I got an offer yesterday from CitiBank. If I sign up for the "Payment Partners Program," it can help my debt reduction goals.
Here is how it works. I agree to make payments for 4 months on time and in excess of the minimum amount due. At the end of that time, if I've complied, Citi will credit my account with an additional amount equal to 20% of the amount I paid above the minimum due, up to $550 in "extra credit." If I pay $2750 extra, I'll get the maximum credit of $550. If I pay $100 extra, I'll get a credit of $20. I was already planning to send a little extra each month, so by signing up for the program it's like making an extra payment of up to $550, merely by doing what I am planning to do anyway. I liked the sound of that.
So, what's the catch?
They reassured me that nothing about the program gets reported to the credit bureaus, so the participation in the program itself will not adversely affect my credit score.
They also assured me there is no penalty for participation. It will not affect the interest rate on my account or any of the other payment terms.
They also reassured me that there is no penalty for noncompliance, other than not getting the "extra" credit, so if I fail to pay extra toward the debt, nothing bad happens. If I make a late payment, the usual consequences would apply, but nothing worse than usual. (The usual consequences are bad enough, really). Since I plan to pay on time, and was already planning to pay extra, I am confident I will earn the extra credit with no problem.
There are two things I have to give up to participate, both geared toward the idea that I want to make this a permanent debt reduction (I like the sound of that, too).
The first thing is, they will temporarily suspend my charging privileges on the account, so that I cannot make new charges or balance transfers to the card during the 4 month period. This does not bother me because the card is already charged up to its limit, and currently has a 0% interest rate on the current charges, but an 8.24% rate on any new charges, so I wasn't planning to use it, anyway. I am only planning to pay down the debt. Again, they reassured me that they do not report the suspension of charging privileges to the credit reporting agencies, so this will not harm me in any way.
The second thing I have to give up is a portion of my credit line. At the end of the program, they will reduce my credit line by an amount equal to the "extra" amounts in excess of minimum payments plus the 20% credit, so that I can't immediately charge the card right back up to where it was. Again, I wasn't planning to do that, so that's not a huge problem for me.
They also reassured me that they don't specifically report the fact or reason for the credit line reduction. BUT -- and this is a big "But" -- they do of course report the new credit line amount to the credit agencies.
This provision is the only potential pitfall. Your credit score is based in part on the ratio of available credit to actual revolving charges on each card. So, if you have a credit line of $10,000 and an outstanding balance of $5000, that results in a better score than if you have a credit line of $6000 and an outstanding balance of $5000.
Part of the way I was hoping to improve my credit score was by transferring some of the debt from my other card to Citi (which I did), and then paying down both credit lines to a better debt ratio. If Citi reduces my credit line, my debt ratio on that card does not improve.
On the other hand, Citi can unilaterally reduce my credit line any time they want to, even without "paying" me for the privilege. And if they are offering me this program, I am guessing that is exactly what they want to do. So I might as well get something for it.
So I signed up.
Wish me luck!!
Wednesday, July 15, 2009
Friday, July 10, 2009
The Money Meme
I'm starting a new meme today. I am hoping I can learn something from anyone who participates in it. I think I know the "right" (i.e., financially smart) answers for all of these, but I am wondering more generally, am I in the mainstream, or way out there with my spending habits?
I'll start, but as you know my finances are such a disaster, no one should take advice from me. My answers are in blue.
1. Do you use coupons, shop the sales, or pay full price?
I shop the sales and use coupons as much as possible, but I will pay full price for necessities (food mostly) if I can't find them on sale.
2. Do you pay all of the bills as soon as they arrive, or wait until the last minute so you can "earn the last bit of interest" on the money in your checking account?
I used to wait until the last minute to pay them all, thinking I'd earn extra interest, but one late fee is all it takes to wipe out years of "extra interest," so I've joined the "pay the bills as soon as possible" camp. I still sometimes wait until the last minute, if I have to wait for a paycheck so I'll have money in my account. But, as much as possible, I pay the bills as soon as they arrive.
3. Do you charge everything so you can earn your rewards points, or save credit for emergencies only?
I used to charge everything so I could earn rewards points. Now I try not to use the charge cards. But since I never have money in my checking account (it all goes toward the minimum payments), I still find myself charging gas and groceries each month.
4. Do you pay your cards in full each month, or carry a balance?
As anyone who has read any of this blog knows, I carry a balance. Boy, do I carry a balance....
5. If you carry a balance, do you pay the minimum payment each month, or send a little extra?
I send extra when I can. Usually I don't have any extra to send.
6. Do you pay your mortgage every two weeks, or once a month?
Once a month. I do "round up" though, paying an extra few dollars every month to make it a nice even amount. It should take a couple of months off the amortization schedule, and it makes it easier to balance the checkbook, too.
7. How much is your car payment?
$475.00
8. Do you have cable television?
Yes. And cable boxes for 2 televisions. One tv is just hooked up directly to the cable, so we get fewer channels on that one.
9. When shopping for birthday gifts, how much do you spend for:
-- relatives? Depends on the relative. Anywhere from $2 for a card, to $40.00 for those I am closer to.
-- your spouse? Depends on the year and what he has on his "wish list." I've bought foolishly expensive toys such as a computer, to less expensive toys such as a cell phone, on down to a polo shirt and cap in a year when he seemed already to have everything he wanted or needed.
-- your kids? Again, depends on their wish list for the year, but generally not more than $50.00
-- other people's kids (birthday parties your kid attends)? I try to keep it to $10.00 with a maximum of $20.00. No exceptions.
10. If you shop for Christmas gifts, how many people do you purchase gifts for? How much do you spend on each?
I shop for a ridiculous number of friends and relatives. At least 40. And I spend anywhere from $5 to $100, depending on the person and the year. It usually costs me at least $3000 to get through Christmas. I have just got to stop this madness.
11. How much do you spend for other occasions, such as Easter, Valentine's Day, Anniversaries, and other potential gift-giving occasions?
My husband and I spend about $25 on Easter goodies for the kids (candy, small games, Easter Egg dye, and so forth). I usually try to shop the end-of-season sales for things like egg dye and toys, and we save and re-use the plastic eggs, baskets, and "Easter grass." But just last month our supply of baskets and plastic eggs was attacked by rats in the shed (can you believe the rats literally chewed holes in the plastic eggs!?! Yuck!!), and we had to ditch it all. I am guessing I'll spend substantially more for next year's festivities.
Anniversaries are fairly expensive; my husband and I usually try to do something together - a weekend getaway or dinner at a very nice restaurant, so it can run anywhere from $100 to $300.
We are both more frugal with Valentine's Day. A card and some chocolate or a nice shirt or tie - usually get through it for less than $30.
12. You find $100 on the ground (don't laugh; this happened to my husband once!). Do you spend it for a night of fun, or pay bills with it?
He spent it so we could all have fun on our vacation.
13. You go out to lunch dinner with a friend. Did you plan ahead and bring cash, or are you hoping to pay the bill with a card and have your friends give you cash so you'll have money for lunch later this week?
I usually plan to pay with my card, and hope my friend will give me cash (although it's also ok if the waiter will charge half to each of our cards....).
14. It's back-to-school time, and your kid needs clothes. Where do you shop and how much do you spend?
I shop the sales at Target, Dillards, Wal-Mart, Ross, TJMaxx, and anywhere else I can find a good deal. And I don't usually wait until right before school to buy things like t-shirts or polo shirts. If I find a good deal in June, I'll buy it - just get it a little larger than the kids' current size. Sadly, I don't know how much I spend in total; I don't add it up. I probably should have a budget and stick to it, but I figure when I'm spending $2 to $5 for each item, I just buy however many they need and let it go at that.
15. You are shopping for kid clothes in June and you see an absolutely fabulous pair of boots, just your size, on sale. Your current boots are literally falling apart, so you try them on -- and they are comfortable. Do you buy them?
Of course I buy them! Who wouldn't? If I wait until fall to shop for my boots, I'll end up spending a fortune. And I absolutely adore boots!!
16. You owe over $50,000 in credit debt. Do you stay home at all times except when going to the grocery armed with coupons and sale papers, or do you occasionally go out to dinner or a movie? What about the kids? Do you pay for fun activities for them?
I feel I shouldn't. I even feel guilty when I do. But I definitely still go out sometimes, for dinner with my husband or friends, to a movie with the kids, to amusement parks, bowling, and so forth. I try to use coupons and discounts when possible, but I have not mastered the art of totally free entertainment yet. I do spend more time playing board games with my kids and going to free shows and the local (free) water parks and taking advantage of "free days" at the museums than I used to, but I still find it "necessary" or at least very tempting to actually pay for dinner and amusements sometimes.
Okay, that seems like enough for now. I'm not going to tag anyone. If you want to play along with this meme, simply post a link to your blog in the comments section below so I can come see what you've written, add one question and subtract one question, and then answer the questions on your blog.
I'll start, but as you know my finances are such a disaster, no one should take advice from me. My answers are in blue.
1. Do you use coupons, shop the sales, or pay full price?
I shop the sales and use coupons as much as possible, but I will pay full price for necessities (food mostly) if I can't find them on sale.
2. Do you pay all of the bills as soon as they arrive, or wait until the last minute so you can "earn the last bit of interest" on the money in your checking account?
I used to wait until the last minute to pay them all, thinking I'd earn extra interest, but one late fee is all it takes to wipe out years of "extra interest," so I've joined the "pay the bills as soon as possible" camp. I still sometimes wait until the last minute, if I have to wait for a paycheck so I'll have money in my account. But, as much as possible, I pay the bills as soon as they arrive.
3. Do you charge everything so you can earn your rewards points, or save credit for emergencies only?
I used to charge everything so I could earn rewards points. Now I try not to use the charge cards. But since I never have money in my checking account (it all goes toward the minimum payments), I still find myself charging gas and groceries each month.
4. Do you pay your cards in full each month, or carry a balance?
As anyone who has read any of this blog knows, I carry a balance. Boy, do I carry a balance....
5. If you carry a balance, do you pay the minimum payment each month, or send a little extra?
I send extra when I can. Usually I don't have any extra to send.
6. Do you pay your mortgage every two weeks, or once a month?
Once a month. I do "round up" though, paying an extra few dollars every month to make it a nice even amount. It should take a couple of months off the amortization schedule, and it makes it easier to balance the checkbook, too.
7. How much is your car payment?
$475.00
8. Do you have cable television?
Yes. And cable boxes for 2 televisions. One tv is just hooked up directly to the cable, so we get fewer channels on that one.
9. When shopping for birthday gifts, how much do you spend for:
-- relatives? Depends on the relative. Anywhere from $2 for a card, to $40.00 for those I am closer to.
-- your spouse? Depends on the year and what he has on his "wish list." I've bought foolishly expensive toys such as a computer, to less expensive toys such as a cell phone, on down to a polo shirt and cap in a year when he seemed already to have everything he wanted or needed.
-- your kids? Again, depends on their wish list for the year, but generally not more than $50.00
-- other people's kids (birthday parties your kid attends)? I try to keep it to $10.00 with a maximum of $20.00. No exceptions.
10. If you shop for Christmas gifts, how many people do you purchase gifts for? How much do you spend on each?
I shop for a ridiculous number of friends and relatives. At least 40. And I spend anywhere from $5 to $100, depending on the person and the year. It usually costs me at least $3000 to get through Christmas. I have just got to stop this madness.
11. How much do you spend for other occasions, such as Easter, Valentine's Day, Anniversaries, and other potential gift-giving occasions?
My husband and I spend about $25 on Easter goodies for the kids (candy, small games, Easter Egg dye, and so forth). I usually try to shop the end-of-season sales for things like egg dye and toys, and we save and re-use the plastic eggs, baskets, and "Easter grass." But just last month our supply of baskets and plastic eggs was attacked by rats in the shed (can you believe the rats literally chewed holes in the plastic eggs!?! Yuck!!), and we had to ditch it all. I am guessing I'll spend substantially more for next year's festivities.
Anniversaries are fairly expensive; my husband and I usually try to do something together - a weekend getaway or dinner at a very nice restaurant, so it can run anywhere from $100 to $300.
We are both more frugal with Valentine's Day. A card and some chocolate or a nice shirt or tie - usually get through it for less than $30.
12. You find $100 on the ground (don't laugh; this happened to my husband once!). Do you spend it for a night of fun, or pay bills with it?
He spent it so we could all have fun on our vacation.
13. You go out to lunch dinner with a friend. Did you plan ahead and bring cash, or are you hoping to pay the bill with a card and have your friends give you cash so you'll have money for lunch later this week?
I usually plan to pay with my card, and hope my friend will give me cash (although it's also ok if the waiter will charge half to each of our cards....).
14. It's back-to-school time, and your kid needs clothes. Where do you shop and how much do you spend?
I shop the sales at Target, Dillards, Wal-Mart, Ross, TJMaxx, and anywhere else I can find a good deal. And I don't usually wait until right before school to buy things like t-shirts or polo shirts. If I find a good deal in June, I'll buy it - just get it a little larger than the kids' current size. Sadly, I don't know how much I spend in total; I don't add it up. I probably should have a budget and stick to it, but I figure when I'm spending $2 to $5 for each item, I just buy however many they need and let it go at that.
15. You are shopping for kid clothes in June and you see an absolutely fabulous pair of boots, just your size, on sale. Your current boots are literally falling apart, so you try them on -- and they are comfortable. Do you buy them?
Of course I buy them! Who wouldn't? If I wait until fall to shop for my boots, I'll end up spending a fortune. And I absolutely adore boots!!
16. You owe over $50,000 in credit debt. Do you stay home at all times except when going to the grocery armed with coupons and sale papers, or do you occasionally go out to dinner or a movie? What about the kids? Do you pay for fun activities for them?
I feel I shouldn't. I even feel guilty when I do. But I definitely still go out sometimes, for dinner with my husband or friends, to a movie with the kids, to amusement parks, bowling, and so forth. I try to use coupons and discounts when possible, but I have not mastered the art of totally free entertainment yet. I do spend more time playing board games with my kids and going to free shows and the local (free) water parks and taking advantage of "free days" at the museums than I used to, but I still find it "necessary" or at least very tempting to actually pay for dinner and amusements sometimes.
Okay, that seems like enough for now. I'm not going to tag anyone. If you want to play along with this meme, simply post a link to your blog in the comments section below so I can come see what you've written, add one question and subtract one question, and then answer the questions on your blog.
Tuesday, July 7, 2009
Update for June
As of the beginning of July, here is where I stand.
I forgot a small-balance credit card when I calculated my initial balance in April. So my debt amount was even worse than I thought, and should have been $112,065.63 total debt (including the car loan).
The required minimum payments were $2062.07, plus the new charges on the card I pay in full every month, of approximately $1650, which is where I came up with the approximately $3700 in credit payments I need to make every month.
But since I have to pay those new charges on the one card in full every month, I decided to recalculate the minimum payment amount to reflect only the revolving credit payments. That amount varies depending on the balances, but is around $2000 - $2200 each month.
Since April, I have transferred some of my higher interest rate balances to the 0% promotional interest rate CitiCard mentioned previously, and made payments on some of the cards. The thumbnail sketch is as follows:
April:
Total debt before payments this month: $112,065.63
Total minimum payments due: $2062.00
Payments made: $ 680.00, plus transferred $8400 to CitiCard with the 0% promotional interest rate.
Note that I did not meet my goal of paying $335 "extra" in April. I didn't even make the $2062 minimum payments. All I did was move money around. Not very helpful.
May:
Total debt before this month's payments: $106,671.82
Total minimum payments due: $2099.07
Payments made: $2173.00
Extra payment above minimum: $73.93
It appears the debt has decreased by nearly $4000, but it hasn't. Some of the balance transfers had posted to my "payee" accounts, but not yet posted to the Citi card, so my total debt looked a lot less than it really was.
June:
Total debt before this month's payments: $110,233.39
Total minimum payments due: $2191.07
Payments made: $2555.00
Extra payments above minimum: $363.93
This month the minimum payments have gone up. That is because of some new charges on one of my revolving charge accounts - and also because of the new payment required for the Citi card. It may go up again for July, as I needed to purchase clothes for my kids and pay property taxes of $750 and had no other funds available. I already had reached my $1600 credit limit on the card that I pay in full every month.
The total debt at the beginning of June is accurate, though, and includes all the balance transfer debt plus all the previously existing debts and credits.
Also note, I met my goal in June of paying at least $335 "extra" above the minimum payments! (Although, to be honest, I charged more than the $335 "extra" on my revolving accounts, so I'm not sure this really counts, as it did not go to debt reduction, but to paying for things I bought this month. But at least I paid extra instead of just paying the minimum and running up the cards.)
July:
Total estimated debt before this month's payments: $110,104.
Summary:
So, during these three months, I have made payments totaling $5408.00, and reduced the total debt by approximately $1961.00 ($112,065 - $110,104 = $1961.00).
That's a lot of money going to interest payments. But at least I can see some progress, which is encouraging. Certainly it is better than it was before I embarked on this project. It used to be that every time I added up the debt it was more than the last time I added it up.
Wish me luck as I continue this ridiculously hard battle to get rid of credit debt.
.
I forgot a small-balance credit card when I calculated my initial balance in April. So my debt amount was even worse than I thought, and should have been $112,065.63 total debt (including the car loan).
The required minimum payments were $2062.07, plus the new charges on the card I pay in full every month, of approximately $1650, which is where I came up with the approximately $3700 in credit payments I need to make every month.
But since I have to pay those new charges on the one card in full every month, I decided to recalculate the minimum payment amount to reflect only the revolving credit payments. That amount varies depending on the balances, but is around $2000 - $2200 each month.
Since April, I have transferred some of my higher interest rate balances to the 0% promotional interest rate CitiCard mentioned previously, and made payments on some of the cards. The thumbnail sketch is as follows:
April:
Total debt before payments this month: $112,065.63
Total minimum payments due: $2062.00
Payments made: $ 680.00, plus transferred $8400 to CitiCard with the 0% promotional interest rate.
Note that I did not meet my goal of paying $335 "extra" in April. I didn't even make the $2062 minimum payments. All I did was move money around. Not very helpful.
May:
Total debt before this month's payments: $106,671.82
Total minimum payments due: $2099.07
Payments made: $2173.00
Extra payment above minimum: $73.93
It appears the debt has decreased by nearly $4000, but it hasn't. Some of the balance transfers had posted to my "payee" accounts, but not yet posted to the Citi card, so my total debt looked a lot less than it really was.
June:
Total debt before this month's payments: $110,233.39
Total minimum payments due: $2191.07
Payments made: $2555.00
Extra payments above minimum: $363.93
This month the minimum payments have gone up. That is because of some new charges on one of my revolving charge accounts - and also because of the new payment required for the Citi card. It may go up again for July, as I needed to purchase clothes for my kids and pay property taxes of $750 and had no other funds available. I already had reached my $1600 credit limit on the card that I pay in full every month.
The total debt at the beginning of June is accurate, though, and includes all the balance transfer debt plus all the previously existing debts and credits.
Also note, I met my goal in June of paying at least $335 "extra" above the minimum payments! (Although, to be honest, I charged more than the $335 "extra" on my revolving accounts, so I'm not sure this really counts, as it did not go to debt reduction, but to paying for things I bought this month. But at least I paid extra instead of just paying the minimum and running up the cards.)
July:
Total estimated debt before this month's payments: $110,104.
Summary:
So, during these three months, I have made payments totaling $5408.00, and reduced the total debt by approximately $1961.00 ($112,065 - $110,104 = $1961.00).
That's a lot of money going to interest payments. But at least I can see some progress, which is encouraging. Certainly it is better than it was before I embarked on this project. It used to be that every time I added up the debt it was more than the last time I added it up.
Wish me luck as I continue this ridiculously hard battle to get rid of credit debt.
.
Saturday, July 4, 2009
Friday, July 3, 2009
A Small Savings
Lately I am constantly trying to find ways to save money.
Of course I use coupons and shop the sales at the grocery.
I've got the air conditioner set at 80 degrees. I tried 82, but my productivity sunk to unacceptable lows as all I could manage to do was sit quietly and drink iced tea, so I put the thermostat back down to 80.
And, although I couldn't convince my dear husband to get rid of cable entirely, I convinced him that we do not need the digital cable box for the tv in the bedroom. (Not the kind you hook up to your tv so you can get a signal even if you don't have cable; the kind your cable company gives you so you can get 1000 channels instead of the 99 your tv will pick up without the box). 99 channels seems like enough, to me, for a tv that we watch only for an hour or so before bed at night. He agreed. Savings: $6.00 per month. It's not much, but it's something.
On a side note, can you believe the cable company charges $6.00 per month, every month, to rent those cable boxes? That's $72 per year. I've had two of them for over 5 years; seems like they ought to be mine by now (can't imagine they'd cost more than $300 or so to buy new, if you could buy one), but they just keep charging me $6 every month. It's like the old days when you had to rent your telephone from the phone company, and they charged something like $12 a month for it. Then companies started selling telephones for $35 or so, and everyone went out and bought one and saved a bundle. I can't wait 'til you can buy the digital cable boxes for a reasonable price and stop renting them from the cable company!
Any other money-saving ideas or suggestions? Please leave me a comment.
.
Of course I use coupons and shop the sales at the grocery.
I've got the air conditioner set at 80 degrees. I tried 82, but my productivity sunk to unacceptable lows as all I could manage to do was sit quietly and drink iced tea, so I put the thermostat back down to 80.
And, although I couldn't convince my dear husband to get rid of cable entirely, I convinced him that we do not need the digital cable box for the tv in the bedroom. (Not the kind you hook up to your tv so you can get a signal even if you don't have cable; the kind your cable company gives you so you can get 1000 channels instead of the 99 your tv will pick up without the box). 99 channels seems like enough, to me, for a tv that we watch only for an hour or so before bed at night. He agreed. Savings: $6.00 per month. It's not much, but it's something.
On a side note, can you believe the cable company charges $6.00 per month, every month, to rent those cable boxes? That's $72 per year. I've had two of them for over 5 years; seems like they ought to be mine by now (can't imagine they'd cost more than $300 or so to buy new, if you could buy one), but they just keep charging me $6 every month. It's like the old days when you had to rent your telephone from the phone company, and they charged something like $12 a month for it. Then companies started selling telephones for $35 or so, and everyone went out and bought one and saved a bundle. I can't wait 'til you can buy the digital cable boxes for a reasonable price and stop renting them from the cable company!
Any other money-saving ideas or suggestions? Please leave me a comment.
.
Subscribe to:
Posts (Atom)