Good Bye Bank Of America

Some may call it the "Golden Ticket" and others will call it stupidity, but I am happy and relieved to have dropped off my final payments to Bank of America. Now before you get all excited for me, all I did was transfer the balances to another card. The good news is I went from 27% to 3.99% which will save an incredible amount of money. Essentially, I will be paying less than $40 per month in finance charges compared to ever $300. The bad news is this is not my credit card that I transferred it to; it's my mothers and I have 23 months to pay it off.

I'm not worried about paying it off in time. The payments equal what I'm currently paying every month. Any follower of Dave Ramsey knows that you should never lend money to family unless you're prepared to gift it or accept that you won't see it again. I took over a month to accept my mother's offer because of my concern on how it would affect her credit rating and the fine print her bank would put into such an offer. To guarantee that my actions will to adversely affect my mom's good credit, I am giving her an extra payment up front to act as a cushion. I will also roll over the payments I've been making towards my LASIK surgery as soon as that's paid off in October.

Goal Progress

After 6 deliveries in one day last week, I'm happy to report an extra $100 payment to one of my credit cards as well as an extra $100 payment for my LASIK. I realize I should have put all $200 towards the LASIK, but the balance on the credit card is so small it will be easy to snowball once its out of the way.

Goal Progress

I took back pop cans for the $.05 refund and earned a nifty $4.00. It may seem like a waste, but every bit helps! On a more positive note, I am set up for deliveries next Saturday. Wahoo!

Did I Make A Mistake?

A month ago I took a good hard look at my credit cards. (Okay, it was actually the bills since I cut up the cards almost a year ago.) I realized that due to a couple of stupid mistakes over the holidays, I've been spending close to $300 a month on interest alone. Fed up I went into my credit union and inquired about options for a consolidation loan. The customer service person told me they don't do consolidation loans, but I could either apply for a new credit card at a low introductory rate of 3.99% or I could apply for an increase in my line of credit at 14%.

Honestly, I didn't think I would get approved because my debt to income ratio is high, but I thought "What the heck?" Its not going to be any worse than paying 26% on the credit card I have now and its cut up so I won't be tempted to use it. Amazingly enough, I was accepted for an amount that was almost enough to cover it.

When I got the card, I was still a bit unsure if I was making the right choice. After all, I've transferred balances before and I'm still struggling with debt. After much debate and a month later, I made the call. Sure enough, it couldn't be that easy. The woman I spoke with today said the interest would be 11%. I asked her about the introductory rate and she said it ended March 15th. Funny, that was about 5 days after I received it. I decided to do it anyway. After all, that is 15% less than what I am currently paying.

So, have I learned from my past? I hope so. To help guarantee my success I've arranged for automatic payments from my account to make sure I don't miss a pay date. I'm closing the other account as soon as its paid off.

The Tax Man Cameth

I know it was my money already, but that doesn't make the day I receive my tax refund check any less exciting. Due to decent planning, my check was only a few hundred dollars. You may ask why that's a good thing, but it means that I didn't loan the government much interest free money.

My first stop was to make a 2nd payment on a Visa card. The second stop was to a department store to pay off a card. Yes, I agree that store cards are high interest, but this one is a rewards card and I pay it off quickly if not monthly. Felt good!

I did the shift this weekend, but didn't work as many hours as I hoped. At least I was able to put $5 towards my emergency fund and fill up the tank of my car. Tomorrow I have a taste test that will bring in another $20 for my emergency fund.

Lastly, I received an email from a local college asking me if I was still interested in participating in a mock jury. If I fit the criteria I will earn $100 for 5 hours of work. That will be a nice addition to the pot.

Fair Isaac Is At It Again! Are you Ready?

Liz Pulliam Weston at Money Central has written a new post and its a must read! Fair Isaac has revamped their FICO score for 2008. Check out "Build A Killer Credit Score In 2008." There are changes and if you aren't privy to those changes you could be hurting your score without even knowing it. According to the article, some changes include:

• "Applying for new credit accounts may hurt your score less.
• Having high balances on your credit cards could hurt more.
• Actively using the credit accounts you have may be more important.
• Having both revolving and installment accounts on your report could help you more, as the new formula is more sensitive to your ability to handle different types of credit."

Throughout the article, Liz Pulliam Weston stresses the importance of keeping credit balances well below the limit suggesting not to exceed 30%. This is because FICO uses this percentage as the largest factor in your score. Unsure of your FICO? While you can get a free annual report yearly at AnnualCreditReport.com, it's not as easy to find out your FICO score without applying for a loan. Having said that, they will for a price, include your FICO score with your credit report. Each of the three reporting companies will have a different score. To play it safe, use the lowest score.

Big Yeah! Two More Debts Down The Drain

I wrote the checks to pay off two debts today.

First, I paid off a Visa card that I've been working on since 1998. This was a bad case of paying a very small amount and watching the majority go towards interest. Somehow this card was a low priority because it was a low interest rate. The problem is that it never got paid off because there was always something of a higher priority. So I'm happy to announce I now have $50 per month to snowball towards another bill.

The other debt that I paid off also satisfies one of my November goals. I have paid off my step father which is a huge weight off of my shoulders. It wasn't a large debt, but I never feel good borrowing money from family.

Snowflake!

Today I got my FSA check in the mail. It's only $30, but that's $30 towards my credit card debt. Big YEAH! The best part is that there is another one that should arrive next week.

This will be a second payment this month which means it will go to reducing the principle. This card is slated to be paid off in December. Oh its just within my grasp!

The "Reduce A Bill" Challenge

Thanks to the inspiration of Working For Financial Freedom and Being Frugal, I am joining their challenge for October. Originally inspired by Being Frugal's ability to lower her grocery bill through determined coupon use and organization, Working For Financial Freedom has created the "Reduce A Bill" Challenge. The idea is to focus on one bill or budget area to lower. Working For Financial Freedom is going to line dry her laundry for the month of October.

While reading through some of the comments, I found a response from Heather who is going to do 10 No Spend days for the month. These are days where you spend absolutely no money. This sounds right up my alley since I find that there is always a dollar here or there that ends up getting spent. Even on my best day I tend to forget about paying for parking somewhere.

If you're interested in participating, check out either site and record your goal in the comment section. Don't forget to think about what you are going to use that money you have saved for. Personally, I'm working on that $1,000 emergency fund.

It's Not Easy Keeping Momentum Sometimes

Fall can be a fantastic season... the changing color of leaves on the trees... trips to the country to pick up fresh veggies at the pumpkin field... starting back to school for parents and children. Unfortunately, it can also be an extremely difficult time. The days are getting darker earlier, the rain is coming down, stress is ramping up as the summer lazies become a memory.

Fall is a mixed bag because I find it a great time to get organized and set goals, but my hibernation instincts kick in as well. This week has been difficult to keep to my food budget. It may be due to being housebound with the ick. It definitely has something to do with a lack of menu planning. So how do you insure against a backslide?

First, let me use an example that I saw many years ago from the Cosby Show. Bill Cosby for those who are not aware has a PhD in Education, something that gives him a bit more credibility for family hour solve-it-in-20-minutes shows. The episode in question has Bill and Theo sitting on the bed in Theo's room discussing energy used to be successful in school. Bill's analogy is to picture a jet plane. A tremendous amount of energy is used to take off and land. It takes much less fuel to maintain its traveling altitude.

The same can be said for any endeavor we undertake. More energy is used to research, plan, create, and implement a project than it does to keep a project going. The question then comes up, is it possible to program an auto-pilot for those times that we need to take a coffee break? The answer is yes.

• Keep track of the menus that you've planned so you can reuse them rather than creating a new one each week. Make about 6-8 and rotate them.
• Put your savings on autopilot. If you have direct deposit, make sure you have a set amount put into your savings be it emergency, travel, retirement, college fund, etc.
• Sign up for on-line bill pay. Forget writing out checks and remembering to put them in the mail. Talk to your bank or credit union for more information.
• Consider DRIPs (Dividend Reinvestment Programs) to make your investments automatic. DRIPs are set up directly with large cap companies where you can invest a set amount each month directly with the company. The amount does not have to equal a full share and you are not charged a brokerage fee. The dividends you would earn off of the investment is then reinvested into the company's stock.
• Invest regularly in your retirement by signing up with your company's 401k program. If you have a company match, make sure you are maxing out your contribution they will match. This is like getting a raise without having to bother your boss.

Do you have other great ideas? I invite you to share them by posting a comment.

Are You Motivated By Rewards?

Over at the Simple Dollar, Trent has posted about material rewards in Should You Give Yourself Material Rewards For Meeting Certain Milestones. Rewards can be powerful motivators and come in the form of verbal kudos, food treats, material treats, debt payoffs, etc. In Trent's case, his posting discusses the change between material treats to being rewarded by debt payoffs and meeting financial goals while on his quest to become financially savvy.

In my quest to payoff my debt quickly, I'm finding that I feel guilty if I want to treat myself to something I really want. I'm not a techie. I don't need to have the latest gadget. I don't collect anything. Honestly, I get lectured at work because I don't spend any money on myself. So where is the balance? I just bought a new to me car, so that is my latest splurge. I could have bought a cheap car, but I've wanted a CRV for a few years. Is this considered a reward? Probably not. It wasn't set to be a reward.

My compromise? For each bill I pay off, I will invest $50. That way, I will be working towards a goal and still feel that thrill of getting a reward. If there is something I want, I will use the extra money I earn to purchase it. Otherwise, Ben and Jerry's Cookie Dough is an inexpensive and tasty treat.

What rewards are you motivated by?

Earning Extra Change

If you're looking for snowflakes to add towards your debt, don't overlook the smaller dollars and cents. The following is a list of ideas to consider to increase your income without committing to a 2nd job yet...

• Returning cans and bottles for a refund ~ Many states offer a deposit program to help support recycling. I discovered awhile ago that no one was eager to take the pop cans back from work. This has brought in an extra $5 per month. Not an incredible amount, but it does add up.
• Selling back used books, CDs, and DVDs ~ Get to know your local used book or music store. Often if you know what they are looking for, you can keep an eye out at garage sales and make a profit.
• Volunteer for focus groups ~ Research firms are always looking for focus group participants and often pay anywhere between $20 and $75 for a couple of hours. Many times they also bribe you with food.
• Garage Sale ~ The trend towards simplifying your life is not only good for the psyche, but also for the pocket book. Go through your house and see what kinds of things are just taking up space. Figure out what is really important to you and what is just clutter. Consider combining efforts with friends and family to really draw buyers in.
• Consign clothes you don't wear ~ Many consignment stores are currently looking for good quality used fall and winter clothing. While you are switching between your pulling your fall clothing out of storage and storing your summer clothing, check to see which pieces still fit and which you are not going to wear anymore. Take them into a consignment store to see if they would better serve you as additional cash towards your debt.

$39 For A Late Charge Is a Missed Snowflake Opportunity

Since I've been following No Credit Needed's 33 Days and 33 Ways to Save Money and Reduce Debt, I've really had the opportunity to examine all of those demons in my financial house. Today's topic is Remembering Due Dates. Here is an area that undermines not only the ability to make the most money work towards paying back debt, but also works against us because banks use this as an opportunity to raise interest rates.

NCN recommends a number of ways to ensure bills are paid by the due date including old school pen and calendar and techno geek Internet reminders. I would add a few more recommendations.

• Snowflake your bills so that you are a month ahead.
• Pay the bill as soon as you get it.
• Keep a post-it on your monitor listing due dates.

Personally, I've been using a combination of styles. (I also have back ups for waking up in the morning.) I have been working on using a calendar at my desk to write down due dates including setting a date to pay bills. My cell phone has a calendar feature that I'm considering programming with these important dates.

The most important goal in this is to stop lining credit card companies pockets with profits they did not earn.