Money Monday - Credit Cards

Credit card debit is one of the most popular reasons people give when asked why they are not saving money. In reality, it's not the credit card that's the problem, it's the interest rate. The average interest rate on a credit card is 18%. To make matters worse, most people are only making the minimum payment each month. Here's an eye-opening little piece of information. If you have a balance of roughly $12,000 on a credit card with an interest rate of 18% and only make the minimum payment each month, it will take you approximately 33 years and 4 months to pay off that card. And that's assuming you don't charge anything else. The most astonishing fact about this is that it will have ended up costing you $29,616 to pay off that $12,000 balance!

The easiest and most effective way to pay off your credit card balance is to get your credit card company to lower the interest rate. Here are some steps to follow to do this:

1. Find out how much interest you are currently paying (take a look at your most recent statement - the interest rate is usually listed on the bottom of the last page in a table)
2. Find out what rates the competition is offering (this doesn't mean apply for a card with a lower rate. It just means find out what is being offered so you have some data when you call the bank. Check out www.bankrate.com)
3. Talk to someone who can make a difference (call the customer service number listed on your statement and immediately ask for the supervisor of the person who answers the phone as first tier support doesn't have the authority to change rates. Tell the supervisor what the competing rates are, and if your bank doesn't lower your rate, you intend to transfer your balance to the competitor)

Lowering your interest rate means it will cost you less to pay off your credit card debt. This is an important part of earning your financial freedom!

Money Monday

I've been reading a lot of books lately, mostly of the self-help genre with an emphasis on money & finances. While I am no expert in the area, I thought I would pass along some of the tidbits I read. Couldn't everyone use a little help considering the current state of the economy? So, from this, "Money Mondays" are born!

I am currently reading "Start Late, Finish Rich" by David Bach. This book is full of interesting information and is an easy read. For this installment I'd like to start off with an excerpt from this book. When I read it, I found it to be simple, yet thought-provoking and motivational.

"The fact is, you don't get in life what you wish for. You get in life what you go for.

People choose their lives.
People choose their actions.
People choose their outcomes.
Life is a cause set in motion.
And life is not over until you quit."

Cutting Back in This Crazy Economy

For sometime now, Dave and I have been cutting back on certain things in order to try and stay ahead of this crazy economy. In 2008, we decided it was time to make a change in the vehicles we were driving. I commute 140 miles round trip daily and the truck I was driving got about 18-20 miles to the gallon...not really the best vehicle for me, but I was involved in a really bad car accident years ago in which I had to be cut out of my SUV and I had a fear of driving anything smaller (if I had my choice I'd been driving a jacked up F-250 diesel 4x4)! Gas and tolls (not too mention having the oil changed every 6 weeks) was really hitting us where it hurt, so we made the decision to buy a much more fuel efficient car. Yes, a car. I was a little apprehensive at first, but realized it really was the best thing to do. Dave and I never argue about money, and I wasn't going to let one of my fears get in the way of that. So, we went car shopping and it was much easier than I expected. See, Dave and I have always been pretty practical and incredibly sensible when it comes to money. A vehicle is not something we've ever looked at as a status symbol and we definitely don't try to keep up with the Joneses. A vehicle just needs to be reliable and practical. So, we decided on a 5-speed, 4 cylinder Honda Civic 2-door that gets 35-39 miles per gallon. Dave taught me how to drive a 5-speed eons ago so it was a no brainer. Plus, since it is a 4 cylinder, the 5-speed adds a little extra pep and is much more fun to drive. We also splurged on the sunroof figuring that this was going to be a car I would be driving for a long time, so it needed to be fun and kind of sporty. It's also a very safe car...lots of reinforced sidebars and airbags so that helped to relieve my fears! I always tell Dave that when I'm driving it, I'm on the inside and don't see the outside, so as far as I'm concerned it's an Infiniti G-35! Also, we decided not to trade in my truck since it was only a few years old. Instead, Dave retired his older truck, which didn't get very good gas mileage because of the oversized tires and was starting to develop some "gremlins" and started driving the newer truck. He has a relatively short drive to work, but the newer truck does save him a little bit in gas and is more reliable.

We also decided to have our home phone turned off. Our bills were running anywhere from $40-$60 per month and we rarely used it. Most incoming calls were people calling for Applebees or Macaroni Grill (our phone number was very similar to both of the restaurant numbers...off by just one digit) and we were always using our cell phones anyway. So, it just made sense and we haven't missed it at all. What's funny is we haven't actually unplugged the phones in each room or the answering machine!

We've also started doing our food shopping at Walmart. There is a lot of money to be saved there. For instance, a bag of Tyson's Buffalo Wyngs are $8.99 at Publix, but only $6.99 at Walmart. That's a big deal when you buy a bag a week in addition to all the other items we save on. The only drawback is that they don't always have the specific brands we use so we do occasionally still make a trip to Publix.

As we reviewed other areas we could make changes in, I brought up the Lotto tickets. Dave and I have been playing the lottery for as long as I can remember. We started off playing $5 a week on Saturday (which for the Florida lottery is 5 sets of 6 numbers, each set or play costing $1). Then somehow, we wound up with another 5 sets of numbers so we were playing $10 a week. Neither of us can remember how we wound up with another 5 sets of numbers, but the rationalization was we had to keep playing all of them...what if we stopped playing one of the sets and those numbers were drawn...we'd never forgive ourselves! Some time ago, Florida added an additional drawing for the same lottery game on Wednesday, so...we're now playing $10 on Wednesday and Saturday. In 2009, the Florida lottery also became part of PowerBall in which the jackpots are HUGE! Well, we had to play at least a couple of dollars there! Now here we are spending approximately $85-$90 a month on the lottery! We went back and forth on this for the longest time until one Saturday when we happened to be flipping through the channels on the TV and by chance stopped on Jim Cramer's (the money guru guy)show. What he said changed everything! He said statistics show you are 12 times more likely to get hit by lightning on the way to buy your lottery tickets, than you are to win the lottery! Everyone knows your chances of being hit by lightning are slim, even here in the lightning capitol of the world! WOW! Funny how that was all it took...we stopped buying lotto tickets that weekend and have never questioned our decision. However, we do still occasionally buy Powerball quick pick tickets if the jackpot is really big...just in case!

What changes have you made to deal with this uncertain economy?