Over the last few months, I been getting notices from the credit card companies that they are planning to raise the interest rates on my three cards to 30% in 2010.  What made me see red was a patronizing paragraph on one notice that stated if I was a good little boy and made my payment on time for the next six months, they will drop my interest rate by one percent.  Last week I cut up my credit cards and sent them back with a request to close my accounts at the current interest rates.  This week I decided to teabag the credit card companies with my own notice that I’m restructuring my finances on terms beneficial to me.

NEW DEBT TERMS

Due to the fact that I been out of work since Friday, February 13, 2009, I have seen my savings dwindled and my debt payments increased.  The debt payments, in particular, has been annoying since the credit card companies are determined to make me pay for their mistakes during the GREAT RECESSION.

I had reorganized my finances to increase my savings and decrease my debt payments until such time I have a job and six months of living expenses in savings.  Then, and only then, will I resume regular debt payments to pay down my outstanding debts.

If my account isn’t already closed, please do so now.

Thank you for your cooperation.

My monthly payments for all three credit cards will now be $50 per month instead of $500 per month that I been paying for years.  The extra money will go towards paying for my car insurance, smog test, and vehicle registration that is due next month, and the taxes on unemployment benefits due in April.  Beyond that, everything goes straight into savings.  The key advantage of taking charge of my financial priorities is that I’m no longer being stressed out by how I’m going to pay my bills.  I’m dictacting the terms, not the credit card companies.

I still have a credit card for my writing business (which is still collecting rejection slips and contributor copies) and a personal loan with the bank that has my checking and savings account.  The bank haven’t tried to stiff me and I can’t stiff the bank without jeopardizing my rent check.  That’s the downside of having linked accounts at one financial institution.  These accounts will be on my priority list to pay down first.

The plan is to prepare for the next layoff that might come sooner rather than later.  I’ll continue living with my reduced budget when I get a new job to use the extra money to build up a six-month cash reserve and start paying down debt.  I expect the economy to have wobbly legs for the next few years and I need to protect myself against the possibility of not having any unemployment benefits during that time.  If I’m debt free the next time I do draw unemployment benefits, I’ll be able to put money into savings since I’ll be living within my means.  An important lesson I’m learning from the Great Recession.

My credit record will take a serious hit for the short term.  All kinds of spurious fees will be added on to the debts I owe.  I’ll get nasty letters and phone calls from the credit card companies, but that’s all they can do if I continue to make regular payments on the accounts.  If they force me into bankruptcy, they can get in line behind the bank.  If they repossess my car (which they won’t since the insurance, registration and smog test is more than the Kelly Blue Book value), my commute costs will quadruple for public transportation, limit my chances of getting a new job, and I’ll have no money at all.

In short, the credit card companies will have no choice.

When I read that charge cards requiring full payment each month are becoming popular again, I applied and was approved for a basic American Express charge card.  I’m planning to use the charge card for gas and vehicle-related emergencies.  This is the only area of my finances that I need a credit card for.  I also upgraded my AAA membership for the 100-mile coverage since I been looking for jobs outside of my typical 10-mile commute range.

Talking to my extended family on Christmas Day, I’m not alone in this outrageous behavior by the credit card companies.  Everyone else had to cut up their credit cards.  My Dad in particular was angry about the percentage spread between interest being paid for savings and being charged for credit cards.  My niece was more explicit about getting a phone call on Christmas Eve: “Eat [expletive] and die!” We have all seen our rates jacked up, our credit limits hacked down, and suffered the snotty attitudes from the credit card companies.

For the record, the definition of teabagging that I’m using is: “The act of protesting certain fiscal policies[.]” Credit card companies are determined to maximize short-term profits by any means possible, including destroying relationships with their best customers.  Teabagging also refers to a certain sexual position.  (Remember that when a politician proudly announced being supported by the teabaggers.)  That’s what Wall Street and the financial industry are doing to their customers and the taxpayers, expecting everyone to respond like Oliver Twist by saying: “Please, sir, can I have some more?”

Not anymore.