Walk With Money » Credit Card Debt

Are You Aware of the Most Common Credit Threats?

Robert Wilkinson — Tue, 27 Jul 2010 08:20:07 +0000

The Associated Press reports a new finding by FICO, Inc. that 25.5 percent of consumers, or nearly 43.4 million people, currently have a credit score of 599 or less. With a quarter of the nation suffering from credit card debt and poor credit scores, it’s obvious that many are not aware of the number of factors that can lower their credit scores.

Photo by The Truth About via Flickr

You can probably list several things you know can contribute to decreasing your credit score, but it’s unlikely you can name them all. In fact, a list of different things that impact your credit score negatively has been compiled by CreditReport.com, and among them are late or missed payments, bankruptcy and periods of unemployment.

Did you know that these common occurrences harm your credit? Here’s a closer look at how these situations are a threat to your credit.

Missed or Late Payments

You may be willing to pay that late fee every now and then if it lets you skip another bill for a few extra days. For some people, $20 or $30 isn’t a big deal. Plus, the Fed is making it even easier to rationalize paying a late fee by approving new credit card restrictions, including a late fee cap of $25.

So why not pay bills late and fork over the extra fee when budgeting gets a bit messy at the end of the month? Go ahead if you don’t care about your credit score.

If you do care, you need to pay every bill on time. Linda Stern of CBS Money Watch details some of the additional regulations that go into effect on August 22, 2010 as part of the CARD Act, but advises that you still need to protect your credit even if the new laws make it easier to skip payments. Stern writes, “Even with new limits on late fees…Late payments will hurt your credit score and that, in turn, will cost you more on everything you borrow.”

Bankruptcy

Filing for bankruptcy is a huge decision that will have a lasting effect on your credit. As Consumer Credit Couseling Services (CCCS) explains, “Credit that you are able to obtain may be from sub-prime lenders that carry very high interest ...

6 Things to Negotiate When Buying a House

Robert Wilkinson — Tue, 27 Apr 2010 22:20:03 +0000

Even though there are some scattered signs that the housing market is picking up, in most areas, it is still very much a buyer’s market. That means that you have some pull when it comes to buying a house. So, if you have low credit card debt, a good credit score, a decent down payment, and a stable job, now is a good time to go house hunting. You’ll get a better interest rate, and you will be able to negotiate with the seller to help you save a little more money.

Photo by MichiganMoves via Flickr

Here are 6 things you can negotiate when buying a house:

Repairs

Every home has to have an inspection. In most cases, major problems that makes the home less habitable have to be repaired by the seller, including heating, air conditioning, wiring, plumbing and structural issues. The exception is when the seller is offering the house “as is.” Even so, you can still negotiate for repairs. Once the home inspection points out the necessary changes that need to be made, negotiate repairs, or negotiate an allowance for repairs.

Paint and flooring allowances

If the flooring looks bad, and the paint is chipped and peeling, you can negotiate allowances for these items. Many sellers will knock off a few thousand dollars (usually between $3,000 and $10,000, depending on the degree of damage) to allow for the fact that you will need to re-paint or re-floor. You might also be able to negotiate that the seller arranges for and pays for paint and flooring before you move in, rather than just providing an allowance.

Finished basement or remodeling

When my husband and I bought our house while it was under construction, it was originally supposed to come with an unfinished basement. We negotiated to have the basement finished with the same materials as used for the upstairs. (We also negotiated to have the air conditioning installed.) Now, we have a finished downstairs, professionally built, rather than having done it ourselves. You can negotiate allowances for finishing the basement or remodeling a portion of the home that just isn’t very attractive. In some cases, you ...

The Amazing Power of Compound Interest

Robert Wilkinson — Fri, 16 Apr 2010 12:20:07 +0000

One of the most constructive, and destructive, forces in finances is the power of compound interest. Compound interest is interest that is not only paid on the principal, but also on the interest that previously accrued on your investment. On the other hand, compound interest can work against you — for instance, as finance charges against your credit card debt that could quickly snowball out of control. It can be a great burden, or a great boon. It all depends on the money choices you make.

Photo by thievingjoker via Flickr

Making Compound Interest Work for You

Compound interest can be a great gift to you if you avoid debt and get into the habit of saving your money. A high yield savings account can get you a 1.35% annual yield, but if you look into longer term certificates of deposit, you can get around 3.00%. And if you invest for the long-term in diversified investments, you can expect an even higher average annual returns.

When you put money into interest bearing accounts, or dividend yielding investments, you get paid for letting your money sit there. For example, if you have $1,000 and average 4.00% APY across your savings and investments, after a year, you’ll earn $40 in interest and dividend. If you let your money sit in your savings account and reinvest the dividend, the following year you will earn $41.60 — doesn’t sound like much, but your original $1,000 will turn into $1,423.31 after 10 years, $2,106.85 after 20, and $3,118.65 after 30!

Tips for helping compound interest work for you:

Start immediately to save and invest your money. The earlier you start, the more you will earn as compound interest works on your behalf. How much you start with isn’t as important as getting started.
Let the money sit. This is easiest in a retirement account. Simply leave the money alone. It will gradually build up on itself as the interest you earn is added to the principal amount you invested — and then interest is earned on the new ...

Related Searches:

Best Places to Purchase Textbooks for Students

Robert Wilkinson — Tue, 16 Mar 2010 07:20:08 +0000

As a college student, we all know how expensive it is to buy just about anything in our daily lives. From our daily meals, to our clothing, how the heck are we supposed to afford all of this? With student loan and credit card debt reaching an all time high per student, I wanted to give you college students some pointers that you can use, in order to save on your textbooks. Honestly, you can use this strategy on just about any purchase.

Photo by Here In Van Nuys via Flickr

Get your ISBN / Textbook title

Since you want to purchase the right book, it’s absolutely essential that you grab the ISBN. You don’t want to solely rely on the title, because you’re soon going to find out that there will be many volumes, and editions that can throw you off. You will most likely get your textbook title the first week of class, or if some professors are on top of their game, you can get it a few weeks before. It never hurts to e-mail them for this information.

#1 – Start with the library

Right when you get the textbook title, you’re gold. Rush to your local library, especially the college one first. You’ll be amazed at how many textbooks they have in their collection. This is a great way to get it for nothing. All you will need to do is keep checking it out, when you want to re-new it. I’ve done this for about 15-20% of my books. Again, the key here is to make sure that you get to the library before anyone else, because a lot of people know about this.

#2 – Rent it!

The textbook rental market is a new thing in this decade, but many students seem to enjoy it. You can rent out the book for X amount of time, and return it once your semester is up. There are some good deals, and there are also some bad ones as well. For example, my Math book would have cost me $72 used on Amazon, but I could rent it for the quarter for only $26 on Chegg. Places like Chegg.com, and others are a great place to start to see what you can rent your particular book for.

#3 – Buy used

eBay isn’t really going to be a goldmine for textbooks, since students only buy at particular points in the season. ...

Other People’s Priorities Don’t Have to Be Your Priorities

Robert Wilkinson — Sun, 14 Mar 2010 05:20:25 +0000

Kelly writes in:

In the past three months, I’ve paid off all but $2,000 of my credit card debt. I feel happier about my money than I have in a long time. The only problem is that my social life seems to be falling apart. I don’t have as much interest in the things my friends are spending their money and time on and I find myself doing other things a lot. What do you suggest?

Bear with me for a second as I go down a bit of a strange road.

I’ll admit it. I’m not a good housekeeper, and neither is my wife.

Yes, we keep our house reasonably clean and we make an extra effort to clean when guests come over, but on a day to day basis, housework is lower on our priority list than it seems to be for many other people that we know. Quite often, we do minimal cleanup during the week and wait until Saturday for a real housecleaning – and, even then, we don’t scrub the walls or things like that on a regular basis.

Our priorities are simply different. There’s no wrong or right about it. Some people value housecleaning more than we do. A few of our closest friends spend literally hours each day on housecleaning because keeping their house sparkling is a very high priority for them.

So what’s a high priority for us? Time with our kids and with each other. Learning new things. Finding ways to have fun without spending a mint.

If we were to simply follow the lead of some of the people in our social circle, we would probably spend more than we do. One of my closest friends is becoming a small-scale land baron. Another one buys lots of Leroy Nieman serigraphs and, on occasion, original art. Yet another close friend really, really values his three automobiles.

Our money goes towards financial stability, because that’s what we value.

Placing that value highly, even if it’s not in line with what our friends seem to value, hasn’t damaged our deepest, most important friendships. You don’t have to value exactly what others value – you just have to respect it.

Instead, our friendships ...

Getting Out of Debt Quickly pt 2

Robert Wilkinson — Tue, 02 Mar 2010 07:20:28 +0000

This is part 2 of a 4 part series on getting out of debt quickly. Make sure that you read all four parts in order to get the most out of this sequence of hints on getting yourself or your family out of the debt trap.

Next you are going to want to try to consolidate all of your debt onto a single credit card with an interest rate that is lower than what your current credit cards are requiring for you to pay. By doing this you are going to be lowering your monthly payments dramatically while paying your credit card debt off much more quickly.

Step #3 - The third step in the process is to find out what your credit score is.

Your credit score is a really important number, because what it represents is essentially how reliable you are going to be when it comes to returning any money that you have borrowed from banks or other lending institutions. When you have a high credit score, it is going to help you qualify for things like low-interest credit card opportunities. Your score is also going to have an impact on how much money you end up paying for auto insurance, home owner's insurance, deposits on utilities, and it may even play a role in whether you can get certain jobs, rent a home or an apartment and a number of other things.

You can easily find out what your credit score is by visiting http://www.myfico.com. You can also visit http://www.creditkarma.com in order to see your TransUnion credit score for free. The number, like an SAT score, is capable of ranging from approximately 300 to approximately 800 depending on the credit reporting agency. If you have a credit score that is higher than 660 then you are more than likely in good shape. Scores over 720 are considered to be excellent. If your score is currently below the 660 point, then you are going to need to spend some time working to improve this number before you are going to be able to obtain a better interest rate on any of your loans or credit cards.

Step #4 - Next, you are going to want to track your spending and make some cuts where necessary.

For a period of thirty days or so, what you are going to want to do first and foremost is to keep a complete record of everyplace that your money goes, leaving nothing out. You can do this using a checkbook register, a notebook or a computer program like Excel or Quicken depending on what your individual needs are. As you go from one day to the next, save all of your receipts for each and every single item that you buy, even the smallest purchases, and then at the end of every day you should sit down and take the time to record as well as categorize every single expense that you make.

…Continued in part 3.

Photo credits: Jonathan Pobre

Originally posted 2009-09-29 03:26:23. Republished by Blog Post Promoter

Related Posts

How to Go Into Debt to Get Out of Debt This really sounds like the ultimate oxymoron, but one of the best ways to get out of debt is to go a little bit further in. What’s that? First, to help this make more sense, let’s clarify – if you need to get out of bad debt, going into good......
Getting ...

Related Searches:
- Extended Warranty Debt Traps

Seven Rational Things to Do When Financial Panic Hits

Robert Wilkinson — Fri, 19 Feb 2010 11:20:30 +0000

I originally included this email in the reader mailbag this morning, but my answer to Susan’s email (below) went on so long that I thought it warranted a post of its own.

Yesterday my husband found out he has lost his job. We don’t know what to do.

He was making $38,000 a year as an IT specialist. I make about $36,000 a year as a school teacher. We have about $10,000 in credit card debt spread across three cards and a $1,300 a month mortgage payment. We don’t have anything saved either other than some retirement account money.

I am so scared we are going to lose our house and lose everything! What do we do? Help!

First and foremost: don’t panic. No problem is solved well in panic mode. Bad choices – choices that you’ll regret down the road – are made when you panic.

Take a deep breath. Here are seven things that you should attempt to do in the coming days.

Be proactive. Some people “turtle up” in bad situations like this and spend their time avoiding the problem, doing things like playing video games and watching television. Now is the time not to do these things to excess.

Instead of withdrawing, fill as much of your time as you can with one simple question: what can I do right now to fix our financial situation? Don’t turn away from the problem – grab it by the horns.

Get that second paycheck back as soon as possible. Your husband needs to find work quickly and get back in a situation where there is a second stream of income coming into your home. He should not be picky at this point. Look for a job in retail where there is often work available for people.

Once he has that in hand, he can then spend his spare time searching for a job that matches his resume and skill set. However, it is vital that you not “hold out” for a better job right now. If you do that, you are going to dig yourself into an even worse hole than you’re in right now.

Cut all unnecessary services. Yes, ...

Pay Off Debt or Invest? Think About Your Rate of Return

Robert Wilkinson — Fri, 05 Feb 2010 09:20:27 +0000

Andrew writes in:

My girlfriend and I bought a home last year and qualify for the First Time Homebuyer Credit. When you include my share of this, I will be getting back around $4500 in my tax refund. This is a lot of money to me and I’m trying to decide what to do with it. About half will go toward an engagement ring, but I’m torn between investing the other half or paying off my $2,000 in credit card debt. I currently have a very low APR on the credit card and can pay more than the minimum each month. As a licensed broker, I am very involved with the markets and believe I can make 10-15% a year. If I can get a higher percentage return on the investments than the APR I pay on the card, doesn’t it make more sense to invest?

In essence, Andrew is comparing two rates of return here.

First, there’s his credit card. An investment in paying off a credit card has a guaranteed rate of return – the interest rate on the card.

On the other hand, there’s the stock market. An investment in the stock market might have a higher hypothetical payoff, but it’s not guaranteed at all.

Regardless of whether the year was 2008 or 2010, paying off a 9.9% credit card will net you a 9.9% annual return on your money. Alternately, if you were able to get a 10% return on your stock investments in 2008, you were an absolute magician.

The reason that the standard advice is to pay off your high interest debts before you invest is because paying off high-interest debts is a far better investment than the stock market. Why? That rate of return is guaranteed ...

The Pros and Cons of Social Lending

Robert Wilkinson — Thu, 07 Jan 2010 03:20:06 +0000

Advantages

Borrowers who might not be able to get a loan through a bank because of a spotty credit history may have a better chance of getting one through a lending site, although it will cost more in terms of a higher interest. Sites like Lending Club offer a range of possibilities for consumers with varying credit scores. Those who have a good credit score can expect to pay around 7.89% per loan. Borrowers on the other end of the spectrum can pay as much as 21%. All loans have 3-year terms. Borrowers can ...

Seven New Years Financial Resolutions for 2010

Robert Wilkinson — Thu, 31 Dec 2009 15:20:40 +0000

This is a guest post from the National Endowment for Financial Education (NEFE), a non-profit dedicated to improving the financial literacy of all Americans. NEFE operates the site Smart About Money and have developed a series of articles filled with tips to help you make 2010 the year of financial freedom. You can also find Economic Survival Tips, worksheets and articles focused on financial education related to housing, spending, credit and job change. Follow NEFE on Twitter at @nefe_org

Control Spending. If you spend less you'll have more money available to pay down debt and save for the future. Write down your expenses for a month to see where your money is going. You might be surprised by how easy it is to find places to scale back.

Create a Debt Repayment Plan. If you carry credit card debt, write down everything you owe and make a plan to pay it off. Start with small items you can act on right away–it will make tackling the bigger debt easier. Also, try buying with cash only. It’s a sure-fire way to prevent increases in your credit card debt.

Setup Auto-Savings Plans. Arrange with your bank or another financial institution to have a set amount deducted from your checking account to a savings account each pay period. Of the Americans who have been able to contribute to emergency savings funds, automatic withdrawal is the most popular method, according to the Consumer Federation of America. Here's why you ...

Walk With Money » Credit Card Debt

Are You Aware of the Most Common Credit Threats?

Missed or Late Payments

Bankruptcy

6 Things to Negotiate When Buying a House

Repairs

Paint and flooring allowances

Finished basement or remodeling

Related Searches:

The Amazing Power of Compound Interest

Making Compound Interest Work for You

Tips for helping compound interest work for you:

Related Searches:

Best Places to Purchase Textbooks for Students

Get your ISBN / Textbook title

#1 – Start with the library

#2 – Rent it!

#3 – Buy used

Other People’s Priorities Don’t Have to Be Your Priorities

Related Searches:

Getting Out of Debt Quickly pt 2

Related Searches:

Seven Rational Things to Do When Financial Panic Hits

Pay Off Debt or Invest? Think About Your Rate of Return

The Pros and Cons of Social Lending

Advantages

Seven New Years Financial Resolutions for 2010