I’ve Paid For This Twice Already…

Archive for the ‘credit cards’ Category

I am not used to having any money that isn’t about to be spent. At all. Any.

I keep looking at the credit card balance and then my emergency savings account balance and thinking… hey, I could grab all that money from the savings account and smack down the debt with it and be almost completely done. Maybe we could scrape up some more money from somewhere and manage to have the entire thing paid off before the end of December. Start 2008 with no credit card debt! How awesome would that be?

But that is crazy talk. It is tempting, oh so tempting, but it is not in any way a good idea.

I know this. I believe it wholeheartedly. And yet I keep thinking about it.

And if it feels this tempting now, when the balance of the emergency savings fund is smaller than the balance on the credit card, how much more tempting will it be once the balance in savings exceeds the remaining credit card balance. I think very.

I know it is insanity. I know it is a bad idea. I know in my heart it is a very bad idea, for if a real emergency happens I will need that emergency fund.

But it is tempting. But foolish. And I am done being foolish with money.

I think.

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I’ve talked before about the attitude shifts that I’ve gone through in my quest to become debt free. The frugality by necessity, learning to budget and to assign every dollar a job, and losing my all or nothing attitude. But one of the things I haven’t really talked about is the shift from paying what I could “afford”, or basically, as little as I could to just get by, to paying as much as I possibly can. It really was an important transition in mindset when dealing with my debt that happened so gradually that I didn’t even realize it.

When I first started paying off my debt and stopped using credit card convenience checks to bail me out of jams, I started paying slightly more than my minimum payment. And I mean slightly. My minimum payment was $199 and I paid $200. This did actually work, every month my minimum went down a tiny bit, and I kept paying $200 every month.

This was a good thing. But it wasn’t quite good enough. I was paying more than the minimum, but I wasn’t paying as much as I possibly could. I basically treated the credit card debt like a monthly bill and adjusted for $200 in my monthly spending. It became predictable and stable and yes, it was better than paying just the minimum, but I never changed it. Not for more than two years. Our financial situation slowly changed for the better as my spouse moved up and got raises and I *talked* about how we should pay more to the credit card and get it gone, and once in a while I would pay a little bit more, but I really didn’t do it with any consistency or commitment. The credit card was just a $200 bill I paid every month.

So, last January or so I finally started making a more thoughtful and concerted commitment to getting out of debt once and for all. And one of the things that changed was that I started the process of snowflaking. At first, every time I saved money on something or spent less than I expected on something,I made an extra little payment to the credit card equal to those savings. When my son didn’t outgrow his shoes as fast as I expected, I snowflaked the cost of new shoes to my credit card. When I got a little money from taking surveys, I snowflaked money to the credit card.

And then I expanded this. I started paying extra to the credit card every time I bought something impulsive. If I bought something impulsively (with cash) for $10, I snowflaked $10 to debt as well. For if I could afford to waste my money frittering it away on a bunch of random stuff, surely I could afford to pay down my debt equally. And the credit card kept shrinking. Little by little, it built up momentum.

Enter the budget. Budgeting made it clear that not only could I “afford” to pay more to debt each month, but that I needed to if I ever wanted to get out of the living paycheck to paycheck cycle we are in. And that is where the true financial revolution picked up steam. Not only was I making small extra payments to debt when I earned extra income, I was also taking my “surplus” money at the end of each month and applying that directly to debt. And the snowflakes have become a snowball. It was a gradual process but truly, over the course of steadily paying down my credit card and other debts, my mindset went from “This is what I can afford to pay every month” to “Where can I find more to pay every month”.

And that change in and of itself has made everything else fall into place. And I didn’t even notice it happening.

What change in your financial behavior happened so gradually you didn’t realize it was happening, but you wouldn’t do without now?

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Earlier this week I got mail from Citicard and they told me that they love me. Well, maybe not in so many words. But we’ve had the card for only a few months and already, they’re raising our limit. I don’t remember what our limit exactly was before, but it is being raised by about $2000.

This is the card we got for the 0% no fee balance transfer offer and now holds our remaining credit card debt. Since receiving the card in August, all we’ve done is transfer ~$5100 to it and then worked at aggressively paying it off ever since. I guess that’s enough for them to decide that we should have even more money to potentially spend. I don’t see the logic in it, but there it is.

Maybe the card didn’t want to give us too high of a limit in the beginning to prevent us from transferring too much in the first place since it was a special no fee 0% offer. But if I transferred more, wouldn’t I be less likely to pay all off in time allotted and so they’d make money in interest on the other end? So shouldn’t they give me all the limit they wanted to up front? I don’t know. I don’t understand this at all and all I can do is laugh, since I’m not going to run out and buy something with my newfound buying power. Although I originally wrote that as “newfound money”, so I guess my old bad habits of how I thought about credit as free money are not *quite* cured.

Maybe they think I will run out and charge a bunch of stuff and lock those charges behind my 0% balance so they can merrily accrue interest while I can’t get at them. But would I seek out such a specific balance transfer offer to take advantage of and then do something silly like that? Not now… but maybe I would have in the past. I hope I wouldn’t have, but I’ve done other silly things that make no sense to me now.

I can’t get inside the heads of the credit card company people, so why do I try?

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So far, my experiences with using the Citicard website and making electronic payments have been positive. I pay, it posts the same day, the next day I log in and the payment shows as posted and my balance is reduced appropriately (love that!). All is well.

Not so with their email notifications. Invariably, about 4-5 days later, I get an email from Citicard stating I have a “pending payment”, dated the date I made the payment. The first time this happened, I got all confused and investigated and confirmed that yes, my payment was *not* pending, it had posted the date I made it, and the email was basically useless. At least it is just an email and not actual paper.

Understand, this is not a notification email after the fact telling me I had made a payment. That I can understand getting days later. This email clearly presents itself as a notification of a *pending* payment. With a date in the past. But written like the payment is going to happen in the future. And not confirming anything has happened with said payment as far as my account is concerned.

What exactly is the use of this? What good does this do me? Exactly…none. Why I am sent this email is a mystery to me. It doesn’t confirm that my payment was accepted. It just tells me I made one…. and long after it has cleared their system, claims it is pending.

Uh…. duh.

What a useless waste of some sort of automated system. If I could find a place to complain I would. But don’t reply to the email… it goes to a mailbox that is not monitored ;).

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Awww… Capital One misses me! I feel so loved… not.

In the mail this week I got a letter from Capital One. For those who are new to the story, my credit card balance used to be at Capital One. After calling them and getting them to lower my interest a tad, I decided enough was enough on the whole paying interest thing and transferred my balance to a Citicard with a no balance transfer fee/0% interest for 12 months offer. I did this in September so I have until September 2008 to pay off the remaining balance (now sitting at UNDER $4000 woowoo) or start accruing interest there.

Well as I said, this week I got a letter from Capital One. They are trying to woo me back with a 0% balance transfer offer of their own. I find this hilarious, because when I originally called them to ask for an interest rate reduction, they claimed they could only go from 10.9% (what I was at) to 9.9%. But now that I took the money away from them, now they can give me 0%. It has a balance transfer fee attached of 2% of the balance (no maximum) but still, that is WAY better than 9.9%.

So… they miss me. Poor Capital One. This both amuses me and makes me a little bit gleeful. And it provides a nice backup plan. Of course, I am NOT going to be transferring anything anywhere right now. I am at 0% for a long while yet. But if Capital One is already sending me offers, they may still be sending me offers in August. If for some reason, I haven’t managed to pay off the credit card debt completely, I may have somewhere else to move it and avoid interest for a small fee. By then the balance will be much smaller so the 2% fee should be minimal.

Hopefully this is all irrelevant and there will be no balance to transfer come next August. But it nice to know I might have options. I really hate interest.

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