Cut up your credit cards and be wealthy!

Credit cards are the bane of existence for many people. Once you start it is very difficult to stop, unless of course you miss a couple of payments and then they tend to help you stop! Even a credit card with a good interest rate is still a bad deal! I know, it is for emergencies! You know, like being hungry on the way home from work and seeing a special on pizza or burgers! You run low on gas and don't have any cash on you. Emergencies!

Now days almost every single bank offers you a debit card with a Visa or Mastercard logo. These work everywhere that credit cards are taken. The great thing about them is you can only spend what you have. O.K. Some accounts offer overdraft privileged with their accounts. Let me just say one thing, overdrafting your account is not a privilidge it is stupidity! Last year alone I had over $1700 in overdraft priviledge fees! This year I overdrafted one item in January by a simple math mistake.

Using your debit card instead of a credit card is the way to go, but how do you stop using your credit card(s)? The answer is simple but it may shock you. Take a pair of scissors and cut them into a million pieces! You don't need the card to pay your bill, the credit card companies provide you with a statement eqach month with a bill. Simply write your check and pay the bill. No card needed!

Some people think that if you don't have any credit cards you have horrible credit. Well, credit cards are one of the top 5 reasons people have bad credit. Eliminate paying more for everything you buy! If you buy a $400 item on credit and pay it out you will end up paying much more than $400. Let me share a little story with you.

A few years back after a long struggle getting my credt back on track after a divorce I applied for a Capitol One credit card. The whole resaon for the card was to build credit. I had planned to put around $10 or $20 a month on the card and pay it off each month. Well, my air conditioner went out in the middle of summer. At the time I was living near Houston, TX where the humidity is always around 100% and the summer tempatures reached 105 degrees on a regular basis.

So, I took my new credit card down to Sears. My new shiny, never been used credit card with a limit of $250. Remember I was rebuilding my credit so it was a low limit to begin with. I bought an airconditioner and after tax and all it was $238. Long story short, a few months later the Enron debacle happened and I lost my job. I had a credit card that I could not pay. It went to default.

Six months ago I paid my last payment to the collection agency on that $238 air conditioner. Grand total? $1748.89 with all the fees and penalties and interest. That was the most expensive airconditioner of all times! Cut up your credit cards! Cut up your credit cards! CUT UP YOUR CREDIT CARDS!

Yesterday I mentioned taking a little additional money and adding it to your smallest debt and paying it off. Well, you can see where that would be a good thing now. The economy is bad, yes, we all see that. If you can pay off one credit card you can take the minimum payment that you were paying on it along with the extra money from being frugal and apply it to the next credit card or debt an pay it off! Always pay off the debts in order of amount smallest to largest.

That is it for today. I honestly hope that you can get out from under the thumb of the credit card companies. We'll discuss it more later.





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Start at the Beginning! Save and Get Out of DEBT!

We have talked some about saving money on bills and in every day life. What we haven't touched on just yet is getting rid of debt. With all the tips I have mentioned you should be saving at least $25 a month by now! That is nothing to sneeze at! You are finally building a foundation!

Now, I would like to offer a way to make that $25 a month grow and grow very quickly! I am not talking about putting it in a piggy bank or investing. Well, I am talking about investing but not in the way that you see it. I am talking about paying off your debts with it!

Some of you just read that and thought "What are you talking about?" You probably think I am crazy! O.K. I might be crazy but lets talk about it for a minute or two. How many credit cards do you have? How much do you have in student loans? How much do you owe your buddy at work, or your mom or your dad?

Today try and make a list of every single debt you have. This will be a daunting task. You need to know how much you owe! After you list every single debt, organize them into the smallest to the largest. Remember, $5 for lunch your buddy loaned you last week is a debt. So, list ALL the debts you have!

Now, here is the fun part. Take that $25 you have saved due to the tips you found here and apply it to the smallest debts you have. Keep doing this until the smallest debt is paid off. This is in addition to the minimum payment.

For example lets say you have a credit card with $500 credit limit. It is close to maxed out. If you look at your statement, 1/3 of your minimum payment or more is interest. That means 2/3 of your payment is principle. This of course is best case if you have a low interest rate. So your minimum payment is probably somewhere in the $15 to $20 range. So, you take your $25 and add it to your minimum payment and you can pay that card off in much less time. If you just pay the minimum it will take no less than 36 months to pay off $500 and you will have paid over $200 interest in 3 years on a mere $500!

Interest will eat you alive! So, get rid of it! Pay off all your credit cards and cut them up! If you were to take your credit card payments and put them into a savings account you would EARN money! Call me crazy if you want but I am down to a single credit card and it will be paid off in two months. After it is paid off I am going to apply what I used to spend on my credit card to a savings account and I will have money that is earning ME money, not the credit card companies.

Think about it and let me know how you feel about it!




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