Saving Money

Save 100′s in credit card interest with a simple call, here’s exactly how

From my column today on InsideStl:

Most personal finance bloggers focus on educating people on shit they don’t care about. Few people follow through on their advice because the message is not reaching them. It’s more important to teach why being frugal makes sense, than it does to simply teach about being frugal. If you understand that by being frugal you will be able to save for a down payment on a lake house that you can be partying at in two years, people will look at their purchases more closely. Below, I will show you how to cut out $100’s of dollars in interest charges on your credit cards this month by following by teaching you how to call the credit card companies and get your interest rate lowered.

Believe it or not, if you simply pick up the phone and call your credit card companies and request a lower interest rate on your card, you’ll probably get it. Below, I’ll show you exactly what I said to my credit card companies that immediately saved me over $25 a month and $300 in interest charges in the first year, on just one card alone.

Looking at my credit card interest rates was a bit surprising, one card in particular that I had was a citicard. Initially the interest rate on the card was around 10%, however, when I looked at the current rate I was being charged, it was nearly 27%. I was being duped and I was pissed. If I simply made the minimum payment, it would take me 24.5 years to pay off and I would pay about $10,500 in interest charges. After a simple phone call and a small threat (which I will show you below exactly what I said) I got my interest rate dropped down to 6%. If I made the minimum payments it would take me 20 years to pay off and I would pay about $2,200 in interest charges. That’s a difference of over $8,000 in interest in total, or a difference of over $300 in savings in interest charges each year. That’s $25 more in my pocket each month for a five minute call. If you’ve got a few credit cards and apply these tactics that could result in 100’s of dollars in savings right away.

I called the customer service department and here’s exactly what I said:

FinanceDad: I would like to inquire about getting the interest rate changed on my card.

CitiCard Customer Service: Sure, one moment please.

They connected me to a credit rep.

CitiCard Customer Service: We understand you would like to lower your APR. Certainly we want to keep you happy sir, let’s see what I can do for you. We have submitted the request and will get back to you shortly.

About 3 days passed and I heard nothing back, so I called again and asked for the status of my request. Here’s what I said.

FinanceDad: I inquired about lowering my APR a few days ago and I haven’t heard anything back. I want my APR lowered right now or I’m going to initiate a balance transfer to another card and stop doing business with you all immediately.

CitiCard Customer Service: Sir, please hold. OK sir, we are sorry about the inconvenience and delay, your APR has been lowered to 6% effective immediately.

FinanceDad: Excellent, thanks!

It really was that easy, and it took less than 5 minutes of my time. Be aware that this doesn’t always work, especially on department store cards and some other cards, but it’s certainly worth the 5 minute call to see if you can get it lowered. Even if you threaten and they don’t change the terms, you’ve got nothing to lose, it’s not like they will or can close your account. They don’t want to lose your business. Try it now and let me know how much money you save right away.

Here’s a link to the calculator I used to compute my savings so you can do the same.

My next column will appear tomorrow and my columns usually appear here on Tuesday and Friday.

FinanceDad writes about saving money and personal finance over at FinanceDad.com. Ask me any question @ Mark@FinanceDad.com or follow-me on twitter @financedadblog

10 ways to cut back on your spending and save money

I hope you enjoy this excellent guest article from David from moneysupermarket.com regarding various ways you can cut back on spending and save a ton of money.

Grocery shopping – it’s easy to go grocery shopping for a few items and come out of the store with a variety of other items that you hadn’t planned on purchasing. The temptation to make impulse purchases can be difficult to resist, particularly as special offers and reduced prices make it easy for us to convince ourselves that the purchase is necessary. In reality, this can be an expensive habit as you end up buying items that you neither needed nor desired before you got to the store. Whilst most people focus on the saving they made as a result of the offers on these items, you should look at the additional money you have spent on these items and realize that in reality you haven’t actually made a saving, you have spent more. To combat this there are a few things you can do. The first is to prepare a list before you go shopping so you know exactly what you are going to purchase from the store. This doesn’t just ensure that you don’t forget anything. Sticking to a list and avoiding anything not on the list is a good way of ensuring that you don’t buy anything that you don’t need. Another thing you can do which you may not have considered is to avoid going food shopping on an empty stomach. If you are feeling hungry you are more likely to be tempted to make impulse purchases! One further way that that you can reduce the amount you spend on your grocery shopping is to try the stores own brand products. In some instances you may try a stores own brand product and decide that you prefer the more expensive ‘known’ brand products but on many occasions shoppers have tried own brand products and either tasted very little difference in the quality of the produce or actually preferred the own brand product. Purchasing own brand products rather ‘known’ brand products is a good way of cutting back on your spending and saving money.

Other shopping – for any other items that aren’t grocery related you should strive to get the best deal possible. These are usually one off purchases such as electrical goods and clothes. Some items, particularly high priced items such as televisions can significantly vary in price from one retailer to the next. Spending an hour of your time to shop around might seem a bit boring but it can lead to huge savings., it’s important that you don’t settle for the first price you see. Shopping online is a good way of saving money on your shopping as you avoid traveling and parking costs. Many online retailers now offer free delivery so it is possible to make a saving this way. Another way to avoid wasting your money is by returning any items that aren’t suitable straight away (e.g. clothes that don’t fit). It’s easy to put off returning an item and what usually tends to happen is that you never get round to returning the item and it ends up being a total waste of money.

Financial services – whether it’s an insurance policy or a new credit card you are interested in, it pays to compare providers to ensure you get the best deal possible. There are a huge number of providers about and the prices for an insurance policy or the rates and conditions of a credit card can vary greatly from one provider to the next. For this reason it is vital that you shop around and spend time researching your options before making your selection. This advice also applies to things such as gas and electricity, mobile phone contracts and loans.

Hobbies – whilst I’m not suggesting giving up your favorite hobbies to save money, it is worth looking at whether or not there are any potential savings to be made. In many cases, it is possible to make a saving without having to sacrifice your hobbies. For example, those that love exercising and are a member of gym could perhaps consider canceling their membership and look to make use of the great outdoors. It’s possible to stay healthy on a budget without the use of expensive exercise machines. Or for those that love going to the cinema, avoid going at peak times when the prices will be more expensive and resist the high-priced snacks and drinks at all times.

Holidays – there are a number of things you can do both before and during a vacation to save yourself some money. Whether you’re looking at weekend breaks or all-inclusive 2 week vacations, there’s money to be saved if you stick to a few of these tips. The first tip is to book accommodation that is outside the main tourist area. By staying in a location that is 5/10 minutes away from the main tourist area you can save a significant amount of money. Many of these places will have good public transport networks which make getting into the main towns easy and inexpensive. A second tip is to avoid restaurants that are aimed solely at tourists. These will likely be expensive and may not reflect the local cuisine. Ask locals which restaurants they recommend; it’s likely that the restaurants that they suggest visiting will offer tastier food for less. A final point to consider is sticking to a daily budget. Before you travel research attractions that you will likely want to visit and look into what travel and eating costs may be. This way you can have an idea in your head of how much you will probably spend over the trip which can then be divided into a daily budget. This should also help avoid any issues with not having sufficient money for your vacation.

Driving – we all know that driving can be very expensive. It’s for this reason that it’s worth considering the following driving tips to lower your automotive costs. The first is to avoid driving short journeys and instead either bike or walk. Not only will this save you petrol, it will also benefit the environment. When you do need to drive, the way in which you drive can make a difference to the amount of fuel you use. Driving smoothly and steadily accelerating and breaking rather than suddenly is a good way of saving gas. Other minor things you can do include avoiding carrying any excess weight and ensuring tires are pumped up to the correct pressure. Whilst these things will only lead to minor savings, over time these savings will add up.

Vouchers and coupons – vouchers and coupons are now available for pretty much everything. Whether you are going out for a meal or buying clothes from the internet, you should always to check to see if there are any discounts available through the use of vouchers, coupons and discount codes. The stigma of using a voucher or coupon has diminished over the years and there are now more available than ever before so whenever you are planning any sort of purchase be sure to check beforehand that their isn’t a voucher or coupon available. With some of these vouchers and coupons offering 50% off or more, there are significant savings to be made.

Satellite TV – we all have a select few channels that we spend the majority of our time watching. If there are certain channels that you are paying for that you never watch then it is worth canceling those channels. Whilst this might only reduce your satellite bill slightly, it is worth doing as over time the amount you save will add up.

News – with the latest news now being available and easily accessible online for free, newspapers could now be classed as an unnecessary expense. Whilst there will be some that would rather read the news in a newspaper, for many it’s worth considering cutting out the costs of newspapers and reading the news online for free. Many of the best known newspapers have websites that include all of the same news that is in their newspapers so you won’t miss out on any of the latest happenings from around the world.

Family activities – it is often assumed that a fun-filled family day out is an expensive treat but this needn’t be the case. As well as taking advantage of vouchers and coupons as mentioned above which can reduce the costs significantly, there are a number of things that you can do that won’t cost you a cent. Taking the kids to the park and having a picnic won’t cost you much and you can take a few ball games with you that the kids will love. Most museums are free to visit and will be educational for the kids and galleries are also often free to visit. Those lucky enough to live near the beach can visit for free; once again you could take a picnic and ball games and perhaps take a kite. Finally, something as simple as going for a walk can be made fun with some imaginative games. Even if the weather isn’t great, raincoats and wellies will help keep you dry(ish) and the kids will enjoy splashing about in the rain!

Strategic default: When to call it quits on your home that’s worth less than you owe

If your home is worth less than you owe on it you’re not alone, major media is estimating that 1 in 5 or 20% of homeowners owe more than their home is worth. So what the heck are you supposed to do if you’re one of those people? It could take years before you are back to owing just what the house is worth, in some cases this could be 10 years or more. This article will help those folks stuck in this situation figure out what they should do by helping people evaluate the positives and negatives of walking away. For many people, this financial decision alone could be the most important one they’ve ever made. It could be the difference in retiring 10 years earlier, or being able to pay for their kids college.

I’m going to start this discussion by dismissing the moral or ethical implications of walking away from a debt (I’ll save this for you to decide). Rather than focus on what is morally or ethically right to do in this situation, I’m going to focus on what makes the most financial sense. In doing this, I’m going to first show you the upsides and then the downsides.

Starting with the positives (this list may not be all inclusive):

• Get to live rent free anywhere from 3 months to up to 15 months. Typically people live in their house after the foreclosure process has begun before being evicted for around 6 months.
• You can pay off other debts hanging over your head with cash saved in not paying rent.
• Can go out and rent a much bigger and better place for less money than you are already paying.
• Instantly take the stress away of staying in a bad situation.
• Start building for a positive cash flow future.
• Chance to reevaluate what got you into this situation so you can avoid it next time.
• With so many people going into foreclosure, banks will likely have to lower their future standards for home ownership, making it easier for you to buy another home with a stained credit report.
• Banks often pay you to leave the house early. How about an extra few grand just to hand over the keys and leave after your 6 months is up? They would rather do this than fight you in court quite often.
• Millions of other people are doing the same, people will understand your reasons and not judge you as harshly considering the circumstances.
• Get out now so you can re buy earlier than others when your credit score is restored. If you’re able to re buy earlier, you’re probably going to get a better deal on real estate than those people who wait and default in a few years.
• It may be better for you to wait and file bankruptcy and start over, as quick as 2 years after bankruptcy people are eligible to qualify for a new home loan.

And now for the negatives (not all inclusive):

• Some states allow banks to file deficiency judgments to collect the difference in what you owed versus what your home sells for at auction.
• It may be more difficult to rent with poor credit. You may be required to put both first and last month rent down or you may not qualify to rent without a cosigner
• You may face a ton of collection calls
• You may lose a home that you really love and have a connection to.
• It will negatively impact your credit for certain.
• You may owe taxes for the months you don’t pay but still live in the property and even if the property remains unoccupied until someone else takes title.
• Bad credit could impact future job searches.

Depending on how far upside down you are, it often makes financial sense to simply walk away. If you’re smart about it, you can change your financial position from extremely under to owing very little to anyone in just a few short months. You have to be willing to move away from credit though, and start living life with just cash. You have to ask yourself how long will it take to bring your home value up to what the house is even worth. If you can do that quickly, than staying probably makes sense. If your home is worth 15% less than you owe, and you’re in other debt, you’re probably fighting a losing battle and would be better off walking away and taking the credit hit. You should consider bankruptcy as a way to start over.

In the future, if you’re married and don’t live in a community property state, it may make sense to put the home mortgage in only one spouses name, and put the other spouse on title. This way only one persons credit is ruined if you were to have default. I will talk about this subject in the very near future.

The above article should not be construed as advice, rather as opinion. Consult a professional for specific advice for your situation.

Are you being controlled by a Lizard?

Check out my most recent column on InsideStl.com:

Today I’m going to talk about how we think, how our brains evolved over millions of years, and how it relates to your ability to control your spending habits and decision making in most areas of your life. Deep down inside we’re all just Lizards and most all of us allow our Lizard instincts to control our actions. We do have the ability to control this inner Lizard once you understand it, hell you may even decide to name it Rudy or Timberfake. Below, you will quickly learn how our brain is really made up of three very different but interconnected brains. The way in which these three brains interact with each other underlies our behavior. Once you are able to recognize which brain is doing your thinking, you can take control of the situation and make better choices.

As mentioned, our brain is made up of three different brains; Our Reptilian Brain (our Lizard Brain as I like to call it), our Mammalian brain, and our Human brain.

Innermost in our brain is what is called the reptilian brain, its oldest and most primitive part. The reptilian brain appears to be largely unchanged by evolution and we share it with all other animals which have a backbone.(1)

Our reptilian or lizard brain is only concerned with making us satisfied now; it tells us when to eat, it doesn’t care what we eat, its mission is to make sure we are fed. It tells us we need to mate and reproduce; it doesn’t tell us to be smart about which person we sleep with because they may have sexually transmitted diseases. This brain tells us we want a cigarette for the nicotine, it doesn’t tell us it could kill us. This brain tells you to get drunk because it will feel good now, it doesn’t tell you that in 12 hours you’ll be hung over and miserable at work and that if you keep doing it you could develop liver problems. This brain is short sighted and only cares about pleasing us now, without considering repercussions of the future.

Next to evolve from the reptilian brain was the mammalian brain. (2)

Our mammalian brain basically evolved to correct some of the deficiencies of our reptilian or lizard brain and body. We gained the ability to remember past events and began developing emotions to further ensure our survival. We also began developing more complex organs and so this brain helped ensure those processes like food digestion worked instinctively.

Our human brain evolved to help us with decision making, because our older brains were inefficient in making good decisions that would ensure our survival for long periods of time. Basically, the reptile and mammal brains were good at taking care of us from day to day, but they didn’t make the greatest of decisions for the long term. Our continued survival as a human species depended on us to be able to make better decisions for the long run. With our human brain we are now able to determine what foods are best to eat and which ones we should avoid because of the long term impact. It helps us decide if the decision we are about to make could harm us in the future.

We have a battle of our brains going on, our Reptile and Mammal brains think mostly about the now, where our human brain fights for our long term survival. When you go shopping at the grocery store, and you shop based upon what you want and you buy crap like chips and beer, your reptile brain is the one doing the decision making. It’s only concerned with what will make you happy now, it doesn’t give a shit other than achieving a short term pleasure. It doesn’t care about your hangover tomorrow or the fact you won’t have money to take a vacation or buy a house.

Your human brain can take over and control your Lizard brain. When you realize who is doing the thinking you can take control of your life. You must use your human brain though, and that means educating yourself and becoming aware of who and what is in control of your actions. Moreover, you must decide right now with your human brain to start becoming consciously aware of your spending.

One great method to defeat your reptile brain from doing the decision making is to delay all Lizard like purchases. By this I mean, when you are going to buy something based upon fulfilling an immediate want or perceived need, stop and ask yourself who really wants, my Lizard or me. Make your Lizard wait, tell your lizard if it’s that important you will make an additional trip after you get home to go get whatever the Lizard wants. By the time you get back home, you will realize you are in control of the Lizard. It’s time for you to take the control back in your life.

Hope you enjoyed this article by FinanceDad! Check out FinanceDad.com until my next column appears Tuesday. Follow me on twitter @FinanceDadblog

(1),(2): “How the Human Brain Developed and How the Human Mind Works,” Manfred Davidmann

Best Savings account signup promotions

It’s a pain to find the best deals for opening a savings account, so I’ve taken the time to scour the net to find you the very best promotions available. While promotions alone shouldn’t be the only variable you should consider when selecting a bank, with interest rates so low, it may be the determining factor.

Personally, I advocate banking online for various reasons, but namely your ability to save time and earn better interest and or promotions. When new banks pop up (and yes they are FDIC insured) they try and lure new customers in with rates that are far above competitors (this is why you see some offer 1.5% while others offer 4%). You couldn’t do that if you stuck to your local town or community. When you open your options to banking across the country, you allow many more banks to compete for your business, thus allowing you better offers and rates. Having said that, below I’ve listed numerous banks with the best savings account offers (rates) and promotions across the country. Keep in mind that these offers may change daily and what is valid now may not be offered tomorrow.

• Capital One Savings – 1.35% APY PLUS a 10% bonus on interest earned*. No Fees.

• First Missouri High Interest Savings Account Earn 4.01% APY*

• HSBC Online Savings -24/7 Online or ATM Access. 1.10% APY* No Minimum Balance.

• State Bank of Waterloo- High Interest Rate of 3.50% APY*.

• Bank Liberty With 3.01% APY

• American Express Bank, FSB

• Sallie Mae® High-Yield Savings.1.40% APY. Open An Account in Minutes

• Webster Bank has promotions of up to $100 on checking accounts, there’s probably something similar for savings.

• EverBank: $75 when opening a savings account (min. deposit required)

• First National Savings: Earn Double Interest & up to $150

• Southwest Bank: Earn up to $150 in promotions