It's August. That means that by the end of the month, most or all students will be back in the classroom, starting another year of education. Especially for college students, this means trips to the bookstore to buy texts and other course necessities.
As a college instructor for the last 13 years, I have seen first-hand how many students are undisciplined when it comes to spending. This is particularly true when it comes to the use of credit cards. Some students have cards in their own name; others use their parents' cards. Either way, this can be a dangerous situation and a bad spending habit that can last a lifetime, without careful consideration and advice.
Many credit card companies and banks are aware of the naivete of these young men and women as well as their desire for instant gratification. For several years, representatives of these companies would show up at campus student centers and "invite" students to sign up for their cards. In many cases, this led to hundreds, and in some cases thousands, of dollars of debt, on top of student loans. Sadly, many parents were not aware of this excessive debt until it was "too late."
So my advice to students is to avoid these salespeople should you see them on campus. Also, if the cashier happens to throw a credit card application into the bag along with your books, tear it up and throw it out ASAP.
Parents, be aware of your child's spending habits, especially if he or she is away at school. Monitor this very carefully. Don't be afraid to ask how they are buying things, what they are buying, etc. In this case, ignorance is NOT bliss - it can lead to pain: in the wallet!
I wish students and teachers a successful academic year!
Monday, August 10, 2009
Thursday, July 23, 2009
Give
Hi All,
It's been a few weeks since I posted here. Sorry to keep you waiting. I have made a couple of trips and been involved with some other projects. But now I back and ready to go!!
Last time, I wrote about the dangers of using a credit cards at fast-food restaurants, like McDonald's. There is a temptation to buy more than you really need or want because you are not spending cash on the spot. And I'm not even taking into account that many items on a fast-food menu are not very healthy.
That leads me to my next point. If you feel the need to "spend" money, think about a cause that is important to you. Consider giving money on a regular basis to an organization that can use the resources to help those in need. Speaking from personal experience, I get great joy when I give to a cause that's close to my heart. It does not need to be a lot of money - that's for you to decide. Amounts are relative. What are you comfortable giving? How much makes you feel good?
The bottom line is that when we give, we get back in many ways, including joyful feelings, gratitude from others, and yes, even money. If you are a cheerful giver, you will never do without.
It's been a few weeks since I posted here. Sorry to keep you waiting. I have made a couple of trips and been involved with some other projects. But now I back and ready to go!!
Last time, I wrote about the dangers of using a credit cards at fast-food restaurants, like McDonald's. There is a temptation to buy more than you really need or want because you are not spending cash on the spot. And I'm not even taking into account that many items on a fast-food menu are not very healthy.
That leads me to my next point. If you feel the need to "spend" money, think about a cause that is important to you. Consider giving money on a regular basis to an organization that can use the resources to help those in need. Speaking from personal experience, I get great joy when I give to a cause that's close to my heart. It does not need to be a lot of money - that's for you to decide. Amounts are relative. What are you comfortable giving? How much makes you feel good?
The bottom line is that when we give, we get back in many ways, including joyful feelings, gratitude from others, and yes, even money. If you are a cheerful giver, you will never do without.
Monday, July 6, 2009
"Super Sized? Sure! Cash or Credit?"
I hope that everyone had a wonderful Fourth of July holiday weekend! Here in the northeast, we actually had some nice weather!! We had a couple of days with no rain - (See, miracles really do happen!!)
While at church yesterday, I was speaking with someone who works at McDonald's. He said that it was very busy there over the weekend because of the holiday. Then he added that the orders were larger than usual because of the number of kids and the size of the families who came in.
He finished by stating that "a lot of people paid by credit card." He probably said that for my benefit. He knows that I write this blog and that I cringe when I hear about unnecessary use of credit. So I thank him for sharing; he is the "inspiration" for today's post.
Folks, think about the philosophy of paying for "fast food" with "LONG TERM debt." It makes no sense! While parents may, in fact, have gone into McDonald's with their kids, they (the parents) had to know that they were going to stop some place for lunch or dinner. Likely, they did not think twice about pulling out the credit card and putting off payment until a later date. The problem with this is that frequently we buy more with credit cards than we do with cash for the simple reason that no dollar bills are coming out of our wallets or purses. We overindulge, thanks to MasterCard, Visa, etc, so we can get instant gratification and immediately satisfy the kids. But the credit card companies "get the last laugh" when the bill comes due becuase there is a very good chance that that McDonald's purchase is not the only one on the current statement. How many other purchases were made during the month for instant gratification or to satisfy kids, friends or somebody else?
You can pay the bill in full every month? That's great! Chances are, this message is not meant for you. At the same time, let's say that money is tight and an unexpected expense or an emergency comes up later in the month. As a result, those unnecessary credit purchases now make it difficult or even impossible to pay the bill in full. We cannot predict the unexpected; we don't know when emergencies will occur. However, we do know that they may occur. So we have to be prepared, financially and other ways, to tackle those events without putting ourselves in debt. That's why an emergency fund is so important. It should be a liquid, cash fund, not a plastic, credit card.
Fast food is fine in moderation. An occasional "super size" is ok. But using credit while placing the order is absurd. As financial consultant Dave Ramsey says, "Cash is king!"
While at church yesterday, I was speaking with someone who works at McDonald's. He said that it was very busy there over the weekend because of the holiday. Then he added that the orders were larger than usual because of the number of kids and the size of the families who came in.
He finished by stating that "a lot of people paid by credit card." He probably said that for my benefit. He knows that I write this blog and that I cringe when I hear about unnecessary use of credit. So I thank him for sharing; he is the "inspiration" for today's post.
Folks, think about the philosophy of paying for "fast food" with "LONG TERM debt." It makes no sense! While parents may, in fact, have gone into McDonald's with their kids, they (the parents) had to know that they were going to stop some place for lunch or dinner. Likely, they did not think twice about pulling out the credit card and putting off payment until a later date. The problem with this is that frequently we buy more with credit cards than we do with cash for the simple reason that no dollar bills are coming out of our wallets or purses. We overindulge, thanks to MasterCard, Visa, etc, so we can get instant gratification and immediately satisfy the kids. But the credit card companies "get the last laugh" when the bill comes due becuase there is a very good chance that that McDonald's purchase is not the only one on the current statement. How many other purchases were made during the month for instant gratification or to satisfy kids, friends or somebody else?
You can pay the bill in full every month? That's great! Chances are, this message is not meant for you. At the same time, let's say that money is tight and an unexpected expense or an emergency comes up later in the month. As a result, those unnecessary credit purchases now make it difficult or even impossible to pay the bill in full. We cannot predict the unexpected; we don't know when emergencies will occur. However, we do know that they may occur. So we have to be prepared, financially and other ways, to tackle those events without putting ourselves in debt. That's why an emergency fund is so important. It should be a liquid, cash fund, not a plastic, credit card.
Fast food is fine in moderation. An occasional "super size" is ok. But using credit while placing the order is absurd. As financial consultant Dave Ramsey says, "Cash is king!"
Sunday, June 28, 2009
Chip, Chip, Chip Away
At this point, you have made the necessary phone calls to lower your interest rates and even to pay off your balances "at pennies on the dollar." The latter may not be possible for you, but the former, the lower interest rates, are certainly possible and, in many cases, essential to getting yourself out of debt in a reasonable amount of time. Time truly is money when it comes to debt repayment.
How many credit cards do you have? How many of them have outstanding balances? You will see that some of your cards have lower balances than others. Which card has the lowest balance?
Your next assignment is to make a list of all of your credit card balances. Write the list from lowest balance to highest. It doesn't matter how many cards you have at this point. The goal is simply to get this list on paper. And actually the grand total of your credit card debt isn't very important at this point, either.
Right now, we simply want to get a list on paper so you see what you are dealing with on a card-by-card basis. Ideally, we want to train your eye to go to the top of this list where the lowest balance appears. This balance will get the majority of your attention and money until it is paid off. You will pay the minimum on the other balances, but you will put as much money as you can toward the card with the lowest balance.......until you see a balance of zero! Of course, you will not be using this card (hopefully you will not be using any of the cards - you can't get out of debt by debting).
Once you pay off the card with the lowest balance, follow the same process for the card with the second-lowest balance. Continue to pay the minimum on the others, but now put as much money as you can toward this "new lowest balance card." And here's some good news - put the amount of money that you paid on card #1 on this card plus as much other money as you can.
Ultimately by doing this, you will accelerate the pay off of this card. In other words, the more you can put towards the balance, the faster you will pay it off. That's common sense, but many people don't realize it, nor do they discipline themselves to stop using their credit cards.
Keep this process going until all of your balances are paid off - whether you have two cards, five cards, ten, twenty, less, more.
Remember that it takes about twenty years to pay off a credit card with a $2,00 balance at an interest rate of 18%. By following the system listed above, you will cut years off your debt!
How many credit cards do you have? How many of them have outstanding balances? You will see that some of your cards have lower balances than others. Which card has the lowest balance?
Your next assignment is to make a list of all of your credit card balances. Write the list from lowest balance to highest. It doesn't matter how many cards you have at this point. The goal is simply to get this list on paper. And actually the grand total of your credit card debt isn't very important at this point, either.
Right now, we simply want to get a list on paper so you see what you are dealing with on a card-by-card basis. Ideally, we want to train your eye to go to the top of this list where the lowest balance appears. This balance will get the majority of your attention and money until it is paid off. You will pay the minimum on the other balances, but you will put as much money as you can toward the card with the lowest balance.......until you see a balance of zero! Of course, you will not be using this card (hopefully you will not be using any of the cards - you can't get out of debt by debting).
Once you pay off the card with the lowest balance, follow the same process for the card with the second-lowest balance. Continue to pay the minimum on the others, but now put as much money as you can toward this "new lowest balance card." And here's some good news - put the amount of money that you paid on card #1 on this card plus as much other money as you can.
Ultimately by doing this, you will accelerate the pay off of this card. In other words, the more you can put towards the balance, the faster you will pay it off. That's common sense, but many people don't realize it, nor do they discipline themselves to stop using their credit cards.
Keep this process going until all of your balances are paid off - whether you have two cards, five cards, ten, twenty, less, more.
Remember that it takes about twenty years to pay off a credit card with a $2,00 balance at an interest rate of 18%. By following the system listed above, you will cut years off your debt!
Wednesday, June 17, 2009
"Hot On The Heels" Of my Previous Post...
Hi All,
If you recall, last time I addressed the need to call your credit card companies and negotiate a reduced interest rate. Well, yesterday's "New York Times" had what I found to be an interesting and inspiring article for anyone facing difficult economic times and especially for those struggling with credit card debt.
In an article titled "Credit Bailout: Issuers Slashing Card Balances," writer David Streitfeld states that "credit card companies are increasingly doing something they have historcally scorned: settling delinquent accounts for substantially less than the amount owed."
Streitfeld cites a gentleman from Chicago named Edward McClelland who reportedly had received several phone calls from a credit card company, regarding a "$5,486 balance." This time, Mr. McClelland had a proposition for "big business." Specifically, McClelland "proposed paying half" of this balance.........and the account representative replied, "It's a deal" at which point, Streitfeld writes, "the matter" was considered "even."
Apparently, credit card companies and banks are becoming more responsive to the plight of many Americans during this recessionary period. No, they are not, all of a sudden, becoming philanthropic and good-natured, but it seems that they are becoming more open to negotiation.
With delinquencies rising, they realize that some money is better than no payment at all. In the article, Streitfeld cites a Federal Reserve report which states that "6.5 percent of credit card debt was at least 30 days past due in the first quarter, the highest percentage since it bagan tracking the number in 1991. The amount being written off was also at peak levels."
Streitfeld continues that not all creditors are on board with this new policy, but the American Bankers Association, "acknowledges that settlements are becoming more common."
Unemployment is now more than nine percent and is likely to rise. Frequently, jobs are the last things to come back during an economic recovery. Thus, as jobs continue to decline, credit card debt and the inablilty to pay will increase.
On a positive note, we now know that there is some "wiggle room"; the potential for negotiation exists. If you are struggling with debt, make that call. I beleive it is better to be proactive and contact the card company yourself than to wait and hope that the company will call and "make you an offer."
Re-read my previous post "Call...And Save!" with regards to negotiating a reduced interest rate. Read Mr. Streitfeld's article in its entirety in the June 16 edition of "The New York Times."
Also, I encourage you to read my blog every week.
If you recall, last time I addressed the need to call your credit card companies and negotiate a reduced interest rate. Well, yesterday's "New York Times" had what I found to be an interesting and inspiring article for anyone facing difficult economic times and especially for those struggling with credit card debt.
In an article titled "Credit Bailout: Issuers Slashing Card Balances," writer David Streitfeld states that "credit card companies are increasingly doing something they have historcally scorned: settling delinquent accounts for substantially less than the amount owed."
Streitfeld cites a gentleman from Chicago named Edward McClelland who reportedly had received several phone calls from a credit card company, regarding a "$5,486 balance." This time, Mr. McClelland had a proposition for "big business." Specifically, McClelland "proposed paying half" of this balance.........and the account representative replied, "It's a deal" at which point, Streitfeld writes, "the matter" was considered "even."
Apparently, credit card companies and banks are becoming more responsive to the plight of many Americans during this recessionary period. No, they are not, all of a sudden, becoming philanthropic and good-natured, but it seems that they are becoming more open to negotiation.
With delinquencies rising, they realize that some money is better than no payment at all. In the article, Streitfeld cites a Federal Reserve report which states that "6.5 percent of credit card debt was at least 30 days past due in the first quarter, the highest percentage since it bagan tracking the number in 1991. The amount being written off was also at peak levels."
Streitfeld continues that not all creditors are on board with this new policy, but the American Bankers Association, "acknowledges that settlements are becoming more common."
Unemployment is now more than nine percent and is likely to rise. Frequently, jobs are the last things to come back during an economic recovery. Thus, as jobs continue to decline, credit card debt and the inablilty to pay will increase.
On a positive note, we now know that there is some "wiggle room"; the potential for negotiation exists. If you are struggling with debt, make that call. I beleive it is better to be proactive and contact the card company yourself than to wait and hope that the company will call and "make you an offer."
Re-read my previous post "Call...And Save!" with regards to negotiating a reduced interest rate. Read Mr. Streitfeld's article in its entirety in the June 16 edition of "The New York Times."
Also, I encourage you to read my blog every week.
Thursday, June 11, 2009
Call...And Save!
Alright, we are beginning to make some headway. We are becoming aware of our spending patterns and we are reducing (or eliminating) our use of credit cards. We are becoming proactive in our quest for debt freedom!
Now, it is time to "slay the dragon" (so to speak). Chances are, the interest rates on your credit cards are quite high. They don't have to be. It's time to call the credit card companies and negotiate a reduced rate on those cards. If you look at the back of your credit cards or on your statements, you will find a toll-free phone number. Call it and speak to the representative. Get your interest rates reduced!
This might take a little persistence on your part. That's not a problem since you are determined to get out of debt. If the first representative says he or she cannot help you, ask to speak to a supervisor or manager. Keep going up "the chain of command" until you are offered a satisfactory rate, one that is significantly lower than your current rate.
You need to do this for each of your cards. It might take some time, but it is worth the effort...and money that you will save!
Until next time........
Now, it is time to "slay the dragon" (so to speak). Chances are, the interest rates on your credit cards are quite high. They don't have to be. It's time to call the credit card companies and negotiate a reduced rate on those cards. If you look at the back of your credit cards or on your statements, you will find a toll-free phone number. Call it and speak to the representative. Get your interest rates reduced!
This might take a little persistence on your part. That's not a problem since you are determined to get out of debt. If the first representative says he or she cannot help you, ask to speak to a supervisor or manager. Keep going up "the chain of command" until you are offered a satisfactory rate, one that is significantly lower than your current rate.
You need to do this for each of your cards. It might take some time, but it is worth the effort...and money that you will save!
Until next time........
Wednesday, June 3, 2009
"Cut " The Plastic (Probably Not What You Think)
Last time, I wrote that we should all add up what we owe on our credit cards. This gives us an idea where we stand presently with regards to debt. Many people have only a vague idea of how much they owe. I remember back when I was deep in debt, I frequently forgot how often I used my credit cards and I had many of them. Ultimately, I didn't know how much debt I was carrying until I finally built up the courage to sit down and add up the balances on each and every card. My best recollection is that I had as many as fourteen credit cards at one time and I owed on most of them.
I felt terrible when I finally realized that I owed several thousand dollars. However, shortly thereafter, I also realized that knowing the exact amount was crucial if I were to stop this terrible trend of unnecessary debting. At first I was guilty, but then I was empowered.
So I suggest that you add up those debts for your benefit. This is not to make you feel guilty or even angry. This is meant to be a "Wake-Up Call." Hopefully, it inspires you to start changing your habits, even if it's just little by little at first.
Now that you know exactly how much you owe, start recording what you buy for the next week. I'm not saying to change your buying habits necessarily, at least not right away. But notice what you buy and more importantly how you pay for it. For example, do you stop for coffee and a muffin every morning? three mornings a week? Do you pay cash? Or do you put it on a credit card? Do you realize that you're doing it?
This is not to condemn; it's to make you aware. So for the next seven days, take a small pad of paper with you and each time you buy something (no matter how relatively inexpensive it may be) write down what it is, how much it costs, and how you paid for it. If you spent cash, write "Cash" next to the purchase. If you put it on a credit card, write "cc" next to it.
After a week, review how you purchased. If you notice that you used credit cards
less often than you usually do, then you are becoming aware that you don't need to use credit cards so often. I suggest that keep that pad with you for at least another week or two and do the same thing.. Remember we are now establishing positive habits and breaking bad ones and it takes time. This also reaffirms/solidifies what you did in week one. In the process, you are convincing yourself that change is possible and that, in fact, it is happening. You'll also see your debt amounts decrease over the course of several months once you drastically lower the number of times you use credit. You have "cut" your use of plastic!!
If, on the other hand, you notice after one week that you used your credit cards as often as you usually do, don't give up. You may have been using credit cards so habitually that it can take a while longer for you to break the habit. Again this is NOT a criticism. Maybe instead of thinking about this as a seven-day experiment, think of it as a ONE-DAY experiment - today. Convince yourself that you will pay cash for EVERYTHING you buy today. And buy what you usually buy for that day - keep it natural. Then notice that you succeeded TODAY. Congratulations!! Now do the same thing tomorrow...and the nex day...and the next day, etc. Soon, you'll notice that a week went by and either you used the card rarely or ideally NOT AT ALL. You, too, have "cut" your use of plastic. Keep doing this day-by-day and see the results!
I'd love to hear from you! Please feel free to comment or ask questions.
Until next time, be positive and see yourself as DEBT-FREE!
I felt terrible when I finally realized that I owed several thousand dollars. However, shortly thereafter, I also realized that knowing the exact amount was crucial if I were to stop this terrible trend of unnecessary debting. At first I was guilty, but then I was empowered.
So I suggest that you add up those debts for your benefit. This is not to make you feel guilty or even angry. This is meant to be a "Wake-Up Call." Hopefully, it inspires you to start changing your habits, even if it's just little by little at first.
Now that you know exactly how much you owe, start recording what you buy for the next week. I'm not saying to change your buying habits necessarily, at least not right away. But notice what you buy and more importantly how you pay for it. For example, do you stop for coffee and a muffin every morning? three mornings a week? Do you pay cash? Or do you put it on a credit card? Do you realize that you're doing it?
This is not to condemn; it's to make you aware. So for the next seven days, take a small pad of paper with you and each time you buy something (no matter how relatively inexpensive it may be) write down what it is, how much it costs, and how you paid for it. If you spent cash, write "Cash" next to the purchase. If you put it on a credit card, write "cc" next to it.
After a week, review how you purchased. If you notice that you used credit cards
less often than you usually do, then you are becoming aware that you don't need to use credit cards so often. I suggest that keep that pad with you for at least another week or two and do the same thing.. Remember we are now establishing positive habits and breaking bad ones and it takes time. This also reaffirms/solidifies what you did in week one. In the process, you are convincing yourself that change is possible and that, in fact, it is happening. You'll also see your debt amounts decrease over the course of several months once you drastically lower the number of times you use credit. You have "cut" your use of plastic!!
If, on the other hand, you notice after one week that you used your credit cards as often as you usually do, don't give up. You may have been using credit cards so habitually that it can take a while longer for you to break the habit. Again this is NOT a criticism. Maybe instead of thinking about this as a seven-day experiment, think of it as a ONE-DAY experiment - today. Convince yourself that you will pay cash for EVERYTHING you buy today. And buy what you usually buy for that day - keep it natural. Then notice that you succeeded TODAY. Congratulations!! Now do the same thing tomorrow...and the nex day...and the next day, etc. Soon, you'll notice that a week went by and either you used the card rarely or ideally NOT AT ALL. You, too, have "cut" your use of plastic. Keep doing this day-by-day and see the results!
I'd love to hear from you! Please feel free to comment or ask questions.
Until next time, be positive and see yourself as DEBT-FREE!
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