Personal Finance Tips

Save Money by Writing It Down

noreply@blogger.com (Bob Johnsen) — Wed, 03 Sep 2008 11:43:00 +0000

Many people don't realize this, but one very simple way to start saving money very quickly is to actually start tracking where you're spending money on a day-to-day basis. Pennies add up. And every time you stop for a quick coffee or soda, pick up an extra magazine, or even buy a pack of gum or some candy, it takes money out of your budget. Most people have no idea how much money they actually spend by buying a little bit of this and a little bit of that every day.

In fact, if you make a habit of always paying things with paper bills but never any change, and just start sticking the change in one spot regularly, you may be surprised at how fast that money adds up.

If you need to reduce your spending bill, then you need to get a handle on where your money is going. And the only way to do this is to write it down consistently. Save every receipt you get, and sit down every day with those to add up how much money was actually spent that day. You may be surprised to find, that even though you only spend a little bit here and there, the total amount is much more than you expected it to be.

Keep track of every expenditure you have. When you pay a bill, write down the exact amount you paid. If there were any additional expenses added to the bill such as credit card fees, you need to note those down too.

If you track where you're spending money every single day, and track exactly how much you're spending down to a penny, you will start knowing without a doubt where all of your money is going. Once you have an idea of where the money is going, it will then be much easier to sit down and create a spending budget for your household. You may choose to create a budget for each individual person as well as the house in general, or you might just want to create a general family budget which is separate from the necessities budget for the house.

Trying to make a budget without first knowing where all of the money is going though will not work. In fact it will just be an act of frustration. Because money will be flowing out, or it will be short in one area or another, and you won't be able to understand why. So by first writing down everything you're spending you can get a much more accurate picture of where the money's going. And you can also see where you may have some bad financial habits, so you can start working to correct those problems while also getting your budget working much more efficiently for your family.

Save Money by Buying More

noreply@blogger.com (Bob Johnsen) — Tue, 02 Sep 2008 23:42:00 +0000

Did you know you can save money by buying more? Yes, this sounds contradictory, but it actually works quite well. Why? Because buying things in bulk actually makes them cost less individually.

For example, if you know that you usually have to buy a package of toilet paper about once a week for your family, then you can actually reduce the amount of money you're spending on that toilet paper by buying a bulk package instead. If you normally buy a four pack each week, that's about 16 rolls each month. If that four pack cost you three dollars each, then you're spending $12 a month on toilet paper. If you instead by one pack of 16 rolls once each month, you might only spend eight or nine dollars for that larger package. See the difference in how much you can spend?

There are many things that all of us use frequently which can usually be purchased in bulk sizes. Before selecting the items you will buy in bulk however, make a realistic assessment of how much space you have available in your home. If your home is quite small, you may not be able to buy too many items in bulk sizes because you will have no place to store them. If you do have some space though, or if you can make space, this is an excellent way to save money.

If possible, it's even more helpful when you have an extra freezer. This is most useful for families to save money on frozen goods. Here are some things you might want to consider buying in bulk to save money.

Laundry supplies. Instead of buying laundry soap every week, try buying a much larger box that will last an entire month. Do the same with your fabric softener, bleach, or any other laundry materials you use. When you compare the prices you'll usually find that the large boxes and containers are less expensive than multiples of the small ones.

Kitchen staples. If you have a family, chances are you cook quite frequently. And there are many food items that tend to stay in stock in your home regularly. Buying decent bulk can be much less expensive too. Staples usually include things like flour, sugar, rice, and potatoes. In some cases, other things are standard to. Spaghetti for example, or other types of pasta. Peanut butter. And more. These will vary somewhat from one family to another, but generally if you have children you tend to constantly buy these items at the store.

So if you buy a 5 pounds of potatoes every week, you can actually save money by buying a 20 pound bag once each month, or even a 50 pound bag if you use that much. You can buy bags of rice in five to 10 pound quantities, and sugar and flour or can be bought in 20 pound sacks as well. Again the compare the price difference is between the bulk purchase and multiples of the smaller purchases. You may be pleasantly surprised at how much money you can actually save by doing your shopping this way.

Use the Internet to Save Money

noreply@blogger.com (Bob Johnsen) — Mon, 01 Sep 2008 14:41:00 +0000

Did you know? You can actually use your computer and the Internet to help you save money in many ways. Most people don't think of using their computer this way, but it's actually quite fun and you might be surprised at how much money you can save too.

For example, did you know that you can find coupons for almost everything online? It's true. Spend just a little time researching online, and you will come across discounts and coupons for almost everything you buy on a regular basis. Sometimes you can even find coupons for specific stores in your area too.

Books and reading can also be found online. As a matter of fact, there are literally tens of thousands of books you can legally read online. And in most cases, you can even download them to read on your computer when you're not connected to the Internet.

In addition to books, you'll also find digital reports, white papers, and many other reading materials too. Just some of the things you'll find to read online include children's books, classic literature and novels, instruction manuals, and more.

There are also some movies, TV shows, and music which can be enjoyed online legally too. The trick here, is to make sure that you're accessing legal materials. Many up-and-coming music artists will release their music for free for example, because they want to get noticed from as many people as possible. TV shows are starting to put some of their material online too, because it provides another place for them to sell advertising.

If you use directory assistance on your phone a lot, you can save quite a bit of money by simply using the online directories instead. Almost any phone number can be looked up these days, and it doesn't cost a thing.

The same applies to maps. Instead of buying a map at the store when you go on a trip, you can simply look up the directions online at no cost. And you can even print them out for reference while you're traveling too.

There are various other things that can be found online completely free. You can listen to radio stations, find recipes instead of buying cookbooks, printout coloring pages for your children, play computer games at no cost, make long distance phone calls, and much more. Getting into the habit of looking for something online before you spend money for it, is a great way to help you save money on your expenses each month.

How to Save Money on Groceries

noreply@blogger.com (Bob Johnsen) — Sun, 31 Aug 2008 11:41:00 +0000

Going to the grocery store is sometimes the fastest way to blow your budget. And if money is tight, you might even find yourself dreading your next shopping trip. There are actually many ways to save money on your grocery bill though, so we'll look at several of those here.

1. Start cooking. If you don't know how to cook, it's time to learn. If most of what you buy at the grocery store involves frozen meals and prepackaged goods, you are wasting too much money. You get much less food per serving, it's not very healthy for you at all, and you end up spending much more money for it too.

By cooking your own meals, you will find that the food is much more satisfying, and it costs much less money too.

2. Make a list first. Before you go grocery shopping, you need to make a list. The best way to do this is to actually make two lists. The first list should be the meals you plan to eat for the next week. Once you know what food you'll be eating, then you can make your shopping list too. Making the shopping list is actually easy once you have a meal list, because all you have to do is simply list down the ingredients you need for each of your meals.

Keeping to your shopping list might be the hardest part of this step. If you're not used to shopping from a list, you may be tempted to pick up other things that catch your eye while you're at the store. This is a bad habit though, and one which usually breaks your grocery budget quickly.

3. Try store brands. In many cases, the store brand of a food is just as good as the name brand is. The difference in price however is sometimes quite dramatic. You'll want to try store brands a little at a time though, because there are some things you may find that you do not like as well. As you experiment though, you can start making educated decisions as to which food you're willing to spend a little bit more money on to get the quality you prefer.

4. Pay attention to sales. This is quite helpful, particularly when you start shopping from a list. If you look at the sales ads each week while you're making your list, you can make note of things that are reduced in price. Don't add things to your list just because they're on sale though. Only note down those things on sale that you need as part of your regular shopping list.

5. Eat before you shop. If you go to the grocery store when you're hungry, you are almost guaranteed to buy things you don't need, and did not have on your list to begin with. In other words, you will spend much more money if you shop while you're hungry. So make sure you are satiated first, then do your shopping with your head and not your stomach.

More Ways to Save Electricity

noreply@blogger.com (Bob Johnsen) — Sat, 30 Aug 2008 17:40:00 +0000

There are many ways to cut down on how much electricity and energy your family uses each month. The most common tips involve ways to either heat or cool your home or efficiently in the summer and winter. Besides those though, there are actually many other things you can do which will help cut the electricity usage and costs as well.

1. Try using fans instead of an air conditioner. This tip is particularly useful during the spring and fall, but it can also be handy on mild summer days as well. In some cases for example, it can get very nice outside at night time in the summer. And on these pleasant nights, you don't have to use an air conditioner to pull your home. Instead it you can simply open a window, and sit a box fan in it. This fan will pull the cool air in from outside to cool your home. This has the added benefit of bringing in fresh air to. You can even use a second fan to work as an exhaust, which will push hot air out of another window.

Since hot air rises, you'll see the best results from having an exhaust type fan in the attic, or at a higher location than your window fan. If you're not able to set up an exhaust fan of this type, you can get similar results with a standard ceiling fan. Simply put it in reverse so that it sucks air upwards instead of blowing air downwards.

2. Turn things off when they're not in use. Modern day conveniences have caused most of us to have very bad habits were electricity usage is concerned. Some people for example, will never turn off a light. They leave lights on in every room even if it's the middle of the day and no one is in that room. This wastes energy, and increases your electricity bill dramatically. The same habits are seen with other electronic devices and appliances.

Try to get into the habit of turning things off when you're not using them. Turn off lights when you leave a room, turn the computer and monitor off when you're finished using it, and don't fall asleep with the TV on all night.

You can even take this one step farther, and unplug things when you're not using them. If you have many digital clocks in your home for example, you might try unplugging all but one or two of them. If you have electric coffeemaker, unplug it which are finished with your coffee each day. Anything that plugs into a wall, will still use a small amount of electricity, even when the device is not turned on.

3. Change your lightbulbs. You may or may not already know this, but the simple act of removing standard lightbulbs and replacing them with the newer energy-efficient ones, can reduce your electric bill by amazing amounts. The amount of money you save from doing this will vary depending on the size of your home, how many people live in your home, and how often you use the various lights in your home as well. Some people notice a small difference such as $20 less on their electric bill when they make this change. Others however, can see as much as $50 to even $100 difference in their utility bills.

These new energy-efficient lightbulbs looks strange to some people. They are curly, and there are even named pigtails. Some people even worry that their globes will not fit over at these new bulbs, so they have not made the change. Regardless of how they look though, they are actually designed to fit into the same space that the old-fashioned lightbulbs do.

Tips for Reducing Your Heating & Cooling Bills

noreply@blogger.com (Bob Johnsen) — Fri, 29 Aug 2008 11:39:00 +0000

For most of us, the electric bill is the largest utility expense we have each month. And with the cost of common fuels rising sharply every single day, this expense is only going to get worse. The best thing we can do, is to start reducing how much electricity we use in our homes. There are actually many easy ways to do this too.

For most of us, heating and cooling the home is at least 50 to 70% of our monthly electricity bill. So many of these tips will address ways to heat and cool for home more efficiently.

1. Insulate your home. Older homes particularly have many cracks and crevices where air can come in or escape. During the summer, the cooler air from inside will rush out, or the hot air will come in. You can help reduce this loss by simply adding insulation around doors and windows.

2. Insulate your windows. Even after you install weatherstripping around the windows in the cracks and crevices, you may still be allowing heat in during the summertime if the sunshine strongly into a window. Likewise, in the winter time cold can come in through the window panes as well.

One of the best ways to insulate your windows, is to simply hang curtains, shades, or blinds. There are insulating curtains which can be hung at your windows in both the summertime and wintertime. These insulating curtains help block the hot air in the summer, and the cold air or in the winter. They have the added benefit in the summer, of keeping the strong hot sun from coming into your home and fading your furniture, or simply heating up the air.

3. Create your own shade. You can easily create your own weather control around your home, by simply planting bushes and trees, or installing awnings and porches. Bushes and trees are the easiest and least expensive, but they can't take time to get the most benefit from if they are small when you plant them.

Planting a bush approximately 5 to 6 feet tall in front of a window which gets lots of sunlight in the summertime will help shade that window, and it will help cool the air that passes by it. You can also plant a tree which grows from 12 feet to over 25 feet tall, and it will provide shade for the roof of the home. When planting trees to create shade in the summertime, make sure that you choose one which will shed its leaves in the winter. This way it will not block the sunshine in the winter when you need it or to help heat your home.

If you don't have the room or desire to plant trees and bushes, simply try a well cared for lawn or garden instead. The simple act of having lush greenery around your home, even in the form of simple grass, can lower the temperature by several degrees.

Save Money by Eating out Less

noreply@blogger.com (Bob Johnsen) — Thu, 28 Aug 2008 14:38:00 +0000

Going out to eat with friends and family is a very popular activity for most people. It's a great way to spend time together, relax, talk and have fun. Unfortunately, it can also be quite expensive.

Going out to eat is also much easier after a long day at work. Instead of going home and having to do even more work in the form of cooking and serving a meal, it's much more appealing to simply go to a restaurant and let someone else do the work. This can get even more expensive however, when you have a family to feed.

If your budget is tight and you need to start limiting expenditures, one of the first things you should do is start limiting how much you and your family eat out at restaurants. This may seem difficult at first, particularly if you are actually in the habit of going out to eat often.

The first thing you should do is try to declare eating out a special event. If you normally go out to eat several times each week, cut back to just once every one to two weeks instead. And declare it to be a special occasion when you do go out to eat. This will make it easier to adapt to the change in schedule, and it will make eating out even more enjoyable than normal.

When you do go out to eat, there are various ways you can reduce the amount of money you're spending each time. For example, if you have a family it is much less expensive to take them to a buffet style restaurant. This way, you pay one fee for each person, and they're able to get as much food as they'd like, and as much variety as they'd like too.

Try to restrict yourself to going to restaurants you already know. If you know the restaurant, then you are more likely to know which foods you like and which ones you don't. This will help you avoid wasting money on a new and exotic dish that you didn't like.

If you really want to try a new restaurant, try going the first time alone or with just a friend or spouse. This way, if you don't like the food, you will have been much less money for just one or two people than for the entire family.

If money is extremely tight, you can go for the cheapest foods, and drink water instead of colas. This does however, limit how much you will enjoy going out to eat, and defeat the purpose of doing so in the first place. Eating out should be a pleasurable experience for the entire family, and not just a necessity.

Power Your Home with Wind

noreply@blogger.com (Bob Johnsen) — Wed, 27 Aug 2008 12:38:00 +0000

The sharply rising costs of the standard fuels and electricity in recent years tops all the news stories every day lately. And it's a very deep concern for everyone. So much so in fact, that many people are now looking into alternative energy sources. There are actually many ways to generate your own electricity too, and the most common are to use a windmill, or solar panels.

Windmill generated electricity is actually a very effective method to use for anyone who lives in an area which gets a decent amount of wind year-round. Windmills have actually been used for centuries. The most common use for them throughout history, has been to pump or move water. These days however, there are many spots around the United States which actually have wind farms producing electricity instead.

A private homeowner can actually have their own windmill power installed. And while prices will vary from one place to another, the average is currently about $5000-$8000. So depending upon how much your electricity bill is each month, you could actually see a return on this investment within just one or two years.

The amount of electricity your windmill would need to produce will depend on your particular household. How money people live with you is an important factor, as well as how much electricity your family uses on average each month. In some cases, a small family may only need about 10 watts of electricity from their windmill each month.

Of course, your ability to use windmill generated power will depend on how much the wind blows in your area on a regular basis. If you live in an area out which does not get much wind at all, you may be better off trying solar power instead. If however, the wind blows somewhat steadily, or even a lot, wind power may be an excellent alternative source of energy for you.

In most communities, if you provide your own electricity through a windmill, solar panels, or other means, and you're able to generate more than your family needs or uses, you can actually sell your excess energy to the local power companies too. This will not only help those power companies during peak load times, but it can also be a source of income for you as well.

If you're not sure whether or not windmill generated electricity will work in your area, the first step to take is to start investigating your options. For example, if the wind blows, but you're not sure it's enough, then start looking into the actual statistics of how much wind your area tends to get on average each month of the year. Then research how much wind is required on average to provide the amount of power your household will need. You can also find out how much power your household uses by simply looking at your past electric bills.

Keep in mind that even if you can't use a windmill to generate all of your electricity for you, you might still be able to generate some of it, which will in turn cut down your monthly electric bill drastically.

How to Reduce Your Garden Water Bill

noreply@blogger.com (Bob Johnsen) — Tue, 26 Aug 2008 23:35:00 +0000

During the heat of summer, most avid gardeners find themselves torn between having a beautiful yard and garden and paying much higher water bills. In some areas of the country, there are even restrictions as to how much watering you can do on your yard and garden during certain times of the year. There are actually many ways you can reduce the amount of water you use in your garden though, which also reduces your water bill, and makes the restrictions of your neighborhood not a problem.

Water under your plants instead of over them. When you spray water on top of your plants, and on the leaves, they are not able to absorb it overly well. This is even worse during the hotter days of summer, because the water evaporates quickly. And, if the sun is extremely hot when you spray the plants, they can actually be burned. A much more efficient way to water the plants, is to water them from the underneath along the ground. By watering the ground that the plants are in, the water is able to seep down and reach the roots which will help water the plants with very little of the water evaporating into the air.

Along the same lines, make sure you do not just sprinkle the ground around the plants. This is known as shallow watering, and it primarily just wastes the water. Because the water is not able to soak into the ground, it never reaches the roots of the plant you're trying to give water to. And on hot days, that light sprinkle of water will simply evaporate into the air.

Water early or late. If you water your yard and garden in the middle of the day, you will again notice that the water evaporates before it has a chance to benefit your plants. By watering early in the morning, the water has a chance to soak down into the ground before it gets too hot. The same applies when you water late in the evening, but in some parts of the world this can cause problems such as promoting diseases and fungus growth.

Avoid using water sprinklers. Water sprinklers are yet in another way in which water can be wasted when you're trying to water your yard and garden. Again, because the water is being thrown around in the air, and landing on top of your plants, it has a tendency to evaporate quickly. A much better way for both the health of your plants, and your water bill, is to use a drip or soaker hose system.

Save Money with Energy Efficient Appliances

noreply@blogger.com (Bob Johnsen) — Mon, 25 Aug 2008 23:34:00 +0000

If you've been trying to find ways to save money in your own home, the first thing you should start looking at is how much electricity you use. Cutting down on the amount of electricity you use will not only helps you save money, but it's also very good for the environment in general. And one of the best ways to start saving money on your electric bill, is to make sure you're using energy-efficient appliances.

If you're in the market for a new appliance, here are some things you should look for.

The energy guide: in the United States the Federal Trade Commission requires that appliance manufacturers must place labels on their products which tell you how much energy a particular appliance uses. This energy guide label is usually black and yellow, and it will tell you a lot of great details about the appliance you're thinking of buying. It will tell you for example, how much money this appliance will add to your electric bill each year. And it often tells you how energy-efficient the appliance is, even compared to other similar appliances.

The energy Star: the energy Star is a special logo that companies are allowed to use for their products which are more energy-efficient than most others. By law they are only allowed to display this energy Star logo if they have been tested and proven to meet or beat certain energy standards which are set by the government. Appliances which have the energy Star logo on them can be as little as 20% more efficient than other models, and they can go as high as more than 100% more efficient. So buying an appliance with the energy Star logo on it is most likely going to save you the most money on your electricity bill over the long run.

Bigger is not always better. Some people seem to think that they're supposed to buy the biggest appliance they can find. What they don't realize however, is that there are different sizes of appliances because there are different sizes of rooms. If you have a very small galley style kitchen for example, it would be a waste of money and electricity for you to buy a large air-conditioner which is designed to cool a huge great room.

Likewise, consider the size and habits of your family. If there are only two or three people living in your home you don't likely need the largest family sized refrigerator you can find. The same applies to your washing machine, and even your dishwasher.

When buying household appliances, there are many terms in numbers you may run into which seem confusing. Don't let this scare you away however, because these numbers can be powerful information which will help you lower your own electricity bills for many years to come. So ask questions, and compare labels on many different appliances before making your final decision.

Building A Good Credit History

noreply@blogger.com (Bob Johnsen) — Fri, 16 Nov 2007 04:02:00 +0000

Building a good credit history can be a difficult task when you don't already have any credit. The vast majority of lenders do like to see a credit history before they will extend credit. This means that if you don't already have a credit history, most lenders will turn you down! So how can you build credit if no one will give you credit?

The most common way is by starting with a secured credit card. A secured credit card is a bit like a checking account. You put money into the account, and you have that amount available to use. The major difference is that this secured credit card will usually report your payments to the major credit bureaus, building your credit history. These also have the potential to convert to an unsecured card after you've made your payments on time for a while.

There are also unsecured credit cards available for people with no credit history. Most of the time, these are bad deals for consumers. They typically charge very high interest rates, and extremely high fees that may be equal almost to the total credit limit offered, which means that you will end up paying a few hundred dollars into the card with nothing to show for it. With a secured card, you should typically be able to use most or all of the credit limit immediately. This is not so with most unsecured starter cards.

Another way to build credit is through a secured loan. When you get a secured loan, you will need some sort of collateral to offer the bank. If you own something like a piece of land or a car, you can offer that item as collateral in order to get a loan from a bank. If you are doing this only to establish credit, and you don't actually need the money, be certain to ask if the loan will report to all three of the major credit bureaus.

And of course you can also get a loan for various purposes by having a more credit-worthy person cosign on the loan for you. What this means is that while the loan will actually be in your name and will usually report to your credit reports, if you do not pay, the person who cosigned the loan with you will be responsible for paying for the loan. If they refuse to pay, the loan will report the missed payments to the cosigner's credit reports. If you have someone who is willing to cosign for you, this is a good way to get started building credit. Car loans and mortgages are two types of loans that commonly have cosigners.

So you see, it is possible to build credit starting from scratch. Everyone has to start somewhere, and there are plenty of avenues available to start building a good credit history.

How Debt Affects you Credit Score

noreply@blogger.com (Bob Johnsen) — Fri, 13 Oct 2006 23:59:00 +0000

Whenever you apply for a line of credit - whether it be a mortgage, a personal loan, or a credit card - your credit rating is the deciding factor in if you receive the credit... and what your interest rate will be. Most people realize this, however, they don't understand how their credit score is tabulated and what their debt and financial history has to do with the three numbers associated with their credit worthiness.

There are three major credit bureaus. Experian, Trans Union, and Equifax - and each of these use FICO (a credit scoring system devised by Fair Isaac & Co.) to establish that three digit number, which goes from a low of 300 to a high of 850.

Let's breakdown the equation used in determining this number:

1. One-third of the score is based on your payment history. Any late payments, skipped payments, and defaults will affect this portion of your score in a negative fashion. If you're a stickler about paying on time for at least the minimum amount, then you have nothing to worry about.

2. Another one-third is determined by how much debt you have as compared to what available credit you have, as well as what your total current debt is. So, if you tend to max out your personal lines of credit, this portion of your score will be affected negatively. Alternately, if you only hold a few lines of credit and tend to pay most, or all, of your balances off monthly - the effect will be positive.

3. The final one-third is a tabulation of three different factors. How long of a credit history you show; the amount of recent credit you've applied for; and what types of credit are in your history. Of these three, the length of your credit history has the heaviest weight. Those who have already established a long history of borrowing and repaying what they owe are looked on as a more favorable credit risk. Secondary to your credit history length is how many recent applications for credit you have. The higher the number, the lower the score. Lastly, the types of loans you've carried will show your overall spending practices and your consistency in repaying those loans.

Once your score is reached and given to prospective lenders, it is the primary; and in some cases, the only, factor that is used in deciding what interest rate to charge you. Therefore, the higher your score, the less money you will spend overall in any loan you receive. Interest rates can increase the base amount borrowed by a somewhat insignificant number up to a very significant number that is translated into dollars out of your bank account.

Also, credit reporting agencies are not always accurate. You should definitely acquire a copy of your credit report to search for inconsistencies and untruths. If you find any, you can dispute them with the reporting agency.

To save the most money you can whenever applying for any type of a loan; be sure you have the knowledge on how your credit worthiness is scored and that the information they have is absolutely correct.

Finding Solutions To Debt

noreply@blogger.com (Bob Johnsen) — Fri, 13 Oct 2006 23:55:00 +0000

Many of us have debt problems, but one thing is for sure, not a lot of us have debt solutions. And even if we did, it wouldn't necessarily mean that one person's solutions would work for another.

With that said, there are still some ways that we can all understand and work towards solving our debt problems.

We need to understand debt before it becomes an unnecessary burden, weighing us down and choking the very life out of us. Some debt is okay to accumulate, and we refer to this as "good debt".

Going into debt with your first mortgage might seem like a lot of debt for instance, but it's a move towards completely owning a major real estate asset. Other good debt includes borrowing for an education. Sometimes this kind of debt can get out of hand and into the area of $30,000 or more. It's important to weigh your future earning potential against your future debt burden before you begin or continue.

Other debt should be avoided at all costs. Credit card debt, for example, typically has high interest rates and low monthly minimum payments. This way, you'll be mired in debt for the next 40 years. When spending on lines of credit, credit cards or on a loan, make sure your purchases are adding value to your life. For instance: renovating your house increases the value of your property when you sell, so this is a good option. Or, purchasing a reliable vehicle for a new job in which you will be required to drive is another smart move. Avoid accumulating debt for meals, clothes or vacations that won't help you in the long run.

Having a budget is the most important debt solution. It prevents you from over-spending and can often increase the amount of money you can put toward your debt each month. Track how much you are spending by writing down all the payments you will need to make in a month.

Example:

Gas: $200
Groceries: $400
Utilities: $200
Mortgage: $600

After that, compare all the spending you are required to do to how much money you earn in the month. Chances are there will be a nice chunk of money left over. That's the money you spend every month on things you don't need or on entertaining yourself. Lots of times, we don't even remember what we spend this money on. The next step is to a lot yourself a portion of that money for monthly spending. Part of the remaining amount can be set aside for emergencies and part of it can be put against the debt you owe.

If you have multiple debts, concentrate on paying down one debt at a time. Start with the debt that has the highest interest rate and continue to make minimum payments on the others. Put as much money as possible onto that debt and when it is gone move on to the debt with the next highest interest rate. You should never make only minimum payments on all of your debts. It will take you years to pay them all off with thousands of added dollars in interest.

If you feel like you can't get out of debt on your own, visit a financial institution or talk to a credit counselor. They can help you with more structured options.

Practical budgeting can help you pay off your debt

noreply@blogger.com (Bob Johnsen) — Mon, 02 Oct 2006 20:38:00 +0000

Many people want to pay off their debt quickly and efficiently and yet most people end up making payments on debt for their entire lives. Well, there is a reason why this happens. The debt systems that are in place are designed to make lenders money and to make money lenders need consumers who are willing to pay off their debt with added interest. So, already consumers are at a disadvantage. Luckily, there are some practical budgeting techniques that can help us all keep things on track.

1. It is important that you have a budget. This can be very complex or very simple and basically compares earning against anticipated expenses. If you can allot money for various items, such as groceries or gas, you can control how much you are spending on purchases we don't often measure. That way you can avoid spending money when it is not needed and you will end up with cash in your pocket. Plus, you will need to develop good spending habits.

2. Balance transfers can be a good thing. Transferring high-interest debt on to low-interest credit cards or lines of credit can lower your monthly payments and save you money, leaving you extra money to pay against your debt. There are some pitfalls to be aware of though.

- Once their credit cards are empty, many people will continue to charge on the new card and increase their debt load even more
- Only transfer your balance if you can control your spending on the new card; you should avoid increasing your debt load

3. Check your credit report regularly. You are entitled to one free copy each year from each credit bureau and this can help you keep your credit report free of any errors or inaccuracies.

4. Another good habit to start is talking to your creditors. As convenient as avoidance sounds, it's not a good idea. They can help you negotiate a lower interest rate or extend the loan so that you can pay them back.

5. If you use store cards, pay them off each month. Often the discount associated with the cards is less than the interest you'll pay if you maintain a balance.

6. Consider creating an emergency fund for you and your family. That way all of your money won't be tied up in bill payments and debt and if something unexpected happens, you won't have to charge it to credit. You can start with as little as $10 a month.

7. Pay with cash as often as possible. It is more tangible than credit or debit cards and you will be aware of how much you are spending.

8. Avoid making late payments as often as possible. Late payments can affect your credit rating and you can also be charged by your credits with extra interest or a flat fee.

9. Determine how much extra money you can afford to contribute to your debt. It will be paid of much quicker and save you thousands of dollars. Never make the minimum payments.

If you follow these simple concepts, your finances will be organized in no time.

Envelope Budgeting and Utilizing it in a Cashless Society

noreply@blogger.com (Bob Johnsen) — Sat, 30 Sep 2006 02:54:00 +0000

Envelope budgeting has been around for a very long time. Even if you've never used it personally, you probably recall your mother - or even your grandmother - tucking cash away in individual envelopes each payday. Unfortunately, in today's mostly cashless society, envelope budgeting is simply not as effective as it once was. However, with some planning, it can still be used to assist you in keeping to your personal budget.

Let's begin with Envelope Budgeting 101. The concept is easy - you take a stack of envelopes and write a spending category on the front of each one. They might look something like this:

1. Mortgage/Rent
2. Utilities
3. Gas
4. Groceries
6. Entertainment

You may have more categories - it's your budget, so you get to label them however you want. Once you've separated your finances by expense type, you figure out how much you are allowed to spend in each, and you put the corresponding dollar amount in the correct envelope. If you go to the movies, you pay for it out of the entertainment envelope. When you run out of entertainment money; you're done until the next month, when you get to fill up the envelope again. It's a nice system and definitely helped many a family stick to a fixed spending limit.

If you're comfortable carrying cash around with you, it can still work exactly as outlined, however, if you're like most people and rarely even have a dollar bill on you, it's time to revamp the envelope budget. This can be done in a couple of different ways.

You can create a spreadsheet, or chart, with each of your expense categories in a separate column, and beneath it the total dollar amount you're budgeting for the month. When you pay your rent, deduct that from the rent column. When you go out to dinner, save the receipt, and deduct that from the entertainment column. If you're religious about saving receipts and recording your expenditures when you make them, this system will work quite well. When you've used all your allocated funds in one area, you are out of funds until the following month.

Another option is a mixture of the two. You can use the chart/spreadsheet for fixed payments, such as your mortgage, and other normal house expenses, such as utilities. Then you can use the envelopes for entertainment, groceries, gas, etc. There are benefits to this - where most people fail on their budget isn't the fixed expenses, but the fun ones, like buying clothes or going out to dinner. By having the cash already set aside, when it's spent, you have an empty envelope - can't get much more of a visual reminder that you're out of cash!

With some tweaking, and self-control, envelope budgeting can still be an effective tool in managing your money. Regardless of what type of budget you use, be sure to be honest about your income and expenses so you don't end up in the red at the end of the month.

Credit Card Debt Consolidation

noreply@blogger.com (Bob Johnsen) — Fri, 29 Sep 2006 00:27:00 +0000

If you're like most people, you have a credit card or two (or ten) in your wallet. You use them for gas, for entertainment, for travel, and for groceries. Unless you're avid about paying off your balances each month, you also have credit card debt. If you're one of the multitudes of people in this dilemma, and you're ready to do something about it, there is some information you need to know.

Are you aware of the Universal Default Clause? This clause allows your credit card issuers to raise your interest rate if you default, or even have a late payment, to another creditor. That's right! Even if your credit with company "A" is top notch, if you were late on a payment to company "B", then all of your other credit card issuers can raise your interest rate. Unfortunately, that's not it - they can also hike your rate if you have a high balance or charge up another line of credit.

It's no wonder so many of us are facing a bleak future with our debt. Luckily, there are choices to assist you in changing the landscape of your financial future. To begin with, consider getting another credit card. Seriously! Shop around - many cards offer low to zero percent interest rates for new customers. Make sure the offer includes transferring existing balances, and if they do, you can consolidate your high interest debt into a lower, easier to pay off, interest card.

If this isn't a possibility for you, or if you prefer to go a different route, consider looking into a debt consolidation loan. The basic thrust is you take out a loan for the total of your credit card debt, pay off your existing balances, and then have one payment per month at a lower annual percentage rate. There are three types of loans to look at if you're considering this option. You can refinance your house, take out a home equity loan, or apply for a personal loan. Do some research and then contact your bank's loan officer or a mortgage broker to get the details.

Another possibility is picking up your phone and talking to each credit card company. They may reduce your interest rate or even lower your payoff amount. Don't rule this option out before you give it a try - after all, they'll get far less, if any, if you decide to declare bankruptcy. You could also give a credit card debt consolidation agency a try. Their job, usually for a small fee, is to reduce your debt with each credit card issuer and arrange for lower interest payments. Just be sure the company you choose is legitimate, otherwise you could end up in a worse financial mess.

While credit card debt can seem like an endless cycle of despair and worry, it doesn't have to be. Be honest with your situation, make a solid plan, and follow it to financial success.

Bankruptcy and Debt - Is it right for you?

noreply@blogger.com (Bob Johnsen) — Thu, 28 Sep 2006 02:46:00 +0000

Bankruptcy - it's a scary word, isn't it? In a way, that's good, because anything this serious should be a little scary. In the best of all scenarios, no one would have to declare bankruptcy; they'd be able to find a manageable solution to their financial distress without this final blow to their self-esteem. Sometimes, however, there truly is no other workable solution. There are a lot of reasons why someone may be driven toward bankruptcy. They could have unexpected medical bills, overwhelmingly large credit card debt, suffered a job loss, or just gotten divorced. Life is rough and sometimes it deals us a hand we have no choice but to play out. If this is you, educating yourself on the basics of bankruptcy is the first step you need to take.

For personal bankruptcy, there are two types - which one you choose will highly depend on your individual circumstances and needs.

1. A Chapter 7 Bankruptcy is the liquidation of all of your assets in order to pay your creditors; after which, you are then discharged from most, or even all, the debt you claimed in the bankruptcy. Under court supervision, your assets will be collected and sold, and the cash is then distributed among those you owe money to. You do have rights to retain various properties if they fall under certain exemptions; such as your house, your car, etc. However, the rules for these exemptions are strict. If you have a lot of equity in your home, or if it is worth a lot, it probably won't fall into an exemption category. If this is the case, a Chapter 7 bankruptcy may not be right for you.

2. A Chapter 13 Bankruptcy allows you to keep valuable assets you may wish to retain that do not fall under any of the exemptions in a Chapter 7 bankruptcy. However, in order for this to happen, you must create a repayment plan to pay off most, or all, of your debt to your creditors. These payments generally are on a monthly basis and range from 3 to 5 years in length. By filing a Chapter 13 bankruptcy, you are protected from any collection activities whatsoever, as long as you abide by the plan. Miss even one payment, however, and the court will dismiss your case.

Both types of bankruptcy will show up on your credit report; however, a Chapter 13 bankruptcy can only appear for a total of 7 years - just like any other damaging information (such as late payments). A Chapter 7 bankruptcy will be on your credit report for at least 10 years. Take this into consideration, as well, when deciding which type of bankruptcy will work best for your situation.

Deciding to declare bankruptcy is difficult for everyone. If this is the decision you've made, consult with an attorney to make sure you have the most up to date information that will apply to your finances. A bankruptcy attorney will know all the variances to the laws - particularly for the state you live in - how they may affect you, and will give you the assistance you need to have.

Budgeting Techniques to Reduce Debt

noreply@blogger.com (Bob Johnsen) — Tue, 26 Sep 2006 03:09:00 +0000

Reducing debt can be a mind boggling experience. When all you see is your dwindling bank account - with no end in sight, how do you go about clearing a path to debt reduction? With a little knowledge and a concerted effort, anyone can begin creating a budget to reduce their overall debt.

Stop adding debt upon debt. Sure, this sounds simple, but it's of paramount importance that you quit accruing debt and that you quit it now. Use cash for your purchases, not your credit cards. Ignore pre-approved credit catalogs when they pop up in your mail. The bottom line is; if you can't pay cash, you don't buy it. Period.

Figure out how much you pay per month total for all of your expenses. This includes rent/mortgage, car payments, car/home insurance, utilities, credit card debt, other personal loan debt, food, gas, internet, cable television, clothes, eating out, and entertainment - literally everything. Now, determine your total income. Subtract this total from your monthly income total. How does it look? Are you comfortably in the positive or barely? Or are you in the negative?

If you're barely in the positive, or if you're in the negative, it's time to reduce your overall expenses. What are you willing to get rid of? Be ruthless and red line extraneous expenses out of the picture. You can also shop around for better telephone rates, cell phone rates, and insurance rates. Make changes where you can.

Phone your credit card companies and try to get your interest rates reduced; sometimes they're even willing to negate past due and over the limit fees. Your goal here is to reduce your overall debt from your credit lenders. See if you can refinance your home for a lower interest rate. Be relentless in searching for better deals.

Pay your highest interest rate debt first, over the minimum if you can, by as much as you can. When that one is paid off, do the same with your next highest interest rate debt. This is called Accelerated Debt Payoff, and it works extraordinarily well in reducing debt fast.

If your paycheck isn't already automatically deposited into your bank account, set that up. You're less likely to take cash out if you're not going to the bank to deposit it yourself. Set up a maximum of how much you can withdraw per pay period - and stick to it.

When you have to make a purchase; take the time and search for sales and discounts. Check internet auction sites and your local paper for gently used items to save even bigger bucks. Be a smart shopper and look for the best quality for the lowest amount out of your pocket.

If necessary, find ways to increase your income. Work a few extra hours at work; get a second job; capitalize on a skill you have (such as baking, automotive repair, computer technology) in your community, or even have a garage sale.

Make the decision now to adhere to a budget that includes some, or all, of the above techniques and you will succeed in reducing your debt to a more manageable level. The next step? Eliminating it completely so you can have a solid financial platform to build your life upon.

Accelerated Debt Payoff or Debt-Stacking

noreply@blogger.com (Bob Johnsen) — Sun, 24 Sep 2006 16:07:00 +0000

If you're attempting to pay off your debt by sending slightly more than the minimum to each of your lenders per month, you're probably getting frustrated at how slowly the balances are dropping. Guess what? You can make a huge difference in shortening that payoff time, as well as paying far less interest, by making one important change. It's called Accelerated Debt Payoff - also known as Debt-Stacking - and it's a proven method of retiring your debt in a quick and speedy method. How does it work? Read on...

First, determine what you're currently paying, in total, toward debt per month. Once you have that figure, rank your debt from the highest interest rate to the lowest interest rate. Simple so far, right? It gets easier! Now, you pay the minimum only, not one dime over, to every debt you have EXCEPT for the one with the highest interest rate. For that debt, you pay the minimum plus whatever you have left from that total sum you figured out earlier. You continue to do this each and every month until your highest interest rate debt is paid off. When that happens, you apply the savings you now have from the paid off debt to the next highest interest rate debt on your list - and so on, and so on. Before you know it, you'll be debt free.

Why does this work? You are focusing all your extra money on one debt at a time instead of spreading it out over all of them. By targeting the highest interest rate debt, you're erasing your most expensive liability quicker. As each debt gets paid, and you have accumulated savings to continue to apply, each successive debt is wiped out faster than the one before. You'll be happily surprised at how expedient this process is!

Don't worry if you've already consolidated all of your debts into one big loan. You should still be able to do this, to a certain degree. As long as your monthly payment for the consolidated loan is less per month than your individual payments were combined, you can make this work. Take a bit of what you're saving, and apply it to the consolidated loan payment to see a quicker payoff and less interest paid overall. For example; let's imagine that your total debt payments before the consolidation came out at $250.00, and your consolidation loan payment is $135.00. You have a savings of $115.00, and even adding a miniscule $10.00 on per month will make a surprising difference in long term payoff time and interest savings.

With this knowledge, you can now apply the money you were already spending in a more effective manner. Which means each dollar you spend toward debt becomes far more valuable and works that much harder for you.

Let's face it, getting out of debt can be a lifelong battle if you go at it incorrectly. Having the proper information will make all the difference in dealing with you debt in the best possible way.

How to Save Thousands of Dollars on Your Mortgage

noreply@blogger.com (Bob Johnsen) — Wed, 23 Aug 2006 03:29:00 +0000

The dream of owning a home is becoming very allusive these days. Although everyone would like to have a home that is paid for free and clear, many people are forced to assume mortgages that will be paid over 25 or 30 years into the future.

Everyone is constrained to a certain degree by their budget. Yet there is a way to pay off the existing mortgage on your home quicker and save money in the process.

Almost all mortgages have built into them an Accelerated Payment Clause. This allows the borrower to pay more than the minimum amount of the monthly mortgage payment.

To do this you simply remit more to the lender than the usual mortgage payment every month. The benefit to this is that every extra dollar paid against the mortgage will lower the outstanding balance of the mortgage. This increases the equity in your home faster over time. Also, by lowering your outstanding balance, you will save on interest charges.

Here is a good example based on the scenario of an average family.

If you are an average family of four making $50,000 a year, let us assume that you are saving annually at the same rate as most Americans. This rate of savings as reported by our government is about 4% of your income every year. This would mean that you are putting $2000.00 in the bank every year for future purposes. This comes out to around $167.00 a month.

Right now you are probably receiving less than 1% Annual Percentage Rate (APR) on your passbook savings.

Why not take $100.00 of this money that you would normally save and pay down the mortgage on your home ahead of time? The following example shows why this is in your best interest.

If you take out a mortgage on a house for $200,000 at a 6% fixed rate, and the contract calls for repayment in monthly installments over 30 years, your monthly mortgage payment would be $1,210.56.

If you paid an extra $100.00 dollars per month toward the amortization of your mortgage, you would add $1,200.00 to the equity in your home every year.

In this scenario, the total amount paid to buy your home over the life of the mortgage would be $435,798.89. When you add $100.00 to your mortgage payment every month you would save $46,360.13 in interest charges over the life of the mortgage. You would also be able to retire your mortgage earlier.

You would be able to trim 38 monthly payments off your repayment of the mortgage. So the mortgage would be paid off 3 years and 2 months sooner if you use this repayment method.

In short, what this strategy does is shift your money from passbook savings only ($2,000.00 per year), to paying $1,200.00 on your mortgage, and saving $800.00 directly into your bank account each year.

To sum up the benefits of using this method, the borrower in the example above saved $46,360.13 in interest on their loan, and accumulated $21,923.85 in passbook savings ( $67.00 per month X 1% APR X 322 months ). This equals $68,283.98 in accumulated savings over 26 years and 10 months (This is the actual time it would take to pay off the original 30 year mortgage).

If the family would have put all of their money ($167.00 per month) in a passbook savings account only, they would have accumulated $54,646.35 over the same period of time.

So this family would have actually saved $13,637.63 more by using this accelerated payment method. And they would have also paid off their mortgage 3 years and 2 months earlier than normal.

This method can be used in any situation where the mortgage has an Accelerated Payment Clause built into it. It will work best if you are consistent with the amount that you pay on your mortgage every month. Any change in the amount of monthly repayment of the mortgage will affect the amount that you will actually save.

Check with your banker to find out if your mortgage allows for Accelerated Payments. Then you can use this strategy to save a lot of money on your mortgage and own your home sooner.

Three Big Steps To Better Money Handling

noreply@blogger.com (Bob Johnsen) — Sat, 19 Aug 2006 17:49:00 +0000

With prices increasing all the time, saving money can be harder and harder to do. Here are some solutions for saving a little so that you can still meet your needs and still find ways to trim off a little for the future.

1. BUDGET – Get one and stick with it! And set aside at least a small portion for savings while you’re at it; savings for your future, your retirement, your education, your vacation, whatever. Head to your local office supply store for planning workbooks or budget sheets to use. Or head to your favorite search engine and type in, “budget planning” for hundreds of sites with articles, free downloads, tips, ebooks and other resources to help with your budget setup and follow up.

2. PLAN AHEAD – Make sure to plan for emergencies and the unexpected, like an appliance break down or garage door malfunction. Even if you can only set aside $50 or so each monthly, place it in an account and earmark it for this “Miscellaneous” fund. Then when things go wrong, and they will – nothing’s perfect – you’ll be better prepared.

3. NON-MONTHLY ITEMS – Work out a monthly payment for items that you don’t pay monthly and set this up in your regular monthly budget. For example, for items like annual home owner or renter insurance, quarterly water bills and automobile insurance payments and annual trash bills, take the amounts and determine what they would be monthly. Then list the items on your budget log and pull these amounts aside, saving them in your account for those purposes. This way, when the bills hit, you won’t be caught off guard and have to scrounge for the payments.

What works well, instead of handling multiple savings accounts for each company owed, is to use index cards and one savings account. Create one index card for each bill. Then simply log the amount you’re setting aside on the card and deposit it into your savings account. Keep the index cards with your savings passbook to remind you what the balance covers. The total of all your index cards should equal the balance in your savings account. (Make sure to create an index card for your regular funds that you are saving each month in step one above and a card for your Miscellaneous fund in step two above).

So next time you get paid, take three giant steps forward. Grab your index cards, follow your budget and invest in yourself and your future. Get a grip on your money handling.

Managing Personal Credit

noreply@blogger.com (Bob Johnsen) — Sat, 19 Aug 2006 17:47:00 +0000

The world of personal credit continues to change at a rapid rate. There are several steps consumers can take to keep a handle on their credit and not be caught off guard when applying for a loan or credit card.

Most of the recent changes in credit are a result of two things: The impact of computerization or electronic processing and government regulations.

Computerization allows credit organizations to amass and process large amounts of information, analyze it, and act on it quickly. The computerization of information has also greatly reduced the role humans play in the credit process and as a result increased the amount of incorrect information found in a credit file. Previously, consumers sat down and discussed the possibility of credit approval for a loan or credit card with another person. The loan processor would even have a role in determining the interest rate. Applicants also had the opportunity to challenge and correct information that was wrong.

Now many applications are completed online and approved or denied without talking to another human being. While convenient, it can also be frustrating because there is no one to discuss the factors the decision is based on and whether it was correct or not.

Whether this is good or bad or right or wrong can be argued, but this is the reality of credit in the 21st century. The defense for consumers is to understand how the system works and control the things within their power. All credit users should know how their actions affect their credit worthiness; how to get a copy of their credit report, how to read it and how to apply for corrections of reported errors.

Beginning in 2005 the federal government mandated that the three major credit reporting agencies (Transunion, Experian and Equifax) must provide individuals with a free copy of their credit report once a year.

Obtaining a copy of your credit report and reviewing it for accuracy is a vital step in managing personal credit. Consumers can request a copy over the internet at annualcreditreport.com; by phone at 1-877-321-8228; or by mail by sending a request to Annual Credit Report Request Service, PO Box 105281, Atlanta GA 30348-5281.

Take the time to review every item listed to make sure it belongs to you. If any errors are found, follow the instructions given for corrections. Reviewing these reports can be confusing, but it is time well spent in the process of managing your credit. It is also important to know that the reports from the three agencies may not contain the same information. One strategy in reviewing the three reports is to compare the information in each of the reports to see where they don't agree. This is a good way to find errors.

The other factor that can affect personal credit is government regulations. These can be local, state or federal. A recent change at the federal level impacted every person who has a credit card and does not pay off the balance each month. The government increased the minimum amount credit card companies must charge each month. So, the amount due every month went up and consumers didn't do anything different. To impact these changes consumers must be informed of the proposed regulations and communicate with government representatives.

Understanding all of this and taking action to manage it is not easy, but is necessary if consumers do not want to be at the mercy of a system that may not be accurately reflecting their true credit worthiness.

Build Wealth Fast with a Powerful Personal Financial Plan

noreply@blogger.com (Bob Johnsen) — Fri, 11 Aug 2006 01:26:00 +0000

Accounting for your own personal finances is the first step toward building lasting wealth. It is essential to know the amount of your Owner's Equity before you can start to develop a good financial plan.

Once you know what your assets are, and you know what your liabilities are, then you can calculate your Owner's Equity. Then you can develop a financial plan to reduce your debt and achieve your financial goals.

Here is the Generally Accepted Accounting Principles (GAAP) accounting equation:

Assets = Liabilities + Owner's Equity

Let's start with the right side of the equation. First, you must calculate the amount of your outstanding liabilities. This means you write down in a list exactly how much you owe right now on your mortgage, credit cards, and any other bills or loans.

Next, let's go back over to the left side of the equation where the assets are. Make a list of every asset you own. Examples would be your cars, home and cash you have in the bank. List all of your major assets.

Now we will determine your Owner's Equity. Simply use this variation of the preceding equation to arrive at your present Owner's Equity (how much you really own):

Assets - Liabilities = Owner's Equity

If you want to increase your Owner's Equity you must pay down your liabilities and avoid borrowing more money to buy more assets. Responsible saving, investing and proper paying down of your debts is crucial to your financial success.

Most experts agree that you need to allocate money every month for all these areas of your financial plan. It is not enough to just save some money in the bank. Because if you are carrying a credit card balance at the same time, you are losing all the benefits of the interest coming from your savings account.

Here is an example of a good financial plan:

1. Take the money that you are presently putting in your savings account every month or investing in other places and divide the total amount by 3.

Then,

2. Pay down your outstanding debts with one third of this money every month.

3. Take one third of this monthly allocation and simply place it in your savings account at your bank. This will be the pool of money you can use to balance out your monthly needs. As this money grows over time you can use it to finance your family's future needs or apply it to the goals of your financial plan.

4. Use another one third of this money and buy 1-5 year Certificates of Deposit. It is best to save up enough money to buy a CD of $1000.00 every time you invest. A good rule of thumb is to buy one CD every three months to six months. Remember to keep enough cash in your checking and passbook savings for any emergency.

By adhering to these tips you will pay off your liabilities in a timely manner. When you invest in 1-5 year CDs you will be earning interest and compounding your money by purchasing more CDs at specific intervals.

The biggest roadblock to financial success is accumulating a large credit card debt and not paying it off as fast as possible.

It is also recommended that when you have enough money saved up in your regular savings account, you begin to accelerate your mortgage payments every month. Check with your mortgage lender to see if your mortgage allows you to pay more per month than your regular payment. If so, start to pay more every month on your mortgage than you are required to. You will build equity in your home faster, save on interest charges and retire the mortgage much sooner.

By using a proven financial strategy such as this one you can reduce your debt faster, and build wealth for your family quickly. The above steps are by no means the only way to build wealth. These principles are basic and necessary though. Your family can be on the way to a brighter financial future when you prioritize your spending, saving and investing habits. After all, it's your money; why not put it to its best use!

Automobile Financing - Know Your Options

noreply@blogger.com (Bob Johnsen) — Fri, 11 Aug 2006 01:23:00 +0000

You’ve found the car that makes your heart race by 120 beats per minute. Now only one thing stands between you and the car of your dreams: financing the purchase. In a perfect world, you’d pay the full price in cash without blinking. But if you’re like the seven out of ten car and truck buyers who don’t live in a perfect world, chances are you’d be paying for your car through one of several financing schemes.

Understanding the basics of each car financing option is key to choosing the automobile financing strategy that best suits your situation. Here is an overview of auto financing options that may be available to you.

Auto Loans from Lending Institutions

You can get a car loan from a bank, credit union, or other lending institutions. The car that you purchase will serve as collateral for the auto loan. This means that the lender can repossess your vehicle if you default on the car loan. Auto loans are a popular car financing option because they generally offer reasonable interest rates and are relatively easy to get.

Two factors are likely to affect the total cost of the car loan. One is the term or duration of the loan. Generally, the longer the term of the loan, the lower your monthly installment will be. But you’ll end up paying more towards interest and this will increase the total cost of the auto loan. If you can afford it, get a short-term loan. Your monthly installment will be higher, but you’ll be paying less money over all. The second factor that may affect the total cost of your car loan is your credit rating. Creditors with less-than-stellar credit history are usually charged a higher interest rate because of the elevated credit risk.

Dealer Financing

Like traditional auto loans, dealer financing is reasonably easy to get. Most dealerships have relationships with numerous lending institutions, so they can arrange car loans even for car buyers with blemished credit histories. To compete with traditional bank loans, many dealerships offer zero percent or very low interest on dealer loans. However, such loans are available to car buyers with stellar credit ratings. Consumer experts advise car buyers to get pre-approved on an auto loan from a bank or credit union before approaching the dealership for possible financing. By getting loan pre-approval from another lending institution, a car buyer gets the upper hand when bargaining for a lower rate on a dealer loan.

Home Equity Loans and Home Equity Lines of Credit

If you own a home and have accumulated substantial equity on your property, then you may consider getting a home equity loan or a home equity line of credit. Home equity loans are fixed or adjustable rate loans that you repay over a predetermined period. Home equity lines of credit are open-ended, adjustable-rate revolving loans with a maximum credit limit based on the equity of your home. Home equity loans tend to have lower interest rates than credit cards and other types of personal loans. Interest payments on home equity loans may also be tax-deductible up to a certain extent. Home equity loans and home equity lines of credit use your home as collateral, so make sure you are financially capable of paying the monthly installments if you don’t want run the risk of losing your home.

Credit Cards

A credit card advance or credit card draft from your credit card company can help you drive your dream car home. Like home equity lines of credit, credit card advances or credit card drafts are revolving lines of credit with variable interest rates. To entice existing customers to avail themselves of credit card drafts, credit card companies waive cash-advance fees, guarantee low rates during the initial period of the loan, or offer high credit limits. However, because credit card drafts are unsecured, they generally have higher interest rates than home equity loans, traditional auto loans or dealer loans. Financing your auto purchase through credit cards could also leave you vulnerable to hefty penalty charges if you make a late payment or exceed your credit limit.

Automobile Financing - Know Your Options

noreply@blogger.com (Bob Johnsen) — Thu, 27 Jul 2006 11:29:00 +0000

You’ve found the car that makes your heart race by 120 beats per minute. Now only one thing stands between you and the car of your dreams: financing the purchase. In a perfect world, you’d pay the full price in cash without blinking. But if you’re like the seven out of ten car and truck buyers who don’t live in a perfect world, chances are you’d be paying for your car through one of several financing schemes.

Understanding the basics of each car financing option is key to choosing the automobile financing strategy that best suits your situation. Here is an overview of auto financing options that may be available to you.

Auto Loans from Lending Institutions

You can get a car loan from a bank, credit union, or other lending institutions. The car that you purchase will serve as collateral for the auto loan. This means that the lender can repossess your vehicle if you default on the car loan. Auto loans are a popular car financing option because they generally offer reasonable interest rates and are relatively easy to get.

Two factors are likely to affect the total cost of the car loan. One is the term or duration of the loan. Generally, the longer the term of the loan, the lower your monthly installment will be. But you’ll end up paying more towards interest and this will increase the total cost of the auto loan. If you can afford it, get a short-term loan. Your monthly installment will be higher, but you’ll be paying less money over all. The second factor that may affect the total cost of your car loan is your credit rating. Creditors with less-than-stellar credit history are usually charged a higher interest rate because of the elevated credit risk.

Dealer Financing

Like traditional auto loans, dealer financing is reasonably easy to get. Most dealerships have relationships with numerous lending institutions, so they can arrange car loans even for car buyers with blemished credit histories. To compete with traditional bank loans, many dealerships offer zero percent or very low interest on dealer loans. However, such loans are available to car buyers with stellar credit ratings. Consumer experts advise car buyers to get pre-approved on an auto loan from a bank or credit union before approaching the dealership for possible financing. By getting loan pre-approval from another lending institution, a car buyer gets the upper hand when bargaining for a lower rate on a dealer loan.

Home Equity Loans and Home Equity Lines of Credit

If you own a home and have accumulated substantial equity on your property, then you may consider getting a home equity loan or a home equity line of credit. Home equity loans are fixed or adjustable rate loans that you repay over a predetermined period. Home equity lines of credit are open-ended, adjustable-rate revolving loans with a maximum credit limit based on the equity of your home. Home equity loans tend to have lower interest rates than credit cards and other types of personal loans. Interest payments on home equity loans may also be tax-deductible up to a certain extent. Home equity loans and home equity lines of credit use your home as collateral, so make sure you are financially capable of paying the monthly installments if you don’t want run the risk of losing your home.

Credit Cards

A credit card advance or credit card draft from your credit card company can help you drive your dream car home. Like home equity lines of credit, credit card advances or credit card drafts are revolving lines of credit with variable interest rates. To entice existing customers to avail themselves of credit card drafts, credit card companies waive cash-advance fees, guarantee low rates during the initial period of the loan, or offer high credit limits. However, because credit card drafts are unsecured, they generally have higher interest rates than home equity loans, traditional auto loans or dealer loans. Financing your auto purchase through credit cards could also leave you vulnerable to hefty penalty charges if you make a late payment or exceed your credit limit.