CREDIT CARDS
Your credit cards are good for you, if used wisely. However, credit card debt can be bad if not used on a limited basis. For instance, if you charge an airline ticket on your credit card and pay if off before your grace period is up, that's a very good thing. That's the correct way to use your credit card. You avoid incurring unnecessary interest charges on your account that you will not have to pay! If you choose not to pay off the airline ticket that you have charged, you may end up paying double or even triple for that plane ticket the longer you let this expense accumulate over time.
What should I do to keep from having credit card debt or problems with my credit cards? Limit your spending on your credit cards. You can limit the number of credit cards you have and use your bank debit card instead of your credit card for purchases. Remember when you use your debit card, this money comes directly from your bank account.
How do I get the right credit card for me? Well, you can start by checking with your own bank on the interest rate that is charged. If the rate is reasonable, fees associated with the credit card are low and there is a 25-30 day grace period, consider getting your bank's credit card. Read the terms and conditions of the credit card. Know your credit card terms before you sign!
NET WORTH
Net Worth is something we all need to know about, if we are planning to be financially successful! You determine your net worth by subtracting what you owe (liabilities) from what you own (assets). This will help you determine your financial worth.
What are my assets? Well, that’s a good question. Your assets are any material or financial possessions that have monetary value at the current market value. Examples of your assets would be the following: checking and savings accounts, your home, 401K plan, IRA, mutual funds, certificate of deposits, stocks, cash, vehicles, and anything else that has a monetary value.
What are my liabilities? Your liabilities are debts that you owe to a creditor or anyone else. Your liabilities may include some or all of the following: your mortgage payment, rent, credit card bill, vehicle payment, student loan, and any other liabilities you may owe. By knowing what your liabilities are, this will help you to determine what you are worth. Once you determine what your financial worth is after subtracting your liabilities from your assets, then, you can work on making adjustments to your spending. By adjusting your spending you will be able to increase your overall worth, to assist you in achieving your financial goals. You've worked hard for your money, so continue to make your net worth grow by decreasing your liabilities and increasing your assets!
STUDENT LOANS
Student loans are a helpful accessory when you need to cover costs when deciding to further your education, including housing and tuition. Student loans are there to be financial lifesavers when grants or scholarships leave your school funding a little short. There are federal loans available as well as private student loans that will help with the financial overload. Loan consolidation is another helpful tool when borrowed loans are at the repayment period and you are feeling overwhelmed.
Federally funded student loans can be applied for online. FAFSA is an online free application for federal student aid. This program is available for both students and parents looking to apply for financial help. The application has seven steps that will ask you questions regarding your personal information, your school and plans, and financial information. The Federal Parent Loan for Undergraduate Students, or PLUS, is a loan program that relies on a good credit rating in exchange for helping with the financial needs of your student. This low interest rate program will help cover not only tuition costs, but also housing, books, and supplies. This student loan can be applied for online or through the mail.
Private student loans are loans that are not offered through the federal government. They are available through banks or other financial institutions. This type of loan is offered to both undergraduates and graduates and it helps to cover school expenses when federal student aid does not cover your those leftover expenses. Private student loan applications can be found online and you are subject to a credit review by the potential lender. Your own credit or your parent’s credit is open for review and a co-signer may be needed if either credit rating is not approved for the loan. Obtain an application for your private student loan through your lender of choice or their online website, if applicable.
Student loan consolidation becomes your best friend when the repayment period of your student loans becomes overwhelming. Loan consolidation will give you a break and put your various loans into one low monthly payment instead of various repayment dates with different amounts to pay for each loan. The Sallie Mae foundation is an excellent example of a loan consolidation program. All you have to do is visit their website and you have the option of downloading the application and sending it through the mail or filling it out online and applying for it right that second. It is a simple way to achieve student loan consolidation and it will give you the well-deserved sigh of relief and peace of mind.
SAVE MONEY
Why should you save your money? A good reason is for a family or household emergency. What if you or a member of your household lost your job? What if the wage earner in your family got hurt on the job or had a traffic accident and are unable to work for a month, six months, a year or longer!
What will you do if you have not saved any money? You will probably over extend yourself by charging or borrowing what you do not have to handle these types of emergencies. This problem could be devastating to your finances if you did not have money saved to get you through those hard times. Remember it is important to save your money for situations like this.
How much money should I save for an emergency? Well, you should have at least three to six months of living expenses in your bank account.
Saving your money, how do I go about doing this? A good way to start saving your money is to begin by paying yourself first! That’s right, when you receive your paycheck you should always pay yourself a specific amount of money, even if it's five or ten dollars! Pay yourself first before you pay anyone! This concept may sound simple, however, most people do not think about doing this. Paying yourself first is an important step in saving your money, creating financial security and making your money grow! Do you have change in your pockets, purse or wallet? I'm sure you do! Well, you can take that loose change you have and throw it in a jar to make your money grow! You will be able to save lots of money this way. Can you believe that the change that you put in your jar can add up to hundreds of dollars a year! This is an excellent way to save your money.
Where should I put my savings? You can put your savings in any of the following: credit union, commercial bank account, certificate of deposits, money markets and savings bonds.
MANAGE FAMILY FINANCES
The effectiveness of managing family finances has never been more significant, as parents struggle to find a balance between work and family life. A recent study by Mother and Baby magazine has found that new parents are getting less sleep than previous generations, with new mums struggling to manage their exhaustion.
Whilst there is no technological solution to sleepless nights as yet, it is possible to assign many tasks which were once only possible through physical movement, to the internet, such as shopping and banking. No longer do you have to worry about co-ordinating the demands of screaming children with your weekly shopping list or about missing the bank at 5:01pm. Whatever issues you may face with your child, there are plenty of websites collating advice from parents around the world, such as www.workingfamilies.org.uk and www.babycentre.co.uk .
There are websites such as www.parentspenniespounds.co.uk offering financial advice and support, and financial comparison sites such as www.moneynet.co.uk, which ensure that parents can always find the best deal for their finances, including credit cards, loans, mortgage, life insurance, house insurance, car insurance and the children’s savings accounts. Many personal finance sites including moneynet also offer “account aggregation” tools, which allow parents (and non parents!) to manage all of their finances online, including current accounts, savings accounts, loans and credit cards. If you think your household bills are too high, uSwitch.com can provide you with a comparison of providers for gas & electricity, water and household communications.
And if that all seems a little too practical, take some time out for a little light relief with www.learnthenet.com. This website offers a wealth of information about how to extract useful information from the internet, as well as providing more random suggestions such as the science of online games, “design a structure of copper coins” and even the world’s most calorific sandwich.
PROTECT YOURSELF
Protect myself against ID theft, what does this really mean? Well, this means that you would undergo various steps to safeguard your personal information from someone who may try to obtain your information by committing fraud. You may want to consider the following in order to protect your personal information:
- Do not carry your social security card or number in your wallet or purse.
- Keep your purse and wallet secure at all times.
- Guard your debit and credit card numbers when you are using your cards.
- Do not provide your personal and credit card information to someone you do not know, if you have not initiated providing your personal information to them.
- Read your bank and credit card statements to make sure there are no unauthorized deductions or charges to your accounts that you did not make.
- Shred all personal information you do not need. Do not throw your personal unshredded information in the trash.
- Be careful how you use your personal information via the internet. Do not provide your bank or credit card information to a company unless this organization provides you with information on how your information will be used and protected. Make sure that the company you are providing your personal information to online, encrypts your information for your protection.
IDENTITY THEFT
Identity Theft occurs when someone uses another person's social security number, driver license, name, address, telephone number and any other information about that particular person as their own. The unauthorized person that obtains this information without the other person's knowledge uses this information to commit theft and fraud.
How does a person committing ID theft get my information? By going through your trash, hacking into a computer that you may use, securing a copy of your credit report, stealing credit card and debit card numbers that you may have, stealing your mail,completing a change of address form to reroute your mail to a different address, stealing your purse or wallet, and scamming information from you by posing as a business person.
How would I know if I am a victim of ID theft? If you receive credit card statements for accounts you did not apply for, you do not receive your mail, your credit is being denied and you do not know why, counterfeit checks are used to withdraw money from your bank account, you receive calls from collection agencies about bills for accounts established with your personal information that you do not know about,and other problems that you may have with your personal information.
Should I order a copy of my credit reports to find out if I am a victim of identity theft? Yes, you may want to consider doing this if you suspect that you are a victim of identity theft. You would want to order a copy of your credit reports from all three credit reporting agencies which are:
What should I do if my identity is stolen by someone? Contact the three credit reporting agencies as soon as possible and let them know that you are a victim of ID theft and ask them to place a fraud alert and your statement as a victim in your credit report file. Order a copy of your credit report from each agency to check the information on your report. Contact the credit reporting agencies fraud units at these telephone numbers or addresses:
- Equifax: 1-800-525-6285, P.O. Box 74021, Atlanta, GA 30374-0241
- Experian: 1-888-397-3742, P.O. Box 9532, Allen, TX. 75013
- TransUnion: 1-800-680-7289, Fraud Victim Assistance Division, P.O. Box 6790, Fullerton, CA. 92834-6790
Should I close my credit and checking accounts if ID theft has occurred? Yes, you may want to consider closing your credit and checking accounts if you suspect identity theft. Contact your bank and creditors about your identity being stolen and consider closing your accounts and establish new ones. If your checks are stolen, request that your bank notify the check verfication company that they use. You may also want to contact the major check verfication companies as well. The major check verification companies that you would want to contact are the following:
- Telecheck, 1-800-710-9898 or 1-800-927-0188
- Certegy Inc., 1-800-437-5120
- International Check Services, 1-800-631-9656
You may also want to contact a company known as Scan at 1-800-262-7771 to find out if an identity thief has been using your checks. In addition, you should also contact your local police department and report that your identity has been stolen. Make sure that you file a complaint with the Federal Trade Commission (FTC) about your identity being stolen as well. You can file this report at www.consumer.gov/idtheft.
BANKRUPTCY
What is the new Bankruptcy Law? The new bankruptcy law is called the Bankruptcy Abuse and Consumer Protection Act of 2005. Under this new law, the creditor can have a Chapter 7 dismissed if the person's income is greater than the median income of the state where the individual resides. At that point the new law may require the person to file a Chapter 13 where they will need to make payments to the creditor.
What is a Chapter 7? During a Chapter 7 filing, all unsecured debt is discharged. For example, unsecured debt would include some of the following: credit cards, medical bills and personal loans.
What is a Chapter 13? A Chapter 13 is a reorganizational plan wherein a consumer keeps assets and makes an arrangement with the creditor to pay their debts within a three to five year period.
Under the new bankruptcy law, will the requirements under a Chapter 13 filing be tough? Yes. A person in debt, must pay their unsecured debt in full including the interest. If the person does not pay the unsecured debt in full including the interest, the person's income which is disposable, must be contributed to the plan for the minimum term of up to five years.
What are some of the other requirements fo the new bankruptcy law? Mandatory credit counseling is required before and after the consumer files for bankruptcy and proof of income must be shown by a consumer by providing a copy of the latest federal tax return filed.
Is there anything else I need to know about the new bankruptcy law? Yes. The new law will eliminate how the automatic stay is used. The automatic stay under the old bankruptcy law is used to stop most of the actions of collectors and persons filing lawsuits against a debtor who files for bankruptcy. However, under the new law, filing for bankruptcy will not stop you from being evicted, suspension/restriction of your driver's license, or lawsuits being filed against you.
RETIREMENT
Yes retirement planning is important for all of us. This is not an easy subject for any of us to talk about, but, we must discuss it sooner rather later! We want to be able to enjoy our golden years comfortably without having to worry about our finances. Planning your retirement is a crucial key to making this happen.
So, what do I need to do to plan for my retirement? You can start by asking and answering some or all of these questions:
- How long will it be before I retire?
- Do I have money already saved for retirement and if so, will it be enough for me to retire on?
- How much money should I put away for my retirement?
- How should I invest my money in order to achieve the amount of money I want to retire on?
- How much money will I need to live on to maintain my present and future lifestyle?
All of these retirement planning questions are important for you to think about in order to have solid retirement planning. Once you have answers to these questions, then proceed to start your retirement savings now!
What are some of the areas I can invest my money in for retirement? Stocks, bonds, certificate of deposits, mutual funds, 401K, IRA, Roth IRA, annuities and many other miscellaneous investment vehicles.
Where can I expect to withdraw money for my retirement? Social Security, savings, pension plans, and your investments from 401K plans, certificate of deposits and other investments.
How much money will I need for retirement? It is estimated that you will need approximately 60-80% of your current income at the time of your retirement. This will allow you to live the lifestyle you are accustomed to having by the time you retire.
When should I start saving for retirement? Now! It's never too early or late to start saving for your retirement. The sooner you start the more money you will have for your golden years to live on.
BUDGET
Make a personal budget, What does this mean? Well, it's a financial plan you have made about a specific amount of money that you will spend for purchasing a particular item. Make a personal budget which includes all of your income and expenses that you have on a monthly basis. When you have your budget, you have a financial plan which determines the amount of money that you will spend on various expenses each month. Your budget will also take into account your income, debt outstanding, savings for retirement and the amount of money you have for emergencies.
Your budget will allow you to understand your personal finances. It will also assist you in understanding how you are spending your money! Making a budget will also help you to determine whether or not you can afford to purchase a home, boat or computer that you have wanted for a long time!
Why should I make a personal budget? Well, that’s a good question! I'm glad you asked. A budget helps you keep track of your money, by helping you determine how it comes in and goes out! As a matter of fact, you will discover by creating a budget, that you may be spending money every month on something you really don’t need or want! By establishing a budget you will write down all of your expenses and your income. You will be surprised to see where your money is going after tracking your expenses for a month.
How do I get started with creating my own budget? You can start by writing down all the income that you receive on a monthly basis when you make a personal budget. This income would include money from your job, alimony, child support, social security and any other income you may receive. After writing down your income, put down all of your expenses which would include your rent, mortgage payment, electric bill, phone bill and any other monthly expenses you may have.
What if my income does not cover my expenses each month? You should consider adjusting your expenses by selecting some or all of the following options: consider reducing your entertainment expenses such as not going to a movie every week and eating out less often. You could go two days a week for a latte at your favorite coffee shop instead of five days and consider canceling your prime movie channels that you may not be watching.
Is there a certain amount of money that I should consider spending on household expenses when I make a personal budget? Of course, the amount of money you spend on certain expenses will depend on where you live. Here is a general guideline on what percentage of your income should be allocated for these particular expense areas:
- Housing 31%
- Transportation 17-20%
- Food 10-15%
- Insurance 5%
- Savings & investing 10-15%
- Health Care 5-8%
- Clothing 5%
- Entertainment 5%
Patience is a virtue! I know you’ve heard this before, but patience is important when it comes to your personal budget! Hold off on making a purchase until you have planned for that expenditure. You will be glad that you did in the long run!
INVESTING
Investing is a subject a lot of people don’t want to think about. And there is good reason for that. Investing seems scary. It either sounds like something only the rich do or something that only a skilled professional can do. But the truth is that investing is something that everyone can and should do—as soon as possible.
Why should you start now?
Think about this. There are two ways to make money. You can exchange your time for money or you can make your money work for you. Most of us work 40 hours a week. In this case, you are trading your time for money. But wouldn’t you rather earn more than you are making? If you are making $1,000, wouldn’t you rather be earning $5,000? Most people think the only way to earn more is to work more. Work overtime is their motto! But there is more to life than working. Investing gives you the chance to let your money work for you—saving you time and earning you money.
But is the purpose of investing to get rich?
Some people don’t invest because they think that investing is something you do to get rich. They figure they’ll never earn enough to get rich, so why bother? But that’s not what investing is for. Investing is a way for you to be able to maintain your current lifestyle.
Think about this: what if the company you worked for suddenly closed down? What are you going to do when you get to retirement? Sometimes working more is not a viable option. Investing gives you another source of savings and earning income. You don’t invest to become a multi-millionaire (of course no one would stop you if that happens); you invest so that you can provide for yourself in the way you are accustomed to both before and after retirement.
Many people are convinced that investing is the right thing to do at this point, but, there are some misconceptions people have about investing that prevents them from actually doing it. These misconceptions are that:
- Investing is too hard
- Investing is too risky
- You need a lot of money to invest
Let’s look at each one of these misconceptions.
Investing is too hard.
You may think that investing is just too hard. But a lot of that has to do with the terminology of the investment industry. I mean who knows what Fed Fund rates, mutual funds, indexes, or blue chip stocks are? But you don’t need to be scared off by a bunch of words—in the end they are just words. Just like you probably didn’t know what PMI was before you bought your first house or what APR was before you got your first credit card, you can learn what these things are. And you will find that they aren’t so hard to learn. And if you seek the advice of a professional, they can explain it to you.
Investing is too risky.
Some people have the idea that investing is risky. Movies such as "Wall Street", no doubt, lead people to think that. But the fact is that investing is only as risky as you want it to be. Do you want to take huge risks? You can invest in international stocks. Want to play it safe? Go with bonds. The risk level is up to you and only you.
I can’t afford to invest.
Many people think they can’t afford to invest. But when you look at the alternatives (social security may not be there, job security is not 100%), you really have to ask yourself how can you afford not to invest. And the earlier you start, the more money you will earn. Even if it’s only a small amount, the money you invest today will earn you big in the future.
