Entries from March 2012 ↓

Debt Consolidation and How to Do It

A lot of people are into consolidating their debts but what exactly is Debt Consolidation and why should you consider it? Debt Consolidation simply means putting together (or “consolidating/combining”) all your small debts into a single debt (or two large debts). And why would you do this?

The two main reasons why you should consolidate your debts are:

1) You can avoid the hassle of paying back several creditors, making your financial management a lot easier and

2) You get a reduction in the cost of all your debts’ interest fees.

How Consolidation of debts work

When you are consolidating your debts, you essentially present a debt consolidation plan to one or two of your existing creditors, or, approach a third party lender to consolidate all of your outstanding debts. Your will be able to settle your debts with all your other creditors, and you get the option of paying only one (or two) creditors. Thus, consolidating your debts works almost just like a loan but not exactly. You will be given a lending solution but only so as to consolidate all your existing debts. Your consolidation lender will ask you to declare the total amount of all your debts and you would need to account for it.

Two ways to consolidate your debts

The first way to consolidate your debts is through self-regulated consolidation. This means creating a debt consolidation plan all by yourself which would save you extra money. This would require you to personally approach one or two of your existing creditors, and convince them to take over all of your other small debts and consolidate it into a single account under them. They would settle your small debts and you would need to pay only them for doing this. This method though would require a lot of discipline on your part in managing your money in order to pay off the consolidated debt.

The second way to consolidate your debts is by paying a Debt Counseling Service to make a deal with all your creditors to consolidate all your debts into a single large debt under the service. You will then pay a monthly imbursement to the Debt Counseling, which would distribute it to your debtors as payment for all your debts. This way, you’re accountable only to one body, your Debt Counselor. The down-side to this method is that you pay a small commission to your counselor for consolidating and handling the payment of your debts.

In any of the debt consolidation methods above, the important thing is to be able to manage your finances effectively in order for you to pay off all your consolidated debt, whether you are paying only a single creditor or paying for the service of a debt counselor.

The author is a freelance writer who writes about emerging communication technologies.

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The Best Personal Finance Tools on the Market

Gone are the days when managing your personal finances meant dragging out a pencil, some paper and a calculator. Today’s personal finance tools have gone high-tech. Now you can see exactly where your money is going at a glance with three of the best tools to manage your personal finances. Track every expense and all of your income and make changes from your computer screen. By using these personal finance tools, you can be in charge of your money and enjoy financial freedom.

Mint
Arguably the most popular of all of the personal finance tools, Mint integrates your banking information and tracks your money daily. See how much you are actually spending for coffee, bank fees and hair styling with this handy tool that helps you manage your money. Mint’s software will remind you when a bill is due, research interest rates on credit purchases and allow you to manage online bill pay. Mint’s service is free and user-friendly. It can help you plan investments, save for a goal or pay off debt. Mint can be used anywhere there is an Internet connection, so there is no need to download software to your computer.
Microsoft Money
This Windows-based system is a favorite of hardcore home budgeters because of its attention to detail. Microsoft Money comes in several versions ranging in price from free to $60, depending on its features. Add in your recurring bills and debts and Money will send you reminders when a bill is due and subtract them from your budget balance. With Money, you can run reports and graphs that give you a visual picture of where your money is going. Microsoft Money is not web-based, so you will have to download it to your personal computer.
Quicken
A crowd favorite, Quicken is one of the most effective software choices for home budgeters. Use Quicken to analyze tax payments, plan for retirement and pay daily bills. Available for both Windows and Mac, Quicken is a great home companion for your personal financial budgeting needs. Quicken has recently introduced an online version of its standalone software, and the online edition features many of the same tools as the software-based version. Of all of the personal finance tools, Quicken is the oldest, having made its debut in 1983. Like the others Quicken can be integrated with your bank account information for the most accurate picture of your finances.
Whatever your financial picture, there is a personal finance tool that will simplify your life. There are both software and web-based options that will track your spending, savings and investments. Plan for future goals and enjoy your current ones with financial tools that allow you to make your money work for you.

John works for one of the leading chartered accountants in his area. While managing your personal finances is definitely a recommendation of his, he also recommends that you take the time and spend the money to talk to professional accountants, as they can provide insights that will be far more valuable than you may ever realise. Spending the time and money to select the right accountant will ensure your finances go even further and you get the most return come tax time.

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Is it a good idea to have a credit card during college?

Many new college students need to begin to pay for their own bills and miscellaneous items once they move out and begin their post high school education, which is why a credit card may be tempting for many of them. College students are just coming of age to be able to apply for a credit card, but many do it for the wrong reasons.

Having a credit card while attending college is actually a great thing to do, but only if the student has the ability to be responsible with how they use it.

Benefits of having a Credit Card in College

Once a child turns eighteen, they are given a credit score which starts out as a big fat 0! A new college student has absolutely no credit to their name because they have never had the opportunity to build up credit. Up to this point the student’s parents have been responsible for all their financial affairs. Now that they are 18 they have become responsible for their financial affairs.

Now that they are 18 they have become responsible for their financial affairs. While this can be a huge negative for some young adults, it is seen as an opportunity for others. Some young adults use this opportunity to apply for a credit card. They do this so that they can build up credit over time. This does not mean that the student goes out and buys a bunch of items with their credit card; instead it allows the student to spend only a few dollars a month so that they can pay the credit card company at the end of each month. This builds up credit every month, which students will find beneficial later on in life.

Why is having a Credit Score Important for College Students?

As a college student, you are beginning a wonderful journey known as “life”. Along this journey you will find that there are some things that you need that are far beyond your budget. For example, you may find that you need to buy a car. The car is a necessity so that you can get to work, or any other important place of interest. Buying this car will mean that you have to take out a loan. The very first thing that will be looked at while in the process of taking out a loan is your credit score. Seeing that you have a great credit score, built up over time while attending college, you are approved for the loan!

Warnings for New Credit Card Wielders

While holding this shiny new card, keep in mind the possibilities. While you may have a great deal of money that is only a scan away, you will have to pay this back. Not only will you have to pay the original amount back to the credit card company, you will also have to pay interest. Interest is the extra money you will pay to the credit card company, which is how they make their money. Only use your credit card for small purchases, as this will be the first step to building up your credit score!

Adam Greene is a financial writer earning his masters of taxation degree online.

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The Road to College Begins with Saving


Giving your child the gift of a college education is one of the greatest things you can do for them. The education they receive can provide a world of knowledge and open doors to fantastic career opportunities. Unfortunately, getting a college education can prove to be very expensive. Here are a few tips to help you save money for your child’s future tuition:

Stick to the Savings Plan

You should plan a savings strategy well in advance and firmly adhere to it. Maybe you want to only save $25 a week. Perhaps you can afford to set aside even more. Either way, staying consistent with your savings plan can ensure that you will have all of the money you need when it’s time to start making the tuition payments.

Open a Savings Account

Putting your money into a savings account is one of the easiest ways you can save for your child’s college education. You will know that the money is securely in the bank and has been specifically designated for going toward the education fund. Plus, savings accounts earn interest over time, giving you even more money.

Invest in a Qualified Tuition Program

These programs, also known as 529 plans, will allow you to start making payments for your child’s education in advance. One of these plan types will allow you to start making payments at a certain school under their current tuition rates without any price fluctuations. Another plan allows you to make tuition payments redeemable at any accredited school, although tuition rates are not guaranteed to stay the same. Either plan will allow you to make gradual payments over a longer period of time.

Take a Part-Time Job

You may already have a hectic work schedule, but taking a part time job can definitely help you get the funds you need for your child’s tuition. This part-time job can be worked on the weekends or any other time you may have off from your other career. If your child is a teenager, they can also get a part-time job to work when they are not in school as a means of contributing to their college fund.

Don’t Borrow Money from Fund

Even though it may be tempting, borrowing money from the college fund can greatly diminish its amount. It can be difficult to pay back the money once it has been taken out for use. The temptation can become overwhelming if you have the money sitting in a cashbox or piggybank at home. Keeping the money in a bank or other financial institution will likely make it less tempting to withdraw any funds.

Following these tips is a great way to get started on the road to saving money for your child’s college education. Sending your child to college can be stressful enough, but having enough money for tuition can help alleviate some of the worries.

Richard Barnes is a writer and student earning his political management degree online.

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How to Build a Great Credit Score

When trying to get the financial aspects of your life in order, one area that impacts all the others is your credit history. When you have a good credit history, it helps you save money on deposits and interest rates. It can also help you get approved easier for loans and credit accounts when you need them. Your credit history is compiled into a single number known as your credit score and lenders use this number to come up with information on a quick glance. If you want to take control of your financial life, it is important to know what your credit score is and know how to improve your score. If you want to build a great credit score, there are a few steps that you should take.

Always Make Payments on Time

Perhaps the best thing that you can do to help your credit score is to always make your payments on time. According to Fair Isaacs, the company who created the credit scoring model, your payment history is the biggest factor in determining your credit score. This means that every time you pay your utility bills, credit card bills and loan payments on time, you’re taking steps to improving your credit score. While it does take some time to develop a positive payment history, each payment helps a little. If you’re always making late payments or completely skipping payments, it will hurt your score tremendously. With today’s technology, you can simply set up your payments to be made automatically so that you won’t have to worry about making any late payments.

Pay Down Balances

Another step that you need to take if you want to build a great credit score is to pay down your balances. If you have multiple credit accounts and they are all maxed out, your credit score will suffer. If you can get the balances on your account down to about 30 percent of their available credit limits, this will help boost your score.

If you have several credit cards or other credit accounts, do your best to pay down the balances to this level. Then when they get down to this level, make an effort to avoid allowing debt to increase past this threshold. If you charge something on a credit card or on another type of credit account, make sure that you pay the balance off as quickly as possible. If you always allow balances to sit on your accounts, it will look like you do not know how to handle your finances.

 

Use Your Credit Wisely

When you’re trying to build a good credit score, you cannot afford to sit on the sidelines when it comes to utilizing credit. Some people think that if they never use their credit cards that it will somehow help their credit. In reality, never using credit will hurt your credit score. While you should not rack up big bounces on your credit accounts, you should use them sparingly. For example, you may want to make a small purchase on one of your credit accounts every month. Then when you get the bill, pay off the entire balance right away. By doing this regularly, it will show that you know how to handle credit responsibly. Over time, this will help you develop a positive payment record and boost your score up.

Avoid Mistakes

Throughout the process of handling debt, it is very easy to make mistakes. Once you accumulate a large amount of debt, you may try to use shortcuts to get out of debt. Many companies advertise debt help and make claims about being able to help you eliminate your debt very quickly. In most cases, all of these types of programs will end up hurting your credit score. For example, if you decide to enter into a debt settlement program, your score will be hurt because you are not paying back the full amount of money that you owe. If you file for bankruptcy to get out of your debt, this will hurt your credit score even worse.

As a general rule, you should never take on more debt than what you can realistically afford to pay back. If you are considering making a big purchase or taking on a load of debt and you’re not sure how you’ll pay it back, you should probably avoid the deal.

Handling your credit responsibly will go a long way towards helping you get a better credit score. Once you have a good score, you can start saving money and improving your financial life overall.

Do a comparison at Kanetix.ca to find out which credit card Canada is most appropriate for your needs. Searching for the best credit card at www.kanetix.ca takes a few minutes only.

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3 Common Debt Traps

Whilst it might appear on the surface we’re starting to recover from the financial disasters of the last few years the reality is many of us are still struggling. For many of us getting all our expenses paid each month with the money that we have coming in just isn’t possible, you borrow more money to pay off what you already own then the interest from that leaves you having to pay even more.

If you take control of your debts early on it’s much easier to manage but this can be easier said than done. Here are 3 of the more common ways people fall into debt and how to recover from them.

Store Cards

You’ve spent all month eyeing up that top or pair of shoes in your favourite store – finally its pay day and you can actually afford to treat yourself. This isn’t a problem; providing you can actually afford it. It can be so tempting when you get to the check out and you’re told you can save some money off your purchase or even better don’t have to pay anything straight away if you take a store card but it’s not beneficial in the long run.

Typically the interest on a store card will be higher than a credit card and in most cases any initial savings will soon be eaten away by crippling charges. If you can’t afford it now the chances are you won’t be able to afford it next month either so just leave it.

If you’ve already got store cards they need to be paid off as a point of priority which is often easier said than done but in the mean time cut it up so you can’t make the damage any worse. If you are managing to pay it off consistently each month try paying the debt off with a new credit card that offers interest free credit for the first few months to stop the interest getting any worse.

Credit Cards

In this day and age credit cards are almost essential, they’re safer for online shopping and often come with automatic insurance should they get lost, stolen or cloned. This doesn’t mean you should be dependent on them though. Your primary card needs to be your main account debit card so you’re only spending the money you actually own. Keep one credit card that you only use in emergencies, if something goes wrong with the car or the kids kick a football through the kitchen window. Things like these would need to be fixed immediately and can’t wait for pay day but you need to make sure you tighten your belt for the next few months to get them paid off right away.

If you’re struggling with credit card debt or you have several credit cards you need to face the situation head on. Maxing each one out then applying for another one is only going to make the situation (not to mention your credit rating) worse. Shop around for the best value loan you can find and get everything transferred over to one monthly repayment and cut them all up.

Pay Day Loans

The last few years have seen an infestation of pay day loans and they’re advertised everywhere, television, magazines and radio. A payday loan differs from a regular loan as they offer a much smaller sum of cash, they offer it immediately and they charge a crippling level of interest to a point where they’re constantly being investigated for fair trading.  To make matters worse these lenders make even more money from selling your data on so you’re being targeted with adverts offering you even more cash.

This is the worst loan you can take out and before you even consider this you have to talk to a free and impartial debt management service, services like Citizens advice, National Debtline and PayPlan can all help you manage your debt and stop the problem getting any worse.

The worst thing you can do with any debt problem is ignore it, it isn’t going to go away, your lenders aren’t going to forget you own them money and the chances of you actually winning the lottery are not big enough for you to pin all your hopes on.

Look at everything head on, know exactly how much money you own and where you owe it, look at your current outgoings and work out what can be cut or where you can make some extra cash. Can you get a part time job? Can you pick up more hours at your current job? Do you really need a takeaway or a night down the pub every week? Find something you can cut and start cutting.

If your money problems have got to the point where you think you’re in real trouble it’s vital you seek debt advice right away from trained professionals.

Jessica writes for Crawley solicitors Bennett Griffin who offer financial and personal law.

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