Credit Cave

The cost of living has been rising steadily and shows no sign of abating. Today Shell and BP announced huge profits of over $14 billion for the first 3 months of 2008. What’s clear is that as the Indian and Chinese economies continue to grow, so will the cost of living. One of the most expensive commodities is gas for your car, so how can you reduce and save money?

• Declutter - It might sound a bit simple, but you will save money simply by removing any clutter from your car. The less rubbish inside your car (books, boxes of stuff in the back, coats etc) will reduce the weight of your car, which increases the number of miles per gallon you’ll get.
• Remove roof rack - It might be handy to have your roof rack but it increases drag and makes your car less efficient. Just by removing it you can improve performance and save money on gas.
• Keep windows up - Another easy way to decrease drag and improve performance is to keep the windows screwed up when on the move. With the windows up the car engine doesn’t have to work as hard to push the car forward, which means you consume less gas.
• Turn off aircon - Driving with air conditioning on means the car engine has to work much more and therefore use more fuel. You’ll get increased MPG with air conditioning off, and because you’ll probably sweat a bit you’ll also lose some weight!
• Turn off the radio - Anything that runs off the engine, even the radio, increases the amount of fuel consumed. Bring along your iPod instead!
• Don’t harge gadgets off cigarette lighter Again, it might seem like nothing, but even charging up your phone or laptop from the cigarette lighter can increase the amount of gas your car consumes. Charge your gadgets before you drive.
• Check tyre pressure - Every car has an optimum tyre pressure, and even the smallest digression can have a huge impact on fuel consumption. To avoid such inefficiencies make sure to regularly check your tyre pressure.
• Drive smoothly - One of the best ways to save money on gas is to drive smoother. Try and avoid stopping and starting the engine. Free wheel down hills where safe. Cap your speeds at 50 - 55 mph as this is the optimum for most engines.
• Car pool - If you have friends at work who live nearby then setup a car pool. This is both environmentally and financially friendly.
• Use a rewards credit card to purchase gas - There are many credit cards that reward you for purchases made on it. These rewards can range from cashback to air miles.

There are so many ways to save money, and it shouldn’t be just limited to certain aspects of you life. There’s a saying that goes something like this:

There are two things you can be sure of in life, paying tax and death.

Well I’d like to add another to that rather demure and completely uninspiring list, that of spending money. If you’re anything like me (alive, needed fed regularly) then you can start saving big next time you are stocking up. Here’s a few tips to get you started on the road to frugality in the kitchen!

1. Choose where you shop - Want to save money on food, then start training yourself to avoid those costly delicatessens and specialty stores. You may not agree with large, faceless, soulless corporate non-entities like Tesco and Walmart, but they are cheap. And when you have a credit card balance to clear, you can do with saving some cash.
2. Keep your eyes down - Yep that’s right, keep your head down. This isn’t some anti-ego post either, it’s purely a tip to keep more of your cash in your back pocket. Ever noticed that prices of goods at eye level are more expensive? Well, it’s not by chance. Supermarkets cater to our inherent laziness; we want in and out as fast as possible. And who cares about price? Wrong. Get those eyes down low, where the cheap goods are and start saving!
3. Shop in the evenings - Yeah, I’d rather spend my evenings on the sofa or chatting with friends, but if it means wringing that little extra out of your cash it then so be it. So why shop later in the evening? Well it’s simple really. All those perishable goods (bread, milk, cheese) have a date on them that determines whether they can be sold or not. So if something is due to expire tonight, it gets marked down to sell quickly. Hence your late night saving.
4. Brands cost more - Have you ever thought why or how brands can afford snazzy logos, fancy packaging and prime time television ads? It’s because they cost more. And just because they cost more doesn’t necessarily mean they taste any better. Be on the lookout for plainly packaged, non-branded and cheaper food on the lower shelves.
5. BOGOF - I don’t mean to be rude! BOGOF, if you haven’t worked it out yet, means ‘Buy One Get One Free’. If you see a BOGOF on an item you need to stock up on, get it. Nay, get two of them and save even more!
6. Collect your points - Most decent supermarkets run royalty schemes to keep you coming back. Make sure you are registered and that you have that card in your wallet any time you go food shopping. Start gathering your points and you can maybe get a few freebies out of them!
7. Be determined - It’s highly unfashionable, but giving yourself a food budget is so important. Whether it is £50 or $75, do not overspend. Squeeze every last penny out of your budget and do not be tempted by the in store advertising to spend.

So there you go, seven fundamental and ultra simple tips to make your money go longer next time you are out shopping for food.

Last time we discussed the benefits of rebalancing your debt load. This time we need to take a half step back and employ a very useful tactic.

Three Way Negotiating Dynamic in Your Favor

Before you actually transfer a balance, call the card where the balance resides and tell them you intend to transfer a portion of your balance or the entire balance if that is the case, but be specific. Then ask the company holding the balance today to give you a lower rate before you use the balance transfer. This will save you a cash advance fee and that can be very important even if they are only matching the rate!

You should also ask for a lower regular rate as opposed to a teaser rate. Tell them that you would like to keep things where they are not just for the next 3-6 months, but until the balance is paid in full.

If they can’t give you a lower regular rate then ask for a teaser rate and if that doesn’t work, then transfer the balance.

Know Your Credit Report

Order a copy of your credit report and study it in detail to understand how you will look to your credit card company at this point in time. Keep in mind that they will look at your history covering all of your creditors and not just your single account with them. If you find any errors or omissions, note them and take actions to correct them, but be ready to describe them on the phone and fill in the gaps. Similarly, if the credit report lags behind the actual status of your accounts by a month or three, be ready to do a fast reconciliation explanation on the phone.

For More Information see:

Part 1: Prepare Before You Call Your Credit Card Company for a Better Interest Rate

Part 2: Credit Curb Appeal for Credit Card Rate Negotiations

Part 3: Paying Down Debt Positions a Better Rate Negotiation

Part 4: Researching and Scripting the Pitch to Lower Your Credit Card Rates

Part 5: Credit Footprint Improvements Prior to Rate Negotiations

We have been covering the steps you need to take to prepare to successfully negotiate your credit card rates down. Today, we start to build your case. In general, you need to gather the facts and then prepare your message in a script.

Research Your Accounts

Review your Accounts in detail and compile that information in a place where you can find it and use it when you make the call.

If you have accounting programs like Money or Quicken, run reports and calculate the total amount of interest and fees you have paid on this credit card over the life of the card.

Run the same reports for the last 5 years, the last year and the last 6 months.

Gather up the facts about your recent progress

1. If you have made a payment and its in the mail prepare to mention it.
2. If your income has gone up or your expenses down, note it.
3. Be prepared to make your case with this information too.

Prepare a Script

After you have read all of our Preparation instructions including what to do and say on the call and what not to do.

1. Then write or type a legible script of your opening statements, your detailed request and reasoning, and several individual pages for potential standard responses if they say no. Think of these responses as mini scripts.
2. Memorize your scripts.
3. Practice your script with your spouse or a friend on the phone. Remember the person taking your call at a call center is trained and experienced at doing this every day all day, you are not. You need the practice and you need it on the phone!

Next time we will look at some of the additional complications that are present for many debtors and how you can prepare for those details as well.

For More Information see:

Part 1: Prepare Before You Call Your Credit Card Company for a Better Interest Rate

Part 2: Credit Curb Appeal for Credit Card Rate Negotiations

Part 3: Paying Down Debt Positions a Better Rate Negotiation

As we continue to look at the ways to better negotiate your credit card rates, today we are focused on some very basic steps to take. You want to look good to the credit card companies when you call so that they will give you what you want. Here are two basic things you can do to brighten up your credit.

Pay Down as Much As Possible

You need to attempt to pay off your debt aggressively before you call. If you have extra money in your bank account, send it in as a payment to get your balance down. Do what you can to bring in more cash and make a big payment on the target card in question.

Benefits

• This helps bring your total balance down improving your metrics.
• It shows the credit card company and possibly the analyst on the phone that you are serious.

Boost Your Income

Find ways to bring in extra money, such as asking for a raise, taking a part time job, doing freelance or contract work on the side, holding a garage sale, using your income tax refund, selling a few things on Ebay.

Paying down your debt as much as possible and reporting that your income is higher than what it used to be are the two most powerful things you can do. Now don’t worry if this is not an option we have more tips coming in our next installments.

For More Information see Part 1: Prepare Before You Call Your Credit Card Company for a Better Interest Rate

A few days ago we prepared an article providing the useful tip that it only takes a little negotiation to get a rate decrease on one or more credit cards. Since then we have received several requests to elaborate on this topic more and we have prepared this article to provide a more comprehensive strategy for decreasing your credit card rates through negotiations with current and new credit card companies.

This process can be done off the cuff with a simple phone call and a request, it never hurts to ask or you will definitely receive nothing. A rate reduction can save you hundreds if not thousands of dollars, which can make it very important to many people.

So we will cover are going to cover 15 steps in multi part series to prepare you for the call. Future articles will cover even more strategies and tactics that you can use. Lets face it something that can save you thousands of dollars in compound interest is worth a little more investigation!

The Test Run Option

Now, I do not recommend calling without preparation but it won’t hurt much and will give you some practical experience. If you fail come back and do the preparation we recommend and improve your odds of succeeding. Do not wait forever to make things ‘perfect.’ If they were perfect, your debt would be paid off you would be able to use cash to make your purchases and the call would not be necessary.

Getting Serious

If you tried the test run or not the first thing you need to do is a little soul searching. You are going to be negotiating to save yourself thousands of dollars. That is like trying to talk yourself into a free car. You need to understand your own position and motivation and perspective. So our first tip is to ask yourself if you want to change to a different credit card company if you do not get a better rate?

1. Consider their customer service.
2. Consider how often they have increased your rates in the past.
3. Consider how many penalties they have charged you.
4. Consider how many balance transfer fees your have been charged and if they were reasonable.

You need to understand just how serious you are about your effort before you proceed. Everything that we will cover in the future will be determine by your goals and attitude, which will come across on the phone!

Many people do not build a budget. They receive bills in, make payments and maybe check their bank account to be sure they have enough to cover the payment. They might push some money into a 401k or an IRA. Too many people do not plan and never get around to making improvements in their financial situation. In essence they are living from paycheck to paycheck and probably dipping into their arranged bank overdraft in the interim.

Why is a budget necessary?

Some of us are not blessed with the natural ability to manage our finances while others are gifted with it. If you have not been managing yourself like a business then you are most probably wasting money on things you simply have no need for. Developing your own budget should be a priority that will help you become much more financially stable in the years to come. It will help you identify what you spend on, what you need to spend on and what you shouldn’t spend on. Even the best finance bloggers out there have problems, JD over at GetRichSlowly has identified his comic book spending as a problem!

How do you build your budget?

You have to look at building a budget as continual cycle of improvement. It can be similar to physical training. You picture what you want your body to look like, make some assessments of your current state, make a rough plan, analyze it, start to work out, and then review your results and make adjustments as necessary.

Set a Goal

For instance, I want to pay off my debt in 3 years and save up $500,000 in 5-10 years. Or perhaps you would like to pay down your outstanding mortgage faster than you currently are in order to increase the amount of money you are left with every month. Another goal could be repaying debt. Whatever you do, get a goal.

Collect Financial Facts

I owe $50,000 in credit cards and loans and $100,000 on a mortgage. I earn $50,000 per year. Your next port of call is working out what your monthly expenses, as well as monthly incomings.

Build the Budget

List out in a timeline fashion the order that your expenses and income will occur over the period you want to consider. A spreadsheet is the best way to do this as many of the items will be very repetitive. You can easily copy and paste the first months details into the next 3 and 6 months and year. Add the quarterly and yearly expense details and then copy the year to the next 3 and then 5 and ten years. Make smaller changes for the events that will occur further out and you will have a budget.

So three years at $50k per year paid entirely to debt (with no interest) will pay off debt. $50k to savings will total $500k in 10 years etc. Here is a list of bills you should include in your budget:

• Electricity
• Heating - how much does it cost for oil, coal and wood to heat your home?
• Food - what do you spend on groceries and dining out?
• Entertainment - what do you spend on TV, magazine subscriptions etc?
• Communications - how much do you spend on phone call and mobile phones?

Analyze the budget

If I had no other expenses at my current rate of earnings I could pay off my debt in three years, but I have other expenses so I need to change my goal or find a way to earn more money. Plus, I pay interest on my debt, so that is another expense. In addition, I will need to replace my car in 4 years. So I will need to earn an additional $25k per year for the first three years to achieve my first goal or find more ways to save money. That higher rate will get me to my savings goal in approximately 8-9 years after my debt is paid so in those years I will need to earn an additional $25k.

Implement the Budget

Now you start to execute. You pay down the debt one month at a time. You earn money each month. You take the opportunities to insure that you come in on track to realize your goal. You do not deviate from the path as much as possible. Whatever happens, keep yourself motivated on the end goal!

Review and Improve

Then you compare your actual checking/savings and investment account activity to your simple spreadsheet with your budget. Ideally type in the actual numbers in the spreadsheet each month as they happen so that you can compare the progress and trends.

Each Quarter you should sit down and note any items that came up in the last three months that created positive results and negative results. Every 6 months you should make adjustments to accommodate those opportunities and challenges, and every year you should entirely review and redraft your budget to stay on track.

I read a great article the other day in Entrepreneur magazine.  A CEO of a burgeoning company made the statement that he never throws away anything.  Its a concept straight out of the old days in the US straight out of the depression.

But its also a very practical suggestion.

When you keep all the stuff that you buy, make, build, acquire, inherit and more, you have a constant reminder of all of things you possess.  To control clutter, you build up a natural incentive not to buy more things that you do not need.  Plus, by keeping all of this stuff, you have lots of potential material to solve future problems or challenges with tools already in your possession.  That saves you money, it saves you from spending your cash and its very useful.

In this modern day and age, many people recycle a great number of items, from cardboard, newspapers, plastic, and aluminum cans to cell phones, cell phone batteries, clothing and more.  From the perspective of the global economy and environment this is good.

From the perspective of your personal finances however, why should you give this stuff away?  Take some time to find recyclers that reimburse you for these items as opposed to giving it away for free or paying to have it recycled.  The stuff usually has value.  If you find out how to extract this value, you might earn a little extra money.  Might pay for the fuel in your car a couple times of year.

Set it up as a chore for your children, let them learn the lesson of saving for financial reasons, and then these funds can offset their allowance or supplement it.  The price of aluminum along with many metals is very healthy right now, so don’t just kick the cans to the curb in a recycling bin.

Some paper can be recycled, but much of it can not.  Don’t just throw it away, if you have a wood burning stove, save it for the winter months and burn it.  Its going to be better for the environment to turn the paper to ash, than it will be to fill of a massive landfill with paper that will not biodegrade quickly as its mixed in with lots of other non-degradable garbage.

Plus, you will be helping the environment by using just a little less electricity or heating oil and reducing your heating bill too!  I find that a short fire during the winter months will take the chill off the house, and this decreases my motivation for notching the thermostat up an extra degree on those extra chilly days and nights.

So remember keep it for yourself, don’t throw it away and if you are going to recycle it, make a buck or two for your family in the process!

After just a few trips to the store, your list becomes a functioning piece of consumer shopping intelligence. Every time you go to the store, you have more information about prices. This creates a continually updating and improving price list. You took a big step forward to protect yourself against cross selling by creating and sticking to the list.

Now you have the greater advantage by having a price history in your list. You can instantly recognize when prices go up or down. You will now know be able to recognize a good deal when you see it and have the certainty of fact to know it for a good deal.

Tips for using this to best advantage:
1. When you see a good price for something on your list, buy it.

2. If the price is wrong and the item is on your list, consider buying it at a later time, when the prices might come down, or buy it and note the price and be prepared.

3. Build into your lists the option to buy bulk on certain items. Mark each of the items that you would not mind stocking up on if you find a good price. When you see that good price on those items, then buy a lot of it. Many retailers move their prices around on different products. The prices go up and down, knowing a good price from a bad price and being prepared to take advantage of lows will save you even more over the long term.

4. If you go to a non-preferred store, and see a better deal, buy it. But also note the price and the store. Over time, you might determine trends that will enable you to stock up on certain items from once source and other items from other sources.

5. There are many PDA’s and smart phones that can run simple software list programs to help you manage all of this activity and keep all your lists for all of your stores with all of the prices in one place. On your phone you are more likely to be prepared to update your list, and use your list!

6. New bar scanning tools are on the horizon and can turn your phone into a scanner. In the near future, you will not have to write the products nor the prices, just scan it and your phone will become a pricing database to help you find and use the absolute best price when and wherever you happen to be.

Wrapping up the Shopping Maximization Section

In this most recent series of articles we have covered the benefits of shopping with a list and detailed the advanced techniques and strategies you can employee to save money and recognize truly good spontaneous deals. In our final series on controlling Cash Flows we will cover the concept of recycling and re-using or utilizing our extra stuff to get extra mileage out of our past purchases. Afterall it does no one any good to save money at the store only to throw it away once they get it home. We look forward to sharing more on this strategy in the next article.

A good list like a good plan requires focus, planning, testing and revisions. You have years of experience shopping, and you can use that to your advantage. Wal-Mart may have selling experts on staff, but you are a buying expert. Here’s how you can level the playing field.

1. Create individual lists for each store you frequent for replacement items. A replacement item is anything you might buy more than once in a 2-3 period, and of course includes things you buy every day or week too.

Setup a list for your preferred grocery store, your preferred hardware stores, electronics stores, clothing, shoes, etc. You get the idea.

2. Make copies of these lists (either in software or printed on paper).

3. Each time you go to the store, take the list and place a box by each item you intend to buy up front.

4. While there check off those items as you buy them, and

5. Write the price listed on the item on the list. If you don’t have time to get the price at the store, take the receipt from your purchase and add everything purchased to the list with all prices.
Wal-mart has one of the most advanced information (intelligence) gathering systems in the world. You make a purchase and the information from the cash register is ready to be tabulated at corporate Wal-mart in 15-30 minutes. That information is used for months and years to analyze how to sell more to you in the future.

When you take a few minutes to review your own purchases and figure out how to spend a little less, you are taking a very big step towards maximizing your savings when shopping. Wal-mart isn’t expecting this. You have the benefit of better information and surprise.