Thursday
Tuesday
Obama Targets Credit Card Industry
In a move that I could only consider genius, Democrat Barack Obama called for new restrictions on "predatory" credit card companies he says deceive consumers into piling up massive debt they have little hope of repaying.
"The truth is, our middle-class families are not going to be secure so long as they can't get out of debt," Obama said Monday, sharpening the populist rhetoric of his presidential campaign. "If we're serious about stopping Americans from falling deeper in debt, we've got to crack down on predatory credit card companies that are pushing them over the edge."
Obama pointed to studies showing that consumers have an average personal debt of more than $8,000, a load driven higher by credit cards. He said soaring credit card debt could turn into a crisis as big as the one in the subprime mortgage industry.
"The larger risk is that what's happening in the housing market could lead to a slowdown in the entire economy," he said.
The Illinois senator made his comments in a statement and in a discussion with debt counselors and consumers who have struggled with credit card debt.
Obama's "credit card bill of rights" would force credit card companies to give consumers the option of dropping out of an agreement if the companies raise interest rates. It would ban increasing rates on past debts and prohibit charging interest rates on transaction fees. He would also force additional disclosures by credit card issuers of terms of the agreement.
"I've seen many Americans who have been driven into financial ruin as a result of all of this," said Obama.
He spoke as he opened his latest campaign swing in the state where precinct caucuses traditionally launch the presidential nominating season, and where polls find him in a dead heat with Hillary Clinton. Both have portrayed themselves as champion of the middle class.
Obama did so again by accusing credit card companies of deceptions.
"Many credit card companies are tricking Americans into agreements they can't afford because that's how they make big profits," he said. "Well, no company's bottom line should come before what's right for the American people."
He said many consumers are squeezed twice, with credit card debt forcing them into bankruptcy, where the odds are also stacked against them.
Obama also spoke of his opposition to an overhaul of bankruptcy laws that he said protects credit card companies more than consumers.
"Every American has a responsibility to pay what they owe, but we need to make sure that what they're paying is fair, and we've got to do more for those Americans who aren't able to climb out of debt and actually have to declare bankruptcy," he said, promising reform of bankruptcy laws if elected president. He said he opposed a 2005 bankruptcy bill because it protected lenders while "preventing middle-class Americans from getting back on their feet after a crisis - even if they've suffered an illness."
He said much credit card debt comes from consumers who have been forced to use credit cards to pay for medical costs.
Thursday
The Thrifty Credit Card Holder
Credit cards are useful financial tools and like any tool, they need to be effectively managed. Learning to use a credit card responsibly is an important step in developing financial common sense.
Here are 5 basic credit card tips. . There are many others, I'm sure, but this is a good starting point!
- Treat your card like a debit card. Your credit card is not "extra money". It is a loan that has to be repaid. So, don't spend money you don't have.
- Don't sign up for cards you don't need. If you get unsolicited card offers, don't sign up for that card. You probably don't need it -- which is why you didn't seek out the credit card company yourself.
- If you use credit cards, pay them off each month. Carrying a balance on your card can add up to hundreds of dollars each year in interest.
- Don't use credit cards for groceries. Buying things like groceries with a credit card unless you pay it off each month is a no-win situation. Recurring items like groceries will only tend to increase your credit card each month.
- Pay your card on time. Late card companies can charge huge fees for paying late.
Credit cards are certainly "OK" when used wisely. Also, some things, like on-line purchases or renting a car, require a major credit card.
They are also important in helping you create a good credit rating. Just keep in mind the total cost of using the card and that the credit card companies are not your friend!
Wednesday
What Is A Charge Off?
If you consider yourself as someone with bad credit, chances are that you have at least one or more “charge offs” on your credit reports. A “charge off” is a fairly generic term used in the debt and credit industry. A charge off is a term that simply means that the original creditor has given up collecting a delinquent debt. Once the creditor exhausts all collection efforts, it will typically charge the debt off and sell the debt to a third party.
For example, in the case of a delinquent credit card bill, the creditor usually attempts to collect the debt for approximately six months before determining that the debt should be written off or charged off. The creditor suffers because it has lost money on the loan, but experiences a tax benefit by writing the debt off. The creditor is allowed to deduct any charged off debts from its profits which mean it pays less income tax because of the lost profit directly related to those debts.
For consumers, a charge off can be devastating from a credit history perspective.
Next to repossession or foreclosure, a charge off is about the worst mark a person can have on his credit. It can prevent you from getting approved for a mortgage, car loan, credit card, or nearly any other type of new credit. Further, a single charged off debt could create multiple separate negative marks on a person’s credit history. This is due to the fact that a debt could be bought and sold multiple times as each party tries to recover lost profits.
Using the credit card example above, let’s assume that a credit card account is charged off. It may be sold to the highest bidding collection agency for thirty cents on the dollar. If that collection agency is unsuccessful in collecting the debt, they will likely cut their losses and try to sell that same debt to another agency for ten cents on the dollar.
As debts become older they are typically more difficult to collect. Debtors are less likely to pay old debts. Plus, the debt gets closer to the statute of limitations which is a point when reached, gives the debtor a “get out of jail free card.” A debtor has no legal obligation to pay once the statute of limitations runs on a debt.
In any event, as the debt is bought and sold over and over again, it is likely that each collection agency will place a negative mark on the person’s credit report. Some consumers report a long trail of charge offs on their credit report for a single debt!
This may sound egregious to some people. The Fair Debt Collection Practices Act and the Fair Credit Reporting Act police credit bureaus and collection agencies and prohibit them from providing misleading, inaccurate, or unverifiable information. It does not specifically prohibit a string of collection agencies from this practice. Although it is implicit that a collection agency should remove a credit report charge off mark once they sell a debt, it does not mean it is always diligent in doing so.
Therefore, the burden often falls upon the individual consumer to remove the inaccurate items by way of dispute letters, investigation requests, etc. Thus, a person dealing with even a single charged off debt may have a lot of work to do if they want to clear their credit history of charge offs.
In sum, a charge off is something that consumers should try to avoid if possible. If you are delinquent on an account, try negotiating directly with the creditor. It is both in the best interest of both parties to avoid a charged off debt.
Tuesday
Credit Score Info
Your FICO credit score is a numerical score derived from your financial activity over the life of your credit history. FICO credit scores change frequently with new activity in your credit report. It can range from a score of 300 to 850, with 850 considered excellent and 300 considered very bad credit. Your FICO score is the number banks and other financial institutions use to decide whether they will loan you money or not. The better your FICO credit score, the more likely you will get the loan.
Things such as late credit card payments, or other bill payments, have a very negative impact on your score. For example, someone with an average good credit rating of 700, can increase their score by as much as 20-25 points, simply by making all of their monthly bill payments on time. Increasing debts can have a negative affect your credit score. By maxing out all of your credit cards you can lower your credit score by as much as 60 to 100 points.
The FICO Score Scale - 300 to 850
700 - 850 -- Excellent or Very Good Credit
680 - 699 -- Good Credit
620 - 679 -- Okay or Average Credit
580 - 619 -- Low Credit
500 - 580 -- Poor Credit
300 - 499 -- Bad Credit
Knowing where in this spectrum your FICO score is located can help you determine the types of loans and interest rates that you can expect to receive. The more you educate yourself on your own personal financial situation, the more you can do to improve it and make the most of your money.
Make it a priority to know what's in your credit report and what your FICO credit score is. If you let your credit score drop, it could take many years to get it back on track, and could also lead to financial disasters.
How Do I Check My FICO Score and Credit Report?
Now that you are aware of how your FICO score impacts your finances, you may be wondering "How do I get my free online FICO score?"
Easy, To learn more about obtaining a free online credit report, visit http://freeonlinecreditcheck.googlepages.com/, an excellent resource on credit reports and your credit score. There are dozens of websites that offer totally free credit reports.
There are so many, in fact, that it can be a little bit overwhelming when trying to decide which company to choose. Some things to look for when choosing a credit reporting service are: ease of use, customer service and assistance, detail of reports, accuracy of reports, and whether they offer to assist in repairing your credit score.
Friday
Debt Repayment Planning
Many people who have debt blindly make their minimum payments each month without a single thought about paying off the debts.
Showing an interest in reducing your debt is a big step. Let one big step lead to another by finding out how to put together a plan to eliminate your debt.
When you're overloaded with debt, it can be difficult figuring out how to best tackle the debt. You have to figure out which accounts you should pay, in what order you should pay them, and how much you need to pay to eliminate your debt. By attacking each of these hurdles one by one, you can tailor a plan that fits your budget and debt load.
Calculate Your Total Debt
To make a plan for getting out of debt, the first thing you need to do is figure out who and how much you owe. Start by getting a copy of your credit report. Your report will contain all of your financial obligations from institutions that report to the major credit bureaus. Your credit report might not contain all your debts, so you should also use recent statements from your creditors to complete your list.
On a single sheet of paper write down the name of each creditor, total amount owed, monthly payment, and interest rate for your accounts. Depending on your goals for getting out of debt, you may want to consider only bad debt, such as credit cards and small loans.
Your list, for example, might look like this:
Prioritize Your Creditors
Once you have a complete list of your debts, you should figure out how you want to pay them.
When it comes to the cost of having debt, the best way to pay your debt is by paying off those with the highest interest rates first. Rank your debts in order from highest to lowest according to interest rate. This is the order you’ll repay your debts.
As an alternative, you might consider paying off your smallest debts first. If your high interest debts also have high balances, you could end up paying on a single account for months before the entire balance has been repaid. Since smaller debts are repaid quicker, many people prefer to pay them first.
You should choose the method that will keep you motivated to pay off your debts. If optimizing your payments is most important, then the high-interest method is best.
Determine How Much You Can Pay
Another crucial component of your plan to get out of debt is the amount you can afford to pay on your debt each month. To come up with this amount, you need to figure out your discretionary income. This is the amount you have for spending after all your financial obligations have been met.
Total your income from all reliable sources including wages, alimony, child support payments, bonuses, or dividends. Then, subtract what you spend each month on required expenses, those items you need for survival. Required expenses include mortgage or rent, utilities, food, transportation, medical expenses, and your current debt payments. This calculation will result in your disposable income.
With your disposable income in mind, you can figure out how much you are able spend to repay your debt each month.
Make the Plan
Now you that know how much you will be spending to pay off your debt, you can complete your plan. Put all of your debt-spending money towards your highest priority debt. This will either be your smallest debt or the debt with the highest interest rate, depending on the method you choose. Pay this amount plus the minimum payment every month until the debt has been completely repaid. Continue making the minimum payments on your other debts.
Once you've paid off the first debt, combine the minimum payment from that debt with the extra amount you’ve allocated for repaying your debts and put it towards the debt with the next highest interest rate (or next smallest balance). Repeat this process until your debts have been completely repaid.
Let’s say you’ve decided to spend an extra $300 each month to repay your debts. Using the previous example, you should start with the Macy's account because it has the highest interest rate.
1. Macy’s credit card, $1515, $89, 18.9%
2. Visa credit card, $780, $47, 11.9%
3. Bank of America loan, $900, $55, 7.8%
Each month, make a payment of $389 ($300 plus the minimum payment) until the debt has been repaid. Even though your minimum payment will decrease as you pay off the balance, continue sending $389. The same goes for your other debts, too.
Using the example from above, your plan will look something like this:
• Macy’s: $389
• Visa: $47
• Bank of America: $55
Once you have repaid Macy’s you should repay Visa, the account with the next highest interest rate.
Your payment should be $436, the $389 you were paying to Macy's plus the $47 you were already paying to Visa.
Update your plan.
• Visa: $436
• Bank of America: $55
Finally, when you have repaid the Visa account, use all $491 to repay the Bank of America loan.
Showing an interest in reducing your debt is a big step. Let one big step lead to another by finding out how to put together a plan to eliminate your debt.
When you're overloaded with debt, it can be difficult figuring out how to best tackle the debt. You have to figure out which accounts you should pay, in what order you should pay them, and how much you need to pay to eliminate your debt. By attacking each of these hurdles one by one, you can tailor a plan that fits your budget and debt load.
Calculate Your Total Debt
To make a plan for getting out of debt, the first thing you need to do is figure out who and how much you owe. Start by getting a copy of your credit report. Your report will contain all of your financial obligations from institutions that report to the major credit bureaus. Your credit report might not contain all your debts, so you should also use recent statements from your creditors to complete your list.
On a single sheet of paper write down the name of each creditor, total amount owed, monthly payment, and interest rate for your accounts. Depending on your goals for getting out of debt, you may want to consider only bad debt, such as credit cards and small loans.
Your list, for example, might look like this:
- Visa credit card, $780, $47, 11.9%
- Macy’s credit card, $1515, $89, 18.9%
- Bank of America loan, $900, $55, 7.8%
Prioritize Your Creditors
Once you have a complete list of your debts, you should figure out how you want to pay them.
When it comes to the cost of having debt, the best way to pay your debt is by paying off those with the highest interest rates first. Rank your debts in order from highest to lowest according to interest rate. This is the order you’ll repay your debts.
As an alternative, you might consider paying off your smallest debts first. If your high interest debts also have high balances, you could end up paying on a single account for months before the entire balance has been repaid. Since smaller debts are repaid quicker, many people prefer to pay them first.
You should choose the method that will keep you motivated to pay off your debts. If optimizing your payments is most important, then the high-interest method is best.
Determine How Much You Can Pay
Another crucial component of your plan to get out of debt is the amount you can afford to pay on your debt each month. To come up with this amount, you need to figure out your discretionary income. This is the amount you have for spending after all your financial obligations have been met.
Total your income from all reliable sources including wages, alimony, child support payments, bonuses, or dividends. Then, subtract what you spend each month on required expenses, those items you need for survival. Required expenses include mortgage or rent, utilities, food, transportation, medical expenses, and your current debt payments. This calculation will result in your disposable income.
With your disposable income in mind, you can figure out how much you are able spend to repay your debt each month.
Make the Plan
Now you that know how much you will be spending to pay off your debt, you can complete your plan. Put all of your debt-spending money towards your highest priority debt. This will either be your smallest debt or the debt with the highest interest rate, depending on the method you choose. Pay this amount plus the minimum payment every month until the debt has been completely repaid. Continue making the minimum payments on your other debts.
Once you've paid off the first debt, combine the minimum payment from that debt with the extra amount you’ve allocated for repaying your debts and put it towards the debt with the next highest interest rate (or next smallest balance). Repeat this process until your debts have been completely repaid.
Let’s say you’ve decided to spend an extra $300 each month to repay your debts. Using the previous example, you should start with the Macy's account because it has the highest interest rate.
1. Macy’s credit card, $1515, $89, 18.9%
2. Visa credit card, $780, $47, 11.9%
3. Bank of America loan, $900, $55, 7.8%
Each month, make a payment of $389 ($300 plus the minimum payment) until the debt has been repaid. Even though your minimum payment will decrease as you pay off the balance, continue sending $389. The same goes for your other debts, too.
Using the example from above, your plan will look something like this:
• Macy’s: $389
• Visa: $47
• Bank of America: $55
Once you have repaid Macy’s you should repay Visa, the account with the next highest interest rate.
Your payment should be $436, the $389 you were paying to Macy's plus the $47 you were already paying to Visa.
Update your plan.
• Visa: $436
• Bank of America: $55
Finally, when you have repaid the Visa account, use all $491 to repay the Bank of America loan.
Wednesday
Working The System
Friday night and the phone rings... you know the call, it's late, the last bite of dinner on your plate, and all you want to do is watch TV and relax. Guess who's calling? Yes, it's a mortgage company that's trying to sell a refinance deal!
The girl asks about my mortgage, my rates, and my credit card debts--and I do reply. After all, I'm always curious about getting a better loan (plus, I like to throw them off their scripts).
I ask her what their best rates are. She tells me that it depends on my credit history. I said, "Okay, say I have a credit rating like Bill Gates. NOW what's your best rate?" She said that she can't quote a rate; however, the loan officer would let me know. So, I agreed to have the loan officer give me a call.
On Monday, while I'm trying to set up the new DVD player, the phone rings. Guess who? It's the loan officer. Let's just call him Kevin. Well, okay, so Kevin is really his name. I'm not going to change names to protect the innocent.
Kevin starts his spiel about how he can save me money on my $110,000, 30-year, 6 7/8% mortgage and $15,000 of credit card debt. I asked him what his best rates are and he told me it varied depending on my credit score, which he could check if I tell him my social security number--I don't think so! There's no way I'm giving that out over the phone. If his deal sounds real, then I'll ask for paperwork to be sent through the mail.
I told him to assume that "my credit history is the best of anyone on earth and in this universe. Now, what is your best rate?" He told me 6.5% with 1 point.
He went on to explain that, unlike other mortgage companies that ask for the 1 point at closing, they "conveniently" include that amount in the mortgage principal. I told him that 6.5% isn't that much better than my 6 7/8% (6.875%), and when you throw in the 1 point, then your "best" loan is really around 6.6%.
That's when he asked me what my credit card rates are. I told him that my credit card debts are at about 1.99% APR, which are a little high since I had the entire $15,000 at 0% for the prior 20 months.
Kevin said that I'm really not getting 1.99% and that there's no way I ever got 0%. He said, "Tell me where I can get those credit card rates?"
I told him to look in his mailbox. That's where many great credit card deals are found. And most really good ones are offered from your current banks.
He still didn't believe me and said that if I look at my statement, I'd see that I was really paying 16% or more. I explained that when I had those 0% deals, my credit card statement would arrive and show a balance of $15,000, and under "finance charges" the total is "$0.00."
His response was, "Think about it, Scott...why would a bank give you 0%. They're not making any money!"
I said, "To get new customers."
Kevin then told me that it doesn't make sense that they would do that. I said, "Well then, does it make sense that Publisher's Clearing House gives away $10 million, or that McDonalds gives away millions in prizes? Why do they do it? To get business."
Why do the banks offer 0%? Because they think that I'm going to forget that the offer ended and let my rate bounce to 15% (or more). I'm not!
I'm simply going to transfer my balance to another low-rate offer when their offer ends. Overall, the bank will make money because most people (not DebtSmart readers--we're all too "debt smart") are not going to notice that the rates have been increased or will be too lazy to continue transferring balances.
After I told Kevin how I keep transferring my balances, he said pretentiously, "So you're manipulating the system."
I said, "I'm taking advantage of my best loan options. You just called me and are trying to get me to transfer my mortgage and credit card debt to YOUR bank. If I decide to use your offer, am I then 'manipulating the system'?"
That comment really caused Kevin's brain to freeze up. Almost as locked-up as Windows 98 with 20 open applications. He was forced to shut down and restart.
He finally replied with, "Well no."
"So then, if I use the other bank's offers, I'm 'manipulating the system,' but if I use your offer, then I'm not. Is that right?"
Kevin said, "Well I guess you're just being smart."
You see my friends, there is a stigma about transferring balances. People say that you're "credit surfing," that you're "manipulating the system", "using Peter to pay Paul" (I don't owe Paul anything) or "paying one credit card with another."
Hear me on this...DON'T listen to these myths. Don't be brainwashed by this dogma! It's always smart to use your best loan options! It's doesn't matter how many times you switch cards. You're always going to save money when you pick a better loan deal.
Kevin changed the subject by trying to give me numbers for his refinancing deal. He said that my payments, with his 6.5%, 30-year mortgage for my $110,000 would be about $750.00 per month. Of course, with my calculator always handy--I told him that the payments are more like $695.28. In fact, they are exactly $695.28. He said that he's including his 1 point fee in the payment.
Well then, according to my numbers, the payment is $702.23. I asked him how he's coming up with $750. Kevin said, "It's obvious that you have a calculator there."
My response was "Yeah, I have a calculator here. What do you have there? Whatever you have doesn't seem to be able to come up with the correct payment."
Finally, since he can't talk about facts anymore, he starts to get emotional and says, "Look, I've been doing this for years. I do this all day. What type of work do you do?"
"I write and publish books, I run a web site, write an email newsletter." However, I never did mention to Kevin the subject matter.
Lastly, I should say that Kevin was nice, and I do want to thank him for calling because it resulted in this informative article.
Tuesday
Using Credit Cards To Pay For Christmas
What a bad idea.
Using plastic to pay for your Christmas. To buy your spoiled brat kid the latest toy or game that they will forget about in a month. To show that you love your friends and family so much that you're willing to go into debt for them.
In the run-up to Christmas, cash registers across the country will be ringing as millions of consumers head to the streets and on to the internet to find the perfect Christmas presents for their friends and family. With the added cost that Christmas brings, many people choose to put their spending on a credit card, but recent research has suggested this is not the best way to ensure you have the funds to cover the perfect Christmas.
According to research from the new money saving website Savebuckets, around four in ten (41 per cent) used credit to pay for Christmas in 2006. However, just 29 per cent of those who used credit to fund their festive few days had paid their credit card off in January, while one in five are still paying for their Christmas spending, more than ten months after the event itself. With certain ones attracting high interest on any long-term balances, cheap loans could be a better way of paying for the time.
Marc Ames, marketing manager of Savebuckets, said: "Many Britons have struggled to pay off their credit card spending from last Christmas. With rising costs of living and interest rate hikes curbing spending power this year, it is likely that many will have to make cutbacks this Christmas." With a cheap loan, the debt hangover could possibly have been reduced.
The message to use personal loans to fund the cost of Christmas has been supported by Sainsbury's Bank, suggesting that a personal loan is, in certain cases, a better method for using credit to buy presents than a credit card is. However, Steven Baillie, head of loans at Sainsbury's Bank, stressed that the use of it for Christmas is dependant on the kind of festive purchases you will be making. "It really depends on what you're buying for Christmas. If you're buying that car for Christmas then I can understand it," he said.
Mr Ballie also said that despite the current consumer debt crisis, personal loans are still a very viable form of lending for people considering credit: "There's no doubt about it [that personal loans are a sensible way to borrow a large sum]. It comes back down to doing your homework, understanding that you're getting the best rate, understanding all the clauses, the small print etcetera, so there are no hidden charges."
The Savebuckets survey revealed that consumers from London are the most likely to borrow money at Christmas time, with 45 per cent falling into this bracket. Following London were East Anglia, Wales and Lancashire with 44 per cent borrowing to fund the festive spending. At 875 pounds per person, Lancashire was found to be the region with the highest spend at Christmas, followed by the Midlands (851 pounds) and the south (845 pounds).
Britannia earlier this year suggested that people were not planning for their Christmas spending ahead of time, which could lead to more people needing personal loans to finance their Christmas purchases. Almost one in four (37 per cent) said they would borrow money to cover the cost of Christmas.
In May this year, a survey by Thomas Charles revealed that more than a third of those over the age of 55 struggled to make their monthly repayments on personal loans and other borrowing. In younger age groups, the problem was also apparent - although not as prevalent - with 24 per cent of the 34 to 45 age group struggling to meet repayment demands. Director of the firm James Falla said that due to this "buy now, pay later" culture, it is "inevitable" that some groups would therefore run into financial difficulties.
Using plastic to pay for your Christmas. To buy your spoiled brat kid the latest toy or game that they will forget about in a month. To show that you love your friends and family so much that you're willing to go into debt for them.
In the run-up to Christmas, cash registers across the country will be ringing as millions of consumers head to the streets and on to the internet to find the perfect Christmas presents for their friends and family. With the added cost that Christmas brings, many people choose to put their spending on a credit card, but recent research has suggested this is not the best way to ensure you have the funds to cover the perfect Christmas.
According to research from the new money saving website Savebuckets, around four in ten (41 per cent) used credit to pay for Christmas in 2006. However, just 29 per cent of those who used credit to fund their festive few days had paid their credit card off in January, while one in five are still paying for their Christmas spending, more than ten months after the event itself. With certain ones attracting high interest on any long-term balances, cheap loans could be a better way of paying for the time.
Marc Ames, marketing manager of Savebuckets, said: "Many Britons have struggled to pay off their credit card spending from last Christmas. With rising costs of living and interest rate hikes curbing spending power this year, it is likely that many will have to make cutbacks this Christmas." With a cheap loan, the debt hangover could possibly have been reduced.
The message to use personal loans to fund the cost of Christmas has been supported by Sainsbury's Bank, suggesting that a personal loan is, in certain cases, a better method for using credit to buy presents than a credit card is. However, Steven Baillie, head of loans at Sainsbury's Bank, stressed that the use of it for Christmas is dependant on the kind of festive purchases you will be making. "It really depends on what you're buying for Christmas. If you're buying that car for Christmas then I can understand it," he said.
Mr Ballie also said that despite the current consumer debt crisis, personal loans are still a very viable form of lending for people considering credit: "There's no doubt about it [that personal loans are a sensible way to borrow a large sum]. It comes back down to doing your homework, understanding that you're getting the best rate, understanding all the clauses, the small print etcetera, so there are no hidden charges."
The Savebuckets survey revealed that consumers from London are the most likely to borrow money at Christmas time, with 45 per cent falling into this bracket. Following London were East Anglia, Wales and Lancashire with 44 per cent borrowing to fund the festive spending. At 875 pounds per person, Lancashire was found to be the region with the highest spend at Christmas, followed by the Midlands (851 pounds) and the south (845 pounds).
Britannia earlier this year suggested that people were not planning for their Christmas spending ahead of time, which could lead to more people needing personal loans to finance their Christmas purchases. Almost one in four (37 per cent) said they would borrow money to cover the cost of Christmas.
In May this year, a survey by Thomas Charles revealed that more than a third of those over the age of 55 struggled to make their monthly repayments on personal loans and other borrowing. In younger age groups, the problem was also apparent - although not as prevalent - with 24 per cent of the 34 to 45 age group struggling to meet repayment demands. Director of the firm James Falla said that due to this "buy now, pay later" culture, it is "inevitable" that some groups would therefore run into financial difficulties.
Friday
Credit Card Debt 101
Credit Card Debt is known to have ruined the lives of many people financially.
Most credit card owners do not realize the scary fact that credit card debt may take a long time to repay, especially if they are burdened with high interest rates. So in short if you do not have the funds available to repay your debt, it can mean serious financial implications for and your family if you're married.
Credit Card Debt Facts
Studies have shown that card debt and personal bankruptcies have increases bank profits to the highest level in the last five years.
An ever increasing number of credit card holders were unable to manage their finances that lead to credit debt, due to the convenience of using credit cards, can lead to a false feeling of financial security and being in a "comfort zone".
When these credit card holders encounter problems with their debt it casts self-doubt on their ability to manage themselves financially.
Most card applicants do not read the "fine print" on the contract documents that they sign and apply for high interest cards without themselves realizing it.
Most people with debt on their credit card are having difficulty in paying high interest for their card debt, resulting in paying more on interest than the actual payment on the previous month's expenditure.
Ideas to Eliminate your Card Debt
Most people with debt and on the brink of bankruptcy do not realize that only they, themselves, are responsible for their bad debt situation, and that by taking immediate action, they can stop the vicious circle of debt.
Start to plan on exactly how you will attempt to get out of your card debt by creating a list of all the credit cards that you currently own, ensuring that you make notes of the total debt including the Apr for each of them. The sum total of all these various debts will give you your total credit card debt.
You also need to check if you have been defaulting on payments on any of these credit cards which normally result in a "late fee" being charged and added to your account.
The next important step in getting out of debt is to check your current financial situation and make an assessment of what funds you got available to apply towards your debt repayment. Then look at the options open to you for eliminating your debt.
Seek the help of a credit card debt assistance company.
Take the time to research the new bankruptcy laws and know your rights, you will discover that there are several options open to you to in reducing or eliminating that high interest debt and get your finances under control again.
Try to go shopping without your card; should you stumble on something you want to buy, you will be forced to give it some serious evaluation in order to determine if you really need to buy the item in question. Time delay before purchase is good so that you can give it a second thought!
Ask your current credit card supplier for help in your card debt reduction i.e. by lowering the APR on your cards.
Take above mentioned facts and ideas serious if you want to get out of your credit card debt!
Most credit card owners do not realize the scary fact that credit card debt may take a long time to repay, especially if they are burdened with high interest rates. So in short if you do not have the funds available to repay your debt, it can mean serious financial implications for and your family if you're married.
Credit Card Debt Facts
Studies have shown that card debt and personal bankruptcies have increases bank profits to the highest level in the last five years.
An ever increasing number of credit card holders were unable to manage their finances that lead to credit debt, due to the convenience of using credit cards, can lead to a false feeling of financial security and being in a "comfort zone".
When these credit card holders encounter problems with their debt it casts self-doubt on their ability to manage themselves financially.
Most card applicants do not read the "fine print" on the contract documents that they sign and apply for high interest cards without themselves realizing it.
Most people with debt on their credit card are having difficulty in paying high interest for their card debt, resulting in paying more on interest than the actual payment on the previous month's expenditure.
Ideas to Eliminate your Card Debt
Most people with debt and on the brink of bankruptcy do not realize that only they, themselves, are responsible for their bad debt situation, and that by taking immediate action, they can stop the vicious circle of debt.
Start to plan on exactly how you will attempt to get out of your card debt by creating a list of all the credit cards that you currently own, ensuring that you make notes of the total debt including the Apr for each of them. The sum total of all these various debts will give you your total credit card debt.
You also need to check if you have been defaulting on payments on any of these credit cards which normally result in a "late fee" being charged and added to your account.
The next important step in getting out of debt is to check your current financial situation and make an assessment of what funds you got available to apply towards your debt repayment. Then look at the options open to you for eliminating your debt.
Seek the help of a credit card debt assistance company.
Take the time to research the new bankruptcy laws and know your rights, you will discover that there are several options open to you to in reducing or eliminating that high interest debt and get your finances under control again.
Try to go shopping without your card; should you stumble on something you want to buy, you will be forced to give it some serious evaluation in order to determine if you really need to buy the item in question. Time delay before purchase is good so that you can give it a second thought!
Ask your current credit card supplier for help in your card debt reduction i.e. by lowering the APR on your cards.
Take above mentioned facts and ideas serious if you want to get out of your credit card debt!
Thursday
Boost Your Credit Score - Smart Borrowing Strategies
Credit reference agencies are responsible for fixing the credit score. A bad credit score may be attributed to various reasons like:
• Delaying or missing a payment.
• Debt defaults.
• Financial commitments not being effectively fulfilled.
Nowadays, loans are also provided to individuals having poor credit record. Initially the interest rates may seem higher, but as time passes, their credit score and financial credibility will get better if they adopt a proper financial plan with the repayment amounts being in affordable limits. But, be careful of not applying for loans which are incompatible with your financial capability.
The Internet is a good place for researching on bad credit loans. Find out about several lenders, their loan terms, processes and interest rates. Do not apply to several lenders in a short span of time as it may further damage our credit score. An independent loan broker can help you with this.
The various kinds of bad credit loans that are available these days are:
• Home loans.
• Auto loans.
• Credit cards.
• Personal loans.
Bad credit personal loans are of two types, secured and unsecured. Secured loans are provided to homeowners depending upon their debt load as well as credit score. Loan is provided on the house property. Unsecured loans are rather very risky on the lender's part. Hence, getting them is usually difficult. Nevertheless, specialized lenders called sub-prime lenders are available for helping with unsecured loans.
For people having a damaged rating and a desire for loans with low rate, a secured loan is a good option owing to its lower risk on the lender's part. These low rate loans can be applied once the credit rating gets better.
Bad credit loans provide us with the much needed finances required to fulfill our dreams, needs, leisure and desires.
• Delaying or missing a payment.
• Debt defaults.
• Financial commitments not being effectively fulfilled.
Nowadays, loans are also provided to individuals having poor credit record. Initially the interest rates may seem higher, but as time passes, their credit score and financial credibility will get better if they adopt a proper financial plan with the repayment amounts being in affordable limits. But, be careful of not applying for loans which are incompatible with your financial capability.
The Internet is a good place for researching on bad credit loans. Find out about several lenders, their loan terms, processes and interest rates. Do not apply to several lenders in a short span of time as it may further damage our credit score. An independent loan broker can help you with this.
The various kinds of bad credit loans that are available these days are:
• Home loans.
• Auto loans.
• Credit cards.
• Personal loans.
Bad credit personal loans are of two types, secured and unsecured. Secured loans are provided to homeowners depending upon their debt load as well as credit score. Loan is provided on the house property. Unsecured loans are rather very risky on the lender's part. Hence, getting them is usually difficult. Nevertheless, specialized lenders called sub-prime lenders are available for helping with unsecured loans.
For people having a damaged rating and a desire for loans with low rate, a secured loan is a good option owing to its lower risk on the lender's part. These low rate loans can be applied once the credit rating gets better.
Bad credit loans provide us with the much needed finances required to fulfill our dreams, needs, leisure and desires.
Tuesday
Tuition Tips
THE CHALLENGE. The challenge of getting ready for college today has become a growing problem for many students and their families due to:
A tendency for college degrees to take longer to earn with the old 4-year bachelor’s degree becoming less common and 5 to 6 years becoming more the norm with new degree requirements in several fields (such as engineering, accounting, and teaching) which stretches out the cost of an education as well as its length.
The need to demonstrate exceptional talent both in the classroom and in extracurricular activities with many wealthier families getting professional counseling to help their children put together attractive portfolios of accomplishments in order to snap up seats at the best schools.
COSTS.
What does college cost today? Tuition and books, living costs, and extra fees all have been rising rapidly in the college sector much more rapidly then the rate of inflation.
The best schools now run at least $20,000 a year in tuition and other costs and some much more than this. It has been estimated that not too far into this century, it may cost as much as $200,000 to complete a bachelor’s degree at some top schools. The best way to check on costs is to develop a list of your preferred schools and write or e-mail for a catalogue and an estimate of tuition, room and board, as well as other costs and fees. Usually you will want to contact the Registrar’s Office or Admissions Office and the Office of Student Financial Aid at your preferred schools. Be sure to do an independent check on living costs by consulting a local newspaper in case your son or daughter has to live off campus and you want to know about rental costs, grocery prices, and other living expenses.
GETTING STARTED.
Personal savings: How do you get started saving for college? The first key is to start early. Almost no amount of crash (last minute) saving can make up for getting an early start when your child is very young and steadily putting funds away until needed for college. Even if your child does not go to college, these funds can later be used for other things, such as financing a technical school education, helping to get a new business started, or for other purposes. Not long ago the U.S. Congress set up a special long-term college savings account called an Education IRA.
These accounts allow you to contribute up to $500 per year for a child less than 18 years of age. While the funds contributed each year are not tax deductible, the amounts deposited grow tax free until withdrawn for qualified higher education expenses. There are limits on who may contribute based on the contributor's adjusted gross income. For further details see IRS publication 590 which can be ordered by telephone at 800-829-3676.
Scholarships: Scholarships from colleges themselves, from civic organizations, from businesses, and from governmental agencies (many of these go begging for applicants and are awarded in many cases without need restrictions); indeed, each year thousands of scholarships lay on the table unused because no one was aware that they were available as noted recently in a 1999 Random House book, The Scholarship Advisor, by Chris Vuturo.
Gifts: Gifts from parents and relatives, which can be set aside as college savings in the name of the student (often at lower tax rates if done according to IRS rules and the Uniform Gifts to Minors Act or the Uniform Transfers to Minors Act, depending upon which law your home state adopts) until needed for a college education. However, you should get sound tax advice on such gifts as they are usually irrevocable. Related to this source of college funding are 529 Plans with tax-free growth of earnings until withdrawn and paid to accredited colleges, universities, and technical educational institutions.
Loans: Loans from private and public lending institutions (including Stafford, Perkins, SLS, and PLUS loans through the U.S. Department of Education) and student loans from banks, credit unions, and other loans (often backed by government guarantee programs).
Jobs: Getting a part-time job for students during summers or part-time jobs during semesters or school terms (including campus work-study programs.
Tuition: Tuition prepayment programs that have been started in more than 300 states and by many colleges themselves and private lenders that allow you to make contributions to a fund and often freeze the cost of college entrance as long as you continue to make payments into the fund. These plans are often tax deferred and, if used for qualified college expenses, may result in tax credits.
Time: Finding ways to reduce the time needed to secure a degree (including counseling and planning in high school) to choose the right field (delays often stretch college time out when students continually switch majors and have to take extra courses and enroll for extra semesters).
Tests: Encourage your student to try to test out of some college courses by taking advance placement tests, thereby saving valuable time for those courses that move you faster toward your desired goal.
Home Equity Loans: Growing use of home-equity loans which permit parents or other relatives to pledge their home behind a college loan (though this deserves very careful scrutiny since the parents or relatives involved could lose their home if the loan is not repaid).
SOFTWARE HELP. Many computer software programs have recently appeared to help you get started in estimating college costs. These programs start with an assumption about how much you will need and what rate of return you will require on your savings and then calculate the monthly, quarterly, or annual savings needed. The key to remember is that early starts on a savings program allow you to save less and still reach your objective.
SPECIAL NOTICE.
Remember that needs tests often apply to scholarships and school assistance packages, but not usually to loans. So that even families whose reported income does not allow them to qualify for financial assistance can often qualify for student loans. It is also important to remember you can often negotiate a better deal for your child and prospective college student even after a college or university has sent you a concrete aid package. If a school makes your student an offer and you receive a better one from another school, you can frequently negotiate for more help from the school you prefer. Be prepared, however, to document the fact that a better offer was received.
CHANGING CIRCUMSTANCES.
Keep in mind that family circumstances may change and may result in qualification for more assistance. Family illness, loss of a job, divorce, or other adverse developments can change your family's financial profile, making your student eligible for more aid.
TIMING.
Recall that May 1st is an unofficial deadline for acceptance of many college offers. Do not miss whatever deadline the college of your choice imposes and lose out unnecessarily, however.
OPPORTUNITY.
Remember too that the best students are pursued first and when they turn schools down (often at the last minute) this may open up an opportunity for your child. Many good offers go begging when students expected to show up at a particular college simply do not appear.
SELF IMPROVEMENT.
Can you improve your chances of getting into college? Yes, and in many useful ways, including:
Start in your first year of high school planning and working with a college counselor.
Work hard at challenging courses to show you can do college work.
Pay close attention to your class rank and work to raise it as many states guarantee admission into state-supported schools to those in the top quarter or top 10% (or some other dividing line) of their high school graduating class.
Start early to consider admission requirements of the schools of your choice and get a catalogue or list of their requirements early so that, if necessary, you will have time to make room in your high school coursework and activities to enhance your chances for success. Contact the College Board, 45 Columbus Avenue, New York, NY 10023 for additional help in getting organized and focused.
Start at least as early as a high-school junior applying for scholarships and aid packages by getting the necessary forms and filing them out. Set up a filing system so you can keep track of the forms you have and which ones still need work to improve your chances.
If it does not work out at first at the school of your choice, think about enrolling in a local or nearby college or junior college and do as well as you can there to get top grades and strengthen your future financial position.
STILL CANNOT GET IN?
College entrance still eludes me: What else can I do? So many people have had the prospect of college pounded into their head so strongly that they are unwilling to consider anything else until forced to do so. However, the truth is that many satisfying and financially rewarding careers go begging each year that do not require a four-year or advanced college degree.
While no one knows for sure what fields will be in demand in future years, the U.S. Department of Education and the Department of Labor often publish lists of careers they believe will be in heavy demand in the years ahead and some are excellent opportunities.
Recent examples of career areas expected to do well include such fields as alcohol and drug counselors, air traffic controllers, biomedical technicians, property management specialists, dental technicians, animal health technicians, engineering technicians, respiratory therapists, computer graphics specialists and those skilled in computer repair and maintenance, chefs, court reporters, dieticians, health inspectors, physical therapy specialists, fashion and home designers, laser and optical technicians, legal assistants, radio and television technicians, equipment operators, flight assistants, medical technicians and office managers, plumbers, travel service managers, welders and tool and die makers, turf managers and water quality specialists.
Our society is changing rapidly with an aging population and new information technologies are transforming products and services and how they are delivered and tracked.
These sweeping changes offer fine career opportunities for those who recognize the need and make an effort to learn as much as possible about a growing business or field. The result can be a rewarding and satisfying career for many people who may never see the inside of a college classroom. College degrees offer no guarantees and many college graduates wind up in unemployment lines or doing something they were not expected to do. Success in college does not necessarily mean success during your working years.
- Growing enrollments and greater numbers of student applicants pressing against limited college facilities, faculty, and other resources.
- Rising costs of attending college, including increasing tuition costs that have been growing faster than inflation, on average.
- A tightening of available student aid sources, including fewer loan programs, tougher lender standards, and more families strapped for extra funds.
A tendency for college degrees to take longer to earn with the old 4-year bachelor’s degree becoming less common and 5 to 6 years becoming more the norm with new degree requirements in several fields (such as engineering, accounting, and teaching) which stretches out the cost of an education as well as its length.
The need to demonstrate exceptional talent both in the classroom and in extracurricular activities with many wealthier families getting professional counseling to help their children put together attractive portfolios of accomplishments in order to snap up seats at the best schools.
COSTS.
What does college cost today? Tuition and books, living costs, and extra fees all have been rising rapidly in the college sector much more rapidly then the rate of inflation.
The best schools now run at least $20,000 a year in tuition and other costs and some much more than this. It has been estimated that not too far into this century, it may cost as much as $200,000 to complete a bachelor’s degree at some top schools. The best way to check on costs is to develop a list of your preferred schools and write or e-mail for a catalogue and an estimate of tuition, room and board, as well as other costs and fees. Usually you will want to contact the Registrar’s Office or Admissions Office and the Office of Student Financial Aid at your preferred schools. Be sure to do an independent check on living costs by consulting a local newspaper in case your son or daughter has to live off campus and you want to know about rental costs, grocery prices, and other living expenses.
GETTING STARTED.
Personal savings: How do you get started saving for college? The first key is to start early. Almost no amount of crash (last minute) saving can make up for getting an early start when your child is very young and steadily putting funds away until needed for college. Even if your child does not go to college, these funds can later be used for other things, such as financing a technical school education, helping to get a new business started, or for other purposes. Not long ago the U.S. Congress set up a special long-term college savings account called an Education IRA.
These accounts allow you to contribute up to $500 per year for a child less than 18 years of age. While the funds contributed each year are not tax deductible, the amounts deposited grow tax free until withdrawn for qualified higher education expenses. There are limits on who may contribute based on the contributor's adjusted gross income. For further details see IRS publication 590 which can be ordered by telephone at 800-829-3676.
Scholarships: Scholarships from colleges themselves, from civic organizations, from businesses, and from governmental agencies (many of these go begging for applicants and are awarded in many cases without need restrictions); indeed, each year thousands of scholarships lay on the table unused because no one was aware that they were available as noted recently in a 1999 Random House book, The Scholarship Advisor, by Chris Vuturo.
Gifts: Gifts from parents and relatives, which can be set aside as college savings in the name of the student (often at lower tax rates if done according to IRS rules and the Uniform Gifts to Minors Act or the Uniform Transfers to Minors Act, depending upon which law your home state adopts) until needed for a college education. However, you should get sound tax advice on such gifts as they are usually irrevocable. Related to this source of college funding are 529 Plans with tax-free growth of earnings until withdrawn and paid to accredited colleges, universities, and technical educational institutions.
Loans: Loans from private and public lending institutions (including Stafford, Perkins, SLS, and PLUS loans through the U.S. Department of Education) and student loans from banks, credit unions, and other loans (often backed by government guarantee programs).
Jobs: Getting a part-time job for students during summers or part-time jobs during semesters or school terms (including campus work-study programs.
Tuition: Tuition prepayment programs that have been started in more than 300 states and by many colleges themselves and private lenders that allow you to make contributions to a fund and often freeze the cost of college entrance as long as you continue to make payments into the fund. These plans are often tax deferred and, if used for qualified college expenses, may result in tax credits.
Time: Finding ways to reduce the time needed to secure a degree (including counseling and planning in high school) to choose the right field (delays often stretch college time out when students continually switch majors and have to take extra courses and enroll for extra semesters).
Tests: Encourage your student to try to test out of some college courses by taking advance placement tests, thereby saving valuable time for those courses that move you faster toward your desired goal.
Home Equity Loans: Growing use of home-equity loans which permit parents or other relatives to pledge their home behind a college loan (though this deserves very careful scrutiny since the parents or relatives involved could lose their home if the loan is not repaid).
SOFTWARE HELP. Many computer software programs have recently appeared to help you get started in estimating college costs. These programs start with an assumption about how much you will need and what rate of return you will require on your savings and then calculate the monthly, quarterly, or annual savings needed. The key to remember is that early starts on a savings program allow you to save less and still reach your objective.
SPECIAL NOTICE.
Remember that needs tests often apply to scholarships and school assistance packages, but not usually to loans. So that even families whose reported income does not allow them to qualify for financial assistance can often qualify for student loans. It is also important to remember you can often negotiate a better deal for your child and prospective college student even after a college or university has sent you a concrete aid package. If a school makes your student an offer and you receive a better one from another school, you can frequently negotiate for more help from the school you prefer. Be prepared, however, to document the fact that a better offer was received.
CHANGING CIRCUMSTANCES.
Keep in mind that family circumstances may change and may result in qualification for more assistance. Family illness, loss of a job, divorce, or other adverse developments can change your family's financial profile, making your student eligible for more aid.
TIMING.
Recall that May 1st is an unofficial deadline for acceptance of many college offers. Do not miss whatever deadline the college of your choice imposes and lose out unnecessarily, however.
OPPORTUNITY.
Remember too that the best students are pursued first and when they turn schools down (often at the last minute) this may open up an opportunity for your child. Many good offers go begging when students expected to show up at a particular college simply do not appear.
SELF IMPROVEMENT.
Can you improve your chances of getting into college? Yes, and in many useful ways, including:
Start in your first year of high school planning and working with a college counselor.
Work hard at challenging courses to show you can do college work.
Pay close attention to your class rank and work to raise it as many states guarantee admission into state-supported schools to those in the top quarter or top 10% (or some other dividing line) of their high school graduating class.
Start early to consider admission requirements of the schools of your choice and get a catalogue or list of their requirements early so that, if necessary, you will have time to make room in your high school coursework and activities to enhance your chances for success. Contact the College Board, 45 Columbus Avenue, New York, NY 10023 for additional help in getting organized and focused.
Start at least as early as a high-school junior applying for scholarships and aid packages by getting the necessary forms and filing them out. Set up a filing system so you can keep track of the forms you have and which ones still need work to improve your chances.
If it does not work out at first at the school of your choice, think about enrolling in a local or nearby college or junior college and do as well as you can there to get top grades and strengthen your future financial position.
STILL CANNOT GET IN?
College entrance still eludes me: What else can I do? So many people have had the prospect of college pounded into their head so strongly that they are unwilling to consider anything else until forced to do so. However, the truth is that many satisfying and financially rewarding careers go begging each year that do not require a four-year or advanced college degree.
While no one knows for sure what fields will be in demand in future years, the U.S. Department of Education and the Department of Labor often publish lists of careers they believe will be in heavy demand in the years ahead and some are excellent opportunities.
Recent examples of career areas expected to do well include such fields as alcohol and drug counselors, air traffic controllers, biomedical technicians, property management specialists, dental technicians, animal health technicians, engineering technicians, respiratory therapists, computer graphics specialists and those skilled in computer repair and maintenance, chefs, court reporters, dieticians, health inspectors, physical therapy specialists, fashion and home designers, laser and optical technicians, legal assistants, radio and television technicians, equipment operators, flight assistants, medical technicians and office managers, plumbers, travel service managers, welders and tool and die makers, turf managers and water quality specialists.
Our society is changing rapidly with an aging population and new information technologies are transforming products and services and how they are delivered and tracked.
These sweeping changes offer fine career opportunities for those who recognize the need and make an effort to learn as much as possible about a growing business or field. The result can be a rewarding and satisfying career for many people who may never see the inside of a college classroom. College degrees offer no guarantees and many college graduates wind up in unemployment lines or doing something they were not expected to do. Success in college does not necessarily mean success during your working years.
Monday
How To Get Out Of Debt
This is the first of six "how to" articles written by our friends at The Motley Fool.
As a financial topic, debt is simple.
There are no complicated secrets, but -- unfortunately -- there are no easy solutions either. It's going to take discipline to bury the debt monster. Anybody who says otherwise is probably just after your money.
It doesn't take a reckless person or a wild spending spree to create a debt crisis. A consistent pattern of spending just a little more than you make, over time, can lead to a serious problem.
Compound interest is a powerful force that works either for you or against you. If you want this force on your side, you'll have to rise above the advertisers and bankers that are used to having the force on their side.
"Good debts" combine a low, tax-adjusted interest rate with the potential to gain something that appreciates in value.
Welcome to The Motley Fool's quick course on beating debt!
We Fools are highly committed to turning net debtors into net savers, replacing the slavery of monthly payments with the joy of expanding investments. We sincerely hope that this series is a big step in that direction for you.
Since you've decided to take a debt seminar, we're going to guess that money problems are at least nipping at your heels. Or perhaps -- worst case -- an overwhelming debt burden is pushing you to the edge of financial disaster. Since we don't know exactly where you are, we take a big-picture approach in this first lesson.
If you are already suffering a debt crisis, however, you should probably skip this lesson for the moment and start with the optional Lesson Five: Debt Triage. Once you get your financial life to a stable state, you'll be ready to take in the rest of the seminar and set the foundation for a lifetime of successful debt management.
If debt is not currently a problem -- you're just here to learn and head off future problems -- let's get started with the basics of managing debt and the fundamentals upon which you will build your financial success.
First, though, please take a few minutes to download your seminar workbook, which will be your trusted companion throughout this seminar -- along with that big bag of potato chips. You'll start putting it to use right after this lesson. Download the workbook by clicking here. Go ahead -- we'll wait!
Beating Debt Is Simple, But Not Easy
Getting out of debt and staying out of debt is actually pretty simple, at least compared to most money management topics. It boils down to spending less money than you make, on a consistent, long-term basis. That's it. Nothing else will get the job done. Nothing.
And it's easy too. Right? Wrong! While conquering debt won't send you scrambling for thick math textbooks, it's an ocean away from easy. One moment of weakness -- or worse, one cruel act of fate -- and you're scratching and clawing your way back out of the hole.
It's not easy.
So, how did something so simple get to be so hard? Because beating debt demands a lot of will power over a long period of time. If you've been a human being for any length of time, you know that this is one tough combination to nail down.
We know we're preaching and it's a pretty depressing sermon. But we're afraid there's no getting around it. Over the long term, regularly spending more than you make -- even just a little more -- will bring your financial house down, even if you are the most responsible of bill payers. Until this basic lesson is taken to heart, even bankruptcy is just a temporary solution.
How Careful Do You Have to Be?
Consider two simple examples, starting with a positive one. Let's say that you begin setting aside $75 every month, in savings earning 5% interest. If you can pull this off for five years, you'll end up with a comforting $5,100 in emergency savings.
Now, let's turn this picture on its head, and assume that you come up short by the same $75 per month, on average, over the same five years. Further, assume that you routinely patch over this difference with a credit card. Note that we're talking about less than $20 per week here -- hardly a symptom of reckless "retail therapy." Nonetheless, at the end of five years you'll be looking at more than $7,200 in debt, assuming an 18% credit card interest rate.
That's an extra $2,100 in debt, beyond the $5,100 earned by saving $75 per month. This is the difference between saving and paying down debt. Saving is hard enough, but paying down debt is $2,100 harder!
And this difference just gets bigger as time goes on. While your bank savings work hard twenty-four hours a day to make you more money, any outstanding credit card debt is likely to be working three times harder, charging a much higher interest rate than your savings pay.
Moreover, as a saver you have the force of compound interest on your side, the idea that your balance starts to snowball as you earn interest not only on your deposits but also on the interest payments you leave in the account. As a debtor, this same powerful compounding force works against you, and the higher the interest rate, the faster the snowball builds.
Good Debt versus Bad Debt
We've been talking tough about consumer debt, but we do realize that some debts are an inescapable part of life for most of us. Still, even when we carry debt, there are some basic debt management rules that will keep the lid on problems:
Somewhere in every mountain range there is a line that divides water flow. On one side of the line, for example, water flows east. On the other, it flows west. Regardless of direction, these rivers and streams start out as a trickle but quickly pick up speed as they head down the mountain, finishing as raging torrents.
Money and wealth work exactly the same way. Over time, you'll end up on either the savings or the debt side of the personal finance divide. It doesn't take much to nudge you one way or the other, but once a direction is established, the momentum tends to build and it gets harder and harder to go back.
If you want to "nudge" yourself in the savings direction, just remember that it all boils down to spending less money than you make, on a consistent long-term basis. (We're hoping you've noticed that this is an important point.)
Take the time now to head on over to your workbook, where you'll begin to get an idea of what your personal financial picture looks like.
As a financial topic, debt is simple.
There are no complicated secrets, but -- unfortunately -- there are no easy solutions either. It's going to take discipline to bury the debt monster. Anybody who says otherwise is probably just after your money.
It doesn't take a reckless person or a wild spending spree to create a debt crisis. A consistent pattern of spending just a little more than you make, over time, can lead to a serious problem.
Compound interest is a powerful force that works either for you or against you. If you want this force on your side, you'll have to rise above the advertisers and bankers that are used to having the force on their side.
"Good debts" combine a low, tax-adjusted interest rate with the potential to gain something that appreciates in value.
Welcome to The Motley Fool's quick course on beating debt!
We Fools are highly committed to turning net debtors into net savers, replacing the slavery of monthly payments with the joy of expanding investments. We sincerely hope that this series is a big step in that direction for you.
Since you've decided to take a debt seminar, we're going to guess that money problems are at least nipping at your heels. Or perhaps -- worst case -- an overwhelming debt burden is pushing you to the edge of financial disaster. Since we don't know exactly where you are, we take a big-picture approach in this first lesson.
If you are already suffering a debt crisis, however, you should probably skip this lesson for the moment and start with the optional Lesson Five: Debt Triage. Once you get your financial life to a stable state, you'll be ready to take in the rest of the seminar and set the foundation for a lifetime of successful debt management.
If debt is not currently a problem -- you're just here to learn and head off future problems -- let's get started with the basics of managing debt and the fundamentals upon which you will build your financial success.
First, though, please take a few minutes to download your seminar workbook, which will be your trusted companion throughout this seminar -- along with that big bag of potato chips. You'll start putting it to use right after this lesson. Download the workbook by clicking here. Go ahead -- we'll wait!
Beating Debt Is Simple, But Not Easy
Getting out of debt and staying out of debt is actually pretty simple, at least compared to most money management topics. It boils down to spending less money than you make, on a consistent, long-term basis. That's it. Nothing else will get the job done. Nothing.
And it's easy too. Right? Wrong! While conquering debt won't send you scrambling for thick math textbooks, it's an ocean away from easy. One moment of weakness -- or worse, one cruel act of fate -- and you're scratching and clawing your way back out of the hole.
It's not easy.
So, how did something so simple get to be so hard? Because beating debt demands a lot of will power over a long period of time. If you've been a human being for any length of time, you know that this is one tough combination to nail down.
We know we're preaching and it's a pretty depressing sermon. But we're afraid there's no getting around it. Over the long term, regularly spending more than you make -- even just a little more -- will bring your financial house down, even if you are the most responsible of bill payers. Until this basic lesson is taken to heart, even bankruptcy is just a temporary solution.
How Careful Do You Have to Be?
Consider two simple examples, starting with a positive one. Let's say that you begin setting aside $75 every month, in savings earning 5% interest. If you can pull this off for five years, you'll end up with a comforting $5,100 in emergency savings.
Now, let's turn this picture on its head, and assume that you come up short by the same $75 per month, on average, over the same five years. Further, assume that you routinely patch over this difference with a credit card. Note that we're talking about less than $20 per week here -- hardly a symptom of reckless "retail therapy." Nonetheless, at the end of five years you'll be looking at more than $7,200 in debt, assuming an 18% credit card interest rate.
That's an extra $2,100 in debt, beyond the $5,100 earned by saving $75 per month. This is the difference between saving and paying down debt. Saving is hard enough, but paying down debt is $2,100 harder!
And this difference just gets bigger as time goes on. While your bank savings work hard twenty-four hours a day to make you more money, any outstanding credit card debt is likely to be working three times harder, charging a much higher interest rate than your savings pay.
Moreover, as a saver you have the force of compound interest on your side, the idea that your balance starts to snowball as you earn interest not only on your deposits but also on the interest payments you leave in the account. As a debtor, this same powerful compounding force works against you, and the higher the interest rate, the faster the snowball builds.
Good Debt versus Bad Debt
We've been talking tough about consumer debt, but we do realize that some debts are an inescapable part of life for most of us. Still, even when we carry debt, there are some basic debt management rules that will keep the lid on problems:
- Be especially wary of double-digit debt -- credit cards and loans that charge 10% or more in annual interest. At this level, balances snowball quickly, and it's tough to get a return on the borrowed money that beats this cost.
- Good debts, like some mortgages and student loans, combine two things: 1) a relatively low, tax-adjusted interest rate; and 2) the potential to invest in something that, over the long run, will grow in value.
- Ignore banker's rules for "acceptable" levels of debt. These are designed by banks to maximize their income. Their calculations cleverly keep you far enough under water that you continue to pay them interest, but not so deep that you go broke. Don't be a slave. Set tighter rules on your own.
Summary - The Personal Finance Divide
Somewhere in every mountain range there is a line that divides water flow. On one side of the line, for example, water flows east. On the other, it flows west. Regardless of direction, these rivers and streams start out as a trickle but quickly pick up speed as they head down the mountain, finishing as raging torrents.
Money and wealth work exactly the same way. Over time, you'll end up on either the savings or the debt side of the personal finance divide. It doesn't take much to nudge you one way or the other, but once a direction is established, the momentum tends to build and it gets harder and harder to go back.
If you want to "nudge" yourself in the savings direction, just remember that it all boils down to spending less money than you make, on a consistent long-term basis. (We're hoping you've noticed that this is an important point.)
Take the time now to head on over to your workbook, where you'll begin to get an idea of what your personal financial picture looks like.
Appeal To Congress
Tell Congress to put an end to hair-raising interest rates and huge fees!
Credit card companies are earning record profits by charging ghoulish interest rates, ghastly fees, and unleashing fine-print phantoms that seem to appear out of nowhere. The spooky truth is that fees charged by the top six credit card companies alone sap nearly $8 billion annually from consumers wallets.
It's time to put an end to credit card tricks!
Act Now!
This Halloween, tell Congress you want tough new laws that take the poltergeists out of your pocket and end creepy credit card rip-offs.
Visit: https://secure.npsite.org/cu/site/Advocacy?JServSessionIdr009=b0qaykcxb6.app44a&cmd=display&page=UserAction&id=1719
Credit card companies are earning record profits by charging ghoulish interest rates, ghastly fees, and unleashing fine-print phantoms that seem to appear out of nowhere. The spooky truth is that fees charged by the top six credit card companies alone sap nearly $8 billion annually from consumers wallets.
It's time to put an end to credit card tricks!
Act Now!
This Halloween, tell Congress you want tough new laws that take the poltergeists out of your pocket and end creepy credit card rip-offs.
Visit: https://secure.npsite.org/cu/site/Advocacy?JServSessionIdr009=b0qaykcxb6.app44a&cmd=display&page=UserAction&id=1719
Saturday
Some Advice For Students Wanting Credit Cards
Creating good credit and getting student credit cards is new territory for college students. Your future is starting now and you probably haven't given much thought to building your credit. Getting off on the right foot is crucial for your financial future. Making the wrong moves can haunt you for years and you should be aware of the risks and rewards when it comes to your credit score.
Your credit score tells lenders if you are a low-risk person who manages their money and credit well, or if you are careless and reckless with your finances. If your credit is good, you'll enjoy low interest rates on loans and credit cards, lower minimum payments than your peers and more lending options will be available to you. This can be very important when it comes to making major purchases such as vehicles or buying your first home. Making bad choices and careless uninformed decisions can lead to a life of high interest, high payments and simply not qualifying for that car or house that you need. The worse your credit gets, the more you pay for everything that needs financing. Trending in this direction can lead you on a downward spiral of out of control debt.
You may not know exactly where to start to ensure that you get the best deal and establish the best score possible. You are probably starting out with no credit score at all and applying for loans and credit cards can be disappointing when you are rejected again and again. Make wise choices. Don't get one just to go shopping or on a trip with your friends. Make sure that you really do have a necessity and don't overcharge any more than you need.
When choosing a card, you may have some luck going through your bank or credit union, but there are companies that have special previsions for students. It is generally best to avoid companies that be preying on the fact that you seem naïve about credit cards. Beware of representatives that offer free t-shirts or any other types of prizes for filling out an application. That freebie could end up costing you hundreds or thousands of dollars in fees and interest in the long run. Look for good introductory rates that don't balloon into something horrible after the promotion runs out. Compare interest rates, fees and terms of many cards before making a decision.
You may need to start out with a secured credit card. These are ones that require you to put money up front, use the card and prove that you are responsible enough to make payments on-time. Making on-time payments is one of the best pieces of advice you can get. Interest rates can fluctuate very quickly when a payment is missed. Fees are usually extremely high and you can get yourself into a bind that you can't afford to get out of. Always pay more than the minimum required and pay off balances as quickly as possible. Show your responsibility to your credit card company and your credit score will reflect your diligence. Once you establish your good credit score, it will pay off for years to come.
Your credit score tells lenders if you are a low-risk person who manages their money and credit well, or if you are careless and reckless with your finances. If your credit is good, you'll enjoy low interest rates on loans and credit cards, lower minimum payments than your peers and more lending options will be available to you. This can be very important when it comes to making major purchases such as vehicles or buying your first home. Making bad choices and careless uninformed decisions can lead to a life of high interest, high payments and simply not qualifying for that car or house that you need. The worse your credit gets, the more you pay for everything that needs financing. Trending in this direction can lead you on a downward spiral of out of control debt.
You may not know exactly where to start to ensure that you get the best deal and establish the best score possible. You are probably starting out with no credit score at all and applying for loans and credit cards can be disappointing when you are rejected again and again. Make wise choices. Don't get one just to go shopping or on a trip with your friends. Make sure that you really do have a necessity and don't overcharge any more than you need.
When choosing a card, you may have some luck going through your bank or credit union, but there are companies that have special previsions for students. It is generally best to avoid companies that be preying on the fact that you seem naïve about credit cards. Beware of representatives that offer free t-shirts or any other types of prizes for filling out an application. That freebie could end up costing you hundreds or thousands of dollars in fees and interest in the long run. Look for good introductory rates that don't balloon into something horrible after the promotion runs out. Compare interest rates, fees and terms of many cards before making a decision.
You may need to start out with a secured credit card. These are ones that require you to put money up front, use the card and prove that you are responsible enough to make payments on-time. Making on-time payments is one of the best pieces of advice you can get. Interest rates can fluctuate very quickly when a payment is missed. Fees are usually extremely high and you can get yourself into a bind that you can't afford to get out of. Always pay more than the minimum required and pay off balances as quickly as possible. Show your responsibility to your credit card company and your credit score will reflect your diligence. Once you establish your good credit score, it will pay off for years to come.
Friday
Are You A Liar?
MSN journalist MP Dunleavey talks about 3 lies that people tell about their money - lies to ourselves, lies to others, and lies of omission.
At some point, we've all probably told at least one of these lies. "Of course, I'll cut out my morning Starbucks so my family can afford the new mortgage" or "I always pay my credit cards on time." It's hard to face the negative feelings that come with credit and debt problems. But denying the truth, to yourself and others, also denies you the opportunity to face your problems. It keeps you from ever fully addressing your financial issues.
I, too, have been guilty of lying about my debt. For three months after I graduated college, I ignored my credit card bills. I didn't have any money, so why open the bills, right? Wrong. Recovering from a three-month delinquency isn't so hard with one credit card, but it's nearly impossible when you have four of them and you're just starting a new job and paying real bills for the first time. While it's a tough situation for a 22-year-old, it's what happens when you're not honest about your finances. I had to face that fact if I ever wanted to rent another apartment, buy a house, or even change my cell phone provider.
Duleavey gives some tips for admitting the truth. Among other things, she says to practice admitting the truth, avoid blaming others, and figure out how to positively deal with negative feelings.
Ready to admit your financial lie? Leave a comment below.
At some point, we've all probably told at least one of these lies. "Of course, I'll cut out my morning Starbucks so my family can afford the new mortgage" or "I always pay my credit cards on time." It's hard to face the negative feelings that come with credit and debt problems. But denying the truth, to yourself and others, also denies you the opportunity to face your problems. It keeps you from ever fully addressing your financial issues.
I, too, have been guilty of lying about my debt. For three months after I graduated college, I ignored my credit card bills. I didn't have any money, so why open the bills, right? Wrong. Recovering from a three-month delinquency isn't so hard with one credit card, but it's nearly impossible when you have four of them and you're just starting a new job and paying real bills for the first time. While it's a tough situation for a 22-year-old, it's what happens when you're not honest about your finances. I had to face that fact if I ever wanted to rent another apartment, buy a house, or even change my cell phone provider.
Duleavey gives some tips for admitting the truth. Among other things, she says to practice admitting the truth, avoid blaming others, and figure out how to positively deal with negative feelings.
Ready to admit your financial lie? Leave a comment below.
Wednesday
Fight For Your Rights
I guess you could call this topic a "lifehack." But here's the deal; every once in a while I pay my credit card bills late. And then their response is to stick me with a) a late fee and b) a new higher interest rate.
But I fight it. And MOST of the time I win.
See today is Sunday and time to pay the bills and as I was looking things over I saw that one of my credit card bills was three times it's normal size. And unless it's the heart of the Grinch at the end of Dr. Seuss's book something being three times its normal size is usually not a good sign. Examining the bill it appeared I had missed the payment date by a day, so they had attached a late fee and bumped the interest rate up by 22 percent. Not good under any circumstances, but in the case of this particular card (who shall remain nameless, since I don't want to be bitten in the ass somewhere down the line) totally unacceptable.
Fact is, a long time ago they offered me a one time only balance transfer deal. At the time they were really hurting, because the low interest rate of the balance transfer was for the LIFE of the loan. Not 3 months, not 6 months, not even 12. But until I pay it off. That rate was under 5 percent (again I'm not going to give the actual figures in order to keep my low profile). But basically I transferred a few THOUSAND dollars of debt from other cards where I had been paying a higher rate every month. So this low interest card is my backbone card. I don't USE the card to buy anything (since the purchase interest rate isn't great) but because of that low interest rate the amount due every month is super small.
Hers the deal; I have a lot of credit cards. Like 7 or 8. I'm not proud, but I'm not getting any new ones. Most of them are from my "youth," and about half are for my business. And at this point all I'm trying to do is pay off the debt. By the way-for those of you who don't know; it's actually not a good idea to close accounts-just stop using them. It will actually HURT your credit rating to close them out; because your "borrow ratio" decreases but the amount you've borrowed has not. Oy vey, I feel like one of those people who used drugs in the past and is now telling people why THEY shouldn't use drugs.
Now...you might not be able to tell, but I CAN be a total bastard. Most people I interact with think of me as a nice guy. However one group of people, the world over, have the exact opposite opinion about me; customer service people at credit card companies. Even when I'm wrong, as far as I'm concerned, I'm RIGHT. That's how I approach the conversation. It's the "so bold he can't be serious" approach. It's the attitude people use to get into swanky clubs, get women to talk to them, etc.,. I have had people do it to ME in lines a lot. I've had people just walk right in front of me while waiting in a line. But when they do-I check their ass fast (hey I'm not just a client I'm a MEMBER of using that technique-don't try that crap with me!)
But back to the cards. When it comes to being late the companies usually charge a late fees AND they usually take the interests rate to the highest possible amount chargeable by law. But I call them up with my bill in my hand and I go on the offense and tell them I've been a loyal customer, will take my business elsewhere with a balance transfer, tell them I KNOW they can reverse it if they want to, take their name and ID number and ask if the supervisor is available. But that last strategy better BE your last strategy. Once you go to the supervisor, you're done with the person you were just talking to and now have to try to use all that same stuff on a much tougher supervisor.
But I do it.
BUT here's the thing; if they do right by me, I very honestly express my gratitude. I tell them thanks for "setting me straight" about why I got charged, and I know they can't do this for me again, how I'd be happy to have my bills emailed to me instead of sent via tradition mail. And leave them with both relief for not having to talk to me any more and not feeling like they did a favor for somebody who didn't appreciate it. If you're going to do this let the person have the victory of having done a good deed
But I fight it. And MOST of the time I win.
See today is Sunday and time to pay the bills and as I was looking things over I saw that one of my credit card bills was three times it's normal size. And unless it's the heart of the Grinch at the end of Dr. Seuss's book something being three times its normal size is usually not a good sign. Examining the bill it appeared I had missed the payment date by a day, so they had attached a late fee and bumped the interest rate up by 22 percent. Not good under any circumstances, but in the case of this particular card (who shall remain nameless, since I don't want to be bitten in the ass somewhere down the line) totally unacceptable.
Fact is, a long time ago they offered me a one time only balance transfer deal. At the time they were really hurting, because the low interest rate of the balance transfer was for the LIFE of the loan. Not 3 months, not 6 months, not even 12. But until I pay it off. That rate was under 5 percent (again I'm not going to give the actual figures in order to keep my low profile). But basically I transferred a few THOUSAND dollars of debt from other cards where I had been paying a higher rate every month. So this low interest card is my backbone card. I don't USE the card to buy anything (since the purchase interest rate isn't great) but because of that low interest rate the amount due every month is super small.
Hers the deal; I have a lot of credit cards. Like 7 or 8. I'm not proud, but I'm not getting any new ones. Most of them are from my "youth," and about half are for my business. And at this point all I'm trying to do is pay off the debt. By the way-for those of you who don't know; it's actually not a good idea to close accounts-just stop using them. It will actually HURT your credit rating to close them out; because your "borrow ratio" decreases but the amount you've borrowed has not. Oy vey, I feel like one of those people who used drugs in the past and is now telling people why THEY shouldn't use drugs.
Now...you might not be able to tell, but I CAN be a total bastard. Most people I interact with think of me as a nice guy. However one group of people, the world over, have the exact opposite opinion about me; customer service people at credit card companies. Even when I'm wrong, as far as I'm concerned, I'm RIGHT. That's how I approach the conversation. It's the "so bold he can't be serious" approach. It's the attitude people use to get into swanky clubs, get women to talk to them, etc.,. I have had people do it to ME in lines a lot. I've had people just walk right in front of me while waiting in a line. But when they do-I check their ass fast (hey I'm not just a client I'm a MEMBER of using that technique-don't try that crap with me!)
But back to the cards. When it comes to being late the companies usually charge a late fees AND they usually take the interests rate to the highest possible amount chargeable by law. But I call them up with my bill in my hand and I go on the offense and tell them I've been a loyal customer, will take my business elsewhere with a balance transfer, tell them I KNOW they can reverse it if they want to, take their name and ID number and ask if the supervisor is available. But that last strategy better BE your last strategy. Once you go to the supervisor, you're done with the person you were just talking to and now have to try to use all that same stuff on a much tougher supervisor.
But I do it.
BUT here's the thing; if they do right by me, I very honestly express my gratitude. I tell them thanks for "setting me straight" about why I got charged, and I know they can't do this for me again, how I'd be happy to have my bills emailed to me instead of sent via tradition mail. And leave them with both relief for not having to talk to me any more and not feeling like they did a favor for somebody who didn't appreciate it. If you're going to do this let the person have the victory of having done a good deed
Thursday
Money Basics
Did you have enough money last month to pay all your basic bills - in full? If you are not sure, look at your paychecks and bank statements for a typical month and compare them to your bills, payments, and withdrawals. It's hard to use money to make money if you are already sinking into debt.
Even families with good salaries can allow expenses or debt levels to get too high. Examples include not paying off your full credit card balance every month, or spending more than you take in. Habits like these can cost you a lot of money in the end.
Get yourself into a position to cover all your main living expenses. Ideas can range from finding a cheaper place to live to brown bagging lunch more often. Debt is very expensive, especially if you are paying high interest rates, which could be the case with some credit cards, payday loans, and tax refund anticipation loans. It can take just a few months to run up enough debt that could take years to pay off, especially if you only pay the minimum balance on your credit cards each month. Who wants to cope with debts for years and years?
Taking care of credit & debt basics
Did you have enough money last month to pay all your basic bills - in full? If you are not sure, look at your paychecks and bank statements for a typical month and compare them to your bills, payments, and withdrawals. It's hard to use money to make money if you are already sinking into debt.
Even families with good salaries can allow expenses or debt levels to get too high. Examples include not paying off your full credit card balance every month, or spending more than you take in. Habits like these can cost you a lot of money in the end.
Get yourself into a position to cover all your main living expenses. Ideas can range from finding a cheaper place to live to brown bagging lunch more often. Debt is very expensive, especially if you are paying high interest rates, which could be the case with some credit cards, payday loans, and tax refund anticipation loans. It can take just a few months to run up enough debt that could take years to pay off, especially if you only pay the minimum balance on your credit cards each month. Who wants to cope with debts for years and years?
True marks of success: debt free, with money set aside
It's fun to wear designer clothes and to drive a fancy car. However, the real signs of success are tougher to spot. The success habits of the rich have been studied - and they are all things you can do yourself:
Even families with good salaries can allow expenses or debt levels to get too high. Examples include not paying off your full credit card balance every month, or spending more than you take in. Habits like these can cost you a lot of money in the end.
Get yourself into a position to cover all your main living expenses. Ideas can range from finding a cheaper place to live to brown bagging lunch more often. Debt is very expensive, especially if you are paying high interest rates, which could be the case with some credit cards, payday loans, and tax refund anticipation loans. It can take just a few months to run up enough debt that could take years to pay off, especially if you only pay the minimum balance on your credit cards each month. Who wants to cope with debts for years and years?
Taking care of credit & debt basics
Did you have enough money last month to pay all your basic bills - in full? If you are not sure, look at your paychecks and bank statements for a typical month and compare them to your bills, payments, and withdrawals. It's hard to use money to make money if you are already sinking into debt.
Even families with good salaries can allow expenses or debt levels to get too high. Examples include not paying off your full credit card balance every month, or spending more than you take in. Habits like these can cost you a lot of money in the end.
Get yourself into a position to cover all your main living expenses. Ideas can range from finding a cheaper place to live to brown bagging lunch more often. Debt is very expensive, especially if you are paying high interest rates, which could be the case with some credit cards, payday loans, and tax refund anticipation loans. It can take just a few months to run up enough debt that could take years to pay off, especially if you only pay the minimum balance on your credit cards each month. Who wants to cope with debts for years and years?
True marks of success: debt free, with money set aside
It's fun to wear designer clothes and to drive a fancy car. However, the real signs of success are tougher to spot. The success habits of the rich have been studied - and they are all things you can do yourself:
- Pay all bills on time.
- Keep track of expenses.
- Pay credit card balances in full every month.
- Put aside enough for emergencies - at least 3 to 6 months of pay.
- Put money into money-earning investments out of every paycheck.
Bankruptcy laws changed in 2005, making it harder for debtors to avoid paying off at least some of the money they owe. Don't count on bankruptcy laws to shield you from creditors.
Major financial problems can happen. Have an emergency fund set aside to protect against job loss or an expensive medical problem.
If you are counting on your family to rescue you, maybe you should think again. Can you be sure that relatives will be able to pay off your debts? Would you feel good about having to ask for support?
Protect yourself and your family. Keep spending modest, lower your debt, and pay yourself something each month. Investments can help your money grow.
Wednesday
Credit Card Roulette
If you suddenly find yourself drowning amidst a sea of high interest credit card accounts, you may wish to try a few self debt reduction techniques to make your monthly payments easier to manage and go further towards paying what you owe rather than just paying on excessive interest rates.
Playing credit card roulette is a popular method of stretching your monthly payment dollars further without having an increase in income or sending larger payments to your accounts.
Transferring Balances
One of the easiest and quickest ways to pay off a credit card is to transfer the balance to another card!
Obviously, you still owe the debt, but the original credit card will have been paid off. The only time it is recommended to transfer your balance from one credit card to another is when you are able to get a credit card with no interest or one with a much lower interest rate than the original credit card, as making payments on the transferred balance with the lower interest rate will result in your payments paying more towards the principal and less towards interest. While this may seem like a fun and easy way to reduce your monthly expenses, there are some important things to keep in mind when you use this self debt reduction technique.
Important Considerations for Balance Transfers Probably the most important consideration if you plan to transfer your high interest accounts to a lower interest account is to be sure that the new credit card with the lower interest rate will be approved for a large enough credit line so that your entire balance can be transferred.
If you think it will help to transfer half of a credit card balance to a new card with a lower balance, think again. What happens when you do that is you suddenly have yet ANOTHER credit card to make payments on, and while the new card has the lower interest rate, you are still not gaining any ground for reducing your overall debt because you’ve added an additional monthly payment to your expenses. Another important consideration when deciding to transfer high interest balances to lower interest credit cards is to understand the terms of the new credit card agreement.
How long is the low interest rate good for?
Most of the no interest or low interest credit card offers are for a specific period of time- and once the promotion ends the interest rate could be as high (or higher!) as your original credit card interest rate.
Make sure you understand the terms and before your promotional period runs out, pay off the balance or find another low interest card to transfer the remaining balance to. In addition to knowing how long the low or no interest credit card offer is good for, you should also know what happens if you pay your credit card payment late. Some cards will automatically revert to the highest allowed interest rate if you make any of your monthly payments beyond the due date.
Skip the Late Payment Fees
On each of your credit card accounts, you should set up an automatic payment arrangement.
On the due date, the money is automatically deducted from your checking account, and that way you’ll never miss a deadline again! Credit card companies make a lot of money on late payment fees- and they don’t give you much time to get your payment in before the due date, either.
Often, you’ll receive a credit card statement and need to put your payment in the mail the very same day in order to have a chance at getting the payment in on time.
Playing credit card roulette is a popular method of stretching your monthly payment dollars further without having an increase in income or sending larger payments to your accounts.
Transferring Balances
One of the easiest and quickest ways to pay off a credit card is to transfer the balance to another card!
Obviously, you still owe the debt, but the original credit card will have been paid off. The only time it is recommended to transfer your balance from one credit card to another is when you are able to get a credit card with no interest or one with a much lower interest rate than the original credit card, as making payments on the transferred balance with the lower interest rate will result in your payments paying more towards the principal and less towards interest. While this may seem like a fun and easy way to reduce your monthly expenses, there are some important things to keep in mind when you use this self debt reduction technique.
Important Considerations for Balance Transfers Probably the most important consideration if you plan to transfer your high interest accounts to a lower interest account is to be sure that the new credit card with the lower interest rate will be approved for a large enough credit line so that your entire balance can be transferred.
If you think it will help to transfer half of a credit card balance to a new card with a lower balance, think again. What happens when you do that is you suddenly have yet ANOTHER credit card to make payments on, and while the new card has the lower interest rate, you are still not gaining any ground for reducing your overall debt because you’ve added an additional monthly payment to your expenses. Another important consideration when deciding to transfer high interest balances to lower interest credit cards is to understand the terms of the new credit card agreement.
How long is the low interest rate good for?
Most of the no interest or low interest credit card offers are for a specific period of time- and once the promotion ends the interest rate could be as high (or higher!) as your original credit card interest rate.
Make sure you understand the terms and before your promotional period runs out, pay off the balance or find another low interest card to transfer the remaining balance to. In addition to knowing how long the low or no interest credit card offer is good for, you should also know what happens if you pay your credit card payment late. Some cards will automatically revert to the highest allowed interest rate if you make any of your monthly payments beyond the due date.
Skip the Late Payment Fees
On each of your credit card accounts, you should set up an automatic payment arrangement.
On the due date, the money is automatically deducted from your checking account, and that way you’ll never miss a deadline again! Credit card companies make a lot of money on late payment fees- and they don’t give you much time to get your payment in before the due date, either.
Often, you’ll receive a credit card statement and need to put your payment in the mail the very same day in order to have a chance at getting the payment in on time.
Tuesday
The Credit Secrets Bible
The Credit Secrets Bible is a great book for anyone struggling with debt or credit issues. The CSB exposes the secrets behind the credit system. The same secrets the government, the banks, and the companies don't want you to know. This educational guide is one of the most comprehensive publications ever compiled in helping you get, keep and repair your credit. Even if you have already filed bankruptcy, this publication can guide you in reestablishing your rating.
The banks and credit bureaus want you to believe that once your credit report is damaged with bad credit marks there is nothing you can do about it. They will tell you the only thing that can repair a bad report is time. In fact, we have been told this so much that we believe this to be fact. You will quite often hear others repeat this misinformation because it has been engraved in their mind. These people are not necessarily trying to mislead you, they just don't know any better, but the truth is starting to come out thanks to the internet.
Banks, debt collectors and other financial institutions build massive corporations by keeping you in the sub prime gap. In fact, the more they hurt you financially, the more powerful they become. The truth is, if you have bad credit you will either completely be unable to get a loan or pay tens of thousands of hard-earned dollars in extra interest, finance charges and fees, etc.
Credit repair and education is definitely a must for people suffering with bad credit.
If you prefer to do it by yourself, I highly suggest reading the Credit Secrets Bible. The CSB is available as a home study course and CD or in an instantly downloadable e-book in Adobe PDF format.
The Bible is also backed by a 30 day, 100% risk-free, money-back guarantee.
The banks and credit bureaus want you to believe that once your credit report is damaged with bad credit marks there is nothing you can do about it. They will tell you the only thing that can repair a bad report is time. In fact, we have been told this so much that we believe this to be fact. You will quite often hear others repeat this misinformation because it has been engraved in their mind. These people are not necessarily trying to mislead you, they just don't know any better, but the truth is starting to come out thanks to the internet.
Banks, debt collectors and other financial institutions build massive corporations by keeping you in the sub prime gap. In fact, the more they hurt you financially, the more powerful they become. The truth is, if you have bad credit you will either completely be unable to get a loan or pay tens of thousands of hard-earned dollars in extra interest, finance charges and fees, etc.
Credit repair and education is definitely a must for people suffering with bad credit.
If you prefer to do it by yourself, I highly suggest reading the Credit Secrets Bible. The CSB is available as a home study course and CD or in an instantly downloadable e-book in Adobe PDF format.
The Bible is also backed by a 30 day, 100% risk-free, money-back guarantee.
Monday
Banks Try To Boost Credit Market
The nation's three largest banks said Monday they will team up to buy tens of billions of dollars in investments that lost value after global credit markets seized up.
The plan is designed to inject more confidence into the market, and increase investor appetite for the short-term debt known as commercial paper. The market for commercial paper, which is crucial for companies to fund short-term borrowing needs, locked up this summer.
That followed a crisis in the mortgage industry, as people defaulted on their home loans at a skyrocketing rate. It caused a widespread aversion to risk and led the Federal Reserve to pump money into the financial system, though the latest plan relies more heavily on the banks themselves.
The Treasury Department introduced the idea of a bailout in recent talks with Citigroup Inc., Bank of America Corp., JPMorgan Chase & Co and others. It was not known how much money would be put into the fund, but there have been reports it could be between $80 billion to $100 billion.
"This proposal will complement other solutions investors and asset managers may utilize in committing and deploying capital to support more efficient markets," the Treasury Dept. said in a statement Monday
The government's role in coming up with a private-sector solution to the nation's credit problems is similar to the bailout of hedge fund Long-Term Capital Management in 1998. The Fed approached Wall Street's biggest banks to rescue LTCM before its wrong-way financial bets set off a financial shockwave.
This time around, the banks hope to not only prevent credit problems from spreading — but also are bailing themselves out. They operate structured investment vehicles, known as SIVs, that reportedly have as much as $400 billion worth of assets. Those could plunge in value unless the credit markets are stabilized.
The SIVs used short-term commercial paper, sold at low interest rates, to buy longer-term mortgage-backed securities and other instruments with higher rates of return. With the seizure of the credit markets, many SIVs had trouble selling new commercial paper to replace upcoming obligations on older paper.
The new fund — called the Master Liquidity Enhancement Conduit or M-LEC — would launch in the next 90 days and be used to buy distressed securities from SIVs. That would in turn give them the capital to pay off their commercial paper obligations, and ultimately extricate themselves from what otherwise might have been substantial losses.
By buying SIVs' distressed investments, the new fund would inject enough liquidity into the market to make investors more confident in buying commercial paper.
The funds' backers said they will shy away from risky instruments and buy only highly rated, asset-backed debt — a market that is already beginning to show signs of life.
The plan is designed to inject more confidence into the market, and increase investor appetite for the short-term debt known as commercial paper. The market for commercial paper, which is crucial for companies to fund short-term borrowing needs, locked up this summer.
That followed a crisis in the mortgage industry, as people defaulted on their home loans at a skyrocketing rate. It caused a widespread aversion to risk and led the Federal Reserve to pump money into the financial system, though the latest plan relies more heavily on the banks themselves.
The Treasury Department introduced the idea of a bailout in recent talks with Citigroup Inc., Bank of America Corp., JPMorgan Chase & Co and others. It was not known how much money would be put into the fund, but there have been reports it could be between $80 billion to $100 billion.
"This proposal will complement other solutions investors and asset managers may utilize in committing and deploying capital to support more efficient markets," the Treasury Dept. said in a statement Monday
The government's role in coming up with a private-sector solution to the nation's credit problems is similar to the bailout of hedge fund Long-Term Capital Management in 1998. The Fed approached Wall Street's biggest banks to rescue LTCM before its wrong-way financial bets set off a financial shockwave.
This time around, the banks hope to not only prevent credit problems from spreading — but also are bailing themselves out. They operate structured investment vehicles, known as SIVs, that reportedly have as much as $400 billion worth of assets. Those could plunge in value unless the credit markets are stabilized.
The SIVs used short-term commercial paper, sold at low interest rates, to buy longer-term mortgage-backed securities and other instruments with higher rates of return. With the seizure of the credit markets, many SIVs had trouble selling new commercial paper to replace upcoming obligations on older paper.
The new fund — called the Master Liquidity Enhancement Conduit or M-LEC — would launch in the next 90 days and be used to buy distressed securities from SIVs. That would in turn give them the capital to pay off their commercial paper obligations, and ultimately extricate themselves from what otherwise might have been substantial losses.
By buying SIVs' distressed investments, the new fund would inject enough liquidity into the market to make investors more confident in buying commercial paper.
The funds' backers said they will shy away from risky instruments and buy only highly rated, asset-backed debt — a market that is already beginning to show signs of life.
Saturday
Credit Card Freeze
By Nov. 1, consumers in all 50 states will be able to freeze their credit file at all three major credit-reporting agencies. TransUnion will roll out its plan Oct. 15, while Experian's offer will take effect beginning Nov. 1.
The third agency, Equifax, said it expects to introduce its new plan some time near the end of October.
Consumers living in states that either don't have credit freeze laws, have laws that aren't in effect yet or limit credit freezes only to ID theft victims will have the ability to place a freeze on their TransUnion and Experian, and presumably Equifax, credit reports. Victims of identity theft will be able to place, lift ("thaw") and remove the freeze for free, while nonvictims will pay $10 each time.
"We're trying to give consumers the opportunity to choose the identity theft fraud solution for their specific circumstances," says Steve Katz, spokesman for TransUnion's Truecredit.com.
Experian and TransUnion's offers will not pre-empt state laws or state-set prices on credit freezes.
TransUnion was the first of the three largest credit reporting agencies to grant credit freezes to all consumers.
Equifax recently announced plans to extend credit freezes to consumers in every state. The agency will release details about the offer shortly, says David Rubinger, vice president of communications at Equifax.
Consumers in all 50 states already have the right to place a fraud alert, regardless of whether they are victims of ID theft. The fraud alert lasts for 90 days and alerts new creditors and other businesses checking the creditworthiness of an applicant that the consumer may be a victim of fraud.
While the fraud alert merely asks the lender to take additional precautions, a credit or security freeze prevents third parties from receiving a copy of the consumer's credit report or credit score, making businesses less likely to grant credit or services to the applicant. Only businesses with a permissible purpose, or for whom the consumer lifts the freeze may obtain the consumer's credit information.
"(The) credit freeze is part of a trend of giving individuals more control over their consumer reports. This control is necessary because credit grantors do not screen applications for fraud carefully enough to stop identity theft," says Chris Hoofnagle, senior staff attorney to the Samuelson Law, Technology & Public Policy Clinic and senior fellow to the Berkeley Center for Law and Technology at the University of California-Berkeley.
Those who wish to freeze their credit report can do so by mailing a freeze request to TransUnion. They will receive a PIN, which they can use to lift the freeze temporarily by either writing or calling. Consumers also can remove the freeze permanently, but must do so in writing. The credit freeze will remain in effect until removed by the consumer.
At Experian, consumers can place a freeze by mail, but can "thaw" it instantly online, over the phone or via mail with their PIN. They must submit a written request for permanent removal.
Consumers must send a written request to freeze their Equifax file. They can call the toll-free number provided to them to remove or lift the freeze.
A credit freeze will stay in effect until the consumer lifts or removes it, except in Kentucky, Nebraska, Pennsylvania, Rhode Island and South Dakota, where it expires after seven years.
Consumer advocates generally expressed support for the credit bureaus' voluntary efforts, but said they would like to see lower fees and the process of freezing and unfreezing credit reports streamlined.
The announcement is really good news for consumers in states that don't provide credit freeze rights or where those rights only apply to identity theft victims, says Jeannine Kenney, senior policy analyst at Consumers Union, the publisher of Consumer Reports. She urges the credit bureaus to make credit freezes even cheaper for consumers.
"The freeze only works if people can afford to use it."
Several consumer advocates said that while charging $10 was better than some state-set prices, fees weren't as low as they should be. There should be a one-time fee of $5 or less, says Ed Mierzwinski, U.S. Public Interest Research Group, or PIRG, consumer program director.
"It should be like the security lock on your house -- you buy it once, and you don't pay every time you use the key."
Removing the freeze should be instantaneous, he adds, just like it is for people who purchase TransUnion's TrueCredit Lock, a credit monitoring service that allows customers to also freeze and unfreeze their credit report instantly online. The service costs $10 or $15 a month, depending on whether the consumer buys monitoring for all three credit reports or just their TransUnion credit report.
People aren't going to use credit freezes unless they're convenient, says Mierzwinski. "A freeze is a consumer right. It should not be a premium product."
In the meantime, 39 states and the District of Columbia have passed credit freeze laws. Prices and procedures for placing and removing credit freezes vary from state to state, so check with Equifax, Experian and TransUnion for more information.
Not for everyone
Some people will find credit freezes burdensome, says Linda Foley, founder of the Identity Theft Resource Center. Until credit freezes can be removed instantaneously, consumers will have to think ahead and remove the freeze several days in advance of any situation where a business needs to check their credit, which poses a problem for getting instant credit.
"It's a personal choice issue," she says, referring to the decision of whether to freeze a credit file or not. "But I'm delighted that they have the opportunity to make that choice."
The third agency, Equifax, said it expects to introduce its new plan some time near the end of October.
Consumers living in states that either don't have credit freeze laws, have laws that aren't in effect yet or limit credit freezes only to ID theft victims will have the ability to place a freeze on their TransUnion and Experian, and presumably Equifax, credit reports. Victims of identity theft will be able to place, lift ("thaw") and remove the freeze for free, while nonvictims will pay $10 each time.
"We're trying to give consumers the opportunity to choose the identity theft fraud solution for their specific circumstances," says Steve Katz, spokesman for TransUnion's Truecredit.com.
Experian and TransUnion's offers will not pre-empt state laws or state-set prices on credit freezes.
TransUnion was the first of the three largest credit reporting agencies to grant credit freezes to all consumers.
Equifax recently announced plans to extend credit freezes to consumers in every state. The agency will release details about the offer shortly, says David Rubinger, vice president of communications at Equifax.
Consumers in all 50 states already have the right to place a fraud alert, regardless of whether they are victims of ID theft. The fraud alert lasts for 90 days and alerts new creditors and other businesses checking the creditworthiness of an applicant that the consumer may be a victim of fraud.
While the fraud alert merely asks the lender to take additional precautions, a credit or security freeze prevents third parties from receiving a copy of the consumer's credit report or credit score, making businesses less likely to grant credit or services to the applicant. Only businesses with a permissible purpose, or for whom the consumer lifts the freeze may obtain the consumer's credit information.
"(The) credit freeze is part of a trend of giving individuals more control over their consumer reports. This control is necessary because credit grantors do not screen applications for fraud carefully enough to stop identity theft," says Chris Hoofnagle, senior staff attorney to the Samuelson Law, Technology & Public Policy Clinic and senior fellow to the Berkeley Center for Law and Technology at the University of California-Berkeley.
Those who wish to freeze their credit report can do so by mailing a freeze request to TransUnion. They will receive a PIN, which they can use to lift the freeze temporarily by either writing or calling. Consumers also can remove the freeze permanently, but must do so in writing. The credit freeze will remain in effect until removed by the consumer.
At Experian, consumers can place a freeze by mail, but can "thaw" it instantly online, over the phone or via mail with their PIN. They must submit a written request for permanent removal.
Consumers must send a written request to freeze their Equifax file. They can call the toll-free number provided to them to remove or lift the freeze.
A credit freeze will stay in effect until the consumer lifts or removes it, except in Kentucky, Nebraska, Pennsylvania, Rhode Island and South Dakota, where it expires after seven years.
Consumer advocates generally expressed support for the credit bureaus' voluntary efforts, but said they would like to see lower fees and the process of freezing and unfreezing credit reports streamlined.
The announcement is really good news for consumers in states that don't provide credit freeze rights or where those rights only apply to identity theft victims, says Jeannine Kenney, senior policy analyst at Consumers Union, the publisher of Consumer Reports. She urges the credit bureaus to make credit freezes even cheaper for consumers.
"The freeze only works if people can afford to use it."
Several consumer advocates said that while charging $10 was better than some state-set prices, fees weren't as low as they should be. There should be a one-time fee of $5 or less, says Ed Mierzwinski, U.S. Public Interest Research Group, or PIRG, consumer program director.
"It should be like the security lock on your house -- you buy it once, and you don't pay every time you use the key."
Removing the freeze should be instantaneous, he adds, just like it is for people who purchase TransUnion's TrueCredit Lock, a credit monitoring service that allows customers to also freeze and unfreeze their credit report instantly online. The service costs $10 or $15 a month, depending on whether the consumer buys monitoring for all three credit reports or just their TransUnion credit report.
People aren't going to use credit freezes unless they're convenient, says Mierzwinski. "A freeze is a consumer right. It should not be a premium product."
In the meantime, 39 states and the District of Columbia have passed credit freeze laws. Prices and procedures for placing and removing credit freezes vary from state to state, so check with Equifax, Experian and TransUnion for more information.
Not for everyone
Some people will find credit freezes burdensome, says Linda Foley, founder of the Identity Theft Resource Center. Until credit freezes can be removed instantaneously, consumers will have to think ahead and remove the freeze several days in advance of any situation where a business needs to check their credit, which poses a problem for getting instant credit.
"It's a personal choice issue," she says, referring to the decision of whether to freeze a credit file or not. "But I'm delighted that they have the opportunity to make that choice."
Friday
What Are My Rights?
If you have seen the dark side of being overwhelmed by credit and collectors you would definitely wonder whether the financially insolvent have any rights at all. It is bad enough that you have no money to make the installments due and most of your belongings have been repossessed; the continuous hounding by the collectors could become a real bad scene traumatizing the strongest of persons.
The Good News – you do have rights that protect you from this horrific scenario. Let us go through some of these basic rights which can retain your sanity when you find yourself totally harassed by the bill collectors.
1. Get familiar with the FDCPA or the Fair Debt Collection Practices Act. This is very important because the FDCPA clearly describes what is permissible and what is not. It will tell how the debt collector should contact you. There are many intimidation tactics that the debt collectors adopt that are actually not legal and the law offers you protection against such practices. However, many people are not aware about these rights and hence they are not able to defend themselves.
2. Other rights that you should know about – when you owe a debt you definitely have the moral and legal obligation to honor it. However, if you are taking steps to clear the debt and need the collectors to stop contacting you – you can write to them asking them to stop and they would have to follow your request. In case they contact anyone searching for you or your contact address, they should not tell anybody you owe money against a debt.
3. The debtors are prohibited by the law regarding the following matters as well:
a. They cannot use any type of violence and direct/ indirect threats
b. They cannot use abusive language or behavior towards you
c. They cannot spread false and damaging rumors about you
d. They cannot contact you under false pretexts such as they were attorneys, government’s representatives, etc.
4. You can find redressal when you believe you have been wronged by the debt collector you need to file a complaint with the Attorney General. A word of caution here – you have to file within a year from the alleged harassment which would give you the right to sue the abusive debt collector(s). The Attorney General’s office would be able to inform you about the law pertaining to the State you live in and your rights.
So, if you find yourself to be hounded to the brink of insanity by debt collectors, do not despair. You do have rights even when you are unable to pay a debt and the sooner you learn about these rights the better you would be empowered to fight against any illegal intimidation tactics that may be used.
Keep in mind though that the best way to win an argument is to be on the right. Hence, you would need to do your best to get out of the debt the fastest way possible. This would be the best way to get rid of the debt collectors.
The Good News – you do have rights that protect you from this horrific scenario. Let us go through some of these basic rights which can retain your sanity when you find yourself totally harassed by the bill collectors.
1. Get familiar with the FDCPA or the Fair Debt Collection Practices Act. This is very important because the FDCPA clearly describes what is permissible and what is not. It will tell how the debt collector should contact you. There are many intimidation tactics that the debt collectors adopt that are actually not legal and the law offers you protection against such practices. However, many people are not aware about these rights and hence they are not able to defend themselves.
2. Other rights that you should know about – when you owe a debt you definitely have the moral and legal obligation to honor it. However, if you are taking steps to clear the debt and need the collectors to stop contacting you – you can write to them asking them to stop and they would have to follow your request. In case they contact anyone searching for you or your contact address, they should not tell anybody you owe money against a debt.
3. The debtors are prohibited by the law regarding the following matters as well:
a. They cannot use any type of violence and direct/ indirect threats
b. They cannot use abusive language or behavior towards you
c. They cannot spread false and damaging rumors about you
d. They cannot contact you under false pretexts such as they were attorneys, government’s representatives, etc.
4. You can find redressal when you believe you have been wronged by the debt collector you need to file a complaint with the Attorney General. A word of caution here – you have to file within a year from the alleged harassment which would give you the right to sue the abusive debt collector(s). The Attorney General’s office would be able to inform you about the law pertaining to the State you live in and your rights.
So, if you find yourself to be hounded to the brink of insanity by debt collectors, do not despair. You do have rights even when you are unable to pay a debt and the sooner you learn about these rights the better you would be empowered to fight against any illegal intimidation tactics that may be used.
Keep in mind though that the best way to win an argument is to be on the right. Hence, you would need to do your best to get out of the debt the fastest way possible. This would be the best way to get rid of the debt collectors.
Another "Bubble" About To Burst
In case you didn't know, there is another bubble, growing massively in this country, getting ready to burst. Revolving consumer credit card debt continues to grow each month, finally breaking the $900 Billion dollar mark for the first time last June. The Federal Reserve reports that this year, Americans have piled on $39 Billion in new credit card debt. We refer to the looming crisis as the credit card tsunami. You better batten down the hatches!
For the month of August 2007, USA, consumers added another $6.2 Billion in new debt, on top of the $5.6 Billion they racked up in July. Overall, including everything except mortgages, Americans owe almost $ 2.5 TRILLION DOLLARS in debt! Now that the mortgage game is over, and all that easy money has been made, the next big thing the banks will milk for maximum growth and profits are credit cards. Fees and penalties have been steadily increasing for years, as have average interest rates. Last year, the banks made over $100 Billion in interest & another $50 Billion in Fees & Penalties; these guys are not your friends.
Many people, who are being squeezed by the bursting housing bubble, are increasingly relying on their credit cards to live. Since the spigot to the home equity money has run dry, and their lifestyles are not changing, or circumstances like lost jobs or medical hardships cause them to continue to rely on credit cards, there is no end in sight to how much additional debt John Q. Public will take on. At some point, the dam has to burst, and a lot of people are going to drown.
Who knows how many people lived beyond their means during the last few years, extracting the temporary wealth in their real estate, only to spend it on luxuries like vacations, and lavish weddings in Tuscany? How many people transferred unsecured, credit card debt to their real estate, only to risk it to foreclosure if they miss a few payments? How about the people who thought the value of an already overpriced home would continue to increase, and took out teaser rate mortgages, hoping to refinance with the profit in a couple years, and are now stuck with a mortgage that has doubled, and no way to pay for it?
Now that the game is over, those people are turning to their credit cards to survive. People who were "hooked" by teaser rate mortgages, now find themselves unable to pay the "real" mortgage payment. Many are going into default on the mortgage, and keeping current on the credit cards. Some are using them like an ATM, maxing them out to their limit, as well as constantly applying for the barrage of new cards that grace their mailbox.
They are living in a fantasy land if they think the missed mortgage payments won't hurt their credit. Give it a month or three, and when the credit cards see that you are missing mortgage payments, they jack up your interest rates to 25%+ and then you are, excuse my French, "screwed." Most of your payment will be wasted on interest, and it could take 10-100 years to pay the debt off.
The card companies know people will do anything to stay current on cards, and that people need cash. Requirements to get a credit card are at there lowest in 10 years according to a Fed survey; if you have a pulse, you can get a credit card. They even give credit cards to peoples pets.
The junk mail credit card solicitations that grace your mailbox are driven to the post office in semi-trucks on pallets, and they are unloaded with forklifts. While the mailers are actually less than what was mailed out at their peak in 2005, the percentage of people responding to, and being accepted by the credit card companies, has risen steadily and has actually increased three times since 2005!
All this is a result of the shut down in taking equity out of your overpriced home. It was never sustainable, and I feel sorry for the people who bought at the peak, paying $600,000 plus for a 40 year old home that was not worth 1⁄4 of that price. To think the bubble could keep getting bigger and the median price of a home exceeded the ability of the average person to buy one, it was only a matter of time before something had to give, and it has.
Now, I talk to people all day long who are taking cash advances from credit cards to live on, or pay their mortgages; that will end at some point.
The credit card bubble will be the next one to burst. If your credit card debt is out of control, you have to do something. Through the process of debt settlement, there are ways to settle with the creditors for less than what you owe, within 3-4 years, that will leave you in a position to get new credit after it is over. Read our free report on Debt Settlement to see if it's an option for you.
For the month of August 2007, USA, consumers added another $6.2 Billion in new debt, on top of the $5.6 Billion they racked up in July. Overall, including everything except mortgages, Americans owe almost $ 2.5 TRILLION DOLLARS in debt! Now that the mortgage game is over, and all that easy money has been made, the next big thing the banks will milk for maximum growth and profits are credit cards. Fees and penalties have been steadily increasing for years, as have average interest rates. Last year, the banks made over $100 Billion in interest & another $50 Billion in Fees & Penalties; these guys are not your friends.
Many people, who are being squeezed by the bursting housing bubble, are increasingly relying on their credit cards to live. Since the spigot to the home equity money has run dry, and their lifestyles are not changing, or circumstances like lost jobs or medical hardships cause them to continue to rely on credit cards, there is no end in sight to how much additional debt John Q. Public will take on. At some point, the dam has to burst, and a lot of people are going to drown.
Who knows how many people lived beyond their means during the last few years, extracting the temporary wealth in their real estate, only to spend it on luxuries like vacations, and lavish weddings in Tuscany? How many people transferred unsecured, credit card debt to their real estate, only to risk it to foreclosure if they miss a few payments? How about the people who thought the value of an already overpriced home would continue to increase, and took out teaser rate mortgages, hoping to refinance with the profit in a couple years, and are now stuck with a mortgage that has doubled, and no way to pay for it?
Now that the game is over, those people are turning to their credit cards to survive. People who were "hooked" by teaser rate mortgages, now find themselves unable to pay the "real" mortgage payment. Many are going into default on the mortgage, and keeping current on the credit cards. Some are using them like an ATM, maxing them out to their limit, as well as constantly applying for the barrage of new cards that grace their mailbox.
They are living in a fantasy land if they think the missed mortgage payments won't hurt their credit. Give it a month or three, and when the credit cards see that you are missing mortgage payments, they jack up your interest rates to 25%+ and then you are, excuse my French, "screwed." Most of your payment will be wasted on interest, and it could take 10-100 years to pay the debt off.
The card companies know people will do anything to stay current on cards, and that people need cash. Requirements to get a credit card are at there lowest in 10 years according to a Fed survey; if you have a pulse, you can get a credit card. They even give credit cards to peoples pets.
The junk mail credit card solicitations that grace your mailbox are driven to the post office in semi-trucks on pallets, and they are unloaded with forklifts. While the mailers are actually less than what was mailed out at their peak in 2005, the percentage of people responding to, and being accepted by the credit card companies, has risen steadily and has actually increased three times since 2005!
All this is a result of the shut down in taking equity out of your overpriced home. It was never sustainable, and I feel sorry for the people who bought at the peak, paying $600,000 plus for a 40 year old home that was not worth 1⁄4 of that price. To think the bubble could keep getting bigger and the median price of a home exceeded the ability of the average person to buy one, it was only a matter of time before something had to give, and it has.
Now, I talk to people all day long who are taking cash advances from credit cards to live on, or pay their mortgages; that will end at some point.
The credit card bubble will be the next one to burst. If your credit card debt is out of control, you have to do something. Through the process of debt settlement, there are ways to settle with the creditors for less than what you owe, within 3-4 years, that will leave you in a position to get new credit after it is over. Read our free report on Debt Settlement to see if it's an option for you.
Consumer’s Guide to the Fair Debt Collection Practices Act
If you use credit cards, owe money on a personal loan, or are paying on a home mortgage, you are a “debtor.” If you fall behind in repaying your creditors, or an error is made on your accounts, you may be contacted by a “debt collector.”
You should know that in either situation, the Fair Debt Collection Practices Act requires that debt collectors treat you fairly and prohibits certain methods of debt collection. Of course, the law does not erase any legitimate debt you owe. This article answers commonly asked questions about your rights under the Fair Debt Collection Practices Act.
Q: What debts are covered?
A: Personal, family, and household debts are covered under the Act. This includes money owed for the purchase of an automobile, for medical care, or for charge accounts.
Q:Who is a debt collector?
A: A debt collector is any person who regularly collects debts owed to others. This includes attorneys who collect debts on a regular basis.
Q: How may a debt collector contact you?
A: A collector may contact you in person, by mail, telephone, telegram, or fax. However, a debt collector may not contact you at inconvenient times or places, such as before 8 a.m. or after 9 p.m., unless you agree.
A debt collector also may not contact you at work if the collector knows that your employer disapproves of such contacts.
Q: Can you stop a debt collector from contacting you?
A: You can stop a debt collector from contacting you by writing a letter to the collector telling them to stop. Once the collector receives your letter, they may not contact you again except to say there will be no further contact or to notify you that the debt collector or the creditor intends to take some specific action. Please note, however, that sending such a letter to a collector does not make the debt go away if you actually owe it. You could still be sued by the debt collector or your original creditor.
Q: May a debt collector contact anyone else about your debt?
A: If you have an attorney, the debt collector must contact the attorney, rather than you. If you do not have an attorney, a collector may contact other people, but only to find out where you live, what your phone number is, and where you work. Collectors usually are prohibited from contacting such third parties more than once. In most cases, the collector may not tell anyone other than you and your attorney that you owe money.
Q: What must the debt collector tell you about the debt?
A: Within five days after you are first contacted, the collector must send you a written notice telling you the amount of money you owe; the name of the creditor to whom you owe the money; and what action to take if you believe you do not owe the money.
Q: May a debt collector continue to contact you if you believe you do not owe money?
A: A collector may not contact you if, within 30 days after you receive the written notice, you send thecollection agency a letter stating you do not owe money.
However, a collector can renew collectionactivities if you are sent proof of the debt, such as a copy of a bill for the amount owed.
Q: What types of debt collection practices are prohibited?
A: Harassment. Debt collectors may not harass, oppress, or abuse you or any third parties they contact. For example, debt collectors may not:
• use threats of violence or harm;
• publish a list of consumers who refuse to pay their debts (except to a credit bureau);
• use obscene or profane language; or
• repeatedly use the telephone to annoy someone.
False statements.
Debt collectors may not use any false or misleading statements when collecting a debt. For example, debt collectors may not:
• falsely imply that they are attorneys or government representatives;• falsely imply that you have committed a crime;
• falsely represent that they operate or work for a credit bureau;• misrepresent the amount of your debt;
• indicate that papers being sent to you are legal forms when they are not; or
• indicate that papers being sent to you are not legal forms when they are.Debt collectors also may not state that:
• you will be arrested if you do not pay your debt;
• they will seize, garnish, attach, or sell your property or wages, unless the collection agency or creditor intends to do so, and it is legal to do so; or
• actions, such as a lawsuit, will be taken against you, when such action legally may not be taken, or when they do not intend to take such action. Debt collectors may not:
• give false credit information about you to anyone, including a credit bureau;
• send you anything that looks like an official document from a court or government agency when it is not; or
• use a false name.
Unfair practices. Debt collectors may not engage in unfair practices when they try to collect a debt.For example, collectors may not:• collect any amount greater than your debt, unless your state law permits such a charge;• deposit a post-dated check prematurely;
• use deception to make you accept collect calls or pay for telegrams;• take or threaten to take your property unless this can be done legally; or• contact you by postcard.
Q: What control do you have over payment of debts?
A: If you owe more than one debt, any payment you make must be applied to the debt you indicate.A debt collector may not apply a payment to any debt you believe you do not owe.
Q: What can you do if you believe a debt collector violated the law?
A: You have the right to sue a collector in a state or federal court within one year from the date the law was violated. If you win, you may recover money for the damages you suffered plus an additional amount up to $1,000. Court costs and attorney’s fees also can be recovered. A group of people also may sue a debt collector and recover money for damages up to $500,000, or one percent of the collector’s net worth, whichever is less.
Q: Where can you report a debt collector for an alleged violation?
A: Report any problems you have with a debt collector to your state Attorney General’s office and the Federal Trade Commission. Many states have their own debt collection laws, and your Attorney General’s office can help you determine your rights.The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them.To file a complaint or to get free information on consumer issues, visit http://www.ftc.gov/ or call toll-free, 1-877-FTC-HELP (1-877-382-4357)
You should know that in either situation, the Fair Debt Collection Practices Act requires that debt collectors treat you fairly and prohibits certain methods of debt collection. Of course, the law does not erase any legitimate debt you owe. This article answers commonly asked questions about your rights under the Fair Debt Collection Practices Act.
Q: What debts are covered?
A: Personal, family, and household debts are covered under the Act. This includes money owed for the purchase of an automobile, for medical care, or for charge accounts.
Q:Who is a debt collector?
A: A debt collector is any person who regularly collects debts owed to others. This includes attorneys who collect debts on a regular basis.
Q: How may a debt collector contact you?
A: A collector may contact you in person, by mail, telephone, telegram, or fax. However, a debt collector may not contact you at inconvenient times or places, such as before 8 a.m. or after 9 p.m., unless you agree.
A debt collector also may not contact you at work if the collector knows that your employer disapproves of such contacts.
Q: Can you stop a debt collector from contacting you?
A: You can stop a debt collector from contacting you by writing a letter to the collector telling them to stop. Once the collector receives your letter, they may not contact you again except to say there will be no further contact or to notify you that the debt collector or the creditor intends to take some specific action. Please note, however, that sending such a letter to a collector does not make the debt go away if you actually owe it. You could still be sued by the debt collector or your original creditor.
Q: May a debt collector contact anyone else about your debt?
A: If you have an attorney, the debt collector must contact the attorney, rather than you. If you do not have an attorney, a collector may contact other people, but only to find out where you live, what your phone number is, and where you work. Collectors usually are prohibited from contacting such third parties more than once. In most cases, the collector may not tell anyone other than you and your attorney that you owe money.
Q: What must the debt collector tell you about the debt?
A: Within five days after you are first contacted, the collector must send you a written notice telling you the amount of money you owe; the name of the creditor to whom you owe the money; and what action to take if you believe you do not owe the money.
Q: May a debt collector continue to contact you if you believe you do not owe money?
A: A collector may not contact you if, within 30 days after you receive the written notice, you send thecollection agency a letter stating you do not owe money.
However, a collector can renew collectionactivities if you are sent proof of the debt, such as a copy of a bill for the amount owed.
Q: What types of debt collection practices are prohibited?
A: Harassment. Debt collectors may not harass, oppress, or abuse you or any third parties they contact. For example, debt collectors may not:
• use threats of violence or harm;
• publish a list of consumers who refuse to pay their debts (except to a credit bureau);
• use obscene or profane language; or
• repeatedly use the telephone to annoy someone.
False statements.
Debt collectors may not use any false or misleading statements when collecting a debt. For example, debt collectors may not:
• falsely imply that they are attorneys or government representatives;• falsely imply that you have committed a crime;
• falsely represent that they operate or work for a credit bureau;• misrepresent the amount of your debt;
• indicate that papers being sent to you are legal forms when they are not; or
• indicate that papers being sent to you are not legal forms when they are.Debt collectors also may not state that:
• you will be arrested if you do not pay your debt;
• they will seize, garnish, attach, or sell your property or wages, unless the collection agency or creditor intends to do so, and it is legal to do so; or
• actions, such as a lawsuit, will be taken against you, when such action legally may not be taken, or when they do not intend to take such action. Debt collectors may not:
• give false credit information about you to anyone, including a credit bureau;
• send you anything that looks like an official document from a court or government agency when it is not; or
• use a false name.
Unfair practices. Debt collectors may not engage in unfair practices when they try to collect a debt.For example, collectors may not:• collect any amount greater than your debt, unless your state law permits such a charge;• deposit a post-dated check prematurely;
• use deception to make you accept collect calls or pay for telegrams;• take or threaten to take your property unless this can be done legally; or• contact you by postcard.
Q: What control do you have over payment of debts?
A: If you owe more than one debt, any payment you make must be applied to the debt you indicate.A debt collector may not apply a payment to any debt you believe you do not owe.
Q: What can you do if you believe a debt collector violated the law?
A: You have the right to sue a collector in a state or federal court within one year from the date the law was violated. If you win, you may recover money for the damages you suffered plus an additional amount up to $1,000. Court costs and attorney’s fees also can be recovered. A group of people also may sue a debt collector and recover money for damages up to $500,000, or one percent of the collector’s net worth, whichever is less.
Q: Where can you report a debt collector for an alleged violation?
A: Report any problems you have with a debt collector to your state Attorney General’s office and the Federal Trade Commission. Many states have their own debt collection laws, and your Attorney General’s office can help you determine your rights.The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them.To file a complaint or to get free information on consumer issues, visit http://www.ftc.gov/ or call toll-free, 1-877-FTC-HELP (1-877-382-4357)
Wednesday
50 Ways To Boost Your Credit Score
1. Open New Credit Accounts with High Limits
Get a credit card with a high limit. Keep the balances low, and use the credit card to establish a credit history or boost a low credit score. Remember: the more available credit on a credit card, the better.
2. Add Your Name to Someone Else’s Good Account
Piggybacking off of someone else’s good credit is an easy way to improve credit rating. Your credit report will benefit each time the primary account holder makes a payment or payoffs the credit account.
3. Dispute Delinquent Credit Accounts
Contact the collection agency and ask for written proof of delinquency. If the collection agency cannot present such evidence, they must cease all collection attempts and delete the collection account from your credit report.
4. Reduce Revolving Debts
Paying your bills on time does not secure a high credit score. A high debt-to-income ratio also plays a role in credit rating. Too many revolving credit accounts can damage your credit score. Limit you number of credit card accounts and keep the balances low.
5. Pay Bills on Time
One late payment can reduce your credit score by 10 – 20 points. On the contrary, you gain about 5 points for timely payments.
6. Get Current on Past Due Accounts
Even if a creditor stops collection attempts on delinquent or past due accounts, the account does not miraculously vanish. Once a past due account is reported to the credit bureaus, your credit score takes a nosedive. Make an effort to repay the old debt, and ask the creditor to delete the negative remark from your credit report.
7. Settle Judgment Accounts
Make payment arrangements with creditors. Consistently submitting payments may prompt the creditor to delete the judgment from your record.
8. Do Not Close Unused Credit Account
Keep all credit accounts open. Because length of credit influences scoring, closing an old account reduces credit history, and decreases credit score.
9. Limit Credit Inquiries
Excessive credit inquiries within a short period will severely reduce your credit score. Inquiries stay on your credit report for two years. To maintain a high credit score, limit yourself to two credit inquiries a year.
10. Do Not Max Out Credit Cards
Maxed out credit cards indicate little self-control, and increases your debt ratio. Even if you submit timely payments, your credit score can remain in the low 600’s. Reduce debts, and keep balances below 25% of the credit limit.
11. Do Not File Bankruptcy
A bankruptcy may seem like the only solution to severe debt problems. However, the long-term effects are worse. After a bankruptcy, your credit score can plummet 100 or more points. A bankruptcy is more serious than having past due, collection, or judgment accounts.
12. Get Credit Advice
Using a credit counseling or debt consolidation agency can decrease your credit score. Choose agencies that do not report “third-party assistance” to the credit bureaus. To avoid scams, select a non-profit organization.
13. Correct Credit Report Inaccuracies
Unfamiliar credit accounts can damage your good credit rating. Check your credit report annually, and work diligently to get errors corrected.
14. Close Accounts Slowly, Starting with the Newest
If you must close a few credit accounts, do so slowly and start with the newest accounts. Closing your oldest credit account will reduce your credit history, and lower your score.
15. Make Sure the Creditor Reports to the Credit Bureaus
Some creditors only report delinquent or past due accounts to the credit bureaus. If trying to establish or rebuild credit, good remarks are essential. Before applying for new credit, be certain that the creditor consistently reports to the bureaus.
16. Get a Secured Credit Card
A secured credit card is perfect for persons who can’t get approved for an unsecured credit card. Keep balances low and pay the bill on time. Gradually, your credit score will improve.
17. Get a Savings or Checking Account
18. Dissolve Joint Accounts after a Divorce
It is common for married couples to have joint or co-signed accounts. If your name remains on an account following a divorce, you become responsible for the payment. During the separation, payoff all joint accounts and have your name removed from the account.
19. Avoid Consolidating Debts or Balance Transfers
Moving debts from card to card will not shrink the balance. Balance transfer offers are good if the new interest rate is low. To be of an advantage, you must payoff the balance.
20. Negotiate Better Terms with Creditors
Due to high finance fees, paying the minimum payment barely reduces the balance. Contact your creditors and negotiate a lower interest rate. For a short period, the credit card company may lower your rate, which gives you the chance to reduce your balance and increase your credit score.
21. Apply for an Auto Loan
Rebuilding credit history after a bankruptcy is important. Since getting approved for a credit card is challenging, apply for an auto loan. Auto loan lenders offer a variety of programs to help persons re-establish credit. While the interest rate is high, an auto loan can be a stepping stone to good credit.
22. Ask for a Credit Limit Increase
If your credit accounts are approaching the limit, ask for a credit limit increase. A higher credit limit will increase your available credit and protect your credit score.
23. Pay Credit Cards Early
If you make a large purchase with a credit card, but don’t want the new balance reported to the credit bureaus, payoff the balance early. Once the statement arrives, pay the credit card within a week.
24. Occasionally Use Your Credit Cards
Occasionally use your credit card for small purchases. Unused accounts are reported as “inactive” after six months.
25. Pay Utility Bills on Time
In the past, utility companies only reported delinquent accounts. However, more and more utility companies have started reporting good accounts. Make an effort to pay your electric, natural gas, and other utilities on time.
26. Maintain at Least One Good Account
If you can’t maintain regular payments on all your credit accounts, make an effort to maintain a good standing with at least one. This one good account could potentially save your credit score.
27. Something is Better than Nothing
If you cannot pay the minimum payment, submit what you can. Some creditors are flexible and will accommodate persons with a previously good payment history.
28. Shop for Loans within a Short Period
When buying an automobile or home, multiple credit inquiries are okay. In order for multiple inquiries to count as one, they must occur within a 30-day period.
29. Live Within Your Financial Means
Create a spending plan, and stick to it.
30. Stop Using Plastic
Practice self-control and reserve credit cards for emergencies.
31. Don’t Open Too Many Accounts within a Short Period
Acquiring multiple accounts within a short period looks bad on your credit report. You could potentially invite a lot of new debt, and new accounts shorten the average age of existing credit accounts.
32. Wait 12 Months Before Applying for a Mortgage
Buying a home is a good way to quickly raise your credit score. On the other hand, if you’ve recently went through a bankruptcy, foreclosure, or repossession, wait at least 12 months before applying.
33. Payoff Existing Loans
If you have installment loans, student loans, automobile loans, or personal loans, make an effort to payoff the accounts. A good credit score is determined by credit acquired and credit paid.
34. Pay More than the Minimum Payment
If you want to reduce your total debt, pay more than the minimum. When possible, submit a lump sum. This quickly increases your available credit, and can raise your credit score by 20 points overnight.
35. Ask Creditor to Delete a 30-Day Late Item
Even if you have a good payment history, one late or missed payment can decrease your score. If you forgot to mail a payment, or the payment was received late, ask the creditor to keep the account current.
36. Enroll for Automatic Billpay
Setup automatic billpay with your bank or credit union, and have monthly payments deducted from your checking or savings account. This puts a stop to late payments, and keeps your score high.
37. Resist the “In-Store Credit” Temptation
Applying for in-store credit can reduce your score by 20 points.
38. Avoid Cash Advances
Credit card cash advances are attractive. However, high finance fees can make repayment difficult.
39. Do Not Exceed Your Credit Limit
By no means exceed your credit limit. Aside from the additional fees, your credit score will drop.
40. Pay Balances in Full
Payoff credit card balances each month. Consequently, you avoid the debt trap, and maintain a high credit score.
41. Avoid Finance Companies
These accounts look bad on a credit report. By eliminating finance company loans, you could raise your credit score by 20 – 30 points.
42. Re-Open Closed Accounts
Accounts closed by consumers can decrease credit score, especially if the account was older. Contact the creditor and re-open the closed account. This maneuver could raise your score by 30 points
43. Lower Overall Debt Ratio
Keeping credit card balances low is a start. However, endeavor to lower your overall debt balances. This includes installment loans, student loans, automobile loans, etc. Pay down balances and your score will quickly rise.
44. Have at Least Three Open Accounts
Having more than one credit account can boost your credit score. If possible, strive for at least three good accounts.
45. Do Not Apply for a “Capital One” Credit Card
With so many consumer complaints, Capital One tops the list of “credit card companies to avoid.”
46. Write a Short Explanation on Your Credit Report
Explaining a delinquent account will not increase your credit score. However, it may induce a creditor to extend a new line of credit, which could help raise your low score. If loss of employment or illness contributed to credit problems, include a short explanation beneath the delinquent account.
47. Prioritize Debts
If you can’t pay all your debts on time, pay the most important debts first. Maintain a high credit score by paying credit cards, mortgage payments, and auto loans by the due date.
48. Know Your Credit Score
Check your report every 6 – 12 months and know your credit score.
49. Get Credit in Your Own Name
Establishing your own independent credit is important. In the beginning, you may need a co-signer for a credit card or auto loan. Once you’ve established a good payment history, have the co-signer’s name removed from the account.
50. Add Information to Your Credit Report
Stability can increase your credit score. Including additional information such as employer, address, banking account numbers, date of birth, or telephone number puts lenders at ease. As a result, the lender is more apt to approve your credit request.
Get a credit card with a high limit. Keep the balances low, and use the credit card to establish a credit history or boost a low credit score. Remember: the more available credit on a credit card, the better.
2. Add Your Name to Someone Else’s Good Account
Piggybacking off of someone else’s good credit is an easy way to improve credit rating. Your credit report will benefit each time the primary account holder makes a payment or payoffs the credit account.
3. Dispute Delinquent Credit Accounts
Contact the collection agency and ask for written proof of delinquency. If the collection agency cannot present such evidence, they must cease all collection attempts and delete the collection account from your credit report.
4. Reduce Revolving Debts
Paying your bills on time does not secure a high credit score. A high debt-to-income ratio also plays a role in credit rating. Too many revolving credit accounts can damage your credit score. Limit you number of credit card accounts and keep the balances low.
5. Pay Bills on Time
One late payment can reduce your credit score by 10 – 20 points. On the contrary, you gain about 5 points for timely payments.
6. Get Current on Past Due Accounts
Even if a creditor stops collection attempts on delinquent or past due accounts, the account does not miraculously vanish. Once a past due account is reported to the credit bureaus, your credit score takes a nosedive. Make an effort to repay the old debt, and ask the creditor to delete the negative remark from your credit report.
7. Settle Judgment Accounts
Make payment arrangements with creditors. Consistently submitting payments may prompt the creditor to delete the judgment from your record.
8. Do Not Close Unused Credit Account
Keep all credit accounts open. Because length of credit influences scoring, closing an old account reduces credit history, and decreases credit score.
9. Limit Credit Inquiries
Excessive credit inquiries within a short period will severely reduce your credit score. Inquiries stay on your credit report for two years. To maintain a high credit score, limit yourself to two credit inquiries a year.
10. Do Not Max Out Credit Cards
Maxed out credit cards indicate little self-control, and increases your debt ratio. Even if you submit timely payments, your credit score can remain in the low 600’s. Reduce debts, and keep balances below 25% of the credit limit.
11. Do Not File Bankruptcy
A bankruptcy may seem like the only solution to severe debt problems. However, the long-term effects are worse. After a bankruptcy, your credit score can plummet 100 or more points. A bankruptcy is more serious than having past due, collection, or judgment accounts.
12. Get Credit Advice
Using a credit counseling or debt consolidation agency can decrease your credit score. Choose agencies that do not report “third-party assistance” to the credit bureaus. To avoid scams, select a non-profit organization.
13. Correct Credit Report Inaccuracies
Unfamiliar credit accounts can damage your good credit rating. Check your credit report annually, and work diligently to get errors corrected.
14. Close Accounts Slowly, Starting with the Newest
If you must close a few credit accounts, do so slowly and start with the newest accounts. Closing your oldest credit account will reduce your credit history, and lower your score.
15. Make Sure the Creditor Reports to the Credit Bureaus
Some creditors only report delinquent or past due accounts to the credit bureaus. If trying to establish or rebuild credit, good remarks are essential. Before applying for new credit, be certain that the creditor consistently reports to the bureaus.
16. Get a Secured Credit Card
A secured credit card is perfect for persons who can’t get approved for an unsecured credit card. Keep balances low and pay the bill on time. Gradually, your credit score will improve.
17. Get a Savings or Checking Account
18. Dissolve Joint Accounts after a Divorce
It is common for married couples to have joint or co-signed accounts. If your name remains on an account following a divorce, you become responsible for the payment. During the separation, payoff all joint accounts and have your name removed from the account.
19. Avoid Consolidating Debts or Balance Transfers
Moving debts from card to card will not shrink the balance. Balance transfer offers are good if the new interest rate is low. To be of an advantage, you must payoff the balance.
20. Negotiate Better Terms with Creditors
Due to high finance fees, paying the minimum payment barely reduces the balance. Contact your creditors and negotiate a lower interest rate. For a short period, the credit card company may lower your rate, which gives you the chance to reduce your balance and increase your credit score.
21. Apply for an Auto Loan
Rebuilding credit history after a bankruptcy is important. Since getting approved for a credit card is challenging, apply for an auto loan. Auto loan lenders offer a variety of programs to help persons re-establish credit. While the interest rate is high, an auto loan can be a stepping stone to good credit.
22. Ask for a Credit Limit Increase
If your credit accounts are approaching the limit, ask for a credit limit increase. A higher credit limit will increase your available credit and protect your credit score.
23. Pay Credit Cards Early
If you make a large purchase with a credit card, but don’t want the new balance reported to the credit bureaus, payoff the balance early. Once the statement arrives, pay the credit card within a week.
24. Occasionally Use Your Credit Cards
Occasionally use your credit card for small purchases. Unused accounts are reported as “inactive” after six months.
25. Pay Utility Bills on Time
In the past, utility companies only reported delinquent accounts. However, more and more utility companies have started reporting good accounts. Make an effort to pay your electric, natural gas, and other utilities on time.
26. Maintain at Least One Good Account
If you can’t maintain regular payments on all your credit accounts, make an effort to maintain a good standing with at least one. This one good account could potentially save your credit score.
27. Something is Better than Nothing
If you cannot pay the minimum payment, submit what you can. Some creditors are flexible and will accommodate persons with a previously good payment history.
28. Shop for Loans within a Short Period
When buying an automobile or home, multiple credit inquiries are okay. In order for multiple inquiries to count as one, they must occur within a 30-day period.
29. Live Within Your Financial Means
Create a spending plan, and stick to it.
30. Stop Using Plastic
Practice self-control and reserve credit cards for emergencies.
31. Don’t Open Too Many Accounts within a Short Period
Acquiring multiple accounts within a short period looks bad on your credit report. You could potentially invite a lot of new debt, and new accounts shorten the average age of existing credit accounts.
32. Wait 12 Months Before Applying for a Mortgage
Buying a home is a good way to quickly raise your credit score. On the other hand, if you’ve recently went through a bankruptcy, foreclosure, or repossession, wait at least 12 months before applying.
33. Payoff Existing Loans
If you have installment loans, student loans, automobile loans, or personal loans, make an effort to payoff the accounts. A good credit score is determined by credit acquired and credit paid.
34. Pay More than the Minimum Payment
If you want to reduce your total debt, pay more than the minimum. When possible, submit a lump sum. This quickly increases your available credit, and can raise your credit score by 20 points overnight.
35. Ask Creditor to Delete a 30-Day Late Item
Even if you have a good payment history, one late or missed payment can decrease your score. If you forgot to mail a payment, or the payment was received late, ask the creditor to keep the account current.
36. Enroll for Automatic Billpay
Setup automatic billpay with your bank or credit union, and have monthly payments deducted from your checking or savings account. This puts a stop to late payments, and keeps your score high.
37. Resist the “In-Store Credit” Temptation
Applying for in-store credit can reduce your score by 20 points.
38. Avoid Cash Advances
Credit card cash advances are attractive. However, high finance fees can make repayment difficult.
39. Do Not Exceed Your Credit Limit
By no means exceed your credit limit. Aside from the additional fees, your credit score will drop.
40. Pay Balances in Full
Payoff credit card balances each month. Consequently, you avoid the debt trap, and maintain a high credit score.
41. Avoid Finance Companies
These accounts look bad on a credit report. By eliminating finance company loans, you could raise your credit score by 20 – 30 points.
42. Re-Open Closed Accounts
Accounts closed by consumers can decrease credit score, especially if the account was older. Contact the creditor and re-open the closed account. This maneuver could raise your score by 30 points
43. Lower Overall Debt Ratio
Keeping credit card balances low is a start. However, endeavor to lower your overall debt balances. This includes installment loans, student loans, automobile loans, etc. Pay down balances and your score will quickly rise.
44. Have at Least Three Open Accounts
Having more than one credit account can boost your credit score. If possible, strive for at least three good accounts.
45. Do Not Apply for a “Capital One” Credit Card
With so many consumer complaints, Capital One tops the list of “credit card companies to avoid.”
46. Write a Short Explanation on Your Credit Report
Explaining a delinquent account will not increase your credit score. However, it may induce a creditor to extend a new line of credit, which could help raise your low score. If loss of employment or illness contributed to credit problems, include a short explanation beneath the delinquent account.
47. Prioritize Debts
If you can’t pay all your debts on time, pay the most important debts first. Maintain a high credit score by paying credit cards, mortgage payments, and auto loans by the due date.
48. Know Your Credit Score
Check your report every 6 – 12 months and know your credit score.
49. Get Credit in Your Own Name
Establishing your own independent credit is important. In the beginning, you may need a co-signer for a credit card or auto loan. Once you’ve established a good payment history, have the co-signer’s name removed from the account.
50. Add Information to Your Credit Report
Stability can increase your credit score. Including additional information such as employer, address, banking account numbers, date of birth, or telephone number puts lenders at ease. As a result, the lender is more apt to approve your credit request.
Tuesday
The Credit Card Minimum Payment Warning Act Of 2007
The Credit Card Minimum Payment Warning Act has been in the works for a few years.
Most recently Sen. Daniel Akaka has again introduced legislation to require credit card companies to plainly tell card holders about the impact of making only the minimum payment. This includes how long it will take to repay your credit card and the extra amount in interest you’ll pay when you make only the minimum payment.
The Credit Card Minimum Payment Warning Act of 2007 requires companies to include the total length of time and the additional fees it will take to pay off the consumer's balance if only the minimum payments are made.
Whether or not the act passes, it is important that consumers be more empowered and know completely what it is they’re getting into by making only minimum monthly payments. By only making the minimum payment a small percentage actually goes toward your balance. The lions share is applied to the interest, making a $500 balance actually $800 after it is finally paid off in about seven and a half years!
It has been endorsed by the Consumer Federation of America, the Consumers Union, the National Association of Consumer Advocates and the National Consumer Law Center, among others. But is this enough to get the bill passed?
The bill makes clear the adverse consequences of uninformed choices, such as making only minimum payments and provides opportunities to locate assistance to better manage credit card debt.
The Credit Card Minimum Payment Warning Act will require that monthly statements include:
Sounds like a pretty good plan and common sense dictates that it should and needs to pass right?
Truth be told this bill has been floating around congress since 2005. Why hasn’t it been passed yet?
Could our government be in colussion with our banking system to keep consumers unaware and in debt bondage? Let’s examine what else was being pushed through congress over the last couple of years. The Bankruptcy Reform Act immediately comes to mind, which makes it difficult for consumers to file for bankruptcy Chapter 13 and almost impossible to file Chapter 7.
Hmmm…It’s seems the plot thickens.
I’m not trying to push a conspiracy theory but facts are facts.
Why is it that a person practically needs a law degree to decipher a credit card disclosure statement, where things like universal default, a practice where credit card companies regularly check cardholders credit reports and raise interest rates if the consumer is late on other monthly bills and double-cycle billing that allows card firms to retroactively charge interest rates on purchases even after they are partially paid for.
Most people agree to these terms without even reading or not understanding them.
Credit cards are unsafe, because they are designed to be unsafe. Card issuers make hefty profits from consumers who don't make their payments in full every month, so card issuers are constantly looking for the consumers who stumble, but don't quite collapse into bankruptcy. In 2006, the credit card companies made over 17 BILLION DOLLARS in penalty fee’s alone.
That last sentence needs to be repeated:
In 2006, the credit card companies made over 17 BILLION DOLLARS in penalty fee’s alone.
The penalty fee issue is critical. Most consumers compare credit cards based on advertised interest rates and perks, said Plunkett. Few if any think enough to compare late fees, over-limit fees, and the like when choosing their credit card. In fact, such comparisons may not be possible. The fees are hard to find, and they can change at any time.
There needs to be regulations that protect consumers from deceptive credit card practices like the ones that protect them from driving an unsafe vehicle and other “unsafe” products.
Most recently Sen. Daniel Akaka has again introduced legislation to require credit card companies to plainly tell card holders about the impact of making only the minimum payment. This includes how long it will take to repay your credit card and the extra amount in interest you’ll pay when you make only the minimum payment.
The Credit Card Minimum Payment Warning Act of 2007 requires companies to include the total length of time and the additional fees it will take to pay off the consumer's balance if only the minimum payments are made.
Whether or not the act passes, it is important that consumers be more empowered and know completely what it is they’re getting into by making only minimum monthly payments. By only making the minimum payment a small percentage actually goes toward your balance. The lions share is applied to the interest, making a $500 balance actually $800 after it is finally paid off in about seven and a half years!
It has been endorsed by the Consumer Federation of America, the Consumers Union, the National Association of Consumer Advocates and the National Consumer Law Center, among others. But is this enough to get the bill passed?
The bill makes clear the adverse consequences of uninformed choices, such as making only minimum payments and provides opportunities to locate assistance to better manage credit card debt.
The Credit Card Minimum Payment Warning Act will require that monthly statements include:
A warning that paying the minimum rate will increase the interest owed.
The years and months it will take to pay off at the minimum rate.
The total costs in interest and principal at the minimum rate.
The monthly payment required to pay the balance off in three years.
A toll-free number for credit counseling and debt management assistance.
Sounds like a pretty good plan and common sense dictates that it should and needs to pass right?
Truth be told this bill has been floating around congress since 2005. Why hasn’t it been passed yet?
Could our government be in colussion with our banking system to keep consumers unaware and in debt bondage? Let’s examine what else was being pushed through congress over the last couple of years. The Bankruptcy Reform Act immediately comes to mind, which makes it difficult for consumers to file for bankruptcy Chapter 13 and almost impossible to file Chapter 7.
Hmmm…It’s seems the plot thickens.
I’m not trying to push a conspiracy theory but facts are facts.
Why is it that a person practically needs a law degree to decipher a credit card disclosure statement, where things like universal default, a practice where credit card companies regularly check cardholders credit reports and raise interest rates if the consumer is late on other monthly bills and double-cycle billing that allows card firms to retroactively charge interest rates on purchases even after they are partially paid for.
Most people agree to these terms without even reading or not understanding them.
Credit cards are unsafe, because they are designed to be unsafe. Card issuers make hefty profits from consumers who don't make their payments in full every month, so card issuers are constantly looking for the consumers who stumble, but don't quite collapse into bankruptcy. In 2006, the credit card companies made over 17 BILLION DOLLARS in penalty fee’s alone.
That last sentence needs to be repeated:
In 2006, the credit card companies made over 17 BILLION DOLLARS in penalty fee’s alone.
The penalty fee issue is critical. Most consumers compare credit cards based on advertised interest rates and perks, said Plunkett. Few if any think enough to compare late fees, over-limit fees, and the like when choosing their credit card. In fact, such comparisons may not be possible. The fees are hard to find, and they can change at any time.
There needs to be regulations that protect consumers from deceptive credit card practices like the ones that protect them from driving an unsafe vehicle and other “unsafe” products.
Saturday
Your Credit Report
A credit report is a record of your credit activities. It lists any credit-card accounts or loans you may have, the balances, and how regularly you make your payments. It also shows if any action has been taken against you because of unpaid bills.
A company that gathers and sells credit information is called a consumer reporting agency (CRA). These types of companies collect information about your credit activities, store it in giant databases, and charge a fee for supplying the information. The most common type of CRA is the credit bureau.
There are three major credit bureaus that operate nationwide, plus many smaller companies serving local markets.
Your credit rating is drawn from your credit report, which outlines your borrowing, charging, and repayment activities. A good rating helps you reach financial goals; a poor rating limits your financial opportunities.
Since your credit report influences whether you are able to buy a home and even get a job in some cases, it is extremely important to protect your credit rating by making loan and bill payments on time and by not taking on more debt than you can handle.
Types of information:
Identifying Information:
Your full name, any known aliases, current and previous addresses, social security number, year of birth, current and past employers, and, if applicable, similar information about your spouse.
Credit Information:
The accounts you have with banks, retailers, credit-card issuers, utility companies, and other lenders (accounts are listed by type of loan, such as mortgage, student loan, revolving credit, or installment loan; the date you opened the account; your credit limit or the loan amount; any co-signers of the loan; and your payment pattern over the past two years).
Public Record Information:
State and county court records on bankruptcy, tax liens, or monetary judgments (some consumer reporting agencies list non-monetary judgments as well).
Recent Inquiries: The names of those who have obtained copies of your credit report within the past year (two years for employment purposes).
Credit bureaus collect information from parties that have previously extended credit to you, such as a department store that issued you a credit card or a bank that granted you a personal loan.
The lenders themselves make the decision about whether or not to grant you credit. The credit-reporting companies only supply the information about your credit history.
To avoid any unwelcome surprises, it's important to see a copy of your credit report before you apply for credit such as car loans, mortgages, or credit cards. Errors in credit reports are extremely common. Keep in mind, however, that they are not part of a conspiracy against you. They are simply the result of human error.
Think about how often your mail has a misspelling of your name or a mistake in your street address. Then, imagine the possibility for error in a report that contains much more information about you. Cases of mistaken identity, out-of-date information, and outright errors can easily occur.
Contact the consumer credit reporting agency immediately. The company is then responsible for researching and changing or removing incorrect data. This process may take as long as 45 days. At your request, a corrected report will be sent to those parties that you specify who have received your report within the past six months, or employers who have received it within the last two years.
You have the right to present your side of the story in a brief statement (100 words or less), which the credit bureau must attach to your credit file. Your statement should be used to clarify inaccuracies, not explain reasons for delinquency. Anyone requesting a copy of your credit report would also automatically receive your statement (or a summary of it), unless the credit bureau decides that it is irrelevant or frivolous.
Generally, all your credit history information, good or bad, remains on your report for seven years. If you file for personal bankruptcy, that fact remains on your credit report for 10 years.
A company that gathers and sells credit information is called a consumer reporting agency (CRA). These types of companies collect information about your credit activities, store it in giant databases, and charge a fee for supplying the information. The most common type of CRA is the credit bureau.
There are three major credit bureaus that operate nationwide, plus many smaller companies serving local markets.
Your credit rating is drawn from your credit report, which outlines your borrowing, charging, and repayment activities. A good rating helps you reach financial goals; a poor rating limits your financial opportunities.
Since your credit report influences whether you are able to buy a home and even get a job in some cases, it is extremely important to protect your credit rating by making loan and bill payments on time and by not taking on more debt than you can handle.
Types of information:
Identifying Information:
Your full name, any known aliases, current and previous addresses, social security number, year of birth, current and past employers, and, if applicable, similar information about your spouse.
Credit Information:
The accounts you have with banks, retailers, credit-card issuers, utility companies, and other lenders (accounts are listed by type of loan, such as mortgage, student loan, revolving credit, or installment loan; the date you opened the account; your credit limit or the loan amount; any co-signers of the loan; and your payment pattern over the past two years).
Public Record Information:
State and county court records on bankruptcy, tax liens, or monetary judgments (some consumer reporting agencies list non-monetary judgments as well).
Recent Inquiries: The names of those who have obtained copies of your credit report within the past year (two years for employment purposes).
Credit bureaus collect information from parties that have previously extended credit to you, such as a department store that issued you a credit card or a bank that granted you a personal loan.
The lenders themselves make the decision about whether or not to grant you credit. The credit-reporting companies only supply the information about your credit history.
To avoid any unwelcome surprises, it's important to see a copy of your credit report before you apply for credit such as car loans, mortgages, or credit cards. Errors in credit reports are extremely common. Keep in mind, however, that they are not part of a conspiracy against you. They are simply the result of human error.
Think about how often your mail has a misspelling of your name or a mistake in your street address. Then, imagine the possibility for error in a report that contains much more information about you. Cases of mistaken identity, out-of-date information, and outright errors can easily occur.
Contact the consumer credit reporting agency immediately. The company is then responsible for researching and changing or removing incorrect data. This process may take as long as 45 days. At your request, a corrected report will be sent to those parties that you specify who have received your report within the past six months, or employers who have received it within the last two years.
You have the right to present your side of the story in a brief statement (100 words or less), which the credit bureau must attach to your credit file. Your statement should be used to clarify inaccuracies, not explain reasons for delinquency. Anyone requesting a copy of your credit report would also automatically receive your statement (or a summary of it), unless the credit bureau decides that it is irrelevant or frivolous.
Generally, all your credit history information, good or bad, remains on your report for seven years. If you file for personal bankruptcy, that fact remains on your credit report for 10 years.
Friday
Time To Rebuild
Managing money smarter can put you on track to a rich life.
Here's how to reach your long-term financial goals.
Bring order to financial clutter
Time it takes: 35 days
Week 1: Get Psyched - When you organize your financial paperwork, you're less likely to miss a bill payment and more likely to know exactly where your money is going, which could help you save.
Week 2: Pay Attention - Jot down in a notebook what you spend for a month. As Bob Goldman, a financial planner in Sausalito, Calif., puts it, the idea is to cut through the "grand amnesia of what happens to your money" after your paycheck lands in your bank account. Can't bear to record every latte and magazine for four weeks? Do it for one week and multiply each category by four; add in your monthly bills. Then take stock to see where you can cut back.
Week 3: Shred - You don't need most of the financial paperwork that's cluttering your life. You can throw out utility bills and credit-card statements within a few months. Hold on to pay stubs only until your W-2 arrives, monthly financial statements until you have year-end ones.
Prevent new clutter from forming by opting for online statements from banks or brokerage firms.
Week 4: File - Create a tidy home for the stuff you need to keep: tax returns (and backup documents for at least six years), insurance policies, deeds, annual brokerage, 401(k) and fund statements and receipts for major purchases. Develop a filing system - a simple alphabetical one or groupings like auto and home.
Week 5: Automate - Move your bill paying online. Even better: Set up automatic payments for regular bills that are due every month or quarter, like your mortgage, cable and insurance.
Find a better job
Time it takes: 35 weeks
Revitalize your network - If you're smart, you've stayed in touch with folks who can help you now. Better yet if you've been helpful to them. When you get together, don't ask about jobs. "People feel used," says Pam Lassiter, author of The New Job Security. Instead, exchange ideas about the industry. Your goal is to get them thinking of you.
Get to know you again - You need an honest overview of your skills, values and what makes you happy. Well-meaning friends may not be objective sounding boards. For that, hire a career counselor. Expect to spend at least $150 for every hour-long session, with a minimum of six meetings.
Look for trends - To see what talents are in demand, scan the help-wanted ads on sites like ExecuNet.com (minimum cost: $39 for 30 days) or Monster.com (free). Package yourself accordingly. Work up different versions of your résumé to highlight certain skills.
Develop a pitch about yourself - At an interview you need to be able to say succinctly why a company should invest in you. "The closer you can come to putting a dollar amount on what you've done, the better," says Lassiter.
Clean up damaged credit
Time it takes: 35 months
Learn your reputation - Order a free credit report and buy your credit score to learn how bad the damage is. With your credit score you'll find out the key reasons your score is not higher. If you find errors, correct them immediately.
Be patient - You typically need two to three years to fully repair terrible credit, says John Ventura, author of "The Credit Repair Handbook". But take heart: Every act of good bill-paying and credit behavior on your report pushes your old rep further into the past and lifts your score.
Have a payoff plan - Track your spending for a month to see how much you can devote to retiring your credit card balances. Attack the highest-rate debt first. The typical household, with $7,300 in credit-card debt at an average rate of 13.9%, could be in the black after 35 monthly checks for $254.89. 4 Save too Build a cash cushion for emergencies so that you don't have to run up high credit-card balances again.
Rewrite history - You can add positive information to your credit report by paying bills on time and retiring your balances. Also, avoid applying for new credit that you don't need. Keep your oldest accounts open and active (use them at least every six months). Loyalty and unused borrowing capacity look good to a credit scoring computer.
Build lifetime wealth
Time it takes: 35 years
Own stocks - You can't beat the long term returns: The S&P 500 has gained 10.2% a year since 1925, a record that no other asset class can match. Stocks may be riskier than bonds and cash in the short run, but you've got 35 years. This is where most of your money should be.
Pay less - That 1.5% annual fee your mutual fund charges looks piddling, but it takes a year PLAN big bite over 35 years. The difference between investing $10,000 in that fund and the same amount in one that charges 0.2% is $50,700 after 3½ decades (if both earn 8% annualized returns).
Start young - Putting money aside early is a surer bet than counting on high returns.
Diversify - Owning a mix of stocks, bonds and other assets paves the way for smooth returns. As you get older, add more bonds to ensure that short term swings in stock prices don't jeopardize your retirement.
Buy a house - Mortgages are getting a bad name right now, so it's worth remembering their virtues: You can deduct the interest you pay; writing a check to a lender rather than a landlord is forced savings; and if you lock in a rate for the next 30 years, your payment will feel smaller and smaller as time marches on and inflation ramps up.
Get and stay married - Researchers at Ohio State University found that divorce reduces a person's wealth by more than half, proving that when it comes to money, you're better off staying on a team.
Here's how to reach your long-term financial goals.
Bring order to financial clutter
Time it takes: 35 days
Week 1: Get Psyched - When you organize your financial paperwork, you're less likely to miss a bill payment and more likely to know exactly where your money is going, which could help you save.
Week 2: Pay Attention - Jot down in a notebook what you spend for a month. As Bob Goldman, a financial planner in Sausalito, Calif., puts it, the idea is to cut through the "grand amnesia of what happens to your money" after your paycheck lands in your bank account. Can't bear to record every latte and magazine for four weeks? Do it for one week and multiply each category by four; add in your monthly bills. Then take stock to see where you can cut back.
Week 3: Shred - You don't need most of the financial paperwork that's cluttering your life. You can throw out utility bills and credit-card statements within a few months. Hold on to pay stubs only until your W-2 arrives, monthly financial statements until you have year-end ones.
Prevent new clutter from forming by opting for online statements from banks or brokerage firms.
Week 4: File - Create a tidy home for the stuff you need to keep: tax returns (and backup documents for at least six years), insurance policies, deeds, annual brokerage, 401(k) and fund statements and receipts for major purchases. Develop a filing system - a simple alphabetical one or groupings like auto and home.
Week 5: Automate - Move your bill paying online. Even better: Set up automatic payments for regular bills that are due every month or quarter, like your mortgage, cable and insurance.
Find a better job
Time it takes: 35 weeks
Revitalize your network - If you're smart, you've stayed in touch with folks who can help you now. Better yet if you've been helpful to them. When you get together, don't ask about jobs. "People feel used," says Pam Lassiter, author of The New Job Security. Instead, exchange ideas about the industry. Your goal is to get them thinking of you.
Get to know you again - You need an honest overview of your skills, values and what makes you happy. Well-meaning friends may not be objective sounding boards. For that, hire a career counselor. Expect to spend at least $150 for every hour-long session, with a minimum of six meetings.
Look for trends - To see what talents are in demand, scan the help-wanted ads on sites like ExecuNet.com (minimum cost: $39 for 30 days) or Monster.com (free). Package yourself accordingly. Work up different versions of your résumé to highlight certain skills.
Develop a pitch about yourself - At an interview you need to be able to say succinctly why a company should invest in you. "The closer you can come to putting a dollar amount on what you've done, the better," says Lassiter.
Clean up damaged credit
Time it takes: 35 months
Learn your reputation - Order a free credit report and buy your credit score to learn how bad the damage is. With your credit score you'll find out the key reasons your score is not higher. If you find errors, correct them immediately.
Be patient - You typically need two to three years to fully repair terrible credit, says John Ventura, author of "The Credit Repair Handbook". But take heart: Every act of good bill-paying and credit behavior on your report pushes your old rep further into the past and lifts your score.
Have a payoff plan - Track your spending for a month to see how much you can devote to retiring your credit card balances. Attack the highest-rate debt first. The typical household, with $7,300 in credit-card debt at an average rate of 13.9%, could be in the black after 35 monthly checks for $254.89. 4 Save too Build a cash cushion for emergencies so that you don't have to run up high credit-card balances again.
Rewrite history - You can add positive information to your credit report by paying bills on time and retiring your balances. Also, avoid applying for new credit that you don't need. Keep your oldest accounts open and active (use them at least every six months). Loyalty and unused borrowing capacity look good to a credit scoring computer.
Build lifetime wealth
Time it takes: 35 years
Own stocks - You can't beat the long term returns: The S&P 500 has gained 10.2% a year since 1925, a record that no other asset class can match. Stocks may be riskier than bonds and cash in the short run, but you've got 35 years. This is where most of your money should be.
Pay less - That 1.5% annual fee your mutual fund charges looks piddling, but it takes a year PLAN big bite over 35 years. The difference between investing $10,000 in that fund and the same amount in one that charges 0.2% is $50,700 after 3½ decades (if both earn 8% annualized returns).
Start young - Putting money aside early is a surer bet than counting on high returns.
Diversify - Owning a mix of stocks, bonds and other assets paves the way for smooth returns. As you get older, add more bonds to ensure that short term swings in stock prices don't jeopardize your retirement.
Buy a house - Mortgages are getting a bad name right now, so it's worth remembering their virtues: You can deduct the interest you pay; writing a check to a lender rather than a landlord is forced savings; and if you lock in a rate for the next 30 years, your payment will feel smaller and smaller as time marches on and inflation ramps up.
Get and stay married - Researchers at Ohio State University found that divorce reduces a person's wealth by more than half, proving that when it comes to money, you're better off staying on a team.
Wednesday
Your Credit Score
What is a credit score?
A credit score is a number that lenders use to estimate risk. Experience has shown them that borrowers with higher credit scores are less likely to default on a loan.
How are credit scores calculated?
Credit scores are generated by plugging the data from your credit report into software that analyzes it and cranks out a number. The three major credit reporting agencies don't necessarily use the same scoring software, so don't be surprised if you discover that the credit scores they generate for you are different.
Why are credit scores sometimes called FICO scores?
The software used to calculate a great number of credit scores was created by Fair Isaac Corporation--FICO.
Which parts of a credit history are most important?
The figures below show a breakdown of the approximate value that each aspect of your credit report adds to a credit score calculation.
Length of Credit History:
Types of Credit:
Your New Credit:
In general, checking to make sure you aren't attempting to open numerous new accounts
Credit scoring software only considers items on your credit report. Lenders typically look at other factors that aren't included in the report, such as income, employment history and the type of credit you are seeking.
What's a Good Credit Score?
Credit scores (usually) range from 340 to 850. The higher your score, the less risk a lender believes you will be. As your score climbs, the interest rate you are offered will probably decline.
Borrowers with a credit score over 700 are typically offered more financing options and better interest rates, but don't be discouraged if your scores are lower, because there's a mortgage product for nearly everyone.
A credit score is a number that lenders use to estimate risk. Experience has shown them that borrowers with higher credit scores are less likely to default on a loan.
How are credit scores calculated?
Credit scores are generated by plugging the data from your credit report into software that analyzes it and cranks out a number. The three major credit reporting agencies don't necessarily use the same scoring software, so don't be surprised if you discover that the credit scores they generate for you are different.
Why are credit scores sometimes called FICO scores?
The software used to calculate a great number of credit scores was created by Fair Isaac Corporation--FICO.
Which parts of a credit history are most important?
The figures below show a breakdown of the approximate value that each aspect of your credit report adds to a credit score calculation.
Use these percentages as a guide:
35% - Your Payment History- 30% - Amounts You Owe
- 15% - Length of Your Credit History
- 10% - Types of Credit Used
- 10% - New Credit
Number of accounts paid as agreed
Negative public records or collections
total number of past due items
how long you've been past due
how long it's been since you had a past due payment
What You Owe:
How much you owe on accounts and the types of accounts with balances
How much of your revolving credit lines you've used--looking for indications you are over-extended
Amounts you owe on installment loan accounts vs. their original balances--to make sure you are you paying them down consistently
Number of zero balance accounts
Length of Credit History:
Total length of time tracked by your credit report
Length of time since accounts were opened
Time that's passed since the last activity
The longer your (good) history, the better your scores
Types of Credit:
Total number of accounts and types of accounts (installment, revolving, mortgage, etc.)
A mixture of account types usually generates better scores than reports with only numerous revolving accounts (credit cards)
Your New Credit:
- Number of accounts you've recently opened and the proportion of new accounts to total accounts
- Number of recent credit inquiries
- The time that's passed since recent inquiries or newly-opened accounts
- If you've re-established a positive credit history after encountering payment problems
In general, checking to make sure you aren't attempting to open numerous new accounts
Credit scoring software only considers items on your credit report. Lenders typically look at other factors that aren't included in the report, such as income, employment history and the type of credit you are seeking.
What's a Good Credit Score?
Credit scores (usually) range from 340 to 850. The higher your score, the less risk a lender believes you will be. As your score climbs, the interest rate you are offered will probably decline.
Borrowers with a credit score over 700 are typically offered more financing options and better interest rates, but don't be discouraged if your scores are lower, because there's a mortgage product for nearly everyone.
Tuesday
Student Beware
It’s that time again when college campuses are abuzz with excitement. For many of these students, it can be the start of their life in the adult world. It does not always turn out to be a positive thing though because the college student is barraged with, among other things, credit card offers.
A recent study conducted by the Attorney General’s office suggests that credit card usage among students can cause graduates to carry the burden of credit card debt along with their student loan debt. The average college student graduates with $18,000 in credit card debt, some charges being for tuition and school related expenses, most being for party essentials.
This accounts for over $500 in monthly credit card debt, paying minimums for around 18 years. Not to mention repayment of student loans and living expenses such as housing, automobile and insurance. You could easily be looking at a $2,000 immediate monthly expense. If it becomes a problem, never fret, you can always get another credit card and put yourself deeper in financial slavery to the credit card companies.
Student credit cards can spell early financial disaster for some students succumbing to temptation and taking advantage of those readily available lines of credit conveniently offered from Visa and MasterCard. The amounts can accumulate quickly. Growing up comes with the added responsibility of paying interest, late fees and penalties.
If you need to carry a credit card, develop the discipline of paying off your card balance every month. It is swiftly becoming a major concern as more students are carrying and using charge cards while seeking higher education, yet a small percentage contemplate the power that these little plastic card hold.
Just a short time ago, the major debt that a student would anticipate was student loans. Now the average student will triple the amount of credit cards they carry from freshman to senior year and graduate with an average $8,000 additional credit card debt.
The credit card companies paint themselves a cheery picture, portraying themselves as responsible lenders, yet on the Visa website you can read:
“It's not uncommon for people to have difficulty handling credit, especially when they are just starting out... keep in mind that a bad credit rating can have serious negative consequences down the road."
Despite the fact that the credit card companies aggressive targeting of vulnerable by contracting slick marketing companies.
I realize that a credit card is necessary to help pay some expenses that the student will ultimately face but these should not include parties or spring break vacations. A debit card connected to a savings account may be a good alternative to help with expenses. The students parents could agree to help with this.
The emphasis is normally placed on schools to prepare students for life in the real world but I have yet to see schools offer any type of real education about credit, credit cards, debt and debt management. But they are not fully to blame. Some responsibility rest squarely on the shoulders of the parents. Finances should be stressed starting at an early age. Parents need to talk with their children about these important financial issues and maybe even learn together because they might not have received the necessary education either.
I believe that schools should have classes in finances starting in kindergarten, stressing the importance of savings and making financial education courses required classes prior to graduation.
If this was the case, do you think that unsecured consumer debt would be as rampant as it is today?
A recent study conducted by the Attorney General’s office suggests that credit card usage among students can cause graduates to carry the burden of credit card debt along with their student loan debt. The average college student graduates with $18,000 in credit card debt, some charges being for tuition and school related expenses, most being for party essentials.
This accounts for over $500 in monthly credit card debt, paying minimums for around 18 years. Not to mention repayment of student loans and living expenses such as housing, automobile and insurance. You could easily be looking at a $2,000 immediate monthly expense. If it becomes a problem, never fret, you can always get another credit card and put yourself deeper in financial slavery to the credit card companies.
Student credit cards can spell early financial disaster for some students succumbing to temptation and taking advantage of those readily available lines of credit conveniently offered from Visa and MasterCard. The amounts can accumulate quickly. Growing up comes with the added responsibility of paying interest, late fees and penalties.
If you need to carry a credit card, develop the discipline of paying off your card balance every month. It is swiftly becoming a major concern as more students are carrying and using charge cards while seeking higher education, yet a small percentage contemplate the power that these little plastic card hold.
Just a short time ago, the major debt that a student would anticipate was student loans. Now the average student will triple the amount of credit cards they carry from freshman to senior year and graduate with an average $8,000 additional credit card debt.
The credit card companies paint themselves a cheery picture, portraying themselves as responsible lenders, yet on the Visa website you can read:
“It's not uncommon for people to have difficulty handling credit, especially when they are just starting out... keep in mind that a bad credit rating can have serious negative consequences down the road."
Despite the fact that the credit card companies aggressive targeting of vulnerable by contracting slick marketing companies.
I realize that a credit card is necessary to help pay some expenses that the student will ultimately face but these should not include parties or spring break vacations. A debit card connected to a savings account may be a good alternative to help with expenses. The students parents could agree to help with this.
The emphasis is normally placed on schools to prepare students for life in the real world but I have yet to see schools offer any type of real education about credit, credit cards, debt and debt management. But they are not fully to blame. Some responsibility rest squarely on the shoulders of the parents. Finances should be stressed starting at an early age. Parents need to talk with their children about these important financial issues and maybe even learn together because they might not have received the necessary education either.
I believe that schools should have classes in finances starting in kindergarten, stressing the importance of savings and making financial education courses required classes prior to graduation.
If this was the case, do you think that unsecured consumer debt would be as rampant as it is today?
Friday
Credit Cards and Living Expenses
“Difficulty is the excuse history never accepts.”
- Edward R. Murrow
The use of credit cards has become a problem of epidemic proportions in the United States. With rising costs of living and flat incomes, families are using credit cards to help pay their living expenses. The average American is living beyond their means due to increased of their credit cards.
This is a sign that the American family is desperately struggling to stay afloat in an increasingly unstable economy. The average household has experienced slow growing incomes that do not keep pace with the rising cost of housing, health care and other basic expenses.
Since the early 1980’s there has been an explosive rise in consumer debt and according to the Center for Responsible Living, credit card debt has tripled since 1989, with Americans owing more than $800 billion in credit card debt alone. There has been over $350 billion in home equity loans to home owners between 2001 and 2003 and personal bankruptcies have gone from 616,000 in 1989 to over 2.5 million in 2005 before revisions to the bankruptcy laws made it almost impossible for a consumer to file chapter 7 bankruptcy.
A survey of low to middle income families reveals that families are going into credit card debt due to drops in income and unexpected expenses. Seven out of ten households reported that they have been using their credit cards to pay for car repairs, basic living expenses, medical expenses, house repairs and paying down other credit cards.
One out of three of the households surveyed indicate that they regularly use their credit cards to pay basic living expenses such as rent, mortgage payments, groceries, utilities and insurance because they did not have sufficient funds in their checking or savings account.
You can see how this is a dangerous practice and can result in what is equivalent to financial suicide. The reasons range from loss of job, prolonged unemployment and unexpected health care costs. It is a sad fact that the average American family is one or two paychecks away from the poor house. In one of the richest countries in the world, this is highly unacceptable.
Another dangerous practice that homeowners are using is taking the equity out of their homes to pay off their credit card debt. While there are tax advantages and the mortgage and banking industry promote consolidation loans, it is not wise to remove the security of your home to pay an unsecured debt like a credit card. You are jeopardizing the single most valuable asset that you possess.
While in theory, the use of home equity to pay off higher interest credit cards provides a short term solution but does not address the long term economic reality that families face. A non-secured debt burden does not warrant risking your home. There are more serious consequences in missing a mortgage payment than missing a credit card payment.
The harsh reality for a family is that wage increases have averaged only 5 percent while fixed costs like housing, child care, health insurance, groceries and taxes has climbed from 53 percent to 75 percent.
Over the course of the last thirty years, American’s savings rate has declined to the point of non-existance. Individuals have put themselves in the position that they must use their credit cards in situations where traditionally funds set aside for “rainy days” would have been used. Savings normally serve two important functions: they help with temporary income loss and unexpected expenses and it help families plan for the future.
With the current trend in family financial practices, what will America’s future hold?
- Edward R. Murrow
The use of credit cards has become a problem of epidemic proportions in the United States. With rising costs of living and flat incomes, families are using credit cards to help pay their living expenses. The average American is living beyond their means due to increased of their credit cards.
This is a sign that the American family is desperately struggling to stay afloat in an increasingly unstable economy. The average household has experienced slow growing incomes that do not keep pace with the rising cost of housing, health care and other basic expenses.
Since the early 1980’s there has been an explosive rise in consumer debt and according to the Center for Responsible Living, credit card debt has tripled since 1989, with Americans owing more than $800 billion in credit card debt alone. There has been over $350 billion in home equity loans to home owners between 2001 and 2003 and personal bankruptcies have gone from 616,000 in 1989 to over 2.5 million in 2005 before revisions to the bankruptcy laws made it almost impossible for a consumer to file chapter 7 bankruptcy.
A survey of low to middle income families reveals that families are going into credit card debt due to drops in income and unexpected expenses. Seven out of ten households reported that they have been using their credit cards to pay for car repairs, basic living expenses, medical expenses, house repairs and paying down other credit cards.
One out of three of the households surveyed indicate that they regularly use their credit cards to pay basic living expenses such as rent, mortgage payments, groceries, utilities and insurance because they did not have sufficient funds in their checking or savings account.
You can see how this is a dangerous practice and can result in what is equivalent to financial suicide. The reasons range from loss of job, prolonged unemployment and unexpected health care costs. It is a sad fact that the average American family is one or two paychecks away from the poor house. In one of the richest countries in the world, this is highly unacceptable.
Another dangerous practice that homeowners are using is taking the equity out of their homes to pay off their credit card debt. While there are tax advantages and the mortgage and banking industry promote consolidation loans, it is not wise to remove the security of your home to pay an unsecured debt like a credit card. You are jeopardizing the single most valuable asset that you possess.
While in theory, the use of home equity to pay off higher interest credit cards provides a short term solution but does not address the long term economic reality that families face. A non-secured debt burden does not warrant risking your home. There are more serious consequences in missing a mortgage payment than missing a credit card payment.
The harsh reality for a family is that wage increases have averaged only 5 percent while fixed costs like housing, child care, health insurance, groceries and taxes has climbed from 53 percent to 75 percent.
Over the course of the last thirty years, American’s savings rate has declined to the point of non-existance. Individuals have put themselves in the position that they must use their credit cards in situations where traditionally funds set aside for “rainy days” would have been used. Savings normally serve two important functions: they help with temporary income loss and unexpected expenses and it help families plan for the future.
With the current trend in family financial practices, what will America’s future hold?
Thursday
Rebuild Your Credit
When you first receive your Trans Union and Equifax credit reports, you will be totally lost.
The information is coded in a way that is not immediately readable by the average consumer.
Each credit report should arrive with a key that interprets the codes and indicators on the credit report. Sit down with the credit report and the key and study it until you understand what each number and code means.
Gather a yellow and orange highlighter pen. Whenever you identify a negative listing, mark the listing in yellow on your scratch copy of the credit report.
Very often, it is difficult to tell if an item on the credit report is negative or positive. The following table will help you identify every negative listing on your credit reports.
Negative Credit Indicators
If the listing contains one or more of these indicators, then the listing is negative. If the listing contains none of these indicators, then the listing is positive.
Experian Credit Report
Any item marked with an asterisk any inquiry
Trans Union Credit Report
Any item rated higher than I1, M1, or R1
.
Any item listed as repossession, foreclosure, profit and loss charge off, write off,
paid profit and loss write-off, paid charge off, settled, settled for less than full balance, or included in bankruptcy
Any collection amount, whether paid or not.
Any court account, including a lien, judgment, bankruptcy chapters 11, 7, or 13, divorce, satisfied lien, or satisfied judgment.
Any item showing one or more thirty, sixty, or ninety day late payments in the column to the far right.
Any inquiry.
Equifax Credit Report
Any item rated higher than I1, M1, or R1 (such as R2 or I9).
Any item proceeded by a ">>>>" icon.
Any item listed as repossession, foreclosure, profit and loss write-off charge-off, paid profit and loss write-off, paid charge off, settled, settled for less than full balance, or included in bankruptcy.
Any collection amount, whether paid or not.
Any court account, including a lien, judgment, bankruptcy chapters 11, 7, or 13, divorce, satisfied lien, or satisfied judgment.
Any item showing one or more thirty, sixty, or ninety day late payments in the column to the far right.
Any inquiry.
Those I2 and R9 codes - what do they mean?
R- Revolving (usually a credit card)I - installment (like home or auto loan)
R1 or I1 = pays as agreed never late R2 or I2 = 30 days late R3 or I3 = 60 days late R4 or I4 = 90 days late R5 or I5 = 120 days late R7 or I7 = making regular payments under wage earner plan R8 or I8 = repossession R9 or I9 = charge off
Correcting Errors Under the FCRA, both the consumer reporting company and the information provider (that is, the person, company, or organization that provides information about you to a consumer reporting company) are responsible for correcting inaccurate or incomplete information in your report. To take advantage of all your rights under this law, contact the consumer reporting company and the information provider.
Step OneTell the consumer reporting company, in writing, what information you think is inaccurate. Include copies (NOT originals) of documents that support your position. In addition to providing your complete name and address, your letter should clearly identify each item in your report you dispute, state the facts and explain why you dispute the information, and request that it be removed or corrected. You may want to enclose a copy of your report with the items in question circled. Send your letter by certified mail, “return receipt requested,” so you can document what the consumer reporting company received. Keep copies of your dispute letter and enclosures.
Consumer reporting companies must investigate the items in question—usually within 30 days—unless they consider your dispute frivolous. They also must forward all the relevant data you provide about the inaccuracy to the organization that provided the information. After the information provider receives notice of a dispute from the consumer reporting company, it must investigate, review the relevant information, and report the results back to the consumer reporting company. If the information provider finds the disputed information is inaccurate, it must notify all three nationwide consumer reporting companies so they can correct the information in your file.
When the investigation is complete, the consumer reporting company must give you the results in writing and a free copy of your report if the dispute results in a change. This free report does not count as your annual free report. If an item is changed or deleted, the consumer reporting company cannot put the disputed information back in your file unless the information provider verifies that it is accurate and complete. The consumer reporting company also must send you written notice that includes the name, address, and phone number of the information provider.
If you ask, the consumer reporting company must send notices of any corrections to anyone who received your report in the past six months. You can have a corrected copy of your report sent to anyone who received a copy during the past two years for employment purposes.
If an investigation doesn’t resolve your dispute with the consumer reporting company, you can ask that a statement of the dispute be included in your file and in future reports. You also can ask the consumer reporting company to provide your statement to anyone who received a copy of your report in the recent past. You can expect to pay a fee for this service.
Step TwoTell the creditor or other information provider, in writing, that you dispute an item. Be sure to include copies (NOT originals) of documents that support your position. Many providers specify an address for disputes. If the provider reports the item to a consumer reporting company, it must include a notice of your dispute. And if you are correct—that is, if the information is found to be inaccurate—the information provider may not report it again.
Adding Accounts to Your File Your credit file may not reflect all your credit accounts. Although most national department store and all-purpose bank credit card accounts will be included in your file, not all creditors supply information to consumer reporting companies: some travel, entertainment, gasoline card companies, local retailers, and credit unions are among the creditors that don’t.
If you’ve been told that you were denied credit because of an “insufficient credit file” or “no credit file” and you have accounts with creditors that don’t appear in your credit file, ask the consumer reporting companies to add this information to future reports. Although they are not required to do so, many consumer reporting companies will add verifiable accounts for a fee. However, understand that if these creditors do not report to the consumer reporting company on a regular basis, the added items will not be updated in your file.
When negative information in your report is accurate, only the passage of time can assure its removal. A consumer reporting company can report most accurate negative information for seven years and bankruptcy information for 10 years. Information about an unpaid judgment against you can be reported for seven years or until the statute of limitations runs out, whichever is longer.
There is no time limit on reporting: information about criminal convictions; information reported in response to your application for a job that pays more than $75,000 a year; and information reported because you’ve applied for more than $150,000 worth of credit or life insurance. There is a standard method for calculating the seven-year reporting period. Generally, the period runs from the date that the event took place.
The information is coded in a way that is not immediately readable by the average consumer.
Each credit report should arrive with a key that interprets the codes and indicators on the credit report. Sit down with the credit report and the key and study it until you understand what each number and code means.
Gather a yellow and orange highlighter pen. Whenever you identify a negative listing, mark the listing in yellow on your scratch copy of the credit report.
Very often, it is difficult to tell if an item on the credit report is negative or positive. The following table will help you identify every negative listing on your credit reports.
Negative Credit Indicators
If the listing contains one or more of these indicators, then the listing is negative. If the listing contains none of these indicators, then the listing is positive.
Experian Credit Report
Any item marked with an asterisk any inquiry
Trans Union Credit Report
Any item rated higher than I1, M1, or R1
.
Any item listed as repossession, foreclosure, profit and loss charge off, write off,
paid profit and loss write-off, paid charge off, settled, settled for less than full balance, or included in bankruptcy
Any collection amount, whether paid or not.
Any court account, including a lien, judgment, bankruptcy chapters 11, 7, or 13, divorce, satisfied lien, or satisfied judgment.
Any item showing one or more thirty, sixty, or ninety day late payments in the column to the far right.
Any inquiry.
Equifax Credit Report
Any item rated higher than I1, M1, or R1 (such as R2 or I9).
Any item proceeded by a ">>>>" icon.
Any item listed as repossession, foreclosure, profit and loss write-off charge-off, paid profit and loss write-off, paid charge off, settled, settled for less than full balance, or included in bankruptcy.
Any collection amount, whether paid or not.
Any court account, including a lien, judgment, bankruptcy chapters 11, 7, or 13, divorce, satisfied lien, or satisfied judgment.
Any item showing one or more thirty, sixty, or ninety day late payments in the column to the far right.
Any inquiry.
Those I2 and R9 codes - what do they mean?
R- Revolving (usually a credit card)I - installment (like home or auto loan)
R1 or I1 = pays as agreed never late R2 or I2 = 30 days late R3 or I3 = 60 days late R4 or I4 = 90 days late R5 or I5 = 120 days late R7 or I7 = making regular payments under wage earner plan R8 or I8 = repossession R9 or I9 = charge off
Correcting Errors Under the FCRA, both the consumer reporting company and the information provider (that is, the person, company, or organization that provides information about you to a consumer reporting company) are responsible for correcting inaccurate or incomplete information in your report. To take advantage of all your rights under this law, contact the consumer reporting company and the information provider.
Step OneTell the consumer reporting company, in writing, what information you think is inaccurate. Include copies (NOT originals) of documents that support your position. In addition to providing your complete name and address, your letter should clearly identify each item in your report you dispute, state the facts and explain why you dispute the information, and request that it be removed or corrected. You may want to enclose a copy of your report with the items in question circled. Send your letter by certified mail, “return receipt requested,” so you can document what the consumer reporting company received. Keep copies of your dispute letter and enclosures.
Consumer reporting companies must investigate the items in question—usually within 30 days—unless they consider your dispute frivolous. They also must forward all the relevant data you provide about the inaccuracy to the organization that provided the information. After the information provider receives notice of a dispute from the consumer reporting company, it must investigate, review the relevant information, and report the results back to the consumer reporting company. If the information provider finds the disputed information is inaccurate, it must notify all three nationwide consumer reporting companies so they can correct the information in your file.
When the investigation is complete, the consumer reporting company must give you the results in writing and a free copy of your report if the dispute results in a change. This free report does not count as your annual free report. If an item is changed or deleted, the consumer reporting company cannot put the disputed information back in your file unless the information provider verifies that it is accurate and complete. The consumer reporting company also must send you written notice that includes the name, address, and phone number of the information provider.
If you ask, the consumer reporting company must send notices of any corrections to anyone who received your report in the past six months. You can have a corrected copy of your report sent to anyone who received a copy during the past two years for employment purposes.
If an investigation doesn’t resolve your dispute with the consumer reporting company, you can ask that a statement of the dispute be included in your file and in future reports. You also can ask the consumer reporting company to provide your statement to anyone who received a copy of your report in the recent past. You can expect to pay a fee for this service.
Step TwoTell the creditor or other information provider, in writing, that you dispute an item. Be sure to include copies (NOT originals) of documents that support your position. Many providers specify an address for disputes. If the provider reports the item to a consumer reporting company, it must include a notice of your dispute. And if you are correct—that is, if the information is found to be inaccurate—the information provider may not report it again.
Adding Accounts to Your File Your credit file may not reflect all your credit accounts. Although most national department store and all-purpose bank credit card accounts will be included in your file, not all creditors supply information to consumer reporting companies: some travel, entertainment, gasoline card companies, local retailers, and credit unions are among the creditors that don’t.
If you’ve been told that you were denied credit because of an “insufficient credit file” or “no credit file” and you have accounts with creditors that don’t appear in your credit file, ask the consumer reporting companies to add this information to future reports. Although they are not required to do so, many consumer reporting companies will add verifiable accounts for a fee. However, understand that if these creditors do not report to the consumer reporting company on a regular basis, the added items will not be updated in your file.
When negative information in your report is accurate, only the passage of time can assure its removal. A consumer reporting company can report most accurate negative information for seven years and bankruptcy information for 10 years. Information about an unpaid judgment against you can be reported for seven years or until the statute of limitations runs out, whichever is longer.
There is no time limit on reporting: information about criminal convictions; information reported in response to your application for a job that pays more than $75,000 a year; and information reported because you’ve applied for more than $150,000 worth of credit or life insurance. There is a standard method for calculating the seven-year reporting period. Generally, the period runs from the date that the event took place.
Tuesday
Cardholder Beware
With this increased choice in credit cards comes increased consumer responsibility. In many cases, there's no law stopping an issuer from charging you a super-high interest rate or an interest rate higher than you deserve.
The only person who can insure that you get a good card rate is you. The best advice is to build a strong payment history and keep your credit as clean as possible.
"The main thing is to keep your nose extremely clean no matter what," says Linda Sherry, editorial director at Consumer Action, a consumer advocacy organization based in San Francisco, Calif. "Avoid late payments."
You can bet a credit card issuer will up your interest rate if they see something on your credit report they don't like. Don't give them a reason. Pay your credit and other bills on time, every month. Here are some tips on avoiding credit card late fees:
Follow payment guidelines as outlined by the issuer on the back of each credit card bill.
Use the preprinted envelope provided by the credit card company.
Include the billing coupon, and be sure to write the amount being paid in the box provided.
Make sure checks are legible and the payment amount is correct.
Sign the check. Write the credit card account number on the check.
Send payment with proper postage at least one week in advance of the due date to the payment address requested by the issuer.
Consider online bill paying. Issuers, including Discover, American Express and First USA, accept online payments.
If the due date is looming, consider sending the payment by express mail or wiring the payment with Western Union. These express services may prove cheaper than paying a late fee.
Let's say your credit record has improved since you applied for your card. There's a good chance you qualify for a lower rate. But no card issuer in the world is going to knock down your rate unless you ask. So call and ask. Have other lower rate credit card offers in hand when you call.
If your issuer won't lower your rate, transfer your balance to a lower rate card.
As an informed and intelligent consumer, you must read the terms and condition of the credit card offer and read the disclosure in its entirety. These are the rules set forth from the issuing bank that you will be playing by so you do need to know what your new credit card is all about. Beware of terms like “universal default” which will allow this credit card to increase their interest rate if you go past due on any other account that you hold. There are many traps that are within the realm of the disclosure that an unsuspecting consumer should be aware of. Read it word for word and do not agree to the terms unless you are one hundred percent sure that you know what the full deal really is.
There are literally thousands of credit card offers available to consumers with interest rates ranging from the 0% A.P.R. (annual percentage rate) which is normally an introductory rate, and as high as 18 to 23 percent for high risk consumers. It is up to the consumer to educate themselves as to how the card works and what fees are involved. Ignorance is not an excuse for not knowing about the terms.
It is all spelled out for you in the disclosure, which no one really reads, and that’s how people get into trouble with their credit cards.
The only person who can insure that you get a good card rate is you. The best advice is to build a strong payment history and keep your credit as clean as possible.
"The main thing is to keep your nose extremely clean no matter what," says Linda Sherry, editorial director at Consumer Action, a consumer advocacy organization based in San Francisco, Calif. "Avoid late payments."
You can bet a credit card issuer will up your interest rate if they see something on your credit report they don't like. Don't give them a reason. Pay your credit and other bills on time, every month. Here are some tips on avoiding credit card late fees:
Follow payment guidelines as outlined by the issuer on the back of each credit card bill.
Use the preprinted envelope provided by the credit card company.
Include the billing coupon, and be sure to write the amount being paid in the box provided.
Make sure checks are legible and the payment amount is correct.
Sign the check. Write the credit card account number on the check.
Send payment with proper postage at least one week in advance of the due date to the payment address requested by the issuer.
Consider online bill paying. Issuers, including Discover, American Express and First USA, accept online payments.
If the due date is looming, consider sending the payment by express mail or wiring the payment with Western Union. These express services may prove cheaper than paying a late fee.
Let's say your credit record has improved since you applied for your card. There's a good chance you qualify for a lower rate. But no card issuer in the world is going to knock down your rate unless you ask. So call and ask. Have other lower rate credit card offers in hand when you call.
If your issuer won't lower your rate, transfer your balance to a lower rate card.
As an informed and intelligent consumer, you must read the terms and condition of the credit card offer and read the disclosure in its entirety. These are the rules set forth from the issuing bank that you will be playing by so you do need to know what your new credit card is all about. Beware of terms like “universal default” which will allow this credit card to increase their interest rate if you go past due on any other account that you hold. There are many traps that are within the realm of the disclosure that an unsuspecting consumer should be aware of. Read it word for word and do not agree to the terms unless you are one hundred percent sure that you know what the full deal really is.
There are literally thousands of credit card offers available to consumers with interest rates ranging from the 0% A.P.R. (annual percentage rate) which is normally an introductory rate, and as high as 18 to 23 percent for high risk consumers. It is up to the consumer to educate themselves as to how the card works and what fees are involved. Ignorance is not an excuse for not knowing about the terms.
It is all spelled out for you in the disclosure, which no one really reads, and that’s how people get into trouble with their credit cards.
Monday
The New Identity Theft Market
“Take chances, make mistakes. That's how you grow. Pain nourishes your courage. You have to fail in order to practice being brave."
- Mary Tyler Moore
Oh great.
Another article about identity theft.
How original.
I know what you’re thinking. Those same old boring statistics and scare tactics to make you worry about someone ripping off your identity. We’ve heard that it’s the fastest growing crime in America claiming over 10 million victims each year in the United States alone. We heard it all, but what can done to actually prevent it from happening in the first place. The services that I’ve seen are more reactive than proactive meaning that they react to a problem after it occurs as opposed to preventing the problem to begin with.
That is until now.
Services are now offering security measures that prevent anyone from opening credit accounts without your personal verification and typically range between $100 - $150 per year for this credit monitoring service. A small price to pay compared to the cost to repair damage done by the identity thieves, which can literally cost a consumer thousands of dollars, not to mention time and the affect it has on your credit score.
And a new market is born. Your credit, what was once a closely guarded secret now has become something that can be quite easy to steal. You NEED protection. You are ‘at risk” of becoming a victim. We’ve heard all the marketing taglines and yes we agree that we need to do something. It has become a common occurrence to hear on the nightly news that our personal information is being compromised. Databases are being hacked into and computers are being stolen.
Also, identity thieves are coming up with new ways to get your personal information all the time.
Yet a credit report carries so much power with the information it holds, but 90 percent of all credit reports that I have examined for consumers all contain errors. What a consumer pays in interest charges and credit worthiness is determined by such information. It resembles the dreaded “permanent record” threat that parents give children in school. The problem is that this document that holds such vital information, holds this information in a less than secure manner. Consumers and creditors alike take the information for granted.
Your social security number, when it was first developed in 1936 was never meant to be a source of identification. It was only meant for tax purposes, but we are always being asked for it for various reasons. Now there is an entrepreneur whose company developed a great deal of publicity by his advertising the owners social security number and offering a one million dollar guarantee that no one will ever open credit accounts without your knowledge.
With subscription costs ranging from $4.95 to $19.95 per month, even the credit bureaus themselves have been marketing their own monitoring service, basically selling a service that protects you from themselves. Does this make sense? Shouldn’t an agency that holds information that is looked upon so vitally be held accountable for errors in their system without charging the consumer for it?
But we gladly pay for the protection and peace of mind that we will not get ripped off. But how are we to know if these companies themselves are not a scam? Have we become this jaded and mistrusting of our fellow man?
You betcha!
- Mary Tyler Moore
Oh great.
Another article about identity theft.
How original.
I know what you’re thinking. Those same old boring statistics and scare tactics to make you worry about someone ripping off your identity. We’ve heard that it’s the fastest growing crime in America claiming over 10 million victims each year in the United States alone. We heard it all, but what can done to actually prevent it from happening in the first place. The services that I’ve seen are more reactive than proactive meaning that they react to a problem after it occurs as opposed to preventing the problem to begin with.
That is until now.
Services are now offering security measures that prevent anyone from opening credit accounts without your personal verification and typically range between $100 - $150 per year for this credit monitoring service. A small price to pay compared to the cost to repair damage done by the identity thieves, which can literally cost a consumer thousands of dollars, not to mention time and the affect it has on your credit score.
And a new market is born. Your credit, what was once a closely guarded secret now has become something that can be quite easy to steal. You NEED protection. You are ‘at risk” of becoming a victim. We’ve heard all the marketing taglines and yes we agree that we need to do something. It has become a common occurrence to hear on the nightly news that our personal information is being compromised. Databases are being hacked into and computers are being stolen.
Also, identity thieves are coming up with new ways to get your personal information all the time.
Yet a credit report carries so much power with the information it holds, but 90 percent of all credit reports that I have examined for consumers all contain errors. What a consumer pays in interest charges and credit worthiness is determined by such information. It resembles the dreaded “permanent record” threat that parents give children in school. The problem is that this document that holds such vital information, holds this information in a less than secure manner. Consumers and creditors alike take the information for granted.
Your social security number, when it was first developed in 1936 was never meant to be a source of identification. It was only meant for tax purposes, but we are always being asked for it for various reasons. Now there is an entrepreneur whose company developed a great deal of publicity by his advertising the owners social security number and offering a one million dollar guarantee that no one will ever open credit accounts without your knowledge.
With subscription costs ranging from $4.95 to $19.95 per month, even the credit bureaus themselves have been marketing their own monitoring service, basically selling a service that protects you from themselves. Does this make sense? Shouldn’t an agency that holds information that is looked upon so vitally be held accountable for errors in their system without charging the consumer for it?
But we gladly pay for the protection and peace of mind that we will not get ripped off. But how are we to know if these companies themselves are not a scam? Have we become this jaded and mistrusting of our fellow man?
You betcha!
Wednesday
The Fastest Way To Eliminate Credit Card Debt
“Change begets change”
- Charles Dickens
There is one sure fire way that is guaranteed to get you out of debt.
STOP CHARGING!
Simple as that may be, if you just stop charging now, you still may have debt obligations that you need to take care of. So what would be the best way to achieve the goal of eliminating this debt.
There are many strategies that you can employ to get you out of debt but there are several things that you nust do first to lay the groundwork for becoming debt free. It all starts with you.
Excessive credit card debt is a growing sickness in America, and like many illnesses, people tend to ignore the problem until it's of epidemic proportions. Take control now and eliminate credit card debt before it threatens your financial health.
You must change the way you think about money, credit and debt. You must change the way you act and feel.
You must change.
PERIOD.
To eliminate credit card debt as rapidly as possible at the lowest possible cost to you, I recommend using a tried-and-true credit card debt elimination method often recommended by financial experts. I call this method the Credit Crunch.
1. List all of your credit cards, including the balance, the interest rate, and the minimum payment percentage and the minimum payment according to the latest statement. The minimum payment percentage can be found in the small print on your credit card statement or your cardholder agreement, and is usually between 2 and 2 1/2 percent of your balance.
2. Rearrange the list so the credit card with the highest interest rate is at the top and the credit card with the lowest interest rate is at the bottom.
3. Add up the required minimum payments for all the cards.
4. Decide how much money you can come up with each month, in addition to the total minimum payments on all your credit cards, to apply to your credit card debt. If you don't believe you can afford to pay any additional amounts over the minimum payment, it's time to do a budget and find ways to cut your expenses
5. Each month, pay the minimum balance on each credit card except the one with the highest interest rate. On the credit card with the highest interest rate, pay the minimum balance PLUS the additional amount you've identified to reduce your credit card debt each month.
6. Continue to do this until the first credit card (the one with the highest interest rate) is paid off entirely. Then take the amount you were paying on that credit card (which is now paid off) plus the amount of the minimum balance on the second credit card, and apply the total to the second credit card each month until the balance is paid off, continuing to pay the minimum balance on all the other credit cards.
7. Continue crunching your payments on the credit card with the highest interest rate as described above, until all credit card debts are paid off.
Some financial experts recommend paying off the credit cards with the lowest balances first, rather than working on those with the highest interest rate. I disagree with that approach because although it might make you feel better to see the number of credit cards with balances decline, that good feeling will cost you money.
Balances with higher interest rates accumulate interest costs more quickly, meaning you pay more to the credit card company in interest and less in actually paying down the principal amount that you owe.
- Charles Dickens
There is one sure fire way that is guaranteed to get you out of debt.
STOP CHARGING!
Simple as that may be, if you just stop charging now, you still may have debt obligations that you need to take care of. So what would be the best way to achieve the goal of eliminating this debt.
There are many strategies that you can employ to get you out of debt but there are several things that you nust do first to lay the groundwork for becoming debt free. It all starts with you.
Excessive credit card debt is a growing sickness in America, and like many illnesses, people tend to ignore the problem until it's of epidemic proportions. Take control now and eliminate credit card debt before it threatens your financial health.
You must change the way you think about money, credit and debt. You must change the way you act and feel.
You must change.
PERIOD.
To eliminate credit card debt as rapidly as possible at the lowest possible cost to you, I recommend using a tried-and-true credit card debt elimination method often recommended by financial experts. I call this method the Credit Crunch.
1. List all of your credit cards, including the balance, the interest rate, and the minimum payment percentage and the minimum payment according to the latest statement. The minimum payment percentage can be found in the small print on your credit card statement or your cardholder agreement, and is usually between 2 and 2 1/2 percent of your balance.
2. Rearrange the list so the credit card with the highest interest rate is at the top and the credit card with the lowest interest rate is at the bottom.
3. Add up the required minimum payments for all the cards.
4. Decide how much money you can come up with each month, in addition to the total minimum payments on all your credit cards, to apply to your credit card debt. If you don't believe you can afford to pay any additional amounts over the minimum payment, it's time to do a budget and find ways to cut your expenses
5. Each month, pay the minimum balance on each credit card except the one with the highest interest rate. On the credit card with the highest interest rate, pay the minimum balance PLUS the additional amount you've identified to reduce your credit card debt each month.
6. Continue to do this until the first credit card (the one with the highest interest rate) is paid off entirely. Then take the amount you were paying on that credit card (which is now paid off) plus the amount of the minimum balance on the second credit card, and apply the total to the second credit card each month until the balance is paid off, continuing to pay the minimum balance on all the other credit cards.
7. Continue crunching your payments on the credit card with the highest interest rate as described above, until all credit card debts are paid off.
Some financial experts recommend paying off the credit cards with the lowest balances first, rather than working on those with the highest interest rate. I disagree with that approach because although it might make you feel better to see the number of credit cards with balances decline, that good feeling will cost you money.
Balances with higher interest rates accumulate interest costs more quickly, meaning you pay more to the credit card company in interest and less in actually paying down the principal amount that you owe.
Tuesday
Managing Your Debt With Education
“It is better to be prepared for an opportunity and not have one, than to have an opportunity and not be prepared.”- Whitney Young, Jr.
Do you want to learn how to manage your finances better?
In title V of the Fair and Accurate Credit Transaction Act, the Financial Literacy and Education was established, for the purpose of educating consumers on financial matters such as budgeting, credit, financial planning and other important issues.
http://www.mymoney.gov/ is the website the United States Government has put together to teach all Americans the basics of financial education. The resources available can help a consumer get the information needed from twenty federal agencies government wide.
Featured agencies include the Federal Reserve, FDIC, The Small Business Administration, The Department of Labor and many other federally funded government agencies that provide resources and information that will educate consumers about key financial issues.
“Money shouldn’t drive your future. Neither should debt” claims http://www.feedthepig.org/, a website hosted by Benjamin Banks, whose weekly email newsletter provides money saving tips and other financial strategies. Their sister website http://www.360financialliteracy.org/ provides a state by state listing of financial literacy programs available.
The Jumpstart Coalition for Personal Financial Literacy http://www.jumpstart.org/ is a wealth of information about personal finances, whose mission statement reads:
“JumpStart is a national coalition of organizations dedicated to improving the financial literacy of kindergarten through college-age youth by providing advocacy, research, standards and educational resources. JumpStart strives to prepare youth for life-long successful financial decision-making.”
It’s high time that someone has finally realized that this education is needed in our children. The credit card companies are targeting a younger market, some even in high school, for their credit card programs. The problem arises when the young card holder has no knowledge or experience in how to use their newfound money without getting in trouble. College students are now using their credit cards to help cover the cost of tuition.
“The average student who graduates from high school lacks the basic skills in managing of personal financial affairs. Many are unable to balance a checkbook and most simply have no insight into the basic survival principles involved with earning, spending, saving and investing.”
The National Endowment for Financial Education http://www.nefe.org/ is a non-profit organization whose mission is to assist Americans acquire the information necessary to “take control” of their finances. The website is composed of four distinct areas including; education programs, collaborative programs, multimedia access and innovative thinking.
Financial education is vitally important in today’s society with credit offers becoming more complex and the credit card marketing campaigns becoming more aggressive. Unfortunately, there is no standardized program that can be taught in schools, but even if there was, that would only address part of the problem. Adults, beyond the age of student, are now accustomed to the buy now, pay later lifestyle. The current economic conditions are forcing families to use credit cards to help pay living expenses and our children are not having a good example set for them. They need to be taught the value of money and the importance of personal financial education.
There is a growing number of websites and organizations that are addressing financial literacy and education. It will take the desire and willingness to learn and to face your financial problems head on to change the course of your life to become debt free and to make sound financial decisions based on education.
Through these types of educational programs, consumers will continue to gain important financial information. It is up to the consumer to become educated about their finances and to locate the financial literacy programs available.
Do you want to learn how to manage your finances better?
In title V of the Fair and Accurate Credit Transaction Act, the Financial Literacy and Education was established, for the purpose of educating consumers on financial matters such as budgeting, credit, financial planning and other important issues.
http://www.mymoney.gov/ is the website the United States Government has put together to teach all Americans the basics of financial education. The resources available can help a consumer get the information needed from twenty federal agencies government wide.
Featured agencies include the Federal Reserve, FDIC, The Small Business Administration, The Department of Labor and many other federally funded government agencies that provide resources and information that will educate consumers about key financial issues.
“Money shouldn’t drive your future. Neither should debt” claims http://www.feedthepig.org/, a website hosted by Benjamin Banks, whose weekly email newsletter provides money saving tips and other financial strategies. Their sister website http://www.360financialliteracy.org/ provides a state by state listing of financial literacy programs available.
The Jumpstart Coalition for Personal Financial Literacy http://www.jumpstart.org/ is a wealth of information about personal finances, whose mission statement reads:
“JumpStart is a national coalition of organizations dedicated to improving the financial literacy of kindergarten through college-age youth by providing advocacy, research, standards and educational resources. JumpStart strives to prepare youth for life-long successful financial decision-making.”
It’s high time that someone has finally realized that this education is needed in our children. The credit card companies are targeting a younger market, some even in high school, for their credit card programs. The problem arises when the young card holder has no knowledge or experience in how to use their newfound money without getting in trouble. College students are now using their credit cards to help cover the cost of tuition.
“The average student who graduates from high school lacks the basic skills in managing of personal financial affairs. Many are unable to balance a checkbook and most simply have no insight into the basic survival principles involved with earning, spending, saving and investing.”
The National Endowment for Financial Education http://www.nefe.org/ is a non-profit organization whose mission is to assist Americans acquire the information necessary to “take control” of their finances. The website is composed of four distinct areas including; education programs, collaborative programs, multimedia access and innovative thinking.
Financial education is vitally important in today’s society with credit offers becoming more complex and the credit card marketing campaigns becoming more aggressive. Unfortunately, there is no standardized program that can be taught in schools, but even if there was, that would only address part of the problem. Adults, beyond the age of student, are now accustomed to the buy now, pay later lifestyle. The current economic conditions are forcing families to use credit cards to help pay living expenses and our children are not having a good example set for them. They need to be taught the value of money and the importance of personal financial education.
There is a growing number of websites and organizations that are addressing financial literacy and education. It will take the desire and willingness to learn and to face your financial problems head on to change the course of your life to become debt free and to make sound financial decisions based on education.
Through these types of educational programs, consumers will continue to gain important financial information. It is up to the consumer to become educated about their finances and to locate the financial literacy programs available.
Monday
Credit Facts
Credit was first used in Assyria, Babylon and Egypt 3000 years ago. The bill of exchange, the forerunner of banknotes, was established in the 14th century. Debts were settled by one-third cash and two-thirds bill of exchange. Paper money followed only in the 17th century.
The first advertisement for credit was placed in 1730 by Christopher Thornton, who offered furniture that could be paid off weekly.
From the 18th century until the early part of the 20th, tallymen sold clothes in return for small weekly payments. They were called "tallymen" because they kept a record or tally of what people had bought on a wooden stick. One side of the stick was marked with notches to represent the amount of debt and the other side was a record of payments. In the 1920s, a shopper's plate, a buy now pay later system was introduced in the USA. It could only be used in the shops which issued it.
In 1950, Diners Club and American Express launched their charge cards in the USA, the first "plastic money". In 1951, Diners Club issued the first credit card to 200 customers who could use it at 27 restaurants in New York. But it was only until the establishment of standards for the magnetic strip in 1970 that the credit card became part of the information age.
The first use of magnetic stripes on cards was in the early 1960’s, when the London Transit Authority installed a magnetic stripe system. San Francisco Bay Area Rapid Transit installed a paper based ticket the same size as the credit cards in the late 1960's.
The word credit comes from Latin, meaning "trust".
A credit card is a system of payment named after the small plastic card issued to users of the system. A credit card is different from a debit card in that it does not remove money from the user's account after every transaction. In the case of credit cards, the issuer lends money to the consumer. It is also different from a charge card (though this name is sometimes used by the public to describe credit cards), which requires the balance to be paid in full each month. In contrast, a credit card allows the consumer to 'revolve' their balance, at the cost of having interest charged.
A user is issued credit after an account has been approved by the credit provider (often a general bank but sometimes a captive bank created to issue a particular brand of credit card, such as Wells Fargo or American Express Centurion Bank), with which the user will be able to make purchases from merchants accepting that credit card up to a pre-established credit limit.
When a purchase is made, the credit card user agrees to pay the card issuer. The cardholder indicates their consent to pay, by signing a receipt with a record of the card details and indicating the amount to be paid or by entering a pin. Also, many merchants now accept verbal authorizations via telephone and electronic authorization using the Internet, known as a customer not present. (CNP) transaction.
An Electronic Verification system allow merchants to verify that the card is valid and the credit card customer has sufficient credit to cover the purchase in a few seconds, allowing the verification to happen at time of purchase. The verification is performed using a credit card payment system or Point of Sale (POS) system with a communications link to the merchant's acquiring bank. Data from the card is obtained using from a magnetic stripe or chip on the card; the later system is commonly known as Chip and PIN but is more technically an EMV card.
Other variations of verification systems are used by ecommerce merchants to determine if the user's account is valid and able to accept the charge. These will typically involve the cardholder providing additional information, such as the security code printed on the back of the card, or the address of the cardholder.
Each month, the credit card user is sent a statement indicating the purchases undertaken with the card, any outstanding fees, and the total amount owed. After receiving the statement, the cardholder may dispute any charges that he or she thinks are incorrect. Otherwise, the cardholder must pay a defined minimum proportion of the bill by a due date or may choose to pay a higher amount up to the entire amount owed. The credit provider charges interest on the amount owed (typically at a much higher rate than most other forms of debt). Some financial institutions can arrange for automatic payments to be deducted from the user's accounts.
Credit card issuers usually waive interest charges if the balance is paid in full each month, but typically will charge full interest on the entire outstanding balance from the date of each purchase if the total balance is not paid.
The first advertisement for credit was placed in 1730 by Christopher Thornton, who offered furniture that could be paid off weekly.
From the 18th century until the early part of the 20th, tallymen sold clothes in return for small weekly payments. They were called "tallymen" because they kept a record or tally of what people had bought on a wooden stick. One side of the stick was marked with notches to represent the amount of debt and the other side was a record of payments. In the 1920s, a shopper's plate, a buy now pay later system was introduced in the USA. It could only be used in the shops which issued it.
In 1950, Diners Club and American Express launched their charge cards in the USA, the first "plastic money". In 1951, Diners Club issued the first credit card to 200 customers who could use it at 27 restaurants in New York. But it was only until the establishment of standards for the magnetic strip in 1970 that the credit card became part of the information age.
The first use of magnetic stripes on cards was in the early 1960’s, when the London Transit Authority installed a magnetic stripe system. San Francisco Bay Area Rapid Transit installed a paper based ticket the same size as the credit cards in the late 1960's.
The word credit comes from Latin, meaning "trust".
A credit card is a system of payment named after the small plastic card issued to users of the system. A credit card is different from a debit card in that it does not remove money from the user's account after every transaction. In the case of credit cards, the issuer lends money to the consumer. It is also different from a charge card (though this name is sometimes used by the public to describe credit cards), which requires the balance to be paid in full each month. In contrast, a credit card allows the consumer to 'revolve' their balance, at the cost of having interest charged.
A user is issued credit after an account has been approved by the credit provider (often a general bank but sometimes a captive bank created to issue a particular brand of credit card, such as Wells Fargo or American Express Centurion Bank), with which the user will be able to make purchases from merchants accepting that credit card up to a pre-established credit limit.
When a purchase is made, the credit card user agrees to pay the card issuer. The cardholder indicates their consent to pay, by signing a receipt with a record of the card details and indicating the amount to be paid or by entering a pin. Also, many merchants now accept verbal authorizations via telephone and electronic authorization using the Internet, known as a customer not present. (CNP) transaction.
An Electronic Verification system allow merchants to verify that the card is valid and the credit card customer has sufficient credit to cover the purchase in a few seconds, allowing the verification to happen at time of purchase. The verification is performed using a credit card payment system or Point of Sale (POS) system with a communications link to the merchant's acquiring bank. Data from the card is obtained using from a magnetic stripe or chip on the card; the later system is commonly known as Chip and PIN but is more technically an EMV card.
Other variations of verification systems are used by ecommerce merchants to determine if the user's account is valid and able to accept the charge. These will typically involve the cardholder providing additional information, such as the security code printed on the back of the card, or the address of the cardholder.
Each month, the credit card user is sent a statement indicating the purchases undertaken with the card, any outstanding fees, and the total amount owed. After receiving the statement, the cardholder may dispute any charges that he or she thinks are incorrect. Otherwise, the cardholder must pay a defined minimum proportion of the bill by a due date or may choose to pay a higher amount up to the entire amount owed. The credit provider charges interest on the amount owed (typically at a much higher rate than most other forms of debt). Some financial institutions can arrange for automatic payments to be deducted from the user's accounts.
Credit card issuers usually waive interest charges if the balance is paid in full each month, but typically will charge full interest on the entire outstanding balance from the date of each purchase if the total balance is not paid.
Tuesday
8 Secrets of Financial Independence
“We simply assume that the way we see things is the way they really are or the way they should be. And our attitudes and behaviors grow out of these assumptions.”
- Stephen Covey
Secret #1 – This is by far the single most important of the 8 secrets. It is the foundational key to all success
TAKE ACTION!
If you can’t take the action necessary to achieve financial independence and success, to improve your life, you will no doubt wind up right alongside the 95 percent of the population that is dependent on debt and are ultimately financial failures.
It’s that simple. You can have the very best teachers, the very best education and training, read the best books and listen to the best tapes but without taking action, it’s all wasted.
I can’t emphasize this point too strongly or enough. You must find it in yourself to resolve to act; otherwise your thinking will amount to nothing.
Secret #2 – The level of success you achieve in your life is directly proportional to your willingness to accept full responsibility for your life.
No matter where you are now, you can only achieve greater things if you take blame and hold yourself accountable for your past. Accept your past and grasp hold of your future.
Secret #3 – Failing to execute a plan for financial independence is the same as planning to fail.
This seems fairly self evident. People just float around through their financial life hoping it will all somehow just work out. This is not only wrong but it reeks of insanity.
Secret #4 – A home based business where you can invest work and time instead of money.
You can make more money with a business of your own than a job would pay you and the tax benefits are worth the effort. It would be a good practice to start slow and small and work it steadily. Eventually, the income will exceed your job and you will need to make a decision as to whether you want to quit your job and take your business full time.
Secret #5 – Residual vs. Linear Income
Most people work at a job that pays them a linear income, which means that for every hour they work they get paid an hour’s wage. Or they sell a widget and get paid a commission on that one widget.
Residual income, on the other hand, is cumulative and continuous. Let’s say that you sell a widget, instead of getting paid a onetime commission, you get an ongoing commission for that sale month after month. Sell two widgets, get two times the residual.
Secret #6 – Multiplex Income
This is the income that you receive when you run your own business and receive your income from the work and efforts of others.
Secret #7 – Positive Mental Attitude
I used to think that keeping a positive mental attitude was the key ingredient to success and achievement, that if I maintained a PMA, success was sure to follow. I knew people that cranked up the positive attitude so much they glowed but were complete financial failures. While a PMA is extremely important, the ACTION needed in secret #1 is the true key. Couple PMA AND ACTION together and you have a solid foundation for success.
Secret #8 – Compound Interest
Compound interest refers to the fact that whenever interest is calculated, it is based not only on the original principal, but also on any unpaid interest that has been added to the principal. The more frequently interest is compounded, the faster the balance grows.
A good lesson was learned on the golf course when two friends decided to “make it fun” by placing a wager on each hole. The bet was for a dime and on each hole the bet would double. Let’s do the math. The first hole is ten cents. The second hole is twenty and the third is forty cents. Not bad, just a friendly wager, right?By the time they reached the ninth hole the bet was for $25.60. OK. Still not so bad for golf buddies. The tenth hole was $51.20, the eleventh hole was $102.40 and the twelfth hole was for $204.80! Now, if we were golfing this game, we would be getting a bit nervous. Hole 13 - $409.60. Hole 14 - $819.20. The bet continues to rise. By the 18th hole the bet will be a whopping $13,107.20!
THAT is the power of compound interest.
- Stephen Covey
Secret #1 – This is by far the single most important of the 8 secrets. It is the foundational key to all success
TAKE ACTION!
If you can’t take the action necessary to achieve financial independence and success, to improve your life, you will no doubt wind up right alongside the 95 percent of the population that is dependent on debt and are ultimately financial failures.
It’s that simple. You can have the very best teachers, the very best education and training, read the best books and listen to the best tapes but without taking action, it’s all wasted.
I can’t emphasize this point too strongly or enough. You must find it in yourself to resolve to act; otherwise your thinking will amount to nothing.
Secret #2 – The level of success you achieve in your life is directly proportional to your willingness to accept full responsibility for your life.
No matter where you are now, you can only achieve greater things if you take blame and hold yourself accountable for your past. Accept your past and grasp hold of your future.
Secret #3 – Failing to execute a plan for financial independence is the same as planning to fail.
This seems fairly self evident. People just float around through their financial life hoping it will all somehow just work out. This is not only wrong but it reeks of insanity.
Secret #4 – A home based business where you can invest work and time instead of money.
You can make more money with a business of your own than a job would pay you and the tax benefits are worth the effort. It would be a good practice to start slow and small and work it steadily. Eventually, the income will exceed your job and you will need to make a decision as to whether you want to quit your job and take your business full time.
Secret #5 – Residual vs. Linear Income
Most people work at a job that pays them a linear income, which means that for every hour they work they get paid an hour’s wage. Or they sell a widget and get paid a commission on that one widget.
Residual income, on the other hand, is cumulative and continuous. Let’s say that you sell a widget, instead of getting paid a onetime commission, you get an ongoing commission for that sale month after month. Sell two widgets, get two times the residual.
Secret #6 – Multiplex Income
This is the income that you receive when you run your own business and receive your income from the work and efforts of others.
Secret #7 – Positive Mental Attitude
I used to think that keeping a positive mental attitude was the key ingredient to success and achievement, that if I maintained a PMA, success was sure to follow. I knew people that cranked up the positive attitude so much they glowed but were complete financial failures. While a PMA is extremely important, the ACTION needed in secret #1 is the true key. Couple PMA AND ACTION together and you have a solid foundation for success.
Secret #8 – Compound Interest
Compound interest refers to the fact that whenever interest is calculated, it is based not only on the original principal, but also on any unpaid interest that has been added to the principal. The more frequently interest is compounded, the faster the balance grows.
A good lesson was learned on the golf course when two friends decided to “make it fun” by placing a wager on each hole. The bet was for a dime and on each hole the bet would double. Let’s do the math. The first hole is ten cents. The second hole is twenty and the third is forty cents. Not bad, just a friendly wager, right?By the time they reached the ninth hole the bet was for $25.60. OK. Still not so bad for golf buddies. The tenth hole was $51.20, the eleventh hole was $102.40 and the twelfth hole was for $204.80! Now, if we were golfing this game, we would be getting a bit nervous. Hole 13 - $409.60. Hole 14 - $819.20. The bet continues to rise. By the 18th hole the bet will be a whopping $13,107.20!
THAT is the power of compound interest.
Monday
The 8 Myths of Financial Independence
“A smooth sea never made a skilled mariner”
- English Proverb
Myth #1 – You can use money the same way everyone around you uses it and still become financially independent. According to statistics compiled by the U.S. Department of Human Services state that 95% of the American population will never achieve financial independence in their lifetime. That is one of the most pitiful statistics that I ever heard of in my life.
Myth #2 – The responsible use of credit can enhance your life.
This is a very dangerous lie that is told to the American consumer by the banking industry, you know, the guys that issue you their credit cards and bury you in interest and fees. Only these parasites and retailers benefit from the use of credit cards. You only use them to have the privilege to overpay for goods and services.
Myth #3 – Pay yourself first
I consider this to be a myth for the way it is applied. You should pay your debts off first. You would be far better off if you eliminate your debt and then concentrate on paying yourself.
Myth #4 – You can get out of debt by putting a little extra on each bill each month
To effectively eliminate your debt you must use the military principle of massing the forces. This means concentrating all resources on one bill at a time. This way you will pay off the target bill more quickly and can then move on to the next. You can apply the monthly payment on the paid off bill to the second and so on.
Prioritize your bills according to the higher interest first and work your way down the list.
Myth #5 – You need to learn how to manage credit.
You need to learn how to eliminate credit. Maintain a credit to debt ration of the maximum of 15%
Myth #6 – It takes other people’s money to make money
This idea comes from the lie that you need venture capital or you have to have a huge start up cost to start a new business venture. This is simply not true. It is easier to start with a large bank backing you up on a business venture but you will also ultimately have to pay the “other people” back with interest. There are always ways to accomplish a successful business start up without using the funding of other people. Find the way.
Myth #7 – Success equals working smarter not harder.
This statement is nothing but a shortcut that seldom is effective. How about working smarter AND harder. That would be a more realistic formula for success.
Myth #8 – Education equals success
Study history and you will find that tremendous successes like Henry Ford, Thomas Edison, Albert Einstein and others who have achieved great success in life were educational failures.
The skills necessary for you to achieve true success are not taught in schools. Don’ get me wrong, education is a vital part of success but what is more important is a self directed mindset.
- English Proverb
Myth #1 – You can use money the same way everyone around you uses it and still become financially independent. According to statistics compiled by the U.S. Department of Human Services state that 95% of the American population will never achieve financial independence in their lifetime. That is one of the most pitiful statistics that I ever heard of in my life.
Myth #2 – The responsible use of credit can enhance your life.
This is a very dangerous lie that is told to the American consumer by the banking industry, you know, the guys that issue you their credit cards and bury you in interest and fees. Only these parasites and retailers benefit from the use of credit cards. You only use them to have the privilege to overpay for goods and services.
Myth #3 – Pay yourself first
I consider this to be a myth for the way it is applied. You should pay your debts off first. You would be far better off if you eliminate your debt and then concentrate on paying yourself.
Myth #4 – You can get out of debt by putting a little extra on each bill each month
To effectively eliminate your debt you must use the military principle of massing the forces. This means concentrating all resources on one bill at a time. This way you will pay off the target bill more quickly and can then move on to the next. You can apply the monthly payment on the paid off bill to the second and so on.
Prioritize your bills according to the higher interest first and work your way down the list.
Myth #5 – You need to learn how to manage credit.
You need to learn how to eliminate credit. Maintain a credit to debt ration of the maximum of 15%
Myth #6 – It takes other people’s money to make money
This idea comes from the lie that you need venture capital or you have to have a huge start up cost to start a new business venture. This is simply not true. It is easier to start with a large bank backing you up on a business venture but you will also ultimately have to pay the “other people” back with interest. There are always ways to accomplish a successful business start up without using the funding of other people. Find the way.
Myth #7 – Success equals working smarter not harder.
This statement is nothing but a shortcut that seldom is effective. How about working smarter AND harder. That would be a more realistic formula for success.
Myth #8 – Education equals success
Study history and you will find that tremendous successes like Henry Ford, Thomas Edison, Albert Einstein and others who have achieved great success in life were educational failures.
The skills necessary for you to achieve true success are not taught in schools. Don’ get me wrong, education is a vital part of success but what is more important is a self directed mindset.
Friday
The Two Things You Should Know About Those “Non Profit” Credit Counselors
“There are two ways of meeting difficulties: you alter the difficulties, or you alter yourself to meet them.”- Phyllis Bottome
The first credit counseling agencies were created in 1951 in the United States when credit grantors created The National Foundation for Credit Counseling, or NFCC. Their stated objective was to promote financial literacy and help consumers avoid bankruptcy. NFCC was really started as a collection agency for Sears and J.C. Penney, along with other major creditors, to help recover money lost to bankruptcy.
In 2005, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 made credit counseling a requirement for consumer debtors filing for bankruptcy. In order to meet this requirement, during the 180-day period preceding the filing of bankruptcy, the debtor must complete a program with an approved nonprofit budget and credit counseling agency. Such a program may include, but is not limited to, one counseling session conducted by phone or over the internet. In addition, a post-filing debtor education credit counseling session is required in order to complete the bankruptcy process and to have your debts discharged.
A credit counseling agency typically receives most of its compensation from the creditors to whom the debt payments are distributed. This funding relationship has led many to believe that credit counseling agencies are merely a collections wing of the creditors. This fee income, known as “Fair Share,” are contributions from the creditors that originally earns the agency 15% of the amount recovered. The use of the term “non profit” suggests that the company is a charitable organization. This is so far from the truth that it is borderline ridiculous.
Here’s how the Consumer Credit Counseling companies actually work.
First they claim to have a special arrangement thousands of creditors, implying that they can reduce your debt. Truth be told, they will only reduce your interest rate and you will be in their program for between 5 and 7 years. You will pay back everything that you currently owe PLUS interest. If you are suffering a true financial hardship, this would not be the most ideal situation for you.
They do however have a special relationship with the creditors. Remember they are funded by the banking industry that includes your creditors. They are supplied a computer database with all of your personal information by your original creditor that promised your information would be held in confidence.
After the initial consultation, or sales pitch, where you provide them the names and account numbers of your creditors and the balances owed, a plan is formulated to tell you what you will pay and for how long. They seldom mention the effect that their program has on your credit report because now your accounts will appear as managed by xyz company. This is commonly referred to as bankruptcy’s brother because the effect that it has is as bad as bankruptcy.
Now come the fee’s. There is really no standardized procedure governing what they can charge and some agencies charge up to $5 per month per account enrolled, some charge a flat rate fee of up to $49.95 per month NOT including your debt payment. Also, you must remember that they get as much as 15% from your creditor for these same accounts.
Do you still think that they are non profit?
Doesn’t there appear to be a conflict of interest issue between these non profits dipping into your pocket and getting commissions from your creditor?
I don’t know about you but I wouldn’t trust a company that claims to be a charitable debt hero that makes their money from the people you owe money to.
The following are some questions to ask when you are looking into a debt relief company:
How much are their fees for your service?
What are the fee’s for since you are non profit?
Do you negotiate the balance of my debt to reduce my payments?
How will my credit be affected byyour program?
When will my credit be improved?
What is the total amount of fee’s that I will pay to your company over the course of our contract?
What will my total savings be?
The first credit counseling agencies were created in 1951 in the United States when credit grantors created The National Foundation for Credit Counseling, or NFCC. Their stated objective was to promote financial literacy and help consumers avoid bankruptcy. NFCC was really started as a collection agency for Sears and J.C. Penney, along with other major creditors, to help recover money lost to bankruptcy.
In 2005, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 made credit counseling a requirement for consumer debtors filing for bankruptcy. In order to meet this requirement, during the 180-day period preceding the filing of bankruptcy, the debtor must complete a program with an approved nonprofit budget and credit counseling agency. Such a program may include, but is not limited to, one counseling session conducted by phone or over the internet. In addition, a post-filing debtor education credit counseling session is required in order to complete the bankruptcy process and to have your debts discharged.
A credit counseling agency typically receives most of its compensation from the creditors to whom the debt payments are distributed. This funding relationship has led many to believe that credit counseling agencies are merely a collections wing of the creditors. This fee income, known as “Fair Share,” are contributions from the creditors that originally earns the agency 15% of the amount recovered. The use of the term “non profit” suggests that the company is a charitable organization. This is so far from the truth that it is borderline ridiculous.
Here’s how the Consumer Credit Counseling companies actually work.
First they claim to have a special arrangement thousands of creditors, implying that they can reduce your debt. Truth be told, they will only reduce your interest rate and you will be in their program for between 5 and 7 years. You will pay back everything that you currently owe PLUS interest. If you are suffering a true financial hardship, this would not be the most ideal situation for you.
They do however have a special relationship with the creditors. Remember they are funded by the banking industry that includes your creditors. They are supplied a computer database with all of your personal information by your original creditor that promised your information would be held in confidence.
After the initial consultation, or sales pitch, where you provide them the names and account numbers of your creditors and the balances owed, a plan is formulated to tell you what you will pay and for how long. They seldom mention the effect that their program has on your credit report because now your accounts will appear as managed by xyz company. This is commonly referred to as bankruptcy’s brother because the effect that it has is as bad as bankruptcy.
Now come the fee’s. There is really no standardized procedure governing what they can charge and some agencies charge up to $5 per month per account enrolled, some charge a flat rate fee of up to $49.95 per month NOT including your debt payment. Also, you must remember that they get as much as 15% from your creditor for these same accounts.
Do you still think that they are non profit?
Doesn’t there appear to be a conflict of interest issue between these non profits dipping into your pocket and getting commissions from your creditor?
I don’t know about you but I wouldn’t trust a company that claims to be a charitable debt hero that makes their money from the people you owe money to.
The following are some questions to ask when you are looking into a debt relief company:
How much are their fees for your service?
What are the fee’s for since you are non profit?
Do you negotiate the balance of my debt to reduce my payments?
How will my credit be affected byyour program?
When will my credit be improved?
What is the total amount of fee’s that I will pay to your company over the course of our contract?
What will my total savings be?
Wednesday
Have You Had "The Talk" With Your Children Yet?
“Money is hard to earn and easy to lose. Guard yours with care.” - Brian Tracy
Have you had “the talk” with your children yet?
Not the “sex” talk but the talk that is necessary for your children’s future. The financial talk about credit and credit cards. Talking to your kids about their financial goals is key to avoiding financial conflicts in the future.
Credit cards, to have one or not to have one. That is often the question faced by thousands of families as their high school graduates have their first experience living away from home. The answer should be carefully thought out by parents and children, alike.
Undoubtedly, there can be many advantages to having and using credit cards. They’re convenient. They certainly can be useful in an emergency such as car trouble away from home or medical emergencies. And, when payments are made in a timely manner, they also can help a young person establish a favorable credit history.
But many young adults away from home for the first time have not yet mastered the financial skills required to successfully manage credit card debt. High school seniors involved in a test to measure their understanding of money scored an average of just 41.9%. Only 21% of high school and college students between the ages of 16 and 22 have taken a personal finance course.
Yet this group of American consumers is one of the most highly sought after market targeted by credit card issuers marketing campaigns. In addition to the many “pre-approved” credit card offers received by mail, college students also may be greeted on campus with a barrage of incentives offered by companies just for applying for a card, everything from free T- shirts to duffel bags.
For many of these inexperienced youth, the misuse of credit cards can spell disaster, not only financially but also academically and psychologically.
Students 18 to 21 years of age are considered adults and are legally responsible for credit card debts. Because young adults holding traditional cards receive monthly bills at their “away from home” address, they are solely responsible for managing the amount charged and making payments in full and in a timely manner to avoid interest and late fees. Parents may not be able
to monitor the amount of charges or the way in which payments are being made.
Having a parent co-sign makes credit card companies more willing to issue a card to a
young adult. However, bills still are mailed directly to the official card holder at his or her away
from home” address. While parents may not be able to monitor the card’s use, they are still legally held liable for debts if their children are unable to pay.
Similar to traditional cards, the young adult is still considered the primary cardholder and assumes responsibility for debts incurred. However, “student cards” generally have lower credit limits. On the other hand, they also may contain provisions such as above-average interest rates.
When considering this option, be sure to read the terms of the contract carefully to be sure it is truly a “student” card with lower credit limits rather than a “traditional” card which is simply being offered to students. While this option provides total independence, the lower credit limit
reduces risk as long as the young adult only holds one card and repays debts promptly.
Intended for those with little or no credit history, secured cards require a deposit equal to the
credit limit on the card. They also may carry a higher interest rate. This option allows total independence within the limits established by the deposit.
This parent owned credit card authorizes children to make charges to their parents account but since bills are mailed to the primary cardholder, parents will receive the monthly statement
of charges incurred. This option provides the security of knowing credit is available to young adults but allows parents to monitor both the types of charges being made and the total amount of indebtedness being incurred
Teen” cards are not truly “credit” cards. Rather, these are actually “smart” cards. Money deposited into an account by the parent is made available to the young adult but each time the card is used, the amount of the “purchase” is deducted from the funds available. When the funds are exhausted, the account must be replenished or the card can no longer be used.
Although more flexibility is provided for young adults over 18 years of age, some companies allow parents to place restrictions on the types of purchases that can be made and some allow online monitoring of the account by parents.
Visit with your young adult about using credit cards responsibly. Encourage your son or daughter to:
Establish a budget and live within his/her means.
Discuss the difference between wants and needs. Define what an “emergency” really is!
Resist the “free” offers made to those who apply for credit cards.
Experts recommend that students, especially, limit themselves to just one card.
Keep track of charges to credit card accounts.
Researchers have found that using a credit card log can help limit credit card debt.
Pay monthly bills in full and on time.
Over time, interest and late fees can add substantially to the total amount owed.
Have you had “the talk” with your children yet?
Not the “sex” talk but the talk that is necessary for your children’s future. The financial talk about credit and credit cards. Talking to your kids about their financial goals is key to avoiding financial conflicts in the future.
Credit cards, to have one or not to have one. That is often the question faced by thousands of families as their high school graduates have their first experience living away from home. The answer should be carefully thought out by parents and children, alike.
Undoubtedly, there can be many advantages to having and using credit cards. They’re convenient. They certainly can be useful in an emergency such as car trouble away from home or medical emergencies. And, when payments are made in a timely manner, they also can help a young person establish a favorable credit history.
But many young adults away from home for the first time have not yet mastered the financial skills required to successfully manage credit card debt. High school seniors involved in a test to measure their understanding of money scored an average of just 41.9%. Only 21% of high school and college students between the ages of 16 and 22 have taken a personal finance course.
Yet this group of American consumers is one of the most highly sought after market targeted by credit card issuers marketing campaigns. In addition to the many “pre-approved” credit card offers received by mail, college students also may be greeted on campus with a barrage of incentives offered by companies just for applying for a card, everything from free T- shirts to duffel bags.
For many of these inexperienced youth, the misuse of credit cards can spell disaster, not only financially but also academically and psychologically.
Students 18 to 21 years of age are considered adults and are legally responsible for credit card debts. Because young adults holding traditional cards receive monthly bills at their “away from home” address, they are solely responsible for managing the amount charged and making payments in full and in a timely manner to avoid interest and late fees. Parents may not be able
to monitor the amount of charges or the way in which payments are being made.
Having a parent co-sign makes credit card companies more willing to issue a card to a
young adult. However, bills still are mailed directly to the official card holder at his or her away
from home” address. While parents may not be able to monitor the card’s use, they are still legally held liable for debts if their children are unable to pay.
Similar to traditional cards, the young adult is still considered the primary cardholder and assumes responsibility for debts incurred. However, “student cards” generally have lower credit limits. On the other hand, they also may contain provisions such as above-average interest rates.
When considering this option, be sure to read the terms of the contract carefully to be sure it is truly a “student” card with lower credit limits rather than a “traditional” card which is simply being offered to students. While this option provides total independence, the lower credit limit
reduces risk as long as the young adult only holds one card and repays debts promptly.
Intended for those with little or no credit history, secured cards require a deposit equal to the
credit limit on the card. They also may carry a higher interest rate. This option allows total independence within the limits established by the deposit.
This parent owned credit card authorizes children to make charges to their parents account but since bills are mailed to the primary cardholder, parents will receive the monthly statement
of charges incurred. This option provides the security of knowing credit is available to young adults but allows parents to monitor both the types of charges being made and the total amount of indebtedness being incurred
Teen” cards are not truly “credit” cards. Rather, these are actually “smart” cards. Money deposited into an account by the parent is made available to the young adult but each time the card is used, the amount of the “purchase” is deducted from the funds available. When the funds are exhausted, the account must be replenished or the card can no longer be used.
Although more flexibility is provided for young adults over 18 years of age, some companies allow parents to place restrictions on the types of purchases that can be made and some allow online monitoring of the account by parents.
Visit with your young adult about using credit cards responsibly. Encourage your son or daughter to:
Establish a budget and live within his/her means.
Discuss the difference between wants and needs. Define what an “emergency” really is!
Resist the “free” offers made to those who apply for credit cards.
Experts recommend that students, especially, limit themselves to just one card.
Keep track of charges to credit card accounts.
Researchers have found that using a credit card log can help limit credit card debt.
Pay monthly bills in full and on time.
Over time, interest and late fees can add substantially to the total amount owed.
Friday
The Debtonator's Debt Elimination Challenge
"The better a man is, the more mistakes he will make, for the more new things he will try. I would never promote to a top-level job a man who was not making mistakes...otherwise he is sure to be mediocre." - Peter Druker
Although I believe credit to be a useful financial tool, I also believe that America, as a society, have become too dependent on credit and credit cards, using them to pay for cost of living expenses. There is currently no require courses in our school system to teach our children about the power of credit and compound interest and we, as a nation are sinking further into the abyss of runaway debt.
This is the reason I am issuing the Debt Elimination Challenge – 90 Days to Financial Freedom. In this challenge I intend to educate the consumer, young and old as to the responsible use of credit and not just managing but eliminating your debt.
But will my challenge be accepted?
That is the question. Have we become so dependent on our use of credit that we will remain slaves to our credit cards? Will we actually choose to remain indentured servants, working two jobs, just to pay our credit card bills? Will remain a nation dependent on credit cards?
These are questions that all consumers must ponder. As your monthly bills are developing into a mountain of debt, you, as consumers must decide if you will continue to accept rising interest rates and escalating fee’s or if you have had enough and desire a change.
Because it is when you truly decide, to make a commitment to yourself, that things will change.
Those that are brave enough to accept my challenge must be sick and tired of this lackluster economy and is willing to take an aggressive approach to their debt problems. The first step is to have a debt management coach that will show you the steps you need to take to eliminate your debt.
It’s time to be debt free.
But where do you start?
First of all, you need to stop charging. No matter what. Stop the bleeding. Do nothing more to increase your balances. In fact, total them up and let’s see how bad the damage is. Now, it’s decision time. Some questions to ask yourself are:
Are you behind on your payments?
Are you only making the monthly minimum payments?
Are you struggling each month meeting your monthly obligations?
Are you possibly thinking about bankruptcy, or are you looking at debt relief programs?
What are you willing to do to eliminate your debt?
Getting rid of your debt should now be your top priority. In the quickest way possible. For the least expense. Debt settlement here is the best way to do this. Your total amount of debt will be paid off for about half of what you owe in about three years. This type of program can be completed sooner, depending on the amount you owe and what you can pay each month.
Also, let’s take a look at where your current income is going. Here’s part two of my challenge, that I call my 30 day challenge. For the next 30 days, get a receipt for every dime that you spend. Every purchase, no matter how small or large. Save these receipts in an envelope for 30 days and see where your money is going. This may come as a shock to you, I know it did me when I first done it.
Can you make some adjustments in the way you spend? Can you brown bag a couple of lunches during the week? Are there any other adjustments you can make?
Develop a spending and savings plan.
A spending plan is another tool that reveals the impact goal setting could have on your personal finances. A spending plan, or budget, is your first step to building financial responsibility, and it is critical to effective decision making when developing your goals.
Financial goals will not necessarily have a dollar amount affixed to them. This will require that you either generate more income or reduce expenses or possibly, if you already have monies allocated, shift monies within your plan. In any case, your spending plan will let you know if your goal is financially possible.
For a workable savings plan, four steps are necessary:
Add up your total income, including any funds you receive in addition to your earnings.
Figure out your total fixed expenses such as rent or mortgage, insurance premiums or car payments.
Provide for a savings fund, adequate to meet emergencies and achieve special goals.
Estimate how much you need for day to day living expenses.
You may need to do some adjusting of the amount in each step until you have what you feel is a satisfactory plan. After going through each step and filling out the worksheet, you will have a better idea of where your money is going and how much you have left over to work with.
After following these steps and changing the way you think and act about finances for 90 days, you will break any of the bad habits that you have developed over the years and will be well on your way to living a debt free lifestyle.
Although I believe credit to be a useful financial tool, I also believe that America, as a society, have become too dependent on credit and credit cards, using them to pay for cost of living expenses. There is currently no require courses in our school system to teach our children about the power of credit and compound interest and we, as a nation are sinking further into the abyss of runaway debt.
This is the reason I am issuing the Debt Elimination Challenge – 90 Days to Financial Freedom. In this challenge I intend to educate the consumer, young and old as to the responsible use of credit and not just managing but eliminating your debt.
But will my challenge be accepted?
That is the question. Have we become so dependent on our use of credit that we will remain slaves to our credit cards? Will we actually choose to remain indentured servants, working two jobs, just to pay our credit card bills? Will remain a nation dependent on credit cards?
These are questions that all consumers must ponder. As your monthly bills are developing into a mountain of debt, you, as consumers must decide if you will continue to accept rising interest rates and escalating fee’s or if you have had enough and desire a change.
Because it is when you truly decide, to make a commitment to yourself, that things will change.
Those that are brave enough to accept my challenge must be sick and tired of this lackluster economy and is willing to take an aggressive approach to their debt problems. The first step is to have a debt management coach that will show you the steps you need to take to eliminate your debt.
It’s time to be debt free.
But where do you start?
First of all, you need to stop charging. No matter what. Stop the bleeding. Do nothing more to increase your balances. In fact, total them up and let’s see how bad the damage is. Now, it’s decision time. Some questions to ask yourself are:
Are you behind on your payments?
Are you only making the monthly minimum payments?
Are you struggling each month meeting your monthly obligations?
Are you possibly thinking about bankruptcy, or are you looking at debt relief programs?
What are you willing to do to eliminate your debt?
Getting rid of your debt should now be your top priority. In the quickest way possible. For the least expense. Debt settlement here is the best way to do this. Your total amount of debt will be paid off for about half of what you owe in about three years. This type of program can be completed sooner, depending on the amount you owe and what you can pay each month.
Also, let’s take a look at where your current income is going. Here’s part two of my challenge, that I call my 30 day challenge. For the next 30 days, get a receipt for every dime that you spend. Every purchase, no matter how small or large. Save these receipts in an envelope for 30 days and see where your money is going. This may come as a shock to you, I know it did me when I first done it.
Can you make some adjustments in the way you spend? Can you brown bag a couple of lunches during the week? Are there any other adjustments you can make?
Develop a spending and savings plan.
A spending plan is another tool that reveals the impact goal setting could have on your personal finances. A spending plan, or budget, is your first step to building financial responsibility, and it is critical to effective decision making when developing your goals.
Financial goals will not necessarily have a dollar amount affixed to them. This will require that you either generate more income or reduce expenses or possibly, if you already have monies allocated, shift monies within your plan. In any case, your spending plan will let you know if your goal is financially possible.
For a workable savings plan, four steps are necessary:
Add up your total income, including any funds you receive in addition to your earnings.
Figure out your total fixed expenses such as rent or mortgage, insurance premiums or car payments.
Provide for a savings fund, adequate to meet emergencies and achieve special goals.
Estimate how much you need for day to day living expenses.
You may need to do some adjusting of the amount in each step until you have what you feel is a satisfactory plan. After going through each step and filling out the worksheet, you will have a better idea of where your money is going and how much you have left over to work with.
After following these steps and changing the way you think and act about finances for 90 days, you will break any of the bad habits that you have developed over the years and will be well on your way to living a debt free lifestyle.
Thursday
A Student's Survival Guide
“To be educated, a person doesn’t need to know how much or to be informed, but needs to have been exposed as vulnerable to the transformative events of an engaging life.”
- Thomas Moore
For most students, college is the last carefree step before their life begins. Although they should have an understanding of finances, including using credit, credit cards and managing debt, they should not have worries about unnecessary monthly bills.
Tuition? Yes!
Living expenses? Yes!
Student loans? Yes!
Credit cards? A loud and resounding NO!
For the vast majority of college students, this is not the case. With aggressive marketing campaigns targeting students, the average undergraduate has at least one credit card and carries an average balance of $2,169.
The problem is that students are flooded with offers from card issuers. They often set up tables right on campus at the start of the school year to hand out applications and free goodies. More offers land in students' hands at the college bookstore, stuffed into bags with the receipts. Still more get pinned to bulletin boards.
Why and how do the credit card companies get away with this marketing barrage on college campuses? They pay the college handsomly for this. It generates a good deal of revenue for the college.
The unrestricted marketing of credit cards on college campuses is so aggressive that it now poses a greater threat than alcohol or sexually transmitted diseases.
As a result of high credit card debt, students have lower GPAs and a higher drop-out risk, because they are forced into taking a job to pay down the debt. Some ruin their credit score making it difficult to rent an apartment, afford insurance or get a job. Even relationships and mental health suffer. But with increasing education costs and no co-signing requirements, credit card issuers have found students an easy market to tap into.
A large part of the problem is that most students simply have not been taught how to handle credit cards by their family or the educational system. Only 15% of high school students take a personal finance class and that doesn’t even scratch the surface of real financial education. Even at the high school level, it is too late to be teaching students about money. This very important subject should be ingrained in our childrens brain as early as kindergarden.
Parents are sending the wrong message to their children by exhibiting the buy now pay later mentallity that our society has become. Don’t we ant our children to have what we never had? I’m not referring to material goods and services, I’m talking about education.
Education AND financial responsibility. Students are to be held accountable for the charges they make, so they just might think twice about charging that beer and pizza party or spring break vacation.
Always remember that credit is a loan. It’s real money and must be repaid. Before you aply for your first card, determine how it will be used. For emergencies? OK, but everyone that first gets a credit card say that it will only be used in emergency. You need to have the discipline that will not allow an emergency party or two.
As a parent, you might consider using a pre-paid debit card with a budgeted amount available every month. Students and parents need to talk more openly about the financial needs of the student.
This way a realistic budget can be made.
- Thomas Moore
For most students, college is the last carefree step before their life begins. Although they should have an understanding of finances, including using credit, credit cards and managing debt, they should not have worries about unnecessary monthly bills.
Tuition? Yes!
Living expenses? Yes!
Student loans? Yes!
Credit cards? A loud and resounding NO!
For the vast majority of college students, this is not the case. With aggressive marketing campaigns targeting students, the average undergraduate has at least one credit card and carries an average balance of $2,169.
The problem is that students are flooded with offers from card issuers. They often set up tables right on campus at the start of the school year to hand out applications and free goodies. More offers land in students' hands at the college bookstore, stuffed into bags with the receipts. Still more get pinned to bulletin boards.
Why and how do the credit card companies get away with this marketing barrage on college campuses? They pay the college handsomly for this. It generates a good deal of revenue for the college.
The unrestricted marketing of credit cards on college campuses is so aggressive that it now poses a greater threat than alcohol or sexually transmitted diseases.
As a result of high credit card debt, students have lower GPAs and a higher drop-out risk, because they are forced into taking a job to pay down the debt. Some ruin their credit score making it difficult to rent an apartment, afford insurance or get a job. Even relationships and mental health suffer. But with increasing education costs and no co-signing requirements, credit card issuers have found students an easy market to tap into.
A large part of the problem is that most students simply have not been taught how to handle credit cards by their family or the educational system. Only 15% of high school students take a personal finance class and that doesn’t even scratch the surface of real financial education. Even at the high school level, it is too late to be teaching students about money. This very important subject should be ingrained in our childrens brain as early as kindergarden.
Parents are sending the wrong message to their children by exhibiting the buy now pay later mentallity that our society has become. Don’t we ant our children to have what we never had? I’m not referring to material goods and services, I’m talking about education.
Education AND financial responsibility. Students are to be held accountable for the charges they make, so they just might think twice about charging that beer and pizza party or spring break vacation.
Always remember that credit is a loan. It’s real money and must be repaid. Before you aply for your first card, determine how it will be used. For emergencies? OK, but everyone that first gets a credit card say that it will only be used in emergency. You need to have the discipline that will not allow an emergency party or two.
As a parent, you might consider using a pre-paid debit card with a budgeted amount available every month. Students and parents need to talk more openly about the financial needs of the student.
This way a realistic budget can be made.
Wednesday
Your Financial To Do List
“They may say I’m a dreamer, but I’m not the only one”
- John Lennon
This is not a to do list in the traditional sense. You are not trying to think of all the things that you have to do, but rather create a list of things that you wanted to do, but never had the money or time.
When you achieve true financial independence you will have both the time and the money to accomplish anything that you want. So what we are going to do in this exercise is “act as if.” You are going to act as if money or time was no object and that you can and will do anything that you desire.
Dare to dream.
Assuming that you actually took the time to do this part of the exercise, and by reading this far I will assume that you have, you have a list of dreams – the things that you have always wanted to do.
Now pick three of these items that you want to accomplish this year. Only chose three.
Three is a good number because chosing just three things to accomplish in a year does not seem overwhelming to the avarage person. Commit to the achievement of these three things. There is no possibility for failure. It is not an option.
Write these three things that you are commited to do down on paper. There is a purpose for this which I will go over later.
What you are to do now is determine what you need to do to achieve these three things. How much money will it take? Where can you get these funds? What will you set in motion?
Remember, you have made a commitment to yourself and failure is not an option.
Write this all down on paper.
Now, in what period of time will you achieve these goals. A week? A month? 6 months? Put a time frame on each of your three things and, you guessed it, write it down.
Look at what you have written down. Don’t worry if it seems like gibberish, no one will see it, only you. Now it’s time for you to make sense of it for yourself. To give you an idea of what I’m referring to, use the following as a guide:
This year I will accomplish
A, B, C
And I will accomplish them in
A – 1 month
B – 6 months
C – 9 months
I commit myself to the achievement of these goals and I will do…..
Complete that last sentence for yourself.
Post this written commitment in a place that you will be able to see it. Make copies even and post them everywhere to keep your mind focused on your commitment. Read your written commitment aloud twice per day. Once when you wake up and when you go to sleep at night. Be sure to read it aloud. There is a psychological reason for this. The more your brain hears this commitment statement and see’s this commitment statement, the more powerful your focus will become.
Commit to this process everyday, without fail. You will certainly achieve the success you desire because people gravitate toward what they think about the most. Do this like your life depends on it.
It really just may.
- John Lennon
This is not a to do list in the traditional sense. You are not trying to think of all the things that you have to do, but rather create a list of things that you wanted to do, but never had the money or time.
When you achieve true financial independence you will have both the time and the money to accomplish anything that you want. So what we are going to do in this exercise is “act as if.” You are going to act as if money or time was no object and that you can and will do anything that you desire.
Dare to dream.
Assuming that you actually took the time to do this part of the exercise, and by reading this far I will assume that you have, you have a list of dreams – the things that you have always wanted to do.
Now pick three of these items that you want to accomplish this year. Only chose three.
Three is a good number because chosing just three things to accomplish in a year does not seem overwhelming to the avarage person. Commit to the achievement of these three things. There is no possibility for failure. It is not an option.
Write these three things that you are commited to do down on paper. There is a purpose for this which I will go over later.
What you are to do now is determine what you need to do to achieve these three things. How much money will it take? Where can you get these funds? What will you set in motion?
Remember, you have made a commitment to yourself and failure is not an option.
Write this all down on paper.
Now, in what period of time will you achieve these goals. A week? A month? 6 months? Put a time frame on each of your three things and, you guessed it, write it down.
Look at what you have written down. Don’t worry if it seems like gibberish, no one will see it, only you. Now it’s time for you to make sense of it for yourself. To give you an idea of what I’m referring to, use the following as a guide:
This year I will accomplish
A, B, C
And I will accomplish them in
A – 1 month
B – 6 months
C – 9 months
I commit myself to the achievement of these goals and I will do…..
Complete that last sentence for yourself.
Post this written commitment in a place that you will be able to see it. Make copies even and post them everywhere to keep your mind focused on your commitment. Read your written commitment aloud twice per day. Once when you wake up and when you go to sleep at night. Be sure to read it aloud. There is a psychological reason for this. The more your brain hears this commitment statement and see’s this commitment statement, the more powerful your focus will become.
Commit to this process everyday, without fail. You will certainly achieve the success you desire because people gravitate toward what they think about the most. Do this like your life depends on it.
It really just may.
Deposit Loan Programs
" Tomorrow is not a reflection of what happened to you yesterday but rather what you chose to do today."
- Author Unknown
Would you like to raise your credit score in a hurry?
Did you know that there is a program that will give you the appearance of greater assets and payment history that can be acquired from any bank?
I have been telling people for years; Know the rules before you play the game. This, and various other strategies that I write about, are what the wealthy have been doing to achieve their riches. They learned the strategies and techniques necessary to get what they want and need in life. You can do it too. You just need to learn how.
What I write about gives the reader a foundation to build further studies upon and spark, hopefully, something within that makes you want to learn more about a topic.
Increasing your credit score by 40 points and lowering your interest rate by 2% can save you over $100,000 on a 30 year mortgage. Additionally, the higher your score, the less you may have to put down as a down payment.
For example, if your score is between 500 and 619, you will typically have a down payment of 30%. However, if your credit score is between 620 and 699, your down payment could be as low as 5%.
Consumers with a score of 620 to 699 typically do what are known as SIVA (stated income verified asset) loans. They state their income and must verify that they have some type of asset such as savings or retirement account, CD’s, or an annuity.
Consumers that do not have any or enough reserve assets can use a little known method called a Deposit Loan Program.
Here’s how it works.
A bank associated with a Deposit Loan Program deposits $25,000 or more into a bank account in your name and using your social security number. The account is deposit only therefore you cannot withdraw any of the funds.
The only purpose of this account is to make it appear as though you have some type of asset that the bank can verify. The borrower simply lists the bank account on their loan application and the lender contacts the bank and requests a verification of deposit (VOD)
Once the VOD is received, the problem of having no reserve assets is solved. In addition, if the lender requires that the VOD be seasoned (aged a number of months) or sourced (closing costs paid through account) these things can also be handled for a nominal fee.
Deposit loan programs charge a monthly interest rate for this service. This is where they make their money. Let’s say that they charge 1% of the $25,000 example. That would mean that they earn $250 per month. Let’s also say that the minimum term of the loan is 3 months. The total interest paid would be $750.
Another great feature of this program is that once you make your first payment. The account reports to the credit bureaus as a current installment loan.
Deposit loan programs are an excellent tool to build your credit quickly. Once you make your final payment, using our example of 3 months, the account gets reported to the credit bureaus as a paid installment loan of $25,000.
Typically, this program can increase your credit score 80 to 100 points in as little as 3 months.
- Author Unknown
Would you like to raise your credit score in a hurry?
Did you know that there is a program that will give you the appearance of greater assets and payment history that can be acquired from any bank?
I have been telling people for years; Know the rules before you play the game. This, and various other strategies that I write about, are what the wealthy have been doing to achieve their riches. They learned the strategies and techniques necessary to get what they want and need in life. You can do it too. You just need to learn how.
What I write about gives the reader a foundation to build further studies upon and spark, hopefully, something within that makes you want to learn more about a topic.
Increasing your credit score by 40 points and lowering your interest rate by 2% can save you over $100,000 on a 30 year mortgage. Additionally, the higher your score, the less you may have to put down as a down payment.
For example, if your score is between 500 and 619, you will typically have a down payment of 30%. However, if your credit score is between 620 and 699, your down payment could be as low as 5%.
Consumers with a score of 620 to 699 typically do what are known as SIVA (stated income verified asset) loans. They state their income and must verify that they have some type of asset such as savings or retirement account, CD’s, or an annuity.
Consumers that do not have any or enough reserve assets can use a little known method called a Deposit Loan Program.
Here’s how it works.
A bank associated with a Deposit Loan Program deposits $25,000 or more into a bank account in your name and using your social security number. The account is deposit only therefore you cannot withdraw any of the funds.
The only purpose of this account is to make it appear as though you have some type of asset that the bank can verify. The borrower simply lists the bank account on their loan application and the lender contacts the bank and requests a verification of deposit (VOD)
Once the VOD is received, the problem of having no reserve assets is solved. In addition, if the lender requires that the VOD be seasoned (aged a number of months) or sourced (closing costs paid through account) these things can also be handled for a nominal fee.
Deposit loan programs charge a monthly interest rate for this service. This is where they make their money. Let’s say that they charge 1% of the $25,000 example. That would mean that they earn $250 per month. Let’s also say that the minimum term of the loan is 3 months. The total interest paid would be $750.
Another great feature of this program is that once you make your first payment. The account reports to the credit bureaus as a current installment loan.
Deposit loan programs are an excellent tool to build your credit quickly. Once you make your final payment, using our example of 3 months, the account gets reported to the credit bureaus as a paid installment loan of $25,000.
Typically, this program can increase your credit score 80 to 100 points in as little as 3 months.
12 Steps To Financial Freedom - Step 12 - The Beginning Of The End
“Patience and perseverance have a magical effect before which difficulties disappear and obstacles vanish”.- John Quincy Adams
Welcome to the beginning of your new fianacial life and the end to your old ways of being a prisoner of debt. No longer will you dread opening your mailbox to find bill after bill or get anxious every time the phone rings, thinking that it might be a collector.
You’ve come a long way and you should reward yourself, at least with a well deserved pat on the back.
Please take what you learned here and use it as a base or a starting point to expand your search for new and different ways to live your life. There is only a short space available here but if you do some investigation, there is a wealth of information available that didn’t appear here.
You are a changed person. You are a person that now hungers for this information and not only that, you are a person of action.
I would like to invite you to contact me for any advice, tips, resources or consultative services that you feel you might need. I have been personally helping people relieve their debt burden for 17 years and would love the opportunity to help you with yours. I am author of several books on the subject of credit, credit cards and debt education and host a radio show in Chicago called “The Debtonator” soon to be syndicated nationwide.
Let’s face it, almost all of us go through some tight financial times through our lives, but how we look at and face those times can set you apart from the crowd. Some people who are in a tight financial situation will let it take them down and they’ll use it as a crutch and blame all their woes on it, whereas another person in the same situation will say that money is tight, but that’s finances are not the end all and be all of their lives.
Life is what you make it.
Deeply dwelling on your financial situation costs you energy you could be using to improve your situation or at least try to make the best of it!
If you’ve always done things the same way, financially speaking, and your situation hasn’t improved, well then it’s time to do things DIFFERENTLY!
How do you do something about your current financial situation?
Do something different today so you can enjoy tomorrow more!
Welcome to the beginning of your new fianacial life and the end to your old ways of being a prisoner of debt. No longer will you dread opening your mailbox to find bill after bill or get anxious every time the phone rings, thinking that it might be a collector.
You’ve come a long way and you should reward yourself, at least with a well deserved pat on the back.
Please take what you learned here and use it as a base or a starting point to expand your search for new and different ways to live your life. There is only a short space available here but if you do some investigation, there is a wealth of information available that didn’t appear here.
You are a changed person. You are a person that now hungers for this information and not only that, you are a person of action.
I would like to invite you to contact me for any advice, tips, resources or consultative services that you feel you might need. I have been personally helping people relieve their debt burden for 17 years and would love the opportunity to help you with yours. I am author of several books on the subject of credit, credit cards and debt education and host a radio show in Chicago called “The Debtonator” soon to be syndicated nationwide.
Let’s face it, almost all of us go through some tight financial times through our lives, but how we look at and face those times can set you apart from the crowd. Some people who are in a tight financial situation will let it take them down and they’ll use it as a crutch and blame all their woes on it, whereas another person in the same situation will say that money is tight, but that’s finances are not the end all and be all of their lives.
Life is what you make it.
Deeply dwelling on your financial situation costs you energy you could be using to improve your situation or at least try to make the best of it!
If you’ve always done things the same way, financially speaking, and your situation hasn’t improved, well then it’s time to do things DIFFERENTLY!
How do you do something about your current financial situation?
Do something different today so you can enjoy tomorrow more!
Tuesday
12 Steps To Financial Freedom - Step 11 - A Business Of Your Very Own
“Most of the important things in the world have been accomplished by people who have kept on trying when there seemed to be no help at all”- Dale Carnegie
10 benefits to running your own business
People do not work for themselves to get rich; there's lots of research that disproves that common belief. Greed is rarely a motivation for taking the risk of free enterprise. Here are the real benefits:
1. Freedom - No boss means no petty rules, no asking permission to visit the dentist and the freedom to set your own goals.
2. Vision - You want to leave your mark on the world and change something. Running your own business enables you to do this to a greater extent than you could as an employee.
3. Control - You're in the driving seat and no one can come and close down your department as part of some global restructure. Your destiny rests in your hands alone.
4. Choice - There are no policies that dictate the car you drive, the software you use or the colour of the office wall. Your own organisation can reflect your personal taste and style.
5. Ambition - Your ambition is only limited by your ability to grow your business. Equally, if you want to stay small, you can.
6. Safety net - There are lots of insurance products out there that can provide you with a financial safety net. Long term sickness or your sudden death need not mean poverty for your family.
7. Work at home - It's likely you'll start a new business from home. That means you can get up at 0855 and be at your desk for 0900!
8. You choose your team - As you're the boss, you get to hire the people you want and not be stuck with who the boss hires to work with you.
9. Long holidays - Providing you can organise your business to allow it, you can take as much time off as you want, whenever you want.
10. Flexible - You can adapt quickly to new opportunity. You no longer have to feed ideas up the line for other's to make the decision.Over the past decade, a steadily growing proportion of the U.S. population have become attracted to the idea of having their own small business. Not only as an alternative to conventional employment, coping with early retirement or as a way of supplementing a family income, but also for the sheer satisfaction of being an entrepreneur and being rewarded solely on the basis of achievement.
Because different types of income are subject to different tax treatments, it is important to determine that the income in question is in fact from a business and not from rental (ie: renting the basement of your house), employment, a hobby, or a capital gain (ie: income from the sale of a building or land)
People in certain occupations are considered employees for employment insurance and Canada Pension Plan purposes, but are self employed for taxation purposes. Which means that income received will have the applicable taxes deducted and a T4 slip will be generated at the end of the year, but for income tax purposes they will be able to deduct from that income reasonable business expenses incurred to earn that income.
For income tax purposes as well as management of your business you should setup a simple bookkeeping system to include income and expenses. There are several systems available that will benefit you in:
1. Enhancing business information including budgeting and spotting of business trends
2. Readily accessible information that may be required from banks and other lenders
3. Faster processing of your business tax returns (income tax, GST/HST, PST) and assurance that expense deductions are not missed
4. Time savings in cheque processing and potential payroll processing
5. Organized business details in the case of a government audit
Keeping records is important because only those expenses which can be shown to have been incurred to earn income are allowable. Supporting documentation includes purchase invoices, contracts, bank statements, and canceled cheques.
Income tax records must be retained for a minimum of six years. Do not destroy receipts or account records for prior year without written permission from the tax department.
If your revenues are under $30,000 in gross sales you are not required to register for the GST, but may do so if you choose. Whether it is advisable to do so depends on the circumstances.
Business who sell primarily to other businesses may find it to their advantage to register for the following reasons:
Registrants can fully recover the GST paid for business related expenses against the GST they collect Registrants may be able to charge a lower price than non-registrants because they can fully recover all GST costs on supplies Business customers of GST registrants may claim input tax credits for the GST charged to them
Businesses who sell primarily to consumers, or whose product or services is very labour intensive may find it advantageous to avoid registering until required to do so.
Each case needs to be examined individually, taking into account all of the factors involved.
Individuals may claim all reasonable expenses incurred in the conduct of their businesses, provided they are reasonable in the circumstances and are incurred to earn income.
The business plan is a written summary of the overall activities of your business. It is a report on the company's sources and use of funds, management personnel, labour relations, products, services, marketing strategy, production techniques and research. It describes the past, present and future of your operation.
A typical business plan begins with a summary of your idea, the market need, the amount of capital required and the projected financial results. It then includes information about how your company is organized and who is involved. You should also include the research that you have conducted about the industry you are in, and how your product or service differs from your competition. This is a critical step to understanding your business operation and the degree to which you have developed a business plan can mean the difference between obtaining the financing you require and not.
10 benefits to running your own business
People do not work for themselves to get rich; there's lots of research that disproves that common belief. Greed is rarely a motivation for taking the risk of free enterprise. Here are the real benefits:
1. Freedom - No boss means no petty rules, no asking permission to visit the dentist and the freedom to set your own goals.
2. Vision - You want to leave your mark on the world and change something. Running your own business enables you to do this to a greater extent than you could as an employee.
3. Control - You're in the driving seat and no one can come and close down your department as part of some global restructure. Your destiny rests in your hands alone.
4. Choice - There are no policies that dictate the car you drive, the software you use or the colour of the office wall. Your own organisation can reflect your personal taste and style.
5. Ambition - Your ambition is only limited by your ability to grow your business. Equally, if you want to stay small, you can.
6. Safety net - There are lots of insurance products out there that can provide you with a financial safety net. Long term sickness or your sudden death need not mean poverty for your family.
7. Work at home - It's likely you'll start a new business from home. That means you can get up at 0855 and be at your desk for 0900!
8. You choose your team - As you're the boss, you get to hire the people you want and not be stuck with who the boss hires to work with you.
9. Long holidays - Providing you can organise your business to allow it, you can take as much time off as you want, whenever you want.
10. Flexible - You can adapt quickly to new opportunity. You no longer have to feed ideas up the line for other's to make the decision.Over the past decade, a steadily growing proportion of the U.S. population have become attracted to the idea of having their own small business. Not only as an alternative to conventional employment, coping with early retirement or as a way of supplementing a family income, but also for the sheer satisfaction of being an entrepreneur and being rewarded solely on the basis of achievement.
Because different types of income are subject to different tax treatments, it is important to determine that the income in question is in fact from a business and not from rental (ie: renting the basement of your house), employment, a hobby, or a capital gain (ie: income from the sale of a building or land)
People in certain occupations are considered employees for employment insurance and Canada Pension Plan purposes, but are self employed for taxation purposes. Which means that income received will have the applicable taxes deducted and a T4 slip will be generated at the end of the year, but for income tax purposes they will be able to deduct from that income reasonable business expenses incurred to earn that income.
For income tax purposes as well as management of your business you should setup a simple bookkeeping system to include income and expenses. There are several systems available that will benefit you in:
1. Enhancing business information including budgeting and spotting of business trends
2. Readily accessible information that may be required from banks and other lenders
3. Faster processing of your business tax returns (income tax, GST/HST, PST) and assurance that expense deductions are not missed
4. Time savings in cheque processing and potential payroll processing
5. Organized business details in the case of a government audit
Keeping records is important because only those expenses which can be shown to have been incurred to earn income are allowable. Supporting documentation includes purchase invoices, contracts, bank statements, and canceled cheques.
Income tax records must be retained for a minimum of six years. Do not destroy receipts or account records for prior year without written permission from the tax department.
If your revenues are under $30,000 in gross sales you are not required to register for the GST, but may do so if you choose. Whether it is advisable to do so depends on the circumstances.
Business who sell primarily to other businesses may find it to their advantage to register for the following reasons:
Registrants can fully recover the GST paid for business related expenses against the GST they collect Registrants may be able to charge a lower price than non-registrants because they can fully recover all GST costs on supplies Business customers of GST registrants may claim input tax credits for the GST charged to them
Businesses who sell primarily to consumers, or whose product or services is very labour intensive may find it advantageous to avoid registering until required to do so.
Each case needs to be examined individually, taking into account all of the factors involved.
Individuals may claim all reasonable expenses incurred in the conduct of their businesses, provided they are reasonable in the circumstances and are incurred to earn income.
The business plan is a written summary of the overall activities of your business. It is a report on the company's sources and use of funds, management personnel, labour relations, products, services, marketing strategy, production techniques and research. It describes the past, present and future of your operation.
A typical business plan begins with a summary of your idea, the market need, the amount of capital required and the projected financial results. It then includes information about how your company is organized and who is involved. You should also include the research that you have conducted about the industry you are in, and how your product or service differs from your competition. This is a critical step to understanding your business operation and the degree to which you have developed a business plan can mean the difference between obtaining the financing you require and not.
12 Steps To Financial Freedom - Step 10 - Work At Home Opportunities
“Try not to do too many things at once. Know what you want, the number one thing today and tomorrow. Persevere and get it done”- George Allen
Home-based businesses are the trend of the future. Government and industry reports show that increasing numbers of men and women are now opting to work out of their homes. In fact, the latest data from the U.S. Bureau of Labor Statistics show that 4.12 million entrepreneurs are now working at home, most of which are in services industry.
There is no greater way to get out of debt than to increase your income. A work at home business provides a great many benefits for the average family.
7 Benefits of Being a Home-Based Entrepreneur
Entrepreneurs are rediscovering the benefits of working at home. The continuously good performance of the economy, followed by a change in lifestyles buoys well for the home-based entrepreneur. Many people now wants to combine their careers with families, opting out of the rat race to spend more time with their families and take a more proactive part in raising their children. The technological innovations in the past decades have also made working at home easier and more feasible.
You need not look farther than your kitchen, bedroom, den, living room, or garage to find the foundation on which to build your business enterprise. Here are seven reasons why it pays to work at home:
1. To gain personal freedom.
The most enticing aspect of starting a home-based business is the opportunity it provides to gain control over your own life. As a home business entrepreneur, you can shape your work life depending on your goals and environment. There are no bosses to follow, no corporate culture to abide by, and no rigid work schedules nor time clocks. Instead, you have the freedom to work and earn as you choose, in the comfort and convenience of your own homes. Of course, having all the time and freedom to work as you please also has its drawback. Thus, a home business entrepreneur needs to have good time management skills and discipline to push yourself to work.
2. To reap financial benefits.
The financial benefits of working at home are equally attractive. The convenience of having your office a few steps away from your bed allows you to save on commute time, gasoline and transportation expenses. There is also little need to buy power suits and dress up every workday as you can work in your jogging outfit or pajama. Since you work at home, you save on rental payments and overhead costs are cut significantly; allowing you to plough all your capital and profits back into the business. Your earning potential is directly proportional to your performance: no more waiting for your boss to give you your raise or promotion before you can increase your income. More importantly, however, a home business allows people who have been frequently shut out of the job market--homemakers, students, retirees, and the disabled, to name a few-to to create new income opportunities.
3. To exploit tax advantages.
Using your home as a place of business offers a number of tax advantages. For starters, it allows you to deduct a part of the operating and depreciation expenses on your home. This means that a percentage of your rent or mortgage payment, depreciation, property taxes, insurance, utilities, and expenses for household maintenance, repairs, or improvements is deductible. You can also be entitled to deduct expenses from using a vehicle for your business, including gas, insurance, depreciation, and others. Consult your accountant for a careful evaluation of what can be and what cannot be deducted from using your home office.
4. To be with the family.
Many opt to start their business from their homes to strengthen family relationships. A home business allows family members to be involved in the business. Husbands or wives can help in various aspects of the business, while children have the opportunity to see what their parents do for a living. Parents, most especially, can both work and earn, while taking care of their children; although daycare arrangements or babysitter may be needed to help you concentrate on the work at hand.
5. To reduce stress.
Working at home can reduce the stress of juggling the demands of your work life with those of your private life. You can work while staying at home to care for a sick child, or continue to work late at night after preparing and sharing dinner with the family. Since you work alone, there is no office politics and deadlines imposed by your boss. You only need to follow the deadlines and schedules you have set for yourself.
6. For job enrichment.
As a home-based entrepreneur, you are not boxed into one job and given a label identifying you as a researcher, secretary, banker, manager, or administrative assistant. You are free to learn and perform a variety of work-related tasks. If you are a solo entrepreneur, then you even have to be ready of being all things for your business: the strategy setter, marketing and sales person, customer service representative, accountant and bookkeeper, and other roles. You can vary your activities to keep you from getting bored. While it means greater workload, the plus point is that you develop an understanding of all aspects of your own business. More importantly, personal growth is greatly enhanced as you learn what you can (and cannot do) and your goals become much more achievable.
7. To increase productivity.
Many home-based entrepreneurs find that working at home helps them to be more productive. With lesser time dedicated to commuting, there is more time available to work. More importantly, working for your own business - wherein the amount of financial compensation depends on your productivity and business management - increases the level of enthusiasm. Many get so caught up in what they're doing that it's actually hard for them to stop.
Home-based businesses are the trend of the future. Government and industry reports show that increasing numbers of men and women are now opting to work out of their homes. In fact, the latest data from the U.S. Bureau of Labor Statistics show that 4.12 million entrepreneurs are now working at home, most of which are in services industry.
There is no greater way to get out of debt than to increase your income. A work at home business provides a great many benefits for the average family.
7 Benefits of Being a Home-Based Entrepreneur
Entrepreneurs are rediscovering the benefits of working at home. The continuously good performance of the economy, followed by a change in lifestyles buoys well for the home-based entrepreneur. Many people now wants to combine their careers with families, opting out of the rat race to spend more time with their families and take a more proactive part in raising their children. The technological innovations in the past decades have also made working at home easier and more feasible.
You need not look farther than your kitchen, bedroom, den, living room, or garage to find the foundation on which to build your business enterprise. Here are seven reasons why it pays to work at home:
1. To gain personal freedom.
The most enticing aspect of starting a home-based business is the opportunity it provides to gain control over your own life. As a home business entrepreneur, you can shape your work life depending on your goals and environment. There are no bosses to follow, no corporate culture to abide by, and no rigid work schedules nor time clocks. Instead, you have the freedom to work and earn as you choose, in the comfort and convenience of your own homes. Of course, having all the time and freedom to work as you please also has its drawback. Thus, a home business entrepreneur needs to have good time management skills and discipline to push yourself to work.
2. To reap financial benefits.
The financial benefits of working at home are equally attractive. The convenience of having your office a few steps away from your bed allows you to save on commute time, gasoline and transportation expenses. There is also little need to buy power suits and dress up every workday as you can work in your jogging outfit or pajama. Since you work at home, you save on rental payments and overhead costs are cut significantly; allowing you to plough all your capital and profits back into the business. Your earning potential is directly proportional to your performance: no more waiting for your boss to give you your raise or promotion before you can increase your income. More importantly, however, a home business allows people who have been frequently shut out of the job market--homemakers, students, retirees, and the disabled, to name a few-to to create new income opportunities.
3. To exploit tax advantages.
Using your home as a place of business offers a number of tax advantages. For starters, it allows you to deduct a part of the operating and depreciation expenses on your home. This means that a percentage of your rent or mortgage payment, depreciation, property taxes, insurance, utilities, and expenses for household maintenance, repairs, or improvements is deductible. You can also be entitled to deduct expenses from using a vehicle for your business, including gas, insurance, depreciation, and others. Consult your accountant for a careful evaluation of what can be and what cannot be deducted from using your home office.
4. To be with the family.
Many opt to start their business from their homes to strengthen family relationships. A home business allows family members to be involved in the business. Husbands or wives can help in various aspects of the business, while children have the opportunity to see what their parents do for a living. Parents, most especially, can both work and earn, while taking care of their children; although daycare arrangements or babysitter may be needed to help you concentrate on the work at hand.
5. To reduce stress.
Working at home can reduce the stress of juggling the demands of your work life with those of your private life. You can work while staying at home to care for a sick child, or continue to work late at night after preparing and sharing dinner with the family. Since you work alone, there is no office politics and deadlines imposed by your boss. You only need to follow the deadlines and schedules you have set for yourself.
6. For job enrichment.
As a home-based entrepreneur, you are not boxed into one job and given a label identifying you as a researcher, secretary, banker, manager, or administrative assistant. You are free to learn and perform a variety of work-related tasks. If you are a solo entrepreneur, then you even have to be ready of being all things for your business: the strategy setter, marketing and sales person, customer service representative, accountant and bookkeeper, and other roles. You can vary your activities to keep you from getting bored. While it means greater workload, the plus point is that you develop an understanding of all aspects of your own business. More importantly, personal growth is greatly enhanced as you learn what you can (and cannot do) and your goals become much more achievable.
7. To increase productivity.
Many home-based entrepreneurs find that working at home helps them to be more productive. With lesser time dedicated to commuting, there is more time available to work. More importantly, working for your own business - wherein the amount of financial compensation depends on your productivity and business management - increases the level of enthusiasm. Many get so caught up in what they're doing that it's actually hard for them to stop.
Wednesday
12 Steps To Financial Freedom - Step 9 - Accelerating Wealth
“The will to persevere is often the difference between failure and success”
- David Sarnoff
What Do Millionaires Do?
They allocate their TIME, ENERGY and MONEY efficiently, in ways conducive to building wealth.
From a standpoint of investments, the following are some simple strategies that you can use to accelerate wealth building:
Use “bear markets” to your advantage, seizing opportunities to intelligently upgrade your portfolio.
Own stocks for only a few days and create double-digit returns.*
Identify, plan, and implement defensive & exit strategies to limit potential losses or downside risks.
Design a personal financial plan—establish your exact financial destination and learn strategies for accelerating your journey to financial freedom.
You need to be involved with cash flow AND growth investments to create true, lasting wealth. Parking your hard-earned money in one place, like the stock market, and praying that it increases, is the riskiest path of all. When you learn to use your money differently, what used to seem impossible, will become reality.
Universal Laws govern the Universe. They are basic principles of life and have been around since Creation. They are laws of the Divine Universe. Universal Laws apply to everyone, everywhere. They cannot be changed or broken. This universal law is working in your life right now, whether you are aware of it or not. You are attracting the people, situations, jobs and much more into your life. Once you are aware of this law and how it works, you can start to use it to deliberately attract what you want into your life. In using the Law of Attraction, there are several steps that can be taken to get you whatever it is that you want.
Step One Where are you now?
Being honest and clear with where you are now is the first thing you must do. Do not make it a bad thing, even though you are not where you want to be. Recognize “This is where I am, and I’m the one that got me here, and I have to get me out of here.” Don’t criticize yourself for things that have happened to you. You have to keep in mind that if you got yourself into the situation you are in now, you can also get yourself out of it.
Step Two
Where do you want to be?
Decide where you want to be, whether it is starting a business, making a lot of money, or something similar. Be very clear in what it is you want to be, write it down; do not just keep it in your head. When you write it down, keep it clear, if you want an online business where you can wake up and check your email to see ten sales of a hundred dollar product, and that is what you see yourself doing then you have to write that down, write down all the aspects of what you want.
Step Three
Learn to use your tools.
There are multiple things to do in this step, but one tool to use is visualization, taking the time to close your eyes and see the one thing that you what, and believing that you are where you want to be for at least a few minutes a day. Bob Proctor brings up an idea of mental money, and this is what he refers to. If you believe you have money, then you will. Therefore, step three is about using the tools of Laws of Attraction to bring that thing to you. Reading and researching the methods that Bob Proctor has written about and teaches will be very beneficial here.
Step Four
Start to take action.
Starting to take action, look for coincidences or those people who show up in your life that came out of nowhere, is what you have to do to continue your journey through Law of Attraction. You will get a feeling, it will jump out at you, when you meet someone or something that will move you closer to your goal. Don’t question these feelings. This is the universe delivering what you asked for, It is rearranging itself to bring you what you want for your life.
Step Five
Find yourself a mentor.
Go find someone who has done what it is you’re doing, and form a coaching bond with them, because that’s one of the easiest ways to get to where you are trying to go. In fact, Bob Proctor offers a training course for a few lucky internet entrepreneurs that get to study under him for a year. This might be the best way to receive that coaching bond that is beneficial to success.
Step Six
Start your transition slowly.
Taking baby steps is the key to Law of Attraction. Recognize that the journey of a thousand miles starts with a single step. You won’t be able to plunge yourself headfirst into achieving all of your big dreams, because your mind won’t have the ability to believe it when you start out. If you’re ready to make a change, tired of living this mediocre lifestyle, and you’re ready to take it to the next level, remember, there’s many other steps that you can take, visualizing what you want, finding a coach, those are things you can do that are going to get you to where you are trying to go.
Step Seven
Succeed!
Following these steps will put you on your way to becoming a wealthy, happy individual.
- David Sarnoff
What Do Millionaires Do?
They allocate their TIME, ENERGY and MONEY efficiently, in ways conducive to building wealth.
From a standpoint of investments, the following are some simple strategies that you can use to accelerate wealth building:
Use “bear markets” to your advantage, seizing opportunities to intelligently upgrade your portfolio.
Own stocks for only a few days and create double-digit returns.*
Identify, plan, and implement defensive & exit strategies to limit potential losses or downside risks.
Design a personal financial plan—establish your exact financial destination and learn strategies for accelerating your journey to financial freedom.
You need to be involved with cash flow AND growth investments to create true, lasting wealth. Parking your hard-earned money in one place, like the stock market, and praying that it increases, is the riskiest path of all. When you learn to use your money differently, what used to seem impossible, will become reality.
Universal Laws govern the Universe. They are basic principles of life and have been around since Creation. They are laws of the Divine Universe. Universal Laws apply to everyone, everywhere. They cannot be changed or broken. This universal law is working in your life right now, whether you are aware of it or not. You are attracting the people, situations, jobs and much more into your life. Once you are aware of this law and how it works, you can start to use it to deliberately attract what you want into your life. In using the Law of Attraction, there are several steps that can be taken to get you whatever it is that you want.
Step One Where are you now?
Being honest and clear with where you are now is the first thing you must do. Do not make it a bad thing, even though you are not where you want to be. Recognize “This is where I am, and I’m the one that got me here, and I have to get me out of here.” Don’t criticize yourself for things that have happened to you. You have to keep in mind that if you got yourself into the situation you are in now, you can also get yourself out of it.
Step Two
Where do you want to be?
Decide where you want to be, whether it is starting a business, making a lot of money, or something similar. Be very clear in what it is you want to be, write it down; do not just keep it in your head. When you write it down, keep it clear, if you want an online business where you can wake up and check your email to see ten sales of a hundred dollar product, and that is what you see yourself doing then you have to write that down, write down all the aspects of what you want.
Step Three
Learn to use your tools.
There are multiple things to do in this step, but one tool to use is visualization, taking the time to close your eyes and see the one thing that you what, and believing that you are where you want to be for at least a few minutes a day. Bob Proctor brings up an idea of mental money, and this is what he refers to. If you believe you have money, then you will. Therefore, step three is about using the tools of Laws of Attraction to bring that thing to you. Reading and researching the methods that Bob Proctor has written about and teaches will be very beneficial here.
Step Four
Start to take action.
Starting to take action, look for coincidences or those people who show up in your life that came out of nowhere, is what you have to do to continue your journey through Law of Attraction. You will get a feeling, it will jump out at you, when you meet someone or something that will move you closer to your goal. Don’t question these feelings. This is the universe delivering what you asked for, It is rearranging itself to bring you what you want for your life.
Step Five
Find yourself a mentor.
Go find someone who has done what it is you’re doing, and form a coaching bond with them, because that’s one of the easiest ways to get to where you are trying to go. In fact, Bob Proctor offers a training course for a few lucky internet entrepreneurs that get to study under him for a year. This might be the best way to receive that coaching bond that is beneficial to success.
Step Six
Start your transition slowly.
Taking baby steps is the key to Law of Attraction. Recognize that the journey of a thousand miles starts with a single step. You won’t be able to plunge yourself headfirst into achieving all of your big dreams, because your mind won’t have the ability to believe it when you start out. If you’re ready to make a change, tired of living this mediocre lifestyle, and you’re ready to take it to the next level, remember, there’s many other steps that you can take, visualizing what you want, finding a coach, those are things you can do that are going to get you to where you are trying to go.
Step Seven
Succeed!
Following these steps will put you on your way to becoming a wealthy, happy individual.
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