Tuesday, June 14, 2005

Minimum Payments on your credit cards to double…

Twelve months from now this will be a desperate reality for thousands of credit card holders making minimum payments. A rule change by the Office of the Comptroller of the Currency first introduced in January of 2003 is now being strictly enforced, requiring credit-card companies to increase required minimum monthly payments over the next 12 months.
If you are having a hard time paying your monthly payments now, look out. Today, typical required minimum monthly payments are 2% of the balance. Some credit-card companies require as little as 1% of the balance. In 12 months, typical required minimum monthly payments will double to 4% of the balance! You ask, “Why are they doing this”. It's an attempt to assure at least some of the principal is paid with each minimum credit card payment. As it is now, usually only interest payments are being covered by the basic monthly payment. If you think bankruptcy will provide some relief, think again. A new bankruptcy bill has been signed into law making it tougher for heavily indebted Americans to wipe out their obligations. The only guaranteed way to avoid this disaster is to start today with a systematic plan to pay off all debt, but especially your credit card debt, as fast as possible. Even paying off 1 or 2 cards will create some cushion to absorb increases 12 months from now. I took this information from Greg Moore, a credit counselor.

One way you might start saving to pay off these credit cards would be to start the “Money Jar.” When TF and I were first married, we lived in an apartment complex and in those days we did not have a washer/dryer right in our apartment. I would go to the apartment laundry room on my day off from work and I would wash clothes. Back then it cost 35 cents to wash and dry a load of clothes. Each night when TF and I came in from work we would take whatever change we had in our pockets/purse and put it into a half gallon glass jar. When I needed to go wash clothes I would take my laundry money from the jar. We discovered that we were putting more money in the jar than we needed for the laundry. Before long we had accumulated quiet a bit of change. Over the last 33 years we have continued this practice. It is an easy way to save and it accumulates quickly.

I had a friend that used to eat a donut and drink a cup of coffee on her way to work every morning. She decided to eat breakfast at home and put the money she saved in a cigar box. She was faithful in putting the money in the box and at the end of a year she had saved almost $500.00.

There are ways to cut expenses in your budget and pay off your credit cards. Do it now and save your self some heartache when those monthly payments double in the next twelve months.

What are some of the ways you save money?

13 Comments:

At 8:18 PM, Blogger T. F. Stern said...

I had a partner who would smoke about $ 3 per day of cigars. He wanted to buy some gold nugget jewelry and I told him that if he only smoked half of what he smoked that would give him enough money over a six month period to purchase the jewelry. He went for the "whole enchelada" and quit all together. He bought the ring, the wrist bracelet and the neck chain. Then the dummy went back to smoking those damn cigars, the dummy. But you can see that even a minor change in spending habits will take you in the right direction.

 
At 8:25 PM, Blogger janie q said...

we never seem to be able to save money, three kids, one in university, the other two playing competitive sports, there just never seems to be anything left for savings. i do have a budget done on excel, all bills are all paid, we seem to spend whatever little extra we do have on things for the house.

 
At 9:25 PM, Blogger Ms D said...

Great ideas on your blog. Yes, we can cut corners. At my age, now my bills are gone. Just the living expences. But I had 2 Kids and I didnt get to save. Went through a split family. And that was hard. Proud of my children and as long as gods will, He will give me what I need. But anyone that has a jar. That sounds like a good. Idea. But For emerg. only, Thats my thought

 
At 7:22 AM, Blogger Jahn said...

Hmmm, great minds think alike. I've been doing the jar thing for years, except I have those coin tubes. When the tube is full, I wrap 'em. Then, I go deposit the money in my checking account, without recording it in my register. Automatic overdraft protection.

 
At 9:02 AM, Blogger Sherpa said...

my dad collected the change in my parents room a few months ago and had over 300 dollars.

I keep a change jar too which includes some bills. When I need a little money to go out, I try and use the money there rather than getting money from checking. I also keep a nest egg in savings that I don't touch.

 
At 9:22 AM, Blogger Beth said...

I really love this blog and am so glad I came over here! I am big into cutting corners and saving money ... being practical.

I cut corners in cleaning products. Most laundry detergents are telling you to use double what you really need. I use a half of the smallest measuring line, even for big loads, and I always have a sudsy wash. I cannot tell you how much this has saved me, but Tide used to be around $8.00 a box. 31 load boxes would be gone through in one month by me, easily. I can make the box go to at least 93 loads, making the $8.00 stretch out 3 months. I do the same thing with Downy concentrate. I use only a teaspoon or less in the rinse cycle and it works.

Also, I use ammonia as a cleaner. $1.00 a bottle and it works perfectly for all jobs, including pre-treating and carpet cleaning WITHOUT damaging special colors! =)

I'm glad I stopped by.

 
At 11:07 AM, Blogger Oh great One said...

I buy store brands whenever possible. They are usually cheaper than the name brand stuff even when using coupons!They are just as good and sometimes better than the name brand stuff.

 
At 1:44 PM, Blogger Evey said...

When I quit smoking I started putting money in a jar when i would normally by cigarettes, and boy did that add up.

 
At 4:23 PM, Blogger Beth said...

Lucy, I wanted you to know, I put a link on my blog to yours. =)

 
At 4:59 PM, Blogger Lucy Stern said...

Gardening Knitter, Thanks I appreciate that. What do you use ammonia to clean? I know it is good for getting blood out of clothing. I can hardly keep from fainting when I open the bottle.

 
At 5:02 PM, Blogger Leslie said...

coupons

sale ads

online clearance w/ free shipping coupon codes

buy Brand "X"

I saved all my son's (not the stained and ratty ones) baby clothes for the next, which is my girl. I just buy a pink shirt to put under those shortalls.

 
At 6:29 PM, Blogger Lucy Stern said...

Yes, I recycled clothes also. I had 2 girls and then a boy. By the time William got the clothes only the best jeans survived. I would buy him things as I found them on sale or clearanced out.
Three years ago, when my grandson was born, I started shopping on Ebay for baby clothes. I got him some really nice clothes that way.

 
At 11:10 AM, Blogger Rossputin said...

Increasing minimum payments is a great idea...although I do oppose government interference into private economic transactions.

Credit card interest rates are so high that people who only make the minimum payments are usually digging themselves into a much deeper hole than they understand. The less they pay, the faster they're digging because the finance charges are so high.

As someone once said, "When you find yourself in a deep hole, stop digging". Higher minimum payments will at least slow down how fast people bury themselves in debt.

 

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