August 11, 2009

• In One’s Best Interest (Rate)

  It’s always the same. Almost each and every month for three years. I receive the bill for my “consolidation account”, a Bank of America credit account called a “Gold Option Loan”, which I obtained about three years ago with what was supposed to be a sliding rate scale, initialized at 17.99%, so I could combine six other credit card accounts into one, supposedly saving me money. Of the $750.00 I am paying each month, roughly $550.00 goes to the percentage rate, leaving only $200.00 for the prinicpal. After three years, I’ve only paid $5000.00 on a $38,0000.00 loan, with over $18,000.00 going to the percentage rate. I could have bought a new car for that amount of money! When the bill becomes due, I usually don’t have the total amount of  money in the bank, and my overdraft account (which is another credit card issued by my bank) covers the difference (at 23.99%)

  Bill in hand, I begin the monthly exercise of attempting to lower the rate.

  With trembling hands I punch in the phone number for customer service, knowing, since this is a repetitive exercise, that I will ask for a rate reduction, and I’ll either be given either a runaround or a decisive “no” answer. (After hearing almost a complete symphony playing through the phone while waiting on hold)

  “Hi, this is Michael Nyiri, account number such and such. When I qualified for this loan in 2006, I was told that after six months paying the minimum on time I should be able to get a rate reduction, thereby reducing my monthly payment. Can you check to see if I qualify for that rate reduction?”

  The answer is either “No, there is no reduction at this time. Call back later.” Or “No, this is a fixed rate loan and will be 17.99% through the eight year duration.”

  That’s either “No”, or “No”.

  After three years, this has become not only a comedy of errors, but a futile exercise in frustration which sometimes causes me to become depressed.

  When I bought “my little house”, the cute little mobile home in which I now live, I knew I was further setting myself up for grief, in the form of a negative cash flow, where more money would be going out each month than coming in. I ran spreadsheets, cutting expenses as much as is humanly possible, but every time I recalculated, I always came up short. I needed to obtain new housing. And the deal purchasing the mobile home was a great one, but the agonizing “bottom line” told me I needed not only to become a much more frugal individual, but absolutely needed to get my “Gold Option Loan” recalculated too, lowering the rate and the monthly payments by at least a hundred bucks a month.

  I moved in last February. Every penny owed me from escrow when the final negotiations were finished went to pay off some of the overdraft account, which I lowered by about $700.00. In the next five months, however, I “borrowed” that $700.00 back and more, in order to pay not only my increased rent, the mortgage payment on the mobile home, and some bit of the cost of staying in a hospital for a week in June, but to cover the $750.00 I pay each month for the dreaded consolidation account from Bank of America.

  Before I moved, I used to eat in restaurants each day for lunch and on weekends I would go all out and dine in fancy places, savoring great meals cooked for me while I read my daily newspaper. First the weekend meals disappeared, replaced by more frugal home cooked meals. I became friendly with the small kitchen in my mobile home, and found ways to prepare meals for just one person which taste as good (or better) than the ones I ate in restaurants. As the months passed, and my negative cash flow kept nagging me with increments borrowed from the overdraft account at $57.00 here, and $150.00 there, I knew something would have to happen real soon, or else the minimum payments on the overdraft account would become too large to manage. When your last line of defense is breached, the war can for all intents and purposes be said to be lost.

  Now I’m only eating out twice a week. The other three times I’m “brown bagging” it at work, preparing my lunch at home before leaving for work, and then eating in my office. This also saves on gasoline, because I’m not driving as much as before.

  Back in May when I last mustered the courage to call Bank of America, I found a sympathetic ear among one of the millions of people in the call center, and he gave me another phone number for the handlers for the “hardship” accounts. I didn’t call in June or July, when I was hospitalized and recuperating. I knew I would have a defininte “hardship” to talk about when the bill became due for the hospitalization, and sure enough, it did, and I did, when I saw in print that I owed the hospital (approximately) $3000.00.

  I paid $100.00, and wrote that I would like to continue paying $100.00 a month if I could afford it. As August dawned, I knew it was time to make the call to the Bank of America. The latest bill arrived last Thursday.

  With bill in hand, I begin the exercise of attempting to lower the rate, this time armed with my “hardship”.

  With trembling hands, I dial the phone number I was given for the “hardship department” and I hold my breath after I outline my problems to Jessica, the account representative who answered the phone (following a hold time which afforded me a listen to another complete symphony, or so it seemed.)

  Instead of giving me a runaround, or denying me the chance to renegotiate my terms, Jessica explained that each time I might have called in the past, there might be extenuating circumstances which would allow the bank to renegotiate, or to hold firm. She told me that currently, the bank isn’t changing terms because of the economy, but in certain “hardship cases”, they might be able to help some customers “if they qualify”.

  When making these calls during the past three years, I expend so much frustrated energy that I’ve sometimes become quite upset or depressed or both. I didn’t know what the final outcome of my present call would be, but so far, I was getting farther along than previously. I told her about my operation and that I’d already started receiving bills for my part of the expense. Instead of being curt, or simply shunning me and my meager financial problems, Jessica seemed to commisserate with me, and she told me I might qualify for a renegotiation of terms on my loan, the first time in three years anyone has offered to do this.

  For the next 45 minutes or so, I answered a raft of questions, the same kinds of questions one has to answer when applying for a loan. How much money do I make a year? How much do I take home? What do I pay each month for groceries, cable bill, utilities, etc. She called up my credit history, so all my credit card amounts were staring her in the face from her computer screen.

  After this exercise, she put me on hold, but not before I explained to her that just a few months ago, I tried, without success, to have the bank where I have my checking account consolidate all my accounts into one. They would be able to do this, but at five years, and the APR for which I qualified at the time, my overall monthly payout would be GREATER than what I’m currently paying.

  She listened quietly and then put me on hold.

  I actually clasped my hands to my breast, and, aloud, prayed for good luck. “Dear God, I know I’m asking for something, and I don’t like to have to bother you with my problems, when so many have so much greater, but I really need to lower this payment. Please help put some compassion into the person who is making the final decision! And thank you, ahead of time.”

  I’m sure God was listening, because when Jessica came back on the line, she told me that “pending approval”, the loan was recalculated at 4.5% over five years, lowering the payment from $750.00 to $620.00 a month. I asked what “pending approval” meant in this case. Could I still receive a denial letter in the mail? She told me that I shouldn’t have to worry. She had already checked with her supervisors and I was sure to qualify based on my answers to her questions regarding my finances and my credit history. (Which, even though I owe a lot, is managed pretty well. My FICO score is 725)

  You can imagine my relief and almost shock that after so long, I was fianlly able to lower this all encompassing bill by over $100.00 a month. I couldn’t believe what I had just heard, and I calculated the terms myself on my computer. In another five years, I will have paid off this loan at 4.5%, only adding another $4,000.00 to the rate. I will still have paid $22,000.00 in terms on the original $38,000.00 loan, but I don’t feel so bad now that I’ve been told the remaining terms are “fixed” at 4.5%. In fact, I feel as if I’ve won the lottery!

  This doesn’t mean I’m going to be any less frugal than I have been since I moved. I’ll still be “brownbagging” at work at least three times a week, and still preparing my own meals on weekends. I hope to get into a situation where I can, first, begin to pay down my overdraft account, releasing more cashflow into my coffers each week. As I pay down the other two credit cards on which I owe ($2600.00 on one, and $1200.00 on another), I should have more cash to save each week. That savings will hopefully eventually get me a new paint job and brakes on my car, and hopefully eventually get me an enclosed porch on my mobile home.

  For now, life is good. If only we’d get some more sales at work, so the overall atmosphere there would become more positive. Last time I  blogged, I mentioned I’ve been going down to our community pool. I usually go for three hours each weekend day, and perhaps two or three late afternoons a week after work. I’m working on a pretty nice tan, and as the days pass, my leg gets stronger and stronger. I can even walk straight without the crutch, but I won’t put it aside altogether until I see my doctor in two weeks.

  I’ve been making “five year plans” for a while. My last plan included getting into the senior mobile home in which I now live. In five more years, I will be completely debt free. (barring any unforseen problems, which might arrive). I should be able to pay off the 401k loan I borrowed to put the down payment on the mobile home. I should be able to pay off the mortgage, and now, I should be able to pay off the mammoth credit card consolidation loan. Of course I can’t go out and buy anything, but I have enough to be thankful for, and don’t need anything else right now. In five years, I’ll be 61 years old. Not a bad age to begin travelling! Maybe I’ll even get a raise by then!

  • 9:41 am
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