The average cost of monitoring all three credit reports and scores is $30 a month. ($360 a year). Now, with a hefty yearly cost like that, I have to wonder, are these companies really providing a service that valuable? Do I really need to know my credit score every month?

The answer to that is going to depend on your goals and your credit history. This is an excellent example of how past mistakes on your credit report can come back to bite you in the wallet. Now, I think most of us are automatically going to agree that this is a pretty poor way to spend $360 a year. However, there are certain circumstances where you absolutely should be paying for this service. In other words, under certain conditions, credit does win over finances.

Let’s take a quick look at when it would actually benefit you to pay for a credit monitoring service.

1) If you suspect your identity has been stolen, and you do not want to freeze your credit report - In this case, monitoring your credit reports for 3 to 6 months would be a wise idea because it will allow you to quickly see if anyone else is opening accounts in your name.

If my identity was stolen, I would freeze my report for 3 - 6 months. Then, after I un-froze it, I would place a fraud alert and purchase a monitoring service for an additional 3 - 6 months just to be on the safe side. In this case, you could probably skip purchasing your credit scores, and just view your reports. This would save some money.

2) If you are trying to repair your credit after a default, judgement, or bankruptcy - Purchasing a credit monitoring service is especially important after bankruptcy because you will need to be sure that companies whose debt was covered under the bankruptcy do not continue reporting negatively after your bankruptcy is discharged.

3) To make sure your “credit repair” credit cards are reporting properly to all three credit bureaus each month. Let’s face it, repairing your credit is an expensive proposition. Secured credit cards require money up front. Unsecured credit cards for people with bad credit often have high yearly fees, application fees, monthly fees, and even more fees when they raise your limit. Not to mention high interest rates if you dare to leave a revolving balance.

So, if you are going to all the trouble of paying for these types of things to repair your credit, then it makes sense to go the final mile and monitor your reports and scores. That is the only way to know whether or not your score is actually going up, and by how much.

One other thing - depending on how low your score was, it could take some time to raise it. Monitoring helps you track your progress, and pick your next course of action. Finally hit above 700? You can qualify for better deals, maybe even to refinance your high interest cards and loans. Above 720? Even more likely.

By paying to monitor your score regularly, you will prevent needless inquiries on your report. (Whoops, sorry, your score is 680 at Experian, not 700…Denied…) Monitoring will save time, and give you the confidence you need to go apply for better deals as you qualify for them.

For a breakdown of the different credit score categories, you can click here (It’s in the middle of the article.)

What do you think? Is using a credit monitoring service important for people with excellent credit too, or just those trying to repair their credit?

Have a question for us? Leave a comment below!

What is a FICO® score?

A FICO® score is a credit score that was developed by Fair Isaac and Company. Lenders use this number in part to decide whether or not to give you a loan. Most lenders offer different interest rates to you depending on how high or low your score is.

Your FICO® score:

All FICO® scores range from 300-850. The higher your score is, the more likely you are to get a loan. The lower your score is, the less likely you are to get a loan.

If you have a low FICO® score and you do manage to get approved for credit then your interest rate will be much higher than someone who had a good FICO® score and borrowed money. So, basically, having a high FICO® score can save you hundreds, if not thousands of dollars over the life of your mortgage, auto loan, or credit card.

What is considered a good (or bad) FICO® score?

• Scores between 720 and 850 are considered a good credit risk. They normally qualify for the best interest rates on a loan , and can receive instant credit approval nearly anywhere. This is the ideal range for your credit score to be in.
• Scores between 600 and 720 are considered a moderate credit risk. People who’s scores fall into this category will not normally have trouble getting a loan, but they will pay more in interest than people who have score above 720.
• Scores between 500 and 600 are considered poor credit. If you fall into this category, you will have difficulty getting a loan. If you do manage to get a loan you can expect to pay double digit interest until you manage to raise your score and refinance.
• Scores below 500 are considered a terrible credit risk. If you fall into this range you will most likely not be able to get a loan of any type, although you may qualify for a secured credit card.

How is my FICO® Score Computed?

Your FICO® Score is computed using all of the following things:

(Photo from www.MyFICO.com)
For more information on exactly how your FICO® score is calculated you can visit MyFICO.com

How can I check my FICO® score?

You can check your FICO® score by paying to see it at any of the three credit bureaus, or you can check your FICO® score for all three bureaus at once by going here.

If you are planning to apply for a credit card, or especially a mortgage or auto loan then it is vital that you know your score before applying. Every time you request a loan it can lower your FICO® score, so you need to know where you are starting from before you apply for credit.

How can I raise my FICO® score?

There are several simple ways to raise your FICO® score:

Pay all of your bills on time, every time. This includes your utility bills, mortgage and auto payments, and all of your revolving lines of credit like credit cards.

Check your credit report at least once a year – You can find out how to get your free credit reports here. You can find out how to challenge bad information on your credit report here.

Do not charge more than 30% of the available balance on any of your credit cards. Banks like to see a nice record of on-time payments, and several credit cards that are not maxed-out. If you are carrying high balances on your credit cards, then make paying them down under 30% a priority.

Do use your credit cards – Many people who make mistakes with their credit believe that the best way to fix things is to never use credit again. If you are afraid that you cannot handle your credit cards correctly then the best policy is probably this one: Run only your utility bills on your credit cards each month, and then pay the balance in full by the due date. This ensures that your utility bills get paid on time automatically, and as long as you keep the habit of paying off your credit card balance each month your score will continue to go up. Leave the credit cards locked in a safe or drawer at home.

Keep your accounts open as long as possible – Even if you are no longer charging on the card. The best policy is to keep those unused accounts open, blow the dust off your card every few months to make a small purchase, then pay it off. How long each of your accounts have been active is a major factor in your credit score.

Remember that it will take time – Following the above steps consistently over a long period of time will repair your FICO® score and allow you to qualify for better loans and interest rates. Repairing your FICO® score does not happen overnight though, so if you do these things for a few months and do not see a large increase in your score, do not give up. They are all habits that you will want to maintain throughout your life to be sure that you keep your finances and lines of credit under control.

Have a question for us? Leave a comment below!

How do I opt out of pre-screened credit card offers?

If you are tired of receiving unsolicited credit card offers in your mail box each week, there is a way to prevent it from happening.

Why you get unsolicited offers of credit in the mail:

The three credit bureaus (TransUnion, Equifax and Experian) regularly sell lists of consumer’s names to the major credit card companies. The credit card companies then send out offers of credit based on the range your credit score fell into at the time the list was made.

If you are tired of these offers there is a simple way to make them stop. However, before you decide whether opting out of credit card mailers is right for you, you may want to consider some of the pros and cons:

Pros:

• Opting out could reduce the possibility of identity theft. You will not have to worry about someone else getting their hands on your credit card offers and ruining your credit.
• The majority of credit card companies who buy your information also find a way to re-sell it. Opting out of the initial list could impact the total level of junk mail you receive. Your name would no longer be sold over and over again to different companies throughout the United States.
• It is getting easier and easier to compare credit offers online. When you decide it is time to apply you can simply search for a card that meets your needs. You can even read reviews and direct card- to- card comparisons without ever leaving your chair, much less opening junk mail.

Cons:

• Occasionally credit card companies will use direct mail to send you an offer that they do not make publicly available - especially if you have either excellent credit or horrible credit. (There are companies that target both markets).

  The interest rates you are offered by mail could be better than the offers that show up online, or the offer may have had other rewards attached. This is not common practice, but it does happen.

Tip:
The best way to combat that little voice in the back of your head that says, “I wonder if I could have gotten a better deal?” is to do a little research online. Credit card companies do not typically make unique, one time only, or only-for-you offers. (Although they want you to think they do!)

Chances are, if you would have been “pre-selected” for an offer, then other people were too - and you can usually find unbiased opinions of those offers in forums like this one. If you hear of a better than advertised deal, call the credit card company and see if you can get approved for it.

How to stop getting unsolicited offers of credit:

Under the Fair Credit Reporting Act (FCRA) you have the right to “Opt-Out” of pre-approved or pre-selected credit card offers. You can choose to remove your name from the marketing list for 5 years, or to opt-out permanently and never receive offers again. You can also opt back in if you change your mind later.

To begin opting-out of credit card offers by mail, or to find out more about what opting out will mean to you, click here.

Ok - Christmas and the holiday season is coming. Here are my personal holiday credit card tips for the festive season.

Use up any points that are about to expire

Yes, if you have a reward credit card that you have not used for a while, chances are that you may still have some reward points that are unused. Make sure you check when they expire and use them during the holiday season.

Use points for merchandise or gift cards

Chances are that it will be very difficult to use reward points for airline tickets during the peak season. Hence, it is probably best to redeem them for merchandise or gift cards.

Take advantage of offers from reward programs

As with all merchants, credit card reward programs offer discounts and special deals during the festive season. They usually come in the form of special items, less points requirements or special discounts when you shop through the credit card reward program’s site. For example, American Express has shopamex.com, Discover has shopdiscover.com. These programs will offer special deals throughout the festive season.

Budget and don’t overspend

Do you rack up more credit card debt than you should and get a January overhang? The key to avoid impulse purchase is to actually budget and do most of your shopping early. Last minute shopping often leads to overspending! By budgeting and doing your shopping early, you also give yourself time to search for the best deals (whether offline or online).

Ask for a lower APR

If you do have to carry a higher balance in the next couple of months, then give your credit card issuer a call and ask them to give you a lower rate. If you have been paying on time and your credit score is good, there is a decent chance they will agree to your request. This obviously would not work if you have not used that credit card for a while or have a record of missing payments!

Get a 0% APR credit card for purchase

Once again, if you really have to carry a higher balance over the Christmas season, you should try to get a credit card that offers a 0% APR deal for purchases. Search for the deals with the longest introductory period. If you have very good credit, then Blue from American Express may even give you a 0% deal for as long as 15 months.

Don’t fall for 0% financing traps

It’s one thing to budget, plan what you spend and make use of 0% APR deals. It is another to spend money on an item simply because it comes with 0% financing. Yes, how many ads have we seem from Lowes! and other retailers who offer some form of 0% financing when you make a big ticket purchase. Buy something because you really need it and not because of zero percent financing. Fall into these traps and offers and you will definitely feel the January hangover.

Don’t apply for cards simply for trivial discounts and bonus offers

Shop at GAP or any well known retailer and chances are that when you check out, you will be asked if you want to apply for their store credit card. “With this card, you will get a 5% discount whenever you shop here” will be the standard sales pitch. If you do the math carefully, chances are that you will hardly spend enough to make that discount worthwhile. Furthermore, if you respond to every offer, you’ll soon be carrying a bunch of retail store credit cards and have the fattest wallet!

With that, I would like to ask you to share your other holiday credit card tips with us.

A couple of months ago, I was at a conference where I met someone who finds auto loans or autos (rather) for people who have poor credit. I was told that there aren’t many firms willing to provie auto loans to people with bad credit. There are also just one or two auto companies that will extend credit to those with bad credit. Then she ended a conversation with these remark. s “If you have bad credit, you just have to take what is given to you! I once had bad credit myself!”. This leads me to todays post about bad credit card application fees.

If you have bad credit and need a credit card, there are issuers who are willing to issue credit cards to you. But these cards will have more fees than regular credit cards. These are the fees you have to be aware of.

Annual Fees - while most regular unsecured credit cards (except some rewards, airline or prestige credit cards) have no annual fee, almost all bad credit cards have annual fees that can go as high as $150 (ouch).

One time application fees - On top of high annual fees, many of these cards charge a one-time application fee that can go as high as $60.00! Worse of all, some have both a one-time application fee and a one-time processing fee!

Monthly Maintenance Fee - On top of annual fee, many cards also a montly maintenance fee! This is usually $6.00 a month, which works out to $72.00 a year.

High APR - Well, if you do not have good credit, do not expect to get low interest rates. Rate of 19% or higher are not uncommon at all.

While many of you may wince and think that credit card issuers are ripping people off, the truth is that these issuers are taking more risk on people with bad credit than regular folks with good credit. Secondly, because the major banks do not generally approve cards for people with bad credit, the subprime market is really left to smaller boutique credit card issuers. These issuers normally do not have their own bank. Hence, they outsource the issuance and operations to credit card processing companies and banks who are willing to issue on their behalf. That is another reason why many bad credit cards have these fees.

But the biggest issue really isn’t about just the fees. It is that the fees are applied to everyone who fall within the “subprime” category. Most banks consider a score below 620 as subprime (”bad credit’). However, someone with a 615 score is better than someone with a 515 score. But unlike regular credit cards, most bad credit cards treat these two applicants the same in terms of fees charged and interest rates. The only card that varies the fees that they charge is the Orchard Bank Mastercard, where you will either be approved for their platinum, gold, silver or secured versions.

Below is a table highlighting all the fees of major bad credit cards. This will hopefully help you make a better informed choice if you have bad credit and need a credit card.

Bad Credit Card Application Fee Comparison

Tribute Mastercard
Application Fee - $29.00
Processing Fee - n.a.
Annual Fee - $150
Monthly Mainenance Fee - $6.50/mth
APR - P+11.25%

First Premier
Application Fee - $95.00
Processing Fee - $29.00
Annual Fee - $48.00
Monthly Maintenance Fee - $6.00/mth
APR - 9.90%

Imagine Mastercard
Processing Fee - n.a.
Application fee$4.95 or $9.95
Annual Fee - $150.00
Monthly Maintenance Fees - $6.50/mth
APR - P+11.25%

Total Visa
Application Fee - $96.00
Appliction Fee - $56.00
Annual Fee - $48.00
Monthly Maintenance Fee - $8.00/mth
APR - 19.92%

Rewards 660 Visa
Application Fee - $95.00
Processing Fee - $97.00
Annual Fee - $48.00
Monthly Maintenance Fee - $10.00
APR - 19.92%

Orchard Bank Prime Platinum Mastercard
Application Fee - None
Processing Fee - None
No annual fee
No Monthly Maintenance Fee
APR - 15.99%

Orchard Bank Platinum Mastercard
Application Fee - None
Processing Fee - None
Annual Fee - 39-$69
No Monthly Maintenance Fee
APR - 8.90% to 14.90%

Orchard Bank Gold Mastercard
Application Fee - None
Processing Fee - $19.00
Annual Fee - $79.00
No Monthly Maintenance Fee
APR - 8.90% to 14.90%

Orchard Bank Secured Mastercard
Application Fee - None
Processing Fee - None
Annual Fee - $35.00
No Monthly Maintenance Fee
APR - 8.90% to 14.90%

Related Posts

Orchard Bank Mastercard Review

First Premier Bank Credit Card Review

Tribute Mastercard Review

Here is my top 10 advice for new college graduates with regards to credit cards, money, finance and career choice. If I could turn back the clock, this is what I would have done better.

1. Pay Your Credit Card Bills Fully and Your Other Bills On Time

Yeah, sounds pretty simple. But in truth, many people do not have the habit of paying bills on time because they are disorganized. Find a way to be organized because regular late payments hurt your credit score.

Paying your bills fully (especially credit card bills) is one of the most important habits you can prick up. People who do not get into this habit simply lack budgeting and financial acumen. This lack of discipline manifests itself in not watching what you spend, pampering yourself with little things like drink with friends (which add up), Venti Starbucks. Think about it, the typical interest on credit cards is about 18%. Most of us have a hard time picking stocks whose growth will exceed 12%. Can you imagine borrowing at 18%?

2. Run Your Finances Like a Business

Yep. That means having a budget (and sticking to it), watching every penny. It also means categorizing your bills from the most important to the least important. Your rent, insurance payments, utility bills are the most important. As with any business, there is always an …..

3. Emergency Fund - start establishing one right away

Yes, your first priority is to establish an emergency fund for about six months. Every business always has an ‘cash on hand’ or ‘lines of credit’. And should you as an individual. Start saving for this fund right away before you think about investing.

4. Have a plan to pay off Your Student Loans

If you have student loans, you should devise a systematic plan to pay off the loan as soon as possible. You want to get rid of this burden as soon as possible.

5. Set up automatic enrollment for bills with your credit card

Put your bills on automatic payment to ensure you do not miss paying your bills. You can either choose to have your bank automatically pay the bills or better still, charge the bills to your credit cards. That way, if there is any dispute, bills on your credit card are easier to handle. You can also earn reward points or cash rebates with a cash back credit cards.

6. Talk to your partner about money and finances if you are living together

For all the love that you feel for each other, money is one of the major causes of breakups, divorces and many unpleasant things. Talk to your partner about money matters early in your relationship. It is tough enough, budgeting, sticking to a budget, thinking about your career and all that stuff. It is even tougher for two to agree on this matter. But you must talk about it.

7. Get a Cash Rebate Credit Card

If you have managed to build a decent credit history upon graduation, then you should consider getting a cash back credit cards, which pays you a certain percentage that you spend on the card back in the form of cash rebates. Don’t use that as an excuse to overspend, but careful use of such cards can earn you some nice change at the end of the year.

8. Build Your Credit History if you have not

While critics have always claimed that credit card companies lure students with credit cards and easy credit, the truth is that there is never a better time to get a credit card than when you are a student. Firstly, most (if not all) student credit cards have no annual fee. Try getting a credit card after you graduate if you have no credit history. You will most likely have to apply for a secured credit card (which comes with an annual fee). If you are reading this and are still in college, it is best you get a college student credit card to build your credit history.

9. Monitor Your Credit Reports and Scores

Develop the habit of monitoring your credit report regularly. Understand what goes into your fico score. You can get a free copy of your credit report from each of the credit bureaus every year. If you are planning on taking a loan (auto, mortgage etc), it is best that you monitor your credit score six months before and take steps to improve your credit. There are lots of services (which charge a monthly fee) that lets you get your credit score from the three bureaus. For example, Equifax Credit Watch™ Gold with 3-in-1 Monitoring alerts to changes in your reports and also provides some insurance against identity theft. Experian Triple Advantatge offers the same service. For a little more money, Suze Orman’s FICO® Kit shows you steps you can take to improve your score. Any one of these services will be helpful if you want to monitor your score.

10. Invest in Yourself and Your Career

The biggest factor in how financially successful you will be is not how good your portfolio returns are. The biggest factor is your career and how much you make (assuming you save and invest as well). In fact, if you are spending too much time reading about ‘investments, debating over actively managed versus index funds and these stuff”, then you are probably not spending enough time on yourself. By that I mean investing in self improvement, investing time in networking with industry peers etc - things that will help you move up the ladder and make more money!.

OK - that’s my advice for now. And this is what I would have done if I could just turn back the clock.

One way to increase the pace of your debt reduction plan is to increase your monthly cash flow. Short of getting a promotion or cutting your expenses (which we assume you are doing), there are a couple of other ways to put more money in your pocket. Below are a few things to consider.

1. Mortgage Refinance

If you are still paying a higher than market rate on your mortgage, then this is really a no brainer. Refinance your mortgage and you could potentially save a few hundred dollars a month. Do not just consider a regular fixed rate conventional mortgage, but also look at fixed to adjustable mortgages. The media will have you believe never to look beyond the conventional fixed rate mortgages, but saving on interest in the early years of a fixed-adjustable mortgage can make the difference between paying off your debt sooner or much later. You can always refinance again later on.

2. Make sure you maximize your tax benefits on your retirement contribution

Many of you have both a company sponsored qualified retirement plan and a perhaps your own IRA. Before you contribute into your IRA, make you max out your contributions to your existing company plan. I know many people who do not max out their qualified plans but contribute to their individual IRAs instead. By not maxing out your contributions to qualified plans, you could be potentially leaving money on the table to the IRS.

For example, if you have a SEP plan and an IRA, you should be maxing out your SEP plan before even thinking about contributing to your IRA. The IRA has certain phase out rules that stops your contribution from tax deductibility. The rules involve both gross income, whether your spouse is an active participant in an employee plan. Know these rules and maximize your contributions to your qualified plan.

3. Putting your kids savings in a 529 Plan

In some states, contributions to 529 plans are tax-deductible for state taxes (not federal taxes). You will have to find out what the rules of your state are. But if you are a resident in one of those states, you could potentially reduce your tax bill quite a bit. In that case, you should get started immediately on a 529 plan. Even if you do not have 529 plans, you can actually start one for yourself! The portfolio in any 529 plans grow tax free. Furthermore, you have full control of the account even if it is for your kids.

4. Invest in Muni Bonds if you are in the top tax bracket

If you are in the top tax bracket, then you have no business being invested in a taxable bond fund. Get rid them and invest in Muni Fund that invest in your states municipal bonds. This is another potential way to save on your taxes and put more money in your pocket.

5. Incorporate Your Home Business

If you have a home business (like running a profitable blog!), then incorporate it rather than just being a ’sole proprietor’. By doing so (in the form of an LLC), you can not only limit your personal liability, but also deduct business expenses, depreciate things like your computer etc.

That’s it for now!

OK, that’s it for now. Please share any other ideas you have for getting more cash in your pocket.

I believe Warren Buffet used to say that you should borrow money when you can, and not when you need to!. When you do not need money, you can borrow at favorable rates. When you you actually need them, well, that’s another story. Part of a responsible financial plan involves making sure that you have access to liquidity. Below is a list of sources that you should consider having a line for in case of emergencies.

Home Equity Line of Credit

This is one of the cheapest source of liquidity that is commonly used by most people, whether it be for renovations or other stuff. Even if you do not need any cash at the moment, it is always prudent to have an available source and this is perhaps the cheapest source.

Margin on Securities

If you have a sizable portfolio, you can borrow against your portfolio of securities. Most major wireline brokerages allow you to do that. This is very useful if you need temporary cash but do not want to liquidate your portfolio. For example, an executive with lots of company stocks may want to keep that concentrated position for the moment and not incur any capital gains tax. Yet, he or she may face a tax bill and needs immediate cash. Borrowing against your portfolio is one way of accessing cash without having to liquidate your portfolio. Very often, the very wealthy can get 0% financing on a vacation home by borrowing against his or her portfolio. If you have an account with a brokerage, then you should consider setting up a loan margin account (just in case you need to use it).

Line of Credit

You can always get a line of credit from a bank. How much and what rate you are charged will depend on your banking relationship and your credit score. But establishing a line of credit with your bank is another source of liquidity that you should tap into.

Credit Cards

Yes, your good old credit cards also offers you a source of liquidity provided you have not used up all your credit! For those who PIF (pay in full) and utilize just a fraction of your total credit, then your credit cards really serve as tool that you can use should you need cash. The rates are obviously higher than both a HELOC or Loan Against Your Securities. So rather than looking at credit cards as evil (as some do), look at it as a source of convenience and liquidity when you need it.

Your own emergency fund

Well, everyone should have at least six months to one year’s of emergency fund. You should set aside an emergency fund before you even think about investing. Should anything happen, don’t feel bad spending it. Afterall, that is why you have this fund.

Lessons

We do not know when we need some extra cash due to some emergencies. Having it is always prudent to have access to liquidity when we need it. But we have to set them up now and not when we actually need it. The list above highlight some of the ways that we can access liquidity and you should be looking to get these set up now. In particular, getting a HELOC, setting up a loan margin account, a line of credit, and having the right amount of credit available from your credit cards are things that you should work on right now.

Well, I’m very embarrassed to say that I was late for my last comcast payment. It is one of the few bills that I have not put on auto payment. The usual thing happened where I did not get the monthly bill (or misplaced it) and ended up forgetting to pay it.

Well, an “urgent” mail came today from the Comcast billing department. This was what was written in the letter :

As of 4/25/07, our records indicate that your account has a past due balance of $126.12. Your last payment of $81.15 was received on 03/06. We understand that in the rush of our daily lives we sometimes overlook our bills (very polite to start).

……….If you wish to resume service with us after your account has been terminated, you will be required to pay the full amount due and will be subject to installation charges. You may be assigned a new Digital Voice number. (well, I guess if this happened, you should switch to Vonage instead!).

Well, I went into my online bank account and paid the bill (which was a genuine late payment). What bothered me was that Comcast (or even credit card companies) do not bother to tell you that you are late just after you missed payment (like a week after). Instead, they tell into after a month or so after stiffing you with a finance charge!

The language in this letter almost made it look as though you are better off with a credit card late payment than a Comcast late payment! At least with a credit card late payment, you are only charged finance charges and a late charge (possible interest rate increase). But you are normally given 60 days before any thing nasty (like reporting to credit bureaus) takes place. With comcast, you lose your cable TV! But thankfully, Verizon TV provides a viable alternative!

While many people get into trouble with debt due to unforseen circumstances like a huge medical bill, others simply get into trouble because of spending discipline (or lack of). Credit cards have become such an essential thing in our lifes now that we (at least I do) use it for every thing we buy. However, the convenience we get from using a credit card also traps people into a spending binge and eventually a credit card debt spiral.

I recently got to know two friends who used to have problems with their credit card debt and this was what they suggest you do if you have problems with your spending habits (you obviously need to formulate a debt reduction plan - but you also need to change some habits)

1. Stop Using Your Credit Cards - Do not cancel your card as this will hurt your score (you also cannot cancel cards with a balance!). But rather, just cut them up and stop using them. Both told me that having to pay with cash really makes you think twice about parting with it. I personally don’t think I can stop using my credit cards. But if I did have a problem, then I’ll probably just use one!

2. Eat at Home - Yes, it not only saves money, but you will probably eat more health food as well. But eating at home will save at least half of your food expenses. This tends to be a problem for two busy working couples who are simply exhausted when they come back from work. One solution is to cook the food over the weekend and pack it in the freezer. Simply microwave it when you get back from home during the weekdays.

3. Stop going to the mall - For shopoholics, this might amount to cold turkey. But it is probably necessary cold turkey if you are constantly doing impluse shopping and piling up your credit card debt. Go to the park and run instead!

4. Use the library - Your local library probably has all the magazines that you want to read. Mine has DVDs too! I just recently borrowed the latest James Bond Casino Royale from the library and did not have to pay any fees.

5. Use quicken and check your bank balance every day - Let’s face it, the reason why most people have financial problems is because they do not treat their finances as a business. Businesses look at business reports every day. Train yourself to look at finances every day. Use a software like Quicken or Microsoft Money. Once you get into the habit to looking at your finances every day or once a week, you will treat your expenses in a different light.

Well, these were the main things I got out of my two new friends. I thought they made sense and these were things they actually did (not some theory on how you should you do it). You may realize that if you implement these steps and take their advice, it essentially involves a change in lifestyle. But that is what you probably need if your spending is out of control.

Share you thoughts and other ideas below.