Steve Repak's Blog - Posts Tagged "debt"
Fox & Friends
I have the honor and privledge to be back on again Fox & Friends this Sunday morning on November 18th at 6:45am ET (rescheduled) where I will talk about the 10 Things The Military Taught Me About Money
What to Do With Your Tax Refund
To keep things simple, there should be at least three things you should consider:
1. Add some cushion to your cushion
Nobody likes to plan on things going wrong, but invariably they do. Your car’s transmission will go out or your pet will swallow a golf ball, and you need short term savings to cover these types of emergencies. It isn’t a matter of if they will happen; it is only a matter of when. A good goal is to have at least 3-6 months of your monthly non-discretionary spending in an account separate from your checking account. If you don’t have this much consider using part of your refund to add to your cushion.
2. Pay down some debt
The more debt you have, the more interest someone else is earning on your money. Your ultimate goal is to be debt-free, but just as you didn’t accumulate it overnight, neither will you pay it off overnight. Evaluate your current debt and put some of your refund towards the debt that is charging you the highest interest.
3. Have some fun
After you have put some money into savings and paid down some of your debt, take the rest of your tax refund money and spend it any way you want. Extremes rarely work and I have found that people who have balance in their lives are happier. Wasting all of your money will lead to poverty while saving every last cent can lead to resentment.
So there you have it. Be responsible with most of your tax refund, but have a little fun with the rest of it!
Ecclesiastes 3:13 (NLT) “And people should eat and drink and enjoy the fruits of their labor, for these are gifts from God.”
http://nicoleodell.com/2014/03/do-you...
1. Add some cushion to your cushion
Nobody likes to plan on things going wrong, but invariably they do. Your car’s transmission will go out or your pet will swallow a golf ball, and you need short term savings to cover these types of emergencies. It isn’t a matter of if they will happen; it is only a matter of when. A good goal is to have at least 3-6 months of your monthly non-discretionary spending in an account separate from your checking account. If you don’t have this much consider using part of your refund to add to your cushion.
2. Pay down some debt
The more debt you have, the more interest someone else is earning on your money. Your ultimate goal is to be debt-free, but just as you didn’t accumulate it overnight, neither will you pay it off overnight. Evaluate your current debt and put some of your refund towards the debt that is charging you the highest interest.
3. Have some fun
After you have put some money into savings and paid down some of your debt, take the rest of your tax refund money and spend it any way you want. Extremes rarely work and I have found that people who have balance in their lives are happier. Wasting all of your money will lead to poverty while saving every last cent can lead to resentment.
So there you have it. Be responsible with most of your tax refund, but have a little fun with the rest of it!
Ecclesiastes 3:13 (NLT) “And people should eat and drink and enjoy the fruits of their labor, for these are gifts from God.”
http://nicoleodell.com/2014/03/do-you...
How I Overcame My Obstacles and Paid Off My Credit Card Debt
I knew a person who came from extremely humble beginnings. Growing up, he didn’t have that much. Kids made fun of the clothes he wore, and when he got into high school he worked evenings and weekends just to have a little spending money. Neither of his parents had a college degree, so education wasn’t much of a priority. He graduated from high school and decided to join the Army.
This was the first time he saw real money. He took home about $700 every two weeks. His clothes, housing, and food were paid for by the military, but he had trouble saving money and would always find himself with nothing in the bank. After about a year in the Army, he got his first credit card. Before his signature on the back of the credit card was dry, he’d maxed it out.
Even though he lived paycheck to paycheck with a maxed out credit card and no money in savings, he was promoted to private first class. A higher rank meant a higher salary, which gave him the opportunity to get another credit card—and he soon maxed that out.
You might be thinking that he would eventually catch on, but the cycle continued to repeat. He would get promoted, make more money, get more credit, and max out his credit cards. As long as he could make the minimum payments, he thought had a handle on his debt. He would always tell himself that the next time he got promoted, he would have more money to pay off credit card debt.
I’m sorry to say that after 12 years in the Army, he left with $32,000 in credit card debt. I’m even sorrier to tell you that this person was me.
I know what it feels like to live paycheck to paycheck and have nothing in savings, a poor credit score, and a mountain of debt. I want to let you know that there is hope if you can follow these four steps:
1. Admit there is a problem. I thought that because my friends had debt, it was OK for me to have debt, too. I had to admit that I had a spending problem—I spent more than I earned. Nobody likes to admit that he or she has a problem, but you have to take responsibility in order for things to get better.
2. Start spending less. What helped me curb my spending was keeping a spending journal. In it, I wrote down exactly where, what, and how much I was spending each day. After doing that for a few weeks, I started keeping more money in my pocket.
3. Build your savings. It might not make a lot of sense, but the only way I was able to get out of debt was to build up my savings. When I first started saving, I would have to use my credit card when an emergency came up. After I built my savings and those emergencies reared their ugly head, I was able to take care of them without resorting to credit cards.
4. Make a plan and be flexible. That’s not a mistake. Don’t make a plan and then stick to it no matter what. There were times I felt I would never be able to pay off all of my debt because things would happen and throw me off track. I had to be flexible and adjust my plan.
What worked for me was making minimum payments on my debts with the lowest interest rates, and paying more towards the cards with the higher interest rates. You could also start by paying off the card with the lowest balance and working up from there. The only wrong way to approach paying off your debt is to not have a plan at all.
http://blog.equifax.com/credit/how-i-...
This was the first time he saw real money. He took home about $700 every two weeks. His clothes, housing, and food were paid for by the military, but he had trouble saving money and would always find himself with nothing in the bank. After about a year in the Army, he got his first credit card. Before his signature on the back of the credit card was dry, he’d maxed it out.
Even though he lived paycheck to paycheck with a maxed out credit card and no money in savings, he was promoted to private first class. A higher rank meant a higher salary, which gave him the opportunity to get another credit card—and he soon maxed that out.
You might be thinking that he would eventually catch on, but the cycle continued to repeat. He would get promoted, make more money, get more credit, and max out his credit cards. As long as he could make the minimum payments, he thought had a handle on his debt. He would always tell himself that the next time he got promoted, he would have more money to pay off credit card debt.
I’m sorry to say that after 12 years in the Army, he left with $32,000 in credit card debt. I’m even sorrier to tell you that this person was me.
I know what it feels like to live paycheck to paycheck and have nothing in savings, a poor credit score, and a mountain of debt. I want to let you know that there is hope if you can follow these four steps:
1. Admit there is a problem. I thought that because my friends had debt, it was OK for me to have debt, too. I had to admit that I had a spending problem—I spent more than I earned. Nobody likes to admit that he or she has a problem, but you have to take responsibility in order for things to get better.
2. Start spending less. What helped me curb my spending was keeping a spending journal. In it, I wrote down exactly where, what, and how much I was spending each day. After doing that for a few weeks, I started keeping more money in my pocket.
3. Build your savings. It might not make a lot of sense, but the only way I was able to get out of debt was to build up my savings. When I first started saving, I would have to use my credit card when an emergency came up. After I built my savings and those emergencies reared their ugly head, I was able to take care of them without resorting to credit cards.
4. Make a plan and be flexible. That’s not a mistake. Don’t make a plan and then stick to it no matter what. There were times I felt I would never be able to pay off all of my debt because things would happen and throw me off track. I had to be flexible and adjust my plan.
What worked for me was making minimum payments on my debts with the lowest interest rates, and paying more towards the cards with the higher interest rates. You could also start by paying off the card with the lowest balance and working up from there. The only wrong way to approach paying off your debt is to not have a plan at all.
http://blog.equifax.com/credit/how-i-...
Finance Tips for Every Stage of Life
No matter what stage of life you’re in, money matters. Whether you’re working to earn an allowance, supporting a family, or gearing up for retirement, your finances are often at the forefront of your mind.
Here are a few tips to keep in mind (and pass along) for all stages of your life:
Teens
Giving is important. One of the earliest lessons most kids receive is about sharing. It’s important not to forget this as you move into your teen years. I have found that the people who are most content with their lives are the ones who share their good fortunes with others. When you get your first job, consider supporting a charity of your choice. Even $10 every few months can help.
Wants and needs are different. In your teen years, it can be hard to distinguish between needs and wants, especially when you’re looking at what your peers have. The reality is, food, shelter, transportation, and clothing are needs—going out to eat every night is not. Wearing clothes is a need—designer clothes are not. Peer pressure is real, but learning to stand up to it is important. If you learn in your teens how to control your emotions and distinguish needs from wants when making financial decisions, you can avoid financial trouble when you get older.
20s and 30s
You’re not invincible. When you’re in your 20s, it’s easy to think you are invincible and will live forever. But that mindset can hurt you financially, especially when it comes to planning for retirement. The best lesson you can learn in your 20s is the importance of compounding money. The earlier you can start saving money, the more you will have later. Don’t wait until you’re on the brink of retirement to start saving. You’ll have to save a lot more, a lot faster, than you would have if you’d started in your 20s.
You should earn interest, not pay it. Many people in their 30s are still paying off their student loans or credit card debt from bad purchasing decisions they made in their 20s. You don’t have to be a finance professional to understand that the best way to increase your wealth is by earning interest on your own money instead of paying interest to someone else. Pay down those debts as soon as possible. If you must have debt, know the difference between good debt and bad debt.
40s and 50s
Prioritizing is important. You are getting close to your peak earning years, but why does it seem like you can never get ahead? Mortgage payments, car loans, and kids are most likely consuming all of your cash. This is definitely the time to learn about financial priorities. The key thing to remember is that retirement should be your number one priority (unless of course, your plan is to move in with your kids and expect them to take care of you during your golden years).
You can’t change the past. There are many people who don’t even start to think about planning for retirement until they are in their 50s. If this sounds like you, know that although it would have been less painful financially had you started saving earlier, it is never too late to start. Don’t whine about something you can’t change—you probably don’t have a time machine to go back to your 20s—and instead buckle down and try to put every cent you make away for retirement.
60s and beyond
A happy spouse means a happy house. Did you really think that you were going to retire and sit around the house doing nothing? This is a great time to consider a second career or maybe give back by donating your time to your favorite charity or cause. Not only will you feel good about giving back, you might also stop driving your spouse crazy by being home all day.
Your priorities will change. You might not be ready to slow down, but the lesson here is that you won’t live forever. As you age, review all of the wills and legal documents you might have drafted in your younger years, and make the changes you deem necessary.
Pass on what you know. Some of the greatest gifts you can pass on to your loved ones (and maybe even perfect strangers) are the lessons you’ve learned over the course of your life. Spend time with the people you love, teach them what you know, and take some time to smell the roses.
No matter what age bracket you’re in, it’s important to set financial goals and learn from your—and others’—mistakes. What are some money management tips you have to share?
via http://blog.equifax.com/credit/financ...
Here are a few tips to keep in mind (and pass along) for all stages of your life:
Teens
Giving is important. One of the earliest lessons most kids receive is about sharing. It’s important not to forget this as you move into your teen years. I have found that the people who are most content with their lives are the ones who share their good fortunes with others. When you get your first job, consider supporting a charity of your choice. Even $10 every few months can help.
Wants and needs are different. In your teen years, it can be hard to distinguish between needs and wants, especially when you’re looking at what your peers have. The reality is, food, shelter, transportation, and clothing are needs—going out to eat every night is not. Wearing clothes is a need—designer clothes are not. Peer pressure is real, but learning to stand up to it is important. If you learn in your teens how to control your emotions and distinguish needs from wants when making financial decisions, you can avoid financial trouble when you get older.
20s and 30s
You’re not invincible. When you’re in your 20s, it’s easy to think you are invincible and will live forever. But that mindset can hurt you financially, especially when it comes to planning for retirement. The best lesson you can learn in your 20s is the importance of compounding money. The earlier you can start saving money, the more you will have later. Don’t wait until you’re on the brink of retirement to start saving. You’ll have to save a lot more, a lot faster, than you would have if you’d started in your 20s.
You should earn interest, not pay it. Many people in their 30s are still paying off their student loans or credit card debt from bad purchasing decisions they made in their 20s. You don’t have to be a finance professional to understand that the best way to increase your wealth is by earning interest on your own money instead of paying interest to someone else. Pay down those debts as soon as possible. If you must have debt, know the difference between good debt and bad debt.
40s and 50s
Prioritizing is important. You are getting close to your peak earning years, but why does it seem like you can never get ahead? Mortgage payments, car loans, and kids are most likely consuming all of your cash. This is definitely the time to learn about financial priorities. The key thing to remember is that retirement should be your number one priority (unless of course, your plan is to move in with your kids and expect them to take care of you during your golden years).
You can’t change the past. There are many people who don’t even start to think about planning for retirement until they are in their 50s. If this sounds like you, know that although it would have been less painful financially had you started saving earlier, it is never too late to start. Don’t whine about something you can’t change—you probably don’t have a time machine to go back to your 20s—and instead buckle down and try to put every cent you make away for retirement.
60s and beyond
A happy spouse means a happy house. Did you really think that you were going to retire and sit around the house doing nothing? This is a great time to consider a second career or maybe give back by donating your time to your favorite charity or cause. Not only will you feel good about giving back, you might also stop driving your spouse crazy by being home all day.
Your priorities will change. You might not be ready to slow down, but the lesson here is that you won’t live forever. As you age, review all of the wills and legal documents you might have drafted in your younger years, and make the changes you deem necessary.
Pass on what you know. Some of the greatest gifts you can pass on to your loved ones (and maybe even perfect strangers) are the lessons you’ve learned over the course of your life. Spend time with the people you love, teach them what you know, and take some time to smell the roses.
No matter what age bracket you’re in, it’s important to set financial goals and learn from your—and others’—mistakes. What are some money management tips you have to share?
via http://blog.equifax.com/credit/financ...
Will My Future Spouse’s Bad Credit Affect Me?
In any relationship, each person brings his or her own baggage. I’m not just talking about emotional baggage—there is also financial baggage of which you should be aware. Before you say, “I do,” keep in mind that you’ll be making a promise to stand by your spouse for richer and for poorer because money is one of the top reasons many couples fight.
If your soon-to-be spouse isn’t as financially fit as you, it doesn’t mean you should call off the big day. However, you do need to have some discussions with him or her before you walk down the aisle.
Joint accounts vs. separate accounts
Before you get married, decide whether you will both deposit your earnings into a joint account or keep your finances separate. Joint accounts could potentially lead to a financial emergency, especially if one person is not tracking what he or she is spending or is spending more than what is in the account.
On the other hand, having separate accounts creates unique issues. For example, you might be unable to see what your spouse is spending or saving. This could lead to problems later because it could result in two people living off of one person’s savings and retirement.
There is no right or wrong answer, but you should have a plan before you tie the knot. In a healthy relationship, there has to be some give and take—an important concept when it comes to your money or any other important decision.
Your first house
The good news is that if you both are working and you apply for a loan jointly, the lender will look at your combined income. The bad news is that the lender will also look at each of your credit reports and your combined debt-to-income ratios. If one spouse has blemished credit or a lot of debt, that could mean a higher interest rate on the loan—or possibly a complete rejection of the application.
Does this mean that if your significant other has bad credit, you can’t get a house? Maybe, but it could also mean you can afford less house as you may face a higher interest rate that increases your monthly payment. You may simply have to apply for a loan in your name only, but this means you will only qualify for a home you could afford on your own instead of for a home you could afford on both salaries.
Credit cards
Bad credit can haunt you for years, so you should both be aware of your personal credit histories and debt situation before you get married. This may raise some red flags around which you will have to plan. Does your spouse have a lot of debt? You will need to make sure the accounts don’t become past due. Is your spouse a heavy spender? You may want him or her to start using a joint card to encourage wiser spending habits. Are you considering applying for a joint credit card with someone who might not have a stellar credit score? You might want to consider just adding him or her as an authorized user to get better terms.
If you are the one who doesn’t have stellar credit, you can be added as an authorized user, but be aware that not all companies report authorized users to the national credit reporting agencies (CRAs), so you might not get any credit for paying your part of the bill.
There are always pros and cons with each route you choose. The point here is that you need to have a plan before your wedding day. Love is blind, but lenders aren’t. They will look carefully at your credit history, so make sure you are making financial decisions with your head and not with your heart.
Article courtesy of http://blog.equifax.com/credit/will-m...
If your soon-to-be spouse isn’t as financially fit as you, it doesn’t mean you should call off the big day. However, you do need to have some discussions with him or her before you walk down the aisle.
Joint accounts vs. separate accounts
Before you get married, decide whether you will both deposit your earnings into a joint account or keep your finances separate. Joint accounts could potentially lead to a financial emergency, especially if one person is not tracking what he or she is spending or is spending more than what is in the account.
On the other hand, having separate accounts creates unique issues. For example, you might be unable to see what your spouse is spending or saving. This could lead to problems later because it could result in two people living off of one person’s savings and retirement.
There is no right or wrong answer, but you should have a plan before you tie the knot. In a healthy relationship, there has to be some give and take—an important concept when it comes to your money or any other important decision.
Your first house
The good news is that if you both are working and you apply for a loan jointly, the lender will look at your combined income. The bad news is that the lender will also look at each of your credit reports and your combined debt-to-income ratios. If one spouse has blemished credit or a lot of debt, that could mean a higher interest rate on the loan—or possibly a complete rejection of the application.
Does this mean that if your significant other has bad credit, you can’t get a house? Maybe, but it could also mean you can afford less house as you may face a higher interest rate that increases your monthly payment. You may simply have to apply for a loan in your name only, but this means you will only qualify for a home you could afford on your own instead of for a home you could afford on both salaries.
Credit cards
Bad credit can haunt you for years, so you should both be aware of your personal credit histories and debt situation before you get married. This may raise some red flags around which you will have to plan. Does your spouse have a lot of debt? You will need to make sure the accounts don’t become past due. Is your spouse a heavy spender? You may want him or her to start using a joint card to encourage wiser spending habits. Are you considering applying for a joint credit card with someone who might not have a stellar credit score? You might want to consider just adding him or her as an authorized user to get better terms.
If you are the one who doesn’t have stellar credit, you can be added as an authorized user, but be aware that not all companies report authorized users to the national credit reporting agencies (CRAs), so you might not get any credit for paying your part of the bill.
There are always pros and cons with each route you choose. The point here is that you need to have a plan before your wedding day. Love is blind, but lenders aren’t. They will look carefully at your credit history, so make sure you are making financial decisions with your head and not with your heart.
Article courtesy of http://blog.equifax.com/credit/will-m...
Can debt free make life stress free?
Life is hard enough as it is but having to deal with debt along with raising your children will make life that much more stressful, on all of you! I had over $32,000 in credit card debt and that is not counting the other debt I had to deal with. Debt made my life much harder than what I could handle sometimes. To tell you the truth, I had nobody to blame except for myself but as soon as I started taking accountability for my situation and actually started making sacrifices by making smarter decisions with my spending, I started seeing real changes in my financial situation and also experienced a lot less stress as time went by.
I want to share with you 3 things to help you reduce your stress by reducing your debt.
1. Change Your Viewpoint
Many times we rationalize to ourselves when we don’t make the best decisions, especially when it comes to debt. The first realization is that there is no such thing as good debt. I am not saying that all debt is bad, but having debt will make your life more stressful. The sad truth is that we cannot totally escape all stress. Buying a house, paying for an education, or starting a business are a few examples of debt that aren’t bad but understand until those debts are paid off, you are adding risk to your financial health. Any debt you acquire for any other reasons (big screen TV, those new pair of designer shoes, that thing you really want but don’t really need) is bad debt and your life will be less stressful if you can just say no!
2. You need a spending plan
If you can spend less money than you earn each month, chances are you can live debt free. For many people, they have more month, than they have money and that is because most people do not make a plan for how they are going to spend their money. Discretionary expenses are usually the biggest culprit and what throws most people off their spending plan. Discretionary expenses are the things that you can do without. I am not saying you can’t spend money on things you can do without, but you must set boundaries in order to not overspend. For example family vacation. My family and I do not NEED a family vacation at the beach for a week, but we make a plan on how we are going to pay for it before we go. That might mean we have to eat out less throughout the year, make sacrifices with how many tv channels we subscribe to, or whatever little sacrifices we make throughout the year in order to set aside that money into a special account that we use to pay for our vacation instead of using a credit card.
3. The best defense is a strong offense
It is not a matter of if, it is only a matter of when some unexpected expense will occur and if you haven’t been building up your savings each month, most likely you will have no choice but to rely on a credit card to get through that financial difficulty. By allocating some of your money each month to savings can be one of your best defenses against emergencies. Make savings automatic and soon you won’t even miss it. I set my savings up like a bill pay, and each month, money is drafted out of my checking account to another financial institution.
Honestly, even if you are debt free that won’t mean your life will be stress free but I do believe by having less debt your life, you will have less stress in your life. The results of less stress is less bickering, better health, and most importantly a stronger relationship with your children because you won’t be worrying (stressing) about your finances as much.
Steve Repak, CFP®
Financial Literacy Speaker and the Author of "Dollars & Uncommon Sense: Basic Training For Your Money"
http://nicoleodell.com/2015/07/debt-f...
I want to share with you 3 things to help you reduce your stress by reducing your debt.
1. Change Your Viewpoint
Many times we rationalize to ourselves when we don’t make the best decisions, especially when it comes to debt. The first realization is that there is no such thing as good debt. I am not saying that all debt is bad, but having debt will make your life more stressful. The sad truth is that we cannot totally escape all stress. Buying a house, paying for an education, or starting a business are a few examples of debt that aren’t bad but understand until those debts are paid off, you are adding risk to your financial health. Any debt you acquire for any other reasons (big screen TV, those new pair of designer shoes, that thing you really want but don’t really need) is bad debt and your life will be less stressful if you can just say no!
2. You need a spending plan
If you can spend less money than you earn each month, chances are you can live debt free. For many people, they have more month, than they have money and that is because most people do not make a plan for how they are going to spend their money. Discretionary expenses are usually the biggest culprit and what throws most people off their spending plan. Discretionary expenses are the things that you can do without. I am not saying you can’t spend money on things you can do without, but you must set boundaries in order to not overspend. For example family vacation. My family and I do not NEED a family vacation at the beach for a week, but we make a plan on how we are going to pay for it before we go. That might mean we have to eat out less throughout the year, make sacrifices with how many tv channels we subscribe to, or whatever little sacrifices we make throughout the year in order to set aside that money into a special account that we use to pay for our vacation instead of using a credit card.
3. The best defense is a strong offense
It is not a matter of if, it is only a matter of when some unexpected expense will occur and if you haven’t been building up your savings each month, most likely you will have no choice but to rely on a credit card to get through that financial difficulty. By allocating some of your money each month to savings can be one of your best defenses against emergencies. Make savings automatic and soon you won’t even miss it. I set my savings up like a bill pay, and each month, money is drafted out of my checking account to another financial institution.
Honestly, even if you are debt free that won’t mean your life will be stress free but I do believe by having less debt your life, you will have less stress in your life. The results of less stress is less bickering, better health, and most importantly a stronger relationship with your children because you won’t be worrying (stressing) about your finances as much.
Steve Repak, CFP®
Financial Literacy Speaker and the Author of "Dollars & Uncommon Sense: Basic Training For Your Money"
http://nicoleodell.com/2015/07/debt-f...
How Realistic Is the Cash-Only Lifestyle?
If you are in debt, you may have heard that you should stop using credit cards and switch to cash, at least temporarily.
But could using only cash really help you get out of debt? Not necessarily. If getting out of debt is your goal, there are three tried and true habits to keep in mind:
1. Spend less money than you take home each week.
2. Build an emergency savings account.
3. Develop and follow a get-out-of-debt plan.
Here are some of the potential pros and cons to consider when using either cash or credit cards:
Potential cons of using cash
One of the biggest disadvantages of carrying cash, of course, is that you can lose it. If you lose your credit card, you can cancel it and get a new one. Not so with cash. Also, if you use an ATM to withdraw cash, you may be charged fees, which is like throwing money away. Worst of all, flashing cash can make you a target for thieves.
Some pros to using cash
A great technique for getting spending under control is using what is known as the “envelope method,” where you have an envelope of cash for each different category of spending. For example, you might use an envelope specifically for food expenses, such as groceries and eating out, another for clothes, and a third for transportation.
You may also want to have an envelope for discretionary (fun) spending. It is OK to spend money on things you like or things you like to do—the key is to budget for those expenses just like you do for your savings, rent, credit card payments and other expenditures. With this method, you are only allowed to spend what is in the envelope and not a penny more.
Potential cons using credit cards
If you continue to use credit cards and you don’t have your spending under control, you may never get out of debt—it’s that simple. But even if you do have your spending under control, you still may be tempted to use credit cards the wrong way.
Balance transfers with introductory or teaser rates are a good example. It may sound enticing to consolidate your credit card debt with a balance transfer offering a low introductory rate, but you should always read the fine print. The 0 percent promotional rate is typically just that—a promotional rate that may not last forever. These offers typically last anywhere from six to 12 months and then the rate increases, often to a higher rate than you had on your old card.
In addition, there are usually transfer fees, which typically are around 3 percent but can be much higher. Make sure you understand these fees before consolidating your debt. There are online calculators you can use to see if transferring balances to a new card will really help.
Finally, if you do decide to consolidate your debt, you may want to consider paying more than the minimum payment due. Consider making your payments on the new card, at a minimum, equal the payments you were making on the old cards. In other words, you may want to avoid consolidating your debt and then paying less toward it.
Some pros to using credit cards
You can make credit cards work for you if you are disciplined. For example, there are credit cards where you can earn unlimited cash back on everyday purchases, with no expiration and no limit on how much you can earn. As always, make sure you read the fine print, as there are often annual fees for these credit cards.
The main thing to keep in mind is this: If you use a credit card with rewards, you still want to pay the balance in full. It will defeat the purpose of getting rewards if you have to pay interest, which could be more than the value of the rewards.
Building your credit, of course, is another benefit, and it’s very hard to build your credit history if you use only cash. Additionally, there are some circumstances in which you might want to use a credit card, such as booking a hotel or renting a car.
Remember, whether you use cash or credit, getting out of debt is only possible if you build a plan, spend less money than you earn, build your savings, and stick to it.
courtesy of http://blog.equifax.com/credit/how-re...
But could using only cash really help you get out of debt? Not necessarily. If getting out of debt is your goal, there are three tried and true habits to keep in mind:
1. Spend less money than you take home each week.
2. Build an emergency savings account.
3. Develop and follow a get-out-of-debt plan.
Here are some of the potential pros and cons to consider when using either cash or credit cards:
Potential cons of using cash
One of the biggest disadvantages of carrying cash, of course, is that you can lose it. If you lose your credit card, you can cancel it and get a new one. Not so with cash. Also, if you use an ATM to withdraw cash, you may be charged fees, which is like throwing money away. Worst of all, flashing cash can make you a target for thieves.
Some pros to using cash
A great technique for getting spending under control is using what is known as the “envelope method,” where you have an envelope of cash for each different category of spending. For example, you might use an envelope specifically for food expenses, such as groceries and eating out, another for clothes, and a third for transportation.
You may also want to have an envelope for discretionary (fun) spending. It is OK to spend money on things you like or things you like to do—the key is to budget for those expenses just like you do for your savings, rent, credit card payments and other expenditures. With this method, you are only allowed to spend what is in the envelope and not a penny more.
Potential cons using credit cards
If you continue to use credit cards and you don’t have your spending under control, you may never get out of debt—it’s that simple. But even if you do have your spending under control, you still may be tempted to use credit cards the wrong way.
Balance transfers with introductory or teaser rates are a good example. It may sound enticing to consolidate your credit card debt with a balance transfer offering a low introductory rate, but you should always read the fine print. The 0 percent promotional rate is typically just that—a promotional rate that may not last forever. These offers typically last anywhere from six to 12 months and then the rate increases, often to a higher rate than you had on your old card.
In addition, there are usually transfer fees, which typically are around 3 percent but can be much higher. Make sure you understand these fees before consolidating your debt. There are online calculators you can use to see if transferring balances to a new card will really help.
Finally, if you do decide to consolidate your debt, you may want to consider paying more than the minimum payment due. Consider making your payments on the new card, at a minimum, equal the payments you were making on the old cards. In other words, you may want to avoid consolidating your debt and then paying less toward it.
Some pros to using credit cards
You can make credit cards work for you if you are disciplined. For example, there are credit cards where you can earn unlimited cash back on everyday purchases, with no expiration and no limit on how much you can earn. As always, make sure you read the fine print, as there are often annual fees for these credit cards.
The main thing to keep in mind is this: If you use a credit card with rewards, you still want to pay the balance in full. It will defeat the purpose of getting rewards if you have to pay interest, which could be more than the value of the rewards.
Building your credit, of course, is another benefit, and it’s very hard to build your credit history if you use only cash. Additionally, there are some circumstances in which you might want to use a credit card, such as booking a hotel or renting a car.
Remember, whether you use cash or credit, getting out of debt is only possible if you build a plan, spend less money than you earn, build your savings, and stick to it.
courtesy of http://blog.equifax.com/credit/how-re...
4 Simple Ways to Jumpstart Your Finances
If you feel that your finances are on life support and you have little hope of the situation improving, I want to you to provide you with a little ray of sunshine by showing you 4 easy ways to jumpstart your finances.
1. Start Giving More
I know what you are thinking, how can you jumpstart your finances if you are giving your money away! Truth be told, getting onto a healthier path with your finances has less to do with knowing what to do and more with doing what you know. If you truly believe that God is able to provide for your needs, then you acknowledge that by giving back to God. If you truly believe it is better to give than to receive, once again, you demonstrate that by giving to others that are less fortunate. Your money attitudes are crucial so by learning to give first, you will have no choice but to learn to live on less and that is the cornerstone of personal finance!
2. Start Tracking Your Spending
There is no secret that people who don’t run out of money at the end of the month are the ones who spend less than they make. Keeping a spending journal for two weeks can really make a big difference in your spending patterns. I think most of us know how much we make; the problem is that many of us have no idea exactly what we are spending each week. If you want to spend less so you can save more and pay off debt, you must know what you are spending your money on and then decide what expenditures you can eliminate or reduce. Consider using cash for two weeks instead of using your credit cards or debit card. I have heard that it hurts to break a $20, so maybe using cash can help you to start spending less of your hard earned money.
3. Start Knocking Out Your Debt
Don’t be one of those people who justify their debt by thinking that as long as you can afford to make the minimum payments on your credit card you are ok. You must start paying more toward your debt which will reduce the amount of interest you will pay over the life of that debt. Also by paying more towards your debt, you will be able to pay that debt off faster so you can start putting that money towards your savings and start earning interest instead of paying interest. Finally, do not be afraid to call your credit card company to negotiate a lower interest rate. The worse that can happen is that they say no!
4. Start Saving, Start Saving, Start Saving
Between making excuses, having good intentions, or just breaking the promises we make to ourselves, it’s easy to understand how we oftentimes fall short of achieving our goals, but we have to start saving money now! For our short term savings, consider opening a savings account at a financial institution different from where your checking account is (to make it a little harder to get to) and set up a bill pay or draft where you pay yourself each month before you pay any other bills. In addition, start putting money away towards retirement because retirement isn’t a question of if, it is a question of when. If your company offers a match where they will contribute a certain percentage of pay if you are setting aside some of you earnings into a company plan, you are leaving money on the table by not taking full advantage of this benefit. For example, if your company will match $.50 of every dollar you set aside into your 401k up to 5% of your salary, by putting anything less than 5%, you are basically saying no to free money. The last simple tip when it comes to saving is this: saving something is better than saving nothing and whatever you have been saving, start saving more!
article courtesy of : http://www.crosswalk.com/family/finan...
1. Start Giving More
I know what you are thinking, how can you jumpstart your finances if you are giving your money away! Truth be told, getting onto a healthier path with your finances has less to do with knowing what to do and more with doing what you know. If you truly believe that God is able to provide for your needs, then you acknowledge that by giving back to God. If you truly believe it is better to give than to receive, once again, you demonstrate that by giving to others that are less fortunate. Your money attitudes are crucial so by learning to give first, you will have no choice but to learn to live on less and that is the cornerstone of personal finance!
2. Start Tracking Your Spending
There is no secret that people who don’t run out of money at the end of the month are the ones who spend less than they make. Keeping a spending journal for two weeks can really make a big difference in your spending patterns. I think most of us know how much we make; the problem is that many of us have no idea exactly what we are spending each week. If you want to spend less so you can save more and pay off debt, you must know what you are spending your money on and then decide what expenditures you can eliminate or reduce. Consider using cash for two weeks instead of using your credit cards or debit card. I have heard that it hurts to break a $20, so maybe using cash can help you to start spending less of your hard earned money.
3. Start Knocking Out Your Debt
Don’t be one of those people who justify their debt by thinking that as long as you can afford to make the minimum payments on your credit card you are ok. You must start paying more toward your debt which will reduce the amount of interest you will pay over the life of that debt. Also by paying more towards your debt, you will be able to pay that debt off faster so you can start putting that money towards your savings and start earning interest instead of paying interest. Finally, do not be afraid to call your credit card company to negotiate a lower interest rate. The worse that can happen is that they say no!
4. Start Saving, Start Saving, Start Saving
Between making excuses, having good intentions, or just breaking the promises we make to ourselves, it’s easy to understand how we oftentimes fall short of achieving our goals, but we have to start saving money now! For our short term savings, consider opening a savings account at a financial institution different from where your checking account is (to make it a little harder to get to) and set up a bill pay or draft where you pay yourself each month before you pay any other bills. In addition, start putting money away towards retirement because retirement isn’t a question of if, it is a question of when. If your company offers a match where they will contribute a certain percentage of pay if you are setting aside some of you earnings into a company plan, you are leaving money on the table by not taking full advantage of this benefit. For example, if your company will match $.50 of every dollar you set aside into your 401k up to 5% of your salary, by putting anything less than 5%, you are basically saying no to free money. The last simple tip when it comes to saving is this: saving something is better than saving nothing and whatever you have been saving, start saving more!
article courtesy of : http://www.crosswalk.com/family/finan...
