I’ve known that credit cards can be good and evil at the same time depending on how you use them. Now, the point of this post is to point out the Love and Hate relationship I have with them.

The things I LOVE about credit cards:

1. REWARDS
   • Who doesn’t love a good reward? Credit card companies love to induce your spending by rewarding you with frequent flyer miles, points to buy things, and cashback!  Who doesn’t love getting rewards?
2. CHARGE NOW, PAY LATER
   • I’ll pay off this nice <INSERT LAVISH OBJECT HERE>with my credit card and pay the rest later.
3. CONVENIENT
   • I don’t have any cash on me and I have to drive far to get cash from the ATM, nor do I want to pay the ATM fees.  Here’s my credit card instead. **SWIPE**
4. AMOUNT OF CREDIT
   • WOW. I just got approved for $16,000 for my credit limit! **Evil Grin On Face** Time to splurge!
5. EASY TO TRACK
   • I can check what I’ve been spending online!

Things I HATE about credit cards:

1. INTEREST
   • I despise monthly interest, but credit card companies need to make sure you’re going to pay them back.
2. CAN HAVE MORE THAN ONE
   • If you have great credit, be prepared for credit card companies to harass you any way they can to have them sign up for more cards.
3. OVERSPEND
   • If you don’t keep track of your spending… you’ll end up drowning in debt.
4. SNAIL MAIL SPAM
   • “Transfer your balance now 0% until 2011!”, “Sign up for a new card, get 10,000 points!”  I’m not a fan paper mail, waste of paper in my opinion and it makes you more viable to ID theft if you don’t dispose of them properly.

I’m hating my credit cards right now! **shakes fist in anger**

As they say.. it takes time to heal these “financial” wounds.  Everyone has different ways of trying to pay down their debt, however I find Snowballing credit cards the most effective way of “healing” your debt than consolidating it.  I came across this awesome free Snowballing Tool to give you an idea of how it works.

It’s been a while since I’ve posted up on here, but I got some great news! (or not so great…)

Looks like American Express and Chase decided to bump up my APRs after being locked in at the same low rate for so many years!  I pay my cards in full every month and there are some times I keep a balance on them and this is what I’m repaid with? Super LAME!

It looks like the Credit Card industry applied their changes before the Credit CARD act that kicked in recently.

The new act allows us, the Consumers, to have more protection when it comes to Credit Card companies trying to take advantage of us by undisclosed fees, rate increases, and unfair fee traps.

The act also requires full disclosure of all credit card contracts to be in “plain language” so the consumer understands what they’re signing up for. (Pretty much remove the legal complex jargon and replace it with plain English!)

Looks like the Credit Card companies are trying to save their asses from future penalties. Anyhow.. just had to vent.

You know you’re back to your old spending habits when you realize you’re scourging Internet deal sites like:

slickdeals.net
bensbargains.net
fatwallet.com

and buying random unnecessary crap. After purchasing  a whole bunch of things which will lose its novelty by the time it reaches me, I’m certainly going to have buyers remorse after this.

Discount products online are discounted for their apparent reasons [going out of style, low demand and overstocked items, etc.].  These sites are evil, especially after depending on them for so long as a college student.  You still go with the flow.  Albeit there are some hidden gems at these sites, the rest are crap items.  So the next time you end up on one of these sites, you need to ask yourself…

“Do I really need this?” or “What am I going to use this for?” or even “If I buy this am I going to use it more than once?”

The cool thing about these sites is you’ll come across a lot of stuff that you passed up as you were window shopping through the mall since they were too pricey.  I’ll admit some of the items may be a bit dated, but in some people’s eyes they are steals!  For example, Newegg.com is selling Soul Calibur IV for Xbox 360, brand new, for $17!  To think I was going to plop down $40 for this game used only a couple of months later to find the game cheaper, brand new.  If you throw in NBA2K9 for about $20 in there too, I bought 2 games for the price of the used game I was going to buy. Note: This only works if you’re willing to wait out on it, you won’t find a deal on popular games yet.

I would only recommend visiting these kind of sites when looking for a deal on a TV, Monitor, Laptop, PC, Cameras, Hard Drives [Ok tons of Computer accessories], and cables [Why cables? Who in their right mind would spend $100 for a 6 foot HDMI cable? When you can get it for only $15].

Although I may have gone back to my old spending habits, I’ve managed to catch myself before I piled up my apartment with worthless crap. Then again, I can always use them for Christmas presents.

What is an Impulse Buyer and why do they make Impulse Purchases?

According to Wikipedia:

An impulse purchase or impulse buy is an unplanned or otherwise spontaneous purchase. One who tends to make such purchases is referred to as an impulse purchaser or impulse buyer.

So now you know what that means, how many of you guys are impulse buyers?  I’m pretty sure a majority of you are.  It’s human nature and a lot of marketing!

I used to be so bad, I’d go into Fry’s Electronics and leave with some random electronic device or goto Foot Locker and pick up the latest Jordans. I racked up a ton of debt in impulse purchases when I was in college it was nuts now that I look back on it! I can now go out, have my wallet filled with cash and credit cards, go walk through the mall and not buy a thing.

Let’s do some quick math with my previous spending binges so you have a better understanding:
Monthly Jordan Purchases: $120-$180
Electronic Purchases: $100-$200

Let’s say we go with the averages:
@ $300/mo for Shoes/Electronics Yearly Cost: $3600

Minimum:
@ $220/mo for Shoes/Electronics Yearly Cost: $2640

Maximum:
@ $380/mo for Shoes/Electronics Yearly Cost: $4560

Let that sink into your head for a bit….

Are you ready to listen now?

There are TONS of ways to approach this.

The way I personally do it is by asking myself “Do I really need this?” and “Will I be still be using it in the next 6 months?”.  If they meet the criteria, then I’ll go through with the purchase. Telling yourself “I deserve it” or “I can’t live without it” are the worst excuses you can give yourself.  I have a collection of electronics I no longer use and my Jordan collection still stands, at the same time I don’t have to buy shoes for a long time.

You can try using a list.  Before you go out for the day, write down a list of things you NEED to buy and go do your errands.  I live and die by my list.

I also keep a budget aside for “toys” and “entertainment” so if I feel like spending, I’ll go buy it guilt free. If you don’t have any kind of budgeting setup, better get started!

Or another way of looking at it is, add up all of those purchases you made in the past year and see how much value it’s worth to you now. Not worth much when it’s piled up in your closet or garage is it?

If you’re the worst of the worst… take your Credit Cards, chop em’ up, or freeze them in a block of ice!

It’s all about discipline.  Make the changes you need. If you want out of debt, you’re going to have to make a ton of sacrifices.  Sell all the old crap you’re no longer using! If you have a goal to buy a house, a car, or go on a lavish vacation, make that your motivation to save up.

ps. I would’ve used a picture of a woman, but then I would’ve gotten a lot of heat from women out there. Enjoy!

I look at the same time frame now and I’ve spent $1k less!

Now this includes a raise in salary and putting more money into savings too, so I’ve probably saved a lot more than that.

Don’t you find it interesting when you go over your expenses and see how your spending habits are? It’s puzzling to see where you spend your money and ask yourself why and how did it end up there. Despite of being in a recession/depression (whatever you want to call it nowadays) you can still spend for the luxuries you enjoy! You just have to know how to save and spend wisely.

Well what do you mean spend for luxuries and still save?

I like to do a lot of things, which means I have to spend money to enjoy them. If you really want to do something, you do it.  So I wanted to save more money.  Sacrifices had to be made, but I can still have fun!

I’ve cut back on my “entertainment” and “hobby” expenses, which include going out to the club/bar ($40 a night) and snowboarding ($150 a trip). Since I’ve been cutting back on that, I’ve actually reallocated the money spent on those activities to either travel, put more into savings, or put it into my business.

I’ve also scaled back on eating out as well. I love to dine at fancy restaurants; can’t help it, it’s just something I like to do. Who wouldn’t love to dine on a steak and lobster meal every now and then or maybe have a fancy salad for lunch.  Yea.. I was feelin’ the pinch on this too. So I had to make some sacrifices on it as well..  make your own meals and eat in!  On the plus side, it teaches you how to be a better cook too!

Money saved from cutting back can go to doing more fun things or getting that “toy” you’ve sought after for sometime.

Now what do I do with all this extra money and maintain it?

This is where it gets fun… get an Online Savings account (or a regular one). Doesn’t matter with who you sign up with. Just find one you like, especially one with a good interest rate (it’s really low right now.. I know it sucks).  ING Direct gives you $25 if you sign up with them and if I refer you I get like $5 bucks, so if you’re interested just drop me your email address.

So what the heck do I with this thing after I sign up?

Put money into it of course!  I have mine setup to take $25 out of my checking account on a weekly basis.  I call this account my “fun” account; i’m putting $100 a month into savings. Big deal it’s just $100! Look at this way, $100/month equates to $1200/year! Of course it’s a big deal, when you’re going to splurge on a cool toy or do something “fun” just pull it out of this account.  This is so you’re not spending it once your paycheck comes in.  Pay yourself first!

Be realistic when setting up financial goals for yourself. I was pretty optimistic myself, but when you look at how the money grows it becomes substantial. Maybe I’ll try saving up for that trip to Australia or London next year…

Cheers!

So if you’re still reading on, it seems that you’re ready to buy a car?  First, I’d like to inform you to DO YOUR RESEARCH!

I emphasize research because if you plan it out carefully then you won’t rip yourself off in the long run. Research involves not only the car you’re going to buy, but also factor in the loan, monthly payments, insurance, maintenance, etc.  The loan is essential [and this is where your credit score comes into play] because you want to get the best rate on your vehicle, because that $40k car can easily become $60k with interest if you don’t pay attention.  The monthly payment on your vehicle is the focal point of your purchase [unless you decide to pay thing in cash], the higher the down payment the lower your payments will be.  Another thing you’ll have to factor in as part or your monthly payments are car insurance and maintenance.

When purchasing a car I hope that you find something reasonable within your means.  This means, don’t go trying to get that BMW M5 you’ve been salivating for years if you can’t afford the monthly payments on it.  Besides if you don’t make enough green, they probably won’t even talk to you.  I’d rather have you living in some kind of establishment rather than living out of your car and I find it quite sad when people actually do that.  Just find a car that fits your budget!  If you have the money to support it, then get your dream car.  Otherwise, stick with the affordable route.  Affordable, meaning, that your monthly car payments should NOT be taking up half of your paycheck, because it’ll be well over your debt-to-income ratio which obviously makes you a large liability to the creditors out there.

Car loans are very important that I emphasize RESEARCH again, because there are TONS of them available to you.  Some are good and some are bad, do the research so you don’t fall into any traps. I may be over exaggerating a tad, but car loans are easy to find.  However, not many will give a low rate.  Some may give you the average and some may give you higher.  You’re most likely to find a gem if you look hard enough and sometimes it’s probably around the corner at your local credit union.  Credit unions, from my experience, have given competitive or even the lowest interest rates available.  Why? Because they want your business! I highly recommend checking out the local credit unions in your area first, then work your other available options.

Car insurance, like car loans, are abundant.  You can find them pretty much anywhere.  You just have to look around for the best deal.  You’ll find a lot of insurance companies marketing on TV, billboards, radio, and the like.  Most of the larger companies have comparisons of competitors prices along with theirs.  So finding a car insurance policy isn’t too hard to do.  I suggest speaking with the insurance company to point out the best policy for your needs.

Stocks are falling and banks are in danger of closing. If you haven’t been paying attention lately, you may want to keep your ears and eye open to see what will be coming in the next couple of days.

IndyMac Bank was seized by the FDIC and some have flown in from all over the country to IndyMac’s Headquarters in Pasadena to get their money withdrawn.  Most people with over $100k in funds have reported only getting a small percentage of their money back, although the FDIC allows insurance up to $100k.  Which means if you have funds in the seized bank totalling over $100k, you’re not likely to receive the full amount back.

The tumble continues as more banks have been hit.  Washington Mutual is a bank that I have accounts with and considering the state of its stock price, its most definitely high on my radar at the moment.

What are you thoughts?

In order to help raise your credit score, you need to kill off your 10-15 of your credit cards and narrow it down to around 2-3 cards.

“But cee.mo I like to shop at Macy’s and I have a frequent flyer card with so and so…”
What’s cool about credit cards today is that there are TONS of rewards type of cards. I don’t know about you, but I’ve managed to go from having 10 cards down to about 4 (Yea, I know that’s still a lot). Back in the day, I had cards for every occasion because they all had little perks [that's how the retail stores suck you in]. I was rockin’ Dell, PayPal, Amazon, Best Buy, NewEgg, you name it I probably had it.

After researching the tons of rewards cards out there, I’ve managed to “consolidate” those cards into cards that give me all-around benefits. Like I said before, I am a geek when it comes to technology and I had to have access to all of my resources [I was hooked on credit!]; I had balances on all of those cards. What I did to consolidate was to pay off every single one and kill them immediately until I narrowed down my card options.

“Why not just do a balance transfer?”
Balance transfers cost money and it really all depends on your situation. I remember a couple years back credit card companies were giving balance transfers away with incentives like “0% interest for 12 months” or “Free Balance Transfers and get 2% interest for 6 months”. Those days are long gone and balance transfers are not as good as they were a couple years ago. Using the balance transfer is another way of “extending” payments on your credit card debt. I would recommend using wisely and not relying on it on a constant basis because they do show up on your credit report.

Close off as many cards as you can and keep ones that actually have some benefit to you. I have a 2 Visa and 2 American Express cards now which all give me great reward benefits [plus you can get rid of that extra plastic in your wallet!]. However, I would highly recommend that you do NOT close off your oldest credit card. The oldest card is extremely important to the health of your credit score because when creditors look at your credit report, they want to see how far back your credit history goes. The longer your credit history, the better!

I own a 2005 Mitsubishi Lancer Evolution VIII. It is not an economy car by any means; I can get an average of 20-22MPG with a light foot. I have debated many times with myself on if I should keep the car or not. The car is very expensive to upkeep! I’ve asked myself many times if I should trade it in and get a hybrid, get a beater, or get a motorcycle. There are lots of ways to approach this.

I could trade the car in and take an extension of paying car payments for another 5 years, but that defeats the purpose of trying to get out of debt. I have about 2 years left until the car is paid off. I could buy a beater for under $3000-$4000, then again the vehicle could become a money pit. Or I could get a motorcycle which certainly would be most ideal but puts my life at more risk.

What would you do?

STOP USING YOUR CREDIT CARDS AND STOP APPLYING FOR MORE CREDIT!

Ahem…

Anyhow, back on topic. So basically do the step above for starters. Why? Because you won’t stop accumulating debt and it’ll just keep piling up right before your eyes.

If you’re still reading at this point, it looks like I’ve got your attention. So, what is the “Rule of 30″ you ask?

The Rule of 30 means keeping your debt below the 30% threshold. If your debt is above 30% on your credit cards, the “Big Three” credit reporting companies, TransUnion, Experian, and Equifax will bring your credit score down a couple of points. Always keep an eye out on how much credit you have and where you’re at with your spending.

For example:

Credit Limit: $5000
30% of $5000 = $1500

Constantly staying at or above $1500 on a monthly basis is not where you want to be.

“But wait, cee.mo what about if you’re paying them in full?”
That’s fine and by all means keep paying your cards in full! It’s financially right to do so, but the “Big Three and the Credit Score” likes to look at the balance on your previous statement. That’s just how it works and that’s how it is when you read your Credit Report. Hence, the Rule of 30.

What’s cool about the Rule of 30, is that you can spread the wealth among the other credit cards you have. Please don’t be stupid and go apply for 5 new credit cards after reading my previous statement. The purpose of the Rule of 30 is to keep your credit score healthy, so let’s not hurt that by pinging for more cards. As a matter of fact, you should be getting rid of your credit cards.

What I meant by “spreading the wealth” between your other credit cards is that when you have applied the 30% rule on one card, it doesn’t affect the other cards you have. This means you can have 30% on your Visa, 30% on your American Express, and 30% on your MasterCard. What I like to do is use the Rule of 30 as my max credit limit and if I’m going over the 30% mark I obviously stop using it.

“What if I have only one credit card?”
Then much props to you, because you didn’t fall into the trap everyone has fallen into. The only problem is if you’re hovering around the 30% mark, you’re going to look bad to the “Big Three”. If you’re in good standing with your credit card company, you can always call them for a credit increase.

So stick with the Rule of 30 and you’ll keep your credit score in good shape.