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Archive for May, 2012

Important Financial Numbers To Keep Track Of

Written by Toi Williams on May 31st, 2012 | Filed under: mindset

Staying on top of your financial situation at all times can be difficult to accomplish, but keeping track of some important financial numbers will provide you with a good look at how your finances are doing.  Knowing where these numbers are on the financial scale will help you make the right decisions concerning your finances and alert you to any issues before they become unmanageable.  You should be keeping track of these important financial numbers at all times.

The Percentage You Are Saving

If you can save a large percentage of your income, you will be much more likely to emerge from financial emergencies unscathed.  Individuals that save a significant percentage of their income are able to purchase the things that they desire without using credit and eliminate the added expenses of interest payments and lending fees.  At least 10% of your income should be saved for retirement and an additional 10% should be earmarked for your emergency fund.  The more you can save, the better off your financial future will be.

Total Net Worth

Your net worth can help you keep track of your financial situation in a simple way.  The variations in your net worth shows you spending trends and investment performance over time and identifies areas that may be causing financial distress, like too much debt or not enough saved.  There are a number of financial programs that allow you to enter your bank account and credit information to automatically track your net worth on a daily, weekly, or monthly basis.

Your Credit Score

It is important to keep track of your credit score because it can affect numerous areas of your life.  Your credit score determines how much you will be charged to borrow money in the future and it will cost you much more in interest if your credit score is low.  Looking at your credit score on a regular basis alerts you to errors quickly and is important to correcting the issues in a timely manner.

Simple Tips For Organizing Your Financial Life

Written by Toi Williams on May 30th, 2012 | Filed under: mindset

Organizing your financial life can seem like an impossible task, taking hours from your life that could be used for more interesting pursuits.  However, it is very important to get your financial life under control and the only way to do that is to organize everything so that it can be found quickly and easily when needed.  Here are some simple tips that can make organizing your finances faster and a much more pleasant experience for all involved.

To Throw Away

There are many things that people save and organize for their finances that can be thrown away without causing any issues.  Anything that can be obtained online or in electronic form can be saved electronically with paper copies being thrown away.  Many types of financial statements can now be obtained online and most companies provide online access to statements and payment records for free.  Some people choose to scan their current receipts and store them electronically to cut down on the amount of paper they are storing in their home.

Things To Keep For Seven Years

Any important documents regarding your finances should be kept for seven years.    The IRS can audit your tax return for up to 7 years after the information has been submitted and credit reporting bureaus keep most financial information in your credit history for 7 years after the information is reported.  Keeping information about debts, tax breaks, and major purchases for seven years will ensure that the records are available if needed.

Things To Keep Indefinitely

There are a number of items that should be filed away in a secure, fireproof place indefinitely in case they are needed.  Actual tax returns should be kept in case you or your heirs need to access the information contained within them.  W2 Forms should be kept until the individual listed begins drawing social security.  Documentation regarding assets purchased, such as stocks, houses, or home improvements, should be filed away for as long as you own the asset.  Personal documents, such as birth certificates, death certificates, marriage certificates, divorce papers, and military discharge papers, should be kept for life.

Common Misconceptions About Credit Scores

Written by Toi Williams on May 27th, 2012 | Filed under: credit score

There are many misconceptions floating around about credit scores and the ways that they are used by individuals and businesses.  These misconceptions are held by large numbers of consumers across the country who believe that they are facts.  This can cost consumers thousands of dollars in missed opportunities and higher costs.  Here are some of the most common misconceptions about credit cards that everyone should be aware of.

The Poor Credit Of Your Spouse Hurts Your Credit Score

Your credit history can never be merged with someone else’s, so if your spouse has poor credit it will not affect your own credit.  However, if you and your spouse decide to try to get credit together, you can be denied if one spouse’s credit score is too low.  The creditor will consider both credit scores and having one poor credit history could cause higher interest rates or higher prices for credit-sensitive products and services that are in both of your names

If You Co-Sign, You Are Only Responsible For Half

If you decide to be a co-signer with someone else on a credit account, you are both agreeing to be responsible for the full amount of the debt.  The account is also reported in both people’s credit files regardless of who makes the payments.  If the other person disappears or does not pay on time, your credit score will suffer and the lender will come after you to repay the full amount.

Adding Users To Your Credit Account Hurts Your Credit Score

If you have a good credit score, adding an authorized user to your credit card can help them establish a good credit history.  They receive a card in their name and can make charges up to the credit limit approved by you.  This will not damage your credit score unless you expect them to pay the bill and they do not.  As long as you are willing to be responsible for the repayment of the debt, adding an authorized user should have no effect on your credit score.

Understanding 845 Charges

Written by admin on May 24th, 2012 | Filed under: mindset, saving

With so many different number prefixes floating around out there it can sometimes be a bit difficult to keep them all straight. One that is frequently creating confusion for people is the 0845 prefix as people seem to be unsure as to what the 0845 charges are. Those that are unfamiliar with the 0845 prefix should know that they are basically non-geographic numbers, meaning that they are not tied to any particular location. Large companies, banks and other similar businesses are usually the types of organizations that will use a 0845 number as they want people from all over the country to be able to call them no matter where they are located.

The 0845 prefix system has changed substantially over the years, which is one of the reasons that people can quickly become confused about what charges they will incur. Up until 2004 a 0845 call was charged at the same amount as a call within the caller’s local area. This caused them for a long time to be described as local rate numbers. These days, very few companies actually charge their domestic customers different rates for local and long-distance calls. This means that a 0845 can’t still be assumed to cost the same amount as a local phone call and in some cases they can cost even more than a local call.

Since this change, most phone companies have even started including an allowance along with a fair usage policy for 0845 numbers in their plans. This allows customers to call 0845 numbers for a certain amount of minutes per month depending on their plan without having to worry about incurring any extra charges. Most of these phone companies provide you with an allowance that is far more than the average person would ever be able to use but in the off chance that they do go over their limit, they should have a separate pricing plan for the amount of minutes or calls over your allowance that were used.

So even though there is still some confusion surrounding the use of 0845 numbers, for the average person they can call them and not have to worry about anything as it is very likely that calls to 0845 numbers are already included in their phone plan. If you are unsure then it might be a good idea to check in with your phone company and see how your plan works regarding 0845 numbers.

What Determines The Interest Rate I’m Charged For A Credit Card?

Written by Toi Williams on May 24th, 2012 | Filed under: credit cards

A calculation that includes a number of different factors is used to determine the interest rate that a particular individual is charged for a credit card.  These factors are the same for each borrower, but the value of each factor will change from person to person.  This results in different people being charged different amounts for the same credit card products.

Understanding how interest rates are determined can help ensure you qualify for the lowest interest rate possible when you apply for a credit card account.  Keeping these factors in mind and taking some preventative measures will save you hundreds of dollars in interest payments on your credit card accounts over time.  Here are the factors most commonly used to determine the interest rate for a credit card.

Credit History

The information included in your credit history has a significant effect on the amount that you will be charged in interest on the credit cards you apply for.  Your credit history shows the credit card company how much risk they will be assuming by lending to you.  Information contained within your credit history generally includes any credit accounts opened, late payments to creditors and utilities, and the amount of your available credit that is currently being used.

Credit Score

The value of your credit score will also have an effect on the interest rate that you will be charged for a credit card.  Your credit score is a calculation that includes several factors, such as length of credit history, ratio of credit available to credit used, and number of credit inquiries on the account in recent months.  Individuals with a low credit score are charged significantly more in interest for credit cards.  Before applying for a credit card, you should obtain your credit score and try to increase it as much as possible before submitting your application to get the best interest rate possible.

Misconception with Payday Cash Loans

Written by admin on May 22nd, 2012 | Filed under: consolidation

Payday Loans have got this stigma attached to them because of the high (APR) interest rates and charges that some lenders put on them and yes they can be off putting when you see this huge number which makes you think why should I have to pay that much interest.

APR wasn’t designed for these types of Cash Loans because a payday loan is generally only taken out over a 30 day period of often less. APR is an annual percentage rate so most other loans will be taken out over a minimum of 1 year, and when you consider the compound interest over this term can add up. The APR for a payday loan may seem high but its an annual rate and the amount your pay in interest is not the high APR in 1 month. It’s calculated by the term. So this can be easily misunderstood.

An easier way for people to see if these types of Loans are suitable for them is sometimes to look at how much they will have to pay in interest. An example on taking out only £180 over 28 days at 1734% APR works out at £45 interest and total repayable of £225. When you look at this its not as high an amount as some might expect. Obviously there are other types of Loans with much better deals, however these offer other benefits than other lenders cannot offer.

The benefits of Payday Loans

  • No credit check application
  • Money in you account the same day
  • Basic requirements to qualify
  • All credit ratings accepted
  • People on Benefits can also apply

Generally most people will be able to get approved a Loan and this is one of the reasons why Payday Lenders charge higher interest rates along with the risks they take for lending money to individuals that may have a bad credit history. It can infact actually help those people with bad credit to rebuild their credit rating back up, providing that they repay the loan on time.

Payday Loans are increasing in popularity amounst people that may not have any other option of where to borrow the money. They may need the cash instantly to pay off a credit card, bank overdraft or to pay for other urgent bills such as rent or even emergency repair work.

Peoples views and opinions are quite narrow minded sometimes and they may need to look at the facts. Like any form of borrowing money, it is adviseable to see if you can consolidate your debts before borrowing more money. Can you make other sacrifices around your lifestyle. Examples could be switch your utilities, sell unwanted jewellery or clothes at auctions sites, cut your food bills down by buying supermarket branded products and many more ways to reduce your monthly overheads.

Savings Mistakes You Shouldn`t Make

Written by admin on May 21st, 2012 | Filed under: saving

When times get tough, people stop splurging on big ticket items and start saving their dollars and pennies for a rainy day. Unfortunately, many people don’t know how to save correctly, so they end up shorting themselves in the long run or don’t get anything saved at all. Here are some common saving mistakes that you shouldn’t do.

People Don’t Pay Themselves First

People want to save, but they often decide to save whatever is left after paying bills. The problem is that there is usually nothing left after paying all the bills. Sometimes people take a few days before they get around to paying the bills and the money starts to burn a hole in their pocket.

You need to decide what bills you are paying on each paycheck and then pay yourself first. Don’t even look at the money. Just have the bank take a percentage of your paycheck out before you pay the bills and deposit it directly into a vacation fund or personal account.

They Don’t Shop Around

Various savings accounts, certificates of deposit and other accounts have different interest rates depending on the vendor. Too often, people will simply go to their local bank and pick whatever ones they offer. The higher the interest rate, the more money you are going to make.

It pays to take a few days to compare the rates of other banks. You may feel a loyalty to your own bank, but this is business and you should go for whose going to give you the most money. If you choose a website like Moneysupermarket savings could be significant. They can tell you about interest rates and the various types of savings accounts.

Lack of Commitment

Savings need to be a major part of your financial process. You can’t create a long term savings plan if you deviate from your process. If you save $200 one month, you should save a comparable amount the next month. You need to develop a savings plan and stick with it through thick and thin. If saving money isn’t an important commitment, you’ll probably not save any.

Setting Savings Percentage After Taxes

Many people like to save a set percentage of money each month from their paycheck. They make the mistake of taking the money out of the post-taxes income. Odds are you have already lost several hundred dollars thanks to Uncle Sam, so don’t lose more by taking out your savings post-taxes. You end up saving the most when you make the most.

There Are No Long Term Goals

The whole point of saving is to eventually spend it on something. This could be an item such as a boat or car or even retirement. If you start saving but don’t have a long term goal, you have no incentive to shoot for.

The Benefits Of Peer To Peer Loans

Written by Toi Williams on May 20th, 2012 | Filed under: loans

In today’s economic environment, it can be difficult to obtain a loan when you need one.  The current economic climate has thrown up many barriers to lending and traditional lending institutions are more likely to dismiss your application than they would have been in the past.  Peer-to-peer loans can help you avoid these issues by eliminating banks and other official lending institutions from the lending process.

Easier Approval

Many banks have a long, drawn out application process that involves multiple meetings and tons of documentation before you can be approved for a loan.  With peer to peer lending, you can avoid this process and be approved for a loan within a matter of days.  Peer-to-peer lending gives you a way to appeal to other individuals for funding for a loan using a loan listing that details your personal financial information, the loan amount needed, and the reason for the loan.  Interested investors review this information to choose which loans to fund and the amount they would like to extend to each borrower.

Cheaper Interest Rates

The interest rates offered by traditional lending institutions are often higher than you would like to pay, but the fees are necessary to pay for the internal overhead that the lender must pay to keep their company running smoothly.  Although the investors that fund peer to peer loans want to make a profit, they do not have the overhead that traditional lenders must pay for so they are willing to accept a lower interest rate.  That means borrowers can often get loans with cheaper interest rates when obtaining a loan from a peer to peer lending company.

No Prepayment Penalties

With many lending institutions, if you would like to pay off your loan early you will get hit with a prepayment penalty that could add hundreds of dollars to the balance of your loan.  Most peer to peer lending companies do not have a prepayment penalty for the loans they extend, so the borrower can pay the loan off as quickly as they wish without having to worry about additional fees.  The repaid investors then have the choice of reinvesting those funds into other loans.

A Brief Guide For Repairing Your Credit

Written by Toi Williams on May 16th, 2012 | Filed under: credit score

Although the situation can seem hopeless at times, anyone at any income level can repair their credit to have an excellent credit score.  It will take some time and dedication to complete the process, but the peace of mind that comes with having good credit is well worth the effort.  In most cases, people that attempt to repair their credit see a significant improvement in their credit scores within two years.  Here are some simple and easy ways to get started on the road to repairing your credit.

Review Your Credit Report

Reviewing your credit report can be very beneficial when attempting to repair your credit.  The information on your credit report will identify areas in your finances that may be causing you problems or where you need to be more vigilant.  Reviewing the information will also allow you to discover if there are any errors on your credit report that may be dragging your credit score down.

Make All Payments On Time

Late and missed payments can drag your credit score down by a considerable amount and remain on your credit report for seven to ten years.  Take steps to ensure that you know when your bills are due and that you have the money to pay them before the due date.  Many people mark the due dates of their bills on a calendar to provide a visual reminder of when they must pay their bills.

Make A Budget

A budget is an excellent way to control your spending and allocate monetary resources to necessary expenditures.  Your budget should include all monthly spending, including housing costs, utility costs, grocery costs, entertainment expenditures, and miscellaneous expenditures.  Some people prefer a highly detailed budgeting plan that takes all of their spending into account while some others choose to lump their spending into broad categories.  The type of budget chosen will depend on your personal preferences.

Don’t Fall For These Credit Card Myths

Written by Toi Williams on May 14th, 2012 | Filed under: credit cards

There are untrue myths floating around about nearly every subject imaginable.  Myths about credit cards can be especially dangerous because believing them can lead to significant debt and financial hardship.  Misinformation about how to use credit cards correctly can cause bad financial decisions and eventual bankruptcy.  Here are some of the most common myths about credit cards and how to avoid becoming a victim of one of these myths.

Paying The Minimum Is Sufficient

Making only the required minimum payment on your credit cards each month is a recipe for disaster.  Many people do this, reasoning that they are paying what the credit card issuer requires them to pay, never realizing that it could take decades to pay off the debt at that rate.  The minimum payment amount only covers the monthly fees charged to the account and 1% – 2% of the actual balance of the credit card.

Reward Cards Are More Beneficial

A credit card with a rewards program attached to it is specifically targeted to people that will spend a lot to get a small reward.  These rewards are still costing the cardholders plenty in the form of program fees, account fees, finance charges, and interest charges associated with the credit card, further reducing the benefit of the reward.  For example, some rewards programs require you to spend a minimum of $5,000 each year to earn a reward equal to the cost of the annual membership fee for the rewards program.  Most people would be better off choosing a credit card with a lower interest rate and saving up to buy the items they really want.

Credit Is Similar To Paying With Cash

Paying for an item with cash is always cheaper than paying for that same item with a credit card.  Even though the total on the register is the same in both cases, the cost of the credit purchase increases quickly due to finance charges, interest charges, and fees.  Paying for an item with a credit card can add 20% or more to the original cost of the item. If the person pays off the balance of their credit card each month, the monthly financing fees and interest are generally waived.