An Unconventional Q&A Session with a Financial Planner
August 19, 2011If you have read more than two of my blogs, you probably already know that while I take your financial lives pretty seriously, I don’t take myself seriously. At all. So, in the spirit of having a little bit of fun with this (it’s summer after all), and answering some REAL questions that I’ve been asked over the last few years, here’s a little “unconventional financial education” Q&A session:
Q: How late can I pay a credit card bill without it REALLY hurting me long term?
A: If you pay after the due date, you’ll most likely get hit with a late fee. So, your overall cost goes up if you pay even a day late. But that wasn’t what the person who asked was really looking for. Digging a little deeper, here’s what they wanted to know. If you pay between a day and 29 days late, it USUALLY doesn’t get reported to credit bureaus and impact your credit score. It’s only when you’re 30 days late that it TYPICALLY gets reported to credit agencies and impacts your credit score. And, it’s usually after 90-120 days that it would go to a collections agency and be considered “charged off/collections” status.
Q: If I have some traffic tickets, how long can I wait to pay them before there’s a negative consequence? Should I pay them before or after my credit card bills if I don’t have enough money to pay both?
A: In most states, an outstanding traffic ticket, parking ticket, or red light/speeding camera violation can be paid a little later than your other bills. (Not a recommendation, just a reality.) Why? The MVA/DMV usually does not report unpaid tickets, so your credit score will probably not be impacted. And, if there is a “hold” placed on your license or registration, it won’t matter much until your license or registration are set to expire. Of course, if you want driving privileges, you will have to pay the tickets prior to getting your renewals, but if you only have money for one thing, this is one that can in many cases, be deferred a while.
Q: Am I a bad parent if I water down apple juice to keep the cost of groceries down a bit? I keep an extra container with a brand name label so that it’s easy to pour some juice out of the new container into the empty and then fill the new juice back up with water.
A: Ummm, NO. In fact, it looks like one of the major apple juice manufactures is doing exactly that in their Tots product line. Look at the upside; you’re reducing the sugar content of the diluted apple juice that your kids are drinking. Don’t consider it being a bad parent; consider it preventing future illness by limiting their sugar intake! Have you read the label on full blown apple juice lately?
Q: With my rent/mortgage, credit card payments, food, utilities, etc. and my $500/month car payment, I’m having trouble making ends meet. My credit score is horrible. What should I do? I’m falling further behind each month and I don’t see a solution.
A: I have some friends in the car business and this is their advice. Take your car to the place you bought it. Tell the person who sold you the car that you can’t afford it and that you plan to stop paying on it and have it repossessed because $500/month is not within your budget. Ask if they have taken in any reliable, but ugly older cars that they plan to take to auction or wholesale. Or, if they can earmark the next one that they take as a trade-in for you, and then sell your car rather than having it repossessed. Yes, you may lose some money on the newer car, and you may have to drive something that’s flat out ugly for a while. But, if your cash flow can improve by hundreds of dollars per month and you can get to a place where you aren’t going backward each month, isn’t that worth your friends seeing you in an ugly car? As long as it gets you from Point A to Point B when you turn the key, what difference does it make? In fact, you can make driving the oldest, ugliest, least costly car amongst your friends a point of pride.
Each of the questions above has been asked of me within the last year. The funny part is that they haven’t been asked by people that I meet in the course of my normal day. They have been asked by acquaintances, friends and family members who know what I do for a living, and wanted some “off the record” advice. And, this is only the beginning of these real-world, yet non-standard questions. As I get asked more, I’ll write more blogs about them. And, if you have something that is just a little different, please let me know. I’ll enjoy it and answer your personal questions privately, and if you make it into a blog entry I promise not to use your name.