I was shocked when I learned that my friend had racked up a credit card balance; she's in a two-income situation and while I don't know whether she has incurred debt for school, she is both going to school part time and co-owner of a mortgage. Her income is healthy and I know she only puts $20/monthly into a 401K. That's a bit scary to me. How?
Why stop at $20? That's $240 annually. How will that help for retirement? Really. That means she doesn't have a big drop in her take-home pay due to retirement savings, which makes it even more remarkable to me that she didn't pay attention to her credit card use until she hit a balance of several thousand.
I admit I'm a bit obsessive about the debt-reduction, but I think it's appropriate; it was only a few years ago that I had a lot more debt than I do now and I don't want to return to that place, especially if we're talking consumer debt. My other goal is to buy a condo or townhouse.
While I'm not quite so fiscally responsible that I have created a strict budget to which I adhere, I'm focused on paying attention. In my case, it means using more coupons at the grocery store, but doesn't mean buying things I don't want/like/need because it's a good deal. I actually know someone who buys canned vegetables when they're on sale. Whether it's a vegetable she likes, or not! While it makes sense to me to stock up on things I like when they're on sale, it makes no sense to buy food I don't like.
Bringing breakfast and lunch to work every day does a lot for me; I save money and am able to have better nutrition. I also have a much better idea of where my money goes and how much of it is going where. I'm not opposed to going out for lunch or dinner, just opposed to doing so multiple times per week and at random. I'm sure that some week in the future I'll end up with too many lunches or dinners out, and that's okay too, as long as I don't fall into the habit of going out a lot each week.
I don't really need anything right now, except contact lenses; as I mentioned before, I can wait a few weeks for that. Next payday I order them.
Showing posts with label fiscal responsibility. Show all posts
Showing posts with label fiscal responsibility. Show all posts
Tuesday, February 24, 2009
Monday, February 23, 2009
Credit Card Debt
I talk to more and more people whose credit card companies are jacking their interest way up. One of my colleagues just told me that her interest is being raised on a card she has never paid late. Her credit card company is likely responding to her credit rating, which isn't that great; yet, supposedly that was supposed to no longer happen. She got the letter that says if you stop using your card they won't raise the rate. I told her not to depend on calling but to send them a letter and keep a copy.
I hardly ever use my credit card, and haven't done so for a month now. I seriously considered using it, stupidly, to make a payment that would've made my cash flow a bit tight until the next payday. I ended up not doing it, because that's how you get into trouble.
The key is to change your mindset and not fall into the trap of "needing" things. My colleague says that she has started using her debit card for everything and either she has money or she doesn't. Good philosopy. I still write checks for certain things, as I do business with some entities that don't take plastic. Which is fine. I have a box of checks that needs to get used up and that's going to take a long time.
I hardly ever use my credit card, and haven't done so for a month now. I seriously considered using it, stupidly, to make a payment that would've made my cash flow a bit tight until the next payday. I ended up not doing it, because that's how you get into trouble.
The key is to change your mindset and not fall into the trap of "needing" things. My colleague says that she has started using her debit card for everything and either she has money or she doesn't. Good philosopy. I still write checks for certain things, as I do business with some entities that don't take plastic. Which is fine. I have a box of checks that needs to get used up and that's going to take a long time.
Monday, January 12, 2009
Becoming Fiscally Conservative
I've alluded to previously owning massive amounts of unsecured consumer debt and basically charging a car; really, it's like charging it when you have payments. Except that the interest doesn't keep going up.
Lately I meet people who are very open with their financial traumas, and they're people we can learn from, if we already haven't learned those lessons. They're all over the economic spectrum. One woman is very open about her bad credit and must not really understand the mortgage industry. She has a home equity loan but says the bank should never have given it to her; clearly there's no understanding that she got the loan because it's secured by the house. It's unlikely the house has retained its value in the past couple of years, but she has a good, solid job so she should be able to continue to make payments.
Nevertheless, she gets in trouble with other bills, like cellphones. For some reason, she pays for three of them, one for an adult child, one for a minor child. Her payments are over $200/mo for the phones. She must have a lot more time and/or services than I do. Because of late payments, changes in her carriers policy and changes in her contract, she was forced to pay a bunch of money up front to get the accounts re-opened. They used to let her carry a late balance, as did her tv source, which is another item she pays late, which results in many added fees. One of the tricks for saving money is to keep better track of dates bills need to be paid and not incur a late fee.
Another thing a couple of people have gotten int trouble with is online gaming. I don't know what the gaming sources are, but it really doesn't matter. One person has a recurring Paypal payment; I haven't had any trouble with Paypal, but I've heard some horror stories, such as hundreds of dollars in bank charges because if you have it linked directly to your bank account, Paypal goes in every day to try to get payment, if you don't have funds the first time. In some cases, they make multiple tries a day. $35 a crack adds up pretty quickly.
In another situation, someone puts money into the gaming account at a pay-each-play webpage. She put in $10 or $20 at a time and only upon receipt of her bank statement did she realize that she had spent $400 on gaming in one month. Easy to do because all you do is click. She went back in to close out her account and because she hadn't been playing, the company had given her $50 in free credits, which she is playing and then will cash out. Hopefully she has the strength of will to close the account. She's pretty solid economically, but if she keeps up the $400 monthly allotment of games, that's going to change quickly. I download free games and have found enough games to keep me entertained for the amount of time I spend doing that sort of thing.
If it's financially questionable, have someone talk you off the ledge. The economy is too shaky to take a lot of chances.
Lately I meet people who are very open with their financial traumas, and they're people we can learn from, if we already haven't learned those lessons. They're all over the economic spectrum. One woman is very open about her bad credit and must not really understand the mortgage industry. She has a home equity loan but says the bank should never have given it to her; clearly there's no understanding that she got the loan because it's secured by the house. It's unlikely the house has retained its value in the past couple of years, but she has a good, solid job so she should be able to continue to make payments.
Nevertheless, she gets in trouble with other bills, like cellphones. For some reason, she pays for three of them, one for an adult child, one for a minor child. Her payments are over $200/mo for the phones. She must have a lot more time and/or services than I do. Because of late payments, changes in her carriers policy and changes in her contract, she was forced to pay a bunch of money up front to get the accounts re-opened. They used to let her carry a late balance, as did her tv source, which is another item she pays late, which results in many added fees. One of the tricks for saving money is to keep better track of dates bills need to be paid and not incur a late fee.
Another thing a couple of people have gotten int trouble with is online gaming. I don't know what the gaming sources are, but it really doesn't matter. One person has a recurring Paypal payment; I haven't had any trouble with Paypal, but I've heard some horror stories, such as hundreds of dollars in bank charges because if you have it linked directly to your bank account, Paypal goes in every day to try to get payment, if you don't have funds the first time. In some cases, they make multiple tries a day. $35 a crack adds up pretty quickly.
In another situation, someone puts money into the gaming account at a pay-each-play webpage. She put in $10 or $20 at a time and only upon receipt of her bank statement did she realize that she had spent $400 on gaming in one month. Easy to do because all you do is click. She went back in to close out her account and because she hadn't been playing, the company had given her $50 in free credits, which she is playing and then will cash out. Hopefully she has the strength of will to close the account. She's pretty solid economically, but if she keeps up the $400 monthly allotment of games, that's going to change quickly. I download free games and have found enough games to keep me entertained for the amount of time I spend doing that sort of thing.
If it's financially questionable, have someone talk you off the ledge. The economy is too shaky to take a lot of chances.
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