Archive for the ‘News’ Category

Introduction.

Everyone loves finding a great deal and interest free credit cards are one of the best deals around that we can find. Or are they and should we really beware of interest free cards? If you agree that there’s no such thing as a free lunch then you’ll not be surprised to hear that there’s also no such thing as an interest free credit card and, when you do see interest free credit cards advertized they’re actually referring to transferring a balance from one credit card to another, where the new credit card, for a time, will not charge you interest on the balance still owing.

Free balance transfers then and now.

The reason we’re so keen to find interest free balance transfers is so that we can reduce the overall amount of debt we’re in and not having to pay interest on a credit card debt can surely only help in that regard. After all, the less interest we’re paying – the more capital we can pay off? Pre-credit crunch – that statement would have been correct as just about anyone could get an new credit card with an interest free balance transfer valid for an average of 9 months. Today, the average interest free period has actually risen to 12 months, which sounds great initially – until we start to drill down a little to see why, in these post-credit crunch times, the credit card companies are keen to be seen to be offering us such a great deal.

Free balance transfers – not so free and not for everyone.

The first reason to be wary of free balance transfers is that whilst pre-credit crunch pretty well anyone could apply for an interest free credit card – to get one of the new interest free balance transfers you’ll now have to have a really good credit score in the first place. Secondly, don’t expect it to be ‘free’ as, these days, credit card companies will make you pay an upfront ‘administration charge’ before issuing your interest free credit card. So, if you owe $10,000 on your credit card – an upfront fee of even just $200 for an interest free card is a pretty steep charge to pay at 2%! Thirdly, why are you in debt to your credit card – because you’ve been missing payments. So an issuer of a new interest free card will make sure your contract includes quite stinging charges for missed or late payments, typically up to $20 a time! Finally, do check carefully what your interest payments will be when the ‘free period‘ expires. If your old card was charging interest at say 17% – how much better off will you be if, at the end of the interest free period you haven’t paid off the debt and the interest rate leaps to 20% or even 24%!

Introduction.

As the festive season draws to a close it’s time to start thinking about your New Year finances. That isn’t just about how you’re going to pay off any debts from Christmas – but how you’re going to keep yourself out of debt in the New Year. With job insecurity looking to be a cloud hanging over us all and, despite what the politicians may be saying, the recession still making tough times for everyone – it has never been more important than now to take control of your finances.

Control that credit score.

One of the most important things to do right now is to control your credit score. The lower your credit score the more you’ll have to pay in interest on any loans you take out. Despite what you might read in some finance articles – there’s no problem at all in taking out a new loan, providing you can repay it without any difficulty. The main reason most folk get into trouble when trying to repay a loan is not paying off the capital they borrowed – but paying off the interest. If your credit score is low you will pay high interest on new loans and might even have to apply for bad debt loan at a swingeing interest rate. Improving your credit score can be achieved by simple and small steps like making sure you always pay at least the minimum monthly dues on credit cards or current loans and mortgages.

Save for the future.

Saving for the future is also a great way to take control of your finances. If you can save money – you might not even need to take out a loan should the need arise. However, your saving plans should look further ahead than the next few months. Planning and saving now for your retirement will have a positive impact on your future wealth at retirement. If you’re not already enrolled in an employers 401(k) scheme – you’ll probably qualify for a Roth IRA, giving you tax deductible benefits. One thing to be careful of here though is using your pension savings to spend on anything at all. You must resist the temptation to use the pension fund as a piggy-bank, to be raided when you need to buy something. Think of your pension savings as being utterly out of reach and if you need something you haven’t got the cash for – then bite the bullet and take out a loan.

Introduction.

In this day and age there really is no good reason why women having their own pensions should come as a surprise. It’s a fact that these days women who are widowed or divorced in later life can, unfortunately, find themselves not only short of money and in financial difficulties as they adjust to life on their own – but if their husband was retired and they haven’t been saving for a pension of their own, thinking they could rely on their husbands pension, can find themselves reliant on welfare checks in later years. So, here’s some pointers to make sure you get your pension funds sorted out now!

Create your own pension plan.

If you’re not in a workplace pension scheme already you must begin a 401(k) retirement savings plan right now. Quite simply, the younger you are when you begin your own personal retirement savings plan – the more it will be worth to you as an annual pension. Or, put another way, the longer you leave it to start a retirement pension plan – the more you will have to save into it monthly, for it to create an annual pension capable of supporting you. At the end of the pension plan, just before you retire, the savings you’ve made are used to buy an annuity that gives you the annual income to live on. To generate an annuity capable of delivering a pension worth at least half of your salary – you’ll need to save around 10% of your monthly pay check into the pension savings plan.

Women that don’t work and pensions.

The above is all well and good for women who are working and can finance their own pension funds, but what about women who don’t work? Although in the case of divorcees the courts will ensure that women get an equal share of a husbands pension, actually getting the ex-husband to hand over the money can be difficult and drawn out. Also, sadly, in the case of a widowed woman believing that she will be able to rely on her husbands pension – she will find that the pension is no longer worth its full value. Women who don’t work can still protect themselves if either of these scenarios were to occur, simply by arranging with their husbands to create two pension funds, rather than just saving into one pension fund for him. That way, if you stay together you can both share each others pension – but if your husband leaves or per-deceases you, at least you have some pension of your own to fall back on.

Introduction.

Although our politicians finally got their act together a few weeks ago and agreed to sort out the national debt – that doesn’t mean to say that we won’t end up paying for their financial mess due to the reductions in the nation’s credit rating. What this means, for me and you, is higher interest rates on our credit card re-payments and credit card blues – as we’ve all previously signed up for variable rate cards in the now false anticipation of falling credit card interest rates.

Beat the interest rate rise.

You can, however, beat the interest rate rise that will soon be being made to your credit card. If you’re thinking of buying something on your credit card – get it now and pay it off before the interest rate rise comes through. Even if you can’t pay off the credit card loan immediately, and the rate rise comes in a few months later, at least you’ll have been able to pay off some of the interest at its lower rate. The same could also be true for taking out a personal loan to make a purchase or an auto loan – take it out now and you should be able to secure it at the current lower interest rate. Food for thought here; winter clothing, Christmas gifts etc will soon be hitting the stores – so buy now to keep your interest payments as low as possible.

Keeping watch for rate credit card interest rate rises.

You’d be amazed how many people don’t know what their current credit card interest rate is until the receive their monthly bill, which could then come as a shock as a small interest rate rise could add hundreds of dollars to your repayments. You need to keep track of your credit card interest so that you can check that you can afford to repay your credit card purchases. So, when mail or email arrives from your credit card company – take the time to read it and look for information about the card interest rate. Don’t ignore it thinking it’s junk mail.

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.

Entering into the main summer vacation period for most Americans going abroad, it’s always a problem to know what to do for your vacation cash. Should you take a big thick role of notes with you, rely on your debit or credit cards for cash or take travelers checks? In actual fact the very best solution is to have a mix of those things available to you – and we hope you’ll find the following helpful in deciding exactly how to organize your vacation cash.

Cash in your clip or wallet.

Arriving at a foreign destination and assuming that you can pay for a taxi or the train fare to your hotel location in dollars can be a risky business. If you have to pay in the local currency you’ll be at the mercy of the airport bureau de changes and their foreign exchange rates (FX) and commission charges. So. it’s always a good idea to make sure you leave the USA with at least enough local currency to get you through the first couple of days. But, don’t just accept the FX that your High Street bank offers you. Check online for FX deals to convert your dollars to other currencies – many of which will get the foreign currency to you the following day.

Credit cards and debit cards.

Always useful in an emergency, there’s absolutely no reason at all why you shouldn’t use your credit or debit card abroad Taking cash out on a credit card card at home or abroad can be expensive, so if you want to draw cash in the local currency – best to use the debit card. However, using your credit card to pay for goods/ gifts whilst abroad can still make sense. You’re not spending the cash in your pocket and the credit card should give you some insurance should the gift be faulty or damaged.

Travelers checks.

Again, don’t just accept the travelers check offers from your local bank – look for online deals giving you a better FX rate and zero commissions. Also, remember fewer and fewer hotels cash travelers checks – which means going inside a bank in the country you’re visiting to cash them. Foreign banks operate differently to ours – and that’s not just to do with the language. For example, I speak Italian and love going to Italy but – Italian bank opening times and the routine you have to endure to get in to an Italian bank, just have to be experienced to be believed. So, if you need cash quickly, or even worse urgently, travelers checks are not always the answer.

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.

Across the country countless millions of dollars worth of free and discounted goods and services are being lost simply because folk can’t be bothered to read what’s on a promotional discount coupon. You know what I mean don’t you, all those coupons in the paper and discount coupons that you’re given when paying at the store check-out – they all just go straight in the garbage without even being glanced at!

Too good to be true?

The reason we all discard these great offers to help us save money is we simply think there must be a catch to it. All they want is to get us into their store or business and then try and sell us something at the full or a higher price instead. Or perhaps they’re somehow going to defraud us. It’s interesting that we all will take notice of discount coupon offers from the big name and well known stores and services, but smaller ones we are more wary of. Well of course you need to be on guard against identity theft and having a regular credit score check will help you to avoid id theft, the fact remains that only a tiny, tiny, number of discount coupons are anything other than a company trying to help you save some cash off a product or service.

Start looking for local discount vouchers.

Do you want to know why so many local businesses send out discount coupons – it’s to try and get your business away form those big name operations whose discount coupons you will take notice of. So, if you see a discount coupon that’s not for Walmart, or Ford or Disneyland etc – then at least take the time to read it as it could be offering you a great deal on theater tickets, restaurant, teeth whitening … etc.  Don’t forget too that you can find loads of discount coupons on the internet to spend in both online stores and in the High Street. Online discount coupons are big business worth billions of dollars a year – the offers are out there waiting for you to save money on all sorts of products, so don’t let them pass you by.

Introduction.

If you’re lucky enough to have had an end of year bonus the inevitable question you’ll be facing is – what to do with it? Needless to say if you’ve got any debts then it makes sense to pay those off first and save yourself a wad of cash in interest payments. Alternatively perhaps you might be looking to add your bonus to a personal loan so you can finally do that home extension or that once in a lifetime holiday etc. However, the positively worse thing you can do at the moment is put it in the bank with interest rates still being so low. So, what are the other investment opportunities at the moment to get your money working for you?

Upward investment opportunities.

In 2011 the hotly tipped upward investments are global equities and US bonds. In terms of global equities Germany is strongly tipped to have solid growth through 2011 whilst China, everyone’s favorite in 2010, will be at risk of over-heating, with rising inflation rates wiping out any potential early gains. Japan, like the US, is probably best avoided for equities as its increasingly older national age profile make any long-term growth prospects increasingly look unlikely to give any significant yield. Any emerging market has a downside of course, which for 2011 as US finances start to show some recovery will be conflicts with the USA on trade, along with currency and political concerns. Regarding bonds, the “steady Eddy” of investments, look for pretty well any home-grown index-linked bonds.

Commodities and property.

By and large commodities will remain a more risky investment through 2011. The one exception to that will remain – Gold. Gold has been riding high for two or three years now and, as global economies start to recover, Gold will stay as the safe haven for investments right up until all the major global economies are fully recovered. The one investment that still holds that ‘toxic’ label is property - in anything but very long term real estate planning. Mortgage foreclosures are still flying out meaning that general property prices will remain deflated with an anticipated fall of around 2% in value over the year. That trend looks set to continue for a good few years and with mortgages being so hard to get, 25% deposits not being that unusual even for folk with a good credit score. So, unless you can afford for your money to be tied up for 10 or 20 years, you could actually lose money and fall into debt with a property investment, rather than making money from it.

Introduction.

At the end of the month you should notice what may well be an unexpected bump to your pay check, which even for someone earning $25,000 a year could be as much as an extra $50 a month, and for someone on $50,000 more like an extra $100 a month – but where’s it from if you’ve not had a pay rise yet? The answer to that question is we’ve all actually got some tax free dollars back form the government, thanks to them reducing the social security tax by 2 points this year from 6.2% to 4.2%.

What to do with the extra dollars?

The question that then arises of course is what to do with those extra dollars? Well our advice would be to use them to help pay off any debts you’ve got on personal loans or credit cards. Whether the extra money in your pay check is a few 10s or 100s or dollars – it’s all completely unexpected and so you really shouldn’t just let it get swallowed up in your regular monthly budget, but put it to some good use. Paying down any loans you’ve got will be an ideal use here. The net result of paying off personal loans or credit card debts early has much more significance than just making you feel good about having paid off your debts. Firstly by paying off a debt early you’ll actually end up paying less in interest – saving you money in the long run; and secondly you’ll help to improve your credit score as the credit rating companies will be impressed by your commitment to repaying bills.

No debts to pay off?

If you’re in the very fortunate position of not having any debts to pay off then the obvious thing to do will be to save the extra money from the tax break ready for a special treat or perhaps as a fund to pay for next Christmas? If you’ve got a mortgage then you could always use it to help pay off the mortgage for a few months, although the extra amount you’ll repay over the year might seem small, you’ll be amazed how much mortgage interest it will help you to avoid paying.