Many murders are committed annually due to anxiety caused by financial difficulties. DEBT KILLS! This article will focus on how you can avoid overspending. If you’re already drowning in debt I will show how you can be forever free from the Credit Card Grinch; those financial Ghosts that have bill collectors dogging you all hours of the day and night; the wolves beating down your door and how you can exorcise those demons of greed that cancer slowly eating you in to monetary misery. I’m going to show you how to set up a step-by-step austerity program that will cast out those demons of debt. Becoming debt free empowers you to take charge of your financial life. I will site examples from my own fiscal situation and lend advice from professional debt busters.
When I was a kid I always had more money and candy than the other kids on my block. My own family nicknamed me ‘Mr. Mc Miser’ after a Tom & Jerry cartoon character of the 1950’s. Growing up on Chicago’s South Side ‘back in the days’ (hard times) was no mean feat but somehow through it all I’ve always emerged as the kid with the most ‘toys.’ Even as an adult I still take overseas holidays, live on Chicago’s Gold Coast, eat like a prince, drive a Jaguar and all that on a retired school teacher’s pension! I thank God and my Mom’s street smart upbringing for my successes. I’m not bragging as life is so unpredictable. It only takes nanoseconds to tumble from plenty to poverty. Miss one paycheck and we both will find out. Anything can happen. I want to show you the way to a money smart and debt free life.
Millions of Americans are over their heads in debt. It’s BAD really bad. This society circuitously encourages people to ruin themselves financially. Just watch those ‘buy-buy-buy’ TV commercials urging consumers to shop till they drop buy till they bust. Now that the annual spend fest aka the Christmas Holidays are over the question remains how are you gonna’ stay out of debt and or pay off the bills you have? If you’re like many folks who’ve been suckered in by slick advertising you might want to think twice about filing bankruptcy. File only as a last resort though still not a good idea. Forever gone are the days when you can max out your credit cards, see a lawyer, and for a reasonable fee go before a Federal judge and plead “I don’t have it — I’m busted.” Uh-uh. Our legislators closed that loop hole some time ago and have enacted very stringent bankruptcy laws. It just ain’t that easy no mo.’ The option of filing that easy no payback Chapter 11 debt reorganization via bankruptcy court is history-kaput. You file now you may have to pay back a lot of what you borrowed.
A method that I use to curb my credit card appetite is to lock my cards up in my safe deposit box. I use them only for vacations and other major purchases. This works for me and might work for you. Being in debt reminds me of the old TV commercial about the Roach Motel. Going belly up from debt is akin to the situation of those unfortunate critters. They check in but they don’t check-out. Getting into debt is easy. Getting out’s the hard part. Combining my own ideas with some of those borrowed from the National Consumer Law Center here’s some helpful hints:
- Don’t’ do what many people, and I’m guilty too, don’t trash those fine-print inserts that accompany your bills in the mail. READ THAT STUFF! Be always aware of any fee adjustments associated with your credit cards. In MY opinion I think that some banks work on the assumption that consumers-I hate that dehumanizing term-will trash their mailed credit updates giving banks the opportunity to sneak in fee adjustments. Are banks crooked? Put it this way banks and bankers have been around for eons with no sign of ever going out of business. Bankers know all the angles. ‘They plan while we sleep’ as my mother used to say. They have many ways to make your life — well — interesting.
- Be careful when getting cash advances! The Law Center recommends that you get them WHEN NECESSARY. Banks charge higher interest rates and service fees when you withdraw from your account; so-called personalized ‘checks’ not withstanding. These people are smart. Banks are in business to make money plain and simple. THEY ARE NOT YOUR FRIENDS!!! Be careful.
- If you must seek outside assistance to help you achieve financial solvency make doubly darn sure you hire a reputable debt consolidation firm. In 1979 if I remember correctly shortly before I had the misfortune of filing for bankruptcy, I hired a debt consolidation firm that I had seen advertised on television. Those crooks had fees so high that for two years all I succeeded in doing were paying off some of the interest I owed my creditors plus hefty debt consolidation fees.
- Another recommended way to erase debt is to secure credit cards that offer lower interest rates. Transferring balances from one card to another to take advantage of low introductory rates is a common practice among U.S. cardholders. Low introductory rates can be very helpful in your quest to become free of credit-card debt. You should look for credit cards that offer a low intro rate (usually for six months), and transfer the balance from your previous credit card to that credit card. Before you take this step, however, make sure that, after the intro rate has expired, the new card offers the same (or lower) interest rate as your current card. If that fails you can always cut the damn things up into tiny plastic pieces. That works too. Been there-did that.
- If you were used to living the high life start trimming down your expenses by removing all nonessential items like an extra car, motor boat, or a jet ski. Sell or trade in your gas guzzling SUV for a smaller more fuel efficient or hybrid model.
- Prepare home cooked meals as an alternative to dining out at expensive restaurants. If you are a religious person develop a spirit of generous giving. Try tithing, it works and you’ll never be broke again. Trust me on this one.
- Know your debts by making a list of your bills and pay off the high interest credit card bills FIRST. Take time to organize your bills by first listing the largest down to the smallest. In the long run this will save you time and money.
- Severe credit card debt can lead to lose of property, lawsuits, divorce, and a bad credit rating. Again let’s not forget that MOST marriages are destroyed for financial failures than for moral lapses.
- Here’s one that I’m for 100%: when you pay your monthly credit card fee PAY OUT THE ENTIRE AMOUNT but if your finances won’t permit this always pay more then the minimum amount. If you pay exactly the minimum amount you’re only paying the interest with the outstanding balance yet to be paid. In short you get a monthly bill for $200.00-just a hypothetical-PAY THE WHOLE THING OUT! For large bills pay the entire amount in about three or four installments. Stay focused. To achieve freedom from debt you will have to cut back on certain luxuries even after your bills are paid off.
- I would suggest refinancing as a debt erasure option, but due to this market being up in the air, I strongly suggest that you examine the ‘refi’ option very carefully. As a former home (condo) owner if you have enough accumulated bills perhaps you might want to refinance your property. This way not only will you nix the debt but you can arrange to have extra ‘play money’ in the process after you finish paying off ALL your bills in one fail swoop. After all why shouldn’t debt repayment be all work and no play-huh? A note of warning: I would STRONGLY suggest that if you refinance your home to pay off ALL of your bills don’t ‘re-fi’ too many times as it affects the price of your home and for heaven’s sake DON’T REFINANCE TO PAY OFF DEBTS ONLY TO GET INTO MORE DEBT AND AT A HIGHER INTEREST!! Jesus Christ once warned: “If your right eye causes you to sin pluck it out!” If credit cards are causing your ruin GET RID OF THEM ONCE AND FOR ALL! All you need is a pair of shears and go ‘snip-snip-snip.’ Use CASH. If you can’t pay for things with cash then you don’t need them. The refinance market has changed drastically since I refinanced my condominium. If I were you I would get some detailed updates. Use your search engine to look up Mortgage Refinancing Tips before you act.
- Here’s my long standing favorite. I learned this in 1969 taught to me by my former ‘straw boss’ of whom I still consider the smartest man I’ve ever met. He once said, ‘with each bank deposit, put $50.00 to $100.00 extra (Make a special notation marked ‘fee’ in red.). This way you never have to worry about overdrafts. Those ‘fees’ soon add up.’ Always have a tidy ‘reserve’ just in case.
Here’s some travel tips: always take more than one credit card when on holiday. Not all countries take American Express, VISA, or even Master Card. Most do but some don’t. If you are traveling within the United States remember this: when writing checks or using credit cards in Southern States and you max out or your check bounce you can expect a visit from the local law. I once knew of a woman who was traveling down south and stopped at a bank in Jackson, Mississippi to make a transaction only to have the teller take a pair of large shears and destroy her credit card right in front of her face. When the customer complained this bank employee rudely cited state law which said that she could get jail time for using maxed out credit cards or her checks bounce. The teller could have called the police. Southern law tends to be a little bit stricter than in the North so be very wary when crossing the Mason-Dixie Line.
When I write travel articles I try to convince my readers to visit all those nice places I mention. I tell about the good stuff but seldom mention any negative experiences that I’ve encountered in my journeys. Since this article is about finance I will.
Hong Kong is Citigroup country. Using your Citicard in Hong Kong is just like using that piece of plastic back home. No problem.
The Philippines varies. Once when I was hosting a fancy banquet for a large number of my marriage related relatives and when it was time to pay the check, I handed the waiter my credit card. Minutes later the manager came to my table and informed me that the credit card processing machine was experiencing technical difficulties. I didn’t have enough pesos to cover the entire amount. If my brother-in-law hadn’t paid my bill I would have been arrested and spent some time in one of Manila’s hellish jails for fraud! BE CAREFUL IN FOREIGN COUNTIRES! Some of them lie in wait for Americans to mess up.
Thailand, Japan, Vietnam, Brunei, Italy, Mexico no problem but in Bali it was strictly cash and carry. You no have cash you no carry! Very few places accepted my credit cards in Bali. Luckily for me I had enough cash to do a little shopping and buy a Big Mac or two but that was about it.
Worse case scenario and this actually happened; I was in Manila and wanted pick up some souvenirs. Normally no problem but what I didn’t know was that I still have a fractional amount still owed on my credit card. I went to purchase a shirt. The store clerk had trouble processing my credit card so I paid in cash. I found out that I had accidentally underpaid my credit card bill before I left the States. When I called my bank they said that I still owed them a measly $3.40! Can you believe it? That $*#@%^* bank cast me adrift thousands of miles from home by freezing my long standing account with them over a lousy three lousy dollars and forty *%*^% cents!! It was only when I guessed the correct number on the last blank check the bank allowed me to pay off the balance over the phone via auto check. I estimated that it would have taken me years to swim back to Chicago from Manila. LOL! Two days later my account was reinstated and I continued my holiday undisturbed. BE CAREFUL WITH BANKS. Case in point: You can be a futuristic space vacationer touring extraterrestrial civilizations and if you wanted to buy souvenirs of your galactic travels and intended to pay by credit card but owed even a slight amount here on earth, your credit card provider would drop you like an asteroid falling on a star leaving you to fend for yourself.
Before you travel make sure you pay your credit cards debts before you leave. If your next bill is scheduled to arrive in the mail when you’re away have a trusted person pay your bill for you or make arrangements with your bank before you fly. You can pay them back when you get home. You have been warned.
Here are some publications that may be of assistance in helping you become debt free:
- The Credit Repair Kit, by John Ventura
- All About Credit: Questions (And Answers) About the Most Common Credit Problems, by Deborah Mc Naughton
- What Every Credit Card User Needs to Know, by Howard Strong
- The Insider’s Guide to Credit Cards, by Barry Klein
- Credit Card and Debt Management: A Step-by-Step How-to Guide for Organizing Debt and Saving Money on Interest Payments, by Scott Bilker
- Debt Consolidation Care
- Budgeting, by Joseph Kenny (Sun Star Network Online)
I know the holiday season is a full five months away but it’s best to plan ahead albeit gradually. One of the best ways to avoid excessive debt this Christmas is to plan months ahead that is unless you want to spend all of 2012 paying for it. ORGANIZE A WORKABLE BUDGET! According to Joseph Kenny, ‘One of the best things you can do is start planning for Christmas expenses early. Don’t leave everything to mid December when you have to pay for it all on credit card, start buying tree decorations, wrapping paper, Christmas cards and some gifts a month or two in advance. This way they’ll be paid for before Christmas even arrives and take some of the financial pressure off the couple of weeks when you really want to be focused on your family and loved ones and not on your credit bills and other worries’. Thrift shops abound. Again it pays to plan. When I was a public school teacher we had a short axiom that went: ‘If you fail to plan you plan to fail.’ That goes for teaching, the legal profession, and even in a simple thing as planning a special events budget. Devise a workable plan of action and STICK TO IT!
Why waste time worrying about bills? You only mess things up for yourself and your family. You will work like a beast of burden paying for what you spent to enjoy one day out of 365 or that vacation to Disneyworld when going to a local or nearby out-of-state water park would suffice? Sure Christmas and vacation time implies that you will splurge but you don’t have to over do it and go broke. ORGANIZING IS EVERYTHING. Don’t be caught with your financial guard down THIS Christmas or THIS year’s vacation. So you took a big hit Christmas 2010; big deal-get over it. It’s now part of your unpleasant past and you can’t take that back anymore than you can correct past mistakes about other things so forget about it, huh? Do something positive for the holiday season. Christmas is a time for cr¨ches not creditors.
If after that’s said and done you still have trouble getting back on your financial feet, perhaps you need professional help. It’s a proven fact that excessive spending is a recognizable addiction. Help is over the debt horizon. There are 12 step programs for excessive drinkers, smokers, sex addicts, compulsive gamblers, spouse abusers, drug addicts, excessive spenders, and other morally challenged persons. Find a group that meets your situation and go from there. Good luck in finding your way back to fiscal freedom.
The writer is a retired highway designer, educator, tax professional with H & R Block. He’s a freelance writer and ceramic and pencil artist.