IN THIS ISSUE #159
Larissa S. Bilker
Editor: Denise Troy
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When it comes to happiness, it's better to be rich
than to be poor: 56% of people who make more than $75,000 a year say they are
"very satisfied" with life; Only 24% of people who make $25,000 or less a year
say they are "very satisfied" with life.
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Letter from the Publisher
by Scott Bilker
Here are a few items for this issue starting
with an email from Richard about Capital One.
What you didn't report about Capital One is
that they are increasing as of September from 9.9 APR to 15.9, a super
whopping 60% increase in their interest rate. You better believe I am opting
out of that. Do a story on opting out of credit cards when they increase
rates like this and what you might save by opting out at certain dollar
levels. Thank you for your informative newsletter.
Yes, I should mention that--thanks!!
Personally, I would hold onto the card but
not use it. In short order, they'll beg me to use them by offering me low rates. They
will! They do!
Debt Consolidation Loans:
One strategy for easing the management of debt is consolidating loans. I
once went to a local bank to get a consolidation loan and they turned me
down. Their loss--I used my credit cards instead. And, I was happy to hear
that this bank went belly-up for bad loans to real estate companies. They
could have made a profit from me, but instead chose risky loans that brought
them down. Anyway, if you're thinking about consolidation loans, you should
CreditLoan. They have good information on all areas of debt
Comments from readers:
"Really love it. I'm in great financial shape, but the information is always
"I wish I had 1/100th of the knowledge about
credit that I have now on that fated first week of college at the bookstore
when my bags were filled with 'Great student credit card offers.' I can
honestly contribute this experience to the beginning of my downfall with
credit. Thanks to DebtSmart, I am getting back on track and learning to make
the most of my hard earned money!"--Tad
Paying off debt is hard work
by Scott Bilker
Your advice on several topics lately has been
about moving around debt to produce the lowest APR or the most savings to
consumers. However, it does not cover anything about the hard work of
actually paying off the debt. The point of this website should be to pay off
your debt and not just pushing it around from one account to another.
For example, your most recent answer to a
reader who wanted to charge a car purchase on a credit card was missing half
of the answer. When you obtain a car loan, the loan is paid off within a
period of time, say 5 years. This time period cannot be changed unless the
entire loan is refinanced. This requires the buyer to pay an amount that
covers interest and a significant portion of the principal. However, when
you finance the purchase, say on a credit card, the payment period can be as
short as 1 year or as long as 30 years. If you paid the minimum monthly
payment on a credit card, you could easily pay more in interest than if you
took out a car loan.
Example, if you took out a 5-year car loan
for $15,000 at 6%, your total interest is $2,400. If you purchase the same
car $15,000 at a special credit interest rate of 3%, but take twice as long
to pay it off, it will cost you $2,402. It would be easy for someone to say,
"Well, just pay it off early," but you and I know, that is easier said than
done. And this is the point I want you to address in your future advice.
Paying off debt is a psychological issue. The psychology of paying off your
debt fast and using your credit to make money not spend it.
Finish Reading Article
DebtSmart Reader Tips
by DebtSmart Readers
Thanks for submitting
your tips! I'm going to be introducing a few new tips in each issue. So you
can be sure that yours will be out soon. Here are this issue's tips:
Credit Cards: 4 steps to manage
(1) Open your credit card bills the day you get them. Look over the
statement (make sure you learn how to read them and really understand them)
to ensure that your last payment was received and that there aren't any
charges you didn't personally make. You also want to make sure your interest
rates are what you think they are. If you see anything unusual or incorrect,
call the Customer Service number right away. TIP WITHIN A TIP: Many credit
card Customer Service Reps must have been found under rocks because they can
be very dense. If a Rep can't easily understand or handle your question or
dispute, ask to talk to the Supervisor; (2) Write the due date and the
amount you are going to pay on the outside of the envelope. Place the
envelope with your other bills in chronological order; (3) Pay your credit
cards online. I've been doing that for many years and have never had a
problem, whereas I've had many problems with the US mail making me late by
losing my payment. You can actually pay your card payment right away online
or schedule it electronically to be withdrawn from your checking account the
day it's due, and; (4) Always print out the web page that says your payment
has been submitted, with the transaction confirmation number. If you ever
get in a dispute with the bank that you paid on time, you've got their
confirmation number that you did.
ID Theft: Photo of Wallet
Take a photograph of what's in your wallet so you know whom to call if it's
lost or stolen.
--Bobby Shaw, host of The Family Friendly Morning Show, KFSH
Read more DebtSmart Reader Tips
"Fees taken off!"
"Scott--another success story for you--I had
absentmindedly forgotten to make a payment on one of my Cap1 cards, and because
of it, it pushed me over the limit. I not only got slapped with an overdue fee,
but an over the limit fee as well. I called and asked for the fees to be taken
off, and the rep refused. I got my scissors out and held them up to the phone,
and cut the card in half and told her to cancel the account. She immediately got
a 'supervisor' on the line who not only took off the over limit fee, but the
past due fee as well. I told her she would have to send me a replacement card,
which she of course agreed to do--so it does pay to call! And, best of all, it
won't be reported to the credit bureau because I was less than 30 days late in
making the payment. Thanks!"
--Sue Sheffler, Richmond Hill, GA
Read about special offer for all three of Scott Bilker's best-selling books
Household Math(tm): Sale or gas savings?
How much are you really saving to be there for that
sale? This is a true situation at our house. My wife drives a Dodge Ram; it gets
12 mpg (miles per gallon). Gas in our area is $2.45 per gallon. The mall is 18
miles each away. If she cuts back and only goes to the mall once a week, instead
of twice a week, how much would she save in one year? (Steve, DebtSmart Reader,
submitted this question.)
Answer this problem
Bush Administration to help 240,000 homeowners keep homes
by Federal Housing Administration (FHA)
President George W. Bush announced on 8/31/07 that HUD's Federal Housing
Administration (FHA) will help an estimated 240,000 families avoid
foreclosure by enhancing its refinancing program effective immediately.
Under the new FHASecure plan, FHA will allow families with strong credit
histories who had been making timely mortgage payments before their loans
reset--but are now in default--to qualify for refinancing.
In addition, FHA will implement risk-based
premiums that match the borrower's credit profile with the insurance premium
they pay--i.e., riskier borrowers pay more. This commonsense, risk-based
pricing structure will begin on January 1, 2008.
Finish Reading Article
Discover Card Consumer Survey Shows we're Upbeat about our Personal
by Curtis Arnold
In May, Discover launched
a new research program, the "Spending Confidence Monitor," with Rasmussen
Reports, a well-known, independent survey research firm. Together, they're
planning to survey lots of us every month--they interviewed 500 consumers
daily (15,000 total) in August alone--to find out what we think we'll spend
in the future, what shape our finances are in now, and what our opinions are
on the economy.
Finish Reading Article
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