In God We Trust

Teaching You How to Get OUT of Debt and Live Debt-Free

Archive for the ‘Debt’ Category


Sometimes it takes a few hits to your backside to get your attention. It did mine, that’s for sure.

The Setting

The other month, I signed up for a credit card from somebody – for the purpose of saving 15% or getting Free Shipping or some other some-such benefit. Gotta save where you can, right? Seems like the charge was $10 bucks or so.

The bill arrived in due time, and I put it in my Bill Place. (Keeping your bills all in one place sure makes the bill-paying process so much easier.) Somehow, that month, I got a bit pre-occupied, and didn’t sit down with my bills on schedule, and let it slip a week or so – probably more on the “or so” side…

The Hit

To my dismay, the Due Date for the new card was a few days earlier than my Bill-paying session… Arrrrrrgggghhhhhhhh!!!!!!

I sent the check anyway.

The next month – you knew this was coming – I got a new bill that included a $39 Late Fee charge. Thirty-Nine Bucks! And, a $1.50 Minimum Service Charge Fee…

Oh yeah! I’m the Financial Wizard, I am…

The Lesson

So, the lesson is two-fold.

1. Don’t sign up for credit cards just to “earn” some sort of Reward.

2. Pay Your Bills On Time.


If you have and use a credit card, it seems reasonable that there should be some Rewards for using it – right? I mean points to use for travel or gifts, cash back, lower interest rate on other accounts with the same outfit.. Things like that.

That way, whenever you use the card, you are being a Good Steward and getting double-duty from it.

The trouble is that these rewards will become a primary decision point between using the card or cash. They will also tend to cause you to spend a bit more on something than you should. “It isn’t on sale – BUT! I’m getting points…!”

Ignore the points when you go to use your cards. Think, “Can I pay for this?”

Paying Bills On Time

The major lesson is that paying bills late costs plenty. Well, you already know that, I’m sure. But how to get out of the whirlpool of increasing debt – THAT’s the question…

Obviously, paying your bills on time will eliminate those horrendous Late Fees. So, paying bills with a system makes it easier to avoid these fees.

The Envelope System

One of the ways to pay on time is to handle the bill once. Open it when it arrives. Write the check for whatever payment you have planned for that account. Put it in the envelope, stamp it, and put the “Mail Date” in a corner of the envelope. File the envelope in a convenient place. Enter the amounts in your budget tracker.

Every day, look at your bills and put the envelopes due that day in the mail… Done.

Two troubles with this method. First, You are constantly reviewing your bills. I guess this is actually a benefit early in getting control. But, it can be stressful.

Second, you really don’t have as much control of your finances as you think. You can’t take the time to review your budget and progress every day that a bill arrives. You might have something else planned, so you put off handling the bill – Ooops. Late again…

The Pay When Paid System

I preferred this system when I was working. I got paid twice a month with one company, and every 2 weeks with another. I made it my habit to sit down with the bills a couple of days after payday and paid upcoming bills.

The advantage here is that I’m only dealing with my finances a couple times a month. I can concentrate on the task at hand. It is a planned activity. I can also get all my due bills off at once.

Who cares if they have my money for a few days longer than they could? The benefit to me would be fractions of pennies, while the benefit of having it gone is that it is PAID on time.

The Automatic Payment System

I’m finally a convert to online banking. It took me plenty of time to get used to it. But, now it is the best thing since MP3 Players…

On all my credit cards, I have arranged the monthly bill to be paid in full and on time. This takes that bill out of my hands – sure, If I need to, however, I can modify how they handle This month as my finances dictate. So, though it is an automatic withdrawal from my bank account, I am still in charge.

And, I avoid those stupid Late Fees.


Late Fees cost Americans Billions. These Billions go to the banks and financial institutions – as they should. However, by avoiding them, Consumers can better choose to spend those dollars in ways that benefit the family, not the banks.

Pay On Time…


This day, President Barack Obama signed legislation limiting how Credit Card companies can charge or change fees and conditions. It is hailed as a boon to the roughly half of Americans who hold $2.5 Trillion in Credit Card Debt…

I vote for the consumer.

Yahoo News reported:

Obama made clear that he didn’t champion the changes with the intention of helping those who buy more than they can afford through “reckless spending or wishful thinking.”

“Some get in over their heads by not using their heads,” the president said. “I want to be clear: We do not excuse or condone folks who’ve acted irresponsibly.”

And yet, he said, for many of the millions of Americans, trying to get out of debt has been made difficult and bewildering by their credit card companies.

As good as it is to have Credit Card companies exhibit a bit of restraint on squeezing their captive market, it is better that their market abandon them.

By this, I mean that you should rejoice that it will be easier to get out of debt – and then do it. Get Out of Debt. The only way to beat the house is to get out of the game. Get out of debt.

Let me know if I can help.

John L


Actually, saving money is much easier than making money, and the end results are even better. 

Consider this:  You are shopping and see a shirt on sale.  It’s not your best color, but you do have at least three pairs of pants it will go with, and the price is unbelievable.  It was normally a $40 shirt and is now just $10!  Even though you don’t have cash with you, you simply cannot pass on this deal, so you dig out the credit card and purchase the shirt immediately saving $30!  In actuality, you didn’t save anything.  You spent $10 on something you didn’t need.  Unless you pay your entire balance on your credit card purchases by the due date, you will also end up paying interest on that shirt for the next 15 to 25 years.  WOW!  What a bargain!  NOT!

Saving money starts with simply not spending it.  If you make an impulse purchase or need to rationalize your purchases, you are literally throwing money away.  You need to define the difference between needs and wants, and begin to eliminate the wants from your purchasing.


In order to survive everyone needs food, water and shelter.  Everything else falls into the want category.  This sounds a little harsh doesn’t it?  I’m not advocating that all of you eliminate everything else from your lives, but to begin recognizing the differences between needs and wants. 

Let’s look at the need for food.  You need a balanced diet to survive and stay healthy.  A family of four can purchase all the necessary items for a tasty and balanced diet from a moderately priced grocery store for $300 to $500 a month.  I’ve done it for far less during tough times, but let’s allow for big appetites.  If you are spending more than this, you are going well beyond needs and getting wants.  Drive through and take out restaurants are not usually healthy, and will take a disproportionate amount of your monthly food budget.  You may rationalize fast food… too tired to cook, don’t have anything in the house, kids want pizza, etc., but these are wants, not needs.

You need water… not bottled water which is expensive and bad for the environment, but you should drink lots of water all the same.  If your tap water is bad tasting or you are afraid of contaminates, purchase an inexpensive but efficient water filter for your home.  I keep tap water in pitchers and water bottles in my frig so I can have cold water handy.  Needs versus wants.

You need shelter.  Shelter can include your home, clothing, and your heating and cooling costs.  So many people live in houses or apartments that are far too big or deluxe for their income.  If you are spending more than 1/3 of your income on housing, you are satisfying wants, not needs.  The housing market problems and foreclosures happening all over the country right now are a result of too many people trying to purchase homes well beyond their ability to own or maintain.  Many of you have already been affected by this, and many more will be feeling the pain within the next couple years. 

You can save a huge amount on utilities with just a few simple changes.  Turn off lights when you leave the room.  Keep the thermostat down (or up) depending on the climate and time of year.  Add (or remove) layers of clothing.  Lower the thermostat on your hot water heater.  Take shorter showers, and don’t let the water run while you brush your teeth or shave.  There are so many more little things you can do, and almost every utility company has cost savings suggestions on their web sites. 

I included clothing in the shelter part, because we need clothing basics to cover and protect us from the elements.  Two or three basic outfits for each season of the year are necessary.  You probably need 2 pairs of shoes if you are employed.  One for work, and one for "play".  If your work place requires a suit or dress clothes, you need two or three basic outfits for work.  That’s it kids.  The rest of the clothing you buy or own is simply to satisfy your wants. 


This one is easy.  From that cup of "fourbucks" coffee you purchase on the way to work, to your stop for dinner on the way home fits into the want category.  Cell phones, cable TV, daily newspaper, books and magazines, almost everything you spend money on fits into the want category.  The only want that is hard to get is this:  I WANT to save money and get out of debt.

Knowing the difference between needs and wants

Only you can dissect your spending into needs and wants.  I can’t do it for you, and neither can your spouse or best friend.  You need to make a decision and then begin to track all of your spending for at least 1 month.  Write down everything you purchase or spend money on.  Include all payments on all debts as well.  At the end of each day, honestly examine your expenditures and write down whether it was a need or a want.  If you are completely honest with yourself, you will find that almost ALL of your purchases are satisfying wants, not needs.   Once you define the difference between wants and needs, you will begin to find it easier and easier to give up some of the wants.  This is the biggest and easiest way to begin saving money. 

If you are reading this, it must be because you recognize that you are having difficulty.  Take me up on this challenge.  It will make a difference.