Credit is so tight these days that people can’t borrow for those flat screen TVs anymore. So retailers like K-Mart are bringing layaway back from the dead.

You ever lay something away back in the day? I did — all kinds of things like games from the first Nintendo to clothes I wanted but ain’t have the cash for when I was in high school.

What’s the last thing you remember “laying away” and would you use it again now if you didn’t have the cash for something you wanted?

*My blog is moving from Bet.com. Keep in touch to find out where I’m going*

I tried posting this earlier this week, but a ton of readers told me they couldn’t see the entire post for technical reasons. So I’m re-posting today:

Today’s post is courtesy of the ING Foundation, which did a survey about black women and money. Among the top findings were that  47 percent of Black women say it is difficult to have their desired lifestyle because of financial obligations to their immediate family;  71 percent say it’s “very important” to give money to their place of worship; more than half have loaned $500 or more to family or friends over the last year; and  68 percent of Black women buy what they want – in a good or bad economy.

Here are the eight tips they gave to black women on handling their own cash:

Saving Over Time Can Help Secure Your Financial Future

Black women’s sense of obligation to community and family is extraordinary and commendable. But when you’re pulled in so many directions financially, someone or something has to pay the price. It’s impossible to financially support your family and community over the long term if you’re not financially secure, so make sure every week you put some money away for yourself. 

Resist Impulse Purchases

One way to find money is to spend less on “nice-to-haves” like electronics, clothing and accessories, eating out and even those addictive coffee drinks. Being more mindful and thinking twice before making a discretionary spend can make a big difference in your wallet over time. By making deliberate and thoughtful choices about how you spend and save money, you truly can make your money work harder for you.

Use Credit Cards Sparingly

Leave your credit cards at home so you’re not tempted to use them on impulse purchases. Save your credit cards for major purchases that you’ve taken the time to consider.

Use an Automatic Saving Plan

Automatic saving plans make saving an effortless, seamless process because a set amount is deducted from each paycheck and put into a savings or mutual fund account of your choice.

Start With a Workplace Retirement Plan

With tax-advantaged workplace retirement plans, you can put money away for retirement and reduce your current taxable income at the same time. And many companies offer an employer match, which is essentially “free money”. 

Create a Financial Plan

Our research shows that a financial plan — even a simple one — strongly correlates to feelings of financial empowerment. The journey to financial security begins with a road map. Creating a financial plan focuses you on where you want to go and, just as importantly, what you need to do to get there.

Don’t Be Afraid to Ask for Help

Our research shows that Black women who use a professional financial advisor are more likely to have created a financial plan and feel more financially secure. To find a financial professional, ask family, friends and co-workers for references or go online. Then interview three to five potential candidates to determine which one is the best fit for you. Don’t be afraid to ask lots of questions and be sure to follow-up on their references.

Learn by Doing/Join an Investing Club for Women

Not comfortable engaging a financial professional but not quite comfortable to go it alone? Find an investment club in your community — many are women only — that’s compatible with your investment knowledge and experience. These can be a lot of fun — and a great way to learn the ins and outs of investing without feeling overwhelmed.

Meaning for me and everyone else who got a direct deposit this week, it’s time to figure out what to do with the cash. I already know I have bills to pay, but if you’re like me, it’s that discretionary spending afterward that can bust your budget.

So I’m going to issue a challenge: if you’re reading this, for the next week, write down every dollar you spend. Carry a notepad with you to make it easier. Don’t cheat. Every pack of gum, every latte and every time you swipe a credit or debit card, write it down. Next Thursday, tally it all up and see how much you’re really spending that you didn’t need to. I’ll keep my own diary and update everybody next week. Hopefully this will be a good exercise for a lot of people and the first step toward taming overspending.

Today another reader needs help figuring out how to get rid of her debt quickly:

 ”I’m going to try to get rid of my debt in 18 months. I have $6,688.21 in debt that I’m paying (I have another loan that counts against my net worth that I took out for a family member, but she is paying that — however, I still need to keep enough money in my accounts monthly just in case she lapses on a payment).

So I got my payment plan from the CNN calculator you suggested. Doable. Hard, but doable. And I’ll be calling AMEX in a few months to see if they can lower my interest rates (which would helpl immensely). But here’s the thing — I want to build up my savings at the same time. I had a good chunk of change in my savings account, but emergencies, some vacations and some car work have whittled it down to just under $600. Hardly a nest egg.

 

How can I go about paying off my debt, while still saving money to get up to the three month (or six months) worth of salary that everyone suggests? Right now, I have my check direct deposited and have $75 taken directly out of the checking account and put into savings on my payday.

 

Any suggestions on what I should be doing? I just got inspired and really want to get my financial life in order — I am about to be 25 after all.” –TB

First, TB, it’s great that you’re trying to get your financial house in order early. Second, I wish I could’ve gotten to you first before you took that loan on behalf of the family member — it’s good to help family out, but somehow these things always end up being harder on the person who borrowed the money than on the person who’s supposed to pay it back.

As far as your debt, the most sensible thing is to put yourself on a longer-term debt diet since you have several goals want to achieve at once. The important thing is to get it paid off, quickly if you can, but ultimately just to get it paid off. If you try to pay it off too fast, you can put yourself in a bad situation with short-term cash flow by overextending yourself on debt payments.

I’ve been in that position: spending so much on debt payments that I was nearly short on bills. Not a good look.

The point is to pay your debt off quickly, but comfortably. Since your money’s divided in multiple places, you need to figure out a realistic budget under which you can make more than the minimum monthly payments to your credit cards and be saving say, at least $50 a paycheck. You should also be contributing to your 401(k), at least to the maximum percentage of your salary that your company will match. After that,  calculate how much more than the minimum monthly payment you can afford to devote to your credit card balance, then you can figure out how long it’ll take you to pay off.

Remember to budget for ll of your monthly living expenses, for stashing away money in your rainy day fund and to keep just a little bit of cash on hand for emergencies or to have fun with, so you don’t get too stressed out.

Good luck, and I hope that helps.

If you’re anything like me, the most nagging financial issue you have is credit card debt (click here to see my plan to get rid of it all).

Most folks think that it’s the credit card interest that keeps you in debt: buy something then pay only the minimum and eventually your balance balloons and you’re not paying down the original principle for years. But this story on MSNMoney.com shows how even if you make more than a minimum payment, carrying and using the card at all can keep you in debt for a long time:

“You’re not thinking clearly about the actual cost of things, because credit transactions skew how you view the money you spend. There is a vast difference between how it feels to pay $10 in cash versus $100 in cash (not to mention the difference to your wallet). But when you sign a slip of paper, spending different amounts feels similar…”- MP Dunleavy, MSNMoney.com

Put another way, carrying a credit card makes it easier for you to overspend because you don’t ever actually see the money you’re spending, unlike cash when the money actually disappears before you. And while the article was about credit cards, I’ve seen how using plastic can screw up your budget even when it’s a debit card you’re using. Those $5 and $10 and $20 transactions don’t feel like much when you just swipe, sign and walk away, but sometimes they’ve added up to hundreds of dollars I didn’t plan to spend.

So I’m trying something different in the next few weeks: I’m going to look at my budget, then withdraw only the amount of money I can afford to spend in cash, and try not to use my debit card at all. Using the credit card is already off limits.

Anyone else have any strategies they’ve used to master the plastic?

After yesterday’s post about the need to pay off credit cards “Slim” posted a comment I wanted to respond to for everybody:

I totally agree about paying off the credit cards. I paid off and closed my credit card just this February 2008 after B of A would not reduce my interest rate. One thing I do not understand, why did my credit score DROPPED about 15 points after I closed the credit card and now only have my mortgage payment as outstanding debt. I have never been late one credit card or mortgage payments. It is like the financial world rewards you for being in debt!!!!!!

Slim, the reason your credit score dropped was because you made the mistake a lot of people do when they pay off a card: You closed it. How much debt you have as a dollar figure is just one of the things that goes into your credit score. Another part of it is your ratio of debt to available credit.

Let’s say I have three cards with $1500 limits. That means my available credit is $4,500. If I carry a $900 balance on each, or $2,700 total, that means I have a ratio of 60%, or that I’m using more than half the credit I have available to me.

Now, if I pay off one of the cards and close it, My balance goes down by $900, but my available credit declines by $3,000. That means even though I’ve paid off one-third of the debt, the credit agency still sees me using the same 60 percent of my available credit.

Another important factor is the length of your credit history. Basically, the longer you’ve had established credit, the more favorably that plays into your score. Close a card that you’ve had open for 10 years, and you could damage your score.

In the long run, the best thing is to pay off a card, cut it up if you have to, but keep it open.

Fortune.com has a really good column about what they call “the next credit crunch”. Since I know most of you aren’t about to click that link and read the whole thing through (even though you should), I’ll run it down for you:

(1) Americans’ incomes haven’t gone up in years (2) so we keep borrowing money, mostly through credit cards, to afford all the crap we want, (3) but credit is now as tight as it’s been in the country in decades so banks are about to cut the credit cord to many consumers (4) and in the end of lot of us are going to be screwed.

Get it? Credit card companies are starting to take big losses and that means they’re about to start raising rates. If you carry a balance, your monthly payment could jump. If you don’t have any savings and have been relying on your credit card for emergencies, think of how much more you could wind up paying off that debt in the long run.

Today’s a good day to get a piece of paper, and make a plan for paying off your cards and saving at least three months worth of living expenses as quickly as possible.

With the economy doing as poorly as it is, there’s no surprise that more folks are having trouble with bill collectors. This story from CNNmoney.com shares some of the horror stories, but the more interesting thing is the tips they share about what bill collectors can and can’t do:

• They can’t harass you (repeatedly calling, threatening you, being belligerent, etc);
• They can’t lie to you (telling you you owe more than you do, or that they can put you in jail or that they’re lawyers when they’re just bill collectors)
• They can’t use “unfair practices” like depositing postdated checks too early.

It’s good to be informed about your rights as a borrower if a bill collector is harassing you. The problem is, everyone knows somebody who has been a victim of an overly-aggressive bill collector, which means either too many people don’t know their rights or that the government isn’t enforcing the rules on them as sternly as they should.

When was the last time you got a call from a bill collector, and how did you handle it?

And not just with that 27 percent interest rate they charge you. I got this link in an email from Vanguard, the company that administers my old 401(k) (which I need to roll over).

It breaks down the kinds of hidden charges and fees credit card companies try to tack on to your bill — if you let them. If you use your credit card to get cash at an ATM, you could wind up paying 3 percent of the amount you take out, in addition to interest on that money. Transfer your balance to another card and you could get hit with another 3 percent on that money. Even talking to a human being when you call customer service could cost you between $5 and $15.

I was just driving back to the office when one of those department store came on the radio, the ones where they talk about their latest big sale and tell you you can even get extra money off if  you put your purchase on one of their credit cards! I know how high store card interest rates are, so I couldn’t imagine running to Macy’s and charging a pair of Ed Hardys and a Ralph shirt. If I can’t pay cash, I just won’t be that fashionable.

Then I sat at my desk and ran across this story on Yahoo Finance, that gives an ill insight into how credit card companies think. Basically, it says, you’ll be lumped in one of two categories: those who get a “free ride” from their credit card by paying it off in full before the monthly grace period ends, or a “poor fish” who gets whacked by interest month after month after month. Guess which is the better category to be in, and which one your credit card issuer would rather you be in.

Since I started my mission to eliminate just over $7 grand of card debt from my life, I’m happy to say I’m quickly moving out of the poor fish category. But I don’t know that I’ll ever be a free-rider, if only because after I’m done paying my balance off, I hope to never have to use plastic again, except in dire emergencies.

So which category are you in? If you’re a free-rider, were you ever a poor fish? If you’re a poor fish, how long will it take you to get rid of all your credit card debt?