A prominent Cincinnati criminal defense attorney was recently giving a lecture to a group of college students. When he finished his prepared speech, he opened the discussion to questions from the group and was surprised by the level of response he received. One of the students who seemed really interested in becoming a lawyer was particularly interested in helping low-income clients and had a lot of questions related to how to prepare for that. The attorney noted that one way to help people is to give them the knowledge to take better care of themselves, especially when they are drowning in unpaid bills. He referenced a Cincinnati debt relief service that he had recently worked with that was doing great work among citizens who needed help paying their credit bills. This company actually gave people the information they needed to contact credit card companies to arrange for smaller payments and longer times to pay their bills.
Many people are surprised that it is even possible to negotiate with a credit card company, but not only is it possible, it is done every day. New credit card rules that just became law make it easier to know exactly how much interest is owed to the company and how long it will take to pay the bill. There’s even a line there that says how long it will take to pay the bill if only the minimum payment is made each month. This is quite revealing for many people who simply blindly pay the minimum payment each month without considering how little the actual amount owed is.
It’s also wise to check how much interest is being paid on your mortgage payment each month. Sometimes this is a great incentive to pay a little more on your principal as long as you have extra money to reduce the amount of long-term interest paid on your mortgage. Some will argue that you shouldn’t worry about paying interest on your mortgage because it’s tax deductible, but why not use that money for something tangible that you can enjoy?
There is a theory that people tend to buy more things and spend more money when they use a credit card instead of paying with cash. While having a credit card is almost a necessity in today’s world, sometimes it’s a good exercise to put that card away (some advisers will tell you to put it in water and freeze it so it’s not available for use) and use the old “envelope system” for a period of time. When the money in the “eat out” envelope runs out, you can’t eat out again until payday makes it possible to replenish the money. When the “grocery money” runs out, prepare meals with what you already have in the pantry, and so on. While this isn’t a practical way to live for long, it’s a good exercise in figuring out exactly where your money is going, and it also encourages some creativity in stretching that dollar.
