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Archive for October, 2011

What Are The Consequences Of Defaulting On A Student Loan?

Written by Toi Williams on Oct 30th, 2011 | Filed under: student loans

After years of rising college tuition and decreasing middle class income, the news that the default rate on federal student loans has increased is little surprise.  According to the Department of Education, nearly one in ten federal student-loan borrowers defaulted during a two-year period that ended on Sept. 30, 2010.  “Defaulted” means the person responsible for the repayment of the loan failed to make a payment for more than 270 days.  While much of that increase was attributed to for-profit colleges, where the default rate jumped to 15% from 11.6%, the default rate among students at public and private four-year universities also increased.

As students and parents struggle to make the payments for their student loans, many are finding this type of debt comes with strings attached.  Taking out a student loan is different from other kinds of debt and the loans are nearly impossible to discharge.  Financial failure and bankruptcy offers no fresh start as the loan still must be paid off and will often have new collection costs tacked on, making the loan more expensive.

Private lenders can get court approval for wage garnishment for up to 25% of a person’s wages until the loan is paid back in full.  If the loan is a federal loan, the government can keep your federal and state income tax refunds, intercept future lottery winnings and withhold part of your Social Security payments in addition to garnishing your wages.  Parents who are cosigners on their child’s student loan may have to divert 401(k) savings to pay towards the loans, leaving them to catch-up as they approach retirement.

A student-loan default means a lower credit score.  Parents with good credit could see a decline of up to 200 points and students’ scores could drop down to the 500s.  The default can remain on a borrower’s credit score for more than seven years.  After a student loan default, college graduates may be unable to buy a home or obtain other credit.

Borrowers who have defaulted can minimize the financial burden of a default by arranging a payment plan with the lenders or collection agency responsible for collecting on the loan.  If the loan is a federal loan, borrowers can also clear the default from their record if nine out of 10 consecutive full on-time monthly payments are made.  A repayment plan may be worked out to protect yourself from wage garnishment.


Debit Cards And Credit Cards

Written by Toi Williams on Oct 30th, 2011 | Filed under: credit cards

Being able to pull out a debit card or credit card has virtually eliminated the chances that you will be caught short of money at an inconvenient time, such as at the checkout counter at a grocery store or during dinner with friends at a restaurant.  In 2006, there were 984 million Visa and MasterCard credit and debit cards in the United States alone.  Although these cards seem to work in similar manners, there are notable differences between them.

Debit cards provide a convenient alternative to cash, especially if you do a lot of shopping or pay your bills online.  The cards are linked to your bank account so the money you spend is automatically deducted from your account and your bank balance goes down with each debit transaction.  This makes you less likely to overspend and reduces the chances of accumulating significant debt.

Credit cards allow you to use a lender’s funds to make a purchase now and you pay the money back later.  If the money is paid back within the billing period, no interest is charged for the purchase.  If you do not pay the balance in full before the end of the billing cycle, you will be charged interest on the balance of the credit card.  These interest charges can add up fast, resulting in quickly accumulating debt.

Using credit cards responsibly can offer a number of advantages.  They help build your credit and provide more protection than a debit card if someone steals your card or account information.  If a fraudulent charge is noticed on your credit card account, you can call the credit card company and make a dispute claim, resulting in the charge being removed from your balance.  If thieves steal your debit card information and use it, it could take weeks for the bank to complete their investigation of your claim and replace the lost funds.

For many people, having both a debit card and a credit card available makes sense. The important thing to remember is do not spend more than you have with either type of card. If you are able to accomplish that, you will be able to enjoy the benefits that each type of card can provide.


Choosing The Best Health Insurance For Your Needs

Written by Toi Williams on Oct 29th, 2011 | Filed under: Uncategorized

With medical costs rising every year, it is more important than ever to find the health insurance option that is best for you and your family.  Shopping for a health insurance plan should involve more than just reviewing premium prices, especially if you are shopping for private health insurance.  Understanding the different types of health insurance plans available and what they cover will help you make the correct decision of what type of health insurance is best for you.

There are three types of health insurance to choose from: Health Maintenance Organizations (HMOs), Preferred Provider Organizations (PPOs), and High Deductible Health Plans (HDHPs).  HMOs provide comprehensive coverage at fairly inexpensive rates and consumers generally don’t pay any deductibles or co-payments for basic care. Your choices will be limited to the doctors and hospitals within the HMO’s network, and your designated primary-care physician will determine your level of care and when you need to see a specialist.

PPOs allow you to go to network providers and pay a small co-payment, or go out of network and have a portion of your costs reimbursed.  The reimbursement amount is typically around 60% to 70% of your costs.  With a PPO plan, you are not required to get a referral from your primary-care physician to see a specialist.  Many people choose to use in-network providers as getting reimbursed for out-of-network claims can be a hassle.

HDHPs are health plans that are linked to a health savings account or a health reimbursement account.  These plans are often offered as an alternative by employers that also offer HMO or PPO plans.  HDHPs work similarly to PPO plans, but the deductibles are much higher, often around $1,000 for an individual.  Many people that choose a HDHP also choose to use a health savings account to put aside pre-tax dollars for their medical expenses.

When choosing a health insurance plan, the first thing you should do is find out what health insurance plans your doctor currently accepts.  You should focus on plans that cover the things that you and your family need most, such as vision care, mental health care, or dental care.  Once you have found plans that cover your health care needs, you should compare the premiums and deductibles of each plan to figure out which one is the best deal for your money.


Lessen Your Chances Of Becoming An Identity Theft Victim

Written by Toi Williams on Oct 22nd, 2011 | Filed under: mindset

According to the Federal Trade Commission, “Identity theft occurs when someone uses your personally identifying information, like your name, Social Security number or credit card number, without your permission, to commit fraud or other crimes.”  The agency estimates that nine million Americans are victims of some sort of identity theft each year and recovering from identity theft can be frustrating and time-consuming.  Taking some preventative steps now to protect your identity can help prevent major problems later.

Review Your Account Statements

It can take years to repair your credit history after a case of identity theft if action is not taken quickly.  In order to spot errors early, you should review your monthly statements from your checking and other financial accounts carefully and note any questionable items that appear.  You may want to consider signing up for online accounts, as it is faster and easier to review financial accounts online.

Check Your Credit Report

Each of the three major credit agencies, Equifax, TransUnion, and Experian, are required by law to provide every individual with a credit history with one free credit report per year.  Be careful of the website that you use to obtain your credit report, as some websites may try to charge you a fee for the credit report or get you to sign up for a monthly service.  AnnualCreditReport.com is the only place to get these credit reports for free.

Secure Your Personal Information

Make sure that your personal information is secure online and offline.  Keep your Social Security card and other important identifying documents at home in a secure location instead of carrying them around with you.  Shred old bank statements, credit card applications, and other documents that have your personal information included on them.  Online passwords to financial accounts should be changed often and personal information should never be shared online unless you are certain that the website you are dealing with is a legitimate one.

Taking these actions will significantly reduce your risk of becoming a victim of identity theft and ensure that any attempts at identity theft are identified quickly.  Anyone can become a victim of identity theft, regardless of income level, so it is best for everyone to be vigilant and keep all personal information secure.


Things You Should Know When Dealing With Debt Collectors

Written by Toi Williams on Oct 21st, 2011 | Filed under: collectors

With the recent financial meltdown and subsequent employment crisis wreaking havoc on the economy, more Americans than ever are receiving calls and letters from debt collectors eager to collect on delinquent debts.  These collectors sole aim is to get you to pay them, so many have resort to using tactics that skirt or break the laws regarding how debt collectors must interact with the people they contact.  It is important for everyone to know how to deal with debt collectors and what actions the debt collectors are legally allowed to take to prevent yourself from being taken advantage of by an unscrupulous collection agency.

Some Collection Agencies Will Tell You Anything To Get You To Pay

Some debt collectors have resorted to telling lies to the debtors they are contacting to increase the chances that the person will pay the amount demanded by the debtor.  Threats of jail time, deportation, credit ruination, and other dire events are simply scare tactics to get the person on the other end of the phone to agree to pay them.  Using threatening remarks to collect a debt is illegal and Federal Trade Commission receives more than 100,000 complaints annually about this type of behavior.

You Can Stop The Harassing Phone Calls

Most debt collectors use your telephone as a weapon, calling frequently and at all hours of the day in order to continuously remind you of the debt they are attempting to collect.  You simply need to send the collector a written letter asking them to stop contacting you, and the collector must comply.  Under federal law, repeated calls, obscene language, threats of arrest, and threats of violence are all illegal.  If the debt collector ignores the letter and keeps calling, you can file a complaint with the Federal Trade Commission and your state attorney general.

You May Not Owe The Debt They Are Trying To Collect

Some bad debt collectors add fees or items that the debtor did not buy to the amount that they are trying to collect.  Others attempt to collect debts that the person never owed, have paid off, or that have expired.  If you are unsure about a debt, you have the right to request verification of the debt, which should include the name of the original creditor, the original account number, and the amount of the debt at minimum.  If you do not owe the debt or the statute of limitations has expired, you will have a successful defense if you are sued.


Understanding Your Credit Score

Written by Toi Williams on Oct 20th, 2011 | Filed under: credit score

If you have recently tried to rent an apartment, buy a car, applied for bad credit personal loans or for some type of credit account, or applied for a new job, chance are that someone has looked at your credit score.  Your credit score is a three-digit number that reflects your credit-worthiness to potential creditors.  This number determines the amount you can borrow and the interest you will owe on it.

Your FICO credit score, the score most often accessed by creditors, is a number based on a formula developed by the Fair Isaac Corporation that takes into account all your credit accounts and payment history.  FICO scores range from 300 to 850 and are determined by a number of factors, including your on-time payment percentage (35% of score), the amount owed to creditors (30% of score), the length of your credit history (15% of score), the types of credit used (10% of score), and number of recent inquiries on your credit report (10% of score).

There are a number of ways that your actions can cause a decrease in your credit score.  Neglecting to pay your bills or fines on time can result in the creditor reporting the delinquency to the credit reporting agencies.  Maxing out your credit cards is another way to lower your credit score.  Your score can also drop if it looks as if you are trying to obtain several new sources of credit because it may be a sign that you are in financial trouble.

The best interest rates on unsecured personal loans and credit cards are given to individuals with a credit score above 700.  To keep your credit score high, make sure to pay all your bills on time.  A low balance of less than 1/3 of your total credit limit should be kept on the card, if you cannot pay off your balance entirely each month. Opening multiple credit card accounts within a short time period can lower your credit score, so be selective about what credit card offers you respond to.

Staying on top of the information in your credit report is also very important.  You can get a free copy of your credit report from each of the three major credit agencies, Equifax, Experian, and TransUnion, once a year, and if you notice information that is inaccurate, you can submit a request for removal to the agencies online or by mail.  It is important to include what information you think is incorrect and why, and include any documents that support your argument with your request.  By law, the bureaus must investigate the complaint and give you a response in writing.


Would you purchase a car on finance?

Written by admin on Oct 18th, 2011 | Filed under: debt relief

When it comes to buying a new car, there are plenty of methods that can be taken in terms of finances. Cars can be purchased with cash or with various financing methods.

The financial assistance you may have available to you will depend on your credit history and your personal financial situation. If you have bad credit, you may still be able to finance your car but you might need a co-signer on the loan agreement.

The best option in terms of paying for a car is to pay cash. Paying cash keeps you from finance charges that can greatly increase the overall cost you will pay on the car.

The fact of the matter is, however, that many people simply do not have the liquid cash to pay for a vehicle upfront. Another option is to use a credit card if the buyer has enough credit available. It is a good idea to make sure you can repay the charges quickly because interest rates are high.

The next option is to take out a car loan from the actual car dealer. You may have to put money down on the car and there will likely be a percentage rate on the loan.

As you think through this option, figure out how much extra the car will cost if you use this financing method. The car may be overpriced in the end, but if it is the only way you can get the car, you may deem it worth your effort.

If you own a home, you could also get a home equity loan to allow you to purchase the vehicle. The interest rates on these types of loans are generally much smaller.

Home equity loans may seem better upfront, but keep in mind that the risks are much greater. You are, in essence, putting your home up as collateral.

If you are unable to pay back the loan in a timely manner, you could lose your home. If you want to have lower interest rates, make sure you are fully certain you can make every payment before you sign a home equity loan agreement for a vehicle.

Buying a car is an exciting event. For most people, it is the most expensive purchase in their life that they will make, next to a house purchase.

Just because cars rank number two in the expense field does not mean that the experience is stress free. Finding the right type of financing is essential to the pleasure you will have with your vehicle of choice.

One way to keep the stress level down is to simply finance your vehicle in house with the dealership. There are many advantages to doing it this way.

Dealerships can often offer better deals because they buy car loans in bulk. You will also be able to build relationships with the individual staff members that may come in handy in the future.

If you do not want to work with the dealership for whatever reason then comparison websites can offer alternatives and you could check out car loans at moneysupermarket for instance.

This option allows you to compare secured loans with personal loans and everything in between. When it comes to finding the right loan, the best idea is to check out as many options as possible so you can grab the loan that is best for you.

Whenever you apply for car financing, you will need to make sure you get the lowest interest rates and best deals. Read all of the fine print and do not sign on the dotted line until you feel you fully understand the details of the financing.


Turning the Tide Against Loan Sharks

Written by admin on Oct 11th, 2011 | Filed under: debt relief

The aftermath of bankruptcy or bad borrowing practices is sure to put your credit rating in the gutter. The scarlet number that is a bad credit score will keep you from being approved for lease agreements, car loans, and even cell phone contracts. It’s a bad position to be in if you expect to live a comfortable life. Indeed, bad borrowing practices and poor financial decisions have their consequences.

But what happens if you’ve learned from your mistakes?

Not everyone with a bad credit score is having to rely on reverse phone lookup to keep bill collectors at bay. Many have paid off their debts yet still carry around with them a bad reputation as a bad borrower. In order to alleviate themselves of this condition, those with bad credit must prove they can make payments on time. But how can those with bad credit make payments if no one lends money to them except high interest loan sharks who prey on those with bad credit?

They use the high interest loan system to their advantage.

Payday loan and car title loan lenders are notoriously predatory. The interest rates attached to such loans can skyrocket to as high as 400% if they aren’t paid off in time. It’s this caveat that keeps borrowers deep down in a hole; hardly anyone can pay back the loans in time to stave off the excessive interest.

But what if you never spent the money you borrowed?

Take the following system of credit improvement into consideration if you’re otherwise finding it impossible to build up good credit and are therefore unable to borrow in any other way:

-Almost every town in states where such lending is legal has a handful of payday loan lenders. It’s in your best interest to locate as many as possible. Find ones that promise to keep the interest low for the first month for new customers. Ideally, you want to find about 12 independent loan sharks in the area. You can also look online.

-Pick one location/online payday loan site. Take out a loan amount of your choosing – it’s probably best to keep it below $1000. Make sure the high interest won’t be applied for one month on account that you’re a new customer.

-Put the money right into your bank account and immediately start paying the loan back, quartering it into four weekly payments for the duration of one month.

-Repeat this process every month for one year, hopping from one loan shark to another to keep taking advantage of that first free month of low/no interest.

One year’s worth of dutiful repayment of loans will boost your credit score. While loan sharks don’t hesitate to report those who don’t pay their loans back to credit agencies, they’ll also have to report proper repayment to these agencies as well. All the while they never need to know that you were never borrowing the money with the intent to spend it in the first place.

Taking advantage of an industry that preys on the disadvantaged, unwise, and uninformed is a healthy way to lift yourself up to more responsible forms of borrowing. If you’ve truly learned from your past bad financial mistakes, then take steps to strengthen your credit score through the aforementioned process.


Tips to Save More Money on Printer Ink

Written by admin on Oct 8th, 2011 | Filed under: saving

The printer industry has adopted the business model long used by the Gillette and Schick. Give away razors for dirt cheap prices or for free and make the money back by selling costly razor blades that are specific to the model of razor you own. Printer companies do this by selling printers for subsidized prices and charging as much as $30.00 for replacement ink cartridges. Did you know that a gallon of printer ink can cost more than $2,500 per gallon? It’s true. Fortunately, you don’t have to play the game that Cannon, HP and Epson would like you to play. You don’t have to buy costly ink cartridges at full-retail price. There are several ways that you can save money on buying printer ink.

If you’re looking to buy cheap ink, your best place to look is online. There are a number of companies which sell remanufactured print cartridges for as little as 1/3rd of the cost of an ink cartridge from a big-box retailer or an office supply store. These cartridges work just as well as the ones sold in stores, but are much, much cheaper.

Another method to save money on printer ink is to purchase ink refilling kits. These kits are generally sold for $10.00 and can often triple the amount of pages that you get out of a single ink cartridge. They typically include a small tool to drill a hole in the top of the ink cartridge, and a syringe with ink to re-fill your empty cartridge. You can usually use two refill kits on an ink cartridge before the ink cartridge isn’t useful. Using a refilling kit is probably the best way to buy cheap ink.

You should also be weary when your printer’s software tells you you’re low on ink. You probably have anywhere from 25 to 50 more pages before your cartridge starts to not produce high-quality prints. If you find that your cartridge is running low on ink, you can also take it out of the printer and shake it up to get some extra life out of it.


Negative Equity And Underwater Homes

Written by admin on Oct 8th, 2011 | Filed under: debt relief

One of the biggest issues of the current economic environment is the negative equity that has homeowners across the nation underwater on their mortgage loans.  Many homes purchased during the housing boom have lost value, resulting in the homeowner owing more money on the mortgage than the home is reported to be worth.  This leaves the homeowner in a difficult financial position.

Homeowners that are in homes that are underwater face some difficult options and each action has benefits and risks.  One way used to solve the problem of negative equity in a home is to attempt to outwait the downturn in the housing market.  In a typical boom and bust cycle, prices rise to a peak before falling and after housing prices have bottomed out, the value of homes should begin to rise again.  This allows homeowners interested in staying in their home for a long time to build equity in their homes after an unspecified period of time has passed.

Another way to deal with the negative equity in a home is to sell the home in a short sale, which occurs when a homeowner sells their house for a price that is less than the price of the value of the mortgage.  Many of the homeowners that choose to use a short sale to sell their home are often facing significant financial hardship and are unable to keep up with the payments for the mortgage of the home.  A short sale must be approved by the lending company that is holding the mortgage and the homeowner may be held responsible for paying the difference between the amount that the home is sold for and the amount owed on the mortgage.

If you are dealing with an international home that’s underwater, you may need to make use of financial translation services, such as those offered by Rosetta Translation, to make sure you have a clear understanding of the terms of your mortgage.

Some homeowners who are underwater on their homes, are facing a interest rate increase on their adjustable-rate mortgage, or cannot afford to make the payments on the home are walking away from their homes and mailing the keys to the lender to save them the inconvenience of tracking them down.  Homeowners that walk away from their homes face legal action in the form of a foreclosure, but for many that have been struggling to make unaffordable payments, facing foreclosure is preferable to the stress and hassle of trying to save their home.  This method is drawing condemnation from many in the financial industry as irresponsible and lenders are increasingly going after homeowners that use this tactic with lawsuits.