Guest Post: Shane Wright on New Credit Card Legislation

Posted on 13. Jan, 2006 by in Saving & Investing

Over the past few weeks I’ve been trying to come up with new ways to increase the value of this site for you. One thing that I believe will increase the benefit of reading this blog is inviting guest writers to contribute.

Today I’m please to announce our first guest writer, Shane Wright — the man I affectionately call the “Budget Meister.” He’s written a great article which happens to follow up with my earlier announcement on the increase in credit card minimum payments. Here are his 2 cents…

With new legislation increasing – in some cases more than doubling – your minimum monthly credit card payments, what can you do?

Let me first say that this new legislation, over the long haul, is a good thing. But, during these first few months of personal transition those with credit card debt may be in financial shock!

What can you do? Well, here are some answers that – if implemented – can change your financial future…
Credit Card
1. Track your daily expenses. Tracking your daily expenses can help you know where you are spending your money. Many people have no idea where there money is going, but at the end of the month they just know it’s gone. By tracking your daily expenses for a month, you’ll know exactly where you money is going and it will help you know where you are overspending … thus telling you where you can cut back!

2. Make a budget (scream!!!). I know, I know … to many people even the word “budget” brings thoughts of the worst profanity … but, a budget – when used correctly – is a very good thing. Make a budget that is realistic and one that you can live with. Often when we make a budget, it is so tight and unrealistic that no one could actually survive on something so scarce! When making a budget realize it needs to be something you can actually “live” and stick to … long term. It shouldn’t be too tight and it shouldn’t be to loose. A good budget is livable, yet snug. I believe budgeting is like dieting once you overspend (or cheat on your diet); it’s going to be easier to overspend the next time and then the next time, until you forget the budget all together.

3. Make a commitment to live the budget with your spouse. If you’re married, you need to work out your budget “together” with your spouse – you both got into debt together – and now you need to dig yourselves out … together! You need to be on the same page, because if you are the only one trying to get out of debt, then you’re going to stay in debt. Success will come only if you work together.

4. Attack 1 bill at a time. Now that you have a budget, hopefully you have some extra money. Whether it’s $50 or $500, focus all of your money on one bill until it’s paid off, then attack the next bill … and so on … until all of your bills are paid off. So, if you have $300 from your budget and $100 to pay your minimum payment for your bill – now you’re paying $400 each month. Once that bill is paid off you take the $400 you were paying and add the next bills minimum payment to your new total. You do this until all of your bills are paid off. You’ll be amazed at how fast your bills will go away.

5. Make a plan, write it down, and stick to it. Devise an execution plan on how you’re going to pay off your bills. Pay your lowest total bills first (just to get them out of the way), then move on to the bigger ones (including your home!). Write this plan out on a paper (remember to focus on only 1 bill at a time), and estimate the month and year that you’ll have these bills paid off. Hang your plan where you can review it each day. Most people with average debt and with a starting budgeted amount of $300 or more per month can have all of their bills paid off as soon as 10 years (I know some who have paid off all of their debt in 7 years).

6. Reward yourself with something big!! After paying off all of your bills and now that your debt free … keep to your budget and save up for a few months. Then, when you can pay for it in cash, do something you’ve always wanted to do – go on a cruise, take a trip to Europe, etc. This will be the carrot dangling out in front of you that, when you want to overspend, that will keep you on the “straight and narrow”.

7. Stick to your budget!! Even after all of your bills are paid off … stick to your budget. Now that you have a lot of extra cash you now need to shove all of this extra money towards your retirement. You’d be amazed at how fast it will add up.

One Response to “Guest Post: Shane Wright on New Credit Card Legislation”

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    05. Oct, 2006

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