If you can, you will quickly find that the greatest rate of return you will earn is on your own personal spending. Being a smart shopper is the first step to getting rich. ~ Mark Cuban
Wednesday, March 23, 2011
Tuesday, March 22, 2011
What the HECK Is A HELOC?
If you want to consolidate debt and have done any research you may have heard the term HELOC, but what is it? The acronym HELOC stands for home equity line of credit. A HELOC is an open ended line of credit similar to a credit card, however a piece of real estate, typically your primary residence is used as collateral. HELOCs are powerful financial tools and can be great for debt consolidation but there are some things to be aware of when using them. Please keep in mind that the following statements are about HELOCs in general, each one is different and specifics will depend on the terms of your particular loan and the bank who provides it for you.
Interest Only Payments
One thing to keep in mind with a HELOC is your minimum payment. Typically the minimum payment is interest only which can be great because it gives you flexibility, for example lets say you have a HELOC and you pay $500 each month. If the interest is only $100 that would be all you are required to pay, so if something came up one month you can pay less than you typical $500 one month and not worry about any negative credit impact. The downfall is that if you become accustomed to only paying the minimum payments you will never pay the loan off.
Variable Interest
Another advantage to a HELOC is that they typically offer the lowest interest rates of any loan product at any given time. However, they are usually variable. We are currently seeing the lowest interest rates in history so which direction do you think rates will go in the future (Hint: the answer is not down). Usually the interest rates on a HELOC have to rise quite a bit to get to the rates that your credit cards or other loans are at, but keep in mind that your interest rate will most likely fluctuate.
Early Closure Fees
HELOCs typically have the highest early closure penalties of any loan product on the market. It is usually a percentage of the total limit of your credit line. Just because you pay your line off does not mean you have to close it, but keep the fees in mind if you don't plan to live in your house for very long. Typically the bank will require you to keep the line open for about 3 years.
As I said earlier, a HELOC can be a great tool to use in consolidating your debts or even to make large purchases, but as with every financial decision do your research and make sure it makes sense for you and not get you into trouble.
Interest Only Payments
One thing to keep in mind with a HELOC is your minimum payment. Typically the minimum payment is interest only which can be great because it gives you flexibility, for example lets say you have a HELOC and you pay $500 each month. If the interest is only $100 that would be all you are required to pay, so if something came up one month you can pay less than you typical $500 one month and not worry about any negative credit impact. The downfall is that if you become accustomed to only paying the minimum payments you will never pay the loan off.
Variable Interest
Another advantage to a HELOC is that they typically offer the lowest interest rates of any loan product at any given time. However, they are usually variable. We are currently seeing the lowest interest rates in history so which direction do you think rates will go in the future (Hint: the answer is not down). Usually the interest rates on a HELOC have to rise quite a bit to get to the rates that your credit cards or other loans are at, but keep in mind that your interest rate will most likely fluctuate.
Early Closure Fees
HELOCs typically have the highest early closure penalties of any loan product on the market. It is usually a percentage of the total limit of your credit line. Just because you pay your line off does not mean you have to close it, but keep the fees in mind if you don't plan to live in your house for very long. Typically the bank will require you to keep the line open for about 3 years.
As I said earlier, a HELOC can be a great tool to use in consolidating your debts or even to make large purchases, but as with every financial decision do your research and make sure it makes sense for you and not get you into trouble.
My Weekend of Savings
The reason for the long delay between posts is because I went on a little weekend get away with the family. Even when I am vacationing I can't stop thinking about money (It's both a gift and a curse). Anyway, I couldn't wait to get back and tell you about my deal. I stayed at a 4 star Hilton Hotel in a major city for $40. Yes 40 bucks.The standard rate for the room was almost $200. So how did I do it? You've seen the commercials for "unpublished rates" every travel site has them and let me tell you they really can save you lots of money.
Whats the catch? The answer is simple. You find a deal and reserve the room, but you don't know where you are staying until the reservation is booked, and there is no cancellation.
WHAT!?!?!?!?
I know, I know, calm down. Here's what makes it great. You do get to specify the neighborhood, the star rating, the room type and the amenities the hotel offers. So ask yourself, with all of that information out in the open, what difference does the brand make? Plus, the gamble is kind of exciting.
And, its not just hotels...
Once I booked a rental car for a vacation in Florida with one of these deals. I got a full size car through Hertz for $11/ day.
The moral of the story is there are a lot of great deals out there, you just have to find them. So next time you are traveling and feeling a little crazy give it a try
Whats the catch? The answer is simple. You find a deal and reserve the room, but you don't know where you are staying until the reservation is booked, and there is no cancellation.
WHAT!?!?!?!?
I know, I know, calm down. Here's what makes it great. You do get to specify the neighborhood, the star rating, the room type and the amenities the hotel offers. So ask yourself, with all of that information out in the open, what difference does the brand make? Plus, the gamble is kind of exciting.
And, its not just hotels...
Once I booked a rental car for a vacation in Florida with one of these deals. I got a full size car through Hertz for $11/ day.
The moral of the story is there are a lot of great deals out there, you just have to find them. So next time you are traveling and feeling a little crazy give it a try
Thursday, March 17, 2011
How to "Rebuild" your credit
There comes a time in every one's life when we just can't seem to make ends meet. There are also times Murphy's law smacks us in the face. Let's face it, bad things can happen to good people. Sometimes those bad things can have a negative impact on your financial situation and your credit. When something bad happens, whatever the situation may be, it can feel like you will never be "credit worthy" again. The good news is you can get back on track by following a few simple steps.
Get Current on Your Bills
This article is assuming that you are recovering from your "financial disaster" so I am not going to spend a lot of time on this section. It deserves a post of its own so I will work on it. However, it is important to keep in mind that it will be difficult to "rebuild" your credit if you can't pay the bills you already have, so if you are behind do whatever it takes to get current.
Check Your Credit Score
Go online and find a site where you can get a credit report and a credit score. Getting a credit score will give you a starting point. Sign up for a program where you can monitor your credit every month. Most of the credit monitoring services will also give you tips on how to improve your score. Follow them. I've seen clients increase their credit scores dramatically within just a few months by simply following the tips.
Get a Secured Loan or Credit Card
This may sound crazy, but the only way to build good credit is to borrow some money and establish a good payment history. The hard part is that most banks won't lend you money if you have a poor credit score. A secured loan or credit card is the way around that. The way it works is simple. Save some money, put it in a savings account and then use the savings account as collateral for your loan. I have seen banks issue secured cards for as little as $300 in collateral, term loans usually require about $1000. The most important thing good payment history and some banks will consider a good payment history with their institution enough to issue you unsecured credit or give you lower rates on loans in the future. Usually small banks or credit unions are easier to deal with when you are trying to rebuild or establish credit.
Monitor Your Progress
Use your credit monitoring tool to track your progress until you are satisfied with your credit score. It's even a good idea to use the tool going forward to keep your score at the level you want, but the fun part is watching your score grow every month because of your hard work.
Get Current on Your Bills
This article is assuming that you are recovering from your "financial disaster" so I am not going to spend a lot of time on this section. It deserves a post of its own so I will work on it. However, it is important to keep in mind that it will be difficult to "rebuild" your credit if you can't pay the bills you already have, so if you are behind do whatever it takes to get current.
Check Your Credit Score
Go online and find a site where you can get a credit report and a credit score. Getting a credit score will give you a starting point. Sign up for a program where you can monitor your credit every month. Most of the credit monitoring services will also give you tips on how to improve your score. Follow them. I've seen clients increase their credit scores dramatically within just a few months by simply following the tips.
Get a Secured Loan or Credit Card
This may sound crazy, but the only way to build good credit is to borrow some money and establish a good payment history. The hard part is that most banks won't lend you money if you have a poor credit score. A secured loan or credit card is the way around that. The way it works is simple. Save some money, put it in a savings account and then use the savings account as collateral for your loan. I have seen banks issue secured cards for as little as $300 in collateral, term loans usually require about $1000. The most important thing good payment history and some banks will consider a good payment history with their institution enough to issue you unsecured credit or give you lower rates on loans in the future. Usually small banks or credit unions are easier to deal with when you are trying to rebuild or establish credit.
Monitor Your Progress
Use your credit monitoring tool to track your progress until you are satisfied with your credit score. It's even a good idea to use the tool going forward to keep your score at the level you want, but the fun part is watching your score grow every month because of your hard work.
Wednesday, March 9, 2011
Resources
I was thinking today. Eventhough a great deal of what I know about personal finance has come from trial and error through time in the industry, a lot of what I have been talking about comes from some of my favorite books. So I thought it might be helpful to give you a list of some of my favorite books and authors to take a look at. The previous 2 post contain some of my personal favorites.
Here are a few of my favorite books
Here are a few of my favorite books. I want to disclose that I am in no way affiliated with Dave Ramsey or his organization. I just think that his message is great and his books have the power to Change Your Life. Check them out for yourself.
Tuesday, March 8, 2011
How to Avoid Bank Overdraft Fees for Good
If you've ever been tight on cash chances are you know how painful the sting of bank overdraft fees can be. I once overdrew my account by $11.37 and paid a $96 overdraft fee. When I questioned the charge the bank was quick to let me know that the fee was charged as a courtesy for paying my transactions. However they also said that the fee would have been the same if they had to return the transactions so it was in my best interest that they paid them. This was when I realized that overdraft fees were part of a game I didn't want to play. Here are some tips to help you avoid a similar situation.
Keep a ledger
Working with the balance you get online or at the ATM is not enough. The bank balance only shows transactions as they "post" to your account, and certain transactions cannot be seen immediately. Rather than risk the costly mistake of forgetting a tramsaction write everything down as you go and keep a running total. That way you always know how much money is available in your account.
Most banks also manipulate the order in which transactions clear your account. Most banks post transactions largest to smallest so you'll want to find out how your bank works, but again if you keep a good ledger you will always be safe because you'll always know how much cash is in your account.
Ask about Funds Availability
Some banks hold your money for a short period of time if you deposit a check. This hold allows the bank to make sure the check will clear. Always be sure to ask when your money will be available BEFORE you start spending to avoid any unpleasant surprises.
Opt Out of "overdraft coverage"
Your bank will have a fancy name for this service, and they will have a well scripted sales pitch for why you need it. The fact of the matter is, the recent finacial reform passed by congress made it illegal for banks to pay debit card transactions and charge you overdraft fees when they know you don't have funds available at the time you swipe your card, unless you give them written permission. Sure there are reasons when you might want the transactions to be paid, but for the most part I would rather have a cashier tell me my card is declined than get a $100 fee because I spent $3 more than I had in my account.
Overdraft Protection
Most banks will give you the opetion of setting up another account to cover you in case you spend to much. Common practice is to link your savings account or credit card to your checking and if you over spend the bank automatically transfers funds from the other account to cover your transactions. There is usually a fee for this service but it is always less than the overdraft fees that would accumulate if it wasn't there.
There you have it. Those are the best and easiest ways to avoid overdrafts. Keep in mind it is always best to ask how your banks overdraft policy works when you open your account. This will give you the set of rules you have to play by.
Keep a ledger
Working with the balance you get online or at the ATM is not enough. The bank balance only shows transactions as they "post" to your account, and certain transactions cannot be seen immediately. Rather than risk the costly mistake of forgetting a tramsaction write everything down as you go and keep a running total. That way you always know how much money is available in your account.
Most banks also manipulate the order in which transactions clear your account. Most banks post transactions largest to smallest so you'll want to find out how your bank works, but again if you keep a good ledger you will always be safe because you'll always know how much cash is in your account.
Ask about Funds Availability
Some banks hold your money for a short period of time if you deposit a check. This hold allows the bank to make sure the check will clear. Always be sure to ask when your money will be available BEFORE you start spending to avoid any unpleasant surprises.
Opt Out of "overdraft coverage"
Your bank will have a fancy name for this service, and they will have a well scripted sales pitch for why you need it. The fact of the matter is, the recent finacial reform passed by congress made it illegal for banks to pay debit card transactions and charge you overdraft fees when they know you don't have funds available at the time you swipe your card, unless you give them written permission. Sure there are reasons when you might want the transactions to be paid, but for the most part I would rather have a cashier tell me my card is declined than get a $100 fee because I spent $3 more than I had in my account.
Overdraft Protection
Most banks will give you the opetion of setting up another account to cover you in case you spend to much. Common practice is to link your savings account or credit card to your checking and if you over spend the bank automatically transfers funds from the other account to cover your transactions. There is usually a fee for this service but it is always less than the overdraft fees that would accumulate if it wasn't there.
There you have it. Those are the best and easiest ways to avoid overdrafts. Keep in mind it is always best to ask how your banks overdraft policy works when you open your account. This will give you the set of rules you have to play by.
Friday, March 4, 2011
thank you
Thank you all for visiting the Blog. I am glad to see that the info is helping so many people. I'm sorry I haven't posted in a while, but I am in the process of working on some great new posts. if you are intersted I also have some articles posted on ezine articles and on goarticles.com. Take a look and let me know what you think. If you have any specific topics you'd like me to write about, leave a comment to this post with what you want to see and I'l do my best.
Thanks Again For All Of Your Support
Thanks Again For All Of Your Support
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