How forgotten debts can create havoc with your credit score

It’s important to know of past missed or disputed payments or forgotten debts.  You may think that an issue has been resolved, but if it hasn’t it can drag your credit score into a black hole.  Follow one couples experience in being turned down for a mortgage and finding out it was all due to a disputed missed payment to the gas company from years prior.

New Year’s Resolutions: Finances in 2011

Besides losing weight, losing debt is one of the top New Year’s Resolutions. While we’re all feeling so warm and fuzzy about the new year, I’ll let you know what some of my goals are. They are beastly hills to climb but I’m feeling better about the coming year. In fact, I’m more optimistic about this year than I have been going into year’s past. Before it would have been more wishful thinking, but I’m heading into 2011 bullish and with a go-get-em attitude.

So… here are my resolutions and I’d love to hear yours. Along the way, I’m hoping to gain some tips and tricks from other bloggers such as Frugal Zeitgeist, Mom Saving Mom, How I Save Money and more.

  1. Improve My Credit Score: In 2010 I increased my credit score by 30 points to 728.  I’d love to get above 750 in 2011
  2. Pay Off Overdraft Accounts: These are expensive buggars so I’d love to get these to $0 from $7,500
  3. Pay Off Amortized Loan: I have a 60 mo. loan that has 4 months left totaling $2,100
  4. Pay Off Subcontractor Account: $2,200
  5. Pay Off One Credit Card: $12,800
  6. Stay the course on the rest of debt paydown

So, that’s the story and I’m sticking to it.  I’d love to hear what your financial resolutions are and how you are tackling them.

I’m in Debt. Where to Start?

They say admitting a problem is the first step in dealing with it.  The only thing is, I haven’t been denying it.  I’ve known and been managing the mountain of debt over the past few years and slowly (and I do mean slowly) there are shards of light poking through.  No, it may not be the “I’ll be debt free in X days” but instead the sense of “ah…my lungs aren’t collapsing.”  

Where do I start?

  1. Take inventory of your debt.  Yes, it’s ugly.  I do this in excel with each account name downt the left and the month/year running along the top.  I input the the ending balance of each account at the end of the month.  I do include property taxes, etc. and not just credit cards,
  2. Find a few blogs to read every day.  You never know where the next tip or bit of inspiration to get you through the day comes from.  Some of my favorites are Blogging Away Debt, Beachgirl’s Budget Blog, Windy City Blues and Counting My Pennies.
  3. Make a Monthly and Weekly Budget.  You don’t need a fancy system for this.  You can use a notebook, the back of an envelope or stolen napkins from the washroom at the gas station – it really doesn’t matter.  Write down how much you take in each month and how much you are obligated to payout.
  4. Prioritize.  Easier said than done.  What items can you not go without each month (e.g. health insurance, prescriptions, utility bills); what items can you do without (e.g. weekly dinner out); and what items can you focus on trimming either by competitively shopping or seeking a reduction in the bill (see my lower your cable bill article).
  5. Set Short-Term and Long-Term Goals.  For the month of September, I’m looking to add no new debt.  I realize that sounds crazy, but it’s the only realistic goal given what I know the income and expense outlook is for Sept.  In October, I’m looking to pay our 2009 tax bill.  Long-term I’d like to have no debt other than the mortgage…but that’s a long way off!

This is my starting point and it may be different for you.  Yes, you can get into the “what do I pay off first?!?” conversation and we will.  For now, let’s just call a spade a spade and in this case, the spade is buried pretty deep in debt.

How to Lower Your Cable Bill in 4 Easy Steps

I’ve been a Comcast customer for years and in looking for ways to get a handle on the household expenses I went looking for a way to lower the cable bill.  Some say you can plot to negotiate a lower cable bill, I say just ask for a lower cable bill.  There is no harm in asking and if you’ve done your research on the competition you can lower your rates or stay at “the best” rate by simply asking every 6-12 months.

Today I’m happy to say I reduced our monthly bill by $97 or 41% per month.  Over the course of 12 months that’s $1164 that stays in my bank account and flows to the bottom line.  Whoo!

Technically my husband has been a Comcast customer with the cable, internet and phone.  I’ve had a separate bill for my home office phone lines.  I work from home so phone and internet are vital and for our sanity, so is cable.

How did I lower my cable bill?  Here are the steps I took:

  1. I called AT&T to ask for the new customer package rate for 3 phone lines, cable and internet.  I explained I was currently a Comcast customer.  The AT&T new customer rates were far better than what we’re currently paying with Comcast.
  2. Next I called the Comcast number 1-800-934-6489 and selected the options to “upgrade” my account.  This gets you to the sales group.
  3. I asked what the current upgrade specials are and “best prices” and upon finding that they couldn’t beat AT&T explained that I’d been a long-time customer and was tired of watching my rates go up and went through the AT&T quote I was given.  I was then transferred to the Customer Retention group – BINGO!!
  4. Once in the Customer Retention group I once again explained my situation, AT&T rates and asked for my calbeasked what the best rates were for the Comcast Triple Play (phone, internet, cable).  The restul was $99 for the first 12 months; additional phone lines are $10 each and additional DVR’s per TV are $8 each.  No contract like a cell phone for 12 months.  The rep said the rate will go up in month 13 by $35.  At that point I’ll go back to step one and start again.

I’ve already put a reminder in my calendar for August 2011 to call and ask for a lower cable bill to keep. 


2009 Personal finance resolutions

With every new year we set resolutions.  Losing the weight of debt on your shoulders, trimming the fat from the budget and toning up assets should rank at the top of lists for 2009. 

Let’s face it – 2008 was a real financial stinker.   401k’s lost value, home values fell, credit card debt skyrocketed, unemployment, salary cuts… drink a dixie cup of cheap champagne and say good riddance to 2008.  2009 is the year to get your personal financial house back in order.

Here are some resolutions for thought:

Cutback on Credit Card Usage
Tuck the plastic away and pay cash.  Yes, cash.  It’s that paper and coin stuff in your wallet or purse.  Become friend again with George, Abe and Andrew.  If you aren’t a cash-carrying fan, use your bank debit card.  You’ll be less likely to spend the extra $5-$50 if you know it’s coming directly out of your bank account.

Make a Budget
Strange as it may seems, many people don’t know where their money goes each month.  If this happens to be you… it’s as easy as a notebook and a pen.  Write down what you spend every day for a month.  Track every penny from the electric bill to tipping the parking attendant.  Once you know where you spend, you can start making adjustments.  Be realistic and be ready to cut things – even if it’s for a month – to see if you really miss it.

Make a Commitment to Know and Improve Your Credit Score
If you don’t know what your credit score is, you need to.  It’s like knowing your weight.  If you don’t know what the number is and set a goal, how will you know when you get there?  Find your credit score using sites such as MyFico which is free an provides you with a full credit report.  Improving your credit score by paying bills on time and lowering debt will save you money in the long-run by being rewarded with lower interest rates.  Tip: Mark your calendar to order a credit report every six months to track your progress.

Pay More Than the Minimum
Yep.  If you are only making the minimum payment on accounts, not only are you paying more in interest but you aren’t taking the opportunity to improve your credit score.  Try and pay and extra $10-$15 on credit cards and if you are extremely disciplined, try and pay an extra 5-10% on your mortgage payment (if not each month, every few months).  Over time these extra few dollars can save you hundreds if not thousands in interest.

Create a Snowball Debt Payment Plan
If you don’t know what a snowball debt payment plan is, read past entries to get started.  It’s quite simple to do and will provide motivation and a great deal of satisfaction in addition to saving you – – – – money!  More for you, less for the credit card company.

Create “Found Money” Situations
Maybe it’s participating in a few focus groups over the year or cleaning out the garage and selling items on Craigslist or eBay.  Maybe it’s finding a job on the weekend or a freelance opportunity.  Make 2009 the time to earn some extra income to apply to your snowball debt plan.

Contribute the Maximum to Retirement Plans
The stock market is in the tank but we know it will come back so why not be buying when stocks are on sale?  Invest in yourself and put the maximum you can towards retirement.  If your company has a 401(k) contribution match – take advantage of the free money.  Don’t forget to contribute to your IRA too!

Start an Automatic Savings Plan
Even if it’s $25 a paycheck, put it aside in an ING savings account.  Having it set aside for emergencies will provide a great deal of comfort.

Get Smart About Your Personal Finances
Don’t assume you know everything or stick your head in the sand trying to hide from it.  Face your fear in the comfort of your own chair or in the library.  Read a few self-help personal finance books.  You will learn a few tips along the way and stay disciplined.  I’ve listed a few books below to help get you started.


Bonus Round Resolutions
I haven’t made it this far but someday I will!!!  The two most wonderful resolutions one could possible do is to save 10% of each and every paycheck and to make an extra mortgage payment each year.   This is a long-term goal of mine and not one that I’ll be able to achieve in 2009… but there’s always 2010.