It’s no joke.  There really is such a thing and it could be costing you a lot of money.  Behavioral economists have studied the spending habits of Americans and come to the conclusion that many of us have a dissociative spending disorder.

Dissociative means a partial or complete disruption of the normal integration of a person’s conscious or psychological functioning.  It is a process that severs the normal connection to a person’s thoughts or can disrupt normal cause and effect thinking.

I know that sounds pretty serious and in the case of some folks it can be if the spending disorder gets them into financial trouble.

How many times have to been tempted to buy something just because it was on sale?  It didn’t matter that you didn’t need it because it was 50% off and that was too good of a deal to pass up, right?  So you whip out your credit card and “save” a lot of money…

Not really because you just “spent” money on something you didn’t really need because your brain is focused on the “deal” you just got not the “money” you just spent.  This is especially true if you purchase with credit.  Using plastic money does not register in the brain as money out of your pocket the same way cash does.  If you have $100 in your wallet and you spend $60 of it, you can see what is gone and how little you have left.  When you use your credit card, you get the card right back and the money you spent is not tangible or real.

Merchants and advertisers have also figured this out and rely on you to impulse buy when they put up big signs that say “sale”. 

You can out-smart them though with just a few small changes.  Pay with cash whenever possible to avoid the credit card/plastic trap.  Don’t buy things you don’t need no matter how good the deal is.  Don’t buy anything expensive on an impulse.  Take a day or two to analyze if you really need and can afford the purchase and how you are going to pay for it.

Here are some sobering statistics about American debt.

• About 1.6 million U.S. households -- one of every 73 -- filed for bankruptcy in 2004.

• Average per household debt in the U.S., not counting mortgage debt, is about $14,500 -- especially noteworthy because before the 1930s, most middle and working class people had no major debts.

• Some 40 percent of American families spend more than they earn each year.

• Average personal wealth of a 50-year-old American, including home equity: less than $40,000.

• Nine of 10 Americans claim credit card debt has never been a source of worry.

• But 47 percent would refuse to tell a friend how much they owe.

• Twenty-three percent of Americans admit to maxing out a credit card.

• Eleven percent of Americans admit card debts went to collection.

• Thirteen percent of Americans have been 30 days late paying credit card bills in the past year.

• The average graduate student has six credit cards and one in seven owes more than $15,000.

• The personal savings rate in the United States has dropped from 8 percent in the 1980s to just below 2 percent since 2000.

Are you in debt and suffering from stress because of it?  If so, you are not alone.  The stress and associated problems that accompany it are becoming a major pain in the neck -- and the back and the head and the stomach -- for millions of Americans.

The problem has become so prevalent that there is even a new name for  it – Debt-Stress Syndrome.  When people are dealing with mountains of debt, they're much more likely to report health problems, too which only makes things worse as people try to navigate their difficult situation. And not just little stuff like loss of appetite of trouble sleeping; this means ulcers, severe depression, even heart attacks.

It is estimated that there are between 12 to 16 million who are suffering some type of medical or health issue that is related to their debts.  And the tough economic times and rising costs of living are just making things worse.

In a poll conducted last summer, people reporting high debt stress claimed the following:

·         27 percent had ulcers or digestive tract problems, compared with 8 percent of those with low levels of debt stress.

·         44 percent had migraines or other headaches, compared with 15 percent.

·         29 percent suffered severe anxiety, compared with 4 percent.

·         23 percent had severe depression, compared with 4 percent.

·         6 percent reported heart attacks, double the rate for those with low debt stress.

·         More than half, 51 percent, had muscle tension, including pain in the lower back. That compared with 31 percent of those with low levels of debt stress.

People who reported high stress also were much more likely to have trouble concentrating and sleeping and were more prone to getting upset for no good reason.  Stress is very harmful to the body. Stress is an alarm system designed to get you to recognize a threat to your survival. When you're constantly worrying and stressing over your debt, you put your body in a constant state of alarm. The body responds by releasing stress hormones such as cortisol and adrenaline, resulting in increases in your heart rate, blood pressure, breathing pace, muscle tension, and inflammation, and dumping fuel (glucose, fats) into the bloodstream.

Revolving consumer debt, almost all from credit cards, now totals $957 billion, compared with $800 billion in 2004, according to the Federal Reserve and that can lead to a lot of stress for those who do not have the money to pay for it.  Sometimes it’s a health crisis that puts someone into debt but the debt can also lead to  a health crisis which makes the situation far more dangerous than just facing bill collectors.

If you are in debt and suffering undue stress, there are several programs that can help you BEFORE it becomes a health crisis.  Let the professionals at First Rate show you what we can do to get you out of debt and keep you healthy for 2010!

I’ve seen several articles recently (most likely sponsored by the big banks) really trashing the debt settlement industry and debt settlement companies in general saying that they don’t work which is absolutely not true.

Just like in any industry, there are good companies and bad ones.  Not all companies are the same and who you choose to work with will make a big difference in how successful you will be.

Debt settlement works and it works well for the right person.  Each situation is unique and debt settlement is not a one-size-fits-all solution.  It must be the right solution for you and you must be committed to making it work.

Many people want to look at debt settlement as a “magic pill” or “get out of debt free” card.  It’s not like that.  It’s a serious program that takes 2-3 years to complete that will save on average 50-60% of the debt owed.  But it doesn’t happen overnight and it’s not without its drawbacks.  

A legitimate company will explain the program thoroughly along with the other options available to make sure that it is the right choice for you.  They will also explain exactly what to expect and what you need to do to be successful.  If you can’t commit to doing what it takes then it’s not right for you.  Here are a few tips to make sure that you are successful if you choose the debt settlement route.

1. Do your homework and find a legitimate company that follows all state and federal guidelines and is a member of one of the professional trade organizations like IAPDA, TASC, or USOBA.  Check them out with the secretary of state to make sure that they are a legitimate and licensed business.
2. Be completely candid and honest with the settlement company about exactly how much you owe and what you can realistically afford.  They are there to structure a program that works for you and need to know the specifics to do that.
3. Comply with the terms of the contract and know what they are.  Read the contract before you sign it and ask questions if you have any.
4. Make your payments each month.  You can’t get out of debt if you aren’t fully committed.
5. Don’t talk directly to your creditors or interfere with the negotiators efforts.  The creditors are professionals and know how to intimidate you and coerce you.  Professional negotiators know how to “talk” the talk and that’s what you are paying for.
6. Be Realistic.  Remember the amount of time you signed up for the program.  That’s how long it takes to get out of debt.  Don’t sign up for 36 months and then get mad when you aren’t out of debt in four months.  Be patient. 
7. Start saving and cutting back on any unnecessary expenses.  You are trying to get out of debt and the faster you save money, the sooner it will happen.

Being in debt is a very stressful situation and one that requires immediate attention before it gets even worse.  Finding the right company with trained, caring financial consultants is the first step to navigating a path to financial freedom.  Debt settlement, done properly by a reputable company, WORKS.  It will get you out of debt much faster than you could just paying your bills normally and you will pay back far less.  You'll also have a chance to 'start over' without the stigma of a bankruptcy.

As more and more Americans find themselves in financial distress, this question may be one of the first ones they ask.  If you find yourself in a situation where your monthly obligations are exceeding your take-home pay, you know you need to make some tough decisions.

In almost all cases, the mortgage is more important than the credit cards.  After all, you do need a place to live.  But what if it’s the mortgage that caused your credit card debt?  What if an adjustable mortgage or a cut in pay has forced you to put regular bills like groceries and medical expenses on your credit cards because your mortgage is sucking up the majority of your pay check?

That’s a problem that has to be addressed first.

If you cannot make your monthly mortgage payment then you have 3 basic options (assuming that a refinance has already been attempted).  A short-sale, a foreclosure, or a loan modification.  Which option you choose will depend on you and your current financial situation. 

In the meantime though, keep making your mortgage payments while you figure that out and let the credit card payments slide since that won’t affect where you live.  Please note though, this is very general advice and only a true financial professional can help you with your situation.  The experts at First Rate Debt Solutions have the experience and the programs to help you make the right choices.  Help is just a phone call away

The economy is in the tank and Americans are suffering.  It’s a natural response for the government to step in to “help”.  Last year we saw bail-outs, takeovers, and new laws all in an attempt to help stop a big problem from getting worse.   Some were probably necessary but others maybe not. 

Look at the new credit card laws.  There is no argument that Credit Card companies have been taking advantage of consumers for years.  But in the days when credit was plentiful and interest rates were low, no one really seemed to care.  It only got ugly when the economy tanked and large banking institutions started to look for ways to minimize their losses (at the expense of their credit card customers).  Banks that were losing millions in foreclosures could make up some of the loss by raising interest rates, increasing late fees, and doubling the minimum payments due.   But at what cost?   Most card issuers didn’t have to give the consumer much notice before changing these terms and therefore it took a lot of Americans off-guard and placed them in a bad financial situation.

The President, in an effort to stop consumers from being taken advantage of, signed a new law that will force the card issuers to give consumers more notice before changing terms.  In response, most credit card companies have already raised rates, increased fees and changed terms BEFORE the new law goes into effect.  And these banks have not just penalized borrowers with bad payment history--almost everyone was hit and many have even had their cards cancelled without warning further hurting their financial situation.

But this is probably just the beginning.  In the future we will most likely see all credit cards come with stiffer terms and gone are the days when you could hop from one 2.9% offer to another.  It’s likely as well that most banks will go back to cards with annual fees and offer fewer perks to customers who use their cards frequently.  In fact, a study by Synovate, a market research firm, found that U.S. households are already receiving dramatically fewer card offers in the mail.

Hopefully in the end, it will all even out but I would rather see the consumer have the option to have a card with high fees, low fees, or whatever perks are offered rather than to see the credit market so tight that you have to “take what you can get”.   Sometimes regulations end up hurting the very people they are designed to help.

Almost everywhere I turn, I find an article of editorial chronicling the mounting dissatisfaction that consumers have with their credit card companies.  And for good reason.  Card issuers have slapped more than half of Americans with higher interest rates, unexpected fees, lowered borrowing limits, and higher late payment fees.  And if you haven't been hit yet, your time may be coming soon.

More and more consumers are trying to fight back by switching to other cards or negotiating their rates.  But for some, getting a new card is becoming increasingly difficult and the higher interest rates are making it almost impossible to pay off their balances.  If you pay your cards off every month, you can probably apply for a new card and transfer your balance without too much trouble.  Remember--you are the customer!  If you are one of the 46% who carry a balance though, that solution may not be so simple--especially if your cards are maxed out and you are using them to meet your monthly expenses.  If that is the case, you need to address your situation right away before those fees force you into a bad situation financially.

A growing number of Americans are carrying high balances on their cards just to make ends meet and aren't sure when (if ever) they will be able to pay them off.  These high balances are hard to make the minimum payments but as card issuers jack the minimum payments from 2% to 5% and the interest rates from 11%-14% up to as high as 27%-30%, that can literally push these people to the brink of bankruptcy. 

If you find yourself in this situation, contact your credit card company immediately and try to negotiate a lower rate.  If that doesn't work, it may be time to turn to the experts.  The sooner you address the problem, the better chance you have of success.

There are many reasons why people get into debt and only just a few solid ways to get out.  The most important step in getting out of debt is acknowledging your situation and analyzing your finances to find out if you really have a problem and if so, how big is it.

The first step is to make a budget.  In one column write down all the money you earn in one month and in another column, write down everything you spend including your Starbucks habit and any other seemingly small incidentals that can really add up.

Total the two columns and that’s your first snap-shot into your finances.  Then start to work on the difference.  If you are spending way more than you are earning, you are headed for serious trouble.  How big of trouble depends entirely on the difference between the two numbers.  If it’s less than 10% difference, you can probably cut back and make it work by cutting back on some of your expenses like going out to dinner, shopping, and other extras.  If the difference is between 10-20% you may need to sell something like a car or cancel your cable service to really balance your budget.  Anything from 20-50% may require a restructuring of debt.  Anything higher than 50% may mean a possible bankruptcy.

To get yourself out of debt follow these simple tips:

1.     Write down every single thing that you spend money on for a month...everything!

2.      At the end of the month, cross off all the things that you know you can do without and stick to it.

3.      Don’t buy anything that you don’t absolutely need and look for the best deal on what you do need.  Use coupons at the grocery store and only buy the meats cuts and produce that are on sale that week.

4.      Evaluate all of your utility expenses.  Cut back on water, electricity, gas use and cancel your cable or reduce the package to save money every month.

5.      Don’t drive anywhere that you don’t need to go and combine all of your errands into one trip or even at one store to save on gas.  Carpool for school and work if possible.

6.      Try to negotiate with any of your credit cards that you are carrying a balance on to lower the monthly interest rate.

7.      Save aggressively to start paying down any debt you may have accumulated and leave your credit cards at home so that you won’t spend anything more.

8.      Prepare for the once a year expenses like auto insurance and property tax.  If you have a little money left over at the end of the month, save it for those expenses or any type of emergency.

Have you seen the movie? A typical Hollywood entertainment piece that depicts a young woman living in New York City who loves shopping and fashion so much that the mannequins actually speak to her and beckon her to buy more than she can afford. Today’s marketing tools are sometimes just as seductive enticing people to buy things that they both don’t need and can’t afford. After she maxes out every credit card and has no money to pay her bills, she ironically gets a job as a columnist for a money magazine.

The movie had all the right elements; the love story, the conflict, and the villain. The bad guy is a tenacious and nasty bill collector who calls daily and is stalking the poor girl trying to get her to pay her debt. For anyone who is actually living that nightmare, the movie would not be very entertaining but it did highlight the harsh realities of being in debt.

Of course, it had a “Happy Hollywood” ending where the girl was able to get herself out of debt with no help but that’s not how is usually works in the real world. In the real world, there is no easy way out but fortunately First Rate Debt Solutions has real solutions that do work for real people. Debt Settlement or Debt Management is the most effective way to get out of debt, escape the nasty bill collectors and avoid bankruptcy. Call us today for details on what we can do for you. 877-332-8730