On Tuesday, I asked what was wrong with my budget. The resounding thing I heard was I don't know (we can't all be money experts, now can we?). Almost everyone who offered advice (via email, in the comments, on gchat, or over the phone) included advice on credit cards. Here's some of my [random] feedback on everyone's advice.
1. Stop Using Credit Cards: Natalie mentioned that I should stop using the credit cards, which is awesome advice. Thanks Nat! This is true, but I wanted to note, that I don't [think I] abuse my CC now. The balances are high due to old debt (College, jobless, working for pennies, etc, etc). So, despite only using CC sparingly in 2009, my balances are still high and I need to stop cold turkey and not use them AT ALL, no excuses, no exceptions.
2. Pay Credit Cards Down: At least 4 people, including Well Heeled said to close my credit cards. They just said close 'em as if it's some easy thing I can just do. Like close a door or close a relationship. Yes, in my opinion it's easier to completely cut someone off with whom you used to be close, than to close a credit card. (Bright Idea: I shall start to think of my credit cards as ex-boyfriends. That means I'm done with them unless there's a life or death emergency.)
I digress. Paying credit cards off is difficult because as my salary increases I WANT to do more fun stuff with my money (and keep paying the minimum balances) vs. use my increase to pay off old debt. BUT I set a goal for what I NEED to do: pay down to 1-20% of total available balance and I'm going to do it!
3. Close Credit Cards - Your credit score looks at your available debt to used debt ratio. If I close a credit card it decreases the amount of available debt I have and thereby lowers my credit score. People have told me "Well I never had a credit card and my credit score is fine." OR "I only have one card and my credit score is fine" OR "I only have two cards and my credit score is fine." I'm happy for those people who didn't make the mistake of opening a gang of credit cards in college and shopping at the mall like clothes were going extinct, but I did and so I have to take different steps to obtain and maintain a high credit score.
Each time I opened a credit card, the available balance was added to my total available balance and now, no matter how many anecdotal and personal stories I hear to the contrary, my credit score WILL drop if close them.
Card #1 has the most history (can't close that) and #3 has the best interest rate (4.90% what what!) and the highest credit limit (can't close that). I could, maybe, possibly, consider closing Card #2 but unless I get a windfall of money or the credit orgs change HOW they calculate credit, iaintgonebeabletodoit.
Nope, what I need is a dose of act right (i.e. self-control) and a bag full of nos. No, I can't go on a trip. No, I can't come to your birthday party, baby shower, wedding, bbq or other function. No, I can't buy Cambodian breast milk at the grocery store or Miss Jessies products online, no I can't go shopping at DSW or Nordstrom or anywhere really. No, no, no, no, no.
*Sigh* This concludes: Get Tea's Money Right Week. Stay tuned for check-ins on how it's going.