Help Getting Out of Credit Card Debt

Face it. You have to charge less than you are paying off. Bottom line. Freeing up extra money on an ongoing basis is key to achieving this. Yesterday, we discussed a bit about automobiles. It was revealed that a used card will cost less because it is, well, used. But you don't lose nearly the amount of money that you would (buying new) when you leave the car lot.

Too often people are driven only by "How much will it cost per month?" This kind of thinking is so short-term that it is frightening when you actually take the time to do some of the math. Sure, it only costs $250 dollars a month. The sticker price may say $10,999. "I can afford that", you say. A new car loan can often be rolled into a package that is for 72 months, or six years. Most people don't keep a car for four years, so if you trade it in, your car may only be worth $3,000 after four years. You still owe $6,000 on that car. You are now upside down on the car and a dealer would be happy to roll that into your new car purchase. Now, you will have a very difficult time getting out from being upside down.

If you did keep your car for the full six years, that $10,999 car would have cost you $18,000. Guess who pockets the extra $7,001? It isn't you. With a used car, you loan is for a shorter term, you pay less up front, and somebody else has already taken the depreciation hit on it.

All I have to say is that you need to think with your head and not your heart. Do your homework and you will thank yourself for that in the long term. Have a GREAT day! (visit my website, the book Never Surrender is scheduled for release on June 14, 2009)

How 'You Gettin' There?

To eliminate credit card debt you need to have ways in which to save money and hopefully there have been some ideas presented that you could use. With the automobile daily in the news nowadays, perhaps we should explore buying a vehicle, after all, most people need one to get to and from work and to places in your life. If you are fortunate enough to live in a metropolitan area that has public transport, that can save a lot of money.

With a car being the biggest expense that one may make besides purchasing a home, you really should do some homework when buying a car.

*NEW vs USED - Nothing beats the feeling of having a new car that nobody else has driven. The challenge is that a new car immediately loses value the second that you drive it off the lot. Too often people look at how much a car costs per month instead of taking the time to figure out how much you will be paying over the long term. With today's financing options, you can blend in the insurance, taxes, and such into the loan. Back in the 1970s, a new car was often a three-year loan. Today, however, it is often a six year loan. You will always owe more than the car is worth usually up until the last payment. Woe is you if you happen to total the car and you have to come up with the money to pay it off.

Nowadays, I vote for used. Somebody else has already taken the hit for loss of value when they bought it new. You can always buy an extended warranty, but you really should take the time to explore the reviews of the car, research its usefulness over its life, and see what cars hold their value over time.

I drive an 11/12 year-old car. It looks nice and it serves the car's purpose: to get you from point A to point B. It is not an investment because there are a very minute number of cars that increase in value, so it is always a liability.

Always.

Sure, there are things that will wear out with a used car. We have had to replace the suspension, oxygen sensors, brakes, and tires. The costs for those (plus the loan payment) is still lower than the cost for a new car.

Use your head, have a GREAT day, and keep looking for ways to save money so that you can eliminate your credit card debt!