Frugal Five Meet Melissa from Arizona

Melissa   is a wife, mom   of one and works at home living in Arizona. 

What is your financial life?
I am married  for 2 years  with a one year old girl. I stay home full time but also work at home doing call center work. My husband is a painting contractor right now and picks up odd jobs.  We have a bit of credit card  debt that we are trying to pay off with some really high interest rates. My work at home job is primarily to pay off the credit cards 

What is your budget buster?

The credit card debt is hurting us-we have over 15k of debt that I am trying to pay off. I am trying to use Dave Rasmey baby steps. We have 1k as our baby emergency fund and are currently on step 2 right now.

What is your favorite money saving tip?

My   most important money saving strategy is to buy secondhand. When I  need something, first I check to see if we can get it secondhand, and if we can't, then we get it new. I shop at a large consignment  store and also at several thrift stores. In my opinion, privately owned stores tend to be too expensive on many items, charging almost as much for used things as they would be new on sale. I get almost all of our clothes used, the only thing I won't buy used is underwear or socks .  My daughter has brand names at really good prices and I hope to be able to “sell them them back.

If you had an extra $1000 what would you do with it?

I would take $1000 and put it towards the credit card debt. I have one debt that I can completely wipe out.

What is your best resource for frugal living? 
When I decided to quit my job to stay home with my daughter   I started searching the internet for tips and websites like thefrugalmom.net and savingadvice.com  were a big help to me.

You can get slammed with interest on those no interest store credit card deals

I am no fan of same as cash offers.  You need to read the fine print on these here is another story on someone getting hit with a ton of interest on  12 months no interest deals from a home improvement store.   




A year ago, we made the decision to renovate our kitchen..
We ordered cabinets, counter tops, and a new fridge from the national home improvement store 

They were running a special where you could get 12 months, zero interest.
I was expecting a large bonus at work later in the year, that would cover the rest of the costs (over $10,000), 
.. which would insure that we didn't get caught paying interest.  (mistake number 1 don't count your eggs before they hatch) 

Of course, things happen.. and my company cancelled their bonus program last year (blaming the economy).
Without the bonus, we were able to pay down only about $2,000 of the $10,000 due.
I sorta hoped and prayed that something would happen that would enable us to come up with the rest, but we just didn't even get close. (Don't ever count on work bonuses in advance to pay down something your already bought) 

A few weeks ago, I got a bill from the creditor letting me know that a $2500 interest charge had just been applied to my account.
$2500!!.. Just a painful blow.. And after calling the company and seeing if there is anything they could do to help me.. They pretty much laughed me off the phone.(They are doing the happy dance when this happens they are not giving me the 0% interest loans from the goodness of your heart) 

In retrospect, if there was ever a time to play the balance transfer game, this should have been it. 
I should have transferred the remaining $8000 to a credit card, where I would at least avoid the back interest.. (this is an option but usually credit card balance transfers have fees of 3-5% to do the transfer) 




Bottom line unless you know for sure (ie have the money in the bank or can make a monthly payment that will pay if off in time) do not do these deals they will come back to hurt you. 

How one family paid off $89,000 of debt in an extreme way

Angela Coffman, of Kansas City, Missouri, one of the four subjects on the recent TLC special Extreme Cheapskates, was a stay-at-home mom of six, and in debt to the tune of $89,000.  

Through extraordinary dedication, effort and big-time penny-pinching, she managed to pull her family up by its bootstraps and erase all that debt … in just six months!

What were you doing to acquire so much debt?

My husband and I were living the American dream. We had several

Big Macs causing debt?

Driving by McDonald's on a recent weekend, the line going through the drive-thru was at least 7 cars deep. I wondered how many were paying cash vs using a credit card.

Yes, credit cards! Most of the fast food places now accept credit cards.

I will say I am not 100% innocent here. We do take-out fast food through one of the burger places at least once a month and use a debit card for the most part. However using a credit card isn't the smartest thing here.

People who use credit cards to buy fast food actually purchase 30 percent more than those using cash. So people are consuming extra calories too and people are getting fat every day that eating large burgers and super size fries.

Those who do choose to use credit cards to buy fast food should make sure they follow the most important rule, which is to never carry a balance over from month to month.

"We know that only one-third of consumers truly pay off in full," Anyone who does not pay in full should avoid using credit cards at fast food restaurants at all costs.

Finally credit card debt free again

The very end of July we charged $600 that I know we wouldn't be able to pay it off right away. I was worried about falling down the slippery slope of credit card debt again! I am happy to say last week I paid off the credit card in full and no more debt!

For the wedding, hotel, tuxes and the other various expenses we paid in cash or used the debit card. The hotel suggested having me give my credit card so I wouldn't have to have a hold put and then switch it to debit once we leave! I love that idea and took them up on it.

It feel good not to have any credit card debt over my head right now!

Dave Ramsey Radical or Common sense

I brought up Dave Ramsey on a women message board as a recommendation for someone who hit rock bottom and I was told that his thoughts are too radical and extreme.

While I can understand some of the ideas, like writing everything down, emergency funds, etc. etc., I don't understand why people go to extremes to get their financial house in order. His ideas are completely unrealistic. Or even need to get out of debt- getting out of debt is completely radical idea. You need credit cards to survive today. Who could even buy a car today paying 100% cash.

I don't agree with 100% that Dave says, but his first 3 baby steps have helped thousands of people get out of debt. Dave Ramsey isn't radical at all. People think he's radical, but it's just plain old common sense. It's the way people lived in the 40's and 50's. and somewhere along the way we've been taught that we nee d to get credit cards, finance or lease cars. We expect everything NOW because we DESERVE it, as opposed to actually saving up and earning it.

Frugal Five Meet Stephanie

Stephanie is a frugal grandmother from Ohio

What is your financial life?
I have been married to my husband for 27 years . I have a 19 year old son still at home and a 24 year old daughter, married with 1 girl who is currently living with us. We have a mortgage that still has 11 year left on it . We also have credit card debt is that is approximately $3000 and a monthly car loan of $276. (Check out Tips to get out of debt) We are looking to retire in the next 5 years or so. My husband is a union carpenter. I worked out of the house for 10 years and recently stopped working so I could help with watching my grandaughter. My daughter is currently getting a divorce so we are trying to help have her get back on her feet emotionally and finanacially.

What is your budget buster?
My granddaughter I love to spoil her rotten. I know I need to cut back.

What is your favorite money saving tip?
I make sure I watch for the sales.

If you had an extra $1000 what would you do with it?

I would put it towards our credit card debt. I really want to make sure I got this debt paid off.

What is your best resource for frugal living?
I read alot of message boards on financial living.

Thanks Stephanie for sharing all of your story! Let us know if you would like to be profiled in the Frugal Five

Why same as cash offers stink

A friend bought a TV with the 1 yr no interest no finance charges. Had been paying perfectly on time, sometimes extra dollars toward their new TV.

On her next to last payment - she was late by 1 day. She opened her next statement...and saw $800 in interest. Yes even though she only had a $300 balance...they charged her interest going back to the original purchase amount.

Was I surprised? No way!

Here's how most of these deals work. If you borrow $1,000 on a 12 month same as cash plan, you have to pay it back within 12 months to avoid interest. That much is obvious. However, the term "same as cash" is very misleading because most of these deals are actually deferred interest payment plans. So, if you borrow $1,000 and pay $950 of it in 12 months and still owe $50, you will be charged interest on $1,000, not on $50! In other words, you will be charged back interest on the full amount regardless of the amount you paid on the loan during the 12 month "same as cash" period

We see these all the time on TV from appliances to furniture. While they may sound good, if you are late at all you will be paying BIG TIME for it. And credit card or financing companies are just so happy to get your money!

I have done the same as cash as few times, but luckily I haven't been burnt on it. However, if I won't do anymore of them. I will be paying cash!!

Getting rid of the credit card junk mail

I hate credit card junk mail. I used to get 7-10 new offers a week for a new credit card. Luckily I opted out https://www.optoutprescreen.com/?rf=t My mail did decrease and so did my clutter!

In the meantime send back to them in their prepaid envelope The Dave Ramsey Credit Rebellion letter

CONGRATULATIONS!!!! Your credit company has been chosen, out of all those in your area, to receive our special “Send us junk mail and get it back at your expense” deal.

I know this is not what you expected when you opened this envelope, but I did not expect your garbage when I opened my mailbox either. I considered sending the following

1. One chain link, symbolizing the people you have enslaved
2. One lollipop, symbolizing the suckers who use your credit cards every day
3. One miniature American flag, representing the members of congress you bought to pass recent legislation
4. One brand-new, stylish BRICK…representing the homes you have wrecked!

Many people on your mailing lists listen to The Dave Ramsey Show, so we are sending you the following suggestions instead:

• Take us off your stupid mailing list!
• Clean up your act, then your guilty conscience will let you sleep at night. No more will you jump at your own shadow, suffer night sweats, avoid eye contact with your children, or have terrible nightmares that are introduced by your former business partners, which feature three strange ghosts.
• Upon receiving your offer in the mail I was excited to see I would have had the opportunity to pay several fees, including the application fee, the acceptance fee, the annual fee, AND the monthly user fee. Seeing how you are full of fees, perhaps I can interest you in my $250 unsolicited mail fee!

We, The Dave Ramsey Show listeners hold these truths to be self-evident that all men are created equal, that they are endowed by their Creator with certain inalienable rights that among these are: Life without credit card debt, Liberty from ridiculous interest rates, and the pursuit of happiness which will be achieved when you finally get the message: Reply THIS shark!!!

Financial Freedom priceless

How much does financial freedom cost? In the vain of those MasterCard commercials, it is priceless.

Being debt free (or in my case credit card debt free ) really gives me a sense of financial freedom, well being and that is priceless.

Dave Ramsey words of wisdom

Some simple tips from Dave Ramsey... on getting your financial house in order

1. Pay Cash or Debit Card.... no credit cards You don't want a second mortgage
2. Get Instense it is about 80% behavior 20% math
3. Find a friend-an accountability partner
4. Sell the car if it is tightening the noose around you....
5. Remember Murphy Laws If it can go wrong, it will go wrong "Keep three to six months of expenses in place. And that will keep the black cats away from the door."

Dealing with Murphy's

Florida teacher wants out of debt

One thing we often hear very often when folks are trying to get out of debt is cut off the extra expenses or try to earn more money. It is always easy to do one, but something doing both can be hard.

Student loans and high credit card debt are affecting a Fort Lauderdale teacher.

He's a 27-year-old physical education teacher who works with special needs kids at a private school in Coral Springs. His income is $32,000, including part-time work during the school year and summer jobs.

He's single, lives in a large house with five roommates, and pays modest rent. But it's not the carefree life that it could be.


Add onto top of that he is 42k worth of student loans and $10,000 in credit card debt from spending carelessly.

He is currently coming out $300 a month short. He is playing the robbing Peter to pay Paul game. I have been in his situation with my debt and I know how stressful it is.

The suggestions from the financial planner include some simple advice:

1. Earn more Apply for higher paying teacher jobs. He is currently teaching in a private school.
2. Get a part time job during the school year.
3. Sell his 2006 car since it is has 14% interest rate and payment is $507. he would then buy something cheaper.
4. See if he could live with a family member rent-free
   
5. Work with the credit card consolidation company to lower rates or a lower payment

Two thing I would also suggest would be a budget as well as a small emergency fund. I also don't necessarily agree with asking a family member to move in. He is an adult and shouldn't be looking for a financial safety net from Mom and Dad. I do agree that he needs to earn more and as a single guy could be working 7 days a week to get out of this financial mess. If you are working 7 days a week, you don't have the time or energy to go out every night.

If you are in debt, there are way to get out of the whole. We had over 20,000 in debt that took us several years to get out http://www.budgetdial.com/news-Jan0105.htm

Frugal Five Meet Darren

Darren is hitting the big 30 this week and is a single guy from Indiana

What is your financial life?

I am single, no kids. I had rented an apartment but I, moved back in with my parents to save up for a sizable down payment on a townhouse or condo. I had 18k+ credit card debt, but now it's down to about 5k. I make a little under 30k a year.

What is your budget buster?
Video games! I'm a gamer. I gotta have the latest games.


What is your favorite money saving tip?
Eh, don't really have any saving tips. Just don't live above your means. Saving money was never my problem. I just didn't pay attention to my credit cards. I let it get out of control and I always just paid the minimum. But I've always been good at saving.


If you had an extra $1000 what would you do with it?

I would pay off more credit card debt

What is your best resource for frugal living?

http://www.savingadvice.com/ is great resource. Just reading the forums has helped me alot. Especially threads about the online banks
and their rates with the money market accounts. I'm going to open up one next week

Will having credit card in college make your life hell?

My first credit card experience is almost 19 years old. The allure of "free money" sometimes just too much for 18/19 year old kid that really doesn't understand what getting into debt really means. I had a number of college friends (and myself a few times) who whipped out the credit card, many times and said Dinner is on me.


10 ways that credit card debt can turn your college life into hell It might make your life difficult, but not hellish. Some of the reasons are a little too far out for me.


Some shout outs

Credit card debt make you get a job during college.

What is wrong with working a part-time job during college. I think it gives you a little bit of responsibility while working in college. It may make you think more about the value of a dollar. If you are working 15-20 hours a week, you may not be using the credit card as much. I did work all 4 years in school, while it didn't necessarily stop me from using the credit card, it kept me busier than I would have been partying.

Huge amount of credit card debt in college can cause sore relationships
The reason could be lack of money, lack of proper financial management, or simply not being able to buy enough presents to your girlfriend. My money was pretty private until my Mom found my credit card statement. She was pretty upset with me that I got to a balance over almost $2,000. I don't remember it causing too many problems with friends or my boyfriend at the time-it never really came up. Of course, once you are in serious relationship and looking towards marriage, the credit card debt can hurt the relationship.

Credit card debt affects the studies seriously.

It you are stressing about it, or you have a lack of concentration about it. Your grades may suffer, but to totally fail out of college. I know I was a little stressed out about it especially after my mom found my statements, but it never threw me over the edge and made me want to quit school.

My final thoughts is that high school kids and college students should take classes on personal finance to avoid get trapped into credit card hell. Once again I recommend picking up this book by Dave Ramsey called The Total Money Makeover: A Proven Plan for Financial Fitness

Frugal Five Meet Cathy

Cathy is a frugal grandmother from New York.

What is your financial life?
I have been married to my husband for 30 years . I have a 19 year old son still at home and a 28 year old daughter, married with 1 son. My daughter and her husband lived with us for a few years while they got on their feet. We have a mortgage and a second mortgage. We also have credit card debt is that is approximately $6000. (Check out Tips to get out of debt) We are looking to retire in the next 5 years or so.

What is your budget buster?
Gas is getting so expensive. I have been really trying to watch my driving.

What is your favorite money saving tip?
I like a good bargain. I watch the sales, never pay for anything full price and often buy on clearance.

If you had an extra $1000 what would you do with it?

I would put it towards our credit card debt. I feel that is hanging over my head.

What is your best resource for frugal living?
Using my own common sense is my best resource. There are a lot of great sites on the internet for learning about money and saving.

Thanks Cathy for sharing all of your story! Let us know if you would like to be profiled in the Frugal Five

Frugal Five Meet Yvette

Yvette is recently transplant to Florida who runs several wahm businesses including. Work at Home Business Buffs which helps newbies build a home business.

What is your financial life?

My income has been very erratic in the past few years since my husband retired! My husband decided to take our pension funds and invest them himself, since he though he could do better than the mutual funds they were in. Well, that was about the time of the mini stock market crash in 2002! Our funds were suddenly reduced by 2/3s! Since then we have recovered and now we are living the best that we ever have!
Our one problem is owning 2 homes. We've recently moved to Florida and we just did sell our Pennslyvania home, so that will be a lot of expense off of us. My husband has even been able to "gift" our kids in the past 2 years, because of our successful stock market ventures. He watches it carefully and is educated in making trades. In fact, he has recently hired our son to work with him! Michael has recently quit his "day job" to work entirely on the internet because he was being so successful. Now his father has insured him a paycheck, so he can be more secure.
Our credit cards are only 2, plus one for my business. We pay them off monthly, so no interest to pay. I'm afraid we do have a mortgage, new car pmt, etc, because my husband figures he can better use the money to invest with - he can earn more interest (20-30%).

What is your budget buster?

Hospital insurance and all those medical expenses are a huge drain. It adds up to over $1000 a month.

What is your favorite money saving tip?

Since credit card debt is so expensive %-wise (up to 20+%!), I advise paying your bills in total every month so you don't have the interest to pay! Paying the interest is a big chunk of your monthly payment! At least, pay extra on your cc debt each month to reduce it quicker so you can pay the total monthly. Do some scrunching and denial and don't add to those bills until you get them under control! (Check out Tips to get out of debt)

If you had an extra $1000 what would you do with it?

That's difficult to say, since it's not very much money anymore! I'd like to add it to my business account, so I could be a little more free in my advertising costs

What is your best resource for frugal living?

I've had my own Accounting practice and we've had retail businesses, such as a Cheese Shop, and now I'm working on the internet and my husband in the stock market, so we've learned a lot over the years. I read Financial Magazines , such as Inc.and the new one: Revenue.

Thanks Yvette for sharing all of your story! Let us know if you would like to be profiled in the Frugal Five

Frugal Five Meet Sharon

Sharon is a single women in her mid 20s who is trying to make sense of her financial life.

What is your financial life?
I am currently renting an apartment with 2 roommates. I have been working for 3 years and have a 401k with $5000 and trying to pay off my student loans. I also have $4000 of credit card debt that I am trying to get serious about. I am not charging anything new on the credit cards.

What is your budget buster?
Weekends It is very easy to spend a lot of money each weekend. I am learning to say no though and suggest more quiet evening with friends. I am also taking my lunch to work each day as well.

What is your favorite money saving tip?
Don't use credit cards-they have gotten me in a lot of trouble.

If you had an extra $1000 what would you do with it?
The smart answer would be to put it towards my credit card debt, but the most realistic answer would be to blow it on a vacation.
What is your best resource for frugal living?
I started to read Debt-Proof Living: by Mary Hunt. I also subscribe to a few yahoo and msn frugal groups.

Let us know if you would like to be profiled in the Frugal Five

Can I afford it?

The reason a lot of people are in credit card debt is because they don't ask the question- Can I afford it? They just pull out their credit card and say "Charge It"

Suze Orman does a great segment on her CNBC show called Can I afford it.

Some of the things that I have seen asked

Coach Bag for $500

I don't get the whole concept these high class pocket books. I don't think I have spent more than $50 a good bag and most of the time my mom gives me one for my birthday every other year. LOL

The 24 year old girl said she was debt-free but had a $5000 bill in collections and had over $400 on her credit card. She was going to use her work bonus on paying for the Coach bag. Suze denied her "Can I afford it?" No, no put that money towards your credit card debt-you have no business spending $500 on a pocketbook.

18,000 Harley

I thought for sure Suze was going to approve this one. The mid 40 guy makes good money-has $26,000 in personal savings/emergency fund and he was going to pay cash for the Harley. She said his 8,000 won't be 6-8 months of an emergency fund. She denied it! When you think about it good advice-bulk up more of the personal savings and he would do it once he gets the 6-8 months of an emergency fund.

She does approve every once in a while-she approved a 30 years for a $75k vacation home.

I have been enjoying Suze's money sass lately and really do need to pick up her newest book.

Authors and credit cards

This article interviews 5 different authors (Stephen King, Sue Grafton, Augusten Burroughs, Nicholas Sparks, Danny Scheter and talks with them about their experiences with credit cards.

A few stories were interesting- nothing outstanding. But I thought it was a good concept to get real life celebrities talk about their own experiences with debt and credit management.