“April, 2007” Archive
Apr
30
One of the things I have struggled with lately is a good work/life balance. Although most companies like to say they have a “great work/life balance”, I am yet to find one that is truly so. The responsibility for creating my work/life balance rests clearly on my shoulders. That said, I tried to find a way to increase my work/life balance (toward the life side) while also saving money. My conclusion: drop the data plan from my Smartphone. Not only will I save $30/month on my cell phone bill but I will truly be able to unplug once I leave the office. I figure the place will NOT burn down if I don’t answer my emails as they come in. I also anticipate that my friends will appreciate me not looking at my phone constantly to see what fire drill has come up?
QUESTION: How do you create a good work/life balance for yourself?
Apr
30
It is often difficult to follow your own advice but in this case, I am going to do just that. Although AMEX is charging me some astronomical interest rates at the moment, Citibank and Bank of America are starting to get up there as well. So, I’ve written them letters as well asking for some temporary interest rate relief so I can jumpstart the debt repayment plan. I have maintained EXCELLENT payment history with both these banks and have been a customer for many years so my hope is that will make the negotiating easier. As with my AMEX letters, if my letters to Bank Of America are successful, I will of course post the text of these letters for people to try their luck.
In these letters, I took great care to stress my excellent payment history, my long relationship with the bank and the fact that I am asking only for a temporary reduction in interest while my financial situation improves. I will keep everyone posted on the results.
QUESTION: Has anyone been successful in negotiating with creditors, whether it be a reduced interest rate or reduced payments? If so, share your story in the comments.
Apr
29
As you can see from my Credit Card Balances, the one creditor I really need to negotiate with is American Express. They are charging me some astronomical interest rates on my cards as I was late with payments a few months back. Although I got myself current fairly quickly, the accounts were closed by AMEX at which point they raised my interest rates to where they are today. This weekend I crafted letters to AMEX in an effort to get my rates knocked down to a level where I can both make the payments on-time AND start hitting the principal rather than paying them nearly ALL interest. Although it will likely be a few weeks before I get a response from AMEX, here are what I think the keys to successful negotiations with creditors:
- BE HONEST ABOUT YOUR SITUATION — This means not only taking responsibility, i.e. don’t blame the creditor for your debt, it also means conveying to them the honest details of your financial situation and why you find yourself asking for a lower rate or payments. Don’t inflate or otherwise lie about your situation.
- STICK TO THE FACTS — Don’t try and appeal to the emotional side of the person who will read your letter. Just stick to facts and reiterate that you intend to pay the debt in full.
- BE SPECIFIC — Tell the creditor what you are looking for in terms of an interest rate reduction, reduced payment and/or different payment terms. Although the creditor might not agree to the exact terms you are asking for, you can set the bar high, i.e. low rate, low payment and let the creditor come back with something else if need be. You can also ask that the account be “re-aged” or “rehabilitated” after you make a certain number of ontime payments (assuming you have been late). Whatever you suggest, however, be absolutely certain you can stick to it if the creditor agrees.
- STICK TO THE PLAN — If you are indeed able to negotiate better terms with a creditor, be sure to STICK TO THE PLAN. If you find yourself falling behind again, a creditor is very unlikely to work with you further and will likely revert to prior, unfavorable terms. This is exactly why it is key to be specific AND realistic.
I will keep you posted on the outcome with AMEX as soon as I get a response from them. If successful, I will post the letters I sent them–my identity hidden obviously–so those who find themselves in the same boat can try their luck. I have been successful in the past with Diners Club, securing a 0% interest rate as I pay off the balance; the only caveat was that I close my account.
Apr
29
Although my days of online shopping and buying things I “want” are behind me for a while, there are still things that I need to buy, such as plane tickets to visit my daughter and other members of my family, clothes for me (as I shrink in size) and my daughter (as she grows) and pet food for my dog. What I have recently discovered at Ebates is that I can get some cash back on these necessary purchases. For most common merchants the rebates are 3-5%, but I have seen some sites offering as much as 20% cash back for purchases made online. If you shop online at any of the most common sites out there, I promise you some value can be derived from Ebates. I can assure you they pay out as I have gotten two checks from them since signing up. Give it a try!
Apr
27
Admittedly I recently let my renter’s insurance policy expire. Yes, I know what a foolish mistake that is. I had meant to shop around to see if there were better rates out there but I allowed myself to get overwhelmed with other things. As I started investigating some new apartment possibilities I noticed that many of them required renters insurance so I realized I needed to address this as soon as possible.
I have heard from many folks that Amica provides some fantastic rates as well as great customer service so I decided to give their online quote a try. After entering in some basic info about the amount of coverage, distance from fire hydrant, construction of apartment etc., I was asked for my social security number, which was optional. The site did mention that a more accurate rate would be delivered if I did enter my SS#, however. Clearly Amica uses what is called an “insurance score”. An insurance score is similar to a credit score, but differs in that it heavily weights whether or not you have paid your bills on time and for how long? Unfortunately for me, I have recently fallen behind with 2 of my creditors–part of the reason I have formally launched my mission to get rid of debt–and when the rate came back, it is clear that these late payments are damaging my insurance score, not to my mention my credit score. The rate was nearly double what I had paid a year ago; OUCH!
So why do insurers do use your credit history vis-a-vis your insurance score to determine premiums? The premise is quite simple. The thought is that people who don’t pay their bills on time are higher risk, file more claims and those claims are typically more expensive. The insurers all have quantitative analyses to support this conclusion but some states and consumer advocates feel the practice in unfair. Unfair or not, at least in Washington State, the practice is used and I’m paying for it, at least for now.
Apr
27
Later this morning Greg Hunter, a consumer affairs and investigative journalist for CNN will be interviewing me about my debt. CNN will be doing a piece on couples and debt, and although my debt was not the ultimate cause of my divorce, the overspending, lack of financial discussions and deception in order to hide the spending certainly contributed. I’m not yet sure when the piece will air but once I do find out I will post an update on here. I will be shot in silhoutte to maintain my anonymity. Why you ask…..well I don’t want my co-workers or my boss to know my financial situation. This blog gives me a wonderful and anonymous forum to detail my journey and I would like to maintain that. Wish me luck!
Apr
26
So one obvious way I have been looking at in an effort to save money is to move into a cheaper apartment. While I am not paying the highest rent in town, I am indeed paying more than the average rent for this area. In addition, I have about a 30-40 minute commute (most of it stuck in traffic) to work each day. With gas prices topping $3.40 per gallon out here, even for the cheapest grade of gas, driving to work is costing me a pretty penny, particularly given I drive an SUV (to be replaced next April with something much smaller and fuel efficient). I’ve found some very nice apartments closer to my work that are close to business that could quickly get me to work, so for the most part I’m at a loss as to why I am even debating the question. Well first, the apartment I’m currently living in is quite comfortable and VERY quiet. Quiet time is often a huge problem in apartment living so I’d hate to compromise that. Second, my current apartment is in an urban environs, something I, as a life-long urban dweller appreciate tremendously. Ultimately, I think the decision is going to come down to dollars and cents, particularly given my need to get my debt down. Based on my potential gas and rent savings, I think I can trim $1500-$2000 year off my combined housing and commuting costs, so this looks like a no brainer. I just hope my neighbors are quiet. I do value my rest!
If you think you are paying too much for rent, give Rent-O-Meter–no relation to the Debt-O-Meter–a try. I’ve found it to be pretty darn accurate and useful when speaking with property managers. Another finding….even rent is negotiable when armed with good information!
Apr
26
As I mentioned in a previous post, the only realistic way out of this hole, even with the more than decent paying job I have is to take on something else on the side. I already have a side gig as a home-based travel agent but that business is proving slow to get traction as word of mouth seems to be the only way I’m effectively getting any clients. So, I’ve been brainstorming to come up with some moonlighting gigs that I think I might enjoy and here is what I have come up with so far:
- Barnes & Noble part-time; I do love to read
- Best Buy part-time; I do love the gizmos and helping people
- Driver for Airport Shuttle Service; love meeting people and I’m sure I’d hear some great travel stories which will satisfy my desire to travel
- Hotel Concierge; great way to learn about and pass on all the free or low cost activites in my city
- FedEx Package Handler; decent pay ($10-$11/hr) and it will keep me in shape with lots of physical activity
- Airline Reservations Agent; dont really like dealing with irate customers but the perks are great after six months
All of these are real possibilities in my city as many places are indeed hiring.
So, for all you moonlighters out there, what do you do as a second job to knock out your debt? I look forward to hearing some other great ideas.
Apr
25
I’ll apologize in advance for this very long post, but I think it is one you will find interesting and hopefully it will inspire folks to have frank and honest discussions with their spouse or potential spouse about debt. I’m a living example that debt, particularly hidden debt, can, in part, ruin a marriage.
I realize many of you are probably wondering, how did things get so bad? How did you get yourself so far into the hole? Well, in this post I will try and provide a Cliffs Notes version of how I now find myself in this situation. Read more
Apr
23
I’m not a huge fan of banks, but I have accepted them as a necessarily financial evil. That said, about a month ago I was hit with two overdraft fees in my checking account. This turned out to be the bank’s fault–they hadn’t linked my savings account properly–and I was refunded my $70 in fees within one business day. So, no harm no foul, right? Yes and no. Upon further investigation I uncovered a nasty little trick banks like to play in order to increase their fee income. Here is how is works:
- Let’s assume you have $150 in your checking account
- You perform a debit transaction for $5.00 on Day X, which will clear on Day Y
- You write a check for $155 on Day X, which will also clear on Day Y
Given this scenario, how may overdraft fees would you expect to pay? How many does the bank charge you for?
Common sense would dictate that if two items were to clear on the same day, the bank would clear the item that is fully covered–in this case the $5 debit charge–and then process the item that sends you into ‘The Overdraft Zone’. I would posit this is a fair assumption to make, but clearly the banks disagree with me.
Here is what actually happened to me. Again, keep in mind this wasn’t supposed to happen because of my supposedly linked savings account, so my discovery is rather unfortunate from the perspective of my bank. I would never have noticed this has I not asked for an explanation.
So, with $150 in the bank, the check I wrote for $155 clears, bringing my balance to ($5.00) and thus incurring a $35.00 overdraft fee. Next, comes the $5 debit, which brings my balance to ($45.00), including the first overdraft fee. Hold on, the bank isn’t done yet! The $5.00 did indeed bring me further into a negative balance, generating another $35 overdraft fee, bringing my balance to ($80). Ouch! All that for technically going $5 in the hole.
So what should have happened. Here is what I would expect:
- Bank clears my $5.00 debit charge first, bringing my balance to $145.00
- Bank clears my $150 check next, bringing my balance to ($5.00)
- Bank charges me $35 overdraft fee, bringing my balance to ($40)
See the difference? By selectively paying the larger item first, I was put into an overdraft situation right way, so the $5.00 debit initiates a second overdraft fee, a result that is avoided if the bank were to follow the scenario I would expect.
Can banks get away with this? As far as I can tell, this isn’t illegal but I would argue that it is clearly done in bad faith. If this happens to you, don’t hesitate to contact your bank, threatening to switch banks if necessary.
UPDATE: My math is horrible without Excel these days. I realize that my balance in the scenario that the bank liked, would be ($80) not ($70) as I previously had. Luckily nobody wrote me to point that out. I found that little number on my own.
