Today’s economic climate has caused many people to seek more help from credit card companies. Many people’s income has decreased while their credit card balances continue to rise. For some, this is the only way they know how to survive. Because people are relying so heavily on credit cards, sometimes these credit card companies take advantage. Some consider their tactics evil and unfair. Yet, what they are doing is unfortunately considered acceptable.

Rate Increases & Double Payments

One issue many people are considered about is the increase in interest rates. These interest rates are increasing for many companies. Some are as high as 36 percent. Also, there are companies that are doubling the minimum monthly payment that is required. This makes it difficult for consumers who are already struggling to pay their bills and do not want to hurt their credit. In addition, many companies have found new ways to charge fees. They charge fees for more than just a late payment and the amount that is charged has doubled.

Be Careful

Although many people are advocating reform for these credit card companies, for now the trend seems to lean towards these practices. Hopefully, you will not abuse the credit you have. Be careful and smart about how much you spend.

Many people today find it difficult to get approved for credit given the nature of the economy. Banks are not lending and credit companies are not approving as many people as they used to. Some people say that they have an extremely difficult time getting approved for credit of any kind, and this makes it extremely difficult to survive in today’s economy.

Don’t Get Taken Advantage Of

Some credit card companies are taking advantage of people in this situation. One company recently sent out an offer to customers saying they were pre-approved for a credit card. The only requirement was that they called or went online to accept the terms of the application. These terms were listed on a separate page. They indicated that the person would receive $300 of credit. The credit card company would charge a fee of $75. Therefore, the net balance on the card would be $225. This fee might sound high, however some people are desperate for credit so they apply.

Read The Fine Print

Later, they learn that they did not read the fine print and their credit card had an APR of 88 percent. This means if they do not pay the balance off in full (including the initial fee) it will almost double. Beware of scams out there like this one.

Somehow the money is always gone before payday, and you find yourself coming up short month after month. If you want that to stop, consider plugging some easy financial leaks.

Do you pay ATM Surcharges? It’s only a couple bucks here and there, but try taking out more and visiting the ATM less, or take out a month’s worth of cash when you deposit your paycheck. Keep cash you don’t want to carry yet in a safe place at home and save yourself the surcharge.

Do you carry a credit card balance? Technically you’re paying someone for the privilege of borrowing their money – but if you pay off the entire balance every month you can get this service for free. Why not take advantage of that, and keep the money for yourself?

Have you ever overdrawn an accounts? Banks charge $20-$45 every time this happens! Monitor your balance thorough online banking – or simply create a buffer. Assume that $150 is your -0- mark. If you go below you must still replenish the funds before you can spend again, but the bank won’t slap you with a fee if it happens. If you can’t afford to start large, start small and work up as you save. Don’t keep a larger buffer than you need (this money isn’t working very hard for you, after all) but keep enough that if a check or bill you forgot about gets cashed, you’re still covered.

Sounds ironic, doesn’t it? I mean, planning is the opposite of freedom, right?

Wrong.

Yes, planning is work, but having a plan you stick to will keep your options open now and provide new ones in the future; that’s what “financial freedom” means.

* Making a plan can keep you away from bankruptcy, which limits everything you do from buying a car to renting an apartment to getting new bank accounts.

* Having a plan will help you stay out of debt, and break the hand-to-mouth cycle of spending your paychecks before you get them.

* Sticking to a plan will improve your credit rating. This opens up huge options and allows you to do more with the same amount of money, since things are cheaper for people with higher credit ratings.

* A plan which includes investment can reap hundreds of dollars from stocks, bonds, and shares. For most people, an investment plan is just something to create for retirement, but starting one while you’re young will allow you to retire earlier and more comfortably for WAY less risk and initial principal.

Letting go of the need to feel your spending is unfettered now will allow you to achieve financial stability. That will naturally provide you a much truer form of “financial freedom,” which means more options, more money, and less stress.

The question of using cash versus credit cards is not easily answered in one word. The system which works best for any given individual will depend on their spending habits, budgetary needs, personal preferences. When choosing for yourself, carefully consider the pros and cons of each.

Cash provides its own physical indication of how much you can spend before you run out, which can be very good for the person trying to stick to a budget. Cash is accepted everywhere, and you don’t have to worry about identity theft or fraud if you’re paying with cash. Cash, too, has it’s flip side. It’s easier for a thief to use than a stolen credit card, and you have to make actively replenish it to have it on-hand. (Though if you’re trying to stick to a budget, this might be a reason to use it.)

Credit or debit cards are smaller than wads of cash, and therefore easier to carry and handle. You’re not burdened with exact change, and you get a list of all your purchases at the end of the month which details exactly what you spent where. The price you pay for all this convenience, however, is pretty high. Cards are extremely easy to abuse, since you can’t see how much you’ve spent until the end of the month. If you can’t pay them off completely, the interest rates are exorbitant, and it’s extremely easy to get into credit card debt if you’re not really diligent with them.

Bankruptcy is around to help out people too far in debt to stay afloat - but if it were easy, painless, and without repercussions everyone would do it. Here are several things to consider before declaring bankruptcy.

It costs money to file, and you’ll probably need a lawyer to get everything in order, which costs more. After paying all this, you may find that you don’t qualify. Then what?

Bankruptcy effectively ruins your credit for seven years. You can work to improve your ratings, but after a bankruptcy no one will lend you the money to let you try. If they’re willing to take the risk, they’ll charge you an arm and a leg (with interest) for the privilege. Ironically, things cost more after a bankruptcy. “Subprime” lending is when you, the borrower, are “less than ideal” The loan institution charges higher interest rates to lend you money “to account for the risk.” This decimates your ability to make large purchases since a higher interest rate can push the payments and the final price out of reach.

It’s embarrassing. Your bank may not even trust you with a debit card. You’re treated like a child who misbehaved, and that be devastating to anyone’s self esteem.

Filing for bankruptcy flags you as a financial pariah; no one trusts you. In declaring you take on a financial problem for seven years that will relieve some of your burdens now. Don’t get caught in that trap; do your research before you file.

The time has come to take financial control of your future. Managing your debt is challenging, but not impossible.

Find a budgeting system that works for you. This can be anything from pencil and paper to a high-tech computer program. It doesn’t matter what method you use as long as it makes sense to you and accounts for your income and expenses.

Find a way to stick to that budget. “Cash & carry,” helps keep some people from spending more than their budget allows. Others prefer a spending diary to keep them on track. Whatever you do, keep your budget in mind and spend sensibly. This will keep you from incurring more debt while you’re trying to pay things off.

While you’re making your budget, make a plan for getting out of debt. Write down each of your debts with the amount you owe and interest rate for each. Figure out how much of your disposable income you can reasonably put toward your debts, and decide in which order you’re going to pay them off (base this on the interest they accrue and the amount you owe against each). Pay as much as you can reasonably afford to, but don’t throw too much at it; make sure you have enough money to live on and still enjoy yourself a little. There is a compromise between paying off your debts and allowing yourself to spend money; finding this is very important to your quality of life.

A few tips and tricks for sticking to a budget and saving money on a variable income:

* Cash and Carry so you don’t overspend.

* Don’t keep a credit card balance. If you must, pay more than the minimum (in lean months pay at least the interest and any fees) and pay it off completely as soon as you have a month when you earn more than you owe.

*Don’t let expendable purchases hide as “credit card bills.” Pay them out of your disposable income if that’s where they belong.

* If you make a commission on top of a salary, use your salary only for bills. If you have extra, put it into savings. After everything else is paid, use whatever is left of your commission for disposable income. Consider your commission to be your play money, but only after you’ve paid the bills and your savings account.

* Keep an Emergency Savings Account which will cover at least one month’s bills. When you use money from this account replenish it as soon as you can afford to. Consider the repayment like a regular bill when creating a budget for the next month.

* Save for big purchases and make them with cash so you don’t incur debt. NEVER use your emergency savings for this – open a checking account just for “disposable” savings.

*Prioritize bills and savings by date and importance; this can avoid expensive fees which do nothing but drain your wallet.

Keeping a spending diary can be a shocking and illuminating experience. If you’re strapped for cash or trying to stick to a budget, it can be a highly valuable one, as well.

You’ll need a small notebook, a pen or pencil, and maybe a calculator. (If your cell phone or wallet has one built in, you’re in luck!)

All you have to do is write down what you spend – whatever you spend.

Tracking money as it comes and goes – forcing yourself to pay attention to every penny – can really open your eyes to your spending habits. If you have to write down every expense, you’ll think twice about that candy bar from the vending machine, or those fabulous new shoes that you don’t really need.

Whatever you do, write it down. The one thing about keeping a spending diary is that you have to keep at it. It sounds so easy; “just write down everything you spend,” but it can be deceptively difficult to remember. Try keeping your notepad IN your wallet. That way you have to take it out every time you try to take out money or a card. This physical reminder can help to keep your spending diary accurate, and may offer incentive to avoid purchases that you don’t need to see written down, later.

Want to make a budget that suits your lifestyle, but don’t know where to start? Track your spending – knowing how much of your money goes to what types of expenses will help you to create a budget you can stick to, because it’s based on your existing habits.

The Paper-Bag Plan

You’ll need a notepad and handful of paper lunch sacks. Or an expanding file, or a few envelopes. Label these based on how you want to track your spending. For example, you might use four bags, and label them with the following titles:

* Bills

* Entertainment

* Groceries

* Transportation

You could always go farther into depth and keep three bags for “eating out,” “bar tabs,” and “shopping,” instead of just one for “entertainment.” Decide what you want to track and label your bags accordingly.

When you’re done, keep them where you leave your wallet every night.

Now, just save your receipts every day and sort them into the appropriately marked bag every night. If you don’t get a receipt make one. Carry a notepad and write down the dollar amount, the date, and what was purchased. Sort that.

Tally up your receipts once a week. Write the date and the total on the outside of the bag under the label. Throw away (or file) the old receipts and you’re ready to start the next week’s count. With the running weekly total on the bag, you can easily make a monthly budget based on your actual spending.