Saturday, August 16, 2008

I don't think I'm contributing to the Credit Crisis...

I'm contributing to the ECONOMY!!!

Actually, I'm one of those "Typical Americans" who's carrying too much Credit Card Debt. But there are a couple-three caveats:
  1. I have *almost* enough money in the bank to zero it out at any time (I DID have enough money a week ago! No longer true after Dynah's surgery, unfortunately)
  2. I "stay on top of" what I owe AT ALL TIMES
  3. I play the 0% Game

True, the zero percent card promotions are fewer and farther between, these days. But I do have good enough credit that I still receive the occasional offer.

I know... I know... There are Financial Advisers out there who tell you "No! No! Stay away from that!" But, in some cases, it just makes sense.

HOWEVER, you absolutely *must* read the fine print and make sure you understand, and play by the rules exactly!

In my case, one of the offers I'd received - about a year ago - was 0% for 12 months on New Purchases AND Balance Transfers - with no little asterisks or plus-signs or teeny-tiny fine print indicating a 3% "Transaction Fee" or whatever would be applied (I shred those offers immediately!).

Anyway, at the time, I was still carrying about $8,000.00 on my Harley loan - at something like 10% interest (or thereabouts). I sat down and calculated what I would end up paying in interest. No easy feat, I might add! I built a monster-spreadsheet to handle the daily calculatons and estimated payment dates and accrual rates and yada yada (it ended up being pretty damned close to HD's calculations)...

Despite the fact that I was making *at least* double-payments every month, it was rather astonishing (certainly "illuminating!") to see how much - and how quickly - those dollars add up!

The next question was: Can I pay off 8,000.00 in less than one year? Bada-Bing, Bada-Boom, I created a (GASP!) Budget Spreadsheet and determined the answer was "Yes."

So I transferred the balance over to the zero percent card. I *also* made the mistake of actually USING the card for purchases as well. But I kept on top of my budget and was able to pay it off before the 0% ran out. Actually, the "final" payment posted about two days too late - so I ended up paying $15.16 in interest for the last statement cycle (on a balance of appx $1,000). But that's ONLY interest I paid (to anyone!) the ENTIRE YEAR.

Compare that to the interest I earned in my ever-growing Savings Acct (at a Credit Union - one that still pays halfway decent interest). Or the interest I would have paid to HD Credit, had I not moved the balance...

In the end, I am definitely "Ahead!"

So yes, the 0% game "can" work.

There's a Scary Zero Percent Game, however. One that I'm playing now. When Dynah went in for surgery, I dragged out a new Mastercard (one with "limited" zero percent interest and a whole bunch of wonky rules) (Oh, incidentally, all of my credit cards - except for the one or two that I actually use - are locked inside our safe). Anyway, it's a brandy-new card with a halfway decent limit. But the 'highball estimate' the vet's office provided exceeded that, unfortunately.

So they steer me to their 0% for 12 months "CareCredit" financing. What am I gonna do, right? I signed up for it - just so I could get her checked-in and lined up for surgery...

I read the "fine-print" later, of course. Here's the kicker: Interest starts accruing the minute you use the credit-line. They waive it if you pay it off within the promotional period. However... If you DON'T pay it off by the end of 12 months, ALL of the interest, going back to Day 1, gets tagged onto the bill. And the interest rate is some outrageous amt, like >22%.

"Aye Chihuahua!!!"

Needless to say, I will *not* be a day or two late with THAT final payment!

Credit Cards definitely can be scary. And yes, I'm one of those people who "got into trouble" with credit when I was younger (and dumber, and poorer!). It wasn't too terribly awful (it was well under $10K), and the 'Bank of Mom' bailed me out (and yes, she's since been repaid!). After that, I refused to even HAVE credit cards! If I didn't have the cash, I wouldn't make the purchase (which is actually the BEST way to be, I think!).

DH Roger was the one who convinced me I needed to rebuild my credit so, over time, I started opening charge accounts again. Now I like to think I have a much healthier attitude about credit and I'm "pretty good" about keeping my spending habits under control. Actually, that's not too difficult because I am an atypical female - I actually HATE to shop. (Well, except online!!!)

I've known quite a few people with very unhealthy spending habits ("Ooh! Shiny! I think I'll buy it!" - OR - "It's on sale, I think I'll buy three!") - and I don't want to be like them!

One good "Mantra" a friend of mine shared with me: Whenever she sees something she thinks she wants, she asks herself "Do I like this more than I like my money?" I really like that approach, and I've adopted it myself!

I'll admit, sometimes I make purchases that "sane" people would consider utterly ridiculous - but they all pass the "I like this more than I like my money" test (Like $300.00 to a scalper for ONE ticket to a Jimmy Buffett concert at the Fillmore - a venue so small I could actually see him sweat!) (Or "several thousand dollars" for back surgery for Dynah!)...

My short-term goal, right now, is to get the credit balances paid down 'til they're below the combined savings account balances! Right now, I'm running at a deficit, but I think I can turn that around in the next couple-three months.........

Okay, that's enough "rambling" for now. I gotta go get started on food prep for tonight's BBQ.

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