Archive of Debt Consolidation Posts

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Carnival of Do It Yourself Debt Consolidation 1

(June 16th, 2007)

Welcome to the June 16th, 2007 edition of the Carnival of Debt Consolidation. In this post, we highlight 9 superb blog posts related to Debt & Credit, Retirement, Loans & other Personal Finance issues.

Debt Consolidation Low Down

Debt Consolidation Low Down presents the 13th Edition of the Debt Management Carnival


Tushar Mathur presents Credit Score Breakup and ways to boost it posted at Life of a Resident Alien

"Pay your bill in full and mail it as soon as it arrives, or at the very least the minimum due."


Sagar Satapathy presents Protect Your Credit Card From the Latest Identity Theft Techniques posted at Credit Card Lowdown

"According to the Federal Trade Commission, nearly 10 million people were victims of identity theft in 2004."

Josh presents Bankruptcy- What You Need To Know posted at My Credit Scores, saying, "If you have been on the cusp of bankruptcy as of late, you must know this. You may be familiar with the definition of bankruptcy and may have coped with what you think may come next. However, you have not discovered all the ramifications of bankruptcy yet. Before you set out to declare any legal proceeding regarding your credit life, be sure to know fully what you're getting yourself into- Mycreditscores is here..."

"Chapter 7. This is a liquidation which permits you to eliminate all or most of the unsecured debt that is currently held."


Josh presents Home Mortgage 101 posted at My Credit Scores

"Very few people can purchase a home without use of a mortgage. When financing a new home is the only option left, there are many financing options that are available to meet your needs. Discussed below are many of these options that are popular today. Even if you already have a mortgage, you can learn options to use later in life or share with others."


Ruby presents 25 Ways to Make Money Quickly and Easily (and Legally)! posted at Advice and Rants.

"Can you drive? Can you drive well? If so, learn about your city’s roads, and put yourself through whatever course you need to pass to get a taxi-driver certificate."

Personal Finance

Josh presents Build Your Portfolio Wisely posted at The Mad Money Analyst

"When you first start building a portfolio many considerations are probably running through your mind. Even if you've had your portfolio for some time, you may be re-evaluating your past purchasing decisions. But have you covered all your bases? Your first consideration when evaluating your position is defining your objectives. Each individual has unique investment objectives based on your age, financial capacity, employment situation, etc. For example a young college student."

Ted Reimers presents 10 ways to save money in College posted at CampusGrotto.

"Don't Drive - With everything you need within walking distance, there is no need to waste gas or lose that precious parking spot."

Larry Russell presents Hear ye, Hear Ye, individual investors: Be wary of new investment asset classes ? A Tip from The Skilled Investor posted at THE SKILLED INVESTOR Blog

"Many promoters in the financial services industry have shown a strong proclivity in recent years to invent and to market supposedly “new” investment asset classes. These supposed new asset classes have included “commodity futures,” “managed futures,” “precious metals,” the 57+ varieties of “hedge funds,” and other asset class inventions. What tends to be “new” about these asset classes is the increased effort by the industry to sell them to “retail” or individual investors through the broker and advisor channels. Oddly, these newly discovered asset classes for individual investors also have been characterized by relatively high sales charges, high broker/advisor compensation incentives, and high ongoing professional management costs — all paid by guess who? … You."

Posted In: Debt Consolidation Carnivals | Entire Article| Comments |

(June 5th, 2007)

Credit Card Balance Transfers Checklist

If you would like to transfer your credit card debt from one card to another (also known as credit card balance transfer) but do not know how to go about it, use the following checklist to help you make a smooth transition without having to pay any hefty fees or interest. Firstly, get a copy of your old credit card's most recent bill and agreement, as well as the new credit card's agreement form.

Ok now you're set. Use the following checklist, ticking each item off after completed.

Balance Transfer Checklist
Send minimum payment due to old company before due date.
Sign up for the new credit card.
Complete the balance transfer form.
While the balance is in transfer, continue making the minimum payments due to the old credit card.
Receive notice of balance transfer from new credit card company.
Call old credit card company to verify the transfer.
Receive statement of billings from old credit card company making sure the balance is $0.
Close the old credit card by phoning up the company or writing to them. Ask the credit card company to inform applicable Credit Bureaus that this old credit card account is now settled and closed.

(June 4th, 2007)

When Is Your Credit Card Debt Too High?

You know your credit card debt is too higher when you have to spend more than 20% of your take-home pay towards paying off the interest + original principal balances on your credit cards. You must think of it in terms of your take-home pay, because that is the amount you actually have to spend (after paying off taxes). John Ventura, a Principal at Center for Consumer Law (University of Houston Law School) quotes, "If you are not able to pay a credit card off within 12 months, which means making a lot more than the minimum payment, then you are not financially sound in your financial dealings. You have too much debt."

He adds, "You have to take an attitude of aggressively reducing it, and that entails sacrifice. That means buying just what you need instead of what you want. You have to be really aware of what you are spending -- going to Starbucks or buying cigarettes."

Top 10 Indications that You Carry too Much Credit Card Debt

1) You have to make garage sales down your basement to raise money for credit card debt payments

2) You take a Cash Advance (Payday Loan type) from one credit card to make a payment to another credit card

3) You're still paying for restaurant meals that you cannot remember.

4) You have no money in any form of Savings accounts.

5) You rely severely on your credit cards to help you save for retirement and put money in a 401k plan

6) You use your credit card to pay for groceries, foodstuffs, utilities, clothing, etc.

7) You don't know how many coffees, teas and cupcakes you purchase every week.

8) You don't remember what you purchased on your credit card last month.

9) Your FICO score is less than 650.

10) You can't remember the last time you had zero balances on your credit cards.

Do you indeed carry too much credit card debt? Here are a few articles that will provide useful insight to help you reduce debt:

(June 1st, 2007)

The Dark Sides of Debt Consolidation

With the lowest record interest rates seen in decades, it is economically feasible for a person deep in debt to consolidate all of his debts into 1 single monthly payment at a lower interest rate. This is what debt consolidation essentially does. However, that is NOT all you need to be debt free, you have to do a lot more. You have to focus on saving up more money by lowering your monthly expenses and accelerating the debt repayment process.

Here are a few pitfalls that could make your debt consolidation program fail and put you in more debt:

1) Debt Repayment Period

When paying off their debts, consumers have their minds on only 1 thing, and that is the monthly payments. Some debt consolidation companies will therefore lower your current monthly payments, which is nice, but they will also stretch your payback period. For example, say you are currently paying $560 per month for 48 months (for a debt balance of $26,000). Some shady debt consolidation companies will help lower your monthly payments to something like $450 a month (woohoo!), but they will also stretch your payback period to 68 months! In this case, you'd end up paying $30,600!

You will basically end up paying more in the long term for the same amount of loan, just that your short term debt obligations (your monthly payments) will be reduced.

If your debt consolidaton company is really out there to help you reduce your debts, they will lower your monthly payments by lowering the interest rates and also NOT stretch your payback period (it must remain the same).

2) Change Your Spending Behaviour

After you enter the debt consolidation program and pay lower monthly payments, it is very important to NOT rack up any more debt, and instead save up as much of your money as you can. Open a savings account with a 5% interest rate from ING Direct or HSBC Online (5.5%) and save all your money there.

Whilst in the debt consolidation program, you should avoid going to luxury restaurants, malls, resorts and use your plastic to rack up more debt. If you do this, your debt consolidation efforts will FAIL!

Carrying higher debt loads and attaching to them your personal assets as collateral is even more dangerous. For example, if you refinanced your debts using a home equity line of credit loan only to use your plastic to rack up more debt, you would be in additional debt and this time around, there is no 2nd debt consolidation program. You will instead lose your home!

(May 22nd, 2007)

Can Debt Negotiation Ruin Your Credit?

Beware of any debt negotiation companies that promise to reduce your debts by "50%" by negotiating lower interest rates and lower monthly payments from creditors. This is because most of these debt negotiation companies will charge you enormously high fees and will ruin your credit just to get their job done. What's more, any settlement that you receive on your debts (any debt forgiveness) will also become taxable income for you!

Paul Richard, Director of the Institute of Consumer Financial Education based in San Diego quotes, "Be very, very careful because there can be substantially more harm than good. It's the fees, the possible liability to the IRS after you get this negotiated and they're not doing anything for you that you can't do yourself. These slick debt negotiators, they smooth talk people around all these issues. They're really taking advantage of people."

Let's explore a few of the pitfalls of dealing with debt negotiation companies shall we?

i) Enormous Fees Charged

Debt Negotiation companies will charge you enormous amounts of fees by using the following tactics:

-> Large upfront "down payment" type fee
-> Fee based on amount of debt you owe or # of creditors you owe to
-> Fee based on the amount of debt that a creditor is willing to wipe away

Daniel Benson, a senior Consumer Attorney at the Legal Aid Society of San Diego quotes, "There are all these hidden charges going on." For example, a debt negotiation company will say they will settle $6000 out of your $7500 credit card debt by negotiating with the lender. They will ask for a 25% - 35% fair share cut! This means you will have to pay them (25% x $6000 = $1500). You really aren't saving much are you? Plus, you will have to pay them additional administration fees as well as the initial upfront fee. You will actually be losing money in this case!

One of Benson's clients portrays a good example of the above. Benson's client was 82 years old and owed about $2200 of debt. The debt negotiation company charged her an initial $250 application fee, and after the debt was settled, charged her a $1350 in settlement fees. That's $1600 paid just in fees to settle a small debt of $2200!

(May 15th, 2007)

Differentiate Between Good Debt & Bad Debt

The reason for such high growth of consumer debt? The answer is credit card companies! Previously, credit card companies issued credit only to responsible people who they knew will be able to repay their debts in a reasonable period of time. Now, credit card companies are shoving these cards to sub-prime borrowers who will continously charge up debt on these cards way beyond their means. I mean I used to see long tables full of credit cards on display at my first year in college. These lenders were targeting 18 year old 1st Year college students, who will indulge in impulse buying and rack up debt way beyond their means. And credit card companies love this fact! They know that if a young 18 year old racks up $20,000 worth of credit card debt, he will pretty much be locked in for life in paying off these debts. This means more and more interest revenue for the credit card companies.

In this article, we will show you the difference between Good Debt and Bad Debt. Here's a tabular summary:

Good Debt
Bad Debt
  • Mortgage loan
  • Business / Commercial Loan
  • Real Estate Loan (Home Equity Line of Credit
  • School Student Loan
  • Auto loan
  • Credit card debt
  • Store credit cards
  • Gambling debt

Mortgage Loan - Best Form of Good Debt

The best type of debt to borrow is a mortgage loan. Value of houses have increased 6.5% per year over the last 30 years. Since you cannot pay 100% cash for this house, you can take out a home mortgage loan. For example, say you purchased a $300,000 house in 2007. This house goes up 6.5% every year. What will the value of this house be in 2010?

Value of House in 2007 = $300,000
Increase in Value in 1 Year= (6.5% * 300,000) = $19500
Increase in Value in 3 years = $19,500 * 3 years = $58,500
Value of House in 2010 = $358,500

See how your wealth increased a whopping $58,500 in a matter of 3 years!? However, if you would have purchased that $50,000 BMW, you would have LOST atleast $25000 in a matter of 3 years! Which is better do you think? Eh?

About 40% of people in America are renters. Now here's what's surprising. Bach says, "The average renter has a median net worth of $4,000, and the average homeowner has a median net worth of about $150,000." And what's the best time to borrow a mortgage loan? Now! Why? Because of low interest mortgage loans (5% - 6%, 25 year fixed mortgages) or home refinance loans using your home equity line of credit.

(May 4th, 2007)

Should I Tear Apart My $300 Limit Credit Card - The Worst Credit Card Ever?

debt consolidation questionDear

I was in a financial crisis in the earlier stages of my life that pretty much ruined my credit. In an effort to rebuild my credit history, i took out a $300 limit credit card that has a $6.50 monthly fee and an Annual usage fee of $150. The interest rate charged on this credit card was a whopping 25%! I want to cancel this credit card immediately, but if I do this, my credit score will be negatively impacted? Remember, the point of me taking out this credit card is to rebuild my credit history! My question therefore is, should I cancel the card immediately, or wait till its fully paid off and then cancel this? How will my credit score be affected under both of these scenarios?

Dear Stephen:

Consider your scenario to that of a dating relationship where the other party is costing you a lot of money, and you are going nowhere with the relationship. Would you still continue on with it? Definitely not! Apply the same analogy to your situation and you will know the answer!

The type of credit card that you are stuck with (the $300 limit credit card) is known as a "Sub-Prime Credit Card." Sub-Prime credit cards carry huge hefty annual fees with ripoff style interest rates. I assume the $150 annual fee is taken directly from your credit card, essentially lowering the credit limit you have available from $300 to $150 ($300 - $150 fee). These types of credit cards are not really meant to help the borrower establish his credit, they are more like payday loans where the lender is trying to make a quick buck. Thus, you should immediately terminate the credit card and stop using it!

A better option for people like yourself trying to establish a good credit history is a low or no-fee secured credit card. This secured credit card is attached to your Savings account, and the balance in your Savings is pledged as collateral. Thus, if you go broke, the credit card lender can withdraw the amount from your savings to recover his loss. In order to establish a good credit history with secured credit cards, treat them just like unsecured credit cards. Make necessary purchases with them (such as grocery items) and pay them off before the grace period ends. Once you make regular on-time monthly payments for a few months, credit card lenders will like your creditworthiness and offer you a higher credit limit, with lower interest rates.

(May 1st, 2007)

Should I Pay Off my Debt or Save Up for a Down Payment on a House?

debt consolidation questionDear

My spouse and myself are working very hard to pay off our current credit card debt by atleast 80% and then build up a good solid down payment for the purchase of our first home. We currently owe over $25,000 in credit card debt, student loans and auto loan debt. My question to you is, should we focus on paying off this big debt first before buying our house, or should we just make the minimum monthly payments on the debt and build up a larger down payment? Currently, we have saved up about $25,000 for the down payment on our house. The house we plan to purchase is valued at $275,000. I want to avoid having to pay Private Mortgage Insurance and build up a down payment of atleast 20% (which is equal to $275,000 x 20% = $55,000).

Dear Mindy:

You have to balance out between saving for the initial mortgage down payment and paying off your $25,000 debt. You should probably focus on paying off the $25,000 debt as soon as possible, before purchasing a home. For example, consider your following situation:

You and your spouse have an after-tax monthly take home pay of $5000. After paying off all the necessary expenses every month (including rent, groceries, utilities, student loan payments, car loan payments, entertainment expenses, etc), you have $1000 to save. Take a 5 year time horizon:

Scenario i) We assume you are paying 14% Annual Percentage Rate (APR) interest charge on your $25000 debt. Here is the amortization schedule assuming a fixed payment schedule. Your payment towards your debt is $625 / month and your savings every month equal $1000 - $625 = $375.

(April 30th, 2007)

Risks of Debt Consolidation, Types of Debt Consolidation Loans, Pros & Cons & Zero Percent Debt Consolidation Loans

Over the last decade, we have seen very low interest rates that entice many consumers to take on many different forms of debt consolidation loans (see below) to pay off their existing debt. These types of debt consolidation loans range from Home Equity Lines of credit to Zero Percent Credit Card debt etc. The goal of these debt consolidation loans is to take multiple monthly payments that have high interest rates into 1 low monthly payment with a lower interest rate. It doesn't get any simpler than this huh? Watch out! What you're doing by taking out a debt consolidation loan is a temporary quick fix to your debt problems, you are not treating the CAUSE of the debt; you are merely working on relieving the symptoms.

To prove the above point, we interviewed Chris Viale, GM at Cambridge Credit Corp. in Massachussets, USA. He says 70% of American citizens who take out home equity or debt consolidation loans to pay off their existing credit card debt end up with similar debt loads (if not higher) almost within 2 years! By taking out 1 more loan together with the tons of debts you already owe, you are merely adding "more fire to the burning fuel" (Chris Viale). What's even worse, most debt consolidation loans that are advertised out there on the market are meant for people with good credit history and a good credit score. Thus, if you have a huge debt load, this means your credit score will be lower and you most likely will not qualify for these low interest debt consolidation loans. Below, we will describe a few types of Debt Consolidation Loans that consumers can take out, their pros and cons and how exactly they work.

1) Home Equity Line of Credit

We have written a detailed review of home equity lines of credit here. The definition is:

A home equity line of credit is a line of credit borrowed with your home as collateral. Therefore, if you fail to make payments on the borrowed credit amount, you will forfeit your home as it has been pledged as collateral. Because your home is probably the biggest asset you will ever own, most people use a home equity line of credit to pay for large education bills, home improvement costs and unexpected big medical bills. A home equity line of credit is not used for your day to day living expenses, that's just stupid.

To add to the definition, a home equity line of credit can also be used to take out 1 bigger debt consolidation loan to pay off large credit card debt balances. The biggest risk to this is that you could literally lose the biggest asset you ever own, your home! Diane Giarratano, Educational Director at Garden State Consumer Credit Counseling in New Jersey quotes, "Some hardship occurs and now they have double the debt and if it's secured by their home, they could lose it."

The advantage of taking out a home equity line of credit to consolidate debts is that the interest you pay on these loans is tax deductible. Ofcourse, tax breaks are always a nice thing! If you apply for a home equity line of credit at any bank, they will determine the total amount you can borrow taking into account the value of your home, what % of your home you own (and what mortgage you have left to pay off). Diane Giarratano, Educational Director at Garden State Consumer Credit Counseling in New Jersey says, "Banks will tell you how much you can borrow. That doesn't mean you should borrow the total amount, but that's what people do."

(April 23rd, 2007)

2 Ways to Achieve Debt Elimination - Debt SnowBall Elimination Method

If you read our article on Do It Yourself Debt Reduction, we presented the following example:

Peter has an after-tax monthly take home pay of $2000. After paying off all his expenses every month, Peter has $450 remaining to pay off any debts owed. He should therefore allocate this $450 towards paying off debt that has the highest Annual Percentage Rate (APR). This is the fastest way to reduce your debt.

For instance, imagine you as a college student owe the following hypothetical debts (in random order):

$18,000 Student Loan @ 8% APR
$12000 Credit Card Debt @ 18% APR
$6000 Car Loan @ 7% APR
$3000 Personal Loan @ 13% APR
$1500 Furniture Purchas Loan @ 10% APR

Most Debt Consolidation & Financial experts will recommend to pay off the above Debts in the following order:

$12000 Credit Card Debt @ 18% APR
$3000 Personal Loan @ 13% APR
$1500 Furniture Purchase Loan @ 10% APR
$18,000 Student Loan @ 8% APR
$6000 Car Loan @ 7% APR

As you can decipher from the table, most financial experts are asking you to pay off Debts that have the highest APR. The $12000 credit card debt has the highest APR of 18%, followed by $3000 personal loan with APR of 13%, $1500 furniture purchase loan with 10% APR, etc. This makes perfect sense mathematically. By paying off debts with the highest Annual Percentage Rate (APR), you are minimizing the interest charges you will pay over the longer term. However, does this method work for everyone? No!

I once owed $12000 in Credit Card debt that had an APR of 18%. I was making $500 per month payment towards it, although psychologically, I felt i was making no progress at all! I was paying $500 per month for many many months and the debt didn't seem to come to an end at all! This made me felt more depressed and financially defeated. I'm sure there are thousands of Americans out there who are in the same boat. We as human beings like to make progress at each step of our lives, and paying $500 per month for many months didn't seem right! This is because the debt was always there, it didn't seem like the debt would vanish away fast.

(April 20th, 2007)

Fastest Way to Eliminate Credit Card Debt - No It's Not Debt Consolidation

The fastest way for you to eliminate credit card debt is to eliminate the big profit generator for credit card companies, and that is, late credit card payment fees and over-the-limit fees. Yes that's right, did you know that in the fiscal year 2006, 31% of the the credit card industry's profits or operating income came from late payment fees and over-the-limit credit card fees? Are you part of an average American family? Then you probably possess $8000 worth of credit card debt and guess what? If you make only the minimum monthly payments required on the debt, it will take you a whopping 30 years to pay off only $8000 worth of credit card debt! What's more, you will end up paying more than $22,000 in interest rate charges.

The fastest way for you to eliminate credit card debt is to increase your minimum monthly payments and make sure you do not have any late payments. Here are 3 simple steps that will help you eliminate credit card debt very fast:

1) No New Debt

Do not rack up any new debt on your credit cards, period! Hide your credit cards in a safe place which is not easily accessible. Integrate this simple mathematical equation into your life:

I Will Purchase Something on my Credit Card -> "ONLY IF" -> I Have Enough Cash to Pay For It!

2) Set Your Mind

Post this message in your bathroom or your bedroom:

By cutting down our unnecessary expenses, we will raise enough cash to pay off our debts in ____ months instead of the original ____ months. The $____ we save in Interest Charges will be put into our Savings account so that we can raise enough money for down payment on a house, and live the American dream as opposed to renting!

Use our Debt Pay Off Goal calculator to see by how much you need to increase your monthly payments towards a particular debt, in order to pay off that debt at a specified future point in time.

(April 19th, 2007)

9 Mistakes Not to Commit when Dealing with Debt Collection Agencies

Debt collectors are nasty when it comes to collection of debts. They will call you late at night or at work, will send you unpleasant letters and make your life a living hell. You can make this even more worse by committing any of the following mistakes:

1) Avoiding Their Phone Calls: If you avoid picking up the phone, they will call you even more. Be man enough to answer your calls or ask them to stop calling you. You can legally ask them to stop calling you by sending them a Stop Calling Me Letter. We discuss this more at: Stop Calling Me Letter to Harassing Debt Companies

2) I Already Sent the Payment: Do not lie! If you tell them that you already sent the payment or the payment is in the mail while it really is not, this will make matters even worse. They even have the right to sue you for lying, so don't!

3) Automatic Bank Debit: Sometimes the debt collection agencies will intimidate you into giving away your checkings or savings account # with your bank. Never give out your checking/savings bank account #!

4) Don't Be Afraid: Do not allow the debt collector to intimidate you. Like Eleanor Roosevelt says, "No one can make you feel inferior without your consent."

5) Issue Bounced/Dishonored Checks: If you do not have money to pay the debt collectors, ask for an alternate debt settlement plan. However, do NOT issue bounced checks that could be dishonored. First, you will be charged a Non Sufficient Funds fee by your bank. Furthermore, the debt collectors will get so angry at you that they will most likely sue you for both lying and issuing bounced checks.

(April 17th, 2007)

Is Forgiven Debt a Taxable Income?

Our article on 10 crucial debt reduction mistakes was posted on the Don't Mess with Taxes blog at: and it has become quite popular in terms of viewership. However, the point we made needs further elaboration and explanation. In this article, we will do just that!

Is forgiven debt really a taxable income? Suppose you owe your credit card company $12000 in credit card debt. You carry out a debt negotiation process with Visa or MasterCard and get them to reduce your credit card debt balance from $12000 to $7000. While Visa has lost $5000 ($12000 - $7000), the IRS has earned itself taxable revenue of $5000. That's right, this $5000 balance which you did not pay is known as Discharge of Indebtedness, or DOI income and you will be taxed on this amount! As a matter of fact, the debtor will issue you a Form 1099 which will detail the debt reduction benefits that you received.

What if the debtor forgets to send you a Form 1099? Does this mean the reduced debt amount you received (i.e $5000) is not taxable? No! Even though the debtor hasn't sent you a Form 1099, the taxable income may have been reported to the IRS. This means you will have to be honest and include this income in your tax return, at the end of the year. Barbara Weltman, a Tax Attorney and Author of J.K. Lasser's Tax Savings in your Pocket quotes, "Any debt that is forgiven is counted as income, and you owe taxes on the amount that's forgiven."

Steve Rhode, Co-Founder of MyVesta (a debt consolidation & credit counseling firm) says, "It's a great way for the IRS to make money." What does this mean for you both as a taxpayer and as beneficiary of debt reduction? Should you therefore not let your credit card company reduce your debts because you will have to pay extra tax if they do so? Well it depends, you have to look at it from different angles. Barbara Weltman says, "What you have to do is recognize you'll have to pay taxes and factor that into your negotiations and your financial planning." Will the extra taxable income you receive push you into a higher tax bracket, thus forcing you to pay even higher taxes? Or will you still be in your current tax bracket and be able to handle the extra tax payments you will have to make?

There are 3 situations under which forgiven debt is NOT included in your taxable income:

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(April 16th, 2007)

Get Real and Get Out of Debt

Now i want to define "DEBT" for you. Debt is when you owe INTEREST to a lender, as simple as that. Now for you my friends who are first time home buyers thinking "Oh Boy, its an asset!", it is really a form of debt! Why? That's because you owe interest on this house! And the interest that you owe is for 360 months, or 30 years. Some of us finance our houses with 0% down, but what you really want to put down is 20%! For some of us in Silicon Valley, it's impossible! With townhouses and condos selling for $700,000 it really is hard. Remember again, when you buy your house for the first time, it is NOT an asset! It is a debt! It is a liability because you owe the lender, an Interest. Whatever that interest is, you might be lucky to get a 6% mortgage interest while others may not be so lucky because they may have got 9% mortgage interest rate.

* Please be patient this video takes time to load *

Video Review

Afro Video Host says: Welcome to the Afro Mega Seminar Series Online. Today what we're going to be talking about is, Get Real and Get out of Debt. Many of us worry about our FICO score and we believe that having a FICO score can lead to good credit. As a matter of fact, a good FICO score CAN lead to good credit. But here's the thing; many of us shop till we drop. In other words, we use our credit cards and charge huge amounts of debt on them, with interest at 23% and up! I mean 15% is very bad and 9% is still bad. So having debt, is NOT really the way you want to go. Let me tell you one thing about debt:

I know many couples who have been married for less than 6 months breaking up because of credit card debt. If you charge $8000 on your credit card, it could literally take you 30 years to pay it off!! And a lot of people have a misconception about what assets are. Some people think that a car is an asset. Especially us the Afro community, we will quickly get inside a Chrysler 300 or a Mercedes and install $10,000 rims on it. Now let me tell you, in 5-10 years, that car is going to lose a tremendous value, I'm talking about almost 80% of the money you put on the car. You'd probably put down $10,000 - $15000 down payment on a Mercedes, especially if you have a FICO score of less than 650. Although the Mercedes costs only $50,000, you'd probably end up paying a total of $75000 with interest included! And especially if you have bad credit, you could see a rate of 15%!

Posted In: Debt Consolidation Videos | Entire Video & Review| Comments |