Credit Cards Mojo » Debt Management

Family’s Fall From Affluence Is Swift and Hard

Staff Writer — Sat, 27 Nov 2010 00:07:27 +0000

Grateful to have found work in this tough economy, Nick Martin teaches grape growing and winemaking each Saturday to a class of seven students in a simple metal building here at a satellite campus of Highland Community College.

Then he drives 14 miles in an 11-year-old Ford Explorer to a sparsely furnished tract house that he rents for $900 a month on a dead-end street in McFarland, a smaller town. Just across the backyard is a shed that a neighbor uses to make cartridges for shooting the prairie dogs that infest the adjacent fields.

It is a far cry from the life that Mr. Martin and his family enjoyed until recently at their Adirondacks waterfront camp at Tupper Lake, N.Y. Their garage held three stylish cars, including a yellow Aston Martin; they owned three horses, one that cost $173,000; and Mr. Martin treated his wife, Kate, to a birthday weekend at the Waldorf-Astoria, with dinner at the “21” Club and a $7,000 mink coat.

That luxurious world was fueled by a check Mr. Martin received in 1998 for $14 million, his share of the $600 million sale of Martin Media, an outdoor advertising business begun by his father in California in the 1950s. After taxes, he kept about $10 million.

But as so often happens to those lucky enough to realize the American dream of sudden riches, the money slipped through the Martins’ fingers faster than they ever imagined.

Credit card traps – common ways of getting caught in a credit card mess

Staff Writer — Sun, 21 Nov 2010 14:38:14 +0000

Today, the number of people that are on debt is alarming. A quick peek into all the people that are in debt might reveal to you about how complicated it can tend to be to remain on credit if you have not planned it out in the right manner. In fact, credit cards are considered as one of the main reasons as to why people are in deep debt. If you are careful with your credit cards, you wouldn’t really have to be worried about the problem of debt. Listed below are some common ways in which you might be caught in the debt trap.

Making minimum payments

One of the oldest ways of getting into trouble would probably have to be by making the absolute minimum payments for each payment period. In doing so, you might end up pushing your debt to a larger figure, eventually realizing that it is next to impossible to be cleared with ease. Many young adults have the habit of making minimum payments, due to which they find getting out of the credit card itself to be a complicated task.

Change this habit right from the beginning and learn to make payments as early as possible. In this way, you wouldn’t have to be worried about accumulating debts, which will accrue interest over time. It is important to look into this and be assured of the fact that you will be able to make the payments as quickly as possible, without having to be worried about some huge bill waiting for you at the end. If you are unable to make payments now, it is quite possible that you will not be able to do so in the near future either. Stop using your card if you are finding it hard to make payments for it currently.

Avoiding the late payments

Credit card traps almost always start off with late payments. Customers sometimes simply forget to make payments, which ends up snowballing into a larger problem. One missed payment is sufficient for your credit card provider to double or even triple your interest rate! Clearly, you don’t want to be paying such an exorbitant rate on your credit card. What is worse is that you might actually end up paying such large numbers even on your other credit cards, without having applied to them.

Credit card use plunges as hard times drag on, debit use rises

Staff Writer — Sat, 11 Sep 2010 02:46:38 +0000

Americans have sharply reduced their use of credit cards, and some analysts believe the trend will continue even after the economy has fully recovered.

The Federal Reserve Board reported this week that credit card borrowing fell at a 6.3% annual rate in July. The last time borrowing with credit cards increased was in August 2008.

Separately, a survey by Javelin Strategy & Research found that 56% of consumers used credit cards in 2009, down from 87% in 2007. Credit card usage could fall as low as 45% this year, the report said.

How Debt Can Destroy a Budding Relationship

Staff Writer — Sat, 04 Sep 2010 02:31:53 +0000

Nobody likes unpleasant surprises, but when Allison Brooke Eastman’s fiancé found out four months ago just how high her student loan debt was, he had a particularly strong reaction: he broke off the engagement within three days.

Ms. Eastman said she had told him early on in their relationship that she had over $100,000 of debt. But, she said, even she didn’t know what the true balance was; like a car buyer who focuses on only the monthly payment, she wrote 12 checks a year for about $1,100 each, the minimum possible. She didn’t focus on the bottom line, she said, because it was so profoundly depressing.

But as the couple got closer to their wedding day, she took out all the paperwork and it became clear that her total debt was actually about $170,000. “He accused me of lying,” said Ms. Eastman, 31, a San Francisco X-ray technician and part-time photographer who had run up much of the balance studying for a bachelor’s degree in photography. “But if I was lying, I was lying to myself, not to him. I didn’t really want to know the full amount.”

Advice for those who Can’t Pay their Credit Card Bills

Staff Writer — Thu, 02 Sep 2010 15:45:06 +0000

This blog is for people out there who cannot pay their credit card bills. If you have lost your job or possibly have suffered from an illness, whatever the reason and you cannot pay your credit card bills…well this hub is for you.

I’m sure you have already had many a sleepless night wondering what you are going to do, maybe you’ve had good credit your whole life, maybe you’ve already tried credit cardconsolidation and now that you missed a payment or two your interest rate has sky-rocketed, your FICA score has plummeted and you don’t know how you are going to pay your next bill. Well, what I am going to tell you may go against the grain of many but here is my advice…are you ready, hmmm?

If you aren’t working, if you are renting your home or apartment or sleeping on your brother-in-laws couch, if you are barely able to buy food for your kids, DON’T PAY YOUR CREDIT CARD BILLS.

Interview with Nassim Nicholas Taleb author of The Black Swan

Staff Writer — Mon, 05 Jul 2010 20:13:10 +0000

Post from: Credit Cards Mojo

Interview with Nassim Nicholas Taleb author of The Black Swan

Vulgar voicemails force debt collector to pay $1.5 million

Staff Writer — Sun, 30 May 2010 18:03:53 +0000

The harassing and threatening voicemail messages left on Allen Jones’ mobile phone are nothing short of vulgar.

“This shouldn’t be tolerated,” he said. “Nobody should have to experience what I had to experience.”

Debt collectors from Advanced Call Center Technologies, LLC left eight messages for Jones in August 2007 trying to collect what it said he owed on a credit card.

Most messages were laced with profanity and spewed racial slurs:

“This is your mother******* wake-up call you little lazy a** b****,” a collector said on one. “Get your mother******* n****r ass up and go pick some mother******* cotton fields.”

Jones is African-American.

“If we did not have tapes, no one would ever believe that this happened,” Mark Frenkel, one of Jones’ attorneys said.

Get Out of Debt with the Debt Snowball Plan

Staff Writer — Wed, 05 May 2010 12:07:23 +0000

Myth: I should pay off the debt with the highest interest rate first to get out of debt quickly.
Truth: You should pay off the smallest debt first to create the greatest momentum in your debt snowball.

The math seems to lean more toward paying the highest interest debts first, but what I have learned is that personal finance is 20% head knowledge and 80% behavior.You need some quick wins in order to stay pumped enough to get out of debt completely. When you start knocking off the easier debts, you will start to see results and you will start to win in debt reduction.

Debt Snowball Plan

The principle is to stop everything except minimum payments and focus on one thing at a time. Otherwise, nothing gets accomplished because all your effort is diluted. First accumulate $1,000 cash as an emergency fund. Then begin intensely getting rid of all debt (except the house) using my debt snowball plan. List your debts in order with the smallest payoff or balance first. Do not be concerned with interest rates or terms unless two debts have similar payoffs, then list the higher interest rate debt first. Paying the little debts off first gives you quick feedback, and you are more likely to stay with the plan.

Consumer debt is not your friend

Staff Writer — Wed, 05 May 2010 12:02:42 +0000

Here’s a simple MBA lesson: borrow money to buy things that go up in value. Borrow money if it improves your productivity and makes you more money. Leverage multiplies the power of your business because with leverage, every dollar you make in profit is multiplied.

That’s very different from the consumer version of this lesson: borrow money to buy things that go down in value. This is wrongheaded, short-term and irrational.

A few decades ago, mass marketers had a problem: American consumers had bought all they could buy. It was hard to grow because dispensable income was spoken for. The only way to grow was to steal market share, and that’s difficult. Enter consumer debt.

Interest Rates Have Nowhere to Go but Up

Staff Writer — Tue, 13 Apr 2010 01:42:34 +0000

Even as prospects for the American economy brighten, consumers are about to face a new financial burden: a sustained period of rising interest rates.

That, economists say, is the inevitable outcome of the nation’s ballooning debt and the renewed prospect of inflation as the economy recovers from the depths of the recent recession.

The shift is sure to come as a shock to consumers whose spending habits were shaped by a historic 30-year decline in the cost of borrowing.

“Americans have assumed the roller coaster goes one way,” said Bill Gross, whose investment firm, Pimco, has taken part in a broad sell-off of government debt, which has pushed up interest rates. “It’s been a great thrill as rates descended, but now we face an extended climb.”

The impact of higher rates is likely to be felt first in the housing market, which has only recently begun to rebound from a deep slump. The rate for a 30-year fixed rate mortgage has risen half a point since December, hitting 5.31 last week, the highest level since last summer.

Along with the sell-off in bonds, the Federal Reserve has halted its emergency $1.25 trillion program to buy mortgage debt, placing even more upward pressure on rates.

“Mortgage rates are unlikely to go lower than they are now, and if they go higher, we’re likely to see a reversal of the gains in the housing market,” said Christopher J. Mayer, a professor of finance and economics at Columbia Business School. “It’s a really big risk.”

Each increase of 1 percentage point in rates adds as much as 19 percent to the total cost of a home, according to Mr. Mayer.