Conscious Consumer Spending
In their book "Your Money or Your Life," Joe Dominquez and Vicki Robin make the argument that money equates to life energy. To help you make better spending decisions, consider the amount of life energy necessary to pay for the purchase. If you earn $12 an hour and you want to spend $48 on the latest X-Box game, the game costs four hours of your life energy. Do you want to spend four hours of your life on that X-Box game? Or would you rather spend those four hours playing with your kids, going for a walk, or taking your wife out to dinner?
When you begin to look at your spending in terms of how hard you have to work to pay for the purchase, and what you have to give up in order to work those hours, spending takes on a whole new perspective.
Interest Rate Increases on Multiple Cards
A little-known secret about late credit card payments is that the creditors actually love it when you pay late. That's right. They love it, because they make buckets of money off the credit card late fees they charge you each time you pay late. Plus, depending on the terms of your agreement, if you pay late even just once, your interest rate can be jacked up to over 20 percent.
For payments that are late but are made within thirty days of the due date, the pain usually ends there. Cross that thirty-day threshold, though, and wheels kick into motion that will haunt you for months if not years to come. That's because if even one of your credit card companies reports a late payment to a credit reporting agency such as Equifax or TranUnion, all your other credit card companies will likely jack their interest rates sky high, too. Plus, your credit score will suffer a little more for each late payment. The lower your credit score, the more you pay for credit. If you pay your bills on time, you can get the best interest rates offered. Pay late and lenders will gouge you with higher interest rates or deny you because they consider you too risky to do business with.
Talking with Your Creditors About Late Payments
Creditors appreciate it when you talk to them. If you are having financial difficulties and know you will be unable to pay your credit card bill on time, you should contact the company as soon as possible. Whether you were laid off, your car broke down, or one of your kids got sick and you have huge medical bills to pay, explain the situation to your creditor and let them know you will be unable to make your payment on time. It's best if you can give them a definite time by which you will be able to make payment and creditors how much you will be paying. If the situation is one in which you are unlikely to be able to pay the minimum on time for an extended period of time, ask to speak to a supervisor, explain the situation to them, and try to set up a payment arrangement to avoid being charged late fees.
Credit Card Balance Transfers
Debt Management Tips: If you have multiple credit cards with different interest rates, one way to manage your debt and pay it off more quickly is to transfer the balances to the credit card with the lowest rate. However, you need to be sure to do this methodically, or you could find yourself paying late fees and getting dinged on your credit report. Organize your statements so you have the account numbers, balances, and contact information for all your accounts. Keep track of the amount you are transferring from each card and the date the transfer was initiated. It takes as long as two to three weeks for transfers to be completed, so if you have a payment due in that period, make the payment on time to avoid late fees. Once you have consolidated your debt onto one card, cut up--but do not cancel¡ªyour other credit cards so you are not tempted to use them again. Why not cancel them? Part of your credit score is based on what percent of your available credit has been used. If you cancel your other cards and the card you rolled your balances to is at or near its limit, that will look bad on your credit report. However, if you think you may be tempted to use those cards, cut up or not, you probably should cancel them.
Drawbacks of Payday Loans
Other than the sky high interest, the No. 1 drawback of payday loans is that many people who tap the fast cash loans market dig themselves deeper and deeper into a financial hole from which there may be no easy escape. By their very definition, people taking out payday loans are not even making it living paycheck to paycheck. When their loan comes due, very often they do not have the money to make good on the debt. When that happens, the payday lender allows the borrower to extend the loan¡ªfor an additional fee, of course¡ªuntil the next payday. Payday lenders don't care if this goes on indefinitely. It's how they bring home the bacon. For the borrower, unfortunately, it is a cycle that only compounds their financial predicament.