Total Financial Makeover
Dealing with Debt - Options when Living Debt-free isn't Reality
January, 2007 - Issue #27
The holiday season seems to be lasting longer and longer each year. It used to be that Halloween would come and go and then a couple of weeks would pass before the Thanksgiving decorations and turkeys would flood our local stores and shopping malls.

Now, holiday seasons overlap and sections of stores that used to be dedicated to seasonal items are now split in two in order to accommodate the expanded service to their customers. This helps us remember the season, right?

Other ways that we remember the seasons are with family pictures, gifts and of course our credit card statements. If you haven't completed all of your purchases yet and are contemplating "how" to buy the next gift (even if it is for yourself), not "what" to buy, here are a few tips that can make the next few statements, I mean months, easier.

Balance Transfers: One of the most common ways to deal with buyer's remorse when we see our debt statements is through balance transfers. The first thing to look at if you are transferring to a new card is to make sure the low- or no-interest rate is for as long as possible. Depending on your credit rating, you could still find some as low as 1.9 percent or even zero percent interest for the life of the loan.

"If you HAVEN'T COMPLETED ALL OF YOUR PURCHASES YET and are contemplating 'how' to buy the next gift, not 'what' to buy, here are a few tips that can make the next few statements, I mean months, EASIER."
Second, this card needs to be one you never charge anything else on until this debt is paid of. That's because the interest rate charged on purchases is usually a lot higher then that of the transfer. Then, any payment you make goes to the lowest interest rate balance first. That means you will be paying interest on interest and the only way to pay it off is to pay off the entire balance.

Lastly, before you agree to the transfer, make sure the entire balance that you want to transfer is accepted. A trick often used is to allow only a portion of your requested amount to transfer over and that leaves you with two credit cards with a balance. Check, or for some ways to find the best balance transfer cards.

Home Equity Line of Credit (HELOC): This option is used for those that have an event, not a pattern of behavior. If something has occurred in your financial life that requires you to charge more then you can pay off each month, then this is a good option. But if you are someone who seems to find yourself in this situation a lot, then this may not be the answer for you.

Basically, an HELOC means that you are taking a relatively small amount of money and using your home as collateral. Translation: If you don't or can't pay off that sweater or toaster you bought, your house will be foreclosed upon. The main issue is that you have not changed your habits. So many people believe that they "deserve" or "need" things and use money they don't have yet to buy it. That can lead to a lifetime of chasing your spending and not leading your income.

OPM (Other People's Money): Consider buying items or using credit that is six months or one year same as cash. Some of the big box stores and internet websites have great deals on last-minute gifts and discount financing. Check out, and If you're looking for computers, can have good financing. Less well-known sites like can help.

It is never too late to begin the foundation for a life change when it comes to your financial literacy. I never did like the word "resolution;" it tends to imply that resolutions are something you are going to try to do instead of just do. Lay out a step-by-step plan that allows you get out of debt, save money and plan for retirement.


Arif Halaby is a financial planner and the owner of Total Financial Solutions. E-mail questions or comments to
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