Archive for the ‘Debt’ Category

Credit Calamities: Know Your Limits

Most Americans have been lured by banks and retailers into a “spend, spend, spend” mentality. As a result, when faced with an opportunity to make a purchase, the consumer’s question is not “Should I buy this?” but rather, “What is the fastest way for me to buy this?”  Banks and retailers are in business to make a profit, and their profits depend on consumers’ spending. So it only makes sense that they spend millions annually on advertising designed to make us what we often do not need and cannot afford.

In this third installment, we will look at ways to help you counter the banks’ and retailers’ campaigns to get you to part with your money and keep more of it for yourself.

Credit limit. Most credit cards have a spending limit, or credit line limit. Even though the credit card issuer doesn’t want you to charge more than that, they often approve the first few charges that put you over the limit.  And then they can charge you an over-limit fee that just adds to your debt.  Plus, going over the limit can trigger an interest rate increase not only on that card, but any other credit card you hold…even with different credit card companies. So keep an eye on your charges, and stop several hundred dollars short of your limit. Give your self “breathing room” to allow for interest charges, late fees (which you should not have once you sign-up for “auto pay” as we discussed last month), and charges that are applied to your card automatically that you may forget about, like newspaper and magazine subscriptions or cell phone and cable charges.

Budget limit. Just because your credit card company will allow you to charge, for example, up to $10,000 doesn’t mean that you can afford to make monthly payments on that much debt. So if you are struggling to keep up with your minimum payments on your current debt, do not make your financial situation worse by racking up more debt. Stop charging. Period. Some consumers take extra measures to protect themselves, like keeping their credit cards at home or even (as you may have seen on a popular television commercial) freezing them inside a block of ice. As long as you keep increasing your debt, you decrease the likelihood that you will pay off the debt in the near future, or ever.

Spending limit.  Do you have a personal “spending limit”?  A “spending limit” is a pre-determined amount, which could be as low as $50 or as much as $500, that you will not spend without a self-imposed waiting period. What might this look like in real life, and how could it be helpful?  Imagine that you stopped by a big box retailer and noticed a new DVD player on sale for fifty percent off. Your DVD player at home works, but a few times recently you noticed some minor problems with it. It costs $50 on sale, which happens to be your self-imposed “spending limit.” You remember that you promised yourself if you wanted to buy anything that cost $50 or more that you would wait a minimum of two days before taking action. Here’s what could happen in those two days:

  • You might discover that a $12 cleaning kit fixed the minor problems you had been having with your DVD player, and now you don’t need a new one at all.
  • If your DVD player does break, you might notice one on Craig’s List for less money that works just as well.
  • You might find a similar unit at a competitive retailer for less.
  • You might remember that you have a birthday coming up and decide to wait and use the money you normally receive from family members to pay cash for the DVD player. Yes, the fifty percent sale that you saw will be over by then, but in today’s economy, retailers will soon be offering another sale to encourage cautious consumers to part with their money.
  • You might decide that no matter how cheap the DVD player is, you need to save up cash to pay for it because you cannot afford to increase your credit card debt any further.  Even if you save your money and pay $65 cash a few weeks later, that is cheaper than paying $50 on credit card and taking months to pay it off. The added interest could easily turn that $50 DVD player into a $95 or $125 model over time.

Try it. See what can happen when you exercise self-control and fiscal restraint. Learn to say “no” to your impulse desires, or at least start saying “not today.” Self-imposed limits are never fun in the excitement of the moment when you want to buy. The sense of pride and accomplishment you will feel when you take control of your spending, instead of letting your spending control you, will be well worth it.

Credit Calamities: Keeping It Under Control

The average American has eight general purpose credit cards. This does not include gas station or department store credit cards. Add on top of these the basic monthly bills most of us pay, like the mortgage or rent, electricity and/or gas, city utilities, medical bills, and loans, to name a few. We spend so much of our month juggling which payment is due next; if we drop the ball and miss a payment, we can incur late fees and risk interest rates on all our accounts going up, not just the account we paid late.

Last month, we looked at ways to save money on our credit cards by negotiating for lower interest rates, exploring balance transfer rates on our existing cards, and researching options for new lines of credit at better rates. This month, we will look at strategies to simplify our payments to all the people we owe. 

Chart What You Owe.  This month’s suggestions starts just like last month’s: make a list of everyone you owe, how much you owe each month and when the payment is due.  Then take your chart a step farther. If you get paid twice a month, list which bills you will pay from the first paycheck each month and which you will pay from the second. Include on your chart contact numbers for each person or company you owe for easy reference. 

Pay on-time, every time, with “auto pay.”  Have you ever forgotten to mail your credit card payment or mailed it a few days late? Then you know what happens next. You get letters and phone calls from the credit card company, asking where their money is, and you incur expensive late fees and pay additional interest. And, late payments can trigger credit card companies’ computers to review your account for a possible interest rate increase. Paying late with one credit card company can even result in increased interest rates with your other credit card companies, even if you pay them on-time. Credit card companies make huge profits off of late fees; stop padding their profits by signing up for “auto pay.”

  • “Auto pay” is a free service that all major credit card companies offer, but you must request it. When you sign-up for it, you give the credit card company permission to draft your bank account for the amount you specify each month. You may choose to authorize them to draft the minimum payment, the full balance, or the minimum amount plus a specified amount.
  • Once you enroll in “auto pay,” you will still receive a monthly statement from the credit card company showing what you owe, but there will be an added line stating that the payment you requested when enrolling will be automatically drafted from your bank account on the agreed upon date.
  • Each credit card company has a different process for enrolling in “auto pay.” Some allow cardholders to sign-up by telephone; some require enrollment by filling out forms and returning them by mail; some allow cardholders to enroll online. Call each of your credit card companies directly to find out how to sign-up.
  • If you have several different credit card accounts with the same company, you must enroll each individual credit card account separately for “auto pay.”
  • Do not assume “auto pay” has started until you see written confirmation. The credit card company should mail you a letter stating exactly when your “auto pay” will start, which bank account will be drafted each month, on what date, and for what amount. Continue to make your monthly payments until you see in writing that “auto pay” is ready to start.  Save the written confirmation you receive with your account statements so you may refer to it as needed in the future.
  • All you have to do after you enroll is make sure that the amount the credit card company will draft from your bank account is actually in your account on the draft date each month.
  • Keep in mind that “auto pay” is different than making a payment online or paying via online banking köpa viagra online. With “auto pay,” once you enroll, no action is required on your behalf each month to make your payment, other than keeping funds in your bank account; the credit card company is responsible for drafting your account. When you make a payment online or pay via online banking, the payment does not draft each month until you take action to authorize it each time.
  • Make sure you understand during enrollment how to cancel or change your payment amount with the “auto pay” program. Some companies accept a verbal change or cancellation, while some require it in writing. Be sure you understand in advance how to make changes or cancel your enrollment before you start. 

Automate the rest of your payments. The days of writing a check and driving a few blocks to make your utility payment in person are long gone for most people. For most people, the payments you make each month are mailed out-of-town and out-of-state. So stop relying on your memory and the efficiency of the United States Postal Service to pay your bills on-time. Automate them with these services:

Online bill pay. Most major banks allow you to pay your bills online. If your bank does not offer this service, or charges a fee for it, consider moving your checking account elsewhere.

  •          Once you have a bank that offers free online bill pay, you simply enter each of the people or businesses you pay as a “Payee.” You will need their payment address and telephone, your account number, and information on how much you want to pay each month. With online bill pay, you must log-in to your online account each month and instruct the bank which “Payees” to send money to and how much on which dates.
  •          Some online bill pay services allow you to set-up recurring payments if the amount does not change. For example, if you owe $150 on a student loan each month, or if you have agreed to send your dentist $25 each month to pay off a procedure, you may be able to instruct your bank via online permissions to automatically send these payments from your checking account each month.
  •          Some more sophisticated online bill pay services even allow you to specify for how many months to send the payment. If you owe your dentist $130, you could authorize your online bill pay service to send $25 per month for four months and then $30 in the fifth month to pay off the debt.

Auto pay for other bills, too.  We discussed at length using “auto pay” for your credit cards; other companies may allow you the same option. Most mortgage and utility companies have free programs that will automatically draft your payment each month directly from your checking account. Some prefer this to online bill pay; the choice is yours.

Keep in mind that the most important step to paying your bills on time is to have a master list of what you owe each month. You may be coasting along just fine paying your bills from memory each week.  It only takes one life-altering event, such as a serious illness or a death in the family, to take your focus off of your financial routine, which can result in costly late fees and increased interest rates.

So commit today to creating a chart that lists all of your monthly obligations and debts. Then decide what options for automating your payments work best for you: logging onto online bill pay periodically to authorize your bank to draft your checking account to pay each bill, authorizing your credit card companies and other service provides to automatically draft your checking account each month with “auto pay” or a combination of the two. But stop sending checks that can get lost or delayed in the mail.  You will save time and money (think how many fewer trips you will make to the post office to buy stamps) and will avoid late payments. In the long run, you will probably see a positive effect on your credit score.

How Are You Coping?

Here at we are trying to build a resource to help people who are dealing with overwhelming debt. We want to provide tips for anyone looking  for information on dealing with creditors to ways to help you cut costs now.

Have you planted a garden? Have you mastered coupon clipping? Do you have tips that others may benefit from? Let us know, we want to help you share your advice with others like you who are looking for ways to save money and get out of debt.

We look forward to an open and frank dialogue about debt with everyone in the Dallas/Fort Worth Metroplex.

Credit Calamities: Check Your Rates

Cut Interest RateAmerica seems based on a culture of debt. Get it today, and pay for it tomorrow. The problem is that most Americans do not pay off their full credit card balance every month, so we are not paying tomorrow. We are paying week after week, month after month; the great deal we thought we had to have today ends up being a very costly purchase when compound interest is added on. The mentality of “buy now, pay later on credit cards” has been the cause of many a family’s hardship, especially when credit card interest rates go up or when the family cannot make its minimum payments.

In this first installment of a three-part series, we will consider some simple strategies that may ease your “credit crunch:” (more…)

DFW Debt

Welcome to, a site designed to help anyone in the Dallas/Fort Worth Metroplex who is dealing with debt problems.

Getting into debt is really pretty easy, and not all debt is bad. Keeping up with your debt and understanding its power in your life can be difficult.

With access to debt counselors and information on bankruptcy, I hope that I can create a plave that people facing financial difficulty will feel safe to come and share their experiences and look for more ideas on how to deal with their financial problems.

While I did say that not all debt is bad, it should always be your goal to get out of debt tadalafil best price. Budgeting and planning should be part of your routine, but you know that. I don’t have to lecture you.

If your debt is out of control, you may need to consider filing bankruptcy. If you don’t feel you have reached that point, you have to learn how to negotiate with your creditors, get a handle on your debt and adjust your spending.

Getting out of debt isn’t going to be easy, no matter what path you choose. Feel free to voice your frustrations and success here in our comments.