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Smarties: A priceless gift doesn’t cost much

Smarties

Posted: June 10, 2010 10:59 p.m.
Updated: June 11, 2010 4:55 a.m.
 

DEAR SMARTIES: My wife's birthday is coming up. I recently lost my job, so I only have a few dollars to spend on a gift. She has been so supportive of me in this difficult time, and I want to give her something special.
- Frustrated in Fresno

HEIDI
: As a wife, I know what I would cherish most - a handwritten letter that explains how deeply you feel about her, on special paper, in a dated envelope inside a decorative box. In addition, a promise to write a new letter for the box for her birthday every year.

SAM: You could gather copies of your favorite photos together in a frame or offer to do that project around the house that you have been putting off - cheerfully. Or how about setting aside a day to do something special together, like a drive in the country? Time together is the greatest gift you can give.

DEAR SMARTIES:
I recently graduated and am glad to say that I landed a pretty good job. I can finally enjoy life a little after years as a "starving student." My parents say I should start paying off my student loan, but I'd rather get a bigger apartment.
-Proud Grad in Piedmont

SAM:
Perhaps you could delay repayment with deferment, forbearance or get your repayment extended. If you were still looking for a job, you should consider these options. Nevertheless, since you are working, you can start you loan repayment as soon as possible.

Can you arrange for a roommate before getting that bigger apartment? Better yet, if you have extra cash, you should be starting a savings plan so that you can become financially independent and not have to work at all.

E-mail us, and we'll send you "The Principles of Financial Independence" from our book.

HEIDI: If you are like most graduates, your loans are sky-high. Unemployment is rising, job layoffs are increasing, and first hires are often the first to go. So don't start "living large" yet.

Adjust your "starving student" budget a little - and save the rest.

DEAR SMARTIES: I want to save my money and not spend it on endless interest payments. What is a simple process for getting my arms around my credit cards?
-Overwhelmed in Ojai

HEIDI:
Gather all your bills, loans, etc. Take a big sheet of paper. Write down a list of all your debts, starting with the debt with the highest interest rate, the next highest interest rate and so on. Write down the balance you owe on each debt. Then estimate how many months of paying the minimum amount it would take to pay off the card, if you never purchased on that card again.

The next step will motivate you - do a rough calculation about how much interest you will be paying on the card between now and when you pay it off.

To save the most money in interest payments, pay off the debt with the highest interest first.

Set up a budget that pays all you can each month toward reducing your debt. Pay off the highest-interest-rate credit card first.

Then apply the same amount to the other cards until you pay each card off, one by one. Don't use the cards except for true, dire emergencies.

SAM: If your debt exceeds what you can handle, call your credit card company to ask if they would please reduce your interest rate and even waive a portion of the principle you owe.

Explain that you have been a good customer, you are setting up a plan to pay them back and you want their advice and support. The worst that can happen is to get a "no."

People who do this are surprised at how many companies these days are willing to adjust the terms of their debts.

Heidi Clingen is a long-time resident of Stevenson Ranch. Clingen and Samuel K. Freshman are authors of "The Smartest Way to Save: Why You Can't Hang on to Money and What to Do About It." They offer only their opinion, which does not constitute professional, financial, or legal advice. To receive a copy of "The Principles of Financial Independence" or submit questions, e-mail them at Heidi@TheSmartestWay.com.

 

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