Two Slaps in the Face

I was the first to admit that all the money I owe is nothing but my fault by signing loans and credit cards that charged me ridiculous interest rates. I was not forced into any of those.

However, I was recently commenting with an online friend that the banks make it too easy for a person to fall into this hole because they are so willing to put a credit card in people with not so good credit history. Like me!

I had been careful until now about naming names but I got slapped twice in recent days so the gloves are off.

About three months ago, I went to Banco Ficohsa to ask for a personal loan to consolidate my debts. They asked me for my salary info, and all my debt info. They confirmed that at the credit bureau and denied me a loan because I had too much debt for the salary I earn. It's hard to listen to those words and to know that the person telling them now knows you are up to your neck in debt.

The slap came over about a month ago when a sales rep from Banco Ficohsa called me to tell me the "good news" that I was approved.... for a credit card! I told them that they were probably wrong since I had been denied a loan and I found it reasonable that they denied it since I had so much debt. The sales rep said that I should accept the offer anyway. Just to test them I said "sure go ahead and run a credit check on me".

Some days passed and I thought I had been turned down. But to my amazement a couple of weeks ago a man came over to my office to deliver my brand new credit card with a $7000 limit! What a nerve! I received it and the next day went over to the bank to have it cancelled. The customer service lady was in all ways trying to have me keep the card but I told her I wanted a loan and not a card because of the interest rates. She eventually accepted my card back and destroyed it. That means I'm no good for a 28% loan but i'm good for a %60 loan, huh?

The second slap came with Banco Promerica. That's the card that I haven't yet put up in numbers. I haven't because after missing several payments I got into a payment schedule with them with the assumption that my card was canceled and I was just paying the balance. I even read the agreement in which it states that one missed payment will allow them to get me to pay by legal means.

Well I was working last week and I got a call on my cell from a happy sales rep telling my that due to my Super Premia card I was being offered a Premia card with a similar $6000 limit. Unfortunately I was in a room with other people and couldn't ask the sales rep how they had the nerve to offer me a credit card when I was summoned by them to get a payment schedule arranged for my credit card debt. This offer I turned down right over the phone and when asked for a reason for turning down "this unique and exceptional opportunity" I just said "yes thank you but no".

I wonder if they either keep poor records of their customers credit behaviour or if sales rep are so eager to dish out card that they don't care who they offer them to.

No wonder the sub-prime crisis hit people. If I had been so much in debt and with the experience I now have I probably would have started using both cards the next day they would have arrived and had been deeper in debt once the fees and interest charge would have started rolling in.

Well, at least this blog is free.

Gazing into the Abyss

It is so hard to write about my problems. It is much easier to write when I get some income and pay some debt.

I've had two setbacks these past days.

The first one has been that the business with my ex-brother-in-law has stopped. Not due to him or me not wanting to continue but our provider has had problem deliver then goods and shipping them to the US. So with no goods to send there is no money to pay the provider and thus no actions I have to do and no money for me to collect for doing that. They say they will be able to resume shipping in a couple of weeks. That will make it a whole month without that income. That's about $920 that I will not receive this month. It has happened before but I'm more affected by this situation now. I'm looking for other suppliers but their prices are much higher and so the search is on.

The other one that really made my heart sink was going to my main credit card and asking for a payment arrangement. For starters they wouldn't use my extrafinancing line to put my credit card debt in it because they see in my records that I've been dragging a balance. Ok, fair enough. So I asked for my card to be cancelled and get a payment schedule. I went to the office for that and since I have a loan with them and my "cellphone card" too they want to close all that up and tie it into one big loan at a rate that is lower than my credit card but higher than the loan and the extrafinancing.

I wouldn't mind even it meant a $500 monthly payment. However they closed up with saying that for them to arrange all this for me they would need for me to get a 2 cosigners. Not one , but two. And they have to earn more than 30,000 lempiras per month. It's close to impossible for me to get one, so I can forget about getting two. I was so shocked and disappointed that I didn't even ask what could they do for me without cosigners. I guess they wouldn't help me without them.

So it has come to start asking friends and family for loans. My best friend is in town this week. That's one reason I haven't written that much because we keep going out a lot (he pays for almost everything to my embarrassment but he is ok with it). I will ask him for help with this card before he leaves on Saturday. He helps me a lot by getting me gigs with US companies that pay me to do work for them from here, so he is already helping me by vouching for me. I will have to drop the shame and ask him for a loan.

I have some more stuff to write that is more upbeat but it's difficult to start when more than one negative thing hits me at the same time. I don't really feel like writing at times. However, like now, after writing about my problems I can look at them a bit more objectively and try to solve them rather than just take pity on myself which does nothing to help me.

Lately I've felt that my wife and kids understand my situation a bit more after some soft and hard discussions we've had. Still I don't think it sticks completely in their mind but maybe with repetition it will.

Well, at least this blog is free.

The utility card

Again, not a real utility card , but that's what I charged on this card.

 

I got this card way back when I was in better financial situation and thought I was financially "smart". They offered to auto debit my home landlines, electric and water bills from the credit card and give me points for them. I thought "great, I can pay them later".

 

Well, by now you probably can figure out the end of the story. I started paying the full balance. Then one month something happened and I couldn't come up with the full balance or the phone bill came up really high since my wife loves to talk and didn't care if cellphone calls were expensive or if international calls were expensive either.

 

So the balance started accumulating. I was in a roller coaster ride with that card. Sometimes being able to pay it in full but then taking out cash advances. Then the big one hit, the "extrafinancing". I thought i could pay the balance and keep paying the debt at a lower rate. Mostly that worked until I got a little more balance in the card. About $2000.

 

In most other cards it would've been sustainable. However on this card they started adding some weird charges to my card for insurances and service fees, and such. The balance grew for a while.

 

For a while then I had my mind set on cancelling the card and about 2 month ago decided it was time to make "the call". I got a letter from their collection department and called them and told them I was having trouble making payments to them. They were very nice and said that they could turn my balance and extrafinancing into a fixed rate loan at 32%  (instead of the 65% the card was charging).

 

So I went to their offices and surprisingly to me I actually had to wait in line to make a payment schedule with them. I did feel some embarrasment but not as much as I thought I would've without other people going thru the same process.

 

So now my balance with them is currently $6651 with a montly payment of $250 for 47 months now. Tomorrow is the due date for payment #2.

 

I have to tell you this was another post that was hard to do. It really drives home the situation i'm in and again I try to think how I let myself get into it and as much as there are some clear reasons there are some others that I just can't figure out. My suspicion is that a good part is real debt but that a big chunk of it is just interest that accumulated over time.

 

If I ever come out of this one healthy and debt free, I will have really learned my lesson. If I ever ever get a credit card again I will get one with a small limit and not fall for their trick of offering a higher limit every time I wanted to cancel it.

 

Well at least today I was able to buy my anxiety and blood pressure medication in cash. Oh yes, I also bought a lot of medicine with my credit cards. Those were real emergencies but constituted only a small part of all the debt I currently have. The word regret doesn't even begin to describe how I feel.

 

I'll put these numbers up on the right soon. I just can't write for a while now. Too painful to see how deep in debt I am (and I still have 2 to go).

 

 

The Cellphone Card

The cellphone Card

 

Well it's not really a cellphone card in the sense of a prepaid calling card.

 

I was going to write about the other 2 credit cards I have but writing about the last one was really hard, so I had to write about one that I felt good about to keep me from giving up exposing all my stupidity to you.

 

I got this last credit card when I was already in NO mode last year. NO mode as in "Would you like one of our credit cards?" , I would say "NO". They would counter with their pre-packed list of benefits and I would just keep saying NO until they would give up on me an try to get me to give them names of some other poor saps that they could bother with the cards.

 

I was going thru my third NO when the guy on the phone line said "When you get this card you can subscribe your phones to a corporate plan. It gives you free calls between all the numbers you register for automatic debit from the card". That really sounded interesting! I call my mom, dad and wife a lot so I started hearing the guy.

 

Here in Honduras the phone companies charge you for calls even within their own networks, on both prepaid and monthly individual plans. Cellphone calls are expensive and even so there are almost 4 million cellphones active in a country with a population of 7 million. The basic rate is about 20 US cents/minute.

 

The only way to get a really good rate is to get on a corporate plan. Those are usually arranged by the cellphone companies with big corporations here like banks or similar sized companies (having your company pay your phone would be the best but rarely happens). The bigger the plan the better the rates.

 

My company had a really small plan, we got charged just a few cents less than the base rate and no free calls to anybody. It really sucked.

 

I asked for all the rates I would have if I took the card, and with a little math I figured I could AT LEAST shave 50% off my cellphone bills. They even gave me 150 free text messages, when most plans only have 50. Even my brother, who has a great corporate plan was amazed at the rates I was going to get.

 

So I did sign up for it, I signed my cellphone, my wife's, my oldest daughter's, my mom's and my dad's. My daughter and my dad talk the least. My mom and I talk about the same. And my wife is the one who talks the most on the phone (too much free time I think).

 

Another great advantage of signing up with this card is that I get free calls not only to the phones I sign up with my card but to all other numbers of all other cardholders. My other brother got himself this card and signed in his and his wife's cellphone and now him and I talk for free.

 

I did make the mistake of letting the card pay the cellphones for several months and soon I had it max out. However I got some money recently and did a big payment on it and now the balance is only $1589. Well I say only because I compare it with the other cards.

 

I'm going to try to pay off this card first of all because it's the easiest or so it would seem.

 

I recently added my cousin and his wife's cellphones to my card and they  are really happy with the much lower bills. I just have to keep them paying me for when I get charged on the card. Then I have to get myself to go ahead and pay the ENTIRE sum to the credit card. I know that's where I usually fail. I hope recognizing that fact will help me not make the same mistake.

 

I haven't seen the latest statement so I can't give you the interest rates or what is going to be my monthly payment on it. But I will write it up on the summary on the right when I get them.

 

Since this card is from the same company as my main card, If I ask for a payment plan they will probably cancel this card too. It's ok, once changed over to the corporate plan they can't sign me out. I've payed the phones in cash before and after I got this card maxed and I was never told I would be signed out of the plan. The only thing stopping me right now from requesting a payment plan for my main card is that I have a uncle and aunt that I love so much (parents of my cousin that is already on the plan). I already requested them to be signed up to my card. As soon as they get signed up and get their first bill on the new plan I'll make my move.

 

Tonight, please say a little pray for me. Actually pray for my wife so that she finds gets, and keeps a job.Any job. Thank you

 

The Main Event

I've had this credit card for the longest of all the rest. I took it when I was just starting to work. At least there are no cosigners on it.

 

I would've waited for the statement to come in the mail but I decided to give you the numbers right now. Currently it has a balance of $7046.51

 

The thing that bothers me the most about this card is that just 10 months ago it had almost no balance. Well except for the dollar amounts. I used it to purchase airline tickets for my wife (who made 2 trips to the US in 2007) to start businesses here that just failed. I also used it to lend money to relatives on my wife's side who never payed me. I used it to buy company stuff, including some $2000 worth of software. Then I got refunded by the company and used only part of it to pay this card and the rest to pay other cards.

 

Remember I told you I had taken an extrafinancing to buy my car and my dad helped me with rest? well this is the card that gave me that extrafinancing. Right now that balance I wrote before probably includes several of the payments I should've made on my extrafinancing.

 

My last statement said they were charging my payment #25 out of 36. The monthly payment of that is $253, so with 11 payments to go that's $2783 to add to the balance stated earlier. At least this payment is fixed at at lower rate.

 

The way extrafinancing works with most credit cards here is they set up a loan for you at some reasonable rate. Mine was 25%, then each month they charge the credit card the amount of one payment. It's up to you to pay your credit card (preferably the whole balance). Most credit cards will set the minimum payment to something a bit more than the extrafinancing monthly payment, so if one could say where the money goes it should be going to pay the extrafinancing.

 

In reality you really don't know since they are just slowly transfering the loan from one rate to a higher one. It's up to the person to keep up and not let the credit card balance rise (as I so miserably did).

 

Credit cards in Honduras actually have two balances one in Lempiras and one in dollars. So my Lempira balance was well, but my dollar balance was going up high. I started paying the dollar balance but in reality I was taking money from the lempira balance to pay for the dollar balance and to pay other credit cards too! I was desperate to keep up. 

 

One positive thing is that the lempira balance is in the same currency as my paycheck so I know that I owe that specific amount. The dollar balance could become more difficult to pay if our currency slides against the dollar. Right now it's at 19.02 Lempiras for one dollar. But if it were to slide just a few cents I could mean that i would have to pay more lempiras to cover my dollar balance payments. Let's hope it's stays the way it has been for a couple of years now.

 

Deep in my gut I feel that I will have to go to them and request a payment plan. I've done it with 2 other cards that I will write about later. It's an awfull feeling of shame. However at least in the previous cases the people have been nice enough since they want to get payed someway. At least I don't have to worry about this card until August 1st. That will give me some thing to think about what to do. Right now, getting a payment plan (preferably a long one) would seem to be the way to go.

 

 

The slavery of minimum payments

Today I got a Credit Card bill on my mail. Balance is $5485.

 

I took this credit card because it offered to transfer my balance from my "main" credit card and gave me 0% interest for 6 months. Well it's the 8th month now and they are now charging me 4.92% MONTHLY! That's 59.04% annually.

 

I should've used those 6 months to pay some of the capital that I owed. I did do that, I paid about $1588 for the first 6 months. But in the last month I was expecting a payment from some extra work that I had done and it didn't happen. So what did I do to pay the monthly bills? (including other credit cards) I took out cash advances on this credit card, which basically took it back to the original level I had when I got it, but now I'm paying interest on all that debt. And to really make me feel like crap I have to tell you that the card I was trying to pay off is now all the way up there again!

 

Looking at the statement closely it's interesting to see how they will keep me in the debt hole if I can't pay more than the minimum payment. Warning, there is a little bit of math ahead.

 

The interest this month is a total of $276. The minimum payment is $289. So $289 - $276 =  $13 . This means that if I paid the minimum payment only (thus keeping the collectors calls away) I would only lower my balance from $5485 to $5472. If I were to lower my balance by $13 each month, it would take me 420 months to pay that debt off! That's  35 years! And imagine if I were to actually charge more on it.

 

So, there are two ways I could go on with this card. Actually there are more (like not pay it), but focusing on trying to keep my creditors happy there are 2 ways. In both cases I will assume that I will not charge the card any more.

 

1) Pay off the mininum balance each month. And it will probably take those 35 years to pay it. Maybe it only takes half, that would be "only" 17 years and 6 months. The good side of that is that every month the payment that I would have to do would be less and less (a few cents probably), and most of it would be going to interest.

 

2) Set a number above the minimum payment of now and pay that amount each month, regardless of what the minimum payment turns out to be. I will try my best to do this. I'm setting my monthly payment to $300. I will pay them $300 each month. Every month a little more of those $300 will go to paying off the balance. It will be like a regular loan. The bad side of this is that I will have that $300 payment to do every month. The good side is that probably I would pay off this debt much faster than with option #1. Let's see

 

A little loan calculator I have here says that If I have a loan of $5485 that I have to pay off at a interest rate of 59.04% annually.... wait .. this calculator doesn't go that high! I guess the creator can't imagine someone paying more than 50% interest rate on any type of loan. Maybe the mob has better rates! Anyhow, I'll have to use the maximum value of 50%. Now I have to play with the loan term to get a payment of $300 or close so. I get a monthly paymentof $296 when I set the term to 3 years. Because i'm actually being charged a little more than what the calculator can reach I will probably have a longer term, like 4 years. But it sure beats 35 years !!

 

Do any of you have a loan calculator that can go up to 59.04% anually ? if you do try telling me the term for a loan of $5485 with a monthly payment of $300.

 

There are some other options I could use to handle this debt. I could pay the bare minimum while I try to finish of paying other debts and then start paying $300 monthly. I could pay $300 almost every month and less when times get tough(er). Unless I can offload this debt to some other lower rate loan I'll have to pay at least $289 soon and some number like that every month.

 

 

Honor Thy Father

My father has always been interested in me looking the social level I should. He felt that by now I should own a couple of cars and a house. About two years ago this month i finally caved in into his wishes of me getting a new(er) car.

 

I have a very old car. it's a 80's car and the only original parts on it are the chassis and the body I think. So I really did think back then that I should get a newer car. He even said he would help me with the loan. And I was about to finish paying an extrafinancing on my main credit card so I told him my limit of about $6000 for a car and he went off to search for one. He's retired so he has a lot of time every day.

 

During that month he showed me about 6 cars, he would tell me that this or that car was ok but not good enough. Finally he showed me one that I really liked, he liked, and my wife liked too.

 

So when it came to money I had no money available, I was going to use my extrafinancing credit line on my credit card to buy the car and pay it in 3 years. But it wasn't enough with my part so he "chipped" in. He got an extrafinancing on his card and just told me to pay it as I would pay mine. That was his help.

 

Don't get me wrong, I think it's fair but he had given me the impresion that he would give me part of the money. I was already liking the car and my family too. Plus it was "only" $75 a month extra on top of my other expenses and debts and payments. So I said yes.

 

I got the car, and soon enough my wife learned to drive it since it's an automatic. The old one is manual. Now I rarely get to use the newer car but it's the family car and it's in ok condition.

 

it's 2 years now and I'm having trouble paying my extrafinancing (that will be another post), and more importantly i'm having trouble paying my dad's extra financing!

 

Right now I should have made payment #24, and last week I just made payment #22. My dad payed one month several months ago and he reminded me this week that I still need to make another payment soon. I'm also paying any interests that run up when I miss a payment. It's a small thing usually but 2 months ago I payed $99 instead of $75 to clear it up.

 

So, right now I owe my dad (actually I owe my dad's credit card) 14 payments of $75 each. That's $1050 right there and we have just scratched the surface of my debts.

 

In hindsight, I still like having a new car. I just think that I should've been better with money BEFORE getting a new car to the point of having some money for a down payment rather than financing the whole car.

 

Aditionally the upkeep is not terrible but it all comes at the worst times. Like a ripped tire or an air conditioner that doesn't cool anymore. It's like if the car would hear when i'm money-less and decides to break then. I think it also has to do with the driver (wife).

 

I really don't want to leave my dad hanging with this debt. He's a retired man who got professionally and personally frustrated at the peak of his carrer. So I would really feel bad for him to see that his son is "failing" too. It's one of the debts that worries me on a different level than the others. I know my dad could pay it off, but I could never look at him in the face again if I let that happen, or I wonder if he would ever look at me again the same way.

 

Anyhow.. that's another little debt that I have to pay for 14 months. Let's tally it on the right side.

 

 

Credit Cards good and evil

Most of the money I owe is to credit card companies, which here are banks. I've had credit cards since I was 18 (an additional one from my parents). As I grew older I got my own card. First it was a regular card, then silver, then gold and now it's a platinum. I got into credit cards with the old saying that I would use it for emergencies only. Well, the term got a broader meaning than expected. Soon it was regular purchases that became "emergencies".

 

Along the years i've also accepted other cards for reasons that seemed logical at the time. One for grocery shopping that would give me discounts and points. Another one set to autopay my utility bills and get points for that too. In the end those were more excuses that I made myself than actual reasons to have them. The last one I got really did help me with my finances as it registered me for a group cellphone plan that cut my cellphone bills (mine, wife and oldest daughter) almost in half. Plus now we have free calling between us and most of my family members, since most of them have the same card.

 

In total I think I owe anywhere between $20,000 to $30,000 to credit card companies. Some i've already managed to cancel the cards and put the balance on payment plans. Still it's a lot of money to pay and I will be stuck paying it for at least 36 months on one and 48 months on the other one.

 

One thing you have to know by now is that in my country, Honduras, credit cards interest rates are HIGH. it's common for them to charge anywhere from 4% to 6% monthly! That's 48% to 72% yearly! so even if you pay the minimum balance, if you keep using your credit cards by the end of the year you will owe more and more and more and it will mostly be interests.

 

Before recent regulation, Credit card companies would calculate interest on the bulk of your balance, which already included interests from last month...talk about a good scam. It's not supposed to be that way and the calculations are supposed to be simpler now but I haven't checked them, I just want to get out of it!!

 

It would be easy for me to blame the credit cards for my current situation but in all honesty I was the one that signed the documents. I was the one that used the cards (well my wife too..in a big part but that will be another post). So I can't really say that I was fooled. I think that I just slid so slowly into debt that when I figured out that I couldn't pay my credit cards and keep a low or no balance over to next month it was too late and I was already in a vicious cycle.

 

Most of this year i've had credit card collectors call me every month from every one of my cards, and it's such a bad feeling to get those calls. I will tell you later how i got some of them to stop.

 

I'm sending a picture of my credit cards and I hope it will post correctly. You'll notice some of them i carved out a V from the magnetic stripe. This is a last-ditch attempt of me to stop using them even if I had to so I wouldn't have a choice.

 

What do you think about credit cards? is it the cards that are evil or is it the credit card holder?