All posts by Barbara Peterson

Barbara Peterson

T’was the Nightmare after Christmas: Holiday Debt 2018

Things are looking up,statistically, when it comes to paying off Christmas debt.  Most consumers think they can pay off Christmas debt in five months, when in reality it could take up to two years.   There is an upside, today, the average consumer is managing to pay off their Christmas debt before the next holiday season.  The down side:  consumers are entering into a cycle of what I call ‘debt row. ’ Although they are paying off their seasonal debt…the cycle begins all over again with the next holiday season.  I call this Debt Row.

How to determine if you are on debt row:  for starters, the fact that you are borrowing to pay for Christmas is the first indication that you are on debt row or headed for it.  If you are borrowing to pay for gifts, chances are, Christmas is not the only time that you borrow to ‘make it through.’  And remember, you still have to contend with those pre-holiday bills, these bills cannot be overlooked.

Make sure December bills are paid.

Make sure your December bills are paid before you purchase any gifts. If you are one of those consumers whose mindset is to pay December’s bills with the January bills; change your mindset.  It is time that we, as consumers change our thought process when it comes to our bill paying habits.  No more saying, “those people will get their money.”

Another indication that you are on debt row:  you pay the minimum monthly amount on your credit card(s).  An another indication that you are on debt row  is your credit card is maxed out.  You may not have a lot of money to purchase Christmas gifts if you pay your bills first, but that is alright.

Many people opt to purchase gifts instead of paying bills first. You must change your thought process. Paying your bills first is a must.  There is no way around it, if you eventually want to be debt free.  It is a wonderful feeling entering the New Year without added debt.  Try it and let that be your Christmas gift to yourself.

Why is it difficult to pay Christmas bills in a timely manner? Interests rate are higher.  Check your monthly billing statement, you are most likely paying 15%.   Most consumers do not bother to get a lower interest rate.  For every six months that you pay your credit card bill on time, you can request a lower interest rate.

Where do consumers get the money to purchase during the holidays?

  • 52% use credit cards
  • 30% use store credit cards
  • 8% use personal loans
  • 6% use payday loans
  • 4% use home equity loans

We have become consumers who are willing to go into debt for our children. Electronic games, iPads, cell phones,$200 footwear, you name it. A new concept would be to let your child/children’s school grades dictate how much and what is under the Christmas tree. One low grade equals one less gift.  Junior and the princess will get over it.  Earning gifts will actually give your children a sense of accomplishment. Parents, it is time  educate our children on the importance of spending and saving for the future.

Can you remember the gifts you received last year? Can your children remember the gifts that they received last year? If not, this is an excellent time to change to a different, gift giving strategy.

Between gift giving, hosting holiday parties and for some, fewer work hours, it’s easy for debt to add up if you don’t have savings on hand. During the Thanksgiving and Christmas holidays we also have to contend with purchasing more groceries than normal. Holiday grocery spending can add an additional $300 – $600 to our food bill. Let’s not forget the all-seafood menu that many of us enjoy on New Year’s Day. That alone can set a budget back another $350.00.

Keep in mind that a Christmas Club account can help defray the cost of grocery items as well as gifts. Be smart as well as proactive; open a Christmas Club account for next year.

We all love the supermarkets where we can get free food samples as we shop. These promotions are plentiful this time of year, we pay for those promotions one way or another. All those advertisements, we pay for those too. Try shopping for your food at some of the discount grocery stores: Price Rite and Aldi’s, etc.

I understand that it is easy to get caught up in the holiday merriment. Advertisers are enticing us on television, on the radio, billboards, everywhere. The malls are decorated beautifully, all to get us to spend, spend, spend. Merchants invest big bucks to get our dollars. When the New Year arrives and you miss a payment, those same merchants (who pulled out all of the stops to get you to purchase from them) start calling you at home and on the job, asking when they can expect payment. Did you know they like it when you miss a payment? Yes, that is how they make a good portion of their money.

Because you missed a payment, they can raise your interest rate, charge you over the limit fees, etc. They don’t really want your monthly payment to come in a timely manner. If you pay your bills on time, merchants and retailers benefit, but not as much as when you miss a payment or pay late. Keep that in mind when you think you want to spend money you do not have during this festive time of year.

It is time for consumers everywhereto get off the debt roller coaster.  Although this holiday season mayentice you to spend more than you can afford, discipline is the key to helpingyou manage your purchases. Do not get taken in by those 60% off deals or those‘no interest until 2019’ deals. Read the fine print, do the math and calculateif it is truly a bargain.

Do not be tempted by liquidation sales that pop up this time of year. Liquidators are in business to make money, they are not giving you a deal, and liquidating is what they do. They come into the area, rent a temporary location and move on before you realize the item you purchased is not performing to the excellent standards that their advertisements proclaimed. Do not be fooled. That flat screen television that you purchased at the liquidation sale for $499.00, you could have purchased it at Walmart for $99 on Black Friday. You would have received a warranty from Walmart. Liquidators do not accept returns nor do they give warranties. And their 800 number is no longer a working number.

Make yourself a Christmas shopping list. Santa checks his list twice – go Santa one better and check your list three times. Do you really want to buy gifts for everyone on your list?  Splurge on a greeting card instead. Trust me, you will get over the commercialism hype of the season and reality will set in on December 26th.

Creativity is the key in gift giving this year. Affordable gift giving, it can be done, get creative in your thinking. We all have pictures that are dear to us and to those we know and love. Clean the dust off those sentimental pictures, give them new life. Now, go to your local dollar store and purchase a nice silver or gold picture frame.

It truly is not the amount of the gift that counts; it is the thought that will touch hearts. Thrift stores sell silk neckties for 99 cents, you can have the necktie dry cleaned for approximately $3. The recipient of your gift will not know how much you spent unless you tell them. When shopping at the thrift stores stick with items that are 50% off. You could very well purchase a Jones NY or Anne Klein suit for $7.99. Note to the men: I purchased a Michael Kors satin dress and jacket a few years ago. It was 50% off, my cost, a whopping $5. Designer items can be found at your local thrift shop.

Nowadays you need a part time job to be able to purchase gift wrapping; everything has gone up in price and there is no end in sight. Creative gift wrapping is the answer. We all have items in our closet that no longer fit. That old outdated linen or silk dress or that 2 sizes too small suit will make elegant wrapping cloth for your creative gift. A bow from the dollar store and you are good to go. If you search, savings can be found everywhere.

An appointment at a hair salon or barber shop makes a nice, affordable gift for the niece or nephew on your list. An oil change or car tune up gift certificate for an elderly aunt or uncle (on a fixed income) is economical and appreciated. A pedicure makes a nice, relaxing gift for your parents.

For gifts that may cost more, consider partnering with a sibling or a friend to make the purchase more affordable. Examples for this type of gift giving would be fruit baskets, cheese and sausage baskets, etc. Restaurant gift certificates would make a nice holiday treat for someone on your list. Consider taking someone different to the office Christmas party and be sure to notice the smile on their face. A gift certificate for a massage for that hard working sibling of yours may garner you the ‘Best Sibling of the Year Award.’ Many of the gift ideas that I’ve mentioned can be found on Living Social, Groupon or other similar websites for additional savings.

Lastly, keep in mind when you use your credit card, you are simply borrowing from your future income. If you use a credit card, remember they are for convenience, and should be paid off at the end of every month. When you use your debit card to purchase a Christmas gift or any item for that matter, ask yourself what bill will go unpaid as a result of that purchase. You know your finances better than anyone. Be honest, ask yourself the hard questions, such as, “Can I really afford this” and more importantly, “Why I am I buying?”

Break the cycle of spending money that you do not have. A sure fire way to know what should or should not be charged on a credit card: can the item be seen in two to three months? If not, you should pay cash for those items. Those items include, but are not limited to groceries, gas and fast food.

Remember, when shopping at any time of the year: ACT YOUR WAGE.Barbara Peterson is founder of Peterson Sewing School, co-owner of The Syracuse Seamstress, Partner at Syracuse Fashion Gallery, owner of Debt Row Freedom and Syracuse Spice Company. She is also certified by the FDIC to teach their Money Smart and Train the Trainer programs.


T’was the Nightmare after Christmas: Holiday Debt 2017

Things are looking up, statistically, when it comes to paying off Christmas debt.  Most consumers think they can pay off Christmas debt in five months, when in reality it could take up to two years.   There is an upside, today, the average consumer is managing to pay off their Christmas debt before the next holiday season.  The down side:  consumers are entering into a cycle of what I call ‘debt row. ’ Although they are paying off their seasonal debt…the cycle begins all over again with the next holiday season.  I call this Debt Row.

How to determine if you are on debt row:  for starters, the fact that you are borrowing to pay for Christmas is the first indication that you are on debt row or headed for it.  If you are borrowing to pay for gifts, chances are, Christmas is not the only time that you borrow to ‘make it through.’  And remember, you still have to contend with those pre-holiday bills, these bills cannot be overlooked.

Pay December’s bills you purchase gifts.

Make sure your December bills are paid before you purchase any gifts. If you are one of those consumers whose mindset is to pay December’s bills with the January bills; change your mindset.  It is time that we, as consumers change our thought process when it comes to our bill paying habits.  No more saying, “those people will get their money.”

Another indication that you are on debt row:  you pay the minimum monthly amount on your credit card(s).  An another indication that you are on debt row  is your credit card is maxed out.  You may not have a lot of money to purchase Christmas gifts if you pay your bills first, but that is alright.

Many people opt to purchase gifts instead of paying bills first. You must change your thought process.  Paying your bills first is a must.  There is no way around it, if you eventually want to be debt free.  It is a wonderful feeling entering the New Year without added debt.  Try it and let that be your Christmas gift to yourself.

Why is it difficult to pay Christmas bills in a timely manner?  Interests rate are higher.  Check your monthly billing statement, you are most likely paying 15%.   Most consumers do not bother to get a lower interest rate.  For every six months that you pay your credit card bill on time, you can request a lower interest rate.

Where do consumers get the money to purchase during the holidays?

  • 52% use credit cards
  • 30% use store credit cards
  • 8% use personal loans
  • 6% use payday loans
  • 4% use home equity loans

We have become consumers who are willing to go into debt for our children. Electronic games, iPads, cell phones, $200 footwear, you name it. A new concept would be to let your child/children’s school grades dictate how much and what is under the Christmas tree. One low grade equals one less gift.  Junior and the princess will get over it.  Earning gifts will actually give your children a sense of accomplishment. Parents, it is time  educate our children on the importance of spending and saving for the future.

Can you remember the gifts you received last year? Can your children remember the gifts that they received last year? If not, this is an excellent time to change to a different, gift giving strategy.

Between gift giving, hosting holiday parties and for some, fewer work hours, it’s easy for debt to add up if you don’t have savings on hand. During the Thanksgiving and Christmas holidays we also have to contend with purchasing more groceries than normal. Holiday grocery spending can add an additional $300 – $600 to our food bill. Let’s not forget the all-seafood menu that many of us enjoy on New Year’s Day. That alone can set a budget back another $350.00.

Keep in mind that a Christmas Club account can help defray the cost of grocery items as well as gifts. Be smart as well as proactive; open a Christmas Club account for next year.

We all love the supermarkets where we can get free food samples as we shop. These promotions are plentiful this time of year, we pay for those promotions one way or another. All those advertisements, we pay for those too. Try shopping for your food at some of the discount grocery stores: Price Rite and Aldi’s, etc.

I understand that it is easy to get caught up in the holiday merriment. Advertisers are enticing us on television, on the radio, billboards, everywhere. The malls are decorated beautifully, all to get us to spend, spend, spend. Merchants invest big bucks to get our dollars. When the New Year arrives and you miss a payment, those same merchants (who pulled out all of the stops to get you to purchase from them) start calling you at home and on the job, asking when they can expect payment. Did you know they like it when you miss a payment? Yes, that is how they make a good portion of their money.

Because you missed a payment, they can raise your interest rate, charge you over the limit fees, etc. They don’t really want your monthly payment to come in a timely manner. If you pay your bills on time, merchants and retailers benefit, but not as much as when you miss a payment or pay late. Keep that in mind when you think you want to spend money you do not have during this festive time of year.

It is time for consumers everywhere to get off the debt roller coaster.  Although this holiday season may entice you to spend more than you can afford, discipline is the key to helping you manage your purchases. Do not get taken in by those 60% off deals or those ‘no interest until 2018’ deals. Read the fine print, do the math and calculate if it is truly a bargain.

Do not be tempted by liquidation sales that pop up this time of year. Liquidators are in business to make money, they are not giving you a deal, and liquidating is what they do. They come into the area, rent a temporary location and move on before you realize the item you purchased is not performing to the excellent standards that their advertisements proclaimed. Do not be fooled. That flat screen television that you purchased at the liquidation sale for $499.00, you could have purchased it at Walmart for $99 on Black Friday. You would have received a warranty from Walmart. Liquidators do not accept returns nor do they give warranties. And their 800 number is no longer a working number.

Make yourself a Christmas shopping list. Santa checks his list twice – go Santa one better and check your list three times. Do you really want to buy gifts for everyone on your list?  Splurge on a greeting card instead. Trust me, you will get over the commercialism hype of the season and reality will set in on December 26th.

Creativity is the key in gift giving this year. Affordable gift giving, it can be done, get creative in your thinking. We all have pictures that are dear to us and to those we know and love. Clean the dust off those sentimental pictures, give them new life. Now, go to your local dollar store and purchase a nice silver or gold picture frame.

It truly is not the amount of the gift that counts; it is the thought that will touch hearts. Thrift stores sell silk neckties for 99 cents, you can have the necktie dry cleaned for approximately $3. The recipient of your gift will not know how much you spent unless you tell them. When shopping at the thrift stores stick with items that are 50% off. You could very well purchase a Jones NY or Anne Klein suit for $7.99. Note to the men: I purchased a Michael Kors satin dress and jacket a few years ago. It was 50% off, my cost, a whopping $5. Designer items can be found at your local thrift shop.

Nowadays you need a part time job to be able to purchase gift wrapping; everything has gone up in price and there is no end in sight. Creative gift wrapping is the answer. We all have items in our closet that no longer fit. That old outdated linen or silk dress or that 2 sizes too small suit will make elegant wrapping cloth for your creative gift. A bow from the dollar store and you are good to go. If you search, savings can be found everywhere.

An appointment at a hair salon or barber shop makes a nice, affordable gift for the niece or nephew on your list. An oil change or car tune up gift certificate for an elderly aunt or uncle (on a fixed income) is economical and appreciated. A pedicure makes a nice, relaxing gift for your parents.

For gifts that may cost more, consider partnering with a sibling or a friend to make the purchase more affordable. Examples for this type of gift giving would be fruit baskets, cheese and sausage baskets, etc. Restaurant gift certificates would make a nice holiday treat for someone on your list. Consider taking someone different to the office Christmas party and be sure to notice the smile on their face. A gift certificate for a massage for that hard working sibling of yours may garner you the ‘Best Sibling of the Year Award.’ Many of the gift ideas that I’ve mentioned can be found on Living Social, Groupon or other similar websites for additional savings.

Lastly, keep in mind when you use your credit card, you are simply borrowing from your future income. If you use a credit card, remember they are for convenience, and should be paid off at the end of every month. When you use your debit card to purchase a Christmas gift or any item for that matter, ask yourself what bill will go unpaid as a result of that purchase. You know your finances better than anyone. Be honest, ask yourself the hard questions, such as, “Can I really afford this” and more importantly, “Why I am I buying?”

Break the cycle of spending money that you do not have. A sure fire way to know what should or should not be charged on a credit card: can the item be seen in two to three months? If not, you should pay cash for those items. Those items include, but are not limited to groceries, gas and fast food.

Remember, when shopping at any time of the year: ACT YOUR WAGE.

Barbara Peterson is founder of Peterson Sewing School, co-owner of The Syracuse Seamstress, Partner at Syracuse Fashion Gallery, owner of Debt Row Freedom and Syracuse Spice Company. She is also certified by the FDIC to teach their Money Smart and Train the Trainer programs. She is also an instructor at OCM – BOCES. 


T’was the Nightmare after Christmas: Holiday Debt 2016

Things are looking up, statistically, when it comes to paying off Christmas debt.  Most consumers think they can pay off Christmas debt in five months, when in reality it could take up to two years.   There is an upside, today, the average consumer is managing to pay off their Christmas debt before the next holiday season.  The down side:  consumers are entering into a cycle of what I call ‘debt row. ’ Although they are paying off their seasonal debt…the cycle begins all over again with the next holiday season.  I call this Debt Row.

How to determine if you are on debt row:  for starters, the fact that you are borrowing to pay for Christmas is the first indication that you are on debt row or headed for it.  If you are borrowing to pay for gifts, chances are, Christmas is not the only time that you borrow to ‘make it through.’  And remember, you still have to contend with those pre-holiday bills, these bills cannot be overlooked.

Make sure your December bills are paid before you purchase any gifts. If you are one of those consumers whose mindset is to pay December’s bills with the January bills; change your mindset.  It is time that we, as consumers change our thought process when it comes to our bill paying habits.  No more saying, “those people will get their money.”

Another indication that you are on debt row:  you pay the minimum monthly amount on your credit card(s).  An another indication that you are on debt row  is your credit card is maxed out.  You may not have a lot of money to purchase Christmas gifts if you pay your bills first, but that is alright.

Many people opt to purchase gifts instead of paying bills first. You must change your thought process.  Paying your bills first is a must.  There is no way around it, if you eventually want to be debt free.  It is a wonderful feeling entering the New Year without added debt.  Try it and let that be your Christmas gift to yourself.

Why is it difficult to pay Christmas bills in a timely manner?  Interests rate are higher.  Check your monthly billing statement, you are most likely paying 15%.   Most consumers do not bother to get a lower interest rate.  For every six months that you pay your credit card bill on time, you can request a lower interest rate.

Where do consumers get the money to purchase during the holidays?

  • 52% use credit cards
  • 30% use store credit cards
  • 8% use personal loans
  • 6% use payday loans
  • 4% use home equity loans

We have become consumers who are willing to go into debt for our children. Electronic games, iPads, cell phones, $200 footwear, you name it. A new concept would be to let your child/children’s school grades dictate how much and what is under the Christmas tree. One low grade equals one less gift.  Junior and the princess will get over it.  Earning gifts will actually give your children a sense of accomplishment. Parents, it is time  educate our children on the importance of spending and saving for the future.

Can you remember the gifts you received last year? Can your children remember the gifts that they received last year? If not, this is an excellent time to change to a different, gift giving strategy.

Between gift giving, hosting holiday parties and for some, fewer work hours, it’s easy for debt to add up if you don’t have savings on hand. During the Thanksgiving and Christmas holidays we also have to contend with purchasing more groceries than normal. Holiday grocery spending can add an additional $300 – $600 to our food bill. Let’s not forget the all-seafood menu that many of us enjoy on New Year’s Day. That alone can set a budget back another $350.00.

Keep in mind that a Christmas Club account can help defray the cost of grocery items as well as gifts. Be smart as well as proactive; open a Christmas Club account for next year.

We all love the supermarkets where we can get free food samples as we shop. These promotions are plentiful this time of year, we pay for those promotions one way or another. All those advertisements, we pay for those too. Try shopping for your food at some of the discount grocery stores: Price Rite and Aldi’s, etc.

I understand that it is easy to get caught up in the holiday merriment. Advertisers are enticing us on television, on the radio, billboards, everywhere. The malls are decorated beautifully, all to get us to spend, spend, spend. Merchants invest big bucks to get our dollars. When the New Year arrives and you miss a payment, those same merchants (who pulled out all of the stops to get you to purchase from them) start calling you at home and on the job, asking when they can expect payment. Did you know they like it when you miss a payment? Yes, that is how they make a good portion of their money.

Because you missed a payment, they can raise your interest rate, charge you over the limit fees, etc. They don’t really want your monthly payment to come in a timely manner. If you pay your bills on time, merchants and retailers benefit, but not as much as when you miss a payment or pay late. Keep that in mind when you think you want to spend money you do not have during this festive time of year.

It is time for consumers everywhere to get off the debt roller coaster.  Although this holiday season may entice you to spend more than you can afford, discipline is the key to helping you manage your purchases. Do not get taken in by those 60% off deals or those ‘no interest until 2018’ deals. Read the fine print, do the math and calculate if it is truly a bargain.

Do not be tempted by liquidation sales that pop up this time of year. Liquidators are in business to make money, they are not giving you a deal, and liquidating is what they do. They come into the area, rent a temporary location and move on before you realize the item you purchased is not performing to the excellent standards that their advertisements proclaimed. Do not be fooled. That flat screen television that you purchased at the liquidation sale for $499.00, you could have purchased it at Walmart for $99 on Black Friday. You would have received a warranty from Walmart. Liquidators do not accept returns nor do they give warranties. And their 800 number is no longer a working number.

Make yourself a Christmas shopping list. Santa checks his list twice – go Santa one better and check your list three times. Do you really want to buy gifts for everyone on your list?  Splurge on a greeting card instead. Trust me, you will get over the commercialism hype of the season and reality will set in on December 26th.

Creativity is the key in gift giving this year. Affordable gift giving, it can be done, get creative in your thinking. We all have pictures that are dear to us and to those we know and love. Clean the dust off those sentimental pictures, give them new life. Now, go to your local dollar store and purchase a nice silver or gold picture frame.

It truly is not the amount of the gift that counts; it is the thought that will touch hearts. Thrift stores sell silk neckties for 99 cents, you can have the necktie dry cleaned for approximately $3. The recipient of your gift will not know how much you spent unless you tell them. When shopping at the thrift stores stick with items that are 50% off. You could very well purchase a Jones NY or Anne Klein suit for $7.99. Note to the men: I purchased a Michael Kors satin dress and jacket a few years ago. It was 50% off, my cost, a whopping $5. Designer items can be found at your local thrift shop.

Nowadays you need a part time job to be able to purchase gift wrapping; everything has gone up in price and there is no end in sight. Creative gift wrapping is the answer. We all have items in our closet that no longer fit. That old outdated linen or silk dress or that 2 sizes too small suit will make elegant wrapping cloth for your creative gift. A bow from the dollar store and you are good to go. If you search, savings can be found everywhere.

An appointment at a hair salon or barber shop makes a nice, affordable gift for the niece or nephew on your list. An oil change or car tune up gift certificate for an elderly aunt or uncle (on a fixed income) is economical and appreciated. A pedicure makes a nice, relaxing gift for your parents.

For gifts that may cost more, consider partnering with a sibling or a friend to make the purchase more affordable. Examples for this type of gift giving would be fruit baskets, cheese and sausage baskets, etc. Restaurant gift certificates would make a nice holiday treat for someone on your list. Consider taking someone different to the office Christmas party and be sure to notice the smile on their face. A gift certificate for a massage for that hard working sibling of yours may garner you the ‘Best Sibling of the Year Award.’ Many of the gift ideas that I’ve mentioned can be found on Living Social, Groupon or other similar websites for additional savings.

Lastly, keep in mind when you use your credit card, you are simply borrowing from your future income. If you use a credit card, remember they are for convenience, and should be paid off at the end of every month. When you use your debit card to purchase a Christmas gift or any item for that matter, ask yourself what bill will go unpaid as a result of that purchase. You know your finances better than anyone. Be honest, ask yourself the hard questions, such as, “Can I really afford this” and more importantly, “Why I am I buying?”

Break the cycle of spending money that you do not have. A sure fire way to know what should or should not be charged on a credit card: can the item be seen in two to three months? If not, you should pay cash for those items. Those items include, but are not limited to groceries, gas and fast food.

Remember, when shopping at any time of the year: ACT YOUR WAGE.

Barbara Peterson is founder of Peterson Sewing School, co-owner of The Syracuse Seamstress, Partner at Syracuse Fashion Gallery, owner of Debt Row Freedom and Syracuse Spice Company. She is also certified by the FDIC to teach their Money Smart and Train the Trainer programs. She is also an instructor at OCM – BOCES. 

 


OUCH! How Much Did You Hurt Your Credit Score During The Holidays?

  • Did you lean on your credit cards more than you expected during the Christmas holiday.  Not to worry, here are a few tips to get you back on track. 

    1.  First things first.  Get your free credit score from www.creditkarma.com.  My suggestion is to get your free credit score before your next credit card billing cycle; this allows you to see your credit score before all of those new charges show up, let’s call this your first credit score.  Be sure to check back with www.creditkarma.com after the billing cycle; this will give you a good picture of any damage to your credit score. Let’s call this your second credit score.    Hopefully, your Christmas shopping has not impacted your credit score.  If the second score is lower than your first credit score; the reason is the amount you charged in a 30 day or less period.  No need to panic, there is hope.

    2. If you can pay off the debt within the next 30 days, you are as good as gold.  If not, simply pay the minimum amount due 7 – 10 days before the due date.  If you do this, your credit score will recover before the next billing cycle.

    3.  If you spent too much, consider using your income tax refund to pay off the Christmas debt.  Continue paying the minimum amount due 7 – 10 days before the due date.  This will give your credit score a little boost.  Let’s count:  month 1 (January), month 2 (February), month 3 (March), month 4 (April) and month 5 (May).

    4.  If you are still paying off your Christmas spending when month 4 (April) rolls around; it is imperative that you pay the balance off by month 5 (May).  How and where will get the money to do that?  Your income tax return!  This will get you what creditors call an excellent payment rating.  Remember, for example if your limit on one credit card is $1,000 and your outstanding balance is 35 – 50 per cent ($350 – $500) you could see your credit score will go down.   On a $1,000 credit limit, you want to keep your outstanding balance no higher than $300. Your outstanding balance should hover around $30 per cent or lower.   If your credit limit is $2,500, your outstanding balance should be no higher than $750.  Do the math, multiple your credit balance by 30 per cent so you know how much should be charged on your credit card at any given time.  If you go over 30 per cent, pay debt down in order to get your balance owed, under 30 per cent during the next billing cycle.

    5.  Using credit cards to pay for Christmas could very well cost double in the long run.  For example, if you spend $1,000 and only pay the minimum amount and the interest rate on your credit card is 13.93 per cent, you will end up paying more than $350 in interest.  I you use a store credit card that has a 24.5 per cent interest rate; you will pay over $1,000 in interest.  Seriously, you should charge on your credit card only what you are willing to pay in cash.

    Keep in mind, maxing out on your credit cards anytime of the year increases the interest rate on all of your credit cards.  This can be very expensive for you.  For example, Sears may look at your credit report and see that you pay your Macy’s bill late.  Sears can and will increase the interest rate on your Sears credit card.  They all do it, it is perfectly legal.   Did you know that the cost of your car insurance can be determined by your credit score?  If your car insurance premiums are high and you have a good driving record, your credit score is causing it.   Remember, if you act your wage, things will get better.

    Barbara Peterson is owner of Debt Row Freedom, an online credit improvement service.  She is also certified by the FDIC to teach their Money Smart and Train the Trainer programs.  She also teaches credit improvement classes at OCM – BOCES in Liverpool, New York.  

     

     


    T’was the Nightmare after Christmas: Holiday Debt


    Things are looking up, statistically, when it comes to paying off Christmas debt.  A few years ago, the average consumer paid off Christmas debt in approximately two years.   There is an upside, today, the average consumer is managing to pay off their Christmas debt before the next holiday season.  The down side:  consumers are entering into a cycle of what I call ‘debt row. ’ Although they are paying off their seasonal debt yearly…the cycle begins all over again with the next holiday season.  I call this Debt Row.

    How to determine if you are on debt row:  for starters, the fact that you are borrowing to pay for Christmas is the first indication that you are on debt row or headed for it.  If you are borrowing to pay for gifts, chances are, Christmas is not the only time that you borrow to ‘make it through.’  And remember, you still have to contend with those pre-holiday bills, these bills cannot be overlooked.

    For starters: make sure your December bills are paid before you purchase any gifts. If you are one of those consumers whose mindset is to pay December’s bills with the January bills, I am talking to you. It is time that we, as consumers change our thought process when it comes to our bill paying habits.

    Another indication that you are on debt row:  you pay the minimum monthly amount on your credit card(s).  An additional indication that you are debt row is your credit card is maxed out.  I know you may not have a lot of money to purchase Christmas gifts if you pay your bills first.credit cards 2

    Many people opt to purchase gifts instead of paying bills first. You must change your thought process.  Paying your bills first is a must.  There is no way around it, if you eventually want to be debt free.  It is a wonderful feeling entering the New Year without added debt.  Try it and let that be your Christmas gift to yourself.

    Sadly, we have become consumers who are willing to go into debt for our children. Electronic games, iPads, cell phones, you name it. My suggestion would be to let your child’s school grades dictate how much is under the Christmas tree. One low grade equals one less gift. Junior and the princess will get over it.  Whatever happened to the days when fathers ruled the roost? And where are the mothers who would say, “Because I said so?” Parents educate your children on the importance of spending and saving for the future.

    Can you remember the gifts you received last year? Can your children remember the gifts that they received last year? If not, this is an excellent time to change to a different, gift giving strategy.

    During the Thanksgiving and Christmas holidays we also have to contend with purchasing more groceries than normal. Holiday grocery spending can add an additional $300 – $500 to our food bill. Let’s not forget the all-seafood menu that many of us enjoy on New Year’s Day. That alone can set a budget back another $350.00.

    Keep in mind that a Christmas Club account can help defray the cost of grocery items as well as gifts. Be smart as well as proactive; open a Christmas Club account for next year.

    We all love the supermarkets where we can get free food samples as we shop. These promotions are plentiful this time of year, we pay for those promotions one way or another. All those advertisements, we pay for those too. Try shopping for your food at some of the discount grocery stores: Price Rite, Aldi’s and Buda’s Meat and Produce. There are others, these are a few of my favorites.

    As consumers living in Upstate New York, we also have to keep in mind that winter in this area brings other expenses such as higher than normal heating bills. If you charged Christmas on your credit cards, not only will those holiday bills be due in January, and the months that follow, so will your winter gas and electric bills. Do not be fooled into thinking that your utilities cannot be shut off in the winter. As a former Field Collector for a local utility company, I know your utilities can and will be shut off during the winter if your bill goes unpaid. The only requirement during the winter is that you receive a 72-hour notice (3 business days) before your electric and/or gas service can be turned off.

    Gas BillThe Public Service Commission requires the local gas/electric company to give a 72-hour notice from November 15 – April 15th. Having your utilities shut off during the winter months is no picnic. Pipes can freeze, which is another added expense. If there is a chance that you may forego paying your electric or gas bill to purchase a gift or two, it is just not worth it.

    I understand that it is easy to get caught up in the holiday merriment. Advertisers are enticing us on television, on the radio, billboards, everywhere. The malls are decorated beautifully, all to get us to spend, spend, spend. Merchants invest big bucks to get our dollars. When the New Year arrives and you miss a payment, those same merchants (who pulled out all of the stops to get you to purchase from them) start calling you at home and on the job, asking when they can expect payment. Did you know they like it when you miss a payment? Yes, that is how they make a good portion of their money.

    Because you missed a payment, they can raise your interest rate, charge you over the limit fees, etc. They don’t really want your monthly payment to come in a timely manner. If you pay your bills on time, merchants and retailers benefit, but not as much as when you miss a payment or pay late. Keep that in mind when you think you want to spend money you do not have during this festive time of year.

    It is time for consumers everywhere to get off the debt roller coaster.  Although this holiday season may entice you to spend more than you can afford, discipline is the key to helping you manage your purchases. Do not get taken in by those 60% off deals or those ‘no interest until 2018’ deals. Read the fine print, do the math and calculate if it is truly a bargain.

    Do not be tempted by liquidation sales that pop up this time of year. Liquidators are in business to make money, they are not giving you a deal, liquidating is what they do. They come into the area, rent a temporary location and move on before you realize the item you purchased is not performing to the excellent standards that their advertisements proclaimed. Do not be fooled. That flat screen television that you purchased at the liquidation sale for $499.00, you could have purchased it at Walmart for $99 on Black Friday. You would have received a warranty from Walmart. Liquidators do not accept returns nor do they give warranties. And their 800 number is no longer a working number.

    Make yourself a Christmas shopping list. Santa checks his list twice – go Santa one better and check your list three times. Do you really want to buy gifts for everyone on your list?  Splurge on a greeting card instead. Trust me, you will get over the commercialism hype of the season and reality will set in on December 26th.

    Creativity is the key in gift giving this year. Affordable gift giving, it can be done, get creative in your thinking. We all have pictures that are dear to us and to those we know and love. Clean the dust off those sentimental pictures, give them new life. Now, go to your local dollar store and purchase a nice silver or gold picture frame.

    gifts wrappedNext, go to your favorite mall retailer and get a nice gift box (it’s free). Get those free gift boxes now while they are in abundant supply.  The key is learning how to become more unconventional in our gift giving. Is there someone on your gift giving list who loves their car more than they love air? Consider purchasing a car wash gift certificate for this individual.

    It truly is not the amount of the gift that counts; it is the thought that will touch hearts. Thrift stores sell silk neckties for 99 cents, you can have the necktie dry cleaned for approximately $3. The recipient of your gift will not know how much you spent unless you tell them. When shopping at the thrift stores stick with items that are 50% off. You could very well purchase a Jones NY or Anne Klein suit for $7.99. Note to the men: I purchased a Michael Kors satin dress and jacket a few years ago. It was 50% off, my cost, a whopping $5. Designer items can be found at your local thrift shop.

    Nowadays you need a part time job to be able to purchase gift wrapping; everything has gone up in price and there is no end in sight. Creative gift wrapping is the answer. We all have items in our closet that no longer fit. That old outdated linen or silk dress or that 2 sizes too small suit will make elegant wrapping cloth for your creative gift. A bow from the dollar store and you are good to go. If you search, savings can be found everywhere.

    An appointment at a hair salon or barber shop makes a nice, affordable gift for the niece or nephew on your list. An oil change or car tune up gift certificate for an elderly aunt or uncle (on a fixed income) is economical and appreciated. A pedicure makes a nice, relaxing gift for your parents.

    basket for christmasFor gifts that may cost more, consider partnering with a sibling or a friend to make the purchase more affordable. Examples for this type of gift giving would be fruit baskets, cheese and sausage baskets, etc. Restaurant gift certificates would make a nice holiday treat for someone on your list. Consider taking someone different to the office Christmas party and be sure to notice the smile on their face. A gift certificate for a massage for that hard working sibling of yours may garner you the ‘Best Sibling of the Year Award.’ Many of the gift ideas that I’ve mentioned can be found on Living Social, Groupon or other similar websites for additional savings.

    Lastly, keep in mind when you use your credit card, you are simply borrowing from your future income. If you use a credit card, remember they are for convenience, and should be paid off at the end of every month. When you use your debit card to purchase a Christmas gift or any item for that matter, ask yourself what bill will go unpaid as a result of that purchase. You know your finances better than anyone. Be honest, ask yourself the hard questions, such as, “Can I really afford this” and more importantly, “Why I am I buying?”

    Break the cycle of spending money that you do not have. A sure fire way to know what should or should not be charged on a credit card: can the item be seen in two to three months? If not, you should pay cash for those items. Those items include, but are not limited to groceries, gas and fast food.

    Remember, when shopping at any time of the year: ACT YOUR WAGE.

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    Barbara Peterson is founder of Peterson Sewing School, co-owner of The Syracuse Seamstress, and owner of the Syracuse Spice Company. She is also certified by the FDIC to teach their Money Smart and Train the Trainer programs. She is also an instructor at OCM – BOCES. 

     


    College Students: Credit Smarts 101

    Now that you are a college student, you’ve most likely received many credit card offers.  Having and using a credit card can be a great tool to build a good credit history, understand; however that falling into the credit card trap is a good way to ruin your credit for a very long time.

    The Credit Card Act  helps to curtail credit card use by college students;  it bans credit card approvals for anyone under 21 years old unless they have an adult co-signer or can prove they have sufficient income to pay the bills.  The average undergrad carries $3,200 in credit card debt.  The average graduate student carries $7,800 in credit card debt.

    Credit card debt is not the only debt carried by many college students.  Nine per cent of college students also have car loans.  College students justify their debt by stating they will be able to pay off their debts after they graduate from college and begin working full time.  What college students fail to understand is credit card debt and car loans do not add monetary value such as increasing their net worth or increasing their earning power.

    It’s no secret that paying off credit card debt can be difficult. The more you owe, the harder it is to get out of debt. And with credit card debt, paying your way out can be very expensive. A mistake you make when you are 18 will stay on your credit report until you are 25.

    As a college student who has need for a credit card, what can you do?  Here is our list of dos and don’ts:

    1.  Use your credit card wisely.  Use your credit card sparingly and pay it off each month on time.  This builds a responsible credit history.

    2. Do not exceed your credit limit.  Exceeding your credit limit carries huge penalties. This is how credit card companies make the majority of their money; they are hoping that you will exceed your credit limit, etc. Do not allow carelessness cost you money that you do not have or need for other expenses.

    3.  Pay in full every month.  Do not carry a balance from month to month. If you persist in charging and only making minimum payments, you will be at your credit limit sooner than you think.  Paying your balance off each month is an ideal way to make your credit work for you.  If you think it is alright paying the minimum amount each month, get ready for a very expensive lesson.  Paying only the minimum will mean you are paying on those debt years after you leave college, even if you stop using the card. Example:  if you pay only the minimum payment due each month on a $1,000 balance with an 18% APR, it will take approximately seven years and an additional $1,731 in interest to pay back what you owe.  Is it worth it?

    4. Do not use cash advances.  The interest rate on cash advances are simply too high.

    5.  Monitor Your Credit Report.  The Fair Credit Reporting Act gives everyone the right to see their credit report from each of the three credit bureaus every 12 months. Go to www.annualcreditreport.com and request your report from Experian, Equifax, and TransUnion. Do not wait until it is time to graduate to see where you stand credit wise.

    6. Don’t Fall for Giveaways.  Credit card companies are known for setting up tables on campuses all over the country.  These companies are now banned on many college campuses, but some colleges still allow them.  These credit card companies will entice you with a free t-shirts and other junk to get you to fill out a credit card application.  Ask yourself if that t-shirt is worth the trouble.

    7.  Annual Fees and APR.  Paying an annual fee for a credit card typically will garner more benefits. Whether or not it is worth it comes down to your purchasing decisions and spending habits.  And if you have a habit of paying late, your APR (average percentage rate) will increase.  Credit cards with rewards programs often have higher APRs.   Credit cards that are branded with popular logos carry very high interest rates.  Logo examples include college affiliated, MTV, Ja Rule, Russell Simmons, the list goes on.

    8. Read the fine print. This is good advice for anyone, but more so for college students who tend to be inexperienced with financial products.   Read everything before signing on the dotted line. And do not be afraid to shop around, look for a credit card with low fees and a low interest rate.

    9. Do not loan your credit card to a friend. Let them figure out how to pay for their spring break and marqueritas for themselves.  Tip:  the person who asks you to do that is not a friend.

    10. Only apply for credit you need.  Too much credit too soon will get you in trouble.  Even if you don’t think you need to worry about your credit score today, those inquiries — where a potential lender checks your credit to decide if they want to issue you credit stays on your credit report for two years.  That could hurt your ability to get a car loan or rent an apartment after graduation.  Credit card companies want to make you think that a credit card is indispensable. Think twice before applying for a credit card that you do not need.

    Barbara Peterson is owner of CBC Associates collection agency and founder of Peterson Sewing School. She is a Certified FDIC Money Smart Instructor as well as a Certified FDIC Train the Trainer Instructor. Barbara also has over 25 years credit and collection experience.


    Benefits of Credit Unions and Hometown Banks

    We all know what credit unions are, but what are ‘hometown’ banks.  Hometown banks are a term I coined that describes banks that are located in your community.  You will not find your credit union and hometown banks located across the country, they are right in your back yard.  What is so great about credit unions and hometown banks?

    For starters credit unions and hometown banks offer more tools that rebuild your credit score than national banks.  They also offer low-cost secured loans, free credit counseling and some offer free online debt courses.  Remember credit unions are member-owned, which means they would be more apt to help members to improve and/or establish credit.  So, if you do not belong to a credit union, it may be time to join.

    Secondly, most credit unions and hometown banks are more  likely to approve credit builder loans; loans that are designed to rebuild your credit over time.  Credit builder loans can range from $500 – $4,000 depending on the financial institution.  Loans rates vary, be sure to check the fine print if you decide to go this route.  While you pay on credit builder loans, your good payment history is reported to the big three credit reporting agencies (Experian, Equifax & TransUnion) on a monthly basis.

    Many credit unions and hometown banks offer unadvertised, free credit counseling.  Be sure to ask your banking institution if they offer any of these services, chances are they do.  Normally, three credit counseling sessions are offered at no charge.  Three is usually all you need.  One of the counseling sessions may include cash flow analysis.  If this is not included, you can always ask for it.  I highly recommend it. Most consumers do not understand their financial situation; the cash flow analysis can be a much needed eye-opener.

    Keep in mind that higher credit scores can translate into lower interest rates.  You probably are wondering why credit unions and hometown banks are offering these services.    For starters, they share the same commitment to the community as you do.  Chances are those who operate and run credit unions and hometown banks reside in the area, same as you.  They are also taking on more of a consultant role instead of charging their members high fees for these much needed services.  All consumers have a desire to be healthy, financially.  Credit unions and hometown banks want financially healthy members.  It is a win-win partnership.

    A huge part of our credit scores are calculated based on our payment history.  Applying credit improvement strategies raises credit scores.  Higher credit scores mean lower interest rates on car loans, mortgage, home improvement loans, credit cards, etc.

    Barbara Peterson is owner of CBC Associates collection agency and the founder of Peterson Sewing School. She is a Certified FDIC Money Smart Instructor as well as a Certified FDIC Train the Trainer Instructor. Barbara also has over 25 years credit and collection experience.


    “Do-It-Yourself” Credit Improvement

    As of January 28, 2015 the average interest rate on a fixed 30 year mortgage is 3.80% and on a fixed 15 year mortgage, the rate is 3.13%. No wonder consumers are shopping for mortgages, the interest rates are at an all-time low. But what if your credit score is low? A bad credit history tells banks that you’re a risky person to lend to.

    There is something you can do. I call it DIY credit improvement (do-it-yourself credit improvement). Most credit repair services charge fees similar to a mortgage payment. You can improve your credit report legally, but it will take a conscious effort; anything a credit repair company can do legally, you can also do for yourself.

    What can the average person do to improve their credit? For starters pay your bills on time; if possible pay your bills 10 -14 days before the due date. Paying your bills on or near the due date keeps your interest rates high, which means you pay more on your bills in the long run. Keep in mind that banks do not like to see unnecessary credit. So keep your credit cards to a minimum, you should not have a credit card for every store in the mall. The next thing on your to-do-list is: SAVE. If you do not have a savings account, now is the time to get one. Banks like to see that you save on a regular basis.

    The next step: increase your credit score. Now is the perfect time of year to get started, everyone is looking forward to their income tax refund. Pay attention, because this works. Open a savings account with a national bank, such as Chase, Bank of America, and HSBC for example. Deposit $1,000.00 in your new savings account. Wait three months, and then apply for a $1,000.00 loan. With a low credit score, you will most likely get turned down for the loan. When they turn you down, ask the loan officer to secure the loan with the $1,000.00 you have saved in their bank. You will get your loan. If they still say no, explain that you simply want to improve your credit. They will most likely give you the loan. The catch is you will not be able to touch the $1,000.00 that you have in your savings account, remember you used those funds to secure the loan.

    These next few steps are very important; do not deviate away from these steps. Pay your monthly loan payment two weeks before the due date. Do this every month for six months. On the seventh month, pay the loan off. Where will you obtain the money to make your monthly payments? With the $1,000.00 loan that your (national) bank approved you for.

    If your income tax return is over $3,000.00, apply for loans simultaneously with three national banks (Chase, Bank of America, Citibank, HSBC, for example). If your income tax return is less than $3,000.00, not to worry, you can complete the process, one bank at a time. After you have paid off the first loan, move on to bank # 2. After you have paid off the second loan, move on to bank number #3.

    Have you ever notice when completing a loan or credit application, 3 financial references are always required? What is better than three national bank references? It does not get any better than that. Twenty-one months (less than two years) to A-1 credit score. Now, it is time to purchase that new home.

    Barbara Peterson is owner of CBC Associates collection agency and the founder of Peterson
    Sewing School. She is a Certified FDIC Money Smart Instructor as well as a Certified FDIC
    Train the Trainer Instructor. Barbara also has over 25 years credit and collection experience.


    Ideal Way to Get Out of Debt: Start a Home Based Business

    Many tax payers struggle year after year to rid themselves of debt. As an owner of a home based business, you will have plenty of deduction opportunities that will increase your tax refund. For starters you would be able to deduct your Home Office.

    Let’s look at the following example: Camille is a fashion designer who uses an extra room in her apartment as her office. Camille’s apartment is 1,600 square feet and her office space is 160 square feet. Therefore, her office space represents 10% of the total square footage. Camille pays $500 per month for rent. She is able to write of 10% of her rent payment each month, which is $50. Her total rent write off for the year is $600. She would be able to deduct 10% of her renter’s insurance as well. Camille decides to complete some enhancements on her office space; she paints, she adds blinds to the windows for additional light in the room and has a new ceiling light fixture added. The cost of the paint/painting supplies is $125; the blinds cost $76 and the new ceiling fixture cost $110. The total write off for the office space enhancements is $311.

    Camille uses her vehicle 35% of the time for her fashion design business. Her monthly car payment is $325. She is able to write of $113.75 per month for the use of her vehicle. Her yearly automobile write off is $1,365. She can also write off 35% of her yearly automobile maintenance costs, gas, etc.

    Camille also pay for her utilities (electric and gas). Her average monthly utility bill is $130. Her yearly utility write off would be $624. She uses her cell phone 100% for her business. Her monthly cell phone bill is $65. Her yearly cell phone write off totals $780. She can also deduct some of her internet bill, but she would have to take into consideration that that some of that internet use is for non-work purposes as well. For example, she would be able to deduct 50% of her monthly internet bill as a business expense.

    To keep accurate records of her customers, she purchases a computer, copier/printer and office supplies; she uses a post office box as her mailing address that cost $130 yearly. Her fashion related supplies (dress forms, pins, sewing machine, fabric, thread, etc) are all 100% write offs. In order to obtain new customers, she attends networking events; she purchases business cards, flyers and she has a website; she would be able to deduct 100% of those costs as well. And let’s not forget Camille’s other office supplies: paper, ink toner, postage, paperclips, etc. These are all 100% deductible too.

    There are times when Camille takes potential customers out to lunch. Current tax laws stipulate that a business owner can only deduct 50% of the meal. Keep in mind that Uncle Sam is always on the alert for excessive and extravagant deductions. So, therefore please do not think about taking a client or customer to the Bahamas that will not go over big with Uncle Sam.

    Camille’s deductions are easily anywhere from $5,000 – $6,000. Her tax refund would pay off a huge portion of her debt and a side effect of that would be an increased credit score. Now you know a few of the reasons the rich continue to get rich.

    What type of home based businesses are easy to start: Avon, sewing, jewelry, cleaning service, nail technician, hair braiding, event planning, household organizer, flea market vendor, personal trainer, graphic design, used book sales, wedding planner, gift basket service, rug cleaning, moving service, music lessons and day care.

    Barbara Peterson March 6, 2015.