I spent my summer in a financial coaching certification program and I thought I’d share some of the more amusing and scary things I learned, with some useful tips and magic spells thrown in…
Jargon:
- What I and every other normal human call an emergency fund the textbooks like to call the “current ratio.” Anyway, if you’ve taken my webinar you know the important thing in life is to have an emergency fund of at least 3 months. The important thing on my test was to call it a current ratio of 3.
- Grace period on credit cards: I knew what a grace period was and you probably do too – it’s that time between when your billing cycle ends and when your payment is due, during which you accrue no interest. But did you know credit cards are not obligated to give any grace period at all? And some don’t, meaning you start getting charged interested as soon as you buy something. Like that day. Most cards do offer a grace period but if you have poor credit or are using a secured card, check to make sure!
There are some wacky rules for debt collectors that can work in your favor:
- Magic spells to prevent car repossession: There is one surefire defense against having your car repossessed. Repo guys are allowed to hook up your car to a tow truck and haul it off. They can even break into the car to do so – totally legal. But if while they are trying to do that you say the magic words “Don’t take my car” they have to shuffle on home empty- handed. For real, this is a legal thing.
- Suing for “loss of happiness”: Did you know collection agencies have to follow a very specific set of rules? A full list of rules can be found at https://www.consumer.ftc.gov/articles/0149-debt-collection but what I found really amusing is that if the collection agencies’ do not follow the rules you can sue them. What I especially loved is that courts award damages for among other things “loss of happiness, loss of sleep, tension headaches and crying spells.” Oh, and kind of like the magic words to stop repo guys, you can send a magic “cease and desist” letter to stop collections people from calling you. And then they legally…just have to stop. Some pros and cons here.
Credit card and student loan companies – GAH!!!
If you been to my live presentations or attended my 5 Tips webinar you know about compound interest and that it works for you when you invest and against you when you borrow. But did you know that credit card companies and even student loan companies often compound your interest DAILY while many investments only compound monthly? That’s right, DAILY, people! Every frigging day that you owe your credit card companies anything they are making sure to figure out how much that is and put it on top of the pile so that tomorrow when they repeat the process they get interest on yesterday’s interest as well. This makes a difference.
So you know what you need to do – get the debts paid off as quickly as possible so you can put more money to work for you.
Yeah, I know easier said than done, but just start. Anything helps even if you just carve and extra $50 out of your budget each month to put towards paying off debt. Starting is the most important thing you can do. Make a commitment to any amount of money that feels possible now and go from there.