Living under debt isn’t fun for anyone, and unfortunately, it’s a yoke that most people have become uncomfortably used to in a society build upon credit debt. There are so many sources saying that this is good credit that is bad credit and it’s hard to know if you’re in a good or bad situation. The reality is, regardless of what kind of debt you have, it’s better not having it at all. Here are some quick ways you can begin paying down those bills and get you closer to a debt free life.
Pay More Than The Monthly Minimum:
Credit card companies thrive off of interest. They don’t want you to pay off your credit card. If you have a large balance and you’re only paying the minimum, it’s likely that you’ll never pay it off. Most of you money is going strictly towards interest. Looking at the balance every month and seeing the figures either staying stagnant or climbing higher, you should start paying far more. Whatever you can reasonably afford, do it, and pay it off. You actually end up saving money in interest alone.
Downsize Your Life:
If you own a home or rent a large apartment then consider downsizing. Moving to a smaller home or apartment will save you across the board. You won’t have to pay as much in utilities and you won’t need to fill your new home with as much stuff. Of course there is the initial cost of moving but in the long run you’ll save tons and get your debt under control at the same time. If you don’t think there’s room enough in your new place for all of your old stuff, use a StorageMart to safely and easily house your things while you’re getting your finances in order.
Filing For Bankruptcy:
This is for those who are in dire straits and don’t have any other alternatives. They debt may be simply too much to control and your head’s too far under water. This is a last resort only. The most common form of bankruptcy in the United States is Chapter 7 . This is when a person is discharged of all debts. Alimony, child support, some student loans, and others aren’t covered by Chapter 7. It will relive you of the responsibility of repaying most creditors but you’ll also have to give up much of your property in order to satisfy those who are owed. Your credit will be very poor for several years and creditors will be reluctant to work with you. If they do, you’ll likely face terribly high rates of interest. As stated before, this is a last resort option.
Though these are some of the most effective ways of paying down credit debt, there are many others. You might also want to speak with a financial advisor to attain an overview of your other options, if you’re finding yourself in need of assistance. There’s always an option but nothing prevents credit debt like good sound financial practices like paying off your full balance every month and using credit in times of emergency rather than as a means of buying things you can’t afford.
For many people, family is the most important priority in their life, and it eventually they will have to make a plan in case of death or illness. With rising costs of living, mortgages, and so many are living on fixed budgets, it’s natural to try and take some of the guessing out of life. You can plan ahead, and minimize the risk to financial security by purchasing life insurance to compensate for unforeseen bills and other financial challenges, which may cause additional stress in a painful time.
There are many different types of policies that are designed to fit a wide range of needs and financial situations. When purchasing life insurance, it’s a good choice to understand most of the decision process is based on factors of need and income. There are traditionally two types of insurance: whole life and term based policies. It’s important to know the difference between the two, so you can pick the policy that best fits your needs. A whole life policy covers the holder and their beneficiaries over the entire life of the policy. Traditionally, whole life insurance is expensive, and the return is usually less than the investment. These estimates are produced by insurance companies and sometimes offer inflated rates due to industry assumptions. This doesn’t mean that whole life policies are a bad idea. They can be incredibly beneficial when individuals find themselves unprepared and underinsured.
For those planning ahead, Term Life Insurance policies offer holders more impact for a lower amount of money, which is the biggest difference between the two different types of policies. Term life policies provide coverage at a fixed rate of payment over a period of time, and in the event of a death, dependants and beneficiaries would receive payments from the insurance company. The amount paid and for how long is determinate on which policy you choose. This policy is the most popular form of life insurance, and the least costly way to provide substantial benefits in the event of death.
It’s important to consider your options before the insurance is necessary. You don’t want to put off making this choice, which may leave your family unprepared. It’s also important to realize that if you wait until there is an illness to buy insurance, the premiums are higher. This is a tough decision, but one should consider all these variables before making such a long-term investment.
The following post was written by Mike from CreditCardForum.com, which is a social media site for the discussion of credit card reviews. When it comes to credit cards, he has two primary goals: (1) to give people the knowledge they need to use them responsibly, and (2) to expose the truth about credit cards since the banks aren’t always forthcoming in explaining things.
During the recession, banks didn’t want to give credit to anyone. But now that the economy has [slightly] improved, they’re back with TV commercials and the whole nine yards, to try and convince you to apply for a new card that you probably don’t even need. One of the things they’re really pushing now is the charge card… but are they actually worth the cost?
Difference between charge card and credit card?
Some people use these terms interchangeably but they are actually two different things. A charge card requires you to pay your balance in full each month. Meanwhile a credit card allows you to carry a balance as long as you make the minimum payment.
Of course the advantage of a charge card is that it prevents you from getting in over your head, since you won’t have the option to rack up debt. But unfortunately, charge cards have annual fees since they can’t make money off the interest.
So when are they worth the fee and when should you avoid them? Here are 3 things to consider…
(1) They’re usually geared towards frequent travelers
I’m sure you’ve seen the commercials lately for the American Express Premier Rewards Gold card which – according to AmEx – is “simply brilliant.” Now I’m not denying that claim, but I don’t think this card would make sense for most people.
For starters, it’s a $175 annual fee and largely what you’re paying for with that is travel benefits. If you don’t travel frequently, it’s probably not worth it. Not even the “3-2-1” rewards program will make up for the annual fee, unless you spend a lot of money!
(2) Business charge cards are geared towards big spenders
I noticed a commercial for the AmEx Plum Card (which is for businesses only) on CNBC the other day. It’s a card that’s actually been out since 2007 but they stopped marketing it during the recession. The commercial plays up the benefits big time, but the truth of the matter is that it will only make sense for businesses that charge a lot (like $5,000 to $10,000+ per month) because the AmEx Plum Card’s annual fee is $185. Business charge cards from American Express Open can be a good match for businesses that travel extensively. For a small business that’s a lot, considering that business debit cards can usually be attained for free.
(3) For many the best card is ironically the cheapest one
You would think the best highly advertised Premier Reward Gold card would be the best value, but ironically, AmEx’s $25 annual fee Zync card appears to make the most sense for the average person in my opinion. The Zync card has the Membership Rewards program and other AmEx benefits like purchase protection and extended warranty, but its annual fee is $70 less than the Green Card, $100 less than Gold, and $150 less than Premier Rewards Gold.
I’m a huge fan of the charge card concept, because it gives you the benefits of a credit card, but without the temptation to go into debt. However I think it’s important to cut through the hype and review the benefits of all of the charge cards before you choose one. There’s simply no point in paying hundreds of dollars for benefits you will hardly ever use.
The age old argument of who are the better drivers: men or women, will never go away, but if car insurance costs and government statistics are anything to go by; then there’s only one winner.
Statistically; male drivers are responsible for the vast majority of driving offence convictions in the United Kingdom – in fact they are accountable for 92% of them, while 98% of all dangerous driving convictions can also be attributed to male drivers, so why should women bare the brunt of higher insurance costs as a result?
On average, men pay 71% more than women for their insurance policies; but there are reasons behind this, such as:
• According to the department of transport, men travel on average 4000 miles per year more than women
• 20% of the UK’s young male drivers are uninsured
• Men are more likely to be involved in expensive write offs rather than minor bumps and scrapes
• Male drivers are more likely to make fraudulent claims such as “crash for cash” scams
• Men under 21 are ten times more likely to be involved in a crash than those over 35
• Men under 21 are five times more likely to have an accident than women of the same age group
• Drivers under 25 are responsible for 20% of deaths from car accidents.
In recent years, there has been a rise in the number of specialist car insurance groups who offer cover specifically to women, however just because they offer cover to females this doesn’t mean they are always the best and cheapest options so follow these tips to save on your womens car insurance.
Find the right car for you
Generally, women don’t drive fast, petrol guzzling cars; they tend to opt for the sensible, fuel economical, small cars instead. Pick a car with a low insurance group, sites such as Parkers provide all kinds of information such as insurance groups, fuel consumption and tax bands so you can get a rough idea of what you’ll be looking to pay each year.
Use the competition to your advantage – shop around
As mentioned earlier; female specific insurance companies don’t always offer the best deals, so use comparison sites such as moneysupermarket to find the cheapest & most suitable option.
Comprehensive v TPFT cover
Third party, fire and theft used to be a lot cheaper than comprehensive cover, however now the tables have turned and you can usually get fully comprehensive insurance for a similar price or sometimes even cheaper than TPFT insurance. There are also shorter term policies available (usually 9 or 10 months) offering comprehensive cover in which you can build up your no claims bonus quicker.
Take a look at what extras are included in your policy; sometimes options such as car hire and breakdown cover are thrown in, so removing these can reduce the cost of your cover. Double check everything before you sign up to any insurance policy.
Parking & Security
If you park your car in the street at night, don’t tell your insurance company that you leave it in a locked garage, as should you have to make a claim your policy may be invalid and you may not be able to receive a payout. Always be honest about where you leave your car in the daytime and at night to ensure you are not liable for the full cost of repairs to a car that is stolen or damaged.
Don’t tempt thieves by leaving any valuables on display such as coats, phones, sat navs or laptops – and remember don’t leave them under your seat as this is the first place most thieves will look. If you have used a sat nav, remember to clear any smear marks off your windscreen – an opportunist may break in to your car just to check the glove box if there are marks on your window that indicate you use a sat nav.
Agree on mileage
Women make shorter journeys than men, so are deemed less of a risk to insurers as a result. Work out how many miles you do each year and let your insurer know; but try and keep the figure down. If you go do more miles than expected; call your insurance company and tell them to change your policy so it does not become invalid.
If you commit a motoring offence that gives you points on your licence, you won’t just pay the fixed penalty – you’ll see your insurance costs rise year on year for the duration that the points are on your licence, so think twice before answering your mobile, speeding or skipping red lights that have just changed; it really isn’t worth the risk.
Insurance companies can charge more for those with points on their licence as they have shown that they are not sensible drivers; so stick to what you were taught when you were a learner driver and watch the cost of your insurance drop.
Americans Could Lose Unemployment Benefits Soon
Americans in Debt Face Additional Hurdle
FT. LAUDERDALE, FL – On June 24th the U.S. Senate failed for the third time to act on extending unemployment benefits, which are currently set to expire in November. Although more than 1.2 million Americans will exhaust their unemployment benefits by the end of June, senators are struggling to reach a compromise. A New Horizon Credit Counseling, a nonprofit credit counseling organization, noted that those who are unemployed and in debt face an even tougher challenge with the loss of this important resource.
According to Stephen Marcus, president of A New Horizon, “Many people relying upon unemployment benefits often find that the majority of their check is spent on making minimum payments towards existing debt, such as credit card bills.” When unemployment benefits end, said Marcus, people find that they quickly become delinquent on their bills. With the unemployment rate hovering just below 10 percent, the number of Americans facing potential financial peril is staggering.
Many experts predict that the bankruptcy rate will continue to climb as jobless Americans become unable to meet their debt obligations. According to Marcus, “A New Horizon has already experienced an influx of clients who turn to their debt management services, which help consumers avoid delinquency or bankruptcy”. While A New Horizon can help its clients reduce their debt, those consumers facing bankruptcy are not alone; the number of bankruptcy filings virtually doubled between 2006 and 2009, totaling nearly 1.4 million.
Senate Democrats calling for an extension of benefits have faced tough opposition from Republicans, citing the rising national debt. Senator Olympia Snowe of Maine may be the first link to a bipartisan agreement. Snowe has asked the democrats to propose a standalone bill, rather than the previous package deals they have offered. As the end of June approaches, however, many unemployed Americans with debt will likely face a tough road.
A New Horizon Credit Counseling Services is a nonprofit credit counseling organization that has been helping consumers with credit card debt since 1978. For more information about their programs, contact 1-800-556-1548. They can also be found on the web at http://www.anewhorizon.org, or reached via email at firstname.lastname@example.org
The Roth Individual Retirement Arrangement (IRA) is a retirement savings account created by the US federal government, regulated by the IRS, with the intention of creating a tax incentive for you to save more for retirement. It was created years after the traditional IRA to please those looking to shelter future income from taxes vs current income. Here’s how it works: you open up a Roth IRA, start contributing after-tax funds, choose your investments, retire, and withdraw your Roth IRA funds tax free. That’s right. You get to withdraw your money in retirement without paying taxes. If you expect to save enough to retire on, then your account will see significant gains (earnings) over the long haul. And in a normal taxable account, you’d pay upwards of 35% in taxes for those earnings. With the Roth IRA you don’t have to pay those taxes. Nice.
Contributions to the Roth IRA are limited to $5,000 annually ($6,000 if you are older than 49). Withdrawals from your Roth IRA earnings can be made tax and penalty free at the age of 59 and a half. Keep in mind that there are income limits to those who qualify to use a Roth IRA.
Most people use a Roth IRA in combination with their 401K or company pension. Why? Well, because it has an opposite tax treatment, and thus, will give you tax diversification in retirement (i.e. pay taxes on some savings now, pay some later).
So how do you open up a Roth IRA? Well, it’s pretty easy these days. You can go to a bank, a mutual fund company, or you can pick from one of the best online stock brokers. If you’re looking to do mainly passive investing within your Roth IRA, then I suggest a mutual fund company like Vanguard. If you are going to be more of an active trader wanting to do cheap stock trading, then choose a low-cost online broker. Skip the banks, as they may be expensive and have a limited choice of funds.
Once you have your account opened, you will need to choose some investments. You can usually invest in a variety of investment types within your IRA: individual stocks, bonds, funds (index, mutual, EFTs), and more. Find an asset allocation model that fits your age and risk tolerance and choose the investments that will give you that mix.
Now that you have an account and some investments picked out, create automatic savings contributions to the account. It’s critical that you set up automatic contributions. Since this account is not tied to your employer, it’s up to you to remember to save. Creating an automatic savings plan will help to take the pressure off of trying to remember. Start small and work your way up to contributions that will get you to your annual limit of $5,000.
Have you considered a Roth IRA? What’s stopping you from opening one up today?
SCL Readers — Welcome to MyMoneyMinute! I’m Jason — thanks for stopping by to read the guest post marathon from Jon Acuff from Stuff Christians Like.
I’m an attorney from the great State of Texas, where I live with my beautiful wife and 3 dogs. MyMoneyMinute is all about “Personal Finance and all that Implies… In Minutes a Day!” I like to write about how all aspects of our lives — family, spiritual, career, politics — intertwine with and reflect our financial behaviors.
Did you know Jesus talked about money more than any other topic during his ministry? There’s a lot we need to learn about money, and none other than Jesus himself knew how entrenched it is in our daily lives.
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Editor’s Note: This is a Guest Post by a fellow blogger, Joel Ohman.
It could be argued that the lack of a formal estate plan is one of the chief concerns for many Americans who may consider themselves “average” but quite uncertain as to whether the estate planning process is for them or just “rich people”. Well, the truth of the matter is that all of us “average people” need an estate plan. From those with multimillion dollar stock portfolios, primary and secondary residences, and BMW’s, to those with a couple hundred thousand dollars in a retirement plan, a house with a mortgage, and a Kia, the necessity of a proper estate plan remains. None of us can know how many more days that God has granted us on earth before it is our time to go and whether or not you are mortgaging your health for wealth, the truth remains that you just never can know what will happen.
While I am not an attorney and nothing is this brief article should be considered estate planning advice/legal advice/personal financial planning advice/tax advice/yada yada you know the deal I do think that it would be helpful if we went through some of the basic things to understand about the estate planning process and all that it entails.
Let’s get started and if you have any questions then please feel free to leave a comment ask an attorney! Just kidding! Please leave any questions you have as a comment and one of our attorney readers can be sure to jump in.
Common Estate Planning Terminology
Here are some of the most common terms used in estate planning and if you don’t get anything else from this article then at least look over this section and learn a few new fancy terms that you can bandy about with any estate planning attorney that you decide to hire!
Decedent: The deceased (once you die then you are referred to as “the Decedent”)
Will: A written legal declaration from the decedent that explains how the decedent wants their property to be distributed (who gets what, who is in charge of seeing that certain things get accomplished, etc.)
Power of Attorney: A written legal declaration that authorizes someone else to act on your behalf. There are three different kids of power of attorney: durable, general, and special. Durable power of attorney authorizes someone to act on ones behalf when they become unable to manage their own affairs (because of physical reasons, mental reasons, etc.), general power of attorney authorizes someone to conduct business on one’s behalf, and special power of attorney authorizes someone to conduct only specific business transactions on one’s behalf.
Living Will/Health Care Proxy/Medical Power of Attorney: All of these terms basically mean a written legal declaration that specifies how one wants situations involving life sustaining care to be handled (i.e. when the plug should be pulled).
Intestacy Laws: State laws that govern how property should be distributed when someone dies without a will. To die “intestate” is to die without a will.
Executor: The person named in the will who is in charge of making sure that certain things outlined in the will get accomplished
Administrator: The person who is appointed by the probate court when someone dies intestate (and “intestate” means… let’s see if you were reading the above definitions or just skimming… to die “intestate” is to die without a will).
Trust: A written legal declaration by someone setting up the trust (called the trustor) that gives certain rights to an individual caretaker (called a trustee) to manage the property of the trust (called the corpus) in a way that is in accordance with the terms of the trust and used for the benefit of a certain individual, company, or organization (called a beneficiary). Trusts can be formed during the trustor’s lifetime (called an inter-vivos trust) or upon the trustor’s death (called a testamentary trust).
Probate Estate: The property that is distributed from the decedent by way of the decedent’s will or the state’s intestacy laws.
Federal Gross Estate: The property that is included into the calculation for determining the decedent’s property that is subject to Federal estate taxation (generally speaking that is comprised of property owned by the decedent at death, property in which the decedent had any incidents of ownership, life insurance death benefit proceeds, and certain gifts). It is worth mentioning here that a common misconception about life insurance is that since life insurance death benefit proceeds are income tax free, they are 100% tax free. This is not necessarily the case as life insurance death benefit proceeds typically are counted as part of the Federal gross estate and potentially subject to estate taxes.
Why Everyone Should Have an Estate Plan
Why is it important to do some estate planning no matter what your financial situation is? The easiest answer is to just simply say that having a proper estate plan is pretty much the only way that you can be fairly certain that your wishes are carried out even after you are dead. No doubt you have heard people complain about there being many strange laws and legal loopholes for allowing all kinds of crazy things to happen and you might have even thought the same things yourself. That being the case – why would you want to not take the proper legal precautions ahead of time rather than dying intestate and leaving your property to be doled out however your state’s probate court sees fit? Avoiding the probate process is one of the primary goals of most estate plans as probate can be a long and drawn out process that may or may not end up with the results that the decedent would have wished.
Common Estate Planning Strategies
Here are some of the most common estate planning strategies:
Creating a will
Creating a power of attorney
Creating a medical power of attorney/living will/health care proxy
Creating a credit shelter trust
Creating an irrevocable life insurance trust (ILIT)
Creating a qualified terminable interest property trust (QTIP)
There are really a bazillion and one different types of trusts and complex estate planning strategies that a qualified estate planning attorney can discuss with you.
What is YOUR Estate Planning Strategy?
What are some of the concerns that YOU have about estate planning? What types of estate planning strategies are YOU utilizing? How well prepared do you think that you would be if you were to pass away unexpectedly (Scale of 1-10 with 1 being not prepared at all and 10 being ultra prepared)?