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Archive for October, 2010

Increase Your Credit Score To 750

Written by Toi Williams on Oct 31st, 2010 | Filed under: credit score

Having a good credit score is very important in these days of tighter lending standards and credit approval difficulty.  In order to ensure the approval of your credit application and guarantee that you will be offered low interest rates, a credit score of at least 750 is now needed.  Individuals that have credit scores that are lower than 750 may find that they do not qualify for the lowest interest rates and may have their credit applications denied by the lender.

Many people believe that there is nothing that they can do to increase their credit score, but the truth is that there are a number of things that can be done to give your credit score a boost.  You can increase your credit score by taking control of your finances and learning how credit scores are calculated.  It is important to know that you cannot repair your credit and increase your credit score unless you are paying all of your bills on time in full every month.

Use Credit But Do Not Carry A Balance

You cannot increase your credit score without using credit and giving the credit score calculators something new to calculate.  In order to increase your credit score, you need to show that you can use credit responsibly.  The best way to accomplish this is to charge a small amount to your credit cards each month and pay the bill in full each month.

Paying your credit card bill in full each month and refusing to carry a balance on the credit cards has several benefits to your financial security.  Only charging an amount that can be paid off ensures that you will not spend more than you intend and find yourself with a large amount of debt in the future.  Paying the bill in full each month will also eliminate the finance charges and interest charges placed on the account for carrying a balance.

Exercise Patience

A credit score cannot be repaired overnight.  Although some credit repair companies draw customers in by promising quick results, it takes time and diligence to repair a credit history and increase a credit score.  Take the steps that are needed to ensure that all of your bills are paid in full on time each month and watch your credit score steadily increase until you have a credit score of 750 or above.

Review Your Credit Report

It is estimated that nearly 25% of the credit reports held by the three major credit bureaus contain errors that could potentially lower a person’s credit score.  If you regularly review your credit reports, you will be able to spot any mistakes reported to the credit reporting bureau quickly and get the errors fixed so that they will cause a drop in your credit score.  Every individual is entitled to one free credit report from each of the three major credit reporting bureaus every year, so an annual review of your credit reports will not cost you anything but a small amount of your time.

Starting A Rainy Day Savings Account

Written by Toi Williams on Oct 30th, 2010 | Filed under: saving

It is important for every individual to have money saved that can be used in the event of an emergency.  Many of the people facing insurmountable debt began on the path of financial disaster by not having any savings available for use when an emergency situation occurred.  Starting a rainy day savings account is not difficult and anyone in any income bracket can use these tips to create their rainy day savings account.

Calculating How Much Is Needed

Before starting a rainy day savings account, you should calculate how much money your rainy day account should contain so that you have a concrete goal to work towards.  The best case scenario would be to have enough money to cover six months worth of your monthly expenses.  This will ensure that you will have enough money available if something unexpected, such as the loss of a job or a prolonged illness, changes your financial situation.

Increasing Your Balance

The key to growing your rainy day savings account to meet your savings goal is to save money on a consistent basis and to avoid using the funds for anything except for real emergency situations.  Needing a new pair of shoes or a new outfit is not an emergency worth dipping into your rainy day savings account.  If possible, you should divert a set portion of your paycheck into your rainy day savings account every time you get paid so that you get used to living without that money as disposable income as quickly as you can.

Another way to quickly increase the amount of money in your rainy day savings account is to choose a daily or monthly expense that can be eliminated and use the money that would have gone towards paying for that expense for saving in the rainy day account.  Nearly everyone will be able to find at least one expense in their everyday lives that they could do without, whether it is specialty coffees on the way to work, gym memberships, or dining out at restaurants.

Most people find that they do not miss the items that were sacrificed to increase the amount in their rainy day fund and often find more areas of excess that can be eliminated.  This reduces your monthly expenses and allows you to save more of your money for future use.  Although it can be difficult to find the discipline to reduce spending and save money on a regular basis, the rewards that can be realized by having money available to handle unexpected financial issues are well worth the initial discomfort of cutting your expenses.

Limiting The Negative Consequences Of Financial Risk

Written by Toi Williams on Oct 29th, 2010 | Filed under: mindset

Everyone will be faced with the consequences of a financial risk taken at some time during their lives.  This typically occurs when a person is facing the choice of gaining a lot of money quickly by taking some type of risk with their money versus allowing their money to grow slowly by more conventional methods.  Although the situation can work out for the best, it pays to be prepared for the worst when it comes to financial risk and limiting the damage it can cause to your life.

If You Can’t Afford To Lose It, Don’t Risk It

Many people found financial devastation when a financial gamble went bad because they risked much more than they could afford to lose and lost everything when the deal went bad.  It is important to limit the amount of money risked on any financial venture to an amount that you could live without in the event that the venture does not turn out the way that you planned.  This prevents you from becoming mired in unmanageable debt because of a financial deal gone wrong.

Your Age Is A Risk Factor

When making the determination of whether a financial risk is appropriate to take, it is very important that you factor in the amount of time that it would take your finances to rebound if things do not go as planned.  A person that is in their early thirties may be able to take on more financial risk than a person that is closer to retirement age because they have a longer amount of time for their finances to rebound before they retire.  Most people shift more and more of their money from stocks to bonds as they get closer to retirement age to ensure that the money will still be there when they need it.

Prior Research Is Necessary

You cannot accurately calculate the amount of risk in any financial decision without first doing your research to determine the particulars of the choices you are facing.  Many things that seem like a great deal and a sure thing when first described turn out to be a waste of money when examined more carefully with all of the pros and cons weighed.  Asking questions and examining the deal from all angles will give you a good base to make a decision about the amount of financial risk you will be assuming.

Debt Validation Protects You From Deceitful Debt Collectors

Written by Toi Williams on Oct 27th, 2010 | Filed under: collectors

In the past decade, the debt collection industry has changed dramatically, with many practices that would have been shunned in the past as unscrupulous becoming an everyday part of the debt collection process.  Once, the companies that were owed the debt used their in house debt collectors to collect monies that were owed to them, but now the companies collecting debts probably purchased the rights to that debt from some other company.  This separates the debt collector from the original purchaser and provides an incentive for the debt collector to collect the debt by any means possible.

Often, the debt that has been sold to a debt collection company is an invalid debt for any number of reasons.  It could be because the statute of limitations has run out for collecting the debt.  In other cases, the account has been paid or charged off, but the account is still listed as delinquent in the records purchased by the debt collection company.  People can protect themselves from being contacted by debt collection companies asking about invalid debts by asking for debt validation.

What Is Debt Validation?

Debt validation is the process of ensuring the debt is correctly reported and enforceable for collection.  The first step in the process is requesting the validation of the debt once you have been contacted by a debt collection company requesting the payment of the debt.  The debt collection company must inform you of the debt that they are requesting you pay in writing telling you the name of the original debtor and the amount that is owed on the account.  On this paperwork, the debt collection agency will inform you that you have thirty days from the receipt of the debt notification to ask for the validation of the debt.

A request for debt validation must be received by the debt collection company (even if they are using a currency trading strategy) within the timeframe provided for them to investigate hether the debt is actually valid.  If the debt is contested, the debt collection company must retrieve records showing that the debt belongs to you and the total amount owed on the account as calculated by the original creditor.  This proof of debt will be mailed to the individual seeking debt validation.  This proof may include account statements from the original creditor or a copy of the signed agreement for the account showing that the account belongs to you.

If no proof has been provided showing that the debt is valid and you are the owner of the account, then that is a good indication that the debt collection agency is attempting to collect on a debt that is not valid.  If you refuse to pay the debt collector for this account, the company’s only recourse is to take you to court for the monies owed and no company will do this without proof that you are the person that owes the debt.  If no validation is provided, but the account still shows as a negative entry on your credit report, you can petition the credit reporting bureaus to remove the entry from your credit report due to the debt being invalid.

Credit Card Trends That Are Costing You More

Written by Toi Williams on Oct 26th, 2010 | Filed under: credit cards

Credit cards have become much more prevalent in the last decade, with many more individuals using credit cards for numerous purchases every month.  As the credit card debt of the nation continues to rise at an alarming rate, credit card companies are focusing more on certain trends that make them lots of money while providing the customers with little in the way of service.  These common credit card trends are boosting the credit card issuers’ bottom lines by a significant amount that is flowing straight from our wallets to their bank accounts.

Interest Rate Traps

One of the most lucrative ways for a credit card issuer to make tons of money on an account is for the interest rate associated with that account to rise.  Many credit card issuers draw in customers by promising below market interest rates for their accounts, but buried in the fine print of the credit card agreement is a provision that allows the credit card issuer to raise the interest rate for the account for any reason that the company deems reasonable.  Over the past few years, many credit card holders have been surprised to find that the interest rate associated with their credit card has risen dramatically for no reason that they could readily determine.

Increased Service Fees

In past years, fee free credit accounts were the norm as different credit card issuers competed for business.  Now, fees abound for most accounts, including annual fees, fees for balance transfers, and fees for the management of the account.  Fees for mistakes, such as making a payment late or going over the credit limit by a few dollars, have increased dramatically and can be as much as $35 per occurrence.  Individuals that get hit with these fees are contributing to the credit card company’s bottom line while getting nothing in return for their money.

Deals That Cost You Money

Many credit card issuers are offering rewards and cash back credits for their credit card accounts as a way to increase their customer base and the tactic is working exceedingly well.  After all, who would refuse something free for doing normal, everyday activities like going to the grocery store?  The truth is that these rewards are costing the credit card holders in other ways, such as increased interest rates or higher annual fees to remain in the program. 

These rewards programs can cost you in other ways as well.  In many cases, a very large amount of money must be credited to the credit card to earn any type of reward at all.  Studies found that one rewards program required the use of nearly $6,000 in credit to be used to earn the reward of a $15 book.  In nearly every case, the reward earned is not worth the amount of interest fees and transaction fees it will cost you to earn enough points for the reward.

How Much Money Will I Need For Retirement?

Written by Toi Williams on Oct 22nd, 2010 | Filed under: mindset

One of the most difficult calculations to make during retirement planning is how much money will be needed after retirement to live comfortably.  It is important to have a financial goal to work towards while saving for retirement to ensure that you will have the money you need to maintain your home, pay your bills, and have enough food to eat after your working years are over.  The actual amount that will need to be saved will differ from person to person due to variables in their lifestyle, such as the type of home they live in, how many children or grandchildren they have, and whether they like to travel, but each can use the same calculations to arrive at the amount they will need to save.

To Maintain Your Current Quality Of Life

Many experts recommend that to maintain your current quality of life during your retirement years, you will need to have at least 70% of your current annual income available to spend each year.  That means that a person making $50,000 per year in income will need to have at least $35,000 per year of retirement to maintain the quality of life that they currently enjoy.  If the person lives for 15 years after they decide to retire, they will need to have at least $525,000 available to ensure that their quality of life does not change during their retirement years.

The reason that less than a person’s total annual income will be needed for each retirement year is that people who are retired do not have the work related expenses that individuals that are still working have.  Many people that are employed have to pay for transportation back and forth to work, in the form of car payments, gasoline purchases, or fare for the bus or subway.  Other employment related expenses that may not be present during retirement include parking fees, the purchase of work clothing, and meal expenses.  These expenses often add up to 20%-30% of a person’s annual income, which can be eliminated from the retirement planning calculations.

To Travel, Move, Or Build A Dream Home

If you intend to travel or build your dream home during your retirement years, you will need to sacrifice now to enjoy your free time later.  People that intend to do more during retirement than they did during their working years will need to have 100% or more of their current annual income available for spending during retirement.  It is important to take an honest accounting of your current expenses and make educated guesses about how these expenses will change during retirement to calculate the amount of money you will need to have on hand to live comfortably during retirement.

Easy Everyday Money Saving Tips

Written by Toi Williams on Oct 21st, 2010 | Filed under: saving

Many people believe that they will have to do something out of the ordinary to be able to save any significant amount of money for a rainy day.  The truth is that saving money does not have to be hard and there are many things that people can do every day in their regular lives to save a lot of money with little effort.  Here are some of the most commonly overlooked ways to save money everyday.

Set Spending Limits

It is very easy to spend more than you intend if you do not have a set spending limit in mind before you decide to pull out your wallet.  Spending limits should be set for all occasions where the amount that can be spent is not fixed, including grocery shopping trips, evenings out with friends, and clothing purchases.  Overspending is one of the quickest ways to get into unmanageable debt, but setting and sticking to your spending limits will greatly reduce the risk that you will spend more than you intend.

Be Smart In Your Actions

Anger, frustration, laziness, and inattention can cost you much more than you realize.  Avoiding fines that eat into your savings can be as simple as double checking to make sure you are not parking in a restricted area, keeping track of the amount of time you have left on a parking meter, or parking in a free lot and walking the extra distance to your destination.  Many traffic accidents that require the payment of a deductible to make repairs could have been avoided if the person was not trying to rush to their destination, had been paying close attention to the traffic around them, or had kept a level head when frustrating traffic issues arose.  Taking the time to think carefully about your actions before performing them can save you hundred of dollars every year.

Use Discounts Whenever You Can

The number of ways to obtain discounts on your everyday purchases is nearly limitless if you can be flexible in your desires.  Many restaurants offer discounts of 10% -50% off of the regular price of a meal in order to entice more customers to try their dishes.  Movie theaters, live entertainment venues, and clothing retailers also offer discounts to their customers to get customers through the door where they will hopefully spend more of the money on items that they desire while at the location.  Even grocery stores have food coupons, sale items, and specials that can be used to save 20% or more on your total food purchases.

When Is The Best Time To Begin Saving For Retirement?

Written by Toi Williams on Oct 17th, 2010 | Filed under: saving

Saving for retirement can be confusing to anyone that is trying to make sure that they have enough money saved to live comfortably during retirement.  One of the biggest questions that many people have is when is the best time to begin saving for retirement.  Although each case will be different, in nearly all cases for all individuals the answer will be to start saving for retirement as soon as possible.  The sooner you begin saving for retirement, the more money you will be able to accumulate to secure your financial future.

Lost Time

One of the biggest problems with saving for retirement is that there is a limited amount of time to save the money that you need.  Each day that goes by without you starting a retirement fund is another day of saving and interest that you will never get back.  In order to maximize your savings for your future comfort during retirement, you should start saving for retirement as soon as you obtain employment that provides you with a steady paycheck, which typically occurs in a person’s early twenties.

Lost Money

Most retirement accounts accrue interest on an annual basis and many employer sponsored retirement plans also offer a matching contribution to retirement accounts up to a specific dollar limit.  It is important to take advantage of these opportunities to increase the balance of your retirement account as often as possible; because once the opportunity is missed there is no way to get that opportunity back.  Start your retirement fund as early as you can and contribute as much as you can up to the employer matching limit to maximize your retirement fund.

It is important to remember that every year that goes by without saving for retirement is a year that cannot be reclaimed.  Even if you double your contribution to the retirement fund the next year, you will still be missing out on the interest that would have been earned by the account that year and will be missing out on the matching funds that your employer promised to make with each contribution to the account.  This additional money for your retirement account cannot be recouped and will significantly reduce the possible balance of your retirement account.

Identifying Debt Traps – Excessive Shopping

Written by Toi Williams on Oct 15th, 2010 | Filed under: mindset

The constant barrage of advertisements on television today have convinced many people that they need to go out and spend as much as they can on everything that tickles their fancy to stimulate the economy.  For some, shopping has become a type of sport with the gold medal going to the person that can spend the most on the most desirable items.  This mindset has gotten many people into financial trouble as they struggle to pay the bills for all of the items that they have purchased over the years. 

Reversing this conditioning is the only hope for most of these people, as they learn to focus on purchasing only what they need instead of buying everything that they desire.  Often, the individuals affected have no idea that they are spending as much as they are until they are shocked by a bank account balance or a credit card bill.  Here are several tips that can help you avoid falling into the debt trap caused by excessive shopping.

Stop Using Credit

The ease of using credit to pay for any type of purchase has led many people to use their credit cards with no thought of how they are going to pay off the bill later.  They forget that the money that they are using is borrowed and must be paid off at a later date with interest.  If the only way that you can pay for the purchase is with credit, then you will probably be better off waiting to purchase the item until you can use cash for the purchase.

Trim Unnecessary Purchases From The Budget

There are many things that people buy everyday that they do not really need.  Trimming these unnecessary purchases from your budget can save you hundreds of dollars each month and that money can be used for saving or for paying down bills.  Take a careful look at your finances to identify areas where spending can be cut or eliminated without compromising your basic quality of life.

Track Spending

It is impossible to take control of your financial situation if you do not know where your money is going each month.  Tracking your spending will allow you to identify areas of wasteful spending that can be eliminated to give you more disposable cash each month.  Tracking your spending will also assist you in determining spending trends in your life, such as excessive shopping just after payday or spending too much during your vacations.  Identifying spending trends is an important step in the process of curbing excessive shopping.

Simple Tips To Save Money On Education

Written by Toi Williams on Oct 11th, 2010 | Filed under: saving

Obtaining an education is something that is very important if you want to secure your financial future and obtain a well paying job.  Unfortunately, a good education costs a fortune and you have to pay that money before you can begin making money.  There are quite a few ways to save money on education, which can save any student a great deal of money when paying for higher learning.

Focus On Career Oriented Courses

Although many of the courses in the college course guide sound like they would be lots of fun to take, taking courses that have nothing to do with your major or are not focused on helping you obtain a job in your field can be a big waste of money.  To make your education dollars go further, only sign up for courses that are tightly focused on the skills that will be needed in your field of study once you have graduated. You could also consider online colleges and universities, which could be more affordable. This will also help you pay off your student loans quicker because you will be better prepared for the job market than some of your peers that took many elective courses during their course of study.

Choose Public Over Private

Public colleges and universities within the state that you live in will always be less expensive than paying tuition at a private college or one that is located out of state.  In addition to being closer to home if help is needed, attending college in state can save as much as 30% compared to a similar education at an out of state school.  The savings are even more dramatic when compared to a year of tuition at a private college.  A diploma from an accredited community college is comparable to those from a public university and the cost of tuition will be significantly less.

Buy Used If Possible

The cost of textbooks for college can be a significant drain on your finances, but many of the textbooks needed for your classes can be found for much less if purchased used.  Most college bookstores will have their bookshelves divided into sections where new and used textbooks for the same subject are located together, making it easy for a student to find the used books that they need.  At the end of the semester, these textbooks can be sold back to the college bookstore to obtain funds to purchase the textbooks that will be needed for the next classes.