Today I spent the afternoon with my mother and grandmother for Mother’s Day. We went for lunch at Swiss Chalet, one of my Grandmother’s favorite restaurants. Then we all went to the garden center and and bought flowers for our gardens. My mother and I paid for my grandmother’s flowers, of course.

Today I realized the tradition behind the garden. For centuries women have been the carriers of important pieces of knowledge. Home remedies whipped up from herbs grown in the garden. How to make great tasting food - again from the garden. Maintaining the life, giving life and the garden is no exception: we provide flowers so that the bees and the pollinators can maintain our food supplies for centuries to come.

The importance of spending mothers day with my mother and her mother, tending to the garden was not lost on me. I felt proud to have inherited such vital, divine knowledge from my family.

When it comes to money, we should also ask what knowledge we have inherited from our families. In our modern family, it often varies who is the keeper of the family budget. In many cases there is no family budget. It is important for mothers and fathers to spend time thinking about what sort of money knowledge they are passing on to future generations. Make a special effort to show your children the good habits that you want them to take away from you and then show their children so that you can leave a family legacy of money tips and tricks - and you can be confident that your children will have more than garden remedies for colds, but also the knowledge that will leave them financially secure, healthy and independent!

This week I have been highlighting tips and tricks for the family that is planning for their student that is on their way to school in the fall. With articles 1 “the cost of an education” and article 2 “what is a healthy student diet” about student finances, this would officially be part 3 in the series. Today I take a slightly different look at finances and think about common mistakes that students make and how to avoid them:

1. My power’s been cut-off
2. The credit card
3. Mom, can you take fluffy?
4. The second job
5. The car loan

1. My power’s been cut-off

There is no reason that this should happen to anyone. Have system for paying bills. This is one that I recommend:

1. when a bill comes in open it immediately.
2. check your monthly budget and if it is the same or less than what was budgeted than take a note
3. if it is greater than, make sure there is enough to cover it in your rainy day fund
4. go to your bank account(s) and pay it immediately
5. keep the receipt of the bill (record of payment) in a file labeled “month”, so if it is the month of may, the file folder will be labeled “may” and will contain all of the bills from may. You can also keep loan documents, receipts and any other important financial documents for may in this file.
6. at the end of the year, compile all of the files from

This system is greatly enhanced if you can bank online or over the phone. If for any reason you cannot pay a bill on time, call the company in advance and explain your situation to the. Ask them if you can pay them late without loss of credit or having your services removed. Most companies are extremely reasonable if you contact them in advance.

2. The credit card

The Financial Consumer Agency of Canada reports 85% of Canadians own a credit card, and 58% have at least two. Sadly, roughly one third of these people aren’t exactly sure what the annual interest rate is on the card they use the most. While the federal agency doesn’t break things down by age, it is highly likely that students are even less aware of credit card costs than their parents – which is too bad since cash-strapped students are the very ones who can least afford costly plastic. Most of them haven’t developed a credit history, have little, if any, disposable income and, in many cases, already have student loans to repay.

Regardless, the abundance of on-campus offers giving low introductory rates, freebies, and bonus airline miles, are going to get a lot of students into trouble. Many students struggle because they think having a credit card makes them grown up and independent, or because they want to keep up the lifestyle their parents provided them at home or, worse still, they like the lifestyle of some of their new, wealthier friends.

Universities and colleges themselves play a huge role in the current trend of high student credit card debt. Over the years, many welcomed credit card issuers but now, worried about pressure sales, most are trying to monitor or even restrict the activities of credit card companies on campuses.

Still, credit cards can be a useful tool for students. Here’s what you need to know before getting a credit and getting in over your head:

Read the fine print

Many cards offer low or no-interest introductory rates, however these are usually good for only a few months. Students without a credit history should try to find a credit card with an annual percentage rate that matches their age – around 18 or 19% or lower right now. Not a bargain by any means, but a competitive rate.

For a good overview of what’s available on the market, the Financial Consumer Agency of Canada regularly publishes a cross section of credit card information. Go to:

publications canada
Stay on top of things

Try to pay off your balance in full each month. If this isn’t possible, make sure you send more than the minimum payment required. You can still accumulate debt by making the minimum payment. Figure 1 demonstrates how one person making the minimum monthly payment vs. a second person making more than the minimum monthly payment on a credit card debt of $1000 with a yearly interest rate of 18% will fair over time. Using minimum payments of 2.5%, it will take person one 153 months to get rid of their debt, and will pay $1,115.44 in interest (more than the initial value of their debt!). Person two makes fixed payments of $50.00, and it only takes 24 months to get rid of the debt, and he/she will pay a mere $197.83 in interest. Remember, your credit rating, a numerical measure of creditworthiness used by lenders to determine whether you’re a good risk, can be affected by late payments or a visit from a collection agency.

Figure 1. Person one pays the minimum monthly payment vs. a second person making more than the minimum monthly payment on a credit card debt of $1000 with a yearly interest rate of 18%.

It’s also a good idea for new users to stay within their credit limit to avoid penalties and reserve available credit for emergencies. Demonstrate that you have financial capacity – the ability to pay back your debt – by keeping your account balances less than 50% of your available credit.

To understand how debt, interest and payments work, take some time to see what you can afford at this website:

http://www.creditcanada.com/debtCalc.asp

Prepaid cards

Prepaid cards allow you to set spending limits and monitor where you are spending your money, both through monthly statements and through Internet accounts that show daily transactions. They work in a similar way to gift cards, in that they’re preloaded with cash. You transfer money from your own chequing accounts to the card which can then be used like any other credit card to make purchases.

But prepaid cards aren’t cheap: one product, MyCard (now operating as HorizonPlus), costs $39.95 to sign up, plus a $5.95 monthly maintenance fee and $2.95 each time you reload the card with cash.

Shop around

Card companies often target university students, however the best rates are typically found off campus. According to some studies, half of all college students have more than one credit card, compared to roughly 38% nationwide. Most have paid a late fee at some point, and the likelihood of that increases with the number of cards owned.

Paying bills on time is extremely important and if you get a credit card, it should fall into the top of your list of things to do each month. A credit card means a credit history, and a poor payment history can translate into big trouble when it comes time to buying a car or renting an apartment.

3. Mom, can you take fluffy?

If you are considering a pet for company, consider this: pets need money and attention for the next ten-twenty years of your life. You cannot travel the world without finding someone to watch them. Vacations also require pet sitters. Cats require litter and food, dogs require food, bones, toys and daily walks. Smaller pets need cages and litter. All pets will have to see the vet at least once in their lives, but as a pet owner I can tell you, your pet will get sick the same month you have spent the pet budget. Saving for pets is really important. Pet health insurance is a possible consideration. Once you commit to the responsibility of a pet, remember that a constant fixed cost is associated with that responsibility and be sure you can afford it so that you avoid this mistake.

4. The second job

Many students work while they are in school. I have personally taken a second job while in school. If this has to be done, I recommend taking a job at the school. There will often be job postings with the university in the financial aid office, in each department, in the library and the career center. Try to keep your work hours to less than 10 hours per week so than you can continue to concentrate on your studies and still find some time for fun and down-time.

Another aspect of your job is that it should be higher than minimum wage and, if possible, should give you skills that will apply to your career later in life. Approach professors that teach courses you have taken an interest in and ask if they have any positions or know of anyone in the field that could give you any useful job experience.

Do not work for many hours at a low paying job in a field that is not rewarding. This will only cause you to be mentally, physically and intellectually drained. You cannot function as a student to your fullest potential when you are being pulled too far in too many directions. A friend I know had a job like this at a movie theatre while he was doing his chemistry degree. He was always an excellent student and had a reputation for being very bright. While the job at the theatre was not difficult, it wasn’t until he quit that job and took on a job in a research lab at the school that his full potential was fulfilled and his grades increased even higher and he became the highest scoring student in the chemistry program.

5. The car loan

One of the biggest mistakes that students and new graduates make is buy themselves a new car before they have gained any appreciable assets. Bear in mind that cars depreciate as soon as you drive them off the lot. Saving to buy a home or investing in other types of funds and accounts with returns is a much wiser place to put your money. When you get a car loan to pay for this depreciating item, the interest on the loan only compounds the loss on your investment. So the lesson here: don’t buy a car unless you can pay for it in full. This usually means that your first car will be used – if you can afford one at all. Remember all of the extra associated costs of owning a car that will also go into your budget:

• Insurance
• Gas
• Maintenance

Try to live close to school and walk, ride a bike or take public transit. It will save you a bundle!

This post was featured in The Carnival of Personal Finance #152

The typical stereotype of a student is someone who only eats macaroni and cheese from a box, spend all their loan money on booze and phones their parents’ monthly to borrow money in order to make rent. This isn’t a wholesome picture and certainly doesn’t have to be the case. A well-prepared student with a healthy budget can eat well, have a good time and still pay the rent. There are some students that leave school with money left over in their savings accounts, ready to take on the workforce without a cent of debt. These students have not managed this by luck alone, but have already learned the simple skills required to plan, budget, and save. These are skills that can be learned by anyone, and no matter what your current life circumstance, rich or poor, are necessary skills that all students need to learn in order to become financially independent and achieve their life goals.

When you are a student, budgeting will keep you out of serious debt

Student income rarely comes as a monthly or weekly paycheque the way that it does for the rest of the world. Instead, grants, loans and bursaries come in large sums at only a few times a year. Usually by the time their money comes, most students are already so desperate that they have been living off credit for months. For some this cycle may begin within months of the school term, for others not until the end of the school year, however once this type of lifestyle has begun it can take a lifetime to end. It is a slippery slope once you begin to live off of borrowed money (credit) and should be avoided at all costs. So for the money savvy student, the trick to staying in the black is to make a realistic, comprehensive budget and stick to it. For students, having both a monthly and a weekly budget is most reasonable.

There are two aspects to budgeting that most people do not always consider. The first is simple – how much can I afford? For the student, the easiest way to figure this out is to take your net yearly income and divide by the number of months away at school. Consider all sources of income; loans, bursaries, grants, scholarships, parental support, part-time jobs, etc… The second aspect is to make a full list of all the possible expenses you have in a month. Include the basics such as rent and bills and the occasional extras such as gifts, medication and clothes. An example of a comprehensive list of expenses for a student budget is given in Table 1. To accompany this list it is a good idea to figure out how much each of these items will cost.

When it comes to items such as rent and bills, these are often fixed costs, but when it comes to items such as unexpected expenses like gifts and medication, you will have to decide, based upon how much you can afford, what is a reasonable amount to set aside for these expenses. It is important that if you do not use the money set aside for these expenses one month, that you do not spend it on something else instead. Stick to your budget. The best idea is to keep the extra unused money in your savings account until you do need it, because we all know there are more birthdays in spring than any other time, and most of us find we need more cold medication in February than any other month. You’ll be glad you kept this money in reserve when you really need it, instead of having to dip into savings or put extra gifts on to credit. Additionally, you can earn interest on this money while sits in your savings account waiting to be spent for it’s budgeted intent.

Now, something many students and parents overlook when composing a student budget is September. Consider the start-up costs you will need when you get to school the first month. Depending upon whether you live at home, in residence or in your own apartment, there are various expenses that can cost a lot of money at the beginning of the term:

Top 10 First Month Expenses

• Tuition, student fees, books
• Moving expenses
• First month’s rent/deposit
• Telephone connection charge
• Electricity, gas, water connection charge
• Cable TV connection charge
• Personal property insurance
• Groceries, cleaning supplies
• Furniture
• Unexpected Expenses

Keep receipts from all your moving expenses, as you may be able to deduct them from employment income taxes or award money that you receive.

Table 1. A comprehensive list of student expenses that can be used to make a budget

Always assume that each expense will cost more than you think. Review your budget on a monthly basis. It’s not cast in stone; it’s intended to help manage income and spending. Catch and correct bad spending habits, and pat yourself on the back for the good ones. It may sound cheesy, but these are good lessons to learn for life.

College and University acceptance letters are coming into your mailbox. Your child is beaming with excitement over the thought of which school they should go to, what courses to pick and what their new lives will be like in the fall.

Terry Savage of TheStreet.com wrote a fairly good introductory article detailing the perspective from a seasoned Wall Street perspective. This article discusses the financial aspects surrounding the costs of a college education. Without an education fund to pay for school, the cost of tuition alone in student loans leaves the average student crippled with debt after graduation. The cost of school has many people questioning the value of this education when it the average entry-level position for a college graduate is a mere $40,ooo/yr.

I have friends that are plumbers, contractors or kitchen chefs that make as much or more and they went through an apprenticeship program where they learned while they earned. I often question my decision to pursue post-graduate eduction. In my case, my student loans were so large that I needed to take on a second job to afford them, which resulted in my termination from my first/primary job. I realized how ludicrously undervalued my education was, so I decided to return to school and acquire a second degree - my masters degree, with the hopes that this time around I would be able to secure a job with an income that could support my student debt.

The rising cost of education and the burden that comes along with it should be carefully considered before you send your child (or you) start post-secondary education. Here are some things to consider:

1. Where is the money coming from?
2. If you are in need of financial aid or assistance, how much? Will you be able to afford to pay this amount back after graduation?
3. Try to get as many bursaries, scholarships and grants to offset the amount of loans you need to pay back.
4. Reduce living expenses by choosing a college close to home and stay with family.
5. Compare the cost of different schools and programs. Make your choice based not only on what will make you happy, but on what offers the most bang for your buck (i.e., features like co-op programs, great student life, good library all contribute to your education)
6. Ask yourself if the program of study that you want to take is going to provide you with a career that will give you an income to support any debt you may carry after school is finished. If not, you may want to consider another one of your preferred career choices.
7. Line up summer jobs and part-time work in advance. Learning to work a couple of nights a week during school helps good student learn to become excellent time managers. This skill will carry-over well into any profession.
8. Make a good student budget and stick to it to prevent expenses from getting out of hand.

Tuesday I will be back to detail how a good student budget can make or break successful student life.

Denina

I need to apologize for not staying on top of my posts lately. Between family and career, life has been a little hectic lately. I have to admit it though, when I get stressed, my favorite thing to do is “reward” myself with little purchases. The splurge is so common in our society that I think most people cannot see how valuable and therapeutic it can be if applied properly. I rationalize my “trivial” spending like this:

“I deserve it – I’ve been working hard”

“I don’t have much time, I can afford to buy my lunch and dinner out this week”

“This week has been so busy, this is something I need”

I’d say that one out of the ten times my rationale is right on the money. The other nine times I am fooling myself. So I have learned to give myself a few rules to keep myself in line when times get stressful in order to cut down on the compulsive spending:

1. Always take a list shopping and stick to it. This cuts down on impulse buys.
2. When you know you are heading into a busy week, take a few hours on Sunday night to prepare some big meals in advance. Package your food into take-away (re-usable, preferably) lunch and dinner containers for the rest of the week and then you don’t have worry about time later.
3. If you want to treat yourself to something new, like some clothes, a new electronic gadget or household item, make sure it is something you have been eyeing for a while. If you’ve wanted it for months, you know you really want it.
4. Don’t cheap out on something that is made poorly. Always get something that is of good quality and will stand the test of time. Do your research to make sure that you get the best. If you are going to splurge, make sure that you spend your money on quality. Many people believe that being frugal means being cheap – but really it means get the best value for your dollar.
5. Finally, if the item you desire is on sale, and you have enough in your savings account for it, don’t wait… go ahead and splurge.

People really do deserve to treat themselves once in a while. The key is not to do it too often. It’s like any other good thing in life. Sometimes too much of a good thing can cause you harm, and in this case the allegory is relatively straight forward: too much spending can just leave you broke.

The article “how to survive a market downturn” was accepted into Hank’s Weekly hangouts #26 this week.

On that note, it may be time to review the use of the carnival. I find that if you are a consumer looking for recent information, but from a perspective (i.e. that of a blogger or an expert) than the carnival is likely going to be for you. There will be a variety of topics all in one spot and they will be fun to read.

This is not a place to do hard-fast research.

If you are a blogger, the carnival is a fantastic place to create new networking opportunities with other internet friends and also to increase your exposure and authority on technorati and other blogging communities/networks.

So I was reading this news release on the Trent University website and while I wasn’t surprised to hear about another large peice of ice breaking apart, I was surprised to think about the consequences of such an event. The face of North America is changing shape. Our map is going to change. WTF??? This got me thinking about how we as North Americans live our lives financially. Most people feel that when everything is holding together, then everything is okay. There is no need to fix something unless it is broken. We don’t emphasis preventative maintenance, medicine or healthy living. The way we treat our planet - we don’t clean it up until is starts literally falling apart. We don’t fix our cars or homes unless they break. I realize, however, that for most of us this is because we are financially living right to the end of our means. How many of you have a car maintenance savings account? Or an account to maintain your home? What if every family set a side money into a savings account for making yearly environmental and energy savings improvements to their home? What if our government did the same thing by creating an environmental tax? What if that environmental tax was re-allocated towards grants for businesses that were creating new environmentally sound products and environmental research? Rebates for homes that cut down their carbon emissions, waste production and water usage? I predict that our planet and our outlook on financial planning would not only become more healthy but we would definitely stop thinking only of ourselves and what pleases us now and instead do what our ancestors knew was best for human survival - think of future generations and how our lives will impact them. The best gift you can give your great-grandchildren is the gift of a clean slate: a healthy planet, a healthy body and no financial burden. The only thing your generation should leave behind is a few good stories that turn into great legends.

Hi there,

Today’s entry will be slightly more casual and personal that what I typically post. I apologize for not posting yesterday, but this week has been busy for me and my partner. His grandfather is very ill and in the hospital. This old man was very prepared. He has been caring for his wife for years. He had already suffered from serious heart injury. He and his wife have lived a very frugal life. They payed for their condo in cash. There are investments and savings ready for their long-term care, multiple wills for the many possible outcomes “in the event of” and executors arranged to oversee the details.

No matter how well you may plan for death, life is impossible to plan for - don’t you think? We tell people to save for the unexpected, budget and reflect and make adjustments. It is precisely all of these details in finance that should give us a clue that no amount of careful planning will actually means things will happen the way you “plan” at the end of your life either. Perhaps you will need to care for additional people. Or maybe you will live way longer than you think! Whatever curve-ball life throws you, do remember this, the better prepared you are, the smoother the transition will be for you and your family “in the event of”. Spending time not only planning the money, but making all of the other concrete arrangements like funeral, burial and where you would prefer to be cared for if you are to live a long life but with need of assistance, will help your family and loved ones know what you want and make the best decisions on your behalf. Go a step beyond and have these discussions openly so that you are sure that everyone affected by your decisions knows in advance!

Happy Monday, and I’ll see you tomorrow with a new and exciting format… (you’ll never guess)

Denina

In a recent newsletter I received from Wellington West, this is the anatomy of a downturn, as described by Dr. Quincy Krosby, the Chief Investment Strategist of The Hartford, parent company of Harford Investments in Canada. Dr Quincy Jones has been observing the developments in the market and the massive credit crisis and by taking quotes from various media sources he has been able to describe the problem accurately and succinctly. If want to banter about the issues intelligently with your friends at the water-cooler, these tid-bits are the sorts of information you need to know.

Jan 4: “It’s (an increase in the unemployment rate) probably the most important link in the economic chain, and if this continues, we’re definitely headed for a higher risk of recession.”

Jan 9: “The Fed will continue to lower rates regardless of what they say about inflation. If this market continues to deteriorate and be underscored by a sell first and ask questions later mentality, the Fed may have no choice but to deviate from its gradual policy of rate cuts.”

Jan 11: “It’s becoming very moot as to whether we are in a recession. Companies are telling you, the bond market is telling you and consumers are telling you – it’s baked in.”

Jan 14: “What you don’t want to see is the psychological break, which may be happening right now. Right before a recession happens, you usually see a psychological break where you see CEOs cutting back on hiring and spending; and that creates momentum for a recession.”

Jan 17: “This is a market rife with rumour and will turn on a dime. It is very much a panic, and the fear is that panics can develop a life of their own.”

Jan 18: “Recent trading feels like the ‘death by a thousand cuts’ that typifies a bear market. Every day the market rolls a bit more into negative territory … and another group of leaders gets walloped.”

Jan 21: “You’re going to see bounces but overall it will be a big, big wave of selling. For the average investor, it is literally when you think you can’t stand it one minute longer, you don’t care what you lose, you call up and say ‘Get me out.’”

Jan 22 : “Today I would just basically sit back, turn off the TV and do something else. Basically what we’ve been telling our investors, and these are people who are saving for retirement, is to continue dollar cost averaging with a portfolio manager who’s got a good, good track record during volatile periods … The Fed is going to continue cutting rates. The economy is going to pick up. The financial crisis is going to heal itself. It takes time, it’s painful, but it will be done.”

Feb 15: “We’re still at the cusp of recession and this (tax rebates) is an effort to get money out there, throw it from the helicopters and marry it with low rates in order to avert a recession, or if we are in a recession, to make it as shallow as possible.”

Feb 18: “There’s an old adage that fortunes are made in bear markets, but you just don’t know it at the time. Investors should look for solid companies that are beaten down for no apparent reason and that will provide long-term opportunity.”

Feb 21: “People lose sight of the fact that this is psychology. The ultimate psychology is when you see people starting to horde. When you see people buying chickens and stuffing them into their freezer because they’re afraid that the chickens are going to be more expensive the next time they go to the market, that is the ultimate manifestation.

Mar 3: “It’s a treacherous market. Volatility spiked up today, and for our retail clients across America, we’ve been just telling them to adjust dollar cost average into this little by little by little, because they will make the inflection point when this market finally turns. But don’t write one big cheque and think you’re going to be a trader in this market. You will just be destroyed.”

Mar 12: “The Fed is being creative and audacious. Any move that can help get the credit market working again and help staunch the domino effect we’ve been experiencing is going to be helpful ultimately.”

Mar 17: “At the very heart of all this is a deteriorating housing market. And if they cannot get the values of the mortgages at least stabilized, the problems are just going to continue.”

Mar 20: “What we’re suggesting is to keep your eye on the financials because I think exactly the confidence is beginning to come back in. But is it one day, one week? We don’t know yet.”

The moral of the story: Pay attention to investment fundamentals, look for long-term opportunities and seek professional guidance

Is there a clear message in all these quotes? There is. In fact, there are several.

1. Part of investing includes the up and the downs – the reasons for the downs are less important then the reaction (which are typically irrational says Dr. Krosby). Sound investors tell us that every decline has historically been followed by an increase. Don’t loose yourself in irrational, reactionary actions, invest with the historical perspective in mind.
2. Recessions equal opportunities. When stock prices are weak, it is easier to see the opportunities, so if you are investing, jump on something solid, go for the stock that has every reason to perform – when the increases happen you will have made the right decision and bought at the right price.
3. Trying to predict the market is futile. The only way to realize you’ve hit the bottom of a decline is by observing the subsequent advance, by then, you missed your opportunity for gain. Wise investors (like Dr. Krosby) advice us not to take big risks during shaky markets, so don’t put all of your investment money into one place at one time, but instead regularly invest smaller amounts over a period of time, for the most reliable and intelligent way to take advantage of a downturn.
4. Beware the Domino Effect. Downturns do not restrict themselves to a single sector, pessimism usually affects the entire market, therefore diversify your portfolio to decrease your risk.
5. Invest 5-10% of your income. It is most important to do this in tough times, as a part of your savings strategy. Budget this into your month’s expenses to ensure that you have secured yourself and your family an additional asset to improve your net worth and overall wealth to help you achieve your goals. If you cannot afford to invest in stock, then start simple with mutual funds. Many of the same rules apply to mutual funds as do with other market investments – there are many choices, different types of sectors and different levels of risk.
6. Speak to a professional Investment Advisor (my newsletter suggests an advisor from Wellington West). The more uncertain times are, the more you should demand professional insight to keep you on track.

Quotes used are from the following sources: Dow Jones News Service, CNNMoney.com, Bloomberg, Financial Times, BusinessWeek.com, Cossacks Breaking News, Associated Press, CNBC, CNBC.com, Fox Business, National Public Radio, “The Hartford” is The Hartford Financial Services Group, Inc. and its subsidiaries, including Hartford Investments which is theManager of Hartford Mutual Funds and a wholly-owned subsidiary of The Hartford Financial Services Group, Inc. of Hartford, Connecticut.

Most people have differing levels of tolerance for how much debt they can carry and what they consider “manageable debt”. In this post I would like to suggest a reasonable credit plan for any household with any level of income.

Most creditors will tell you that canceling all of your cards is a mistake because it will ruin your credit rating. This really is true and for anyone who is in serious credit card trouble I would only recommend canceling their cards if their debt is so serious that collection agencies are knocking on their doors and they have already lost their rating. For the rest of you, this is best way to go:

1. Research each card, find out which have the lowest interest rates, and then consolidate your debt onto the cards that have the lowest rates
2. Put every bit of self discipline into paying down those cards until there are only two cards left with any balance on them, and be sure that the balance is manageable (payable within a month’s salary)
3. In order to execute this plan effectively, you MUST do the following while you are paying down your credit cards:
   • do not spend any money on any card unless you are certain you can pay it off in full at the end of the month!!!
   • pay all of your bills on time
4. Now that you are in a position to bargain, for all of the cards that have no balance remaining call each respective credit card company and VERY POLITELY request to have your account canceled.
5. In many cases you will be transfered to a customer service or a service manager. When you talk to this person simply explain that your interest rate is too high and that you are trying to reduce your credit card debt.
6. If they offer you a better deal than your other two cards (the ones you have kept with your current manageable balance on them) then take the deal, and ask if you can transfer a balance from your other cards with no charge.
7. Continue until you get two cards with low interest rates. Make sure you have two cards with low rates and limits that will never be too high for you to pay dawn within a year.

I personally did this with my ten credit cards about two years ago and now I only have two credit cards, and a good line of credit with my banking institution. One of my cards has an average interest rate, but has the pay pass option, a good rewards point system that I often take advantage of and the limit is only $2,000.00, while my other credit card has an exceptionally low interest rate, it is platinum, which gives me a fantastic travel insurance benefit and has a limit of $7,500.00.

I tend to use my rewards card for common inexpensive purchases and pay them in full monthly, whereas my other card is perfect for vacations and travel. I encourage all credit card consumers to do what they do with their other purchases - shop around and get the best deal they can. When you are paying any company for any service you need to be sure you get what you deserve!