Dear Mary: I like the idea of shopping online. The problem I have is that I am digging my way out of debt. I am in credit counseling and have no credit cards. Do you know of any websites that will give us "non-credit card customers" the chance to enjoy shopping online? I'm anxious to find out how to do this. — Richard
Dear Richard: Sorry, but in all good conscience, I can't help you with that because I don't think you should be shopping online — or any other place, for that matter. If you absolutely need something, purchase it locally. But whatever you do, stop shopping!
I'm talking about the kind of shopping where you wander around a mall or website just to see what kind of bargains you can find. Isn't that what got you into trouble in the first place? Shopping when you cannot afford to buy anything is a waste of time and only makes you wish, want and — pardon me if I say so — whine. Instead, put that energy toward changing your attitudes and repaying your debts as quickly as possible.
I know you can do this, provided you buckle down and refuse to let anything get in between you and that finish line!
Dear Mary: I hardly ever carry cash and rarely use credit. I use only a debit card. But still, there are times I feel out of control. How can I get some control over my spending? — Roberta
Dear Roberta: Merchant research groups have proven it over and again: Customers who shop with plastic (debit or credit cards) spend about 30% more than those paying with cash. I believe that's because credit and debit cards (even checks) are stand-ins for our money. They're not the real thing but more like "play money." I know for myself that swiping a card or writing a check for, say, a $50 purchase doesn't require the same kind of mental consideration as paying with cash. I suggest you put yourself on a cash-only diet for the next 30 days. Don't even carry a checkbook or plastic. Except for payments you must send through the mail, force yourself to pay with cash.
Living on cash is inconvenient, and you have to plan ahead for how much cash you'll need for the day. But it is an excellent discipline! Keep a written record of how you spend the cash, too.
While making the switch to cash will be quite an adjustment in the beginning, I predict your mindless spending will disappear.
Dear Mary: Soon, I will receive an inheritance that is almost equal to the amount remaining on my mortgage. I am a widow, age 55, with no dependents. I have 25 years with the same employer and have been participating in the company's 401(k) plan for the past 15 years. I plan to work until I am 65. Should I use the inheritance to pay off the mortgage or, as friends suggest, invest it in a variety of stocks and bonds and keep my mortgage because the interest is tax-deductible? — Eleanor
Dear Eleanor: You need to check with your tax professional, but if I were you, I'd pay off that mortgage so fast the lender would get dizzy. Investing in your debt is always a wise decision, because you cannot lose.
If you pay off your mortgage, no matter what happens to the economy, you'll enjoy a rent-free retirement. As for the deductibility of mortgage interest, it is highly overrated. It's a consolation prize for those who have no choice but to pay on a mortgage.
Let's say you pay $1,000 a year in mortgage interest and you are in the 28% tax bracket. By deducting that $1,000 from your taxable income, you realize a $280 reduction in the tax you owe. Does that make sense to you to choose to pay $1,000 so you can get $280 back? If so, I have a better deal for you. You send me $1,000 every year, and I promise to send back $500 every April 15, no questions asked! Deal?!
Would you like more information? Go to EverydayCheapskate.com for links and resources for recommended products and services in this column. Mary invites questions, comments and tips at EverydayCheapskate.com, "Ask Mary." This column will answer questions of general interest, but letters cannot be answered individually. Mary Hunt is the founder of EverydayCheapskate.com, a lifestyle blog, and the author of the book "Debt-Proof Living."
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