Monthly Archives: April 2008

One Phone Call — $1,000 Saved

I finally made the dreaded calls to the credit card companies to try and lower my interest rates. I’ve been saying I was going to do this for weeks.  In fact, in a comment on the Snowflake Revolution, I promised I would do it that day, but wimped out.  I don’t know why these calls seemed so hard.  Partly, I think, it’s because I don’t really like making calls to strangers, and, partly, it’s because I had this irrational fear that the evil credit card companies would give a black mark in my permanent record for even asking.  However, the Motley Fool’s Get Out of Debt seminar spurred me on.  After finishing Lesson 1 yesterday, I sat down for Lesson 2. 

Lesson 2: Six Steps to Eliminating Credit Card Debt

The Fool’s site offers up the typical advice about how to plan your pay-off order and how to stop using your cards.  Again, I could have easily said, “yes, yes, I’ve heard all this and have put it into practice.”  Then I got to Step #5: Reduce the Interest Rate.  That little niggling voice in the back of my head said, “yeah, silly, you’re really supposed to make those phone calls!”  Still, I hesitated.

Sample Script

In the downloadable workbook, the Fools give you a script to use when you call the credit card companies.  Suddenly, with a script, the calls seemed much more manageable.  I used to call alumni from our university for donations.  That was the one point in my life where talking to strangers on the phone was actually fun, mainly because we had a whole script to use.  I was great at taking the script, putting my own spin on it, and making it sound real.  Perhaps the hidded actress in me had her moment to shine.  So, with the Fools’ script in hand, I felt in more familiar territory. 

Making the Call

I actually made two calls, but my title for this post had such a nice ring to it.  With the first call, I got nowhere.  I tried Card #3 with a balance of $3545.77 and an interest rate of 17.24%.  I was a little nervous, but took a deep breath and rattled off the first part of the script about a better offer, how I didn’t really want to leave because of the great customer service, but was going to have to unless they could lower the rate.  The person on the other end quickly transferred me to a supervisor, just as the script said he would.  I thought I was totally in business.  So, I repeated the spiel with the supervisor and got this response: “We just lowered your rate from 17.99% to 17.24%, so you’ll have to wait six months to try again.”  What??  I tried my threat to leave, and she said fine.  End of call.   0.75% in six months is all that I can expect after years of on-time payments?  I hung up pretty discouraged and almost didn’t try the next one. 

The Magic Call

You can see that this story has a happy ending.  Next up, I tried Card #2, which has a rate of 19.24%.  I decided to try it since it was the next higher rate.  After another deep breath or two, I dialed them up.  In the spiel, you say that you have an offer for a new card with a 5.9% introductory rate, hoping to get your rate down to 11% or 12%.  So, the woman on the other end pulled up my account and said, “Well, the best we can offer you is prime + 0.  Prime just went to 6.5%”  I almost fell out of my chair!  I made her repeat that they could give me 6.5% and calmly said that would work while doing a seriously huge happy dance inside my head.  Then, she offered to raise my limit by $1,500 and asked if there was anything else she could do.  I said, “do you have any balance transfer offers?”  And, she offered up 0% for nine months and no transfer feesSo right then and there we transferred over the full amount from evil Card #3.  Now, all payments will go to the 0% balance first, so my original balance with them will sit at 6.5% until I pay off the $3,500, but at the rate I’m going, I think nine months is really do-able.  Even with that caveat, I’ll be paying $125 in interest rather than $996.  My plan now is to pay a big chunk with this payday on Card #1 and then call Card #2 back up next week and ask to do one more balance transfer.  In the end, by making those darn calls rather than burying my head in my sand about my credit card debt, I’ll avoid having to pay roughly $1200 in interest.

Hooray for the Motley Fool!!

What I Learned

Of course, not getting discouraged was the big key to my success.  I could have easily said, “eh, this calling for rates thing doesn’t work” and ditched the whole thing after that first bad call.  Also, Card #2 is with my brick and mortar bank; I actually use it for on-line purchases, and I have a low balance compared with my credit limit.  I think all this worked in my favor, while Card #3 saw that I have just been making small-ish payments and am near my limit.  They probably figured I was theirs for life.  It does make sense that you’ll likely get your best deal from the card that has the most reasons to keep you.  In any case, if you’re dreading the “lower the rate” call, I’ve got over a thousand reasons why you should do it!  Good luck!  I’d love to hear from you if you do give it a try.

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The Fools Help Me Get Out of Debt

First off, I’m sorry. Surfing the PF blogs this week, I came across this link to the Motley Fool’s Get Out of Debt seminar. I should have tracked who found it first so that I could give that blog credit, but I forgot. So, if you’re out there, let me know!

I’ve always like the Motley Fool. There’s a nice blend of humor and decent financial advice. This seminar is free, clever, and you can print off their handy workbook after each session. Typically, I’d race through something like this, think “yeah, yeah, yeah,” and go on to the next site. This time, I decided to go slowly. I’ve had lots of revelations about my spending habits over the last few weeks, but reinforcement is good, especially because payday is tomorrow. It’s hard waiting for the fun “pay down the debt” day. I keep finding myself itching to spend money on little treats like a haircut rather than saving the surplus in my budget for the big pay off. So it may only be a day or two away, but it seems like the last little wait is the worst.

Lesson One: Setting the Foundation
Here, the Motley Fool reminds us that little bits add up. They should join the Snowflake Revolution! According to their numbers, just putting an extra $75 a month on your credit cards can add up to $7200 at 18% interest in five years. Now, rather than go over your budget $75, if you were able to stay under $75 a month, you’d have $5100 in the bank if it earned 5%. That’s quite a difference! Rather than trying to come up with an extra $7200 when you’re already overspending, you’d have $5100 in the bank and a great saving habit. Given the rising cost of food and gas lately, going over $75 a month seems pretty easy to do. That doesn’t even count the extra treats I used to love like new books from the bookstore or new yoga pants or kitchen gadgets.

I went into our local bank branch yesterday to deposit some survey and rebate checks. These days, I like seeing what the CD rates are, planning for that bright day after debt reduction when I can seriously start saving. As I stood in line, I didn’t see one flyer or poster advertising a CD, but I counted five posters or flyers for credit cards or consumer loans. No surprise, I guess. Clearly, the bank will be much happier making money off my credit card habits than paying me money for my savings.

The Fool’s workbook starts you off by listing out all your bad debts. I was feeling pretty good about my debt repayment, so I decided to log into all my credit cards to get the exact amounts. Here’s what I found:

  • Card #1:  $1774.82  @ 23.99% = $425.00 annual interest
  • Card #2:  $2005.81 @  19.24% = $385.92 annual interest
  • Card #3: $3545.77 @  17.24% = $611.29 annual interest
  • TOTAL: $7326.40 of debt and $1422.21 interest payments 

At this point, I still wasn’t feeling too bad.  Yes, the cards ticked up a bit this month from work expenses that I’ll get reimbursed for and the wedding invitations, but I’ll still be able to put a nice dent in that debt this weekend.  So, yes, it’s ugly.  And yes, those interest rates are very, very ugly, but at least I can face the music.  A few months ago, I didn’t even want to total everything up.

Bad Debt-to-Income Ratio

Then I turned the page to this step.  I skimmed down to the “Danger, Will Robinson!” line: a 21.4% bad debt-to-income ratio.  I thought, well, I bet I’m more like 9% or 10%.  So, I did the math.  I multiplied my take-home pay by 12 and got $33,672.  I thought about adding in my 401(k) payments, but those are involuntary, so that money is not available to pay my debt.  What was my debt-to-income ratio?  “Danger, Will Robinson!”  I’m at 21.8%, pretty darn close to the Fool’s bad example.  Ideally, of course, I want to get to zero, but they advise you keep the ratio at 15% or less.

It was a good little motivating exercise, because I could easily go out tonight and blow some money.  Now, though, I’m more motivated to save my surplus for the debt.  I may even throw all of it at the debt rather than putting some in my “fun” account.  These days, what’s most fun is seeing those debts shrink!

 

Daily Accounting and Carnivals: 4/23 and 4/24

Earned: $2.88      Spent:  $20.75   Saved: $0

Yesterday, I put $13 of gas into my car.   When I got in and turned on the engine. . .the gas gauge went all the way from E to 1/4 a tank.  $13 buys 1/4 a tank!  I remember when I filled my tank for $10. Oh no, I’m the old “I remember when” lady!  Seriously, I know higher gas prices will be good long-term for the planet and all, but short-term, eek!  Right after that, I went over and paid $0.75 to air up my tires.  Three tires were underinflated, so here’s hoping adding air will help my mileage.  Today, I’m having lunch with friends, so that will be the other $7.  I’ll change it if we go crazy at lunch.  The $2.88 was a snowflake from selling stuff on Amazon.

Speaking of snowflakes, the Carnival of Snowflaking, First Edition is up.  My “Snowflake State of Mind” was an editor’s pick along with great posts by Antishay Ventenne and My Small Cents.  If you haven’t read their blogs, be sure to check them out.  I have a feeling they are kindered spirits! And if you’re visiting here from the Snowflake Revolution, thanks! You can read more about me on the “About Me” page and my “Tale of Two Budgets.” If you like what you read, I’d love to have you subscribe. Thanks!

It’s Only Money

In my 20s, I had a very dreadful mantra about money: “it’s only money, and you always get more.” Apparently, I made it up, because a quick Google search doesn’t yield any references. Fortunately, no one else is quite as silly! I would toss this little slogan off anytime I was worried about money or whenever friends were trying to decide about how to spend money. The idea was that there were much more important things in life and no reason really to grub over every dollar. I felt that I was talented, educated, and pretty lucky in life, so I figured I’d never make heaps of money, but some money would always be there.

How did I cultivate such an annoying sense of entitlement? No, I did not have a trust fund — far from it! However, I did basically get paid to go to college. I chose to go to our local public university. In an effort to boost their quota of over-achievers, the school awarded full rides. Our state also gave scholarships to everyone with a certain ACT score to keep them in state. I was fortunate enough to get both scholarships, so I think this may have shaped my thinking about money. Don’t get me wrong, I believed that I worked hard for that money. However, I also had the feeling that I’d always have a job and that lucky breaks would fall my way. In many ways, that held. I had a teaching assistantship all through graduate school and lucked out on the academic job market when the time finally came. I have always had a steady stream of income. For most of college and graduate school, I also worked part-time jobs for extra money. Over the years, I did fund raising for our university, was an orientation leader, taught ESL classes, answered phones, taught with my high school marching band, judged competitions, did SAT tutoring, sat at a reference desk at the National Archives, and wrote for the Maryland State Archives. Four of those part-time positions offered me full time work; I accepted two — one for a year after my M.A. and one for a year after my Ph.D. So, on the plus side, my “you’ll always get more” mantra worked for me; I was never without work.

However, lately, I’ve been thinking about how awful the “it’s only money” half of the mantra really was. Basically, my little philosophy set me up to live paycheck to paycheck. Since I thought I’d always get more money, I spent all the money I had. I have two big regrets about my financial choices during those years: not studying abroad and taking out all those student loans for my Ph.D. In college, I had all my expenses covered — tuition, room, board, and books. I worked every year after my freshman year, so I could have used that money for my car, insurance, and “fun” expenses. If I had put the state scholarship in the bank rather than spending it, I could have easily taken advantage of our study-abroad program, especially since my school scholarship would have covered everything except spending money and plane tickets. However, since I had a paycheck-to-paycheck mentality, I spent everything I brought in.  In my family, money had been tight when I was in high school, so blowing my extra money at the mall or the bookstore felt great because I hadn’t really done that before. Thus, when the time came each year to apply for the study-abroad program, I never had enough saved to think that I could do it.

The other time in my life when that “it’s only money” sensibility really hurt me was during my Ph.D. program. Again, I had tuition covered. I lived in group houses and didn’t have a car at first, so I didn’t have major expenses. I had a friend who hooked me up with that cushy job at the National Archives, so I had extra money coming in. However, since I had used student loans on my M.A., I just kept taking them out for my Ph.D. I charged everything from dinners out to clothes to hiking gear, so each semester, I had that debt to deal with. I used the loans to pay off the debt, vowed not to run up the cards again, and kept chanting “it’s only money, and you always get more.” So, when dinner invitations came along, or a friend suggested season tickets for the ballet, or another friend wanted to go to Europe for a few weeks, I’d remind myself “it’s only money, and you always get more” and say “sure!” Granted, I had a lot of fun and experienced many things that I never dreamed I would have back in my hometown, but I also had no sense of priorities. Imagine what would have happened if I had lived within my actual means and saved money? I probably could have graduated with the $16,000 in loans I took out for my M.A. rather than the $114,000 that I took out over eight years of my graduate education.

Dreaming of Ferraris tagged me with a meme the other day to write a six-word memoir. Fortunately, “it’s only money and you always get more” is eight words. I can dump that off in the dustbin of history and come up with a new one for the rest of my life! After thinking it over, I’ve come up with:

“It’s seriously money, so save some!”

It doesn’t have the optimism of yourth, but I think it will get me farther than my old mantra. And I’m tagging Craving Anthropologie, Pixie Stick Queen, My Small Cents, Save and Conquer, and The Digerati Life to try their own six word memoirs. Enjoy!

Daily Accounting: Tuesday 4/22

Earned: $0 Spent: $97 Saved: $0

Another grocery day today. I could have put $41.21 in the “Saved” column because that’s how much Krogers said I saved. However, I only budgeted $90 for the week, so that savings just kept me on track rather than going over. I did get some really nice deals, including one of those automatic air fresheners for 99 cents rather than $9.99 and three boxes of cereal for $2.50. We are now swimming in cereal. It’s so hard not to buy it when it’s a great deal! That’s one of the dangers of stockpiling, I suppose. I did buy Chex cereal this time, so I’ll make some party mix with that this weekend for a snack. The other $7 was for lunch in the faculty dining room and postage for another sale on Amazon. One more snowflake for the TV fund!

Today, two carnivals went up with posts of mine. On Financial Success posted a pretty cool Festival of Frugality with every link written into paragraph form. Very unique! You can read my post “Kid-Friendly Frugal Fun” along with this great post by Save and Conquer about the life during the Great Depression.

Can I Get Rich on a Salary hosted this week’s Carnival of Money Stories. Through his “once upon a time” story, you’ll find my thoughts on shopping from “Can Anthropologie be a Frugal Choice?” Happy Tuesday!

Homemade Crackers

When I saw this post, “Maybe This is Why We Should Stick with Buying Saltines,” on Money Saving Mom, I had to chime in with our cracker success. I make crackers from scratch almost every night. Once you get the hang of it, it is so simple. I use this wonderful stone-ground whole or rye wheat from a local mill, but you can make them with all-purpose flour or regular whole-wheat flour. I’ve adapted the recipe from Mark Bittman’s How to Cook Everything. I’m writing it up here because I’ve put my own twist on it.

Ingredients

1/2 c stone-ground flour
1/2 c all-purpose flour
2 TBS. butter
pinch of salt
1/4 c water

Preheat the oven to 400 degrees.

Put all ingredients except for the water in a food processor. I usually chop the butter up into smaller pieces. Pulse the processor two to three times to blend. Add the water and run the processor until the dough forms into a ball. Flour a wooden board, dump the dough on it, and roll it as thin as you can (I usually get it about 1/8″ thick). I then slide the dough onto my pizza stone in the oven, but you could bake them on a cookie sheet. They just might not be as crisp.

Bake 15 to 18 minutes. Let cool and cut with a pizza cutter or break into smaller pieces.

The great thing about this recipe is its simplicity. You can add any herb or spice or salt that you want. Sometimes, I put in a pinch of cardamon. Sometimes, I sprinkle salt on top. What I love about these is that you get the flavor of fresh bread in about 15 minutes. I often roll these out, slide them in the oven, and then cook dinner. Sometimes, we eat them with dinner and sometimes, the future husband has them as his midnight snack. He loves to eat crackers and Laughing Cow. In fact, we had to have a little financial summit about how much his crackers were costing us. Now, I make these for him most nights, and the fancy store-bought flatbread crackers that he likes last us two to three weeks rather than one!

Daily Accounting: Weekend Update+Monday 4/21

Earned: $0 Spent: $50 Saved: $0

I went over the tally for my weekend trip to see my parents. I had budgeted $50, and $50 I did spend (counting one dollar for my pre-workout snack today). The $50 covered lunch on Friday, parking at the airport, tips, lunch Monday, a used book, and a coffee during my layover in Chicago. I could have skipped the book and coffee, but since they totaled $4 and kept me happy on the flights home, they were good purchases. Visiting my parents is always nice; we chatted lots and got in some good wedding planning. It’s also very inexpensive since they treated for the rest of our meals (thanks Mom!).

I now am hoping to keep spending to a minimum until Friday. Friday will be great because I can tally up my snowflakes for the month. It’s also the last day of classes, and the local farm market should be open with asparagus. I can’t wait!