.

I know that sounds pretty serious and in the case of some folks it can be if the spending disorder gets them into financial trouble.

How many times have to been tempted to buy something just because it was on sale?  It didn’t matter that you didn’t need it because it was 50% off and that was too good of a deal to pass up, right?  So you whip out your credit card and “save” a lot of money…

Not really because you just “spent” money on something you didn’t really need because your brain is focused on the “deal” you just got not the “money” you just spent.  This is especially true if you purchase with credit.  Using plastic money does not register in the brain as money out of your pocket the same way cash does.  If you have $100 in your wallet and you spend $60 of it, you can see what is gone and how little you have left.  When you use your credit card, you get the card right back and the money you spent is not tangible or real.

Merchants and advertisers have also figured this out and rely on you to impulse buy when they put up big signs that say “sale”. 

You can out-smart them though with just a few small changes.  Pay with cash whenever possible to avoid the credit card/plastic trap.  Don’t buy things you don’t need no matter how good the deal is.  Don’t buy anything expensive on an impulse.  Take a day or two to analyze if you really need and can afford the purchase and how you are going to pay for it.

The New Year is a time of new beginnings.  A fresh start and a renewed outlook.  Most Americans participate in the age-old tradition of making New Year’s Resolutions and not too surprisingly, we all share similar goals when it comes to improving ourselves and our lives.

Below are ten of the most common resolutions. See how many are on your list too.

1.  Lose weight and/or eat healthier
2. Quit smoking
3. Exercise more/join a gym
4. Spend more time with friends and family
5. Get out of debt
6. Enjoy life more
7. Quit drinking
8. Get organized
9. Learn something new
10. Help others/donate/volunteer

While all of these resolutions are admirable, it’s not likely that the average person could accomplish all of them in one year if it that was their goal.  It’s actually best to choose one resolution—the one most important to you and make that your top priority.  Or maybe choose your top three but work on only one at a time in order to be successful.  The key to achieving your goal is to make it realistic.  Saying something like I’m going to lose 50 lbs by Valentine’s Day is only setting yourself up for failure (and frustration).

Statistically most Americans have given up on their resolutions by early spring and don’t revisit them again until the next year but by breaking it down to just fixing one thing in your life; you have a much better chance of being successful.

If getting out of debt is high on your list, First Rate Debt Solutions is here to help.  With millions of dollars in debt settled in 2009 and a wide range of programs we can tailor to fit your needs, 2010 can finally be your year to become DEBT FREE!

Happy New Year!

I’ve seen several articles recently (most likely sponsored by the big banks) really trashing the debt settlement industry and debt settlement companies in general saying that they don’t work which is absolutely not true.

Just like in any industry, there are good companies and bad ones.  Not all companies are the same and who you choose to work with will make a big difference in how successful you will be.

Debt settlement works and it works well for the right person.  Each situation is unique and debt settlement is not a one-size-fits-all solution.  It must be the right solution for you and you must be committed to making it work.

Many people want to look at debt settlement as a “magic pill” or “get out of debt free” card.  It’s not like that.  It’s a serious program that takes 2-3 years to complete that will save on average 50-60% of the debt owed.  But it doesn’t happen overnight and it’s not without its drawbacks.  

A legitimate company will explain the program thoroughly along with the other options available to make sure that it is the right choice for you.  They will also explain exactly what to expect and what you need to do to be successful.  If you can’t commit to doing what it takes then it’s not right for you.  Here are a few tips to make sure that you are successful if you choose the debt settlement route.

1. Do your homework and find a legitimate company that follows all state and federal guidelines and is a member of one of the professional trade organizations like IAPDA, TASC, or USOBA.  Check them out with the secretary of state to make sure that they are a legitimate and licensed business.
2. Be completely candid and honest with the settlement company about exactly how much you owe and what you can realistically afford.  They are there to structure a program that works for you and need to know the specifics to do that.
3. Comply with the terms of the contract and know what they are.  Read the contract before you sign it and ask questions if you have any.
4. Make your payments each month.  You can’t get out of debt if you aren’t fully committed.
5. Don’t talk directly to your creditors or interfere with the negotiators efforts.  The creditors are professionals and know how to intimidate you and coerce you.  Professional negotiators know how to “talk” the talk and that’s what you are paying for.
6. Be Realistic.  Remember the amount of time you signed up for the program.  That’s how long it takes to get out of debt.  Don’t sign up for 36 months and then get mad when you aren’t out of debt in four months.  Be patient. 
7. Start saving and cutting back on any unnecessary expenses.  You are trying to get out of debt and the faster you save money, the sooner it will happen.

Being in debt is a very stressful situation and one that requires immediate attention before it gets even worse.  Finding the right company with trained, caring financial consultants is the first step to navigating a path to financial freedom.  Debt settlement, done properly by a reputable company, WORKS.  It will get you out of debt much faster than you could just paying your bills normally and you will pay back far less.  You'll also have a chance to 'start over' without the stigma of a bankruptcy.

After the bankruptcy laws were changed in 2005, there was a drop in the number of filings each year.  But that drop was short lived as the declining economy pushes more and more Americans into filing for bankruptcy protection.  The numbers in 2008 were up over 30% from those in 2007.  These frightening statistics are all too real.

The real question now is after filing, how can you recover your financial well-being and get back on track?  First and foremost you are going to have to be patient.  It’s a long but achievable process.

1. Start by applying for a new credit card.  One with the lowest fees and rates you can qualify for.  Remember when you were in college and got your first card?  You were excited even though it was 30%.  That kind of card may be all you can get.  Take it and spend a little bit of money on it and pay it off every month.
2. Keep your debts at a minimum and make every payment on time.  This is critical to rebuilding your credit history.
3. After a year or so, apply for a another credit card with a lower rate and ask that the rate be reduced on the original card now that you’ve proven you make your payments on time.
4. Keep your balances under control.  Do not spend a lot on any cards or loans.  Part of a good FICO score is a low debt to available credit ratio.  Don’t buy anything you can’t afford to pay off in one month.
5. Don’t get sucked into any kind of credit repair scheme.  There is no magic pill to wipe out a bankruptcy.  It takes time and discipline.  The bankruptcy will stay on your credit report for 7-10 years but if you play your cards right, you can start to rebuild your credit before that.

The easiest way to recover from financial distress is to avoid bankruptcy in the first place.  Debt Settlement can often be the optimum solution to helping you avoid the long-term negative effects of a bankruptcy while still providing serious debt relief.  The key to a successful debt settlement program though is to get into the program before you are “bankrupt”.  Sometimes if you wait too long to address the situation, you leave yourself no option but to file. 

If you think you might be headed that direction, contact the consultants at First Rate for a free evaluation to see if debt settlement can help you.

This is a very common question and one that is easily explained.  In almost all cases, secured debts are not negotiable and in almost all cases, unsecured debts are.  That’s the short answer, but here’s the difference.

All debts are either secured or unsecured.  A secured debt is usually tied to an asset, like a car for a car loan or a house for a mortgage. If at any time you stop making payments, the lender (or lien holder) can repossess your car or foreclose on your house.  Secured is the same as collateralized and they just take the collateral if you can’t pay the debt.

An unsecured debt is not tied to any asset and includes most credit cards, bills for medical care, signature loans, private student loans, and debts for other types of services such as cell phone service and other utilities.

Some examples of unsecured debt that are not negotiable are:  government backed student loans, taxes (current or past due) and other government loans.  If you owe money to the IRS, you are most likely going to get a payment plan (best case) unless you file for bankruptcy.

One example of a secured debt that might actually be negotiable is your home mortgage.  Over the past year, we have had tremendous success with home loan modifications.  In most cases, we were able to negotiate a new lower payment for our clients significantly improving their ability to pay and therefore avoiding foreclosure.

This is the question on everyone’s mind today.  We’ve been in a decline for almost 2 years and there are a few signs of some recovery but not really enough to say we’re headed back in the right direction.  Here are a few things you should be watching:

1. The new higher loan limits and the lower interest rates earlier this year seem to be helping to boost the lending and real estate market a little bit.
2. The huge government stimulus package has helped consumer spending.  By putting money into people’s pockets, they are in turn eating out and spending more than they would have been able to which keeps businesses in business.
3. There are predictions that there will be positive GDP growth in the second half of the year which is typically a sign that the economy is improving.
4. That growth is predicted to be ever so slight which may be good as it will not send any type of spike in interest rates.
5. Job losses are expected to continue to rise in the second half of 2009 which will most likely offset any other positives helping in the recovery.
6. Mortgage foreclosures and tough lending guidelines will keep housing prices low for at least another year or so.
7. Any changes in the housing market will be good indicators that things may finally be on the “up” swing.

There is some moderate hope that 2010 will show some stability as equilibrium pricing for houses and the unemployment rate stabilizes.  Until those two things “hit bottom” and start to turn, it’s going to be hard for other aspects of the economy to follow along.  One important thing will be for the government (and the American people) to stop borrowing.  The increased debt will only make it harder for us to recover when the time comes.  We all need to re-evaluate our financial situations and make sure that we are looking out for the future.

Now is a good time to get your financial house in order.  Getting out of debt and positioning yourself for the recovery is the best thing you can do for yourself.  Take a moment to speak with one of our trained consultants to find out what you can do to get out of debt.

There are many reasons why people get into debt and only just a few solid ways to get out.  The most important step in getting out of debt is acknowledging your situation and analyzing your finances to find out if you really have a problem and if so, how big is it.

The first step is to make a budget.  In one column write down all the money you earn in one month and in another column, write down everything you spend including your Starbucks habit and any other seemingly small incidentals that can really add up.

Total the two columns and that’s your first snap-shot into your finances.  Then start to work on the difference.  If you are spending way more than you are earning, you are headed for serious trouble.  How big of trouble depends entirely on the difference between the two numbers.  If it’s less than 10% difference, you can probably cut back and make it work by cutting back on some of your expenses like going out to dinner, shopping, and other extras.  If the difference is between 10-20% you may need to sell something like a car or cancel your cable service to really balance your budget.  Anything from 20-50% may require a restructuring of debt.  Anything higher than 50% may mean a possible bankruptcy.

To get yourself out of debt follow these simple tips:

1.     Write down every single thing that you spend money on for a month...everything!

2.      At the end of the month, cross off all the things that you know you can do without and stick to it.

3.      Don’t buy anything that you don’t absolutely need and look for the best deal on what you do need.  Use coupons at the grocery store and only buy the meats cuts and produce that are on sale that week.

4.      Evaluate all of your utility expenses.  Cut back on water, electricity, gas use and cancel your cable or reduce the package to save money every month.

5.      Don’t drive anywhere that you don’t need to go and combine all of your errands into one trip or even at one store to save on gas.  Carpool for school and work if possible.

6.      Try to negotiate with any of your credit cards that you are carrying a balance on to lower the monthly interest rate.

7.      Save aggressively to start paying down any debt you may have accumulated and leave your credit cards at home so that you won’t spend anything more.

8.      Prepare for the once a year expenses like auto insurance and property tax.  If you have a little money left over at the end of the month, save it for those expenses or any type of emergency.

Have you seen the movie? A typical Hollywood entertainment piece that depicts a young woman living in New York City who loves shopping and fashion so much that the mannequins actually speak to her and beckon her to buy more than she can afford. Today’s marketing tools are sometimes just as seductive enticing people to buy things that they both don’t need and can’t afford. After she maxes out every credit card and has no money to pay her bills, she ironically gets a job as a columnist for a money magazine.

The movie had all the right elements; the love story, the conflict, and the villain. The bad guy is a tenacious and nasty bill collector who calls daily and is stalking the poor girl trying to get her to pay her debt. For anyone who is actually living that nightmare, the movie would not be very entertaining but it did highlight the harsh realities of being in debt.

Of course, it had a “Happy Hollywood” ending where the girl was able to get herself out of debt with no help but that’s not how is usually works in the real world. In the real world, there is no easy way out but fortunately First Rate Debt Solutions has real solutions that do work for real people. Debt Settlement or Debt Management is the most effective way to get out of debt, escape the nasty bill collectors and avoid bankruptcy. Call us today for details on what we can do for you. 877-332-8730

If you're one of the thousands of Americans struggling just to make their minimum payments on their credit cards each month, I have bad news.   Citibank, MBNA, and Bank of America recently announced that they are raising the minimum monthly payment from 2% to 4% of the outstanding balance.  That's double and it may be just enough to send tens of thousands more Americans into serious delinquency.  Other major banks are expected to follow suit as well.

So what can you do?  The first thing is to figure out if you can continue to make your payments.  If not, you need to address the situation immediately.  The longer you wait, the more the interest, late fees, and balance will grow.

If you have savings, you may want to take some to pay down the balances but if you are truly cash-strapped and can't make ends meet then a debt settlement or debt management program may be in order.  The key to any effective debt program is to be qualified by an expert and then to get into the program before your debt escalates to the point of bankruptcy.

At First Rate Debt Solutions, we have trained experts who will analyze your situation and customize a program to meet your financial goals and budget.  Times are tough but there are answers out there for people in trouble.  If you need help, give us a call.  Toll Free (877) 332-8730.

According to recent statistics, there were 984 million bank-issued Visa and MasterCard credit card and debit card accounts in the United States in 2006.  If you add in American Express and Discover, that number jumps to 1.5 Billion cards in use which represents about 73.0 percent of U.S. families.

With these types of numbers, it’s no wonder that America is a nation in debt.  Credit cards have become a habit and millions of Americans are addicted. The total U.S. consumer revolving debt was $963.5 billion in December 2008 and about 98 percent of that debt was credit card debt.

These numbers can be staggering and so are the implications.  The average consumer has a total of 13 debt obligations. These include credit cards/unsecured debt (such as department store charge cards, gas cards, and bank cards) and installment loans (auto loans, mortgage loans, student loans, etc.).  Of these 13 credit obligations, nine are likely to be credit cards.

Nearly one in every three consumer purchases in the United States is made with a payment card, including credit, debit and prepaid products.  Credit and debit cards provide a great convenience but when finances are tight, 59 percent of people surveyed said they would pay their credit card bills last.

About one in six families with credit card debt pays only the minimum amount due every month and 28 percent of those surveyed say their ability to pay off their credit card balance has become more difficult in the past year.

Where all of this gets really scary is in the interest rates and fees and how quickly they add up.  Most credit cards have an interest rate of at least 12.5%, many have annual fees, and almost all have late and over the limit fees.  If you can’t pay your bill in full and on-time, these fees can substantially alter the cost of whatever you purchased on the card.  Since 55% of all consumers keep a balance on their card, that’s a lot of dough.

If you are one of the many Americans that is finding it harder and hard to keep up with your credit card debt, there are solutions.  Don't let mounting debt destroy your financial future.   First Rate Debt Solutions has answers and we can help.

(data source: creditcards.com)