I Want You To Spend A Lot

10 Sensible Ways to Reduce Credit Card Debt

You don’t need financial advisors or credit reduction agencies to eliminate debt, just some common sense tips, plus a dynamite strategy that actually INCREASES your wealth in the long run.I looked at all the options suggested by the financial experts, all the Top Ten Ways to Financial Freedom articles, and glanced at a few of the books and programs that deal with debt reduction, and then basically tossed them all out the window.And then I got down to business. Here’s how I dealt with my debt in practical, sensible ways, and why I chose the methods I used. Some of what I learned from this process is fairly obvious, but that doesn’t mean they aren’t important, and by the time your finished reading, you’ll be able to see for yourself how the obvious things lead up to the amazing Big Credit KO Punch at the end.

1. Don’t Fall Into the “All At Once” Trap.The first thing I realized was that it’s a natural tendency to think that the best way to deal with it is all at once, especially so since it was an Immediate Gratification mode of thinking that got me into the mess in the first place. That same mentality has a tendency to leave you feeling that you’re not making progress, which leads to an overall lack of motivation.

2. Nickel and Dime ItMake payments as often as you can. If you have 10 extra dollars, make a payment. It WILL add up, and you will see a difference. DON’T save it all up for the monthly payment. Go online and make the payment NOW!

3. Find More MoneyTo make any headway at all, I had to start coming up with more money I could actually use to make payments higher than the monthly minimum… it’s too easy to think that monthly minimum means “the minimum amount you need to make some headway” when it really means “the minimum amount that is best designed to increase your debt even further.”Like most people, I was used to carrying cash around, “just in case I needed it”. The problem is, when you think about it, is that we invariably wind up spending a little of that cash here and there on things we don’t really need. In other words, I came to understand that if I didn’t have it, I wouldn’t spend it.

4. Use Direct Deposit: Screw the Banks!The next thing I did was opt into a direct deposit for my paycheck. The reasons for doing this go well beyond the obvious, such as the tendency to write a number into that little box on the deposit slip that says, CASH BACK. It also put me in a position of being less likely to overdraw my account and wind up paying overdraft fees (which is the last thing you need when your already trying to save money). Without going into a lot of detail, your friendly neighborhood bank has practices in place that are DESIGNED to make you more likely to overdraw your account, but that’s another story.

5. Put that Money Into Reducing Your DebtI suddenly discovered that I COULD make a higher payment at the end of the month, sometimes significant, and my balance on my highest interest rate cards began to drop. The prospect that I was actually making a little headway gave me a boost of badly needed encouragement, and I started looking for more ways to save money.

6. Ask Yourself, “Do I Really Need This?” But don’t foregt to REWARD YourselfFast food is convenient, but is it really necessary? Nope. But I did allow myself to indulge in it occasionally. Just because I was in a financial mess didn’t mean I couldn’t reward myself. The same went for groceries. I started paying more attention to the little labels that said, “cost per ounce” instead of what had the lower price, and quickly came to understand the psychological games that supermarkets play to make the most profit off of their shoppers. The lowest price almost NEVER means the best value. Think of it as buying gasoline. That’s the ONLY price we see: the cost per gallon, not packages of various gasoline brands in colorful, deceptive containers designed to look like they hold more, with big signs saying, “NORMALLY 3.99, NOW 2 for 7.49!”

7. Reduce Your Utility CostsNext to rent or a house payment, what’s the biggest expense most of us face? Energy bills. You can save a significant amount of money over time very easily by not being lazy. Close doors to rooms you don’t need heated or cooled most of the time and shut the vents. Turn the cooling up 2 degrees in summer and down 2 degrees in winter. Turn out the lights in a room you’re not using. Buy a compact fluorescent bulb or two when they’re on sale and slowly replace all the lights in your living space. Get out of convenience mode and get into savings mode. Start thinking long term. You’ll be amazed just like I was.

8. Negotiate Lower Rates and Transfer Balances… On YOUR TermsI started making more headway, including getting some of the lower balance cards reduced by half. Now it was time to get on the phone and make some calls to the credit card companies to negotiate lower rates. Sure, I could have tried to play the Zero Balance Transfer Game that most new card offers come with, but do you really think for one second that those offers aren’t designed to do the exact opposite of what you’re trying to do? Don’t get caught up in that trap.The best way to do this is by getting your lowest rate card spending limit increased, which is something nearly every credit card company is MORE than willing to do. It also never hurts to ask at the same time if they can shave a little off the interest rate, and give them the impression that you’re sort of tied into the higher credit limit based on this. You might get nothing in the way of rate reduction, or you might be surprised. It doesn’t hurt to try.Now it was time to play the credit transfer game I’d set up for myself and do it by my own rules. I transferred as much as I could from the higher rate cards to the increased limit lower rate cards, and then focused on paying off any remaining balance on those high-rate cards. As soon as I got one to zero balance, I got rid of it. Cutting up a card from a company that’s been legally screwing you over is amazingly rewarding.

9. The Coup de Grace: Put Your Retirement Account to Work!You know that 401K plan at your company that you’ve been paying into? You can take out a loan, usually 25% of the total amount, and pay down or pay off your credit card debt. This may sound like a bad thing or a risky thing, until you consider all the ramifications. The rate on my 401K loan was 8% annually, not compounded daily on a daily balance average (credit card interest rates are really effed when you think about them, aren’t they?). The reason most people see this as a risky venture is that you’re messing with your retirement account, your future, and cutting down your potential growth by having less money to compound over time.Amazingly, this isn’t true at all. By paying off your credit card debt, your return on investment is actually the 8% rate you’re paying PLUS the credit card interest rate you’re NO LONGER PAYING. So if you’re credit card rate is, for example, 19%, you’re return on investment in the long run is 8% + 19%, or 27%. Who wouldn’t jump at the chance to invest 25% of their retirement account into a guaranteed return of 27% over a six-year period (the maximum length of repayment on a 401K loan)?Not only was I enjoying that aspect, but the monthly loan payment was several hundred dollars less than the total of the various credit card payments I HAD to make every month, which meant more money in my pocket, so to speak.Additionally, the loan payment comes out of your paycheck pre-tax. You’re not paying your normal 40% tax on that amount, so the real COST of the loan per month is even lower.

10. Cut Up Your CardsDoes this really need any explanation? It’s too easy to fall back into the same trap. Don’t do it. It’s not worth it.And that’s how I got out from under my huge credit card debt, which is something I’ll never have to do again. I keep one card, and use it only in emergencies, and pay off the balance in 1-2 months. I refuse to play a losing game. If I want to do that, I’ll just go to Vegas. At least there’s a small chance I might come out ahead.

A Little Kindness Goes a Long Way

“Don’t sweat the small stuff.” That’s a trendy catch phrase, and in our hectic, fast-paced world, it can be good advice. But there’s more to that quote. What’s not being said is as important as what is being said. Don’t sweat the small stuff, but don’t forget the small stuff either. More often than we realize, a small act can make the difference, affect influence, and change a life.

I grew up in the 1960′s , when parenting and self-help books didn’t have their own section in the bookstore, and raising children was pretty much a seat-of-your-pants type of thing. What your parents learned from their own parents, whether good or bad, was how you were raised. That’s not an indictment. That’s just the way it was. It’s not that my parents were mean-spirited or didn’t love or care for us, it was more that they didn’t know how to express those things, or were too caught up in their own issues to take notice of the four of us and what we needed as children. We did the things all families did: posed for family photos, visited relatives, took vacations, celebrated birthdays and holidays. But in the midst of those family activities there existed an inner layer of turmoil and discomfort.

One year, when I was about seven, we went on a camping trip to a family reunion in South Dakota. Relatives from all around the nation were coming, and it was a chance for us to see many of our cousins, uncles, aunts, or others more distantly related. The last time our family had been to a big reunion, I was much younger, so for all practical purposes, this was the first time in my own memory that I’d meet many of my relatives. And it was one such relative, who, through a very small act, taught me the value of the ‘small stuff’. His name was Morrell Chambers, but everyone called him Uncle Mix.

How he got the nickname Mix, I’m not really certain, but it fit him well, in the sense that he was full of mirth and amusement. He was a solid man, a little round in the waist, with a pronounced nose and square jaw, and a slim mouth that always seemed to be on the verge of a smile. He’d inherited his bald top from his father, although he wasn’t much beyond 40 at the time. But his most distinguishing feature was his blue eyes, eyes that held a constant twinkle, as if they held a secret known only to him, a secret that gave him his ever-present sense of joviality and peace.

It was only natural that a seven-year old boy like me would be drawn to someone like Uncle Mix, and I spent quite a bit of my time lingering in his presence. It made me feel good, and he put up with my active mind, full of questions and wondering, as if it were second nature to him.

One day he decided to do some fishing, and of course, I tagged along behind him, walking along the edge of the lake and up to the boat dock. He carried a nice looking rod and reel, and a tackle box that, to me, was so big that it could probably hold the contents of an entire bait shop. Up to that time, my experience with fishing had pretty much been a bamboo pole with a string, hook, and bobber, so I was amazed when he opened the box, and the nested trays bloomed out, revealing the most colorful assortment of fishing lures I’d ever seen. I was fascinated by all the bright, shiny, mysterious objects, and squatted down for a better look. I didn’t dare touch anything, although I was greatly tempted. With a broad grin, Uncle Mix pointed out this one and that one, explaining what each was for, and how it was used. I muttered a few, “Oh!”s, as if I really understood what he was talking about, and after a few more minutes of explanations, he finished, and moved back a step or two to prepare his pole as I continued to take in all the colors and shapes of everything he’d pointed out. Finally, he lofted his rod and reel, satisfied that it was ready, and stepped forward to where I still crouched over that tackle box. Seeing the tops of his black shoes broke my spell of wonder and awe, and I looked up at him. He smiled down at me, eyes glittering, and then he said something I’ll never forget. “Why don’t you pick one of those that you really like, and you can keep it,” he said simply, so matter-of-fact, as if it was a natural thing to give something I considered precious and expensive to me, a young boy he hardly knew. But I was so completely, pleasantly, extraordinarily taken aback, that it literally took me about a minute to register his offer, and when I realized he really did mean it, I was so overwhelmed that I was speechless with excitement. “Go ahead!”, he urged with a chuckle.

I think I could have spent hours deciding, but I was at least mindful that he was ready to leave, so I fairly quickly settled on a red spoon lure that had a curvy, white stripe from end to end on the front, a chrome-bright shiny underside, treble hook on the back end, and a brass eye hook on the top. I lifted it gingerly out of the box, and held it up in front of me.

“Are you sure that’s the one you want?” he asked, still smiling. I nodded absentmindedly, transfixed by red and white, sunlight on chrome, as it swayed and turned in the morning breeze. Uncle Mix stooped down, set his pole to the side, and closed the tackle box. He paused to stare at the lure for a moment, head cocked slightly aside, as if maybe he too could see and feel what I did. Then he scooped up his pole and box, and with a grinning “See you later!” he stepped onto the boat.

I stood and watched him pull away, the boat’s engine gurgling and churning the water into a wake as he made his way out and away. I hadn’t even thought to thank him, but he waved back to me, as if he knew what I was thinking, as if that was his way of telling me that it was OK, that no thanks were needed.

I don’t remember much of anything else specific to that reunion, other than that I somehow managed to get a pole with a reel, no doubt from a cousin or some other relative, and spent hour after hour casting that lure, my lure, my gift, out into the water along the shore, not so much interested in catching fish, but more to watch it spin beneath the water, strobing red and silver, feeling the vibration in my hands as I cranked the reel. I was in seven-year-old heaven, and I was probably as happy as I ever have been.

I wish I had the opportunity to tell him what he did for me that day, but he died of a heart attack at a relatively young age while walking up the stairs of the school where he loved to teach. The news of his passing caused me to remember that day on the lake, and the memory of that precious moment in time began to take on new significance. Uncle Mix was just a giving type of person, and he probably never gave it another thought, but that small act gave me hope, and taught me that kindness and goodness have a place in the world. That was the real gift he gave me, a gift that changed my outlook on life, and shaped my character in a way that few other life events ever could.

And so, I thank Uncle Mix every time I hold a door for a stranger, help someone pick up spilled groceries, spend an extra moment listening to someone that needs to be heard, or one of a thousand other things that anyone can do to show kindness or consideration to others. And I share with my children the story of a small boy and a great man, and that moment by the lake on a warm summer morning, that they might picture in their minds the flashing of the lure, and in it, catch a glimpse of a man they never met, yet can still get to know, through me.