3 ways (I would use) to reduce debt

I've been out of debt (again) for months now and it definitely feels good. However, watching the news these days - or reading it as I do - makes me feel as if I might be one of a shrinking minority - those free of debt. For everyone who's out there, currently in debt. I have to say - I've been there. Here are some ideas for reducing your debt today.


1. Negotiate down your interest rates - One way to reduce debt is by taking the time to humbly call your credit card company and talk up the CSR about your interest rate. Now it should go without saying in order for this technique to work - you almost have to have an excellent payment history - If you don't, you most likely won't succeed. that being said, a good way to start out the conversation is by talking about how much a great customer you've been over the year's and how you'd hate to break up the relationship by switching to a card that will give you a better rate or even a 0% rate. If the CSR seems unwilling to budge, then immediately ask for a Manager and again start off polite. Being and @$$ over the phone line with someone who deals with jerks all day will not magically open up doors for you but, just might win you the 'jerk-of-the day' award - an award by the way that has more likelihood of increasing your interest rate than decreasing it.

2. Sell that shiny new car ..for a junker - You just graduated from College or maybe you got tired of carrying around Bondo to patch up your multiple dings and dents on your 80's model car. So you went out and headed towards the new car lot searching for something that was affordable but would be around for year's to come. The salesperson was so nice and explained everything except for the fact that you would be contributing a little too much money out of your monthly budget if you chose the cherry red sports car. But man, can it turn heads! Now, however, buyer's remorse has set in and the new car smell has long since left. You can turn the heads of the opposite sex but can't help pay for dinner or really go out for that matter. It might be time to swallow your pride sell the pretty little sports coupe and buy a 90's model dependable car until you're out of debt. It will be painful no doubt at first to switch in the automatic starter for the 'manual power windows' but, in the long run your pocket book will thank you and you'll be able to maybe just meet you date at the restaurant that's within walking distance form your house if you're that embarrassed of the new car. If you can't give up the car, just make sure your car and your pride don't lead you to bankruptcy - which will no doubt lead you to both in the process.

3. Pay the smallest balance OR the largest interest rate first - This is an ongoing debate between debt-hating people like myself. Which do you do first - pay off the bill with the highest interest OR the smallest bill? Honestly either way will probably work - it's just a matter of personal preference. If you have a pretty high credit card/debt bill in general - over $5K or $10K - then either way will get you there. I personally like the Dave Ramsey approach of paying off the smallest bills first. For example:

- If you have a 5 cards, 1 with a balance of $500 at 0%, 2- with a balance of $1500 of 15% and cards 3, 4 & 5 all with balances at or around $3,000 with 20% interest rates. It would probably be easier to pay off the $500 card first then the $1500 cards as well. You could also use that extra money from one less payment to attack the next card in line once the first is paid off. Having one less payment also builds your confidence and allows you to gain more focus as well.
- In contrast, if you have 1 card with $9000 on it at a 30% rate and 4 other cards with balances all under $1000 and interest rates under 15% it might be best to attack the big card. Even possibly look for balance transfers to the lower rated cards and then focus all your energy on the remaining balance while paying the minimum on the smaller cards. Have a small party (with cash) once the big one is paid off and then repeat said steps for the smaller cards.

Anyway, those are just a couple of ideas to get out of debt quicker. Just be aware that there WILL be hurdles along the way. Don't get discouraged and give up just realize that any worthwhile goal in your life will have roadblocks and detours. Your goal should always be to continue on despite these roadblocks.

Disclaimer: Reggie, is by no means a CPA or CFP so it would behoove readers to speak to professional financial adviser before making any major or minor financial decisions. Thanks for reading!

WebVideo of the Week: Money as Debt - part 5/5

Here is the final 3 minutes - of Money As Debt



Plenty of quotes to make you question reality here.

Why can't we just make a society where everyone has the same amount of stuff? Oh wait, that's called communism and turns out it was a sucky idea. Back to the drawing board.

Web Video of the Week: Money As Debt part 4/5

Here is the 4th part of the movie/video - Money as Debt. This portion offers possible solutions if you consider our money system a problem:



Unfortunately, the solutions presented are easier said than implemented. What do you think?

Web Video of the Week: Money as Debt part 3/5

Here is part 3 of the 5 part series of the Money as Debt video. This is the video I ran across the first time that opened my eyes. I guess if you think about it, it's somewhat common sense - but I'd say not that many of us think about it.



Are you dependent on bank credit? Most likely you are, just like the American economy that just took a big hit (well at least the Dow did) today. It would kind of suck if the economy went from a recession (which I think it is already in - no one wants to admit it though) to a depression - which means helloooo - 3 jobs!!!

WebVideo of the Week: Money as Debt - part 2/5

Here is part 2 of the Money as debt video:



Enjoy, let me know what you think.

Thanks!

WebVideo of the Week: Money as Debt - part1

If you haven't noticed I'm kind of on a kick about this Money is Debt concept. In order to continue amongst that vein I think I'll post the 5 parts - 1 part a week - over the next 5 weeks - enjoy:

Why "Money=Debt" part 2

Today I'd like to wrap up my post on Money is Debt.

Again, I'm basing this post off the video I came across a week ago: Money as Debt. This video up brings up some common truths about money that I feel are quite interesting.


MONEY+INTEREST = NEVER-ENDING DEBT
The key issue is a very simple one - that money that is in a bank or money that is being loaned is constantly creating more and more debt be it to the bank or in the example of our country to other countries we owe money to. This has created a world of never-ending debt.

As people and countries, work and work to get out of debt, in general they are on a never-ending treadmill of debt because the amount they pay back is always more than what they originally owed. When this goes on for years and years more and more energy has to be put in to pay back a debt. In the case of the U.S. though - this leads to a crippling amount of debt(+$9 trillion), the kind of debt that makes the world begin to say "your money's not good here" or at least "your money is not AS good here as it used to be". That's basically what the world is beginning to say in not so subtle ways as the American dollar loses more and more of it's value compared to the Euro and other currencies such as the Loonie.

Einstein once said:

“The most powerful force in the universe is compound interest”

The true question is -'Can our country's addiction to easy credit and unrestrained consumption be sustained?' or 'Can we keep buying all the crap we want without any drawbacks?'. In my opinion the short answer is 'no' we cannot.


SOLUTIONS?
The video Money as Debt offers a few solutions to the perceived problem with today's money system:

• Taxing bank profits - if our government began to more effectively tax bank profits we could definitely begin to see a reduction in our nation's overall debt. However, the taxation of banks would most likely lead to either higher loan prices for consumers or lower overall return on individuals investments or most likely both.
  
• Banking as non-profit service - I think this would be a wonderful idea. The only problem with this is that so many in powerful positions are linked to the banking industry that a law or a non-profit such as this would likely ever come to fruition because bankers enjoy their income and most experienced bankers would not settle for a lower income.
  
• Return to gold-based money - money that is backed by gold in the bank (like the U.S. Dollar used to be) would be a fairly durable type of money and might hedge inflation a tad, However, gold is obviously very hard these days to value and even if the process suddenly became easier, those that are fairly wealthy may try and corner the market on gold and deplete the world's gold supplies by holding it for themselves.
  
• Return to silver-based money - since silver is more plentiful it might work a little bit better to make a durable currency however, again the issue becomes how you can value silver on a regular basis without speculating.
  
• No-interest money - The idea here is that if money was based equally for everyone - possibly based on hours worked - rather than dollars per hour. There would be less inequality for money and dollars would retain there value longer. However, who's to say that the work that a retail cashier does should be reimbursed at the same rate that say a judge or a doctor? ( I have a feeling this idea wouldn't go well at all here in the U.S.)
  
• Local barter system - This idea would be to have a barter system for local goods in your local area. As Dobson (my relative) mentioned, this would most likely be a step backward for progress in my opinion.
  
• Inflation instead of taxes. - one last unique idea would be to have a steady amount of inflation instead of taxes on income. I think this would be confusing at first, but may work. It would possibly put a strain on the Fed - as for example : One Month you may earn $50,000 and a few months later - due to inflation, you may Earn $60,000 so the value of certain items would continually be fluxed.
  

After a long discussion about this article/video with Dobson (my relative who is extremely interested in economics, just not in making any posts here) it seems that - in his opinion the fact that Money is debt is a basic economic principal. The fact that money is simply created without any pre-existing money to show for it is a part of this process.

I think it is somewhat depressing though, that Money - this this thing that we can eat, we can't stack to create shelter, we can't use as clothing - but we are so dependant on - is made simply by signing our signature on loan documents - again and again. Hopefully, my signature will only be needed for one house...and I'll be paying cash (or Euro's - *sigh*) for everything else.