This is a guest post from Joel J Ohman, a certified financial planner and president of Credit Card Chaser. 

If you are in the enviable position of many who have their high interest consumer debt paid off and firmly in control then you have likely reached a point in your financial life where you are maybe in somewhat of a befuddled mindset about how to best make the transition from solely working for your money to putting your hard earned money to work for you as your servant with you being it's master rather than vice versa.

This transition of how to best deploy your hard earned cash is a great place to be because now you are no longer in the "pay off high interest debt as quickly as possible" stage but rather you are about to enter the stage of "Wow, I had always hated watching interest rates climb when I had a balance on my credit cards but now I love high interest rates because it just means that my interest earning bank account balance is going up even faster!"

Granted, this was a rather broad introduction but I think it is appropriate because I think two of the very best ways to jump feet first into the "making money work for you" stage is by using a combination of a high yield checking account (sometimes called a rewards checking account) and a rewards credit card.

Definitions

First, lets make sure that we are on the same page and define what exactly a high yield checking account and a rewards credit card is:

High Yield Checking Account - This is a checking account that earns an above average rate of interest (often significantly higher than the average) and is typically found at regional banks, online banks, and local credit unions.

Rewards Credit Card - This is a credit card that allows card holders to receive special perks for every time they use the card. These specials perks can be in the form of cash back (my personal favorite), points, frequent flyer miles, free hotel stays, free dining, free travel, etc.

Pros and Cons

High Yield Checking Account Pros

• Interest rates can be astonishingly high (the highest rate that I was able to find from the chart linked to above was 6.01% APY with the average yield for all 483 high yield checking accounts surveyed being 3.74% APY). Compare those rates with the rates that you would get (if you can find a personal checking account that earns interest at all in the first place) on a regular checking account at Bank of American or Wells Fargo or any one of a number of national banks and you will quickly see that even the average high yield checking account's interest rate will quickly send the checking accounts from the big bad national banks crying home to momma.
  
  
• Debit card access. It is rare to see any type of checking account without debit card access be it a regular checking account or a high yield checking account. Many high yield checking accounts have the same Visa or MasterCard backed debit cards as their regular checking account counterparts.

High Yield Checking Account Cons

While of course each high yield checking account is different and there are many different requirements from one bank to another here are some of the downsides to using a high yield checking account:

• Balance caps. Every single one of the 483 high yield checking accounts on the list that I searched through had a balance cap of anywhere from $25,000 to $100,000 with the average balance cap being $34,451. What this means is that you can certainly keep more than the balance cap in the account but the maximum base that they will pay out interest on is limited to the balance cap number.
  
  
• Number of debit card transactions. Most high yield checking accounts institute a requirement that you use your debit card a minimum number of times every month or else the interest rate will decrease to close to nothing. Usually the minimum is set at 10 transactions every month.
  
  
• Maximum deposit levels. Another restriction that some banks and credit unions impose on high yield checking accounts is that they set a maximum deposit amount that will be able to earn interest. This means that if the maximum deposit amount is $5,000 and you deposit $10,000 then at best only $5,000 of your deposit will earn interest and at worst none of your deposit will earn interest because it exceeded the preordained maximum deposit amount. The exact implementation of this requirement, if at all, will of course depend upon the specific bank of credit union.
  
  
• Various bank fees. I almost didn't even add this bullet point because it seemed like a no brainer. Understanding that there are many potential bank fees is a no brainer but I think it's important to just mention this quickly because we all need to be reminded about how quickly those bank fees could potentially eat into our interest if we aren't careful. Whatever you do make sure that you don't throw your money away on bank fees.

Reward Credit Card Pros

You likely already know many of the benefits to using a reward credit card but here are a few quick things to remember:

• Cash back. You really can't help but love cash back. As long as you use your cash back credit card properly and make sure to pay off the balance in full every month then if your card gets 1% to 3% cash back on every purchase then you are essentially only having to pay 97% to 99% of full price for everything you buy. This is like your own little plastic coupon that guarantees that you will never have to pay full price for anything no matter where you buy it (unless they don't accept credit cards for payment of course).
  
  
• Additional rewards. Even though my personal favorite is cash back (I use the American Express TrueEarnings Costco Card) there are many different rewards cards that offer anything from free flights to free hotel stays.
  
  
• Purchase protection. Just like any other credit card if you make your purchases with a credit card you have a level of protection that you just don't have with cash or checks (although many Visa or MasterCard backed debit cards offer just as much protection as a credit card so this is not really that much of a distinguishing feature for most rewards credit cards vs. high yield checking account comparisons).

Reward Credit Card Cons

There are certainly some cons to using a rewards credit card:

• Potential for mismanagement. If you carry a balance on your rewards credit card for even one month then you can potentially wipe out an entire years worth of cash back savings. If you think that you might feel at all tempted to just run up a bunch of purchases on your card without having the money in the bank to pay the balance off in full every month then you should seriously consider either scheduling your credit card payments to be made automatically from your checking account to your card and for the bill scheduler to be set to automatically pay off the balance in full every month (which will force you to spend responsibly) or if that still doesn't work then you should reconsider using a rewards credit card in the first place until you can get a firm grasp on managing credit responsibly.
  
  
• Fine print. This is true of a high yield checking account just like it is true of a rewards credit card because you can see from the above high yield checking account cons that there are quite a few hoops that one has to jump through to earn the high interest rate for the checking account but I think it is important to point out on the credit card side of things because it seems that many people tend to gloss over the details for their credit card. Wander blindly into a new credit card application at your own peril. Take a few minutes and really compare credit cards in depth to make sure that you understand the features and the fine print.

What Should You Choose?

So should you choose a high yield checking account or a rewards credit card? I don't know your specific situation and so of course I have no idea of what strategy is best for you but I do know that many people can put their money to good use and their spending to good use by using a combination of the two. I am a firm believer in putting ones money to work for them rather than going into debt and serving money. When you have paid off any existing high interest consumer debt then consider crafting a strategy that involves using both a rewards credit card and a high yield checking account to propel you towards your financial goals.

What do you think?

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Do you ever think back to how and when you started using credit? The days where if someone pulled your credit file, instead of pages and pages of accounts and inquiries, you'd only see a blank sheet of paper.

I'll never forget how my credit history started. The year was 1995 and I was 18 years old. I'd applied for one or two regular credit cards but I was declined due to lack of a credit history. I didn't let that stop me though; I was bound and determined to get a credit card. After all, an 18 year old with a credit card would make people think I had money, right?

I don't remember if I saw the advertisement for a secured credit card on a TV commercial or in a magazine. All I had to do was send them $300 and they would send me a credit card with a $300 credit limit. The $300 I mailed them would stay in an savings account and earn interest but I could not withdraw the money.

I mailed them the money and received my credit card. In fact, I still have an account with the bank. Only now, my initial $300 credit line secured card is now an unsecured card with a $35,000 limit and I am not required to maintain a savings account to serve as collateral. I don't really use the card that much since I have another credit card that offers a better cash back program. This is my oldest credit card though and I try to make sure I use the card every now and then just to keep the account open and active.

Now it's your turn, how did your credit file start?

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If you have a credit card with a zero balance that has been laying around collecting dust for awhile, you may be receiving a letter from the credit card company soon.

Credit card issuers have been flipping the switch recently and closing unused or inactive credit cards. Unused accounts cost the company money and in a time where the bottom lines are overflowing with red ink, credit card companies are trying to cut costs wherever they can.

The credit card companies have lost so much money in the last few years, they are trying reduce risk wherever they can by closing unused accounts and reducing credit lines. According to the New York Times, credit card companies wrote off approximately $21 billion dollars in bad credit card debt in the first half of 2008.

It may not be fair, but the credit card company has every right to close your credit card whenever they see fit. You may not have read the small print in the little booklet that came with the card but it outlines all the "rules" that come with using your credit card.

How can you minimize the risk of your account being closed?

• Setup recurring billing. If you have a utility bill that accepts credit cards (and there's no extra for doing so), have your bill charged to your credit card and pay the bill in full each month.
  
• Small Purchases. Next time to fill up your tank, use your credit card instead of your debit card or cash. When the bill comes, pay on time and in full.
  
• Large Purchase. If you have a rewards credit card and have a large bill coming that you had previously planned to pay cash for, use your credit card and reap the rewards. Keep the money in a savings account until the bill comes from the credit card and pay it off in full. You'll earn a few bucks on your savings and reward points on your credit card. I do this for my auto insurance premiums. I save the money in my savings account and pay my bill with my credit card that offers 2% cash back. When the bill comes, I pull the cash from savings and pay off the credit card.
  

Have you recently had a credit card closed due to inactivity? Did you try to get the account reopened?

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Apparently, the credit card companies don't see me as too much of a risk. Even though we've been hearing about numerous credit card companies suddenly reducing the credit lines of credit worthy customers just because of the places that they use the card.

The past few days, I've received three separate offers from two different credit card companies offering me low interest money because I am a "valued" customer. They want me to use their money for anything I need. Just in case I didn't have any ideas, they suggested that I could use the money to take a vacation, buy a computer, do home repairs or consolidate other high interest debt.

I thought about taking them up on the offer; not to do the things they suggested but to put the money in a savings account until the low rate expires and then payoff the balance in full. Basically, I'd take advantage of the offer to make a little extra money for myself. This game worked a lot better when the interest rate on savings accounts were over 5%.

The only catch is that the offer includes a balance transfer fee of 3%. If I took $10,000 of my $15,000 credit line, the fee would be $300. Putting $10,000 in my savings account that is currently paying 2.5%, I would have $250 after one year. By taking advantage of the offer, I would actually be losing $50.

No thanks, I'll pass on the "generous" offers this time. Next time, send me an offer that doesn't include a balance transfer fee and I'll probably take the money off your hands.

Image courtesy of Andres Rueda

Each day that we are in this financial crisis, more and more companies are having to take extreme measures to limit themselves from losing more money. Fueled by rising levels of bad debt, American Express is one of the companies taking steps to manage the risk in their credit card portfolio.

In a move to reduce the number of customers who may be considered a risk, the company is offering select customers $300 to pay the balance owed and close the account. The customers that were selected will have until April 30, 2009 to pay the balance in full.

Unfortunately, the offer was not sent out to everyone. I am an American Express cardholder but the card has a zero balance and I haven't used it in months. It seems like I would be an unprofitable customer and they would want me to close my account. Since I pay my balance in full each month (when I do use the card) and don't pay any interest (anymore), I would be one of the people that they asked to close my account.

Customers who were chosen and pay off the balance before the due date will receive a $300 pre-paid American Express card.

Were you one of the customers given this option?

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Who hasn't been bombarded with credit card offers? Each day you go to your mailbox, you seem to get more junk mail than mail of importance. However, have you considered that what you sometimes disregard as junk can in fact be just the thing you are looking for or, in fact, the envelope may contain important information. In any event, while time consuming, the process of reviewing all of your mail might be beneficial to your financial well-being.

Here are some reasons you should never judge your mail by its envelope.

The Terms Are A Changin'.
Your credit card company may send you correspondence that outlines the changes in your credit card terms. In some cases, the letter may require that you contest the change within a certain period of time. If you throw away the disclosure without reading it, you will likely get stuck with fees and charges on your credit card account that you cannot change. It is better to promptly file and keep your notices in case there is ever a situation involving a dispute.

Opt Outs Need An Answer
Some companies where you maintain an account can send notices about opting of a specific program or change in your account. By not replying, you are essentially agreeing to sign up for what may turn out to be a costly program.

Checks Should Be Destroyed
Occasionally, credit card companies will send out blank checks that you can use to transfer the balance from another account onto your credit card. If your mail is stolen or your fail to dispose of the checks that you do not want, you could become a victim of balance transfer fraud. This type of fraud occurs when a thief has access to and writes out checks for their own benefit, leaving you with the check amount added to your balance. You should always shred any checks you've received to make sure they are completely unusable to others.

New Credit Cards Were In There
Your credit card company may have automatically issued a new credit card due to your due date expiring. If you do not open the envelopes and throw the card out in the trash, you will not only have a working credit card past the expiration date, you will also leave yourself open to criminal activity.

Better Opportunities
Sometimes, that so-called junk mail may contain information you've been looking for all along. Because some promotions that are sent through the mail can't be accessed anywhere else, you might have a chance at finding the deal that is right for you. Some promotions may also offer bonuses and other incentives by applying during a certain period of time, which you will most likely miss you don't read through your mail.

This is a guest post from Trisha Tolar. Trisha is a freelance writer providing content for CreditCardAssist where she regularly writes about credit cards, rewards programs and general consumer finance issues.

Discover Card - $50 Cash Back Bonus!

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According to an article in Sunday's, Atlanta Journal-Constitution, retailers are expecting consumers to reduce their use of credit cards this holiday season. Most people plan to use cash for their holiday purchases. What? Is this a new concept? People actually be spending their own money for gifts this holiday season?

Because of the credit crunch, more banks have cut back on credit card offers at the same time consumers are cutting back on purchases. In my opinion, if there is any good that will come out of the credit crunch, it is that people are starting to realize it is a bad idea to spend money that does not belong to them. If you don't have the ability to pay cash for a purchase, you probably should not be making the purchase; especially, if it is for a want and not a need.

Credit card issuers have also started to get better about who they issue credit cards to. For the second quarter of 2008, compared with the second quarter of 2007, most of the top credit card issuers have reduced the number of credit card solicitations they send out.

According to Synovate Mail Monitor, solicitations by HSBC are down 54%, Citigroup is down 45%, Discover is down 33%, Chase is down 9%, Bank of America is down 3%. Some issuers such as Washington Mutual and Capital One have actually increased the number of solicitations they've been sending out.

How do you plan to pay for your holiday purchases?

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I finally got around to taking my car to the shop this weekend for some past due maintenance and a couple of new tires. I've needed an alignment for some time now and I just haven't wanted to spend my day off waiting in the car repair shop. I took my vehicle to a local automobile repair shop and told them what I needed.

For my two new tires, an alignment and an oil change, the total came to just over $400. I gave them the ok to go ahead and start the work. While sitting in the waiting area, the manager comes over to me and tells me that I can go ahead and complete the instant credit form while I'm waiting and by the time my vehicle is ready, I'll know how much I am approved for. I politely told him no thanks and went back to watching the TV in the waiting room. He looked at me a little strange but didn't push the issue and went on his way.

About twenty minutes later, he came back in to give me an update on my car and to see if I was ready to submit my application. Again, I politely told him no thanks. Apparently, he was not taking no for an answer this time. He started to explain how short the application was and how I would more than likely be approved. By this time, he'd started to work on my nerves a little. So again, I told him thanks, but no thanks, and that I would be paying with cash. I told him I wasn't worried about getting approved but I just did not need any additional credit. When he started in on the 90 days same as cash, I lost it. I firmly, but politely, told him that I don't care how long the application was, how long it would take to get approved or how many days I could use their money, I DO NOT WANT TO APPLY FOR THEIR CREDIT CARD. Unfortunately, it took me having to be a little rude for him to stop the sales pitch.

Have you had a salesperson try to push a credit card on you? How did you handle it?

Image Credit: Larry Page

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Two weeks ago, I posted about the mailer I received from Chase with a pretty sweet incentive to use my credit card. I've been a cardmember for a year or two and I have two different Chase credit cards. I only used the cards for a couple of months and they've since been locked in my junk drawer along with all the other credit cards I don't use.

The offer of a $5 statement credit per day to use the card during the month of July is a pretty good deal and I've certainly taken advantage of it. I have only been using the card for purchases I had already planned to make and the balance will be paid in full next month. The offer stated the statement credits would be posted within 6-8 weeks from the date the promotion ends. As you can see from the image below (click to see it bigger), they've already starting applying the statement credits which makes the deal even sweeter.


Yesterday, I received another offer for the other Chase credit card I have and don't use. This offer is a little different and not nearly as tempting. They are offering a free $25 gas card for using the credit card. This time though, I need to spend at least $100 each month between July 1 and September 1.

I like that I don't have to make daily purchases to get the bonus. I don't like that I have to wait up to 6 months (3 months for the promotion to end and then 2-3 months for the card to arrive) before I receive the gas card. I haven't decided whether I will take advantage of this promotion or not. Maybe if I continue to not use the card, they will send an even sweeter promotion??

Have you received any offers/incentives to use your Chase card?

Looks like I am going to be digging my Chase Card out of the depths of my sock drawer. I received a mailer today for an offer I can't refuse. Usually, I get balance transfer checks from them that all end up in the same place...the shredder. The interest rates vary from 4.99% until the balance is paid in full or 0.99% for a limited number of months. I probably would take advantage of the balance transfer offers if they offered a zero percent interest rate and no balance transfer fees. Of course, I'd deposit the money in savings and payoff the balance before the intro period expired.

This offer was a little bit different. They are offering $5 statement credit each day I use my card during the month of July for a maximum of $155. Since I currently have a zero balance on the account and will pay any charges off in full, I am actually making a little extra money.

Frequently Asked Questions from the Flyer:

What do I have to do to receive a $5 statement credit? $5 will be credited to your account for each day you make a single purchase with your card regardless of the dollar amount or number of purchases you make in a day.

Who qualifies for this offer? As long as your Chase Card is in good standing, open and not in default when the credit is posted, you qualify. Note: The offer only applies to the account that received the offer. The last four digits of the card number is posted on the inside of the flyer in the upper right corner.

When will I receive my statement credit? The credit will be reflected within 6 to 8 weeks following the last calendar day in which the credit was earned.

I haven't quite decided what I will purchase but it will be something small since there is no minimum purchase. I may end up buying a pack a gum each day!!

Did you receive this offer? What do you plan to buy?

Get your own Chase Credit Card:

I couldn't wait to post this weeks saving money post. I made a few smart moves this week that saved me a little more extra money.

This week, I saved money by:

Mypoints Redemption. I redeemed a chunk of the points I'd saved up to get a couple of gift cards for a few things I needed to purchase. I'd wanted to replace my dining room light fixture since I purchased my home but I did not want to shell out the money for the new fixture. I redeemed enough points to get a gift card to Home Depot. I was able to get my new light fixture for free! Not only was the light fixture free, I was able to get it installed for free. Using my new bartering skills, I did my uncle's taxes for him in exchange for him installing the light fixture. By using the gift cards and free install, I estimate that I saved about $150. If you are not a MyPoints member already, you should really consider signing up. It's really quick and easy to earn free stuff that you can actually use. Want to know more about how Mypoints works? Click here.

Cash Back Credit Card. My homeowners insurance was due this month. Instead of writing a check directly to the insurance company, I paid with my cash back credit card that is currently paying 5% for the first three months. I will then payoff the credit card balance in full. By using this method, I was able to earn a couple of extra pennies in interest and a cash back bonus of $25.

Earn 5% on your gasoline and auto maintenance purchases and 1% on all your other purchases with the Discover Open Road credit card. Please apply for this card ONLY if you will use it responsibly and pay off your balance monthly.

By thinking ahead and being creative, I was able to save over $175. Doing this all the time can and will add up to considerable savings. What small things can you do to add up to big savings in your financial picture?

Did you save money this week? How did you do it?

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I currently have the Citibank Cash Returns credit card that I am using for any purchase where I am able to use a credit card. The reason for this? The card offers a 5% cash back rebate on all charges for the first 3 months of card membership. I have another month and a half before the cash back rebate returns to the measly 1% cash rebate. Once the bonus cash back period is over, I am considering switching to another cash back credit card to use as my primary credit card. I currently have 3 other cards that offer a cash back feature. Unfortunately, they all only offer 1%.

How do I decide which one I will use as my primary rewards credit card? I made an informal list on paper and finally decided on which one I will use.

The three cards I considered and the highlights of each:

Citi Dividend Card. This card has a credit limit of $15,100 and offers a 1% cash back bonus. The card has a cash back bonus limit of $300 per year. You can only request a check once you have reached $50 in rewards which is the equivalent of spending $5000.

Bank of America Cash Returns Card. This card has a limit of $10,000 and also offers a 1% cash bonus. There is no limit to the amount of cash rewards but like the Citi Dividend card, you must reach $50 in rewards before you can request a check.

American Express One. This card has no preset limit and offers a 1% cash back bonus. The difference between this card and the other two is that whatever bonus you earn, the amount is automatically credit to a savings account with American Express Bank. The card does carry a $50 annual fee. This card was my choice until I remembered the annual fee. I like that the amount is credited to a savings account each month and I don't have to wait until the balance is $50 to redeem the rewards. The only thing about this card that I don't like is the annual fee. Due to the annual fee, I will actually cancel this credit card. To make up the difference for the monthly fee, I would need to spend at least $5000 annually before I break even (not including the savings account interest). I do not spend nearly this much on my credit cards and I do not plan to spend more just to get a few extra dollars in rewards.

After looking at all the above, I think I will actually make the Citi Cash Rewards card my primary credit card for my everyday purchases. The limit is only $5400 so I will need to consolidate the credit limit from my 2 other Citibank credit cards. For any business related purchases for my rental property, I will continue to use my Discover Business Card. My Discover Business Card offers a 5% cashback bonus on office supplies, 2% bonus on gas and 1% on all other purchases.

What card do you use for your everyday purchases?

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I knew it would happen sooner or later. Every since I paid off the remainder of my credit card debt, my credit card companies have not heard from me. Of course, what I mean by saying they haven't heard from me is that I have not used their credit card. There are only two cards that I use on a regular basis and that is only for the rewards. I no longer carry a balance and I pay off the balance in full each month.

Today, I got two offers from two different credit card companies offering me easy money because "I am a valued customer". One company "valued" me so much, they offered a 2.99% balance transfer for 6 WHOLE MONTHS (why can't I have a year) and the balance transfer fee is ONLY 3%. The letter encouraged me to take advantage of my entire $10,000 credit line.

Let me make sure I'm understanding you correctly. You want me to use your money for 6 months and charge me $300 up front plus monthly interest for the privilege to do so? NO THANKS! I'll pass on this "deal". In fact, the letter and checks they sent have already been shredded.

Had this been a few years ago, the OLD me would have jumped all over this. I would have promised myself I would pay it off in full before the special rate expired and when the rate actually expired, I would have some excuse for not paying it off and continue to carry a balance at the regular interest rate. The NEW me is not having it. The NEW me does not like debt anymore. The NEW me knows that credit card debt is bad.
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I have a credit card from one of the big home improvement stores. When I bought my first home four years ago, I figured I needed a credit card from one of the big home improvement stores in case I needed emergency repairs or supplies for my home. Knowing then what I know now, I would have setup a special savings account for home repairs.

I bought several things over the first two years with the promotions the stores would run. Make any purchase over $299 and pay no interest for six months or twelve months. Of course, I would never pay the balance off before the promotion ended and would end up paying more interest than I saved over the course of the promotion.

When I decided I wanted to get out of debt, this was one of the cards I paid off first. I've had a zero balance on this card for over two years. I've used the card since I've paid if off but promptly paid the balance in full the next month.

Lately, the big home improvement store has been sending me 2-3 coupons a month advising I can save 10% since I am such a valued customer. This is nice but the only way they will let me save 10% is if I use my credit card and I can only save up to $200. If I am such a valuable customer, why don't they let me use whatever method I want to pay for my purchase?

And why can I only save up to $200? Where do these coupons end up? In the shredder along with my pre-approved credit card applications.

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Those sneaky credit card companies are always out to make an easy buck. I paid off the remainder of my credit card debt last month but I got a bill this month for the remaining interest charges of $20.99. I immediately went online to schedule my payment. The payment is due on the 17th of this month. As I was scheduling the payment on the credit card company website, I had the option to schedule the payment to post on any day up to the 21st of the month.

Why would they even offer the option to pay on the 21st when my payment is due on the 17th?

The credit card company wants me to schedule my payment AFTER the due date so they can promptly charge late fees and jack up my interest rate. Just a heads up; when you are scheduling an online payment, be sure you schedule it to post on or before your due date. (I usually schedule my payments to post at least 2 days ahead just in case there is a problem. (This gives me time to fix it if something does go wrong.)

I won't mention the name of the credit card company but they aren't located in my CITY. ;-)

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If you have been following my blog, you know that I was trying to purchase an additional investment property. I found a property, put in an offer and had the home inspection completed only to find out that there are huge problems with the homeowners association. I did not want to buy someone else's problems so I rescinded my offer. I was really bummed last night and today so to make myself feel better, I PAID OFF ALL MY CREDIT CARD DEBT. That's right guys. I finally pulled the trigger and paid off the debt. It was all at a low interest rate but I was still paying interest that I could be saving and investing.

One card had a balance of $3,150.00 and the other had a balance of $7,566.48 for a total payoff of $10,716.48.

Here is how paying off this debt will affect my future finances:

• Cash on hand - $31,498.28. Still alot of cash but as I have posted before, I have a mental need to have alot of cash on hand because I am scared of a major financial emergency.


• Extra cash - I will have roughly $400 left in my budget that I'm not paying out to the credit card company. I plan to add an additional $100/month to my freedom account, $100/month to my rental property acct , $100/month in additional principal on my mortgage loan and $100/month additional payment to my car loan.


• Non-Mortgage Debt - As of December 31, 2006, my non-mortgage debt decreased from $66178.97 to 47,816.38 for a change of 27.75%.


• Credit Scores - My credit scores currently are 707 TU, 706 Experian, 694 Equifax. I think my scores should rise at least 10-15 points. I will keep you guys updated.

I am headed over to NCN Network right now to update my debt totals. If you haven't visited the NCN Network, it is a site started by No Credit Needed to help everyone track their debt reduction progress. If you need inspiration to pay off your debt, be sure to visit and read everyone's progress.

I know when you read the title you may think, "what in the hell is he talking about?" The reason I ask is that from my opinion, changing your behavior is one of the most important things you need to get out of debt. Yes, you also need money and to spend less than you earn. I did not create this blog to be a "how to" site or to give financial advice, I created it to share my journey with getting out of debt. With that being said, one of the biggest tools for me in reducing my debt is changing my behavior. I have tried to get out of debt many times in the past only to end up in a worse situation than when I started. I noticed my debt ONLY started to decrease significantly when I decided to change my behavior. What do I mean by this? I changed the way I thought about money. I looked back on my failures with getting out of debt in the past and figured out where I went wrong. It all went back to the same old thing; I never changed my behavior.

One problem I had was that I continued to use my credit cards to buy things I didn't need because I promised myself I would pay it off. The next week, I would purchase something else and say the same thing. In about 6 months, I am looking at my credit card statement thinking how I am going to pay it all off. I always said that when I got my next raise or my next bonus, I would use that to pay off the credit card. When I got my bonus or raise, I would pay SOMETHING towards the card but I would never pay it off. I paid off all my credit cards a few years ago by taking out a 125% loan on my house. Not shortly after that, I was back where I was before I refinanced. You can read that story here. The next problem I had was a lack of patience. If I wanted something, I did not stop to plan the purchase. I took out the credit card and boom, it was mine. I never took the time to sleep on it and make the right decision.

About a year ago, I decided enough was enough. I realized that I know HOW to get out of debt but I was adding about as much as I was paying off. I've since stopped using my credit cards like free money. Sure, I still charge things on my credit cards but the balance is paid in full the following month. I do not charge more on the card than I can pay in full the next month. I have an account set aside as a freedom account. If I want something, I have to save up and pay for it in CASH!

I apologize for rambling on so long but this has been on my mind for a couple of days now and I wanted to share. Maybe this post can help someone who is in the same situation.

I bet that got your attention huh?? But really, I did find $75,000 in my wallet. The only thing that sucks about it is that it is all plastic and belongs to someone else. I just cleaned out my wallet and I had several cards in there that I no longer use.
My wallet contained the following cards:

• Amex $45,000 limit; $115 balance - This is the card I use as my everyday card. Paid in full every month although Amex will let me carry a balance.
• Citibank $15,000 limit; $0 balance - I used to use this card alot when I got 5% on grocery, gas and pharmacy. Now that they have dropped that to 2%, I no longer use it.
• 2 Chase cards $10,000 limit; $0 balance - Hardly ever use these.
• Visa $5000 limit; $0 balance - Can't remember last time I used this one.

My wallet is much lighter now and only contains my drivers license, debit card, my insurance card, my Amex and my company corporate card. This will allow me to carry a much lighter wallet, keep me from spending on impulse ( I am more likely to impulse spend with a card that has no balance), and make alot fewer phone calls in case my wallet is ever lost or stolen.