Consumer Finance Tips

In this fast-paced world we live in today, you can do almost anything from anywhere as long as you have internet access and a credit card.  In the past, you would have to go through a travel agent to book a vacation, now you can simply log on and purchase a full vacation online.  Basically you can buy most any item from wherever you are provided you have a credit card.  Back in the day, you would have to apply for a credit card by phone or via mail.  It could take weeks just to find out if you had been approved or not. Then possibly another few weeks to actually recieve your new credit card.  And while waiting, you would have no credit card.  Nowadays, you can apply for many credit cards at once and have almost instant buying power.

Years ago, the actual credit card application process was lengthy and drawn-out.  Since the emergence of the internet, everything is totally different.  Now, you can apply for multiple credit cards at once. There are many different instant approval credit cards available which can be found by doing a quick search online. But before you go applying for every credit card online, it’s worth it to take a few minutes to compare things such as: the credit card’s interest rate, late fees, grace periods, rewards programs, and application fees.

More and more credit card companies are adopting a reward program that offers a cash back incentive.  This means that for every dollar you spend on the card you receive a percentage of the money back as a cash reward at the end of the year. This amount can really add up, if you use that card frequently.  Some companies offer rewards such as: enhanced security features, designing your actual card, and low apr’s (annual percentage rates).

If your credit is not good you may think that you can’t qualify for any credit card or loan for that matter. With the economy in it’s present state, it may be true that some financial companies are looking a lot more closely at an applicant’s credit than ever before.  However, there are many instant approval credit cards for people with bad credit. These cards can actually play a role in helping the person improve their credit score. The major difference with a credit card for someone with a poor or bad credit rating and someone with a perfect score is a security deposit and/or application fee. This basically means that if you have bad credit, the credit card company may require you put a deposit down and that amount will be what your credit limit is.  This means that if the customer gave a deposit of $500, the card’s spending limit would be $500. When you are granted one of these instant approval credit cards, you won’t be able to use it until the security deposit had been received by the card issuer, they will then credit the amount to your card and you could begin using it.

There are other credit cards that may require that you pay an application fee usually ranging from anywhere between $5 to $50 depending on the company.  They will then offer you a credit card with a low credit limit, say around $300.  If this is the type of credit card you decide to go with, be sure to read the terms which state late fees, annual fees (if applicable), etc.  Sometimes, these companies will charge an annual fee and application fee but deduct it from your $300 credit limit.  This would reduce your credit limit right away, and by the time you receive your card in the mail, the fees have already been deducted.  For example, if your credit limit was $300 and your application fee is $50, and the annual fee is $75, then when you receive your card your actual spendable credit limit would be $175.  So, as soon as you get your card you would already be owing the company.  This may sound like a rip-off, but for those that have bad credit this may be one of the only ways to get a credit card.  And once you pay your monthly bill you would start building your credit.  So, basically you would be “paying” for credit.

Regardless of which credit card you choose to apply for make sure read the fine print and the terms section where they state the fees and percentages.  If you follow some of the tips you will be well on your way to multiple instant credit card approvals.

With the economy in its present state, it’s no wonder we all need to make some “financial” new years resolutions!

Here are some ways you can jumpstart your finances for 2010, choose one or two that particularly apply to your situation.

• Create your 2010 filing system. This might include new file folders, a new box to hold them or space in a filing cabinet with easy access.
• Set up a folder to collect all the important 2009 tax documents which will be arriving soon. Sure to arrive at your house are W-2s, 1099s, mortgage statements, etc.
• Set up an appointment with your tax professional early so you get the appointment of your choice. This also gives you a deadline to get your information ready! If you’re self-employed, the next quarterly estimated tax payment will be due on January 15.
• Review last year’s investments especially in your 401(k), IRA’s etc. Find out what financial planning resources your company or 401(k) plan administrator offers and set up an appointment to talk to them. For non-company portfolios, talk to your investment advisor. You have until April 15 to make contributions to IRA type accounts (check with your tax preparer for eligibility).
• What about Quicken or Microsoft Money? If you don’t use software to balance your checkbook, pay your bills and keep track of your savings and investments, this is a great time of the year to get started. My personal favorite is Quicken and for small businesses, you might consider Quicken Home and Business. If you are a small business with Payroll needs, check out QuickBooks.
• Medical Insurance reimbursements. If you haven’t submitted all your medical bills to your insurance provider, now is the time to do so.
• Will and Estate Planning. No one likes to think about dying, but the best thing you can do for your family is to make sure they are taken care of by creating a will and making sure you have adequate life insurance. Think how easily you’ll sleep knowing you have provided for your family even if you are no longer there.
• Speaking of insurance… If you haven’t reviewed your health or home and auto policies in the last couple of years you might find you can save money and/or have better coverage. For example, if you still have a $250 deductible (which was my first deductible in 1979!), you will probably save by increasing it to $500 or $1000. Try to set aside some of your savings for deductibles in case you need them.
• Create your own Anti-Emergency Fund! We all know those car and home repairs, school fees, medical expenses and vacations are going to happen. Why not determine how much you’ll need and save 1/12 of it each month?
• Holiday Bonus or Money Gifts – If you received a financial gift this holiday season, hold on to it for at least 30 days while you decide what you really want to spend it on. All too often financial windfalls are spent before they even arrive. Consider dividing it into thirds: 1/3 to the past, 1/3 to the present and 1/3 to the future. Past might include paying down debt, present could be something you need or want now and future could be retirement, college savings, or a special vacation
• Financial Goals for next year - Think about where you want to be next year at this time financially. If you want to save $1000, put aside $2.74 each day and you’ll be there! Break down your financial goals into monthly, weekly and daily amounts and watch how quickly your savings will grow.

By Cindy Morus

Cindy Morus (www.cindymorus.com) is a Certified Financial Recovery Counselor specializing in showing women and their families how to achieve financial well-being and peace of mind. She is also a Certified Credit Report Reviewer.

While 40% to 50% of us make New Year’s resolutions on January 1—a ritual that has existed since ancient times—approximately 60% to 80% of us have already broken them by the end of February, according to researchers.

It’s still not too late, however, to reset the trajectory on your family’s finances, experts note.

1. Build a Budget
If you haven’t already done so, create a realistic budget.

Approximately 85% of your income should be set aside for necessities like housing, food, health care and clothing, according to the professionals at VISA USA.

This leaves 15% for entertainment—and something many consumers completely neglect: savings.

2. Distinguish “Needs” from “Wants”
Make sure you have a clear understanding of what you need in life versus what you want in life.

You need to pay for the antibiotics when the doctor diagnoses a respiratory infection. You don’t need to buy the latest movie released on DVD to aid in your recovery.

You need to pay the rent or mortgage. You don’t need to buy the lovely accent pillows that beckon to you from the interior design boutique.

Always separate the needs from the wants—particularly if money is tight.

3. Monitor Your Spending
To see what you really spend each month, keep a running log of all purchases—no matter how small—for a full month. This will give you a visual display of where your money goes after you deposit your paycheck.

You may find that the $3 cup of coffee that starts each day adds up to $90 a month—a pocketbook pincher that may prompt you to buy a pound of coffee beans at the local market and grind them yourself. That $90 blossoms into $1,080 in savings at the end of a year.

4. Create an Emergency Fund
Life is full of surprises—both positive and negative. If you happen to lose your job or suffer an illness that temporarily sidelines you, you will need cash reserves to support you during the rough months.

“In most cases, consumers who find themselves dealing with a financial hardship are unprepared and have not saved for unexpected situations,” says Diane Giarratano, director of education for Novadebt, a U.S. financial management service agency, with multiple locations, that provides credit counseling, budgeting and financial education.

5. Educate Yourself
When you attended high school or college, you studied history, mathematics, language and science, but there was probably no course in basic money management.

If you need help in meeting a financial goal—whether it’s buying a home or reducing your debt—take advantage of community resources.

“Consumers should feel free to contact a good credit-counseling agency to obtain free advice with regard to establishing a budget or to learn how to handle unexpected hardships,” Giarratano says.

6. Don’t Become a Victim
Identity theft has become an international epidemic, so be extremely cautious when giving out your credit card or personal identifying information. Monitor your credit card bills carefully for unauthorized charges, and immediately report suspicious activity to the issuing company.

“Identity theft is often an inside job,” warns Robert L. Siciliano, a personal security expert with Boston, Massachusetts-based SafetyMinute Seminars and author of “The Safety Minute.”

“Lower-level help desk workers and frontline call center employees often have access to all our personal information in their databases,” he says. “What are you doing to protect yourself? If you’re not paying attention, you could be a victim, too.”

And when a disaster strikes, such as the recent killer tsunamis in South Asia and East Africa, be wary of scammers from fake charities before reaching for your checkbook. Unfortunately, there will always be unscrupulous individuals who seize such opportunities to profit from others’ misfortune.

“Avoid using your credit card to make contributions,” advises James Walsh, author of “You Can’t Cheat An Honest Man: How Ponzi Schemes and Pyramid Frauds Work…and Why They’re More Common Than Ever.”

“Even though this can be a convenient way to proceed, many crooks are looking for credit card numbers,” Walsh says. “They will press strongly for ‘immediate support.’ Don’t rush.”

Instead, initiate the call yourself, and select a reputable charity.

“Go with recognized names,” Walsh says. “No organization is perfect; even the best-meaning groups occasionally misallocate money or fall victim to abusive employees. But larger charitable groups—like the Red Cross, the United Way and Catholic Charities—have the mechanisms in place to audit their people and performance.”

Charitable contributions are tax-deductible, so keep good records of all donations—including small cash gifts.

Thinking of buying or building that perfect home?  Before you sign on the dotted line some research into home loan interest rates will be needed.  This will give you a much better chance of obtaining some interest rate savings.

To begin finding the best home loan interest rates you will want to study the current rates and rate movements or trends.  Home loan interest rates generally reflect the over all picture of interest rates.  They basically will follow Wall Street Securities with their rise and fall.

Home loan interest rates combined with your individual financial status would then determine how much you can borrow.  This would have an impact on how much house you can buy.  Higher interest rates would mean you may have to settle for a bit smaller home than you originally had planned.

One of the things that you may consider to lower home loan interest rates is to consider if you are willing to pay points or not.  A point is 1% of the total loan amount.  It is the up front fee that would reduce your monthly interest rate and the total amount of interest over the length of the loan.  By paying points you are essentially buying your way to a better rate and trading between paying now vs. paying later.  Paying points should only be considered if you plan on keeping the loan for at least four years.  The reason this is suggested is gives you time to get back the upfront money with the lower monthly payments.

Another factor to consider in regards to home loan interest rates length of loan.  A typical 30 year mortgage will have a higher interest rate than that of a 15 year mortgage.  The 30 year mortgage will have lower monthly payments but you would pay thousands of dollars more in interest rates over the life of the loan than that of a 15 year mortgage.

Also a higher down payment would have a positive effect on home loan interest rates.  This down payment would typically need to 20 percent or more.  This would furnish you with more equity in you home giving you a much better interest rate.

Most lenders offer a variety of options to help assist you with home loan interest rates.  When shopping around make sure you are looking at comparable points and rates amongst the different lenders.

One of the final things in regards to considering with a home loan interest rates is, do you want a fixed rate mortgage or an adjustable rate mortgage.  A fixed rate will allow you more money, is fixed throughout the life of the loan.  This kind of loan the interest rate stays the same.  The other a variable rate has the possibility of going up or down bed By paying points you are essentially buying your way to a better depending on the current market.

Do your homework on home loan interest rates, choose between one of the many programs offered and then decide on how much a down payment you can afford.  In the long run this research will pay off handsomely for you.

Tired from paying interest on student loans every month, afraid of the deadline of paying back loans, there is a solution of your tensions, STUDENT LOAN Consolidation. In student loan consolidation, a student may enjoy many benefits; some of them are following below.

1. lower monthly payments
2. only one monthly payment rather than paying separately
3. Student loan consolidation rates are very low, fixed interest rate cannot exceed 8.25% at any time, coupled with national interest rates at a 40-year low.
4. For the application of student loan consolidation, you don’t have to offer any credit card check or processing fees.
5. the terms and payment plans of student loan consolidation are very flexible, the provider can mode them according to your financial needs
6. While you don’t need to consolidate in order to take advantage of this one, you can knock an additional .25% off your rate by making your monthly payment electronically. This electronic debit option does more than save you money – it decreases your chances of forgetting a payment.
7. The option to prepay your loan at any time without incurring a penalty

Sometimes a student got confused about the qualification of applying for student loan consolidation. But now government clears that students who are still in their grace period or cannot re pay their owe money on a student loans can qualify to get student loan consolidation or those who are still in school may consolidate their government-guaranteed loans

Today in the market, there are many companies offering student loans to the college students, but when it comes to their interest rates, they are charging very high. A student has to pay interest on their loans, every month, which is quite impossible for some due to lack of money and time. When it comes time to pay back their student loans, it can be a real burden and a distraction from their career. For those, student loan consolidation is a best deal and step to follow. In this, you don’t even get low interest rates, but can enjoy other facilities including grace period of six to nine months, only one monthly payments, tension-free mind etc.

Due to existence of government sector, a student has an opportunity to enjoy the offers given by the government as they are quite competitive than private. Student loan consolidation rates is fixed and cant be changed after signing the contracts and whenever student has graduated or ceased to be a full time student, he can also enjoy the benefit of grace period of six to nine months which allows him to get employed and repay their loans easily.

One of the most overlooked personal finance tips is for consumers to know what their worth is, that is, their “net worth”.   There is a fairly easy way help you discover what your per minute worth is.  This will enable you to see how much money you might be losing because your personal finance and budgets are disorganized.

Here’s a pretty simple method to calculating your worth, all the way down to the minute.

Your Per Minute Worth Calculation

Yearly income divided by 52 weeks = weekly income
Weekly Income divided by 40 hours (or total hours you work per week) = hourly income
Hourly income divided by 60 = Your Per Minute Worth

Before you begin to overhaul and balance your financial budget, you need to find out your net worth, and your spending habits. This will help assist you later with your budgeting, payoffs, or long-term personal savings. It will also
help in guiding you with such things as your insurance, investments, income tax, retirement, and estate planning.

Your total net worth is your total assets (what you own or already have saved) minus your total liabilities and personal expenses (what you owe out).  It may not be as easy to figure out your per minute net worth and it will take a little more time and persistence to determine this.
Total assets – total personal expenses = Total Net Worth

It’s easiest to do this exercise  when you are paying your bills.  During “bill paying time”, you usually have the information handy to help you calculate your net worth.  So, if it usually takes you an hour to pay your
bills, tack on at least an extra hour this month for this exercise.  You can use the list below as a guide and fill in the blanks with your personal information.  You will be writing in your totals for each line. For instance, if you have two savings accounts, total your balances first and then write in the total next to Savings Account.

ASSETS
Cash Reserve Totals

Certificates of Deposit:
Checking Account:
Credit Union Account:
Money Market Account:
Savings Account:

Investment Totals

401(k):
Bonds:
Mutual Funds:
Stocks:

Personal Totals

Art:
Boat:
Car(s):
Furnishings:
Jewelry:
Other:

Real Estate Totals

Home:
Second Home/Vacation Home:
Other Real Estate:

TOTAL ASSETS: $

LIABILITIES

Short-term Debt Totals

Credit Card Balances:
Current Bills Owed:
Loans w erms of six years or less:
Taxes:

Long-term Debt Totals

Loans w erms of seven years or more:
Mortgage(s):

TOTAL LIBILITIES: $

Congratulations! You did it!
Remember,  Total assets – total personal expenses = Total Net Worth

Now see if your net worth falls under A., B., or C. below, and see how you
can begin to bring some balance back to this area of your life.

A. If your total net worth is half or less of your annual income or you have
a negative number you need to REALLY * OverHaul * and Balance your financial state!

~~ Pay off some/all debt
~~ Cut back on spending
~~ Stop charging
~~ Start a savings plan

B. If your total net worth is more than half your annual income but less
than a few years’ income you need to * OverHaul * and Balance your financial
area.

~~ If you’re 40 or under and own a home, you’re okay for now
~~ If you’re 40 or over and you don’t own a home:
“ Cut back on personal spending
“ Stop charging
“ Reduce debt
“ Increase your personal savings
“ Buy a home before retiring

C. If your total net worth is more than a few years’ of your annual income,
CONGRATULATIONS! Keep doing what you’ve been doing!

The first step to avoiding the troubles of financial debt is to create and maintain a budget.  This will prove to be a big help in getting ahead and managing your finances.

First off, create a list of all your monthly income and also a list of your monthly expenses. When determining income, list all sources including alimony, child support, side jobs, etc. In calculating expenses, be sure to include housing, food, transportation, utilities, entertainment, etc. To gain an accurate reflection of actual expenses, sit down each night and write down expenses, just make sure to save receipts. Determine if your income covers all of your expenses. If the answer is no, then some expenses need to be reduced.

Adjust expenses. If it is a small discrepancy, it may mean reducing some minor expenses like entertainment or cell phone plan. If the deficit is larger, you may need to downsize your vehicle or living arrangements. If your income covers all of your expenses, you still may want to trim some of the excess fat off your spending habits. This can free up extra money for things such as vacations or college funds for your children.

Cut Back on Spending

At first it may seem difficult to limit spending and stick to a budget, however there are a few practical changes that you can make everyday that will cut your spending more than you expect.

Firstly, alter credit card behavior. Start to pay cash whenever possible. This will help you avoid making a purchase unless you actually have the money available. If you decide to make a credit card purchase, be prepared to pay the balance off monthly. This will save a lot of money through avoiding interest charges. If you already have a credit card balance, then transfer to a card with a low interest rate. Also, find a card that does not charge an annual fee.

Another tip is to pack your lunch everyday. All of those lunch hours spent at restaurants will add up. Bringing your own lunch can save you several dollars every day, which will add up over time.

Stop throwing away the Sunday newspaper before skimming through the advertisements. Clip some of those coupons and check out the sales. This may seem old-fashioned or outdated, but the savings are often worth it. Many stores will double or triple the amount of the coupon. This technique can save you up to 20 or 30 dollars each time you head to the food store.

Additionally, refinance. Mortgage rates have been extremely low over the past year. This has been a great opportunity to reduce the monthly house payment significantly. If you are planning to have your house paid off prior to retirement, then you may want to factor this in before refinancing.

Finally, bundle your insurance. Many insurance companies will offer their customers lower rates if they purchase multiple policies. For instance, some people use the same agent for multiple cars, and others combine their cars and house. Always keep in mind that a dollar here and there really begins to add up. Avoid the temptation of thinking that changing your spending habits wouldnít save that much money.

Start Saving your money! Are you are loaded down with bills to pay each month and are wondering how you can begin a savings account for emergencies and other expenses?  In other words, where can you find that extra cash to put away for later? Firstly, when configuring your budget, plan for your savings first. You will grow richer each month if you begin to pay yourself first. Before paying any bills, decide on a set amount that you will pay yourself first, it may be five or ten percent or whatever amount you decide from your paycheck. Then, deposit the amount into a savings account before paying any bills. When you do this at the beginning of the month, your entire paycheck will not suddenly slip through your fingers. If you wait until the end of the month, there may be nothing left to save. Paying yourself first will give you a systematic way to make your money grow.

Another technique you may try for saving money is to empty your extra change into a coffee can or a jar each day. At the end of the month, roll the coins and put them into your savings account. You may be able to save 30 or 40 dollars each month just with your spare change. Remember that good money management is more than just a mathematical formula.  The object of a good budget is to make your money go the farthest in helping you reach your goals, it is not there to force to you to abide by rules. Don’t get discouraged if the budget plan doesn’t work perfectly right away. It may involve some revising and editing until it fits your needs. Then, make sure to review it often, and be sure it is making the best use of every penny! Because we know how helpful those spare pennies can be!

Avoid Spending Pitfalls! With all the advantages that are evident from personal budgeting, it is no wonder that more and more people are relying on them to reduce debts and increase their savings. However, when budgeting your finances you need to be careful to avoid some common pitfalls that often appear.

Credit cards may seem like small pieces of plastic, however they can cause a great deal of trouble for the owners. It is common for people to make unwise purchases, which they would have avoided otherwise, because they had the credit card in their wallet. The best solution for many people is simply to get rid of credit cards and begin paying only by cash, check, or debit cards. You may want to keep one card handy for emergencies, but it is probably best to keep it out of reach, and far away from your wallet.

Another problem with budgeting is impatience. There are financial goals set, but people do not have the patience to complete a savings program. For instance, an individual begins setting aside money for a new car; however, after a few months they discover the car of their dreams. Rather than waiting, they make the purchase. This could pose some serious financial strains. Discipline is a must to prevent impatience from breaking your budget.

Once a person makes a budget, they often fail to adjust it when necessary. A budget is created using a set of expenses and income figures that are liable to change. As these figures do change, it is important that the budget changes to reflect the adjustments.

If executed properly, a personal finance budget will allow a person to simultaneously meet their expenses, place money into savings, and pay back outstanding debts. Therefore, it is in your best interest to create and implement a budget.