'Spring Forward' To Financial Security With Bills.com's Debt Payment Plan

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New season can bring new motivation, Bills.com's Housser suggests.

Now that most Americans have adjusted to the new daylight savings time change, Andrew Housser, co-CEO of online consumer portal Bills.com (http://www.bills.com), suggests consumers take this opportunity to "spring forward" on their debt repayment plans.

"The average U.S. family carries credit card balances of about $8,000," Housser said. "If you are among this group, think twice before launching into spring projects that add to that debt. Instead, take advantage of spring to eliminate debt. You'll put yourself in a better position to pursue life's dreams -- and you'll be better off if the unexpected hits."

To get started, Housser suggests this plan:

1. Track spending. For a week or a month, carry a small notebook and write down every purchase. "This is a great method to see how small purchases add up -- coffee, fast food, candy bars, drugstore purchases and little gifts and doodads," Housser noted. "Alternatively, you might learn that you don't spend frivolously. In that case, you will want to look more closely at ongoing bills or income."

2. Make a budget or spending plan. Budgeting requires responsibility for where money goes -- rather than allowing whims, advertising, habits or peer pressure to influence spending. Budgeting templates and educational information are available in any number of personal finance books or online sites, including http://www.bills.com/guide/. The key element, Housser said, is to divide spending into the categories of "must-have" (food, housing, basic clothing, transportation, education) and "optional" (dining out, movies, CDs, entertainment shopping, gifts).

3. Use cash. Pay bills with checks or set up automatic payment plans to avoid concerns about a late or forgotten payment. For all other expenses, use cash. Debit cards can be helpful for transactions for which a credit card is necessary, such as travel plans or paying for gas at the pump. "This way, you're still effectively paying with cash rather than risking piling on debt," Housser said.

4. Trim the fat. Work to reduce the "optional" budget category to pay off debt. Premium TV channels or restaurant meals are not needed. Serious debt-cutters often axe modern-day "necessities" such as cell phones, home Internet access and caller ID. Even putting $15 a month toward a credit card bill makes a difference (see #5).

5. Pay more than the minimum. Ignore the minimum payment on credit card bills. Instead, pay more. "Minimum payments are set at a relatively low percentage of the balance," Housser explained. "Typically, minimum payments go primarily to interest and fees. They don't pay down your principal significantly. Paying only the minimum will keep you in debt for years, and result in total interest payments that could exceed the amount of debt you borrowed in the first place."

If all debts cannot be paid down in a short period of time, then prioritize. Make minimum payments on the cards with the lowest interest rates, and put all excess cash to the card with the highest interest rate. Once that is paid off, put excess cash to the card with the second-highest rate, and so on until no debt remains.

6. Seek help. For those with serious debt that they can't pay, help is available, especially if the situation was caused by a short-term problem such as a medical emergency. Other emergency options include borrowing from relatives, borrowing against life insurance or retirement funds, or consolidating old debt onto a no-interest credit card. If still more support is needed, seek out a trustworthy debt resolution advisor. For more ideas, visit http://www.bills.com/debthelp/.

"Start working now to eliminate debt problems, and you can face the new season with the optimism that you're giving yourself freedom from money worries," Housser said. "There is no time like spring to start afresh. You will thank yourself later for your dedication today."

Based in San Mateo, Calif., Bills.com is a free one-stop online portal where consumers can educate themselves about complex personal finance issues and save money by choosing the best-value products and services. Since 2002, Bills.com and its partner company, Freedom Financial Network, have served more than 10,000 customers nationwide while managing more than $350 million in consumer debt. The company's co-founders and CEOs, Andrew Housser and Brad Stroh, were named Northern California finalists in Ernst & Young's 2006 Entrepreneur of the Year Awards.

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Aimee Bennett
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