Five Signs You May Be a Compulsive Spender

According to the National Consumer Council as many as one in ten people is a compulsive spender. How can you tell if you are compulsive spender? Money gurus agree that there are certain traits shared by compulsive spenders, also called compulsive debtors: • If you are unclear about your finances… • If you don't know things about your finances such as account balances, monthly expenses, and interest rates… • If you are using one credit card to pay another… • If spending money gives you a rush… • If you feel "better" when you buy things on credit than when you pay cash… …you may be a compulsive spender. To take a fifteen question quiz to decide if you are a compulsive spender, check out the Debtors Anonymous Web site. The site also includes resources for finding help.

Drawbacks of Short-term Loans

The drawbacks of short-term loans is the fact that you even need one, because that means you don't have any cash savings to draw on when unexpected financial needs come up—as they always will and do. Financial planners recommend setting aside three to six months worth of take-home pay in an emergency fund to cover things like medical expenses, car repairs, and other unexpected expenses. Of course, that's easy for them to say as they pull down six-figure incomes. Few people are able to follow this advice. Does that mean you shouldn't at least try to save some money for emergencies? Not at all. Here's some useful advice on Short Term Loans: Even if you can only afford to put $50 a month aside, that's $600 a year. For now though, if you are considering a short term personal loan, try to find avoid using a payday lender unless you absolutely have no other options available. And, take this moment to think about your financial big picture. You may want to seek financial counseling to help you get things in order and get on your way to a more stress-free financial future.

Accelerating Bill Payments

If you are paying off bills but it seems to be taking you longer than you'd like, could you be unconsciously sabotaging yourself? If you're trying to figure out how to pay bills more quickly, STOP ADDING TO THEM. If you are trying to pay off high interest bills such as credit cards but you continue to use them, you will never get ahead of the curve. Start paying cash for purchases, and, if you don't have the cash, don't buy it. You can use either the "smallest first" payment method or the push payment method to pay your bills off. The "smallest first" payment costs more in the long run but gives you a more immediate sense of gratification by clearing small bills quickly. It may be better for those who might be discouraged from sticking with a debt pay down plan by the seemingly endless wait to finally pay off a bill. The push payment method delays that gratification a little longer, but it ultimately pays off all the debt more quickly and saves thousands of dollars in interest by paying off the highest rate debt first. The finance section of FamilyResource.com's site has some good articles on the pros and cons of each of these methods.

Preventing Bounced Checks

Under the provisions of the Check 21 law, any check you write is going to clear your account much more quickly than it would have in the past. In fact, some checks will clear almost instantaneously, much like a debt card transaction does. If you've been practicing good checking account habits all along, you should be all set. However, if you're one of those who subscribe to the philosophy that you can't be out of money because there are still checks left in your checkbook, you could be in trouble. If you haven't already done so, balance your most recent checking statement. Make sure you record all ATM and debit card transactions. Once you've done that, keep a current running balance in your check register so you know your balance at all times. Finally, don't write any checks unless the money is already in the account to cover the full amount. Otherwise, you are going to bounce checks. At the very least, you'll get slapped with high fees. At the worst, your check bouncing history will be reported by merchants to check verification systems such as ChexSystems, and stores will no longer accept your checks.

Debt Management Plan Red Flags

Don't make the mistake of assuming all is well just because you've taken steps to set up a debt management solution. You must review each and every one of your bill statements every month. If your bills are not being paid the correct amount, or are not being paid at all, that is a HUGE red flag that there is some monkey business going on at the agency you are working with. You need to spring into action immediately! Contact both the Federal Trade Commission and your state attorney general's consumer protection office for help. If your payments to the agency administering your debt management plan are being automatically withdrawn from your bank account, contact your bank to terminate those withdrawals. Resume paying your bills yourself, and make the payments on time. Contact all your creditors immediately to notify them of what has happened and try to negotiate a payment plan with them yourself. Finally, visit the National Foundation for Credit Counseling's Web site, and use its search tool to find a truly reputable credit counselor to help you get back on track.

Alternatives to Short-term Loans

Before you take out a short term loan, make sure you've considered all your other options. Some employers offer payroll advances or no-interest loans for employees experiencing a temporary financial hardship. Do you have anything you can sell? You'd be amazed how much money you can make hawking stuff you don't use on eBay. If you are a college student waiting for scholarships or loans to be paid out, does your school offer short term bridging loans to get you through until the check arrives or the funds are deposited into your account? If your car is dead, can you take public transportation until you have the cash to pay for the repairs? If none of these are options, make sure you compare rates and terms on any loans you are considering so you don't get gouged.

Talking with Your Creditors About Late Payments

Creditors appreciate it when you talk to them. If you are having financial difficulties and know you will be unable to pay your credit card bill on time, you should contact the company as soon as possible. Whether you were laid off, your car broke down, or one of your kids got sick and you have huge medical bills to pay, explain the situation to your creditor and let them know you will be unable to make your payment on time. It's best if you can give them a definite time by which you will be able to make payment and creditors how much you will be paying. If the situation is one in which you are unlikely to be able to pay the minimum on time for an extended period of time, ask to speak to a supervisor, explain the situation to them, and try to set up a payment arrangement to avoid being charged late fees.

Avoiding Debt Management Scams

The Federal Trade Commission (FTC) is the nation's consumer protection agency. It, along with a handful of state Attorneys General, recently filed lawsuits against a slew of companies they believe are guilty of ripping off consumers by charging high fees for services, lying about their nonprofit status, and not making payments on time—or, in some cases, at all—on behalf of customers. To ensure you are dealing with a reputable credit counseling service, look for an agency that offers a variety of services, including: • Budget counseling • Savings and debt management classes, not just debt management plans • Is licensed to provide services in your state • Provides written agreements that specify the services to be provided and all fees to be charged • Can demonstrate to you exactly what measures it has in place to protect the privacy of your financial information. Avoid doing business with any agency that is unwilling to answer your questions, and never, never, commit to anything without first receiving and reviewing a written service agreement from the agency.

Benefits of Short-term Loans

Short term loans can be a lifesaver when you are in a financial pinch. If you qualify for a short term personal loan, you are likely to have an interest rate that is much lower than those for credit cards. You are better off applying to a traditional bank or credit union, because their rates are usually much lower than payday lenders. The loan will usually have a term of two years—although payday lenders offer much shorter terms for correspondingly much higher interest. At the end of the term, you've paid back the principal plus interest, and you're done. None of this carrying debt forever by paying low minimum monthly payments that barely make a dent in the principal amount owed like with credit cards. Another perk of these loans is that they can usually be approved in as little as one day, three at the most. Plus, personal loans are pretty much no-strings attached at least as far as what you spend the money on. Spend it how you will, but make sure you pay it back according to the agreed upon terms.