It seems that I’m not the only one that BofA increased the rate on. I saw an article here that says that BofA is raising people’s rates all over the country. It seems that they may have changed their standards internally, but they are remaining quiet about the whole thing. A common theme seems to be that people who have a balance higher than a certain percentage of their limit are getting enormous rate increases, even when their credit score remains unchanged and they pay all of their bills on time.
I don’t see how this is going to help their bottom line in the long run. They certainly prompted me to pay them off faster, and all of their income from me comes from the interest that I pay. By raising the interest rate to usurious levels, they end up with nothing.
Unless of course they know something that nobody else knows. Are they trying to ditch what they perceive as their worst customers in order to make some sort of play in the near future as the Fed keeps dropping the rate?
Somehow I doubt it.
This is a Note to HighClassLowIncome.blogspot.com
I cannot comment on your blog. Your settings on blogger are set to only allow comments from other blogger users. Furthermore, I tried to tell you by email, but the email address listed on your ‘About Me’ profile bounced.
I don’t particularly hate BofA, so to speak. But I do hate 21.9% 18% interest. So I dug out an old Credit Card and called them up.
“Thank you for calling Chase, how may I help you?”
“I’m not sure,” I said. “I either want to close an account or transfer a balance, depending on what offers you have available.”
“I see here that you have a $4000 limit and a zero balance. How much would you like to transfer?”
“It would depend on what balance transfer offers you can give me,” I said.
“OK,” they responded. “I can offer you a 3% transfer fee with a $75 maximum, up to $3700, zero percent interest until January 22nd of ‘09.”
“I would like to transfer $3500 from my BofA CC to this card then,” I told them.
“What is your account number at BofA?”
“XXXX-XXXX-XXXX-XXXX”
“Done.”
And that was that. I think that it is totally worth the one time $75 transfer fee to get zero percent for a year. Seeing as I was to have to pay over a hundred dollars per month in interest, I come out WAY ahead. Even if I were to pay this off over the summer I would come out ahead. After this and the Citi transfer go through, I will have a $2000 balance left on BofA, which I expect to make quick work of. I’ll be getting my W2 when I go to work this afternoon (or at least I expect to) and I’m hoping to get a little something back this year.
So as of right now, my intention is to pay off a card that I have with a $500 balance on payday, and then to knock out BofA next. After that I will begin paying off my non-zero percent CC’s from smallest to largest, and probably transfer my Air Conditioning financing over to BofA at 1.99% (that’s a lot better than 18%) and just include that in the mix.
I’ll be replenishing my EF first though. I will put the $100 back into it on payday and whatever is left in my checking after paying off the small card this time will go toward getting my wife something for Valentine’s day. I expect there to be somewhere around $300, assuming I work all of my hours today and tomorrow (which would finish my work week without getting canceled for the first time since July).
It feels good having a plan to get out of debt. I can totally see this debt going away in short order. Especially if I’m knocking the interest rates down. The only way I can think of that I can lose is to get frustrated and quit. That’s a lot of what this blog is about. Keeping myself motivated. It helps me to stay focused when I have to put it all into words and then proofread it. Of course, something unexpected could come up (like last year, when my AC fried) that could put me back. But if I’ve paid off a lot of my existing debt, I’d be in a lot better position to deal with it.
I can see myself getting better organized as the days go by. I still haven’t written all of my debts down in order yet though. So far I’ve taken the position that one at a time is all I can handle. But I’m getting to the point where I’m going to have to look at the whole picture if I want to really make the most impact. I think mostly I have just wanted to pay off those small debts that could be paid off in one paycheck (albeit with the WHOLE paycheck). After this next one, I will be to the point where I need to start thinking along the lines of paying things off in multiple paychecks. Paying something off in two or three months worth of paychecks is more difficult, but I would imagine, more rewarding.
I was somewhat taken aback when my 13 year old was looking the numbers over with me and he pointed out that at the end of March, the student loans will break through $6000.
I appreciate the comments that people have left so far. It’s a strange feeling to know that someone is actually reading what I have written here. I particularly like some of the observations that FranticWoman made.
So thanks a lot, you guys.
I finished out the work week and I’m tired. I normally work on Friday, Saturday, and Sunday every week, for twelve hours per day. Then I have four days off. But of course since I work the night shift and the rest of the free world is on more of a daytime schedule, Monday is a useless day for me. I try to sleep a little and stay awake a little and hope that somehow I will be able to sleep well tonight so that I can wake up on Tuesday and have a real day off.
Monday is a good day for laundry. Or reading. Or rolling up pennies. Or any other mindless task. What it’s not good for is making budgets. Or planning things out in general. It’s not a good day for making major life decisions. Or any other decisions, for that matter.
But as it happens, there are always a few hours on Monday night where I am awake and the rest of the family is asleep. It leads to some interesting thinking sessions. I don’t think that Mondays are good days for philosophizing. Especially about debt. My attitude is that if I knew anything about money I wouldn’t be in debt to start with. But sometimes there is a quiet moment of inspiration and everything that’s been going on just suddenly makes sense. And that’s kind of where I am today.
As I was sitting here, I started thinking. It’s not really about the debt. It’s not a numbers thing at all. It’s all about behavior. If it were simply about numbers, every time I got a raise my debt level would fall. The problem isn’t whether or not I make enough money. It’s a problem with behavior.
Somewhere along the line I seem to have accepted that being in debt is acceptable behavior. That it’s OK to buy stuff when you don’t have the money to pay for it right now. It seems that debt is insidious. I’m sure that there are people out there who had major life catastrophes where they suddenly had to take on a lot of debt in a short period of time. But that didn’t happen to me. I built up my debt slowly over a number of years. Other than my car and my student loans, most of my debts have been incurred in very small amounts, multiplied by a number of years. I always mean to pay it off on payday, but somehow it just never works out that way. And the hundreds of dollars turned into thousands…and now tens of thousand…of dollars.
So it seems to me (and remember, I’m no money expert) that simply by reversing the behavior, the debt will disappear as well. By simply living below my means I can apply extra to the principle debt balance and it will slowly melt away.
It’s a simple concept, really. But putting it into practice remains the tricky part. The problems seem to come when you have unexpected expenses. The unexpected flat tire. The broken garbage disposal. The burned out headlight. Little things that weren’t in your budget. I think when I am finished building my EF to $1000, I will also build in a slight buffer to my checking account. Maybe two hundred dollars or so of “just in case” money. Things that don’t really qualify as an emergency, but that require some attention, nonetheless.
Maybe it will be easier to think about when it’s not Monday. Or maybe I’ll wake up tomorrow going “What was I thinking?”
Oh well. Whatever.
And somewhat unrelated, it’s only a few more days until payday, and I’m looking forward to being able to knock out my EF and move on to some evil debts. I never really did get around to calculating what I should expect on my paycheck. I can usually figure out my net to within ten or twenty dollars. I just have been so busy working lately that I haven’t spent much time counting chickens. But if I net a thousand dollars above what it takes to pay the bills, I’ll be happy with the results. I didn’t work as many hours as I had hoped in the second week of the pay period, but I more than made up for it in the first week.
It’s a funny feeling knowing that my debts will soon be dropping off. It’s as if I’ve been given a second lease, so to speak. There’s a strange sense of hope right there on the fringes. But there’s the other part of me that is a doubting Thomas. As if I expect to shoot myself in the foot any time I get ahead. I keep thinking that if I can just have one good year that I will be set for the rest of my life. 2007 was definitely not my year.
And as I look forward to 2008, it seems like a long way to go to put this debt out of its misery. But as I look back on 2007 I realize that a year is actually not that long of a time. I don’t think I can pay everything off completely in a year, but I know that I can get the lion’s share of it. Especially those pesky student loans, which I have grown to hate.
I don’t think it would behoove me to concentrate so much on maximizing my income so much as controlling my spending. On a normal year I can make right at six figures, so my debt level is very manageable. I’m afraid that if I work too many hours that I will burn myself out along the way. I think that slow and steady is what will win this race. Set a sustainable pace and keep at it until I am finished. Even if I had to stretch it out to two years, it would be easier than killing myself to pay it off in one. At least that’s what is making sense right now. But I’m tired right now and I’m glad that I am not going to work tonight. Maybe if I were better rested then extra shifts would sound like a good idea.
Nevertheless, hello.
And here is the classic problem with getting out of debt.
I got paid on Thursday, fine-tuned my budget, sent off all of my monthly payments, bought food for the week, and updated all of my goals, checklists, and schedules. I balanced my checkbook, projected my income, and blogged about my progress. I made a ledger, analyzed my bills to see where I can make cuts, and calculated projected interest payments for the life of each loan. I worked on my blog format and updated several pages. And now I’m finished.
And it’s only Monday.
But I’m still pumped. I want to be able to DO something to help myself get out of debt. I want to be able to make some progress every day. I know that on my next payday I will probably complete my Emergency Fund and move on to debt repayment. But it’s ten days until payday.
I have all of this motivation…all of this energy. And nothing to do with it.
Yes, I am the hare. If I were the tortoise, I wouldn’t be in debt to start with.
I have ten days to go until my next payday.
