Best money bets for college students

A question I get asked often is for advice for college students. One of my Twitter followers, @BeForREAAL, brought the topic up last week:

My thoughts on that question never waiver: the best financial decision college students can make is to avoid graduating with unnecessary debt. The two most important ways to do so is avoid over-borrowing for school (i.e., borrowing for more than tuition, fees and books instead of working to pay for incidentals), and using credit cards for non-essential purchases. The average college student in the 2008-2009 school year had borrowed more than $23,000. That's a lot to have to pay back -- with interest -- in a tough economy where it's hard to find a job.

I opened the question up for my timeline and got some other answers:

Pretty sound, common sense advice. What else would you suggest?

Grading CNN's Black In America: Almighty Debt

I caught CNN's Black In America special, "Almighty Debt" last night. Bottom line: I think CNN deserves kudos for putting up the time, money and Soledad O'Brien to report on black debt, but the presentation left me wanting. I was hoping that at some point the church angle would go beyond anecdotes about how some churches are helping their members financially. Helping congregants isn't specific to black churches and it left a lot of material unexplored. For example, where does "prosperity gospel" as preached by megachurch leaders like Bishop Eddie Long, fit in a community plagued by debt and institutional economic bias? What role, if any, do black churches still have as economic engines in downtrodden communities?


And I really would have loved to see a more explicit discussion of the difference between debt as a function of the legacy of institutional racism and debt as a result of really, really bad choices. For an example of the latter, see this keeping-up-with-the-Joneses couple, who sold luxury cars and houses for a living and have a daughter with a $400 a month credit card habit but landed in foreclosure on their house:



I want to know heard more about this couple's mindstate before landing in foreclosure. What the hell were you thinking?


In any event, if you didn't watch it, you should check out the re-airings over the weekend or more clips from the show here http://www.cnn.com/SPECIALS/in.america/black.in.america/

Can I save for a home and pay off my debt at the same time?

Sorry for being gone for so long; the month of April was ridiculously busy at the 9 to 5. But I'm back strong and with a good question that came from formspring:

I'm almost debt free and I want to start saving for a down payment. How can I aggressively tackle the last credit card...and save at the same time?

My advice: Don't spread yourself too thin. You have a finite income and that money only stretches so far. If you're almost debt free, you should devote as much of your income as you can to paying off the debt until it's gone. That will help you as much as saving for a down payment (on a home, I'm assuming) because lowering your debt will help improve your credit score. When the debt's gone, take the money you were putting toward that and apply it to a down payment. Take your time and remember you can't do it all at once.

Also, how much money do you have in an emergency fund? If it's less than six months worth of your living expenses, that should be your priority over both a down payment and paying off debt. What you don't want to do is be in a situation where you've got to run up credit cards or beg, borrow and steal if you should  lose your job.

Good luck.

What's worse: cheating or hiding debt?

I'm stealing this question from CNN's Jack Cafferty who asked it on the air the other day.

My own opinion: neither is worse than the other. Both things are bound to ruin a relationship. Most marriages end over two things: infidelity or money, and it's easy to see why. A person who's dishonest about money is exhibiting the same character traits as someone who's not honest about what they're doing sexually. It shows a lack of trust, a lack of faith in the relationship and that that person doesn't have a level of commitment to the relationship that would allow it to work.

What's your take? Do you think your relationship has a better chance to survive cheating or your partner lying about how much debt they have?

How she got out of debt - 3 times

Yesterday, I gave an encouraging update on a reader who is taking my $0 Balance Challenge has has paid off nearly 50 percent more of her credit card debt in three months than she planned to.

Today, I want to share the story of a personal friend who, having read about the challenge, wanted me to use her as an inspirational example. She asked that her name not be used, but a few things I can tell you is that she's a single, professional woman with a solidly middle-income lifestyle who worked hard to rack up credit card debt and harder to get out of it.

Here's the rest in her own words:

I have always had an up-and-down relationship with money, including 3 rounds on the credit card merry-go-round. When I graduated from college in the mid-1980s, I was blessed to have no student loan debt. But I succumbed to the lure of easy credit cards. The first round wasn't too bad, and it only took a year to pay them off.

Then came the 1990s. I got my dream job and, thanks to a series of promotions and bonuses, I was flush with money. Back came the credit cards and large debt. I enrolled in Consumer Counseling Credit Service, and this time, it took three years to pay them off. At that point, I swore off credit cards and actually lived within my means. My only debts were my car (a reasonable car with a reasonable payment) and my mortgage.

Then in 2005, I found out two things: one, I eligible for a nearly $12,000 credit limit with 2 credit card companies; and two, I became pregnant. You can almost guess what happened next. I used the credit cards to take care of things while I was on maternity leave. The next thing I know, I was $10,000 in debt. I left my job to take another that came with a $10,000 pay cut. So in March 2005, I called CCCS again and joined the program.

The program had changed since the last time, and I had access to some great tools to help me stay on a budget and learn how to better spend -- and save -- my money. I made my last payment in December. This year, I managed to buy nice -- but modest -- Christmas gifts without having to break out the plastic. Not that I could, because I don't have plastic anymore.

My plan now is to double my car payments and have that paid off by the end of the year. I have a nice little rainy day fund, and have no plans to get another credit card anytime soon, despite the best efforts of credit card companies to tempt me. I have just called to opt out receiving any future offers. Can I add how amazed I was that even while in debt and the tight financial markets, credit cards were still trying to woo me?

I won't say the process was easy. I decided to be aggressive and pay $500 a month to get rid of my debt faster. I worked with the non-profit CCCS to negotiate my credit card interest rates. I had to learn to live on -- and stick to -- a budget. I had to tighten my belt and cut out some of the things I really enjoyed. But I kept my eye on the prize and once that car payment is done, I'll be completely debt free. I have a retirement to fund and a child to get through college.

And please -- don't tell me you can't live without a credit card. I have been doing it since March 2005. I've bought plane tickets, rented cars, paid for hotel rooms and handled everything else using only my debit card.

I paid 99 cents to download the Big Spender app on my iPod Touch and I'm tracking EVERY penny I spend in 2010. You can follow my adventure at http://spender2010.livejournal.com/. Sometimes you need to actually see where the money is going, people!

I challenge all of you, Keith's loyal readers, to make becoming credit-card free and getting your financial house in order a priority in 2010. Cheers!

Pay more than the minimum on your credit cards

Today, an update to the $0 Balance Challenge:

Last October, a reader wrote in that her goal was to eliminate $8,157.48 in total debt she had on two credit cards over in twelve months. Not an easy goal given the payment arrangement she worked out for both cards has her sending in only $200 a month; at that rate, she'd have paid $2,400 in 12 months with some percentage of that being eaten up in interest payments.

Three months in, though, there has been progress: I've managed to pay off a little more than $1200 and I'm quite excited. Still, I have a long way to go and staying focused on paying down the cards is quite challenging. For the past few months I've stuck with the minimum payments but when I get "extra" money, usually from baby-sitting or freelancing, I always some put money towards the cards. I've put the most money towards the card with the highest interest rate.

Plan for 2010: Increase my minimum payments from 80 per month to 120 per month on card #1. Commit to contributing a set percentage of "extra" money to paying down the debt on top of regular payments. I'm not sure how much of my "extra" income should go to paying down debt though, guess that's something to think about.
First, CONGRATULATIONS! By finding a way to pay more than the monthly minimum, you've eliminated in three months what it would have taken you six months to pay. That's wonderful and it shows how one of the most important principles of paying off debt works: pay more than the minimum.

Paying more than the minimum on your credit cards not only means you'll get the debt paid off faster, but it saves you money by eliminating interest payments from the end of the loan. Remember: any interest you pay is compounded and tacked on to every monthly statement. That means the longer you take to pay off your credit cards, the more you're going to pay in interest.

As far as how much extra you should pay each month, pay what you can afford. Freelance income isn't necessarily steady, so don't budget for the same amount every time. That said, pay as much of that money to the card as you can afford to, but make sure you save at least 15 percent of it in a separate account so you don't wind up like I did: a $0 Balance on my credit card but a big tax bill.

Beware of debt consolidation schemes

As the $0-Balance Challenge goes on, I'm getting more questions from people who are committing to paying off their credit card balances and want to know the best way to go forward. Like this:

I'm in the process of eliminating my credit card debt. I don't use the cards anymore and I recently set up payment plans. I hear about these services that consolidate all your debt so you only pay one "low" amount a month. Seeing as though I'm paying off two credit cards and student loans, is something like that worth looking into or should I keep doing what I'm doing?

I'll answer your question with a slogan I saw on a bus billboard the other day. It said, "Danger. Debt consolidation could cost you your home." It was a warning about scam artists who target people in trouble with their mortgages with 'consolidation loans', but I think the DANGER message applies to ads about credit card debt consolidation every day on the sports talk station I listen to and I shudder.

Why? Because what most people don't know about these operations is that many of them are owned by the very credit card companies they claim to be helping you get out of debt with. Think about it: how else would some random company or 'nonprofit' be able to negotiate a settlement on your behalf with a behemoth bank? And that's just in the best case scenario; in the worst case, debt 'consolidators' are pure, outright scams who will take your payments and never turn over anything to a credit card issuer or worse: steal your personal information and perhaps make your credit worse.

While there are a few legitimate debt consolidators out there, the truth is most people don't need them. Unless you're buried under so much debt it's impossible for you to get out (in which consolidation wouldn't help but Chapter 7 might), you don't need a third-party to consolidate your debt. If you've already set up a payment plan with your card issuer that's affordable, stick to it and remain disciplined about not using the card any further. That pays off in the long run without the worry of being scammed.

image: freedigitalphotos.net - Michelle Mieklejohn

Advice for soon-to-be college grads

If you're a college senior and you watched the video, you're probably not encouraged. When I graduated a decade ago, jobs were plentiful and although the dot-com boom was about to go bust, unemployment never reached anywhere near 10 percent during the 2001 recession.

Students, are you concerned about leaving campus for the last time with the economy and job prospects still in the toilet? At least one reader has two questions that showed she's worried about exactly that:

What's the best way to invest money if you're a student w/ no real job but have leftover money once expenses are taken care of? If you were a student and you got an absurd refund, would you save it all or pay down an undergrad loan?

Both are good questions. After doing a little interviewing I found out that the questioner has about $600 in savings and as of now, no solid job lined up after graduation. If she doesn't find one, she plans on living with her parents while looking for work.

With that little in savings and facing graduation in a tough economy, I'd be adding any extra cash to my savings. I'm not sure how much it costs you to live a month under your parents' roof, but $600 isn't likely to last beyond a month or two. You'll need more cash than you have to weather the storm until you find a job. You can worry about stocks, bonds and mutual funds when you have a job and a serious income.

As for the refund, use the money to pay down the student loan. Remember that the refund is only a check for the difference between what you borrowed for school and the cost of a semester's tuition. It's not free money and ultimately you'll have to pay it back with interest. Better to do that now while your loans are in deferment than in a few months when you'll be paying interest on it -- perhaps without a job.

Black Friday: The day debt takes over

"Black Friday" is over, but that's only the beginning of the holiday shopping season. And that means it's only the beginning of a lot of trouble with debt for some consumers.

Black Friday is a great name for the start of holiday shopping not because it's the day that most retailers turn a profit for the year (which is actually no longer true), but because ominously, so many people doing their holiday shopping start plunging into credit card debt when the doorbuster sale ads start appearing.

Consider: The National Retail Federation said that holiday shoppers spent a total of $41.2 billion last weekend, with the average per-person being $343.31. That's less than the $372.57 per person consumers spent last Black Friday weekend but still, more people plan to use their credit cards for holiday shopping --28.3 percent -- than cash --about 25 percent.

Last year the numbers were worse, with more than 30 percent using credit cards for their holiday shopping. But think about it: even in this economy, even with credit card issuers jacking up rates sky high, nearly a third of consumers are buying holiday gifts on credit.

Since most people don't carry around as much cash as is available on their credit cards (and many don't even have that much in the bank). That makes it easy to overspend especially when every store you walk past has a sale going on.

So if you're shopping this year, try to live by two simple rules: 1) Make and stick to a budget and 2) spend it all in cash. If you can't pay for it up front, you don't need it, no matter how cheap it is.

College students' credit card debt soars

A comment to a previous post about college students and credit card debt inspired today's post. "Student" writes:

Credit card companies typically employ a very sly tactic in getting college students to register new credit cards. They usually give a very low interest rate for the first year. After the first year, the interest rate will begin to increase. Fortunately, since college students are still very young, their credit cards' limits are a lot lower than their adult counterparts who are in the corporate world.

You're absolutely right, and I'd add that credit card companies use many shady tactics to get students to sign up. In a previous post I wrote about how one of my college hustles was working a table giving away 'free' t-shirts to get students to sign up for credit cards. I got paid in cash and my classmates got shirts they never wore and a mountain of debt.

One thing I will challenge is your statement that students' credit limits are necessarily lower than working folks. It is true that students have lower incomes and should have been given very low credit limits but lending standards were so lax for so long that many students left school with just as much credit card debt as working professionals. College seniors with at least one card last year graduated with an average of more than $4,000 in credit card debt.

Should I use a student loan refund to pay off my credit card?

Today a credit card debt question from @miss_mielle on twitter:

There are a lot of personnel changes at my job, so I'm getting back in school ASAP. I've been putting it off to pay off some cc debt but it's gonna take a while and I don't want to wait anymore. A friend of mine suggested taking the max on an edu. loan and paying off my debt with the refund checks. It sounds viable, esp. since my debt isn't extravagant(<$7500). What do you think?
I'm on payment plans on both cards, but they will still take a while, and I'm unable to get some things I REALLY need meanwhile

.
First, thanks for the question. I'm glad you're committed to paying off you debt and for being proactive about the situation at your job by seeking more education. (MESSAGE: Learn to feel which way the wind is blowing at your job and never wait for a layoff to be looking for new opportunities!)
Still, I have to challenge some things you said. First, I can't tell what your debt-to-income ratio is because I don't know how much you make but I'm not sure I'd say $7500 on credit cards "isn't extravagant". I had about that much last year and I was stressed as all hell trying to pay it off. True, it might not be as much as may others have, but you're not paying their bills, you're paying yours, right? Can you even remember everything you bought with that $7,500? I say all this not to berate you but to get you to rethink you habits after you've paid this debt off.
As far as the debt payment strategy your friend suggested, I think you need to consider a multitude of factors. On the surface it looks like that would be the simplest thing to do: by paying the credit card debt with your student loan, you're basically consolidating all that debt into one payment. But will that payment be less than you'd pay with a separate student loan and credit card payment? What's the interest rate on the loan compared with the rate you're paying on your card (it's almost certain to be lower than the card rate, but still, check).

Also, are you getting a federal student loan or one from a private lender. Private lender loans tend to come with higher rates and tougher repayment terms than ones given or backed by the US Department of Education.

Lastly, whether you take the larger loan or not, how are you going to make the payments if you're not working (or working less) to accommodate school?

Think about all those things before making a decision.

A freeze on credit card rate hikes?

How would you like it if your credit card rates were frozen so that your card issuer couldn't raise them for a few months? Most of you would love it, I'm sure, especially if you're taking the Zero Balance Challenge or if you're like the guy who wrote me last week about his credit card jacking up his rates:

I'm usually good about knowing how much interest I've accrued on a credit card in a given month. So when the balance of a card I've been furiously paying down was about $6 more than I expected, I wondered what was going on. It was too much for it to be simply that an introductory rate had disappeared.
Come to find out my APR had been increased. That one went from 15.40 to 21.74. According to HSBC, which holds the card: "Your interest rate structure is changing because everyone that has your current interest rate structure is being increased to the pricing terms listed below."
I can exercise my right to reject the changes before 12/09/09, but, as of my last statement, they're there.
I have another card that I've now been told had an introductory rate of 9.9, then went up to 16.99 after that intro rate was done. I don't keep a high balance, so I didn't really notice.
Then I put a big purchase on it. I figured what the hell, right?
Yeah, til I got like 35 bucks in interest added to my account. The new APR for that account is 23.74% The lady in India who answered my call -- this is a Chase account -- said I'd been sent a notice in the mail in late June-early July. I never got it as I was in the middle of moving.

Damn. there's a lot that bothers me about this story on both sides: someone who's carrying a balance on his credit cards absolutely needs to pay attention to the notices they get in the mail from the card issuer to avoid missing fine print about rate increases and other new fees and tricks the companies play. I'm also a little astonished that the writer would add a new, major purchase to a card that already had a balance on it with such a cavalier, "what the hell" attitude. That's simply ASKING for it from your credit card company. Whatever you bought, did you really need it that bad that you were willing to make installment payments on it at a high interest rate? So many people talk about going on debt diets when what we really need is debt rehab. Get off the card!
On the other hand, if what the writer is saying is true (and for the record, I haven't called HSBC or Chase for their take), the card issuers don't deserve any slack here, either. Since credit card reform was passed earlier this year, credit card issuers have been using any excuse (and sometimes none at all) to jack up customers' rates, add new fees and in some cases cancel cards altogether before the new law takes effect.
Which brings me back to the proposal in Washington of a moratorium on new rate hikes until credit card reform takes effect next year. The proposal, from Sen. Chris Dodd, isn't supposed to have much chance of passing.

How many of you think it's a good enough idea that you'd be willing to call your own Senator to make your voice heard?

image: freedigitalphotos.net

I paid off the credit card! Now on to the next goal!

I'm a fan of big, audacious goals and try to live by this rule: if you shoot for the stars and miss, at least you get the moon. That philosophy was a big reason I was successful in paying off my credit card debt in less than one year. If I dedicated myself to paying off every last dime but didn't make it, at the very least I'd have much less debt than I started with.

And so it is that one day after I made the final payment and reached my $0 Balance Goal, I'm immediately planning my next big, audacious financial goal will be. My immediate thought was to beef up my emergency savings and investment accounts and that's certainly doable given the amount of free cash flow I now have (since I'm not making a credit card payment anymore). But why not think bigger than that, and eye something else that will push me to stretch for the stars again?

So I've decided that my next goal will be that over the next year, I'm aiming to save and invest at least $25 grand. That's right. At least that much. That means I'll have to push myself to do more than just stash a portion of my paycheck: I'll have to continue to limit spending, network and be creative enough to create new income streams and be diligent enough to live off only the money I make at my nine-to-five and stash any extras away. It'll also mean I'll have to figure out some new tax strategies so Uncle Sam doesn't come and take it all. Wish me luck.

In the meantime, I'm going to continue to write about eliminating credit card debt and keep up my $0 Balance Challenge push. If you've already eliminated all your credit card debt, great. Start thinking about the next goal (and post it here in the comments section so you can encourage others.) If not, think of eliminating that debt as your first big, audacious goal and get to work.

Good luck!

$0 Balance testimonial: How she paid off a $2,900 credit card bill

I've heard from many people this week congratulating me on reaching my $0 balance goal or telling me their own success stories in paying off credit card debt.

But yesterday I got a comment from Lechelle, who like many who are contemplating taking my $0 Balance Challenge, is concerned about making it happen in just one year:

I do see myself becoming debt-free, but I need a few things first to take place to see my dream come true...more revenue or additional revenue. Things are just tight, but I know I need to start somewhere. Therefore, I have been brings my lunch more and more every week.

I think your concerns are realistic Lechelle, but I need you to not give up or give in because of the tight times. There will always be reasons why not, but your imperative is to be motivated by and think of the reasons why. Also, if you're a spiritual person, remember that like everything else in life, there will be negative forces that seem to crop up more and more the closer you get to your goal (I'll talk about how that affected me more in a later post). DON'T LET THEM STEAL YOUR VICTORY!

So this post is for Lechelle and anyone else with doubts about whether you can do it. Here's the story of someone who committed herself to pay off a card and succeeded. If she did, you can!

- Adriennewrites, 30, Chicago, who blogs at http://www.adriennewrites.net

I owed Discover card about $2,900...a lot of money for me, since I'm not really a credit user. Then, they raised my 5 percent interest rate to 9 percent two years ago and then to 11 percent last year and now to 14.99 percent. I was livid because I've got an awesome credit score, so I decided to pay it off and never use it again. I gave myself a year to pay it off. I got pissed seeing that I was paying $40 in interest a month and that the interest was compounding.

I set my auto-pay with my online bank to just pay $300 a month and I started bringing my lunch to work so I could afford it. I did this because I was tired of paying money to this credit card company who was doing me wrong and refusing to lower my rate again to 5% even though it had pretty much hovered between 5-9 percent for the last 7 years or so.
When I got an extra $50, I added it to the pot. Now I only owe $50. That'll be paid off , um, today!

My tips on making it down this far? Set up autopayments with the bank. Think about how cutting back on just one hairstyle or one pedicure can remove debt forever. I thought about how I wanted to go to Paris, and needed my money for Paris, not to be paying off some clothes from The Gap that I bought 5 years ago. How lame is that?

I also cut back on my savings so I could pay this off. I figured that once I get it paid off, I get to put the full amount into savings. So now that same $300 a month is being switched into both savings and paying off the next credit card bill. It will take me another year to get rid of this Visa bill, but I'll do it. I'm worth it.

This is what debt freedom looks like

That grainy BlackBerry pic is the account summary from my last credit card statement. In case you can't read it, is says that I started with a balance of $679.45, I made $853.83 in purchases (had a business trip that was reimbursed), then paid that off, plus some to the tune of $1,015.28.

The end result is that I'm $500 from freedom, and that $500 will be gone tomorrow. So why'd I post that, besides the fact that I'm ridiculously excited to see the balance drop to zero? Because images are among the most powerful motivating tools you can have when working toward a goal. So for those of you accepting my $0 Balance Challenge, I want you to think about the most powerful images you can think of that would motivate you toward paying off that card and using credit more responsibly in the future.

For me, motivation was as simple as seeing the balance slowly come down from nearly $8,000 to almost zero over the course of a year. Anytime I was having a bad day, I'd log in to my account online and see where the balance was, reminding myself that I was inching closer to my goal. That's a good tool I'd recommend for most people: take the account summary from each month's statement, and tape them in order to a piece of posterboard, and hang the poster somewhere you can see it. You'll soon be looking at a visual history of the debt going away and know you're making progress.

For others, it could be looking at a picture of your family and knowing you're giving them greater financial security, of finding a picture of your dream house, car or TV and knowing the less credit card debt you have, the closer you are to obtaining those things.

Whatever your visual motivation is, find it today, put it somewhere prominent and look at it often. Stay motivated!

The $0 Balance Countdown

This is it: the big week when I'll be making the final $500 payment on the credit card balance I've been carrying since college.

I can't wait to feel the exhilaration of hitting the "make payment" button, logging in the next day to see the balance reflected as $0, and knowing the liberation of having hundreds of suddenly available cash flow in my budget every month after that. In fact,it's such a great thought and a great feeling, I want you to have it, too. So I'm issuing a challenge: how many of you believe you can eliminate all of your credit card debt in the next 12 months, using nothing but sheer financial discipline and sound budgeting?

If you think so, hit me up with your story (keithtr(at)gmail(dot)com or on twitter). I'll pick a few people to follow and chronicle here monthly as they work toward their goals.

In the meantime, I'm devoting all this week to posts about credit cards and debt elimination, be sure to check back.

photo courtesy freedigitalphotos.net

What to do when your creditor disappears

Twitter question of the day is from @djamesUBMS:

What should one do when paying a creditor and the company (whoever owns your overdue account) disappears or folds?
Background is: Visa credit card that went to collections, we made the effort to find the account after checking our credit, payed it down very quickly. Then all of a sudden, there was no working number and the website was useless. We still owe some cash, but can't pay it down because we can't find the company.

Be careful here and don't assume you're off the hook because you can't find the company. Often when a company folds, it keeps a collections arm open to recover money that it is owed so that it can pay off its remaining debts. In other cases, those debts are acquired by a collections firm for pennies on the dollar, and they in turn spend their time hunting you down. By paying little for the debt and collecting as much as they can on it, they make a profit.

With that in mind, you need to be proactive by making as much of an effort as possible to find the creditor and pay the bill off. If you can't get in touch through conventional means, Google the collection agency to see what you can find out. Pull your credit report again in a month or so and see if there are any new delinquencies being reported. If so, call the creditor that reported them; if not, call the credit bureau and ask someone if they know whether the company you owe has gone out of business.

As a precautionary measure, you might want to write the three credit reporting agencies (Experian, Equifax and Trans Union) a letter to add to your credit file explaining that you've made significant attempts to contact the creditor but haven't received a response back.

In the meantime, in lieu of making monthly payments, set aside the money you'd be paying on that bill in an account where you won't touch it. If and when the creditor shows back up, you don't want to be without the money to pay them off. If they don't show back up, you've stashed away some extra cash for other goals. Good luck.

If I'm paying off my credit card; can Ann Minch bail out on hers?

This morning I made the penultimate (next-to-last) payment on my credit card, a $176.23 testament to beating the debt monster I've been carrying in my wallet since college. I'm quite proud of myself for the obvious reasons (a PF writer with a mountain of unsecured debt is not a good look; looking forward to that TV that's been at the top of my 'reward yourself' list for three years) and the not-so-obvious (freeing up cash flow for investments, savings and a sprucing up of the crib that is in great demand from certain quarters).

But my fortune at being disciplined and financially stable enough to pay off my Visa makes me consider the millions of people in the US who are neither as disciplined nor as fortunate; people like Ann Minch, who the HuffPost profiled for her refusal to pay off a Bank of America credit card because, she says, they've gone too far in jacking up her rates. Here's Minch on video talking about her "debtors revolt":


Is Minch right? Should we have the right to just say "screw you" to lenders who are treating us unfairly, or is this the rant of someone who made irresponsible choices with credit and needs to do what I did and just pay up?

Credit card debt almost gone

If you've been following me for a while, you know I'm a big advocate of getting rid of any and all credit card debt. While it continues to be the bane of most Americans' financial existence, it's particularly crippling to young people who are just starting out in their careers and families.

So as to lead by example, I've been keeping tabs -- publicly, on how my quest to get rid of more than $8,000 in credit card debt has gone since last year and today I'm happy to report that the magic number is down to a mere $679.45!

No secrets, no tricks, no gimmicks or TV commercials, just common sense budgeting and consumer discipline is all it took. And even though a trip to Florida (for business) and school shopping for my son were a setback in August (I was supposed to pay the whole thing off last month but wound up adding more than $700 to the balance); I used the same discipline to quickly pay every penny off and keep the balance right where it is. $679.45.

Can't wait till the first week of Oct. to blog/tweet that zero balance.

Real economic changs is up to you, not this guy

While Barack Obama was being sworn in, the stock market was tumbling. The Dow had its biggest Inauguration Day loss ever, of more than 300 points.

When the stock market takes dips like it did yesterday it's a buying opportunity because shares are cheap. It's like shopping at the mall during a sale: you can buy twice as many pairs of shoes at half off as you could when they were full price. The difference with stocks is that when prices come back up, you can't resell the shoes and make money; with stocks you can.

But the big questions are why did the market fall so much and is that a bad sign for the economy under Obama? Reality check: no one has the answer to either question. I've heard commentators speculate everything from another round of bad news for banks to wealthy investors being worried that Obama will repeal the cozy tax cuts they got from Bush (another reality check: Obama's already said he won't immediately raise anyone's taxes and a tax cut could well be part of his stimulus package).

Either way, here's a few words from Obama's speech that everyone should take to heart if they're really interested in seeing the economy and their own finances improve:

Our economy is badly weakened, a consequence of greed and irresponsibility on the part of some, but also our collective failure to make hard choices and prepare the nation for a new age.

"Our collective failure to make hard choices". Collective, y'all. Sure there were a great many greedy folks on Wall Street and elsewhere who made bad loans and absconded with shareholders' money. But they're not the only reason the economy is where it is: If you're like me and still paying off purchases made months ago, plus interest; or if you're still spending way more than you save or invest; part of the problem rests with you, too.

Ultimately we can all wait for an Obama stimulus or the stock or housing or job markets to turn around, but if we all don't make the decision now to save more of our incomes when we get our jobs back, to only buy houses we can afford with down payments and under terms we can understand, and start saving for the retirement we know we'll have to foot (because with deficit spending, social security just won't be around), any recovery will only be shallow and temporary.

So, are you really ready for change?