Wednesday, July 28, 2010

Thinking seriously about which oil company gets my business

It's day 100 since the Gulf of Mexico oil spill began and BP has become a constant fixture on the nightly newscasts and in the morning papers and vilified on website, blogs and social networking sites. I don't know about you, but I have certainly changed my fuel buying habits since this crisis began.

I've started buying my fuel again from ARCO gas stations. ARCO is owned by BP.

So perhaps I am bucking a societal trend.

The decision is based entirely on economics -- mine.

Yesterday, on my way to work I notices the fuel prices for regular unleaded gasoline on two gas stations I drove past. One, the ARCO station that I have recently started using as my primary fuel station, listed unleaded for $2.76 per gallon. The Shell station that I sometimes have used to my fuel purchases listed it's price at $3.00 per gallon.

For the record, I'm rounding up, as I refuse to play along with gas stations' deceptive marketing strategy of listing the price in big type, and the 9/10th figure is small type. So, the Shell sign actually read 2.99 and 9/10ths. We all know that's $3.

At a price difference of 24 cents per gallon, it would cost me more than $4 extra at the Shell station to fill the tank. I can buy a meal for that price at a fast-food join, or probably more than one at the grocery store.

To be fair, the price at the Shell station actually dropped today by 4 cents per gallon, but it would still cost me about $3.40 a tank more at the Shell station.

One of the reason I used to be a periodic Shell customer was that I have a Shell credit card. It was not my primary fuel stop, as Shell tends to be more expensive than either Chevron or Texaco, for which I also have a credit card (different names, same company, same card for Chevron and Texaco). I got used to using the cards when I lived in California. It was so convenient to use the gas cards at the pump of the self-serve stations there.

ARCO was more of a pain. They don't take credit cards. So it required cash (or later debt cards). It took more time to go into the store to pay, or use their pay island kiosks.

So I paid a little more for the convenience of speed. Usually, I paid off my bill every month so it was no big deal.

But now, with gas prices back near $3 per gallon, sometime I have carried a balance over on those cards. I'm still trying to pay off a balance on one of them, even though I've been paying cash for gas for at least a month now.

In my effort to get debt free, I think I will keep my business with stations that offer the best price for fuel and don't tempt me by making it too easy to use a credit card. In this part of the country, that's probably going to mean buying fuel most of the time at ARCO, from BP's subsidiary.

For my money, BP is no more evil than any other oil company out there. In fact, ARCO's no credit policy is more benevolent, than the others companies that rake in billions of dollars every quarter -- every 3 months -- by charging steep prices for their fuel and more than 25 percent interest (or more) on their credit cards.

BP reported a $17 billion loss Monday for the quarter with costs related to the oil spill. Royal Dutch Shell will report earnings Thursday. In the first quarter, the company reported nearly $5 billion in net income for the quarter ending in March. But that's nothing. Chevron will report earnings on Friday, and Thomson Reuters expects the company to report a 30 percent increase in profits, to $52.5 billion.

I can live, with a little more economic comfort, with my decision.

Monday, July 26, 2010

Putting a new financial tool in my toolbox

I added a few links to the blog, including a debt reduction calculator. That find is pretty exciting, because it showed me in concrete terms when I can expect to get out of this hole I dug myself into.

I've crunched the numbers a couple of times. If I can stick to the payment plan the calculator spells out, I could be completely out of debt in four years.

Four years.

It's exciting, and daunting, all at the same time. The daunting part is wondering if I can maintain the discipline to stick to the plan after I start getting some things paid off. The second year could be the toughest one. I should be able to pay off a couple of accounts in the first 7 months. But I wouldn't be able to polish off the next account on the list until 23 months from now. Year three will pass without clearing off any more accounts, but then in year 4 I would clear off 6 accounts, getting through a new one every couple of months. It would be a very exciting year, after two very slow progress years.

The debt reduction calculator also showed me that two of the accounts, which are charging me some of the lower interest and carry the lower monthly minimum payments would stretch out payments, at the amounts I have been paying the last couple of months, for about 10 years. I would end up paying about twice the amount in interest I now have as a balance on a couple of my accounts. It was very informative and gave me the impetus I need to destroy a couple more credit cards. I kept one bank card in the event of an emergency. I also still have two gas company cards, but if I can continue to keep paying cash for fuel, I will soon have the confidence to trash those too.

Small steps. I know I should be making these decisions faster, but a lifetime of habits are hard to break all at once. I'm starting to realize there really is light at then end of the long tunnel. But it's not going to be quick to get through that tunnel, and there will be lot of dark days before I can emerge into the daylight on the other side. But there is something reassuring about facing the next four years and that's the realization that the older I get the faster time seems to pass. The past four years, in which I've dealt with the worst parts of this oppressive debt aggravated by a national recession, have gone by pretty fast, in spite of the panic. Four more, without adding to the debt, should be something of a relief. Right?

Thursday, July 22, 2010

Sometimes I have to talk myself into doing the right thing

Writing this post is actually a delaying tactic. I'm stalling for time. I'm trying to work up the courage to do what I know I should do.

While I've got pretty good in recent months about not using credit cards for miscellaneous purchases, I have only actually cut up one card, and that's the Chase card that is charging me obscene interest. The others I quit carrying and locked them away in a box. However, I still have the key to that box.

The justification, in my mind, for not cutting up the cards is that perhaps some emergency may arise, like my car breaking down, and the only funding access I might have would be those credit accounts.

But my vehicle is getting old enough now, that if something major happens to it, it would be time to walk away from it. It's lasted 15 years, easily 5 beyond what I though I would get out of it. And she's still trudging along, leaking some oil and burning too much gas, but still getting me where I need to go. She could, potentially, carry me to the end of this credit crisis, with some luck.

So, tonight, I was planning to take the big plunge and chop up the next-highest interest rate card. Perhaps I should not have looked to see how far under the limit I am on that card. I learned I have about $1,200 of room to work with on that card, which is more than I have on any of the other cards left.

I know I should destroy them all. I certainly need to get rid of one charging me nearly 24 percent interest. So, why haven't I done it yet?

Tackling this debt demon is going so slow. I'm tired of the stress and the boredom already. Any new charges will only prolong the agony.

OK, I did it. Chopped another card to bits.

So here's the tally so far: Two accounts closed to new purchases. Two other credit cards destroyed. Six more to go.

Monday, July 19, 2010

Scared of the water, yet dying of thirst

I'm not sure I'm equipped to be in the dating pool in 2010.

In reality, I'm not anywhere near the pool. I'm sort of outside the fence, looking in at the water and daydreaming about floating on the waves, while still being scared shitless to get dunked under and drown.

I know I'm way past the bar scene, where I'd be more likely to come away with a hangover than a phone number. Friends have suggested I try an online dating service. I did finally create a profile on one of the sites, but I'm not getting much out of it. But then I'm not putting much into it either. It doesn't seem significantly better than the bar scene, with everything based on a first, visual impression and a few lines of small talk.

I don't know what all the factors are that create attraction, those tangible and intangible things that spark that chemical reaction. It just doesn't feel like I'm going to find it in an online profile.

As my daughter would say, I'm a serial monogamist. I also hate (fear) rejection. If I'm going to run the risk of being shot down, I only seem to be able to put myself out there if I have already developed interest in a woman. That doesn't mean I need to be in love, but I have to have a pretty strong and persistent crush, so the drive to spent time with the object of my desire overpowers the flight reflex.

One side effect of my financial plight has been that my world has gotten pretty small. I've become a homebody in an effort to keep my dollars in my wallet, but it's not very conducive to making friends and meeting new people. I'm not sure I have the money to spend on a relationship anyway. Not that every night has to be fancy dinners and extravagant dates. I learned the hard way a few years back that you can't buy love. But it sure doesn't hurt either.

Saturday, July 17, 2010

Playing with snowballs in July

One of the key reasons I decided to start blogging again, particularly about dealing with my finances, is that I regularly find myself having a crisis of confidence. Am I'm making the right choices on my quest to get out of debt?

I've been listening, when I can, to the Dave Ramsey radio show. That helps keep me focused. It also is a good reminder that I am not alone in dealing with problems of too much debt. It also helps me realize that I don't have it so bad. I'm not on the verge of losing my house. I rent. I don't think there will be any need to file for bankruptcy. I don't have creditors or debt collectors hounding me. I don't have a car payment.

Fortunately, I have been able to pay my bills. But some months that is harder than others. I have finally realized that I cannot use credit cards at all, to pay for anything. But I confess that I have not destroyed the cards, except for one -- a Chase credit card that is charging obscene interest. I think I could get a better rate from a loan shark. The only way my rate could be any worse if is I was regularly late, or not paying at all, and even that would only raise my interest rate by 2 percent.

They obviously expect me to default on that account. I am awfully tempted to prove them correct out of spite and pay the creditors that look at my good payment history. Chase obviously doesn't care about that and seems determined to help me default.

As I said, I've been listening to Ramsey. In his system, what he advises it to take on the smallest debt first, rather than the account with the highest interest. He calls it working on the debt snowball, starting on the small debt, and building on that success. I can see the reasoning behind Ramsey's advice in that it would feel good to just get some of those monthly bills eliminated. I would take any positive reinforcement I could get right now.

But there are days, like today, when it feels like the snowball is working me. It's several days until pay day, the checking account is almost empty, the vehicle's fuel tank is almost empty, and some household supplies are empty, or on the verge of empty. In the not-too-distant past, I would have just used a gas station credit card and filled up the truck without thinking twice about it. I've done that recently enough ago that one of the gas cards I have still has a balance of almost $300 due to some work-related and personal trips I took in late spring and early summer. I just eliminated the debt on another gas card. This would be the second step in my debt snowball.

But it seems like if I keep doing the debt snowball approach, I will be at this forever. So I may revert to the approach I was using a couple of month ago, which was to tackle my two highest interest rate accounts by paying an amount that, if I could maintain it, would eliminate those two debts in about 3 years. I have another account that was converted to a loan, which will be paid off in about four and a half years. Those three accounts make up nearly half of my debt. Along with continuing minimum payments on the other accounts, that would mean I would have eliminated more than half of debt in about 4 years or so.

Even that seems like a long time. I have to remind myself that it took me 20 years to get this deep in debt. So, maybe that's not so bad.

But it sure doesn't feel good. At least not today.

Thursday, July 15, 2010

Uncle Sam isn't doing my financial reform many favors

Congress passed a financial reform package today, and President Obama is expected to sign it, perhaps as early as next week.

I'm nervous about what this will mean. That's not because I'm some big-wig investor or mega-bankers. I'm just a schmuck swimming in credit card debt. And the reason I'm scared is because the last time Congress clamped down on banks for their abusive practices on their account holders, the banks retaliated by becoming more abusive, raising interest rates even more and lowering limits.

And people wonder why consumers haven't started spending again to buy the country out of this recession. The answer is simple. We can't afford it.

There was only one beneficial piece in the last consumer protection bill as far as I can see, and that's the provision that requires the credit card companies to print some very useful and important information on the credit card statements. That key information tells us some very important things about what our credit cards are really costing us. In that information we can find out how long it will take to pay off our balances -- and how much we will eventually pay -- if we don't charge any more and only make the minimum payments. We can also see how much we would have to pay if we quit charging on the card to pay it off in three years.

That's important information to know. Of course the other actions the bank took have made it harder for me to dream of paying off the cards I have in three years or less. Credit card issuers have raised interest rates, and lowered limits which increases the proportion of debt you have, which lowers your credit rating, which then puts you at risk of getting rates raised again, and limits lowered again, and further erode the credit rating. It's feeling like a vicious, and expensive, cycle.

For me, though, there has been something of a silver lining. It has helped me to realize that I need to get out of debt as soon as possible and never get back into it again. I am tired of paying in blood to these legal loan sharks.

It is that conviction that brought me back to Digital Fishwrap again, after an absence of more than a year and a half. I feel like I've turned a corner in my financial life. After rounding that bend, I can see clearly the long, steep climb I face to summit this mountain of debt. I think the Fishwrap site can help me on this journey, because sometimes I need a place to confess my fear and frustration. I need a venue to vent my anger at myself and the assholes that helped me create this huge mess.

Learning to live without using credit cards has been tougher than I imagined. It's not that I lead an extravagant lifestyle. My couch and recliner are the two pieces of furniture I bought after getting my first job after college, bought on credit of course, because I didn't have the cash to buy them outright. And that's been the pattern of my life, buying items, large and small, on credit when there just wasn't the cash available. Gas for the car, gifts for others, travel to visit family when I lived far away, dinners for family and friends, all paid for on plastic.

I wasn't making much money in that first job, and had a series of low-paying jobs, but I make what should be a decent wage now, and I am still always broke, because nearly two-thirds of my monthly income goes to pay on credit cards. About one-third goes to all the core household expenses, like rent and utilities. Which leaves very little for everything else, like food, clothing, fuel and insurance for the car, etc.

I don't pretend to be a financial expert. If you saw my monthly bills and the checking account balance you would see that for yourself. I'm just a guy on a journey to get my life back. I've come to face the reality that another big raise or promotion is not just around the corner in this economy. There is no lottery jackpot coming my way to rescue me from myself and the banking bogeymen. It's going to take time, determination and tons of patience. I'm not sure I have that much patience, but maybe if I take the time to write about what I'm finding and learning it will keep me from running one and spending money on a lark just to avoid staring at the four walls or eating yet another home-prepped bargain-basement meal. And maybe you, dear readers, can help keep me on track.

The End Debt Daily