FHA loans — you know, those loans that, when push comes to shove, we as citizens get to insure — have risen to almost a quarter of all home loans from 3% just a few years ago. Why? Because apparently they don’t care who they loan to:

FHA also has tightened lending standards, requiring a 10% down payment for those with credit scores below 500.

When 10% down payment for a credit score below 500 is an indication of tightened standards, you just have to laugh. Or cry.

Someone with a score in that range has shown an obvious lack of financial acumen, and has no business with a credit card with a $1,000 limit much less a home loan of potential $100s of thousands. Until one has shown at least the modicum of restraint — and a sub-500 credit score is just about the exact opposite — the dream of home ownership should remain precisely that: a dream.

A letter showed up today letting me know that AMEX has decided it is about time to change terms on my Blue account. Namely, a pretty hefty jump up in my interest rate. Plus a ridiculous rate on cash advances — does anyone actually do them anymore, and if so, how clueless are they? Tack on some minor tweaking to late payment fees.

credit: the Other michael

Oh, and most interesting, they are dropping all overdraft charges. Does this mean I essentially have limitless credit? Why don’t I run down to the local dealership and see if they’ll let me throw a Cayenne Turbo S on it? Eh, well, maybe not… they may just allow it! With the way the auto manufacturers are stumbling over themselves to get you into a new car, one never knows!

Go ahead. Set my interest rate to 39.9%. Make the late payment fee $497. As long as you don’t pull a brain-damaged move like Chase and arbitrarily start charging me a fee just to have the account, I’ll keep you around, if only to keep my credit utilization portion of my credit report as low as possible.

Because in the end, I just don’t care.

I don’t finance my life with credit anymore.

I really have to laugh at the various credit card companies and their reaction to the imminent passage of new credit card legislation that curtails some of their most egregious activities. Threatening that they may just have to start screwing over their most responsible customers in order to make up for no longer being able to screw over their less than perfect ones as badly.

“Those who have managed their credit well and currently have very good credit card deals will find that card companies are limited in their ability to distinguish between them and those that have credit problems,” Edward Yingling, president of the American Bankers Assn., said in a statement.

“The result will be some subsidy from those that manage their credit well to those that have problems, affecting negatively the terms the former will receive.”

Who do they think they’re kidding? Those most responsible customers don’t need their silly pieces of plastic, after all. They are merely a convenience. Attempt to nickel and dime them, and you’ll see a mass exodus to either those credit card issuers who know that a fairly treated customer can be a profitable one, or off the credit merry go round altogether and using their debit cards.

Or, god forbid, back to cash. The Horror…

photo credit: fotograf1v2

Glancing at the calendar, I notice that almost half of the month has disappeared in a pile of other people’s tax documents. The brain is just a little crispy right now…

Which is not to say that little has gotten done with our debt destruction progress. Actually, all of a sudden our future debt reports have gotten incredible simple. Not that they were all that complicated to begin with, but by the end of this month, the report would consist of a single line containing our mortgage balance.

That’s right. As of sometime next week, when our medical bill shows up and we write out one more check, we could call up Dave and shout WE’RE DEBT FREE! Well, except for the mortgage, which Dave seems OK with. Which always felt a bit disingenuous to me, when most people’s biggest debt is an oversized mortgage, but that’s a whole ‘nother post.

So, how did we kill off $27k+ in a single month? More awesome side job income? Nah. I didn’t tap those funds at all. Just letting those stockpile up for the time being for next year’s tax bill. Instead, we finally got rid of my father’s gift, which covered the loans taken out against it along with leaving a few thousand extra to work with. We plan to kill off the last of our medical and use the rest as an initial boost to a real emergency fund. OK, and we may blow just a bit of it celebrating.

Anyway, enough prattling on. Let’s take a peak at what is probably the final State of the Debt report:

So what’s ahead?

The State of the Debt reports are probably done. Seems a bit boring to report something like ‘Yep, made another mortgage payment.’ I fully intend to accelerate paying that mortgage off as quickly as possible, but a monthly report on that progress? Eh. Maybe in passing I’ll mention milestones, but really, I’ll have to see if I can come up with something a little funner to point out…

Like I alluded to, a real emergency fund, in the neighborhood of six to twelve months of expenses. Haven’t sat down to ponder the exact level, but somewhere in there. Our miniature one has come in handy when stumbling blocks appeared along this path, but having something substantial in place should a more extreme emergency make an appearance definitely would be a good idea. Plus, having that to fall back on gives you freedom to take advantage of opportunities you’d otherwise be hesitant to consider otherwise.

More life simplification. In my free time (in other words, not in the last six weeks or so) I’ve been reading quite a bit on life hacking. Think along the lines of books such as:

• Margin by Swenson
• Your Money or Your Life By Dominguez & Robin
• The 80/20 Principle by Koch
• The Myth of Multitasking by Crenshaw

Like too many people anymore, I spend far too much time doing things that add far too little to my life, and far too little on the things that actually do.

I will be correcting that imbalance.

photo credit: danesparza

As I mentioned in my last post, we accomplished something that I consider absolutely huge — we no longer have any credit card debt. And I’d like to extend my thanks to Chase for being the pricks they are for motivating us to pull as much out of budget in order to kill them off as quickly as we did!

In other financial news, the side business that is becoming my main focus continues yielding gangbuster results. I assumed that after the holidays, things would rapidly slow down on that front. But it looks like January has ever so slightly passed up the incredible December. That said, next month is unlikely to see the same debt killing as this one, as I really need to set aside a pretty healthy chunk for quarterly taxes. I set aside none this month to ensure that we could kill Chase, so I’ve got a little catching up to do.

Anyway, on to some numbers… let me just say right now, 2009 is going to be awesome!

For the first time since I initially laid down the plastic to pick up some trinket almost 20 years ago, we are officially credit card debt free!

Following my little rant over Chase doing extensive modifications to our agreement, we shuffled a few items around in our budget, waited for my side business commission check to come in, and then scheduled one whopper of a payment to them. The payment cleared last night.

And now, I have an envelope on my desk containing the remains of a credit card along with a letter requesting account closure just waiting for me to find a stamp.

photo credit: jeremyfoo

With the success of our recently discovered income source, all of a sudden we have a healthy chunk of extra debt destroying powers. Since we have a variety of potential targets, we sat down recently to decide which target was most deserving of the full wrath we could focus on it, and made plans accordingly.

Since none of our debts vary all that much in interest rates, we thought we’d take the Dave Ramsey route and go smallest to largest. So, looking at the latest State of the Debt, that would mean knocking out the medical debt, followed by the HELOC, followed by the Low Energy Loan, followed by the Chase card, and then finally the mortgage.

But upon checking the balances of our various accounts online this afternoon, the order has been altered a bit. I noticed that Chase was ten bucks higher than YNAB said it should be. Wanting to fix what was likely an entry error on my part, I investigated further. Only to discover a mystery Account Service Charge for $10. Being as I had no idea what it was for, I sent off a quick email inquiring about it. I received this back:

As your credit card company, we value your business. It’s important to us that we address your questions regarding the terms associated with your account. Thank you for sharing your concerns with us.

We consistently review our business practices to ensure that we provide valued services and remain competitive in the business. As noted in your Cardmember Agreement, we may change the terms associated with your account and will notify you of the change in writing in accordance with applicable law.

Our records indicate that a Change in Terms notice was sent to you in November 2008, which advised of the addition of a $10.00 Account Service Fee and a change to the required minimum payment for your account, effective as of your January 2009 billing statement. Please note that the Annual Percentage Rate (APR) on your account is not changing and you may continue to take advantage of the promotional APR currently in effect on your account.

First off, Chase doesn’t send me a thing. I am enrolled to receive electronic statement, and haven’t received a single piece of paper from them since the last time they sent me a new card because the last had expired.

Nevertheless, searching out past statements just to see what I have apparently agreed to, I find a pdf of my Change in Terms Notice. Along with my Bose Sound Offer and my Holiday Rewards craptacular junk jewelry offer, which I had to check out because who knows what else they may have decided to sign me up for, as they can pretty much arbitrarily change the agreement to whatever strikes their fancy. (And in case you were wondering, nope, no Bose radio is on the way, nor any overpriced costume jewelry!)

And here is the gist of the Changes to my Terms, my emphasis added:

We’re sending you this notice to advise you of some new changes to your credit card account. These changes will take place automatically and will be effective with your January 2009 statement.

Here’s a summary of the key changes:

• A new Account Service Charge of $10 per month will be applied to your account.
• Your minimum payment due will increase from 2% to 5% of the ending balance on your monthly statement. As a result, your required monthly minimum payment will increase.

Important: Your APRs will not be impacted by these changes.

The key factors we considered when making these changes include the current APRs and revolving balances associated with your account.

The minimum payment jump of 3% doesn’t bother me so much. Only, quite honestly, because we can afford it now. Six months ago, it would have caused some serious hardship. There is a world of difference between a $324 minimum payment and a $850 one!

But the $10 a month Account Service Charge? That’s just petty. And pettiness deserves, well, a swift kick to the nether regions.

If you have any questions regarding these changes, please contact us by calling the customer service number on the back of your card.

Hello, Chase CSR? Please close my account. Immediately. I’ll scrape together the cash to pay it in full by the end of the month.

Oh, and bite me.

So it looks like we’re in collapse and people are killing each other in the streets. Oh, wait, no, not really.

Sure, the markets are having a fit, which makes it painful to look at our retirement accounts. Except that we aren’t planning on touching them for many years, so eh. Feel a little bad for the baby boomers inching up on retirement, but really, not much. Yes, I know that schadenfreude isn’t exactly a positive emotion or anything, but many of them have defined their lives by excess so they shouldn’t be surprised when it comes around to bite ‘em. A little frugality isn’t perhaps a terrible thing.

photo credit: missdesigndiva

Meanwhile our politicians are tripping over themselves trying to do, well, I don’t really know. Looks like they are hellbent on trying to find a way to spend my son’s future income in an effort to stave off what will be an admittedly painful correction. Personally, being a free market kind of guy, I say go ahead and let it correct. But I am probably missing the big picture.

That said, at least in our household, things are certainly not flying off track. In fact, despite the supposed tightening of the credit market, we just received notice that one of our credit cards has substantially increased it’s limit. Thanks, but we really don’t need it. We won’t mention that to the government, because they may just decide they need that as well!

We did a decent job of killing off more debt this month. Broke well past the $1000 mark. And honestly are still living quite comfortably even with that kind of progress. We could probably introduce a little more pain and get the ball rolling a little faster. But that’s a budgeting issue, not a reporting one.

I’ve been having a lot of fun recently with my side business, and it’s beginning to really take off. Right now it is not adding any to our debt attack plan, as I am stockpiling cash right now in anticipation of further expansion. The holidays are rapidly approaching, and I have a feeling I’ll be spending a fair amount on advertising soon!

Oh, and oops, I will take a cue from Wall Street and restate some debt. I misread a medical bill statement and understated that debt by around $800. Where’s my bailout?

While I am certainly no fan of the tactics of many in the credit card industry, sometimes I’m not so sure we don’t get precisely what we deserve. For instance, in public comments to regulators on their credit card gripes, we see one commenter lamenting, apparently, the reality of time passing:

I agree that 30 days late is late — one day is not late!

Has our education system gotten so poor that we cannot even grasp simple words like late anymore?

late: Coming, occurring, or remaining after the correct, usual, or expected time; delayed

photo credit: Daveybot

Spring ends, summer begins, more debt goes to the great beyond. Isn’t it a wonderful thing?

Yet another month of incremental debt killing. While I could have boosted the damage done to the final tally a bit by using returns from my expanding online marketing side business, right now I’m comfortable using the funds to reinvest in what’s been working. Maybe next month I’ll throw the excess at the debt, but for now having the ability to use the play I have in that side business’s cash flow to experiment has proven useful.

Likewise, I’m sure we could have trimmed more, but going over our spending versus the budget it looks like we did a little comfort spending in June. In the end, it is just money, and we needed a little cheering up more than we needed to knock a couple hundred more off the total, so c’est la vie. Speaking of, we are still waiting to hear on medical bills associated with our loss. Since we have a pretty substantial deductible, unless medical procedures have gotten cheap all of a sudden, the ol’ total is almost certainly going to suffer a brief reversal soon.

Anyway, for those into specifics, here ya’ go: