Spending Two When You Have One is No More Sexy

Things are changing. And changing fast. I never thought that we Indians would ape the Americans and start spending more than what we earn. But emails have started trickling in about how some guys have got into a vicious debt trap. I really hope this article in Express is an isolated story: Meltdown impact: 'It was over in five minutes

Excerpts: Jadhav has crossed the overdraft limit on his two credit cards and has run himself into a Rs-70,000 credit card debt. As he describes, “I am quite a spendthrift”. If he does not land a job in the next one month, Jadhav cannot pay his credit card dues and the card company will “come knocking to my door.”

Jadhav’s credit card debt has not found favour with his father whom he describes as his opposite because he abhors loans. “If my father has ten rupees in his pocket, he might consider spending one rupee. But I will spend two rupees if I have one rupee in my pocket,” he describes. Jadhav concedes he will have to change his squandering habits for the sake of his wife and son. His wife might soon start job scouting too.

It has only been a week since he has lost his job and Jadhav says he can manage for the next couple of weeks on his last pay cheque. If he does not find himself work within a month, Jadhav says he will go to his dad and say “zindabad” to his bank. He says how he expects his father to respond: “He will call me shameless!”

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Looks like the time has come for workshops on Personal Finance, focused towards young and new heads hoping to make better financial decisions and avoiding financial mistakes in the future

Photo credit: Debt20's photostream

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India's first online weekly on Personal Finance

Do's & Don't of Credit Cards

GetRichSlowly has a list of Do's & Don'ts for credit cards and I agree on all of them.

1. Learn to read the fine print. Read the legal stuff when you fill out the application, when you receive the card, and on any future mailings. Credit card terms and conditions can be confusing. If you don’t understand something, ask for help.
2. Similarly, review your statement every month. Due dates, fees, and interest rates are subject to change. Reconcile transactions and keep an eye out for fraud. Many people — and I’m one of them — actually check their statements online several times a month. By paying attention, you can prevent small annoyances from becoming large hassles.
3. As always, don’t be afraid to speak up. If you notice something strange on your bill, call customer service. If you want to dispute a charge, call customer service. If you want a rate reduction, call customer service. It never hurts to ask.
4. Be wary of the special offers your credit card company sends you. Understand the teaser rates. Beware offers to skip a payment. Be suspicious of other products the company tries to push: insurance, fraud protection, etc. Many of these are bad deals for consumers.
5. Finally, pay your bill on time and in full every month. If you are not yet in credit card debt, don’t start. Don’t rely on credit cards to support a lifestyle you cannot afford. Don’t resort to using a credit card because you can’t afford to pay cash for something — use a credit card because you can.

India's first online weekly on personal finance

10 Credit Card Tips to Keep You Out of Debt

This blog has it's first guest post. I haven't written anything on credit cards and when Heather Johnson volunteered to write about how to be using your credit cards, I thought it a great thing to share with you. Yes, if anyone of you would like to share some of your personal finance stories, please feel free to comment or write to me (ranjanvarma at gmail dot com). Over to Heather Johnson.

The moment we come of age, credit card companies are stuffing our mailboxes with enticing offers and convoluted fine print. It's no wonder there is a staggering problem with credit card debt these days, particularly in the United States. However, credit cards don't have to be your enemy. In fact, they can be quite useful and it's very hard to exist without at least one major credit card.

Below are 10 credit card tips to keep you out of debt:

1. If you are someone who will carry a balance from one month to the next (which is most of us), then your finance charges should your biggest priority. Choose a card with the lowest percentage rate available.

2. When you do find a "Zero percent interest" or "Low interest" card, read the fine print and make sure that interest rate isn't going to drastically hike after an introductory period.

3. Sometimes, "fixed" rates aren't fixed at all. With a little warning ahead of time, credit card companies are free to increase your rates at any time.

4. Don’t carry your credit card around with you. Unless you are specifically leaving the house to use it, keep it at home so impulse shopping won't tempt you.

5. Carefully read each month's statement, as companies certainly do make mistakes. Also, you want to make sure that no unapproved charges have been made.

6. Watch out for annual fees. Some cards have no annual fees, other cards (particularly those with big rewards) may charge quite a bit.

7. Can't afford a big ticket item that you really want? Don't use the credit card as a crutch. It isn't a gateway to free money and you will have to repay it eventually.

8. Always pay more than the minimum charge on your bill or you will never pay it down.

9. Never mail your monthly payment in late. Even an honest mistake could result in a huge rate hike as penalty. Credit card companies are not sympathetic to mistakes, unfortunately.

10. Create a household budget and stick to it.

Credit cards are a necessary evil in the 21^st century. Even if you are liquid enough to never have to charge something, you will need a credit card to buy a plane ticket, reserve a hotel room and more. In other words, it is in your best interest to learn how to use a credit card wisely, as it will always be a part of your adult life.

By-line:

Heather Johnson is a freelance business, finance and economics writer, as well as a regular contributor at Business Credit Cards, a site for business credit card and best business credit card offers. Heather welcomes comments and freelancing job inquiries at her email address
heatherjohnson2323@gmail.com.