Sunday, January 4, 2009

Embrace Your Debt...

Jacked, squeezed, or pinched? That's what people are telling me is happening to them. These folks aren't necessarily struggling; at least they weren't before their rates got "jacked". I talked to a union pipe fitter out east who told me that he's feeling the squeeze because his rate got jacked from around 9% to over 30%. And he had never been late on a payment. When he called the credit card issuer they agreed that he was a preferred customer and promptly reduced his interest rate to around 20%. He's feeling the pinch because he's not getting as many hours at his job and the household income is down. Now he's struggling just to make minimum payments.

I'm talking to folks everyday who are telling me that they are getting "jacked" for no reason, other than these companies are losing (and have lost) billions with the mortgage market and now the credit card meltdown and they have to pull in cash from anywhere they can. Credit card accounts are a prime target. I heard a statistic that approximately 95% of consumers holding active cards can expect their cost of carry their card(s) to go up through higher interest rates, annual fees, and indirectly through lower credit scores. It's putting a lot of people in a bind that weren't in a bind before.

What does this mean to me and you? It means that if you are carrying balances on cards, personal loans, or lines of credit with unreasonably high interest rates or finance charges you need to take action to reduce and eliminate these balances as soon as you can. While there are no “cookie cutter” answers as to the best ways to reduce the bad debt, the consensus is to use your current income to make extra payments to get these paid off. Know your cards, balances, rates, etc. and strategically pay them down. If you cannot reasonably expect to accomplish this on your own you might what to consider outside help.

Have you been jacked, squeezed, or pinched? How are you coping? Tell us about your experience, what you are going through, how it’s affecting your business/personal life, and what you are doing to address your situation. We might be able use your story, anonymously of course, to help our readers with their personal “credit crisis”.