Escape the Credit Card Death Spiral

You\'re burdened with crushing debt and at the end of your rope. There\'s got to be a way out. You go to the door every day, expecting bad news. Your minimum credit card payments are eating up most of your paycheck every two weeks. You can\'t go to dinner, go on a trip, or save for your kid\'s education, and it just keeps getting worse. You\'re using your credit cards for living expenses now. This really sucks!

Many people are finding themselves in this situation; the \Credit Card Death Spiral\. As the nation\'s credit card burden continues to climb, the number of people facing this credit nightmare is increasing at a frightening rate. It happens for many reasons and is depressing and debilitating. Credit card companies have relaxed the initial requirements to get a card in the last few years. The change is allowing people with marginal credit scores to get a number of credit cards. In addition, many of these cards have higher credit limits than in the past. This combination has encouraged many consumers to take on much higher levels of debt than in the past.

In addition to the relaxation of credit card requirements, lenders are changing the way they do business once a consumer has the card. In the past banks and other credit card issuers would not let you charge over your credit limit. This has changed. Now, many financial institutions will accept a charge even if it puts the account over the credit limit. When the account goes over the limit, they charge a hefty fee, raise the card holder\'s rate, or both. Many credit card issuers are doing this and it can raise rates on a credit card to over 40%!

Here\'s one common scenario. You have a card with a 12% rate and a $5,000.00 credit limit. Your card\'s current balance is $4,475.00 and you\'re picking up some clothes and school supplies at a back to school sale. You visit a few stores and pick up some items. Like most people, you don\'t have your exact account balance memorized. Your last purchase takes you a just few dollars over your limit. The charge is approved anyway.

Imagine your surprise when you get your next credit card statement. Your interest rate has been raised to 30% and your minimum payment, which had been $88.00, is now $168.00.

To really pour salt in your wounds, the bank has added a $39.95 charge for exceeding your credit limit. It gets much worse. Not only does the 29% interest rate apply to the purchases you just made, it applies to your credit card\'s entire balance!

This type of scenario occurs hundreds of times every day. If left unchecked, you\'ll enter the \Credit Card Death Spiral\ that many times ends in bankruptcy or, at least, a horrible credit picture. There are ways to escape this chain of events. One choice for many is through a debt consolidation loan.

A consolidation loan consolidates the borrower\'s debts by paying off the smaller loans with one larger loan. This type of loan typically uses equity in the borrower\'s home as collateral for the loan. Having a secured loan enables the interest rate to be much, much lower than the unsecured credit card loan. The lower rate creates one payment that is substantially lower than the total of the previous credit card payments.

Steve Faber writes about a variety of topics from business to home theater systems.

For more on how to escape the Credit Card Death Spiral see The Debt and Loan Consolidation Guide

The Curve Drawdown A Sensitive Aspect of Stock Trading

If you are a new player on the stock market, you should know
that things aren't always nice and shiny when it comes to stock
trading. There are downsides and upsides as in any other trading
or investing process and you have to be prepared to cope with
the negative aspects. The drawdown is the worse thing a stock
trader may experience along the years. You should know that a
peak in a share's price is always followed by a going down to
the bottom period. But don't panic, this negative impact is also
followed by an ascending trend, so your shares will be going up
again.

Experienced systems traders are well aware of this drawdown
trend; the 'rookies' (new traders) are those who panic and start
selling their shares. This drawdown period represents an
important percentage of the stock's profit evaluation process.

This drawdown curve is representing a test for the 'buy, hold
and hope' rule that investors should follow on the long term.
What does this mean? Well, inexperienced stock traders chose to
sell their shares when their price is going down, instead of
realising that this price drop is only a natural thing to
happen. This kind of traders is losing money as the price is
lower than the one they have paid for the shares. This is the
reason why you should try not to panic and to commit yourself to
holding to your shares. Keep in mind that this price drop is a
normal phenomenon on the stock market.

Experienced traders have a strong commitment when it comes to a
drawdown. They know that the best thing to do when a drawdown
occurs is to follow all trade recommendations. Anyone who is
involved in stock trading should be emotionally and financially
prepared to deal with this kind of negative situations.
Experienced traders know that the worst thing to do is to sell
your shares just after a drawdown as the price will definitely
go up.

Therefore, if you plan to get involved in the stock trading
process, be prepared to face its downsides too. And keep in mind
that any investing process is a matter of instinct, trading
method, good information and luck.

Real Estate Laying the Foundations for Buying a Home

Build a house and you start with the foundations. Seems pretty
obvious, doesn't it? But buy a house and too many people focus
just on what they see above ground, forgetting that it's as
necessary to lay good, solid foundations for buying a house as
it is for building it. Perhaps, as a prospective homebuyer, you
see great interest rates and a buoyant housing market, and
you're not convinced of the need for thorough preparation. You
could find, though, that you don't get to buy your dream home,
but instead pay the price for not being prepared by losing out
to someone who has done the necessary legal and financial
spadework.



The business of America, declared Calvin Coolidge, is
business, and you should make it your business to recognise
that buying a home is the biggest business transaction you're
likely to make during your lifetime. So, use your head before
you lose your heart (and perhaps your money) to that dream home.
Complete the preparatory steps before beginning to look at
specific homes. It's only common sense: foundation stone first
and keystone last. Well, let's get down to basics. Let's see how
best to start laying that foundation stone to ensure that you
stand the best chance of actually buying the house of your
dreams.



One of the most important preparatory steps you need to take is
to initiate the loan application process. This will entail a
lender running a credit check and drawing up a credit report for
a modest fee of $25. You will also need to complete a loan
application. All being well, the lender will furnish you with a
good faith estimate showing the costs of the loan and the
approximate monthly repayments. Pre-approval will follow
pre-qualification subject to verification of the information you
provide.



So why then, is pre-qualification so important?



1.The process involves a credit report. This might highlight the
need to settle outstanding debts in order to maximize your
credit score. Settling any debts, however, doesn't automatically
erase them from your report - it might take months. You might
perhaps need the services of a mortgage consultant to get you
qualified for a loan. Whatever the problems you may experience
with your credit report, the very fact that you will have picked
them up early will save you disappointment later.



2.If all goes well and you get prompt pre-approval, you'll be
able to put in an immediate offer when you find your dream home.
Pre-approval stands you in good stead to have a reasonable offer
accepted. It's true that bidding wars have taken place in the
northeast U.S, but it still generally holds that
pre-qualification gives you leverage over sellers impressed by
your pre-emptive action.



3.Pre-qualification will help focus your home search. Knowing
how much you can afford will be very useful when searching
property websites.



So, make sure your finances are in order. Make sure too, that
you have a realtor working for you and don't rely on the
seller's agent. Word of mouth and personal recommendation are
the best way to secure the services of a realtor you can trust,
and who will act in your best interests.



Finally, having advocated a proactive approach throughout, there
is one area over which you have no control and that is the
appraisal. Mortgage lenders like to have an appraisal of your
prospective home's market value to protect their financial
interests. You might imagine that your interests too, are being
protected - surely an appraisal will reveal any real problems? -
but you'd be wrong. You might pay for the appraisal but you
would be well advised to pay for a home inspection report as
well.



Why the extra expense?



1.The inspector is independent of the lender.



2. The inspection will be thorough taking in inspection of the
roof; testing of electrical appliances; checking plumbing and
heating and looking for signs of pest infestation and dry rot.



3.Having had the forethought to get a home inspection report you
will now have the leverage to defer payment of the appraisal fee
should you be dissatisfied with the proposed handling of repairs.



One final word of caution. You should apply the same
precautionary principles to the home itself as you did to the
homebuying process. Again, don't let your heart rule your head.
Your dream home might require as much hard work - the addition
or removal of features, for example - as did laying the
foundations earlier in the process.