Welcome to the first installment of “Extra Credit,” Girlboss’financial advice column where all your burning spending and saving questions will be answered monthly.
Got a money problems? Want make 2017 the year you save for that Bali trip you’ve been dreaming about? Pamela Capalad of Brunch and Budget is here to help.
As Girlboss’resident financial planner, she’s on hand with advice relevant to all your money woes. Let’s start with a couple of universal cash quandaries: What’s the best way to deal with credit card debt, and how in the name of Rihanna can we control our online shopping habits more effectively? Here we go.
I’m in a bit of a sticky situation with my credit cards. Recently, I heard an ad on the radio about a service that helps you negotiate your credit card debt down, and they claim that you don’t really have to pay back everything you owe. But there’s gotta be some catch, right? —Crapped Out Credit
I would say, as a general rule of thumb, not to trust financial services that advertise on the radio, as they’re often preying on folks in the most vulnerable financial circumstances (credit card ads, student loan ads, car ads, etc.) Not sure exactly what sticky situation your credit cards are in, but your instinct is right, to not trust an ad like this.
There are some situations where you can negotiate down your credit card debt, but even if this company could do it for you, they most likely won’t be doing anything you couldn’t do yourself, or utilize free solutions as a place to start.
If your credit cards are in collections, it has most likely moved to a collections agency (you’ll know because you’ve started getting weird letters and phone calls). This is a place where you can negotiate down your debt. Collections agencies have most likely “bought” your debt from your original credit card company for pennies on the dollar, so getting any money back from you is often a win for them.
When you’ve saved up enough money where you can pay about 50 percent of the debt balance, call the collections agency and negotiate down the balance. Ask them if they could reduce the amount owed if you pay it off in one lump sum. Then, before you give them a penny, make sure you get it in writing!
If your credit cards are not in collections, but you’re having a lot of trouble keeping up with the payments, reach out to a non-profit credit counselor, like Clearpoint (a division of Money Management Intl). They can put you into a debt management program where they’ll take all your credit card debt, negotiate lower interest rates on your behalf with the credit card company, and put you on one-monthly payments to pay off the debt.
There is a catch—any credit card you put through the program gets closed. I know credit card debt can feel like a heavy burden, but it doesn’t have to be and there are ways out of most sticky situations. You can do it!
HELP, I can’t stop shopping online! I’ve set budgets for myself on Mint and everything, but I just keep blowing through them. What’s the first thing I should do in order to stop this madness? — Amazon Addict
Whew, I feel you. Shopping online can quickly add up for most of us! You don’t even have to swipe or remember your credit card info, or look someone in the eyes as you buy the thing. It’s way too easy and for many of us, it’s become a habit.
The next step is to set up your environment so it’s not *as* easy to shop online. With Amazon, you can do things like delete the mobile app to prevent shopping when you’re playing with your phone, turn off one-click buying, and only use your debit card to make purchases. For other online shopping temptations, the simplest thing you can do is unsubscribe from their newsletter.
Another thing you may want to try is, right before you buy something, ask yourself why. Take a moment to pause before you hit that “Buy” button and literally just ask yourself why you’re buying this.
You can still buy the thing, but by giving yourself a moment to connect your conscious brain to what has perhaps become an unconscious act, you are changing your relationship to your habit.
Finally, know that this habit is not going to change overnight and this budget that you set is a target, not a rule. You won’t hit your budget every month, and that’s okay! As long as you start to see a downward trend over the next 3-6 months, you’re on the right track. God speed!
Got a question for Pamela? Submit it HERE and we’ll answer it in an upcoming installment of “Extra Credit.”