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Archive for the ‘Money problems’ Category

Introduction.

It’s a fact, but worldwide financial instability and political uncertainty is once again wreaking havoc with USA money markets, quite apart from our own ‘home-grown’ financial problems. One result of these problems has been a rise in the rate of inflation from -0.4% in 2009 to nearly +2.4% already this year, or put another way in less than a year inflation has risen 3%. The net result of this is that interest rates on loans will be rising – something that can hit anyone paying off their student debts really hard.

The cost of graduating.

This rise in inflation and interest rates means that all but the best paid graduates, with large loans to repay, will be particularly hard hit as the re-payments will rise completely out of proportion to their wages; with the risk that whereas last year they were making great in-roads into paying off their student loans – they will now find the gains they made last year wiped out and even reversed this year. As if that’s not bad enough, with many graduates having to take out personal loans on completing their courses to afford things like the clothing they’ll need for their new jobs, fitting out an apartment to live in or even just needing an auto loan to buy a car so they can get to work – having all of these loans whilst struggling to establish yourself in a new job can seem just too much.

Consolidate your debts.

If you’ve recently graduated and are struggling to repay your loans the solution is to seek a debt consolidation loan; putting all of the separate loans together – meaning that you have one repayment to make, to one company and at one interest rate. As student loans traditionally have lower interest rates than other types of unsecured loans, you will need to make sure that the actual student loan you’re repaying isn’t better left as a separate loan and then just consolidate the other ones. Either way, the fewer companies you have to deal with when clearing student debt the better.

Introduction.

I guess it was only a matter of time before Mohammed Yunus’s Nobel Peace Prize in economics, for his pioneering work in micro-loans, – started to draw attention from the big banks and finance houses. The problem is quite simple really, what started out as a system whereby one person lent a relatively small amount of money to someone else for the purpose of, say, improving their sewing business in a developing country – has blossomed into a $60 billion a year loans industry.

Micro-Loans in the beginning.

As mentioned above the idea of micro-loans was originally very straightforward and low key. Rather than leaving any spare cash you had in a bank, instead you made micro-loans to individuals or small organizations and  businesses – who when they then repaid your loan had to pay a small amount of interest; often as little as 10% and way below commercial loan interest rates but generally higher than savings interest rates too. This made the micro-loan business more akin to a charitable system than a business one. However, to the people making the loans that didn’t matter as, by and large, they were as interested in their money doing ‘good’ as they were in turning a profit.

Micro-Loans today.

Fast forward a few years and the demand for micro-loans now by far out-strips the supply. Yes there are a lot of people out there that want to ‘do good’ with their spare cash; but there is only a finite supply of it. Needless to say the big banks and finance houses are stepping in to fill the void, ever keen to turn a dollar and even if it is to a high risk venture in somewhere like Nigeria. The sad part of this is, however, the interest rates that they are choosing to charge. No longer set at the charitable 10% – some of these big banks and finance houses are charging as much as 100% interest to high risk projects – as bad as if the borrower had gone to a loan shark. Ironically, they’re saying the high interest rates are because of the high demand for micro-loans in the first place! If you have some spare cash but do need to make a small profit on it and yet are basically of an altruistic nature – then providing micro-loans is something to consider. To get involved in micro-lending, look for a social lending website that is transparent about giving loans to poorer people to help them – rather than to just simply make a profit out of them.

Introduction.

As the run up to Christmas closes in is there really a way that you can make using a credit card pay for you? Unfortunately Santa Claus, or Father Christmas if you prefer, doesn’t include his own brand of special Christmas credit card – but that’s not to say that you can’t find one to match the type of spending power you’re likely to need.

Holding credit card balances.

It’s a fact that the majority of credit card holders keep a balance of some sort on them. Of course this is not an ideal situation to be in as you are always owing at least some money to the credit card company and, if you at least don’t keep up with the minimum repayments, the interest you get charged can start to mount up leaving you with an absolutely huge bill. What you have to remember is that every time you use your credit card you are in effect taking out a small personal loan; so it’s not just the cost of whatever you buy that needs repaying, but that cost plus interest. It is therefore absolutely essential that you apply for a credit card with the lowest APR (interest rate) that you can find. If you have a good credit report, especially when applying for a new credit card, then use that as a bargaining tool with your credit card company to reduce your APR. Alternatively, if you have a high APR credit card, look for a company willing to give you a lower APR one and transfer your outstanding credit card debt.

If you regularly clear your credit card balance.

For those that can afford it the very best way to use a credit card is to buy things with it – but then always clear the balance as soon as the credit card bill comes through. If you are such a customer you should be able to negotiate a great APR, even though you rarely need to worry about it. Also, as a good credit card customer you can expect to pay no, or at least, reduced annual credit card or transfer fees that some of the credit card companies charge for.

Introduction.

Being in need of a quick loan in the pre-Christmas rush can make some people just a little bit sloppy, about where they’re getting a personal loan from or what interest rates they’re being charged. Quite frankly, December can be one of the worst times to get caught out when looking for some cash to spend on your Christmas preparations, so we hope you’ll find the following couple of things helpful.

Search, think, take!

Whether you’re looking for an online personal loan, applying for one over the phone or even walking into a local finance office – always do some searching around for the loan offers and then have a think about them before you take one out. For example, we all know how easy it is to search for and find an internet loan; however, you should never just accept the first offer that you come across. Always seek one or two other offers to compare it to – to make sure it really is the best deal. The advantage of searching online for a personal loan is that you can take your time searching around, unlike with a phone application or being in an office with a sales-person constantly trying to tell you how marvelous their offer is.

Ask questions.

Whether you opt for an online loan or get one from somewhere else, always ask questions about the deal you’re being offered. Don’t forget that modern day finance companies are simply the Scrooge of today. It is always worth asking if they can lower the repayment interest rates, remember – if you don’t ask, you’ll never find out! If a loans company thinks they can charge you 20% interest they will, but, and especially if you’ve got a good credit report, they’d probably agree to charge you 15% rather than lose your business. Also, an absolutely vital question to ask is, do they have a ‘cooling off period’. This means if you change your mind about taking out the loan within say a day or two, it can be cancelled without you incurring any penalties.

Introduction.

With the Christmas season being truly upon us now and all the spending that it entails, it is also the time of year that you need to start financially preparing for 2010 to avoid those New Year money blues. On the basis that the New Year will bring with it all the bills for the money you spent on the Christmas celebrations – should you be worried that you’re probably not going to be saving any money?

Savers are losers!

The immediate response to that question is that you really shouldn’t feel too bad about not being able to save any money in the first part of 2010. The Federal funds rate has been pretty steady since 2008 at 0.25% and it’s showing little, if any, sign of improving in the New Year. The net result of that is that putting your money into a regular savings account with a bank will not yield any interest of any significance at all. However, that low rate could be potentially very attractive to borrowers. By that it is simply the case that, if you have taken out a personal loan to cover the costs of Christmas, it will have a low rate of interest attached to it – making it easier for you to repay. So, why bother thinking you’ll save some of the spare cash you have and re-pay the debt, when you might was well simply use all of the spare cash to pay off the loan more quickly. Paying off the loan ahead of schedule may well help you to reduce the total interest you pay and could significantly help your credit score when you next apply for your free credit report.

Loans you’ve already got.

Another tip when preparing for 2010 is to think carefully about switching any variable rate loans to fixed ones. The longer term your variable rate loan has to run the more reason you have to switch it. If you can’t repay the current loan and the finance company won’t let you switch it to a fixed rate loan – talk to a financial advisor about taking out a new loan on a fixed rate to repay it instead.

Introduction.

Life and debt is becoming every bit as much of a reality for most folk as the inevitability of life and death. No matter whether you’re on one of the lower wages, comfortably off on a middle income or consider yourself to be doing quite well, this recession has hit everyone in one way or another. No matter whether that’s worrying over whether you can pay this months rent or worrying that your pension fund seems to be evaporating before your eyes.

Take control of your debt.

The single most important thing for anyone to do if they’re in debt is to budget. Surprisingly, the more income people have the less inclined they are to budget. Unlike people on a restricted income, they think money isn’t in short supply so why do they need to budget? Their problems can then quickly start to multiply when they suddenly need to access spare cash, having been used to spending it all – there’s none available. A simple budget plan can save you hundreds of dollars a month. Just budgeting to only spend a set amount on food or socializing will not only save you money – but might just get you thinking how wasteful you’ve been in the past. Along with your budget keep a spending diary recording all your expenditure, you can then use that information to refine your monthly budget even further.

Still in debt?

If you still find yourself in debt then you should think about seeking expert advice. You can do some things for yourself like getting your free credit report, so you can check up on exactly how much debt you have. The more debts you have on personal loans, mortgages or credit cards the more money you have to pay out in interest. So you could see what online financial advice you can gain about how to reduce the amount of interest you’re paying, so that you can then concentrate on paying off the capital and clear the debts.

Introduction.

If ever you needed a reason for getting a free credit report, even if you believe you’ll have a good credit rating – then that time is probably now. Apparently it has been exposed that people who had genuinely good credit reports and credit scores can suddenly find themselves being able to access the best online loan offers.

Why you might need your latest credit report.

Apparently credit companies have been tracking who’s looking for online loans, then if someone repeatedly returns to one particular online loan offer, in order to consider it further or compare it to other online loan offers, when they do eventually apply for the loan they suddenly find they’re being offered a different rate to the one originally advertized. Needless to say the online loan companies are reluctant to discuss the way, or why, they track potential customers IP addresses – but they do and so you might well need proof of your good credit history, from your free credit report, in order to prove to them that you’re worthy of a better loan deal.

Getting a free credit report.

If you don’t already know – everyone is entitled to at least one free credit report a year from each of the major consumer reporting companies – that’s Equifax, Experian and TransUnion. Your credit report lists your credit history and status, by calculating what is known as your FICO score. Basically, the higher your FICO score the more credit worthy you are and the better you should be able to persuade a personal loan company that you will be a good, low risk, customer and get some favorable repayment terms from them. Your free credit report will also include all sorts of other information including your home address, banking details and employment etc, which along with details of all the loans you’ve had can help you to check that you’re not the victim of an identity theft scam.

Introduction.

With the whole country seemingly fixated by what may or may not happen regarding health insurance, a financial problem of potentially equal enormity seems to have been pushed to the back-burner, that of pension planning for retirement. It is currently estimated that only one third of the population are adequately planning for their pension, which in effect means that only one third of us are paying sufficient funds into our pension pots.

The cost of putting off pension planning.

The main problem with pension planning is planning for the effects of inflation, or indeed further market crashes, in years to come. What might seem adequate and a good deal now – in 20 years time might not be so good. A simple example here would be suppose you retire now at 65 on a $20,000 a year pension. You can quite realistically expect to live for another 20 years or more, but in 20 years with inflation at just 3% a year, you’ll need nearer to $40,000 to maintain your lifestyle. Add to this the fact that you may well need extra medical insurance as you get older to deal with the ailments that age can bring – and what seems like a good pension can soon look like not so good a deal. If that sounds like the situation you might be in – do discuss your pension requirements and planning with one of the reputable and professional independent financial advisors you can find on the internet, by searching for something as simple as ‘pensions advice‘.

401(k) investing.

Even if money is tight right now, avoiding providing adequately for your old age really is a false economy. So, if you’re working for a company operating the 401(k) pension scheme, start up a pension plan now. No matter how small the amount you invest in it now, it will pay dividends for you in the long run, especially if you can add catch-up contributions when you get nearer to retirement age and any financial commitments to your immediate family probably decrease. Following last years recession stocks have risen about 50% in the last eight months, so if you’re waiting for the markets to recover before starting a pension plan – you’ve already lost out on several months saving, so delay no longer and review or start your pension plan now!

Introduction.

The great thing about finding financial advisors on the internet is that it really is just so simple. However, how do you know which is the best one to pick out of all the online financial advisors you have to choose from? Needless to say you need to make a wise and careful choice on this one to either safeguard your hard earned savings and investments or to get the right advice about personal loans, mortgages or clearing debts.

Types of Financial Advisors.

An individual financial advisor advertising their services should at least be able to prove to you that they are qualified to work as at least one of the following: A Certified Financial Planner (CFP) will not only have passed the appropriate examinations but will also have at least three years experience as a personal financial planner. A Certified Financial Consultant (CFC) is very similar to a CFP, but he or she is more likely to be involved with selling insurances as a financial product. If you need advice concerning your taxes then a Certified Public Accountant (CPA) would be recommended; whereas for help with investments a Chartered Financial Analyst (CFA) will sort out your securities for you. Whilst you might find a website offering financial advisor services ‘free of charge’ the reality is that you will be paying them either some hidden form of commission or a higher flat rate/hourly fee.

Questions to ask.

So, don’t be afraid to ask them outright if they charge a flat rate or hourly fee or if they are paid according to commissions on their work for you. Some advisors might well expect payment according to ‘fee based compensation’; this is just a fancy term for charging flat rate/hourly fees and commission. You might also want to ask them who else they currently represent and look for references/testimonials from exiting clients, to check that they are bona fide. Another thing you can do to protect yourself from any likely financial charlatans is by asking to see their financial advisors ADV form. This is a form that all registered investment advisors must lodge with the SEC or their State authority. Finally, do ask them “if they accept financial fiduciary”; which simply means that they will always act solely in your best interests.

Introduction.

You know some folk really have a gift for not being able to save money. I’m not talking about putting money into a savings account here; just saving money by thinking they’re not being wasteful. The problem is these things often end up being hair-brained schemes that end up costing them more money than they could ever save or even worse – afford.

1 – Wash day blues.

I know this one guy who had a problem with his wash-tub, all that was wrong was the seal on the door was leaking a little. Now fitting seal is fairly easy and it would only cost about $40. What! “$40 – no way” says he. Instead he’d read on the internet that you could fix leaking tub seals using a general purpose window frame caulk. Sounds fair enough eh? Caulk is easy to work with, its water-proof, when ‘set’ it retains a bit of flexibility and it costs only $8 a tube, a great way to save $32. So, he finds the leak and seals it with caulk, that week-end he and his family goes off out for the day, putting a load in the wash-tub before leaving. On their return some hours later, you guessed it; the wood-floor is flooded. OK, they clear up the mess and the wife tells him to get it fixed by a plumber. So now its $40 for the seal and $40 to get it fitted, that’s $88 total now! But oh dear his woes were not over, after a few days of the heating being on all the wood panels lift and warp, net result is he has to fit a new floor costing an eye-watering $400 – the total cost to replace one $40 wash-tub seal ended up at $488!

2 – Driving on slicks.

Let’s face it running an auto is an expensive business and the number of ways people will try to save money by not spending it on their auto seems unending. After all why bother to pay auto insurance, you’re such a good driver you’ll never be in a wreck – will you! Hey – that’s against the law dumb ass – get yourself insured now! Anyway, I know this one woman, that’s a picture of her there, whose country cousin – wouldn’t you know it – told her she didn’t need to spend $500 on new tires, she could save $500 by driving on the old ones! Oh dear, he knew that racing cars have ‘slick’ tires with no treads, and reasoned if no treads are good enough for racers – they sure must be good enough for driving round their roads too. Of course what he didn’t know was that ‘slicks’, are made of special rubbers and stick like glue to the road – bald tires just skid along it. Net result – she hit a grease patch on the road and wrecked her $5000 auto!

3 – Drive-Fly vacation.

I know some people who live in Canada, we’ll forego all the usual jokes about Canadians as they truly are my friends. Anyway they live out at Thunder Bay and needed to get to Toronto for a flight to Europe. Its about 900 miles between the two places, a flight for the two of them would have been about $500 and taken around an hour and a half, with an eye to saving money they decided to drive. To mean to set off a day early and have a night in a motel for an extra $100, they set off in plenty of time a full 24 hours early, but it still took them nearly 20 hours; although it did only cost $125 in gas, so far so good. Problem was they were that tired when they got to the Pearson airport, they just fell asleep in the terminal and missed their call for the flight to Europe – costing them $2500 in lost air fares! So, for saving $375, they lost $2500!

4 – Who needs insurances?

Why we pay for insurance policies at all can be quite beyond some folk. The whole idea of an insurance policy is to protect you against something that might happen, so why spend all that money when it might not happen? The point is you only need to have to claim on an insurance policy to know it makes sense. Suppose you’re a keen home enthusiast, but decide not to take out the accidental damage waiver on your household insurance, after all if any thing needs fixing – you can do it yourself. Why pay an extra $100 or so on your insurance? So, said home enthusiast decides he’s going to repaint the lounge. He starts off stripping the paint off the doors with a blow-torch, gets carried away and burns the door that badly it needs replacing. Doh- there’s an extra $100 already to spend, because he can’t claim it back off the insurance. Better still, whilst painting the ceiling he falls off the ladder, upsets the paint pot and covers the floor carpet in white emulsion. Net result, one ruined carpet needing replacing at $480, even if he fits it himself! In this case, spending $100 could have saved nearly $500 more.

5 – Wear warm clothes in the winter.

Anyone living in one of the colder regions will fully appreciate having thermals to wear when it’s really icy and cold. Of course thermals aren’t the cheapest of clothing articles to buy so I wouldn’t be surprised this year to see guys wearing – mantyhose. Hideous as I might consider them to be, for anyone having to work outdoors in freezing temperatures they might just make sense to help keep your legs warm and they’ll be a darn sight cheaper than thermal leggings. Hey they’re only $7 a pair, compared to about $40 for proper thermals. The problem is of course that proper male thermals are meant to withstand some wear and tear and will last for months, whereas you could end up paying out for new mantyhose every other day or so – now that’s no way to save money guys is it? But, also think how expensive wearing mantyhose might it be for you in other ways. So, you’ve been working all day, you stop by a bar on the way home and get chatting to a pretty woman. Before you know it she’s asked you back and – well, what on earth do you think she’ll make of your mantyhose?

6 – Don’t have the heating on.

We’re all being told to turn down the thermostat on our heating systems and not have the heating on at all if it’s not really cold. Now I’m all for saving the planet and gowing green etc, and turning the heating down or off is a great way to save money – after all no heating equals no fuel bills. Even worse, what a waste of fuel, energy and your money it is to have the heating on – when you’re away on vacation. Hey – just turn it off, who’s in the house needing warming anyway? So, having turned off the heating you take off on a vacation. Problem is, when you return home there’s been a cold snap and the temperatures been below freezing for days. You walk in and the house and it’s cold as the grave, first thing you do is put the heating on full blast, all the water pipes warm too quickly and burst – flooding the whole house. Net result of trying to save money by being miserly with the heating – hundreds of dollars needing to be spent on new flooring!

7 – Eating in is the new eating out!

If you didn’t know there’s a recession on and we’re all being told that the in-word is “eating in is the new eating out”? Sounds good to me and a great way to save money; go to a decent restaurant and you’d be lucky to come away only $200 lighter – just to pay for the food and drinks and then paying another 15% on top of that for the tip, oh sorry, I mean service charge. They might as well pick-your-pocket on the way out and be done with it? Sure I can cook, so I set up eating in with my girlfriend. The food only cost $50, the girlfriend comes round, the tables ready with candles on it and I put the meal in the oven; it only needs 45 minutes. Then we start to enjoy a glass of wine, whilst the meal’s cooking we have some more wine and things get, well, amorous. Before you know it a couple of hours pass by before remembering the food – and what’s that strange burning smell form the kitchen? Opening the kitchen door to an inferno – net cost $20,000 for a new kitchen!