Wednesday, February 8, 2012

Facing the Reality of Credit Card Debt

Credit Cards—everyone has one and everyone has found themselves wishing they didn’t. Then comes credit card debt and while no one wants it; most everyone has it. It can seem like there is no way out and most people have a hard time facing the reality of it.

However, facing reality is always better than burying your head in the sand. Dealing with your debt head on will not only improve your sanity but also get you back on track. Here are some steps to help wipe out your credit card debt.

1. Facing reality
Yes, it will be painful, but you have to just grin and bear it. Recognizing the severity of the debt is essentially the first step.
1. Add up the balances on all your credit cards and other loans—figure out the total of what you owe. Note the interest rate you are paying.
2. Make a list of all your monthly essentials: rent/mortgage, utilities: heat and power, loans, auto payments, health insurance, taxes, cell phone bills, food… everything you cannot live without.
3. Calculate your total income and your monthly essentials. The end number will be your discretionary spending.
4. For at least one maybe two months, write down every cent you spend. It will give you an idea of how quickly things add up. 

2. Do you really need that
You might be surprised how quickly life’s little luxuries such as eating out and getting coffee every morning may add up. Instead of spending $3-$5 on coffee each morning put aside that money and use the extra change to pay down your debt.

3. Contact your credit card company
For some people, keeping up with their monthly payment is impossible. Calling your credit card company might be the only choice. It is important to know that if you decide to call your credit card company you MUST remain calm. Explain your financial situation and give legitimate reasons why you are a responsible person who is determined to pay off your debt.

4. Arrange your credit card debt from highest to lowest
Keep up with minimum payments on all your cards, but pay whatever extra cash you can afford on the card with the highest rate. Once that card is fully paid off you can move to the next highest rate and so on. This is a sure fire way to make progress. As this strategy continues to work, you will be able to pay off bigger portions of your debt.

5. Be cautious
Be cautious about debt settlement companies that “guarantee”. No company can guarantee a debt settlement with a credit card company. In fact there is no reliable shortcut in getting rid of your credit card debt. For the majority, it is a long process, so stay focused.

If you can follow these steps and remain determined through hard times you stand a chance against credit card debt. When that debt-free day comes, you will be glad you faced the reality.

Tuesday, February 7, 2012

What Bankruptcy Means for Corporations and Brands

In today’s economy it is no shock that more and more American companies are announcing their plans to declare bankruptcy. In the past few months alone, corporate giants such as American Airlines, Kodak and Hostess have all managed to make headlines with their financial struggles. However, what does that mean for the brands that those companies have worked so hard to construct?

To this day, people are still buying cars from Chrysler, stores are continuing to stock their shelves with Sharper Image electronics, and many travelers are arriving at their destinations on American Airline planes. Although all of those companies have at one point filed for bankruptcy, their brands have remained synonymous with trusted American products and for some reason they continue to sell even after their parent company gone through a financial crisis.

Perhaps it is because Americans want to see other Americans succeed or maybe it is to keep jobs stateside, but either way consumer culture seems to do whatever it can to keep popular brands alive. Thanks to the massive consumer followings that many brands have developed, many times when a company files for bankruptcy, even if the company is dissolved, it can have a very minimal effect on product sales.

One way that popular culture keeps brands alive after their parents companies file for bankruptcy is simply through their name. Sometimes after a company has filed for bankruptcy a consortium of buyers will purchase the rights to the popular brand’s name and use them to market its own products. For example, in 2009 a group of buyers bought the rights to the Polaroid name for $88 million.

This tactic is becoming increasingly popular in developing world markets as well due to the boom in online shopping. Companies that buy the legal rights to a brand name can market that brand wherever they please, which allows consumers worldwide a chance to own an iconic American product, even if it is being sold by a no-name retailer.

These days it is important to remember that bankruptcy is more about restructuring a company than defaming it. Even companies involved in the biggest bankruptcy cases have found ways to bounce back, but when they don’t, Americans will make sure their brands continue to live on.