“I was thinking one day and I realized that if I just had somebody behind me all the way to motivate me I could make a big difference. Nobody came along like that so I just became that person for myself.”
– Unknown

Apparently, I ruffled some feathers last week with my subject line: “Thanks for nothing”. Well, in a sense, I’m glad–it’s always a good thing to get a reaction, especially when that reaction indicates a beating human heart.

Rightly so, people inherently recognize that gratitude is so critical for emotional well-being. Well, I tried to make the case that it’s also linked to *financial* well-being as well. In my opinion, money is a simple demonstration of what is valued–no more, no less. And there’s a certain kind of logic in how it moves through the system, and the hands of its bearers.

If, somehow I wasn’t clear last week, I’ll say it now very clearly to you: We deeply appreciate your trust, and are honored by the opportunity to help you realize your dreams. We understand that money is the fuel for those dreams–and not their fruition. Which is why we work so hard to help you keep more in your bottom line…so your REAL dreams can come true.

Sure, it may seem a bit lofty for a simple accountant-type, like me…but it’s how we remember that every dollar and cent matters. Your dreams are important, and worth protecting–zealously. So again…thanks for letting us help.

Now, to my Strategy Note for the week…as you may be staring at some debt, I further want you to know that we do NOT “judge” you for the decisions you’ve had to make during these tough times. Simple…we’d just like to walk alongside you, and help you out. That’s why I’ve put together some strategies for beating back that debt.

And, as always, I would love your feedback, as I read every comment that comes my way!

“Real World” Personal Strategy
Beat Back That Debt

First, some sobering numbers–and they may be worse now: by the end of 2008, the average credit card balance per household in America was $8,329 and the average balance per card was up 11 percent over the previous year to $1,157. 

You may be in a better situation…it may also be worse. So, to answer the questions we often get around here, some basic strategy for you:

1. If you ever hope to pay off your credit card debt, pay more than the minimum payment each month.
If you only pay the minimum payment each month, your bill could continue to INCREASE, even if you completely stop using your card. This is called “negative amortization”–where you think you are paying on your debt but the additional fees and finance charges are more than the minimum payment. The bottom line is: Pay more than your minimum or you will eventually be in debt over your head.  

2. Implement a regular *system* for credit card debt reduction.
With online banking and automatic payment options, there are GREAT tools for ensuring you don’t mess up because of administrative chaos. If you feel you can’t manage all your bills by pen and paper, there are several good software programs available for keeping track of your financial records. 

3. You can negotiate with your credit card company.
No, you do not need to be an attorney or other professional to negotiate with your credit card company (you will need patience and persistency though). The rising amount of consumer debt in this country has made creditors realize that they need to be more understanding of their customers — if they hope to get any money back. If you file bankruptcy they are only going to get pennies on the dollar, so they are willing to make deals.

4. Write letters to each of your creditors acknowledging your debt and the situation, and tell each one when you can begin repayment.
Open communication always helps. Usually credit card companies get ignored and end up sending delinquent files to a collections agency. So they’ll actually appreciate your openness in contacting them and may be more understanding of your situation. Proactively dealing with your debt problem rather than hiding will not only help your financial problem but make you feel better about yourself.

5. Keep track of what you are able to pay each creditor every month.
If you are not able to pay the full amount of your credit each month, you still should still pay something to stay on top of it. You should work off a written budget so you know exactly where you stand. Some experts suggest that you divide your monthly debt budget by the percentage each bill makes of the total and pay that amount.

Here’s an example: If you owe a total of $1,000, and one credit card is $800 and the other is $200, and you only have $100 available to pay for that month… You should pay $80 on the $800 balance, and $20 on the $200 balance. This way you are reducing each debt by the same percentage.  

6. Don’t fall prey to intimidation tactics
No matter how forthcoming and honest you are, some creditors have been taught to be mean and downright nasty. Hang in there and don’t let this tactic intimidate you. 

Lastly–don’t let the IRS be one of those creditors. Let us help you this tax season, and THAT will be one less creditor to worry about. I guarantee it.