I’ve been doing a little thinking about the whole price of stamps going up ordeal.  It seems to have hit the personal finance blogs pretty quickly as a hot news item with some of them saying "stock up on the Forever Stamps!".

Don’t do it!

(at least not without reading on)

Why Forever Stamps Don’t Save You Any Money

If you had $0.41 to invest in an index fund that only ever kept up with the rate of inflation, would you do it?  If you did, would you keep it in a kitchen drawer or laying around on a desk where it could get lost once you bought it?  Let’s say you had $4100 to invest, would you buy into that index fund knowing you probably couldn’t ever sell it for what you paid for it?

Inflation

photo by forcasts.org

If you’re in debt paying 10% interest, would you rather pay down the balance and save on interest, or buy a big stack of forever stamps so you eliminate one tiny expense for a lifetime?

Well, that’s about what the forever stamp is.  A tiny investment into a USPS product that never increases in value faster than inflation.  For the long term, there’s just no major savings for the customer.

Now, these statements make a few assumptions:

1. You’re an average citizen that just mails a handful of letters a month.
2. Buying a book/roll of stamps isn’t something you do an awful lot.
3. You’re not running a business that requires you to send out lots of mail once in awhile in massive quantity. 

So when is it a good idea?

Let’s say you know exactly how many stamps you’re going to use each month.  Right before the price change, it would make sense for you to buy enough stamps to make it through the first few months after the change.  If you burn through your stamps within the first quarter, you’re essentially saving at (rounded) four times the rate of inflation, which is a pretty good investment.

Let’s say you’re running a business.  You already budgeted for the entire year how much you’ll need in stamps to maintain all outgoing mail.  It probably makes more sense to buy forever stamps knowing they’ll still get your mail out for the year without having to do any accounting changes.

Convenience

What the forever stamp ends up being in the end, is a big giant convenience for many people that just don’t want the price of stamps to affect the stamps they’ve already bought and paid for.  Don’t want to buy a bunch of 1-2 cent stamps to let you use the ones you’ve already got after a price increase?  The forever stamp is that perfect convenient fit…it’s just not an investment!

I hope that helps clear up any confusion.  I remember when they first came out everyone had jokingly talked about buying 1000s of them so they’d never have to pay for stamps again.  Sorry, but I simply don’t use stamps anymore.  I’ll buy one book of forever stamps, and it’ll probably last me a couple of years just because we use our bank’s web bill pay for everything we possibly can, and email for everything else.

So, how many forever stamps do you feel like buying?

Last week I became extremely frustrated with myself for letting my credit card interest rates raise obnoxiously high.  The worst part of it was that it happened totally unbeknownst to me, so I shared my tip about checking your interest rates often.  (it shows how out of hand my rates were on my cards and how much I’m wasting every year because of it)

So, today I saw Mrs. Accountability’s post about how she just opened a new card that has an offer for for a 12-month 0% interest transfer with no transfer fee on the first transfer.  That’s the part I hate about most of these card offers is the 3% transfer fee attached to the whole deal.

My initial credit line is only $6000, but that’s how big my largest card is, so I won’t bother asking for more.  All additional transfers will require the 3% transfer fee.

Here’s a snapshot of my confirmation page:

I have a feeling this is the beginning of a series of card transfers to completely get rid of the $300 a month worth of interest I’m throwing away to credit card companies every month.  I’m not too happy about having to manage all of these cards, and the last time we did this I ended up with an extra $5000 worth of debt.  But doing this will pay us more than my wife’s part time job! 

Anyone else out there doing something similar to this?  I’d like to know of any other cards or offers out there that I could utilize to get the other $12000 worth of credit card debt in an interest free state for awhile.

As I was going through some bills this week, I noticed how little progress I was making with a certain credit card’s balance after making pretty big payments.  It turned out I was paying 28.99% interest on a near $6000 balance.  Ouch.  That’s a huge waste of almost $150 a month!

What kind of progress can one expect to make on debt with rates as horrible as these?  Here’s the scary part…it’s been like this for months and I haven’t noticed.  I’ve just been paying a couple hundred bucks a month without putting much thought into it.

The Problem

Photo by oberazzi

I have absolutely no idea what the interest rates are on my debts.  Sure, I got a ballpark of the crappy rate I’ve got on my sub-prime mortgages.  I know my student loans are single-digit rates.  But I have absolutely no clue (other than the one I’ve already discovered) what my credit card rates are.

This situation is very dangerous.  For all I know, I could be paying 30% interest across the board on over $15,000 in balances.  That’s like FIVE THOUSAND DOLLARS a year!  Come on!  Just knowing the balances on your cards is not good enough, you need to regularly examine your credit card interest rates to make sure you’re not wasting money.

Allow me to be the example here of what not to do and what not to let happen.

The Catalyst

So, just not knowing your exact rates may not be the total cause of wasting thousands of dollars.  Perhaps they were all fine six months ago when you last used them.  The biggest problem you might have beyond not knowing your rates could be that the credit card company just decided to up your rates without really broadcasting it in your face.  I mean, they have to give you those little folded pamphlets about terms and conditions and all…but who reads all that mail with the fine print anyway?

Here’s three things to watch out for:

1. Your rates can change anytime.
2. Universal default clause can trigger all companies to change rates.
3. Electronic statements sometimes hide the rates on another page or view so it’s not immediately obvious to those not looking for it every month.

That little pamphlet is basically telling you that the credit card company can change your rate to whatever they want ANYTIME they want.  Borrower slave to the lender?  Yeah, you can say that again.

Not only that, with what’s known as the universal default clause one little pin-drop on your credit report and all your credit card companies can just go nuts with your interest rates.

One thing I’ve noticed is how much the current card interest rate is hidden.  Just in the last 10 minutes I’ve had to dig through multiple screens on the website and the only place I found it was on the PRINTABLE PAGE for the statement.  There’s no HTML page displaying my current interest rates!  I had to dig up the printable page!  LAME!

The Solution

The next step is to stop being uninformed.  I’m examining all of my credit card interest rates right now before I finish this article.  In fact, here, I’ll list them (rounded) right now.

So, I’m basically wasting over $200 per month for not having all my credit card balances right around 8-10%.  Why do this?  All it takes is sticking a reminder on your calendar every month to check your credit card interest rates.  Or just look at it every time you get a statement.

I have a feeling I’m going to be contacting some credit card companies pretty soon.  I’m about to get a nice tax return, and it’s going to be the perfect leverage during the phone calls I have with them.  I’ll save that for another story though. 

So, check your interest rates and share your findings!  How often do you check your rates?  Any surprises?  Am I the only one getting totally taken for everything I’ve got because I’m too relaxed on watching rates?  Let me know.

Photo by pointybunny

I grew up moving around quite a bit.  Compared to many, I’ve actually moved around quite a bit since I grew up.  One side effect of doing so is that I’ve accumulated quite a few bank accounts in various places over time. 

Of course none of them had a significant amount of money, but when sitting down to REALLY do the math, I surprised myself.  I had FOUR bank accounts in places that I have not visited or passed through in over THREE YEARS. 

Total value of all accounts?  Just over $300!  Ok, $300 is now a significant amount of money.  So how do I get my hands on it?

A Simple Phone Call

For each bank, you simply look up the main phone number and give them a call.

1. Identify yourself.
2. State that you’d like to close all accounts since you no longer use them.
3. Ask that they just mail a check to your current address.

Yes, that was it.  I mean, how EASY is that?  I feel like an idiot for not having done this before.  There’s simply NO reason to have 10 bank accounts spread all around the country when I can access my two or three main accounts from anywhere already.

Consolidation Keeps Things Simple

I don’t know about you, but I get enough mail as it is.  This eliminates four monthly/quarterly statements that I simply don’t need in my mailbox and in my file cabinet.  That money is also going to waste at 0-0.5% interest in old savings and checking accounts at local banks in places I’m a THOUSAND miles away from.  LOL!

So What Took So Long?

Photo by Mason Poe

I have just never really closed any bank accounts.  Ever.  I didn’t know how easy it was, so I always just left whatever money was there when I moved out of town.  Fear of the unknown made me hesitate.  Once I called the first bank ready to deal with some long tedious process of exchanging signatures and faxing paperwork only to find out it only took a FIVE MINUTE PHONE CALL…I just laughed myself silly!  ROFL!

So, now I’ve got less to keep track of, an extra $300 in my pocket, and I’m no longer AFRAID of just asking questions or inquiring about things I don’t understand.  Don’t hesitate!  Call up some banks and close old accounts you’re not using anymore TODAY!

Please let me know if you’ve had any "nightmare" experiences closing an account.  I mean, this just shouldn’t be as bad as trying to cancel your AOL subscription!  ;)  Do any of you have unnecessary bank accounts that have been dormant for over 3-5 years?  I’m curious if I’m alone on this one.