Debt Recover

Debt recovery

When building a home you start with a foundation. Brick by brick the structure is erected until you have shelter. A home, safety, a place to rest your body and mind. A place for famlily. Financial independence is that completed home. The roof, the walls, and the furnishings, the family photo above the mantel. I don't think it takes an architect to know this, but I don't believe that single person can build a home in a day, several days, or even weeks. It's done brick by brick. Last time I was here, I had an opportunity to speak about financial literacy and specifically, the power of compounding. Can someone please remind us what compounding is? It's earning money on your money. Allowing your money to gain interest over time so that you fund your education, retirement, the new Chrysler or Cadillac. However, in order to save money, you MUST spend less than you earn. Right!!!! You must spend less than you earn!!!

We are in a positive place, among positive people, and positive things are in happening for you and in your future. In order to add a positive mark into your savings we need to manage our debt.

1. Know what your debts are. As simple as this is, you can't recovery from you things that you do not know that they exist.

a. Whether its sitting down with a notepad and listing your monthly expenditures as you receive your bills

b. Or keep every receipt from every purchase for a month or weeks.

i. No matter how small the purchase, tracking and understanding your spending habits is an important building block of your budget.

2. Know your interest rates. Your credit cards, your mortgage, your auto loan, personal loans, student loans.

a. You will be the most effective in eliminating credit card debt when you align according to interest rate and you work towards paying the most on the card with the highest rate. Regardless of the balance that you have, make your minimum payment on every card and the card with the highest rate, apply as much as you can to the principle.

i. Based on a financial website that I reference frequently, the average annual percentage rate, or APR, on a standard credit card these days hovers around 13%.

b. If you have a higher rate on your auto loan, see if there is funding options out there that is at a lower rate.

c. A mortgage is a li

SITTING IN THE back of my closet, I've got a teeny black dress that's about the size of a bathing suit. It's made out of some sort of frightening spandex material that I thought was absolutely fabulous about five years ago, when in a fit of spontaneity I slapped down some plastic and paid a ridiculous $199 for it. Since then, it's sat in my closet, tags still on, waiting for the perfect event. Recently I squeezed myself into it -- and barring some sort of blackmail situation, I can safely say that this item will never, ever see the light of day.

That's especially a shame since I've now probably paid about $400 for it. You see, like 50 million Americans, I have credit-card debt. It's leftover from my 20s, when I was in grad school and then beginning my journalism career here in New York City. Back then my salary barely covered my rent, and, well, a girl's got to live a little.

Slowly but surely, however, I'm paying those cards off. But as more people, like myself, dig themselves out of debt, the cards seem stacked against us. It's appalling enough that the average annual percentage rate, or APR, on a standard credit card these days hovers around 13%, according to Bankrate.com. But worse, many people are still stuck paying rates of 25% or higher. And penalty fees can run as high as $39 a pop.

Does it seem as if you can trigger those penalties just by breathing these days? You aren't far off: Over the past few years, credit-card companies have become increasingly dependent on the fees they charge users. In 2004, Americans paid a whopping $24 billion in credit card fees, according to CardWeb.com. That's an increase of 18% over the previous year. So while it used to be that fees were applied to keep you on the straight and narrow, credit-card companies are now financially dependent on your breaking their rules -- and paying the price. "It's a fact that they are tacking on new fees and more expensive fees," says Travis Plunkett, legislative director for the Consumer Federation of America. "Income from fees has become much more important for profitability."

Credit-card companies are now required to disclose all their various penalties, including their penalty APR for late payments. They also need to state clearly (and in decent-sized print) the permanent rate on a card that comes with an introductory teaser rate. Most of this information is included in what's known as the "Schumer" box (named after New York Democratic Sen. Charles Schumer), typically located on the back of an application.

But some consumer advocates say these rules don't go nearly far enough. "It's a bunch of baloney," says attorney Howard Strong, author of "What Every Credit Card User Needs to Know." "You can say in big letters, 'I'm going to rip you off!' or you can say it in small letters. It doesn't make a difference." Part of the problem, says Strong, is that credit-card companies are lightly regulated. Federal laws don't control things like over-the-limit fees and late charges, he says,