SHPC Blog

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Cheeseburger Loans

 
Cheeseburger loans?! Very cute!  Now that you’ve got my attention, tell me what this article is really about so I can decide whether or not I want to read it.
 
It’s really about cheeseburger loans.
 
Yeah, right! Look, quit wasting my time. No one gets a loan just to buy a cheeseburger. What would you use for collateral…french fries? 
 
No collateral required. In fact, millions of Americans take out loans every day for cheeseburgers, milk shakes, tacos, fried chicken…even grilled salmon with teriyaki glaze on a rice pilaf and Crème Brule for desert.
 
You’re making me hungry! But I still don’t see…
 
It’s simple, really. If you are carrying a balance on your credit card instead of paying it off in full each month and you charge a meal, you’re borrowing from the credit card company to pay for that meal. Doesn’t matter whether it’s from McDonald’s or the Vince Young Steakhouse. Immediate loan approval, no collateral required, and interest rates up to 30%. What a deal!
 
So that cheeseburger that I just ordered off the dollar menu could end up costing me two or even three dollars…  And I was so proud of myself for ordering on the cheap!
 
Well, at least you didn’t make the mistake that most people do. The fast food places have found that the average person orders about 30% more when charging their meal than when using cash.
 
Why do you suppose we do that? I can’t imagine that we’re actually hungrier when we’re paying with plastic. It gives me a great idea, though. I think I’ll write a new diet book –”The Pay-With-Cash Diet”. No exercising, no pills to take, no special meals to buy. I’ll make a fortune!
 
And you’d save people a fortune! We use credit cards so much we’ve lost touch with the true value of a dollar. We’re no longer limited to spending only what’s in our own pockets, so we don’t see the money running out. And we don’t stop to think about the true cost of what we are buying…we just keep on writing ourselves those instant loans.
 
So the next time you reach for your charge card to pay for the $40 Tex-Mex meal your family just ate, ask yourself whether or not it was worth the $60, $80 or maybe $100 or more you’ll actually end up paying by carrying a balance on your credit card rather than keeping it paid off.
 
Common sense…don’t leave home without it!
 
If you have money questions or would like some help with your finances, just ask the The Budget Guy (aka Allen Gunter). “If he don’t know, he’ll tell you so!”
 

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How About a Game of Freeze Tag?

 

By: The Budget Guy, Allen Gunter

 
Ready to get rid of your credit card debt?  All it takes is a game of Freeze Tag!
 
Rule #1 – Freeze Your Credit Cards
Literally. Put your cards in a baggie, fill it with water and put the baggie in your freezer. You ain’t never gonna get rid of your credit card debt if you keep using your cards.
 
So why not just cut them up? Because you may end up with an emergency and you can always thaw those cards out and use one of them. Just make sure it’s a real emergency and you have no other options!
 
Rule #2 – Freeze Your Monthly Payments
No matter how many credit cards you have, freeze the amount you pay on each at whatever amount you’re paying now. Don’t pay less next month just because the minimum amount has gone down.
 
Do you know why your minimum goes down each month? Because that keeps you in debt and paying interest longer!  And it makes it easier for you to add to your debt.
 
Suppose, for example, you have a VisEx card from Friendly Bank, NA:
 
All you have to pay right now is $90, so that’s what you pay and next month your minimum has gone down to $88. Cool! So you only pay the $88 and the month after that your minimum has gone down again so you only pay it.
 
Keep doing that and it will take you more than 9 years to pay that card off and you will have paid more than $1,300 in interest! How’s THAT for a waste of money!
 
And if you didn’t follow Rule #1, things will be even worse!! But what if you continue to pay $90 each and every month instead of being suckered into paying just the minimum? You’ll have that dude paid off in just over 3 years with less than $700 of interest!
 
Rule #3 – Tag a Card
You can stick with Rules #1 and #2 and they will work fine. But if you have debt on more than one credit card, you can get rid of all of it faster if you tag a card and use the “avalanche” or “snowball” approach:
 
  1. Add up all of your frozen monthly payments from Rule #2.
 
  1. Each month, pay only the minimum on every card other than your Tagged Card.

 

  1. Pay what’s left of your total monthly payment on the Tagged Card.
 
Here’s how it works. Suppose you have three cards and these are the minimum payments:
  • Card A: $ 100
  • Card B: $ 150
  • Card C: $   90
  • Total:    $ 340
You pay the $340 and here are your new minimums for next month and the payments you would make under Rule #2:
 
Card Minimum Payment
A $    97 $ 100
B  145 150
C    88   90
Total   $ 340 $ 340

 

But using Rule #3, you’ve tagged Card C. So in the second month, you’ll pay the minimum on Cards A and B and whatever is left on Card C:
 
Card Minimum Payment
A $    97 $ 97
B  145 145
C    88   98
Total   $ 340 $ 340

 

You keep doing that month after month – minimums on Cards A and B, the rest on Card C – and before long…boom!Card C is paid off! But you don’t stop there. You keep on paying $340, but now it’s only split between two cards. Pay the minimum on one and the rest of the $340 on the other. You might decide it’s time to go big or go home. So you tag card B to get rid of your biggest remaining balance:
Card Minimum Payment
A $    97 $ 97
B    145   243
Total   $ 340 $ 340
 
That dude’s going to go down fast!  And once it does, all of the $340 goes to the last card standing. Before long it’s time to party!  (Just don’t charge that party!) And you’ve even got $340 extra each month you can put to much better use than credit card debt. So how do you decide which card to tag first?
 
  • If you want to get out of debt the fastest and save the most on your finance charges, tag the card with the highest interest rate.
  • If you want to get at least one balance paid off as soon as possible, tag the card with the smallest balance.
 
Now go start playing Freeze Tag!
 
If you have questions or would like some help making this work for you, Just ask the The Budget Guy (aka Allen Gunter).  “If he don’t know, he’ll tell you so!”
 

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