100s if not 1000s

Finding debt relief through debt negotiation can seem very appealing at the outset. However, before deciding on this option, it is important to understand the pros and cons of the process of negotiating credit card debt.

Most people hire a debt settlement company to do the dirty work for them. The first process they will do is have you stop making any payments toward your debts. Instead, the company will set up a trust account for you to put your payments into. Then once the account has enough money (between 25-50% of the total debt you owe) the company will begin negotiating a payoff amount with your creditors. Typically this amount will be no more than the cash you have already accumulated in their trust account. Once an amount is settled on, the company will pay the debt off in one lump sum.

Not everyone will benefit from debt negotiation. Everyone circumstances are different and so they should thoughtfully reviewed before a course of action is set. First of all you have to be at least 3 months in arrears in order to be considered for this program. Second, it will sting your credit because you will be forgiven some of your debt. And last, you will most likely receive a 1099 form at the end of the year with the amount of the forgiven debt and have to pay taxes as if you made that money. However, for a person that is facing bankruptcy as the other option, this is a far better plan. Also, it will help with stress, because a settlement company will be screening all the calls from your creditors instead of you.

Some disadvantages of it are that you will have to pay a company if you hire them a lot (typically 20% of the debt that is forgiven). You will get bad credit ratings (when you stop making your payments in order to negotiate). You will have to pay taxes on the forgiven amount. And last, your credit report will show the debts as “paid as agreed” or “settled”

Determining whether or not debt negotiation is right for you is a weighty matter. Do not take it lightly. These tips will help you in your consideration, but you should do more study before making your decision.

This is negotiating credit card debt a good idea. How to make the most of a bad situation.

As we begin the New Year, the nation’s economy is crumbling. It is becoming apparent that protecting your finances is extremely important in addition to protecting your identity. To get you off on the right foot, we have listed several tips and suggestions to get your financial house in order.

1. Make sure you know the difference between your needs and your wants. Financial security depends on you spending money in the smartest possible way. For instance, gasoline is a need while ordering a pizza is a want. Frugality is absolutely a necessity. Clip coupons and watch for sales or deals on things you will be needing soon.

2. Put away 6 months living expenses into a Savings Account. Estimate 6 months of living expenses by totaling your monthly bills, gas, and grocery expenses and multiplying by 6. Put this amount of money into a savings account. Start by simply putting a little away every month from your paycheck. This will be your rainy day fund and should only be touched in an emergency. If you absolutely must dip into it, make sure that it is for an emergency and that you replace it as soon as possible.

3. Pay off all of your DEBT. Begin paying off your debt by starting with the highest interest bearing debt like credit cards and personal loans. Sometime the interest rates on these can be as high as 39%. Do this before you begin saving. It will help to save you money in the long run and is one of the most important steps to gaining financial independence.

4. Protect your Identity. Identity theft has become the crime of choice in recent years. It costs victims on estimated 6 billion dollars a year to pay for identity theft. You can protect your money and your identity with a service like Life Lock. Life Lock is a service that guarantees protection of your credit backed by $1,000,000 to you if they don’t. They help to reduce the amount of credit card offers you receive and pro-actively monitor your credit.

5. To keep you from dipping into your savings unnecessarily, put extra money into CDs, money market accounts, or other securities that are harder to access. That way, you won’t be tempted to spend all that hard saved money.

6. Write out a budget and stick to it no matter what. This is so super easy to do. Label several jars with categories like “eating out”, “movie night”, or “entertainment”. Every payday, put $40 in each jar. That will be your allowance for that particular category. When the jar runs out, you have to wait until the next pay day to replace the money and your budget for that item. This sounds tough, but it can really be of benefit to your finances.

The current world economy is in bad shape. That is no big, sensitive secret. As a result, we have already seen government bailouts of major companies we thought would always be there. Dont let that happen to you in 2009. Follow a simple budget, look for deals and just spend smarter.

If you are careful with your money, you won’t need a bailout. Maybe, you will one day be teaching CEOs how to run the finances of a company!

Linda Seamore is an expert on the subject of personal finance and has written numerous articles on it and on credit protection services like LifeLock. She suggests researching all credit protection services like www.lifelock.com before signing up.