4 tricks to selling old items in rural areas
Live in a big city with an active Craigslist? If so, you have a major advantage when it comes to selling stuff to pay down debt. But, even if you don’t, you still have options.
When I lived in Kansas City, which has a bustling Craigslist community, I could quickly turn unwanted items into cash.
My husband was in grad school during the recession, and I used Craigslist selling to supplement our income. Most of our budget was dedicated to paying bills, including our mortgage and my student loan debt.
If we were short on grocery money or just wishing for a date night with cheap wine and snacks from Aldi supermarket, I’d find something to hock on Craigslist. It helped us not feel too deprived during those lean times.
In Kansas City, I could post certain types of items online and almost be guaranteed to get multiple responses and make a sale within days. A bike would be claimed within five or 10 minutes — really. Nice wood furniture was popular. So was anything cool, unusual or vintage.
Here are just a few of the things I easily sold back in those days:
- Vintage ads from Kansas City businesses that had been used to line the floor of our attic and were still in good shape.
- A hideous wood bookshelf I had painted maroon and decoupaged with Frida Kahlo pictures in a moment of bad taste. I listed it for $100 and sold it to a young woman who loved it.
- Antique medicine cabinets ripped out of a neighboring house and left on the curb as trash. I sold them for $100 each.
- Vintage cabinets and a vintage sink. I had bought a group of items, which included the cabinets and two sinks, to get one of the sinks for my house. I bought the lot of items for $75, then I flipped the rest of the items on Craigslist and made about $250. I got my sink “free.”
After I moved to a smaller town in the South three years ago, I expected to be able to use Craigslist again when we were trying to pay off my husband’s student loan and other debt. But I got an unwelcome surprise.
Online selling is much less popular here, and the only things that sell quickly are practical items such as appliances and tools. I sold a chest freezer, my old bike and some pedestal sinks taken out of our house during a remodel. But it took weeks.
And usefulness is no guarantee that an item will go: We’ve listed a lightly used mini-fridge multiple times with no luck. And the antique items that were so popular in Kansas City are almost unsellable here. For example, we had a beautiful tiger oak pedestal table that we’d bought at an antique store in Kansas City. It didn’t fit in our house here, so I put in on Craigslist. After listing it multiple times for months, I sold it, in desperation, to a guy who talked me down to $30.
So, what can you do if you also find yourself in a small town or rural area where selling on your local Craigslist isn’t a snap? Here are a few ideas:
- Sell to a store or dealer. We took out some walls during a remodel, leaving us with six beautiful antique doors that did not sell online. I emailed an architectural salvage store owner and he snapped the doors up for $200. In retrospect, I should have called local antique shops about my oak table. And for items such as clothes, jewelry and bags, consignment shops can be a good option.
- List on a larger city’s Craigslist. If you live within a few hours of a large city and are planning a trip there soon, consider listing your item on that Craigslist. This is only worth it if your item is worth a substantial amount — for me, that would be $100 or more, since you’ll likely have to drive out of your way to meet the buyer, and some buyers can be flaky.
- Scout out the best place to sell online. About.com’s Frugal Living guide recommends selling books online, noting that you can check BookScouter.com to find the online book seller that will give you the most bucks for your books. About.com recommends selling clothes on eBay and listing vintage items on Etsy.com.
- Sell through an app. Learnvest.com suggests using apps such as DeCluttr. You can scan the bar code of your old CDs, DVDs and video games and find out how much DeCluttr will give you. You then download and print a label and ship for free. Another app, Poshmark, lets you create a ‘virtual closet’ and sell clothes to buyers all over the country.
While I still lament my loss of Kansas City’s Craigslist, I am excited about exploring some new options — especially apps — to help us pay off our current credit card debt.
My low debt tolerance at odds with common sense
How’s your debt tolerance? After some trial and error, I’ve discovered mine is close to zero.
That is, I don’t feel comfortable being in credit card debt, even when I get a great zero-percent deal — something my husband and I did during our remodel this year.
It was a hard decision to go into card debt because we’d just gotten out of debt the year before, with the exception of our mortgage. But we did put some appliances and remodeling supplies on credit back in January, and I truly felt OK with it at the time. It was a relief to be able to finish our kitchen and get cooking again.
However, as the months have gone by, carrying a balance, even at zero percent, has made me feel anxious and bogged down. In contrast, when we were debt free (except for our mortgage), I felt much more financially secure, happy and free.
I’m not alone. A July 2014 survey by market research firm Mintel found that, right now, many consumers are cautious about taking on new debt. And, according to Mintel Vice President of Research Marla Commons, consumers are “particularly reluctant to borrow on their credit cards or against the equity in their homes to finance spending.”
Not all consumers despise debt, though.
My husband, Joe, falls into this camp. He’s apparently got a higher debt tolerance and isn’t bothered at all by our balance. In fact, he says he’d rather rack up more debt to pay painters to paint the exterior of our house than do the job ourselves.
Sure, I’d rather spend these beautiful Georgia autumn Saturdays riding my bike. But rolling up my sleeves and getting some paint spatter on me sounds a lot more appealing than pulling out the credit card.
Carrying a balance can have major downsides: It might mean you’re paying hundreds of dollars in interest, and it also can affect your credit score by changing your credit utilization ratio — the amount of your total credit limit that you’re using, WallStCheatSheet.com points out.
But my dislike for debt is more emotional than rational.
I discovered the pain that debt can bring when I was first learning how to manage my finances. I’d racked up a credit card balance by just spending a tiny bit more than I earned. This left me feeling panicked, like I always was playing catch-up. I found that dialing my spending back just a little and making sure I had the money before I spent it made me feel much more in control. That lesson has always stuck with me.
I asked consumer psychologist Kit Yarrow, a professor at Golden Gate University in San Francisco, for her take on debt tolerance.
“People who are more security oriented will have a tougher time with debt,” she says. That trait can come from uncertainty in childhood — economic, or other factors, such as an illness or loss, she says.
That makes sense: My family didn’t have much money when I was very small. However, I’d say my bad experience with mismanaging my own finances right after college played a big role in my current attitude, too.
“Debt phobes like you and me are more common than you might imagine,” says Yarrow, who says she refuses to carry credit card debt and also is married to a spouse who’s less debt averse.
She says there’s “irrational thinking” at both ends of the spectrum — both the debt haters and those who see no problem at all with being deep in debt. For example, she says it can make sense to go into debt in certain scenarios, especially with a low- or no-interest deal.
And some types of debt can be good: We have a mortgage, which allows us to build equity in a home, provides us some income tax breaks, and helps keep our credit strong when we pay on time, which we always do.
But I’m going to embrace my inner “debt phobe” and use my uncomfortable feelings about owing money as a motivator to get back out of credit card debt once and for all. From experience, I know I’ll feel better when our balance hits zero.
6 banking lessons for teens and college students
My teenage boys have had savings accounts since they were in elementary school.
In the beginning, I divided their allowance up for them into savings, spending and charity. The money was automatically deposited at the first of each week, and they learned some great lessons with those accounts. They learned how to shop for a charity, how to save for things they wanted and how to spend (relatively) carefully.
This year, we got them debit cards, we upped their allowances, and made them responsible for saving for school supplies and clothes. So far, it has been a success.
But soon, we’ll be taking the next step. My eldest boy, George, will turn 18 in a few months, and his banking needs may change. For two years, he will study at a local college. He then plans to move to another city to get his bachelor’s degree. He recently asked me if he could stay with our credit union, and we did some quick online checking. The answer: He can do some banking in his new town with a partner bank, but there are limits, such as the amount of money he can withdraw in a day.
So, is George ready to shop for a bank? If he left home tomorrow, the answer would have to be no. Here’s what I’ve begun to teach him, so he’s prepared when the time comes:
- One of the first lessons George learned when he received his debit card was that overdraft protection is a mistake. You get slammed with fees every time you go over the amount of money you have in your account. I’ve taught him that it’s better to take the walk of shame from the counter after being told he has insufficient funds than to get hit with a $30 fee for buying a $2 Coke. He’s done the walk of shame, and now checks his accounts online frequently.
- This one is a little trickier — George has a tendency not to carry cash, a byproduct of his generation, I think. But I’m teaching him to plan his trips to the ATM machine, so that he isn’t tempted to use an out-of-network machine. Too many ATM fees is actually a problem for college students, according to an August 2014 Consumer Reports study that looked at schools’ alliances with banks.
- Part two of using in-network ATM machines: There are ATM machines placed by scammers on tempting street corners, waiting for you to give up your debit card information. Lesson: Use an ATM you know, and when traveling, an ATM located at a bank you know.
- The Consumer Reports study shows that college students may not get the best deals when it comes to banking if they opt for the banks their schools align with. The study found that kids who used their bank frequently could spend as much as $520 in fees a year. Out-of-network ATM costs and PIN-debit transaction fees were a particular problem for these students. But, by shopping around, students can minimize their bank fees. George will need to take note of his banking habits before he settles on a bank. Does he want the convenience of an on-campus ATM? Will he be using his debit card frequently for in-store purchases? He’ll need to comparison shop for fees, as well.
- MyBankTracker.com advocates using larger banks, which frequently have student account programs that, in some cases, don’t charge excessive fees. However, MyBankTracker’s Theresa Kim notes that your student needs to make sure there is a branch or even an ATM near campus.
- Money.USNews.com points out that financial institutions are developing online money management tools that can help students budget their money. It will be worth George’s while to check out Mint or its ilk once his banking needs become more complicated.
My goal is to have George ready to comparison shop for banks once he turns 18. He’ll be hard pressed to find a better deal than our current credit union (we have never paid a fee in our 14 years there), but there will come a time when he needs to choose his own institution, and I want him prepared.
How a credit report dispute held up my mortgage refinance
When my husband and I went to refinance our mortgage a couple of months ago, we ran into an unexpected glitch: an old dispute on my credit report.
We were at the tail end of the application process, and I’d spent over a month supplying all the documents our bank, SunTrust, needed. I thought we were close to closing when a bank representative told me the refinance couldn’t proceed unless the dispute was removed from my credit report.
The dispute was over a late payment on a student loan account that I paid off in full last year. The late payment had been reported six years ago when a check I sent apparently was lost in the mail. By the time I figured out what had happened, my payment was over 30 days late and was reported to the credit bureaus. I disputed the late payment, but it stayed on my account.
On my credit report, the account showed up with a remark: “Account disputed by consumer,” making it look as though I had disputed owning the account altogether.
I wish I’d known about advice from mortgage broker Shane Milne, who says his clients have had 100 percent success rate in getting disputes removed by approaching the major credit bureaus directly.
- With Experian, Milne recommends asking for the executive customer service team.
- With Equifax, you ask for the executive consumer service department, he says.
- And with TransUnion, you ask to speak to the special handling department.
By telling the bureaus you are no longer disputing the account, you often can get the dispute removed instantly, Milne says.
But, at the time I was wrangling with SunTrust and the student loan company, I hadn’t come across Milne’s advice. To get my dispute removed, the bank representative suggested I do a conference call with a representative from the bank and a customer service representative from the student loan company. I arranged the call and, after much back and forth, the student loan company agreed to remove the dispute.
A few weeks later, the SunTrust representative told me the dispute hadn’t been removed from my credit report and our interest rate lock was about to expire. The bank employee told me we’d have to pay to extend the rate lock, so it would be better to reapply for our refinance.
I called the student loan company again and was told that their records showed no dispute. I asked to talk to a manager, who asked me to email him screenshots of the dispute on my credit report. I did, and he told me he would remove the dispute but that it could take 30 to 60 days for the change to show up on my credit reports.
Apparently, other people have had the same issue. One person, in a forum on FatWallet.com, complained that his mortgage application came to a halt two days before closing due to a disputed Verizon account. Despite disputing that he owed on the account, he had paid the amount anyway in order not to have any defaulted accounts listed on his credit report. But the dispute remained on the credit report. A reader who wrote in to the Ask Experian column had a similar problem.
The Consumerist recommends that before you apply for a mortgage or mortgage refinance, obtain copies of your credit report, look for any disputed items and get them cleaned up on your own.
I agree, and I definitely would have done that if I had any idea an old dispute could hang up my mortgage refinance.
In the end, though, I’m glad we hit that snag. Since we were going to have to reapply anyway, I decided to do a little more shopping around.
I found a bank with much better interest rate and no origination fee — a charge for getting the loan — which will save us $12,000 over the life of the loan.
So, our credit glitch reminded me that a little time spent shopping around for the best deal on an expensive product can pay off in big savings.
Join our G+ Hangout: Rewards cards for the holidays
When it comes to rewards cards, I’m not as observant as I could be.
I have a Bank of America Rewards Signature Visa and typically cash in my points for credit on my bill when it’s enough to make a difference. But other than that occasional small balance reduction, I haven’t taken much advantage of this card’s benefits. I know I can do better than I’ve been doing.
That’s why Ben Woolsey got my attention. He’s an expert on reward programs and president and general manager of CreditCardForum.com, the webís largest interactive forum dedicated to credit card rewards programs.
Ben says that with a hefty sign-up bonus and by keeping on the lookout for cards that will maximize your expenditures, you can enjoy great benefits such as trips overseas and free hotel stays. †The trick is to read the fine print and spend some time analyzing how you use your credit card. Do you use your card for groceries? Are you open to paying your phone and cable bills by credit card? How you answer will help you choose the right card for you.
I’ve asked Ben to bring his expertise to our Oct. 16, 2014, Google+ Hangout, hosted by CreditCardGuide editor-at-large Erica Sandberg. At 11 a.m. Central Time, Ben and Erica will explore how you can maximize rewards cards in time for the holidays.
Ben comes with an impressive background in the credit card world. Prior to his role with CreditCardForum, Ben served as an industry analyst for CreditCards.com. He has also worked in the credit card industry for several of the nationís largest issuers, where he has managed co-brand partnerships and designed reward programs.
Erica is a personal finance expert, advice columnist and show host. She is author of “Expecting Money: The Essential Financial Plan for New and Growing Families” and is KRON-TVís consumer finance expert.
At our Google+ Hangout, the chief of CreditCardForum will talk about:
- How to get the most out of your travel points.
- What you need to know about annual fees.
- What can happen when you don’t use your card enough.
- When a rewards card is not right for you.
- The dangers of overspending in your quest of points.
- Maximizing cash rewards.
- Choosing the right cards for your priorities.
- Why you should also be thinking in the long term about your rewards.
Join Ben and Erica at 11 a.m. CT on Oct. 16 on CreditCardGuide’s Google+ page for our G+ Hangout about maximizing rewards cards during the holidays. Questions for Ben? Hashtag #RewardsCardsCCG on Twitter, Facebook or Google+.
6 tips to avoid banking fees
It’s never fun to get hit with bank fees, but one survey has good news: Most of us pay nothing.
A new survey from the American Bankers Association (ABA) found that 62 percent of Americans say they pay nothing in fees — up from 55 percent last year. And another 12 percent said they pay $3 or less per month.
The telephone survey of 1,000 U.S. adults, conducted on behalf of the ABA by Ipsos in August 2014, asked consumers to estimate how much they pay in fees for monthly accounts, ATMs and other banking services. The survey also found:
- 7 percent of consumers said they pay $4 to $6 per month, down 8 percent in 2013.
- 3 percent said they pay $6 to $9 a month, down 4 percent from 2013.
- 7 percent said they shell out $10 or more, down 14 percent the previous year.
My husband Joe and I have used a couple of tactics to save on bank fees. The one that has saved us the most has involved using a split direct deposit. Our bank waives the $7 monthly maintenance fee for each checking account that has $100 or more direct deposited into it each month.
Here’s how it works: We get most of Joe’s monthly paycheck deposited into our main joint checking account. But Joe requested that his employer separate out $300, directly depositing $100 into our second joint account and our two individual accounts. That saves us $28 a month or $336 a year.
A few years ago, we also switched from a credit union to our current bank, SunTrust, to save on fees. The credit union didn’t have enough ATMs in the region, and we had plans to take road trips around the South. We didn’t want to get stuck having to pay to go to another bank’s ATM when we wanted cash. That has worked out well for the most part, though we have wound up in a few towns that didn’t have SunTrust ATMs.
The ABA recommends that you opt out of overdrafts, which can leave you with hefty fees, and instead sign up for alerts and keep close tabs on your transactions. Also, the ABA says, some banks will offer you free accounts if you use their bank for many of your banking needs.
Here are a few more ideas for avoiding fees:
- Get an account with a bank that doesn’t charge you a fee for using another bank’s ATM and that will reimburse you the ATM fee that the other bank charges non-customers, Time Money suggests. Time Money recommends digital banks Ally and Schwab, which don’t have their own ATMs.
- If you do use a bank that charges ATM fees and/or doesn’t reimburse you, download your bank’s mobile app, which can point you to the closest ATM when you’re traveling, Time Money recommends.
- If your bank charges for paper statements, go electronic, SmartAsset.com recommends. For example, Central Pacific Bank charges $1.50 for paper statements on some accounts, while U.S. Bank charges $2 on certain accounts.
- Beware of closing an account too soon, SmartAsset.com advises. Some banks charge early account closure fees. For example, PNC Bank charges $25 for closing an account within 180 days of opening it.
And one more tip from me: Always carry cash (I try to have about $50 in my wallet) when you’re traveling by plane. You might find only one bank’s ATMs in an airport and it’s likely they won’t belong to your bank.
I made the mistake of forgetting cash once and hoping that the Atlanta airport would have a SunTrust ATM. No such luck: They had only Wells Fargo, so I had to pay a hefty fee from Wells Fargo and one from my bank, too.
With a little knowledge and planning, many bank fees can be avoided. And, it’s always nice to save a few bucks.
How I’m preparing my teens for fraudsters
Victims of elder financial abuse, including scams, lose about $3 billion a year collectively, according to a study by MetLife. It’s a big problem, and elder advocates have responded aggressively.
There are hotlines and email blasts that keep the elderly up to date on the latest scams targeting their age group, such as the AARP’s Fraud Watch Network and its fraud-fighting hotline, (800) 646-2283. Also, the government issues alerts, such as the Federal Trade Commission’s advisory on the “grandparent scam,” sometimes called the family emergency scam.
There is understandable concern about the fraud our elderly face, but I have to wonder whether we’re ignoring teens and young adults.
Every time I get an alarmist piece of mail warning me that my car’s warranty is about to expire, or I get an automated call announcing my “final notice” that I’m paying too much interest on my mortgage, I wonder if my two teenage sons would know how to handle these situations.
In the past couple of months, I’ve come up with an action plan that I hope will prepare my boys for the scammers that are out there. Here are my five tips:
- Make them answer the home phone. This gives them a chance to hear the different angles of fraudsters, and they can ask me or my husband how to handle the call in real time.
- Educate them about personal information. They know not to give their personal information to the Nigerian prince email scams, but do they know not to give out Social Security numbers, driver license numbers or bank account information over the phone? Probably not.
- What if the call is legitimate? That said, there will be times when a service provider calls, or heaven forbid, a debt collector. When this happens, I will teach them that the callers should be the ones providing the information. For example, if the caller wants personal details, I will tell my boys to get the caller’s name, employee ID number and then call the company’s listed number to confirm the caller is legitimate. (My financial advice company periodically calls me and asks for personal identifiers before we can proceed. I always get the representative’s name and call the company’s listed number to confirm that it is a legitimate call.)
- Have them sign up for the Do Not Call Registry. Explain that they can register their cell phone number now, and home phone once they move out (if they have one), and that they will then be placed on a list banning telemarketers from contacting them 31 days after registration. I will give them a short script to say when a company calls. “This line is on the Do Not Call Registry. Please take me off your list or I will file a complaint.” After 31 days, the legitimate companies will stop calling, and you are left with the fraudsters. (Also, if a caller claims to be with the registry, he isn’t.)
- Teach them the fine art of hanging up. If someone calls and clearly wants information or money, teach your kids that it’s OK not to engage them. In fact, there are times when it’s OK to simply hang up. I got a call recently from someone who said she was with “the Claims Department.” I asked what that meant, the caller stuttered and couldn’t say which “company” she was with, so I hung up. My kids were there, and I explained to them what happened.
By giving your kids practical experience in how to handle con artists, you arm them with an important life skill. Don’t let them move out without knowing how to negotiate through the minefield of fraudsters out there.
4 steps to take when choosing a financial planner
I had a bad case of financial planner anxiety. For over a year, I couldn’t bring myself to make an appointment with a fee-only financial planner.
But when I found a planner I thought would be a good fit, I called her, and she immediately put me at ease. “There’s nothing to be nervous about,” she told me, and we chatted for half an hour. Finally, I made an appointment.
The 2013 Household Financial Planning Survey, by the Certified Financial Planner Board of Standards and the Consumer Federation of America, found that nine out of 10 American households do some type of financial planning, even if it’s just an informal budget jotted down on a notepad.†
But far fewer — only 19 percent — have had a certified financial planner or similar professional create a comprehensive financial plan for them. In the group of consumers who did have a pro make a plan, though, most have all of their bases covered: emergency savings, retirement savings and plenty of insurance.
Until last week, I wasn’t in that group. But now I’m happy to say I am. And my husband and I feel much better about our financial future.
Curious about what happens in a financial planning session? Here’s how it went for us:
Before the session
My husband Joe and I filled out a detailed questionnaire about our finances. We wrote separately our short-, medium- and long-term goals and dreams, as well as our tolerance for risk and attitudes about investing. We also provided a lot of documents, including a copy of our most recent tax return and Joe’s most recent retirement account statement. (I didn’t have a retirement account, because I’d cashed mine in during the recession, which was part of the reason I wanted to meet with a financial planner.) We had to pay half the $600 fee upfront.
During the session
We did our session remotely because the planner is located a few hours from us; not every city has a fee-only planner. We dialed in via my laptop, using a meeting tool called WebEx. We talked with the planner while she pulled up documents, charts and graphs on the screen to illustrate her points. First, we talked about estate planning, such as creating wills and making sure we had named our insurance beneficiaries. Once that was out of the way, we went over retirement planning scenarios based on our goals. She played with numbers — such as retirement age — and investments at different risk levels, showing us how each scenario would look. I’m self-employed, so she outlined my retirement account options. Finally, she came up with a spending, saving and debt repayment plan that made all of us happy.
After the session:
We followed up on “action items” the financial planner assigned to us. For example, I opened a savings account with Ally Bank, which earns 0.9 percent, to hold our emergency savings. We tweaked our budget to reflect the amount the planner recommended we commit to debt repayment and, later, to saving. And I will open an individual retirement account as soon as we finish paying off the credit card debt we incurred during our remodel. We also get a half-hour follow-up session with the planner.
After having been through the financial planning experience, here’s the advice I’d give to anyone considering it:
- Go with a fee-only planner. This means the planner is paid only by you and is not getting commissions to sell you financial products. You can find a fee-only planner on the website of the National Association of Personal Financial Advisors. The Certified Financial Board of Standards offers a guide to choosing a planner.
- Consider a mini-plan. If your financial life isn’t very complicated, many planners have a less expensive package that might cost half as much as a full financial plan. Depending on your situation, it might be all you need. That’s what we did, and it saved us quite a bit.
- Don’t put off meeting with a financial planner out of anxiety. I can tell you from experience, you’ll probably feel relieved once you’ve gotten the advice of a pro.
- Find a planner who’s a good fit for you. Most planners are happy to talk with you on the phone about their services, so you can get a feel for whether they’re a good match. I talked with one other planner, but went with the one we chose because she focuses on financial life planning — that is, tailoring financial goals to your hopes and dreams, rather than straight number crunching.
So, if you’re considering a financial planning session, I’d say go for it. It’s pricey, but I think it will pay for itself many times over.
How to fight credit card budget woes
It turns out that less than a third of Americans keep a detailed budget, according to Gallup.
Gallup also found last year that if you went to college or have a household income of at least $75,000, you’re a little more likely to keep a budget — a little under two-fifths in those categories said they kept a budget.
So, what is our hang-up about budgeting? Gallup surmises that Americans might not feel the need to budget because they can check their bank account balance at any time via mobile banking, as well as online banking, the most popular mode of banking, according to American Bankers Association. But, budgeting is about more than reviewing your checking account regularly.
If you keep a detailed budget, you can plan for big expenses, such as visiting Aunt Mae over the holidays. Perhaps more important, you can plan for the unexpected, such as the $3,000 in car repairs my husband incurred when he recently went in for “routine maintenance.”
Because I set aside part of my take-home pay for unexpected bills, we have not suffered from any recent, unplanned expenses.
While I have my family on a strict financial diet, there is one thing I struggle with when it comes to keeping a realistic budget — budgeting for credit card bills. I’ve wondered if credit cards are actually a major reason why people do not budget adequately. Do we hide our heads in the sand because we are going over budget every month with our credit cards?
My husband and I pay our card bills off every month, a habit I highly recommend, but I still always struggle with keeping the credit card part of the budget under control. And I have put off itemizing my cards by category on my budget spreadsheet, because I know the news won’t be good. Head in sand, you say? But some people actually use credit cards as a budgeting tool.
Hank Coleman writes on DailyFinance.com that he and his wife have found that charging expenses primarily on a credit card has simplified their budgeting, because there is a paper trail. Coleman suggests that you use a charge card if you are concerned that you’ll go over budget with a traditional credit card — with a traditional card, you can simply pay a minimum payment each month. A charge card requires you to pay in full each month.
But what if you already have credit card debt?
Louise Balle advises on TheNest.com that if you owe on your cards, pay off the card with the highest interest rate first. She suggests that you make up a budget of all your expenses, including your minimum payments on your cards, then subtract that figure from your take-home pay. That sum is what should go toward your credit cards until you pay them off, she says.
Benjamin Chambers writes on Money.StackExchange.com that you can get your bank to send you a text when you reach a certain balance threshold. He actually uses his card for groceries, paying off the bill each month. Benjamin says personal finance is about behavior, rather than knowledge, and if you practice, you can learn to manage the credit card aspect of your budget, and it will become as natural as using cash.
I like the idea of getting alerts on my phone if I go over a certain amount, but the alerts allowed on my favorite card, which is with Bank of America, don’t include that option. I looked at my Capital One, and it does have an option to alert you if your balance goes above a certain amount.
I set up an alert with Capital One; I want to see if I can curb my card spending this way. It will be interesting to see if I can change my behavior, as Benjamin says you can.
Americans like banks again, but I don’t
The recession permanently changed my view of the American banking industry, but it looks as though other consumers are letting go of their resentments.
Every year, Gallup publishes its Work and Education Poll in which Americans rate their feelings on various industries. The choices range from one, “very positive,” to five, “very negative.”
In August 2014, Gallup surveyed 500 people about 24 industries. The survey shows that Americans, for the first time since 2007, have a positive view of the banking industry. How quickly we forget.
I will say that my view about the industry as a whole is different from my view on specific companies. I have generally positive feelings about the institutions where I bank. I like Sun Trust, where I have my checking and savings accounts. I also am happy with my credit card issuer, Capital One. When I think of the relationships I have with banks I use, I focus mostly on their products and how I’m treated.
However, when I think of the banking industry as a whole, my feelings are much less favorable, primarily due to the subprime mortgage mess and the resulting recession in 2008-2009. That was the root cause of other Americans’ negative feelings about the banking and the real estate industries from 2008 to 2013, according to Gallup.
My husband and I experienced the trauma of the recession first-hand, and it affected our lives in a big way.
In 2003, when housing prices were flying high, I bought my first home in Kansas City. I bought a house I could easily afford, and everyone — including my mom — said buying was a smart decision and that I’d make some money when I sold the house.
Fast forward to 2011, and we had to move. My husband, Joe, had lost his job in the middle of the recession, had gone to grad school and finally landed a job in Georgia. After years of being broke, it was a no-brainer for him to take the Georgia job. But we had to sell our house and its value had taken a nosedive. A few relatives told us to stop making payments and let the bank foreclose, but we didn’t want to abandon our obligations or wreck my credit.
When the first real estate agent we called told us she didn’t think she could sell our house, I almost cried. Our inner-city neighborhood was taking a beating from the recession, and a bigger house right behind ours had just sold for $14,000 after a foreclosure. But, we finally found a real estate agent who agreed to help us. He gave us tasks, such as rearranging furniture and painting our walls a fresh, airy cream color. Whenever there was a showing, I’d throw fresh flowers cut from our yard on the table, load the dogs into the car, park a few blocks away and hold my breath. It seemed like a miracle when a buyer put in an offer for $64,000, which was $10,000 less than we still owed. We had to take out a $9,000 personal loan from our new credit union in Georgia to be able to afford to sell the house. The whole situation left us a bit bitter.
At one point, I even called my mortgage bank and to see if it would let us settle the mortgage for less than we owed. I didn’t expect the bank to say yes, but I wanted to at least ask and also let it know what I thought about the huge role banks had played in the housing crisis, due to their backing risky mortgage loans, and the fact that situations like mine were the result.
I told my bank I could easily let the house go into foreclosure and it could then sell it for $12,000 or so. Or, maybe they could accept $64,000 and forgive at least part of the additional $10,000 I would still owe. They said no way.
I’ll never forget that conversation and the (at least it seemed to me) smug and callous attitude of the bank rep I spoke with. “Banks like yours caused this mess,” I told her. “And now regular consumers like my husband and me, who are trying to do the right thing, are paying the price.” It wasn’t much, but it was my little chance to tell the “banking industry” what I thought.
So, we sucked it up, took out the loan, and felt grateful to have sold our house. We paid off what we owed in about a year, but my unhappy feelings toward the banking industry will linger for much longer.