• Posts Tagged ‘credit’

    When Should You Buy Your First Home?

    by  • November 20, 2014 • Tagged: ,  • Comments

    Are you thinking about purchasing your very own home for the first time? Perhaps you’re sick of renting or you’d just like a permanent place to call your own. Whatever the case may be, make sure you’re certain that you’re ready to buy your first home and are doing it wisely. Follow the helpful tips below and your first home buying experience should be a breeze.

    1) Check Your Credit

    One of the first things that banks will do when offering you a loan is check your credit. If your credit is poor, they will either deny you a loan entirely or they’ll hike up your interest rate and down-payment amount to protect themselves in case you default.

    Before you even head to your bank or credit union (or HomeStart Perth for that matter), do yourself a favor and check your credit yourself. CreditKarma.com is a great place to do this since they’ll provide you with a free report from Transunion (one of the major three credit report companies) and they will tell you why your score might be low and what you can do to improve it.

    2) Save Up 20%

    If you really are serious about buying a home and making it your long-term residence, then I would suggest that you save up 20% for your down-payment. With this 20% you can basically insure that your home value will never fall below what you owe the bank and you can therefore avoid PMI payments to the bank as well!

    I understand that saving up 20% of the purchase price might take quite a long time, but this process will teach you to scrimp and save and to live within a budget, which is very important for when you own a home and have unexpected items that are in need of repair. Make a plan to sock a large amount of money away each month and save up that 20%!

    3) Find a Deal

    So during what time of the year should you buy a home? The absolute best time is when demand is low and house prices can be found for cheap. For many areas in the north, this means winter time. Nobody wants to buy a house during the holidays and they certainly don’t want to move their stuff in the snow. If you don’t mind this and would be willing to make a purchase in the winter to save a few thousand bucks, then I would certainly encourage you to.

    If you want to find even more of a deal, don’t be afraid to find a fixer-upper home. Ideally, you’d like to find a home that is appealing on the outside, but could use a few updates on the inside (ie. carpeting or flooring, vanities, etc). If you are fairly confident that you can repair or replace the rundown areas of the house, then that means you can probably do fairly inexpensively as well. By purchasing a fixer-upper, you can save yourself another 10%-20% off the fair market price.

    Are you ready to buy your first home?

    Budgeting for Traveling and Using a Great Rewards Credit Card to Help Along the Way

    by  • July 8, 2014 • Tagged: , , ,  • Comments

    Learning about different cities, cultures and customs is educational and exciting! Everyone loves to visit different places, whether it is to visit friends or family or for a vacation. You may be wondering if it is possible to travel more without spending a lot of money. It is possible, with careful budgeting and using a travel credit card to its fullest potential. The best way to do this is to analyze your needs and then look for a credit card that will benefit you the most.

    The card that should place itself at the top of your list is the Southwest Airlines Rapid Rewards Credit Card since it got the received the most rave reviews on comparison portals like MileCards.com. It is a useful credit card that offers plenty of perks and benefits, and when combined with good budgeting and smart shopping, it will allow you to travel more often with your hard-earned money. One of the biggest perks for cardholders is the Southwest Airlines Companion Pass, which allows you to travel with a companion free for at least one year, wherever you go!

    Just for applying for the Southwest Rapid Rewards credit card and spending $2,000 in the first three months of opening the account, you will be awarded with 50,000 points. This is enough for two round-trip, economy class tickets with Southwest Wanna Get Away fares in the continental United States. The only cost to cardholders is the government taxes, which can be as low as $10 per ticket. This is definitely one of the best bonus offers available.

    When purchases are made directly with Southwest Airlines or AirTran, you will earn double points for each dollar spent on travel, another budget bonus. Double points are also awarded at A+ Rewards and Rapid Rewards Hotel and rental car partners. Purchases made directly while traveling with Southwest Airlines, such as inflight meals, Wi-Fi sessions or movies and video games will earn you double miles as well.

    Budgeting involves living within your predefined spending limits. You can use coupons, shop sales, dine at home instead of eating out and shop with a grocery list so that you don’t over spend and are not tempted to buy items you don’t need. Just cutting out a coffee every morning on your way to work can save over $300 a year! Using your Southwest Rapid Rewards credit card to pay for everyday purchases, like gas, groceries, dining out and movies will earn you one point for every dollar spent. Large purchases, such as furniture for the house, insurance for your home or car and telephone and cable or utility bills can help you accumulate more points. Make sure ahead of time that you can pay for large purchases with the credit card so that you earn points.

    Savvy cardholders will want to enroll in the Rapid Rewards dining program. Just for registering the Southwest Rapid Rewards credit card, you will earn 300 bonus points. There are thousands of participating restaurants, bars and clubs across the United States that participate in the program. Every time you pay with the Rapid Rewards credit card, you will earn four reward points per dollar spent. This is another great way to earn additional points. You may think this goes against your budgeting plans, but it is okay to eat out every once in a while, especially if you are earning bonus points that can be used towards free travel!

    The Companion Pass with Southwest Airlines is one of the best airline perks available. When you earn 110,000 points with Southwest, you are awarded the Companion Pass. The pass allows you to travel with a selected companion, such as your mother, a friend or spouse every time you fly with Southwest! It is based on a calendar year, so if you earn the 110,000 points in September, you will have the pass for the remainder of the current year, as well as for the entire following calendar year! The 50,000 bonus points earned for applying for the card count towards earning the pass too. Earning the pass can be straightforward. Points earned through Rapid Rewards partners qualify towards earning the pass. If you qualify for the card and spend $2,000 with Southwest Airlines on your Southwest Rapid Rewards credit card in the first three months of having the card, you will have 54,000 points. This gets you more than half way there! By budgeting your travel and eating expenses to make the most of your card offers, you can save money on future travel with your companion.

    Research the different card offers to find the right one to help with your particular budget. There are several offers that could be helpful at keeping your travel spending in check.

    Paying Off Credit Card Debt and Improving Your Credit Score

    by  • April 10, 2013 • Tagged: ,  • Comments

    There is no doubt that having credit card debt is stressful – especially when you know that it just keeps on growing day after day. Paying down credit card debt can be just as stressful as trying to ignore it, however, paying off your debt is recommended – ignoring it is not!

    There are a number of options open to you if you have decided it’s finally time to get rid of that debt. We’re going to look at balance transfer credit cards, to see if that is the right route for you.

    Balance Transfer Credit Cards

    Transferring the balance from your current store or credit cards onto a balance transfer card can give you a great opportunity to pay down debt, without having to worry about interest. Transferred balances will attract low or no interest for a given period of time, giving you a chance to pay off more of your actual debt, while taking a break from interest.

    To do this properly, it’s important to choose the right balance transfer offer. Offers vary according to the card provider, so you could get a card with 0% on balance transfers for six months, or another card with 3% on balance transfers for 12 months.

    To choose the right offer, you will need to work out how long you need to pay off your debt. If you’re certain you can pay it off quickly, go for a card with the lowest possible interest over a shorter period of time.

    If you think you will need longer to pay off your debt, you may need to choose a longer offer. Bear in mind that longer offers can sometimes charge higher interest – but, you will still be paying a lot less interest than a standard credit card.

    Try using a balance transfer calculator or a credit card calculator to work out what you can afford, and what is the best option for you. Also be aware of the card’s reversion rates, what happens when the offer ends, and be sure to read the terms and conditions of the card.

    After You’ve Paid Off Your Debt

    Congratulations, you’ve paid off your debt! Now it’s time to think about whether the balance transfer card is still the best card for you. You may find that the card has reverted to a much higher interest rate, in which case, you need to decide if it’s still affordable.

    If you pay off your balance at the end of the month, you shouldn’t need to worry too much about the card’s interest rate. However, if you have trouble paying it off each month, then you may want to switch to a low interest credit card. This will help you keep a lid on the amount of interest you’re paying on your debt.

    While you may not always be able to pay off your balance each month, it is certainly something to aim for. Never just pay the minimum repayment, or it’s likely you’ll end up in trouble with your credit card again sooner rather than later.

    Again, it’s a good idea to use a credit card calculator and a comparison site, to find the best credit card for you, and to ensure you get what you need from your card.

    Improving your Credit Score

    Treating your credit cards with respect can help to improve your credit score. This means, always pay your bills on time, try to pay off the balance in full each month, don’t apply for more than one credit card at once, and keep a good relationship with your credit card provider.

    How Plastic Can Actually Help

    by  • February 22, 2013 • Tagged:   • Comments

    In the financial services industry, experts often give credit cards the lion’s share of the blame for consumers accumulating debt. Although credit cards can definitely cause problems if they are not used correctly, they can actually be good when in the right hands. If you’re concerned about how credit cards can hurt your financial situation, here are a few positive aspects to consider about cards.

    Building your credit

    If you’re in need of boosting your credit score, credit cards are one of the best tools to use for that purpose. When you charge purchases on your card, and then pay off the balances quickly, this boosts your credit score. Every time you make a payment on time to your credit card company, this is reported as a positive on your credit history. When you keep your balances low, this also helps boost your score. By using credit cards, you’ll be able to really get your credit score moving in the right direction.


    When you use a credit card, you’ll also get to take advantage of the rewards program. Most cards today offer some kind of reward for all of the money you spend on your account. For instance, you might get one point for every dollar spent on the card. This makes it possible for you to get something for things that you would have purchased anyway.

    Choosing a card

    If you are going to use a credit card to help your financial situation, you must choose the right card. You need the absolute best credit card for your situation. For instance, you might want to look for the best reward cards if you plan on using your card to make many purchases. This way, you can get the most bang for your buck. If you plan on periodically leaving balances on your card, you should try to find one that has a low interest rate. This way, you’ll be able to minimize the amount of money that you have to pay in interest charges.


    Regardless of what type of card you choose, you’ll have to use it correctly if you want to maximize the benefits. Otherwise, you’ll probably end up accumulating debt and actually hurting your financial situation in the long run. Once you master the use of your credit card, you’ll be able to take control of your finances and forget about the problems that come with too much debt.

    Credit Karma’s Free Credit Report Monitoring – Great For Busy Parents

    by  • September 13, 2012 • Tagged: ,  • Comments

    Completely Free Credit Score - Credit KarmaAs you know, I’m a busy guy. I have a gregarious toddler running around and both Her and I work full-time. I don’t have the time to worry about any delinquent activity on my credit report. And now, with Credit Karma’s Free Credit Report Monitoring, I don’t have to.

    With identity theft being the most received complaint by the Federal Trade Commission in 2011, protecting your identity has become a hot topic. While we’re entitled to three free credit reports a year (one from each bureau from AnnualCreditReport.com), spaced out evenly there’s four months between check-ups. That’s a lot of time for someone to wreak havoc on your credit accounts. There’s other circumstances in which you can get a free credit report, but those methods are generally unavailable until something bad actually happens, and then it’s too late.

    I was admittedly skeptical at first when I first heard about Credit Karma. Free credit score? AND free credit monitoring? What was the catch? So far I haven’t found one.

    Credit Karma actually gives you three scores: a TransUnion Score, Auto Insurance Score, and a VantageScore. While these aren’t bonafide FICO scores, I can assure you that these scores are only a few points off from the real deal. For a free service, that’s more than I can ask for.

    If you’re a set-it-and-forget-it kind of guy like I am, they’ll send an email every so often telling you that there’s a new score available. If you want it your-way-right-away, then you can manually update your score on the website.

    The main reason I signed up for Credit Karma is for the free credit report monitoring. Imagine that I had the money and time to get a credit report everyday and check for any wrongdoings. Credit Karma does all that work for me. They’ll alert me by email if there’s been any significant activity on my credit report, such as a new account opened or if a creditor posts a delinquency. Fortunately I don’t know what that email looks like, and I hope to never see it. Getting notified right away allows me to take immediate action, instead of finding out whenever the next time I remember to get my free credit report.

    Protecting my family has become a big deal since I’m now a father. Credit Karma helps me to ensure that my family’s financial future are safe. What are you waiting for? Sign up for Credit Karma now!

    Breaking the Financial Rules – Co-signing Loans

    by  • March 7, 2012 • Tagged: , , ,  • Comments

    Break rule

    I have no idea.

    image: Eason41

    Don’t spend more than you earn. Don’t buy too much house. Don’t forget to pay your bills on time. There’s quite a few financial rules that are floating around that we’re told to follow, or else. Just like rules in your everyday life, sometimes you need to know when breaking them will benefit you more than following them. One of the “rules” I often see is to never co-sign a loan. However, I’ve twice been a part of the breaking of this rule.

    Co-sign Me Out of Debt

    When I was in graduate school I had a plan: consolidate all of my debts so that I can get a better overall rate and more manageable monthly payments. That plan didn’t work out so well as some parts of the plan involved getting a payday loan and locking my keys in my car and myself out. Eventually I figured everything out and applied for a personal loan from the credit union associated with my university. Although I had been keeping up with the payments for my various debts, the loan officer was reluctant to give me the loan because of past missed payments. She told me that I could get a loan if I could get someone to co-sign the loan.

    After careful consideration, I decided that my brother would be the perfect sucker co-signer for my loan. He is seven years older, he had a great job, a house, and high income. I called him and asked for him to co-sign my loan, with the promise that since the payments would be deducted directly from my paycheck (which was true), so as long as I was a graduate student getting a stipend I would never miss a payment. After a heavy sigh and what seemed like a 20-minute pause before giving me an answer, he agreed.

    The loan was eventually paid off in full without any missed payments before I completed graduate school. A few years later, I told him over drinks, “See? You had nothing to worry about.” He made me buy the next round.

    Co-sign Her Out of Debt

    A few years after my first co-signing incident, Her and I were living together and had just combined our finances. Of course, I did this with great reluctance as I was also agreeing to help pay of Her’s enormous student loan debt of ~$130,000, of which was half federal student loans and the other half private student loans. The private student loans were the most egregious, with the interest rates at just under 10% with a monthly payment of around $750. Although we used a bunch of methods to decrease our balance and pay off the loans ten years sooner, it was still an enormous burden. Her received in the mail a letter from the private loan company stating that the interest rate could be lowered if she were to get a co-signer. Of course I was hesitant to agree to this, but I figured that it’s our student loan debt now, and that anything we can do to mitigate its financial effects would be good. I agreed to co-sign the loan.

    Me co-signing the loan did decrease the interest rate by a percentage point or so, but didn’t change the way we attacked the loan. Our saving grace came when we transferred $11,000 of the balance to a card at 1.99% for life and when Her’s godmother paid off the rest of the balance of $50,000. We laid those loans to rest, which freed me from my co-signer responsibilities.

    Have you broken any financial “rules?” What were the circumstances for that decision? Let us know in the comments!

    Credit Card Conundrum

    by  • June 17, 2010 • Tagged: ,  • Comments


    photo: Andres Rueda

    Over the past few months I’ve chosen to close a few credit card accounts. I think that in each case, the card carriers were going to start charging an annual fee unless we started using the card. The most recent example was my Citibank card, as they wanted us to spend at least $2400 per year to have them waive a $60 fee.

    The problem with all of the recent cancellations are that 1) the cards were among the oldest that I had and 2) they had pretty high credit limits. Cancelling those cards has reduced the average age of my credit history and has decreased my overall credit limit. I do still have a relatively high overall credit limit around $35,000 and my oldest card was opened in 2000, with others opened from 2005 to 2007. But still, it sucks that I had to cancel those cards.

    Of the remaining credit cards that I have, I use two of them regularly. Both are rewards cards, but one of them has a $45 yearly fee. Oh, and Her also has that card as well. So yes, we’re paying the $45 annual fee twice.

    So naturally, I’m contemplating closing that card as well so that we don’t have to pay the annual fee more times than we need to. The problem is that card is also the second oldest card that I have and has the second highest credit limit; closing the card would effectively halve my overall credit limit. I don’t want to take another ding on my credit score. I’ve had this card for almost 5 years, so we’ve paid $180 in fees so far – soon to be $225. We have definitely received much more in rewards (5-star hotels in Europe are a very nice perk), and so far have accumulated enough points to go on more awesome vacations.

    Do you think it’s worth it for me to still have this card? What alternatives could you think of instead?


    Oh Nos! Credit Card Thefted!

    by  • May 4, 2010 • Tagged: , ,  • Comments


    photo: 10b travelling

    This past weekend I was dillegently reviewing the week’s transactions on Quicken, when I noticed two charges made to Newegg.com on my Chase Freedom Card. I’m a huge fan of Newegg and have purchased items from there before, but I was pretty sure that I didn’t buy anything from them last week.

    Coincidentally, I was reseraching computer parts and wondered if I accidentally added stuff to my cart and then went through with the purchase. I checked my account on Newegg and confirmed that I hadn’t bought anything from them, at least not since February 2009.

    I called Chase to talk to a customer service representative, and was transferred to their Disputes department. They asked if I called Newegg to ask why I was being charged. I told them that I hadn’t, but I should maybe do that. The person transferred me again to another guy, who offered to call Newegg on my behalf. He did and conferenced me into the call since Newegg needed my permission to get more information. I confirmed that I did not buy the items in question, and also learned that the fraudsters were able to input my home address to actually use the card but have the items shipped somewhere else.

    The Disputes representative then gave me two options. Since the total charges were under $500, I could either file a dispute or a fraud claim. If I filed a dispute, then Chase would only work with Newegg to reverse the charges. If I filed a fraud claim, Chase would close the account and re-issue me another card with another number. Obviously I didn’t make those purchases, so I decided to make a fraud claim. The Disputes representative then transferred me over to their Fraud department.

    Of course the Fraud representative had no idea of the conversations that I just had, so I had to reiterate the whole story to her. I asked to close the account have have a new card issued to me. She processed the request, and had me listen to a recorded message about their fraud claim process. I guess it’s cheaper to do that than to have the representative read it to me from their script.

    This morning I was relieved to find that the charges on my credit card have been reversed. It took about 48 hours since I originally call to have all of this taken care of. The communications were a little frustrating, but I’m glad everything worked out.

    Have any of your accounts been compromised lately?

    Do NOT Subscribe Me to That Service!!!

    by  • October 20, 2008 • Tagged:   • Comments

    Due to my recent marriage and subsequent name change, I have spent the last several weeks calling financial institutions to change my name on my accounts. The new credit cards have been piling up in my mailbox and today I dedicated an hour to calling to activate all the new cards. Previously when I have activated a credit card, I have been badgered to sign up for unnecessary “services” such as credit protection or account monitoring. I always, always decline. So you can imagine my surprise when two card companies automatically signed me up for these services without even asking! They included notice of this in their canned, rushed legal-speak. “As a courtesy to you we have automatically registered you to receive our credit monitoring service free for the next fifteen days blah blah blah.” It was thrown in there so subtly that I almost missed it! I cut the representative off and demanded they not subscribe me to anything. Both times the representative continued on, telling me I was already signed up and could call to cancel in fifteen days. I was furious! I ended up shouting “Do NOT Subscribe Me to That Service!!!” twice before they agreed not to sign me up. What a scam! Watch out for this, since it happened at two different companies I assume this is the new trend. Don’t let them bully you into thinking you already agreed to something you didn’t.

    None of My Credit Card Companies Fought to Keep me as a Customer

    by  • October 10, 2008 • Tagged:   • Comments

    Last night I closed six store credit accounts and one Visa account that I rarely use. It’s part of the credit clean-up we’re doing to start our marriage off. I was all geared up to argue with the credit card companies and decline their repeated offers to entice me to stay. I thought it would probably be like trying to close an AOL account (anybody else ever live through that nightmare?).

    Boy was I surprised when not one of them tried to get me to keep my account open! I have excellent credit so I thought they would want to keep me around. Guess not!

    I have read that banks are trying to reduce the credit they have made available to customers, so maybe this was why.

    Anybody else get hit with the door on their way out recently?

    Two Styles, One System: Communication and Money

    by  • September 24, 2008 • Tagged: , , , , , ,  • Comments

    Laura is a twenty-something woman out of school and happily married. Eliminating credit card debt has energized her to knock out her car loan and student loans. She blogs at Green Panda Treehouse about reducing debt, building savings, and working with her husband on finances, as well as her successes and failures.

    Many people worry about discussing finances when they have different views. Avoiding financial talks can lead to disaster in relationships. It can build resentment and escalate into fights that tear down and could lead to divorce. Money isn’t the root of the problem, it’s lack of communication.

    If you share openly and honestly your thoughts and feelings with your fiancé or spouse, you are missing out on a great opportunity. Relationships are mutually defined and both need to share to make it work.

    Here are a few examples of how my husband and I handle money in our relationship. Is it perfect? No. Does it work? Yes, because we’re willingly to talk about our common thoughts and our differences.


    We keep a Google Spreadsheet to display and organize our monthly bills. This allows us to see what our joint bills are and gives a snapshot view of our individual accounts. I can see how much he puts in his 401(k) and he can see my Roth IRA deposits.

    He’s great at setting up the spreadsheets and I love playing around with them.


    Some of my personal goals are to pay off my car loan and my student loans. We also set aside money in our budget for saving. We’re working together: our ‘extra’ money goes to joint savings and to paying down the car loan.


    My husband puts aside money for retirement, but is only semi-interested in following his accounts. When he changed jobs and was rolling over his old 401(k) to an IRA, he asked me to look at investments to put them into.

    I get a kick out of learning new things about index funds, stocks, ETFs, etc. While I explained why and how I came up with my suggestions, he just agreed and made the changes. He’s more conservative with his money and his investments are a reflection of that. I tend to invest more in international funds than him, but the volatility is within what I can handle.

    Credit Cards

    I have two credit cards (I’m closing one) while my husband has no credit cards. After learning the hard way about high credit card interest rates, I’ve paid my debt. I generally pay it off each month.

    I use credit cards mainly for convenience and rewards. I normally keep it at home with me. If we go on trips, I use my credit card. He is very adverse to debt and has not found a credit card that ‘he likes yet’. He generally saves until he can buy it, like his car.


    I’m the paperwork queen. It basically falls to me to organize bill payments and documentation requests. Due to our basic system, it doesn’t take up to much time (5-10 minutes). If there are any issues we’ll discuss in the evening.

    I show him where I keep the files, in case something happens and he needs quick access.


    It’s an imperfect system to be sure, but we make it work. The best advice we received? Talk it out and figure out what’s right for you two.

    Talking it out can help you to understand your partner so much better and help you to build a stronger foundation on future communication, not just with money. Remember also that you’ll discuss these issues as your circumstances change. It’s not set in stone.

    Keeping each other in the loop is essential to a successful marriage. Two different viewpoints can lead to a stronger system.

    How different are the two of you? What do you two agree and disagree on?

    How I Got Comfortable Sharing Money With My Husband

    by  • September 19, 2008 • Tagged: , , ,  • Comments

    Hannah blogs about money and marriage at Monogamoney.com. Topics include saving, budgeting, investing, travel, and The Dark Knight.

    In honor of the nuptials of Him & Her, I thought I would harken back to, lo, those many months ago (October, 2007) when Jon and I tied the knot.

    After our wedding and honeymoon, we immediately hunkered down and cut back on spending, so we could pay off our credit card bill. And we started discussing how we would max out our Individual Retirement Accounts for 2007, and contribute the full $4,000 each. That’s when Jon said, “If, at the end of the year, I still need an extra $2,000, you can give it to me.” Wait a minute, I thought. You want me to GIVE you $2,000? Just GIVE it to you? And you won’t even pay me back?

    You see, Jon’s parents have always completely shared their finances. My parents, by contrast, don’t even have a joint checking account. That’s partly because Jon’s father was always the primary breadwinner, so a joint account was necessary. My parents, by contrast, have always made roughly the same amount of money, so there was no need to combine everything into one account. But the funny thing is, I grew up on a commune. You’d think I’d be the one advocating that we share money.

    Of course, I knew I should give him the $2,000. I had made more progress putting money into my own IRA, thanks in part to a generous gift from my grandmother. And in the long run, it’s obviously better for me if we’ve saved as much as possible in BOTH of our retirement accounts. I just had a little trouble, the first month or so after the wedding, adjusting to this new mindset, in which “we” replaced “me” when it came to financial decisions. Unlike Him & Her, who have clearly been a financial team for a while, Jon and I didn’t start thinking about these issues until after our wedding. (That’s when I started our blog, Monogamoney.)

    A few weeks after our initial discussion about the IRAs, the thought finally occurred to me: “You’re either in it for the long term, or you’re not. And if you’re in it for the long term, give him the money.” And since I’m in it for the long term, I gave him the money. We use our joint account to pay rent, but everything else is paid for out of our individual accounts. And we no longer keep track of every dollar we spend.

    Do you share and your partner share all your finances? Why or why not?

    Managing Our Debt – A Review Of How We Live With A Large Debt Burden

    by  • December 19, 2007 • Tagged: , , ,  • Comments

    photo: iandavid

    Over at The Digerati Life, Silicon Valley Blogger muses about handling large debt loads. Her examples include two bloggers who have large amounts of debt: the always controversial Casey Serin and a newer blogger Debt Kid. She also narrates a story of a man she knew who bought a $1.5 million dollar home, but who had a bunch of contingency plans should things go financially awry.

    In our own writings, I have to admit that we can be brazenly blase about the amount of debt that we have and how we’re tackling it. I feel that we can do this because we’ve come up with our own action plan to manage our debt. When we first started this blog, we had $18,054.88 in credit card debt, and $135,966.11 in student loan debt. Many people look at those numbers and tend to freak out; we did too. Fast forward to today and we’ve eradicated all of the credit card debt, and we’re working to accelerate the student loan payment. Here’s how we’ve managed this amount of debt without waking up in cold sweats.

    1. We have relatively low rent. This was our first step for our finances after college and has been paramount to freeing up cash. Currently our housing costs are 18% of our take home income (about 10% of our gross).

    2. We used the debt snowball for debts with balances of under $1,000. We had a few cards with a few hundred dollars debt on them; each of them demanded a minimum payment every month. One of things I do like about Dave Ramsey’s debt snowball is that it frees up cash relatively early in the debt payoff. Even though it made more mathematical sense to pay off the higher balances first, when we paid off the lower balances it freed up more cash in that it was one less minimum payment we’d have to deal with.

    3. We applied freed up cash towards the higher interest rate balances. When we first started this blog, I was paying off a debt that was at 20.99%. As soon as a few of the lower balance cards were paid off, the extra cash went towards battling the debts with monster interest rates.

    4. We took advantage of great credit card deals. I managed to lower the debt of my credit cards to 0% and 2.99%; Her got all of her debt on a card with 0% interest as long as we made 2 purchases a month on it.

    5. Since we started this blog, we increased our income by at least 42%. In these two years, I received three pay raises; Her received two. We also have some income from this site. The extra cash definitely made sleeping at night easier.

    6. We have an emergency fund. Yeah, it’s not clearly defined, but we know that if there is an emergency that arises we can take money from our savings. After the wedding, we plan on having 6 months of expenses remaining in our savings accounts.

    7. Once we paid off the credit cards, we took advantage of another offer to put $11,000 on a card at 1.9%. We put exactly that amount of student loan on there, saving us a lot of cash in the future.

    8. We have not incurred any new consumer debt. We vowed to never pay another penny in credit card interest and now take advantage of rewards programs.

    9. We are a one car family. Shortly after moving to Chicago I sold my car; it was costing me a lot of money to have it in the city. With the car we do have, we minimize our expenses.

    10. We continue to look for ways to increase our income, use leverage and arbitrage to get better interest rates, and make solid decent financial decisions.

    For us, it was these actions that showed us the light at the end of the debt tunnel.

    Are you under a mountain of debt? How have you managed it? How do you let it not keep you up at night?

    Our 2007 Goals Status, Part 3: Pay Off Credit Card Debt By November 2007

    by  • December 10, 2007 • Tagged: , ,  • Comments

    This is part 3 of our retrospective look at our 2007 goals. Here’s part 1 and part 2.

    When we first started this blog, we had $18,054.88 in credit card debt. A year later, in January 2007, we reduced it to $11,560.40. It was our goal this year to eradicate all of our credit card debt by November 2007.

    On June 18, 2007, a whole 5 months early, we sent in our last payment. Suck it, credit card interest.

    The road to no more credit card debt was an interesting one. While Her had higher balances, I had atrocious interest rates. One of the first things I did was to reduce my retirement contributions to pay off the credit card debt. I eventually played the balance transfer game for the lowest interest rate until all of my credit card debt was at 2.99%.

    When both Her and I had paid off all of our non-0% credit card debt, we signed up for rewards cards that we judiciously paid off every month, making sure not to pay any interest charges. We’ve used those cards to accrue rewards that will pay for much of our honeymoon. It’s about time we took back from the credit card companies what they took from us. That last sentence made me sound like a vindictive barbarian. I digress.

    Status: Completed.

    Reimbursed Vacation

    by  • October 25, 2007 • Tagged: , , ,  • Comments

    photo: Davide Schiano

    Since Her and I graduated from college, we’ve never taken a “real” vacation together…something about paying off debt got in the way. We could never justify spending a lot of money to take a nice real vacation together.

    I’ve mentioned a few times that I get to travel for my job, and that I usually get put up at nice hotels. This past summer, I was offered the chance to go to a pretty nice location for work to attend a conference. I was going to be there for a few days and would have a lot of downtime. I thought it would be perfect opportunity to have Her come along and have a fun vacation on the cheap. Here’s how we did it.

    When I signed up for the Citibank AAdvantage card, I was entitled to received a free companion ticket. I made the reservation for both of our tickets with American Airlines; my ticket would get reimbursed, and Her’s was free with the exception of taxes (which amounted to about $20).

    Our company generally reserves hotel rooms only a few weeks in advance of travel. Because of this, many of the hotels near the convention center were already booked. We ended up booking a room at a hotel that was a little farther than walking distance, but happened to be the nicest hotel I have ever stayed in. It might as well be the nicest hotel I will EVER stay in. We arranged a 4 night stay, but since I was doing work on only 3 of the days, we had to pay 1 night out of our own pocket. Since I was there for a conference we got a reduced rate on the room for all of our stay. We could have probably stayed somewhere cheaper for that 1 night, but all we could find were hotels that were far away from the convention center and hotel we were arranged to stay at. We decided the hassle wasn’t worth the $50 we’d save.

    Since we were more than walking distance to the convention center, we needed the use of a car. We rented a car for the full 4 days we stayed there, but paid for 1 day out of our pocket. We got a phenomenal deal on the rental through the travel agency that my work goes through, so we ended up paying $15 plus gas for the rental car.

    Whenever I travel, all of my meals are reimbursed as well. On the non-business day we were there, we ate pretty frugally – living in Chicago has given us an astute sense of where the cheap, but good eats are. Some of the days we ordered room service for 1 – the portions were so large that it easily fed both of us. Other meals weren’t extravagant, but weren’t all at at Subway, either. We saved a ton on food – so much that I didn’t mind the incredible pain in the ass it was to file the expense reports, separating our meals.

    A lot of the stuff we did for fun was free or cheap. We’re not really into touristy stuff, and much rather prefer to go on self-guided tours and get a feel for the culture of the place we’re visiting. We did do 1 touristy activity and got tickets from the hotel since they offered discounts. I guess that is one of the perks of staying at a super-nice hotel.

    After I was reimbursed for everything, our total out of pocket costs for the vacation was approximately $400. Not bad for 2 roundtrip flights, 4 nights hotel, 4 days of rental car, 4 days of meals, and entertainment. Oh yeah, and we got rewards for ALL of the vacation. The only downside is that I actually had to work on two of those days; although if it weren’t for my job, we wouldn’t have been able to have our first “real” vacation together.

    Restaurant Credit Card Roulette

    by  • September 25, 2007 • Tagged: ,  • Comments

    photo: s e l v i n

    The scene:
    You and a few friends are eating at a nice restaurant. After everyone is finished with their meal, the bill comes as usual. Everyone then proceeds to throw their credit card into a hat. Instead of the bill being split evenly among the cards, they are removed one by one. The last credit card remaining pays the potentially wallet crippling restaurant food bill.

    Does this sound like your idea of a good time? Me neither. But according to this Chicago Tribune article, people willingly play this game. Or maybe not so willingly…

    “I was sweating bullets,” Ashley said in an e-mail interview. “I felt sick at the thought of having to pay that bill and then trying to explain it (or hide it) when the bill came in. It was both scary and amusing, after the fact, to watch those whose cards had been removed from contention to suddenly ‘find’ a larger-than-normal appetite and thirst.”

    Ashley said the final tally for his group that night came to $1,249.

    I have to wonder what kind of people these are: adrenaline junkies? impulsive gamblers? super-rich?

    This game might be fun once. Maybe twice. And only if I were eating somewhere like McDonald’s or something. And if I were never the last one picked.

    Would you ever do something like this?

    Handling Work Expenditures

    by  • September 19, 2007 • Tagged: ,  • Comments

    photo: Jim Frazier

    Money Under 30 just wrote an article on how he handled work expenses, along with great tips on how you can do the same. The article had me thinking about the evolution of how I handle my reimbursable work expenditures and how it fit into our finances.

    When I first started at my company, we didn’t have much money stashed away in savings, and I had balances on (high interest rate) credit cards. There was no way that I was going front any of my own money in hopes of getting it reimbursed. I knew that other people had company issued credit cards, so I would have to ask them to purchase something for me. At first it was only under $50 items I would ask for, but then when it came time for me to make arrangements for my first business trip, I felt bad asking them to put $1,000+ on their company credit card and then have them deal with the paperwork associated with it. After that, I asked for my own company credit card.

    Things went pretty smoothly after that. I put all work related expenses on the company credit card, saved receipts, and did all of the paperwork. During actual business meetings, I would always bring $100 in cash with me for the little things like cab rides or tips, diligently saving all of my receipts. Remember, with anything reimbursable, RECEIPTS ARE KING.

    Fast forward to a few months ago. We have no credit card debt, and we’re now using rewards cards that we put mostly everything we buy on, and then pay off each month. We even have a substantial (for us) amount of money in savings. All of these things allowed me to cover a lengthly business trip in which I incurred ~$1,800 in expenses. The credit card bill came before the reimbursement check, but we were able to pay with bill without much financial hardship. When the reimbursement check came, we deposited it directly into savings.

    By having our own personal finances in order, we were able to not freak out about taking on a relatively big expense, all while earning rewards for business trips that I’d have to go on anyway.

    How do you handle work expenses? Has it ever been a drain on you personal finances?

    My New Credit Limit Scares the Bejeezus Out of Me

    by  • June 26, 2007 • Tagged:   • Comments

    Today I got a notice from one of my credit card companies that they have raised my credit limit to over $16,000. This is the first time I have had a credit limit cross the five-figure line. We currently carry zero credit card debt, which is probably why they felt the need to “tempt” me with enough credit to charge a car. I didn’t request the increase, and have no plans to use it. Still, it is a 1% rewards card and this could be an option for a large purchase someday. We never want to carry credit card debt again, so it would only make sense for us to save up money first and then pay it off right away.