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.

Once in a while, we would take our family out to TGIF. Whenever we do so, we always go to www.couponcabin.com to get a TGIF discount coupon. The discount coupon gives you a free appetizer if your total order exceeds $15.00.

Our usual order is 2 kids meal (our youngest share with us) and a main course which both Mr Credit Card and I share. We also get our free appetizer. Our kids usual order a cheeseburger kids meal with french fries and a speghetti with tomato sauce, together with chocolate milk. As the portions are quite large, Mr Credit Card and I share a main course and we always try different appetizers.

We last went to TGIF last Friday and the bill came up to about $31.00, which is the usual amount. I left it to Mr Credit Card to pay the bill but knowing him, he would just have given the usual 15% tip on top of the $31.00 bill. I insisted that he give extra tips for the $8.00 appetizer that we got for free from the coupon. So he used his Amex Blue Cash to pay the $31.00 and we left an extra $6.00 in cash for the waiter, who was very nice to us. We figured that $4.50 for the normal tip plus $1.50 for the ‘appetizer’ that we got free was appropriate. If we had not used the coupon, our bill would have been about $39.00 and we would have paid $45.00 (with tips). So we still saved $8.00.

I wanted to write about this because I feel it is only ethical to give a tip on any ‘freebie’ you get from coupons to the person who served you. I’m sure there are lots of people who would have just given a tip based on the discounted price but I think that should tip based on what the total bill would have been without the discount.

Share your thoughts and comments if you feel differently.

During a short visit to Strasburg in Pennsylvania, I found a Pottery Barn at Rockvale Outlets. I found somethings that I always wanted but could not buy because they were too pricey (at least for me). On top of that, I didn’t want to pay for the hefty shipping surcharges.

I bought an entry bench from the Samantha Collection - mahogany stain & the gingham roman shades. Both items are catalogue/internet exclusive. The regular price for the bench was $399 & the outlet price was $285. However, there was an additional 40% off & we paid $185 ! The shades were originally $89 & outlet price was $59.97. However, it was further discounted to $21.97 and on that day they offered another 20% off on all items except for furniture which had 40% off. The final price for the shades were $17.57 each. We took 4 shades - 2 for each of our boys’ rooms. I was overjoyed !

Although the bench has 2 minor scratches, it was OK because my kids would have “abuse” it within days. The roman shades - unbelievable ! I didn’t have to buy separate rods and curtains and they are easy to install (makes mr credit card happy). In fact the shades are lined with blackout materials which is what I wanted.

(Left) - The bench that we bought. Right - 40% discount sign at Pottery Barn Outlet.

I love browsing at Pottery Barn Outlet. They have merchandise from West Elms & William & Sonoma too. They have everything you need for a house. From beds, mirrors, sheets, lawn chairs etc etc etc…..I was almost dragged out by the store assistants at closing. You can buy so many beautiful things for your house at a fraction of what you might pay at the regular store/catalogue/internet - even at their sale price. With careful planning and patience, you too can furnish your house in style.

Shopping at outlets is definitely a great way to save especially for big ticket items like furniture, china, designer clothes and shoes.

I’m patiently waiting to return to the store again - and my neighbor wants to come along !

P.S. - This post is written by Mrs Credit Card (as I’m sure you suspected!)

In the Rich Dad Poor Dad series, Robert Kiyosaki talks about taking the fast train to financial success rather than taking the “slow train”. If you really sit down and think about this, there are many implications when you are thinking about the career path that you wish to take. Without getting too intellectual about this, an observation about my friends career paths tell a very interesting story.

1. Slow and Steady

I have many friends who belong to this category. They work in corporate america and earn an “average” middle income. They are typically married and have a couple of kids. I guess they are living the american dream. But they cannot stop work now if they wanted to. Most are seeing a financial advisor, setting aside a systematic savings program to save over seven figures by the time they retire.

2. Fast track corporate america

I know another group of friends who work on Wall Street. Though they are ‘employees’, they are certainly highly paid employees. Unlike others working in corporate america, these friends of mine can probably retire in their mid or late thirties. That is assuming that they have saved and invested wisely the bonuses they have made.

3. Business Owners

I also happen to know a lot of business owners. I know restaurant owners, manufacturers and many others. Most are relatively successful in their business but work very hard as well.

4. Wildly successful entrepreneurs

Yes, I do know a few of these people. What sets these friends apart from others is that they have this uncanny ability to see an exisiting problem that is not addressed by the marketplace and build a business around it. These friends of mine are extremely successful and wealthy. They have a very different mentality of most people. They are always looking for new ideas, have lots of energy and are generally very optimistic people.

Putting it all together

When I reflect back on all the people I know, the most successful people working in corporations are extremely hardworking and most of them come from very good schools and had very good academic grades. They are had a very good personality which enabled them to land starting jobs in great companies and in high paying industries like Wall Street firms, hedge funds, private equity, prestigious law firms etc. My friends who have risen to the top are wealthy beyond their wildest dreams. Those who hit a ceiling aren’t too shabby as well.

The successful entrepreneurs I have met are also different. Most are not from top schools. But they all have uniques ideas and more importantly, they take action and make their vision come through.

For those who are looking to start a career out of school and changing a career, I think it is important to take a hard look at yourself and ask what do you want to achieve. If you want to achive massive wealth in a short period of time (the fast track), then you cannot think and act like most people do. Perhaps a corporate america job will not be suitable unless you get a job on Wall Street or perhaps Google!

But just starting your own business isn’t going to generate massive wealth for you. To be successful, you have to have a very unique value proposition in the market space that you are addressing. Just opening a pizza place ‘because you love pizza’ isn’t going to cut it. You need to ask yourself if you have to mentality to think and act like an entrepreneur to pursue this path.

Whatever path you choose, I think it is important to have a financial objective. Like I said early, if you wish to generate lots of wealth fast and achieve financial freedom at a relatively young age, you have to be different and do things differently.

When you are formulating a credit card debt reduction plan, you have to ask yourself whether you want to reduce your debt as quickly as possible (ie whether cash flow is a priority) or if improving your credit score is more important. That is because your decision will determine how you approach your plan.

If you want to reduce your credit card debt as soon as possible, then pay off the card with the highest interest first. Then work on those with the next highest rate and so forth.

However, if your goal is to get your credit scores up, then it is probably better to reduce debt on your card with the higher credit utilization. This is because credit utilization is one of the key factors in determining your credit score. Once you have reduced the utilization to about 25% to 30%, then move on to the card with the next highest utilization issue.

If improving your cash flow is a priority, then you may want to consider consolidating your debt into a 0% balance transfer card (but do it only once). But if improving your credit score is a priority, then consolidating your debt may not such a good idea because you will have a very high credit utilization on one card but very low utilization on the rest of your cards. The are distinct ‘gaps’ in the credit utilization ratios among your different cards.

But first a word of caution. If you want to do a 0% balance transfer on a credit card, then do it once only. Then get on a systematic plan to reduce your debt. Many people keep playing the zero percent balance transfer game and what it does is that it ends up possibly lowering your score because you end up utilizing too much of your credit on one particular card. This especially happens when you transfer debt from a high limit card to a lower limit card. BUt more importantly, playing the merry go round may blindside you from reducing your debt.

The decision to consolidate credit card debt and which card to pay off first depends on whether improving your credit score is more important or reducing your debt quickly. Think about this issue carefully before formulating your plan.

Yes, Mrs Credit Card and myself have just celebrated our 10th Wedding Anniversary last week. Looking back, I just want to share some financial lessons I have learnt during the last 10 years.

1. Save the bulk of your year end bonus

We have always saved the bulk of our year end bonuses we get from our jobs. This has allowed us to set aside a sizable chuck of savings. This has come in very handy many times during the last 10 years (when we needed to dip into some savings).

2. Buy things that last (not just cheap stuff)

When we just got married, we often had to watch what we spent. Afterall, we had just started our carriers. But there were several times that we probably spent more on goods that we should have, but those lasted a long time. For example, I spent a few hundred dollars on some nice shoes that lasted about 8 years. I bought a couple of designer suits that I still wear today! (and they still look very good). Mrs Credit Card still has business dresses that she bought 10 years ago. I believe they are still in this condition because they are of good quality and they do last (though they cost more).

3. Second Hand Cars really saves you a lot of money

We have had a few cars. All were second hand except one. And we wished we had not bought that new car (because of depreciation). All the second hand cars we bought never gave us any serious problems. We still own a second hand car today.

4. Never assume your kids would like what you bought

Mrs Credit Card toyed about buying a nice big doll house for our daughter. She assumed that she would fall in love with it and spend a lot of time with it. When we finally got it last Christmas, our daughter hardly looked at it! She spends more time drawing with her brothers, playing legos or Thomas the Tank Engine! Just goes to show you should never assume your kids would like what you bought for them.

5. Never assume your kid will like what you want them to do

Mrs Credit Card got my first son to learn to play the voilin when he was four. He was actually pretty good at it and we were all happy about it. Then, due to us moving, relocating, we stopped his voilin lessons and he has since refused to continue learning voilin. My son now likes soccer, baseball and playing chess. He says he does not like football or basketball. Come to think of it, we spent quite a bit of money on his voilin lessons (including buying the voilin and replacing the strings a couple of times). Not to mention the stress of asking him to practice daily! Don’t force something on your kids. They may not only be unhappy, but you end up wasting both time and money!

6. Teach your kids about Money

One thing I have learnt is that you have to teach your kids the value of money. Most people do not learn money management skills from their parents and hence, most are poor at that. I talked to many enterpreneurs and they all teach their kids about business and money and I have started that with our kids. I think we still have a great deal of room to improve, but at least we think about it.

7. Hire a financial advisor early

When you are young and educated, you think you know it all. I started investing myself in both stocks and mutual funds very early on. I really thought I knew it all. Most of you do (especially pf bloggers). But do you know your risk tolerance. Well, I thought I did until the daily volatility of my yahoo, amazon.com and ebay stocks was more than my annual salary!. I’ve made out ok over the years but when I looked back, I could have made much more by truly having a diversified portfolio.

But even here, most people do not understand what a truly diversified portfolio means. Do you know what percentage of the US equity markets consists of large cap, mid cap and small cap stocks? Do you know what percentage of US equities make up the World Equity Indices? What percentage of total Global Capital Markets is fixed income and what percentage is equities? How do you mix in index funds with with superior fund managers? Do you understand what Alpha and Sharpe Ratio is?

Truth is most people (including dare I say pf bloggers, investing bloggers, magazine writers, finance web site writers) do not know that answers to these question. And if you do not know the answers, how can you have a truly diversified portfolio and understand why it is constructed that way.

8. Take your time to buy your first home

Although most financial advisors and the mainstream press would have you believe that you should buy your first home as soon as you can afford a downpayment, I think you should think about this issue very carefully. Firstly, you should have a stable job. If you work in a very unstable industry, you probably have to save more to have a “cushion”. Buy only what you can afford. This sounds common sensical but with the real estate shooting through the roof in the last few years, you can get caught up easily and buy something that you really cannot afford (or one that leaves you no margin for error).

By the way, we bought our first house at a foreclosure auction. This probably saved us close to $50,000. (not bad at all).

9. Time is Money

Sometimes, in a bid to be more frugal, we tend to save money but waste a lot of time. When we were first married, Mrs Credit Card wanted to do the laundry herself (and save the money we would have spent at the laundromat). But this was taking up too much time on Saturdays! And she always accused me of not helping (well, I hate doing laundry). I finally convinced her to send the clothes to the laundry so we do not waste our precious Saturdays arguing over it. She finally agreed and was happy with the decision.

Remember, while you may want to save money, consider how much your time is worth as well.

10. Delayed Gratification

Delayed gratification is one of the most important trait to have for success. We all have our dreams, our dream car, dream house, dream BBQ grill etc. But financially successful people always put off spending on discretionary items until they can easily afford it. Both of us put off buying our house for years until we have really saved enough. We listened to music on my old Dell Laptop for years before buying a Hi-Fi system. We had a 19 inch TV for ages before buying a Home Theater. It is easy to fall into the 0% financing that is so common and is advertized to us everyday. But most people I know got into trouble because they buy stuff before they can afford it.

We are trying to teach our kids about this too. So far, we think we are on the right track. When we go to Toys R Us, our kids know that we will not be buying anything for them (unless it is their birthday or Christmas). They know that they are only there to ‘look at stuff’. We allow them to use their savings and pocket money to buy things. But when they realize that they will be using their own money, they stop thinking about buying stuff!

11. Use Reward or Cash Back Credit Cards to Earn Freebies

Both Mrs Credit Card and myself pay our credit bills in full (most of the time anyway). We use our cards to pay for everything, pay in full, and earn either reward points or cash rebates. Our two main cards are the American Express® Preferred Rewards Gold Card (although I have now upgraded to the Platinum Card) and the Blue Cash® from American Express . We have got lots of free airline tickets and cash rebates over the years.

12. Develop Money Trust Between One Another

Since we first dated, we have never had an argument over money. We never blew our money on stuff we cannot afford, nor have we really questioned each other’s expenses. If Mrs Credit Card saw a nice handbag and wants to buy it, I never question that decision. She has never abused that trust by being a shopperholic and buying a handbag every month! The same goes for me. This makes it so much easier. We had our fights in many other areas, but thankfully, money was never one of them. It’s tough enough to argue about relationships, kids, work etc. The last thing you really need is to argue about money with your partner.

So that’s it - my lessons from 10 years of marriage.

Choosing a credit counselling firm is not easy as there are many not so reputable firms around. If you are able to pay more than the minimum payments for your debts, you should generally avoid this route and instead trim your budget and have a more aggressive plan to pay down your debts faster.

But here are some check points to consider :

Is the credit counselling firm accredited?

You should check with the National Foundation for Credit Counselling or the Association of Independent Consumer Credit Counselling Agencies. Go to the following websites for more information - www.nfcc.org, www.aiccca.org.

What fees are being charged?

Well, when you have serious problem paying off your debts, the last thing you want is to pay more “unnecessary fees”. $50-$75 to set up a plan would be reasonable.

Ask When and How Much will the creditors get paid?

Many credit counselling firms get a monthly payment from their customers and then threaten your creditors to miss payments if they do not negotiate the amount of debt owed. Missing payments or having late payments can dramatically lower your credit scores. Ask and have in writing when and how much will creditors be paid.

Check the Better Business Bureau

Call the BBB in your area and check how many complaints does the firm have against them. You should be take the extra steps and check with your State Attorney’s Office to see if there are any regurlatory actions filed against them. Yes, it is quite a bit of work. But this can save you from unpleasant experiences down the road.

What do these organizations promise you?

Anyone who promises that there will be no impact on your credit score or if that they will settle your debts for less than you actually owe is probably being very unrealistic. You are likely to end up with massive disappointments with you work with people who overpromise. You should work with someone who lays out the full picture, the best case scenario and the worst case scenario and is honest about the impact it could have on your credit score.

Ask for referrals

Better still, if you know anybody who has been in a similar situation, talk to them about who they used and their experiences. You will pick up a few tips on how to approach credit counselling firms.

Well, you will probably send some time just searching for the right organization to work with. Take your time, do your due diligence and you are less likely to be disappointed.

We were at New York over the weekend with the kids and obviously, we ended up at Toys R Us.

Mrs Credit Card had a few things to shop. Our kids have been invited to a couple of birthday parties. Our own kids birthday was in June. We could end up spending a lot, but fortunately we managed to get a 20% discount coupon from the most unexpected place.

We got a 20% discount from the City Guide New York! And we got the City Guide New York from our hotel at The Hampton Inn Chelsea at 24th st between 6th and 7th Ave. In fact, when Mrs Credit Card presented the coupon to the cashier, they did not accept it straight away and decided to check it. They even asked where she got it from and was surprised when we told them where we got it. In fact, the cashiers even said they will be looking to get this discount coupon for themselves.

What was more interesting was that there were other coupons from other merchants as well. So when you are travelling (especially to New York), you might want to check out the City Guides (in whatever city you are going) at the Hotel Lobby that you are staying. You may just save yourself a few dollars in change. We certainly did.

By the way, this discount is valid until the end of May. But I won’t be surprised if there is another promotion after that!

This is the second post I am making in the “Turn Back the Clock” series. As I reflect on my younger days, getting a second hand car was probably the best financial decision I have made.

We have all heard that cars are the worst investment you can ever make. Countless Financial Gurus like Suze Orman and even Peter Lynch in one of his books mentioned how getting a second hand car makes much more financial sense compared to getting a first car.

When I first graduated and got my first job, it seems that most of my classmates quickly got their first “brand new car”. They quickly saved for the downpayment and because they had pretty decent jobs, the swanky new car was one of the first big ticket item purchase that they made.

I actually resisted that temptation because my granddad always told him that properties are one of the best investments you can make and that I should be making that my priority. So while I did not have the latest wheels and gadgets, I just got a crusty old Toyota Corolla (BTW - I still have a Toyota Corolla today), which is perhaps one of the best second hand cars you can ever get. It never gave me any problems and it just went on and on without breaking down!.

One of the tricks that I did to get the best deal was to actually get a friend of mine who was familiar with cars (because his father used to sell second hand cars and because he was kind of a mechanic). He did the negotiations for me! (was very bad at that). He managed to get the seller to let us inspect the car and then managed to negotiate a well good price for me. He got a nice big meal as a thank you!

Over the next year after I got the car, all I had to change was the brakes. Everything else worked out fine for a long time because my friend had the car inspected. I think I probably paid about $1,500 to $2,000 (in cash) for the good old Toyota. In contrast, most of my friends paid that amount for a downpayment and continued to pay about $200 a month for their lease or loan payments. I sure saved a lot of money back in those days. One thing that I did not mention earlier is that I waited until one year into my first job before getting the new car (needed to save some money). If I were to do it all over again, I would still get a second hand car as my first car. This is what I did and would do to make sure I got the best deal.

1. Get someone (preferably someone who used to sell second hand cars) to negotiate for you. Buying a second hand car is very tricky because price variation could very imply quality variations.

2. Ask the seller to allow you to get an inspection. Get to know the mechanic well before you bring the car to him. The inspection required to pass the test for a second hand car sale is not very stringent. I had friends who had to spend $800 on suspension alone not long after they had bought their second hand car.

4. If I had my way now, I would apply for the Citi® Driver’s Edge® Platinum Select® Card or the Citi® Driver’s Edge® Card for College Students, earn rebates and use them to reduce the amount I pay on my car!