I’ve Paid For This Twice Already…

Frugal living and debt reduction tips for a better financial future. This is one family’s story.

Archive for the ‘credit cards’ Category

California Debt Consolidation Programs can Reverse the Financial Domino Effect

Wednesday, August 21st, 2013

While much of the country’s population is starting to recover from the recession of 2008, a number of people in California and nationwide are still experiencing lingering financial troubles. For various reasons, many Americans just can’t seem to get their financial lives back on track.

Are you are still dealing with a financial crisis, whether it be underemployment, unemployment, extremely high interest rates, maxed out credit cards, or other difficulties? Do you live in California?

If you answered yes to both questions, then there are solutions available that may be able to help get your financial life back on track – without making you suffer any longer.

The Financial Domino Effect

The problem some people fall into when they find themselves in financial trouble is that everything starts falling behind. For instance, if your bills start falling behind, you might eventually get a shut off notice one day. To make the payment, you might have to spend your savings on the bill, or the money you had set aside for the mortgage.

Either way, using money from one bill to pay off another is not the answer to your financial troubles because doing so only makes the financial domino effect worse.

Eventually, most people who have financial problems start having trouble paying not just their bills, but taxes too. Not paying taxes is even more serious than not paying the bills because of the actions the Internal Revenue Service can take to recover the money owed in addition to the actions your specific state can take to recover the money owed.

According to the State of California Franchise Tax Board, the California Tax Board can issue a wage garnishment order to recover unpaid local taxes, unpaid utility bills, unpaid interest, fees, and monies that may be owed to the courts. California and other states can also issue a wage garnishment for unpaid child and spousal support as well.

According to the United States Department of Labor, the U.S. Internal Revenue Service can issue a federal wage garnishment order to recover unpaid federal taxes, interest, fees, and monies owed the courts.

A wage garnishment is an order that requires your employer withhold money from your paychecks each week, or each pay period if not weekly. Sometimes, the IS and State of California can freeze bank accounts, and take and sell your physical items if the courts issue judgment against you for unpaid debts. However, this usually only happens in cases in which the debtor is unemployed, or owes a large amount.

Consolidating to Get Out of Debt

If you live in California and have a number of credit cards that are maxed out, a mortgage, a car or two on which you must make payments, overdue utility bills, and other miscellaneous bills, you may be able to get some relief. The various available California debt consolidation programs may help you to dramatically reduce your monthly bill payments. Simply stated, programs that consolidate your debt are all about keeping you and your family finances afloat in times if financial crisis.

While the term ‘debt consolidation’ is not easy on the ears, the act of consolidating your debt is a legitimate and simple step you can take to help dig your way out of debt. If you apply for a debt consolidation program, and are approved, the process for paying your debts is simplified instantly. The program will lump all of your debts into one monthly payment that is usually lower, and usually has a lower interest rate than the rate you paid previously.

After consolidating debt, you make a single payment each month that covers all of the debts you consolidated. This not only helps maximize the amount of money you can afford to pay each month, but overall, consolidation can help you save money after paying off the interest, which leaves more money that goes towards the principle.

The Worst Things to Purchase with Credit

Thursday, September 1st, 2011

America is in a terrible economic crisis because of our reliance on credit. According to Patrick Allen of CNBC, we could be headed towards another full on credit crisis. By purchasing things we cannot afford and living beyond our means, we have made America a more difficult place to make a living and will make it even harder for our children to live better lives than ours. Here are some things you should reconsider purchasing until you can fully afford them:

Necessities

While credit might seem like the most viable option for purchasing things you absolutely need, think again before you swipe that card. Do you really need to fill up your SUV’s tank to capacity, or will three quarters of a tank get you through until payday? By spending too much on things we think we need, it often leads to trouble when credit card payments are due. Take time to really evaluate the purchases you deem as necessities.

Make a list and stick to it when you go shopping, purchase store brands instead of name brands where you pay for the packaging instead of the content, and if you can’t afford something you think you need; sit down and make a list of all of the alternatives and options.

Clothing

All of the magazines we read encourage us to hightail to the mall and buy the latest fashions so we can make our husbands more attracted to us and garner the jealousy of our friends. If you stop to notice, every couple of weeks a new issue of the same magazine is published telling us that what we purchased last week is passé and new stores and specialty boutiques have the fashion remedies we need.

Step back and reconsider the basic principle of clothing: to provide warmth and comfort. The media limelight tries too hard to convince us we are not adequate unless purchasing; be wary of the pitfalls.

Technology

The same ideas that clothing companies tell us apply to purchasing technology with credit as well. Every week there is a new gadget on the market that performs more functions than the one you currently own. By purchasing these electronic gizmos with credit you are ensuring that you will be paying a lot of money over time for obsolete technology.

Impulse Purchases

While at the pharmacy there are tons of temptations staring us right in the face. You may think that purchasing a pack of gum with your medications is an innocent move, but what if that means another $8 a month towards your credit card you can’t pay off right away? Your single pack of gum for each visit can raise your interest rates and keep you from eliminating your debt for an even longer period of time.

By taking the correct precautions and practicing discretionary spending, you can live your life without the bothersome burden of debt looming over your shoulder.

At What Cost Credit? And What It Is Worth?

Wednesday, May 27th, 2009

After my post about Capital One raising our interest rate, I got a lot of interesting comments that made me wonder about the role of credit in our society and how it is changing.  I’ll be the first to admit that I don’t pay much attention to news about credit cards in general.  I am not strictly anti-debt but in the past I have not been as responsible as I wish I had been about using debt and accumulating debt, and I can finally see the light at the end of the tunnel, a world without monthly non-mortgage debt payments.  I don’t blame credit cards for taking advantage of me – I am not claiming they always do the nicest things or are in the business of helping the consumer – but it was my attitude towards available credit and taking on debt that needed an adjustment.

Now, the rules governing credit cards are changing.  Things like universal default (when you are late on one card, every card can penalize you) are being eliminated, and interest rates can’t be raised automatically when you pay late.  Fees and penalties are being capped.   Many things are being put into place to stop credit cards from taking advantage of those who are in over their head.

Which is good.  But on the other hand, someone has to pay for it.  And that someone seems to be those who use credit but do so without getting behind or paying late.

Annual fees – a yearly fee just for having a credit card – are expected to make a comeback.  As I’ve already firsthand experienced, interest rates for everyone are being raised as a pre-emptive strike before the laws go into effect.  Having a credit line “just in case” is going to cost me.  Is that worth it to me?  I don’t think of the credit card as my money any more, nor as an emergency fund.  But I’m not in a place yet where I can say with conviction we can handle anything life might throw at us without turning to credit.  I’m working on getting there, but we are definitely not there yet.

So on the one hand, I’m happy that preying on the most vulnerable will stop.  For example (and again it is my “friends” Capital One), my middle brother is not the most responsible when it comes to managing his finances.  He has a Capital One card with a very low limit, and he’d charged it beyond its limit.  Totally his fault, and he was assessed a penalty for it.  But the crazy thing was, his minimum payment due the next month wasn’t even enough to bring him below his limit!  And he doesn’t pay attention to things like that, so he paid his minimum, then was charged another over the limit fee for being over the limit.  This went on for three months until he asked me to take a look at things and I explained what was going on.    I’d like practices like that to stop.  It’s not illegal, but certainly unethical and just… tricky.

But at the same time I’m not really excited about paying a fee just to have a credit card.  Someone has to pay somewhere, and that someone might be me.  So, we’ll see what happens.  But for now, I can only say I am ambivalent.

Capital One Has Something To Say To Me

Friday, May 22nd, 2009

We’re raising your interest rate just because we can, and we’re annoyed you don’t owe us anything.  So there.

Well, that isn’t exactly what the letter I received said, but it might as well have.

This week I got a form letter/flyer from Capital One which informed me that they were raising my interest rate from the fixed 9.9% it was at to a variable rate that is currently 17.9%, effective immediately.  Hey, thanks Capital One!  I’ll get right on that…

We don’t have a balance on the Capital One card, and haven’t used it in several years.  It was the first thing I completed paying off in my debt-destroying extravaganza, and hasn’t carried a balance in over a year.   And to thank me, Capital One has finally gotten around to raising the interest rate.  Hey, thanks.  I appreciate it.

Many people who are anti-debt or anti-credit card debt destroy their credit cards and cancel them.  We didn’t.  It wasn’t a firm yes or no decision, it was more apathy on my part.  I didn’t really feel passionately about getting rid of them, so I just kept them.  My problem that got me into endless credit card debt wasn’t one of impulse control exactly, it was more poor money management.  I wasn’t one to pull out a credit card and buy things on impulse.  I used them as an emergency fund and then kept transferring balances back and forth while trying to pay them down until the next emergency.  Once I figured out how to track my money and know what I was really spending and started having a cash emergency fund, I didn’t increase the credit card debt and began to reverse the process.

So, I still have them.  Three, in fact.   This we’ve had for about 10 years, and I have had another one since 1996.  The last we got while we were paying down debt in 2007 to transfer our balance to a 0% rate.  So closing this one isn’t closing my longest-held credit card.  I think that means it won’t affect my credit score.  And the longest held credit card also has a $40000 limit, so if for some reason I found myself in a position where I needed to use a credit card, that one would suffice.

So Capital One, I think our days are through.  Thanks for everything… sort of.

Credit Might Be Drying Up – Should I Be Worried

Thursday, October 30th, 2008

A few days ago, Capital One about gave me a heart attack.  I got an email from them telling me that my statement was ready.  This made my heart skip a beat because I have not done anything with my Capital One card in over a year, and ever since I moved my balance to a 0% interest offer on a different credit card (and subsequently paid it off), I have not gotten any emails about statements or anything else of the kind.  Until a few days ago.

I was scared that someone had gotten a hold of my card and used it, so I went to the website (by typing it into my browser, don’t click on email links you are unsure of) and found that I still have a zero balance and the same credit limit.  I’m not sure why I was sent an email about my statement being ready, when there hasn’t been any activity or change in anything, but at least it was all okay.

And then I read an article about how credit card companies are cutting credit and closing inactive accounts.  I have three credit cards, and all of them could be classified as inactive.  One I haven’t had any activity on for about 4 years, the Captial One has been inactive for about a year now, and the last one which I opened to transfer the Capital One balance, hasn’t been used since February.  In total, these three cards together have about a $70K limit.  All of which is available and unused.

For a second I thought to myself,   What then?  Even though we have a small emergency fund it is nowhere near a true all-encompassing one, and what if a big emergency happened?

But then I realized, I didn’t actually care.  If all our credit cards get closed because we don’t use them – I’m okay with that.  I’d rather that than using the cards and feeling dependent on them.

Do you use your credit cards just to keep them from being inactive?

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