Besides, many of you got so passionate about your plastic in your emails to me that I figured we’d all get a charge out of kicking around this costly topic again.

Since I’d rather see you kick the habit than kick yourself in the butt (I wanted to write ass) in the New Year, here are 5 MORE Ways To Screw Your Credit Card Company — and again, they’re all legal!

1. Stop staying loyal to “Loyalty Programs”

Years ago I played like a “good dog” and stayed loyal to a credit card loyalty program that really bit. The program appealed to my romantic dreams of flying for free on “points” and seeing the world for a mere annual fee. The problem was, I never seemed to collect enough points to get my gold card off the ground and the annual fee alone could have paid for a plane ticket home! Ouch!

I wrote about this sneaky credit card tactic in my book, 397 Ways To Save Money — and I lived to tell the dog’s tale.

If you think the cost of a “free” reward ticket or loyalty bonus is costing you a small fortune in fees at a higher interest rate, then do yourself a favor by doing some simple math. If the fees paid for your card add up to more than the free reward, then find yourself another credit card with a more attainable rewards program. It makes NO sense to stay loyal to a credit card rewards program that just doesn’t fly. Besides, loyalty is for the dogs.

2. Take a pass on “Convenience Checks”

Oh those credit card companies LOVE to send us stuff in the mail. They offer us 0% balance transfers, extra credit cards, and even offer teaser rates. But when your issuer sends you a little envelope stuffed full of convenience checks then do take a pass.

What are convenience checks? Well, they look like standard checks, but what they actually do is charge against your credit account at even HIGHER rates than regular purchases, and interest is often calculated immediately! PLUS many of these little check gems add extra fees to the mix — so you’re really giving your credit card company a BONUS by signing one of these guys. If you want to keep more moolah for yourself, then don’t sign your name to any of these convenience checks.

3. Stop paying an Annual Fee

Don’t you love that time of year when your credit card company bills that pesky annual fee directly to your statement? Wheeee! If you’re paying an annual fee for the privilege of charging in plastic then maybe it’s time to switch your credit card.

Many “premium” gold and platinum credit cards charge big annual bucks — money that could otherwise be used to pay down debt or saved for something that brings you real value. Since there are several no annual fee credit cards on the market, consider making the switch to save some big cash. After all, you do have the power to stop paying that “annual fee” if you so desire.

4. Don’t ever “Skip a Payment”

It’s that time of year when even modest holiday spending can add to an existing credit card balance, and the credit issuers know we’re a little strapped in January when it’s time to pay the piper! So if your credit card company makes you the offer to “skip a payment” then run for the hills and just say, “NO!”

Skipping a payment may seem like a deal, but think again. Not paying your minimum balance could hit your credit score, increase your interest rate, and most certainly stretches your payments over a longer term thus increasing the amount of interest you pay! Yuck!

Need convincing? Try this simple Credit Card Calculator to see how long it will REALLY take to pay off your balance!

5. Be wary of “Low Introductory” rates

So you’re minding your own business when a letter lands in your mailbox advertising a super low introductory rate on a new credit card. Since you’re carrying a balance on your current credit card with a 19% interest rate, how could this gift from the credit card gods not be a win! Well think again!

Credit card companies love to offer low teaser interest rates on newly issued cards — it’s how they make money after all! If you tend to carry a balance, this kind of offer may save you money. But if you’re not careful, these enticing low “introductory rates” can come with some expensive surprises, for example:

Lose the interest-free period on new purchases by skipping a payment or not paying off the whole balance! Do this and you might pay the regular (or higher) rate!

Add to your balance and see your payments applied to the lower interest rate balance first! It’s true, most credit card companies apply your payments to balance transfers and cash advances before they apply them to new purchases.

So before applying for a “low teaser rate” offer from the credit card gods do look this gift horse in the mouth. Be sure you understand all terms and conditions and ask the credit card company what transactions the introductory rate applies to, when the introductory period ends, and how your payments will be applied to all balances.

Phew! I think I’ve kicked this can enough for today. If you’ve gotten a kick out of this post then feel free to comment. Many of you guys respond to the email updates — and that’s cool! But to get your voice heard don’t be shy, click to the blog and speak up!

Your Two Cents: Got MORE ways to screw your credit card company? Or maybe you’ve got a credit card tip to kick around?

	397 Ways to Save Money Spend Smarter & Live Well on Less By Kerry K. Taylor

Sure, it’s not hard to get tricked by credit cards. With all the enticing minimum balance payments, high interest rates, and ease of use it’s pretty darn easy to fall prey to the power of plastic.

But unless you love paying the price for plastic, it makes good financial sense to get wise to the credit card game. Using your credit card the smart way and avoiding the common pitfalls will not only save you lots of money but might just screw over your credit card company and prevent them from getting your cash. You won’t feel bad, promise. Here are 5 legal ways to screw your credit card company:

1. Pay More than the Minimum Balance

If you’re stuck for the month and can’t pay off your credit card balance in full, then aim to pay more than the minimum balance. Paying the bare minimum on your monthly balance only prolongs the debt agony and increases the amount of interest you pay to the credit card company — and that’s how to get screwed!

Depending on the size of your debt, you may add thousands to your wallet each year by adding a few more dollars to your monthly payment. For example, on a starting balance of $2,200 with an annual interest rate of 18%, your debt would be paid off in 8 years and 6 months if you paid only the minimum balance of 4% of the initial balance. The total interest paid is a massive $1,193.54 on an initial loan of only $2,200. If you can’t pay your card off in full each month, try to at least double the minimum payment so you’re actually taking a bite out of the principal.

Want to see how much paying the minimum balance is costing you? Check out this handy Credit Card Calculator for the scary results. You might be shocked!

2. Pay Credit Card Balances in Full

Fully paying off your credit card each and every month is a sure fire way to screw the credit card company. With some credit card interest rates well over 18%, it’s easy to lose a bundle by not paying off monthly balances. It just makes good financial sense to keep that money for yourself — you worked hard to earn it after all!

Besides, paying off your credit card balance in full helps you to establish a good credit rating, improve your credit score or FICO score, and build an excellent credit report for lenders to reference if you’re in the market for a mortgage or a loan.

If you need convincing, here’s a 5 Minute Guide to Your Credit Report and Credit Score to get you thinking seriously about paying off your balances.

3. Pay in Cash

Skip plastic altogether by spending what you have, not what you hope to have in the future. By keeping honest with your cash on hand you won’t be borrowing against your future to deal with high interest credit card debt.

Besides, sticking to a planned spend rather then getting seduced by a sexy sales sign is how to win the credit card battle and ultimately win the war against plastic. If you’re feeling the call of plastic over cash, then try posting a sticky note on your card with a reminder not to spend beyond the cash you’ve set aside.

4. Negotiate a Lower Interest Rate

If you’re carrying a balance on your credit card, don’t be afraid to call your issuer and ask for a lower rate. Many lenders will cut you a break if you’ve been paying the minimum balance each month, and they may reduce your monthly interest rate if you ask nicely.

It costs you nothing to pick up the phone and negotiate a lower interest rate with your lender and could help you pay off your credit card sooner. A cut in rate from 22.5% to 15% on a $5,500 balance could save you almost $500 a year!

It’s the new math people — be a kind a courteous bill payer, ask for a better interest rate, and then kindly kill your credit card debt faster.

5. Students — Stay away from Free Frisbees!

Don’t get hit in the head with a piece of flying plastic by signing a new credit card application on campus. Credit card companies love to entice fresh-faced college students with free stuff like T-shirts, food, and Frisbees in exchange for a student credit card. These plastic peddlers often set up booths on campus to get your attention and to get you spending on credit sooner. Do yourself a solid and take a pass on this collegiate debt game play.

If you need a credit card while studying at school, ask your parents for help with finding a good lender and get an education in paying off the balance. There’s no sense in getting schooled by debt and getting taught a lesson in credit when you’re just looking for a way to pay for tuition.

There must be countless ways to win the war on credit cards so I might just add to this list in a later post.

UPDATE: Read Part Two: 5 MORE Ways To Screw Your Credit Card Company

Penny for your thoughts? Got another way to politely screw your credit card company and pay off your plastic debt sooner?

	397 Ways to Save Money Spend Smarter & Live Well on Less By Kerry K. Taylor

Credit card companies love it when you pay only the minimum balance since they earn a lot of interest while you spend years trying to pay off your credit card debt. Many credit card bills outline this minimum balance in bold just to highlight how little you need to pay back to stay in good standing.

But I want you to beat the minimum balance game. So I created the Credit Card Calculator to show you how many years it takes and how much interest you pay by sticking with minimum balance payments. So go grab your credit card statement, find your annual interest rate, and spare yourself from getting “the sads” while time is still on your side.

How to use the Credit Card Calculator:

Step 1: Open the Credit Card Calculator.

Step 2: Credit Card Balance: Enter the total amount you owe to the credit card issuer.

Step 3: Annual Interest Rate (APR): Enter the annual interest rate charged by your credit card issuer on your balance.

Step 4: Minimum Monthly Amount, Minimum Monthly Percentage: These are the minimum amounts you must pay each month on your credit card. The minimum payment is the greater of these two amounts:

• A fixed amount (for example, $15), or
• a percentage (for example, 4%) of the balance you owe.

Check your credit card agreement to see what formula your credit card issuer uses to calculate the minimum monthly payment you are required to pay on your credit card.

Step 5: Click Calculate. The Credit Card Payment Report displays below. Find out how many years it really takes to pay off a credit card when only the minimum balance is paid. You may just be shocked by how much total interest you’re paying. Hugs.

Use the Credit Card Calculator Payment Report to better understand the true impact of only paying the minimum balance on your credit cards. I’d love to see you beat those credit card companies by increasing your payments by just a bit and thus reducing your credit card debt faster!

More Credit Card Calculator Help:

• 5 Ways To Screw Your Credit Card Company
• 5 MORE Ways To Screw Your Credit Card Company

Got a credit card balance story to share? Have you beaten your credit card debt by increasing your payments? Ever used a credit card calculator to reduce your debt faster?

	397 Ways to Save Money Spend Smarter & Live Well on Less By Kerry K. Taylor

A mortgage meltdown is what happens to nice people when the dream roof over their heads costs more than they can afford. Now I’m not squawking about that whole subprime lending mortgage mess, but rather the case when well-intentioned folk go to the bank to get a regular mortgage and fail to add up all the real costs before moving in.

For most of us, our mortgage represents our biggest debt and the only kind financial experts consider good debt. But an over-your-head mortgage is one of the quickest routes to serious financial trouble, or even bankruptcy!

So before looking at current mortgage rates or shopping for that perfect home, perhaps take a second, chill out, and consider these 6 surefire ways to avoid a property with a mortage that leaves you in the poor house. Avoiding a mortgage meltdown and living in a home you can afford is preferable.

1. Crunch ALL the numbers.

It pays to crunch ALL the numbers and know ALL the costs before viewing homes and falling in love with a property. A too-high mortgage coupled with unaccounted for monthly costs could leave you resorting to credit cards and lines of credit to pay everyday expenses – a downward spiral that could cost you thousands in interest. And forgetting to add up all the costs of property ownership could leave you scrambling for extra cash.

So before setting foot in any property find out all the costs, even hidden fees, and do the math with a simple Mortgage Calculator.

Don’t Forget These Costs or Fees:

• Buyer’s or seller’s taxes
• Property taxes
• Paperwork filing fees
• Lawyer, realtor, banker, or land transfer fees
• Condo fees
• Maintenance costs
• Utility costs
• Parking costs

Also, don’t be afraid to see the impact that various mortgage rates have on your monthly costs by using the Mortgage Calculator. You’re less likely to feel the chill of a mortgage meltdown if you face the financial facts and crunch the numbers.

2. Practice Your Mortgage

Knowing what you can afford could spare you financial catastrophe in the future. An excellent way to see how a mortgage feels, and to know if you can truly afford it, is to practice paying it before you buy. Seriously.

How to practice your mortgage:

Pay your landlord your rent, and then take the difference between that amount and your anticipated mortgage cost and put this additional money into a high- interest savings account to use later for your down payment.

If you can’t come up with this additional monthly cash, then you know the mortgage price is too steep and you need to either continue saving for a bigger down payment or look at lower-priced homes.

3. Get a Home Inspection

Getting a home inspection done before you make an offer on a home may be the best money you ever spend. A home inspection costs around $500 and uncovers unseen problems that may cost you thousands of dollars down the road. A home inspection also serves as a negotiation tool with sellers, as they may fix flagged issues or reduce their selling price. Take the time to find the right home inspector, and be aware that it might not be the one your real estate agent recommends. Check references, ideally from homeowners who have been in their home for a few years so that any potential troubles have surfaced.

4. Don’t Buy Someone Else’s Renovation

Falling in love with the seemingly fresh look of paint, new flooring, or a freshly planted garden can be a financial disaster if the structure of the home is not sound. The previous homeowner may be trying to disguise something that really needs an expensive repair underneath. Be sure to look past a new bathroom or kitchen renovation and learn what lurks beneath the surface. You may discover that new plaster and paint are a facade disguising mold, water damage issues, or a cracked foundation. These repairs could cost you thousands and make your dream home a nightmare.

5. Buy a Smaller Home

Palatial palaces cost big bucks in terms of buyer’s fees, down payment size, mortgage interest, home maintenance (don’t forget lawn care), and utilities. Buying a smaller home can reduce all of these costs. For example, let’s assume you pass on a $300,000 mortgage in favor of a less expensive $275,000 loan. The mortgage price difference of $25,000 is substantial indeed. Assuming a 25-year mortgage at a 5% interest rate, your monthly payment is around $150 less, saving you a total of $18,844.26 in interest over 25 years, compounded monthly. Add it all up, and a $25,000-less-expensive home saves you $43,844.26 in interest plus principal on the mortgage. And this calculation doesn’t even include closing fees and maintenance costs! With all this saved money why not retire a year sooner? This is the new math, people. Need more incentive to play with the numbers? Try the Mortgage Calculator!

6. Negotiate Your Mortgage

Don’t be afraid to shop around and ASK for a better deal. Asking for a better mortgage rate is free and could save tens of thousands of dollars over the years you live in your home.

But before sitting down with a prospective mortgage lender, get your credit score so you know where you stand. You can find your score online for around $25 at Equifax or TransUnion or write in and get mailed your credit report for free. If you have a good credit score then be set to bargain. Ask lenders for a better mortgage rate, shop around, and play multiple offers off each other. A half a percent rate reduction could save you thousands over the span of your mortgage, so it’s well worth your time.

If a lender offers you perks like gift certificates for furniture, loyalty card points or a trip, take a pass. These so-called perks come at the cost of a higher rate. If the banks are not budging on their offer, consult with a mortgage broker. Mortgage brokers are paid finder’s fees by banks and these fees generally do not differ from bank to bank, so the broker has limited incentive to act outside your best interest, thus finding you the best deal possible.

Final Thoughts

These six surefire steps spared Carl and me from buying a toooooo expensive property while living in the uber expensive Canadian city of Vancouver, B.C. years ago. In fact, after running ALL the numbers and crunching the hard financial facts we opted against home ownership and continued renting our affordable apartment. This single decision was heart breaking since we both wanted to own our home and had a solid downpayment – but the math just didn’t work in our favor. In hindsight I’m relieved we continued along the renting path and saved more money until we were in a better position to buy in another, less expensive, city. For us, putting emotion aside and letting the numbers keep us sane saved us from a mortgage meltdown.

Got some additional tips for avoiding a mortgage meltdown? Got a mortgage story?

	397 Ways to Save Money Spend Smarter & Live Well on Less By Kerry K. Taylor

You might just be surprised with how much interest you’ll be paying with the wrong mortgage rate or be buried by the debt of a too pricy piece of property. It pays to do the math before falling in love with a home.

Use the Mortgage Calculator to:

• Learn how mortgage rates impact your mortgage payments.
• Evaluate if you’re ready for a mortgage refinance.
• Calculate monthly, weekly, or twice weekly payment schedules.
• Calculate mortgage rates, total payments, and total interest paid.
• Run the Mortgage Report to see how changing payment schedules lessens (or increases) the amount of interest paid.
• Make smarter financial decisions based on hard financial facts. You can’t argue with the mortgage calculator numbers.

How to use the Mortgage Calculator:

Step 1. Open the Mortgage Calculator.

Step 2. Mortgage Amount: Enter the total amount for your mortgage (for example: 325000).

Step 3. Term: Enter the length of the mortgage term. From the drop-down list, select the term duration (for example: Months or Years).

Step 4. Mortgage Rates: Enter your current mortgage rate.

Step 5. Payment Period: From the drop-down list, select the preferred payment period (for example: Monthly, Twice Monthly, Every Two Weeks, or Weekly).

Step 6. Click Calculate. Mortgage payments and mortgage rate results are calculated and display below. View number of mortgage payments, total mortgage paid with principal and interest, and total mortgage interest paid.

Step 7. Click View Report. A detailed Mortgage Calculator Interest Report opens.

Use this Mortgage Calculator Interest Report and Amortization Table to better understand the impact of current mortgage rates, to see how changes in mortgage payment schedules can lower or raise your interest costs, and to do the math before buying a too pricey piece of property.

Carl and I made this Mortgage Calculator just for you, so give it a try and use it as tool to keep you mortgage smart. Because banks are rarely our friends when it comes to signing up for a mortgage I think it’s best to take the initiative and DO THE MATH before shopping for a home or signing up for that so-called sweet mortgage rate. Lastly, before signing on the dotted line be sure to consider your total consumer debt and add your debt repayment to your monthly costs. You don’t want to get sunk by your dream home and turn the roof over your head into a nightmare.

	397 Ways to Save Money Spend Smarter & Live Well on Less By Kerry K. Taylor

Today a PR company sent me a ridiculous and financially harmful message. These PR people want you to shred your unpaid credit card statements to ignore creditors, to hide consumer debt, and to keep spending. Just buy their paper shredder (it’s only $69.99) and all “evidence” of your over indulgent “retail therapy” can be destroyed and hidden “out of sight”. I $hit you not. These people are serious.

Here’s the email:

Start out the new year by shredding out the old!

Dear Fox,

What could be a better way to start off the New Year? By shredding out the old!

As we approach the New Year and continue to navigate an ecomony [sic] that forbids the kind of retail therapy we women enjoy, many of us are looking to start off fresh. Depending on how budget-conscious one was in 2008, starting anew may require getting rid of sticky pasts.

[Company Name] has the perfect new product to accomplish such a task: the [Product Name]. It comes in red and silver and shreds up to eight sheets at a time. Best of all, its handle and compact size allows aesthetically-minded users to stow away the shredder with ease once all evidence of indulgences has been destroyed, thus keeping bills, credit card statements and receipts out of sight.

Not to mention, shredding is recommended as a key measure to prevent identity theft. Even during this economic crisis, we still need a little retail fix here and there, and now we can do it sans evidence!

For a product sample please contact Justine. The [Product Name] is available for $69.99 at [Company Name] stores and online.

Justine

Yes ladies, with your credit card statements “out of sight” you are free to “start fresh” with some retail therapy, despite the economic crisis. Hiding the evidence is the key to spending success splendor. Don’t fret your pretty face on financial frivolity since this shredder is “aesthetically” pleasing and matches your pricey pumps.

Fox’s response:

Dear Justine,

Did you write this poorly spelled sexist crap?

I am horrified by your shred it and financially forget it mentality towards credit card bills. Women (and men) have financial and legal obligations to pay their creditors. Besides, unpaid credit cards rack up big interest debt fast!

Do you know about Credit Scores? Those pesky bad FICO scores can determine who gets approved for loans and mortgages. Not paying your shredded bills is a sure fire path to bankruptcy and foreclosure. You can’t hide your financial woes in a paper shredder.

Sincerely,
Fox

Do be smart about spending this holiday:

• Do pay your credit card bills.
• Do be aware of media messages.
• Do spell “economy” correctly.
• Don’t be a Justine.

Are you horrified by this financially foul PR product pitch?

	397 Ways to Save Money Spend Smarter & Live Well on Less By Kerry K. Taylor

Before launching into this anti-debt rhetoric I thought I should consult Google for a nice definition of “good debt” just to be sure I’m not living on planet nuts. I must admit, I’m very surprised with Google’s response: “No definitions were found for Good Debt.” Snicker.

Google aside, most people living on earth would argue “good debt” is money borrowed for purchasing things that retain, and hopefully increase in value over the long term. These things would include borrowing for an education (student debt), a home (mortgage debt), or for your own business (business debt). At the outset, these examples of “good debt” make very good sense. However, what this simple definition fails to consider is borrowing money for perceived gains is high-risk speculation. Since people get absorbed with perceived gains, they also seemingly fail to anticipate the other expenses incurred with so called “good debt”. Let’s consider each form of “good debt” in detail.

1. Student Debt

Many students graduate these days with massive debt incurred from post secondary education. School is expensive, and many students and parents don’t have the funds to send junior off to school. Then why my beef with student debt? It’s simple, when taking on education debt many students fail to consider if the subjects they study can bear the financial burden of debt repayment. Will students who take degrees in Psychology, English, or History be employable in lucrative enough jobs to service and pay off tens of thousands in loans? Yes, I can hear all you English and History majors grumble. But I know several English majors who upon graduation found work at Starbucks. In some cases, these already indebted (and unemployable) students go back to school once again for advanced studies in the hope of improving their employment prospects. I’m not trying to be mean here, just pointing out some honest facts. The problem I think is students are led to believe student debt is good, and therefore it’s OK to study any particular subject without considering if the investment in time and money makes long-term financial sense.

Another beef I have with student debt is it’s easy for students to get loans. So easy in fact many students take on loans before considering ways to avoid debt, such as part-time work and scholarships. I’m really not trying to be insensitive to students as I’ve been on both ends of the student debt issue. I graduated from my first degree with zero debt, and then graduated from my second degree with a whopping 17K in debt. I’ve written and reflected on how I avoided student debt in my first degree and then how I paid off my student debt in six months in my second degree. I must admit, graduating with no debt is the highly preferable option.

2. Mortgage Debt

Another form of perceived “good debt” is mortgage debt. I’ve really dreaded writing this part, mostly because I hate telling people their mortgaged homes are both money pits and terrible investments. I dread conversations where my friends proudly tell me about their 25+ year mortgage and how small their payments are today. They really love to dig in and declare themselves superior to my renting self. They seem to think they’re building huge equity. Not true I say.

The sad truth about buying a house is the actual cost far exceeds the simple sticker price of the home. It’s not hard to spend several times the purchase price of the house when considering all the costs. For example, a buyer of an average $325,000 detached house who takes out a conventional 25-year mortgage will pay for that house twice in interest alone. In the illustration below I show a $325,000 house, at 6.5 percent interest rate, over 25 years (with $2,194.42 in monthly payments) to cost in total a whopping $658,326.98. That’s $333,326.98 in interest alone! Don’t believe me? Try my Loan Amortization Calculator for yourself. Better sit down first.

Isn’t “good debt” fun? Now add 25 years of property taxes, home insurance, normal maintenance, and add a new roof just for kicks and the total cost of buying this house could escalate to a million bucks, easy.

Now I hear all the homeowners out there howling, “But my home is an investment, property values only go up!” Not true I say. A house is a very inefficient means of investing. For starters, consider your house as part of an investment portfolio and tell me what percentage of the portfolio it entails? I bet most people’s homes comprise 50-75 percent of their total portfolio. Now tell me, when invested in a single piece of real estate, how diversified are you? An investor with most of their eggs invested in one basket is not diversified and is very open to market risk.

For my investment portfolio I highly prefer stocks. After inflation, a diversified portfolio of stocks returns 7 percent a year over long periods. The bonus with stocks is I can easily diversify and buy various sectors, including: Financial, Communications, Energy, Health Care, and Real Estate. I actually own real estate in the form of Exchange Traded Funds (ETFs). OK, if the stock market returns 7 percent a year, your house must be making you a fortune right? Nope. The sad truth is houses barely keep up with inflation in the long term. Over at MSN, a fellow with alias SmartMoney does some serious number crunching to show the average real return for houses over long periods is zero. He says:

Houses don’t appreciate any faster than the level of inflation over the long term, so forget about buying a home and put your savings into stocks.

I highly recommend reading his article Why Rent? To Get Richer! before getting angry with me. Ohh, and there’s no guarantee when selling your house the price will be up. Just look at the current sub-prime meltdown, or the deflated home prices in the early 90s, and tell me how fun it is to sell your biggest single undiversified investment during a downswing?

My final point on this matter is addressing those who consider my rent as money thrown away. Fair enough. I pay $1000 a month in rent. Let’s look at my earlier example, the homeowner with a $325,000 mortgage with payments of $2,194.42 per month. Given the alternative, I’m perfectly happy to give my landlord $1000 a month and save the home owner’s otherwise spent mortgage payment of $1200. I take that $1200 and invest in a portfolio of diversified stocks which will return 7 percent over time. Additionally, I save all the “other” costs the homeowner pays, costs on property taxes, home insurance, normal maintenance etc. In reality, I save $2000 a month by renting and I earn a higher rate of return.

Need some more proof? Let me introduce you to Millionaire Mommy. She’s a millionaire who sold her home and now rents. Her thoughts on Rent Vs. Buy: The Hidden Cost of Lost Opportunity are stellar and really resonate with me. Another good read is Jersey Gilbert with Is Your House Really A Good Investment?

3. Business Debt

It is a dream for many people to quit their indentured job of servitude and go into business for themselves. Everyone says being your own boss is the road to riches and financial independence. Watching the news it seems pretty simple, just look at people like Martha Stewart and the Google guys who risked it all to become billionaires. All Martha did was perfect pie crust. And the Google Guys, well, they just search for stuff. Success can’t be that hard, right? Well, maybe. But the honest truth is I don’t think most people have the smarts or the financial acumen to run a profitable business. Most people can’t manage their own personal finances, they don’t have an emergency fund, have little retirement savings, and carry considerable credit card and consumer debt. Now honestly, how the heck can a person with little financial smarts run a profitable self-run business? I think it’s a shame really. I’ve seen a few good people with interesting business ideas go completely bankrupt because certain “experts” led them to believe business loans and debt are the preferable path to success and riches. I think the big-bad-banks sell business loans as the preferable “good debt” path since all debt is good business if you’re on the other end of interest collection.

Despite my negativity on business debt, I’m not opposed to people starting-up a company. There are ways of going into business without going into debt. In today’s internet age it takes only $9.99 to buy a Web domain name and another $100 or so a year to get the site hosted. One no longer needs office space and storefronts to run an operation. There are indeed ways to avoid business debt. Get smart about it! Ohh, perhaps learn to manage your personal finances before quitting your indentured day job. Learning some basic money management skills and having an emergency fund can go a long way when starting a fledgling business.

4. Health Debt

My final point regarding the “good debt” lie is my most important. How much is your health worth? How much is your relationship with your spouse worth? How does debt and the feeling it entails impact your mental, physical, and relationship health? I don’t know about you but when I had “good debt” in the form of student loans I felt like s$it. I felt stressed, tired, and suffocated by the weight of debt. I often had chest palpitations, and I felt as though I were drowning. I also felt tied-down to a job I hated with no freedom or choice. The debt had to go, and I had to work hard to pay the beast off. My relationship also suffered. At the time, my then boyfriend was free from debt and liberated to enjoy some disposable income by eating out and traveling. I hate to say it but I kinda resented his financial freedom. To make matters worse, I was exhausted from working over-time and my libido was dead. I may be female, but I really can’t get a hard-on for debt. It doesn’t turn me on, it doesn’t make me feel good, and it certainly doesn’t put me in the mood to get naked. Libidos aside, the issue was plain to see – my “good debt” was an obstacle and it made me physically sick and emotionally exhausted to deal with it.

5. Conclusions on Debt

I retired my “good debt” seven years ago. I feel great today having zero debt and a healthy diversified portfolio. I think being free financially is phenomenal both emotionally and physically. I certainly hope I’ve made you think differently about “good debt” and why I think it’s a lie. Cause really, how can anything termed “good” make one feel so bad?

	397 Ways to Save Money Spend Smarter & Live Well on Less By Kerry K. Taylor

Yet, despite my lack of investment and money knowledge, I managed to graduate with my first degree without any student debt. Astounding, non? What is more astounding is despite my early success in managing my student finances, I somehow racked-up 17K in student debt during my second degree. How did I go from zero student debt in my first degree to a 17K pit of debt in my second degree? What did I do differently? Here are some tips I should have considered while studying the second time around.

Five ways to avoid student debt:

1. Go to an affordable school (or one close to home):

Some colleges and universities just cost more than others. I discovered this truth when I paid my first year tuition at an Ottawa-area university. For some reason, my communications courses cost less than those same courses at a Toronto-area university. The programs were similar and achieved the same result, however the price tag was very different. Over the span of 4 years, I probably saved myself 5k in tuition fees. I also discovered that by attending school close to home, I saved considerable money on the following:

• Going home for weekends and holidays: An easy car ride costs far less than a train or plane ticket.
• Laundry: I would take my laundry home on weekends and save on detergent and coin operated laundry machines.
• Food: I would eat weekend meals at home and even take some food back to school with me.
• Utilities: My father loved the movie E.T., and would often give me money for my phone bill telling me to “phone home.”

2. Get a scholarship:

Some people are just darn smart and manage to score a scholarship or bursary for school. I’ve seen numerous scholarships awarded to a variety of students, including: nerds, jocks, those with special talents, and those with organizational affiliations. I’ve seen students score high-value scholarships just from applying to a variety of competitions. When I entered my first degree, I landed a generous university scholarship by having strong high school grades. I also managed to keep my scholarship by maintaining my academic standing on the honour roll. I figure, working hard and being a nerd saved me 7K.

3. Live at home:

Living away from home costs big bucks. Students that stay home for school save money on food, residence, utilities, and transportation. I think the biggest expense with going away for school is the “going away” part. Living expenses are just darn expensive. Of course, living at home may prove difficult if your parent’s home is not near a college or university. I wasn’t able to live at home during either my first or second degree. I had friends though who lived at home for several years during and after their degrees. These friends of mine saved huge bucks on living expenses. I really hated them, sometimes.

4. Buy used textbooks:

Some courses use the same textbooks year after year. Course material in calculus, chemistry, and computational theory never seems to change. I saved lots of money during my first degree by buying used and abused textbooks. Some students get all caught up in buying the latest edition or just want to crack a fresh book spine. Not me. I attended book sales, viewed “for sale” boards, and even called senior students to buy their books for less. Saving $100 or more on every course’s book list really added up!

5. Do co-operative education:

Some college programs offer students co-operative job placements with participating companies. For me, being a co-op student really saved me big bucks. Not only did I gain valuable job experience, but I earned school credit and got a decent pay check to boot! If your school offers co-op job placement, APPLY. On the job training not only lines your pockets, but the experience is really priceless.

6. Get a part-time job:

If your academic program does not offer co-op job placement, may I suggest working a part-time job? During my first two years of school I worked several part-time jobs to help pay for tuition. Every little bit of money really helps to fend off the evil pit of debt.

How did you get though school financially? Did you graduate debt free?

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	397 Ways to Save Money Spend Smarter & Live Well on Less By Kerry K. Taylor

Apparently, the average amount of debt a student carries upon graduation is about 19K. So really, my 17K wasn’t soo bad. But still, looking back on those early days makes my stomach lurch and my head ache. Back then I knew that debt felt bad, and I wanted to get the debt monkey off my back as soon as possible. So I made the commitment to myself and to my financial future to get outta student debt fast.

Here’s how I paid off my student loan debt in six months:

1. Negotiate your first job offer:

You have your degree, now use it! The most important action I took in paying down my student debt was to not settle for my first job offer. So many new grads get excited with their offers and accept them quickly in fear it’s the best they will get. Not true I say! Companies exist by keeping their costs down, hence paying their new graduate employees as little as possible. When you get your first offer (congratulate yourself for starters), and then negotiate for a little bit more. When I got my first offer, I thanked the company wholeheartedly for their offer and stated my excitement towards the position and working with their team. I also mentioned how I felt the job was a good fit for my skills and my direction. I kept the happy feeling going by saying I was flexible with compensation, however, would the company consider $X amount more as my skills were solid in areas A, B, and C. Surprisingly, this has always worked for me. While my fellow graduating students accepted their first offer, I negotiated better compensation.

2. Keep living like a student:

You’ve been living the life of a student up till now, so keep doing it! When I graduated from school I kept my same inexpensive apartment, my same bus pass, and my same habits. By continuing to live as I did when I had no money, I didn’t increase my cost of living and consume all my newly earned salary. Instead of keeping up with the Jones, I kept up with my loan interest and paid down lots of loan principal up front. Paying down principal quickly prevented my loan from increasing in size with compounding interest. In fact, since my loan didn’t start accruing interest until I was out of school for six months, I knew I had some time to pay it off before interest became my enemy.

3. Use all available tax credits:

In Canada, students get tax credits for tuition payments and the education amount. Back in my student days, I would file my tax return and use all my credits from my “Tuition, Education and Textbook Amounts Certificate” (T2202A). Sooo many students get this form and “loose it”. Well, let me tell you, if the good people at the Government of Canada are going to give you a break, you’d be silly to squander it. So keep all education tax receipts and use them towards paying less tax. The tax savings usually got me a refund, which I then applied to future educational expenses, and hence borrowed less money and accumulated less debt. If you live in the USA or another country, do yourself a huge favor and familiarize yourself with student tax credits in your area.

4. Save for retirement:

New graduates always laugh at me about saving for retirement. They say “I’m only 20-years-old, why do I need to start saving now?” The answer is simple, more tax breaks. When you begin your new job and start pulling in a nice salary (cause you negotiated from #1), you will pay more tax! Welcome to being an adult. BUT, if you start contributing to a Registered Retirement Savings Plan (RRSP) through your company or on your own, you will pay less tax. Along with paying less tax, contributing to an RRSP has the added bonus of giving you the feeling of growing a nest egg. Let’s face it, working hard and having nothing to show for it but debt repayment isn’t exactly fun. So growing some savings can really make you feel good. When I contributed to my RRSP way back then, I took my tax refund and used it to pay down more student loan debt. Consider this tax break the new math: you contribute to retirement, you get tax breaks, you get tax refunds, you then feed the refund to your debt. You win the “get outta student debt game!”

5. Delay buying stuff:

I’ve seen sooo many new graduates land their first job and then go out and blow their pay check on crap, or stuff. They might buy a new car, new stereo equipment, or rent a bigger apartment. Heck, I’ve even seen new grads buy a new condo! My advice is to delay buying stuff. If you really want to get out of debt, your goal should be to pay it down. Buying stuff just fills an emotional need for the moment, and then the consumer high is gone. I really hate stuff, and I often call stuff crap. After I graduated I bought what I needed for work, which was clothing. That’s it! I saved myself from the “buying crap” mentality and directed my earnings into my debt. It worked!

How did you pay off your student loan?

fox

	397 Ways to Save Money Spend Smarter & Live Well on Less By Kerry K. Taylor

I must be weird. I don’t have lines of credit, maxed-out credit cards, and most of my paycheck goes directly into savings. I do have nice things though. I purchased new furniture this year, I participate in an expensive sport, and I have a stunning diamond ring.

So why am I worth six-figures while others shuffle debt?

Do I have a lucrative job? Nope. I make an average salary for my age group, according to the November 2007 issue of MoneySense Magazine.

Did I win the lottery or inherit buckets of money? Nope. I’ve never played the lottery, and my family is alive and well. Although I have been promised a pretty set of china tea cups from my grandmother.

Did I play the stock market and strike it rich on a flashy investment? Nope. I’ve invested small portions of money slowly over time. I invest in index funds and ETFs. I’m pretty boring about investing, actually.

Do I own a house, condo, or other real estate? Nope. I am a renter and have been renting for well over a decade.

So, how did I get to be worth six-figures and still afford some nice stuff? It’s pretty simple really, here’s how:

1. Rent:

I am a proud renter. I don’t pay condo fees, mortgage interest, or maintenance. I save the money that would otherwise go towards mortgage interest and invest it. My rent is 1K a month. In the past six years real estate has gone bonkers in terms of pricing. Renting has been the better dealio after running my the Rent Vs. Own numbers in my city of residence. With so many people up to their eyeballs in mortgage debt, I feel pretty good with having growing (and diversified) investments.

2. Live below your means:

Everyone always says to live below your means…but I don’t think people really get it. Living below your means requires one to spend far less than what they earn.

3. Track the moolah:

I figure if you’re going to live below your means, you’ve really got to know what your means entail. You’ve got to track the money flow. I use Quicken, and I track every penny. Yes, EVERY PENNY.

4. Don’t buy it today:

Most people have a hard time delaying gratification. They want the latest and greatest “thing” now, today, pronto! By delaying gratification and not buying the hot new toy today, I save lots of money by buying used or discounted items tomorrow. It’s amazing how prices of gadgets and stuff drop after a few months on the market.

5. Buy used:

I tend to buy lots of used stuff. My dining room furniture was purchased used from craigslist.com. I’ve also purchased used sporting equipment from kijiji.ca. My sister also bought baby goods and maternity clothing used from these sites. Buying used saves A LOT of moolah! Do yourself a huge financial favour by browsing Buy and Sell lists before hitting the shops.

6. Don’t buy crap:

The best way to avoid debt is to stop buying crap. Most of the stuff out there is crap. Crap doesn’t hold it’s value. Crap takes up space. Crap is stuff you use a few times and put it aside in favor of the next crappy purchase. Crap is bought to perhaps help feel emotionally better one day, fill a short-term desire, or as an unplanned splurge. Crap costs you money. Avoid crap.

7. Move the moolah:

This is really simple. Every time I get paid, I move a portion of my moolah to a savings or investment account. I move my moolah every pay, without fail. Some people call this “automatic savings”. I just call it common sense. I figure, why I am working so many hours if I have nothing to show for it at the end of the week! Moving my moolah every pay is the significant reason why I am finally sound.

8. Get rich (and skinny) by brown bagging lunch:

I bring my lunch to work everyday. I figure the average lunch costs about $10. Doing the math, $10 X 5 day = $50 bucks. Doing more math, this is $200 bucks a month! The yearly total is: $2,400 for just lunch! OUCH. Besides, eating out can be pretty unhealthy. I find that bringing my lunch everyday not only saves me big bucks, but I can control the healthfulness of the food I eat. So yes, I get rich and skinny at the same time.

9. Make dinner at home:

This is really a continuation of item #8. I tend to plan my dinners weekly every Sunday and prepare LOTS of leftovers. I then use the leftovers for my weekly dinners and some lunches. I save HUGE money, lots of time, and stay skinny!

10. Bike to work:

I don’t own a car. I haven’t owned a car in over 12 years. Biking to work everyday makes me wealthy and skinny at the same time. It’s kinda funny how all the free and inexpensive forms of transportation can make you slim and rich. If you live in a city with good transportation it’s pretty easy to ditch your car and take transit, or better yet, ride your bike!

I have a feeling I will be adding to this list over time. I have many tricks for saving money and keeping healthy. What are your tips?

fox

	397 Ways to Save Money Spend Smarter & Live Well on Less By Kerry K. Taylor