Friday, May 28, 2010

Drastic times




Drastic times call for drastic measures.



Tuesday, May 25, 2010

"Ask a Credit Counselor"

today you can go on MSN money board and ask an NFCC Credit Counselor advice.

http://moneycentral.msn.com/community/message/board.asp?board=AskACreditCounselor

Saturday, May 22, 2010

To Save or Not to Save...that is the question

Lately I have been hosting an internal debate as to whether it is better to build up a savings account or whether to use all excess income (after all the many bills have been paid) towards paying off my substantial credit card debt.

When googling and reading numerous MSN Money articles on this topic, I came to find that there was no definitive answer. At all. Everyone has a different opinion.

There are many articles on MSN on how you should have at least $500 in  your savings account in case of emergencies. Which makes a lot of sense. Except that I only  have about $60 in my savings account and this savings account in question is earning less than 2% interest.



Suzie Orman (who on my fico gave me a script on what to tell my credit card companies regarding lowering my apr and suggested credit cards allowing 0% balance transfers. I was rejected on all fronts and ended up with a lower credit score from applying for all those 0% cards because of dear Suzie) states that you should ONLY pay the minimum on your credit cards and then sock all the extra towards savings. Because the world might end and you will be unemployed and living on your savings. Which is understandable. 

But then again, my credit card aprs are ridiculously high. And ever since credit card companies are required to post how long it would take to pay off the credit card with minimum payments only, I have been startled by the fact that it will take me 22 years to pay off any of these cards.  That's right.  22 years.  Dear Suzie, that's horrible. Those $10 in my savings account are an extra $50 on any of my cards.  Mathematically it is better to actually chip away at your 18% or 29% apr credit card because you end up paying less and in essence SAVING more in the long run (in the way of lower aprs etc). But these math experts out there aren't exactly worried about losing their jobs and get paid to dispense all this math advice.

So there is basically no definitive answer that I have to give out on this topic. Except to find whatever works for you, perhaps not exactly aiming for $500 in the bank, but to just have at least $100 in savings and using the extra $ to chop away at your credit cards. It should be whatever you feel comfortable with. The less debt you are in, the more you will be able to save. That's what I'm doing. But the most important part is to be able to break the cycle of bad debt and endless payments because in 22 years I definitely don't want to add up the fact that a $10 meal ended up costing me $50 because I was socking away savings earning me nothing at the time. And all those credit card balances keep growing.