Tag Archives: Americans and Credit Card Debt

Our Debt is Embarrassing

Money MindWe know we suck at money management…we just gave ourselves a C or lower in personal finance class. But then we say we are spending more and basically not doing anything about it.

Yet, we are embarrassed about our credit card debt…more embarrassed about that than our weight, age, credit report or how much money is in our bank account.

It’s embarrassing and we stress about it. We’d like to say “don’t sweat the small stuff,” but your finances aren’t “small” and maybe sweating it would do you some good.

If you’re this far, the good news is you CAN find the light at the end of the tunnel. It’s called “saving money.” And it can be the answer to all your financial woes.

The bad news? It’s going to take some work. For the rest of your life (or until you don’t have to worry about money anymore). Money management doesn’t just “go away” once you have it in order. It takes lifelong tending and growing.

Go Girl Finance has some ideas to get you started saving money and living stress-free:

Identify the problem. Be serious…what is the real issue? Spending too much on fancy-schmancy stuff? Too much activity on your credit card? Or is there just not enough income coming in? Find out why you are stressed about money, then make a plan and start getting organized.

Stay positive in the present. Nobody likes a Debbie Downer. But it’s easy to become one and jump on the “woe is me” bandwagon. Focus on what you are doing now and give yourself a daily pep talk. Remember what Stuart Smalley used to say: “I’m good enough. I’m smart enough. And doggone it, people like me.”

Put yourself in the power seat and know that you can change your situation. Above, we said you need to make a plan. This is when you put that plan into motion, little by little. Remember, it’s a marathon not a sprint. One small change (like saving $25 a month) can have a snowball effect, and encourage you to do even more.

Exercise! Yes, move your body more than just lifting the remote. Exercise is a great stress buster. Just a regular old walk around the block can put you in a better mood, and relieve stress.

Savvy Money says to track your spending. Maybe not forever, but this is a must for a few months. Here’s how it should pan out:

  • 35% for housing
  • 15% for transportation
  • 15% for debt
  • 10% for savings (this is NON-NEGOTIABLE!)
  • 25% for any other living expenses

If you feel like housing can be a lesser expense, use it towards another category. It’s your choice! You can borrow from any category EXCEPT savings.

Managing your money smartly takes time, effort and dedication on your part. But we know you can do it…because you’re good enough, you’re smart enough, and doggone it, people like you.

Advertisements

It’s America Saves Week!

America Saves Week February 24-March 1, 2014
America Saves week
(February 24-March 1, 2014) is an annual event promoting good savings behavior and a chance for individuals to assess their own saving status.

Although the week focuses on saving, it’s a good reminder for you to take a long hard look at your financial plan (or lack of) and determine a game plan for you or your family.

According to a recent survey by America Saves, most Americans still face savings challenges. Only 35 percent of respondents were making “good” or ‘excellent” progress in their savings goals. That means two in three adults are making no progress or “fair” progress in their savings needs. Come on people…we need to switch those around!

Saving money is essential for your financial health. You can’t pay down debt if you don’t have any money left over at the end of the month. You can’t build up a solid cushion of money if you are constantly trying to manage your bills. It’s  like the hamster in the little hamster wheel…spinning around but not going anywhere.

Start with this post: 54 Ways to Save Money. Surely you can find something you can do…there’s more than 50 tips!

Here’s two of our favorites:

  • Reduce credit card debt by $1,000. That $1,000 debt reduction will probably save you $150-200 a year, and much more if you’re paying penalty rates of 20-30%. (Read more about credit card debt and the amount of money people throw away on interest fees)
  • Take the amount the item costs and divide it into your hourly wage. If it’s a $50 pair of shoes and you make $10 an hour, ask yourself, are those shoes really worth five long hours of work? It helps keep things in perspective. Maybe retail stores should start putting that information on price tags?

Credit unions are another good place to start. Many have financial counselors at your beck and call, who can put you in the driver’s seat of a good financial plan, and definitely not one that will have you running in circles. Credit unions focus on financial literacy and people, not making money. As not-for-profit organizations, any profit they make goes back to the people who use the credit union. Here is more information about credit unions.

In the meantime, stay tuned because we’ll be unveiling our participants next week.

How Your Tax Refund Can Help Your Financial Goals

Average tax refund last year: $2,700Nobody likes taxes. Have you seen the new commercial for tax software or tax preparers? They make it sound all fun and easy…like some kind of party: ”You did so much crazy, awesome stuff. So, we’re pretty sure you can answer questions about those things and file your taxes on your own.” Another claims: “Get Your Billion Back!”

Well, for one thing, you won’t get a billion dollars back, and did you really do some crazy, awesome stuff?

Maybe you used to…and are thankful every day that phones with cameras and social media did not exist back then…but last year? Not so much.

Worrying about taxes is an adult thing, and definitely not a party. Taxes are that dreadful thing that rears its ugly head. Every. Single. Year.

Some people can’t wait to get that tax refund. In fact, many count on it. According to a Fidelity survey, most Americans (75% of you) will get a refund…to the tune of $2,700 (See? Definitely not a billion dollars).

The good news is that most people say they will save or pay down debt with their tax refund.

Wait…save it? Pay off some debt? Psshhh…that’s not fun at all. Sounds like something Sandra Dee would do.

In fact, 33% said they intend to pay off debts and 46% plan to use the money for some kind of savings (retirement, college, etc). Such a responsible bunch…you know the type…Teacher’s pet. Goody-two shoes. Responsible citizen.

Yes, people want to be responsible financially…no one wants to be debt. These statistics are the light at the end of the tunnel. Individuals and families want control of their financial situation. They want financial health.

Start the ball rolling with your tax refund. According to creditcard.com, the average credit card debt per U.S. adult is $4,878. With your $2,700, you could cut away good chunk of that debt…and be on your way to that billion dollars…all on your own.

Pay Down Debt With These Four Letter Words

Oops. Are we not supposed to talk about four letter words?

No, not those four letter words. These are words you can say out loud and on regular television, and they won’t get you a trip to the principal’s office. Words like debt, more, high and time. See? Innocent four letter words.

Let’s start with DEBT:

$15,270.

It’s the price of a 1.13 carat round brilliant flawless finish diamond or a used 2008 Nissan Pathfinder.

It’s also how much the average American household owes in credit card debt (according to NerdWallet.com).

Seem like a lot? Yeah, well, swipe and spend is as American as burgers and fries.

Do you know how long it will take for you to pay down a $15,000 credit card debt?

We didn’t think so, which is why we did it for you using this handy-dandy calculator. This graph shows $15,000 debt, at 18% APR and only paying the minimum payment. In this instance, the minimum payment is calculated at 4% of the balance, which comes to $600 for the first payment. As debt is paid down, the minimum payment is reduced as well.
$15,000 credit card debt paying minimum payment
Wait…that said 14 YEARS. Yes, my friend, it did.

Now, let’s add $25 to the minimum payment, which means you are paying $625 per month, and we’ll continue paying $625 until the debt is gone.
$15,000 credit card debt paying $25 more than minimum balance

I don’t know about you, but two years sounds a whole heckavu lot better than 14 years. Fourteen years is twice as long as the average marriage in America. It’s also about how long a kid has been in school by the time he or she graduates from high school. You remember how long THAT was, right?

Oh, and did you happen to notice how much you’ll save in interest just by paying $25 more per month? (About $5,000, if you are wondering).

One more thing: These amounts are based on the fact that you aren’t ADDING to the debt.

So, let’s nip this in the bud. The above shows that by paying a little bit MORE toward your credit card DEBT can be extremely beneficial. Those are the first of your four-letter words!

Here’s the rest:

HIGH: Got a card with a high interest rate? Pay off that card first, even if other credit cards have larger debt. And in case you didn’t get it the first time, the more you pay, the quicker the debt goes away.

TIME: This is a no brainer. Make your payments on time. Making a late payment could result in a fee. And being 60 days overdue could result in a late penalty fee, which increases your interest rate on that card, and possibly your other cards too! That’s blasphemy! I know, right? But it’s true. Pay on time, people.

Debt, more, high and time. Four letter words that can actually get you out of (financial) trouble.

Consumer Debt is Rising, but Consumers Say Getting Out of Debt “Extremely Important”

With headlines like “US Household Debt on the Rise Again” it’s easy for consumers to fall into the “everyone is doing it” mindset.

Reports indicate that consumer debt is climbing faster than Austin Powers’ Jaguar can go from 0 to 60 (7.4 seconds if you are wondering). Outstanding student-loan balances have reached more than $1 trillion.

That’s right.
Dr. Evil: One Trillion Dollars!A trillion dollars is a million million. One followed by 12 zeros or $1,000,000,000,000. And of those loans, more than 12% were delinquent 90 days or more!

Before you and Mini Me throw up your hands in despair and wonder who is racking up all this debt (because we know it’s not YOU), there’s a light at the end of the tunnel.

A recent survey from Credit.com (Americans and Credit Card Debt) indicates Americans with credit card debt believe that getting out of debt is “extremely important” and plan to shape up their finances this year.

I know we started out talking about student loan debt, and this recent survey is only about credit card debt, but according to this infographic, 75% of those who sought help from a financial counselor had credit card debt. Let’s face it, who doesn’t have one or two…or eight credit cards?

If you are a numbers geek, here’s more survey findings:

  • 55% of survey respondents said they have at least some credit card debt.
  • Of those 55%, half are chomping at the bit to develop a debt reduction plan for 2014.
  • 68% are ready to roll now, as they said it is “extremely likely” that they will start to pay down their debt in 2014. Yeah baby! (That has to be said like Austin Powers or it’s just not as funny.)
  • A little more than 40% of those surveyed say it is extremely likely they will be able to eliminate all of their credit card debt this year. Let’s do it!

That’s what this campaign is all about. Most people know they have debt. Most people know they spend too much. They just need guidance and a little push in the tush to get them going on a path that’s going to make them a Saver Superhero or Debt Destroyer. I mean, who doesn’t want that alter ego following them around?

Already Over Budget For the Holidays?

Control Holiday SpendingThe holidays are upon us, and so is the season of overeating and overspending. Although the average person only gains two to five pounds during the holidays, that same person may pile on 40 percent more debt on their credit cards during that same time.

And here’s another statistic: the average consumer will spend $786 on holiday gifts this year, and 30% will spend more than $1000. Do you have an extra $700 laying around this month?

It’s a bit late to do anything about this year’s holiday spending, but let’s talk about what you can do next year. How about a Christmas Club account at your local credit union? If you start your 2014 holiday saving next month, you can save for the holidays a little at a time, which is way better than racking up your credit cards the last month of the year.

According to this article in The Wichita Eagle, Christmas Club accounts (and layaway options at retails stores) used to be popular avenues to keep holiday spending under control.

“More than four decades ago, layaway was a common method used by consumers to pay for holiday gifts. So, too, were Christmas Club savings accounts, which allowed consumers to routinely set aside a certain amount of money and, at the end of a 12-month period, withdraw the amount they had saved plus interest, then use that to pay for Christmas.”

So, to keep you in the black for next holidays season, determine your budget for the holidays, and start setting aside money monthly in January. These funds should be in addition to your regular savings goals and budget requirements.

Yes, we know it’s hard, especially when those holidays bills start rolling in. Keep in mind you may need to cut back on your spending for a few months to get yourself back on track…just like you’ll need to cut back on those holiday sweets so you can quit wearing those sweatpants.

By starting your holiday saving now, you won’t put yourself into holiday debt then and the holidays might be more enjoyable for you.

As for the overeating…well, we can’t help you with that!