I have posted a loan application on prosper for a 16% rate:  pretty sure bet considering I am putting it up on my blog as a matter of insurance for people.  Long story short the debt I collected while unemployed has been transferred around to 0% interest credit cards and opening accounts + revolving credit + inquiries (to do transfers) has hurt my credit score…down to about 700 plus score, and 678 on the lender scale.  So I need all of you guys help to get my credit score up by transferring that revolving to a fixed loan .  Sign up with the link on the left and then go here:

http://www.prosper.com/lend/listing.aspx?listingID=327147

and fund my loan.  You get free $25 just for signing up there so you get to lend me money AND get free money.   Ive got some great posts coming this week, just need the time to finish them off and post them.    Thanks for the help guys, and drop me an email if you decide to do it, Id love to see who all out there is helping!

David Ramsey Hypocrite. It keeps popping up as how people get to my site. I really can’t understand that considering I have mentioned David Ramsey exactly once (maybe twice). I seem to remember a few other people tackling this subject; five cent nickel and debt free revolution come to mind. Well I have no loyalty to Ramsey though I do like his debt snowball technique so I am going to dive into this David Ramsey hypocrisy issue. Of course I have a feeling I am opening up a Pandora’s box but here goes:

David Ramsey hypocrisy allegation #1: David Ramsey filed for bankruptcy and now he is a financial advisor

When I was in grade school I remember as part of the I think now defunct D.A.R.E program they brought in a speaker who was a former alcoholic and drug addict. If anything someone who has been through the absolute worst in a particular situation is in a good position to show the evils of that situation. I just don’t find a lot of credibility with this argument.

He even describes the time as the worst time in his life full of fear, desperation, etc. I think the fact that he has made it his life mission to help others avoid the same mistakes he made is noble, not hypocritical.

Score: Not Hypocrite view 1, Hypocrite view 0

David Ramsey hypocrisy allegation #2: David Ramsey rejects credit cards and ‘forbids’ their use, but he accepts them on his website

I had to do some personal investigation into this one and I was surprised to see that he does, in fact, accept credit cards. There is a disclaimer:

We understand what is running through your mind right now. “I can’t believe Dave Ramsey is accepting credit cards! This can’t be true! He’s sold out on his principles!” But before you shave your head and run outside on your front lawn screaming, “The world is coming to an end, save yourself!” let’s clear up a few things:

Number 1 - We are NOT accepting credit cards! Never have and never will. I mean, come on, do you listen to the radio show at all? Have you ever heard of a plasectomy? Please understand that accepting credit cards is something that will NEVER happen as long as Dave is still alive (and even forever after that!)

Number 2 - We are accepting DEBIT cards. We know that some people will go nuts when they hear that, but one factor is being overlooked. Debit cards do not work unless there is CASH available.

There is one problem with this: there is no distinction in Visa processing between debit and credit cards. I find this to be somewhat of a cop out especially considering his militant views on the subject. This is basically akin to leaving a cookie jar on the table around people addicted to cookies and telling them “you better not take a cookie.” It leaves somewhat of a doubt in my mind about how much of his stuff is “for show” and how much is “for real.” He obviously is just trying to make a living like the rest of us but the thing is, he’s gotta know most people are so desperate for his information (and likely to buy) are the ones who use credit. There is no way around the fact he makes money off the people he’s trying to help and that not offering a credit card option would hurt his income.
You could argue the “drop of water in a lake” theory …but what is a lake except a lot of drops of water? I can see both sides here. I lean toward hypocrite here, but I can’t be decisive about it. Point for each side plus a half point for hypocrite.

Score: Not Hypocrite view 2, Hypocrite view 1 .5

David Ramsey hypocrisy allegation #3: David Ramsey pushes “smart” financial decisions but his debt snowball is fundamentally “not smart” because it basically ignores interest rates

As one fellow blogger put it “David Ramsey is bad at math.” That is true, but he is also “Good at motivation.” The argument goes that he is telling people to be smart about finance, but paying off low interest rate small debts before larger high interest debts is decidedly backward as far as the smartest way to pay off a debt. I can see this point of view but I also think he is right in a lot of ways just for the morale boost it provides. This isn’t “hypocrisy” in the pure meaning of the word so this argument is null and void. No points for either side.

Score: Not Hypocrite view 2, Hypocrite view 1.5

The long short of it is that I don’t think he is a hypocrite: he lives what he preaches and thats really what it comes down to. I would definitely say there is some “stage acting” going on but that doesn’t make him an hypocrite, it makes him a showman. A lot of people have used his system successfully which is what I care about here: you the reader. By all means listen to his show and read his books, just don’t become a militant on any issue and keep an open mind.

You wanna live the American dream?  You wanna fix your financial problems? Don’t live beyond your means.

There was such a positive response to our failing article that I decided to follow up on a little more direct and slightly less sarcastic take about living beyond your means.

Here is the US Savings rate historical graph, its a nasty thing to behold:

Sadly, what you see above is true for a good portion of us. The U.S. Department of Commerce’s Bureau of Economic Analysis’ statistics suggest that the typical American family sometimes spends all of its cash and then dips into existing cash savings – or borrows cash from others – to keep spending even more. If the government’s personal saving statistics are to be believed (we all know how government statistics go, and many economists believe they are flawed), the typical American family is living beyond its means, choosing to live a lifestyle it truly cannot afford on the income its breadwinners bring home each month.

There is some good news though… your family does not have to live like the typical American family. Your family can choose to be different. You can choose to set aside part of your income each month to build up cash savings. Then, you can invest those savings wisely so that your family can pull ahead of the typical American family over time. After all, why choose to “keep up with the Joneses” materially when you can just as well choose to beat them financially? Is it challenging to do? Sure it is. But, you can do it. You just have to think radically.

Lets get sort of crazy, crazy like a fox, not like Michael Jackson

Let’s think radically for a moment. Would it not be a completely radical idea to do the exact opposite of what the typical American family does with its cash income each month? What would it feel like to save more cash than you spend each month? Think about it. Imagine paying all of your bills out of your monthly cash income yet still having more cash left over than what you just paid out in bills! Can you imagine that? Wouldn’t that be nice?

There is one easy way to do this. Spend a lot less per month! (Gasp)

Hey, I never promised that getting ahead financially was going to be fun, did I? Mentally and financially, cutting back on your monthly expenses is very dull, hard work, especially at the beginning. It requires you to make hard decisions and sacrifices, and to have patience. However, once you get started, your cash savings start to build up. You can then use this accumulation of cash savings to build wealth over time through the commitment of that cash savings to sound, long-term investments. So, the sooner you get started accumulating cash savings, the sooner you can choose to live off the income from your investments instead of the income from your own labor. Or, if you want to, you can choose to continue to work. That is the great thing about doing the opposite of the typical American family: you have greater freedom to choose what you want to do when you want to do it. This is what is meant by achieving financial security and freedom, perhaps the best way to have fun and enjoy life.

Yeah it sucks

I can hear the metaphorical room splitting down the middle. Some of you are cheering for me and others are gathering your weapons to come to my house. For the second group, I can hear you muttering to yourself how difficult and unattractive it would be to get radical: “Cut back significantly on my monthly expenses? Forget that, that sucks” Yes, it would “suck.” Significantly cutting back on your monthly expenses could dramatically alter the lifestyle to which you have become accustomed, perhaps a comfortable lifestyle somewhat beyond your means. You might have to move to a less expensive house or apartment in a different part of town. You might have to sell your current car and buy a less expensive, more fuel-efficient car, carpool with someone else, or take public transportation. You might have to stop eating out at restaurants multiple times a week and just eat self-cooked meals at home and at work. You might have to cancel your overpriced (and overindulged?) cable or satellite TV services. You might have to live without the latest gadgets and gizmos and just stick with the perfectly good technology you already own. You might have to forgo exciting vacations overseas and just take cheap road trips here in the good ol’ U.S.A. You might have to do all of these things until you are living well within your means, living a lifestyle you can afford to live on the income you bring home each month.

Trust me, things could be worse

Yes, downsizing your lifestyle would “suck.” But, do you want to know what “sucks” worse than slashing your monthly expenses so that you can save and invest for the future? I’ll tell you:

-Growing old poor, unable to afford to travel and visit your grandkids living with their parents – your grown children – in another city or state

- Having only meager Social Security or pension checks to live off of in your retirement or in the case of our generation, probably no social security at all.

- Living your final decades on Earth as a potentially unwanted financial burden on your grown children’s families and their own futures

-Having no choice but to work up until the day you die because, over your lifetime, you failed to create any personal wealth that enables you to choose to stop working in your old age

-Dying penniless, leaving behind no legacy of financial security for your family’s future generations

That is what “sucks” worse. And, that is exactly what a good portion of the people you know (some estimates put it as high as two in three Americans!) are going to do.

Do something

You do not have to live your lifestyle the way you live it today. Your lifestyle is largely a matter of choice – your choice. With the exception of financial obligations such as government taxes, court orders to garnish your wages, debt payments to creditors, or other payments for which you have a moral, ethical, or legal responsibility to pay, the cash you earn each month is your cash, and you alone choose to whom you hand over your cash each month. In other words, to save or not to save your cash is largely your voluntary choice.

Stash a large chunk of the cash you earn each month into savings – what a radical idea, huh? Well, if the U.S. government’s personal saving statistics are to be believed, saving cash apparently is a radical idea in early 21st century America. Each month, “financial radicals” across America choose to stash a large chunk of their cash income into savings – cash held at the ready to provide financial security and/or to fund sound, long-term investments. These financial radicals demonstrate a strong preference to save and invest for a brighter future than to spend their hard-earned cash on wealth-depleting consumer goods and services in the here and now.

What about you? If you have made the choice to do what it takes to build wealth over the long term, consider living a “crazy” lifestyle. To do so, make whatever lifestyle changes necessary for you to minimize the amount of cash that you voluntarily hand over each and every month to retailers, restaurants, finance companies, entertainment companies, utility companies, grocery stores, and others. Use the cash left over each month to build financial security and freedom for you and your family over the long term. It all starts when you refuse to live a lifestyle you cannot afford on the income you bring home each month.

Expensive cell phone? Cut it. Expensive car? Sell it. Expensive stuff laying around your house that you don’t need/dont use? Sell it and put the money in savings. Eating out every day? Stop. Personal trainer? Motivate yourself (and use resources such as fitnesstitans.com
Buying tons of groceries? Add a garden this summer. Still spending too much on gas? Ride your bike. Cut up your credit cards.

Its a battle, win it. Its the American dream, live it.

There was a character in Shakespeare named Polonius, for those of you that remember who said, in modern day terms “no credit needed.” America today runs on credit and unfortunately it has taken on a terrible terrible life of its own.

The first and most obvious piece of this Pandora’s puzzle is consumer debt, the debt that you and I and Bob your next door neighbor have racked up. The average American household now owes over $20,000 and $8000 in credit card debt…and that doesn’t even include mortgage debt. Half of all American families spend more than they earn every year.

That all pretty bad, but its no where near as bad as the worst spender on credit…the United States government. Right now the government owes $9,391,477,965,650 which, when you look at the population of the US 303,654,870 this means that each citizen’s share of the national debt is $30,928 and growing. Of course by the time you read this, that will have increased. Ouch.

We as a nation have been gorging ourselves on credit and our debt waistlines show it. Do yourself a favor, balance your budget; do the country a favor, write your representatives.

Credit card week here at TPS has been fairly busy and so in my endless digging to defend you Ive come up with some extra things to watch out for. Your credit card is costing you money in ways you probably didn’t even realize. Thats right, that innocent little piece of plastic you’ve come to love (or hate) is actually hiding some secrets away.

1) Annual Fee
If there is an annual fee, make like a flock of seagulls and run far far away. The ONLY time this is acceptable is if the rewards program FAR outweighs the annual fee. This happens just about 0% of the time.

2) Rewards that really aren’t that rewarding
You finally saved up those 25,000 points to fly somewhere, awesome! Oh except you have to travel on certain dates….at certain times, and stay in certain places, oh and you have to book it a year in advance, oh and you can get bumped at any time….etc etc.

3) Cash advance fees
Never ever use your credit card to get a cash advance from an ATM. Card companies see these as loans. That means you’ll pay a 3% fee on the amount you withdraw, plus interest which starts accruing immediately. Interest rates on cash advances are generally ridiculously high. We are talking 10-30% kind of high. Thats a lot to pay just to get some cash out. Why on earth do you need cash that urgently anyway, and where the heck is your debit card?

4) Convenience checks are convenient for sucking you dry
Filling in convenience checks, which come with a lot of low-rate balance-transfer offers, is a terrible idea. These are treated as cash advances, and you may get smacked with a 3% fee, AND $5 to $10 minimum. As a sweet bonus not only do you get nailed if you use the checks, but card issuers will hit you with an average fee of $30 if the check is returned or stopped payment on. Even more awesome.

5) Lottery Tickets are treated as cash advances
Thats right , see #3 and don’t do it again!

6) Overseas? Get more Fees!
You will usually end up with 3% extra charged against you for “conversion” fees by both Visa/Mastercard and whoever the card issuer is. Ouch.

7) Pay by phone - More Fees
Paying by phone might cost you an extra $5-$20

Lose your statement? - More Fees
Thats another $15 probably. Unless of course you are using online banking (which you should be!)

9) Lose your card? - More fees
Theres another $20 most likely.

10) Late payment fee
This will cost you anywhere from $15-$25

11) Over limit uh oh fee
Go over your limit for even two seconds and you’re likely to get a nice $35 fee.

12) No balance at all fee
Thats right, you could get hit with a “Finance charge” for NOT having a balance. This is probably the most annoying of all credit card fees. Its small $2-$5 but it is absolutely BS.

13) Lack of use fee
This is rare anymore, but they may charge you for NOT using the card often enough.

14) Calculating interest from the time of purchase
Thats right, you could make a purchase, pay it off the next day and STILL get charged interest on the purchase.

15) Return Item Fees
You can be charged for returning an item you bought. Guess charging you interest on the day you bought it isn’t good enough, you need to pay a fee for returning it too.

So finally we get to the payoff (literally). How do we ditch this debt that has grown after days, months, years of using the credit cards. There are a lot of theories out there on the best way to go about it, some of them great, some of them ok, and some of them terrible. Most of the terrible ones involve you paying someone to tell you how to do what I am going to tell you how to do…except I don’t charge anything for it. The credit card contest has really energized me to share as much as I possibly can for everyone. I want you all to crush your debt, I mean that, just absolutely kill it, and become rich. If any of you keep up on this blog and are getting out of debt, and you use these concepts to get out of debt, for the love of God, email me and let me know, I want to hear your story. Ill post it on here, and if you are ever in northern colorado Ill take you out for a beer and we can talk about what a relief it is.

I think its important to include that I am in the same boat as all of you, I have the same temptations, debts (hello 6 months of being laid off), and problems as the rest of you. In fact, chances are you have a leg up on me: I have to force myself to organize things. In the world of personal finance, organization is everything, and its my weakness. The trick is that this is a “long haul” game. Its not a short term solution, it has to be a life change. There will be times of falling off the bandwagon, but as long as you keep at it, and persevere, you WILL get everything paid off. So now exactly do we go about getting rid of this debt? Well there are several methods and I am going to go over each of them because I don’t believe there is a one size fits all catch all thing here but I am going to focus on the snowball method because I believe that is the easiest one to follow for most people.

If you are having trouble coming up with the money never fear, I have some methods in here as well to help come up with extra money to put toward the debts. You can use any mix of these methods so read them all.

Method #1: Debt snowball
This has been popularized by David Ramsey on both his radio show and his book Total Money Makeover (which I have read). Its a decent read of a book if you are curious, I would recommend picking it up. The way it works is that first make a list of all the debts you have, with the debt with the lowest balance being #1, the second lowest being #2, and so on down the list. Some of these are painful to look at.

I did this a while back and the one that hurt the worst oddly was my student loan debt. I had to take out the entirety of my student loans in 2 semesters meaning I got TERRIBLE rates. I had to pay my mortgage while going to school and I had 2 weeks notice I was being laid off, thats it. I wasn’t prepared for it at all because I had been given a top rating at Hewlett Packard and I was the sole engineer left on my team….why on earth would they lay me off? Well they did and I had no backup plan and no emergency fund so I got stuck with 15k in student loans at 12% interest. Ouch! In general loans that have something backing them up are not so terrible to look at: mortgage and car loans you have assetts there. The credit card debt is the one that is really really painful to see.

Next step is to allocate as much of your budget as possible (That we made in the previous article) to debt crushing. Now make the minumum payments to all of the debts except for the one with the smallest balance. For that one, pay the absolute most you can until it is gone.

Now with that money that you were paying toward that smaller balance debt, you put all of that money PLUS the minimum payment you were paying toward the second largest balance debt. This is why it is called the “debt snowball” because with every debt that is paid off, there is more and more available funds to pay off each progressive debt and eventually it is all gone.

Example:

Ignoring interest rates, let’s pretend you have the following debt (along with the minimum payments):

-Visa - $2500 balance - $150/month minimum
-Mastercard - $250 balance - $25/month minimum
-Student Loan - $15000 balance - $100/month minimum
-Discover - $1500 balance - $50/month minimum

Thats a total of $325/month. You would order the debts like this:

Mastercard $250
Discover $1500
Visa $2500
Student Loan $15000

Now if you allocate an extra $100 to paying off debt per month you would pay $125 toward the Mastercard, and the rest would get the minumum payments. After two months the Mastercard is paid off and you now allocate the $125 that you were paying for it plus the $50 minimum you have been paying toward the discover card so you are paying $175 toward the Discover until IT is paid off, then that $175 plus the $150 toward the Visa, and so on until all your debt is gone.

Pros: You get to see progress immediately, paying off smaller debts lets you “write off” each one. which is really nice. It is a great way to get in the rythm of paying off debts.

Cons: It does not take into account interest rates so you are not being 100% efficient at getting rid of debt.

Method #2 High interest to low interest

This method is fairly simple. Start with the exact same steps as the snowball method, except order your debts in order of highest interest rate to lowest interest rate. Now begin paying on the highest interest rate and add your extra money toward the highest interest rate until it is paid off, then move to the next highest interest rate putting the money from the first toward the second as well.

Pros: This is the most efficient way to pay off debt because you will end up paying the least amount of interest over all.
Cons: It is difficult to see progress, it may feel overwhelming.

What if you are having trouble coming up with money to help put toward your snowball, are there any options? Yes, yes there are.

Method #3 The Consolidation Loan

This is where you go to a bank or credit help insitution to get a consolidation loan for all of your high interest debt. Usually you will pay more with these types of loans in the long run, but if you are desperate it can reduce your payments. Things you should look for are to make sure there is no pre pay penalty because that is counterproductive to your cause.

Pros: Can help if simply cannot cut out enough to meet your payments, ability to reduce monthy payment
Cons: Will end up paying much more in the long run, generally higher fees for the service

Method #4 Sell stuff around the house

This is best if used in conjunction another methods. This can help get a jump start on knocking down balances. You can sell old clothing to second hand thrift stores. You could also have a garage sale and sell some things on ebay.

Pros: Gain some extra money, get rid of things you dont need and reduce clutter
Cons: May not net too much money from it

The main thing to keep in mind, this is a long race, not a 2 second fix, but you CAN see results right away. Get to it!

If there was an adult version of sesame street it would have a feature: A is for auto which costs 600 a month, B is for budget something you probably don’t have.

So I heard on the radio the other day that of Americans with credit card debt 90% of them do not have a set budget for the month. Is that really surprising though? Alright so now that we cut up our cards, and got rid of temptation, lets set up a budget.

The steps to setting up a budget are actually easier than you might think.

1) Sit down an make a list of all the things you spend money on each month that are set in stone. All of your bills, housing costs, etc…basically anything that has a set monthly cost.

2) Make a list of expenses that are NOT set in stone. What you think you will need for food, gas, unexpected expenses. Now is the time to be honest with yourself. How much do you REALLY spend on food and going out? How about on random purchases?

3) List all of your income. For most people this will be one source, married couples 2 sources. But some people have multiple jobs, whatever, just write it all down. Now add them together.

Now we are going to do a little math, everyone brace yourself.

Take the total from #1 and add it to the total from #2. Now subtract that from #3. There are two possible outcomes here:

1) The result is positive
If you are not lying to yourself about how much you spend on a monthly basis, then great, stick to this and use that extra money to pay down debt. If you seem to still be accumulating debt its time to go back and revise your values about what you are ACTUALLY spending.

2) The result is negative
Uh oh. This is where that lovely credit card debt came from. Its a pretty simple equation, if you spend more than you make you will go into debt. Now is the time to go back through and see what can be cut out. Chances are you will find that you can cut out a decent amount of food and entertainment expenses. If not, then its time to restructure your finances to do what it takes to make ends meet. This might mean canceling cable or some other sacrifice, but in the long term if you do not take care of it now, then you will have to make that many MORE sacrifices later on.

The overriding budget golden rule is this: decide how much you are going to spend so that it is within your budget and then stick to it. Keep track of it. Check up on it daily.

Ok so you now know where your money is going, tomorrow: how to get rid of that credit card debt that is there already…

This is a guest post from Debt Free Revolution, special thanks to her for taking the time to do this. I was going to wait until after the end of the credit card cut up contest but I have the flu so here it is:

Jesse asked me to do up a guest post since I just became consumer debt free on February 26th, and I am happy to oblige! He thinks y’all will be particularly interested in the “big picture” since my journey to eliminating debt (except for the mortgage now … and that will get its day) spanned just three days shy of fourteen months. It felt tough at times, but this was something I knew in my bones had to be done if I was ever going to turn the financial ship around in my life.

I accomplished this debt free feat using the Dave Ramsey “baby steps” and recommend them personally.

Once I made the decision to get out of debt, I had to learn a few productive money habits. The first was getting caught up on my bills, and paying them on time (cringe; yes I was that disorganized). The second was learning how to make a budget that works. Yes, I just used that nasty “B” word. Except it’s no longer a bad word for me. The best quote about budgeting I think I have ever heard was: “A budget is telling your money where to go instead of wondering where it went.” Some folks rename their budget, calling it a “cash flow plan” or maybe even “allocated spending plan” since that sounds fancy, or you can just call it “Fred” if you want. (”Fred” says we can’t buy that right now.)

Doing a realistic working budget was a huge eye-opening experience for me. Before I wrote it down in dry erase and white, I thought we didn’t make enough to make ends meet. After writing it down, I discovered that somehow at least $600 per month was just disappearing! Over a year later, I still can’t say for sure where that money went to … although I suspect it vanished in the local restaurants.

OK, so I was current on my bills and I now had a working realistic budget in hand … time to kill some debt, right? Not so fast, Hoss …. and this is where I am so grateful I was following the Dave Ramsey plan! The next step is to build up a baby emergency fund of approximately $1,000. No problem, I said. I had a non-retirement mutual fund I could cash out, and I did. I squirreled away the $1k and used the rest to finish off the last two months of my car note and start in on the next debt on my list.

Then my furnace broke at the end of January when it was only 21F outside. The repairs ended up being $1140, and it wasn’t the only time I tapped the baby emergency fund! The other time was a few months later in May when I had to replace the brakes on all four wheels on my car. So … I play my radio a little to loud to have heard the brakes squealing BEFORE it became a serious problem. I had about $300 of the $538 it cost to fix that, so I only pulled about $250 to cover it. I distinctly remember my son whispering to me after I paid the bill: “Mom, can we afford this?” I whispered back: “Yes, we have an emergency fund.”

Which brings me to another thing I did: get a weekend job delivering pizzas. It doesn’t have to be pizza delivery, but picking up a part-time job on the weekends is a great way to bring up your income. Just don’t work somewhere you might be tempted to spend!

Oh, and one thing I didn’t do that I wish I did: convince hubby to sell his truck. Somewhere on hubby’s Y-chromosome is the “I Love Trucks” gene, and there was just nothing I could say or do to convince him to sell it, even though its sale price was MORE than one year worth of salary for him. Hubby dug his heels in deep on this one, so it was a matter of knuckling down and simply paying it off. He did promise to drive the wheels off of said truck, so hopefully it will last until at least 2015 (it’s a 2005, but also a Chevy). But if you can sell high-dollar items without causing a major rift in your relationship … DO IT!

And right there are the keys I used: better habits about paying bills, getting on a working realistic budget, and getting a part-time job. Just be sure to put that baby emergency fund in place LOL Add in a natural stubborn streak and the burning desire and determination to get out the chains of debt, and you see me DEBT FREE but the house, BABY!!!! LOL It’s been a week now and I am still celebrating.

Oh, there’s a whole lot of other parts to this story but Jesse asked for a “big picture” post which was in danger of being the size of an ebook before revision. Although Jesse has left the door open to the possibility of further guest posts that deal with y’all’s questions

If you have been reading, then you know the number one step in eliminating your credit card debt…Cut up your credit cards.

Now step two:

Getting rid of the temptation

Everyone is tempted sometimes, its just a fact of life. From Adam and Eve checking out the tasty looking apples hangin out on the tree in garden to me buying (and later taking back after I came to my senses) a gigantic TV. Credit cards are one of the most insidious forms of temptation because they allow for immediate gratification EVERY DAY. Giving in isn’t selling your soul to the Devil, but it is like selling your wallet to him. Of course the devil in this case is the credit card company and your eternal damnation is an eternity of debt. Sick of the personification? Ok, lets down to business.

Temptation #1: The Mail
Most people don’t know this but you can actually stop the credit bureaus from seeling your name and address. To get the forms dial 1-888-5-OUTPUT. Thats right, no more “0% limited time offer is here now, you must do this now or else you will never get another good deal again and your firstborn is cursed and you will regret it for the rest of your natural life. Really you will, you fool, get our card now or risk eternal damnation and burn in hellfire with the other that did not take this offer” mail. Not to mention the “this is official and dated information, VERY important. You MUST fill out this form.” Next, write to the Direct Marketing Association, Mail Preference Service, P.O. Box 9008, Farmingdale, NY 11735-9008.

Bonus step: Call your credit card companies that you have accounts open with that you want your account marked to indicate that you do not wish to have any of your personal information shared with telemarketing firms. Remember, just because we cut up our cards doesn’t mean we are closing our credit lines (Dont!) so credit card companies will still treat you like a customer which includes sending you crap.

Temptation number #2: Free Stuff
“Five free oil changes if you fill our this credit card application.” “Sign up today and get a free PONY!” “You are entered to win a life of ease drinking margaritas on the beach, all you have to do is fill out this application.” Do any of those things sound familiar? Oh yeah, of course they do. Walk on a college campus or through a mall on a busy day, and you WILL see people peddling credit card apps for random free crap. Don’t give in. You will be able to buy 100 ponies with the money you will save not paying 20% interest on a maxed out credit card.

Temptation number #3: Store discount
I have covered this before, and if you are one of the 15% of people that pay off store purchases right away then you probably aren’t reading this article. So, simply, don’t do it. Check my girlfriends testimony on the credit card cutup contest.

Now that we’ve slain the temptation dragon, tomorrow we taken on the next step….

Helping a reader out:

“Hello and my name is Jacob. I just graduated with a degree in mechanical engineering. I have 5k in high interest credit card debt, 21k in student loans, and 8k in a car loan. I just received a job working for a company that designs cranes and I am starting out at 55k a year. I don’t know what I should do next. Should I be trying to buy a house or stay in my (very inexpensive) apartment? I have six months before my student loans are due so should I ignore them for now? The biggest one is very high interest (18%) due to my parents at the last minute not being able to pay for a bunch of expenses. What order should I be looking at things? Should I be putting money into the company retirement plan? Im still pretty young so I have a few years to start that. Basically I am just completely lost, help me please :)”

This is a great email because I think it reflects a lot of people coming out of college. It’s a whole different world with different priorities.

My advice to him was fairly short and sweet.

1) Stay in the apartment
If it is inexpensive, wait until you have saved up enough for a sizable downpayment to go the house route. There is no reason to rush this and it would even hurt you in the long run. Plus housing prices will continue to fall as foreclosures increase.

2) Get to work on the credit card debt. Start getting rid of that sucker ASAP. Even better, ff you can, transfer it to a zero percent interest card.

3) Consolidate those student loans. Since the majority is high (ridiculously high, I thought my 11 percent I had for one while unemployed was crazy high) consolidate those SOBs. Federal consolidation rocks because it is capped at 8.25% This means you get an automatic lowering of your interest rate. Nice.

4) Make sure you immediate start investing in the retirement plan ASAP. The company match is FREE MONEY. Its like the company saying, oh you’re going to give yourself 100 bucks when you are 60? Ah what the hell, heres 100 more just cause. Not to mention the younger you start, the more years for compound interest and the more moola you will have.

I also gave him a few other points, but I am curious what you, the readers have to say to him, what are your ideas?