Monthly Archives: November 2008

Up, Up, And Away – Check Your Credit Card Statement!

Have you received a letter from your credit card company?  (It might be bundled in the same envelope as your statement, or it might be delivered separately.)  If so, be sure to read it.  Why?  Because, several credit card companies are changing their terms, rates, and policies.

According to Credit Addict, both Citibank and American Express have recently made several changes.

A summary of the changes made by American Express –

* Cash advance APR is increasing to Prime + 17.99%
* Late payment APR is increasing to Prime + 14.99%
* Default APR is increasing to Prime + 23.99%
* Foreign transaction fee is increasing to 2.7%

A summary of the changes made by Citibank –

* Purchase APR is going up to a minimum of 16.99%
* Cash advance APR is going up to a minimum of 21.99%
* Default APR is easier to trigger, and increasing to a minimum of 23.99%
* Fees for foreign transactions are increasing (new 3% transaction fee)

Click over to Credit Addict for complete details about the cardholder changes made by American Express and the rate increases by Citibank, along with information about how these changes will or won’t affect you.

Personally, I’m a big fan of life without credit cards.  I never have to worry about late fees or changes to my cardholder agreement.  Sure, there are hassles associated with a cash-only life, but I’d rather put up with those hassles than deal with another credit card payment!

If you are thinking about moving away from credit cards, may I suggest the Envelope System.  For those unfamiliar with this super-simple money management system, I’ve made a quick, four minute video tutorial, explaining the Envelope System and how I use it to manage my cash.  Check it out and let me know what you think.

For those who might be concerned about changes to your credit card cardholder agreement, you might want to visit your credit card company’s website or even give them a call and ask about any changes.  Also, you have the right to opt out of any changes they make, but they also have the right to cancel your account!  Be sure to visit the Credit Addict site and read more about details and how / when you should opt out.

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The Financial Sky Is / Is Not Falling

According to ShopperTrak - the world’s foremost provider of shopper traffic counting information, technology and decision support software for businesses in the retail, gaming, hospitality and entertainment industries – Black Friday sales were up 3 percent this year over 2007.

That’s right.  With all of the news coverage about bailouts, mortgage failures, bankruptcy filings, and financial devastation – Americans spent 3 percent more this year than they did last year.

Here’s the full press release from ShopperTrack

CHICAGO – November 29, 2008 – Despite a lagging economy that has left the retail industry collectively holding its breath, ShopperTrak RCT today reported the holiday shopping season got off to a healthy start as GAFO retail sales increased 3.0 percent over 2007 – a day which increased more than 8.0 percent from Black Friday 2006. Preliminary sales estimated at a daily rate for Black Friday totaled $10.6 billion or $10,606 million.

While ShopperTrak warns that Black Friday isn’t always the best indicator for holiday season performance, retailers should be cautiously optimistic as deep discounts drove consumers en masse to various retail locations to spend – despite myriad economic pressures seen over the last two months.

“Retailers truly experienced what we’ve dubbed the ‘perfect storm’ over the last few weeks, with the financial markets melting down, the presidential election which typically slows retail traffic and relatively high gasoline prices – all of which slowed both retail traffic and spending,” said Bill Martin, co-founder of ShopperTrak. “Under these circumstances, to start off the season in this fashion is truly amazing and is a testament to the resiliency of the American consumer, and undeniably proves a willingness to spend.”

Retail traffic was heavy throughout the country as shoppers responded to early openings and numerous door buster specials and sales promotions. Regionally, the South lead the way with a 3.4 percent rise over 2007, with the Midwest (+3.0 percent), West (+2.7 percent) and Northeast (+2.6 percent) closely following.

“While this is an encouraging start for retailers, there’s no guarantee these deep discounts will continue after Black Friday weekend, which could slow spending,” said Mr. Martin. “Additionally, consumers have just 27 days to shop this year as opposed to 32 in 2007, which may catch some procrastinating consumers off guard, leading to lower sales levels.” Martin continued: “Needless to say, retailers will be closely watching this trend and most likely adjust as needed heading into the annually strong Saturday before Christmas, or Super Saturday.

Information supplied by the National Retail Sales Estimate (NRSE), Retail Traffic Index (SRTI) and ShopperTrak RCT Corporation.

Here’s the part of this article that bothers me, just a bit –

“Retailers truly experienced what we’ve dubbed the ‘perfect storm’ over the last few weeks, with the financial markets melting down, the presidential election which typically slows retail traffic and relatively high gasoline prices – all of which slowed both retail traffic and spending,” said Bill Martin, co-founder of ShopperTrak. “Under these circumstances, to start off the season in this fashion is truly amazing and is a testament to the resiliency of the American consumer, and undeniably proves a willingness to spend.”

I have to tell you, this reports bothers me, just a bit.  Sure, I’m happy that the economy (might) be in a little better shape than we have been led to believe, but if people are struggling, shouldn’t we all be spending less and not more?

What do you think?  Is this a good thing and a sign of a recovery?  Or, do you think that people flooded the stores, bought as much as they could for as little as possible, and the rest of the holiday shopping numbers will be down?  Or, are people simply ignoring the current financial crisis and choosing to shop, shop, shop?  What about you and yours?  Are you cutting back?  Are you buying less?  Are you buying more?

Personally, I’d love to see people adopt lifestyles that were a bit more frugal.  I realize that moving towards a more frugal society will hurt in the short-term, but imagine the long-term benefits.  My wife and I, wanting to add a bit more to our non-retirement savings, have decided to reduce Christmas spending by about 25%.

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Top 10 Ways To Save Money – Number 2 – Live On A Budget

Let’s take ten minutes and create your new budget for December.

Write down your expected monthly income.  (Use your take-home pay.)

Write down your expected monthly expenses.

Include everything – gasoline, groceries, rent, mortgage, insurance, food, clothing, gifts, miscellaneous, cell phones, credit card payments, etc.  Need help?  Look over your bank statements from the past couple of months.  These should help you compile a pretty accurate list.

Subtract expenses from income.  Did you get a positive number?  Good!  This is the amount that you can budget for extra savings or extra debt reduction payments.  Did you get a negative number?  Not so good!  This is the amount that you need to earn (in the form of more income) or reduce (in the form of cutting expenses)

Creating a budget takes about ten minutes.  Learning to live on a budget takes a little longer.  If you are struggling, now is the time to sit down and take stock of your financial situation.  When I created my first budget, I immediately realized two things –

I was spending a lot of money on things I did not need AND I was making enough money, if I managed it wisely, to begin to reduce my debts.

I have written several articles about creating a budget, including –

Creating A Budget If You Have Irregular Income (Do you live on commission?  This budget is for you!)

I Pay Myself First, Last, And All Along The Way (Here’s how budgeting helps me save month, at the beginning, end, and middle of each month.)

Annual Expenses – (Here’s how to handle annual expenses, things like life insurance premiums or car tags.)

After you get into the swing of things, living on a budget becomes second nature.  For 2009, I plan to create one budget, have it set up by January 1st, and use it for an entire year.  I can do this because I have worked hard to fine tune my budget for almost four years.  Starting out, you will want to focus on one or two months at a time.

Personally, I use the You Need A Budget software to manage my finances.  I’ve been using it for more than two years, and I highly recommend it.

Remember, you can write down all of the numbers you want, but you must FOLLOW THROUGH WITH YOUR PLAN.  You budget has to mean something.  You can’t just write down a bunch of numbers and then ignore them.  Treat your budget with respect, and stick to it, and you will save money.

Click here to read the Top 10 Ways To Save Money.

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Skipping The Long Lines And Shopping Online

I have decided to do the majority of my Christmas shopping online this year.  In fact, even though I like bargains, I am going to forgoe going to any stores on Black Friday.  I might, however, take a peak or two at Amazon’s Black Friday page and see what I can find for my family and friends.

I would like to have all of my shopping wrapped up (pun intended) by the first week of December.  Across the board, I think that I will spend a little less this Christmas than in the past.  One positive thing to come from the recent economic situation, people are finally learning to tell the difference between needs and wants.  Most of the things we buy as Christmas gifts are wants, not needs.

I will confess, Christmas is the one time of year when I like to splurge.  I really enjoy buying gifts for my kids and my wife.  This year, I am going to be a little more frugal, but I’ll still buy them some fun things.

For the most part, I will take my own advice, and stay away from the mall.  I might go once, just to pick out a few things for my wife, but I think it best to stay out of any atmosphere which promotes reckless spending.  Even after years of living on a budget, I am still susceptible, like most people, to the occasional impulse purchase.  Staying away from the mall, and shopping online, allows me to research products, take my time, and really think before I buy.

Also, when I shop online, I can shop through Upromise and earn cash back for my kids’ college savings.  When saving, every penny counts, and since I don’t use credit cards, I look for bonus rewards from wherever I can get them.  With Upromise, I just registered my debit card, I shop with it online, and I get cash back.

By the way, for those worried about shopping with a debit card online for security reasons, here’s my setup.  I use the debit card associated with my ING Direct Electric Orange checking account, instead of a credit card.  The amount in the account is limited, and I regularly check my balance.  I’ve been using my debit card online for several years and I have never had a problem, but you might want to contact you financial institution and ask them about how they handle identity theft and debt card fraud.

I love Christmas, but back when I was getting out of debt, I didn’t have a lot of spare cash for buying Christmas presents.  I have written down a few ideas for a debt-free Christmas.  I hope that these ideas will help you save a bit of money and get out of debt.

I don’t know if I will have time to write much over the next few days, so I wanted to take this opportunity to wish each of you a very happy Thanksgiving.  Each day, I am amazed by the number of folks who take the time to read my site, leave comments, and connect with me.  The last three plus years have been amazing, and I just can’t wait to see what’s around the corner.  You guys rock!

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