Tag Archives: credit cards

Money Possible Produces Debt Destroyers

Debt Destroyers photo all participants-no logoRaquel, Fredica and Lisa and Bryan made it. Sixteen weeks of rigorous budgeting and saving and heavy financial lifting.

OK, maybe not that intense…but our three families did make a commitment, met with a financial counselor and made major changes in their financial life. And lived to tell about it.

Here’s what they learned:

“Say no to frivolous spending.”
“Live within your means.”
“Don’t overwhelm yourself with credit.”

Each participant started out with a different financial issue. Lisa and Bryan wanted to bulk up their retirement savings. Fredica needed to control her spending. Raquel’s payday loans were spiraling out of control.

But the outcome for the three was the same: a lighter debt load, and more importantly, less stress in their lives.

The takeaway is that financial stress can cause problems in your daily life…which is in line with this recent survey that says employee financial problems or stress can reduce worker productivity.

What did our participants accomplish in 16 weeks? Here’s the skinny:

Financial Literacy is a family affairLisa and Bryan

  • paid off four of their credit cards
  • learned the difference between needs and wants
  • involved their children and developed a family budget

credit cardsFredica

  • stopped using credit cards
  • is paying down her existing credit card debt
  • learned to live within her means, and work with what money she does have

emergency money jar - compressedRaquel

  • paid down 30 percent of her debt
  • is current on all her bills and has stopped using payday loans
  • started an emergency fund

If you only remember one thing from this post, remember this: Your household budgets and finances are up to you. It’s a life-long process, not just something you can do once and be done.

But don’t feel like you need to do it alone. Get help from the Consumer Credit Counseling Service or a credit union. Financial education is a primary focus of Kansas credit unions, and credit unions nationwide. Credit unions promote financial fitness, and their goal is to make your financial life easier. Get started on your own by downloading the Money Possible Workbook.

Thank you to Lisa and Bryan, Fredica and Raquel for sharing their stories for the world to hear. Using a public venue to air your dirty laundry can be intimidating. These three credit union members took it in stride to promote the importance of financial literacy, and learned a little something along the way.

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Quick Tip: On Time Payments

Destroying your debt doesn’t have to take hours. Watch our 15 second tips and then be on your merry way. These tips also air on KAKE-TV’s (ABC, Wichita, KS) regularly.

View all our quick tips.  Follow along on social media at #moneypossible.

On Time Payments

By making credit card payments on time, you can save $30-35 per month in late fees which could free up an extra $500 a year.

The Freshman $30,000

We took an informal poll last month regarding your grade in financial literacy. The majority of US adults give themselves a C or lower in money smarts. Either smart people took our poll or you think you manage your money better than you do, because the majority of the respondents gave themselves a B. See the poll results.

Education SavingsIn light of this being the graduation season, and the fact that we ran across a survey that said students wished they learned more financial management in school, this post will be about how kids (or their parents) can become be money smart at school.

Forget the “Freshman 15.” We need to worry about the “Freshman $30,000.” The average student graduates with close to $30,000 in debt. That’s a lot of financial weight.

Students are screaming for education in how to manage their money. Some states require a class in financial education to graduate, but many do not. And just ONE class? We all know it takes more than that to get through to a teenager!

This is where parents need to step up and teach their kids. Or find somewhere that can…like a credit union or consumer credit counseling service.

Here’s why: First-year college students required to take a financial literacy course in high school are more financially responsible than those students who didn’t take the class, a recent study found. This means they were more likely to pay credit card bills on time and less likely to go over their credit limit. Both of those add up to less debt. But just 17 states require a course. And ongoing education is critical.

Our friends at A Smarter Choice have some good tips to get students started on the right foot. Here is a scaled down version of their blog post Get Started on the Right Financial Footing.

Stay frugal. Be mindful of what you’re spending. Check with your gym, and cellphone and cable providers, to make sure you’re getting the best rates. Pack lunches from home. Have friends over for dinner and movies instead of going out.

Negotiate your pay. Starting out with a higher salary will mean higher earnings over the course of your career.

Build an emergency fund. Prepare for the unexpected by setting up an emergency savings account and have your paycheck directly deposited into that account. You should have three to six months of living expenses saved. For real.

Start saving for retirement now. If your job offers a 401(k) or similar retirement savings accounts, put money into it! Even better is if your employer offers to match a percentage of your contributions. Your 50 year-old-self will think you were super smart for doing that.

Pay down student loan debt. Know what you owe and contact your lender immediately–before the due date–if you’re going to miss a payment. Pay extra if you can.

Use credit appropriately. A strong credit history will pay off when you want to buy a house or purchase other big-ticket items (the new iPhone 6 doesn’t count). Here’s the biggest piece of advice that you don’t really want to hear: Don’t charge more than you can afford to pay off monthly! And please, pay your bill on time. Spending too much and having late payments can get you in a heap of trouble…and fast.

College students are smarter, but have more on their plate than in years past. Make financial education a requirement for them, and maybe as an adult, they’ll be shedding that $30,000 before swimsuit season.

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.

Money Brain

money brainThere’s “mommy brain,” “senior moments” and “blonde moments.”

Well…now there’s “money brain.”

Experts say being a spender or saver depends on your brain. What you’ve been taught at home has something to do with it too, but in this post, we’re talking about that gray matter between your ears.

Recent research shows that while parents do have an effect on your financial habits, your brain’s chemistry plays a role too.

We won’t bore you with case studies, focus groups and medical gobbledygook, but here’s the deal: some of you get a thrill from instant gratification (buying that super cute pair of shoes NOW) and some of you get excited by “the deal” (think shopping sales or seeing your savings grow).

Think about it: When you get a free meal, doesn’t it taste better? Or if you find those super cute pair of shoes HALF OFF, aren’t they all that much cuter?

If you want to read the research, read The Psychology of Money-How Spending and Saving Habits are Programmed in Your Brain or The New Science Behind Your Spending Addiction.

Now that you know “you can’t help spending” … well, actually, you can…but if you feel you are one of those people like our friend Fredica (who had a spending problem, but now realizes she can control it) here’s some tips:

  • Use cash. The simple act of seeing the dollars can help. A credit card is just a plastic card, right? You can’t see the money being spent until it’s too late (and $300 later).
  • Use an ATM or branch office to withdraw your money, and make sure you get a balance inquiry. This helps you see your dwindling account.
  • Never “put it on my tab.” Pay as you go so you keep track of how much you are spending. Wait…the only place we know of where you say “put it on my tab” is a bar, and you shouldn’t be wasting money there anyway.
  • Don’t be swayed by “the big sale” or sales people! Remember that Friends episode when Joey bought all that stuff for his new apartment and racked up a major credit card bill?

Ross: What… what’s that?
Joey: It’s my VISA bill. “Envelope one of two.” That can’t be good.

No Mr. Tribbiani, it’s not good.

Don’t buy things because they’re on sale. Buy them because they are a need.

  • Know the difference between needs and wants. Read this “Needs vs Wants” from a recent post.
  • We’ve said it before. Tell someone you are trying to control your spending. A good friend will stop you from buying too much. A great friend will buy it for you. JUST KIDDING. Don’t think we want you to be a charity case. A great friend will help you and may even suggest a financial counselor at a credit union or non-profit agency.

No matter if you are a spender or a saver, you brain has a lot to do with your money smarts, as well as the habits you learned early on in your fiscal career. The bottom line is all about control, and we know you can control your brain. Well, most of us can.

Behind the Scenes of Money Possible

It’s always fun to go “behind the scenes” … kinda makes you feel like you have a backstage pass at a Justin Timberlake concert.

We begged asked our Money Possible participants to meet for a quick (and by quick we mean three hours) video and photo shoot/financial literacy class/get to know you session on an icy Saturday. They were all kind enough to show up, and what’s even better, they were early!

What a fantastic group of participants. They did everything we asked…even with lights and a camera in their face.

The interview.
Lights, camera....Money Possible interview

We thought this was cool. It’s a jar of cut up credit cards.
Destroy debt: cut up credit card jar

Group session.
Group session

Needs vs. wants.
Consumer Credit Counseling Service session: needs vs wants

Scary Statistic: “We have more payday loan locations than McDonald’s Wendy’s and Burger King combined.”
Scary Statistic: We have more payday loan locations than McDonald's Wendy's and Burger King combined.

Stay tuned, we’ll reveal a little bit more about our participants next time.

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.