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Episode 220 - These Small Things Can Make a Big Impact during Your Debt Journey

Have you ever considered how minor adjustments and paying attention to the finer details could significantly impact your path to financial freedom? In this blog post, we'll dive into 4 tips shared by Katie Hatfield on the Debt Free Dad podcast, shedding light on how small changes can lead to substantial progress in conquering debt.

 

Trailing Interest: A Hidden Fee Trap

Trailing interest might sound like a complex financial term, but understanding its implications can save you from unnecessary charges. Katie explains how even if you pay your new balance in full and on time, you might still encounter trailing interest. This sneaky interest accrues from the first day of the billing period until you settle your balance. By being mindful of your billing cycle and making prompt payments, you can steer clear of this extra cost.

Avoiding Overdraft Fees: A Game-Changer

Overdraft fees can quickly accumulate and drain your finances. Katie shares her personal experience of realizing she had paid over $500 in overdraft fees within a short span. By switching to a bank that doesn't impose such fees or by setting up alerts to monitor your account balance, you can avoid falling into the overdraft fee cycle.

Negotiating with Financial Institutions

One overlooked strategy in managing debt is negotiating with your bank or credit card company. By discussing adjustments to due dates or interest rates, you can create a repayment plan that aligns better with your financial situation. Katie's success in reducing her interest rate from 29% to 0.99% showcases the significant impact negotiation can have on your debt repayment journey.

Handling Medical Bills Wisely

Medical bills can be another financial burden, but Katie emphasizes the importance of negotiating payment plans directly with the healthcare provider. Avoid putting medical bills on a credit card to evade interest charges and late fees. Requesting an itemized bill can help identify any discrepancies and ensure you're only paying for legitimate services provided.

Conclusion:

Incorporating these simple yet effective strategies can pave the way for a smoother journey to debt freedom. By paying attention to trailing interest, avoiding overdraft fees, negotiating with financial institutions, and handling medical bills judiciously, you can take proactive steps towards achieving your financial goals. Visit debtfreedad.com for more insightful tips and resources on managing your finances wisely.

Resources Mentioned

Get better results with your finances in 30-60 days - GUARANTEED. Watch this video to learn how! - https://www.debtfreedad.com/payoff-debt-in-60-to-90-days 

Free Tools and Downloads at www.debtfreedad.com

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Episode Transcript: 

Kati: Do you ever look at what are some small things Or something in the fine print that could make a big difference in how you get out of debt. I'm going to share a few things today that I started at the beginning of my freedom from debt journey, and I hope it'll help you too. 

Hey everyone, this is the Debt Free Dad podcast where we help you take control of your finances so you can live a Happier and less stressful life. My name is Katie Hatfield and I will be your host for today's episode so I had started my journey about five and a half years ago and Seemed like overwhelming All this debt over a hundred and twenty thousand dollars, uh, between student loans, credit cards, medical [00:01:00] bills, car loans. 

It just seemed like I was never going to be able to get out from under all of this debt. And a couple of things that I learned that were just little, little things, little changes in my life. Um, made a big difference. So, first of all, trailing interest is something I actually had never even heard of or thought about or really knew what it was until just a couple of years ago because I now work at a Big bank and I read people's, uh, credit card statements and review Uh accounts and things like that and I was like, what is this trailing interest? 

I'm going to read it directly from a credit card bill mine. Not somebody else's so trailing interest You may see interest on your next statement Even if you pay the new balance in full and on time and make no new charges. This is called trailing [00:02:00] interest Trailing interest is the interest charge when, for example, you didn't pay your previous balance in full. 

When that happens, we charge interest from the first day of the billing period until we receive your payment in full. You can avoid paying interest on purchases by paying your balance in full, or if you have a plan or payments, uh, by paying your adjusted balance on your billing statement. By the due date each month, so it's in there. 

It's just the small print. You have to read the small print on statements a lot of times. So what does this mean? Trailing interest? This was my statement for all of the charges at the end of December and most of January. And then it is going to be due, or it was just due. On february 20th. So when my billing cycle ended on January 26th every single day from January 26th until I made the payment, which I [00:03:00] did in full, on February 20th. 

If I had waited those almost three weeks to pay off this bill, I would have been getting charged that little bit of interest every single day from January 26th through February 20th. So, a lot of us look at our due date on our bill and think, okay, I just have to pay it by that date. What you should be looking at is, okay, my bill Or my billing statement ends on the 26th of January. 

I should be paying this bill on January 27th. If you've ever paid off a credit card in full and then the next month you get like 4, 12, 27 of a bill the next month. 

You're like, wait a minute. I paid all of that in full, but you weren't paying the interest because every single day the bank was charging you a little bit extra. Interest is not your friend. 

So I [00:04:00] learned about that and i'm like, hmm. I do have to Rearrange when I think about due dates on bills and that has made even though it's a little bit every little bit counts. You can also call your bank and most of them should be able to work with you on changing the due date or the billing cycle dates for your bills. 

Never put your medical bills on a credit card. The hospital, the doctor's office, whatever, if you set up a payment plan with them, even if it's 5, 10, 50, 100 a month, whatever it is, if you have a giant bill going to the hospital or any kind of doctor, um, as long as you're on a payment plan, they can't send you to collections. 

They should not be charging you interest. Yes, you have a lot that you owe them, but as long as you're making payments to it, don't put it on a credit card. Because with a credit card, you're going to pay interest on [00:05:00] it, and it's gonna accumulate quickly over time 

I was the queen of overdraft fees. I was constantly overdrafting my account and one day I knew it was gonna happen again and I knew they were gonna ding me another 25 35 whatever dollars  

um, so try to Stop making those i'm just gonna float this payment and pray that it doesn't come out before my paycheck drops um, try to Avoid those overdraft fees because again, those are so simple to avoid But you have to have a plan for your money. What's in your account on the date that your bills are due and it's gonna come out. 

Or have a cushion, uh, that you always have a hundred dollars extra in your account whenever possible, just in case, something slips through.  

Just little steps like that. Can make a huge difference. I know I [00:06:00] didn't pay one or two of credit card minimum payments for a month or two when I was first getting started because I just didn't have the money and I was deciding between rent and utilities and my credit card bills and groceries and in my Okay, I have to have things to live. 

I need a house or apartment or a roof over my head. I need to have groceries to eat. I need to have utilities on so I have internet to do my work because I work from home and I need a phone to contact people so, um, just little things like that. But it makes a huge difference. So, hopefully these are some tips that might help you in your debt journey. 

And I just hope that, um, You continue to listen for other fantastic, uh, episode, um, tips and tricks that we share here on our podcast. And, [00:07:00] uh, we've got the Debt Freedom Planner. And make sure you are getting, um, going over to DebtFreeDad. com. You can check out our free Life Without Payments. group on Facebook, and we have a workshop where we give you lots of great tips so you can get started. 

Um, and we just have a really great community on Facebook. I always like to remind people of our Life Without Payments free group because you have other people that are like minded in similar situations, sharing ideas of this worked for me, this worked for me. It's not, we know not just one thing is going to work for everyone, but we hope that A little tidbit here or there could be the aha moment that just really helps you when you're getting out of debt. 

So thank you for listening and until next time, take care. 

Yes, I am sure I want to stop recording. Thank you. 

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