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Archive for October, 2008

Tips For Managing The Risk In Your Financial Goals

Written by Toi Williams on Oct 31st, 2008 | Filed under: mindset

Every person that attempts their own financial management will experience some level of risk when trying plan their financial future.  Financial stability can become uncertain from year to year and the many things that play into these fluctuations can make it difficult to predict how stable the financial future will be.  In many cases, situations that are beyond the person’s control can create chaos to the person’s financial planning, such as death, illness, or the loss of a job. Sometimes, predictable events can greatly affect one’s personal financial situation because the person failed to take into account just how much the event will end up costing them.  Reviewing the events that could have an affect on your financial situation and adapting your finances prior to these events occurring can help you effectively manage any risks you may be taking with your financial future.

Allowing for a small amount of risk when planning for your financial future is not always a bad thing.  Assuming some risk with your finances can actually help them quickly grow, such as investing in stocks in the stock market. The trick is to know when to hold on to assets and when to get rid of them to reduce the impact on your account balances. The most difficult thing is learning how to manage the risk that you take.  A few mistakes may be made in the quest for a person to gain the experience needed to manage risk effectively, but knowing some of the pitfalls ahead of time can prevent you from making a major mistake.

Limiting The Risk

Most of the time, when financial mistakes are made, a person will find themselves facing a large deficit.  The wrong thing to do at this point is invite more risk to recoup any losses the person has realized.  This may result in the person facing even greater losses than they were exposed to before they doubled down on the amount of financial risk they were taking.  The most appropriate action would be to accept the loss as a learning experience, then find ways to reduce your exposure until your financial stability returns to its previous level.

Any major financial decision should be well researched before any decision is made in order to successfully manage your financial risk. Before buying a stock or making a major purchase, research the company itself rather than listening to what is telling you about those particular stocks. Stocks can rise very quickly and can fall just as fast, taking your finances down with it if you have invested heavily in a particular company. Take the time to look at the positives and negatives of each financial decision to greatly reduce your exposure to risk in your financial future and increase your ability capitalize on good opportunities.

Simple Steps For Securing A Vehicle Loan

Written by Toi Williams on Oct 30th, 2008 | Filed under: Uncategorized

Being able to secure a loan to purchase a vehicle can have many benefits for the people that need a vehicle for transportation.  Having a personal vehicle in the home makes it easier for the person to get to and from work, retrieve ill children from school and get them medical attention, and shop for food or clothing.  There can be many difficulties associated with obtaining a loan for a vehicle for many people, but knowing what these obstacles are beforehand can help the person prepare and increase their chances of getting the vehicle loan.

Determine A Price Range
One of the first things that a person will need to do is to determine how much they can afford to pay for the vehicle and find a payment range for the vehicle that they would be comfortable paying each month.  It is important to remember that the cost of owning a vehicle will include making repairs to the car when needed, paying for car insurance, and putting gas into the vehicle.  If the person believes that they will not be able to pay for all of these additional items as well as making the payments on the vehicle, then they should hold off on purchasing the vehicle until they feel that they are more financially stable and will be able to afford the costs.

Review Your Credit Report
The next step in securing a vehicle loan is to review the credit report to make sure that there is not anything present on the report that would disqualify the person from receiving the loan.  If there are mistakes present in the person’s credit report, they may be enough for the person to be rejected for the vehicle loan, even though the information is inaccurate.  It is best for the person to clear up any of these mistakes with the creditors and with the credit reporting agency before applying for a vehicle loan so that they will have a better chance of being approved for a vehicle loan that is affordable with a lower interest rate.

Applying For The Loan
Obtaining a vehicle loan requires the person to provide detailed information about their finances to any lender that will be providing them a vehicle loan.  The lenders will gauge the ability of the person to repay the loan granted and will create a loan agreement with terms that can be beneficial to both the lender and the borrower.  To ensure that the borrower is getting the best rate for their vehicle loan, they may want to consider shopping around for lenders that will provide them with the best lending options.

With the popularity of the internet skyrocketing, many people have found it very easy to get information on obtaining vehicle loans from internet websites dedicated to the topic. The person will be able to compare multiple loan options from many different lenders in the comfort of their home or office, often being able to review interest rates, terms, and insurance products that protect their investment in their vehicle.   In some cases, the person will be able to obtain a quote directly from the lender that is specific to their financial needs and ability to repay the loan.  Searching online for the lender can help the person find the loan that they need to get the vehicle that they desire.

Breaking These 5 Bad Habits Can Save You Hundreds Each Year

Written by Toi Williams on Oct 29th, 2008 | Filed under: mindset, saving

The choices that people make everyday can eliminate the possibility of becoming free of debt any time in the near future and in many cases, they do not realize the damage that they are doing to their financial future.  Each of these bad financial habits can cost a tremendous amount of money in higher interest rates on loans, late fees, additional charges, and increased debt to creditors.  All of these habits can be very difficult to break, but the quicker you learn how to avoid these common mistakes, the faster you will reduce the money wasted each month on bad financial habits.

Not Checking Your Credit Report Regularly
Many people have never checked their credit report for any inaccuracies.  Regardless of whether you believe that there is inaccurate information on the credit report or not, checking the credit report should be done each year to ensure that none of the information within your credit report has changed.  The current law requires credit reporting agencies to investigate any disputed entries in your credit report and correct any mistakes that are found. The removal of inaccurate items from your credit report can raise your credit score by a significant amount and allow you to obtain lower interest rates on loans.

Neglecting To Create A Monthly Budget
For some unknown reason, a large number of people view budgets as bad thing or something that only lowly paid individuals should adhere to. Creating a budget is essential for routine purchases and paying the bills to make sure that you are not spending more money than you can afford. When people take the time to take control their finances by creating a budget, they ultimately get the opportunity to see exactly where their money is going to each month. With a detailed budget, you can see if money is being spent on unnecessary purchases and can trim your costs to help you save money in the future.

Brushing Off The Seriousness Of Your Financial Situation
One of the biggest financial mistakes a person can make is electing not to talk to their creditors once financial hardship takes place. You may be embarrassed or even upset about your situation, but hiding and ducking creditors will only make the situation worse. In most cases if you have a valid reason for the financial hardship, such as illness, death of a spouse, loss of job, or divorce, your creditor may be willing to work out a payment plan to keep you from falling deeper into debt.

Obtaining Store Credit Cards Just For The Initial Discount
Signing up for store credit cards that are promoting special savings for using them is only effective when the balance of the card is paid off in full at the end of each month. Most of the store credit cards available have much higher interest rates attached to them compared to the rates for major credit cards.  If you need to make a purchase on credit, the cost of that purchase should always go on the major credit card you hold if you cannot afford to pay off the purchase within the month.

Neglecting To Save Money For Emergencies
Many people hold off saving money for unanticipated expenses so that they can have the immediate gratification of acquiring an item that will satisfy their desire. Unanticipated expenses are one of the leading contributors to falling into debt and can cause the accrual of late payment penalties from creditors, higher interest payments on credit accounts, and less credit available for any other unexpected expenses that just might arise.

Save Cash By Avoiding Convenience Charges

Written by Toi Williams on Oct 28th, 2008 | Filed under: saving

Many companies have recently upgraded their bill payment processes to make paying the bill easier for their customers.  A number of these companies are now allowing their customers to make payments on their accounts using methods outside of the typical pay by mail method, permitting customers to quickly pay their bills online through a company website, by an automated system, and with customer service representatives via the telephone. What unsuspecting consumers may not realize is that most of these alternative methods for paying bills can end up costing them more money than the traditional method of bill payment by mail.

A number of the companies that allow bill payments online or by telephone will charge customers additional fees for using those services.  These fees will often appear on the next bill as a convenience fee, which means that these companies are charging customers for the convenience of paying their bills through an automated processing system or by phone. The traditional method of mailing in a check means more work for the current employees and higher overhead for the company that employ these workers to process payments by mail.

The companies that charge these convenience fees areusing a fee structure that is designed to increase revenue from customers who do not pay close attention to the terms and conditions attached to utilizing these services.  This allows the company to create much more revenue without having to work any harder for the customer.  If the company can get enough of their customers to become dependent on paying their bill through these methods, the company may even be able to save money by laying off some of the workers that handled the payments that arrive in the mail.
How To Avoid The Fee

The fees associated with online and phone payment methods may vary from company to company.  An average charge for paying your bill by either of these methods can be between $5 to $10 dollars per transaction, which adds up to between $60 to $120 dollars in fees over the course of the year charged to your account for the convenience of using these payment methods. The services that the company charges for can differ as well between companies, with some only charging for bill payments that are made over the phone and some charging fees for online payments only.

To avoid having to pay these unwanted fees, it is crucial to remember to always read the terms and conditions for any account that you may have. If there is a fee charged to an account holder, it must be disclosed in the terms and conditions or by the customer service representative prior to completing the transaction to make the account holder aware of the fees and the reason for it being charged to them. Sometimes the fees are not disclosed until the end of the transaction in the hopes that if you have taken the time to go that far in the process, you will be unwilling to start over with another payment method to avoid the fees. If there is still time to send a check to the company by mail, you should do so in order to avoid costly and unnecessary fees.

Why Health Insurance Is An Important Part Of Retirement Planning

Written by Toi Williams on Oct 27th, 2008 | Filed under: Uncategorized

Many people that are planning to retire assume that a great deal of their healthcare costs will be taken care of after they have retired from their job.  Others fail to take into account how much medical bills may cost if they become really sick.  Planning for your health care during retirement is a very important part of retirement planning and neglecting this step can cause financial devastation in the future. 

Many people that are looking forward to retirement believe that they will be eligible for Medicare benefits very shortly after they retire from their employment positions.  This means that they will be covered by government sponsored health insurance so they do not have to worry about planning for their future health care.  If these people took the time to do some research, they would find that there are many things they do not know about the Medicare program and they may be subject to some very unpleasant surprises in the future.

Considering A Bridge Health Insurance Policy

Many of the people that retire from their jobs are eligible for Medicare soon after they have left their positions, but the retirees that take early retirement will have a gap between the end of their insurance through their employer and the date they can apply for Medicare benefits.  To prevent the occurrence of a devastating financial emergency due to a health problem, these people will need a “bridge” health insurance policy to make sure that they are covered and they will not be saddled with catastrophic medical bills if something happens to them.  These bridge health insurance policies can be costly because seniors are considered to be a high risk group by most health insurance companies and seniors that do not have enough money to cover the costs of the bridge health insurance policy may be able to qualify for Medicaid which will help to bridge the gap in coverage while they are waiting to become eligible for Medicare.

Does Medicare Cover Everything?

When a retiree qualifies for benefits under the Medicare program, they will still be responsible for some of the health care costs incurred because all of the costs associated with the health insurance are not paid by the government.  Many people that qualify for Medicare health insurance must still pay a monthly premium for the insurance coverage.  People that have retired must also consider the costs of the medications that they may need into their health care planning because the prescription drug benefits only pay part of the costs for most medications.  Having enough insurance to provide for the health care of the person and how to pay the insurance and associated costs during retirement should be an important part of retirement planning for every person that is nearing retirement.

Reporting Identity Theft Properly

Written by Toi Williams on Oct 25th, 2008 | Filed under: credit cards, scams

Identity theft is a very difficult experience because it can take years to repair the damage caused by the theft and there is no way to be sure that the person will not be victimized again.  Knowing how to report identity theft and how to obtain a free credit report can help provide the person that has been victimized with peace of mind after the crime and may even lead to the prosecution of the criminal that has stolen the person’s identity.  The method for reporting identity theft properly is easy to understand and can be accomplished fairly quickly, but it does take time to correct all of the information that has been compromised and solve all of the problems that the identity theft can cause.

Steps For Reporting Identity Theft Properly

If the person reviews their credit report and finds that they have been the victim of identity theft, it is important that they know how to report the identity theft properly to limit their accountability for the charges that have been incurred.  First, the credit card company should be notified that a fraudulent account has been opened.  A request should be made that the company close the account immediately and flag wherever the account has been used to aid law enforcement in finding the criminal that has opened the account. 

Next, a police report should be made of the theft so that law enforcement is aware of the theft and the criminal can be prosecuted with criminal charges once they have been found.  The final step is to contact the credit reporting bureaus to alert them to the identity theft and let them know what accounts are in question so that they can be removed from their credit report and monitored for further action.  Following these steps quickly after the questionable accounts have been found can ensure that these accounts are closed quickly before they can cause more damage to the person’s credit history and credit score.

Why Is Knowing The Proper Method So Important?

Knowing the proper way to report identity theft is important so that the person can regain their identity quickly and limit while minimizing the number of problems caused to the person’s credit history.  The first thing that typically occurs in an identity theft is a credit card obtained using the person’s personal information and many things are charged to the credit card as quickly as possible.  These credit cards are used for a very short time period and then the thief gets rid of the credit card and all of the information associated with the card.  This reduces the likelihood of the criminal being caught with incriminating information and reduces the case against them when they are finally caught. 

Every person should review their credit report on a regular basis to make sure that there is nothing on the credit report to indicate that the person has become a victim of identity theft.  Often, the first indication that a person will have that they have been a victim of identity theft is that they obtain a current credit report and find an account or several different accounts that they do not remember opening.  The person will never receive any statements from the credit accounts that have been opened because the criminal will use a dummy address to prevent the victim from being alerted.  Knowing the proper way to report identity theft allows the person to report anything abnormal on their credit report in a timely fashion to give the law enforcement a better chance of catching the criminal.

Common Mistakes Made With Credit Cards

Written by Toi Williams on Oct 24th, 2008 | Filed under: credit cards

There are many credit card mistakes that people can make that lower their credit score and reduce their ability to obtain credit.  Many of these common mistakes are things that most people do not think of as affecting their credit score.  The truth is that there are many things that can reduce their credit score from actions that they may think are benign.  People that avoid the common credit card mistakes keep their credit score high and the interest rate for their credit accounts low.

Missed Payments
The most common mistake that many people make is believing that a missed payment on their credit card will not have an affect on their credit.  Some people believe that the only consequence is a penalty fee and most are willing to accept the fee to so that they do not have to pay the minimum payment due for the credit card.  What they don’t understand is a missed payment will also show up on their credit report and has the ability to lower their credit score significantly. 

Not Securing Personal Information
Another common mistake many people make is not keeping their credit card information secure.  There are thousands of scam artists and thieves using tricks designed to get a credit card account number or security code for the credit card.  This is all that criminal needs to make purchases on the internet and have the items delivered to a different location.  These mistakes are common when people are distracted or not paying attention to what they are saying to a person that they do not know.  Often, the person will not even know that their credit card has been used until they receive their credit card statement and find charges that they have not made. 

Carrying Balances
When using a credit card, the person should only charge what they are able to pay off each month.  Paying off the balance each month allows the person to save a lot of money in interest payments and finance charges.   This also demonstrates to the credit card company that the person knows how to use credit responsibly, making them more credit worthy and increasing the chance that they will be approved for credit line increases and other types of loans. 

Maxing Out The Credit Card
Another common credit card mistake is to use most or all of their available credit.  People that use over 30% of their available credit are considered to be a credit risk by the credit card companies.  Credit card companies base their decisions on who to extend credit to on formulas that do not take anything but statistics into consideration.  In recent years, there have been many people that were not approved for loans, mortgages, or credit cards because they had used too much of their available credit.

Making mistakes when using your credit cards can end up costing you a lot of money in the long run so it is important to avoid making these common credit card mistakes.

Great Methods For Avoiding Credit Card Late Fees

Written by Toi Williams on Oct 23rd, 2008 | Filed under: credit cards

The amount of profit that credit card companies have made off of credit card late fees has reached record levels in the last few years as more and more individuals find themselves unable to make their payment on time.  Credit card fees are destroying family budgets by adding additional charges to the credit card, making it more difficult to pay off and causing the payment of more interest to the credit card company.  Making a payment late can affect a person in a number of ways as well, such as a rise in the interest rate for the credit card, less credit available on the credit card, and a negative entry on the person’s credit history.

Many credit card companies have increased the fees for a late payment by a significant amount over the last several years.  In the 1980’s, the late payment penalty may have been $10 at most credit card companies, but now, the fee for making a late payment on a credit card is close $40 for any credit card company.   If your payment is late, you will be paying the credit card company a large amount of money that you are getting no benefit from.

How Can I Avoid A Late Fee?

There are many ways to avoid having to pay a late fee to the credit card company.  One of the easiest ways to prevent these charged is to pay your credit card bill as soon as it arrives in the mail each month.  By not waiting until the last minute to make the payment, you make sure that the due date for the payment does not slip your mind, triggering a late fee.

Another way that you can use to avoid credit card late fees is to post reminders in prominent places to pay your credit card payment on time.  Notes on your calendar or an alert on your PDA can warn you that the day is approaching that you will need to make your credit card payment.  This will serve as visual cue to check the balance in your bank account and mail the check to pay the bill. 

Many credit card companies have multiple ways for their customers to make their payments and some can be useful if you have forgotten to mail off your payment.  Other methods of paying your credit card include payment by telephone, which involves talking to a customer service representative, and making a payment on the credit card company’s website.  Credit card late fees account for a significant portion of the fees charged by credit card companies, giving the credit card company free money out of your pocket by paying your credit card bills a day or more late.

Want An Easy Way To Take Control Of Your Finances?

Written by Toi Williams on Oct 22nd, 2008 | Filed under: mindset, saving

Taking control of your finances is a very important part of getting out of debt permanently.  If a person is unable to handle their finances and make sure that they are not spending more money than they should be, they will be unable to take the steps necessary to get themselves out of debt and stay out of debt for the foreseeable future.  One of the easiest ways for a person to take control of their finances is tracking their spending and their debt. 

Many people do not know what they are spending their money on each month because they are not keeping track of the things that they are buying and how much they are paying for them.  Once these people begin to track what they have been spending their money on, they are often surprised to see the amount of money they have been wasting on frivolous purchases.  Before any financial plan can be put into place to manage the finances for the household, you must track your spending to find out what the money is being spent on.

Getting Started

Tracking your monthly expenses is the first step in taking control of your finances.  This includes your bills, any other major monthly payments, weekday lunches, movie tickets, vending machine purchases, and anything else that you spend money on.  Although these purchases may seem trivial, you would be amazed at how much these small purchases add up over the course of a year.  To be able to trim your spending in the areas where it is necessary, you need to discover when you are spending money that you don’t have to on things that you do not really need.

For a period of two to three months, you should track every single thing that you are spending money on, no matter how small the amount of the purchase is.  Sometimes the person’s largest expenses for the month are on routine purchases of less than $10 per occurrence.  The easiest way to track your expenses during this period is to keep a pen and a small notepad in your pocket or purse.  This way it can be pulled out and updated each time you place an item on your credit or debit card or pay cash for a purchase.  Tracking everything during this time period can help you find patterns in your spending and areas where costs can be cut.

Completing The Process

Once you have tracked your spending for the recommended time period, the next step is to find the areas where your spending can be cut.  By identifying the areas where your spending is excessive, you will be able to keep more money in your bank account and will be able to confidently make a budget that allows you to spending less on your monthly purchases.  You may be able to find several areas where money can be saved by substituting one thing for a similar item that is cheaper, such as brewing coffee at home instead of buying it at a coffee shop or packing a lunch to eat at work instead of purchasing a meal at a fast food or casual restaurant. You can also switch to Cash back credit cards and get better rewards than useless airline miles.  The money saved from eliminating these expenses can be added to a savings account or used to pay off any debts that you may have.

Can A Debt Reduction Company Really Eliminate My Debt?

Written by Toi Williams on Oct 21st, 2008 | Filed under: scams

People across the country are finding that they are deeply in debt with no way to return to secure financial footing.  As they search for a solution to their financial problems, many people contact debt reduction companies that promise to eliminate their debt and give them a clean slate to start fresh.  In recent years, companies that scam everyday people have become very good at taking advantage of people in seemingly impossible financial situations, but there are some indications that will tell you whether the program being offered can really help you or whether the program is a scam to steal what little money you have left.  By keeping these things in mind, you will reduce the risk of being taken for a ride by an unscrupulous debt reduction company.

Offering A New Credit History Or Credit Score

Some debt reduction companies are offering to reduce a person’s total personal debt by creating a new credit history and credit score for the person, wiping the slate clean so people can start accumulating credit all over again.  What the person does not know is that this process is typically accomplished by creating a fake social security number for the person and creating a new credit profile under their name with the new social security number.  This is illegal and if you are caught using this social security number and credit profile, you could be prosecuted and sent to jail under felony charges. 

Finding Credit Agreement Loopholes And Debt That Cannot Be Collected Legally

Some of the companies that offer debt reduction services lower what they say their customers owe by telling them that charges, interest payments, or fees that have been charged to the person are illegal.  They may also tell the person that there are flaws in their credit agreement that work in their favor to make the entire debt amount illegal for collection. 

The company will offer to contact the company on the person’s behalf and after some time has gone by, will tell the person that the company is discharging the debt or that they have filed a lawsuit on the company on their behalf.  People that believe these statements often find themselves deeper in debt due to finance charges and late payment fees or are sued by the creditor for the balance of the account.  This dramatically reduces their credit score and prevents the person from obtaining any credit account until the person’s credit score has been rebuilt.

Although there are some debt reduction and financial planning programs that can help a person reduce the total amount that they owe to creditors, many of the promises that debt reduction companies make can lead to deeper debt, being sued by creditors for large amounts of money, or even having criminal charges levied against the person.  The best solution is to contact one of the many government programs offering free financial planning and following the advice that they give you to the letter to reduce your debt in a safe and legal way.