Dave Ramsey mentioned this later on a recent podcast episode (which could have been a repeat) and so I looked it up.  It can be found online in a collection of his writings here.  However, I thought you might like to read the letter because it is quite interesting to see Abe’s approach to helping his family.

Dear Johnston, Your request for eighty dollars I do not think it best to
comply with now. At the various times when I have helped you a little
you have said to me, “We can get along very well now”; but in a very
short time I find you in the same difficulty again. Now, this can only
happen by some defect in your conduct. What that defect is, I think I
know. You are not lazy, and still you are an idler. I doubt whether,
since I saw you, you have done a good whole day’s work in any one day.
You do not very much dislike to work, and still you do not work much,
merely because it does not seem to you that you could get much for it.
This habit of uselessly wasting time is the whole difficulty; it is
vastly important to you, and still more so to your children, that you
should break the habit. It is more important to them, because they have
longer to live, and can keep out of an idle habit before they are in it,
easier than they can get out after they are in.

You are now in need of some money; and what I propose is, that you shall
go to work, “tooth and nail,” for somebody who will give you money for
it. Let father and your boys take charge of your things at home,
prepare for a crop, and make the crop, and you go to work for the best
money wages, or in discharge of any debt you owe, that you can get; and,
to secure you a fair reward for your labour, I now promise you, that for
every dollar you will, between this and the first of May, get for your
own labour, either in money or as your own indebtedness, I will then
give you one other dollar. By this, if you hire yourself at ten dollars
a month, from me you will get ten more, making twenty dollars a month
for your work. In this I do not mean you shall go off to St. Louis, or
the lead mines, or the gold mines in California, but I mean for you to
go at it for the best wages you can get close to home in Coles County.
Now, if you will do this, you will be soon out of debt, and, what is
better, you will have a habit that will keep you from getting in debt
again. But, if I should now clear you out of debt, next year you would
be just as deep in as ever. You say you would almost give your place in
heaven for seventy or eighty dollars. Then you value your place in
heaven very cheap, for I am sure you can, with the offer I make, get the
seventy or eighty dollars for four or five months’ work. You say if I
will furnish you the money you will deed me the land, and, if you don’t
pay the money back, you will deliver possession. Nonsense! If you can’t
now live with the land, how will you then live without it? You have
always been kind to me, and I do not mean to be unkind to you. On the
contrary, if you will but follow my advice, you will find it worth more
than eighty times eighty dollars to you.

I guess we could call this a guest post by Abraham Lincoln

If you’re a newer reader you may not be familiar with the Credit Rate Reduction Rally.  One of the purposes behind the rally was to build a movement that is about optimizing interest rates for people paying off debt.  In my case doing this on one of our cards reduced the interest we’re paying per month (which also includes a lower balance from making payments) by $125.00 a month.  That would be like saving roughly $1,400.00 in one year’s time [calculated loosely with the assumption of a reducing balance with minimum payments].  Or three Nintendo Wii’s, several car payments, a very, very nice bottle of wine, a Mac Book with memory upgrade, or a nice donation to a charity.

Have you sat down and calculated how much money you might save by getting your interest rates reduced?  Be persistent, be consistent, and make them change your interest rate.  It could change your future!

I will more than likely enjoy my economic stimulation check for all of two seconds as I flip it over, sign it, and then cash it in at my bank.  Upon actually receiving the funds in my account it will go towards paying off my debt.  The ‘fun’ of the spending money will be gone in a flash, but the excitement of being that much close to debt free is there.  In fact last night I got paid for some work and that money is going straight into the debt snowball.  Five hundy down in all principal since I’ve already made the normal monthly payment on  the Disguster Discover card.  It is this kind of extra payments that are exciting, but at the same time are a monument to my folly.

There are very few things in life that don’t come with lessons, but when they kick your pocketbook, the lessons feel a little more like sandpaper than satin.  I’ve found that each check gets me closer to the short term goal of debt paid off, but serve as a reminder, as I sign them,  that I’m signing off on the consequences of my previous stupidity.  I don’t say that to be melancholy, but more to emphasize that I recognize the consequences of past actions, and in the future, as I sign other checks after having my debt paid off, I’ll be signing them as a monument to where I’ve been, where I’m going, and to help build the foundation of the long term goal: financial independence.

Do you care about your economic stimulation check’s arrival date?  I figure that a few months difference in interest payments can be somewhat important, but the short term difference to me is insignificant.

If you’ve seen the television show ‘House’ then you’ve probably heard the lines about everyone lying.  In each episode something goes wrong with some patient and they have to find out what is causing the ailment.  Often the problem has to be ‘dug’ into and they have to find out who is lying about information so that they can get to the truth of the problem.  They don’t take ‘no’ from anyone.

If you have tried to get a lower interest rate from a credit card company and they’ve said no to lowering your rate and you’re paying anything like 18%: they’re lying.  Don’t take no for an answer.  Dig deeper.  Go up the chain of command until you’re speaking to Warren Buffet’s cousin.  Get to the person who can and will say yes.  Don’t put it off, don’t delay, call now.  Get a lower rate and save yourself some big cash!

Excuses that drones at the card companies will use include:

• Your rate is the best we can do - that is not possible
• Your account has been locked for rate reductions because of late payments - this is a totally bogus issue that is policy.  Policy that can be over-ridden by a higher up manager
• Your card offers you rewards, those rewards are funded by your interest rate - bull pucky.  Those rewards are paid for by any number of things - but the interest rate doesn’t fix things.  If you have to switch card companies now may be the time to do it

Kick the credit card interest rates in the butt.  We got our interest rates dropped twice and each time they dropped the rate we saved $50.o0 in interest per month!  Of course we’ve got enough debt that we’re paying a lot anyway.  However, getting the lower rate will help us pay it off faster.

I interviewed a buddy, “John” who was willing to talk to me about a bout with “Pay-Day” loans and lessons learned. Check out the audio podcast to learn more.

Pay Day Loans 4.5MB requires iTunes or Quicktime to listen to.

We’re on the second to last day of the Credit Rate Reduction Rally - tomorrow I’ll cover what to do if your reduction attempt failed - but today we’ll look at reasons not to participate if you’re sitting on the fence.

You’re already getting zero percent interest -  If you’re already getting a special interest rate then this isn’t for you.  Clearly you’ll need to jump onto the bandwagon when those rates jump up at the end of your ‘interest free’ period.  Kudos for your great rate and keep it up.

You like giving your money to others - If you love paying money to others for ’services’ rendered in the past this is great - but I’d suggest giving your money away to charities that could use it for better things than lining credit card company wallets.

You pay off your credit card every month - This one is a double edged sword.  If you do pay it off every month and have the discipline to do so, great, but its still good to make sure that you’re getting the very best rate possible.  That way if you accidentally let a balance roll over you’re not going to get hit with as high a finance charge.

The last, faux reason would be that you hate being on the phone with the people in charge of taking these sorts of phone calls.  Get past your concern and save yourself a buck or seventy and get this taken care of.  If you could invest that money laster instead of paying it now, you’d be much better off!

Since this week is the Credit Rate Reduction Rally I wanted to explore, each day, one of the areas that the rally touches on.  You can imagine that credit card companies are in the business of making money off of your spending money.  Each time you spend money on your credit card and carry a balance for the specified period of time, your card company will charge you interest.  There are three way that the credit card companies may calculate interest: Average Daily Balance, Adjusted Balance, and Two Cycle Balance [see: How Does Your Credit Card Calculate Interest].  Since Average Daily Balance is common, we’ll assume that your credit cards use this method, but check your agreement, it could be different.

Given that there are multiple variables, we’re going to save time to present a principle: Lowered interest rates can save you huge amounts of money, even if you pay off a loan in the same standard amount of time.  Below is a chart that outlines this principle.

The other side of lower interest rates is that you can pay off the loans faster at a higher payment per month.  For example, the chart below shows that the payment is nearly identical for all three loans, but that the time period for paying off the loan is significantly faster with the lower interest rate.

The other side of paying off the loan faster is that you’ve also paid less interest, which means more of your money later on to do what you want with, for example investing, which works in the inverse: the higher interest you earn, the greater the return on the investment.  Think of interest rates as reverse investing: the more you pay, the more others are making off of you.  Their investment was the initial cash and patience with time, their return could be thousands of dollars.

If you’re new to the Watch My Money Maker blog you’re possibly not familiar with the Credit Rate Reduction Rally that is taking place next month.  From January 7th through 11th the world is invited to get blogging, posting, thinking, calling and making change to their credit card interest rates for the better.  Not everyone is aware of the fact that they can often negotiate lower interest rates for credit card debt.  Card companies make good money on charging interest, but they’d rather have you pay the cards off than leave them hanging with bad debt (even if later they come back with collection agencies).

Take a moment to check out the Credit Rate Reduction Rally homepage and consider blogging it yourself.  Or better yet: tell a friend.

If you have a blog and want to participate in the Credit Rate Reduction Rally please email me at randy@watchmymoneymaker.com and I’ll get a custom banner made for you. Instead of saying “Joe or Jane Consumer” it will have your blog’s name, or your name, on it. It may take me a few days to churn the logos out, but I’m sure that a custom banner will help you and your readers get excited and help spread the word!

You can see examples of the banners and read more about the Rally here.

If you’ve embraced the old maxim, “Ignorance is bliss.” then you’re possibly wrong.  You see not so long ago my wife and I were a bit distressed because we had debt of an unknown amount and bills coming in of unknown amounts kicking my sorry bum at unknown times.  Basically our ignorance of our financial state kept us spending with credit cards, panicking over those bills, and wondering where all our money was going.  We were ignorant and in despair.

However, after going over a very, very thorough plan of our budget we discovered that we had a lot more money left over if we were disciplined and that we could tackle the debt issue.  What you have to do is find out where you’re at so that you don’t step onto any land mines.  Just like the Windows game “Mine Sweeper” we were clicking in the dark with fear that we might be clicking on an explosive month with more month than money.  Now we’ve got a goal, peace and a plan.

If you’re frustrated with bills, now is the time to get ahead.  I’d strongly recommend reading “Your Total Money Makeover” by Dave Ramsey if you want a good plan and some motivation.