Posted on: April 20, 2009 by Matt
While driving with my girlfriend yesterday we had a conversation about my credit card that still carries a balance. We started talking about my car loan from an ex-girlfriend and how excited I am to have it paid off in August and I noted that I should be able to pay the balance of the credit card off by the end of October. She asked how much the balance on the credit card is and I told her that I still owe about $1,900 on the card.
She thought for a minute then asked the questions: “Why is it going to take so long? Why haven’t you paid it off already?”
I responded that I just can not afford to pay off the debt and still be able to carry other expenses that we incur. She then argued that I make enough that I should be able to pay off the card in a couple of months at the most and that all the expenses that I claim I need cash for could just as easily be paid for with the credit card. I started to feel a little squeamish. I just do not relish the thought of emptying my bank account and using a credit card for living – especially when I am trying to just pay the balance off.
After further discussion she logically laid out the following thoughts:
- I am paying a high interest rate on the card: Certainly higher than the interest I am getting returned from my bank account. Paying the card down to a lower balance certainly makes sense here.
- I will still have the money available, just in a different place: My argument of not being able to pay for gas, groceries and other expenses makes no sense. I normally use a debit card for all these purchases – if I pay down the credit card balance I can just as easily use my credit card.
- I will probably spend less on the credit card: I argued that I was trying to avoid spending on the credit card because I would probably spend more, not less. Her response: If I am working on paying the balance off and not wanting to increase the amount owed – I will probably think a little harder about impulse purchases. I had not considered that using a credit card would encourage me to spend less before. Her argument is good and plays to my thought patterns pretty well. If I am holding a card that I am hesitant to charge I am really gonna think about how much I really need what I am buying.
- I am just neurotic about money: I knew this already. I freak out when my checking account drops below having a couple hundred dollars in it. There is not a set amount but it triggers me into a bit of a panic mode. I like the security of having money available.
At the end of our conversation I agreed to give her method a shot and see what happens. It should be interesting and I will be sure to keep everyone updated on how it goes. I am hesitant as it seems that most personal finance literature I read expounds the evils of credit cards but she made a good argument (you guys just got the synopsis).
What would you do? Would you prefer to pay down the debt and use the card for expenses or keep using cash and try to pay the debt down slower? I suppose the real question is cash or credit?
Tags: Budget, Credit Cards, Debt, Debt Reduction, Relationships Filed Under: Banking, Budget, Credit Cards, Debt, Debt Reduction, Expenses, Relationships
Posted on: April 16, 2009 by Matt
My girlfriend and I live together but we keep our finances fairly separate. We communicate the status of our bank accounts in passing throughout the month and we each cover some of the household expenses (we have a system to scale it based on income as mine is significantly higher). Our little system works fairly well as it allows us to each budget and plan in our own way. We also find that neither of us feels the system is unjust which means neither of us feels alienated by the arrangement.
In the past I have noticed that my girlfriend’s planning and budget includes spending about $300 per month on her credit card that she pays off at the beginning of the next month. I have been sure to let her know that I do not really agree with her method of planning and think it would be much wiser to plan based on what she has available. Having been burned way too much by debt I fear she may get behind the proverbial eight ball a little bit. However we have agreed not to force each other into decisions as long as we communicate before making any major investments or purchases. I am sure it sounds kind of funny but we are not yet married and we both enjoy having a level of financial freedom and latitude.
Last night my girlfriend told me that she has not yet charged anything to her credit card! She also alluded to not needing the credit card this month but that she was planning on using it for gifts while we are on vacation at the end of the month. Discovering that she has been able to make it through the month without using her card and having her portion of all her household bills paid is a huge step forward in my book. She has gone from the “I need” attitude with regard to her credit card to the less dramatic “I want”. I do not know if she will continue down a path of budgeting without the credit card but she has now proven it is possible.
I know that she has some financial goals and think that this may be a possible step in the right direction. I am just impressed and proud right now. I know it might seem like a small deal to a lot of people out there but she does so much to move herself in the right direction every day and I think a little acknowledgment but is due (even if she doesn’t read the blog).
Tags: Budget, Debt, Expenses, Family, Relationships Filed Under: Budget, Debt, Expenses, Goals, Planning, Relationships, Savings
Posted on: March 30, 2009 by Matt
Over the weekend I received my cell phone billing statement for last month and was slightly surprised to see it was about $40 higher than usual. I knew it would be a little higher due to some data usage from our impromptu family vacation but I think I expected it to be closer to $10. A while back I canceled my data plan as I rarely use the package and living in a rural area the data feature is roaming constantly anyway if it is even available. I figured that I should not bother paying the $25 per month to carry a service that I do not use.
However – while we were out of town I used my phone to look up a couple bits of information while we were looking into lodging. The total transmission was around 1160 KB and the price breaks down to about $0.03 per KB which total out to an extra $34.80. Nothing earth shattering but still a bit higher than I had hoped. Not much I can do about it now but learn my lesson and make sure that I do not use the feature again unless I am willing to invest the extra $40 for the information. I suppose I am off to work on updating my budget to accommodate this now…
Posted on: March 23, 2009 by Matt
I have been meaning to get my taxes done for a couple of months now and finally decided to give H&R Block a call. I called them earlier in the week and scheduled some time on Saturday to go in and have them take a look at my taxes. Normally – I have no problem filing myself but this year I moved and continued to work for a company in another state. This lead to being a resident of two different states and paying income tax in one state only. I was worried about the risk of error and figured I would give the work to a professional.
Overall – I was pleasantly surprised with the entire experience. The cost of having my taxes prepared was a bit higher than I thought it should be at $233 but the cost was offset by the increase in return due to deductions I was not aware I could claim. There was about a $400 increase in my federal return from working with H&R Block so I still ended up in a better position than I expected.
The state items on the other hand appear to be pretty close to a wash. The state of Colorado will owe me about $1,500 and the state Vermont will want just about that much back. After getting the states all taken care of I get to keep about $40 as a middle man fee.
Finally – I was able to save some time having someone else handle my taxes for me. In previous years I have spent about two or three hours to get my taxes done and reviewed. On Saturday I was at the H&R Block office for about 45 minutes. Not too bad – I could complain about the fee being so high for such a short amount of time but I prefer to look at it as investing in time for myself!
Posted on: March 19, 2009 by Matt
Well – not really free, more like pre-paid and I just did not know it. I am not sure if I have mentioned it here before but I see a counselor once a month to discuss basically anything on my mind and seek advise. I started going a number of months ago to help get through dealing with some old lingering problems and have continued because I really get a lot out of the sessions.
My most recent appointment was yesterday around lunch time and at the end of the session I was informed that my insurance company has set it up so that this visit was free. I was pretty confused because my insurance has a high deductible and pretty much sucks (for lack of a better term). As we discussed the issue I was informed that while he charges $100 per session (what I had been paying) the insurance company only covers $77.
Somehow he had to work with the insurance company to get the payment to apply to my deductible and in order to do so he could only charge me the official insurance company rate. Since I had been paying him at the rate of $100 per visit and the actual cost was $77 I was able to bank some credit with my counselor. Yesterday marked the visit where he had all the paper work sorted out and I had about $90 in credit which meant my visit yesterday as free!
It was a nice unexpected surprise in a month where I have already over committed myself a bit and really made my day! I believe that the visits are worth every cent that I spend on them but getting one for free is almost priceless!
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