Cutting Expenses-The Final Leg

Hello Everyone, Welcome back. 

So this will be the final blog on a few main ways to cut expenses this year. In my previous blogs, I went into detail about saving money by cutting food cost, phone bill cost, work, travel and general leisure expenses. 

In this blog I will be going over bank fees, credit card interests and subscription cost. I'll start with subscription fees, because this should be the simplest. 

Subscription Fees

So you know the ones, a lot of us have so many subscriptions and believe it or not these do add up. I was one of those people, I had Netflix, Hulu, Amazon Prime, CBS All access, Spotify, Youtube Premium and the list continues. 

A lot of the times, I forgot about some of these or I don't use them very often. I liked having the option to watch whatever I wanted, whenever I wanted, but the fact remained that most often I watch Youtube, regular old basic YouTube. I've canceled all subscription except for Netflix, mostly because it's Netflix, but also because my mother and sister uses it.

Instead of paying for all those apps and subscriptions, consider using free options and limit what you're subscribed to, to one or two options. These should be the things you use the most often. I realized that a lot of the shows I watched were shows like The Flash, Super Girl, those super hero ones, Riverdale, Nancy Drew, and many others, were all shows that were available on the free app CW, there is also CW Seed, obviously Youtube. There are also a range of other apps I have not personally tried, like Crackle, Tubi Tv, Pluto TV, a quick google search could reveal others. I literally just watch Youtube.

The point is, maybe you don't have to pay for all these subscriptions, this might include gym memberships, I use to have one of those and I went twice, and it was hell to cancel after a year.  

Look through your card statements and remove any and everything that you don't absolutely need or make the most of, and instead find other alternatives to getting the same features. Just be creative.

Maybe work out at home instead, or outside. Go for walks and runs. Use the free version of Spotify and Pandera for music. Icloud storage for like $10 for 2tb, yes I had that too. At times like this, these are considered to be a thing of luxury, and every little thing adds up. 

It's crazy how these can add up and it's money you can use for other more important things. On average I was probably paying over $50 a month for these subscriptions, and no it's not a big chunk of change but again you can use that money for other things you actually need. And everything adds up so for the year you're saving $600 or more. Add that to the $2000 you saved on food, and whatever else you saved on your phone bill and you're on your way to saving a lot for the year. And on your way to paying off your bills faster. 

​Let's Go!

Now on to the big guy. 
Credit card Interest and bank fees. 

Omg I don't know about you but I pay so much interest on my credit cards, for a number of reasons, I've had some debt for a while, my credit cards are high interest cards and if you're only making the minimum payments, sometime the interest is double, even triple that and in which case your bills do not go down. 

So that's the main thing that has affected me, and the reason I've had this debt for so long. Based on how much I worked I was paying the minimum payment on each card and they did not move. So I have a great payment history but a lot of revolving debt. 

I tried getting a personal loan way back, and got it, and it ended up being really bad. The interest was super high, over 20%, which was actually worse than having it on many different credit cards. Most of my cards do have high interest but there are a few that does not and it didn't really help in that sense. Only get a personal loan if the interest is much lower than what you currently pay or all that money you owe in one area will be way worse. 

This is where I say I am not a financial advisor, and I'm not giving you advice based on your specific situation. I would however recommend you look into your finances and see where you can save money and where your money is going, then do research and make decisions for yourself, that is best for you. I'm merely sharing my experience and thought process, what I did and what did not work for me. 

I think what could work is getting another credit card that offers a period of no interest or a lower interest and move a small amount from a high interest card to the low interest card and pay it off quickly. Then repeat. If the debt will stay on that card for a while, do not do it. That's just my suggestion, because then you have another card, and another bill to juggle. I made the mixtake of doing that but with all the debt and not being able to pay it off before the interest kicked in. Big fail on my part. 

I've heard people talk about debt relief programs and in my opinion that sounds really sketch. I'm not a subject matter expert but look into whatever you feel like you need more information on. I didn't go with that option personally because of how it works. First you stop paying your bills. Yes all of them. This is to make it seem to credit card companies that you will never pay these bills again, and this will take some time for them to believe. So months to years. Eventually the Credit card company will cave because they want their money, they don't want to lose everything. So they will say instead of paying the $10,000 you owe for example, you can pay $5000, and they'll call it even. To me that sounded great at first but there is a catch. What happens when you stop paying your bills? Late payments, delinquent accounts etc, and this will tank your credit. In that time you will pool all your money together in a separate account set aside to pay off the agreed upon amount. 

This might work for some people if you have no intention to use your credit for 7 to 10 years. Meaning no buying a house, or car where credit is needed, or anything else. Everything you do for the next decade will have to be cash, until you rebuild your credit. Maybe you'll be the lucky one and it will be sooner than that. But it's going to be more than 2 years at least, and according to some of the reviews for the companies that offer this service, it doesn't seem like many people are happy about taking this option. For me I don't want to have to wait that long. I have dreams and goals I would love to accomplish in the next 2 or 3 years, and 7 years is just not an option for me. 

Someone also mentioned that I consider filing for bankruptcy and again after looking into it, I determined that the damages would not be worth it. I firmly believe with the newly made plans I have in place, I can pay off my debt in 1 year, and move on to accomplishing my goals. Of course it hurts that most of the money I'll make will go to bills, but somehow I got it, and whether it's my fault or not it's my responsibility. 

Back to the topic at hand, my point is last year I paid over $4000 in interest with all my cards combined, similar for the year before. I know for a fact that this is the reason my debt takes so long to pay off and this is the one thing I have to figure out to move forward. However that's easier said than done. 
You can contact your card company and see what options are available to you for reducing interest. 

I was able to do a payment plan with Discover to reduce interest and have a lower payment minimum for a period of time. I was also able to do the same with my two American Express cards, but that was probably because they had no faith I could pay off the debt on those cards. 

They said if I took the payment plan they'll close my accounts, which they already closed for whatever reason and if I pay the card off regularly, they would reopen both accounts I guess and give me $2000. And I was like keep it close. Apparently I missed one payment by $35 and I didn't pay the current month, but it wasn't due yet and I had plans to pay it actually today as I write this.

Banks sometimes do things like that for people that seem risky. Them closing it actually worked out way better, because my minimum payment was way too high and now I have a payment plan. This card will be going to the back of the line so to speak because it doesn't affect my credit. Meaning even if I paid it off it won't increase my available credit because it's closed. I do however have to do the minimum payments, because that would affect my credit. But it worked out even better for me, because honestly I have a lot of cards I'm not worried about not having those two. And the best part is, they reduced my interest so I can go ahead and pay off high interest cards first and save on interest. 

Capital One did not offer me a plan, but that might be due to the fact that I paid a lot of payments this month to them, because that was my focus. They did offer to defer my payments until June and I can call to extend the time period. This doesn't help me, because getting a lower interest is really the goal, and they kind of charge me the most out of all the cards. I have three cards from them and each month with all cards combined I'm paying $220 a month, currently. Which at the end of the year is about $2600 in interest for just those 3 cards. 

Still trying to get Citibank on the phone and through chat, apparently they have long wait time. Right now I've been on hold for 40 mins and counting. I'll wait an hour and try another day. 

Those cards are really the major ones, all my other cards have pretty low interest and I don't owe much on those either, they pose less issues for me right now.

The bulk of my debt is centered around 5 cards. And yes I guess you have figured it out, I have a lot of debt and a lot of cards. I hope you're not surprised.
​

Also one problem I had with my credit cards was late fees for being one day late, that gets me so upset. It doesn't go on your report because it's not actually late if your late by a day but you still pay. Some cards also charge return payment fees so be careful of that. Those are easy things to avoid paying, just be extra vigilant, we are all busy people and sometimes it happens. 

The plan I made for this is to pay off the higher interest cards first, which is something I wasn't doing. I'm also paying off cards that have the largest balances first. So minimum on everything else and the bulk of the money on those important cards that will make a difference. It won't stop the bleeding right away but over time it will. Revisit your plan through out the year to ensure you're on track. I'm three months into the year and I remain optimistic. I feel so good about this plan, and though the timing is kinda weird because of Co-Vid 19, I feel good and I'll explain why in my other blog, about making extra money. 

Lastly I really hate paying those maintenance fees. I had multiple bank accounts and I was paying multiple fees, for what? I use my cards for different things, and I need my money. This might not be a problem for you, because a lot of banks have the option to waive fees by keeping a minimum balance and that did not work for me. So I closed my TD account, my Chase account and I was so much happier for it. I was really tired of calling Chase to waive fees. This is an option you have for certain fees, you can call and ask if they can waive it. You can call your bank and credit card company and ask for a lot of things, doesn't mean you'll get it but you can try. 

What I did instead was open a Varo card and also a Chime card. They don't have a physical bank but I don't need one. I've literally not gone to Chase once in 3 years. There are many atms I can use around me, and in some ways it's way better than a traditional bank. They have so many non-fee atms at pharmacies and corner stores I was really impressed. 

The only downside is that they do have a small daily cash limit of $500 a day for cash withdrawal, which they changed recently to $750. Either way I make two trips if I have to, on my way from work I stop and get the cash if I need to or I take a short walk to a nearby atm. These cards charge no fees at all. No maintenance fees, overdraft fees, return payment fees, fees fees, nothing. 

In fact my favorite thing is that Varo gives you the option to go over by $50 for purchases, so my balance is at $0 and I can still spend $50. This came in handy so many times, I can't even tell you. Chime gives you a $100 overdraft limit. When your account goes negative, when you get a direct deposit it comes out, or you'll have 30 days to add money. After that I do not know what happens, you can look it up, but why let it get to that? For all of that you might as well ensure you don't use the feature. 
Also another cool thing is that you get paid faster, up to two days at times, which I think is the best gift of all. 

That brings me to the end of this blog and cutting expenses. However at the end of the day cutting expense won't always be the thing that make you pay of your bill, sometimes you will need more money and that's the option I took to help myself pay off my debt. So that I will over in another blog. 

Varo

Chime