Archive for February, 2009

We all know that our credit score is very important when it comes to our finances. Even with knowing that your credit score is important, you may be surprised at how big an impact that score can have on your life.

Here are some common areas that will often consider your credit rating:

Mortgages

Just getting approved for a mortgage loan may be challenging. If you are approved, your credit score plays a large part in determining your interest rates and monthly payments. Those with higher credit ratings will usually get lower monthly payments and interest rates. Because lenders view low credit scores as an increased risk, they assign these consumers higher interest rates and payments. You may not think a 2-3% interest rate will affect your payment but do the math and you will see your monthly payment rise significantly if you are viewed as a risk to the bank.

Credit cards

Your credit score directly determines your credit card interest rates and credit limits. Consumers with higher credit scores will receive lower interest rates and high credit limits.

Auto loans

When leasing or purchasing a car, your credit score can affect the terms of your auto loan agreement with your auto dealer. Having a high credit score can keep the interest rate on your monthly payments low and can also positively affect your closing terms.

Insurance rates

While most states have begun regulating how much insurance companies can factor in your credit score when determining your risk factors, credit scores definitely affect your rates. There are a few companies throughout the nation that are regularly pulling credit reports for those seeking homeowners or automobile insurance. If you have a low credit score they can charge you more on your annual premium or worse…deny you insurance through their company.

Getting a job

Many employers are now using credit checks during the hiring processes to make sure their potential employees are stable. They view credit risks as a threat to their companies. They don’t want to hire a person for an accounting job when that person can’t even pay his own bills.

You will surely come across the need for a mortgage or insurance at some time in your life. When you do make sure that you are educated about your credit score so that you will be able to take advantage of the best rates available. Please keep in mind that all of these companies must have your permission to run your credit report.

Budgeting

The dreaded “B” word. Not many words evoke such an unpleasant feeling…but don’t let it scare you. A budget is simply a way, or plan, to make your money work for you…not the other way around.

Dictionary.com defines the word budget this way.

“an estimate, often itemized, of expected income and expense for a given period in the future.”

Budget planning should address:

• How much money do you make?
• How much money do you spend?

On average, people spend 10% more than they make each month. By using a monthly budget you can cut hidden spending, increase savings, and eliminate debt. Isn’t that what we all desire?

When you see that a budget is just spending your money with a specific intent, you’ll actually experience more freedom than before.

Creating your budget

• First, list your income. Be sure to include all income including alimony, child support, investments, etc.
• Next, list your fixed expenses such as rent, mortgage, child care, car payment, savings, charitable donations, etc.
• Then list your variable expenses like groceries, haircuts, gas, and debt repayment.
• Subtract your expenses from your income and you will see what is left over.
• If you have extra money left over create specific categories that need to be funded.

If you know you will need to replace a vehicle soon create a new vehicle fund. If you vacation each year make sure you are contributing a certain amount to your vacation fund each month.

Don’t forget Christmas and even birthdays they happen every year at the same time. There is no excuse not to plan for them. For example, let’s say you spend about $800.00 on Christmas. You need to take $800.00 and divide it by 12. You should be saving about $67.00 per month. If you do you will be able to spend your own saved money and not rely on credit cards to “help” you out. It is a very empowering feeling to do this.

If you end up in the red on your first budget you need to do some trimming. Some ideas might be to look over your insurance policies to see if you can raise deductibles. Maybe you can cut out some of your trips to Starbucks. Can you live with basic cable rather than movie channels for a while? Be creative…it will be worth it when you realize you are in charge of every penny that you make.

Be sure and realize that a budget is a plan and it will take 3-4 months to start really working for you. You may need to tweak the grocery budget one month and reduce the entertainment fund the next, but know that it will work if you stick to it.

Note: I highly recommend that you keep all your financial information in one location. Whether it be a plain notebook, a simple spreadsheet in Excel, or an online source (such as Wesabe,YNAB, Quicken, or Mint) having all of your financial information in one place will create an organized and controlled environment on your quest for a happier financial life and eventual financial freedom.

While a payday advance loan is a viable option, daily cash management is the key to becoming debt-free.

Need a few ideas to help you start managing your cash? Start here:

Set Your Priorities

Your first step in creating a balanced budget is to think about your priorities. Determine what you have to spend on the necessities, like your mortgage or rent, food, car, or utilities. After you’ve established how much you need to cover those expenses, check over them again to figure out where you can make some changes. Can you raise your insurance deductible? Can you cut down on the grocery bill by using coupons? Talk to everyone in the household about your new budget. Have them come up with ideas on ways to trim the budget. Talk to them about wants vs. needs. If everyone participates in setting budget priorities, making the decision to not overspend will be so much easier.

Attack Your Debt

To pay down your debt most effectively, always focus on high interest loans and credit cards first. Take your credit card that is charging you the highest interest rate and pay them off first. Then move on to the second highest. In no time you will be debt free. One thing you need to do is learn the difference between good and bad debt. Good debt increases the value of something over the long-term (home improvement, college education). Bad debt applies to those things that are consumed quickly with no long-term payoff (vacation, eating out, groceries). Make sure you are only acquiring good debt in the future. When dealing with your debt, try to pay extra on your credit card bills and go beyond the minimum payment when you possible.

Record and Track Your Spending

One great way to keep track of what you spend is to use a notebook to record your purchases. Whether you’re buying groceries or gifts, a list will keep you focused and prevent impulse purchases. When you can actually see, in writing, what you buy you may start changing your shopping habits. Once you’ve kept track for a week, sit down and really consider where you can cut back. Things like coffees, sodas, and small impulse buys can really add up fast.

Begin Saving

Make a goal for yourself by writing it down in your finance notebook. Give yourself a positive reason to save and aim for a specific amount. Have a set amount of your paycheck automatically deposited into a separate savings account. If you do this you will never miss it since you won’t actually see it. If you ever receive extra money such as a tax refund put that money in your savings account instead of spending it. It may be hard at first but when you see the balance grow each month you will be so proud of your financial maturity.

By following these steps you will learn how to prioritize your expenses, track your spending, and start a savings program. More importantly you will begin to feel better about your “financial big-picture” and that is worth more than all the money in the world.

Have you ever wondered what criteria the credit bureaus use in order to rate your credit score? Sometimes their jargon is more than difficult to understand. Let’s take a look at what exactly we need to do to build up our credit scores.

Pay your bills on time

Your recent payment history is one of the largest factors of your credit score. Staying current with your bills and paying those on time will do far more good for your score than you can imagine.

Carefully maintain your credit cards

It’s very easy to run up debt on a credit card. Watch those credit card purchases. Avoid making purchases on your credit card if you are uncertain when you will have the income to pay them off. One tip is to subtract the money out of your checking account immediately for the amount of the credit card purchase.

That way you will know you have the money to pay the card off at the end of the month. Also, remember that lenders typically like to see consumers using no more than 25% of their available credit limit. Maxing out your credit cards will hurt your credit rating.

Refrain from opening too many new credit cards

The last thing you want showing on your credit report is a list of credit cards checking your credit. Each time you apply for a credit card or loan your credit score will lower. Another reason to not open too many credit cards is that a larger number of credit cards are usually more difficult to manage. Keeping track of account numbers, names, and balances can drive even an accountant crazy. Stick to a few favorites and keep those accounts in excellent standing.

Settle your outstanding debt

Even if your payment history has been rocky in the past, it is a good idea to correct those mistakes as soon as possible. Not only will this re-establish good financial relationships but it also shows lenders that you are capable of overcoming past problems and are committed to upholding your financial agreements.

By taking action now to ensure a strong credit rating for yourself you can really open many more doors to financial stability, and this is something everyone should want to have.

The cash advance loan process may seem daunting and scary to some. While you may have had nightmares at previous loan agencies, we want you to know it doesn’t have to be that way. The loan process can be simple, straightforward, and fast.

Cash advance loans tend to be simpler than personal bank loans. When trying to acquire financing through a bank they expect adequate collateral, their standards on credit worthiness are very tight, and the process may take up to a week for just a decision. To top that, the loan officers are never really happy about loaning money.

There are a few steps you can take to make your cash advance loan process run smoothly.

Compare Cash Advance Lenders before Applying

Before selecting a payday loan company, use the internet to compare and contrast lenders. Cash advance lenders have different terms and fees. Fortunately, there is a lender for everyone. Make a list with all of the information pertaining to loan fees, loan terms, minimum monthly salary, maximum loan amount, etc. After comparing companies, submit an online applicant to the lender that fits the majority of your needs.

Meet Minimum Loan Requirements

The loan process will proceed smoothly if applicants meet all loan requirements. Cash advance personal loans are intended to help people during a financial crisis on a short-term basis. Applicants must have a steady job, be 18 years of age or older, and have a verifiable checking or savings account.

Satisfy Terms of Agreement

Once you acquire funds, you have approximately two weeks to repay the money. In some instances, you can arrange a long-term or 30-day loan. To prevent late fees, pay back the money promptly. If at all possible, repay the funds before the due date. By doing this you create a good record with the payday lender. Failure to repay a cash advance will make it impossible to get future loans. Moreover, the balance will continue to balloon, creating further hardship.

Complete Loan Application and Provide Documents

If you need quick cash, it is important to fully complete your loan application before submitting. If information is missing from the application, it will delay the process. Some cash advance lenders will request fax copies of your paycheck stubs, banking information, and so forth. These documents are needed to complete the loan approval process.

By following these steps you can be more prepared when the time comes to apply for your cash advance loan. The more prepared you are the less likely you will be to run into problems and the faster you will be able to get your cash.

Cash advance loans can get you through sticky financial times. Just like any other kind of debt though, it is possible to dig yourself deeper into debt. If you rely on them to manage your budget regularly you may have a more serious financial problem than cash advance loans can fix.

Here are some guidelines for managing your credit and cash advance loans responsibly.

• Review your account status with your cash advance loans provider regularly so that you know exactly how much you owe and how often you’re borrowing from them.
• Are there alternative sources of credit available to you for a particular need? For instance, does your bank offer overdraft protection for a small fee? If so, you may be able to reduce your reliance on cash advance loans.
• Are you taking out a cash advance loan immediately after paying one off? Some payday loan providers impose limits on how many consecutive loans you can take out. If you find yourself unable to meet your regular expenses on an ongoing basis, cash advance loans may not be the right solution for you.

Those who follow these guidelines are reaping the benefits of cash advance loans. They only use them for unexpected emergencies and they pay off the loan promptly and in full.

Most of us live on a fairly strict budget. Sometimes living this way can get stressful and intense. We all know we need to save money but most of the time get overwhelmed with the idea. Here are 10 small and easy ways that might be beneficial to your savings plan that won’t stress you out so much.

Cook at home often: Cooking at home is a proven money saver. By using a menu and sticking to it, you will begin to see your restaurant budget dwindle. Just make sure you shop often so you have the ingredients on hand to cook with so you won’t be tempted to order take-out.

Brown bag it: Taking your lunch to work can not only save you cash, but also can help you to eat healthier. You don’t have to eat in everyday because often lunch times are great opportunities to network and make connections that could improve your career growth. Try bringing in your lunch twice a week then eating out the other three days and see how that works. You may get to the point that treating yourself for a lunch out only once a week is plenty for you.

Make a shopping list: Using a list at the grocery store is imperative. Without a list you will buy items that you simply do not need. This not only helps us with impulse purchases but it also helps us remember what products we need to buy for the meals we will be creating (AT HOME!) this week. Getting all that you need in one trip can help avoid another unnecessary trip and temptation.

Pay your bills on time and avoid late fees: Get organized about your regular bills. If possible, automate the payments through a bill pay program via your bank. This will ensure that you won’t be paying late fees (usually $39 a pop!) as well as creating a great credit score due to on time payments.

Borrow books from the library: Whenever possible, borrow your books instead of buying them. The card to your public library is free and the libraries are generally well stocked. If your library doesn’t have an item request they get it from another branch. Most also carry DVD’s and CD’s to check out as well. When new books range in cost from $9-$25 this saving could really add up.

Price check EVERYTHING: Prices can vary widely between brick & mortar stores and online stores. If you can wait for a while track the item for a couple of months before you purchase. A great deal may come along and save you even more with a coupon code. Who knows, you may even decide that you don’t even need the item anymore!

Maintain your vehicles: Regular oil changes, checking tire pressure, and changing air filters will significantly lengthen the life of your car, giving you years and years of use.

Carpool: Whenever possible, share a ride with a colleague or spouse and save both on gas and reduce the environmental footprint.

Go to Matinee’s: Everybody loves going to the movies but nobody likes paying the $10-$12 bucks for a ticket. Instead go before 6pm (or whatever your cut off is for matinee showings) to save cash. Also, check to see if your town has a discount theatre where you can see movies that you don’t necessarily HAVE to see right away. Usually these theatres offer movies for $2-$4 dollars. Try to avoid the temptation to buy popcorn or candy by going to the theater after you have had a meal. If you cannot resist the popcorn consider sharing with your fellow movie-goer.

Regulate your electric use: When not in use, unplug electric appliances like toasters, and computers. These appliances suck electricity even when not being used. When not in a room, switch off the lights and the fan. Use a programmable thermostat to control your A/C and heater usage. Just by doing a couple of these things your electric bill should show a marked decline.

1. Plan your meals for two weeks at a time, do one big shop every two weeks and then have no need to go out for fast food at all.

2. Try natural cleaning recipes to clean your house. White vinegar and baking soda can work miracles on even the toughest of grime. Not only will you be avoiding toxic cleaners but you will be saving money since you don’t have to buy those expensive cleaning products.

3. Don’t leave your gift buying until December. Always be on the lookout for Christmas gifts (and birthday presents) all year round. Target has some amazing clearance prices going all of the time. The perk here is not only do you save money on gifts you would normally buy but you also get to steer clear of the crowds and craziness of shopping! Also, remember the best time to purchase holiday related items are the day after that holiday. Savings usually amount to 50-75% off.

4. Learn to mend, sew on buttons, or alter clothing so that it lasts longer. Not only is this a smart skill to have but it also stretches your clothing budget so that you won’t need to buy new clothes so often. While on this subject, seek out more quality clothing when you are purchasing. They may cost more up front but in the long run they are a money saver.

5. Buy fruits that are in season rather than paying more for imported fruits out of season. Seek out farmers markets that sell their produce at a lower cost and are local.

Are you stuck in vicious cycle of debt? Are you guilty of living beyond your means? Do you rely on your credit cards to get you by from month to month? If so it is time to break this cycle before it breaks you!

Take a look at this outline for debt reduction.

1) List each one of your debts. How much do you owe? Who is the creditor? What the minimum payment? What the interest rate? By listing these things out you begin to see the scope of your problem and hopefully resolve to correct these nasty habits.

2) List your recurring expenses. This includes the bills you have EVERY month. Include your utilities, car payments, groceries, rent/mortgage, gas, insurance, and anything else you can remember. Be sure to include the minimum monthly payment that you make on all your debts (personal loans, credit cards, etc.).

3) Determine your net monthly income. If you’re paid a salary, add up what you earn each month after taxes. If you’re an hourly worker or are largely paid on commission, be fair — but conservative about your earnings. Also, if you have regular other income (alimony, child support, etc) include it.

4) Determine your disposable income. Total up your net (after tax) monthly income and subtract out your expenses. The leftover amount is the amount of money that you are going to use to pay off your debt.

5) Create a program and stick to it. Use your disposable income to pay off your debt. Some use the debt snowball idea. This is where you take your smallest debt and pay it off first. Then move onto your next smallest debt and pay your minimum payment as well as the amount you were paying off on the previously paid off debt. Keep doing this over and over until all debts are paid off. Whatever you decide to do please be sure and put yourself on a budget. Cut back on the things you’d “like” to have and focus on the things you “have” to have until your debt is paid off.

If you sit down and follow these steps to debt reduction you will not only feel better about your financial future but you may also find that your mindset in regards to “stuff” will change and you will find yourself “needing” less than ever before.