Tag: credit
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Managing Our Debt - A Review Of How We Live With A Large Debt Burden
Posted on December 19, 2007 by Him
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
Posted on December 10, 2007 by Him
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
Posted on October 25, 2007 by Him
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
Posted on September 25, 2007 by Him
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
Posted on September 19, 2007 by Him
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
Posted on June 26, 2007 by Her
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.
Peace Out, (Revolving) Credit Card Debt
Posted on June 18, 2007 by Him
This weekend we hit a major milestone - we've paid off all of our revolving credit card debt! Not only that, but we accelerated our payoff schedule a few months earlier than our goal of November 2007.
From this day on, we vow to NEVER pay another cent in finance charges. As we've said before, we're still using credit cards, but only rewards cards that we're paying off every month. We're hoping to turn the tables on the credit card companies and have them start paying US.
We now officially own all of our stuff. Go us.
Drinks On Us, Flights On You
Posted on March 09, 2007 by Him
Ever since we've received the Citibank AAdvantage card, we've been thinking of all of the possible ways that we could maximize our mileage. Thus I present to you this case study: Happy hour.
The last few weekends, my co-workers and I have been extending happy hour to a happy 5 or 6 hours. Sometimes only a few of us go, but on other occasions we've had a crowd of 15 or more people. Most people don't stay past the first hour and only have one drink; others tend to stick around for a few more drinks and order food. When people leave they throw in whatever amount they owe - I've been the money collector more than once and I've never needed to ask for more to cover the bill. In fact, on occasion people overpay (in which we all agree that the extra should just be added to the tip).
Normally I contribute to the bill using my personal allowance money to fund my libations, but the last few times the bill came close to $500. During those times I assumed my position as the money guy, and saw there was enough to cover the bill. Instead of paying with cash, I paid with the mileage rewards card. I then pocketed the cash, and the next day I deposited it into our account and put it into our savings account where it earns interest until the bill comes.
I just hope I don't become an alcoholic just for the miles.
All Quiet On The Financial Front
Posted on February 28, 2007 by Him
Things are quiet. Very quiet.
Since we've paid off the majority of our credit cards, we are only getting two credit card statements a month. By the end of the year we'll only receive one. Our Saturday morning "pay the bills" time has been greatly reduced since all of our bills are on auto-pay. That's a far cry from the almost 30 bills we'd pay a month a little over a year ago.
Retirement savings to our SIMPLE IRA, 401(k), and Roth IRAs is automatically deducted. Our account are growing in value with little intervention from us.
While I'll be the first to admit that our finances aren't perfect, it is a strange feeling not worrying about money as much as I used to.
Automation is silent. Silence is golden.
We're Still Using Credit Cards, But Not Adding To Our Debt
Posted on February 21, 2007 by Him
Last month, we paid off all of our non 0% credit card debt. We're currently on track to pay off the rest of the credit card debt, which is at 0%, by the end of the year. So we thought we would celebrate in the most logical way possible: by getting another credit card.
I applied for, and obtained the Citi AAdvantage card. The rationale: to pay for our honeymoon flights.
My company gives us the freedom to book our own travel whenever we need to go somewhere for business. Since Her had a ton of American Airlines miles from her college days, I decided to book all of my travel using that airline as well. Since I started this job a little over two years ago, I've racked up about 15,000 miles.
On this card, every dollar spent is equal to a mile. Once we spend over $300, we get 20,000 "free" miles. Also, this card will give me one complimentary companion domestic flight ticket when I book a American Airlines flight with this card. Since I'm going to go on a few business trips during the summer, we thought this would be a great way to get a very cheap vacation.
In order to use this card wisely (responsibly?), we've made a couple of rules for ourselves, at least for now. The first order of business was to open a joint savings account at Chase, where we already do our checking (of course I waited until there was a $25 bonus for opening the account). We opened up this savings account so that every time we use this card we could go home and immediately transfer the amount we charged from our checking to the savings account. This ensures that we'll have the funds to completely pay off the monthly bill.
Next was to determine out what expenses would go on the card. We decided at first that recurring monthly expenses would be automatically charged to the card: cell phone, cable, phone/internet, insurance, etc. We figure that since we have to pay for all of that stuff anyway, why not get the miles?
Finally, we determined what else can go on the card. Our answer: wedding stuff. Same rules apply here: as soon as we charge something for the wedding we go home and transfer money from our online savings account to our "holding" account.
Not all credit card use is evil. Just irresponsible use.
20/20 - How We Stayed Home To Watch This Crap
Posted on January 20, 2007 by Him
If you're looking for a real review of the 20/20 show (read the 4 parts of it here, here, here, aaaand here) then maybe you should read Boston Gal's, or No Limit Ladies, or Blogging Away Debt, or Frugal Law Student, or Kiss of Debt, or Money Turtle. If you post a review, please email me and I'll include it here.
So we stayed up for a little while last night to watch the TiVo'ed episode of 20/20: Flat Broke: Begging and Borrowing in America. Here are my thoughts:
1. This show is aimed for retarded America. 20/20 is the reason why I try and limit my idiot-box watching to other mindless drivel such as The Office.
2. If my "fashion sense" is as good as Matt Peterson, someone please kill me. See the glorious screengrab below:
All I have to say is...is...is...at least I own my sweater. <latina headbob>OH NO I DIDN'T!!! OH YES I WENT THERE!!</latina headbob>
3. How do I become an intern for 20/20? How much did that person get paid to do this:
Honestly, that person did a great job of stacking all that. Although I can imagine John Stossel walking by and having his 80's mustache knock it over. I hate that guy.
4. Wonder what happened to the Petersons, the ones in debt? Suzie Peterson (but this is the internet, so it could be some guy in his mother's basement) is actually contributing to the discussion of the show on the 20/20 message boards. On one thread she's getting encouragement. But not on the other...
5. I don't really like grocery shipping as it is, but I will NEVER EVER EVER bring a walkie talkie with me to the grocery store. I'm okay with coupons though.
6. Some debt collectors are douchebags. There is a special place in hell for them.
I do think that the good ones are just trying to do their jobs. Some poor business lost money. Someone else didn't pay. According to the show, it seemed like the good debt collectors were willing to work with the debtor to make things work. Poor guys, they're just there in order to keep out of debt themselves.
7. If all else fails and we can't pay our debt, we can always make a sex tape and "leak" it to the internet, then sign up with a porn distributor to make a movie called "Nasty Debtcapades" or "Debtor Debutantes".
Car Maintenance = Free Airfare
Posted on November 01, 2006 by Him
This past weekend we went out to the 'burbs for dinner with some of Her's family. Shortly after pulling out of their driveway, we heard thwump thwump thwump thwump thwump coming from the back of the car. I got out of the car to see what was wrong and discovered that one of the tires was flat. We pulled into a K-Mart parking lot down the road to change the flat tire and found there was a philips head screw neatly lodged in the tire tread.
It was a little past due for us to do some maintenance anyway, so I brought the car in to get the tire replaced and have a bunch of other stuff done. The total cost of everything was a little over $300.
Instead of this being a major financial headache, we're looking at it as sort of a mixed blessing. Last week, we received in the mail a special promotion for one of my rewards credit cards: spend $300 from now until the end of the year and they'll give us a free plane ticket. Fortunately for us, that card has a zero balance on it. We were going to pay for the services with cash, but now we'll just use the rewards card and then pay that off as soon as we get the bill.
We believe that credit cards can be used as a great tool to complement our financial plan. We've learned our lesson about overspending and credit card abuse. In this case it makes sense to use a card for the free plane ticket. Hopefully we can use it for Her to join me on one of my business trips sometime next year and we can have a cheap vacation.
Lose your Chase Credit/Debt Card After Business Hours? You'll Have to Wait Until Morning to Cancel
Posted on August 29, 2006 by Him
Last Friday we went out to dinner with a few friends from out of town. When we were waiting for our table I decided to run to the ATM and grab some cash to make things easier when the bill came.
That was the last time I remember seeing my ATM card.
Last night I opened up my wallet to put a coupon in it, and noticed that my card was missing. I looked around in the usual spots around the apartment to no avail, and then proceeded to backtrack my whole weekend. Turns out that I didn't buy anything all weekend (!), so I never cracked open my wallet. My ATM card had to still be in the machine. Luckily for us, no one had made any puchases using my card.
I grabbed Her credit/debt card and called the number on the back. I got a recorded message and navigated through the maze of menus to try and get connected directly to a Real Live Person (TM). Turns out that they only have people on staff from 7AM-9PM, local time; it was about midnight when I called, so I would guess that most call centers were closed (maybe not Hawaii?) Therefore, I could not report my card as missing or stolen!
Credit card holders though, get special treatment. A dedicated 24-hour number is available to report missing/stolen cards. I tried calling that number and told them my situation, but was promptly transferred to the original number that I called.
Him, meet run-around. Run-around, Him. Pleased to meet you.
I checked our account again this morning, and to my relief everything is still in order. I cancelled the card, but I made it a point to ask whether or not they had a 24-hour number for reporting lost or stolen ATM/Debit/Credit cards. The representative told me what I already knew about their hours of operation, but assured me that they [Chase] wouldn't leave me hanging if something did happen. Yeah, right.
According to the Chase Visa Check Card page, there is zero liability on unauthorized transactions when Chase is notified promptly.
I guess promptly means between the hours of 7AM-9PM. A lot can happen in the eight hours that they are closed for the day.
What To Do With Credit Cards With No Balances?
Posted on August 17, 2006 by Him
This past weekend we hit a milestone: we paid off the balance that was transferred to the 0% balance transfer card a few months back. Now I only have one credit card with a balance on it, and that'll get paid off as soon as we pay off Her cards with higher interest rates (but still all under 5%, mind you).
On the other hand, I have seven credit cards that have no balance on them that aren't doing anything. They range in age from being opened seven years ago to being opened in the past year. Two of them are store cards. None of them have any cool rewards programs. My total credit line for all of my cards is $11,580. Knowing this information, what would you do with my cards?
Should I close the newer accounts at the risk of lowering my overall limit?
What happens to the cards after long periods of inactivity, like grow mold or whisper suggestive shopping phrases in my ear? Should I be using them periodically, then just pay off the balance?
75 Cents at 18.99% Please
Posted on July 01, 2006 by Him
Coca-Cola is going to roll out vending machines that accept credit and cards. Not just that, but a touch less way to pay for a Coke using a credit or debt card.
Because, you know, that's exactly what we need. An effortless way to spend money, or worse, go in debt for a refreshing, calorie-ridden, obesity causing, tooth decaying carbonated beverage.
If it were beer though, you bet your ass I'd be all over that.
(via Digg)
Virtual Rewards Card
Posted on March 27, 2006 by Him
We all love rewards cards. Use a reward card to purchase something, get something back, whether it be a percentage cash back, airline miles, etc.
What about getting virtual currency as your reward? (via Digg)
Very soon, credit card companies and game makers will reward their customers who spend money in the real world using private label "rewards" credit cards. They will use gifts of virtual currency such as Blizzard's World of Warcraft gold and Second Life's Linden dollars.
(More information on World of Warcraft and Second Life)
This has to be the most ridiculous thing I have ever heard of. I'm not one for being preachy when it comes to finances and credit cards, but I find the fact that these credit card companies are not even rewarding anything tangible to be quite revolting.
Playing devil's advocate for a minute, I can see why these people would be a great target. This would be the perfect card to buy Mountain Dew, Doritos, and takeout so that people would be able to keep gaming. The average age of the online video game player is 26, the perfect age for someone who is just of out college to sit around and do nothing but work and play their games - and to buy expensive stuff with their credit cards.
I've read quite a few articles on how in game economies of these affect real life economies. For example, if you search for "World of Warcraft" on ebay, you get a lot of hits from people selling in-game items, a practice that Blizzard is has been trying to stop. Everquest was one of the first games where this was a big problem. There are even sweatshops in that produce in-game items to be sold. Rewards cards are just going to be another tool for these people to use to further their online ambitions.
But seriously, virtual rewards?
Things I Learned By Calling MBNA
Posted on March 02, 2006 by Him
A few weeks ago I applied for, and was approved for an MBNA card that offered 0% balance transfers until April 2007. It had a modest credit limit of $2,500, which allowed me to transfer my $1,500 Citibank Card at 20.99% balance onto it. My next highest balance was on another MBNA card with a 17.99% with around $1,400 on it, so I called MBNA to see that that balance could also be transferred over.
Lo and behold, credit card companies don't really want consumers transferring balances from high rate cards to lower rate cards. I also tried to see if they would consolidate the two credit cards, but I guess they only do that if both cards have no balance on them.
The real surprise was that the customer service rep told me that I didn't make a payment this month. Whaaa? As it turns out, both Her and I have MBNA cards, and when we were doing our online bill paying we paid her MBNA card instead of mine. The customer service rep was really nice about it and said if I get in my payment ASAP they'd waive the late fee. Whew.
I wonder if they'd also tell me if I were a suspected terrorist by paying down too much on my credit card. (via Digg) In the near future, it doesn't look like we're going to have to worry about that.
Round and Round the Balances Go
Posted on March 05, 2006 by Him
This month has been a hectic month for me as far as credit cards go. I transferred all of my 20.99% Citicard balance to a 0% MBNA card, good until April 2007. My next highest balance was at 17.99%, which is on another MBNA card. Unfortunately, I found out that I could not transfer the balance from one MBNA card to another.
On that post, ncnblog left a great comment with the advice to transfer the 17.99% MBNA balance to Citicard, then transfer that balance to the 0% MBNA. (confused yet?)
Yesterday, I called Citibank to ask what the rate was for balance transfers.
2.99%, for the life of the card. Yes, that's not a typo.
I was floored. I kept asking if that was correct. TWO POINT NINE NINE? The customer service rep patronizingly confirmed this to me about ten times. While I was on the phone, I also asked if she could raise my credit limit, and she did! $2,600 of $2.99% balance transfers, woo!
Here's the plan: Since I have a few other cards with balances on them, I'll transfer what I can to the 0% MBNA card. The rest of the balances will get put on the Citicard. We'll aggressively pay off the 0% card before the rate converts to 12.9%, then worry about Her credit cards, since the 2.99% balance will be the LOWEST rate we'll have on any of our balances.
Citicards, you didn't really think that I was leaving forever, right? Everything cool between us?
Art + Stuff = Rock!
Posted on March 01, 2006 by Him
We here at Make Love, Not Debt are huge advocates of the DIY arts/craft culture. In fact, I even have a photoblog (no link because, well, that would destroy our anonymity, and we wouldn't want that, right?) that I semi-regularly post photos to. And she likes to crochet!
We also like to buy stuff. Well, we used to like to buy lots of stuff, but now we just covet stuff.
So you could tell we were super excited to see a blog that combines both. Consumerist highlighted the super-cool blog Obsessive Consumption today, and I almost fell out of my chair. Artist Kate Binagaman draws the things that she buys. She also draws her credit card statements. Totally rad. Her site design left me drooling.
She's also been mentioned over at BoingBoing, so I'd suggest getting to her site before the server goes boom.
Warning: Excessive Use Can Lead To Bankruptcy
Posted on March 01, 2006 by Him
In a recent comment, Emily pointed to her post on Creditbloggers that Australian credit card statements may come with warnings to emphasize the potential financial ruin that they can cause.
There's running a contest to see if you can come up with the funniest warning that you can think of. Leave a comment on their site to enter.
I think that this is a great idea, but I believe it should extend to high-priced luxury goods. Here are some examples:
HDTV
Warning: The correct cables to get the full experience will also set you back $500. And let's face it, you'll probably screw that up anyway.
Ford Mustang
Warning: Driving this car will not make up for your small penis.
Handbags
Warning: Your lipstick does not care how expensive the bag is that you put it in.
Shoes
Warning: The amount of pain your feet will feel wearing these is directly proportional to the price of each shoe.
Starbucks
Warning: This coffee tastes exactly like Dunkin Donuts. Sucker.
Care to add any others?
$125K paid off (not us)
Posted on February 16, 2006 by Him
I was cruising the Fool.com discussion boards today, and saw this post of the day about a family with over $125K in credit card and consumer debt, paid off in 7.5 years! They did it with a combination of the snowball method of paying off credit cards, personal finance discipline, and a lot of hope. Not only that, but the guy lost 30 pounds, gained a bunch of muscle, and is going to run in a half-marathon this spring.
I subscribe to the pfblogs.org feed, so I read many PF blogs. There are only a few PF bloggers who are in debt, fewer who are in as much debt as we are in. It was a relief to see that someone got themselves out of a mountain of debt, versus reading about other bloggers who post about their capital gains, house flipping adventures, blah blah blah ad nauseum.
No offense, but I mean it takes a few PF bloggers' net worths to even pay for our debt.
20.99% no more!
Posted on February 09, 2006 by Him
My second credit card ever was a Citibank Platinum Mastercard, with a credit limit of $1,800. I was young and seduced by the fact that I was receiving a Platinum card. The card came just in time for Christmas, but more importantly, it came right after I maxed out my first credit card!
This card has been the bane of my existence for the past few years. Within a few weeks after I got the card, I maxed it out, and the monthly interest rate pushed the balance to over my credit limit, and then I got hit with the over the credit limit fee. I think that the card was over the limit most of the time I was an undergrad. In the time between undergrad and grad school, I was really tight on cash, and I neglected to pay even the monthly minimum payment on this card. Twice. I was over 30 days late the first time, 60 days the second. Subsequently, the APR went up to 20.99%.
The worst part of all of this is that the 20.99% interest rate was "grandfathered" in. A few months ago I called the company and tried to get the rate lowered. The rep was very nonchalant in telling me that nothing could be done, and that the rate was stuck. I don't ever remember getting receiving word that the rate was going to be fixed - I probably just trashed whatever mailing that they tried to communicate that to me with.
Since my FICO score was low, I was getting really crappy offers in the mail (see example) that didn't help at all, and I didn't want to risk having too many inquiries on my credit report, further lower my score. I was seriously between a rock and a hard place.
Earlier this week I received a credit card offer that proved to me that changing our financial behavior pays off - a card with 0% APR on balance transfers until April 2007, and a rate of 12.9% thereafter. I was a bit skeptical, because receiving a credit card offer doesn't mean that I'll actually be approved. She and I deliberated for a bit about the potential cons of applying for the card, but the potential pros eventually won out. So earlier tonight I called (right in the middle of a drapery installation session -- sorry hon, for leaving you hangin') and got approved! Not only did I get approved, but I now have a $2,500 credit limit, meaning I can (and will) put more than one credit card balance on there. It is kind of sad that $2,500 is my largest credit limit EVER. The only drawback to this whole thing is a 3% balance transfer transaction fee. Compared to the hundreds of dollars that I'll save, it's not so much of a bad deal.
Bye bye, Citibank. It's been fun.
Should I reduce my retirement contribution to pay down debt?
Posted on February 08, 2006 by Him
If you haven't noticed, we are drowning in a crapload of debt. Between the two of us, we have eight credit cards (down from 20+ a year ago) and about $18K in credit card debt. Because we are also trying to save for a wedding, right now we're only putting an extra $100/month towards the highest rate card (mine at 20.99%, eek, I know). This feels like using a band-aid to cover a gaping wound. We need some sutures!
In order to speed up the process of paying those pesky cards down, I'm thinking of reducing my Simple IRA (a 401k-like plan for small businesses) from 6% to 3%. In doing so, that will free up $80/month that will all go towards credit card debt reduction. When our debt is all paid down, then I'll put my contribution to 6%. My company matches dollar-for-dollar up to 3% of my salary, so in essence I'm still going to be receiving 6% when all is said and done.
We've already looked at our monthly budget and think that we've trimmed most of the budgeting fat. Do you think that this is a good idea?
Awesomely bad credit card offer
Posted on January 20, 2006 by Him
Okay, so a few years ago I missed some payments on a few of my credit cards. As a result, my current FICO score is a dismal 661. I've been doing well for the past year and a half, and I have even managed to get some of the credit card companies to lower my APR. But that doesn't stop the Awesomely Bad Credit Card Offers from coming in.
This specimen featured below has to be the all time greatest of Bad Credit Card Offers. (click on the image to trigger a pop-up of the full sized image)
Highlights:
--The hologrammed diamond on the "Pre-Approved Gold Club Card." Classy.
--The pivotal question is asked: "How do you establish or win back credit if no one is willing to offer it?" Well, thank you very much, Diamond Center, for being my personal credit savior.
--The FREE pair of 14K Gold Earrings with any purchase over $200. Two words: BLING, BLING.
Please, enjoy my bad credit.
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