happiness
Sometimes, in your quest to live life without spending excessively, people may call you a cheapskate, a tightwad, or worse. Maybe I’ve developed a bit of tough skin over this, but it really doesn’t matter anymoe. What’s funny is that these values were embraced by those of different generations. Growing up, my parents were never rich in things, but were rich in values and friendships. The tried to pass these values down to their children. Being the prodigal son, I was not always willing to adopt the same values and lifestyles, but as I grow older, I realize that a lot that they were attempting to teach me were the right things. Looking back (while looking forward at the same time), here are some things that have been learned:
* If you truly want it, save for it - there is no better feeling than seeing something that you want and saving for it little by little. If you truly want it, you will still want it by the time that you have saved enough to pay for it. Instant gratification is nice, but things have a tenency not to mean as much if you see it, grab it, charge it, and pay for it for a long time.
* Don’t spend too much for things you need - mom was a great budgeter and she always kept her eye open for a good value. She had a budget and stuck to it.
* Waste not, want not - items were purchased for a reason and waste was not an option
* Buy quality, not quantity - mom and dad were not “brand buyers”. I was not brought up to “need” to wear
Nike shoes or
Levi’s jeans. Mom always bought quality clothes that lasted and didn’t look too bad.
* Save for a rainy day - As I get older, it makes more sense, because sometimes life has a way of happening: your car may need shocks and struts (especially if you purchase a used car), the plumbing may stop up (and you cannot fix it yourself), your glasses may get broken, or something may need to be done that you don’t normally expect. I now have a
savings account online that pays a decent rate and the money is accessible if I truly need it.
Be wise, or as Spock would say, “Live long and prosper.”
Tags: credit card debt elimination, financial independence, frugality, money, saving
Have you ever seen a penny on the ground and left it there thinking “it’s only a penny, it isn’t worth it”? You may want to think again. The little things quickly add up to be big things, especially when there is compound interest involved. If you were to save one dollar per week (which is a mere $0.14 a day), over a twenty year period, that would add up to be $3,276.14 (with a 10% compounded interest). Divide that amount by 14 and it works out to be $234.01. I can only imagine that if you were doing laundry and found $234 in a pocket, you wouldn’t throw it away. Saving those pennies is actually worth it. In reverse, if you were to charge a dollar or two a day on coffee and snacks, with the interest charged, it could end up costing you even more. I found the calculator at David Bach’s site to be a real eye-opener. Now I know why people use coupons, attempt to find the lowest price on things — it all adds up!
Let’s just use a simple example. Where I work during the day, we have vending machines that offer candy bars, soda, and the like. If someone find themselves hungry for a snack (or skipped breakfast or lunch), they can always find refuge in the vending machine. A candy bar costs $0.85 and a soda costs $1.10 (your findings may differ slightly). $1.95 a day for five days equals $9.75 a week (let’s round it to $10 for simplicity sake. If you were to take that $10 a week, invest it at 10% and compound it for twenty years, that candy bar and soda habit adds up to $32,761.30. Now that is one expensive habit (and you though it was trivial). We will explore little things that you can do to free up cash to help pay down your credit card debt.
More at my website.
Tags: Add new tag, credit card debt elimination, money, saving, wealth creation
“The times they are a changing”, at least that’s how the old Bob Dylan song went. In these tough financial times, everybody is feeling the pinch. I have read that people simply aren’t charging as much as they used to (whether they don’t want to, or they are completely maxed out on their credit cards). This may be good news for a country who has become dependent on oil, gas, fast food, and, dare I say, credit cards. This may make your journey for credit card debt elimination a bit of a gauntlet rather than a simple side-step to another path.
Just this morning I was reading about some of the sneaky ways that
credit card companies are trying to maintain their high profit at the expense of the lowly, unsuspecting consumer. It was certainly disheartening, to say the least. The credit card companies are raising minimum payments, adding new fees (which are pure profit for them), lowering credit limits (which can lower your credit score), and being less and less forgiving for late payments. All I can say is “Watch Out!!!”. One must remain steadfast and relentless in their pursuit to become less dependent on the need to have something now and pay a much bigger price later.
At times, it can be extremely tempting to consolidate all of your debt into one, convenient payment. Let’s look at some pros and cons
PROS
* Instead of having multiple payments to juggle and figure out which one gets paid at which time, when you consolidate, you will have a single payment to be made at one place.
* You know how much interest you are paying each month because it is all in one convenient location.
*Having everything in one place will show you immediate progress toward the whole.
CONS
* Depending on the interest rate that you get for your consolidation, you may end up paying more for everything in the long run.
* Once you have consolidated, it is much more difficult to get the interest rate lowered.
* The intimidation of one monthly lump sum may seem a bit unsettling at first.
I was fortunate the first time through (you will recall that I have been saddled with debt many times in my life) that I was able to secure a personal loan at my credit union. My father was kind enough to cosign for me and I was able to get a low rate with a decent monthly payment. It was certainly lower interest rate than I was paying combined on my credit cards. If you have someone who can cosign for you, a personal loan might be a good thing for you (but I am not in the position to offer you loan advice).
Read more at my website.
For The Very Disciplined
There is a school of though promoted out there that, when one exams it for the long-term effects, is an extremely good program. It makes sense because you will save money by paying less to eliminate you debt by paying the debts that have the highest interest rate first, thereby immediately lowering the interest in dollars by paying the highest percentage interest debts first. This is promoted by
John Cummuta and if you are a highly disciplined individual, you will find that this is an excellent program. Unlike last time when we discussed paying the lowest balance first and building on that success to build momentum to pay off the next-lowest bill, that plan advocates the strength in conditioning and has rewards of seeing you credit card debt eliminated chunk by noticable chunk. In the short term, you see success happen fairly rapidly. In the long term, you may have paid more interest (money) to see this success.
Let’s face it: if you were extremely disciplined, you probably would not be in the hunt for credit card debt elimination. This plan has you analyze all of your debt (not just your credit card debt) and rank them by interest rates. The theory goes that if you spend every extra dollar eliminating the highest interest first, you will pay less in interest because that balance diminishes more quickly. From a strictly analytical view, this plan does eliminate your debt well. While you may not pay off the credit card with the lowest balance first, you may pay it off before the highest interest credit card is paid off, but then you will have more money each month available to pay down that higher interest.
Next, we will examine consolidation. Visit my
website for more information.
When it comes to developing a plan to eliminate your credit card debt, there is a plethora of advice out there: some advocate paying your lowest balance first, some will preach about highest interest balances first, while others advocate evenly splitting your payment between all of the cards. Which one is right? Yes. In other words, there are good points to each method and one can argue in favor of each one, because it a certain style fits your personality, then that is the one for you.
Paying Your Lowest Balance First.
This one has some merit. Here is the premise of this plan: Let’s say you have five credit cards, all with various balances and all with different interest rates attached. Just for illustrative purposes, we’ll suppose that the minimum payment on each add up to $175 per month. You have scrimped and saved and you have an extra $75 per month (for a total available of credit card reduction cash of $250 per month). With this plan, you would pay just the minimum on four of the credit cards and apply the entire amount towards the card with the lowest balance. Once that card is paid off, you would then apply the extra $75 plus the amount that you had been paying on the lowest balance credit card to what you were paying on the next-lowest balance. When the second lowest balance card is paid off you add all you were paying on that one to the next one, and so on.
The cool thing about this is that you can see some measurable results in a fairly quick (relatively speaking) fashion. This helps to add to the feeling of success and may help you to stay the course. Some feel very strongly about this method. You can find more here.
Tomorrow, we will look at paying the highest interest cards first. Visit my website for more information.
When first you look upon the burden of the mounting credit card debt, it may (or may not) be a task that seems formidable at best. Just as a beginning runner may look at the course of 26.22 miles for a marathon as un-doable, sometimes it is a matter of taking it one step at a time: perhaps you start by jogging to the end of your driveway, then to the end of the street, then to the end of the next block, and you build on your confidence of doing more and more until a five mile run seems like a walk in the park (pun intended). Such is true with credit card debt.
You can “build your endurance” for eliminating credit card debt. Perhaps, if you are in a deep dependence on a credit card, use the credit card with limits, or use it every other purchase…you just have to start somewhere. My use curtailed gradually in the months before I ceased using them altogether (with the exception of one department store card that I use every three months or so, but only when I already have the cash to pay for the purchase, but I use the card to help my credit score), I began to use them less. It wasn’t because I had developed a “master plan”, but as the limits on the cards were reached, I quit using them (not because I wanted to, but there was nothing left to use on the cad). The constant late fees, high interest rates and the beginning cacophony on menacing phone calls all began to wear on the nerves. I finally had to shout (to myself)
ENOUGH!! I then quit cold turkey and started using only my checking debit card. If I didn’t have enough, I would do without. It is amazing when I look back at how much I
wasted. The truth of the matter is that if I can do it, so can you. Read more at my
website.
A Challenge.
As this journey has progressed, there have been times that I have asked myself “Can I Eliminate Credit Card Debt?” From the time that I first had a credit card nearly 28 years ago, it was a question that I had to grapple with. It started with a pair of dress shoes that I couldn’t really afford at the time (nothing too expensive, just a pair of dress shoes from JC Penney), but I needed for the concert that I was scheduled to perform in with the orchestra. Of course, you had to wear a tuxedo and I managed to use my black suit and white shirt, but I didn’t have any black shoes. Granted, I was in the percussion section and nobody in the audience would have noticed that my shoes were brown, but I would have never lived that down, especially since we were going on a weekend tour to different parts of the state. I had just gotten a credit card from JC Penney and decided to get the shoes. They were $50 and I was a poor, newly married college student, but I got them. I was diligent and made the monthly payments on them, but the interest added to the total cost. The cost was $5 a month and it took me nearly 15 months to pay it off. But it never seemed to end. So….to answer the question, “yes”. You can eliminate credit card debt. Is it easy? No. But you can.
I have now entered my second year of not using a credit card (although that isn’t entirely true, I have kept one department store credit card that I have used to help restore my credit rating, but I have used it for purchasing something that I had the money for, but charged it and immediately scheduled the payment online for my department store card so that it was really like paying cash for it, but it made me look good in the eyes of the credit reporting agencies. I have slowly watched my credit score rise from dismal to poor (it is an improvement, but very slight). I was following the advice of one of the
books that I have read. The solution is not immediate, although some techniques have brought me some quick relief.
CELEBRATE!!
Getting out of credit card debt can be a long, tedious, and sometimes overwhelming process. To be sure, it takes months, even years of steady, applied discipline. Keeping track and negotiating lower rates takes time and energy. If you have/had an extensive list of credit cards, it can be downright daunting. One thing that I have found that helps me to stay focused and to keep the edge sharp and clear is to take occasional break from the grind. I am not advocating pulling out your credit cards and going all-out with a limousine-chauffeured event (complete with an open bar). You certainly don’t want to erase everything that you are working toward and then some, but I have found that as I reach a milestone (say, paying off a credit card, or reaching a certain percentage of credit card debt erased) it helps to keep the focus my celebrating in a small way. I may enjoy an inexpensive meal at one of my favorite restaurants (I now rarely eat out, unlike a daily routine years ago) or purchase a book that I have had my eye on (it has a more lasting effect). It may be something as simple as watching your favorite show on television, talking a walk in a park that you haven’t visited in a while, or spending time with those that you love. Whatever. Just take a brief respite from the difficult goal that you have set for yourself and you will find that you will have more overall zest for that credit card debt elimination.
Take a break! Enjoy life! (But don’t forget to get back into the game).
See more at my website.
You Are Not Alone
Sometimes we may feel like we have to be a maverick, we have to do things our own way, we have to forge our own path. That’s all good and fine in some things, but when it comes to credit card debt, we may need some support. Sure, it would be nice to have somebody else sweep in and erase our debt, but the probabilities of that happening are two: slim and none. You got yourself into this debt (albeit not entirely your fault because the whole industry is geared to draw you deeper and deeper in debt and in less control of your financial life) and you will succeed in getting yourself out of debt. Just as you don’t just wake up one day and find yourself deep in debt, you won’t wake up and find yourself out of debt. It came on dollar by dollar, and that is the way it will come off as well.
As it was mentioned yesterday, you can always find help with
books, or
consumer credit counseling services, but sometimes just having a non-judgemental friend to air out your concerns with can do a great bit of good. A good friend will listen to you, and offer support (although I never ask for them to pay my bills) and encouragement when you need it most. My father was very supportive of me after the first divorce and he was kind enough to offer to put up some of his stock as collateral for me to take out a low-interest loan at our credit union so that I could pay off a large debt that I had (it was money that I owed the IRS, but that is a whole different story in itself). Bottom line: I had support and that meant all of the difference in the world to me.
You can read more at my
website. More later.
