Infograph: Credit Card Statement Changes

I'm sure many people are aware that as of July 1, your credit card statement has to meet specific formatting guidelines laid out by the Federal Reserve. These requirements are part of a larger set of rules put into place by the Fed in 2008. Five Cent Nickel created this infograph to illustrate the changes that I'd like to share.

Credit Card Statement Changes from Five Cent Nickel

While the new reporting requirements for credit cards statements will be helpful to some people, I don't suggest carrying credit card balances in the first place if you can, it's no fun at all paying them down, I speak from experience. It's only fun to the watch interest grow on investments and savings : )

Have You Pulled Your Credit Scores Recently?

I normally pull my credit report and check my credit scores at least once a year. Since I am not moving or making a major purchase in the immediate future which would require credit, I don't think I need to pull them more often than that. But in this tough economy, it doesn't hurt to know where you stand.

I decided to pull both my credit scores and credit reports this week after hearing through the personal finance blogosphere and regular news outlets that beginning February 14th Experian; one of the three major credit bureaus will no longer offer FICO scores based on its data through Fair Issac Corp.'s myFICO.com. FICO scores based on data from two other credit bureaus, Equifax Inc. and TransUnion LLC, will still be available through the Web site. This is very disappointing information and I wonder if this is a permanent situation or will be resolved in the future.

My credit scores are higher than they were when I checked them last year, and if I had to use credit, for a car loan for example, I would be able to get a reasonable rate. Though I have credit card balances and student loans, I always pay on time. I am sure as I continue to pay my credit cards down (and have a lower utilization of available credit), my credit card score will be impacted and rise a little more.

Have you pulled your credit reports or scores recently?

Credit Cards

I am on track to pay off my Discover credit card balance ($250) with my first pay check of December. If I do receive a holiday bonus this year (I wasn't at my current job this time last year, so I'm not sure if we get one), half will go toward textbooks for the Spring 2009 semester of my classes and the other half will go toward my Visa card balance. I will decide how much money I can comfortably afford to put down on my Visa card balance per month in December, but I am leaning toward $300. I hope by seriously cutting back on my discretionary spending (a.k.a. - shopping!) starting in January, that I will be able to pay off this credit card by the end of 2009. I'm anxious to start saving for my car, and I won't do that until this credit card is paid off.

What to do with October's extra check?

I know it's only mid-September, but I have been contemplating what I am going to do with the extra pay check I will receive in October. I get paid on a bi-weekly schedule, and since there are five fridays in the month of October, I get three checks. Sure, there are plenty of things I could do to with my extra check. I could use it to pad my emergency fund and pull myself a little closer to my $5,000 goal. I could add it to my travel fund, because I'd like to take a fun trip somewhere for my 25th birthday next year (yikes!). I could also buy a few household items I've been wanting like a chair, a new comforter or a file cabinet.

But what have I decided to do with that extra check once I receive it? Apply it to credit card debt. My Discover card which would have been paid off by February with my planned $250 payments will now be paid off by November! I will apply $1,000 of my extra check to my balance and pay the remainder in November. By this time next year, I hope my extra checks will go toward something like my travel fund or to start my house downpayment fund. But in the mean time, I have to crush this credit card debt!

How often do you check your credit score and credit reports?

For the past few years, I have pretty consistently checked my credit score and report once a year during the first few months of the year. But because identity theft seems to be running rampant these days coupled with the desire to know where I stand financially, I have decided to check my score and report twice a year. I don’t anticipate making any major purchases before 2009 (property, car, etc.), but I may have to take out a minimal amount student loans (I know Michelle Singletary would cringe if she overheard me say that) for grad school in the near future. I use www.annualcreditreport.com and looked at each report from the three credit bureaus: Experian, Trans Union and Equifax. You are entitled to one free credit report per year but FICO scores have to be purchased for a nominal fee. I personally think those credit monitoring services are a waste of money unless you have had experienced serious instances of identity theft. To find out find out more about identity theft, visit the Federal Trade Commission Identity Theft Center at http://www.consumer.gov/idtheft/.

There weren’t any surprises on any of my credit reports, but I did notice that all three of my credit scores had dropped a few points since I last checked my scores in February. I know that my high credit card balances are to blame for this drop. My balances are slowly creeping down, but my available credit is minimal on two of my credit cards. The one store credit card I have, Ann Taylor is paid in full when I make purchases on it. According to my credit report, the fact that my credit history is still fairly new (about 5 years starting with my undergraduate student loans) affects my score. My oldest credit card was opened in 2005. All of my scores are in the fair range, but to get the best rates on any loans or other credit I would want to take out in the near future, my scores needs to improve a minimum of about 20 points. Sigh.

All you have to do is open up your local paper to the business section to see how important maintaining your credit is. Your credit can impact your job prospects, ability to buy a home or a car or take out educational loans for yourself or your children. Needless to say, I’ll be working to get my scores up by early 2009 when I plan to check them again.

When was the last time you checked your credit score?

No Longer Swayed By Temptation

The old Small Budget, Big Style Chick would have been tempted to click on this coupon and buy something from Bloomingdale's ASAP simply because hey, I'm getting a deal right? $25 off at Bloomie's is great! But since It would not have even occured to me to shop, let alone shop at an expensive store like Bloomingdale's if I had not seen this coupon, it's not a deal. I have plenty of "stuff" and don't really need anymore.Any money I spend (not alloted to some bill or other commitment)would be better served in paying off some debt or adding to my savings, not shopping at Bloomingdales.I resolved not to use the particular credit card for which I received this coupon for any reason until I have a zero balance. Not being swayed by this "temptation" makes me realize maybe I am learning something about willpower through blogging...

Paying off debt like an Olympian

Watching so much of the television coverage of the 2008 Olympic Trials over the past few weeks has me thinking of my own goals. Specifially, my goal to pay off my debt. While I am definitely no athlete I can apply the same focus and energy to making strides on my financial goals as an athlete makes strides to win that Olympic medal. Every month when I am juggling around my money to see how much extra money I can put toward paying off my consumer debt I get frustrated because I think of how much money I’d have saved if all of this money was going in my savings account and not on my credit card balances or student loan payments ugh!

I got lax during the month of June with using my credit card and my balance crept up some. But I have a new resolve and plan to have at least 2,000 of my credit card debt paid off by the end of the year. Once I have my EF up to 1,500 (not a month’s worth of living expenses but a small cushion is better than none at all). I will resume the more long-term goal of 5,000 in Emergency savings in January. It makes no sense to have more than a months worth of expenses saved up and still have credit card balances to pay off. I will then throw as much money as I can on my credit card balances because I am determined to have them paid off by this time next year. It’s time to buckle down and get this monkey off my back. I can comfortably afford to put $500 a month toward credit card balances if I curb my impulse spending.

A person seeking an Olympic medal and a person seeking to pay off debt both need:

• Focus and Drive. You have to have single minded focus to pay off large amounts of debt. If your focus strays, you are more likely to incur more debt. If your focus strays in competition, you are likely to lose.


• Visualizing Yourself Reaching Your Goal. Like any other goal, actually visualizing your goal is key in accomplishing it. Visualize a zero balance on your credit card statement as you would visualize yourself crossing the finish line in a race.


• Good coaching. Whether it be from a financial advisor, trusted friend, or blogging community, everyone needs coaching at some point to reach the goal of paying off major debt, just as you would need coaching to beat your opponent in a gymnastics competition. An objective person that can see the good and bad things you are doing to meet your final goal is very helpful in accomplishing that goal.


• A Plan of Attack. Just as a relay team has a plan of attack and knows how to play up the strengths of differerent members of the team at various points of the race, you need a plan to pay off debt. Whether you are paying off high interest debt first, or concentrating on paying off debt by amount, you need to devise a plan and stick to it to pay it off in a timely manner.


• Know Your Opponent. Credit card companies, retail stores and other outside forces can suck you right back into a cycle of debt, so its good to know your opponet so you won't fall pray to their advances. Say no when you are offered a discount to open a store card when the cashier is ringing you up. Don't use that credit card just because you are racking up frequent flyer miles if you a carrying a large balance. Stay vigilant because there are deterrants everywhere to impede on your progress.

My closest brush to athletic competion was winning a gold medal in my brief run as figure skater while I was around 10 years old. I have forgotten all of the spins and jumps I so painstakenly practiced to win that medal, but I do remember that feeling of winning and the pure joy that goes along with that. I want to have that feeling again when I win this battle against my debt.

I'm going to train my mind to zero in on my ultimate goal of being debt free as if I have an Olympic gold medal riding on reaching this milestone. Hey whatever works to make it happen right?

Tackling Credit Card Debt

The average American household with at least one credit card has nearly $9,200 in credit card debt, according to CardWeb.com, and the average interest rate runs in the mid- to high teens at any given time.
–CNN Money

There are several different ways that people choose to tackle their credit card debt. Even if some methods will allow you to pay off your debt faster, I personally think that you should just choose a method and be consistent with it. Here are two popular methods I am aware of that people use to pay down high CC balances:

1. Paying Off Balances With Highest Interest Rates
Say you have three cards with varying balances and interest rates:
--Visa - $5,000 @ 3%
--Master Card - $500 @ 13%
--Amex - $250 @ 7%
You would pay off the Master Card first followed by the Amex, then lastly the Visa. The purpose of using this method is to avoid paying so much money in interest.

2. Paying off Amounts According to Size: Smallest to Largest Using the Snowball technique ( term used by Dave Ramsey)
This technique emphasizes the sense of accomplishment you feel when you pay off a CC balances, even if it is a small balance. This may keep you motivated to keep going with you goal of paying off all balances. Using the same numbers from the previous method, you would first pay off the Amex, followed by the Master Card, then the Visa. Once the Amex is paid off, apply the money you were using to pay it down to the Master Card. Then once the Amex and Mastercard hit zero, apply the money you were using to pay them down to the Visa. Paying off balances with high interest rates makes sense numbers-wise, but people (like me) get antsy when they can’t see immediate results in paying off debt. Here is a debt reduction planner I found on CNN Money that you can use to plan out the amount of your credit card payments and how long it will take you to pay off your credit card debt: http://cgi.money.cnn.com/tools/debtplanner/debtplanner.jsp.
Tools like this are helpful for visual people like me that like to be reminded of their goals.

Other options that help you to pay off credit card debt faster:
--Transfer high balances to a 0% interest card
--Call your CC company and try to negotiate down your interest rate
--Throw any windfalls toward debt (after you have at least $500 in emergency savings)

Options I wouldn’t suggest you use to pay off credit cards:
--Refinancing your home
--Getting a HELOC
--Borrowing money from friends and relatives- Borrowing money may fix the problem, but actually taking the time and money to pay off your debt without help will make you think twice about running up those CC’s again!


I plan to use the ‘snowball’ technique of paying off my credit card debt which is on three separate cards. My smallest balance will be paid off this week, my other two balances are in the (gulp) 4 digit range. But it’s totally feasible to pay them down significantly by the end of the year and have them paid off in full by the end of the first quarter of 2009. I’ll give an update on my progress on paying them down at the end of the month.

Credit Cards and College Debt...Do They Go Hand-In-Hand?

Did you or are you currently Majoring in Plastic as a college student?

According to a recent Washington Post article (click on the link above to read the whole story):

"In a recently released U.S. PIRG survey of 1,500 students at 40 colleges in 14 states, nearly two in three students reported that they had at least one credit card. Fifty-five percent of cardholding students said they used their card for day-to-day expenses. Reflecting escalating college costs, 55 percent said they charge their books and nearly one-quarter said they pay their tuition with a card. On average, those freshmen whose parents were not helping them with their bills had a balance of $1,301. Seniors had more than twice that, $2,623."

Sometimes, taking on debt as a student simply cannot be helped, but PLEASE keep in mind that credit cards should be used with caution and that it can take years to climb out of credit card debt. Credit cards may indeed prove to be the best way for some students to finance expenses associated with colleges but make sure to explore all options before resorting to credit cards:

1. Student Loans (AFTER YOU HAVE EXHAUSTED YOUR SCHOLARSHIP SEARCH). Student Loans should be taken out only if you have looked high and low for scholarships and aid. The student loan industry has been under fire lately, but low interest federal loans if you are eligible are still the best way to finance college if you or your parents don't have the cash up front. Federal loans normally have lower interest rates than private loans and can normally be consolidated in the future to lock in on a lower rate.

2. It Takes A Village To Put A Child Through College. Your "village" (Family members friends and supporters) may be more receptive than you think to help you with the expenses associated with college. Reach out to them and explain why you would like their help. Many loved ones would like to feel that they have invested in your future. Instead of asking for the iPod or Play Station 3 video game, ask your favorite Aunt or Uncle to purchase a text book, or make whatever small contribution they can afford to give you to go toward tuition. And be sure to send out thank you notes to your "village" to express appreciation.

3. Work and Pay For School As You Go. If you are are working full time, try taking only as much course work as you can afford to pay for out-of-pocket. This method may take you longer to complete your degree, but you won't have to worry about credit cards or loan payments to pay off in the future.

**If at all possible, credit cards should only be used when you know you can pay off the balance in full when the bill is due. In a perfect world everyone would be able to do this, but its never too late to start the practice if you haven't done this in the past.