Fix Your Money Screw-Ups
No, your life isn't over. We show you easy ways to set right common blunders with your credit cards, student loans, parking tickets and more.
By Elizabeth Ody, Associate Editor, Kiplinger's Personal Finance
November 2, 2007
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EDITOR'S NOTE: This article is from Kiplinger's Success With Your Money special issue. Order your copy today.
You goofed.
You ran out of stamps, so of course you couldn't pay your credit-card bill. You lost your W-2, so you figured you'd save yourself some trouble by not bothering to file a tax return. Repaying your student loans completely slipped your mind -- for over a year.
Unfortunately, these screw-ups neither go unnoticed nor fix themselves. As with a mess in your kitchen, a mess in your finances won't go away unless you clean it up. But it doesn't necessarily require a lot of elbow grease to make things right.
Below, we give solutions to five common financial indiscretions, but the advice works just as well for most other money mishaps. The bottom line: Pick up the phone and call the people you've slighted. That's the first step to getting back in their good graces. So go find that student-loan tab, utility bill or whatever it is that keeps you up at night, and call the number on the bill. Seriously, go.
Work off your debt
Susie Armitage racked up $3,000 in credit-card debt last year while preparing for a trip to Russia to do volunteer work. "Once I had too much debt to pay down in a month, I started blowing it off as 'Oh, whatever. Everyone's in debt,'" says Armitage, who works for a Washington, D.C., nonprofit. But when she got back from her two-month trip, the balance was still sitting there, plus finance charges on the 18% Citibank card.
So Armitage, 25, called Chevy Chase Bank, which agreed to transfer $1,000 of her Citibank balance to a new zero-interest card. She then worked three jobs and eliminated her entire balance in three months -- first making payments on the interest-bearing card, then on the 0% card.
Blowing off your credit-card payments damages both your credit score and your financial habits. The sooner you take control, the easier it is to get back on track. Now Armitage is back to one job and pays her bill in full each month.
Exceeding your credit limit isn't the end of the world if you've got the funds to make up the difference. But that, too, will send your credit score into a tailspin. If you breach your limit, call your bank immediately and let it know you'll send in a check. Be honest about how much you can pay and follow through.
If you're not sure whether you've missed a payment, or you don't know how much you owe, call the bank and ask. You can usually send in a check without your monthly statement if you include your account number. And if plain old disorganization leads you to skip payments, consider setting up automatic withdrawals from your checking account.
You have more serious credit issues if you can't afford your minimum payment or can't keep your balance within your credit limit. Call the National Foundation for Credit Counseling at 800-388-2227 to speak with a credit counselor if you're worried about deeper financial problems.
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