I am a FRAUD (I have credit card debt)

This article has subtitles - I would say CLICK HERE to turn them off but unfortunately our DVD remote is stuffed (sorry).

(open scene) (happy music playing trumpets, etc) so there I am on A Current Affair on Tuesday all dressed in suit and tie (Money by Pink Floyd playing “Money, get away. Get a good job with good pay and youre okay.” ) giving financial advice for generation Y (song fade and camera fade to black()!).

(narrative only.. black screen)but I’ve had a dirty secret for a while now…I have a credit card debt (silence) Two credit cards in fact! (Psycho -Shower screen screams). And since November I paid a large amount on my credit card to do a hair regrowth program (maybe I am a fool -see the full story in Christmas spending hangover)

Well the good news is my hair does seems fuller (bald Phil Collins – “I can see it coming in the hair tonight”)… but the bad news is a few branches have been chopped from my money tree (tuba low sad note).

The Damage – when it rains it pours

So the first problem was the few gorrilas on the hair regrowth program. Then of course car insurance, 2x strata repayments of $685 a quarter. Christmas… etc. etc. (worlds smallest violin starts playing)

Now I owe $4,640 on 1 card and $2,509 on another. Total $7,149 (large babble of voices what? why?)

Immediate Action Required – CUT UP THE CARD (sword slice!)

OK – so about mid December I realised that I was in the financial poo. I knew when I signed up for the hair program that it would be a few months before I could pay the credit card off (of course the salesman said it was cheaper to pay upfront and pay off your credit card in a few months than pay the monthly instalment option)   (Pantera guitar wailing in the foreground)

I’ve read financial books that tell you to cut up cards – or put them in the freezer so you need to wait for it to thaw before using it (laugh track used when jokes not funny)

What I did

1. I immediately have tried to pay everything possible on my 2nd credit card (an American Express or AMEX) (Stars and the stripes – Jimi Hendrix starts playing).

2. STOP THE SHOPING I cut (scissor sounds) going to the shops. Even though I have gift vouchers I know that a gift voucher means I’ll spend more in the shop so I am waiting until I go.

3. I have looked at payment due dates. In November I only paid $339 on my AMEX. I made sure I paid this before the due date so I kept my interest free days. Just to re-iterate this point – if you miss a credit card payment – ANY further purchases are immediately getting charged interest on them (rather than getting 30+ days interest free).

So I know that I will owe $2,409 on 4 February 2010(+I spent $100 on shopping a few days ago… there is only so long a man can live on tinned food, work biscuits and xmas leftovers).

I get paid on 15th so I’ll probably redirect my payment into the CBA credit card (which will reduce interest from 15 Jan rather than the AMEX which is only due on 4 Feb) (lightglobe turn on sound)

4. Hold off payments – there are some payments you might be able to hold off. I’ll wait until they send a 2nd reminder for the Water bill (p.s. I don’t really recommend this – could affect your credit rating when you go to borrow money but 1 missed bill should be OK – don’t make this a habit).

I have also told my parents – they were OK if I suspended payments on my loan to them (they lent me money when I bought my unit so I didn’t have to pay Lenders Mortgage insurance (definition at bottom))

Other Tricks

1. Reimbursement Trick -  I was on my work social club committee for 3 years (ending in Dec). Our Xmas drinks I put $1,500 on my Amex. Then I used the reimbursement payment onto my Commonwealth Credit Card.  So I have now recycled the debt to another interest free card.

2. Put dinner on your credit card – the poor cousin of the above. Everyone chucks in cash for dinner, then you take the lot and use your credit card. (I just came back from dinner with friends tonight and I did this!)VERY IMPORTANT – Pay the tip that your friends have given. If you do not do this that is stingy (you are already being a little unfair to the restaurant making them pay merchant charges for accepting your credit card – YOU MUST GIVE THEM THE TIP!).

reason why this doesn’t work – you get the cash you put it in your wallet and then within 7 days (magicians wand WHOOSH) the money has magically disappeared from your wallet and you have to pay the full credit card amount next month   – so in short YOU SPENT MORE AS YOU SPEND THE CASH IN YOUR WALLET.

Things that might not work as well.

1. The refund – In France I prebooked accomodation -instead of charging $30 Australian they charged $3,000! I checked my credit card statement and luckily they had sent me an email as well. But I don’t think this amount went against payments. (Also it is usually treated as refunded the same day).

2. Credit Card Stoozing Savings guide have an article about this (as I haven’t tried this myself I’ll take their word for it)

The last  crazy idea

My last idea is an unusual one (keep saving). Why would you keep saving to get 4% interest when you can pay off credit card interest at 20%?? (no music pause… suspense builds) Its the mental thing. If you feel like you are going forward and saving 10% (or repaying your mortgage as I will be doing) you feel like you are getting ahead (rather than working back to ZERO).

This means that you are more inclined to go with the PLAN to pay off your credit card.

Well I hope so anyway and I’ll let you know how it goes (a guy walking in a city…you recognise the riff.. Bittersweet Symphony by the Verve… its a bittersweet symphony thats life, try to make ends meet you’re a slave to money then you die…hi…….(fade to black… sound of a man snoring because it is way past his bedtime)

Posted in Debt, Life, Saving Money

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