Official DIS Debt/Finance Support Thread

[jenr812]

I'm glad to see this thread revived! It is amazing how fast 0% interest offers came rolling in as soon as I paid off all our Capital One cards (they KILL your credit score!!) and the department stores. I did apply for the Disney Visa for the $50 bonus and rewards. It's 0% interest til December and we're putting most daily purchases on it to earn rewards. I transferred my Home Depot balance and a huge (and huge interest) loan to another 0% interest card (til next July) and that move saved us $2300!!!!!!! in interest. That makes me so happy. $20 off my $200 payment was going towards interest on that stupid loan I won't be entirely happy til they're all paid off, but it's so nice to have the option to pay no interest - that was never an option before. Plus we're earning 5% back on our gas and groceries now, but I will admit that Dave Ramsey is a fly in my ear - we are definitely spending more at the store by using the 0% interest rewards CC than if I used cash. I am struggling with that a bit. Oh and I am paying off my car this week - it is due to be paid off in December, and I only owe $911 on it ($100 payment every other week) but I get 30% (around $260) off the remaining balance by paying it off early - every little bit helps. That car payment will then go towards the CC debt.

Only 264 more days til graduation and doubling our income It will be so nice to have money and not have this CC/loan debt!!


ETA: DH is a bit uncomfortable with the shuffling around I've done and with the use of CCs (I can understand his concern!!!) and I definitely hear Dave in my ear... But I know things will be ok. I mean, if I wasn't graduating next year (with only $2500 in loans) and doubling our income, then I would be concerned. But even if we don't pay everything off by July and have to pay a month or two of interest, it will be minute compared to the interest we're saving.

For instance, my struts were shot and I needed new tires and tie rods because of it, so we just dumped almost $1000 into my car last week. Well, instead of taking it from the emergency fund that is earning 5.05% interest at HSBC, I put it on the 0% interest CC - it doesn't make sense to deplete our interest earning account and it would set us back because then we'd have to put our debt snowball on hold to rebuild that account. For the financially savvy (Steve!) do you think that was a wise move?

 

[disneysteve]

we just dumped almost $1000 into my car last week. Well, instead of taking it from the emergency fund that is earning 5.05% interest at HSBC, I put it on the 0% interest CC - it doesn't make sense to deplete our interest earning account and it would set us back because then we'd have to put our debt snowball on hold to rebuild that account. For the financially savvy (Steve!) do you think that was a wise move?

I'm not a Dave Ramsey fan for a few reasons. One reason is his stance on credit cards. I think credit cards are an incredibly useful financial tool and everyone should have at least one good reward card and learn to use it to their full advantage as much as possible.

As for your example, I agree that it makes no sense to pull money out of an account earning 5.05% to pay off a debt costing you nothing to carry. Obviously, that is only if you are making adequate payments to retire the debt before the rate jumps, you make all payments on time and you keep your CC balances below 30% of your available credit.

 

[dvcgirl]

I'm not a Dave Ramsey fan for a few reasons. One reason is his stance on credit cards. I think credit cards are an incredibly useful financial tool and everyone should have at least one good reward card and learn to use it to their full advantage as much as possible.

As for your example, I agree that it makes no sense to pull money out of an account earning 5.05% to pay off a debt costing you nothing to carry. Obviously, that is only if you are making adequate payments to retire the debt before the rate jumps, you make all payments on time and you keep your CC balances below 30% of your available credit.

Dave Ramsey is an interesting character. Personally, I think he's a good motivator...because...boy, does he have a following. I think his very simple and sort of "good ole' boy" approach is why people gravitate to him. However, when you really listen to him...it becomes very clear that Dave's greatest gift is as a salesman. He promotes "all things related to Dave Ramsey" throughout his program. Also, he *always* uses 12% as the rate of return on all investments. Many of his listeners aren't savvy enough to understand that this doesn't always happen.

Some of the things he says simply aren't true. He is always saying that a credit score isn't important....and today, that's not really true. It's pulled a whole lot for things like auto insurance, rental complexes, homeowners insurance...even by potential employers. He also says that a debit card is just as safe as using a CC. I don't buy that. If someone gets my debit card number and empties my bank account.....well, I don't care what promise Visa makes saying that I will be reimbursed....try getting them to send you a check. Whereas with a bogus CC charge, I call the CC company, and they pull that charge from my account. Big difference.

 

[ldb1030]

I'm glad to see this thread revived! It is amazing how fast 0% interest offers came rolling in as soon as I paid off all our Capital One cards (they KILL your credit score!!) and the department stores.



?

Is there something about Capital One I don't know?? My husband and I each have one....why do they KILL your credit score or are you talking about credit cards in general?

Thanks!

 

[ldb1030]

Just wrote out a check to pay off a Medical bill that seems like we've been paying forever on. That free's up $80 a month to go towards something else.

Ahhh the dreaded medical bills! My problem is, I get one paid and another one appears! Our health insurance pretty much sucks! But it's better than having no insurance I suppose! Got a letter saying they were not paying for my daughter's teeth cleaning! I called and asked why and they said "well she went too many times this year"! I asked the lady to tell me what days my daughter had gone this year as I KNOW she only goes every 6 months and all of a sudden, it was a "computer error" and my daughter had NOT gone too many times and they would pay for it NOW that I've called!! I wonder how many people don't think to check up on their insurance and end up paying more than they really owe?!

 

[disneysteve]

I wonder how many people don't think to check up on their insurance and end up paying more than they really owe?!

I'm a doctor. Trust me. This happens every single day. You should NEVER pay a medical bill without confirming it is accurate. Virtually every hospital bill contains at least on error. Even bills from your doctor or dentist's office may be incorrect through simple human error: forgetting to include a diagnosis code or sending the claim to the wrong place or transposing numbers on a form.

 

[ldb1030]

I'm a doctor. Trust me. This happens every single day. You should NEVER pay a medical bill without confirming it is accurate. Virtually every hospital bill contains at least on error. Even bills from your doctor or dentist's office may be incorrect through simple human error: forgetting to include a diagnosis code or sending the claim to the wrong place or transposing numbers on a form.

So do you call the doctors office everytime you get a bill and say "is this correct?" How would anyone know the difference if they say "yes, it's correct". The only way I knew about the dentist thing was that my dentist office won't even scheulde cleanings more than twice in one year so I knew my insurance had to be wrong in this case.
But when you get those bills with codes for lab work etc....I would never know if those were correct or not. And all they had to say is yes, they are correct!?

 

[mrsbornkuntry]

Dave Ramsey fans....can I buy a book of his that will give advice or do I have to sign up for the annual website help he has that costs $89 a year? I am confused!

I'm a DR fan and I just checked his books out of the library. When I need a boost I check it out again. The only thing is that you don't have the worksheets doing it that way, but I just used notebook paper.

I'm glad to see this thread resurrected, too. I never got around to posting on it before. We are about $22K in debt ($15K is our van). So far we have paid off 2 low balance, high interest cc's. My problem is that I still use my cc's sometimes. I have my emergency fund in place, but I don't want to touch it, even when an emergency comes up. I'll use a cc thinking "well, I'll pay this off what I just spent when I get paid", but then not much extra is getting paid toward the balance.

I agree with what a previous poster said about this thread helping by keeping me accountable to someone .

 

[disneysteve]

So do you call the doctors office everytime you get a bill and say "is this correct?" How would anyone know the difference if they say "yes, it's correct". The only way I knew about the dentist thing was that my dentist office won't even scheulde cleanings more than twice in one year so I knew my insurance had to be wrong in this case.
But when you get those bills with codes for lab work etc....I would never know if those were correct or not. And all they had to say is yes, they are correct!?

You should do exactly what you did. You checked the bill and knew it was for something that your plan should cover and questioned it. The vast majority of people have no clue what is and isn't covered by their plan.

When you get a bill, you shouldn't just blindly pay it. First, you should check that it is for a service that you actually received. If it is, then you should verify that your insurance was billed properly and paid the appropriate portion. For example, if you have an 80/20 plan and the bill is for 50% of the fee, something is probably wrong. Or if you have a deductible and are sure you met it for the year but the charge is still being applied toward your deductible, you need to call and correct it. Or if the bill says your coverage wasn't in effect, you need to correct that.

As for hospital bills, always ask for an itemized bill, not just the summary they usually give you. Review it line by line and if their are charges on there for services you don't think you received, question them.

 

[Ladyslug]

Is there something about Capital One I don't know?? My husband and I each have one....why do they KILL your credit score or are you talking about credit cards in general?

I was just reading about this...apparently Capital One is one of the very few credit card issuers that doesn't report a credit limit to the credit agencies. One of the things the credit agencies use in computing your score is the amount of your available credit that you have outstanding (it should usually be no more than 25-30% of your maximum credit limit total being used in order to have a good credit score on that count). Because they don't have any credit limit info from Capital One, they just use the biggest balance you've had in the past and use that as your "credit limit" number. So if you charge a $500 maximum on Capital One, and then charge $450 or $500 the next month also, it looks like you're using 90-100% of your credit limit, which the credit agencies don't much care for.

 

[ldb1030]

I was just reading about this...apparently Capital One is one of the very few credit card issuers that doesn't report a credit limit to the credit agencies. One of the things the credit agencies use in computing your score is the amount of your available credit that you have outstanding (it should usually be no more than 25-30% of your maximum credit limit total being used in order to have a good credit score on that count). Because they don't have any credit limit info from Capital One, they just use the biggest balance you've had in the past and use that as your "credit limit" number. So if you charge a $500 maximum on Capital One, and then charge $450 or $500 the next month also, it looks like you're using 90-100% of your credit limit, which the credit agencies don't much care for.

So here is another question you may be able to answer....I just don't know enough about how the credit score works.........I have a card I've had for years, never charged much on it....have not used it in a long time...and it's almost paid off...just a couple hundred dollars to go.....my question is, they have my credit limit at some stupid amount like $24,000.00 or something! It seems the longer I DON'T use it, they more they keep raising my credit. Should I have them lower it or leave it alone or what?

 

[ldb1030]

You should do exactly what you did. You checked the bill and knew it was for something that your plan should cover and questioned it. The vast majority of people have no clue what is and isn't covered by their plan.

When you get a bill, you shouldn't just blindly pay it. First, you should check that it is for a service that you actually received. If it is, then you should verify that your insurance was billed properly and paid the appropriate portion. For example, if you have an 80/20 plan and the bill is for 50% of the fee, something is probably wrong. Or if you have a deductible and are sure you met it for the year but the charge is still being applied toward your deductible, you need to call and correct it. Or if the bill says your coverage wasn't in effect, you need to correct that.

As for hospital bills, always ask for an itemized bill, not just the summary they usually give you. Review it line by line and if their are charges on there for services you don't think you received, question them.

Good advise! Hope I never have a trip to the ER when I may or may not remember what services I received!

 

[jenr812]

Dave Ramsey is an interesting character. Personally, I think he's a good motivator...because...boy, does he have a following. I think his very simple and sort of "good ole' boy" approach is why people gravitate to him. However, when you really listen to him...it becomes very clear that Dave's greatest gift is as a salesman. He promotes "all things related to Dave Ramsey" throughout his program. Also, he *always* uses 12% as the rate of return on all investments. Many of his listeners aren't savvy enough to understand that this doesn't always happen.

Some of the things he says simply aren't true. He is always saying that a credit score isn't important....and today, that's not really true. It's pulled a whole lot for things like auto insurance, rental complexes, homeowners insurance...even by potential employers. He also says that a debit card is just as safe as using a CC. I don't buy that. If someone gets my debit card number and empties my bank account.....well, I don't care what promise Visa makes saying that I will be reimbursed....try getting them to send you a check. Whereas with a bogus CC charge, I call the CC company, and they pull that charge from my account. Big difference.

I agree that 12% can be misleading. But as far as Dave saying that the credit score doesn't matter, the context that I have heard him use that is because he figures you're already in debt, in over your head. Most likely not paying more than the minimum balance. Your credit score stinks anyway. In his FPU DVDs, he says that people are brainwashed into being more worried about their credit score than anything else, putting their credit card payments above their daily needs like food, clothing, shelter. He teaches you to make a workable budget so that you're not using CCs for daily needs anymore. He teaches that if you're in that dire straits, you need to get your daily needs taken care of FIRST, and then work out a plan with your creditors. Yes, your credit score is likely to take a hit, but it's more important to get a workable budget in place and realizing that your CCs are not your god - you need to take care of you and your family FIRST. Hope that I am making sense - I am not as eloquent as DR

Anyway, he does refer to credit scores being used for employment, insurance, etc. in the FPU series. Just wanted to clarify. He *is* a fabulous salesman and some of his info isn't wise for those who are already on the right track financially, but I will swear by him for anyone who lives paycheck to paycheck as a starting point - a way to get on your feet, get a budget, pay your bills off...then perhaps it's time to branch out and look at other financial motivators when you're ready to build wealth, etc

Oh! And regarding the credit score affecting your insurance - my DH was a victim of ID theft and also had an old (bad) paid credit account on his score from when he was younger. Those two things (mostly the theft) doubled our Homeowner's insurance and car insurance. I had forgotten about that fact, but last month decided to call and see if they'd re-pulled his credit score (the theft and old bad account have both dropped off due to SOL). Well, we got a check in the mail last week for an adjustment to our premium (went straight on our credit card debt ). So if yours hasn't been checked in a while, it may be wise to ask them to

 

[jenr812]

I'm not a Dave Ramsey fan for a few reasons. One reason is his stance on credit cards. I think credit cards are an incredibly useful financial tool and everyone should have at least one good reward card and learn to use it to their full advantage as much as possible.

As for your example, I agree that it makes no sense to pull money out of an account earning 5.05% to pay off a debt costing you nothing to carry. Obviously, that is only if you are making adequate payments to retire the debt before the rate jumps, you make all payments on time and you keep your CC balances below 30% of your available credit.

Thanks Steve!

 

[disneysteve]

Good advise! Hope I never have a trip to the ER when I may or may not remember what services I received!

Very often, the errors are glaringly obvious when you review the bill. I know one person who went to the ER, was treated and released the same day. She later received a hospital bill for a 6-day stay.

I've seen more than one man get billed for a pregnancy test.

People have gotten bills for x-rays or other tests that were never done.

I'm not suggesting that you can expect to catch every single error, especially from a hospital stay where the itemized bill can be many, many pages long, but it is worth checking.

 

[mousefanmichelle]

I work in a hospital and the information on your bill/claim is as good as the person who enters the info into the computer. I advise all my family/friends to pay attention because errors happen. Another piece of advice I can never stress to them enough is that they need to be aware of their health benefits - this can be a costly mistake if you don't know them.

There is some really great info on this post - but what about those credit cards with rewards that were mentioned - I have cc's and none of them has a rewards program. Are those better to have vs. traditional cc's? I am not looking to open up another line of credit but if something came through with 0% financing and had rewards say cash back would it be wise to transfer a balance and then charge and pay off monthly on that card?

Michelle

 

[disneysteve]

what about those credit cards with rewards that were mentioned - I have cc's and none of them has a rewards program. Are those better to have vs. traditional cc's? I am not looking to open up another line of credit but if something came through with 0% financing and had rewards say cash back would it be wise to transfer a balance and then charge and pay off monthly on that card?

Michelle

I don't think I'd use a CC that didn't have a good rewards program. Why get nothing when you can get something? My main card is my Marriott Visa. We usually get a free vacation every other year. Three years ago it was 5 days in Boston. Last year it was 5 days in San Francisco. Next year it will be somewhere else. We actually have enough points for a free trip already, but won't be redeeming them until next year some time.

 

[dvcgirl]

Anyway, he does refer to credit scores being used for employment, insurance, etc. in the FPU series. Just wanted to clarify. He *is* a fabulous salesman and some of his info isn't wise for those who are already on the right track financially, but I will swear by him for anyone who lives paycheck to paycheck as a starting point - a way to get on your feet, get a budget, pay your bills off...then perhaps it's time to branch out and look at other financial motivators when you're ready to build wealth, etc

Well, I haven't had any debt for a very, very long time (small student loan paid off years ago) and am ahead of the curve in saving for retirement. I still find his show interesting to listen to from time to time. But then again, I enjoy personal finance, and so I suppose it makes sense that I'd find his show entertaining. I definitely don't agree with all of the advice he gives, but his overall message is a good one...."the paid off home replacing the BMW as the status symbol in America...."....we need more of that in our country. That's his gift...motivator/salesman.

Other things I don't agree with him about....

He just loathes credit cards, and I don't have any issues with using them and paying off the balance monthly. I use them for convenience purposes only. We also get some nice rewards from them. I am very disciplined with respect to our budget, and so I don't unconsciously spend more when I use a credit card.

I definitely don't agree with passing up the match on a 401K while you're getting out of debt. I understand his reasoning, but I don't agree with him there.

Also don't like his pushing of his ELPs (endorsed local providers)....and his line that they all have "the heart of a teacher". I'm a little too cynical to believe that he could possibly know what's in the hearts of those folks. They all pay him a fee to be an ELP associated with him.......money is common denominator there. And I have no issues with that at all, but when you start referring to your financially successful show as your "ministry", or to mututal fund brokers who are paying a fee for referral business as all having "the heart of a teacher" then I have a problem.

Thankfully I don't need his advice and just listen for entertainment value....so....no skin off my nose.

 

[Stein]

Thanks Steve!

Just keep in mind that with one misstep, the 0% will go to 31.99% with fees and your investment profit will go negative in under a second. Plus, all of your other cards will likely hit the roof. All you have to do is be one day late or loose one payment in the mail (on this account, or any other account you may have).

If you have $1000 in the bank for one year at 5.15%, you will make $52.73, or $4.39 a month. After tax, I would end up with about $40, or a little over $3 a month. That is money earned, but for me, the risk is too high for $3 a month.

If you can play the game well and run it perfectly, you will make a few bucks. If you trip, even slightly, you will get slammed by the cc companies, loose money and have a ding on your credit report.

I agree with Dave in that most people do not factor in RISK when the run the math on these decisions.

 

[Ladyslug]

So here is another question you may be able to answer....I just don't know enough about how the credit score works.........I have a card I've had for years, never charged much on it....have not used it in a long time...and it's almost paid off...just a couple hundred dollars to go.....my question is, they have my credit limit at some stupid amount like $24,000.00 or something! It seems the longer I DON'T use it, they more they keep raising my credit. Should I have them lower it or leave it alone or what?

This one I'm not so sure on. I was worried about having a very high credit limit on one of my credit cards awhile back, and so I asked them to lower it (I picked the number). They did, and haven't raised it again since (although I'm sure if I asked them to, they would). Now I somewhat regret it, since when I was paying for my wedding and honeymoon I pretty much maxed that card out! If I had a bigger credit limit on it still, I wouldn't have had to worry so much about going over the limit.

And again, if you have a high limit, but you don't use it, that looks good for that component of your credit score, but it's possible for some things (colleges, other credit agencies) they look at your credit limit as the amount of money you have available and don't give as much financial aid or think maybe you're a bigger risk that you really are. But, like I said, I don't really know for sure. If you're really worried, have them cut it back to a number you think is reasonable, and ask them to raise it later if you're planning on doing some major spending (that you'll pay right off, of course!)