Prepaid Discover Card Keeps Spending in Check

Jeremey over at GenXFinance reviewed the new Discover Prepaid Debit Card.  The card is focused on teaching teenagers about controlled spending and maintaining balance limits, which is great.  But what about those Gen X and Gen Y’ers who don’t trust themselves with their plastic?  A good way to impose restraints on unruly spending?  We think so. Read more

Interview with BillShrink’s Peter Pham

We’ve been getting lots of inquiries about BillShrink, the free online website that analyzes credit cards and phone bills to find the best deal for your specific needs.  So after giving a couple of thorough overviews of the services, we decided to go straight to the source and get some information about the site firsthand about what spurred these guys on, what to expect from the service, and most importantly, where they plan to expand to in the future.  Keep on reading for our Q&A with BillShrink CEO, Peter Pham.

The concept of BillShrink is great.  What prompted you to develop this service?

It started out of frustration that [Co-founder] Schwark had when trying to find a cell phone plan for his family and after a complicated and frustrating experience calculating the most optimal plan for his usage, he realized that millions of other people must have the same frustration. The same complicated choices exist for many other bills that everyone gets and then keeping up with the changes of the market would be next to impossible.

Has there been a big increase in users on the site due to more people actively looking to find as many ways as possible to cut costs?

Yes, definitely there has been an increase of traffic to the site over the last few months. Given the current economy it’s important to make sure you aren’t overpaying on your cell phone and making sure you are on the right credit card for your lifestyle.

How many credit cards and phone plans are currently represented on the website?

There are over 200 credit cards on the site today, and every plan from the 4 major carriers which make up over 10 million combinations.

How often are the plans updated?

The plans are updated on a constant basis, always with the most current plans, options, and phones available in the market.

Once people are signed up with the service, do users get periodic updates on new plans that have more to offer than their current ones?

Yes, carriers come out with new add-ons, data plans, combinations, and plans every month and we keep track of those to changes to continually make sure consumers are on the right one that matches their usage.  It’s not always about switching carriers, but many times just optimizing which plan and addons that fit your calling pattern.  For credit cards, new promotion, earning bonuses for points, interest rates, penalty fees etc are always changing and we keep track of those as well.

What is Bill Shrink’s user demographic?

Pretty evenly split between male and female but over 75% over the age of 35.

Wow, I’m surprised there aren’t more users in the 20-30 year old age range given the level of comfort they have with web 2.0 technology and managing their lives online.  Do you think this is due to a lack of financial awareness in the younger generations?

I think because most of our buzz has been in main stream media, but also that yes, 20-year-olds aren’t as financially aware.

On average, how much money do customers typically save when signing up with the service?

The free service we provide for consumers on average can save consumers $300/year for cell phone plans and over $1,000/year for credit cards.

Do you have any plans for the company to branch out into other industries – maybe internet providers or cable companies?

Absolutely, we are looking to aggressively expand to many  different industries that cover everyday services for the average American and internet/cable is on that list

Editor’s Note:  BillShrink also has a great financial blog — Shrinkage is Good — on their website with great tips on saving money, raising your credit score, and lots of other vital financial advice.  Check it out!

Don’t Get Scammed! (Like I Did)

With all of the bank mergers and acquisitions taking place right now, many people are getting tons of updates from their banking and credit card companies regarding the transitions to other companies and new policies and procedures.  Read more

I’m Debt Free!

I’m not one to toot my own horn, but I will today because, frankly, I deserve it.  Today I became a card-carrying member of the Debt-Free club.  This beautiful day follows an intense two year period of handing over half of my salary towards debt repay, and I am tickled pink to have finally gotten to the point where I don’t have to throw away my paycheck on crap that I purchased eight years ago.  Read more

Personal Story: Two Years to a Debt-Free Existence

In a new monthly feature we’re going to call “Personal Story”, we’re going to publish our own and reader’s personal finance stories. We’ll focus on how we got into debt, how we’ve worked (or working) our way out of it, and how we keep ourselves on track financially. The hope is that we can all get ideas and encouragement from each other to find ways to live within our means, stick to budgets, and save for a rainy day. It’s hard to stick by these plans by yourself, so we want to try to build a community that encourages these principles. I’m going to kick things off by talking about my own debt story.

I moved to NYC about four years ago, straight out of college. I had a nice little bundle of student loan debt, although nothing compared to some of my friends who owed $30-$40K in student loans, and a couple of low-balance credit cards. All in all, I was in pretty good financial shape. I was bunking with a friend of a friend who lived in Washington Heights (Manhattan). It wasn’t the greatest setup since I was crashing on a living room sofa, but I ended up staying there for about four months until I got settled in. Around the time that I was planning to move out, my friend found out that she was eligible to purchase a studio apartment in one of those rare, somewhat mythological middle class housing projects. Since she had to move quickly to take advantage of it, I was left with the apartment if I wanted it. Needless to say, I was pretty psyched about having my own place, especially considering that it came without all the hassles of a broker’s fee and moving expenses. The major downfall was that I had to sign a new lease and the previous $875/month shot up to around $1,100/month. For a lot of people in New York, this would still be considered a bargain. But since I was fresh out of school with no real work experience my full-time job was bringing in around $26K a year.

Like most people fresh to New York City, I had conjured up my ideas on what my life in the big apple would be like. It was primarily based on what I saw on television and was a far cry from the way that I could even remotely afford to live. In my attempt to stake out the perfect little urban utopia I had imagined for myself, I decided to keep the apartment – even though it was well over the amount I could afford to pay. I got my father to co-sign for a personal loan which I used to furnish the new place and pad my checking account for a little while. I lived decently for the first six months or so, somehow managing to still have a few dollars left over to occasionally grab drinks and eat out with friends. But like all free money, my loan finally ran out and my lack of cash started to catch up to me. My answer to the problem was credit cards. I began funding my burgeoning social life with them and eventually took to paying all of my monthly utilities with credit for well over a year.

Since I was using my entire paycheck plus some to pay my rent and my credit cards to pay my utilities, I had little cash left over to buy anything else including food. I reverted back to my college days, buying Ramen by the boxes and filling up on cheap bagels. I was fine with this because food was something I was willing to scrimp on in order to have some cash on hand to play with. After about a year, I reached a point where I couldn’t afford to keep living in the one bedroom by myself, so I found a room for rent in the city and moved into a tiny bedroom on the Upper West Side. I stayed there for a few months and then continued to hop around from place to place.

Fast forward to a few years later, I found myself at a new job with a better title with a higher salary. And not even two months after securing the job, I had found a new apartment to move into – a two bedroom that I shared with a roommate for $2,100. My share was $1,050. This move was basically a reaffirmation to make me feel like I had “made it” in the big city – even though it was taking a nice, fat chunk of my earnings away each month. This kept on for about a year and I continued to struggle to pay my bills. By this time, my credit cards were completely maxed out and I was being moderately harassed by creditors

My moment of realization came two years ago when I was still living in the overpriced Lower East Side place. After buying a laptop on credit and not making payments on it for well over a year, I was threatened with a law suit for negligence to pay. After many a phone call with a shark lawyer who represented the company, I started rethinking my financial situation. I sat down with a close friend and hashed out a budget. I joined Consolidated Credit and let them take over sorting through my debts, and this was probably the single most effective thing I have ever done in managing my finances. They did a fantastic job at getting creditors off my back and negotiating fair interest rates. Realizing that I couldn’t possibly keep paying a huge portion of my rent for a bedroom in Manhattan, I decided to downgrade my living arrangements. I found a nice room in Brooklyn for $600 a month in a much larger space.

Fast forward a few more years, I’m still here, and in November I will be completely debt free. It would have never happened without me making some drastic changes to my lifestyle. Once I started to focus on myself and what I needed to do to be able to live well, I was able to stop focusing on trying to impress other people and get myself on sound positive financial footing.

.

Submit your own “Personal Story” to lauren@lifestylermag.com. If your story is chosen for our monthly feature, you will receive a $30 Amazon gift card and a by-line.

BillShrink Expands to Credit Cards

You may remember our previous post on BillShrink, the immensely helpful website that recommends cheaper cell phone plans. It’s been updated to analyzes your 3G iPhone Plan to find the best rates and scouts out credit cards that are most beneficial to your spending habits.  And although we recommend choosing the iPod Touch over the iPhone, we think their credit card analyzer is a pretty great tool.  Read more

Tips for Moving to a Cash-Only System

Credit cards can be bad. Like most people, I learned that the hard way. A few years ago, after destroying my credit and sinking as low as was financially possible for me, I decided to turn it all around. No more spending sprees, or paying exorbitant amounts for a tiny bedroom downtown or ordering takeout every night. I cut up my credit cards and lived happily on a cash only basis for the few years it took me to work my finances out. Read more

Get the Most Out of Your Apartment Hunt

Renting an apartment, especially in New York, can be an enormous headache. Lots of people fall into the trap of getting a job and seriously overestimating what they can afford to spend on rent each month. When I first moved to New York, I lived in a pretty spacious (at least by New York standards) one bedroom in Washington Heights. The rent was $850. My salary was 26K. How did I do it? By using almost all of my paycheck to pay my rent, and paying utilities, food and other random bills with credit cards. A big no-no.

Pretty soon, I was maxed out on credit and had to leave and sell off my furniture to move into a tiny bedroom in a shared apartment. Hopefully others aren’t as dumb as I was, but after overhearing a young girl on the train one evening state that she paid $1,000 to share a bedroom in Washington Square, I’m not so sure.

The last thing you want is to have a great apartment and not be able to furnish it, or worse, bury yourself in debt. Keep on reading for some thrifty tips on what to look for and how to figure out what you can really afford to pay for a new place.

Tip 1. Make a Budget

I cannot stress enough how essential this is to staying on a financially stable track. People who do not follow a budget don’t have a clear idea of where their money is going each month. If you are one of these people and you don’t believe me, look at your bank account and track your spending for the prior month. I’m willing to bet that you will be shocked by the amount of money you spend on at least one of your essentials–most likely food spending. An easy way to find out what you can afford is to take your monthly net income (income after taxes) and divide by three. This amount will probably be on the low end, and that’s the point. You want to leave yourself some breathing room for additional expenses, debt repayment, food, utilities, personal spending, and most importantly, emergencies.

Tip 2. Be Realistic About Where You Can Afford to Live

If you make 35,000 a year, you cannot afford to live in Manhattan. Period. Unless you can find a bedroom to rent for $500 a month, you will always be barely scraping by. Look for places to live in The Bronx, Brooklyn, Queens, or Staten Island, and, specifically, up and coming neighborhoods. You’ll get more space and have more money leftover after paying your bills. And that translates into a happier and more stress-free existence.

3. Explore Neighborhoods

Don’t limit yourself to one borough. Check Craigslist for listings in neighborhoods that you’ve never heard of. Google them. Visit the neighborhood and check out the place in person. You never know when you may find a gem in the rough. Plus, many places in the outer boroughs can get you into Manhattan quicker than you’d expect. I get to my job in midtown quicker now living in central Brooklyn than I did when I lived in the East Village all thanks to express trains.

4. Hunt Without a Broker

While finding an apartment in the city without a broker can be a hassle, you’ll be better off eliminating the middle man. You’ll have to put down two months rent for deposit and pay moving expenses–do you really need to pay a 15% finders fee? Look for owner-listed apartments on Craigslist and in the newspaper. If you find the perfect apartment, but it’s listed by a broker – do a little research. Find out where the apartment is and see if you can’t get in touch with the landlord yourself. Also, walk around in the neighborhoods you like and look for “For Rent” signs. In the end, you’ll save yourself a ton of money that can be put towards other expenses.

5. Start Small and Work Your Way Up

Keep in mind that you’re young and you have another decade or two to accumulate things and upgrade your living space. Don’t try to jump right into a large one-bedroom or two-bedroom if you don’t really need it. Chances are, if you’re fresh out of college, you probably don’t own a ton of furniture anyway. Use that to your advantage, find a studio and spend way less money furnishing it.