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Tips for Making Early Retirement a Reality

2010-03-26T07:02:00.001-07:00

For years people have been conditioned to think that retirement starts once you’ve hit the age of 65. Today people would prefer to retire while they’re still young enough to enjoy it. These tips for making early retirement a reality might help you retire a few years early, too.

One thing anyone considering early retirement will have to do is to live frugally. You can’t expect to be able to save a good deal of your income if you’re spending every penny you make. Choose to live well below your means now and you’ll have a better chance of saving enough to retire early in the future.

Do you really need the newest car on the market? If you’re thinking about retiring early, a good, used car will probably be just as good. Not only will you save money on the car itself, but you’ll probably also save money on the insurance for it, as well.

If you’re buying a home, consider paying at least one extra mortgage payment toward principal each year. By making just one extra principle payment per year, you can shorten the length of your loan by a good bit, saving you a considerable amount in interest alone.

Besides not spending all your money each pay period, you will also want to put some of those savings to work for you. At the age of 20, if you’re able to keep out 20% of your yearly income, place it into a fund that follows the S&P 500 Index, and leave the money to grow long-term, you could feasibly retire around the age of 40. Of course, the more money you can place into a fund like this, the better off your retirement portfolio will look.

To help these tips on making early retirement a reality along, you might consider having the amount you’ve decided to save taken out of your paycheck and automatically deposited into a savings plan. Check with a Certified Public Accountant or Financial Counselor to help you make the necessary arrangements.

Of course, you’ll want to participate in the 401(k) at your place of business. This will be an additional savings plan. Your employer may match your contributions, but the amount they contribute will be much less than you would like. Any extra they contribute will help meet your retirement goals, however.

You might also consider putting money into a ROTH Individual Retirement Account. The Roth IRA has a limit on how much you can save per year. You will also have to pay a 10% penalty if you retire earlier than 59 ½. If you retire after that age, any funds you have saved will be penalty-free when you make the withdrawal.

Although these tips for making early retirement a reality aren’t going to guarantee that you’ll have a sizeable nest egg, they might give you ideas of what you can do to start saving a little bit more. Who knows, with some planning and saving, you may be able to retire earlier than you originally thought.

Live Within Your Means and Budget!

2010-02-07T08:49:00.001-07:00

The basic premise behind a budget is that the income has to exceed the expenses. It there is a deficit, then you either have to cut your spending or increase your income. Continuing on a deficit path will only lead to an eventual crash. It all has to start with a budget. It is important to get an understanding of what you are making and what you are spending so that you can bring it into balance.

Set your priorities. If you have to have two cars then choose a smaller house. If you have to have a large house then you could choose one in the country (where prices are lower). If you have to have cable then subscribe to the smallest package possible. If you have to have an addition on your home then shop around for the best company at the best price to do the work (or find one that will let you do it a step at a time).

Tackle the credit and debt that already exists in your life, but start by committing to NO MORE! As you pay off one debt, take the money that would have gone to it and apply the money to your next debt. When you are debt free, the extra money you have each month could be overwhelming.

Find ways to make more money doing things that you enjoy (sewing, writing, gardening or babysitting), or take a seasonal job to save for specific needs. Taking a special job during the Christmas holidays, even for just a few weeks, could give you the money you need for your holiday spending. You could also use any extra income to pay off your debts or to start an emergency savings fund.

No amount of frugal mindset or thrifty thinking will help if you are spending more than you bring in. This is one action that is best remedied immediately. If you want to have a future that is financially bright, then it is very important to develop a plan that has you bringing in more money than you spend. Putting together a budget, setting priorities, eliminating debt and bringing in more money are all steps to getting your finances in the right balance.

Five Places in Your Life to Live Frugally and Save

2010-02-03T13:31:00.001-07:00

Frugal living does not have to be about a life of depravation. The frugal life is one of thrifty shopping, careful choices, and a saving mindset. Making just a few adjustments in five areas of your normal life will help you become a frugal person.

Groceries are one of the most expensive items on any budget. Be sure to take a list with you to the grocery store; this will help to cut back on impulse items. If you are still concerned, then why not take a friend shopping with you. Exchange lists at the store and each of you can gather up the other's groceries, virtually eliminating all impulses. And don’t forget to cut out coupons. It may take some time, but it will add up in the end.

Frugal people still vacation, they just do it wisely. You can really stretch the vacation dollars by traveling during the shoulder season or off-season, although it's a good idea to check to see if local attractions will be open if you want to attend. Since much of a vacation budget goes to housing, why not spend your vacation visiting family? There is the joy of bonding with relatives, but you also get to stay for free.

Being frugal doesn’t mean that you have to stay home all the time. If you do a little looking around, you are sure to find that many of the museums, zoos, botanical gardens and other places offer free or discount days. For those that don’t offer the free days you can check to see if a group discount is available and then call up your other frugal friends for an outing. For movie nights, check with the local library to see if they have movies available to check out. There are lots for you to do, and you can do much of it without ever spending a dime.

Clothing is one of those items that civilized society has deemed necessary. The clothing manufacturers, who realize our dilemma, often charge outrageous prices. Buying out of season (buying winter clothes in the summer and vice versa) will help to cut this item in your budget. Instead of buying new, check out your local thrift store or second-hand store where prices are a fraction of the retail (and sometimes the clothes still have the original tags). An even better way is to just trade with friends. Hand-me-downs are the frugal person’s best friend.

One item that it is not always wise to buy new is the automobile. While there is nothing wrong with having a nice car, if you can’t pay for it with cash then it is probably not worth it. Drive what you have while you save up, and then purchase with cash. Just having the money in hand will give you a lot of negotiating power. Today, many of the used car dealers include some type of warranty with their cars, making the purchase even more secure.

The frugal lifestyle can be more enjoyable than any other. There is money for the things you truly want to do and there is no worry about how the bills will be paid each month. By being a little thrifty here and there, by thinking about your choices before you make them, and by developing a mindset of savings, you can live a fulfilled frugal life.

Four Warning Signs That You're Digging Yourself Into a Debt Hole

2010-01-06T16:35:00.000-07:00

Debt has a way of piling up, accumulating, until it becomes out of control. Many people today are buried deep in debt and are unable to get out of it no matter what they do. If you have already experienced being in debt and then getting out of it, then you know firsthand how liberating it is to be free of debt. But then again, many of us are quick and easy to get back into that cycle of debt. It doesn't have to be this way. There are warning signs to look out for. They can tell you that you're getting yourself into debt, and if you don't act quickly enough, you're likely to find yourself in financial trouble.

Warning Sign #1: You're making big buys. The thing with big purchases is that they leave a hole in your funds. The bigger the hole becomes, the less you?ll have for other things you need. So check your monthly credit card bills. Mark off on a notebook when you buy cash for big stuff. Small things can pile up, and more so the big ones. Be watchful.

Warning Sign #2: You're becoming dependent on your credit cards. Using your credit cards too much is like adding more weight on a bridge your crossing. The best strategy, as with bridges, is to mark a limit. Nothing this big should pass. Something like that. If something big crosses the bridge, it won?t collapse immediately, but you?ll feel the strain for other needs.

Warning Sign #3: You get short on the basics. Gas, electricity, groceries... how come you don?t have enough money to cover for them each month? You must have spent more than what you should. A money management plan is always about limits and projections, forecasts on when you?ll sink. Ignore the limits and make those big buys and you?ll feel short for the things you actually need. That can be depressing.

Warning Sign #4: The shopping channel rules you. Compulsive shopping can be emotionally rewarding, as the sheer joy of buying the desired product is akin to an adrenaline rush. But money management is nothing like adventure. It?s housekeeping. Don?t expect adventure. Turn off the TV or switch to another channel when you see sales and ads you like. When you?re solvent, you can buy good stuff with no worries. When you?re not you can still buy good stuff, but with consequences.

When you have all or even a combination of these warning signs, that should be enough to tell you your money management skills are in question, and that you are soon going to be up to your neck in debt if you don't act now. The moment you spot the signs and put off acting on them, you allow the tide of debt to mark a date on you.

How Much Do I Need to Save for Retirement?

2009-12-27T08:44:00.004-07:00

As the retirement years draw to a close, many people wonder, “How much do I need to save for retirement?” They are concerned whether they’ve done enough to help provide for their retirement years, and if there’s more that they can still do before it is too late.

When determining the amount of money you’ll need for retirement, you need to calculate exactly what you’ll need to live on, what bills you will still have to pay each month, how will you pay for health related services, and are you willing to give up some things now so that you’ll have more money for the future. It has been estimated that you will need to maintain approximately 70% to 85% of your current income to live after retirement.

Make a list of everything that you currently owe (mortgage, car payments, insurances, groceries, clothing, utilities, etc.). Don’t forget to factor in at least 4% inflation per year when figuring out what your yearly monetary needs. After deciding on how much money you think you’ll need, you will want to consider when you plan on actually taking retirement. The earlier you plan to retire, the more money you’ll need in your retirement account.

For example, you have estimated that you’ll need $80,000 per year to live on in retirement and will retire at 65. Estimating a 4% withdrawal per year, you would need a minimum of $1,875,000 total retirement account balance. You may decide after you retire that you can do without some luxuries in order to make that money stretch a little further.

If you’re a woman, your financial needs for retirement may be entirely different than if you’re a man. If you’re married, you need to consider that your husband may not be around when you retire; therefore you will want to factor in that possibility when determining your retirement goals.

Putting money into a savings account, while it is better than nothing, won’t generate the amount of money you will need to survive. Social Security may or may not be available when you reach retirement age, so you’ll want to consider what you can do now. Luckily, there are still options for saving and investing that may help your retirement outlook a little brighter.

Stop wondering, “How much money do I need to save for retirement?” Make an appointment with a Financial Counselor or Certified Public Accountant. They will be able to help you make the determination of how much you’ll need, and be able to give you advice on how to get to that financial goal. They may even have some other ideas of things that you can do now to not only save money in the short-term, but also save money “for” the long-term.

The Basic Steps for Building a Budget

2009-07-27T08:30:00.003-07:00

A great way to start living a frugal life is to plan for it. And when it comes to finances, the most important plan is a budget. Setting up a budget is possible no matter what you income, how you get paid, or what your current financial situation. Developing a budget is the first (and most crucial step) to becoming frugal. Here are some great tips on how to do it:

1. Write down your spending. You can't plan out how you will spend your money until you know how you are spending it at present. Carry around a small notebook for a month and write down every purchase you make. This will help you see how your money is disappearing.

2. Make a list of all your expenses and include the spending you have in your notebook along with any monthly bills that you might not have written down. Total up the categories that you have and the total spending as well.

3. Write out all of your income and how it arrives (monthly, weekly, bi-weekly). Total up your income.

4. Write out your budget (based on the last month that you recorded). Compare that budget with your income. If you have more going out than coming in, then it's time to make some changes. You can either cut your expenses or you can make more money.

5. Study your budget and even take a few days to really think about the items you have listed there. Make better choices. If you only watch your television once a week then cancel your cable. Save that money for something else. If you have so many clothes that you can’t open your closet then determine to pass on the shopping for a while. Decide to choose a future instead of a fleeting present.

6. After you have cut all that you can cut, review your budget balances. If there is still a deficit, it’s time to consider a second job (or a job change). The only way to balance a budget (and start saving money) is to bring in more than you spend.

7. Review your budget regularly. Your situation will continue to change and so should your budget. As you learn to live a frugal life, you may well find that items on your budget are no longer important to you and can be removed.

If you want to live a frugal life then it is important to understand your spending and learn to get it under control. Setting up a budget is a first step towards that prosperous way of life.

Beginning the Frugal Life

2009-07-26T08:28:00.003-07:00

Most people think of being frugal as living without enjoyment. Frugal people are seen as the scrooges of life – the ones who count every penny and refuse to part with one even for some heat in winter. The truth is that frugal people live some of the most joyous lives of anyone. They have money, little or no debt, and lots of freedom to enjoy it all.

The truth is that frugal people are not stingy, they are wise. They have learned to spend their money in the best way possible. The years have taught them to be thrifty and to look for the best deal or bargain. Experience has shown them to be patient and wait for the sale or to purchase when the time is right. Most importantly, frugal people have learned to save as many pennies as they spend.

There are many wonderful benefits to living a frugal lifestyle. The first is security. By choosing to hold off on purchases, trips, or other spending and putting that money into savings, you know that you have money if something should come up in the future.

Frugal people often have more time to enjoy life than others. Because they spend less, they need less to spend. This monetary need translates into easier working hours or even working from home. It’s a lot like retiring well before your time.

When it comes to making purchases, cash is still king and it gives you a great deal of power in negotiations. Living a frugal lifestyle will help you accumulate the cash you need to buy the things that are important to you. It will teach you to make calculated decisions with your money, not emotional ones. And it will help you be in a position to almost name your own price.

It is not extremely difficult to become a frugal person. It probably is a good idea to talk with your family (or anyone who lives with you) before you begin your quest. It is easier to accomplish it together. Start small by paying for what you need with cash and getting rid of your credit cards. Cut your spending and begin to institute a 24 hour waiting period for purchases. The more you wait and think, the less likely you are to purchase something you don’t need.

A frugal life can be a wonderful life. You have security, freedom, and an appreciation for all that you have.

Being Frugal Now Can Mean Future Security

2009-07-25T08:27:00.001-07:00

Nothing can tighten your chest more than knowing the electric bill is past due and that the bank account is hitting rock bottom. Not having the finances to pay ordinary bills can be the stress that breaks a marriage’s back. Learning to live a frugal life not only helps with your finances today, but it can also prepare a secure life for tomorrow.

Learning to cut expenses, to make thrifty choices, and to save all your excess opens doors that would never be possible otherwise. You could choose to retire early, start a business from your home, or just live off your savings. Being frugal will help you have choices that you wouldn’t have if you didn’t know how to manage your spending.

Retirement is not simply the idea that you are leaving your current employment. It is choosing to have a life where you don’t make a regular paycheck. With frugal choices you will no longer need as much income to maintain a financial balance. You can finally say goodbye to your nine-to-five if you choose (although that lifestyle is not for everyone).

Making frugal choices will help you build up your savings. Having several months' worth of income in the bank could finally give you the courage to start that business you have always dreamed of having. Being in a position where you don’t have to rely on your income will make it easier for you to find success on the path that you desire. The stress to make money will be replaced by a simple desire to succeed.

Being thrifty and putting aside your savings can help you build up a hefty nest egg in no time. You could choose to live off that money for a while and take a trip across country or around the world (backpacking of course, because that is a frugal way to travel). The money could be your living expenses while you go back to school. Living off your savings could give you enough time to finally write that novel.

The main idea behind the frugal life is that it gives you freedom. As you choose to walk away from purchases and save that money, you set yourself up to be able to make different and better choices tomorrow. As you cut your budget and save the difference, you protect yourself from unexpected events. Building a nest egg today will give you choices and security for tomorrow.

Self-control Is a Key to a Thrifty Lifestyle

2009-07-24T08:24:00.001-07:00

It is generally agreed that if you want to live longer you have to exercise your body. Likewise, if you want to have financial security during that life you have to exercise your self-control. Having the ability to walk away from a purchase, being able to wait until you have the cash before you buy, or simply having the boldness to just say no are all key elements to living a thrifty life.

One of the best ways to develop a thrifty lifestyle is to quit carrying around all those cards. Leave your debit cards at home. Cut up your credit cards. Start paying cash for your purchases. This one step that requires you to physically pass your money to another party is likely to have you rethinking purchases from the onset.

Set aside your money for specific purposes and only use if for those purposes. Some people go so far as to put it in separate envelopes (each one labeled for a different use like groceries, gas, rent, utilities, medical, etc). If you don’t have money set aside for something you want to buy, then it is a good idea to wait until you do have money in that envelope.

Another way to develop your self-control is to set up a waiting period for purchases. Three days would be ideal but you should wait 24 hours (at least) before following up on a purchase. If you still want it and just can’t live without it after the waiting period (and you have the money already set aside), then it is probably a good purchase for you to make.

Find an accountability partner. For many people this is their spouse, although sometimes spouses will go out of the beaten path to avoid talking about finances. Be open and honest with someone about your financial situation and make sure it’s okay to call them when you are feeling tempted or weak. Support is one of the most important elements to developing any positive character trait.

Self-control in a frugal lifestyle is all about restraining your impulses so that you can make wise decisions. It will help lead you to a place where you can develop a plan for your future and begin the process of implementing that plan. Self-control teaches you to walk away from anything not in line with your goals. Saying no will become part of your regular vocabulary. And with the right support you will be able to develop this amazing characteristic in no time flat.

Cutting Extras Can Add Up Your Savings

2009-07-23T08:18:00.000-07:00

Today’s society is all about the latest gadget, gizmo or service. We have to have it, and it has to be the biggest or most that is offered. In reality there are so many modern conveniences that you can live without if you choose to live that way. Releasing the services or gadgets that you don’t really need could save you thousands of dollars each year. Here are some ways to do it.

Get rid of the phone. If you are currently paying for a cell phone and a land line, then you need to decide which one you really have to have. Compare the costs of long distance, local calling, and features (such as call waiting). Choose whichever one is the best deal and fits your overall needs. If you cut the land line you could save around $50 each month. Getting rid of cell phones could easily double that amount (and it would mean that you COULDN’T be found all the time in all places).

High-speed internet service or dedicated internet service is not usually necessary for ordinary use of the computer. If all you are doing is playing games, then why not buy a CD instead. If you are only logging on to check your emails, then you can save the $50 a month by downgrading to a lower service. If you need only occasional access (once a month or once a year) to high-speed service then check with the local library and see they provide public use of the internet.

Cut the cable. If you can turn it off completely, then do. It is only stealing your time, your intelligence, and your family life. If you need some channels to keep the peace, then be sure to choose the smallest plan that can fit your needs. There are rumors that companies will eventually let you pick your channels individually which will be perfect for those who only watch a couple of channels exclusively.

Stop the presses. You will save money by not subscribing to any more magazines and canceling all the subscription you currently have. If you must have reading material in the bathroom, then why not check out a book from the local library. You will save yourself a fortune in subscription fees and you will help reduce the clutter in your house at the same time.

By cutting some of the extravagancies out of your daily life, you can save plenty of money. The more you save, the more you will want to cut - and the more you cut, the more you will find you want to cut and the more you will save. It is a wonderful cycle that eventually ends with plenty of money in your bank account.

Small Change Makes Big Wealth

2009-07-22T08:22:00.000-07:00

There is an old saying that if you don’t break a dollar then you won’t spend that dollar. That is even truer today if you talk about bigger bills, but the idea behind the saying stands. The smaller the money, the easier it is to part with. That’s why so many people are parting with big bucks in small increments. Our minds just don’t seem to be able to add it up. But if we stopped the little spending then we would be able to save big money every week. Here are some great ideas on how it can be done:

Cut the coffee shop out of your day, or break that smoking habit that you’ve been promising to break. Take that $4 and put it into a savings account at the end of every week. By the end of the year you will have added around $1000 (depending on how many weeks you have off each year).

Take your lunch to work each day instead of buying it there. You can have a much healthier meal and a greater variety by doing it yourself. Plus, you’ll save around $5 each day and that will add an additional $1250 to your savings account.

Eat in more often. If you are a regular at dining in restaurants then you are probably wasting a large sum of money each year. By giving up just one meal out each week for you and your family you will probably be able to add another $2500 to your savings.

Cut hair at home. This is a pretty big saver for large families (especially those high on the girl numbers). You could potentially save $30 a head and that would mean lots of additions to your savings account.

Give up the cable. The television is only eating your valuable time and it doesn’t give you anything in return. By cutting the cords you could save $60 a month. That means you would be building your savings by $720 each year.

Once you build up your savings, switch them over to a higher interest rate investment option. CDs are one of the most secure, higher rate investments on the market. As you continue to grow your savings, you can seek professional advice about the best way to invest that money.

Use the savings to pay off your mortgage early and you can save yourself even more money (in the form of interest). But be sure to check on prepayment penalties before you make that leap. It could end up costing you more than it would save you.

The Frugal Mind

2009-07-21T08:15:00.000-07:00

Anyone can save money by not spending it. Misers and scrooges pinch their pennies and have a perfectly miserable life to show for it. The frugal life, however, is not just about saving money. It is about making choices to enhance your life.

There are always ways to spend your money – no matter how much you have. You can buy your lunch at work or you can buy groceries to make your lunch to take to work. The frugal person will make her lunch and then save the rest of the money for something else (a vacation, paying off the mortgage early, a spa day as a treat, or a new pre-owned car).

Income tax checks are a great chance to be frugal. You could use the money to put a down payment on a new car or to buy that surround sound system you always wanted. A frugal person will save a portion, pay off any outstanding debts with a portion, and use the rest for a treat that they have desired for a while (maybe a professional hairstylist or a new outfit for business meetings). The money will be used or spent, but it will go towards things that have lasting value. Splurges are allowed, but they are controlled.

Being frugal is about spending money the best way it can be spent. You learn to compare items and opportunities and decide which one is the best choice for you. It requires a willingness to do some research, a boldness to ask questions, and the ability to walk away until another day (or for good).

It takes a special mindset to live a frugal life. You have to understand the bigger picture and be willing to sacrifice a little now in order to gain a lot tomorrow. The trick is that you may not be able to see the gain for some time. It’s a walk of faith that in the end it will be better.

A great way to start on the frugal path is to meet some truly frugal people. They will be the happy people who have no hefty bills weighing them down because they have paid them off. Talk to them about their walk and see if they will help you along your own journey.

Learning to be frugal will help you to save money, but it is not just about the money. A frugal person learns to make the best choice in financial situations so that he can enjoy his life to the fullest.

What Are Credit Card Debt Relief Programs?

2009-07-20T14:00:00.000-07:00

About Credit Card Debt Relief

For people with immense credit card debts, there are relief programs and help options available to alleviate this financial crisis. This relief programs are designed for this specific method wherein financial assistance is provided in order to make debt settlement more manageable. In world ridden with debts, it is quite a common thing to meet people suffering from the same financial burden.

That is why credit card debt relief programs were created to cater to people who have difficulty meeting the monthly debt payment requirements for different types of loan. When you have difficulty being able to make both ends meet, then it is best to consider debt relief solutions to improve your financial condition.

Debt Consolidation

If you are new to the concept of debt or loan consolidation, the idea here is that all of your existing debts are combined into another single loan. The process begins with your new creditor sending out checks to settle any existing debt to your credit card companies in order to have them fully paid. In return, you acquire a new loan in replacement for that. Therefore, you only have one debt payment to make each month.

This method of debt relief is suited best for individuals with more than one existing debts, wherein the high interest rates make it difficult to cope up with the monthly payments for all. One downside to debt consolidation is that it extends the period of payment to make up for the reduced monthly rates. You can secure a nice deal with your debt consolidation if you have good negotiation skills.

Other Debt Relief Options

For more options in providing relief from credit card debt, you can opt for debt settlement. This option offers reduced “payback ratio”, which eventually means you could be paying as low as 40 cents for a dollar you owe.

Credit card balance transfer is another valid option. This method enables you to acquire a low interest credit card. Then, you simply transfer your high interest loans into it. This is advisable only if there aren't any default payments involved with your low interest credit card.

For those individuals who have dilemma with managing their finances as a whole, instead of just dealing with credit card debt problems, then you might want to consider credit counseling as an effective method to gain relief. Here, you will have the aid of credit counselors and professionals who will devise a debt relief solution to get you out of your debt trap. In fact, they can also suggest a few convenient debt relief programs or methods that you can opt for which suits your own financial status and credit history.

Benefits of Debt Relief Programs

Aside from the obvious benefit of having reduced debts and a healthier financial flow, you can enjoy the following benefits if you opt in for any credit card debt relief program:

• Debt relief programs enable you to manage and handle your debts efficiently.
• You can learn a few debt management strategies so you can handle your debts with ease and create a sustainable financial plan.
• This is a valid option for people who debts are way over head.
• It is your first step towards better debt management.
• You are able to settle any existing debt and just focus on a single debt payment.

The Ugly Truth Behind Credit Card Debt

2009-07-19T13:59:00.000-07:00

Credit card debt is one of the leading causes of financial crisis in America and for most part of the world. Indeed, lots of focus by economic experts are geared towards analyzing the benefits or disadvantages posed by the use of credit cards. There are also several factors that are involved with credit card use that could impact the way an individual manages his or her finances.

Is Credit Card Important?

Several individuals are enticed to secure their own credit cards because they are lured by the many advertisement claims about how it can make your transactions a lot easier. While credit cards do offer a few benefits, it is outnumbered by the financial discrepancies caused by owning a credit card.

What many people do not realize is that using credit cards to pay for their transactions or bills actually result in them spending more. In fact, the same can be said even if you are religiously paying your bills on time. So you can just imagine what those credit card owners who aren't making punctual payments are going through financially!

Credit cards are beneficial in a few instances such as having convenience of extra finances for emergency situations, or safety during travel. However, the interest rates can be quite a burden on some families who earn only minimal income each month. Also, there is the possibility of misuse since it creates a false sense of financial security that often ends up in people having massive credit card debt.

Cash or Credit Card?

Budgeting is an essential aspect of handling your finances. This is often neglected when people have to rely on credit cards to make their purchases. Therefore, some people are on a toss-up between which is the better means of making financial transactions, either on cash or through credit card. Here's what would help you decide more effectively.

Imagine yourself paying on cash during purchase. There is an emotional attachment to that money, which you have worked hard on earning, that makes you unwilling to let go of it. However, the case is different with using credit cards for purchase. There is none of that emotional attachment and you can simply swipe away without remorse.

Using credit cards to make your purchase instead of paying on cash could end up in you spending about 12 to 18 percent more than the actual value for the item if you paid with actual cash. Imagine how much could have gone onto your savings!

Teenagers and Credit Cards

Credit card companies are targeting teens on their ad campaigns, however it is not a good prospect for parents, especially if you want to teach your kids on how to become responsible with their personal finances. This is more true based on the fact that teenagers have the tendency to be impulsive and with credit card in hand, it creates that false sense of financial security that they can afford anything they desire. Instead, make them work hard to achieve something they want, especially in the material aspects.

Financial Security

If you want to achieve more financial security, credit cards is not the way to go as it exposes you to risks of acquiring credit card debt. But if you are going to opt for one, make sure you have an effective and practical approach at spending. There are a few advantages offered by using credit cards but it does not make an effective replacement for cash whatsoever, unlike most credit card holders believe.

Professional Credit Card Debt Management

2009-07-18T13:58:00.000-07:00

Personal Financial Management

When it comes to handling and managing finances, most people differ largely. There are those who can effectively do it on their own, while some others require professional help to get organized. Financial management already proves to be a difficult undertaking with the many financial considerations and budgeting involved. This is one of the reasons why debts, specifically credit card debts, is one of the leading problems in the United States alone.

Hence, many opt to seek out professional services in order to straighten out any financial shortcomings or overlapping debts.

Professional Credit Card Debt Management

Seeking the services of professional credit card debt management is a valid option for anyone wishing to get out of debt. The most obvious reason for this is that the people involved in this type of service deal with debts and other financial management services on a regular basis. Hence, their knowledge and expertise on the field can help you deal a more beneficial credit card debt management scheme.

Speaking of expertise, there are different types of professional debt management services that specialize on specific financial issues. Each one are designed in a specific method and objective such that not all types of professional credit card debt management services are suited for all. When you decide to partake in a given professional credit card debt management service company though, you have to subject yourself to the guidelines created by the company in the hopes of providing a limit to your spending.

Benefits of Professional Credit Card Debt Management

Although you expect to settle some fees in accordance with the services provided, some people find it worthy for the set of benefits derived from acquiring professional debt management service. Here are just some of the most prominent benefits you can enjoy:

• With the services of a debt management professional, you can learn helpful tips and tricks when it comes to better financial and debt management. This provides a long-term benefit since you are able to practice healthier financial management methods that will (hopefully) keep you out of debt.

• You can save a large amount of time. You can use the knowledge of the debt management professional to know about the surest methods and techniques that you can employ to find debt relief.

• Depending on the type of service you hire them for, they can either process debt relief for you or provide invaluable advice that will get you out of debt.

• Simply put, hiring a debt management professional will help you secure a better deal.

Tips on Choosing Services Effectively

On top of the difficult decision on whether to hire a professional credit card debt management services comes the more difficult step in this entire process: choosing the service. With the wide array of debt relief companies in the industry and the presence of numerous scams, one could easily fall into committing mistakes.

Outlined below are some of the specific guidelines you need to consider before you can be confident that the professional debt management service you hired is one to take you out of debt.

• Perform a thorough research. This is beneficial not only in terms of comparison but also in ensuring that your debt management service is legitimate.

• Compare what you can gain from the service and the costs charged for that service.

• Opt for a credit card debt management company who has established a good reputation in the business.

Practical Credit Card Debt Solutions

2009-07-17T13:57:00.000-07:00

Improving your financial status and becoming free of debt usually only requires practicality on your part. When you learn to become responsible and practical in your use of credit cards, then you would not have had immense debt problems to begin with. However, you can apply the same level of practicality when it comes to paying off or settling debts.

A few companies offer debt elimination programs but you need not jump right into it. You need to consider whether you will end up paying more than you could afford. However, if it saves you time and stress while also reducing the interest rate placed on your debts, then it would make great sense. There are steps that you can take yourself to advance toward your effort of becoming free of any credit card debt.

1. Set a specific time frame for your debt elimination.

Before you determine how much you are going to pay for your debt settlement on a monthly basis, you must come up with a specific time period first. Say for example, you are paying the minimum monthly payment for your debts, which means that you would end up paying your debt for another 5 or 10 years. If you want to shorten the payment period, then you can opt increasing your monthly payments if you do not want to extend your payment period.

2. Be flexible with your debt elimination campaign.

In the middle of paying off your debts, it is not unlikely that some people with encounter financial emergencies. Therefore, it is best to opt for a credit company that allow flexibility or changes in your payment options when these cases should arise. Find a flexible debt payment plan that make room for such changes.

3. Determine your source of cash for purposes outside debt settlement.

There are a few credit company that unable you to have access to your own money during emergency cases. Therefore, make this an important determiner when you look for a debt relief program. When you encounter financial emergencies, the inaccessibility of ready cash bring about more financial stress. Look for a debt settlement plan that will have extra funds available when such emergencies occur in the middle of working towards your goal to eliminate credit card debt.

4. Evaluate its impact on your credit rating.

There are a few debt settlement methods that can impact your credit rating, so you have to find one that will help eliminate any of your existing credit card debts without necessarily hurting your credit status. If there are any negative marks that could tend to pull down your FICO score, look for other alternatives that could make your FICO score quickly increase. Whether it is making on-time payments or paying double the minimum monthly payments, you need to talk with your credit company to not just free yourself of any debts but also to boost your credit rating.

5. Look into associated fees and charges.

Although some credit card debt elimination programs are offered for free, most are charged service. It is therefore important that you understand how much such services cost before you commit on your involvement with them. Some of the most common fees are upfront fees or attorney fees and some other processing charges. If there are any hidden fees, try to talk them out. The idea here is obvious: you are trying to lift off any financial burden and having your credit company charge you with huge amounts would not help at all.

Learning how to work your way around such negotiations involved with settling off credit card debts could help you be debt-free and regain better control over your finances.

Personal Steps Toward Reduced Credit Card Debt

2009-07-16T13:55:00.000-07:00

The presence of multiple professional credit card debt management services nowadays are a testament of two things: (one) debt is a major problem in the financial industry, and (two) most people suffering from escalating debts cannot repair or settle those debts on their own. However, doing so is not entirely an impossible job provided that you remain dedicated in your effort to pay off any remaining debt and improve your credit report.

Settling Credit Card Debts On Your Own

One of the biggest dilemma that people had to face when it comes to hiring professionals in their credit card debt settlement or management is the additional charges involved. If you were trying to be practical, any additional cost is detrimental in your effort to free yourself from debt. Therefore, you need as much money as you can possibly find to resolve all of your remaining debt balances to your credit card company.

In fact, some people hire debt counselors or negotiators not to settle debts but provide debt settlement advices that you could probably figure out on your own. The approach at credit card debt settlement is pretty simply and straightforward, which is important if you want to embark on fixing your credit card debts on your own.

Why Are Professional Debt Management Services Popular?

One of the most evident reason behind the success of professional credit card debt management services is that they have the knowledge and willingness to negotiate a desirable deal. Professional debt negotiators are known to be capable of reducing debt balances by as much as 50 percent and they charge individuals with 15 percent of that fee.

One reason why professional debt negotiators are ideal for the job is that they are the bridge that brings together creditors and debtors in an agreed term. Meaning, debtors would be unable to settle those debts in the first place if not for the initiative of these professional debt management companies.

Important Factors for DIY Credit Card Debt Repair

Before you try and find solution to your escalating credit card debts, there are a few compromises that you should be willing to take. After all, this is not a simple process given the stakes involved.

• You have to be willing to spend some of your time. Even professionals who do this on a regular basis know how difficult a task credit card debt repair is. You need to work on documents, communicate with your creditors, negotiate, and do a lot of follow-ups to ensure that the deal goes your way.

• You have to carefully thought out strategies that can be employed to achieve the result you want. This part of the process could be the most tiring.

• While trying to figure out what could work towards your advantage, you also have to identify the pitfalls you are trying to avoid.

• Establish realistic goals, such as being able to reduce (even in minimal percentage) your remaining balance. After all, you owe that money to the creditors so you have to pay what is due them.

How To Do it Yourself Effectively?

To attain better success with your doing your own credit card debt settlement, you need to document each step of the process. When you make payments, never do it over the phone or when you lack proper documentation. When releasing a statement to your creditor, always type them or have them handwritten so you have a written proof of any transaction that went on in your debt settlement process.

If you are suffering from a real financial hardship, use this as a turning point in your effort to seal a great deal for settling any remaining debts. Processing debt settlement yourself is similar to processing your own taxes or other professional or legal documents. If you have good negotiation skills, then use that to your advantage.

How To Eliminate Credit Card Debt

2009-07-15T13:54:00.000-07:00

Overcoming Credit Card Debt

Any kind of debt such as credit card debt needs to be quickly addressed if one wishes to establish a healthier financial situation. You can begin with a basic technique such as budget planning or other saving methods, but the truth is it is more difficult than it seems. This is even more true with making financial transactions using your credit card since it basically offers you lots of convenience to purchase items you normally would be unable to afford if you had to rely on actual cash to make the purchase. Improving your credit card debt is of essential when you are trying to improving your credit rating since it also affects your overall financial stability.

Below are suggested steps in which you can help achieve a more stable personal finance system and eventually become debt free.

Stop Spending

When you already have thousands in debt, stop causing more financial troubles by adding up to your existing debts. Refrain from using your credit card to make any more purchases, especially major ones for it will only turn things into worse. With access to credit card, it is relatively convenient for an individual to splurge today without realizing the financial burdens that he or she will have to face in the coming days. Indeed, if you employed this behavior then you can at least practice some financial responsibility by helping yourself cope with your credit card debt before adding any more into your debts.

Create a Budget Plan

This applies not just for people who are suffering from credit card debt but for anyone who wish to establish a healthy financial flow. However, with the increased access to credit cards, budgeting seems to have been easily neglected by most that often results in people spending more than they actually make. But it is not too late to get started on a budget plan yet. Doing so will help you identify areas of your spending habits that lead to wasteful spending and can be eliminated from your budget plan.

Creating a budget plan will also enable you to appropriate the more important expenses and make them a priority in your list. This is an important method in financial planning that people often fail to undertake with using credit card.

Use Cash Instead of Credit Card

This is a simple step but for people who have relied so much on credit card, they might find it difficult. The trick here is that credit card companies provide you with noncash substitutes that you will use for spending instead of actual cash, because it makes it easier to let go and spend them. There is none of the emotional attachment you associate with spending actual money. Since using credit cards to make your purchases feel like you are not spending at all, then you expose yourself to bigger credit card debt.

Improve Your Credit Card Rate

Another way that you can help eliminate your credit card debt is by improving your credit card rate. This can impact your monthly cash flow if you have a large personal debt by reducing the interest rate. However, the ability to get lower credit card rate is dependent on your own credit rating. Hence, it makes it a worthy investment to take good care of your credit status as it can have its own set of advantages and disadvantages in the future.

Credit Card Debt Negotiation For Easier Debt Relief

2009-07-14T13:52:00.000-07:00

What is Debt Negotiation?

Several people suffer from overlapping credit card debts that make it difficult for them to manage payments for. This is mostly due to the nonchalant nature of spending using your credit card, hence many have started to question about using credit cards as a valid alternative for real cash to make purchases.

When you begin to suffer the same problem with rising debts, debt negotiation is a proven and legal method to figure out a way out of that debt trap. Debt negotiation involves, of course, negotiation to pay off the balance of your debts that is in reality less than your actual balance. For example, you owe your credit card company a given amount for non-payment and you work your way into reducing that amount so you can save on your payments. It is important to clearly discuss terms with your credit card company because they share the same interest with you, which is to settle any remaining balance on your account.

If you have any qualms about debt negotiation process, then you need to know that it is a completely legal process. There are several debt negotiation professionals that you can hire and they are the ones responsible for speaking with credit card companies to do the negotiation for you so you can reach a reduced payoff.

Benefits of Debt Negotiation

If you are having trouble trying to organize all of the credit card debts you need to settle, debt negotiation services is a valid method that can help resolve your debt problems. Some people have difficulty dealing with the staggering amount of phone calls or letters being sent to them by their credit card companies insisting that they settle all of their existing debts. There are a few benefits that you can get from settling with debt negotiation services and they are listed below.

Having Professional Assistance

One obvious benefit that you can derive with debt negotiation on your credit card debts is that you can hire the services of professional debt negotiators. Their expertise on this field would help you gain an advantage in securing the lowest possible payoff. This is helpful for anyone who lacks proper negotiation skills and lack the knowledge when it comes to the twists and turns of the credit industry.

Save Yourself From Stress

For people with huge amounts of credit card debt to settle, you might find that staffs of credit card companies can be really hard on you. As if settling your existing debts do not offer enough stress alone, having staffs to harass and demand from you can be doubly trying. Hiring a debt negotiation service to do the negotiating for you can reduce the amount of stress involved in settling your credit card debt. You do not have to employ your own tactics just to settle with your desired payoff amount. These debt negotiation services have been doing this for a living and they utilize proven strategies that will help you arrive at your desired payoff balance.

You Save Money

In terms of your financial status, debt negotiation offers a few advantages on your part. First off, the reduced payoff balance will enable you to manage your debt settlements a lot better. It also offers some benefits to your credit card company given that they are able to receive a settlement for your debts.

However, the aim of debt negotiation is basically to help people with astounding credit card debts. With a lesser amount to settle, you are able to keep up with your balance and go back to establishing a more solid financial ground that is free of any debt.

Credit Card Debt Counseling

2009-06-24T05:00:00.000-07:00

What is Credit Card Debt Counseling?

Interest rates on most debts incurred by debtors become increasingly high to the point that an individual's monthly payment isn't even enough to cover just the interest. Individual resort to many different credit card debt relief programs and credit card debt counseling is just one of your many possible choices. But, why should you opt for debt counseling?

This method enlists the help of professional debt counselor. Their role is to do the negotiating with your credit card company with regards to possibly reducing your current credit balance. Some might even suggest you get into a debt consolidation program once they have assessed that it would help alleviate your financial condition while eliminating credit card debt.

You will typically start off with basic money management and they would help you come up with a sound budget plan. Hence, the idea here is to not only help an individual get out of debt but to improve their financial management ability to ensure that they put an end to the debt cycle.

When To Opt for Debt Counseling?

The choices of debt relief programs are quite extensive. Hence, deciding on whether debt counseling might offer the best and most efficient debt relief method is difficult. Every credit company has their own counselors that are responsible for handling the budgeting, consumer credit, and debt management aspects. Therefore, having a reliable debt counselor will also provide the financial organization you need.

If you are still unsure, ask your credit card debt counseling agency the following questions to assess whether this credit repair service is for you:

• How much will the service cost you?

• How much is the percentage of payments or if there are any hidden fees?

• What range of services do you offer? Does it meet my debt relief needs?

Once you have determined that a particular debt counseling agency provides services specific to your needs and still allow you to save some money after paying the program's services, then it should not be a bad option for debt relief.

Benefits of Debt Counselor

The presence of the debt counselor's professional advice could really boost your financial management strategies while also allowing you better insight into how you can work at resolving your debt problems. If you are undecided with opting for credit card debt counseling to provide the financial relief you need, then you need to be aware of some of the benefits you can acquire:

• You save yourself from the hassle of having to speak and deal with your credit card companies. Your credit card debt counselor will be the one handling these negotiations for you.

• Your debt counselor can help reduce your monthly interest rate on an existing debt.

• The acquisition of better budgeting plan and improved financial or debt management will help ensure you pay your bills on time.

Choosing Your Debt Counselor

Now that you have become aware of what benefits you can acquire from hiring a credit card debt counselor, your next step is to choose a reliable credit card debt counselor. Below are proper guidelines that will help you evaluate a debt counselor before choosing them:

• Research on the specific agency's reputation. Were previous clients satisfied with their service? Was it able to deliver the promise of debt relief?

• Make sure the specific agency you are looking into has its own insurance.

• Your debt counseling agency should be one willing to work with all credit companies. Beware of those who are willing to work only for specific companies since they could have some secret arrangement wherein both companies can profit.

• Paying methods to your creditors. Take time to learn about what percentage goes to the agency so you can finish paying your debts within your desired time frame.

Common Credit Card Debt Settlement Mistakes

2009-06-21T10:37:00.002-07:00

Paying off your credit card debt can be damaging to your financial status that you often resort to just about any technique or method needed to get out of that trap. However, you need to methodically analyze your decisions in terms of handling your debt settlement since they can impact your long-term financial status. Moreover, legal complications could get in the way and that's the least you want to happen with an already escalating credit card debt balance.

If you want a good credit card debt settlement, you must try to avoid any of the following methods or mistakes. Most of them include pointers on what you should avoid if you would not want your credit card debt to continue escalating.

Closing Your Account

Some people become extremely fed up with their credit card debt due to their inability to meet the rising interest rate and debt balance to settle. Therefore, most opt for the easy way out, which is to close their accounts. While this solves one aspect of your problem, it offers another type of dilemma. Doing so will cause your credit rating to take a massive dip.

Here's a solution that you can try. If you have determined to not want to use the cards, then set it aside. You need to really fulfill the promise to not use cards in any of your purchases again since it can easily add up to your debts. Meanwhile, make sure to continue settling any other existing credit card debts while you help yourself by not adding more to the damage.

Debt Consolidation

Debt consolidation is a debt relief option that is already becoming quite popular among people with debt problems. While this has helped few people settle their debts and return to a smoother financial status, it is not always the best option to relieve yourself of debt. If you're not familiar with this method, debt consolidation is when you find a new creditor that will pay off any of your existing multiple debts. Then, you will now have to settle those accounts through your new creditor. The convenience offered by debt consolidators is that you now have only one debt to settle, as opposed to multiple of them. Plus, negotiating for a low interest rate on your debts are possible but it will extend the life of your loan and payment period.

Of course, these debt consolidators don't do it if there's no benefit for them. Debtors are given up-front fee for some consolidating companies while a statement of having “third party assistance” will be reflected on your credit report.

Paying High Interest Rate

This is an obvious mistake that most debtors often make when trying to settle credit card debts. Since being able to settle all of your debt balance is also in the interest of your credit card company, then you need to negotiate a meeting point when it comes to achieving your interest rate. Once you have agreed on a lower interest rate, look into making punctual payments to avoid adding more late payment charges on your balance.

Opting To Settle Minimum Balance

This is one mistake that people often make when paying off their credit card bills that often result to rising credit card debts. When you are using credit card to make purchases, it is easy to believe you have an unlimited pool of money. That is when excessive splurging comes into play that causes unimaginable credit card debts. If you pay only the minimum balance, your creditors could care less because they will be getting a percentage of interest on that. If you can, try paying double your minimum amount in order to relieve yourself from mounting interest that could really hurt your debt and financial status.

Avoiding Credit Card Debt Relief Scams

2009-06-20T15:31:00.000-07:00

Benefits of Debt Relief Programs

People with mounting debts can reap major benefit from debt relief programs. These programs are designed for this specific purpose but choosing the specific terms of the plans could affect each individual's financial condition differently. If you wish to free yourself off any debt, then you must choose a debt relief program that meets your needs.

For instance, debt negotiation is one common debt relief program that offers benefits to the debtor. It saves money since you will get to pay a reduced amount from the original amount of debt you owe, it will save you time as professional debt negotiators will be the one discussing this debt reduction process on your behalf. If you are able to choose a reliable and sound debt relief program, most people with debts find themselves free of debt within two or three years.

Common Scam Techniques

While there are several legitimate debt relief companies available in the industry, there are a few others who are looking to take advantage of people's urgency to settle their debts. Like with legitimate debt relief companies, they offer debtors a promise of the opportunity to become debt-free. Sadly though, they most often target individuals who are desperate to find debt relief since they cannot afford to lose their money.

There are a few common tell-tale signs that the debt relief program you are dealing with is a scam. Hence, identifying them will help you recognize whom to trust and whom not to in terms of finding solution for your debt problems.

Charging to Fix Your Credit Report

There are a few debt relief programs who offer their services of cleaning out your credit report and any errors with massive fees. This process is quite intricate, which is the reason why most people often opt to hire professionals to do it for them. However, you need to be extra careful with choosing since some of them can be outright deceptive. Another reason why such claims are considered scam is that you can fix credit report free of any charge. There are three credit bureaus from which you can acquire a free copy of your yearly credit report. When you have the copy, study it for any false information or suspicious transactions.

Loaning To Fix Bad Credit

This particular scam technique affects debtors in two ways. First, you are charged for a loan that you are not even qualified for to begin with. Therefore, the money you spend trying to settle the loan is put to waste since you could have used that trying to settle off your previous credit card debts. Next, although your creditor makes claim that you have loaned out money, you never get to receive any money. Worse thing is, these scams do not provide you with a legitimate company name so they basically run away with your money while you are left with no way to trace them.

False Identity

This is a sure sign that you are dealing with bogus credit repair companies. When they ask you to create a new credit identity to attain a high credit score, then you need to realize that this is a complete illegal move. Even if you are unfamiliar with legal laws, then everyone might be aware that creating false identity is a clear violation of law.

Therefore, make it a point to screen out the credit repair company you are dealing with before you decide to work with them. If you are serious about getting rid of any credit card debt you currently have, then opting for illegal means is not the best way to do it. Moreover, being subjected to scams would cause you money that could have been used to pay off your credit card debts.

Fair Debt Collection Practices Act

2009-03-11T08:13:00.002-07:00

The Fair Debt Collection Practices Act (also known as the FDCPA) is a US Statute added in 1978 with later amendments, which protects consumers from unscrupulous debt collection agencies or methods. It also gives consumers a way of challenging inaccurate information that may be held against them.

This post gives a summary of the provisions as we understand them, but it is not exhaustive (it does not include all of the details) and its accuracy is not guaranteed.

What It Covers

The FDCPA regulates debt collectors, who are defined as "any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another."

This means that it covers the situation where a debt collection agency is contacting you for payment of a debt that you owe to another institution such as a bank. If the bank is collecting the debt itself, the FDCPA does not apply, although some states have laws that regulate institutions that collect their own debts in the same way.

What Debt Collectors Must Do

- Every time they contact you, they must tell you who they are and that they are a debt collector.

- They must notify you of your right to dispute the debt. This notice is called a 1692g Notice.

- If you ask in writing within 30 days of receiving this notice, they must tell you who the original creditor was (the name and address of the company or institution that you owed the money to). They must also produce proof of the debt if you request it within this 30 day period.

- If they file a lawsuit, it must be in the place where you live or where you signed the contract that incurred the debt. So if you used to live in New York and you got into this debt while you lived there, but now you have moved to Washington, the debt collector can file a lawsuit either in New York or in Washington. Nowhere else.

What Debt Collectors Are Not Allowed To Do

- They must not phone you after 9 pm or before 8 am (your time zone).

- They must not continue to contact you if you give them written notice that you do not want further contact or that you refuse to pay the alleged debt; except that they can still tell you certain things, e.g. that they plan to file a lawsuit or that they are writing off the debt.

- They must not harass you by telephone, e.g. constantly ringing you.

- They must not contact you at your place of work after you ask them not to in writing.

- They must not go on contacting you after you give them details of an attorney who is representing you, they must contact your attorney instead.

- If you ask them for verification of the debt within 30 days of the 1692g Notice, they must not contact you until after they have sent you the verification.

- They must not engage in misrepresentation or deceit; e.g. they must not lie about how much you owe, or claim to be attorneys when they are not. They must not demand extra unjustified amounts above what you owe.

- They must not publish your name and address on a bad debt list.

- They must not threaten you with arrest or legal action unless these things are genuinely possible and planned.

- They must not use abusive or profane language.

- They must not reveal or discuss your debt with anybody who is not involved, except your spouse or your attorney, and they must not threaten to do this (e.g. they must not threaten to tell your employer).

- They must not contact you in way that reveals your debt to others, e.g. putting details on a postcard, or sending a letter in an envelope that is marked as being from a debt collection agency.

- They must not put false information on your credit report, or threaten to do so.

If you have been subjected to practices which are against the terms of the act you can report the collection agency to the Federal Trade Commission. You can also sue the collection agency, but it would not be worth while for most people to do this. That is why the Federal Trade Commission takes the role of enforcing the Fair Debt Collection Practices Act.

Don’t Rely on Your Pension Alone

2009-02-04T06:51:00.000-07:00

Events in recent years involving businesses such as Enron and WorldCom have people concerned about establishing pension accounts with their employers. You can hardly blame them, either. Employees around the country are being told, “Don’t rely on your pension alone” when it comes time to retire.

While the chances of every business in the United States being dishonest and bilking their employees out of their hard-earned pension are slim, Enron and WorldCom are examples that it can happen. If you are concerned about the prospects, the solution is to have more control over the funds that you set aside for retirement, and where they are placed.

As a general rule, 401(k) plans are a safe place to save money. Your employer will deposit pre-taxed money into an account and will usually match a portion of your contribution. You should be able to decide where the money is placed, and in which proportions. If you are concerned that things aren’t right, your employer should have given you a telephone number for you to contact concerning your account.

It is unlikely, however, that even if you saved the maximum allowable contributions you would have enough money saved to cover the entire length of your retirement. It is for this reason that diversification is a good idea, especially when it comes to retirement funding.

There are several options to choose from when saving for retirement:

• Personal retirement accounts
• Roth Individual Retirement Accounts
• Money market funds
• Stocks and bonds

You may or may not have funding from Social Security, so you’ll want to consider some of these other options when planning your retirement nest egg.

One thing you can control, much more than the amount of money you could earn from the stock market, is what you are currently spending. If you choose to live below your means, and saving what you don’t spend, you can put that extra money toward IRAs or other stable savings plans.

There are even retirement plans for those who are self-employed. Keogh plans can be opened at any bank, credit union, or brokerage firm but have certain limitations. Check with a financial planner, financial counselor, or certified public accountant to get the rules for saving contributions for your state. Individuals may also set up individual retirement accounts, either traditional or Roth.

No matter where you place your money, you want it to grow for you. Having more than one source of saving would also be advisable since you never know what the financial markets are going to do. However you decide to save for retirement, don’t rely on your pension alone. You may find that there just isn’t enough there to meet your needs.

Be Cautious When Taking Out a Cash Advance Loan

2008-12-26T06:07:00.004-07:00

Has Christmas left you short of money? Need some quick cash? Getting a cash advance may be the answer, but beware, there are risks involved and you need to know exactly what you're signing up for.

Taking out a cash advance requires little on your part. All you need to do is prove you have a bank account and a job with a minimum monthly salary and the money is as good as in your bank with the cash being available in less than one day. However, money that comes this easy also comes with a few red flags and warnings.

Here’s what to look for:

Maximum Loan. How much can you borrow? Most payday loans have a maximum of $1000 or $1500. Consumer advocates warn against taking out a number payday loans, particularly at once. Not only because the fees you’ll be paying are expensive but because many banks will close your account if you bounce too many payday loan checks.

Most payday loans are paid back by the lender cashing a predated check that you write. If this money isn’t in your account when the loan comes due, the check will bounce and your bank will make record of it. If you’re taking out several payday loans to cover a debt or payment, and the funds aren’t available then the bank can close your account, which means it may be difficult to get another bank account.

Term. How long do you have to pay back your loan? Standard loan terms range from one week to two weeks. Make note to find out exactly when the loan is due and your check is going to be cashed so you can make sure you have money in your account.

Fees. How much is your loan going to cost you? The standard rates seem to range between $30 and $40 per $100 borrowed. That means that if you borrow $100 you owe $140. On top of that, if you’re unable to pay the loan back when its due you may owe significant fees. Find out what these fees are before you sign on the dotted line.

Contract terms. Some lenders have lots of small print. Read the small print. Many online lenders have a policy where they automatically deposit cash into your account every month, and they automatically deduct that cash, plus a fee, every month. Make sure you’re not signing up for one of these loans or you’ll be paying your lender on a monthly basis for loans that you do not need and getting out of this loop can be difficult.

Because payday loans are so expensive and there are inscrutable lenders out there, it may be helpful to consider other options.

Looking to local community-based organizations may make small business loans to individuals.
Asking your creditors for more time to pay your bills. Find out what they will charge for that service - as a late charge, an additional finance charge or a higher interest rate. This may be significantly less than what a payday loan will cost.
Find out if you have, or can get, overdraft protection on your checking account.
If you need help working out a debt repayment plan with creditors or developing a budget, contact your local consumer credit counseling service.
Look at the possibility of obtaining a credit card. The cash advance fees and interest rate may cost less than a payday loan.
If you decide you must use a payday loan, borrow only as much as you can afford to pay with your next paycheck and still have enough to make it to the next payday.

Being short on cash is never fun and it happens to millions of people every day. Examine all of your options, read the fine print, and determine if a payday loan is your best option.

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Getting Your Credit Back on Track

2008-12-16T16:49:00.000-07:00

Many people are struggling with bad credit. Unfortunately it doesn’t take much to derail your credit. A few missed or late payments on any credit card or loan can send creditors knocking on your door and a world of stress into your life. If you are in this situation, here’s how to get your credit back on track and eliminate credit card debt as quickly as possible:

Step #1: List all of your credit cards, including your outstanding balance, your interest rate, and the minimum payment percentage and the minimum payment according to your latest statement. Yes, this could be painful and may strike a chord of panic in your chest. Don’t worry. This is the first step to gaining control of your finances and getting your credit back on track.

Step #2: Once you have that list, highlight or circle the credit card with the highest interest rate. This is the card you’re going to attack first.

Step #3: Add up the minimum payments for all of your cards. This means if you have five credit cards, what minimum balance do you owe on each and what is the total of your minimum balances?

Step #4: Create a budget. Yep, this may sound like a scary word, but a budget will tell you exactly what you have to spend each month and how much you have to pay off your credit card balances.

Step #5: Pay the minimum balance on each credit card you have EXCEPT the one with the highest percentage rate. On this card you will pay as much as you can on top of the minimum balance. So if your minimum balance is $125, and you’ve budgeted to pay an extra $100 toward your credit card debt, you’ll make a payment of $225.

Once your balance is paid off from your highest credit card, move on to the next highest credit card percentage rate. Continue the process until your debt is paid off.

Call your credit card companies and see if you can lower the percentage rate. If they will not lower your credit card rate, consider shopping around for a card with a lower rate. If possible, transfer the balances on your high rate cards to cards with a lower rate. Keep in mind that you will likely incur a fee for this transfer. Make sure you cancel the card that you just transferred the balance from. You certainly don’t need the temptation of a card with a zero balance to ruin your progress.

Benefits of Creating a Personal Budget

2008-12-13T17:10:00.000-07:00

A budget is a spending plan. It is your single best tool for knowing where your money is going and how much you have to work with. Of course, just the mention of the word budget can send even the most structured and organized person running for the hills. A budget, however, has several tremendous benefits. Among them are:

1: A budget makes it easy to save and have extra money. By tracking your expenses and income and controlling how much you spend on variable expenses, you will quite likely find that you have more money than you thought you needed. What are you going to do with that extra money? Of course the experts will tell you to save it and that’s probably a good idea, but maybe you could set aside just a little bit of that extra money to do something fun - like take a vacation or go to that five star restaurant you’ve been anxious to try.

2: A budget saves you time. How long does it take you to collect information at the end of the year for taxes? Even if you don’t do your taxes yourself, gathering all of those financial documents can take days and can be extremely stressful. When you have a budget, all of your expenses and income, including your taxes, are documented. This is particularly the case if you use a spreadsheet program or accounting software.

3: A budget makes it easy to track, and control, your spending. It gives you freedom from the stress of not knowing you have enough money to cover certain expenses. It is so much better to control your finances than to let them control you.

4: A budget can reduce family and personal stress. A family budget creates an environment of teamwork and communication rather than one of stress and blame. Everyone is accountable for the spending decisions made and the financial goals you’re striving towards.

5: A solid budget makes it easy for you to make spending and investment decisions with confidence. Have you ever had the chance to invest in something but you weren’t sure if you could? With a solid budget in place you know exactly where you stand financially and your investment decisions can be made with the right information at your fingertips.

6: Budgets help you plan for the future with ease and confidence. Are you saving for your retirement? If yes, are you saving the right amount or should you be saving more? Are you going to need a new car soon? If you are, will you have the money for it? A budget gives you the ability and the confidence to plan for the future because you know exactly how much money you have to work with right now.

There really is no downside to budgeting. It reduces one of the most significant causes of stress and it puts you in control of your money and your future.

Is a Cash Advance Loan Right for Me?

2008-12-02T06:16:00.001-07:00

With the holiday season here, and Christmas right around the corner, many are looking for cash to help with the holiday spending. One way of getting cash to help is through Payday loans or Cash Advances, but is it right for you?

Payday loans or cash advance loans are personal unsecured loans, which means you don’t have to put down any collateral for the loan. You do however have to pay significant interest rates and fees. They can be good for someone who is an immediate cash crunch, if you’re willing to pay the price. For example, you have a car or home payment which is due tomorrow and you don’t have all of the cash you need to make the payment. Rather than risk a late payment, expensive fees, and a bad mark on your credit report, you decide it is worth the extra fees to get a payday loan.

Payday lenders are able to charge such high rates because the loans are unsecured and they take very little information from you. Meaning, for the lender they are incurring a bit of risk, which you’re paying for. All you really need to get a loan is a job, an address and a checking account that is in good standing. Another benefit for consumers is that they money is available almost instantly with cash in hand times ranging from one hour to 24 hours.

One of the nice features about cash advance loans for consumers is that they are easily accessible and you can likely find a cash advance store in your hometown or online – whichever is more convenient for you. The average loan pays out generally no more than $1000-$1500 and the loan term generally lasts less than 14 days. The fees generally range from $20-$40 per hundred dollars. That means if you borrow $1000, you owe them $200-$400 in fees. Pretty steep, though some do charge a flat fee of around $30 or $40. If you extend or "roll-over" your loan, you will pay hefty fees for each extension.

If you’re in a bind and need cash fast, the process is simple. In store you would write a personal check payable to the lender for the amount you need to borrow plus a fee. So if you’re borrowing $300 and the fee is $40 per every $100 borrowed, you’d write a check for $420. The lender will give you the amount of the check minus the fee. They’ll give you $300. If you borrow online, the process is similar in that you give them your routing number and account number and they deposit your loan into your account.

Payday or cash advance loans are an alternative for people in a cash crunch, however great care must be taken to make sure borrowing doesn’t turn in to a cycle of debt. When the loan comes due, not being able to make a payment will result in extremely costly fees. Be careful and weigh all options before you make a decision to obtain a payday loan.

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Federal Student Loans to Consider

2008-11-21T07:48:00.000-07:00

Federal Stafford Loans are loans based on student financial need and as the name implies, they are regulated by the federal government. There are three categories of Stafford Loan: Subsidized, Unsubsidized, and Additional Unsubsidized Stafford Loan. The Subsidized Stafford Loan is a long-term loan with a low-interest rate. Subsidized means that the government will pay the interest on the loan while you are attending school or when you student request a grace period or deferment.

Unsubsidized is also long term with a low interest rate, however it is not need-based and is generally a good option for those that don't qualify for other types of financial aid, or who still need more money in addition to other forms of financial aid. Unsubsidized means that you are responsible for the interest. Payments can be deferred.

The additional unsubsidized Stafford loan is reserved for independent students and must meet several federal guidelines.

Federal Perkins Loans are reserved for students in extreme financial need. They have very low interest rates and you have the ability to defer payments for up to 9 months upon graduation or part time status. The amount of funds available for Perkins Loans is extremely limited, which means the amount you receive will be low. Recipients of this loan will likely need to supplement it with private loans.

Parent Plus Loans. Plus loans are given to the parents of students attending college. This loan is based on a borrowers credit score. The benefit of this loan is that you are borrowing federal money, which means the interest rates will be low. Some benefits include the ability to borrow the total cost of tuition The loans are non-need based, the interest may be tax deductible and they require no collateral, additionally the interest rate is fixed so there isn’t a concern of rising rates.

Graduate Plus Loans. This loan is a new program which enables students with a good credit rating to use federal funds to pay for graduate school. Like the Parent plus loan they are not need based, the interest rate is fixed and the interest is tax deductible. Additionally, a borrower can borrow up to the total cost of their tuition.

When it comes to federal loan programs there is a tremendous variety. They can be an extremely beneficial solution to paying for higher education.

Should College Students Pay For Their Education?

2008-11-10T06:02:00.000-07:00

High school graduation is upon you and your child wants to take the next step. College is not cheap these days. The costs continue to rise each year. This fact has some folks asking, should college students pay for their education?

Higher education is a necessity these days. A student with an advanced degree beyond the high school diploma has a world of options available to them. Depending on the program of study, college students can apply for internships and gain valuable experience while they are still in college. All of this adds up to a brighter future in the world of work.

Parents continue to support their children through the college years. A summer job is hardly enough work to finance an education, so parental help is necessary. Some parents, however, don’t have the finances to fund a college education for one child, let alone two or three.

Students begin the journey towards a college education when they are in high school. Here, they map out a plan to get them to the college of their choice. These are the years when grades, volunteer work, and other opportunities are worked on. High school sets the stage for college.

Students that use high school as a staging area for further educational pursuits are, in essence, trying to pay for their education. Good grades can lead to local scholarships. Athletic students can earn tryouts from college scouts that could lead to scholarships.

Financial aid can come in the form of grants, loans, institutional scholarships, and private funding. Senior year is the time when aid is applied for. Hard work pays off in the form of a lucrative aid package that limits the amount of funding parents need to provide. With just a bit of help from the parents, college students have paid for their education.

On the other hand, parents can start an educational savings fund for their kids as soon as they are financially able. A total of 529 plans exist for each state, and can be used for all educational needs of the college student. This also relieves the financial burden on parents because even a small amount added over time equals substantial funding for college.

If parents are worried about how they will manage to run a household and support a college student, start early. Prepare your child to shoulder some of the responsibility by getting their act together and following a game plan for the high school years. Parents can prepare early by starting a college savings fund in the name of each child.

By working together, the problem of funding a college education becomes less painful. Should college students pay for their education? Yes, but not alone. They should do everything within their power to obtain the money they need. Parents need to do the same. College is a rite of passage - make it a smooth one.

Should College Students Have Credit Cards?

2008-11-06T09:40:00.001-07:00

It was scary enough to think of them driving a car at sixteen. Now they are heading off to college. Most parents are not worried about their teenagers getting their hands on a credit card — the plastic of choice for college students. But should they have credit cards in the first place?

It never fails. If you advise your child against something, they will want to do it even more. That goes for credit cards, too.

College students are the fastest growing untapped market. They are not fully adults but not children either. They represent millions of dollars in buying power. They qualify for loans to attend college and other financial aid.

Credit card companies often make deals with colleges to distribute applications to their students in exchange for credit cards that carry the college logo or school name. It’s too bad that those applications are not accompanied by some literature or a course in money management. When the college students qualify for those high credit limits, they don’t account for the fact that they don’t have the income to repay their purchases.

The question is not whether college students should have credit cards but instead, who should give them one. They will acquire one whether parents want them to or not. To head off disaster, parents can be the one to supply the credit card for their college student.

You can add your college student to your own credit card account. You can have a card issued to them in their name but where you can see what they purchase on the account. Set some ground rules and see what becomes of the situation. If good money management has been a part of their life up until then, the student will have a fighting chance of resisting the temptations of plastic.

Go over the statements once a month with them. This can be done over the phone if they attend school far away, or in person if they can make it home for a weekend. Keeping in touch and setting up payments adds accountability to the equation. With a credit card, they will need that from you.

Another option is to open a bank account and get a debit card. Your college student can use the debit card like a Visa or MasterCard. By adding a certain amount of money to the account each month, you are setting a “credit limit” for them. If they can manage the money in this account over a period of time, they could prove themselves ready for a credit card.

College students may not realize the importance of a good credit score, but their parents do. In an attempt to keep their credit good, help them ease into the world of plastic by providing a proving ground of your own making to test their mettle.

Fight the Rising Cost of Tuition With a 529 College Savings Plan

2008-11-01T13:30:00.001-07:00

Your child is ten years old, but has decided they want to be a doctor. You’re probably pleased with the prospects of having a doctor in the family. However, if you’re like most parents, you try to hide the panic as you consider how much a college education eight to ten years in the future will cost. Luckily, there is 529 college savings to help fight the rising cost of tuition.

529 college savings plans are available in and administered by each state. Quite often they allow an investment firm or mutual fund company to manage the accounts. While the plans vary by state, they do have some things in common.

The College Savings Plan Network, a national non-profit organization, works to make a college education affordable for families, regardless of their income level. They list various 529 plans and allow you to compare them to find the best one for you. You may search for it on the internet to visit their website.

One of the main advantages of using a 529 college savings plan is that they are federally and state tax-advantaged to encourage people to save for a college education. There are two basic forms: college savings plan and prepaid tuition program. Both plans allow you to save money free from federal income tax and possibly withdrawn as federally tax-free if used for a qualified college or university in your state.

The 529 prepaid tuition program allows parents, grandparents, and anyone else interested in helping pay for a child’s education to lock in future tuition at the current rate. The plan may be funded in a lump-sum or in monthly installments. The 529 college savings plan is an account paid on the behalf of a child and is dependent upon the saving goals originally set. They receive a return based on a variable rate similar to a bond, but may not receive as high an interest rate.

Your child is never too old or too young to start a 529 account. Of course, the sooner you begin saving, the less you’ll have to pay out to reach a certain level. If you begin saving when your child is a baby, you may only have to invest $100 a month to reach the savings you desire. Whereas if you wait until your child is about to start high school, you’ll likely have to save nearly $600 a month to reach the same level.

Planning ahead is wise when it comes to your child’s future educational goals. Use 529 college savings to help fight the rising costs of tuition. Starting an account, sooner rather than later, will not only benefit your child, but could have benefits for you, as well.

Comparing Various College Savings Plans

2008-10-23T07:53:00.000-07:00

College expenses are expected to rise. In fact, by the time a child born this year reaches college age, tuition is expected to be three to four times greater than it is now. Families with children are already preparing for the inevitable by comparing various college savings plans and choosing the one that will best suit their needs.

Qualified Tuition Programs (QTPs), also called 529 funds, are the best way to save for your child’s educational future. You may establish a 529 fund (named after the IRS 529 code) by pre-paying for your child’s education, or by starting a college savings plan. The largest benefit to the pre-paid tuition is that the in-state college or university must lock in the rate of tuition based on the fees at the time of its inception. There are no guarantees with the college savings plan.

Every state in the country has some form of state 529 plan. Some states offer only the college savings plan, some states offer only the pre-paid plan, and a few states offer both plans. A group of private colleges are also offering national pre-paid tuition plans for private and independent colleges. This is known as the Independent 529 Plan.

The 529 pre-paid tuition plan was established to guarantee the savings will increase at the same rate as college tuition. If you purchase a year’s worth of tuition today, it will be worth a year’s worth of tuition when your child is ready to use it in ten years. The value will remain the same regardless of how much the tuition actually increases.

This plan allows a student’s parent to lock in the tuition rate at the time they begin paying on the plan. It offers peace of mind and offers a higher rate of return on your investment than the other plans. There is no risk to the principal and are usually guaranteed by the state in which they were established. These plans are exempt from federal income tax, and often from state and local income taxes. If the student chooses not to attend college, or dies before attending, the plan can be transferred to another family member.

The 529 college savings plan differ in that they do not offer any guarantees on tuition rates when the child reaches college age. They are a tax-exempt saving plan earmarked for education, but they are subject to market upheavals. Because they are more risky, there is potential for a greater return on your investment. The plan is adaptive based on the age when the plan is started and how long it will take the student to enter college.

Anyone can contribute to a student’s 529 plan, regardless of which plan the student has. Each state will have some limitations to their plans, so check with the state in which you live for their requirements. You may be able to make periodic withdrawals, but again, check with your state for specifics.

Besides the 529 Tuition plans, you may use the tried and true methods of savings bonds, putting money into traditional money market funds, or trust funds. Surely by comparing various college savings plans you will be able to find one that will meet your current financial and your child’s future educational goals.

Chapter 7 Versus Chapter 13 Bankruptcy

2008-10-12T12:21:00.000-07:00

Is the financial situation in your life such that you need to file for bankruptcy? If so, there are two types of bankruptcy that apply to the individual: Chapter 7 and Chapter 13. They differ in many ways. Learn the details of both before choosing which type of bankruptcy to file for.

Chapter 7 bankruptcy is the one that most people seek to file. When a person files for bankruptcy under Chapter 7, their assets are liquidated to pay what is owed to the creditors. The courts decide on a reasonable amount for payment based on individual circumstances.

All of the assets are not liquidated. Each state has its own policy as to what assets are considered a part of the liquidation equation. You may be allowed to keep your home and car.

In October 2005, the laws concerning Chapter 7 bankruptcy were changed. Now, there are tests that have to be passed in order to file for Chapter 7 bankruptcy. A person’s income must be lower than the determined median income for the state in which they reside. Also, a person must not have the assets available to pay at least twenty-five percent of their debt owed in order to qualify to file under Chapter 7.

Special circumstances have to be demonstrated by the filer in order to override the testing requirements. Special circumstances were extended to victims of Hurricane Katrina so that they could have the chance of a new start after the flooding disaster that destroyed their homes. If the judgment is against filing for Chapter 7 you may appeal, but this involves another trip to the courts and extra expense. If you feel that you need to be heard, it could be worth it.

Chapter 13 bankruptcy involves repayment of the debt owed to creditors. You are given a time frame to pay off your debt and means are developed for you to do so. The assets that you own are not liquidated. The courts look at your finances and determine what you can reasonably afford to pay back to the creditors.

Under the new bankruptcy laws, this process is a little different. The court used to decide what expenses where necessary for you to pay and what were not. Necessary expenses where things like rent/mortgage, groceries, utilities, and so forth. Under the new law, a formula developed by the IRS determines this.

The government wants people to think long and hard about filing for bankruptcy. Before any bankruptcy proceedings take place, the potential filer must attend credit counseling. Also, the government can liquidate or non-exempt any assets that were purchased right before bankruptcy was declared. The attempts to hide money within property not subject to seizure are no longer an option for abusers of the system.

Bankruptcy filing is a serious matter. If you are determined to file, know which type you stand a chance of qualifying for with the courts. Since laws are tougher, be aware that bankruptcy lawyers will charge more for their part in the process.

Are Debit Cards Smart Choices?

2008-10-11T07:50:00.001-07:00

Debit cards are associated with checking accounts. Consumers can use them as credit cards if they contain a Visa or MasterCard logo on them. They don’t incur fees like a credit card does because they are backed by the amount of money in the account. With that said, are debit cards as good a choice as they seem?

Debit cards are issued when a checking account is opened if the customer elects to do so. Debit cards give the illusion of a credit card, without the fees and penalties that go along with failure to pay or late payments. They make it easier to purchase items in stores or restaurants. We’ve all seen those commercials where everyone in the shop pays with plastic and things run smoothly. Then, that one person comes along that puts a monkey wrench in the machine with a handful of cash.

Debit cards teach people to manage money again when they have had trouble in the past with credit cards. They come complete with a safety net because they are tied to a checking account with a set amount of funds. Checks and cash are being pushed out of the way in favor of the “new plastic”.

Now that we know how a debit card functions, here is a word of warning. Debit cards are a smart choice if they are handled with care. Pitfalls do exist and a debit card user can fall victim if they are not careful.

Since they are tied to a checking account, transactions need to be recorded in a ledger or a computer program. The enemy of the debit card is the ATM machine. It really does seem like a genie in a box. You put a card in and push some numbers and money spits out at you.

Just as quickly as that money was deposited in your account it can disappear if you are not careful. The checking account can become overdrawn without ever bouncing a check. ATM receipts can be deceiving, because they don’t always reflect the true current balance in the account if other transactions haven’t cleared the bank.

Debit cards are also subject to “blocking” just like a credit card. This means that some merchants can block off a set amount of money in the account until your transaction with them is processed. Case in point: using a debit card to pay for a $20 visit to the gas station, but the store blocks off $50 on the card. If the extra $30 was earmarked for something else, you will run into problems until that block is removed.

Debit cards are a good choice if managing money is a problem. But, learn to use them wisely or you could run into trouble with your checking account balance.

Savings Account Interest Rates Overview

2008-10-06T06:46:00.000-07:00

From the amount of debt Americans have today, it’s obvious that people like to spend money. What’s better than spending money however is saving money. Unfortunately, most people don’t save, and if they do, they don’t understand about savings account interest rates.

To understand saving money, one needs to understand interest rates, how the rates differ, how they are figured, and how they can benefit the saver. If people realized the potential of saving, even a little, each week, there might be more savers than non-savers.

One way to determine interest is with Simple Interest, and it is just that, the simplest type of interest to calculate. It is calculated as I = P r t or Interest ( I ) = Principal ( p ) times the Rate ( r ) times Time ( t ) periods. If you invest $100 at 5% interest for a year, the calculation would be $5 = $100 x 5% x 1 yr. So, for a year at 5% interest, you would gain $5 interest on $100.

Banks generally don’t pay simple interest, although that may be the initial interest payment since compounding hasn’t begun. Most banks will use compounding rather than simple interest. They also use annual percentage yield to figure interest. (Check around to see which bank offers the highest APY.)

The annual percentage yield (APY) is how banks determine how much interest a person earns in a given time period. The higher the APY, the more money you will receive for leaving money in that institution. The APY is the amount of yield you earn on any money deposited over a year’s time. This is how much money you’re making for maintaining this financial relationship.

It is rare for a bank to pay out interest on a monthly basis any longer, but will usually pay quarterly. Suppose you opened a savings account with $1,000. Each week you saved $50. At the end of the quarter (three months), you would have $1,600 of your own money in the account. The bank would figure the interest based on and pay interest on that $1,600. If the interest rate were 5.3%, you would receive an additional $84.90 automatically deposited into your account. Maintaining this rate of deposit and interest, you would have $4,408.28 in your account at the end of the year.

The calculation for figuring the APY is: APY = (1 + r/n)n -1 where r is the stated annual interest rate and n is the number of times it is compounded each year. This is also called the Effective Annual Rate (EAR) calculation, if you’re in finance.

All of the mathematical calculations aside, you can save with confidence if you find the highest APY and choose to save at that institution. With a little work, it is possible to understand savings account interest rates. Just remember, the higher the APY, the more money you’ll earn in the long run. And isn’t that why you’re saving in the first place?

Tips for Choosing the Right Savings Account

2008-09-29T08:38:00.001-07:00

The reasons for saving are as varied as the types of accounts you will find at financial institutions. People set aside money for emergencies or for future major purchases. Others save for a child’s education or retirement. Knowing the reason for having a savings account will help you choose the type you need, along with these tips for choosing the right savings account.

Consider one of the following types of accounts when you’re searching for a new savings account:

• Certificates of Deposit (CDs) – CDs are best for those leaving their money for short periods of time, as little as one month up to five years. The longer you leave the money in the CD, the higher payout you will receive. There are penalties for early withdrawal; if you know you won’t need your money for a while, a CD might be a good option for you.

• Money Market Funds (MMFs) – A good choice for an “emergency fund,” the MMF allows the owner to access the money through check-writing privileges, if the need arises. They are as safe as a bank money market account, but may earn more interest than a money market account.

• Money Market Accounts (MMAs) – This type of account would also be viable as an emergency fund. They are insured by the FDIC, and interest rates are usually competitive with MMFs. You may be able to access your MMA account online through your regular check account.

• Ultra Short-Term Bond Funds – This type of account carries more risk. In fact, instead of earning interest, you may actually lose money. If having a certain amount of interest added to the money you’re saving is important, a CD would be a much better choice. The possibility of earning more interest is there, but these accounts tie up your money from six to twelve months.

• Short-Term Bond Funds – If you know you won’t need your money for two to three years, the short-term bond fund is a good option. They take longer to mature but this type of bond will receive higher yields. The downside, however, is that the funds may fall if the interest rates rise. Weigh the risk against the possible gain to determine if this account is for you.

• Mortgage-Backed Bond Funds – Often referred to as Ginnie Mae funds, these funds are invested in mortgage-backed securities. They are very sensitive to the changes in the prime interest rate and can easily lose money if funds are removed prior to maturity. Keeping the money in this fund for the duration will allow it to earn the most money. Expect these funds to be tied up at least three years.

You may also find online savings account through institutions other than your local bank. These accounts, however, may require you to deposit more initially. They may also require additional fees for keeping the account for you, and they may require a higher balance. For these reasons, an online account may not be the best choice.

Research the various types of savings accounts. Then follow these tips for choosing the right savings account for you. You just might find that your local bank has what you’re looking for and what will bring you the most return for your money.

Create an Achievable "Get Out of Debt" Plan

2008-09-15T06:21:00.000-07:00

When you have an overabundance of debt, it's natural to want to get rid of it as quickly as possible. Interest costs can really add up, and having too much debt makes it difficult or impossible to take on debt for things you need. But when we're faced with more debt than we can handle, it is important not to panic.

Getting out of debt on one's own is best if it's possible. But many debtors make the mistake of trying to pay their debts off too quickly. They set unrealistic goals, and when they can't achieve them they become discouraged. This often ends with them filing bankruptcy, because they feel that there is no way around it.

The best course of action is to be realistic. Make a budget, and include everything that you spend money on each month. Then find what you can realistically do without, and put the money you save on those things toward paying off your debt. Here are some things we can often cut out of the budget:

Eating out. Whether you pick up fast food for lunch when you're working, or go out to eat with friends at a fancy restaurant once a week, you can cut costs here. Take your lunch to work, and have dinner with your friends once a month instead of once a week. Or better yet, suggest a less expensive activity that you can do together.
Vices. Cigarettes, lattes, and other things we buy as a matter of habit are good places to cut back. Quitting smoking is good for you anyway, and switching to regular coffee, made at home with some flavored creamer, would be less expensive. Every little bit helps.
Entertainment. No one's saying that you have to sit at home and be bored all of the time. Just examine your entertainment budget and see if there are ways you could cut back. If you rent a lot of movies, for example, consider signing up for an unlimited plan.
Travel. With gas prices usually going up instead of down, cutting back on travel can be a real money saver. Carpooling, and combining trips as much as possible, are two ways that can save you a substantial amount of money on travel.

It may take you several months or even a few years to get your debt paid off, depending on how much debt you're in and how much extra money you can put toward it each month. But as long as you're able to make your minimum payments and add a little extra to at least one of your bills each month, you will be making progress. You'll also be keeping your credit in good shape by making the payments on time. Just be patient, and you will eventually be debt-free.

Do You Need to Eat Out Every Day?

2008-09-10T07:03:00.000-07:00

This is a question we need to seriously think about. It’s fun to eat out with co-workers, but can our budget handle it? Following the group could be part of the problem that is siphoning our hard earned money each payday.

No one wants to be left out. Eating lunch together is a way to bond away from the office. Besides it’s only six dollars, right?

This scenario demonstrates how we think when it comes to spending money on food. Food and good times seem to go together in our culture. Eating out is not the only way to bond over food.

When setting up a budget, a category is created for groceries. A weekly or biweekly shopping trip to the grocery store brings enough groceries in the house to feed the family. Buying lunch when there is food in the house blows the budget.

Ask co-workers to try bringing in their own lunch at least three times a week. Make a plan to eat in the break room together or outside at a picnic table for lunch. They will save money also.

When you eat out, you probably choose the same one or two places. Make some of your favorite dishes at home and take them for lunch. The grocery trips are not just for breakfast and dinner items. Buy foods that are good in a packed lunch. Most workplaces have a microwave and/or a toaster oven. You can prepare your food and eat it piping hot.

If you have a group of co-workers that you spend most of your time with, why not start a lunch club. Each person takes a day and fixes something for the others in the group to enjoy. No one has to prepare a meal more than once a week and they will know in advance when it is their turn.

The extra food can be figured into the grocery bill. The lunch club idea may catch on and more people will want to join. The more people are involved, the less often each person has to contribute a meal. The meals don’t have to be elaborate. There are many delicious meals that require only a few ingredients.

You can still eat out once a week or maybe even twice. Add it to your budget. Pay for your meal in cash. This eliminates the temptation to overspend that can happen when using a credit card. Eating lunch out means that dinner will have to be eaten at home to balance spending habits.

Lastly, if the group still wants to eat out more often that your budget allows, opt out. Tell them politely that you can’t go and brown bag it. They’ll still be your friendly co-workers, and you’ll have learned a valuable lesson about resisting the temptation to follow the crowd at the expense of your money.

Stop Ignoring Debt Collectors and Start Working With Them

2008-09-08T10:33:00.000-07:00

If you're drowning in debt, it makes life much more difficult. You have trouble getting credit for the things you need, and you probably spend a lot of time trying to juggle your finances. And then there is the matter of debt collectors calling day in and day out.

Debtors often avoid answering the phone when debt collectors are calling. They don't want to be reminded of how much they owe and how far they are behind, because they simply don't have the means to pay their debt. But what they don't realize is that debt collectors are often willing to help them get back on track.

It's true that creditors want their money. That is why they are calling you. But it's also the reason that they will often work with you. They are often willing to lower interest rates, reduce monthly payments, or waive late fees to help you. Many creditors realize that by helping debtors, they are more likely to get payment in full than they would by making demands.

How to talk to debt collectors

When a debt collector calls, it's important to tell them about your circumstances. Whether you've had problems that were no fault of your own or just spent too much and got in over your head, letting them know that there is something keeping you from paying them is important. They will be much more willing to work with you that way.

Once you've explained yourself, they may offer assistance. Listen to what they have to say, and if it sounds doable, accept. If the debt collector does not offer a solution, ask if there is any way that your interest, payments, or fees can be lowered to put them within reach.

If the person you speak with is not helpful, ask to speak to a supervisor. It could be that the person calling does not have the authority to extend the assistance you need. Once the supervisor is on the line, explain your situation again and tell him or her what it would take for you to be able to get your payments current.

What if they won't help?

In some cases, debt collectors are not willing to be of assistance. If this happens to you, try to work something out with your other creditors so that you can afford to make payments to everyone. If that doesn't work, you may need to talk to a credit counselor. They have the clout and experience necessary to work out deals with creditors that consumers may not be able to.

No one likes to talk to debt collectors, but sometimes doing so can be beneficial. It certainly doesn't hurt to try. You just might be surprised at how willing they are to help.

Roth IRAs, 401(k), and 403(b) – Which one is Right for Me?

2008-09-04T11:59:00.000-07:00

The task of planning for retirement can seem confusing, but it doesn’t have to be. You can learn about the different options. But you’re probably wondering - Roth IRAs, 401(k), and 403(b) – Which one is right for me? The following overview of each might help you make that decision.

The Roth Individual Retirement Account (IRA) is less than 10 years old, but it has been widely used since its introduction. Contributions to this IRA are not tax-deductible, but the funds can be withdrawn tax-free after the age of 59 ½ if the account is five years old or older. The Roth IRA does allow for some early withdrawals without penalty, but you are limited in the amount of money you can contribute, only $2,000 per person for a joint account. If you won’t be retiring for a number of years, this might be a good match for your retirement plan rather than a traditional IRA.

A 401(k) is a defined contribution plan in which the employer makes contributions. The employee may make contributions, but they are not required. The amount of money you can have contributed to a 401(k) is considerably larger than an IRA, so they may have an advantage if your employer offers them. They also have the benefit of being transferable should you ever leave your current job. These funds may be left as they are, moved to a new 401(k) plan with your new employer, they may be rolled over into an IRA, or they may be dispersed as a lump sum. Remember, however, if you take the lump sum you will have to pay a penalty for early dispersal.

The 403(b) plan is similar to the 401(k) except that it is restricted to employees of educational institutions or staff of non-profit organizations (501(c)(3)s as determined by the Internal Revenue Service). They are tax-deferred until the funds are withdrawn, and are generally an addition to the normal pension plan that educational employees and non-profit organizations give their employees. Having a 403(b) will not affect your social security benefits, and this plan can be used by part time employees as well. This plan does not allow you to move your account without paying penalties, unlike the 401(k).

These short overviews for the Roth IRA, 401(k), and 403(b) plans are not exhaustive, but they might help you answer the question, “Roth IRAs, 401(k), and 403(b) – which one is right for me?” The person who can best answer that question, however, is a trained professional such as a financial planner or counselor. Remember, ultimately the choice belongs to you. Listen to the advice and then you choose based on the information you understand.

Living Debt Free: A Guide for Getting Out of Debt

2008-09-03T07:47:00.001-07:00

Finding answers to your debt problems can be overwhelming but "Living Debt Free" can be a lifesaver for anyone who is in debt. This 35 page ebook is a financial guide to help anyone who’s in debt get out of debt. Outside of sound advice, included in this ebook are worksheets, sample letters to help you talk to your creditors and an audio version for anyone who would rather listen than read the information.

Kristine McKinley, the author of this ebook, is a CFP (Certified Financial Planner) as well as a CPA (Certified Public Accountant). Her experiences with helping people who are in debt is why she decided to write this ebook. She put those experiences in writing to help others who feel like they are drowning in debt.

This ebook shows you exactly where to start. Armed with ideas on where to start, you learn how to free up cash and how to create your own system. You start to feel better from the get-go. It even explains how to deal with your creditors. The sample letters in the ebook make it easy for you to write those letters that you've been dreading. Most people don't know what to say in them, but with the help of this ebook you'll know just what to do and say.

It will teach you about credit scores, what they are and how they affect you. Why closing credit card accounts could hurt your credit score and other financial insights. You'll learn how to utilize your credit reports, correct mistakes and restore your credit score.

Staying motivated while trying to get out of debt can be hard but with a little patience and perseverance you can achieve a "debt free life". If you need help finding a way to get out of debt take a look at this ebook. It’s not very expensive and the help you get from it makes it a worthwhile investment in your financial future. I would encourage any one who needs this type of help to look into this ebook.

To learn more about "Living Debt Free" just CLICK HERE.

How to Plan for Future Expenses

2008-08-30T14:36:00.001-07:00

Many people live from paycheck to paycheck, never quite sure if they have enough money to cover their bills. Living this kind of lifestyle makes planning for future expenses like emergencies or a new car extremely difficult. However, these big expenses do pop up from time to time and if you’re not prepared, it can be an extremely stressful event. Here are some tips on how to plan for the future and save money for the little and the big expenses.

Step 1: Create a budget, or call it a spending plan if you prefer. A budget simply tells you how much you are spending on certain items in your life. It gives you control over your spending and cash flow, and helps you know where you can cut back.
Step 2: Create spending goals. How much you spend on the majority of expenses in your life is up to you. You don’t have to spend $1000 a month on going to the movies. When you create a spending goal, you begin to control your money in a positive way.
Step 3: Create savings goals. Include both short-term and long-term savings goals. Short-term goals give you more immediate satisfaction, like saving for a new coat or a vacation. Long-term goals like college fees or retirement are important too. Both types of goals will have time lines and a planned amount to save each month. For example, if you’re saving for a family vacation your goal may be to put away $200 every month for two years.
Step 4: Create a separate savings account for your goals. If your savings and your checking mingle, then you run the risk of using your savings to pay for bills or things you want to buy.
Step 5: Put away money for emergencies. This is particularly important in this day and age where people can get laid off from their jobs, or businesses can go under without notice. And if you’re self-employed, a savings is particularly important. Experts advise to have a minimum of six months salary set aside just in case.

Saving money doesn’t have to be a painful process. With the right planning and a good budget, saving money can be a very positive and empowering experience. After all, it’s worth all our time and a little effort to make the future more secure, to provide a good role model for our children, and to enjoy the fruits of our labor.

Deep in Credit Card Debt? Refinancing Might Be the Answer

2008-08-27T10:30:00.000-07:00

Paying off debt isn’t always an easy task to accomplish. There are certain steps you need to take initially to determine when or if paying off debt is a realistic possibility with your current financial status. To determine if you’re able to pay off your debt as it stands - this means without incurring more debt or resorting to alternative financing methods - take these three steps:

Step #1: List all of your credit cards, including your outstanding balance, your interest rate, and the minimum payment percentage and the minimum payment according to your latest statement. Yes, this could be painful and may strike a chord of panic in your chest. Don’t worry. This is the first step to gaining control of your finances and getting your credit back on track, and it is absolutely necessary.

Step #2: Add up the minimum payments for all of your cards. This means if you have five credit cards, what minimum balance do you owe on each and what is the total of your minimum balances?

Step #3: Create a budget. Yep, this can sound like a scary word, but a budget will tell you exactly what you have to spend each month and how much you have to pay off your credit card balances. To determine if you’re able to pay off debt with your current financial conditions, list the total minimum balance of all your credit cards as a regular monthly expense. When you’ve completed your budget, do you have enough left over to tackle paying off the credit card with the highest interest rate? This means paying the monthly minimum which is already figured in your expenses and paying more money on top of that amount. The more you can pay off, the better.

If the answer is that you don’t have enough to pay extra on your highest credit card account your next option is to consider refinancing your home or taking out a home equity loan. This means you’re borrowing against the equity of your home and thereby reducing the amount of your home that you actually own. You can also open up a home equity line of credit. The benefit to doing this is that your interest rate is going to be much less than what your credit cards are charging you. The downside is that you will own less of your home and that there are always fees associated with borrowing money. Also, if you don’t cut up your credit cards but you continue to use them, then you’re simply increasing your debt.

So while there are obvious benefits to this type of debt solution, there are also some drawbacks, and a home equity loan or refinancing shouldn’t be a decision that you make lightly.

Creating a Personal Budget

2008-08-24T07:34:00.000-07:00

Where does all that money go each month? Everyone wants to know but no one wants to tackle the one thing that can answer the questions: create a personal budget. For some, you might as well be strapping the handcuffs on them. A personal budget is tedious at the outset, but once it is in place, you’ll be glad you did it.

Let’s start with the basics. A personal budget needs to have a listing of all the money coming into the house on a monthly basis. This includes salaries from work, child support, alimony, income from real estate investments, and pensions. All of these sources make up your monthly income that can be used towards household expenses.

Add these up. This is the amount you have to start with. You probably can’t believe you have that much money coming into the household when you open your wallet at the end of the month and nothing but moths fly out.

Now we tackle the debt. What are the expenses that you pay each month? This includes mortgages, utility bills, other loan payments, child support, alimony, credit card payments, child care, entertainment bills, car insurance, and car payments. If the price of these bills stays the same each month your budget will be easier to figure out.

Money also needs to be allocated for variable expenses. Clothing, food, gas, medical co-pays, and entertainment fall in this group. This type of entertainment includes going to the movies, a play, or out to dinner. Monthly cable television bills would go in with the recurring bills.

Add up all of the recurring debt and subtract that from your income. The remainder will create monthly allowances for the variable expenses. People who send money to their savings account each month can record that amount as an expense. If you are having trouble saving, this is the perfect time to allocate an amount for that purpose.

Keep a log such as a check register, or use finance software aids in tracking where the money goes. One way that money disappears is through the ATM machine. It is easy, convenient, and the number one way to ruin your budgeting efforts.

Creating a personal budget is a family affair. Parents don’t have to go it alone. Let everyone in the house contribute to the final product. After all, each person will be governed by it in some way. Children can benefit from the financial habits that they see you implement in your daily life.

Budgets are not quick fixes. Just like any other habit it will take time to become second nature. Before it is all said and done, you may find that you have to change the original budget several times until it fits your lifestyle. An ideal budget should allow wiggle room but provide structure to keep to your goals.

Reasons for Why Every Family Should Have an Emergency Fund

2008-08-23T08:18:00.000-07:00

Long ago, men could expect to work at a job long enough to retire and be given a gold watch for their years of service. They knew that if they started working at a company, they would most likely be working there the rest of their life. Times have changed, however. Job security is a thing of the past. That is one of the reasons every family should have an emergency fund.

There are many reasons to have an emergency fund: your washing machine breaks down and cannot be fixed, you must attend a funeral across the country and have to buy a plane ticket, or you or your spouse get laid off from what you thought was a permanent job. There are reasons every day that cause us to spend money that we hadn’t intended on spending. You could put those bills on credit cards, but you’re only delaying the inevitable. If you have an emergency fund, you may be able to avoid unnecessary debt and sleep a little better at night.

Every family should have an emergency fund, and the sooner you get one started, the better off you will be. Unexpected things happen to everyone. Starting to save money now is a proactive way to prepare for the unexpected when it happens.

Financial experts advise having a minimum three to six months living expenses in an emergency fund. This would include everything that you normally pay out over the course of a month – mortgage, car payments, car and home insurance, groceries, electricity, telephone, and any other bill you might have. If all of your bills add up to $2,000, you would need to save between $6,000 and $12,000 in your emergency fund.

If you’re used to living from paycheck to paycheck, setting aside money for an emergency fund might seem daunting. You can, however, find little ways to save money during the month. Refrain from eating out. Depending on the size of your family, that could save you $25 or more each meal. Don’t go out for movies and popcorn. That would be an additional $30 or more savings. Take any money you would spend on luxuries and put it into savings. It’ll take a while to build the fund up, but you’ll be so glad you did.

After you have started an emergency fund, how do you determine an adequate reason for getting money out of it? If your car breaks down and it will cost more than you have available in your regular account, by all means use the emergency fund. What happens if your air conditioner breaks in the middle of an oppressively hot summer? Yes, that constitutes an emergency. Go ahead and use some of the money you have saved up.

The reason every family should have an emergency fund is to avoid taking money out of their normal budget or putting more money onto credit cards. Emergencies happen and can wreck havoc on a family budget. By having an emergency fund set up, handling emergencies will be easier and will cause you much less stress. And it won’t take you into financial ruin should an emergency happen to you.

Payday Loans vs. Credit Card Advances...

2008-08-22T14:19:00.001-07:00

A bill is due tomorrow, your bank account is low, and you need cash fast. What can you do? Many turn to the payday loan option. This option has several pros and cons.

The Pros of a payday loan:

You can get cash in less than an hour.
You can make the transaction online.
You don’t need to put down any collateral, they’re unsecured loans
You don’t need much information to process the loan.
The money is deposited right into your account

The cons of a payday loan:

The fees are very high, generally ranging between $30 and $40 per $100 borrowed.
The term of the loan is short, usually less than 14 days, which means you absolutely must have the money coming your way soon to repay the loan or you’ll be paying very high fees.
Many lenders have an automatic deposit and withdrawal system whereby they deposit a loan into your bank on a monthly basis, and then take the money out on a regular basis. Not only do they have free access to your bank account, you’re paying monthly fees and the plan can be difficult to get out of.

Another option you may consider is a cash advance from your credit card. Here are the pros and cons of that option.

Pros of a credit card cash advance:

There is no authorization phase. It is your credit card and you've already gone through the application process.
All it takes is a trip to your local ATM and you can deposit the money in your bank.
You know and have a certain amount of experience with your creditor versus no prior relationship with a payday loan company.
You control when you pay back your cash advance.
You can borrow as much as you need, up to your limit

Cons of a credit card cash advance:

The fees are high.
Your interest rate for your cash advance may be different than your regular APR
Without a pre imposed payment deadline, the interest can climb and you may end up paying on your cash advance for years.

When comparing your options, consider how much money you need, how fast you will be able to pay it back, and what fees your loan will cost you. Consider obtaining a small personal loan or speaking with the company or person you owe money to, to see if different payment arrangements can be made. Both payday loans and credit card cash advances are an expensive solution. However, both can also get you out of a quick financial bind.

Credit Bureaus 101 ...

2008-08-20T08:00:00.000-07:00

By definition a credit bureau is an agency which collects and sells information about the creditworthiness of other people and businesses. It collects information about your credit history including how much credit you have available to you, what your balance is and your payment history.

A credit bureau or agency compiles the information to give individuals a credit score, which is a number lenders use to evaluate the risk of lending money or giving credit to you. They also generate reports of your financial history and sell them to prospective lenders. This information is used to not only determine whether or not to extend credit to you but at what interest rate. This is one of the reasons it is extremely helpful to have good credit. It could mean the difference between a 1% car loan and a 10% car loan – potentially thousands of dollars depending on the cost of the car.

Here's what a credit bureau does not do:

A credit bureau does not make any decisions about whether or not you should be given credit or a loan. They simply exist as an information collection agency, it just so happens that all the information they collect is directly related to your credit history. This means loans, credit cards and bank account information will all be present for creditors to evaluate their lending decision on.

The three largest credit agencies are:

Equifax
Experian
TransUnion

According to the Fair Reporting Credit Act, citizens of the United States are entitled to one free credit report each year. These can be obtained at http://www.Annualcreditreport.com. This is the only place you can take advantage of an entirely free credit report. If you see the words “free credit report” on any credit reporting site, it is likely a promotional offer to get you to become a member and there will be fees charged on your credit card at a later date.

It is important to take advantage of your free credit report because it helps you stay on top of your credit score, but more importantly it protects you against identity theft. When you view your credit report you can easily see if any accounts have been opened in your name. When you find discrepancies, contact the organization immediately. While it can take some time to clear your identity and clean up your credit after being a victim of identity theft, the good news is that you are not responsible for the debt.

Differences in Saving for Retirement for Men and Women

2008-08-19T06:22:00.000-07:00

One would think that when saving for retirement, the rules would be the same for everyone. However, there are differences in saving for retirement for men and women. It is advisable that both men and women consult with a financial planner. They will have the best advice for saving for retirement.

Prior to the 1980s, most companies had defined benefit plans in place where an employer saved money for the employee and then paid them a percentage of their income each month for the rest of their lives after retirement. Now, however, employees have to contribute to a defined contribution plan and the employer pays only a portion of the cost at retirement. 401(k) and profit sharing plans would be included in this type of plan.

Traditionally, men have been the main financial provider. They are not expected to live as long as women, and are not expected to be the sole provider for their dependent children should their spouse die. Therefore, they have been advised to save for retirement, but generally have left the actual planning to the employer. Times have changed, however, and men are now realizing they have more responsibility and options when it comes to saving for retirement.

Women, on the other hand, are relatively new to the job market and worrying about what to do about retiring. Women are generally given different financial advice than men. Part of the reason women are given different financial advice is the fact that they are expected to outlive their spouses. They are advised to save more for retirement because they are expected to live longer.

Another reason women are advised differently is because women generally make less money and start to save later in life than men do; therefore, they end up saving much less than their male counterpart. Women haven’t been taught about financial planning and so probably avoid making financial decisions because they are afraid they’ll make a big mistake.

As a general rule, if a couple were to divorce, the children would most likely be awarded custody of any dependent children. This fact alone could make a huge difference in how a woman would be able to plan for retirement. If her ex-husband doesn’t pay child support as he should, she would have less money to save for retirement because she would be using it all for maintaining the household.

Both men and women would be wise to take advantage of any financial education that is available to them. Because there are differences in saving for retirement for men and women, both would benefit from education and advice from qualified financial planners or certified public accountants to help them make the best financial decisions about their future retirement.

Advantages and Disadvantages to 401(k) Plans...

2008-08-18T07:12:00.000-07:00

The 401(k) plan, or “defined contribution plan,” is so called because the amount of contribution is measurable; the amount you receive upon retirement is not measurable. There are advantages and disadvantages to 401(k) plans. Choosing to invest in this type of plan is entirely up to you. You might want advice of a qualified certified public accountant (CPA) or financial counselor.

Advantages of the 401(k) plan include:

Tax Deferred. All savings for retirement in this plan are tax deferred. This means the contribution is taken out before taxes are paid on your paycheck. Taxes will be paid on the amount withdrawn, however.
You have a choice. You have a choice in how much you contribute; therefore you control how much you are able to save. Your employer may contribute a matching percentage which will help the amount you save grow even quicker.
Payroll deductions. Most companies will have 401(k) contributions taken automatically taken out as a payroll deduction. You should also get quarterly reports from the investment company.
Will not affect Social Security. Your 401(k) account will have no bearing on the amount of money you will receive from Social Security. Since Social Security was established to help supplement your income, you will want to have another source of income, and a 401(k) can provide that income.
Your funds are safe. Even if the company you work for files for bankruptcy protection, the money you have contributed is safe. It is held in trust by a separate entity and cannot be touched in case of a bankruptcy. The money vested in your account is yours and remains safe.
Loans are possible. Because the money in your 401(k) plan is yours, you may be able to borrow against it in the case of an emergency. Realize that if you do not make regular payments back into the 401(k), it will be changed to a distribution and all penalties and taxes will follow.

Disadvantages of having a 401(k) are varied:

Loans are possible. While many might think the ability to borrow against your 401(k) is an advantage, the ease by which you may borrow really makes it a disadvantage. If you fail to repay the loan, you may face stiff penalties and possibly forfeit the remainder of your 401(k).
Market driven. Your money, when placed into a 401(k), does not have the benefit of being insured. In fact, depending on the investments that you’ve chosen, you could actually lose money while it is tied up in a 401(k). If you see that you’re starting to lose money on a particular investment, you might want to consider changing it.
Limited payout. Unless you have chosen to invest in risky investments, you may not receive the return on your investment that you desire. Most financial counselors will suggest that you spread your investments out between conservative and risky investments.
Employer limitations. Some employers may not allow you to contribute as much as you’d like. They may also choose not to match your contributions. In either case, you may not be able to save as much as you would prefer.

By looking at the advantages and disadvantages to 401(k) plans, you can see that much research or advice may be needed before choosing to sign up for the plan at work. A reputable financial counselor can give you the advice you need to make the best decision for your financial goals.

It’s Never too Early to Start Saving for Retirement

2008-08-17T09:19:00.000-07:00

Well, maybe that title isn’t entirely true. If you’re six and just got $20 for a birthday present, it might be a “tad” bit early to start saving for retirement 60 years in the future. However, if you’re an adult, it’s never too early to start saving for retirement. In fact, the sooner you start the better off you’ll be when the time to retire comes.

Most financial advisors will advise you to begin saving money for retirement when you begin your first job, so it really isn’t too early to begin planning for the future. The fact is, if you begin saving when you begin a job, and save faithfully every month, when you’re ready to retire, you could have saved a good deal of money. If you waited ten years to begin saving, you’d have less money saved in the long run.

Look at it this way, if you retire at age 65 and you live until you’re 90, you’re going to have to live on what you’ve saved for 25 years, and you won’t have a paycheck to help you out. So starting to save when you’re younger will give you that many more years to save, and compound interest on all that you’ve deposited.

Savings options abound when it comes to retirement. There is the traditional 401 (k) that you can start at your place of employment. You can also open an Individual Retirement Account (IRA). There are stocks and bonds, Certificates of Deposit (CDs), and Money Market Accounts. It is advisable that anyone beginning to save for retirement speak with a financial planner to give them the best advice for where to put their hard-earned savings.

Deciding to save money for retirement depends on a number of things:

Your age when you start saving
The age you plan to be when you retire
Whether or not you’re married with a family
What lifestyle you would be most comfortable with when retirement comes.

Speaking to a financial advisor will help you learn how much money you will need for retirement, how much money you will need to save, and approximately how long that money would last you. You can also find online calculators that will give you similar information.

Everyone agrees that saving for the future is important. Unfortunately not everyone does it. Remember, even if you’re getting close to retirement age, you can still begin to save. While it’s never to early to start saving for retirement, it can be too late. Begin now, regardless of how old you are, and you’ll have more to time to save for the future – your future.

Understanding 401(k)... Is It For You?

2008-08-16T06:52:00.000-07:00

401(k) plans are offered by a large majority of employers to help their employees save for retirement. However, there is much to learn about the 401(k) – details and explanations that will help someone decide whether a 401(k) is right for them or not.

Most employers provide tax-deferred investing to their employees in the form of the 401(k), which also helps to lower your taxable income because of the pre-tax deduction to fund the 401(k). However, you’ll want to leave money in the 401(k) rather than making withdrawals since the withdrawals will be taxable based on your tax bracket, along with having to pay penalties for early withdrawal.

There are restrictions to the 401(k) plan, based on what the employer chooses as investment opportunities. They are also limited by the 401(k) fund manager. Despite the restrictions, however, the 401(k) can be a wise choice for retirement savings.

A 401(k) is a defined contribution plan, meaning that you are not guaranteed a certain income upon retirement. The plan allows the employer and employee to make contributions to the employee’s 401(k). The amount of money you can contribute is generally set by the employer, and they will only match a percentage of what you contribute.

The longer you remain at your job, the more vested interest you will have in your retirement plan. The method for determining your vesting is determined by the employer and is usually related to the number of years you have worked for them and how long you have been contributing to the 401(k). Normally to become 100% vested, you will need to be employed for 10 years. Check with your human resources manager to determine the vesting rules for your company.

One major problem with a 401(k) and any other defined contribution plan retirement account is that you really don’t know how much money you will receive when you retire. Your nest egg at retirement will be based on how much money you contributed to the plan, what your employer contributed, and the performance of the investments in your portfolio. Seek the help of a qualified financial planner to help you decide if you should move your investments in order to get more of a return for your money.

Benefits of this type of retirement account include:

Contributions are taken out pre-tax, so they lower your taxable income rate
Contributions are sheltered when you make them
Funds are often taxed at a lower rate when you withdraw them at retirement
Your contributions and earnings are protected from income tax until withdrawal, which means the funds have more potential to grow.

Perhaps the biggest benefit of the 401(k) is the fact that it can be moved if you ever change jobs, usually without incurring any penalties. You may maintain the account as is (unless required to be removed by your employer), roll it over into another 401(k) account at your new employers, transfer it to an IRA, or make a withdrawal at the time. Remember, that making a withdrawal before you actually retire may cause you to pay stiff penalties and income tax on the withdrawal.

The 401(k) plan you have may be difficult to understand, but it doesn’t have to be. Speak with a qualified financial counselor to give you specific information about the 401(k) – details and explanations – to ensure you understand the benefits and potential problems of having this type of retirement account. Your financial planner can give you good advice, but you have to seek them out.

Budget is Not a Bad Word...

2008-08-15T07:26:00.001-07:00

Sit amongst a group of friends and associates and mention the word budget, and suddenly everyone has somewhere else they need to be. Usually no one wants to talk about budgets, no one wants to think about budgets, and no one wants to follow a budget. However, when looked at with open eyes a budget is actually a fantastic thing. Here are three reasons why budget may become your favorite word:

Reason #1: A budget puts you in control of your money instead of your money controlling you. What did you spend your last $100 on? You may not remember. Maybe it was a pizza, or stickers for your children, maybe it went to piano lessons or a new pair of boots. The point is, many people have no idea where their money goes. When you set, and follow, a realistic budget your cash is freed up so you can spend your money on things that are important to you and your family rather than spending it on purchases you won’t remember buying ten minutes later.

Reason #2: A budget can improve your relationships. There’s little worse than the stress money can cause. Debt causes tremendous stress and so does the fear that you won’t be able to pay your bills. It can ruin your health and it can destroy relationships. When you form a financial plan with your family you work together as a team to reach your goals. The lines of communication are opened and the stress is eliminated because you have a plan and a team of support. Additionally, when you’re all on the same page financially there are no arguments about money, which makes better relationships with your spouse and your children.

Reason #3: Most people would agree that it is better to live within your means than to get into debt. However, some people don’t realize they’re living beyond their means until it is too late and the debt has become overwhelming – and stressful. A sound budget keeps you living within your means and prevents or eliminates debt. A structured and realistic budget prevents the “Oops I spent too much on my credit card this month” mistake that we often make month after month until we’re paying more on our minimum balance than on our mortgage. If this applies to you, don’t let it get to this point. Take advantage of the power of a budget and gain control over your financial life.

There is absolutely no downside to forming a budget and we’ve only scratched the surface of the benefits they provide. Take a few minutes to realistically analyze your spending habits, your income, and your financial goals. I promise you’ll be glad you did.

How Negative Credit Affects You

2008-08-10T06:32:00.000-07:00

Credit, good or bad, is a part of functioning in today’s society. When you rent an apartment, you establish credit. When you buy a house, that certainly affects your credit. Credit cards, student loans, home equity loans, department store credit and bank accounts are all influenced by your credit rating.

This means that the effects of negative credit are far-reaching and can make life quite difficult.

Here are some of the various ways negative credit can affect your life:

When you go to purchase a car, chances are you’re going to want a loan. Whether it is a used car or a new one, the interest rate you qualify for can mean the difference between being able to finance the car you want and your second or even third choice. A new car loan can range anywhere from the promotional 1% finance rate – pretty darn good - all the way to 10%. Used car loans generally range from 5% to upwards of 20% depending on your credit. This difference in percentage rates can equate to more than $100 a month depending on the cost of the car.

Did you know that if you have bad credit you can be denied an apartment? When you rent an apartment, your credit will be checked and you can bet that if you have bad credit, you’re going to have a tough time finding a place to live.

Did you know you can lose a job because of bad credit? Yep, many employers obtain credit reports on their job applicants. This is entirely legal. Why would they get your credit report? Many employers want to know that their employees are financially secure. This demonstrates not only an ability to behave responsibly, but it also tells your employer that you are likely someone who can be trusted. If you’re in bad financial straits and owe money to many creditors, you could be stressed and distracted, and you may even be more likely to steal from the company. Now this is of course a huge generalization, but it is one that companies are legally entitled to make.

Your credit rate actually affects your insurance premiums, too. Both home owner’s insurance and automobile insurance rates are a direct reflection of your credit score. Financially, bad credit can mean an inability to get a credit card, a loan or a home mortgage. If you are given credit, chances are there will be more hoops to jump through, more fees, and your credit will come at a higher interest rate. In short, it will cost you more to borrow money.

While bad credit can have a negative affect on your finances and on your life, it is reversible. The advice if you have bad credit is to develop a budget and pay off your credit cards. And consider getting a secured credit card to rebuild your credit score and repair your credit history.

2008-08-09T09:33:00.000-07:00

Will Debt Consolidation Improve Your Situation?

Thanks to the current economic situation, many people are trying to shave a little--or even a lot--of money from their expenses. To get a lower payment, many loan owners are turning to debt consolidation. With the ripple effect that the cost of gas is having on the cost of everything else, having a large sum of money in the bank can help in other areas of your finances.

At What Point Should I Consider Consolidation?

You should seriously consider consolidation for your debts it you have several credit accounts with high interest rates and high balances. Having a large principle amount on your credit lines with high interest rates means that approximately 90% of your monthly payment is going towards interest, this means that it is going to take years to pay the principle amount off and cost you thousands of extra dollars over the life of the loan.

What Are The Options?

Debt consolidation can be considered in a few ways. Taking out a home equity credit line is a fast and easy way to get extra money. This is when the lender allows you to borrow against the equity of your home. With proof of gainful employment and a minimum of thirty percent equity, this type of credit line will be granted to you by almost any lender.

If you need some extra cash, then doing a cash out, or a refinance where you keep the difference of what your house is worth versus you owe, may be a good option for you. By re mortgaging the home you can be a part of huge amount of fair profit. If you currently have a high interest rate on your home mortgage, this option can be especially helpful. This is especially true because interest rates are still very low and this may not be the case in a few months.

What are the steps?

You must complete an application in order to acquire a loan from the lender. A standard application form along with a financial form are what most lenders use. Before you begin to fill out this form, make sure that you have the following information handy as you will need it: Income, savings, debts, credit line information.

Getting It Done

When you have made up your mind to go ahead and consolidate your debt you may want to consider going to the bank you do your banking with. They will be more likely to give you such loans if you are already doing business with them. The Internet has a lot of great choices. They will take a look at any options available to you after you take a moment to quickly and securely complete the forms. Debt consolidation is something anyone with high interest rates should consider doing as it will lower your monthly payments and pay the debt off more quickly.

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You Can Get Out of Debt on Your Own

2008-08-07T09:21:00.001-07:00

There are lots of options out there for those who are too far in debt. There is credit counseling and debt consolidation. There are lawyers offering to have your debt reduced for a fee, and in extreme cases, there is bankruptcy. With all of these choices, one might imagine that a person can't get out of debt on his own.

The truth is that it is quite possible to get out of debt with no outside help. Even those who don't think there is room in their budget to pay down their debts are often surprised. It takes willpower and determination, but you can usually get out of debt on your own.

How Do I Get Out of Debt on My Own?

In order to get out of debt on your own, you will need to develop a plan and stick to it. Here is how:

1. Stop accruing new debt. Put the credit cards away, and refrain from taking out new loans or refinancing old ones to borrow more money.

2. Create a budget. You need to know where your money is going each month, and in which areas you can cut back to free up more money to pay off your debts. If you're not sure where your money is going, write down all of your expenses for a month and then make your budget.

3. Cut the unnecessary items out of your budget, and cut back anywhere else you can. Set this money aside to pay down your debts.

4. Determine which debt needs to be paid off first. If you have secured debts other than a long-term mortgage, you may want to pay them off first. Debts with high interest should also take priority, unless you have lower-interest credit cards that charge exorbitant annual or monthly fees.

5. Pay the minimum payment each month on all of your debts except the one that you have given top priority. Put all of your extra funds toward that debt, and continue to do so until it is paid off. If you get a bonus at work or unexpected money from some other source, consider putting it toward your debt as well.

6. When you get one debt paid off, start putting your extra money toward the next one. Repeat until all of your debts are paid in full.

Paying off debt on your own is often easier than you think. By taking a realistic look at our finances, we can often find ways to come up with the money to pay debts off without the help of anyone else. Doing so helps us maintain good credit, or rebuild our credit if it is imperfect.

Live and Spend Within Your Means...

2008-08-06T10:01:00.000-07:00

Living within your means is a liberating way to live your life. It means no debt – debt is one of the most common causes of relationship stress. Living within your means gives you the freedom to save money for special things rather than always scrimping to pay your bills.

Unfortunately, many people don’t live within their means. They live above it, way above it. This happens for many reasons. Maybe they just don’t track their expenses, and purchases are made without thinking. Maybe they’re trying to keep up with their friends and family. Maybe shopping is a misguided form of therapy. Whatever the reason, the end result isn’t a happy one.

If you feel that you could do more to live within your means, here are a few tips to help keep your life on track and your financial status right where it belongs:

Tip #1: Keep track of your spending. It is important to know where your money goes. Once you have an idea of what you’re spending your money on, you can begin to control it.

Tip #2: Buy a used car or at least keep your new car for more than a couple years. A new car depreciates the moment you drive it off the lot. Sometimes it depreciates as much as 50%. A used car already has that depreciation figured into the cost.

Tip #3: Don’t be afraid to grocery shop with coupons or stock up on items for sale. Personally I love it when the grocery offers "buy one get one free items", particularly when the items are large ticket items like meats. Not only do I save tons of money but when I can’t figure out what to make for dinner, I can just open my freezer and I have options.

Tip #4: Do buy quality clothing items, not quantity. When you’re shopping for yourself, don’t make whimsical clothing purchases or follow the latest trend. What’s better? Spending $100 on a pair of jeans that will be out of style next season, or spending $150 on a pair of jeans you can wear for five years?

Tip #5: If you have a credit card debt, develop a plan to get out of it. A debt elimination plan begins with reducing your interest rate. A phone call to your creditor can usually start the process. Next, stop the charging on those credit cards and get busy paying them down. Pay more than the minimum balance or you’ll never get it done. A great way to manage the process is to develop a monthly budget. Your budget will contain your income, expenses including debt and your savings.

Living within your means is possible! It is empowering to have complete control over your money and your finances, certainly less stressful than letting your money control you!

Secured Credit Cards Explained...

2008-08-05T14:30:00.002-07:00

When searching for a credit card you will likely come across several credit card terms. Among them are the terms "unsecured credit cards" and "secured credit cards." Here’s the difference:

A secured credit card is a credit card that is attached to your savings account. The funds in your savings account may be taken by the credit card company if you are unable to make payments. In most cases your creditor will require 100% to 200% of your credit card limit. This means if you put $500 down on a credit card, you will be issued $250 to $500 in credit.

This arrangement allows the credit card company to issue credit to people with bad credit or no credit. This type of account is excellent for people with bad credit who are looking to repair their credit rating, for students who are beginning to build credit, or for people who just don’t want the risk or temptation of an unsecured credit card.

What are the benefits of a secured credit card?

They are an excellent tool for rebuilding credit.
You’ll never get in over your head because they’re generally limited to a small credit amount and it won’t be more than you have in your savings account.
When you get a secured credit card, the information is sent to credit reporting agencies and your credit rating may instantly go up.
Prepaid credit cards simply won’t let you go beyond your ability to spend. They won’t let you break your budget.

So what is an unsecured credit card?

Unsecured doesn’t mean you’re more vulnerable to identity theft, it means there are no secured finances to back your spending. Unsecured credit cards are what people commonly refer to simply as credit cards. The creditor issues you a card with a certain credit limit and it’s up to you to stay within your means and make your payments on time. If you don’t, creditors can’t tap into your savings account and take care of your balance, it’s entirely up to you.

Unfortunately, many don’t have the willpower or the knowledge of their own personal finances to keep their spending under control and live within their means. This results in their percentage rate increasing, late fees being assessed, and their credit score suffering.

How do you decide if a secured credit card is for you?

Secured credit cards are generally issued to people who have declared bankruptcy or are unable to otherwise get credit. They’re also a great option for people just entering the credit world and beginning to establish a credit history.

Secured credit cards are a great tool to build your credit rating. However, they often come with very high fees, much higher than a standard unsecured credit card, so they are not recommended unless your credit is in need of repair.

Poor Credit? Find the right Credit Card for your situation!

Determine Just What Your Debt Is...

2007-11-29T14:11:00.000-07:00

The very first thing that you need to do to address your current financial position and reduce and eliminate your debt is to determine exactly what your current debt is.

Now this might seem very obvious and when you ask most people they would probably say that they know how much money they owe but more often than not it comes as a great surprise to them when they sit down with a pen and paper to work out exactly what the current debt actually is.

It is very difficult to remember precisely how much you owe on so many different areas of debt and it is only when you do take account of all the individual debts and add them up that you can actually see the extent of your debt.

Be prepared for a surprise because that is what happens most often and it will give you a really good picture of why you are struggling to make ends meet each week and why all the income that might seem reasonable isn't enough to cover your outgoings.

So step number one on your debt management program is to address the situation.

It is only after you have done this that you will be able to create a budget that will help you move towards eliminating debt from your life.

You will be able to compare your monthly spending to your monthly income and that will give you the opportunity to see how much is left over if any to start reducing your debt.

When you are making a note of your debt you must ensure that you put down everything that you owe even the most minor of debts because at some stage they need to be settled and even small debts that are left unpaid can give you a bad credit rating.

Keep Your Banking Information Safe

2006-04-17T07:48:00.000-07:00

It would seem that the computer is becoming a bigger and bigger part of our lives each and every day. There's good reason for that perception... it's true. One specific area that is becoming incredibly popular is online banking. Customers love it because it is very convenient and a great time saver. The banks love it because it automates a great many functions for them and cuts down on their overhead.

The number one concern of anyone that deals with online banking should be security. Putting your personal information over the Internet can be risky, there is no denying that. Fraud and identity theft have become huge problems in the modern age. There are any number of hackers and thieves out there in cyberspace just waiting to prey on innocent people.

Fortunately for us, the financial institutions of the world are very aware of this problem and are working aggressively to combat it. There was a time when a bank's chief security concern was whether they would be robbed or not. I think we've all seen the old movies about Bonnie & Clyde, John Dillinger and the like... to say nothing of the daring train robberies of the wild west. Now banks face a new and much deadlier challenge than ever before, and instead of wearing a mask and using a gun, the bad guys are now invisible and use keyboards.

Identity theft has now become so prevalent that thieves are rifling through garbage to attain any information that they can use to steal from their unsuspecting victims. With this said, there are some simple, common sense approaches that will go along way to securing personal bank information.

1. Do not share your passwords with anyone.

2. Keep important documents locked in a safe or safety deposit box.

3. Shred documents that you no longer need.

4. If you bank online, make sure your bank is using a secure, encrypted site (It's OK to ask what security features they employ).

5. When using an ATM make sure no one can see the codes you enter.

These are a just a few of the things that can be done to keep banking information secure and to avoid possible crimes against you. While many of these suggestions seem to be glaringly obvious, all to many times they are taken for granted or just plain ignored. It is at these times when the criminals are at their best. Individuals that grow careless and complacent are exactly what criminals look for. Don't be counted as one of the careless!

A Common Mistake with Retirement Planning

2006-04-03T06:24:00.000-07:00

Most articles about 401(k) plans, traditional IRAs and Roth IRAs focus on rules and regulations. Contribution limitations and income tax issues usually take precedent.

Unfortunately, little attention is given to the matter of control. This refers to one's ability to personally manage the asset on an active and ongoing basis.

For example, when you join a 401(k) plan you are restricted as to the investment choices. Your plan sponsor makes that decision as part of their fiduciary responsibility.

In the past, this was a big concern because plan participants (i.e. the employees who enroll in their company's 401(k) plan) were often given terrible choices.

Sometimes, this was the result of ignorance on the part of the plan sponsor. However, with some publicly held companies it was the desire to encourage employees to invest in the stock of their own company.

Today, federal regulation mandates better investment choices. This means a plan participant is able to choose from a greater variety of investment styles, as well as a cash account that typically replicates a money market fund.

But, this is still insufficient. The ability to design the most appropriate investment plan continues to be severely limited in 401(k) plans when compared to the freedom of choice in IRAs.

It is important to review briefly what has happened over the last 20 years with retirement plans.

Not long ago, it was common for a company to provide employees with a defined benefit plan. This type of plan design guaranteed a stream of income based on length of service and average wages. The income began at what was then considered the normal retirement age of 65.

For many workers, the defined benefit plan, together with social security, ensured a sense of security for their future lifestyle. Obviously, times have changed considerably.

Today very few companies will assume the defined benefit plan liability. In fact, companies have shifted the responsibility for retirement savings to the employee by adopting 401(k) plans.

Some companies will match a portion of the employee's 401(k) contribution up to a maximum amount or percentage. But this doesn't come close to replenishing the void caused by the terminated defined benefit provision.

What is more, the investment opportunities in typical 401(k) plans are expensive due to excessive management fees and brokerage commissions. Even the so-called no load separate accounts have administrative costs that significantly reduce the net return for the average investor.

Most plan participants are oblivious to the costs associated with the administration of their plan. Also, they do not pay enough attention to the allocation of their investment.

A self-directed IRA hosted by a low cost online brokerage firm provides an opportunity to reduce substantially the ongoing costs related to retirement planning.

In addition, the IRA owner can invest in a wide variety of individual stocks, bonds and commodities to create a highly diversified portfolio. The 401(k) participant must take the total package of a bundled investment to include issues that can jeopardize the total return.

This is not to say 401(k) participation should be avoided. Not at all. But it should be coordinated closely with a IRA to enhance the overall strategy for long-term growth.

It's apparent that Congress must continue to provide expanded retirement planning opportunities for the individual employee. The rules will constantly change, but the writing is very much on the wall.

Companies will no longer provide guaranteed future benefits. Factors which contribute to this include the pressure of worldwide competition, the deterioration of union power, the ever increasing cost of health insurance and the peripatetic nature of the workforce.

Therefore, the individual employee needs to understand how to create a balance between the restrictions found in the 401(k) plan and the significant freedom of choice of the IRA.

Both instruments permit the postponement of income tax. Whether the investment principal is pre-tax 401(k) or tax deductible IRA is irrelevant. At some point the tax piper must be paid.

The strength of both systems is in the tax deferment because, in most instances, this will be a long period of time. In fact, many people choose not to withdraw any money at all from retirement accounts until they are forced to by federal regulation.

As stated earlier, rules change frequently. Therefore, it is important to know what restrictions are in place before making any investment choice. But the basic premise doesn't change.

Analyze both the 401(k) plan together with your ability to open a IRA. If your employer offers a matching provision, commit a portion of your pretax dollars to guarantee no less than the matching amount.

Anything over and above this figure should be allocated to a self-directed low cost brokerage IRA. This gives you the opportunity to enhance your total retirement investment.

If your income exceeds the limitation for deducting the cost of your IRA, do not let this to be the sole reason not to open the IRA. Your freedom of choice and long-term tax deferment can far outweigh your lack of deductibility.

In the final analysis, most people make financial decisions based on their level of comfort. Indeed, this frequently leads to less than desirable results.

Three Strategies to Improve Your FICO Score

2006-03-29T06:04:00.000-07:00

It used to be that "people" made decisions about your credit worthiness. You knew your banker and your handshake was all the collateral you needed. Those days are long gone, and now a single number - your FICO score - determines your credit worthiness.

Although there are several credit models, the most commonly used is FICO, based on a model created by Fair, Isaac Company. Their consumer website is myfico.com, and you can find information about the FICO credit scores there.

Your FICO credit score can be used to determine your interest rate and how much credit a lender will give you. So taking care of your score, and keeping your credit clean will save you money.

Preserving your FICO score, and improving it, is not difficult, but it may take time. Here are some tips to maintain and improve your score, based on three credit situations.

Strategy One: Obtain a Credit History

There are many reasons you may have no credit history. Maybe you're just starting out, maybe you pay cash for everything and have never needed a loan. In any case, if you have no credit history, your FICO score is likely to be low.

The easiest way to raise your score is acquire a loan, and pay it off on time. In general, installment loans are weighted more heavily than credit cards. In other words, you will improve your credit score faster if you buy goods with an installment loan, rather than acquiring a credit card.

Another way to acquire a better credit history is to take $1000 and open a 6 month CD account at a financial institution. Now, get an installment loan for $1000, using that CD as collateral. Now, here's the trick. Take the $1000 loan, and open another 6 month CD account at another institution. Take another loan for the $1000 at the second institution. Do this one more time.

Now what you have is 3 loans. Pay the minimum payment for 6 months. In the last month, cash out your CDs and pay the loans off. You now have a credit history, and did not go into long term debt to get it.

Strategy Two: Maintain Your Good Credit History

Good job - you have paid your bills on time, and do not have high credit card debt. Here's some ideas to keep your FICO score as high as possible.

First, don't close your old accounts. One part of your credit score is based on the amount of credit available verses amount of credit used. Closing old accounts can lower this part of your score.

Second, paying off your credit cards every month is good money management, but you may be able to improve in this area. Here's the scenario: you have a $2000 credit card. Every month, you charge about $1800 to that card. And, every month you pay it off. But here's what happens - your credit card company reports your credit information monthly to FICO. If they report it before you pay off your card, it looks like you carry a balance on your credit card every month. You may find your FICO score improves if you pay off your credit card at a different time of the month.

Strategy Three: Repair Your Poor Credit History

For whatever reason, if you have a poor credit history, there are things you can do to improve your score. Some of them take time, and you will probably be best served by talking to a credit counselor to be sure that you not only repair your credit history, but also eliminate what caused that poor credit history in the first place.

The most heavily weighted part of your score is based on your payment history. The first thing to do to start repairing your credit history is to pay your bills on time. The mortgage is the most important, followed by installment loans, and finally credit cards.

The next largest portion of your FICO score is based on how you use credit. The fastest way to improve this is to pay down your credit cards.

One final thing to look for is errors in your credit report. Get a copy of your credit report from all three primary agencies, and look at all the entries. You can find the agencies here: experian.com, equifax.com, and transunion.com. If there are any errors, start the process to have them removed. Call your creditors - sometimes they will remove negative information.

Your FICO score is an important part of your financial life, and using these strategies may help improve your FICO score. Before making any drastic changes to your finances, consult with a financial advisor.

Creating Wealth Starts In The Mind

2006-03-07T07:55:00.000-07:00

The first step to creating lasting wealth is to know what wealth means to you. What is it that you are striving for? Happiness is not a destination. It is traveling through life's journey. Happiness is not like an oasis that lies on the edge of a desert. It's not a place you reach after you are prosperous. If you study many of the greatest success stories, they will say that the happiness and fulfillment came when they were starting to build their fortunes. They were happiest when they had that raging fire of ambition and determination burning in their spirit. Determine to be happy now, not later. It requires nothing more than a conscious effort on your part.

Once you've figured out clearly what wealth means to you and what your key destination is, the next step is to develop what's known as prosperity consciousness. To be wealthy, you must think wealth. As with all success, everything begins with the mind. Your outer world reflects your inner world. Recognize that your mind can generate the richness you seek. And it will soon come as surely as the night follows day.

Every man and woman in this world was born to succeed, be wealthy, and be prosperous. The potential for prosperity is one of your most essential human qualities, whether you realize it or not. If there is not an abundance of all that you desire in your life, do something about it and do it this very day. It all begins by tapping into the hidden and magical powers of that part of your mind: the subconscious mind.

Before you can do wonders in the outside world, you must raise your standards about what you can do in your inner world. Every thought concentrated in the direction of your dreams is like a nugget of gold, moving you confidently towards lasting life wealth. When your every thought is in the direction of where you want to go in your life, your actions follow and become productive ones. Everything is created twice. The first time is a blueprint in the mind's eye and the second one is in your reality. The process is very similar to the work of an architect who first drafts a sketch of the way things will look in a building. Then methodically following this blueprint, the structure is created. Thoughts truly do become things. You are developing that state of magical thinking known as prosperity consciousness. You will start attracting tremendous opportunities and gifts that you never thought possible. What are you creating today?

Is an Equity Line of Credit the Answer to Your Financial Needs?

2006-03-05T05:26:00.000-07:00

If you own your home you have a financial resource available to you that can help you with your financial needs or concerns. What is it? HOME EQUITY!

Equity is the value of your home minus the remaining mortgage balance which is outstanding. While you live, eat and sleep in your home worrying about debts or wishing you could refurnish the living room you may be sitting on the cash that will grant your wishes.

Why Would You Want an Equity Line of Credit?

Unlike a typical loan which deposits a set amount of money in your account and begins charging you interest and payments at a fixed rate until repaid, a line of credit acts as a revolving credit (like your credit card). You do not need to pay interest on the full amount you have access to -- you only pay for what you have used. Also, like a credit card, when the debt is repaid you still have access to the credit.

Using an equity line of credit (also known as a Home Equity Line of Credit or HELOC) gives you greater flexibility with the least cost. Not only can you access the credit only as you need it, but your monthly payments will reflect only the balanced used. The less used the lower your payment. Some lines of credit have only the interest as the minimum payment which can be helpful when finances are tight.

An equity line of credit is great when you don't have a large fixed amount to spend in one place that will take many years to repay and you want access to the credit without asking for a new loan when you have paid it back.

What Can I Use the Equity Line of Credit For?

While you can no doubt find numerous uses for your line of credit, here are samples of the more common reasons for obtaining an equity line of credit.

Consolidate Debts

Using your equity line of credit to consolidate other debts can not only eliminate the stress of multiple bills but can also give you a more favorable interest rate or tax benefit.

Second Mortgage

Use your line of credit to pay off the existing mortgage for better interest rates.

Add On, Update or Go Away

You may use your line of credit for renovating, buying new furniture or a car, or taking a vacation with less interest payments than using a credit card or store card making it a wise choice for large purchases.

When Should You NOT Use a Line of Credit?

Before succumbing to what seems like 'easy money' it is important to evaluate the additional risk.

Some debts -- like student loans- have features that you may not be entitled to if you switch them to an equity line of credit.

Other items like cars and vacations may seem like a good idea to buy with your home equity line of credit, but with the ability to pay only the interest you may find the motivation to pay off the debt is lacking and end up owing for items that have lost their value or were consumable. Plan to pay off the debt quickly for the most advantage.

Second mortgage (or refinancing) may or may not be a good idea depending on interest rates and your repayment terms. While lines of credit take advantage of current low interest rates you may find that your regular loans protect you better from fluctuating rates if you will not be paying the loan down in the next few years.

Using your finances wisely can give you great relief and freedom. Before taking on any financial obligations it is important to understand the risks as well as the benefits.

The Credit Card Horror Story

2006-02-16T08:42:00.000-07:00

It is the modern American horror story, but one now being seen increasingly throughout the world...

A successful middle class consumer, with a good income and excellent credit history, enters middle age knowing that it is time to start saving for retirement. Then something unexpected happens. It may be good news, such as the birth of a new baby, or it may be bad - an illness, a family emergency, a divorce...

None of these events by themself, are usually enough to destroy anyone's financial future. But, they can trigger credit card abuse and eventually lead to significant financial hardship. What may have been a problem for only a few people who couldn't "handle" credit in the past has become an increasing problem for many people.

It has become quite common for the middle-aged, middle class consumer to have many bank and store charge cards at any given time. And most, if not all, are carrying large balances. In 2005, the average consumer had nearly $10,000 in credit card debt, or even double or triple that if loans for cars and other large expense items are included. Worse still, in 2005, the credit "rules" were changed...

First, many credit companies have now doubled the minimum monthly payment to four percent. In itself, this is not a real problem for most consumers. Most cardholders probably pay this anyway.

Second, with no usury laws to stop them - and despite inflation rates from 1-to-3 percent - credit companies have pushed interest rates for "problem" cardholders to 30 percent or more.

Third, if there is a a problem with any creditor, such as a late payment, other creditors have the option to cut their card's credit limit (often to the current balance), double or triple the interest rate and cancel any "special offers".

The "Six months no interest" or "Zero interest on all balance transfers for one year" are attractive offers. But the slightest infraction involving even one creditor, and the next bill may include full interest charges - from the start of the offer.

It only takes one creditor to turn someone with a decade of good credit into a "problem" customer. A bill one day past due may cause an account to go up in interest, down in limit or both. And this can spur other credit card companies to follow suit meaning that in a short time all your credit cards could be charging a high rate of interest, over-limit fees and even late charges when your bank account is hit by the high rate of interest.

Now a double minimum payment becomes a serious problem, as that original $10,000 total debt begins growing by $250 a month in interest, plus up to $500 in accumulated overlimit fees and another $500 in possible late fees!! You can begin to see the problem...

And what about bankruptcy to solve the problem? Not any more. As of 15 October 2005, it became virtually impossible for an American consumer to declare personal bankruptcy. At least, not without a lot more cost, a lot more time - and the certainty of losing everything, including home and car.

The moral of this story is this. Take another look at those colorful bits of plastic in your wallet, the ones offering those great promises of "easy payments" and a better lifestyle. See them now for what they really are...Viral monsters, ready, willing and able to destroy the cardholder's life in the blink of an eye.

Next time, think about handing the sales clerk some colorful cash instead.

Cash Back Credit Cards: Good or Bad Idea?

2006-01-10T08:06:00.000-07:00

Getting a credit card that offers cash back always sounds like a good idea. What could be better than getting cash back on all the purchases that you make with your credit card? It sounds too good to be true, doesn’t it?

Well, there are cards that give you free cash, but it is usually only around 1% cash back. However, free money is free money, right? Well, sometimes.

If you like to buy a lot of things in one month, this kind of credit card probably sounds great to you. However, you need to keep in mind that they are not going to give you cash back on every purchase that you make. Even if they claim to give you cash back on every purchase, they will only give you up to a certain amount per transaction. The company also has a strict limit on the amount that they will give back to their customers. If you read the little, itty-bitty print on the form that you signed, you will see a paragraph with their limits in the terms and agreements.

This is another way to try to draw in new customers for these companies. It is a good credit card to have and sounds great in theory, but they will have to check your credit rating before they will give you their card.

Research different credit card companies to see what they are offering. You may be surprised to find a cash back credit card that offers you just what you need and want with a high cash back percentage, few limits on the amount they will give you back, and instant cash deposits when you make each purchase with their card.

Although these credit cards seem like a great thing to have, some companies will need your credit rating to be great too. However, there are credit card companies that offer these cards to people with a low credit rating to help them rebuild their credit. Research all of your options.

What should your decision be? If you have a good credit rating, then this card is a great option for you. Research different card companies – there are cards out there that offer you up to 3% cash back and impose very few limits. If, however, you have a bad credit rating, you may want to find a credit card that will help you rebuild your credit.

The Importance of Money

2005-12-26T12:59:00.000-07:00

A great philosopher once said "Money is a barrier against all possible evils." Let's explore and expand on this thought.

Money can prevent the sufferings that come with poverty like cold and hunger. While sickness can not be totally obliterated by money, it can be considerably relieved by it. Giving away money to charity can also provide us with the satisfaction of relieving others from suffering.

With money, we can obtain an advanced education that may aid us in the development of genius and extraordinary achievements. It gives us the leisure to devote a part of our time to culture and art. Money can provide a powerful diversion for all or our troubles by permitting distraction from the anxieties that assail us.

So we must try to get a thorough understanding of all that we may possibly do, in an honorable and legitimate way, to conserve wealth. Even to those who have inherited wealth, idleness can be a certain cause of ruin. A great fortune needs genuine labor for efficient administration. Those who leave this duty to strangers may pay a penalty for their negligence. This is why a rich man, who wants to preserve and increase his fortune, should be his own business manager.

Even artists must know the price that their work is worth. It is necessary for the artist to be a businessman in order to have the right to be a genius. History is full of examples of this. The great Shakespeare labored as a theatre manager to obtain the necessary leisure to produce his dramatic masterpieces. Edison worked as a telegraph operator to pay the bills while he "moonlighted" as an inventor.

From the bottom to the top of the ladder, it is necessary to amass money in order to apply it to some great cause. Money is the means by which we may fulfill our purpose in a larger and better way.

Everyone should, in his own way, make an effort to amass some money. Some will apply money to their daily wants. Others seek to swell the fortune that they desire to leave to their children. Some only desire money so they can devote it to some noble enterprise or charity. Finally, a large number see money chiefly as a means of immediate gratification.

Whatever the reason, everyone capable of earning money should learn how to manage it properly in order to ensure that they will have enough of it to apply to the causes that they choose.

7 Ways to Change Undesirable Spending Habits

2005-12-24T07:49:00.000-07:00

Many people dream of retiring with a healthy bank account but few people actually achieve it. This is largely due to lack of discipline in building up their retirement fund and poor spending habits. While building a retirement fund requires time, you can accelerate the process by making incremental but positive changes in your spending habits.

Here are seven ways that you can change your daily lifestyle for more positive results in your spending habits:

1. Do more walking than driving. If you can reach your destination within ten minutes by car, consider leaving the car behind and walk instead. You will save money on gasoline and parking fees. This can easily add up to a few thousand dollars a year.

2. Use a bicycle if the destination is within 30 minutes by car. This helps promote blood circulation in your body and also reduces environmental pollution. You can also save on gasoline and parking fees.

3. Bring your own coffee to office. Many people like to drop by a Starbucks or similar coffee outlet and end up spending a few dollars or more on a cup of coffee. You can potentially save many dollars dollars each week just by making your own coffee at home and bringing it to your work place in a Thermos. Besides, who knows, it may taste better than the coffee from Starbucks! If you really cannot live without Starbucks coffee, consider getting a Starbucks rebate card. You can use the rebates to redeem free Starbucks coffee after you have accumulated enough points.

4. Dine at home more frequently. You can experiment with different recipes and save some money at the same time. In addition, you are honing your cooking skills and this could be very useful for the home dining experience.

5. If you are a smoker, start reducing the number of cigarettes you smoke each day. Over time, you may be able to quit smoking completely. Besides saving money by not buying any more cigarettes, your health will also improve and this means a huge saving in your medical bills.

6. Have you ever noticed how much time you spend sitting in front of the television? The longer you sit, the worse it is for your blood circulation. Besides, the time you free up can be used for more useful tasks such as teaching your kids or learning a new skill.

7. If you are an avid reader, use the public library whenever possible. There is no need to buy the latest books from bookstores like Borders unless it is in a category that does not fit into a public library. The public library will usually acquire popular titles after some time. Learn to be patient.

These seven ways are a good start for changing unhealthy spending habits. However, you should continue to research and incorporate more healthy habits that contribute to the building of your retirement fund. By re-investing the money saved from using these tips, you will be many steps ahead of your peers and closer to your retirement goals.

Do-It-Yourself Credit Repair

2005-12-11T12:37:00.000-07:00

Many of us believe that it is only through an agency that we could possibly have any hope for repairing our own credit. Rest assured that this is not true. It could possibly cost you more money and time to arrange through an agency than it would to just do it yourself. My recommendation, before contacting an agency for assistance is to follow the steps below as you may just be surprised at the results.

Repairing your own credit takes time, and definitely takes patience. You first need to contact the credit reporting agencies in writing requesting your credit report. You are entitled by Federal Law to a free credit report every year. There are three main credit-reporting agencies that you will need to contact. The bureaus information can be located by running a search on the internet for “Credit Reporting Agencies” or looking through you local phone book. Include the following in your written correspondence with the credit agency.

1. Written request for a copy of your credit report (You are entitled to one free credit report a year).
2. Include a copy of your state ID.
3. Send proof of your current address if it is not current on your ID.
4. List your last known addresses for the past 5 years.
5. Include a copy of your social security card.
6. Sign the document

Allow at least 4-6 weeks to receive your credit report(s). If you have already received an annual credit report from an agency and are not entitled to the free yearly report, you may also use any denial letter of credit within 60 days of its receipt. If you receive a letter denying you credit, make a copy and enclose it with your written request for a copy of your credit report.

Once you receive your reports from all of the agencies, review each report for accuracy and differences. Design a spreadsheet or written log to track the differences. Do not hesitate to make use of disputes or accounts that are invalid. If you find anything on your report that is worth disputing, most agencies allow you to file an official dispute via their website. Your credit reports should include contact and account information for each creditor. Organize all of your debt and creditors. Most debts older than 7 years old will or may not appear on your report, if this is the case, leave them alone, do not dig around for them. Most creditors after 7 years of not having any contact with you will write off the debt, some may continue their pursuit to locate you, either way, don’t open the Pandora’s box if the account isn’t listed on your credit report.

Take it upon yourself to contact each creditor to make payment arrangements, most are willing to work with you, some may make your task very difficult. If a creditor is being difficult, feel free to ask for his or her supervisor or speak with someone else. Expect some creditors to be rude and unwilling to work with you, do not feel discouraged, and just ask to speak with someone else. Offer a settlement amount. Write down details of the conversation as well as the person’s contact information every time you speak with a creditor.

It may take up to 6 months to feel like you are making any progress at all on your credit with your payment arrangements but rest assured that your credit will fall into place within a year.

It is very important that while you are paying your creditors, when you mail in your payment, that you pay by check or money order and keep all of your receipts. Always include a SASE (self-addresses stamped envelope) with your payment and request a receipt for the payment from the creditor.

Obtain copies of your credit reports on a yearly basis from each agency. Do not obligate yourself to any other creditors while paying off your current ones. You will or may receive several credit offers, throw them away. Stay focused on your goal to get out of debt and keep track of all your activity such as payments, contact with the creditors, their names, extension, time and date you spoke with them and list any details of your conversations and arrangements.

Are Debt Collectors Harassing You? How to Make Them Stop!

2005-11-26T07:27:00.000-07:00

If you've been a victim of job loss, a medical emergency or another cause of income loss, you may be one of the millions of individuals facing a pile of debts that you cannot cover. Miss one or two payments and you can expect to get a call from a debt collector.

Calls from debt collectors trying to find you at your place of employment can be humiliating. You may already be screening your calls, your chest tightening as you realize it's them -- again.

While not every debt collector is unsympathetic and berating, they likely do have to steel themselves for many of the sad stories given to them as explanations for past due debts. They are also frequently rewarded for their efforts in collecting the debt with a commission based on the amount obtained. It is easy to see why it is not uncommon for individuals who are already in a desperate state to fear encounters with the more aggressive collectors who are determined to get their fees.

"What Are They Allowed to Do?"

Debt collectors are allowed to contact you by person, by mail, by telegram, by fax and by phone; at home or at work - unless they know your employer would disapprove. They may not contact you before 8 a.m. or after 9 p.m. unless you have agreed to the contact at that time.

They must contact your attorney unless you don't have one. They may then contact other people to find out your telephone number, work place or address, but in most cases they are not allowed to inform them that you owe money or contact them more than once.

"What If I Don't Want to be Contacted?"

Whether or not you actually owe a debt, you can write a letter to the collector telling them to stop contact. They may then contact you only once to inform you that they will make no further contact or to tell you what action may be taken against you.

Stopping contact will not clear the debt. If you do not believe you owe the debt make that clear in your letter.

"What Can I Do If I Am Harassed?"

The FTC (Federal Trade Commission) has a Fair Debt Collection policy to protect consumers. Knowing your rights will put off even the most determined collector since they already know the law and are pressing you on the assumption that you don't.

Debt collectors are NOT allowed to harass, abuse or oppress you or other individuals on your behalf - that includes obscene language, threats of violence or repeated calling in an effort to annoy.

They are not allowed to misrepresent themselves as government agents, attorneys or representing a credit bureau if they are not. They cannot imply they are sending legal documents if they aren't or that you've committed a crime, if you haven't.

They cannot imply legal action, including seizing property or garnishing wages unless they are legally allowed and intend to do so.

You can find out more about your rights from the FTC. If you want to report an agent you can do so by contacting the FTC or your Attorney General. If they are breaking the law you have the right to sue.

Strategies To Protect Yourself Against Identity Theft

2005-11-23T05:17:00.000-07:00

Identity theft is a serious crime that is growing each year. If you're a victim of identity theft you may spend months, even years, trying to repair a ruined credit history. A seriously damaged credit report can compromise your chances of getting a new job, a bank loan, insurance or even rental housing. It's even possible to be arrested for a crime you didn't commit if someone else has used your identity to break the law.

Unfortunately, many of the methods that thieves use to steal identities are beyond your control to guard against. Although it's rare, even store clerks have been known to use their position to pass along information to identity thieves. There are some measures you can take, however, that will make it harder for a thief to steal your identity.

Protect Your Credit Card Number When Making Purchases

After you make a purchase and your credit or debit card has been swiped through a credit card terminal, check to make sure that the printed receipt hides all but the last 4 digits of your credit card account number (usually there will be Xs in place of the first 12 digits). Some terminals still print receipts that show all 16 digits of an account number, and may even include the expiration date as well. After your card is swiped, you're permitted by law to hide the first 12 digits of your account number on the copy of the receipt that the vendor keeps. Use any marking pen that will do the job.

When you go to a restaurant, it's especially important to make sure that the first 12 digits of your credit card number are hidden on your receipt. You might be in the habit of signing it and then leaving the restaurant's copy on the table after your meal. An identity thief can easily steal the signed receipt before the waitperson comes back around to pick it up from the table. Don't take any chances.

Do You Really Need To Give Your Social Security Number?

Another important way that you can guard against identity theft is to avoid giving out your social security number unless it's absolutely required. Although you need to share your social security number when you apply for credit or for a bank account, sometimes a store or an organization will want to use it as an ID number, simply to identify you within their system. This is a common practice even though the law says that social security numbers aren't to be used as ID numbers. In these situations, use your judgment. There's usually an alternative if you ask.

Destroy Documents That Contain Sensitive Personal Information

Buy a paper shredder and use it to destroy documents you're throwing away which contain personal information such as credit card numbers, social security numbers, phone numbers and dates of birth. This is important to do both at home and at work. Identity thieves aren't above going through someone's trash to find valuable personal information that can help them obtain credit in your name.

If The Worst Happens

If you do become a victim of identity theft, take the following steps immediately:

Contact your credit card companies, close your accounts and ask to have new cards issued to you.

Place a fraud alert on your file with any one of the three major credit bureaus. The other two will be notified automatically.

File a police report. You may need it to show to creditors as proof of the crime.

File a complaint with the FTC, which maintains a database of identity theft cases used by law enforcement agencies for their investigations.

A Few Ways To Consolidate Credit Card Debt

2005-11-20T08:39:00.000-07:00

Spending is such a hard habit to break, especially when people use their credit cards. Once they get "addicted", they continuously endure the agony of spending in spite of imminent problems that tag behind.

And when things eventually get out of hand, most people will soon realize that they are already stuck with a mountain load of credit card debts. Morning after morning, they will wake up each day worrying about how they can repay all of those instant splurges.

One way to get out of credit card debt is through "debt consolidation." Here are some recommendations to help achieve this:

1. Make a balance transfer.

One way of consolidating a credit card debt is through a balance transfer. In this way, the person who has a huge outstanding balance on his or her credit cards will get another credit card with a lower interest rate. Once approved, they should immediately get a cash advance and use it to pay off their standing balance on the other credit card. In that way, they consolidate all of their payables into one credit card. Plus, they get to have only one rate to worry about.

2. Home equity loans can do the job.

This is a very workable strategy provided that it will be used properly.

Getting a home equity loan is probably one of the easiest things to do. Best of all, home equity loans can offer tax deductions for the interest rate of the loan.

However, there is a drawback. The debtor’s house will serve as the collateral. But nevertheless, it still one good way of consolidating credit card debts. The debtor should keep in mind that the money from the loan should only be used for paying credit card debts. If used on other things, it will only worsen the problem.

3. Make use of retirement funds.

There are instances wherein debtors can make use of their retirement funds in order to consolidate credit card debts. But this should only be done if there are no other options available. This is because this type of consolidating credit card debts can be very tricky.

Loans on retirement funds are not actually tax deductibles. However, the problem sets in when the person fails to pay back the loan within five years or when he or she resigns from work.

Indeed, there are no easy fixes when consolidating credit card debts. The bottom line -- it is better to just avoid unnecessary credit card spending, use your credit cards wisely and pay your debts on time.

Beware of Pay Day Loans!

2005-11-14T20:09:00.000-07:00

You have you seen the commercials. Cute characters promise financial prosperity. Happy, professional individuals appear to regularly visit their corner pay day loan shop as proudly as cashing a check at the bank. Customers at the grocery store all recommend pay day loans as the easy solution for a lack of funds.

Could pay day loans be the answer consumers with low bank accounts have been looking for? Is there any harm in using these services? Aren't they better than using credit cards or going hungry?

WHY USE A PAY DAY LOAN?

Some individuals reason that paying a bill with borrowed money is better than receiving bad credit marks because of not paying the bill. This is understandable. However, some financial institutions are willing to make the occasional exception if contacted about the situation. Or there may be a small fee, but not a credit report made.

Using it for groceries or other items? Consider the true cost before making a decision. Compare the cost of using a pay day (or cash advance) loan to the fees charged for taking a cash advance on your own credit card. Can family help? Often those who are forced to use pay day loans are not able to repay the loan by the next pay check and that can lead to a cycle of debt and stress.

WHAT IS THE COST?

Several sources, including a consumer report by the FTC (Federal Trade Commission) and the CFA (Consumer Federation of America) state that usual the usual APR is between 350 - 650% with some as high as 780%.

A loan of $100 ranges in cost between $15 - $30. If the loan is not repaid by the pay date then it can be renewed with another fee due at each renewal. A loan of $100 can cost $60 in fees after 3 renewals.

WHO BENEFITS?

Based on the warnings issued by federal and consumer organizations it is clear that using pay day loans or cash advances from these businesses can often lead to more debt and problems. Some sites were reported to automatically roll over the loan and only withdraw the renewal fee on the pay date. Other sites surveyed by the CFA required customers to agree in contract to not participate in class action suits or to file for bankruptcy.

For those who are having debt problems it is recommended to seek no- or low-cost credit counseling from a local non-profit organization. These organizations can help with reducing current interest charges and lowering monthly payments. If the problem is budget, you should look to a financial planner who can help you to manage the money you do have and avoid using credit at all.

The Government and Credit Repair

2005-11-13T14:35:00.000-07:00

If you are trying to build a credit history, suffer from bad credit, or even if your credit is great, there are government resources available that will help you maintain credit, repair credit, and/or build a credit history.

The Federal Government recently reported that there are new resources available to make it easy for families and individuals to repair their credit and get back on their feet again. Today private lenders and the government are also teaming up to make our economy more productive by helping those in need, including those in need of credit repair.

Government loans are available for business start-ups, home purchases, assistance for single parents, education and so on. The government offers these loans to eligible individuals and they often come with 0% interest or rates much lower than the current interest rate.

If you have bad credit you must at least apply for two loans and be turned down before the government will consider giving you a loan. Your credit report is not what is important here but rather the loan “declines” are the focus and defining criteria.
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The government also offers grants to assist people in getting back on their feet again. You do not have to repay the government, but you must use the money for what was indicated in the grant application.

Other resources are available to help those that are re-entering the employment market, as well as helping those who are unemployed and/or unable to work. There are funds available for those with low or high-risk credit scores. If you need a loan for a home, debt consolidation, car, or just funds to start up your own business, the government and private agencies are waiting to help you along.

Reduced loans and free programs are available that will benefit millions in the economy that are suffering with bad credit and “blemished” credit histories. Legal Aid is one source that can help with credit repair, as well as many other resources and these resources are free of charge in most cases.

If you are paying high fees to rent an apartment you might want to fill out an application with HUD (US Department of Housing and Urban Development). HUD pays a certain amount toward your monthly rent each month and you are required to pay the remaining balance. HUD also has a solution for first time homebuyers with bad credit.

The Homebuyer’s Bill of Rights allows you the right to purchase a home despite having bad credit. Government resources and private institutions have lowered their Interest Rates to around 5% for homebuyers and extend up to $500,000 for first time buyers to help them buy a home. These government and private institutions also offer debt consolidation loans, assistance with late payments, business start-up funding, and home improvement loans.

The Fair Credit Reporting Act (FCRA) offers credit report protection. It includes laws that provide privacy protection and require reporting fairness and accuracy by the credit reporting agencies.

If you are searching for a way to get out of debt, create a career, or just seeking employment, you might want to consider starting up your own business. The government has programs specifically geared for small business start-ups and entrepreneurs. These programs help business owners finance their business and guarantees loans to those that are creating a plan to support themselves (as well as paying their taxes to the government). This is a wonderful solution for getting back on your feet again and getting those creditors off your back. To find out more about small business loans check with your local bank or Small Business Association.

It is often very difficult having bad credit and not knowing where to start to repair your finances is even more frustrating. Bad credit can be misery, but it does not have to be a force that destroys your life forever. Look to your local, state and federal government for assistance. You may be surprised by what you find!

For further information contact your local or state agencies.

For US Federal Government information visit: http://www.firstgov.gov

Is Debt Negotiation Bad?

2005-11-12T07:17:00.000-07:00

Is debt negotiation bad? Well, yes and no. It all depends on your situation and how you view the negatives (and positives) of debt negotiation.

Educating yourself about the ins and outs of debt negotiation is a good first step. Please note that the term ‘debt negotiation’ is also known as debt arbitration or debt settlement.

For starters, a lender has little motivation to arbitrate anything less than the full amount unless the person is two to three months behind in payment.

To answer your question is debt negotiation bad? You need to view it as a last-resort measure. The truth of the matter is it’s one step away from declaring bankruptcy.

Remember, your lender gave you the money or property in good faith. He or she has every right to expect that the loan be repaid in full. Morally, you should do everything that is within your power to pay your debt(s).

However, this is not always possible and despite how much you would like to repay the loan in full you just can’t – not now and not in the foreseeable future. This is where debt negotiation comes into play. It may be your only logical course of action.

And, in the case of an old debt that you’ve long since forgotten about, debt negotiation would be the best way of dealing with it. There’s no point in keeping a small blemish on report when a little negotiation can easily turn things around.

But if you find yourself overwhelmed with your current debt load, credit counseling should instead be your first action step. A credit counselor will give you some tools and suggestions for reducing your payments.

Debt consolidation may be more appropriate. A credit counselor will walk you through the debt consolidation process. In a nutshell, it means creating a whole new loan for a longer period of time. This would hopefully lower your payments enough so you can get back on track.

Please know however, that debt consolidation can be nothing more than a way of putting off the evitable. It really does little to correct the problem. That’s why many people come back to debt negotiation as a way of getting out of their financial problems and starting fresh.

If you’re determined to pay of your debt(s) and turn over a new ‘financial’ leaf you may wish to contact your creditors yourself. By doing so, you may be able to negotiate a lower interest rate or a more realistic repayment plan. This is known as self arbitration.

So, is debt negotiation bad if you really need it? The bottom line answer is no. When your debt is very delinquent, negotiation is often in your best interest. If this is the case, now is the time to either consider self arbitration or seek out the help of a debt negotiation company.

Although a debt negotiation program will lower your credit score for as long a you’re in the program, you’ll also find that most debt negotiation companies require the creditor to make sure that the final credit report reflects the account is now paid in full. Therefore, once your account is settled you will no longer have a negative report.

A number of debt negotiation companies also include a credit repair service as part of their debt negotiation program. This repair service removes any negative items caused by the program. Although it is part of the program there are additional fees associated with this service.

Is debt negotiation bad? Ultimately, you’re the best person to judge whether debt negotiation is right for you or if it’s in your best interest to consider another alternative such as debt consolidation.

Start Investing Early in Your Career

2005-11-11T08:32:00.000-07:00

You’re young, you just landed a new job and you’re going to be getting a decent paycheck. You also have bills to pay and there are also a few items that you’ve always wanted so now you can finally afford them.

Investing for your retirement may be the last thing on your mind at the start of a new career. Take some advice from those with a little more experience: Start investing early in your career. Start from day one and you will never miss that money you’re setting aside. If your company has available a 401-K or a TSP program, jump on the band wagon immediately. If you don’t have these programs at your disposal, you can still start an IRA and the concepts stated here are applicable as well.

It really does it make a difference when you start contributing. It is important to invest in your retirement account early in your career for two reasons. First, if you’re fortunate to receive matching contributions, you don't want to miss out on those added contributions that are a significant part of your retirement benefit. Second, the longer contributions stay in your account, the more you stand to gain. Your money makes money in the form of earnings, and those earnings in turn make money, and so on. This is what is known as the "miracle of compounding." As money grows in your account over time, the proportion resulting from earnings will become larger compared to the proportion resulting from contributions.

The size of your account balance is going to depend on how much you (and your company if they match funds up to a certain percentage) contribute to your account and how your account grows as a result of earnings on your investments. To get an idea of what your retirement account could be in the future, look at the following projections.

Assume that you are an employee eligible for organizational contributions, that you are earning $28,000 each year, and that you receive no future salary increases. You choose to save 5 percent of basic pay each pay period; therefore you receive total organizational contributions of 5 percent. The growth projections below are for an assumed annual rate of return of 7 percent on your investments.

After five years your account balance would be almost $17,000; after ten years your balance would increase to $40,000; and after contributing for twenty years, your account would have a balance of $122,000. Clearly your balance would continue to increase each year. If you contributed for forty years, which is fathomable if you start a job at 23 and want to retire at age 63, your account balance would be $615,000. That’s over half a million dollars folks! Just from contributing 5% of your income from the day you start work!

Looking at the numbers, it’s hard to imagine why someone wouldn’t start investing immediately!

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'The Wealthy Barber' - a Beginners Guide to Wealth Building

2005-11-10T08:20:00.000-07:00

If you, like most people, have not seriously considered what steps you should take for planning your finances and are now planning on buying a house, getting married or having children, you will do well to read David Chilton's book 'The Wealthy Barber'.

It will not matter if you have never heard of a mutual fund or even balanced your checkbook. If dry financial reading is not up your alley, you will STILL find 'the Wealthy Barber' easy reading. It will have you fluent in financial planning in weeks.

The key to David Chilton's success with his book is that it is written as a story, rather than a manual. You follow three 30ish individuals as they build their financial houses from scratch. They get their information from one of the most knowledgeable and financially secure individuals in town - the barber.

The gem of this story lies in the fact that the barber shows how income is not the biggest factor in planning for financial prosperity - proper planning is. And you can have your own finances in order by reading and applying the tasks he assigns his 'students' while they visit for their monthly trim.

'The Wealthy Barber' has been favorably commented on by newspapers and financial reviewers because it does not stress budget or a reduced standard of living. It is these steps which often sabotage the best intentions of individuals. The sooner the methods are applied, the easier it will be to see their effects while maintaining your lifestyle, but it is always better to start now than not start at all.

'The Globe and Mail' calls 'The Wealthy Barber' "...a perfect gift for young couples trying to live comfortably and save money in an increasingly tough world". Is that not a gift worth receiving?

'The Wealthy Barber' will show you how to plan for your retirement, save for large purchases or future needs, invest, protect your family and avoid being victimized by financial blunders by exposing some financial products and services which you may not need, but are sure to be sold.

Although the story is set in a Canadian town, the general methods and training provide a valuable education in personal financial planning.

Having a clear understanding of your financial situation and preparing a plan is no longer a mystery. Although some decisions require the guidance of an expert, arming yourself with the right questions and basic knowledge will ensure your best financial outcome.

In today's world financial education is often sorely lacking. Taking steps to educate yourself, and pass that education on to your children will protect your family and provide an abundance whether you are current millionaires or not.

Money Saving Solutions

2005-11-09T07:45:00.000-07:00

Wouldn’t it be great to get a little help with your money handling? Here are a few simple solutions to try.

1. COUPONS – These are not just for food! Check online, in print media and in your postal and email boxes for money saving coupons to use with your next computer, software, bookstore, office supply store or any store purchase. Enjoy a social life, too. Head to the fitness center, take your spouse out to eat and get your pet groomed – all with coupons. Plan ahead and keep the in a drawer or specially marked container. Purge monthly or quarterly. Trade with friends, neighbors, co-workers, church and organization member, colleges and family.

2. INCENTIVES – Many credit cards, restaurants, movie theaters, stores and other places offer incentive programs. Find one or more that fit into your purchasing plans and earn things like free air travel miles, movies and pop corn, gasoline, meals, a percentage back in the form of a check, gift certificates and more in exchange for your participating in their program. Keep up with the times, too. If your child is grown, no need to use your Toys-R-Use Visa and get back certificates for toys any longer. Call the bank and see which other programs they have, ask your friends which ones they use, surf the Internet for new offers - and switch.

3. ALTERNATIVES – Look for alternative solutions before you spend. Often there are generic packages of the products you want (items with no brand names) and there are home remedies and local pharmacists to ask for alternatives to expensive medications and treatments. And many places offer discounts for package deals, like family haircuts instead of individual ones.

4. ATTITUDE – Don’t focus on what you “don’t have.” Instead, focus on what you “do have.” Make lemonade out of those lemons; recycle what you can, reuse what you can, donate what you can. No need to have “new” things all the time, or even part of the time. Be happy with what you have now and make it work for you! Head to the library for free help in thousands of books that can show you step by step how to get exactly what you want.

So look before you leap to grab your wallet or credit card. Take a time out, sip some tea and plan ahead with coupons, incentive programs and alternative buying solutions. Make your money stretch just a little bit farther and give yourself a raise!

Debt Stacking - Fast Track Out of Debt

2005-11-08T09:09:00.000-07:00

You go to the mail box and scan - a couple fliers (nah), your magazine subscription (yes!) and bills (groan). Every month the bills show up and as you sigh and take out your check book you wonder if you will ever be free.

Each month you pay the minimums and although you KNOW you've got a handle on it - you are not charging your credit card or accumulating new debts anymore - it seems that you will be paying the minimum fees forever.

Did you know that HOW you pay your debts can affect how soon you will finishing paying them off - even if you keep paying the same amount for debt every month? Of course you might be able to get a consolidation loan, but if you're not eligible or are not interested then there are several other things you can do.

It's not always the easiest to figure out the mathematics, but there are three steps to quicker debt relief - guaranteed.

STEP ONE - Create a list.

List your smallest debts first followed by your largest high-interest debts (credit card) and then your largest low-interest debts (Lines of credit and taxes).

Plan to pay the minimums on all debts with these goals in mind:

STEP TWO - Small bills first.

They may not be the highest interest, but every bill that you are paying some interest on means you are usually only paying minimal amounts on the principal. Multiple debts are also a sure way to bring your spirits down. Paying off small debts first is a quick way to start checking them off - and freeing your mind.

STEP THREE - Move the payments along.

When one debt is paid add the funds to the next debt. For example, say you're making $75 payments to a small debt. When the debt is cleared add the $75 to the next debt on your list. If the next debt had a minimum payment of $100, you will now pay $175 until it is paid off. When that one is finished, take the $175 and add it to the next payment and so on.

STEP FOUR - Save the cash!

Don't forget that when your debts are cleared you have set yourself up for a better financial future. The best way to take advantage of your new situation is to use all the money you were spending on debts and start investing or saving it every month.

With this strategy your debts will clear faster meaning you will pay less interest, you will see progress as you clear small debts first, and you will not be tempted to use the funds for personal use instead of debt repayment.

It is a worthwhile goal to get out of debt. Seeing that goal come sooner and teaching yourself discipline sets you up for a brighter financial future. You OWE yourself that!

Consolidating Your Credit Card Debt

2005-11-07T08:21:00.000-07:00

Credit cards have revolutionized the purchasing experience since Diners Club released the first credit card in the year 1950.

The Dinners Club credit card gave consumers limited credit that, at times, even surpassed the personal savings of some participants. It allowed them to buy items they usually could not afford if they were to make a straight cash purchase. It also provided the convenience and safety of not having to carry large amounts of cash.

On average, American households possess 4 credit cards or a total of 13 payment cards if debit cards and store cards are included. There are, actually, 1.3 billion payment cards of assorted types in circulation in the United States.

But, if you think that credit cards have made the lives of modern American consumers easier, you may be wrong...

Statistics show that the average credit card debt for each household in the U.S. is $4,800 per month. Also, there were 1.3 million credit card holders declaring bankruptcy in the year 2003.

And if you still consider yourself unaffected by credit card debt, then consider this: upon retirement, most Americans can only expect to receive about 37% percent of their annual retirement income because of prior debt payment. This will leave many individuals depending on the government, family and charity for economic survival.

These are some scary facts. So before you find yourself in a position of economic uncertainty, it might be wise to evaluate your spending and current credit card debt.

If your credit card debt exceeds what seems to be a reasonable level, you may want to consider credit card debt consolidation.

So what is credit card debt consolidation?

In a nutshell, credit card debt consolidation is taking all your credit card payments and consolidating them into one monthly payment. This way, you don’t have to worry about managing the payments individually. Aside from this advantage, it may also provide you with the following additional benefits:

- Reduce interest payments
- Waive late and overtime fees
- Reduced monthly payments
- Debt relief in a shorter time
- Credit improvement
- Save more money in the long run

There are actually two major types of credit card debt consolidation...

You may want to consider a Credit Card Counseling firm. They assist consumers by consolidating all their monthly payments into one single payment and then dispersing this to the creditors on behalf of the consumers.

The other type is through a home equity loan or other secured loan. This is done by exchanging an unsecured debt (such as credit card debt) for a secured debt (a debt backed by specific assets such as real estate).

Now, credit card debt consolidation isn’t a magic balm that will drive all your credit card debt malaise away. But, it will make paying all your debt easier and might save you money in the long run. Definitely an alternative worth considering...

Click here to become Debt Free!

7 Simple Ways to Increase Your Credit Card Limit

2005-11-06T06:58:00.000-07:00

Many credit card holders aspire for a higher credit card limit. The obvious reason for this is that a higher credit card limit enables the purchase of otherwise unaffordable merchandise.

First and foremost, credit card holders need to remember that to get a higher credit card limit, they must abide by the terms and conditions of the credit card company or bank.

Below are 7 other ways to get a higher credit card limit.

• The most important thing to do for getting a higher credit card limit is to prove your credit worthiness. This is the first thing that banks and companies look for when giving a higher credit limit.

• Attract positive attention from the credit card company or bank by paying finance charges once in a while. Obviously, this is not advisable on a repeating basis and should only be used as a last resort to increase your chances of getting a higher credit limit.

Proving to credit card companies and banks that you are good "borrower" can be a convincing way to get a higher credit limit. But be careful because this strategy also means that you will be paying finance charges which can accumulate in a hurry.

And always remember, a higher credit card limit means greater purchasing power, but it also increases the risk of your having to pay greater interest charges and other processing and late fees.

• Always spend within your credit card limit because doing so means that you are capable of controlling your expenses.

• Use your credit cards regularly. Don’t keep your cards for emergency use only. If you use your credit cards sparingly, banks and credit card companies will be unable to understand your spending and pay-back behavior. Under these circumstances, most banks and credit card companies will be reluctant to give you a higher credit card limit.

• Never make minimum payments. Instead, try to pay for the entire outstanding amount. This will usually give you a better chance of getting a higher credit card limit.

• Avoid late payments as much as possible. Not only will your increase payment increase, but you may also have to pay an additional fine for not clearing bills on time. This will also dim your chances of getting a higher credit card limit.

• The best and simplest strategy for getting a higher credit card limit is to use your credit card wisely. Always keep in mind that credit card companies keep a record of your transactions and payment patterns, so always pay on-time.

The bottom line is that your performance in the records of banks and credit card companies will determine whether you’ll get a higher credit card limit or not.

It Takes Credit To Build Credit

2005-11-05T07:52:00.000-07:00

Using a credit card wisely is an important step in building a good credit rating. If you're trying to re-build your credit or if you're young and just starting out, pay close attention the next time you receive a new card offer in the mail. When you're trying to build a positive credit history for yourself, using the right credit card makes sense. Making small purchases and then making your payments on time each month is a simple, reliable way to build an outstanding credit report.

What to Look For On a Credit Card Application

If you receive a credit card application that appears to offer a low monthly interest rate, don't make a decision until you turn it over and closely examine the Disclosure Box. In it you'll find a more important measure of credit terms - the Annual Percentage Rate, or APR. By federal law, the Disclosure Box will also tell you whether or not the card has what is called a grace period - a number of days, usually 25, until your purchase starts to accrue finance charges. If a card has a reasonable grace period and you pay off your balance at the end of each billing cycle, you won't have to pay finance charges. It isn't difficult to find credit cards that offer these grace periods, so if the Disclosure Box doesn't declare one then throw the application in the trash and look for a better offer.

If you don't have any credit history at all, a credit card company won't want to give you a very high credit limit, but that's probably best when you're just starting out. You don't want to be tempted to go into serious debt with your very first credit card.

Calculate Your Monthly Finance Charges

Ideally you want to pay off your balance each month to avoid paying any finance charges, but when that isn't possible it's important to know the actual cost of the items you purchase. The annual percentage rate, divided by 12 months, gives you the periodic rate that will be applied to your outstanding balance each month. You can estimate what your monthly finance charge will be by multiplying the periodic rate times the outstanding balance. It may sound complicated at first, but taking the time to learn this simple equation can make a big difference in how you use your credit card.

When you're able to see how much you actually spend on an item that you don't pay off at the end of the month, it might help you to resist the temptation to over-use your card. An item that you want to buy might be on sale at the time you purchase it, but if you don't pay off your balance at the end of the month then those finance charges can dramatically increase the actual amount you'll end up paying.

Use Your Credit Card as a Tool

Credit cards are only one of the tools available to help you build a positive credit history. Making on-time payments for other forms of credit, such as rent and utilities, are also important. Depending on your situation, within 1-2 years your credit rating will be improved enough that you no longer need to use your card for new purchases to maintain your good credit. Use these tools wisely, and they'll help build your financial future!

Save Time, Money & Frustration -- Get the Right Credit Score

2005-11-04T07:45:00.000-07:00

You go into a lender's office prepared to apply for and receive a loan. After all, you've done your homework, you've pulled your credit reports and you know what your credit scores are--you even got one score from each of the three major credit bureaus: Equifax. Experian, and TransUnion. You are shocked when your loan is denied, or maybe you were approved, but the interest rate is much higher than you anticipated. How can that be you say? My credit score is good, I know I checked. Maybe it's not as good as you think. It all depends on where you got it and what kind of credit score it is.

The fact is, there are several different credit scoring methods. Credit scores calculated from the same credit reports can differ substantially from credit scoring method to credit scoring method. So how can you ever know what your credit score really is? Well, luckily, 75% percent of lenders use FICO scores exclusively and you can purchase FICO scores yourself--you just have to know where to go. (www.myfico.com)

FICO credit scoring is a numeric method of scoring your credit worthiness developed by Fair Isaac and Company. Your credit score is a number between 300 and 850 that tells creditors how likely you are to pay your bills. The higher the number, the better it looks to potential lenders and creditors.

The three major credit bureaus each have their own version of the FICO score: Equifax uses the Beacon system, TransUnion uses the Empirica system, and Experian uses the Experian/Fair Isaac system. Despite each credit bureaus' use of their own versions, all systems are based the original Fair Isaac FICO scoring method, so each credit score calculated with these systems are generally called FICO scores. However, although most lenders do use FICO scoring, some lenders may have their own scoring methods.

There is only one place where you can get your FICO score from all three bureaus and that is at www.myfico.com. If you order your credit score from anywhere else, again be aware that these scores are "FAKOs" (or "fake") and can differ considerably from your FICO credit scores.

Adding to the confusion is the credit bureaus themselves. Recently, Experian revealed that the national average credit score of its consumers is 678. This is very misleading to the average consumer. When you buy your credit report and score directly from Experians website, you are getting what they call the "PLUS Score," which is NOT a FICO score, and is NOT used by lenders anywhere. (Equifax is the exception--you can buy your FICO score directly from them at their website; however, the only place to get all three scores together is at www.myfico.com.) The 678 PLUS Score reported by Experian is actually the average of consumers' PLUS Scores, not their FICO Scores.

Clearly, the PLUS Score (and all Non-FICO scores) are useless. Not only that, but such hype misleads consumers into purchasing their PLUS Score thinking that they are getting the same credit score that their lender will use. Non-FICO scores are worthless not matter what the credit bureaus or any website selling non-FICO scores claim. Even a few points difference in your credit score can mean confronting the reality of the loss of thousands of dollars out of your pocket--a loss that you probably didn't plan for. The next time you want the most accurate credit score available, do yourself a favor and get the industry standard: the FICO credit score.

CLICK HERE To Get Credit Report, Credit Score & FICO Score

Credit Cards and You

2005-11-03T19:59:00.000-07:00

Practically everyone in the United States has credit cards. From teenagers to retirees, almost everyone has at least one credit card. Everywhere we go we see ads - in the television, radio, newspapers, billboard advertisements - on credit cards. Some credit cards are even mailed directly to our homes. But what are credit cards, why should you have one and what are some of the risks involved?

Simply stated, a credit card is a financial arrangement between you, the consumer or the card holder, and an institution such as a bank. The arrangement specifies that you borrow money from the lending institution with the promise that you will pay them back in the future. The institution agrees that it will provide the money you need and in-turn you are expected to return payment over a certain period of time. Your payment will include not just the amount of money you borrowed, but also an additional charge based on a pre-defined rate of interest.

Credit can provide various services, making it an indispensable tool for today's consumers. These include:

Convenience.
You saw this wonderful dress in a shop. Perfect for tonight's party, you thought. But you don't have money right now. Thanks to your card, you can buy anything you want right now. Credit cards give you that wonderful allowance not to bring that much cash and to order goods from catalogs. In addition, many of the online-based shops and stores, such as Amazon.com, mainly accept payment using credit.

Emergency Protection.
For emergency situation, credit cards can be an extremely helpful tool that could be your friend that could pay for your emergency needs, like when your car conked out in the road, or your mother gets hospitalized, or any emergency situations that you need money but can't get it from the usual means.

Budgeting.
Putting you in the right budget. Want to keep a detailed record of your expenditures? Credit cards can do that.

Security.
In today's world, carrying large cash has become a problem. If your cash gets lost, there's no way you can retrieve it. Compared with credit cards, money cannot be returned back when it got lost or stolen. If your card, for example, got broken or it got lost or someone stole it from you, you can always ask for a credit card termination or cancellation. You will have another card, a new one that will replace it in a few days.

Traveling.
If you're quite a traveler, whether across the town or country, or outside the US, it is relatively easier to travel with a credit card.

When used responsibly, credit cards can help improve our daily lives. With credit cards, life can be much easier. However, the joy of using credit cards can quickly change to a curse!

Are you starting to get notices from creditors to pay or "else"? Are you worried that you might lose your properties like your house because of credit debt? Chin up: Dealing with credit card debt is not as hard as you may think.

And, if there's any consolation, you're not the only one facing such situations. At some point, many people like you face financial crises with credit card debt.

Here are some simple tips to help you cope with your credit card debt:

Make a Budget.
If you want to have a grab of your financial situation before you lose everything, making a budget is what you should do first. Assess how much do you get from your income or other means and your expenditures. For example, if getting that posh apartment means you have to limit your meals to once a day, then it is not a great and sound budgeting decision. Your goal is ensure that you can answer for all the basic necessities: food, housing, clothes, health-related costs, among others.

Contact Your Creditors.
Remember: Running away from your creditors is not the answer. It is not a solution, and may in fact lead you to bigger problems. If you are having trouble paying off your debts, address this immediately with your creditors. State to them sincerely and fully the reason why it has become hard for you to pay these debts, and check if they could give you a revised payment arrangement that will put you at ease on your payment terms. Do not let creditors turn over your situation to someone or an agency to do the collecting for them, as this means that they have given up on you.

Address Debt Collectors.
There is a law that gives certain conditions for debt collectors as to when and how they should ask you to pay. The federal law, Fair Debt Collection Practices Act, clearly states that those collecting debts may not bug you, give false assertions, or do practices that are not fair when they are getting to collect money from you.

Get Credit Counseling.
You could also consider getting the aid of groups or institutions that will help you in your problems. If you managed to have an improved payment arrangement of your debt with a good credit counseling organization, creditors may approve of your proposition and accept your modified arrangement plan..

Bankruptcy.
Generally, personal bankruptcy is known as the last choice to fix your ballooning credit debt. A bankruptcy unfortunately stays on your financial information report for years. Getting additional credit, buying a house, sometimes even getting a job might be hard for you. Technically, however, it is a legal way of addressing your credit debt.

Enjoy the use of credit to make your life easier. . .BUT don't let it become a nightmare! Learn to use your credit responsibly.