Credit Card Companies Seek Every Last Penny Out of Customer

Recently I closed our only credit card, which was with Chase Bank. We had only gotten it on impulse in the beginning of the summer (before Dave Ramsey changed our lives, of course), and after paying off the balance before the due date, called to close. The representative was friendly enough and told us we would receive a confirmation letter and that there were no further charges.
Well, a word to the wise. Don't trust them to be good on their word. When you close a credit card account, that means less money for the credit card companies. They don't like it. It means they can no longer get any interest from you.

After I closed the account, I could no longer access it online. Until, suddenly, today. I was checking my checking account and noticed the credit card account had reopened. With a finance charge.

Yes, even after I had paid off the balance in full and gotten a statement from the company. They were going after my pennies. If I had not seen it, I would have been "late" on my payment (which is what they like, isn't it?) and thus induced more charges. No notification was sent to me either by mail or email in the meantime.

I called to complain, but the lady simply said it was a finance charge and needed to be paid. I eventually asked for the charge to be removed since we were told otherwise and had never been late on any payments and she consented. Let's just hope they stay true to their word.

So, for all of you working to pay off your credit cards (especially from Chase, I have heard similar stories) remember to pay an extra two or three dollars to account for that inevitable finance charge they will try to bill you. That way, they owe you money rather than the other way around.

Lesson learned: don't dabble with credit cards. They really are out to suck every last penny from you!

Student Debt Increases

If you've recently graduated or entered college, chances are you took out a student loan in order to afford it. With the sky-high prices of higher education continually on the rise, it's no wonder that student debt has increased dramatically over the past several years. Although many advocate that educational debt is a worthy investment, the rapid rise of unemployment has been cause for some concern. No longer are graduates confident that they can find a job immediately after graduating from college. With that, a fear of possibly not being able to pay down student loans and other debt has rippled in those who find themselves in the midst of the economic crisis.

Funding higher eduction does not have include the multitude of debt that often accompanies it. However, since many parents have not adequately planned or saved for their child's future (or lost it during the recession), taking out a loan seems to be the only choice. Many students sign the documents without a second thought, thinking, surely they would get a job and everything would be ok once the loans entered repayment. Has this attitude created a disillusionment for our young students? Have they really weighed the costs of pursing a higher education?

There are ways, of course, to help battle the high cost of education and college expenses. One of these is to attend a local community college during the first year or two before transferring to a larger university. Students may elect to take general courses at a much lower rate this way and still transfer the credits at a different school. This takes the cost of dorming and food plans out- which can account for more than 2/3 of a student's total cost of attending a university. Living on one's own rather than in the dorms is another way to cut costs. Working a low-wage job for a year before attending school is yet another alternative and a way to save money for the high costs.

Sadly, many parents and prospective students view high education as an 'experience' (though it is rightly so), but neglect the most important factor- education. This causes them to enroll in expensive universities they cannot afford for the sake of not 'depriving' themselves of what all their friends will be doing. Many students simply take for granted the fact that they can attend such intstituions without weighing the costs- literally.

In order to lower the statistic of rising student debt, students and parents must come to realization that college is not free or a hand-out. Until then, expect the number to increase. And with the recession wearing many people thin, expect more people to default on payments.

Budget Right: Are You in Denial?

Recently, I stumbled across this article which discusses how many people are in denial about their debt. Why are they in denial? Because they are not seeking help. This is surprising, because the people polled for this article say they have not only fallen behind in their monthly payments, but that they are unable to "meet their credit commitments". Because this article is based on the UK, it reinforces the fact that we are in a worldwide recession.

Does this sound like you? Apparently there are more than 6 million people who are afraid their home my be repossessed. If you find yourself unable to meet your credit commitments, you should know there is help! It's called financial and debt counseling, and its more readily available than you may think.

People who are in denial about their debt reminds me of those who are in denial about their OCD. Research indicates that more than 2 million Americans have Obession Compulsive Disorder. However, it remains to be one of the most under-treated and under-diagnosed pyschological disorders even though highly effective and readily available treatment exists. What is interesting about this is that those with OCD are fully aware that they have a problem. It disrupts their lives by hindering their work, relationships and daily activities. They either don't want to seek help or are unaware that it is available. Likewise, those with debt are also aware that there is a problem, and it severely disrupts their lives as well.

If you have questions about how to manage your debt or get help, I encourage you to check out this site. Jessica Swingle is an accredited Financial Counselor who answers your questions for FREE in order to help get your finances going in the right direction. Specializing in financial counseling for military families, young couples and individuals, Jessica's aim is to get the word out that there is help and educaiton available. She has remarked that the ratio of those who seek help verses those who actively need it is desperately out of proportion. Perhaps many people are simply unaware that financial education and help exists. If so, then now is the time promote financial education awareness.

Saving money by using coupons and sales is simply a starting point for getting your finances inline. However, many people need more professional help with the rest of their financial lives. Perhaps you need to refinance your mortgage, understand your debt repayment options for credit cards or initiate an overhaul on your stock portfolio. Its never too late to get help and advice.

Budget Right: Getting Help with Debt

For those of you who read my last post on debt management here, I figured I should leave you with some places where you can get debt help if you really truly don't know where to start.

If you are struggling or unsure about your college loans (or if you just recently graduated, like me, and are dumbfounded at that huge financial commitment you made about four years ago when all you wanted to do was move into the dorms with your friends), check out this site, called You Can Deal With It. This is a great site full of resources to help your manage and get help in paying back your student loans. For example, you can learn about the different repayment options available for your loans and find out who to call if you are about to default. It also discusses loan consolidation, and gives you tips on how to practically manage your money.

If you need debt help with credit cards, this site also provides some valuable information on step by step actions you can take now to help eliminate it.

With the Obama Administration's new financial stimulus plan, there is real help for those of us (in the USA) who've found themselves unable to pay the mortgage. Click here to visit the government's website to determine if you are eligible for refinancing.

I hope this helped steer you in the right direction if you are having trouble getting debt help.

Click here to read my review of Dave Ramsey's bestselling book, Total Money Makeover. I really encourage anyone who's trying to get control of their finances to read his book. You can buy it here.

Stay tuned for more on budgeting right as well as more principles from Dave Ramsey!

Budget Right: Debt Managementt

Debt is a familiar term for most of us. Whether it be student loans, a mortgage or maxed out credit cards, debt is a real and vibrating force in many of our financial lives. Some of us like to sweep it under the rug, and put on the persona that everything is fine and dandy. But in reality, its not so fine and dandy when those statements come in. So how does a normal person deal with this? Do you pay the minimum? Do you ignore it? Is it even something that can be managed? I'm here to answer all those questions in this post about debt management.

Types of Debt

1. Student Loans-- This is referred to as 'good debt' because it really is an investment in your furture. So don't get down on the fact that you still owe over 40 grand. However, it is VERY important to not ignore this debt. If you do, you risk defaulting, causing your credit to not only plumment, but your loan will automatically be due in FULL. If you are having trouble paying your monthly payments, contact your lender. They can usually help you out by offering a lower monthly payment depending on your situation.
   
2. Mortgage-- This is your house. Believe it or not, most people don't own the homes they live in- the bank does! Right now there are tons of government programs in the works to help people who are having trouble paying their mortgage due to variable interests rates and recent layoffs. However, do not simply view your home as an investment-- it a place to live, a roof over your head. You are paying for shelter. Having a mortgage may increase your credit, but be careful not to default on these or you could have trouble taking out another one in the future.
3. Credit Cards-- Credit cards are either your friend or your enemy depending on how you use them. They can be an excellent way to consolidate finances, providing you pay the amount you owe in FULL each month. DO NOT pay the minimal amount due if you can help it. Interest rates, especially now, are jumping at unbelievable heights. If you pay the minimum, you risk getting yourself sucked into a whirlwind of debt that may take years to get out of.

There are other types of debt out there, but I am just covering the basics. So, what do you do when you find yourself with all this debt each month? Here is what I recommend you do in beginning debt management:

• Pay the minimum due each month for student loans. The bigger the payment the better, but only pay extra if you don't have any other debt.
  

• Pay the minimum due each month for your mortgage, but double up on one month each year. This will get your ahead in your payments and help you own that house sooner. It also saves you money that you could otherwise have lost due to interest.

• Pay your credit card bill in FULL each month. If you are a victim of whirlwind debt, I suggest you pay off the smallest amount first. For example, if you own 100$ to credit card #1 and 5000$ to credit card#2, pay the most you can on credit card #1 until it is paid off, but just pay the minimum on #2. Do this with each card until you have no more debt.

In my next post of Budget Right, I will cover how to get control of your finances to avoid incurring any additional debt by creating a budget.