Category Archives: Debt - Page 2

How to Pay Down that Credit Card Debt

card.jpgStatistics show that the average American has over $8,000.00 in credit card debt. If you fall under that credit card debt range, then you’ve got some major cleaning up to do. There are millions of people who have come out of some heavy credit card debt, so now it’s your turn.

Follow these 5 steps to be on your way to being credit card debt free. 

  1. First thing, you need to stop the credit card offers. You want to get away from all these tempting offers. You can actually force credit card bureaus to stop selling your information at 1-888-5-OPTOUT. Call the number to get the forms.
  2. Reduce your interest rates. The average credit card interest rate goes for about 18%, which is really high. You want to be in the 7%-12% range. You can call your credit card provider and negotiate for a lower interest rate. If you have been a customer for a while, then it should be really easy to negotiate. 
  3. Stop using your credit cards. If you’re trying to reduce your debt, the last thing you want to do is to keep adding to it. If you have a hard time not using your cards, then take them out of your wallet or purse and leave them at home. If those methods doesn’t work, you can even cut up your cards.
  4. Always pay more than the minimum due amount. Credit card companies love it when you only pay the minimum amount because the balance is calculated based on a system so that they can extend your payment plan as long as possible to make optimal profit.
  5. Consolidate your debt. Once you have reduce the interest rates of your cards, you want to combine your credit card debt into the card with the lowest interest rate.

Once you have stopped using your cards, reduced your interest rates, and have consolidated your debt, then you’re heading in the right direction for paying off your credit cards.

[Photo Credit]

10 Reasons why I Love to Budget

piggybank.jpgSo whats the big deal with budgeting and why is it so important? Let me tell you why I love to budget, I have ten reasons and maybe you might see for your self the reason for its importance. Here they are:

  1. Big Awareness. Through budgeting, it keeps me aware of how much I spend on the daily basis.
  2. Saves me money. By knowing whats coming ahead and being able to plan, it helps me to spend less and less every month.
  3. Smart planning. Knowing how much money I have allocated, daily budgeting keeps me financially aware of my situation.
  4. Puts me in the right direction. Helps me to reach my financial goals.
  5. Helps me Prioritize. By keeping a nice balanced budget, I don’t have room to always buy things that I want. Instead, I need to make sure that I am able to buy the things that I need first before being able to buy anything else.
  6. It just feels good. The satisfaction of spending within my allocated funds is a great feeling and an accomplishment.
  7. Helps reduce debt. Financial planning and strict budgeting is a great way to help reduce debt.
  8. Keeps me in a positive financial mind set. When I’m consistently around numbers and percentages, I’m always being reminded to keep going.
  9. I love numbers. I love to calculate and to see how I’m improving from month to month.
  10. Organized. Being able to plan my budget has definitely helped me to be more of an organized person.
  11. (Extra)I’m ready for those emergencies. Life is unpredictable and you never know what’s heading your way. Being on a budget prepares me for those emergency times when I need those extra few bucks.

Budgeting is a very nice way to keep track of all your expenses and it also helps you stay organized. The best thing is it only takes about 20 minutes per week. I recomend using this program called pear budget. Its an excel spreadsheet that keeps track of how much you spend on the daily casis. If you want to give it a try, you can download it for free here.

[Photo Credit]

5 Basic Concepts To Teach Kids About Money

piggy2.gifOne of the most important life lessons you can teach your kids is to develop successful money management habits  and  a sense of financial responsibility. When it comes to teaching your kids about money, the sooner they learn the better.

  1. Help your child understand the value of saving money.  Here is where you start showing them the importance and the  benefits of saving money. This can be done with a simple but balanced form of an allowance. While they are young, giving them small amount of money will help them prepare for the future when the amount becomes larger.
  2. Discuss the privileges and pitfalls of owning a credit card.  Show that credit cards can be a very powerful tool which could help you dramatically with your finances and also in return, how you could misuse a credit card and how much that could affect your life.
  3. Give your teen ‘real world’ experience with money and budgeting. Instead of buying their yearly school clothes yourself, give them a set amount and let them decide what they need and what they don’t need. Emphasis that that is all they are getting so chose wisely.
  4. Teach your child how to track spending. Get them in the habit of tracking their spending by either getting a notebook or a creating a simple excel spreadsheet on your computer.
  5. Cover the basics of investing. It’s never too early to start explaining the general overviews of investing. The earlier you start, the better they’re equipped when it’s actually time for them to start investing.

Credit Card Update

So I managed to bring my credit card debt down to an even $4,000.00 just this past weekend. Paid off $1,404.22 out of the $5,404.22  which brought my total to an even $4,000.00 :) I plan on paying off a little more as soon as I receive my refund from my federal return. My goal is to bring it down to $3,000.00 by next week. It would be nice if I could have it completely paid off before summer starts but I doubt that will happen, simply because I am only working part time and spent money on worthless junk. However, this will not stop me form trying to get it down as much as possible. Here is a general idea on how I plan on getting it down as much as possible. Some of the stupid/unnecessary things I spend on includes:

  1. Chinese food – This one is really stupid considering I have a meal plan on campus which is completely already paid for. I just need to throw out all my carry out menus from my room.
  2. Starbucks - Ah, how I love coffee. This one is going to be a little hard to stop but I am going to try to cut down little by little. I go about 5-7 times a week. I love their new Dulce de Leche Latte. Such temptation makes this one quite tricky.
  3. Random grocery shopping. Yes, I am truly a college student. I all I do is eat and study. Although I love the infamous Ramen Noodles, I tend to spend a little more on the hot pockets and frozen pizzas.
  4. Car gas. Gas price is no joke. Especially since my car only takes premium fuel.
  5. Pure junk. Stop carrying my cards and cash everywhere. Simple.

I think that if I am able to cut down on these 5 things I can save so much more. I’m going to set my target date for May 21st. Until then, I plan on keeping a record of how much I would of spent and instead saved.

10 Tips On How To Master Your Saving Skills

save-money.jpgGetting tired of trying to save and not seeing any results? Well follow these simple steps and watch your savings account grow.

  1. Set a goal or a target. Write down the amount you want to save and also a date in which you want to accomplish this goal. Get a general idea on how much you have to save per week or month to meet your goal.
  2. Don’t let your money stay idle. Keep idle cash in an account that pays interest.
  3. Keep your checking account low. Have enough money in your account to pay bills and move the rest to somewhere else to gain some interests.
  4. Put savings account on Auto-Pilot. Set up an automatic monthly or weekly transfer to your savings account from each check.
  5. Shop around for the best interest rates. There are many places that offer more than 4%, places like gmac bank. Their money market savings account which also serves as a checking account are current running at 5.10%!
  6. Fees are bad. Find checking/saving accounts with low minimum balances and little to no fees.
  7. Avoid ATM fees. Find banks who can reimburse you on those annoying ATM fees.
  8. Take advantage of banks that show transactions online. This way, you don’t have to wait for that monthly account statement to come in the mail and you can balance your account when it’s best convenient for you.
  9. Overdraft protection. We all make mistakes – avoid those overdraft fees by having overdraft protection for your savings and checking accounts.
  10. Learn to reason. The rule is simple, if you don’t need, you don’t get. Learn to differentiate between your needs and your wants. It’s good to treat ourselves every now and then but let’s not make that a habit.

Carnival of Debt Reduction #81

Welcome to the 81st edition of the Carnival of Debt Reduction. I hope everyone had a nice and a productive weekend. I want to start off by giving big thanks to John at MightyBargainHunter for letting me host the carnival, it’s an honor.  I really enjoyed reading all the articles, there were many great submissions. I was very flexible with the selection of articles that were picked, but unfortunately for those that had no relevance to debt reduction I had to exclude them. In this edition, I took a small clip from each of the 25 articles to give the readers a brief idea on the topic. Other than the editors choice, these articles are posted in the order that they were received. Okay, without any further delay I present to you the Carnival of Debt Reduction. Enjoy! 

***Editors Choice***

Ask Mr. Credit Card reveals some Drastic Ideas for Debt Reduction. “If your present income has taken a hit and you money.bmpare very stretched, you may have to take some of the following steps to relief your debt payment burden”

Your Credit Score Secret explains the importance of your Debt to Credit Ratio and How they affect your Credit Report. “People are constantly commenting on what a good idea it is to make sure and pay off all of your cards every month in full to make sure to establish good credit and show that one can pay their bills. This is such a misconception and only leads to confusion. Having a revolving balance kept at the right percentage compared to your debt and you are on your way to a better credit report”

360 Degree Success on Money Consciousness: Do you have any of the 5 symptoms of Debt Overload. “In our society, so many people are overrun by debts. “Debt overload” is any situation where your debt is in control of you, instead of you being in control of your debt.”

Need To Be Debt Free explains how debt is the reason why Most Americans Will Not Have Enough To Retire. “To maintain their standard of living, experts say Americans will need to save ten times their annual pay in their 401(k)s by the time they retire.”

Kirby on Finance asks Is Your Own Ego Your Worst Enemy?Emotional spending and investing are created by our own perceived weaknesses, but just as a perceived weakness can cause us to handle our money poorly, so can an unreasonable perceived strength – an ego.”

Pfadvice brings us Wasting Money When You Think You’re Saving. “There are many instances when people believe they are saving money when in reality they are actually wasting it”

Suite 101 on The College Loan Process. “Find out how to manage the process before you dig into the hole of student debt”

John from QueerCents wrote A Costco Fable: The Day Money Became Real. “But by being forced to pay cash, and by having to wait for a discount, I was given a rare oppurtunity to view a $20 savings as real money.”

***More Great Articles***

Creditcardlowdown presents “Borrowing to pay me” and 19 other moronic things people do with credit cards. “20. Last spb_finance_2000.jpgand most obvious, but not the least: use a credit card when you don’t have the money to pay back the amount spent. Have a payment plan in mind before you make the charge.”

1031 Exchange Lowdown  posts Get divorced while screwing the women out of everything. “Divorce can be a dirty business – with the help of lawyers, your ex can easily play power games to gain an unfair advantage over you.”

My Two Dollars on Credit Cards that Pay you for Carrying a Balance. “Ohh, cash back on the interest I already paid. Gee, thanks for giving me some of my own money back.”

My Wealth Builder explains and illustrates Another Cost Of Having Debt-Weath Destruction. “Having $25,000 of debt can cost one over $2,600,000 of wealth.”

The Skilled Investor says If Personal Finance Is Difficult For You, Then Carefully Hire A Good Financial And Investment Advisor. “A good financial advisor could make things much better. A poor one could make things much worse.”

Debt Free 4 Ever states it’s 70% Attitude and 30% Hard Work. ”If you think you can, or if you think you can’t, you’re right”

FreeMoneyFinance brings up the question: Is It Ever a Good Idea to Pay a Credit Card Annual Fee? “Yes, under the right conditions, it can be worth it to pay a credit card annual fee. But for the vast majority, it’s not a good deal”

SearchLight Crusade explains Why Refinances Tend To Have Lower Payments. “…you should Never Choose A Loan (or a House) Based Upon Payment”

NCN gives Massive NCN Network Update! 11 Charts! Over $40,000 Paid! “well over $40,000 worth of debt has been paid in the last four months!”

CampusGrotto shares the Benefits of getting an MBA. “With tuition alone at the Harvard Business School at just under $40,000, an MBA will give you more college debt. Even with the combined student loans, the investment in education is worth the debt.”

FiveCentNickel on Georgia Upholds Ban on Payday Loans. “Supporters of House Bill 163 have argued that the state went too far in banning payday lending back in May 2004, and they want to bring the industry back, albeit with new regulations”

Information Age Education  posts Suze Orman Supports Financial Literacy for Women. “It’s a five month program to help you create a healthy relationship to money, make more out of the money you have for yourself and your loved ones, and gain more financial freedom.”

Mill1on questions Are You Living Paycheck To Paycheck? Save A Little. “Saving just 1% of your paychecks over a period of a year can save up to thousands over a 2-3 year period depending on how much you make”

Financial Hack lists 10 Ways To Simply Your Finances. “Consolidate all your investments at one company: By placing them all with one company, you can reduce the fees that you pay and it will be much easier to track how all your investments are doing.”

Money Under 30 says You’re In Debt. So what? “Let me make it very clear: debt is not you, and you are not debt. Your debt is a financial consequence of past life choices or circumstances. That is all.”

OhCash points out Things To Consider When Consolidating Debt. “Once things get to a certain point, often times people will start thinking about bankruptcy. For most people this is a scary concept. It will of course show up on ones credit report, and can remain there for up to 10 years after filing the case. It is at this point that many will start exploring debt consolidation”

Well that’s it. I hope you enjoyed the stay. I want to mention that the next edition of the carnival will be hosted at NCNBLOG so start getting in your submissions! Have a great week :)

How I plan on using my tax return

vm_tax_story.jpgSo it’s that time of the year where everyone is gathering all their paper works and getting ready to fill out those tax forms. Almost everyone I know has already filed their taxes, and so I guess that leaves me. Well the reason for that is because I have been pretty busy these last two weeks, and also I’m kinda paranoid that I might not file them correctly if I rush and not get back as much as I could, so I waited. My goal for this week though is to get all my paper work together and get it done this weekend. This past year, I paid a little over $4000.00 in taxes so it looks like I should be getting back around $2,500.

So what is my plan for my tax return this year? Buying new clothes? Adding more DVDs to the collection? Going on a nice trip to Hawaii with the Girlfriend for spring break? Nope, it’s better. Instead, every penny that I get back it’s all going to help pay off my debt on my credit card. So after my tax return gets here, I will be extremely close to being debt free. I can’t wait. That gives more of  a reason to file my taxes asap. So I hope that I will be able to do so this week.

After getting out of debt, I can finally start contributing to my Roth IRA and so much more other fun investment funds. :)

Debt management

debt-reduction.jpgDid you know that the average American household with at least one credit card has nearly $9,200 in credit card debt? That’s quite amazing isn’t it? Looking at the number, it is a little hard to believe that the average is so high, but when you realize that our nation is built on credit, it becomes a little more easier to gulp down.

There’s the good and the bad:

When I look at debt, I see it as two kinds of debt. There’s the good debt and the bad debt.

You accumulate good debt when you’re borrowing money for a student loan or for a home. You just have to make sure that you don’t borrow more than you can pay back.

Bad debt is using your credit card to buy things like food, clothes, DVD, etc. This is the easiest way to fall in debt. When you get in the habit of buying things with your credit card, in return you also want to get in the habit of paying it off in full that month.

The general rule is that you don’t want to get in a habit of using your card unless you plan on paying every back that month, this is the fastest way of falling in debt. Here I have gathered 3 general debt management tips.

Debt management tips:

  1. Make a budget journal. Most people spend thousand of dollars without too much though as to what they’re buying and that’s why people are surprised at how high they’re credit card is. Get a nice journal and start writing down everything you spend. At the end of the month you’ll know not only how much you spent but also what you bought. This way, you will know what you can cut back on and how much less you want to spend the following month.
  2. Pay off your highest-rate debts first. On average, most people have more than one credit card. The key to getting out of debt is to first pay down the balances on credit cards that charge the most interest rate while paying at least the minimum due on all your other debt. Once you finished paying off the highest rate, then start tackling the one next highest.
  3. Expect the unexpected. You want to expect the worse can happen at any given time, so start making an emergency account. You want to have enough saved to last you 3 – 6 months of living expenses in case of those emergencies. If you don’t have an emergency fund, a trip to the hospital or damaged car can seriously upset your finances.

If you end up with more debt than you can manage, then you should get some help whether it’s from a professional or someone you know before it’s too late. It may be embarrassing to ask a relative for some help but that’s alot better than ending up with bad credit.

Retire Young Retire Rich

retire_young_retire_rich.jpgOne of the Chirstmas gifts I got this year was a book called Retire Young Retire Rich, from the same author who wrote the best seller Rich Dad Poor Dad, Robert Kiyosaki. I am looking forward to reading this book and possibly share some key points and post them here. My goal is to read at least one chapther a day so that means I should be done in twenty one days which is the 16th of January.

So far I have read the introduction to the book called ”Why David Met Goliath” and want to point out some parts that I liked. Robert Kiyosaki talks about how one the most important word in the world of money is leverage. He says, “Leverage is the reason some people become rich and others do not become rich.” The book is broken up into four sections based on leverage.

  1. The leverage of your mind (chap 1-8)
  2. The leverage of your plan (chap 9-13)
  3. The leverage of your actions (chap 14-20)
  4. The leverage of the first step (chap 21)

In the introduction, he noted that David and Goliath was one of rich dad’s favorite stories. Saying that he suspects that his rich dad may have seen himself as David, a man who started with nothing, yet to rose to compete against the giants of business. Rich dad said,”David could beat Goliath because David knew how to use the power of leverage. A young boy and a simple slingshot were far more powerful than the feared giant, Goliath. That is the power of leverage.”

I’m looking forward to starting this book.

3 rules to get you out of debt

Problem:How to get out of debt

  1. The problem here is not how to get you out of debt, but rather recognizing what made you get in debt in the first place.To get out of debt, you can’t just simply start off by trying to pay off everything that you’re in for, instead you need to start at the root. Find the cause. First you need to ask your self how you got in debt to begin with. When you find this source, that’s when you can start getting out of debt.
  2. Analyze what made you get in debt and see if you can notice a pattern so you can try to change from there. It’s always best to tackle the problem from the source. Many people who finds themselves finally getting out of debt eventually gets back in debt and that’s because they never learn/realize what got them in debt in the first place. As hard as it is to just pay off everything you owe, it’s pointless if you’re going to get back in debt again in matter of weeks.
  3. Once you have realize/analyzed what got you in debt, then you need to make sure you throw out all the bad habits that caused all of this, then you can start to pay things off.

The next problem: most people after getting out of debt thinks that they’re now in the safe zone because they’re not in the negatives. Well if you think in terms of negatives, then when you get out of debt, your technically at a zero. Which to me does not sound like your in the “safe zone”. Once you get out of debt, then think of it as a clean start, you now are ready to be in the positives.

Don’t stop at zero, think smart and get ahead. After getting out of debt, start up a savings account of some kind, whether it be a mutual funds of some sort or invest in a 401k/IRA account. This is a great habit and surely will be a good payoff in the long run.