Aug 7 2006, 04:47 AM
College students and credit cards? Everyone I know got into debt with credit cards they got because they were in college. It would be a rare student who would have the finances to pay down a credit card balance to zero every month and not avoid taking a beating with interest charges and late fees. I think Suzie Ormond is crazy giving that advice.
I'm not sure how student loans are set up in the US gumby cc, but ultimately you have to negotiate the loan through your bank. You can set up an automatic debit from your account for any amount you want--just set it up to come out weekly instead of monthly. I had to set one up to pay the "interest" amount on the loan, but I added another $20 to the monthly total, divided that by 4, and ended up paying the interest and the principlel down. It's brought down the principle quite a bit. I think you can do this for any long term debt, like mortgages, too. Over time the whole loan costs you much less.
Does Tamara Draut finally give you some ideas about how to stop being "strapped"?
Aug 7 2006, 12:02 PM
Suze Ormond's advice came with the caveat of paying it off every month. If you are disciplined enough to know your spending limits, and use a credit card with rewards, it makes perfectly good sense to use the card for day to day, pay it off at the end of the month, and reap the rewards w/out paying interest. This obviously doesn't apply to everyone (myself included - no sense of the $$ I spend if I use plastic).
As for the student loans, when I consolidated mine 3 years ago, I had them through Bank One, 5/3, and Sallie Mae I think. Yeah, i just picked up the closest form in the financial aid office every year. They were all federal stafford loans, but the private banks did the administration of them. I did not get my interest subsidized, and had the option to pay a little as I was in school or let it accumulate and pay after. All you have to do is talk with your bank. There are many, many different companies that will consolidate the loans fairly painlessly, though now you will have to do it at a higher rate. I was fortunate enough to get mine locked up at less than 3%, so even if I did have a lump sum of cash to pay them off, no way I would. Not with the interest being deductible on taxes and my ING savings account paying 4.5% these days.
Aug 9 2006, 08:58 AM
Ah, yes, but what teenager is "disciplined enough to know their spending limits" in college, where the need for money is huge? I think college students are purposely targetted by credit card companies because they know this target market won't be paying down monthly balances to zero.
The interest write off plus the high interest on your savings account are a very lucky break--I hope more people are able to set something like that up for themselves after graduating. It's not everyday you see a tiny interest rate on a loan offset by a higher interest rate on a savings account; it's a terrific point to be aware of.
Student loans where I'm from start at prime (right now at about 6%) and go higher. Their interest rates are far from "reasonable" so it does pay to knock down the balance as much as you can as quickly as you can.
Aug 9 2006, 09:31 AM
A private student loan is different from a federal unsubsidized administered through a private bank--the latter is still a federal loan. I borrowed about $16,000 for undergrad and, um, I can't even talk about how much graduate school cost me. My undergrad and much of my grad loans were federal, but I had two small private loans -- one from Citibank and one from my graduate school. I was not able to consolidate the three together when I finished school, but my federal loans I did consolidate through the US Dept. of Ed, and got a 3.25 percent interest rate, locked in. My Citibank loan varies according to the prime rate, although if you pay on time for four years (I will reach four years in December) you get an automatic 1/2 percent reduction. My loan from my graduate school is reevaluated based on the market every two years. The first two years, I paid 3 percent interest. The last year, it's been 5.5. I will pay it off before the next evaluation, as it was designed to be paid off in six years.
I am only in decent shape debt-wise because I received an insurance settlement about a year ago that was almost exactly what my husband and I owed in credit card debt -- the bulk of which I accrued in college/grad school, the three months I was unemployed after finishing my education, and then when I bought my condo and put every liquid cent I had into the purchase. I feel like it is only sheer luck that's allowed me to do this. Paying off my credit cards has allowed me to pay double on my variable-rate student loan, so I will pay that off in about two years. Sometimes, I think about doing a balance transfer on the variable rate one to my credit card, because I'd have only 3 percent interest instead of slighty more than prime, but I think that I'd rather have high-interest "good" debt than low-interest "bad" debt.
I could have paid interest on my variable-rate private loan while in college (most of my loans are unsubsidized and accrued interest), and did so when I could afford it, but that was rare. I won't pay off my big federal consolidated loan for another 21 years (sweet Jesus), but at least being smart now will allow me to get rid of my smaller ones quickly. I do wish I'd understood these things a little better when i was in school, because I currently put $400/month toward my loans, and I'd really rather use that money for something else.
Aug 9 2006, 06:47 PM
I recently paid off a credit card, patted myself on the back, and cancelled it. Big mistake. My credit score went down. Apparently the longer you hold a card, even if you have a zero balance, actually adds to your credit. So, don't cancel those cards!
Aug 14 2006, 06:36 AM
Ok, I finished the book Strapped. It is NOT a summer read. If anything, it has motivated me enough to get a second job. The "what you can do" section in the back was pretty damn small, her argument is you can't really do anything except help push for major policy shifts in the gov't, that younger people have to be more involved in things like voting and advocating for yourself (politically) because thanks to our hyped up version of capitalism on steroids, along with the whole laissez faire attitude of the gov't, there is really nothing we can do to even stay afloat, let alone get ahead (unless you have affluent parents). God, it's so depressing.
Aug 14 2006, 07:04 AM
Yeah, I completely agree with a lot of the political encouragement of that book, but I'm not quite willing to bow down to that idea that there's no way to "get ahead". There are plenty of ways, dammit, and we are dealing with capitalism on steroids and it's very ugly (so that means things are harder for people living at present than they were, say, 50 or 60 years ago). But if you feel defeated and not somehow empowered with this information then the book's ideas will just defeat you.
We're all stuck on the idea of accumulating money in order to have what we need and want. It shouldn't be so. There are other alternatives: barter, focusing on trade in a local area in order to create economic strength, devising means of obtaining necessary services in ways which won't bring about personal financial decline. All these ways demand an interdependence on other people...something we're all told is just so bad and "communist", I guess. But it just has never been done any other way, and when you're faced with capitalism on steroids, as you put it, there is no better way than this to defeat it.
We really have to learn how to make things again, and how to help others do this as well, instead of how to buy things. That alone would get us out of debt more quickly and keep us out of debt; and without debt it's far, far easier to invest in things like savings, or other means of making wealth (like buying property, or starting your own business).
Aug 14 2006, 11:01 AM
okay, i could use some credit advice from you ladies. i don't have a credit score. i mean, i've been paying cellphone and utility bills for a few years now, but other than that i don't have anything. i've never had a credit card and i've never had loans, and no one wants to give me a card except for capital one, who keeps sending me stuff in the mail. should i be wary of the capital one insistent sending me a card every week deal, while my own bank won't even give me a card because they don't have enough info to base my score on? i don't want it to overspend with--i'm very careful with money--but i want to build up a freaking credit score so if i want to buy a house or a car that costs more than $700 someday, i can.
Aug 14 2006, 11:07 AM
the book talked more about the bigger picture...she didn't get into smaller ways of saving money, and you are right chacha, bartering works if you can do it but that kind of stuff wasn't even mentioned.
she was talking about the whole debt for degree program (how most kids leave college with thousands of dollars in debt), how the cost of living has risen so high that nobody on even a decent salary can afford a down payment on a (modest) house, how there is no regulation of the childcare industry and that a decent program is completely out of reach for most....and that saving for things like kid's college or retirement is a pipe dream when you still have 5k in credit card debt from when you were first starting out after college.....
I do like the idea of living simply but you need the time to make things or barter things or whatever. i guess i'm just super cynical.
Aug 14 2006, 11:31 AM
mouse....if i were you, i would get the capital one credit card and then buy stuff on it that you can PAY OFF EVERY MONTH. more expensive things like mattresses and furniture are good, because big purchases (and time) on a card increase your credit score. but they say that no score is better than a bad score, so i honestly really wouldn't get one if you were unsure about making the full payment every single month.
i applied for my first credit card and was denied for the same reason, mouse....so i got the crappier one wiht the higher interest rate. pretty soon i was getting tons of offers....so then there is more to choose from. i got a platinum card after 1 or 2 years of the crappier card.
Aug 15 2006, 10:28 AM
Or you can increase your credit rating without taking out credit cards at all.
I don't know where you live, but in Canada I know you can borrow money to purchase things like an RSP deposit or Savings Bonds. The idea is you can borrow any specific amount (you could figure out the highest contribution you could make to save yourself what you have to pay in taxes for that year, and then modify that by what you can afford, use the tax-write off to benefit from the contribution and quite possibly pay back the loan with what you are given as a tax return) and you can make arrangements to pay the amount back within a 12 month period. The loan's fully secured (by the RSP contribution) so you don't need someone else to co-sign with you, and the risk (to the lender) is minimal, so these loans are easy to set up within your means and easy to manage.
Still and all, in the end it's a bona fide loan that you've borrowed and repaid--and that gives you a favourable example of reliability and responsibility on your credit bureau rating. Plus you have money saved for the future.
Same goes with purchasing savings bonds--you can purchase an amount over the course of a year with a loan; you may be able to write off the interest you pay on your taxes, have a saved amount at the end of it all, and still have another favourable loan example on your credit rating.
I think you have a 401K in the US which is very similar to the RSP here in Canada, so you might be able to work out a similar loan arrangment with your bank (or whomever sells 401K where you are)...and there may be an equivalent to the Savings Bond loan in the US too. If you're in Canada, just go to your bank and see what they can do for you--and you can do the equivalent in the US.
These are nowhere near as exciting as getting a credit card, but they're a lot easier to get and way easier to manage and use to your advantage. Once you have a couple of solid examples of having had loans you've successfully repaid, it will be much, much easier to get any credit card and demand the lowest rate possible.
I'm not sure if this applies in the US as it does here, but, making repeated applications for credit that is often refused also reflects negatively in your credit bureau. So don't fall for all those junk mails offering low interest on specific mastercards and such if you feel like you'll be turned down. It's better to start off with a great credit rating by getting the easier to manage small loans like the ones above.
Aug 15 2006, 10:52 AM
thanks chacha, i'm in the us and i don't think i have remotely enough money to go anywhere near a 401(k)...and in general, to get a loan here, you have to have credit.....which i don't. the only option really is to get a secured card or loan, which is the stupidest thing i've ever heard of. basically you end up paying like $300 to get a credit score. you give them $1000 or whatever, of your own money, and then they give it back to you in increments, with interest. makes no sense to me.
the credit cards i've applied for have been at banks, not the stuff you get in the mail, and what i have been getting in the mail is one of those "pre-approved" ones. i think i may take gumby's advice and just get that. i'd be super careful with it, i'm not one to overspend, but i was just wondering if any of you had had problems with cards like that having hidden fees or whatnot.
Aug 15 2006, 12:35 PM
Well, I might be completely wrong about this, but I meant that if the 401K were like the RSP (and I think it is), you can borrow an amount of money to make a 401K deposit. That is fully secured by the bank (hell, ultimately they have your deposit, right? If you let the loan go bad they have the entire amount there, so they lose nothing by giving you that loan. In return, you pay a little bit of interest (which you could also write off against your taxes), you save on what you'd have to pay out that year, tax-wise, you have some saved money at the end of the process plus a credit rating reflecting your fully repaid loan.
These are one of the few loans you can get here without credit, simply because the bank is absolutely guaranteed of getting the money back. And if you default, they get the principle they leant you, plus whatever you paid them, back--so they lose nothing! That's why the loan is easy to get. It doesn't seem like banks would offer this to customers only here in Canada when they have an almost identical product to offer to customers in the US--it might be worthwhile to ask about it with your bank. After all, it would be a great way for them to keep a customer, who will likely bring them all kinds of business in the future. If they don't offer this product and service, then they don't, but if they do, you have a great option for building your credit rating and your savings.
I hate the idea of putting your own money up, interest free, as security to get credit for the same amount--credit on which you must pay interest. If you do choose this option, make sure you can limit the amount of time they hold on to your money to no more than six months; ask if they pay a "going rate" of interest on that secured amount (hell, you know they're making a massive amount of interest on your security deposit, by using that as money to lend to others--which generates interest at whatever they're charging rates!). That's a huge "hidden" fee--you give them your cash, they use it to make money off others, then loan you money at exorbitant rates to boot. While your money earns....nothing.
How about getting a credit card at a store? Those should count on your credit rating, too--and you can probably get one of those much more easily. They charge a fortune in interest, but they are only good in one place and it may be easier for you to control the spending to an amount you can repay completely when the bill comes in. The crazy interest rate is reason enough for you not to use them often...and your credit rating improves if you've got one and keep it in good order.
Aug 15 2006, 12:59 PM
yeah, everyone says get a store card, but i never shop at those types of stores and i hate the idea of spending money on something i wouldn't normally buy. i mean, that's what i want to avoid with not getting a card.
i'll look more into those loans, but i know my bank doesn't offer anything since i've talked with them in depth about this. it's ridiculous though--they recently sent me some mail offer about how i'm pre-approved for a home equity loan. i don't even own a home. i don't get how they can approve me for a home equity loan, yet not a credit card. ugh.
Aug 16 2006, 06:33 AM
Well, you can be pre-approved for a home equity loan if you own a home. That's another pretty safe bet for a bank--loan out an amount based on the difference between what you've paid on a mortgage and the increase in value of the home you've taken your mortgage on. It's secured by the house and by its increased value--so they know they'll have no problem getting their money back.
It'd sure be weird, though, if you're renting and they sent you a personal letter telling you you'd be approved if you applied. Otherwise, it's just junk mail they'd send out to anyone, hoping a homeowner would hit them up and become a new customer.
As for the store credit cards, I never thought I'd need one but I picked one up for my small business expenses in hopes of creating a healthy rating. I have a card for Best Buy, for example; I pick up the occasional computer thing I need (like ink for my printer, blank CDs and DVDs, or a flashdrive). They're tiny items I could pay cash for, but instead I use the card, pay off the amount to zero easily every month, and use that as a means to build my overall credit rating. I don't even use it very often as I don't need to replenish these items frequently--but having a credit card that doesn't carry a balance and is still viable and always paid down to zero on time is the strategy for developing that credit rating, isn't it? And I was surprised at how willing the store was to give it to me, and how high the limit is. I'll never spend that much there because I'm not interested in buying PSPs or a brand new computer every six months. There's little in the store I'd ever want except what they can do for my credit rating.
Now if the credit card were for a store which carried the many luxurious and frivolous things I really want, I'd be doomed.
Aug 17 2006, 10:47 AM
hmmm, best buy's is a good idea. i wonder if fry's has a credit card....?
Aug 17 2006, 05:51 PM
I only pop my head in here occasionally, but I saw 'Strapped' mentioned a few posts back. I haven't read it, but it doesn't sound as helpful as a book I read quite a while ago (and should reread again for inspiration). If you want to be inspired to be financially independent, try:Stop Working...Start Living: How I Retired at the Age of 36 Without Winning the Lottery
a Canadian book, but a lot of it applies whereever you live.
Unfortunately if you're in the US, you start off on different footing because your college/university is so much more expensive, but it can still be done.
Aug 18 2006, 04:58 PM
sounds like a good suggestion...
I read a review of that book and found that she has a website where she publishes a lot of her articles on line, for free, if you're interested:
Aug 18 2006, 05:15 PM
Ijust want to double check - is this true?
"having a credit card that doesn't carry a balance and is still viable and always paid down to zero on time is the strategy for developing that credit rating, isn't it?" - Chachaheels
Just, I thought that and have done that for years and years, but it's my friends who never pay the full amount that get offered bigger and bigger limits and more cards. I am still on my original $500 limit, yet my friends who aren't so careful are all on more like 3-5 thousand. Also they get offered pre-approved loans and I don't. Someone who is a 60+ beneficiary with no savings has a credit limit of over 10 times more than mine!
Popular wisdom seems to be that if you get in debt and then pay it eventually (or not at all) you will be more attractive to credit agencies than someone like me who pays her card off within a day. Which is he opposite of what I would have thought but I can't ignore the facts.
So which is it?
Aug 19 2006, 08:22 PM
I'm not sure what is going on (maybe in the US it is different?), but I started off with a $500 limit, paid it all the time (aside from once or twice when I was out of town). That was almost fifteen years ago, and my credit limit has gone up about 20 fold--I have to ask them to put the credit limit down (because the credit limit on your cards is considered your debt load--even if you carry no balance--when you apply for a mortgage).
Maybe the problem is that it works differently in Canada and the US and we are confusing ourselves? Or is something else going on? I'm curious as well.
Aug 20 2006, 09:59 AM
In the UK, it works the same as NZ, I think - at least, I was in the same position as Venetia. I wanted to have credit cards available that I would be able to use when I moved to the US three weeks ago, and I tried to get my 500GBP limit increased and they wouldn't give me more than 600; but I was able to apply for and get another card with a 1000GBP limit.
Now I'm in the US and a credit blank slate, of course (I had to pay a $75 deposit to get a cellphone contract), which is why I'm glad of my UK cards - in credit and UK bank overdraft facilites, I have 3500GBP in unused credit available to me in case of emergencies. I don't think I'd be able to get a US credit card unless I took the weird prepaid option, which I would prefer not to do - I think I can live without one easily enough.
Aug 20 2006, 10:22 AM
Well, that used to be the way, but credit card companies are evil bastards, and they don't want the customers who pay off all their debt every month. (They actually call them "deadbeats".)
The thing is a good credit rating and lots of credit card credit aren't the same thing. What makes you have a good rating (and thus the ability to get a decent rate mortage, car loan, whatever) doesn't necessarily make you attractive to credit card companies, who are now courting the customers who aren't so responsible (or are just in over their heads trying to make ends meet, which I think is more common) b/c they make more money off these people.
I am a pay off my card every month person and the last new cards I got were when I moved to the UK, and it did still happen that they kept increasing my limit, but in the US I don't know that I'd expect that to happen anymore. A few years ago I had one issuer cancel a card on me b/c I rarely used it, which I know isn't uncommon.
It does vary b/w the different card issuers, and the really huge companies (Citibank, MBNA, etc) would probably be the most likely to penalize you for being responsible and paying off your debt.
As for them being evil bastards, how this bit of information (which I just learned):
Most companies have a "universal default" clause buried in that huge, unintelligible pamphlet that they send out with the terms and conditions. It means that if you miss a payment on ANYTHING, not just with their card, or their company, they can raise your interest rates. I heard of one case where they used the excuse that they'd found that a guy had missed one payment somewhere else SIX YEARS PREVIOUSLY and raised his rate. So you can have what you think it a pretty decent (though still high) rate of 9.9% and you are late with your car payment once and suddenly your credit card payment is raised to 29.9%. Perfectly legal.
Also, a credit card is the only time when the cost of a purchase can be raised AFTER you buy the item. Really put me off even more, to think of it that way.
Aug 20 2006, 12:01 PM
This past year I found out that carrying a credit card balance of zero, using the card only on occasion, and paying it off on time does give you quite a bit of clout in terms of your actual rating. The amount of money that is loaned to you through the card is variable and it doesn't actually reflect your rating (for example, one card I applied for and got gave me a credit limit of over $3000, and trust me, my income, other debts, and lack of savings do not warrant such a large amount (unless, of course, they hope I'll lose my mind and run the card up to the limit so they can profit immensely. Which is what they're doing, naturally).
A good credit rating, however, allows you to demand a lower rate of interest on things like mortgages and consumer lines of credit--rates that are lower than what is posted, or lower than a competing bank is offering you. It gives you a certain amount of power in terms of the conditions on which you'll repay any money given to you for large purposes, or for investments. It even gives you a lot of power with major credit card companies in that you can negotiate a far lower interest rate on any balances you are carrying.
Also: the number of credit cards you have may actually hurt you, as tatiana said previously: if you've got a number of credit cards and you're not even carrying a balance on them at all, when you apply for a large loan like a mortgage the entire amount of your credit limit for each card is actually factored in when they work out your debt to income ratio to see if you'll be able to carry your debt burden on an ongoing basis. Even if you've got a total credit card credit limit of, say, $90,000 dollars, but you only owe $50.00 and you'll certainly pay that off on the one card you've actually used, your bank will "pretend" you owe the entire $90,000.00 to your various creditors--because they feel you could go out and rack up your cards to their full limit at any time. I'm very sure this rule applies in the US as well as Canada.
So it's best to use the retail credit cards to establish a credit limit, but get rid of them when you qualify for a bank-based credit card with a far lower interest rate as soon as you can. And watch out for the fine print--one late payment does cost thousands...but if you find your MC or Visa is doing that to you, call another Visa or MC bank card office and let them know you're interested in transferring your balance from one bank to another and see what interest rate they quote you, or ask them if they have such a promotion going on. Then go back to your creditor and tell them you will switch if your rate is not lowered and kept low. If you aren't satisfied with their response and they won't give you a rate that's fair, switch to the other creditor.
I don't give a damn if the credit card companies are calling me a deadbeat: I want to have credit to use as a means of benefitting me, a means by which I can keep more of my money and increase my own profit--not the lender's.
Aug 21 2006, 04:08 PM
I have but a couple small tidbits to add regarding the credit cards & 401k loans mentioned earlier.
Unfortunately, in the US, interest paid on a 401k loan is not tax deductible. Just about the only interest that is tax deductible in the US anymore is that from a mortgage or home equity loan.
As for credit cards, it is true that how much available credit factors into your score and whether or not you get a mortgage. However, also important is the percentage of available credit you have used. For example, if I have a total available of $10,000 on my credit cards and have used $5000 of that credit, that looks better than if I only have $5000 in total credit with $4000 of that being used - even though the amount in debt is higher in the first case, the % of credit used is much lower and thus I look like a more responsible user of credit.
Best way to win with credit cards is have one tucked away from emergency (though emergency savings fund is MUCH better to have, though keep the card in case the cash can't be had at a moment's notice) and use one that has useful rewards for everyday purchases (food, gas, etc) IF AND ONLY IF you can pay it off every month. Basically then you can earn interest on your money until the statement comes due plus you get, in effect, interest from the credit cards in the form of rewards.
Also, if you find yourself strapped down by credit cards (or if you just like fucking with them), call them and tell them one of two things:
1. You are having difficulties making all your payments, and with their interest rate being as high as it is, if they can't significantly lower it then you'll be forced to file bankruptcy
2. Inform them that of all your cards, their rate is the highest and unless they will lower it, you'll be closing your account with them and transferring the balance.
They'll usually only do it once or maybe twice a year, but I did that in April and got my rates lowered anywhere from 3-10 % points.
Aug 21 2006, 08:20 PM
That reminds me, I should check to see what my credit rating actually is...
I love having emergency funds!! It's kind of like having insurance except it earns you interest and you don't have to fill in forms. I like to make monthly payments to myself for various pretend insurance schemes of mine such as Cat Medical.
Aug 22 2006, 12:28 PM
I don't think we can write off the interest for an RSP loan in Canada, either (and I know we can't write off the interest on a mortgage or home equity loan either up here). The actual RSP deposit amount, for which you took out the loan, comes off the total taxable income for that year, if you make a contribution (so you will be taxed for that amount at a later date, when you're earning less $, presumably during your retirement but far more often for many Canadians, during a spate of unemployment). So that savings alone more than makes up for what you'd have been able to write off. In fact, many Canadians use their increased tax return (thanks to the RSP deposit for which they've arranged to take out the loan to make) to pay down their RSP loan debt.
So it pays off--and it's a really easy loan to get to beef up your credit rating. In the end you have money put away and a credit rating; that's better than what a credit card will bring.
And I think your ideas about how to force credit card companies to lower their rates are top notch.
Nov 13 2006, 07:15 AM
I haven't been motivated by anything except fear to find a second job, and even that hasn't been enough for me to look hard....my boyfriend and I both work part time and then make art on the side, with the hope that eventually we can show.....but today we did the math and found out that our COMBINED salaries makes only $3k OVER the living wage for our city. I'm totally freaking out now, no more pissing away my time....I've got to find a second job! Argh!
Nov 13 2006, 09:09 AM
hey gumby-do you babysit? cause that has been a total lifesaver for me-it's flexible, you can do as much or as little as you want, you set your schedule, etc. i was working 3 days a week and i had to find something else to do, but i i didn't want another "job." i just saw my little dude yesterday, and he said "i love being with you." it was soooo cute!!!!!
Nov 14 2006, 09:58 AM
yeah, i do babysit, but unfortunately i dont have a regular gig, and it seems like this year everyone asks me for the same night, which happen to be times when i cant do it...i had one on friday but they canceled at the last minute....i totally love it for the extra money but i need a more regular paycheck. gotta love under the table, though.
Nov 14 2006, 12:21 PM
hmm, yeah getting a regular gig that you can count on is tough. i had one that was 2-3 days a week, and now i just see him every now and then, but i've been sitting him for over 3 years now....
do you have daytime hours available?
do you have a sense of how much money more you need each month to be ok? that can help, figure out how much you need, and then you can break it down into how many hours/week you'd need to add to your schedule.
oh yeah, i loooove getting cash-ola!
Nov 15 2006, 04:47 PM
I'm feeling so overwhelmed right now and I just need to vent. I'm shaking non-stop and I hate myself.
I have this capital one credit card that's fucked up my entire life. The whole point of getting that was to consolodate my bills and make everything manageable. I missed one payment, and so the next month's payment had a late fee, PLUS they bumped my minimum payment up to $100. I still didn't have a job, and my financial aid didn't come in until last WEEK, so I could'nt pay that one either. Another fee, another 100 added to the minimum. Still no job, still no aid. No way to pay for it. Then I had a job, but there was no way I could pay the bill and rent. It ended up being a $500 bill this last time, and my freaking aid finally came in, so it was enough to cover both my credit card bills, and I'm saving the rest of the aid so that I will have funds available in the next few months when my exhorbitant bill comes in. I would just pay a massive part down, but then I would'nt have the money to pay the $100 minimum next month. And I just lost my job 3 weeks ago, so there goes that income.
So. I have this other
credit card bill that my mom is paying while I'm in grad school, and the interest on that is really high, so she wanted me to call the credit card people to ask them to lower it. The other alternative she gave me was to open a new account with a much lower APR and transfer all my bill there.
I called to ask them to lower the interest, and they said that my overdue bill is still showing up unpaid, which is bullshit because I just spent $900 getting all that straightened out. So now my other option is to open that other account, but since that shit is showing up on my credit report I doubt it would get approved. And my mom doesn't know about this other massive bill (she would kick my freaking ass). So now I don't know what to do. She called me twice to see what I've done about the card, and I just don't answer the phone, which I realize is childish, but I really can't deal because there's this whole other history behind this. I just want to vomit and/or cry. A lot.
I know that once next semester's financial aid comes in it'll be enough to cover all the debt that she doesn't know about, but that's next freaking year. I feel like such a fucking loser.
Nov 15 2006, 05:02 PM
ok: if telling your mum is not an option then you have to speak to both credit card companies. first, speak to the one you are struggling to pay. ensure that payment you have made has cleared and explain your predicament. sometimes with loans you can take payment breaks and credit cards may be same. do you have credit card protection (an additional fee each month? usually a percentage of the balance and it usually covers unemployment). SPEAK to them though, you need to see if you can have charges lifted. THEN speak to the other credit card company. in your circumstances they will realise something has to be done, you can't afford to make payments and they won't want you to default cos then they lose the balance (and this would be bad for your credit) so they'll work something out like a payment plan but you may have to beg (but if it gets you out of trouble).
also, it may be different across the pond but here the interest rate on a loan is so much lower than a credit card; I consolidated my credit card debt into a loan and am now paying a manageable monthly payment. I realise this is something you can't do just now but maybe between you and your mum? with the proviso that once you have work/aid you pay her back/take over payments?
furthermore, speak to your college finance department. here there are such things as hardship loans which aren't loans at all but money given to you to survive.
try to relax, debt is one of the most stressful things but freaking out will make it worse. ignoring phonecalls from your mum (or the bank) is just going to make it worse in longrun - you need to tackle this head on now for your own wellbeing.
Feb 15 2007, 06:05 PM
I recently found it kind of shocking but not at all surprising that the United States' national savings rate has dipped below zero -- it's at negative 1%, the lowest since the Depression. It can't be this bad in other countries.
Feb 15 2007, 08:48 PM
ok, so I thought I was good at money, but I've really gone downhill since I spend a year living off loans and savings and pretty much buying whatever I want. I always spend but I also always kept up with my bills. Not anymore. I'm sad I can't go out as much and buy the things I want. I've even considered that I have a shopping addiction.
I've decided to cut up my credit card and wrote my cable company post-dated cheques so I could catch up on that bill. I should probably get rid of my cable but I feel really (irrationally) attached to it.
I'm also considering telling my mom about the reality of my situation. She knows I'm struggling and that I'm trying to get a second job, but she doesn't know I'm sturuggling as bad as I am. She also suggested dipping into my extending my line of credit (that I got to pay for school), but I've already done it as much as I can (it has to be secured by my savings, which is an inheritance that I feel sick about wasting and she wants me to be able to spend in a positive way).
oh, also, how should your income be divided percent wise (rents, savings, food, disposable) in an ideal world? Is there a formula for this kind of thing? I want to budget more, but I don't really know how to get started.
anyone dug themselves out of this kind of hole? What worked for you, what didn't? Pros and cons of telling all the dirty secrets of how bad it's gotten?
(oh that was long.)
Feb 16 2007, 08:46 AM
Oh I know, I know.
I wish I could say I was in debt because of school loans, although I will be before long. Mine is mostly because of visiting family, furniture, and general survival mixed with some silly spending during my time in nyc. I live in a city where having a car is essentially better, but I have sacrificed that luxury to pay off my bills instead. I take the bus and/or put on some good walking shoes, plus I'm doing my part for the earth. I have also sacrificed having a computer (that was left with the ex in nyc) at home. So I live very humbly these days. My tv/dvd player was a donation after living without one in my room for several months.
I still have some extravagances that need to be cut out.... buying lunch everyday at work, smoking too much, wine, treats/coffee's/pom tea/naked's, ya know. I figure it's the mainly the everyday spending that must be edited. In order to allot savings.
When my paycheck comes, I try to think in terms of priority.... rent, bills, cc bills, bc/meds, gym fee, groceries/household, you get the idea. Everything that's left is disposable or goes to savings, ideally.
I would suggest making like... a daily log or weekly log of your spending habits and go from there. Take your monthly income and divide it accordingly. These are just some basic suggestions i'm sure you're aware of, but if you're like me... it's nice to be "reminded".
Not to say that I lack idealistic spending by any means. I'm finding it difficult to save money. It's just cutting out the crap that you can live without. You may have to get crafty with thrift finds. Set up Naked Lady parties for clothing exchange so you feel like you're getting something "new".
Well... Good Luck to us, right?! All bout commitment.
Feb 18 2007, 09:23 PM
starpiste, I've found the Get Rich Slowly
blog useful for financial questions. You might want to browse its archives (eg, budgeting
Feb 19 2007, 06:18 PM
Thanks for the blog link. I only read a bit (as I'm at work) but I'll look more at home.
So over the weekend I did the following:
1. I paid my credit card for this month and gave it to my mom to put in our saftey deposit box that I don't have a key too.
2. I paid off my phone bill, and changed my billing around so I won't get the overage charges I was getting.
3. Cut off my cable. I did increase my DVD membership but that was $5.00 rather than the 40 cable was costing me.
4. Paid my line of credit on time so it's up to date (I keep not paying it until they make me 3 weeks later, but then I have two payments that I can't afford, rather than one I can barely afford).
When I get my job situation sorted out (applied for 4 more this weekend) I'll work on a budget. right now, since I can't afford anytihing budgeting is kind of silly. I'm also going to get my mom's name added onto my investments so I can't use them to extent my Line of credit anymore unless she thinks it's ok.
I totally know I have to track my spending. In my head I know a lot of my problem is buying small things that just add up to a lot before I realize it. When I was living overseas for school (and with seemingly without care for budget) I wrote everything down in a spread sheet. I should pull that out and start using it again.
Feb 19 2007, 09:23 PM
Excellent measures to take! I'm glad your mom's helping out.
Sounds like you're back on the right track. Good luck.
Feb 21 2007, 08:02 AM
Starpiste, is there any way you could use the fact that you're backing your line of credit with collateral (investments) to force down the interest rate? I don't know if this applies where you are, but lines of credit are often unsecured here in Canada, which means you'll pay a higher interest rate. You can negotiate a lower one if you offer to secure the line of credit--often significantly. Maybe this is something you can use to bring the overall (and monthly) cost of the line of credit down some so you're not always just barely making the payments, but you have more left over for you.
Same kind of thing goes for the credit card--you can force your credit card company to drop their rates, especially if you have an offer of a card from one of their competitors. I just used a new credit card to transfer a balance on an account with a really high rate of interest, one on which the previous card company would not budge. Soon as I made that transfer, however, they original card company got on the phone to try and out-bid their competitor. In my case, that meant they were suddenly willing to drop their interest rate down almost 16%! So you know all of this is just arbitrary. It's worth a try--and if you can get a competitor card company to make you an offer so you can transfer your business, you can really save a fortune on interest.
Good luck on all of this--it does sound like you've got a great plan in place and you can feel like things are looking up. Debt can be overwhelming, but its just a symbol of money, after all--the danger is to become so obsessed about it that it limits your life completely. Better to make a plan and work towards eliminating it in a way that liberates you from the worry.
Feb 25 2007, 06:51 AM
theres a sorta interesting interview of suze orman in the NY Times magazine this week.
Mar 2 2007, 10:11 AM
hi there, i'm new to this thread because my finances is a topic i usually don't like talking about or dealing with in general, which counts toward the (sorta) mess i've gotten myself into, namely credit card debt. i'm able to pay the minimum on my bills, so no defaults or collection agencies or anything, it's just a huge sum that will take forevuh to pay off, and i'd like to start thinking about a mortgage soon.
anyone ever take a personal loan to pay off cc's? bunnyb, i scrolled down to see that's what you did. how's it working out? or use one of those debt consolidation agencies? i also hear that you can roll the debt into your mortgage payment somehow at a lower rate?
Mar 2 2007, 01:06 PM
whatever you do, cancel and cut up the cards if you pay them off with a loan nick! that is the best advice I can give. the loan payments are manageable (here in the UK the interest is considerably lower than cc interest so it made more sense) but I ran up a little bit more debt and now I'm struggling to pay those overheads along with the loan - so much so that the boy is tiding me over each month but this is a catch 22 as when I pay him back every payday I'm poor again and I can't save or pay off more of my debt. I've gone overdrawn by a couple of pounds (honestly, that's all) for a few months in succession (the day before being paid usually) and the bank are crippling me in charges; I tried to take a payment holiday (something that's a feature of loans here) to get myself back on my feet but the bank refused because I'd been overdrawn so that's another catch 22. Now, I'm just trying to stay afloat but it's depressing - I want to save to go on holiday as need a break but once my bills are paid I have so little to play with.
Apologies for the rant; moral of the story: if you consolidate your debt then be responsible with it and don't extend your line of credit again.
Mar 2 2007, 02:35 PM
thanks bunnyb, that's certainly my intention. well, i'll keep one, and now i'm honestly better about using it sparingly. i used them like crazy a few years ago when i had a crappy paying job but i refused to give up a few luxuries. if i only had a time machine!
Mar 2 2007, 02:52 PM
hey there-i've been stressing about money lately too.
i ran up 4K in cc bills in college, got my mom to cosign a loan at a better interest rate, paid it off. then, went to grad school, ran up 7K. I paid it all of myself-it was very stressful but it feels sooo amazing not to have cc debt. (i have 55K in student loan debt, bleh).
anyways, getting a personal loan definitley is good, but the biggest thing is really to spend less. paying the minimum on each card will almost guarantee that you'll never pay it off. I was able to get a 12 month 0% balance transfer from mbna, and i was able to work really hard that year to get it paid down.
I would definitely get a consolidation loan-but go to your credit union if you have one-i don't know about those consumer counseling services...
the other thing you can do is try to transfer it all to one card, so that at least it's just one check a month. you can also call and request your interest rate to be lowered....
if you can't consolidate, start tackling the smallest debt first. if you have one card with just 1K on it, start working on that. paying one thing off feels so good that it'll inspire you to keep going.
if i had a time machine, i'd go back and shake myself when i signed those loan notices-but i was 21 and stupid.....so now i'm stuck with 55K in loans! gahhhhh. i decided to tackle my smallest-which is 6300 so it's not really small considering i take home like 24K per year. But, I've gotta start tackling it, cause it's just so depressing to see-last year I paid $1000 in interest alone on a 13,000 loan-crazy!!!!!
May 1 2007, 02:18 AM
bump for hazy
May 3 2007, 12:07 PM
May 14 2007, 06:21 PM
This is a longshot, but does anyone have any experience with Primerica?
The boyfriend and I recently met one of their financial advisors because we want to plan out our retirement. The company seemed to offer some pretty good options, but I figured I'd do my Internet research before going any further.
All I can find on this company are mostly negative comments posted by people that took the financial advisor course and failed.
I would love to discuss with people that have actual experience with long-term investments with Primerica (or any other company for that matter).
substandard english usage
May 14 2007, 07:17 PM
I think they're bad for you, per se, but I think they are sort of pyramid scheme-y. Think financial Amway. Here are three reasons I don't recommend them:
1. They are a Citigroup company. If Citigroup were proud to have them, you would have heard a lot more about them.
2. When I was job hunting, for completely non-financial related service companies, I was getting calls from Primerica reps to interview for a job. I asked them to call me back on my cell phone. At the time, my cell phone was still a long distance number even though I was local. The people contacting me were not able to call dial long distance because they were calling from their day jobs. I don't think I would recommend a part-time retirement planner. (I declined the interview).
3. I used to work in an office building with a Primerica office down the hall. The only person who was ever there was some receptionist *except* when they were trying to rope in new "reps."
I would suggest looking elsewhere for financial planning.
May 22 2007, 01:29 PM
I OVERDREW MY DEBIT ACCOUNT AGAIN! #@&%$!!! I tried to cancel our automatic cell phone bill payment (which was super high this month because my boyfriend - we share a plan - got a new phone) but I must not have done it in time and now I am $75 short. AAAAND I am going to get like 5 overdraft fees because even though I went to Brueggers, the bike store, the salon, Peet's, and got gas BEFORE my huge cell phone bill went through on Monday, since it was the weekend they are all dated the 21st and OF COURSE the cell phone bill is FIRST, so all those other things are in the red. That so has to be on purpose so they can get more fees. ARRRGH!!! So bummed out. I suck at money.
May 23 2007, 07:28 AM
Sorry laurenann. That stinks! I've so done that. Banks LOVE it when that happens and I think they hold out on processing transactions so they can grab you by the booboo. Even overdraft protection doesn't seem to work! then they leave without being able to deposit a check. Cause they will strip it clean. and you need to pay your bills! erggggh! Maybe do a check cashing place and pay off the overdraft lil by lil until you are back on track? But if you have auto-deposit at yer work... so sorry.
I'm over my limit with one of my credit cards. That was a slapper. I'm so in debt and still need a car. derrrrn. Need to dig around and figure out what's good debt and bad debt. My father tries to give me a hard time about it... like "You are that much in debt?!" But doesn't seem to realize that it accumulated when I bought plane tix fom NYC to them every 4mths!!! But I also used it to bail me out a wee bit too much... or buy gifts for myself...Hated that I fell into that trap....