Debt is Scary

I refuse to owe people/companies anything (other than the mortgage). I've gone out of my way to make sure that I paid for my $6000 roof all at once in a cheque, and that I don't charge to my credit card more than I have in the bank. I think interest is a completely avoidable expense. 

I know for some people though this isn't possible. If you're living from pay check to pay check, then a big sudden expense might have to go on a credit card. I have a friend going through this right now. Below were my suggestions and discussions with them. 

1. If you can't afford to pay for it, you shouldn't be buying/charging it. This might mean you don't get to go out on that fancy dinner, or go to that theme park with friends, or even afford gas that week. In all situations, try to change the plan so you spend what you can afford. If it's gas, there's public transit. If it's an event, it's an apology and a rain check. 

2. Sit down and figure out your budget. What comes in is ALL you have. If one pay check pays all bills, then you have the second pay check as what you could spend all month on food and gas. This is what you should make your max credit card amount as. When you charge it up and have no more room to charge, then you at least know you can pay it. And get rid of any other credit cards, lines of credit or etc temptations that might make/allow you to charge more than that second pay check amount. 

3. DON'T just transfer your balance to different cards/line of credit. Yes the interest rate might be better on one, and this is a bandaid for maximum a month as you'll still get charged the interest, but it's bad all around. You need to pay it off, not just move it. And DONT'T get tempted by those pay check advance loan places. Those are best described as you on a treadmill where they just keep pressing the up button on speed. 

4. DON'T just pay the "minimum" charge on your credit card. This is usually $10, and will not even partially cover the interest charged on that month. No, pay as much as you possibly can. Scrounge every penny and pay everything you can each payment and as many times a month as you can too. On the bottom of each credit card bill is a handy little line that says "if you only pay the minimum each month it will take you __ months/years to pay it off". This is a horrifying number to look at as it also factors in interest. 

5. Remember, interest is charged on the WHOLE balance.. This includes last months interest. So if you owe $1000 and don't pay for 1 month and get the 22% interest charge, your balance is now $1220. Okay so next month if you don't pay, you're now going to owe (1220+22%) $1488. So you can see how a minimum payment of $10 won't be a drop in the bucket. 

6. If you have ANY savings, pull that out and pay the balance. Yes you might lose money because it's one of those "lock it in" deals, but you can't afford to be in debt or paying high interest when you have money sitting there. I tried to explain it as "don't be worrying about your future when your present is in trouble". 

7. So you need a lump sum to help knock off a bunch of what's owed? Ok. You know that jar of spare change in your room and car cup holders.. Start there. No word of a lie, any money is good. Now you want to keep enough money in your account to cover the "auto-charged" things so you don't incur a bounce/insufficient charge, but anything else should go to debt repayment for a few months. 

8. Live on nothing! Eat out of the freezer and pantry. Buy $1 rice meals and coupon/price match every single thing. You can't afford anything other than spare change meals for a little while! Walk or carpool instead of filling up with gas, or do an in-home movie night with candles and dollar popcorn instead of a date night out. This is also a good time to use your gift cards or to sell them to friends. Get creative!

9. Side hustle and call in "favours". If every friend you have can find you something to do for them for $10, you'll easily have a nice chunk to throw at your debt. Move a fridge, paint a bathroom, the first step is simply asking if anyone has any odd-jobs. Make sure to weight the cost of getting to the project doesn't zero out the amount you'll get. If no friends have anything on the go, post on Kijiji or with some flyers at an old folks' home.. Just ask for any odd jobs paying cash!

10. Sell stuff. Unused DVDs, trinkets, clothes.. People will buy anything if it's priced right, so throw up some ads on Facebook and Kijiji that are priced well and be willing to take anything people offer. Maybe you can promote a friends' business in exchange for something, try negotiating? Try something like Bookscouter to see if you have any books to sell too. Ask your family if they have anything they want to sell and if you do all the legwork can you get half/25% of what's made?

11. If all else fails, consider a second job. Yes this is the "ugh" option but if you are in debt and you can't see the light, then you need to do this. For a short period of time, every waking hour should be making you some money until you can get the debt gone. Remember, anywhere that's hiring is a good option.

12. If everything fails and it's the 11th hour, see if a family member or friend can bail you out. Can you have them pay if off and remove the interest and you pay them back every week/month? This is a question for good family members like parents that you immediately write and sign a contract for. Commit to pay them what you know you can afford a month and then pay back more. I'd still do all of the above items as it's still debt, but it's a last-ditch effort to remove the ever climbing interest amount. If this is the route you go, then seriously do not buy or charge anything until you've paid it back. It can be seen as insulting to some generous family members if you buy something instead of paying them back first. 

Switching banks – how much would it take?

Is the hassle worth the Bonus cash?

 

There are a lot of opportunities to get some bonus nearly-cash freebies – everything from buying a car at a certain time, to signing up for a credit card during a promo, and then banks trying to get new customers. I took advantage of a good sign up deal at Meridian when they opened across the street and scored a bunch of extra money (in the form of interest %) for just putting what I was already holding as savings into a different bank at the right time.

 

My hubby and I decided to try and cash in (HAH!, get it?) on BMO bank offer to “switch banks and we’ll give you cash!”.  We wanted to open up a joint account somewhere anyways, so this was a good opportunity to jump on a free money deal. We set an appointment with the Manager to sign up…

 

 

Now the rest of this post is more of a rant/opinion. I wanted to post it as a reminder that not all that glitters is gold, and to weigh what could go wrong with something before jumping headlong into it.

 

After a lot of just “getting to know us” and credit score checking, we were handed a full page of details about how we get free money. This included and bunch of “must-do’s” including setting up an automatic deposit, getting a new credit card, paying that credit card bill, etc. All of these items had to be completed by a certain date. Seemed easy enough! We went throught the sign up process for a totally JOINT account on the middle plan (saying we would get $250 if we did everything), got a new credit card for each of us and left feeling pretty confident. Our first to-do checkmark was making a deposit, which we did before we left that day of our wedding gift money.

 

 

Cue the problems...

-          Immediately, the new BMO debit cards have had issue after issue. We were hit-and-miss with whether it worked somewhere or not, but it would work up to the point of then saying declined. That’s a horrible feeling when you actually do have money. We complained and they sent us new cards. My husband is on card #4 now, and I’ve stopped using mine entirely. Stores around us like Swiss Chalet still have notice on their doors that they do not accept the new BMO debit cards 

-          We found out very quickly that “Joint account” at BMO does not mean that. Someone on the account has to be “main” or something, we still don’t understand, but basically my husband can do basic things like paying a bill or seeing HIS credit card balance. He cannot make changes, see “my” credit cards balance to make a payment, and he can’t talk about the account without me around. This has been incredibly frustrating.. Mostly because we don’t understand why 

-          We needed to have printed documents for a lawyer saying what we had in all of our bank accounts. This was not easily done as my husband couldn’t print the screen I can see which shows chequing and three credit card balances. I had to “order” the printout and have it put in an envelope for pickup by my husband

-          While paying bills somehow we paid one credit card amount to the wrong card. I called to try and find out how to switch the credit on one card to pay the other card and it is a “cash advance”. They cannot immediately credit me the charge for this, so have to call them back in the next month to have it refunded (hoping the whole time the “note” he has put on the account is indeed there)

At one point we started worrying that we hadn’t checked off all the boxes on the to-do lists. My husband went to the bank on three different occasions and was told something different each time.. usually starting with “no clue”. I kept trying to call the Manager we had signed up with but no answer. My husband emailed her a few times too, again with no response. 

Finally, we got a hold of the Manager. She said she would send us the printout again so we could see if we checked everything off. She (and basically BMO in general) couldn’t tell us whether we checked all the boxes. We were told by one of the people at the bank on one of my husband’s visits that the deadline for doing everything was December, so I was concerned that I wanted to make sure we hadn’t missed anything. She informed us that actually, no, the deadline was August! All that stress and hassle with the company, and we might have missed something because we were told the wrong deadline!

 

Fast forward to now and we received the money, so we had done everything on time, thank goodness. But as I stare at the free money, I wonder if the hassle was worth it?

 

Basically 6 months of annoyances and not being able to use a debit card where our money was seems like we should have been paid more, especially if this had actually been my sole bank account. I cheated and still kept my other bank account with a working bank card and all my bill payees intact, but had I not had this I would have been totally dependent on the faulty BMO cards and customer service. If this had been the case, the money would not have been worth it.

 

As it is though, I think it was worth the aggravation for $250 and hubby and I will now work on switching accounts to somewhere else.. Maybe to TD who has a Switch for $300 offer on right now...

 

SPC - Student Price Card... Get one!

If you are in school or are a parent/grandparent/friend to someone who is, this has been probably one of the best "investments" I've ever made. Everyone who can, get one! 

The SPC card is a student price (discount) card that is accepted in more and more places, from food to shopping to entertainment to banking to travel. They have a great list on the back of the card that shows all the places it is accepted and there is even an app that you can quickly use on your phone in your area on the go. 

The card costs $10. Yep that's it. When I got my card years ago, I was making a purchase of something like $120. I bought the card first and used it on that purchase, and it paid for itself immediately, and every discount since has been free effortless money! This is a complete no brainer! Every time we go out to eat, I save something like $3-$5. A couple meals and the card is paid for again. 

I always ask at retailers if they have a SPC discount and more and more places are saying yes. Banking and travel too, every little 10% adds up! 

To qualify, you need to be in school with a student ID card to show when you make the purchase. As long as you are a student you can buy the card every year and it is good for a year. 

Then there is this awesome second part, called the BMO SPC MasterCard. This I got quickly after getting my original card (can apply through their website) and it is a SPC discount card combined with a no yearly fee, chargeable, credit-building MasterCard. This was great for me to start building credit as it was my first credit card, and one less discount card I had to carry around. PLUS you can hook up the card to air miles and get air miles with each $20 charged to the card. This card is like a triple dream! Annnnnd.. Every year they automatically renewed my SPC credit card, so in the entire life of my SPC affair I've spent only $10. 

Since I got the MasterCard, I no longer had to show my student ID either because retailers assume that BMO has already screened me. One less card I needed to carry around again.  

There are other student discount programs as well. On campus, grab one of those free planners they give out and inside should be the various places that will give student discounts for your school. I went to York University, and they had their own separate student discount card plan that was good off campus too. While I was in school I would also ask stores if they had a student discount, and a bunch did though they didn't promote it anywhere. 

It pays for itself almost immediately so in my opinion there is no reason not to get this card (or MasterCard) and use it!