FNTN

Archive for the ‘Money problems’ Category

Introduction.

If you haven’t got any debts to pay off – then lucky you, but the fact is that for the vast majority of Americans they have debts to pay off in the thousands of dollars. Those debts aren’t just for big sums like your mortgage but will include smaller credit card debts, personal loans and quite probably an auto loan too. Of course no one likes or wants to be in debt, so in order to really get stuck into debt reduction – what should your priorities be in paying off your debts?

What’s the most expensive debt?

You should really focus your attention on paying off the most expensive debt as quickly as possible. But what is the most expensive debt you have? If you have a mortgage you may well think that this is the most expensive debt as it will in all probability be for the greatest amount, almost certainly in the hundreds of thousands of dollars. However, as a mortgage is a long term debt, relative to other loans, it will, or at least should, have a much lower interest rate than a personal loan debt or your credit card debt etc. So, leaving aside your mortgage for the moment, your most expensive debt is the one that is costing you the most in monthly interest payments – and that’s the one to concentrate on reducing and paying off as quickly as possible.

Reducing massive debts.

Your ability to reduce your debt does, of course, depend on the amount of disposable income you have from your pay check. If you should have credit card, personal loan or auto loan debts in the $10,000s then rapidly paying off high interest loans may be beyond you. If you are in that position then you should look for online debt consolidation loans, which will bring all your debts in to one with a lower overall interest rate. As stated above – a mortgage is a massive debt and will, over the period of the mortgage be very expensive in the amount of interest you pay. If you feel you’re paying too much mortgage interest – look for online mortgage refinance deals to lower your mortgage interest.

Introduction.

All over the country at this time of year college graduation ceremonies are releasing thousands of former students into the real world of having to deal with their own finances – on their own! So, ahead of beginning that first job what graduate finance tips can we give them?

Student debt.

The first thing to get their heads around is the amount of student debt they have and how that will impact on their future spending and saving. Most students will have more than one student loan and clarifying exactly how much they owe in total is an essential step to take. Only then can they determine how much they’ll have left out of their monthly pay checks to live off. To keep track of all the student loans and their various repayment dates and amounts can be a complex business, so if they’re not very well organized a debt consolidation loan tailored to student debt might be worth considering.

Budgeting for the future.

To be able to cope with student debt means having a budget and sticking to it. Whatever your pay check will be always take out of it your student loan repayments, your rent and, if you have one, your auto loan. What’s left is then yours to spend – but, remember that putting money aside for utility bills, transport costs to and from work and food all come before deciding how much to spend on leisure activities. Being a graduate should mean that you’re able to negotiate a remuneration package that includes health insurance and a pension plan. If not – then you need to seek expert advice on saving for insurances and pension plans as soon as possible. The first few months out of college may well seem tough financially – but you’ve got the degree and so should, as you gain more work experience, quickly be able to increase your earnings and clear your debts.

Introduction.

It’s a fact that since the credit crunch some years ago now – getting credit or a personal loan has become more difficult for everyone, and only those with massive personal savings can get a mortgage. If you’ve recently been refused a loan whether a secured loan or an unsecured loan – chances are your credit score has something to do with the refusal. The problem is that the credit agencies often as not won’t give you any reasons for their refusal. So, the only thing you can do – starting right now – is adopt some smart credit scoring tactics.

Your repayment history.

You’ve probably have no idea how important your credit history is to your success in getting a new loan. Your credit payment history for the previous five to seven years will account for about a third of your credit score figure, so keeping up to date with your loan repayments is essential. However, there is some good news here in that the older the history the less it counts. In other words – missing a loan payment a few years ago is less serious than missing one now, so keep on top of your current debt repayment plans. Even if you can’t make the full payments – never miss a months repayments, it could cost you 20 percentage points off your credit score!

Your credit – your score.

Like maxing out on your credit cards? If you do then stop now. Being at or near the max of your credit card limits will cost you more credit score points, as the credit agencies think you’re over spending on your credit cards. Over using a single credit card can be bad for you too, simply because all your ‘loans’ seem to be from one place. Providing you can pay them off look at opening several credit lines, an auto loan, a personal loan to pay for that holiday … even using a different card to pay your cell phone contract; they’ll all help you to develop a broader credit line profile. Finally, if you apply for and then cancel a credit card, or loan, that can count against you too on your credit score. So make sure before sending off a card or loan application that you’re going to go through with it.

Introduction.

Here at FNTN we are as concerned as anyone else to help you avoid getting into credit card debt. However, for all the articles you can read on the internet regarding the potential pitfalls of having credit cards there are also times when you will appreciate the fact that there are actually advantages to using credit cards. So, let’s explore a one of the situations in which using your credit cards could actually be quite a sensible thing to do.

When financial emergencies arise.

These days, if you’re earning enough to cope with your normal monthly bills then you probably feel that you’re doing OK and are able to keep yourself out of debt. Which is fine until an emergency occurs that means you need to make a big cash outlay quickly to cope with something. Dependent on your monthly paycheck this could be something as relatively small as the wash-tub needing replacing through to needing to buy a new car due to an auto wreck or re-roofing your property after a storm. Sure, some of these things you might be able to claim for on insurances – but how long will it take to get the payment made to you? For anyone who is unable to save regularly to build up funds to cover such emergencies – using their credit card gives them immediate access to the cash they need, without having to organize a new personal loan.

Credit card virtue limits.

If you think using your credit card as an emergency cover fund will be a good idea you first of all need to set yourself a credit card limit for emergencies. How big should that notional fund be? Well the answer to that question is one that only you can determine, but we can offer some guidance here. First off, you need to know what the maximum is that you can draw on your credit card. It’s no use thinking you can use your credit card to cover a $10,000 emergency if your credit card limit is $5,000. Secondly, having decided how much emergency cover you might need – work out what the repayments will be and that you know you’ll be able to make the monthly repayments without getting into debt. Finally, if you’re in the habit of using credit cards, make sure you’ve one that has nothing owing on it – so you can max it out immediately if necessary.

Introduction.

You know – it’s not just taking out too many loans that can cause you to fall into debt, one of the quickest ways to fall into debt is quite simply not to manage your approach to financial matters effectively. So, what advice might help you in avoiding poor financial management so that you can either avoid debt or at least be able to quickly pay off any debts that you have accrued?

Debt – deal with it!

First off – those credit cards. If you seem to be paying a fortune every month and yet never see the capital owed reduce, then you should look online to transfer your credit card debts to cards with lower interest rates or, even better, ones offering 0% interest for 6 to 12 months. That really will let you attack the outstanding credit card debt. When it comes to personal loans, having multiple personal loans is a killer when it comes to good financial management. Look online for a debt consolidation loan that will bring all the outstanding debts into one loan, with one rate of interest, requiring you to make only one loan repayment a month. Regarding your mortgage, if you are in arrears with your mortgage payment, look online for a new mortgage deal that either extends the repayment period to reduce the monthly repayments and/or offers a lower rate of interest.

Plan ahead.

The first thing you must do is be prepared to accept that you have debt and it won’t magically go away. This is where financial planning really comes in to its own. Having begun to sort out your finances an unexpected expenditure can really throw your plans, say you need a new wash tub or tires for the car. To cover these eventualities you must start to save a little from your pay check each month, look for high interest savings accounts online. Ultimately, if you are in debt, good financial planning will also mean accepting that sometimes you just can’t afford somethings. So be prepared to accept that things like a new TV or cell phone,whilst the old one is still working, might just have to wait for a few more months.

Introduction.

To many people being asked a question like “can debt be good” would only illicit one response – a resounding no. However, strange as it may sound, there actually are occasions when being in debt could be good for you, albeit over a long period of time rather than in the short term. So, how can a long term debt be beneficial to you and what are the short term debts that you should avoid?

Short term debts to avoid.

The simplest way to avoid short term debts is to not try and live beyond what you can afford from your monthly pay check. So, having allowed for your rent, utility bills and food; plus don’t forget the amount you need to repay those long term loans that we’ll come to in a moment – you’ve then got a fixed amount you can spend on yourself. Whether that’s for buying clothes, saving for a holiday or buying the latest gadget, if you can’t afford it now don’t pay for it off your credit card or take out a personal loan or pay day loan – wait until you’ve saved for it. The main reason for this is that taking out small loans or building up credit card debt will hit your credit score badly – making it more difficult to get a good deal on a bigger loan when you need one.

Long term debts as investments.

Any long term debts that you incur which are then of advantage to you later on – can actually be seen as investments. These debts are usually for significant amounts of money and so will need repaying over several years – but if in the longer term they make you money, then they are also an investment. Probably the best example here is a college loan, taking out student loans to get you a first degree will cost tens of thousands of dollars and will take a while to pay off. But, having obtained that first degree you’ll be qualified to work in jobs paying you hundreds of thousands of dollars more over your working life, than if you’d never bothered going to college. If, for whatever reasons, you don’t go to college – why work for the man when you can work for yourself. Taking out a business loan to start up your own business leaves you in full control of what you earn and how hard you work for it. It doesn’t matter if you take a loan for a truck to start a plumbing business or to rent offices for a finance company, a business loan is a true investment. There are, of course, plenty of other examples we could cite but taking out a mortgage is one debt that we all see as a long term investment, be it for ourselves or our families in the future.

Introduction.

With the national personal consumer debt heading towards the $2.5 trillion mark – what should you be doing about your own personal credit crisis? Whilst we all need a credit card these days they can also be a major source of any personal credit crises. So almost inevitably controlling your expenditure on your credit cards is a significant step towards controlling a personal credit card crisis – but how should you set about doing it?

Avoid making the easy credit card mistakes.

Every time you use your credit card you are in fact taking out a small personal loan. Now that might not seem to be important as, unlike taking out a personal loan to pay for a new kitchen or bathroom, a credit card loan is usually for a much smaller amount. However, the fact that you will be charged interest at almost certainly a higher rate than you would be for a regular personal loan – makes using your credit card really expensive. The other important mistake to avoid is having too many credit cards. Resist the temptation to take out new store credit cards when buying something from a store you haven’t used before. The extra 1% or 2% discount they might offer on the price will soon be lost by the interest they charge you on yet another store card, not to mention the effects too many credit cards can have on your credit score.

Avoiding that personal credit card crisis.

If you’ve got a wallet full of credit cards and store cards, reduce them down to one or two. That way you won’t be so tempted to spend on them as, at the end of the month, you’ll see on just one or two bills how much you’re spending on those cards per month. This will probably shock you to see all your credit card expenditure on one or two bills – rather than spread out into a lot of smaller amounts over several credit card bills. Even better try not using your credit cards at all. Having paid your rent and utility bills for the month take out the remaining cash from your pay check and make it your target to only spend what’s in your pocket. Wean yourself off credit – if you can’t pay in cash, you can’t afford it. To go along with this new found philosophy you’ll need to budget quite closely so, if you’re not very good with spreadsheets yourself, look into using one of the online budgeting services.

Introduction.

If you’re reading this in the last couple of days before Christmas, then we suggest you bookmark it, enjoy your Christmas and come back to it in a few days. Otherwise, if it’s just before New Years Eve or into the first few days of the New Year – then now really is the time to start thinking hard about how you’re going to set about driving down your debt. So we hope you’ll find the following tips and advice helpful.

Take control.

The first thing you have to do to drive down your debt is simply to take responsibility and control of your debt. It can be all too easy to blame the loan companies or the credit card or the time of year or … the list can be endless can’t it. But the fact is you’re the one in debt and you’ve got to control it, which begins with you accepting responsibility for it. Check your credit score and establish exactly how much debt you are in. If you owe monthly more than 20% of what you earn – you are in the danger zone! Create a budget that has the minimum you need to spend monthly on essentials like utilities, rent, food, travel, then add the monthly amount you owe in loans – anything less must be used to pay off those loans more quickly. So that means watching your daily spend and no treats for a while.

Other tips for dealing with your debt.

If you are in debt and have got lots of small loans it might be worth looking for a debt consolidation loan, bringing all the debts into one loan with one monthly repayment. These can work out cheaper in the long term to repay and, with only one monthly payment to make, so it’s easier to avoid missing a payment. If you’ve got store credit cards, cut them up, and even if you’ve got regular credit cards – look for better online credit card deals offering lower interest rates, then cut up the expensive ones or better still cut them all up except the least expensive one.

Introduction.

Summer 2010 and the unemployment rate stubbornly remains at around the 10% mark. Time was and only the unskilled and semi-skilled workers would worry about such a high unemployment rate but, since the recession of a couple of years ago ex-workers from across the employment sectors are struggling to find both new jobs and finances. The net result of this is that highly qualified and skilled workers such as accountants and IT specialist etc are now wondering what their 99er prospects are.

99er payments ending.

Therein lays the problem for millions of people in the USA right now – that for folk who lost their jobs at the start of the recession, the 99 weeks of federal unemployment support will shortly be coming to an end. Of course the effects of unemployment are devastating to all, but they are also relative to the individual concerned. The classic view that unemployed people must be unskilled workers with no means of personal financial support, other than that offered by the government, is no longer true. Along with this is the fact that not all 99ers will be hopelessly in debt and fighting to pay a sub-prime mortgage before their home mortgage is foreclosed. Such skilled and professionals who have found themselves in the unenviable position of being 99ers will, by and large, have had some financial cushion to help supplement the federal aid. However, with that aid coming to an end – what can they do before all of their savings become depleted?

Work for yourself.

The answer to that last question is that they should re-think their attitude to work and think – why should “I work for the man” when I can work for myself? For a very modest outlay they can equip themselves to become an online trader in things like Forex and CFD. Forex trading is where you make your money by finding the best deals in foreign exchange currencies using, requiring only a computer, fast broadband and a the specialist Forex trading software. CFD stands for contract for difference, whereby you make money trading shares online according the opening and closing prices that they are quoted at. If that sounds too complex – why not find your own niche market and become the number 1 online trader in that instead.

Introduction.

With so many people struggling now to take out personal loans – it has been almost inevitable that some unscrupulous lenders would try to worm there way into the market. As the High Street banks become less inclined to offer loans especially to low credit score borrowers – the more people turn to online loans providers to get hold of the cash they so desperately need. For most people, most of the time, this is not a problem at all and there are many great offers out there to be had in online loans. However, if a personal loan provider wants to charge you an up-front loan fee before giving you any of the loan cash – you’re better off refusing them and seeking your loan from another online lender.

Bogus loan companies.

Even if you have the worst possible credit score imaginable, there really is no reason for a finance company to ask you to pay a fee up-front before deciding whether or not to offer you a loan. Any company that insists on you making a payment before giving you the cash should be treated as at best suspicious – if not a downright bogus loans company who have no intention at all of lending you any money. A typical scenario is for you to work through the application procedure only to find that before the company can process your application you have to pay an ‘administration fee’ of anything around $100 to well over $1000!

3 reasons not to pay an up front fee for a loan.

The simplest possible of reasons here is that there is no guarantee that having handed over your cash – that they’ll then agree to your loan request at all. The chances of you being ripped off like this are quite high from companies demanding up-front payments – it really is just a scam for them to get money from you. Second, OK so the company you’re borrowing money from wants to make a profit itself – fair enough they’re not a charity, but if they need you to pay them for a bit of administration in advance – then you really should worry as to whether they can afford to lend you the money in the first place. Third, even if a loan company says you’re a bad risk to lend money to – that’s no reason to get you to pay them for giving you a loan before you’ve seen the color of their money, they’ll soon enough recoup any expenditure they make through the interest rate they charge you anyway.