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Suze Orman The 9 Steps To Financial Freedom Book Review

By: Connie Brooks
11/23/2008

Every Sunday here on Ask Mr. Credit Card’s Blog we do a book review. This Sunday, I thought we would do things a little differently. Instead of reviewing the entire book in one sitting, I am going to break it down a bit. This review will cover the first few steps to financial freedom, and the other steps will be reviewed next Sunday, and the Sunday after.

That way, we can dig a little deeper into the book itself, and get more benefit from it.

So, without further ado, let’s taste some of this “Financial Freedom” shall we?

Introduction: What do you want from your money?

“There isn’t a part of our lives that money doesn’t touch-it affects our relationships, the way we go about our everyday activities, our ability to make our dreams reality, everything. Most of us, I think have a core of anxiety that we carry around with us, though we may not admit it to ourselves. That is part of money’s power over us. “

Well, those words are true enough. However much of a love / hate relationship I might have with my finances, mastering them is essential. I spent a lot of years being afraid to manage my own money, hating to balance my checkbook, being afraid that I couldn’t meet my obligations. The fear diminished quickly when I actually started taking charge of my money, instead of letting the fear of it control me.

“From years as a financial planner I have learned that true financial freedom doesn’t depend on how much money you have. Financial freedom is when you have power over your fears and anxieties instead of the other way around. That’s why, in this book, we’ll address first the fears, and then the finances.”

True financial freedom doesn’t depend on how much money you have. I love that sentence. How else do you explain how two people, who work for the same company, and make the same salary, can have two vastly different financial situations? One of them may be well-off, the other deeply in debt. I definitely agree with Mrs. Orman when she says that financial freedom is not how much money you make, but how well you manage that money, and your emotions.

I have high hopes that this book will shed some light on that particular area of money management.

When I was very young I had already learned that the reason my parents seemed so unhappy wasn’t that they didn’t love each other; it was that they never had quite enough money even to pay the bills. In our house money meant tension, worry, and sorrow.”

Money issues are definitely one of the main reasons for divorce. It has been a challenge for me too, in my own marriage. When two people are not on the same page financially, working towards shared goals and dreams is all but impossible. Now it is a double challenge, with my daughter. I want her to grow up having a positive view of money. I want her to know innately how to manage her money and live below her income. That is something that has to be taught early, and consistently.

Many of us, we didn’t have that benefit growing up, largely because of what Mr. Orman highlights here – that money was a source of contention for her parents, that it was cause for sadness, arguments, and despair. It was not something that was talked about at all, or if it was, it was never positive. I definitely want to work on changing that outlook in my own life, to become more positive about my finances, to build security – real security for myself and my family.

Knowing what steps to take, and actually taking them are two different things. I believe that is why Orman spends so much time in this book focusing on the psychology of money management. Because we all know that 2 +2 = 4, we all have the math, what we don’t have is the control, or the confidence.

Let’s take a look at chapter one.

Chapter One: Seeing How Your Past Holds The Keys To Your Financial Future

The first step to financial freedom is a step back in time to the earliest moments you can recall when money meant something to you, when you truly understood what it could do. When you began to see that money could create pleasure- ice cream cones, merry-go-round rides; and also to see that it could create pain-fights between your parents, perhaps, or longings of your own that couldn’t be fulfilled because there wasn’t enough money, or even because there was too much.

I don’t really remember my earliest experience with money, do you? Will you share it if you do? Orman encourages us to think back, because she believes that our attitudes about money today stem from those first early experiences.

I would agree that they partly come from those first early experiences, but I would argue they my attitude about money today comes much more from trial and error, all of the successes and failures that I’ve had along the way as I grew, and learned to manage my finances.

Orman highlights a couple of case studies from her previous clients. One lady, who’s earliest experience with money was that her family had to move across country to have more of it, was still stuck in her forties living as if she had to pick up and move the next day – because that’s what her knowledge of money meant to her.

The other case study was of a man who lost ten dollars as a young boy. His mother gave him the money to go and bread, and he lost it on the way to the bakery. Ever since that day, he had avoided dealing with money, and if he did make investments, he wanted the money to be “safe”.

Well, I’m not going to say that I think this is a load of bull, though I do think the examples are over dramatized. Clearly, this was a real issue for the people involved. Personally though, I can’t trace my money problems back to a single “overwhelming” moment.

I can point a finger a bit though, to one experience (though it hasn’t crushed me and over run my financial life!)

When I was 17 my parents sent me on a school trip to France. They gave me two credit cards, and I blew money left and right on both of them. When I returned home, and they got the bill, I certainly got the lecture on responsibility that I deserved – but I was not the one that paid the money back – they did.

That did give me some future problems with credit, for a little while. When I started to college, I got two credit cards of my own, and managed them irresponsibly – making payments irregularly, and looking at the cards as if they were “free money”. But it really didn’t take me very long to figure out that the money I put onto those credit cards was still money that I owed.

And I’m certainly not going to sit here and blame my parents for not making me pay back what I spent. They did what they thought was right, as each parent does. Parents, we do the best we can. My mistakes were my own. I actually learned the lesson better by messing up a few times and fixing it on my own anyway.

I think this is dangerous territory. One thing I do not believe in is passing the buck for my financial mistakes. My family, and my parents taught me what they could, and my mistakes were my own fault.I take credit for the mistakes, and the solutions I found to them. Not owning up to your problems, and pointing the finger at family, or past experiences, doesn’t really help you move forward.

Chapter One does include a few more examples of childhood trauma regarding money. I’m not going to reprint them here, but they are similar to the previous two examples.

I don’t know, you guys out there reading this, what do you think? Do all of our money problems go back to traumatic childhood experiences? I’m really not sure about that, but I’m going to move on to chapter two.

Chapter Two: Facing Your Fears and Creating New Truths

“Don’t you find it strange that you can raise a family, hold down a job, fix things that are broken, and deal with everything that comes up in life – except your money? I hear it from new clients every single day: “I’m too busy at work to deal with my money. I just don’t have time.”

How is it possible that we’re all too busy working so hard to earn our money to be able to deal with the money we’re working so hard to earn?”

I do agree with Orman that fear is the reason we refuse to make time to deal with our money. It’s a lot easier, and more fun to simply not balance that checkbook, draw up a net worth statement, or learn how to research investments.

To me at least, managing money is just like everything else – you will prosper in direct relation to the time and energy you devote to it. If you don’t make being prosperous a priority, and dedicate the time, energy and education to it, it will never happen. If you’re afraid of the steps that you have to take in order to do that, this book might be a real help to you.

Chapter Two includes several more case studies from previous clients. This time they deal with a fear of money, traumatic events that cause these folks to avoid dealing with their money in their adult lives.

The first example comes from a woman who broke a platter when she was very young. It was her grandmother’s special lobster platter, and she begged and begged to carry it to the table until her grandmother finally let her. On the way to the table, she dropped it, and it broke, expensive lobsters, and shards of the platter were all over the floor.

Ever since that day, the woman had been living as if she “could not hold onto anything” – even her money.

Aside from the case studies, Chapter two does have several exercises designed to get you to think about where your own fears of money come from. Orman asks several questions, and gives some fun examples of the replies she gets from her clients.

The first question is, what are you afraid of concerning money?

Typical client’s answers include:

Orman advises creating a personal mantra – a powerful message to yourself that you will use to combat these fears and give you a new lease on life. This is pretty good advice psychologically, and it does work.

Things like:

  • I have more money that I will ever need
  • I am in control of my financial affairs
  • I am putting at least $200 a month into savings

    • Orman encourages you to repeat your mantra over and over until it becomes a part of you, and you begin to make it real.

    If this is your first exposure to psychological tactics of this kind, then this book is an excellent for you. If it is not your first exposure, and you’d like something a little more in depth, I wholeheartedly recommend “Think and Grow Rich” or “Healing Your Financial Soul“. In place of this book.

    So far, I do like The 9 Steps to Financial Freedom, even though some of the examples are laughable at best. It is an entertaining read, and Orman takes the time to thoroughly explore the psychology behind some of the most common money problems that we all face. The psychology behind her tactics is sound, and it works for lots of people. It’s a pretty typical approach to overcoming problems and fears.

    Check back next Sunday, for a review of the next few chapters!

    Have a question for us? Read the book? Tell us about it by leaving a comment!

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    Putting Your Finances In Order

    By: Connie Brooks
    11/22/2008

    The current economic downturn is bringing to light lots of financial crises, On a big-business level, and an at-home personal level too.

    It makes me want to sit back, and take stock of my life, and my money. It also makes me want to take a long hard look at how, and why I spend my money the way that I do. I have very little debt, and I pay my credit cards off in full each month. Still though, there are months when I put more on credit than I need to.

    There are months when I spend more on food than I should, or clothes, or electronics. There have been a couple of months recently when getting that credit card bill the next month hurt a bit. So, what’s behind that?

    What’s behind it for you, when you do it? Will you tell me?

    Even though I care for my credit score, and manage my money well enough, the finer points of budgeting still seem to elude me. I’ll set a number for something (Christmas for example) and then that number flies right out the window when I shop.

    Maybe it’s worthwhile to revisit some of the basic tenets of money management, especially when it comes to credit cards. From now on, before I spend any money (on credit or not) I am going to ask myself the following questions:

    With the holidays coming up fast, I need a checks-and-bounds system for gifts too. If it is an item for someone else, I am going to look at it this way:

    I am also going to try to complete my Christmas shopping in early December, so that I do not get stuck rushing around at the last minute trying to find something, anything, to give someone that I forgot.

    If I have learned nothing else about money, I have learned that given a little time, thought, and preparation you can save yourself a lot of trouble, and money.

    The articles below all deal with managing different aspects of credit, and personal finance. I really enjoy looking through my feed reader each week, visiting favorite blogs, and discovering new ones. I hope that you enjoy these articles too!

    Holiday Shopping

    Shoring Up Your Finances

    Carnivals, Festivals and Celebrations:

    That’s it for this weekends thoughts, and links. I hope you have a wonderful weekend!

    Children and Identity Theft

    By: Connie Brooks
    11/21/2008

    Children are especially vulnerable to identity theft for one reason: If their identity is stolen it might take years for anyone to figure it out.

    Most adults become aware of identity theft pretty quickly – we check out bank balances, our credit card statements, and our credit reports. When we do find that someone has been using our personal information (as I recently did), we take the necessary steps to cancel our accounts, and stop the theft.

    The problem with children and identity theft is that it may never be detected until the child goes to apply for his / her first loan – which could be years after their identity was first stolen.

    There are three types of identity theft to watch out for:

  • Standard Identity Theft: This is a situation where the thief obtains your child’s information and uses it to get loans, credit cards, and bank accounts.
  • Criminal Identity Theft: This occurs when the thief uses a child’s identity to obtain a driver’s license, and then they use that identity when the commit a crime, or get caught committing a crime.
  • Identity Cloning – This happens when someone purchases your child’s information and uses it to establish a new identity for themselves. The most common example of this is illegal aliens using the child’s information to establish citizenship so that they can work, get loans, and operate as a natural-born citizen.

    • So, how can you tell if your child’s identity has been stolen?

    In a worst case scenario, your child will find out that their identity has been stolen by having bills sent to them, having an arrest warrant, being turned down for a loan, fired from a job, or denied employment because of a “criminal record”. The best thing though, is not to let it get to that point.

    The easiest way to keep tabs on your child’s identity is to check their credit reports just like you check your own. Since the credit bureaus do not “knowingly keep records on children under 13” the best thing that you can have happen is to be told that there is no report on file. You can find a sample letter here that you can print out and send to the three main credit bureaus to check on the state of your child’s credit report.

    If your child does have an active credit report, then that is a sure sign of identity theft. If that is the case, you will want to treat it just as if your own identity had been stolen:

  • Get copies of all three of their credit reports – You will need copies of their report form TransUnion, Equifax, and Experian.
  • Freeze all three of their credit reports – any time there is an identity theft situation, freezing your credit report is free. Do not simply place a fraud alert on their report, because some banks will still issue loans even with a fraud alert on the credit report. Make sure you freeze the reports themselves. Freezing a credit report means that lenders cannot access the report or score, and it will effectively stop the identity thief form opening p new accounts in your child’s name.
  • File a police report – this will make getting the various accounts closed easier for you. Some companies will want the information on the police report when they close the accounts. It will also help you waive the usual fees since most companies – including the credit bureaus- offer free services in case of an identity theft situation.
  • Contact any companies listed on your child’s credit report – Explain to them that you are the parent of a minor, and that their identity has been used to open up an account with them. Make sure you negotiate not only to close the unauthorized account, but also to have the accounts information completely removed from your child’s credit report.
  • Check your child’s criminal records – You can check with the FBI and your local police department. Find out how to check criminal records. It’s a short article that tells you what you need to know.
  • Follow up – From that point on, pull your child’s credit reports each year to check for new activity. Keep their credit files frozen until they come of age and want to start building their own credit. Stopping a single case of identity theft does not mean that the criminal won’t sell your child’s information, so do make sure that you keep their reports frozen, and keep tabs on any activity until your child is ready to do that on their own.

    • Identity theft is a scary situation, it’s a real violation, especially when it happens to a child. Thankfully, we have enough laws in place, and enough ways to combat identity theft that if it does happen to you or your child, you just have to take the necessary steps to stop it.

    Have a question for us? Leave a comment below!

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    Some More Thoughts On The Big Delta Promo

    By: Jason Steele

    The more you think about this promo the better it gets. Many bloggers have been doing the math, and have come up with some interesting reward options.

    Diner’s Club Huge Reward

    If you actually have a Diner’s Club card, you probably already know that they have been offering a 35% bonus for redemption of Diner’s Club points to Delta SkyMiles. When you redeem 30,000 points, you would get 40,500 miles, already a pretty good deal. Add the 150% Bonus, and now you have a whopping 101,250 SkyMiles! Why anyone would have Diner’s Club points in their account at year’s end is beyond me.

    Starwood Rocks

    Between my wife and I we are approaching 80,000 Starpoints. Many of which were earned through sign up bonuses, by we also put the majority of our day to day spending on our Starwood American Express cards. While we were building these points, we merely hoped for the generous 5,000 mile bonus when we converted them to SkyMiles, leaving us with perhaps 100,000 miles. Now, we are looking at a cool 250,000 miles, a major coup!

    Other Partner Bonus

    Earn 250 miles just for signing up at Shutterfly, and another 1,000 miles when you purchase $25 worth of pictures. With this promotion, if you earn or redeem at least 10,000 bonus miles, your 250 becomes 625 and your 1,000 becomes 2,500. Actually, it is even better. If you were to charge the $25 on your Delta Amex, the $25 would become 67 SkyMiles by itself! That works out to less than 1 cent per mile, even if the pictures are worth nothing to you! To put that in perspective, my Business Class ticket to the middle east costs $4,000 when it is on sale, but can be redeemed in the “low” award for 120,000. That works out to a value of 3.33 cents per mile.

    At the View From The Wing blog, Gary has determined the FTD flowers promotion that gives you 25 SkyMiles per dollar spent, is now essentially 62.5 miles per dollar.

    Transfer Miles

    The language of the promotion specifically includes Delta’s transfer miles program allows you transfer up to miles for 1 cent per mile + a $30 fee. So you can basically transfer 30,000 miles for $330 dollars and the recipient gets a bonus of 45,000 miles. That recipient could transfer back those miles in the same way. Earning both of you a net 45,000 each, or 90,000 total for a mere $660. Again, if you both used Delta Amex Cards, you would both receive 2.5 miles per dollar on the $330, so there is another 1650 miles. In this scenario your miles are being purchased for a mere .72 cents each.

    What Are Delta Miles Worth These Days

    Because Delta awards are largely service based, as they say, your mileage may vary. It also gets more confusing as Delta offers a tiered award system, with point values varying wildly for “low”, “medium”, and “high” awards. Carefull spending of SkyMiles eleven months in advance on “low” awards can return a value of 1.5 cents per mile all the way to 4 cents per mile.

    Delta also offers “cost based” awards called “Pay with Miles”. This relative straightforward program allows you to redeem miles towards any Delta purchase at one mile per penny. So even if you choose to Pay per Mile, your Transfer Miles earned at .72 cents pay for themselves nicely when redeemed for 1 cent each.

    Another popular way to redeem awards is on Delta’s partners. A First Class ticket to southeast Asia on vaunted Singapore Airlines from a North American gateway is 140,000 SkyMiles. This ticket can easily cost $12,000, returning a value well over 8 cents per mile, on miles you purchased at around .7 cents a mile, you can go to Asia, First Class for about $1,000, esentially less than the cost of coach! This is how incredible this deal is!

    Look at it another way. In theory, you could $2240 worth of flowers from FTD, and earn 62.5 miles per dollar, and earn 140,000 SkyMiles. With those Skymiles you could get first class ticket on Singapore Airlines worth $12,000. Actually, you would put it on your Delta or SPG Amex and still have another 5,600 SkyMiles, and I don’t know what you would do with $2,000 of flowers!

    We are now getting into the realm of the Pudding Guy territory!

    Follow Up On The Big Delta Promo

    By: Jason Steele
    11/20/2008

    I just received the following question from a reader in regards to the “Big Delta Promo” that I mentioned yesterday when describing my credit card churning experience.

    Re, Delta 150% promo. I signed up and transferred starwood miles BEFORE it was taken off. Subsequent phone calls to Delta I was told that I will get the 150% bonus, however i do not have anything in writing from Delta.
    Have you received your bonus miles yet? If not when do you expect to get it.
    Would it be possible for you to let me know when you receive it?
    I think that Delta will honor this for someone like you with a Blog to let the world know but not for someone small like me.

    Thank you.
    AD

    A Little History

    The Big Delta Promo that I described here and here was offered last November. I also wrote about it here, here, and here in my personal blog, Steele Street. Delta posted a starting web page for the promotion, called a “landing site” describing in detail how all SkyMiles partner activity until the end of 2008 will be eligible for a 150% bonus. The terms of the promotion very clearly included points transferred from Starwood and other hotel programs, but it did omit transfers from the American Express Membership Rewards program. The “landing page” even included a registration link. My wife and I promptly registered for this promotion using the link. We even did it twice, just to be sure, only to see the confirmation page saying that we had already been registered.

    When Promos Goes Bad

    Within a few days, the “landing page” changed to offer a rather down message, “We’re sorry, this campaign is currently not active.” A few days later, the landing page displayed this message:

    “The More Miles You Earn, the Bigger the Bonus

    The SkyMiles® multi-partner threshold promotion was in the development phase and not yet formally announced or launched when it was inadvertently published online. The landing page should not have been live and the content was subsequently removed.

    However, Delta Air Lines will honor the bonus miles promotion for SkyMiles members who have already enrolled.”

    This explanation remains visible today at the landing page.

    Most observers found this explanation a little odd. Why would such a big company develop a promotion and publish it, along with an apparently functional registration link, when they never intended to? It seemed more likely that Delta simply changed their mind when they realized how many SkyMiles would be given away.

    Regardless of the details, I and others applauded Delta for standing by their offer, regardless of if it was “intended to be published”.

    When Will I Get My Miles?

    That is the big question. The details of the promotion specified that miles will be awarded “8-10 weeks following the conclusion of the promotion.” Since the promotion ended on December 31st, you should expect your miles by mid-March at the latest. The best explanation for this delay is that the promotion includes all miles accrued during the promotional period, and that some miles might take a while to actually post to your account. You will notice when you look at your SkyMiles statement online that each line lists two dates, one for when the miles were earned, and another for when they were posted.

    Further complicating this matter is the nature of Delta’s promotional registration systems. All of the people that I know of who have attempted to verify their registration were told that Delta is unable to do so. Between now and md-March, we will just have to have faith in Delta’s systems and hope that they execute the promotion according to their terms and in good faith to all of us who have registered.

    As for myself, I would love to believe that writing in this and other travel blogs has given me the clout to strongarm Delta into complying with the terms of it’s own promotion. In my dreams, Delta upper management reads this blog every day and is terrified that I might write a negative post about them. Yes, it is Peter Greenberg, Chris Elliot, and me, Jason Steele, who are the big wigs of the travel industry.

    All kidding aside, I do have an electronic paper trail of writing about this promotion and my registration in it while it was active. I would hope Delta would not attempt to deny me and my wife’s timely registration. About a dozen or so other small travel blogs wrote about this promotion, and I know that there will be many people like you and I who will be closely monitoring their SkyMiles balance in about a month.

    I will be happy to notify my readers when my bonus SkyMiles come through. The only thing that I can guarrantee is that Delta will be in a world of negative internet publicity from myself and others if they do not.

    Turned Down For A Student Loan

    By: Mr Credit Card

    One of our readers, Danielle, had this question about her credit cards and student loan:

    I have a question – My credit score is 662. I have 5 Credit cards (revolving) and some installment accounts mainly student loans with 1 auto loan payment. I am trying to apply for another private student loan and was recently denied (even with a cosigner). My credit to debt ratio is rather high 96%, but I do not have any negative accounts, no late payments, and no defaults. If I was to pay off one or two of my credit cards, how long would it take for my credit score to increase?

    Thanks for your question Danielle!

    Paying down your credit card balance is exactly what you want to do in this situation. Your debt – to – credit ratio (how much you owe) is 30% of your FICO score. If you start paying down your current balances you should see your credit score start to rise within a month. (It takes at least a month for your credit card companies to report your new lowered balances to the credit bureaus. As your balances continue to go down, your score will continue to go up.

    The standard financial advice for paying down your debt would be to pay down the credit cards with the highest interest rates first. However, if you want to maximize your credit score as quickly as possible, make sure you pay down your credit cards that are closest to the limit first, and do not focus as much on what the interest rate is.

    Paying the cards down in order of “closest to the limit gets paid first” is the best way to boost your FICO score because it will have an immediate effect on your debt – to – credit ratio.

    Ideally, for your score to go up as fast as possible, you will need to get all of your credit card balances down to under 30% of your available credit. If you can keep them that way, then over time, your credit score will be up over 700. All you have to do is just keep making your payments on time, and keep your balances low.

    It may help for you to call your credit card companies – see if they can lower your interest rates, or even increase your limit. A limit increase would positively affect your debt to credit ratio too because that’s an instant way to make it look like you haven’t borrowed the full amount you have available.

    Do be careful asking for too many limit increases in a row though. Each time you request a limit increase, the credit card company will pull your credit score, which counts an an inquiry. Too many inquiries will actually lower your credit score, and that’s what you’re trying to avoid.

    In your position right now (with trying to get a student loan) I don’t think I would apply for any new credit cards for a while. Having new cards with no balances would certainly help to lower your debt to credit ratio, so it would seem to be a fix. But, new credit cards will also lower the average age of your accounts, and ding your credit score from the inquiries. So it’s probably best right now just to knock some of your total debt down, keep making your payments on time, and periodically check your credit score.

    Before you apply for your student loan again, make sure that you give them a call. Ask them what credit score you need to have to be approved. That way you can monitor your own score and approach them again when you’ve reached that point.

    It does surprise me that they wouldn’t give you a loan, even with a co-signer when you have no late payments or charge offs. That sort of suggests that they may think that your debt vs. your income is too high as well. Either way, paying down those balances is the first thing you want to tackle because it will raise your credit score fastest.

    Thanks for your question!

    We also had another reader, Nancy, who left us this question:

    My husband and I are planning to file bankruptcy. My question is, we opened up a new account with Discover in hopes to transfer a higher balance over,however Discover only transfered half because of our credit. This account is so new we haven’t received a bill yet,should we transfer the Discover amount back to the original account, before we file?

    Thanks for your question Nancy!

    If I am understanding you correctly, you are about to declare bankruptcy and you are wondering what you should do with your new Discover account. The only reason you would want to transfer the Discover card amount back to the original card is if you are trying to keep the Discover account through your bankruptcy.

    Credit card accounts with zero balances can sometimes slip by through a bankruptcy without being closed. If you are to have any chance of doing that, then yes, you need to transfer the balance back quickly, before Discover bills you. Once they bill you the account will show up as having a balance on your credit reports, and would probably be included in your bankruptcy.

    If it’s too late, and they have already billed you, then you can go ahead and transfer the balance back, wait a month for the new billing cycle so that the card reports as zero balance, and then declare bankruptcy.

    You can also consider doing what is known as reaffirming your debt, which basically means that you make an agreement with your credit card company to pay your balance with them – even though you are declaring bankruptcy. Not all lenders will accept debt reaffirmation, but if you want to keep the account, then it would be worth looking into.

    Thanks for your question!

    Do you have a question for us? Leave a comment below!

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    Delta’s Bombshell Bonus Deal

    By: Jason Steele
    11/19/2008

    It came to me in a news flash e-mail from reward travel guru Richard Ingersoll, otherwise known as the Frugal Travel Guy. His story about the latest Delta promotion is sending shockwaves throughout the frequent traveler community.

    It Is Good!

    According to this link Delta will be offering a 150% mileage bonus on virtually all non-airline miles that post to your account between November 13 and December 31st, 2008. To be clear, this is NOT a mere 50% bonus on top of your redemption, but a full %150 in addition to whatever SkyMiles you would have earned.

    Are You Serious?

    Details are still emerging, but here is what appears to be the case: If you have the Starwood Preferred Guest American Express card, for example, you can redeem 20,000 Starpoints for 62,500 Delta Skymiles. How is that possible? 20,000 Starpoints are redeemed normally for 25,000 SkyMiles. Add 150% and you have another 37,500 SkyMiles, for a total of 62,500.

    What Partners Count

    There is a huge list at the registration link that includes multiple hotel, car rental, credit cards, shopping, dinning, and financial partners. Starwood Preferred Guest is specifically mentioned, as are many top hotel brands. What partners don’t count? Delta and all it’s airline parnters are excluded. If you have get on a plane, the bonus does not count. American Express Membership Rewards are not listed under credit cards in the terms and conditions. At this time, it appears that this program is inelligible for the bonus.

    How To Really Cash In On This

    To go crazy, transfer points from other programs to Delta’s SkyMiles. The rules, as currently posted, specifically allow this:

    Convert Partner Points to Miles:
    Club Rewards from Diners Club International; Banco Santander Brazil—SuperBônus Program; HSBC Clube de Beneficios; Hertz #1 Awards; Choice Privileges; EA$Y CHOICE; Hilton HHonors; Hyatt Gold Passport; Sirius by Jumeirah; Marriott Rewards; Priority Club Rewards; Radisson goldpoints plus; Sofitel Compliments Points; Sol Meliá MaS Rewards; Starwood Preferred Guest; Taj Inner Circle; Wyndham Rewards.

    Now, I have no idea what a Taj Inner Circle is, but I do have points laying around in many of these other programs. If you have a Diner’s Club card, or cards offered through Hilton, Hyatt, Marriot, Radisson, or of course Starwood, I can’t imagine another way to get more value from your existing points than to transfer them to Delta by year’s end.

    Be Sure To Register

    One of the tricks for this promotion is that you have to register at this link.

    Will I Really Get A 150% Bonus

    Well, actually the full 150% is only available if you earn/redeem 10,000 points in the time period. That is a lot if you are merely earning miles on a Delta Credit card, yet not that much if you already have the miles in a partner program. If you earn/redeem less than 5,000 SkyMiles, the bonus is only 50%. Between 5,000 and 10,000, the bonus is 100%. These lesser amounts still represent a good deal, but the 10,000 and up is so unique and earth shattering, I will probably be cashing in everything I have with every program. Of course it doesn’t hurt that my main goal in life at this moment is several international award tickets on Delta.

    Should I Declare Bankruptcy?

    By: Christina

    One of our readers, Alicia, asked:

    I have one Credit Card debt with a balance of $15,000 can not pay the Min amount they want like 3,000 they will not work with me to set up a payment plan i tried many times.

    I can only send them a certain amount each month and yes it is small $125.00 but they still want there 3,000 each month they keep calling asking for this amount i told them if they will not accept the $125 a month i will have to file Bankruptcy which i do not want to do.

    I thought they would rather have some money going to this account as little as it may be at least I’m trying to pay something on this account then to have to file Bankruptcy and they get no money it’s all i can sent (not only Debt i have) should i keep paying $125 or file Bankruptcy and Pay nothing on this account?

    Thank you for your question Alicia.

    Declaring bankruptcy is a serious issue – I know, I’ve done it. There are a lot of things I wish I had known beforehand, that might have helped me during that time. So, I’ll do the best I can to try and help you figure out your options here.

    The general (and it does not fit everyone) – the general rule for bankruptcy is to ask yourself this question: Can I pay down all or most of my debt within the next 5 – 7 years?

    There are two reasons for the 5-7 year question. The first is because that is how long a bankruptcy will hurt you on your credit report. Bankruptcy actually stays on your credit report for ten years, but as long as you make your payments on time after the bankruptcy, then 5-7 years is about the amount of time you will have to wait before lenders stop looking at you like you’ve grown two heads when you apply for a loan.

    The second reason for the 5-7 year question is because if you can pay down your debt, or make settlements – even if it is over a period of years – it will always look better, and keep your credit score higher than defaulting on all of your accounts and declaring bankruptcy.

    See, this was something I didn’t understand when I declared bankruptcy. I was panicked – we owed a lot of money, and I had no idea how I was ever going to pay it back. After declaring bankruptcy I realized that given 5 years to pay my debt back, I probably could have done it, and I would have been better off. That was how my situation went- let’s take a better look at yours.

    Since I do not know what your income is, or what your total level of debt is, it’s hard to make a conclusion about whether or not bankruptcy is the right thing for you to do. But I can certainly help you with the one account that is driving you nuts!

    You can consider credit counseling:

    Since you are wanting to make payments, and you are having trouble getting your credit card company to cooperate, then you may be a good candidate for this.

    If you choose to see a credit counselor you will take in all of your bills to them. They will sit down with you and to work out a repayment plan. At that point, the counseling service will call the people you owe and work out payment plan with them. Pretty much all you will have to do from that point is to send your credit counseling agency a check each month, and monitor your credit report to be sure they they are sending your payments in as agreed.

    Pro’s of a credit counseling agency:

    They will probably help keep you out of bankruptcy because they will take on the tough negotiations with your credit card company, and your other lenders. They should be able to get your interest rates reduced, your late fees removed, and get you set up on a reasonable payment plan. You simple meet with them, hand it all to them, and write your checks. It takes a lot of stress out of a bad situation. In the long run, this can help keep your credit score healthier than if you default and declare bankruptcy.

    Con’s of a credit counseling agency:

    Unfortunately, not all credit counseling agencies are legitimate. Also, it is standard practice for them to hold your checks for a few months in order to make negotiating with your creditors easier for them. (Its always easier to negotiate with a credit card company when you’ve made no payments for several months.) This will definitely hurt your credit score, though not as much as a bankruptcy will. You can also ask your credit counseling agency to negotiate with your credit card company so that those late payments are removed from your credit report.

    It is worth it to say that some of the better credit counseling agencies will not hold your checks and make you late – it just depends on which one you use.

    If you use a credit counseling agency, you will need to monitor your credit reports. This is just a safety measure that double checks your counseling agency. You need to know that they are paying on your accounts as they agreed to, and that your credit is not being damaged by they way they make the payments on your behalf. You can usually monitor all three of your credit reports for about $15 a month by using Equifax, Transunion, or Experian’s services.

    We have several resource articles on how to choose a credit counseling agency – I’ll link them here for you.

    So, that is one option for you. The second option would be for you to continue trying to negotiate with your credit card company yourself. If you choose to do this, keep sending in your $125 a month, whatever you do. This should prevent your debt from being sold to someone else. Here’s a few quick tips for that.

    1. Don’t be intimidated – yes, you owe them money. But that does not mean that they are allowed to harass you day and night either. Check out how to stop collection calls for a quick fix to that problem.
    2. Don’t be afraid to negotiate with them – If you call them to set up a payment arrangement, and they will not work with you, hang up, and call back. If the next person you reach will not work with you, ask for a manager. Keep asking for a manager until you get one. Repeat to the manager what you told me. “I have $125 to pay you each month. I will obviously send more if I have it, but I am going to guarantee you that if you make a payment arrangement with me I will send in that $125 every single month until the entire debt is paid off.” Keep repeating it if you need to, until they listen.
    3. Don’t respond to threats – Collections reps can be evil, there is no doubt about it. I hate that you have to deal with them, but you should never be afraid of them. They are there to get as much money out of you as possible, and they are trained to do that. So, just don’t hang up with them until you have a set payment arrangement and a plan of action.
    4. While you are talking to them, do not forget to ask them to remove all of the late and over the limit fees on the account. Talk to manager again if you have to. All collection reps can, and will do this when you call them to make a payment, so if someone is giving your trouble, hang up, and call back until you get human being who really does want to help you.
    5. For help on this, check out Credit Card Debt Settlement – How To Do It Yourself.

    If you try both of the tactics above, and bankruptcy still seems better for you (as I said, I don’t know your whole situation here) then call for a free consultation with a lawyer. Sit down with them, and let them walk you through the bankruptcy process so that you understand what is involved before you make the leap.

    You can also check out my bankruptcy story, that will tell you more about what I had to do to start recovering from my own bankruptcy.

    I hope this helps a little, please feel free to come back and ask a question any time.

    Have a question for us? Leave a comment below!

    Keep Reading:

    Service Based vs. Value Based Rewards

    By: Jason Steele
    11/18/2008

    Spend as much time as I do looking at different reward credit cards, and you start to see patterns. Not the spooky patterns where you read the first letter of each word and it spells out a secret message to you. No, I am talking about the value of the awards relative to their normal cost.

    I have decided that all awards are either Service Based, or Value Based. Allow me to explain:

    Service Based Awards

    These awards are based on a service being performed, and they have no fixed relationship to the value, or normal cost, of the service. They typically involve a service with a low marginal cost and a fluctuating price. The classic example is an airline seat. The marginal cost, the direct cost of the service provided, is often close to zero, unless when the aircraft is going to depart %100 full. If the seat would have otherwise been empty, the airline’s direct cost of offering the award seat is only a small amount for the extra fuel needed for the trip, and perhaps some minor food costs.

    You, on the other hand, are receiving a product of variable value. The domestic round trip award might be worth as little as $59, if it is for a short flight between two nearby cites served by Southwest Airlines, or well over $1,000 dollars to travel between to minor cities on opposite ends of the nation.

    Premium International travel awards typically have both the highest value and vary in price more than any other award. Some first class tickets on foreign carriers cost tens of thousands of dollars! Even a transoceanic business class ticket can easily cost as much as a late model used car.

    Other service based awards can include car rentals, hotels, rental cars, and other types of travel services.

    Value Based Awards

    The other class of awards are value based. These awards offer a product or service at a fixed or maximum value, in return for points at a fixed redemption rate. When merchandise is being offered, it is easy to calculate how many dollars per mile or point you are getting. Typically, this calculation applies equally to almost all items from a few dollars in cost, to big ticket awards that can be worth thousands of dollars. For example, the Sony reward for a 26″ flat panel television is 59,999 Sony points, while the product itself can be purchased directly from Sony for $549.99. Essentially, you are getting just under one penny per point. The same is true for their PlayStations as well as the rest of their product offerings. In the case of Sony, the point value is fixed, although you do receive more points on a Sony card when you purchase Sony products. The number of points received per dollar spend varies on where you their products, with online purchases earning the most points per dollar.

    Value Based Travel Awards

    These value based awards are becoming more and more popular. For example, Bank of America WorldPoints air travel rewards have fixed, predefined values. Their 25,000 point reward is good for a domestic ticket, so long as the ticket has a maximum value of a mere $400. Obviously, the value of that award is always less than 1.6 cents per mile. Other award programs like Citi’s Thank You rewards offer travel certificates for hotels and car rentals at a pretty strict 1 cent per mile in value.

    Which Is Better?

    You will typically receive far more value from Service Based awards than Value Based awards. As I have consistently shown, one can maximize the value of an airline award ticket or a hotel room far beyond a mere one or two cents a mile. Savvy award travelers can book awards way in advance to capture seats or rooms that return award value of up to six cents per mile. The idea is that the average award redeemed is valued at less than six cents per point/mile, but there is no reason that you have to be average. Sure a New York to London flight might be found on sale for $599, but you don’t use your award ticket to Europe for that trip. Save it for your Sacramento to Zagreb trip that would have cost $3,000. The point is that with service based awards you have the opportunity to hold out for a high value redemption. With value based rewards, there is a fixed exchange rate, and little if any opportunity to go beyond it.

    When Do Value Based Rewards Make Sense

    Value based rewards still make sense for some people. If you need to get rid of orphan miles or points in a system that you are no longer using (United MileagePlus?), then you can often just get rid of them on a small, value based award such as a newspaper subscription, or a trinket in their “mileage mall”. Otherwise, I prefer to skip value based rewards and focus on cash back cards.

    The only real way to maximize value based awards is by maximizing the points received per dollar spent. Sony’s .9 cent value per point might seem bad, but if you were going to spend a few thousand dollars on their merchandise at SonyStyle.com, then you would get 5 points per dollar spend. When you redeemed the award, you would then be getting about a 4.5% return, which is not bad.

    Money Myths, Madness, and Mayhem – The 85th Edition of the Carnival of Money Stories

    By: Mr Credit Card

    Welcome to the Carnival of Money Stories! I am thrilled to be able to host this edition of the carnival. I hope you enjoy all of the submissions as much as I did.

    This issue of the carnival contains some wacky and wild money stories brought to you Myth Busters style. Some are true, some are false, all are a little crazy! If you’re new here, please subscribe to my RSS Feed and then sit back, and enjoy the stories!

    Wealth in Your Pocket?

    Myth: In April of 2006 a wealthy businessman named Scott Travers decided to honor national coin week by placing three rare coins into circulation. The coins have never been “found”.

    Status:

    Scott Travers did unleash three rare coins into circulation – and it wasn’t the first time he’s done it either. It turns out that Scott, who is the author of The Coin Collector’s Survival Manual and the ex-vice president of the American Numismatic (The study and collection of coins) Association was hoping that if he put the rare coins into circulation and then publicized it, it would spark a renewed interest in coin collecting among the American public.

    The three coins he released were all pennies:

    1909-S.V.D.B. Lincoln Cent – worth approximately $1,600
    1914-D Lincoln Cent – worth approximately $479
    1908-S Indian Head Cent – worth approximately $200

    No one has ever claimed to have found these coins, or several of the other coins Scott released either. Check your pockets!




    Drugs in our Money?

    Myth: The majority of the paper money in the United States is contaminated with cocaine.

    Status:

    The majority of the bills in the united states are contaminated with cocaine – In very, very microscopic amounts. In a 1997 study scientists found that as many as 4 out of every 5 bills contained minute traces of cocaine.

    How does this happen? Since cocaine is a fine powder, it is easily spread in small quantities. Tiny amounts of cocaine dust transfer from a contaminated bill to every other bill it comes in contact with. Since most money is in constant circulation, it is regularly coming into contact with other bills which have been exposed, and so on – via ATM’s, cash drawers, etc.

    The results of the study did say that the amount of cocaine actually on our cash is so minuscule that it will never show up in our bodies – Especially since most of us are handling cash less and less, and using debit and credit cards more often. So unless you’re at home rolling around in your cash like Scrooge McDuck, you probably don’t have anything to worry about. One more reason to wash your hands though!

    Want to know more? Check it out on Snopes.




    Your Money’s No Good Here?

    Myth: There is a law that says merchants don’t have to accept more than 100 pennies from you when you pay for an item.

    Status:

    Pennies are considered legal tender in any amount. So if you want to haul your change jar in to pay for your groceries it may be inconvenient (and the cashier certainly will not thank you for it!) but it is legal.

    With the advent of services like CoinStar, and the ability to change money at our banks, it is thankfully less common to see people paying for things with large amounts of loose change. It might be something to keep in mind though, the next time a merchant upsets you! You can always crack open that piggy bank and tie up about an hour of their time. 🙂



    Penny Wise and Pound Foolish?

    Myth: It costs more to mint a penny than its worth.

    Status:

    Most years it does cost more to mint a penny than it’s worth. This is due to the rising cost of the base metals that penny is made from. Pennies are made from 97.5% zinc and 2.5% copper.

    In 2007 the the approximate cost to mint a penny was 1.7 ¢ Our government justifies the difference in manufacturing costs and value because pennies are used for years before they drop out of circulation – so they feel they are “getting their money’s worth.”



    Bad Mojo?

    Myth: Two Dollar Bills Are Unlucky

    Status:

    While it’s impossible to say whether or not two dollar bills really are unlucky, they have certainly been considered “bad money” throughout history – and for a variety of reasons.

    The United States first began printing $2 bills in 1862, and they are still being printed today. Yet hardly anyone uses them, and there are even people who believe that they aren’t “real” money. So what happened? How did $2 bills become the red-headed step children of the economy? Well, it’s a lot of myth and legend really.

    In the 1930’s a single session with a prostitute cost $2. So anyone who had, or carried $2 bills was thought to either be a prostitute, about about to consort with one.

    The standard amount of bets placed on horses used to be $2, so anyone with a wad of $2 bills, was certainly “up to no good”. You know, between the gambling and the prostitution.

    And the third mythological reason why two dollar bills are unlucky is because they are often called “Duces” which is a slang term for the devil.

    Even though none of these reasons really have anything to do with fact, and much more with assumptions, it’s easy to see why people would shy away from carrying them in large quantities. Those are the historical “reasons”, and even though they don’t give way to logic, it was enough to doom the $2 bill into relative obscurity.


    That’s it for the 85th Carnival of Money Stories. Thank you so much for all of your submissions. I enjoyed reading each of the articles, and visiting your blogs. Come back and see us soon!

    Best,
    Mr. CC

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