Beverly Harzog is a nationally recognized credit card expert and consumer finance analyst for U.S. News & World Report. She's also the bestselling and award-winning author of five personal finance books. You can read her columns and see her US News interviews and videos here.
Her expert advice has been featured in thousands of media outlets, including TV, radio, print, and major websites. She’s appeared on Fox News, CNN Newsource, NBC New York, NY1, ABC New York, NBC NY, ABC News Radio, Bloomberg Radio, and more.
In this conversation, we discuss how people can improve their credit scores to help get lower interest rates on major purchases. We also discuss how to stay out of debt and be prepared for unexpected expenses. I've found Beverly's finance columns to be very helpful and practical. Check them out here:
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Stephanie Nelson, Host (00:00):
Well, I would like to welcome my friend Beverly Harza to the Pivotal People Podcast today. I'm so excited she's with us. I reached out to her and asked if she could come on. She is a national media personality, but we met each other years ago and she remembered who I was. So she's here today. It's a privilege to have her. She let me tell you who she is. She is one of the country's biggest credit card experts. She's a bestselling author, she's a columnist for US News and World Report, along with other online media publications. She has been on national news many times as a credit expert. She's has been written in the Wall Street Journal, she's been on C nnn, she's been on Fox News and also U S A today in New York Times. So she's the real deal. I'm so thankful you're here. Thanks for joining us Beverly.
Beverly Harzog, Guest (00:49):
Thanks so much for having me, Stephan. I am delighted to be here.
Stephanie Nelson, Host (00:51):
Well, I wanna tell you what really got me to reach out to you because I subscribe to her newsletter. Everyone should go to beverly harza.com, subscribe to her newsletter because she writes for us News and World Report. She has excellent articles that come out on a regular basis. And the one that grabbed me was an article that she wrote in response to a survey done in April that said 49% of Americans are experiencing high financial anxiety right now. Now that's not a surprise to anyone, but the reason I asked her to come on is because she had some really good advice about how we can deal with that and how we can manage credit in our lives and how we can manage finances so that we don't have this crippling anxiety. Some of the details of the survey, the number one reason we have financial anxiety is because of high prices. Right, Beverly. So
Beverly Harzog, Guest (01:46):
Stephanie Nelson, Host (01:47):
And what were some of the other insights you got from this survey? And you've been doing, Beverly's been doing this for decades. So are you seeing an increase in financial anxiety today as compared to past years?
Beverly Harzog, Guest (02:01):
Stephanie, I have definitely seen an increase in financial anxiety. And I think one of the reasons, as was indicated in our survey or the high prices, you know, you know, job salaries, our income hasn't really kept up with the rate of inflation. So what people are experiencing is that they can't meet their monthly obligations. And when you've got high prices, you know, on just your essential items like food and gas purchases, it's really hard to get ahead. So I think a lot of this creates anxiety. Another thing we found in that same survey was that over half, didn't you have an emergency fund? Not any emergency fund. And so, you know, if you're dealing with high prices, you're having trouble, you know, meeting your monthly expenses and you don't have an emergency fund, well that's gonna make your anxiety even higher. So if you just have that little safety net that can help a little bit.
Stephanie Nelson, Host (02:59):
What kind of emergency fund do you recommend and what are we talking about? Thousands and thousands of dollars or,
Beverly Harzog, Guest (03:04):
Well, you know, if you don't have one at all, I don't want anyone to freak out about that. You can start this week, you can start today with something small. You know, even if it's just $20, start putting it away when you can. If you could do $20 a week, if it's only $10 a week, just get started. You know? And as you start to build up this fund, you're going to feel so much better because you know that, you know, if an emergency happens, you're going to be able to cover it. Now your first goal should be to have an emergency fund that covers about a month's worth of expenses. And of course that's gonna be different for everyone. You know, if you're a family of five, you're going to need a much higher number than if you are a single person. So think about how much you spend every month and you've got a budget.
You know, that's really a good start. Have a budget and you'll be able to gauge your expenses, see how much you spend on different items, and perhaps cut back on some areas where, you know, we call them discretionary expenses. You know, like getting a pedicure <laugh>, which I like to do <laugh>. So, but you can cut back, you know, maybe you don't do a pedicure every week. Maybe you do one every other week and you've got a little bit of money there that you could put into an emergency fund so you don't have to give up everything you love. I actually don't support that because, you know, I remember years ago I gave up chocolate for like three weeks and I thought, you know, I'm done with chocolate <laugh> and then I went on a chocolate binge for another three weeks <laugh>. So, so you know, you have to have some treats for yourself and only you can decide what those treats are. So have a little bit of something for yourself, you know, just, you know, in the, in the name of self-care, you do need to treat yourself well, but where you can cut expenses, do so, and then you can use that extra money to start on your emergency fund.
Stephanie Nelson, Host (04:59):
There's also substitutions. I've always loved the whole subject of frugality. So a trend, you know, a, a real issue today is online shopping. I mean real, it's way too easy to get something from Amazon in five hours. And I mean, it's convenient, it's easy. I see my kids do it. It's one thing you had a little bit of a barrier when you had to drive to the mall and park, but when we can just go to our computer. So it's one of the things that the survey showed is that when people experience financial anxiety, one of the ways to soothe ourselves is to do emotional purchases, is to do retail therapy. So the very thing that is causing financial anxiety is what we resort to, to feel better. There is so much psychology behind money, it's not even rational or practical. But then the reality is, and this is what scares the heck outta me, is that people have mounting credit card debt. It's way too easy to get a credit card and this is your expertise. You know how to avoid credit card debt, how to use credit wisely, because it's not necessarily an evil if we use it well. And then thirdly, how to get out of credit card debt.
Beverly Harzog, Guest (06:13):
Yeah, all great points. Stephanie. You know, retail therapy is a, a topic I've covered a lot because you know, money and emotions are so closely tied together. You know, when I was in my twenties, I'd just gotten outta college and I got into terrible credit card debt as a young person, you know, I was actually a C P A <laugh> at the time, you know, because credit is not intuitive. You know, anyone, no matter how educated you are, anyone can get into credit card debt, you know, so it's very important that you learn how to use credit cards responsibly. Now you mentioned retail therapy. And this is a topic that I do like to talk about because it is so emotionally connected. And you know, we did find in that survey that, you know, as you pointed out, you know, people turn to the thing that's causing their anxiety because it's a quick fix.
You know, you get that little adrenaline rush and you're excited, you bought something for yourself. And when you do it online, there's a disconnect. You don't even have to touch your credit card. So you know, you're not really making, you know, a conscious connection with what you're doing. And so that's why it's so easy to just sit there and, you know, buy things and feel better. And then when you get the statement, it doesn't feel good anymore. So what you can do and this is what I do, actually, you can, you know, when you online in your shopping, you know, go ahead and get your shopping card if it's something you think you want. And then let it sit for a little bit. Don't make instant purchases. And I've actually done this in person at stores several years ago I wanted a pair of boots at Macy's and I didn't really need to, but they were so pretty <laugh>.
So I put them on hold and I thought, I'll come back tomorrow if I really want these boots and it's worth the money and I really think, you know, it's gonna fit in, you know, with my wardrobe, I'll come back and get it. You know what, I didn't go back and get it because after I got away from it and you know, I looked at the shoes I already had, I thought, I really don't need that <laugh>. And so it works in person and it works online, just that shopping cart there for a little bit. And I mentioned already budgets, it's so important. And if you have credit cards, and I do believe that credit cards can be a great money management tool. You know, you need to have great credit. There are some experts that say you don't need credit at all. And I just respectfully disagree with that because you know, if you wanna buy a house or if you have an emergency, if you have great credit, you're gonna be able to get the lowest interest rates.
So, you know, I think it's very important. I don't, you know, support, you know, using credit cards and carried balance. You know, in a recent survey we found that many people believed that you have to carry a balance to earn a great score. And that's not true. You could earn a great credit score for free. All you have to do is, you know, use your credit card, pay the balance in full by the due date, and you're using credit cards to your advantage. And if you're using a rewards credit card, you've earned rewards that you can use to redeem for great things. You know, if you use cards strategically. But that's the essence of using card responsibly. And as I've mentioned, you know, it's good to have some treats for yourself, but put that in your budget. I call it in my budget, I call it a budgeted splurge. So I have a little amount set aside every month for me to just do something for myself. And that helps me, you know, avoid, you know, impulsive purchases. Cause I think that gets people into trouble too.
Stephanie Nelson, Host (09:51):
Well, if we were to look at the actual interest that someone who's carrying, if you have credit card balance, the actual interest that you're paying each month is, you know, flushing money down the drain. If you were to avoid having the credit card balance, you can actually look at a little bit of that unwasted money as something you could spend on yourself. So if when I went from my experience was going from working to not working and seeing that, the challenge is to, you know, stand back and say, okay, what is prompting this purchase that I have in my mind? Do I need it? Do I want it? As Dave Ramsey says, you know, I spent all my money buying stuff to, I don't need to impress people. I don't like <laugh>. Do I really need that? And if you stand back and say, or is there a clever way to find a substitute?
And I can remember when we had no extra money, my substitute for shopping was going to garage sales. It's a treasure hunt. And they were, on Saturdays, you would find something for 50 cents, you would buy books for 25 cents. And that was the other thing was I discovered the library. Wow, you get all these free books, you return 'em in a few weeks. And so there are a number of ways that people can be clever without depriving yourself. And these days you can get free eBooks from the library website. And there are all kinds of ways to be clever if you want to be, make that turn your in intellectual challenge to what you can get free or, or really inexpensively to kind of satisfy that retail therapy thing.
Beverly Harzog, Guest (11:27):
Yeah, those are, those are great points. I love your garage sale idea. I might go this Saturday <laugh> and do a garage sale. I'm excited now about that possibility.
Stephanie Nelson, Host (11:37):No, this point in my life, I need to have a garage sale and get rid of all the stuff I have
Beverly Harzog, Guest (11:41):
<Laugh>, I'll come to your garage. Now, <laugh>,
One thing I've started doing recently is I started checking out programs like Rakuten. Okay. And I've been getting checks month <laugh> and I only, you know, I, I use the cash back I get from Rakuten, you know, if you have it, you know, when when you're in a browser it'll pop up and say, do you want like 2%, 3%, or I've even gotten 8% cash back on your purchase with a particular store. And so this is just something extra I started doing just to check it out. And you know, I'm getting checks like 25, $30 a month. That's not a lot, but that's money for me. <Laugh>.
Stephanie Nelson, Host (12:21):
Well I do agree. If you have to shop online, if you have to shop, you should always do it. Okay? Look online because that's how you get what Beverly's talking about. Cash back offers. You can get them from, I bought a Rakuten retell me not. And capital One has a really good one. You wanna have a browser, you wanna have their app on your browser so that when you're on a site it does pop up and say what you could be getting. And you also wanna search for an online coupon code. You can combine those. And if you have a rebate credit card, I have a 2% one, you pay for it with that. But you have to be careful that you're not saving so much, you're spending so much, right?
Beverly Harzog, Guest (13:00):
Stephanie Nelson, Host (13:01):
I found this great deal. I, you know, ive spent a million dollars in great deals, so it's all a balance. So back to the whole idea of new information to me about credit scores and how to improve your credit score. One of your articles made a really good point that you don't wanna wait until you need to know what your credit score is to look at it. So for example, suppose you know you're gonna wanna buy a house and you wanna get a, the lowest possible mortgage rate possible. You need to look at your credit score and understand what can hurt it and what can help it far in advance. And then there are a number of places where you can check your credit score free. So can you kind of give us some tips on what we can do to help it? What hurts it? And you know, how far ahead of time should we really start monitoring it?
Beverly Harzog, Guest (13:47):
Great questions. And particularly now with mortgage rates, you know rising above 7%, you know, it's really important to have a great score. Now if you're planning on getting a mortgage or even just buying a car and you're gonna need to finance part of it, or even a new credit card, let's say you've got your eyes on a rewards credit card and you know you're gonna earn a lot of rewards, but you have to have a great score for that. You know, start a couple of months ahead of time depending on where you are. You know, if you're rebuilding your credit, you know, you might wanna give yourself six months to a year to actually get into a good credit score range. And you don't need a perfect score, which is eight 50. If you can get your PCO score up to around a seven 60, you should qualify for the lowest interest rate.
So that should be your target, you know, and one of the ways to do that is to use a credit card responsibly. We talked about that. And don't carry a balance. You know, when you start carrying a balance that becomes your new normal. That's what happened to me many years ago. And you think I'm gonna do this for one or two cuz this is something I need. And sometimes, you know, it's, it's something practical. You know, you need a car repairs or something like that. But once it gets a little bit out of control, you've got compound interest on credit cards, you know, and with your savings account, that's a good thing. But it is not good with credit cards. And that's why I say never carry a balance. But the other part is, okay, you've got this thing called a credit utilization ratio. Now that's the amount of credit you've used compared to the amount you have available.
Now, if you get that ratio above 30% just to, to make this sim I'm gonna use the simple math example here. Let's say your credit limit is a thousand dollars. You don't want your balance to get above $300. That's 30%. Okay? And if you start carrying a balance high, well e, even during the month higher than that 30%, it can impact your score in a negative way. So if you're carrying low balances on your credit cards throughout the month and then pay it in full, that's great for your score. Another way you can increase your score in a hurry is, and this only works if you've been, you know, a great credit card holder and I mean you pay your bills on time and you're not running up your credit cards or you know, as we like to say, maxing them out. You're not doing that because you don't wanna call attention to yourself if you're not doing a great job.
<Laugh>, I've seen this backfire on people where they've, it's, I used to go to this doctor who would always ask me questions about credit <laugh> and he told me, he said, I called my credit card issue and asked for a credit limit increase. And they said, because I had been sloppy with payments, they lowered my credit limit <laugh>. So that is a possibility. So be sure you're in good shape, you know, in terms of just making payments on time. But you can ask for a credit limit increase and then that increases the amount of available credit you have. So instead of that thousand dollars credit limit, now you've got 1500. So that can help your score in a hurry. But mostly to avoid credit card debt, that's when it's really, really difficult to have a great score. But there are also ways to get out of credit card debt, you know, and as you see your credit card debt going down, you will see your score go up as long as you're not using that credit card for new purchases. That's very important.
Stephanie Nelson, Host (17:12):
So I actually had a family member who told me recently that if you had $10,000 in credit card debt, like you'd actually spent 10,000. So that's before any interest is added. And if you were to simply pay the minimum payment over the entire life of that, you would actually, it would be costing you $45,000 or those numbers skewed.
Beverly Harzog, Guest (17:35):
That sounds about right. Okay. And it, it'll probably take you 30 years or more <laugh>, so yeah, yeah, you don't ever want that to happen to you. But you know, if you wanna talk about credit card debt for a minute, you know, the $10,000 balance, that's a, that's a good starting point to talk about debt because you know, we just talked about credit scores. If you still have a pretty good score and if you've had credit for a while, you probably have big credit limits. So you can still have a good credit score, even if you have credit card debt, that's a possibility. If you're in that situation, you can consider a balance transfer credit card and if your limit is high enough, you can transfer that $10,000 in credit card debt to the new balance transfer card and pay zero interest on that for a certain amount of time. Right now the highest I'm seeing is almost two years around 21 months. So that's a good way to get out of credit card debt if you've gotten yourself into credit card debt. You know, there are a couple of ways to get out of it. Yeah. So I know people get depressed and they, they think I'm never gonna get out of this, but there, there are some steps to take.
Stephanie Nelson, Host (18:42):
So what I hear you saying is if you're, you know, wise and if you do a very good job tracking it, yes that would definitely be a smart strategy for, you know, these offers are out there, 0% interest for a certain period of time and I would suggest literally having a spreadsheet to note the dates. I would put those dates on your calendar, set an alarm, whatever you have to do. Because I'm gonna tell you a quick story of someone who I know who tried this but did not, she was not financially literate, so she was unemployed due to illness, she couldn't work. So she was leaning on her credit cards. She had never had credit card balances in the past. She'd always paid 'em off. But I think it's very tempting when you get something in the mail that says 0% balance transfer a very useful tool if you use it correctly and you stay on top of it. But in her case today after a year she has 12 credit cards, $65,000 in debt, no income and doesn't know what to do. So we're kind of walking through that with her. That was a lesson for me to say how easy it is for us to fall prey to advertising. And as you said, you know, so many people are not financially literate, but we, this is why we have to read Beverly's articles because she is telling us everything we should know.
Beverly Harzog, Guest (20:03):
<Laugh>. Yeah, that story is a nightmare. Okay. And one thing I talk about when, when I get into balance transfer credit cards is you have to stop using your credit cards. All of them don't use a credit card for anything until you're out of debt. That balance transfer card is only for getting out of debt. And sometimes you're right, people get pulled into the advertising and the offers, you know, very often you'll see a balance transfer credit card that also has a 0% a p R on purchases. So you're thinking I can use this card for new purchases and not pay interest. But you know what, you're still increasing the amount that you have to pay back. So, you know, my biggest advice with the balance transfer card is do not use that card for any new purchases. This is a golden opportunity to get out of debt, focus on that. And you know, when you're out of debt then you can use that card for things that you need <laugh>.
Stephanie Nelson, Host (21:04):
That is great advice. I mean, honestly that is, like you said, credit is not intuitive. Yeah, I would've thought just the opposite. I would've thought, hey, there's 0% interest on all new purchases, this is the card I should be using. Mm-Hmm. <affirmative>. So that's really great advice. I appreciate that. So I guess back to your, the survey that you wrote about the 49% of Americans with financial anxiety. You talked about how to get out of financial anxiety. You've covered a couple of these already, improve your credit score, but some of the other things you said that I thought were really helpful, getting a new job or getting a side hustle. I mean so many times we're telling our kids in the twenties, I'm guilty of this <laugh>, follow your dream. What's your passion? It doesn't matter how much money you make, it just matters if you found your purpose.
I've heard Dave Ramsey said, baloney, you know what, you need to pay your bills. Just get a job, pay your bills. My dad said this to me when I wanted to follow my dream and have a low paying job in my twenties. He's like, Hey, you know what, you can follow your dream as a hobby, but you need to pay your bills and there's no more money coming from me. And it made me get a new job with a higher rate of pay that led to meeting my husband. So the whole thing worked out, but sometimes we had to face reality, you know? So talk to me quickly about finding a new job or getting a side hustle, bringing in more money. Sure.
Beverly Harzog, Guest (22:22):
You know, when I was in debt, one of the things I did was I asked for a raise and I did not get it <laugh>. So I decided, you know, I really knew that I was underpaid. And so I started looking for a new job and I did get a new job with higher pay and that helped me a great deal and I was very careful with that extra money. I considered it as, you know, just money that was for my debt. And so I took all of that extra money, I made up my new job and paid off my debt. I was around $21,000 in debt and that was a lot, you know, back when I was in debt. And it took me about two years, you know, I cut back on everything and we've talked a lot about self-care and one thing I did, exercise is very important to me.
And if you're in debt, I really recommend exercising. You don't have to do it in an expensive way. You can just walk around the block, you know, do anything. It just helps you deal with the stress because physical a elements come with that stress. I had headaches all the time and upset stomach, you know, so exercise helped me and I was a member of a a health club. I didn't need to spend that much. So I downsized that to a local gym and saved a whole lot of money. All that extra money went to pay off my debt. So there are a lot of things you can do, you know, when you get a new job that actually pays you your worth. Okay. And another thing is a side hustle. I've had lots of friends over the years who got side hustles to pay off their debt.
I've also got friends like even now who have their passion. And like you said, you know, you can follow your passion, but it doesn't necessarily pay the bills. I also told my kids, do what you love <laugh>. Yeah. You know, and my daughter was gonna major in drama and, and you know, I was getting a little worried about it, but she ended up changing to business about halfway through <laugh>. So I'm like, whew, <laugh>, you know, but she did, she still enjoys drama as a hobby. But you know, you've got a side hustle and you've got a passion. Make that your side hustle. And if you wanna make that your full-time job someday, that's fine, but you've gotta work up to that. It can't just happen, you know, you've gotta find a niche and you've got to work hard to make that happen.
I mean, I feel like I am doing absolutely what I love to do. You know, I'm very passionate about financial literacy and helping consumers stay out of trouble with credit. But you, this didn't happen overnight. You know, I worked on this for decades, <laugh> to get to where, you know, this is something that I can do full-time. So side hustles are great, whether you're just paying off debt or you're working towards, you know, a more, more contentment in your working life. And I also think if you've got a job and you're not happy, that's going to impact other areas of your life as well. So maybe on the side you can start working towards something that would bring you more satisfaction and more contentment in life.
Stephanie Nelson, Host (25:20):
I love that. I love that. I'm almost 60 and my side hustle ended up turning into a career, but it was a hobby for three years. It's so easy to fall victim to the mentality of I have to be successful immediately. When in fact that time of a side hustle is great incubation, it's great learning and you don't have the risk because as you said, it's a side hustle. So it's just a matter of where are you gonna get the time. And I think there's plenty of things that we all do that we could probably spend a little less time doing, maybe watching TV or social media. I'm talking to myself here, <laugh>. So lots of opportunities. I just wanna thank you so much for spending your time with us. I have learned a lot. I am sure our listeners have too. And I hope we can have you back on because this is always gonna be a topic that we need to learn about.
Beverly Harzog, Guest (26:11):
Well, thank you Stephanie. I also have a book called the Debt Escape Plan. If anybody has credit card debt and they need to work on that, it's on Amazon
Stephanie Nelson, Host (26:19):
And it's a bestseller. I forgot to say that. It is, it came out years ago and it's still a bestseller.
Beverly Harzog, Guest (26:25):
And it won an award from the American Society of Journalists and Authors. I used to be a member of that. Oh. in the self-help category. So I hope somebody finds it helpful.
Stephanie Nelson, Host (26:34):
The debt escape plan, the debt, everyone needs that. I'll put the information our, in our show notes. That's just one of her books. She has other books on her website, beverly herzog.com. You can get her newsletter and you can also find her articles from us News and World Report, regular articles that come out on really timely topics. So I'd, I'd encourage you to go there. Thank you so much and keep up the great work.
Beverly Harzog, Guest (26:59):
Thank you Stephanie. Same to you. I love your site coupon, mom. I've used it so many times. Thank you. Thanks for having me on.