Howdy!  Here are the on-topic submissions for this week’s carnival:

• Bargaineering hosts a guest post on how to sue debt collectors.
• The Smarter Wallet shares some first-hand experience with debt collection practices.
• The Digerati Life runs through options for debt consolidation loans for people with good credit.
• Studenomics asks if student loan consolidation is right for you.
• Ask Mr. Credit Card has a radio interview with Lending Club, with an emphasis on debt consolidation.
• Budgets Are Sexy wouldn’t mind moving back in with the ‘rents to pay down debt.

Thanks!

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Welcome to this week’s Carnival of Debt Reduction! I’m very pleased that more of the submissions are on-topic. This is a very good thing, and I know it will benefit everyone concerned, from readers to submitters to hosts, to have a more on-target carnival each week.

Here are this week’s debt reduction posts, with the personal debt reduction stories up top:

• The Good Life on a Budget has paid off a car loan eight months early! Congrats!
• Man vs. Debt has a post from a reader on how they paid off their $15,000 debt by selling their stuff on eBay.
• Digerati Life has a post from a guest contributor that reduced debt with a loan modification.
• Reduce Debt Faster outlines three good ways to lower your credit card payments.  (Hint:  It never hurts to ask!)
• PT Money has an interesting question from a reader with a bit of debt problem that isn’t really her own overspending.
• Damon Day shares a sad story of a woman hit with a debt settlement nightmare.
• Christian Personal Finance gives four ways on how to pay off your mortgage early.
• Bargaineering has a post from Kyle from Suburban Dollar on telling the difference between first- and third-party debt collectors.
• Cash Money Life suggests this question as a wake-up call:  “Do you know how much interest you are paying each month?”
• Clear Choice Credit Cards posts a debt elimination guide.
• Your Money Relationship stirs up the good debt vs. bad debt question, with an anecdote on student loan debt.
• Eliminate the Muda has an interesting take on debt consolidation.

Again, thanks everyone for the on-topic posts.

One last thing:  If you’ve got debt questions, head over to Cash Commons and ask them!  They can even be as specific as this one.

Have a great week!

Got money questions? Ask them at Cash Commons

Happy Columbus Day, everyone!  Here are the articles for this week’s Carnival of Debt Reduction.  At the top are the posts by people who discuss areas of their personal debt reduction, which is what the carnival is all about:

• Modern Tightwad is deprioritizing her debt payoff in pursuit of some other goals.

And other posts closely tied to debt reduction:

• Free Money Finance lists a couple of suggestions for deciding when to pay off your mortgage.
• Bargaineering shares a guest post on debt validation, which is a lender’s response to a debt collection dispute letter.
• Man vs. Debt has taken the plunge and told credit card companies exactly what they can do with their rewards.
• The Digerati Life discusses the pros and cons of debt settlement companies.
• Financial Methods asks a simple question: What would you give up to get out of debt?

Thanks for checking out the articles this week.  Also, if you have a debt reduction question, you can ask it over at Cash Commons!

Hot hot hot money questions at Cash Commons

Hi everyone, and welcome to this week’s Carnival of Debt Reduction. There were more good articles submitted this week than are shown below, but only a small number of them dealt directly with (a) personal debt reduction stories or (b) how to reduce consumer debt:

• No Credit Needed dispenses with a lengthy introduction and jumps right in with a six-step process for eliminating credit card debt.
• Free Money Finance recounts a story of how one couple paid off their mortgage.
• Financial Methods confesses that there’s no such thing as the debt fairy.
• Clear Choice Credit Cards runs through seven tips for reducing credit card debt.

I’ll include some of the other articles in a roundup later this week, but if your post wasn’t included, please revisit the submission rules and rest assured that it’s absolutely nothing personal.

Have a great week!

Hot hot hot money questions at Cash Commons

Five Cent Nickel published a post that discussed what things to consider when you have both debt to pay and money in the bank.  The main problem is that the difference in what the bank pays in interest is far below what one would pay on a typical credit card balance.  Holding on to a large bank account while slowing paying down a credit card balance means that there are a lot of interest expenses being paid to the credit card company.

Nickel’s advice isn’t one-size-fits-all, which is good:

… sit down and carefully consider how much money you really need to have sitting in the bank. $1000? Six months of expenses? Twelve months of expenses? The “right” answer will vary. But if you’ve got more than that amount stashed away, use the excess to attack your debt.

Not a thing wrong with this advice.  Some specific questions I would ask as you “carefully consider how much money you really need to have sitting in the bank” are these:

• How safe is your job?
• Do you have an independent source of income, either in a second job or a side business?
• Are you in an industry that is slashing hours or slashing jobs?
• Are you important enough to the revenue stream of your company that your job is safe?
• If you were to lose your biggest paycheck tomorrow, how long would your emergency fund last based on your current expenses?

If you have cash, this is your ace in the hole for weathering a long recession. An excess of money in the bank buys you time to replace a lost income source.  The more cash you have, the more time you have before bad things like late payments, defaults, foreclosure, and bankruptcy happen.

Here’s a specific example.  Let’s say you have $10,000 in the bank, and $15,000 in credit card debt, at some interest rate.  Your minimum monthly payment on the debt is, say, 2% of the balance, or $300, but let’s say you’re whittling it down a little faster than that, say $500/month.  Your monthly expenses are $2,000 per month, and you’re just about breaking even right now:  outflows match inflows.

So, at the moment, you have enough to cover five months’ worth of expenses ($2,000 per month times 5 months = $10,000) should you lose your job today.  You can even squeeze another two weeks out if you cut your debt repayment back down to the minimum.

Now, say instead that you threw $5,000 at that debt.  Your minimum payment drops to 2% or $10,000, or $200, which is great.  But your bank account now stretches less than three months. You have only about half the time to replace that income should it go away.  Not a good position to be in.

Cash in the bank is recession insurance. It does carry a cost if you have debt to pay off: interest spread.  But once you make the decision to pay down your debt with your cash in the bank, it’s not available to you anymore. The credit card company won’t give it back to you, and if they loan it to you, it will be at very high interest rate.  You may as well start charging on your card again.

People questioned Suze Orman when she advised not paying down debt as quickly as she had advised before, but I don’t think it’s bad advice at all.  A bolstered emergency fund is an excellent idea in this economic climate.  I might go so far as to say that you can’t have enough emergency fund right now.

If you should lose your job, you’ll be glad that you have as much as you do.

Hot hot hot money questions at Cash Commons

DINKs Finance jogged my memory of this U.S. National Debt Clock in a recent post, so I popped over to check it out.

Of course, it’s mostly really bad news:  $11.7 trillion on the national debt; another person gets unemployed every 20 seconds; the unfunded liabilities like Social Security, Medicare, and the prescription drug benefit, are pushing $59 trillion.

But there was one piece of good news – perhaps an indication of some responsible American behavior, or perhaps merely a micro-drop of Wite-Out® for the reams of red ink, perhaps just a statistical anomaly.  USDebtClock.org’s take is that credit card debt is decreasing.

This is known in the personal finance world as a Very Good Thing.  We’ll see how long it continues.

Hot hot hot money questions at Cash Commons

(This post is a bit off-topic but I want to get the word out quickly on this.)

I’ll take time now to thank Debt Sucks for hosting this week’s Carnival of Debt Reduction and also for his next post on why he’s never, ever hosting a blog carnival again.

I’ve been watching as hosting carnivals has gotten to be more and more work for very little reward.  There were thirty submissions to Jake’s carnival this past week, and he included only four of them.  He deemed the rest to be spam, off-topic, or astray of the rules that I had set up.

And I applaud him for holding a high standard like that.  Carnivals have gotten out of hand with the volume of submissions, and if these things are to remain useful and viable, the rules have to change.

BlogCarnival.com has done a lot to make the blog carnival popular.  There’s a flip side to that popularity though:  blog carnivals are easy one-way links for the submitter.  Intentionally or otherwise, it’s become too easy for people to submit to carnivals there.  There is no limit to how many times a particular URL can be submitted at BlogCarnival.com.  What’s more, I know of services that will submit one link per week to between ten and fifteen carnivals through BlogCarnival.com, for only $25 per month!  This is possible because there is standalone software that automates the submission process.

So, starting as of about 25 minutes ago, I’ve deactivated the submission form over at BlogCarnival.  The only way to submit to the Carnival of Debt Reduction is now through this submission form on the carnival’s website.

I’ll also be encouraging hosts to be more selective about what posts they include.  Free Money Finance has a good thing going with the Best of Money Carnival.  It was a breeze to host that one.

What I’m hoping this will do is reduce the number of submissions from search-engine optimization companies on behalf of paying clients.  They’ll still be able to do it if they really want to, but now they can’t just click a button to submit a post to the Carnival of Debt Reduction.  They have to come over to the form on the website and do it all themselves.

I’m hoping that’s too much work for them.  I’m also hoping that it’s not too much work for people from whom I actually welcome submissions.

(If you already submitted your post for next week’s Carnival over at BlogCarnival.com, don’t worry, it got through.)

OK, back to regular content.

Hot hot hot money questions at Cash Commons

This month’s Wired magazine (subscribe) had a review of a couple dozen rules for tech-savvy folks, and one of them dealt with the subject of hyperopia.  Hyperopia means “excessive farsightedness” and describes people who sacrifice today for gain tomorrow more than most people do.  The negative consequences of hyperopia are lots and lots of regrets; studies show that the  “doing the right thing” like giving up a party to put in a few extra hours of work in turns pretty quickly from self-congratulation to self-flagellation.

Saving as much income as possible in order to cover future needs can turn into hyperopia as well.  As Lazy Man and Money said in that article, it’s “not very fun” to be brown-bagging your lunch, drinking water, and staying home all the time just for the sake of building up the bank account “for someday.”  If the studies are to be believed, “someday” will likely be filled with a lot of empty memories and a lot of regret.  So, if one is to avoid this, the solution is easy:  spend money on fun stuff, today.

I know that sometimes I get concerned about not doing more family getaways to see The Mouse and wonder about what other things in life my family and I are missing.  But I also have a healthy fear of where things are going, and a few thousand dollars can go a long way to alleviating fear if invested correctly.  I’m certainly not so concerned that I want to put a vacation on credit, and I hope you’re not, either.  (Maybe it never crossed your mind.  Good for you!)

At the end of the day, there are more important things to do anyway, like building a legacy and fulfilling a calling.  Once those are clearly defined, working toward them is its own reward, and regret falls by the wayside.  Time, and money, that’s spent working toward the most important thing you can do is never wasted, but getting into debt usually postpones the time that you can start working on your calling.

The bottom line, then, is to figure out what are the most important things you want to accomplish with your life, count the cost, and begin working.  Then, the decisions you make about your time and money aren’t a matter of work vs. fun.  They’re a matter of unimportant vs. important, and hopefully there’s no regret involved in channeling resources toward important things instead of unimpostant things.

Hot hot hot money questions at Cash Commons

This is a bit of a mind trick but it’s helpful to reduce debt.  If your credit card minimum payments are $78, $187, and $365, make them $100, $200, and $400.  If your car payment is $210, make it $250 or $300.  If your mortgage payment is $879, pay the extra $21 toward principal and have $900 taken out each month.

I find it easier to think in round numbers so that’s how I pay a little extra on my mortgage each month.  My extra amount is $20.41.  Less than one dinner out per month — something that will hardly be missed, but as they say, it adds up.

Any way that you can trick yourself to make extra payments on non-producing debt helps. I still think, at least for now, that it’s a good idea to build up a good emergency fund before making big payments on your debt, because sudden joblessness will derail just about any financial planning.  But if you’re doing that anyway, a little more toward your debt will help, and you’ll have the satisfaction that you’re doing something to speed your debt reduction.

Hot hot hot money questions at Cash Commons

There is still time on the West Coast for celebration of Waffle Iron Day.  My apologies for posting this so late in the evening.  Please don’t batter me.  This Carnival of Debt Reduction will feature fun facts regarding the humble waffle iron and the scrumptious breakfast treats it produces.

Personal debt reduction stories

• Crapped Out on Credit shares a very personal story of the toll that a gambling addiction can have on one’s finances.

The waffle is old.  It dates back to 14th-century Greece!  The Greeks at that time topped their waffles with cheese and herbs instead of syrup and whipped cream.

Debt-related resource posts

• Bargaineering explains how debt settlement works.
• Free Money Finance gives five ways to make paying back student loans less painful.
• Five Cent Nickel has some thoughts on paying off the mortgage early.
• Debt Goal discusses overdraft protection and its impacts.

“Weird Al” Yankovic is no stranger to the waffle.  (He’s not a stranger to much of anything edible.)  In one of his songs, he was convinced that he had to make a model of the Eiffel tower out of Belgian waffles.

• Bill Eater calls us to action, telling us to stop dragging our feet, and get out of debt.
• Leave Debt Behind has three surefire ways to raise your credit score.
• Credit Card Assist differentiates a soft and hard credit inquiry.
• Dough Roller lists hard-to-find 0% balance transfer offers.
• Canadian Finance Blog discusses Debtors Anonymous.
• Prime Time Money answers readers’ questions about clearing up credit report errors.
• Out Of Debt Christian has a take on MJ’s financial legacy.
• Ask Mr. Credit Card answers some questions about bankruptcy and credit.
• Debt Tips wonders why debt settlement has a bad reputation.

Waffle Iron Day breaks the monotony of the five otherwise waffle-holiday-less months between International Waffle Day (March 25th) and National Waffle Day (August 24th).

Generally good ideas to save money so that you can reduce your debt

• Frugally Green discusses energy efficiency, appliances, and saving money.
• Budgets Are Sexy lives like he’s broke.
• Christian Personal Finance reviews Upside Living in a Downside Economy.
• Money Ning recommends doing the entrepreneurial side hustle.
• Wealth Pilgrim shares the best, and cheapest, wedding present you can give anybody.
• Money Smart Life suggests not being lazy during the lazy days of summer.
• Savings Toolbox has six tips for saving money on life insurance.

Waffles with either peaches or spiced apples on top are my favorites.  (Please don’t mail any to me, though.  The thought is good enough.)

• My Dollar Plan reviews You Need A Budget.
• Personal Finance Analyst gives ways to reduce debt without tightening one’s belt.
• Almost Frugal asks how we judge success.
• Miss Bankrupt chats on frugal lunches.

And just for fun … the talk like a banker word search!

That’s it for this week.  Thanks for reading!  Please consider stumbling your favorites if the posts spoke to you.

Next week Rocket Finance is host, and the following week No Credit Needed will be hosting Carnival of Debt Reduction #200!

(Photo: Wallslide)

Hot hot hot money questions at Cash Commons