Tuesday, April 28, 2009

5 Ways to Save Money for Your Summer Vacation

Many Americans work hard all year love and live for their summer vacations. Many Americans love to travel during the summer and family vacations usually begin during the Memorial Day holiday. The work load is usually not as high, the kids are out of school, and airline companies compete for your business.

Americans work between 10-12 hours days which is very unhealthy. We rush to work, rush to get the kids, rush home, rush to come dinner and then repeat the entire process all over again the next day. Americans actually need multiple vacations because we sometimes still do work while on vacation. We never fully take the time to relax. It may seem there are never enough hours in the day to get everything done.

We all need to take time out to relax. I am often guilty of this myself but at least once a year I plan a vacation. Every employee should do the same. You work hard all year and deserve take a vacation even if it is just a mini-vacation for the weekend to a nearby beach or hotel.

Now is a great time to find bargains on airfare, hotels and vacation spots. Here are 5 ways to save money when planning your summer vacation.

1. Plan ahead. Plan in advance for vacations especially if you in debt, recently getting out of debt or live paycheck to paycheck. This way you can save enough money to go on vacation without using your credit card to pay for it.

2. Find deals. Shop around to find the best deals. Visit websites like hotwire.com, priceline.com, kayak.com or hotels.com to find cheap rates for hotel, airfare and cruises.

3. Talk. Talk to friends and neighbors about their current or past vacations and find out how they planned their vacation, i.e. ask about any discounts or sales they know about, inexpensive restaurants, shops, etc.

4. Move quickly. When you see or hear about sales or discounts you have to move quickly to capitalize on the deal because they usually don't last long.

5. Reduce spending. Buy traveler's checks, they can quickly be replaced if lost. If you credit card is stolen you may not have another credit card available to purchase any necessities. Buy toiletries and other necessities before traveling. Take one credit card only for emergencies.

Friday, April 24, 2009

Don't Pay for Someone Else's Debt

When a financial crisis occurs many people often become victims of scams and get taken advantage of because they don't know their rights and allow fear to cause them to make bad decisions.

Companies take advantage of many consumers by using guilt and fear. Don't take responsibility for a debt you do not owe because once you do; you are bound to that debt and will have to pay it.

Many companies are desperate for business and are looking for someone, anyone to pay back an old debt. Companies are now reaching out to relatives and friends of the deceased to try to recoup money for delinquent debts.

Based on the Fair Debt Practices Collection Act by law you are not required to pay a debt that does not belong to you unless your name is on the account as a joint account holder or authorized user.

A creditor can only contact you for payment for a debt of a deceased spouse or parent who had an estate or any assets worth value, i.e. an inheritance, a banking account, boat, car, home, stocks, bonds, or other assets. The money owed to the creditor is paid by the estate after any money owed to the government is paid first.

To protect yourself in that situation, get the caller's name, title, name of the company they are calling from and what they said. Tell the caller you will contact your attorney and then contact them if it is determined that money is owed to them. If you have any bank accounts or other accounts that are in the name of your deceased spouse or parent's name put them in your name to prevent creditors from garnishing those accounts.

If you feel you are being harassed tell the company to stop contacting you by phone and notify you in writing. Learn about your rights as a consumer at ftc.gov.

Monday, April 20, 2009

Understanding Credit Score Codes

When you order a copy of your credit report you get several pages of information which can be confusing. Your credit report can at times seem like a maze. You may see abbreviations and codes that you don't understand. You may be provided explanations of why you have good or bad credit but still may not understand what it means.

One of the major factors in understanding your credit report and your credit score are the reason codes listed on your credit report. Some reason codes that may appear on your credit report are:

1. Length of credit history – this means how long you have had credit, either a loan or credit card.

2. Too many inquiries – this means you have had more than 1 or 2 companies pull your credit report within the last 12-24 months which lowers your credit score. You should have no more than 1 inquiry every 12 months if needed.

3. Too many new accounts – this means that you are considered a risk because you opened more than 1-2 new account within the last 12-24 months which also lowers your credit score. You should have no more than one new account opened every 12 months if needed.

4. Account balances too high – this means that your credit cards are maxed out or the balance on your credit cards are above 30% of the credit card limit.

5. Number of revolving and installment accounts – you need to have a mix of revolving (credit cards, line of credit) and installment accounts (student loan, car loan, mortgage, etc.).

6. Recent delinquency – you had one or more accounts that were paid late in the past 0-3 years.

Your credit score consists of the following factors: your payment history which accounts for 35% of your credit score, the amounts owed which accounts for 30% of your credit score, the length of your credit history which accounts for 15% of your credit score, new credit which accounts for 10% of your credit score, and the types of credit used which accounts for 10% of your credit score.

If you disagree with any of the information or explanations on your credit report or credit score contact the credit bureau reporting it to dispute the information and ask for a listing of the accounts that caused your credit score to be low. To order your credit report visit annualcreditreport.com.

Friday, April 17, 2009

Balance Transfers: A Positive or A Negative

Many credit card companies make it easy to transfer credit card balances from one credit card to another offering a lower interest rate for a promotional period of time. After that promotional period expires you will be required to pay a much higher interest rate and any payments made will first be applied to the old debt.

Any future purchases will continue to accrue finance charges. Once the old debt is paid down then any payments made will be applied to the new purchases. You may say – what is the point, I don't see the benefit.

Well, for those Americans who are struggling to pay down credit card balances with interest rates of 17%, 21%, 25% or 32%, a balance transfer is a reasonable option but should not be your first option. You should try to negotiate with your creditor to get a lower interest rate at least temporarily. If your creditor refuses to work with you, you can file a complaint against the creditor. To save time and money you can transfer the balance to a low interest credit card.

Remember that each time you open a new account it counts towards your credit score and if you have opened more than 1-2 accounts in a 24 month period your credit score will slightly decrease. However, once your debt is paid down to 30% or below the credit limit your credit score will increase.

Transferring credit card balances may also lower your credit score because it is an indication that you are unable to manage your money. The biggest mistake made with transferring credit card balances is not reading the credit card agreement to find out all the terms and guidelines associated with the credit card.

The key to balance transfers is to pay off the transferred balance before the promotional period ends and use the card only occasionally for small purchases paying the balance off in full at the end of the month to prevent paying high finance charges.

Do some comparison shopping before selecting a credit card that offers a balance transfer. Some good sites to use are bankrate.com and creditcards.com.

Here are 5 reasons to transfer a credit card balance to another credit card with a lower interest rate.

1. If your current interest rate is higher than 12%
2. If you are struggling to make the payments due to late fees, over-the-limits fees and finance charges.
3. If you know you will be able to pay the debt off before or by the end of the promotional period.
4. If you are have at least an average credit score of 650 or above and can get approved for a new credit card.
5. If you are serious about getting out of debt.

The goal is to get out of debt and the fastest way to get out of debt is to pay more than the minimum monthly payment.

Tuesday, April 14, 2009

Paying Medical Debt

Medical debt is one of the reasons why Americans file for bankruptcy. Every year many Americans file for bankruptcy due to medical debt. In 2008, 46 million Americans did not have any health insurance coverage.

Many people are uninsured due to the high costs of medical coverage. Many employers only pay a small portion of healthcare costs leaving the remaining expense for the employee. It is expected that 1.4 million Americans will file for bankruptcy this year, and some will be due to medical debt.

Health care costs continue to increase each year. According to the National Coalition on Health Care, in 2008, total health care costs increased approximately 6.0% - almost twice the rate of inflation. In 2008, employer health insurance premiums increased by 5.0%. The annual premium for an employer health plan covering a family of four averaged nearly $12,700 versus $4,700 for individual coverage. Retiring elderly couples will need $250,000 in savings just to pay for the most basic medical coverage.

Many Americans file bankruptcy for various reasons such as job loss, illness, death of a loved one, disability, loss of coverage, divorce, and the additional medical fees associated with health care coverage such as co-payments, deductibles, prescription costs, COBRA costs, etc.

The problem is the lack of mandated regulations in the health care industry, industry fraud and billing errors. Health insurance companies over charge patients fees for services and if you do not have health insurance coverage you might as well sign over your child to pay for the medical costs because when you don't have insurance you can basically be charged whatever fee the doctor or hospital chooses. When you have health insurance you can only be charged a certain amount for services.

We claim to be the most powerful country in the world yet we are the sickest developed country in the world. We have the highest incidents of high blood pressure, diabetes, heart attacks, stroke, and cancer.

We should demand that full health insurance coverage is provided to all Americans no matter what their income or lack of income. You should not get better treatment or additional services simply because you have a higher income or can afford better coverage. Every human life should be valued but based on our health insurance industry it is not. We must fight back and force Congress to develop better laws to improve our health care industry and provide insurance for all Americans because we deserve it.

Saturday, April 11, 2009

Are Hair Weaves An Option for You

In a study by DailyMakeover.com women are cutting back on hair styling costs to save money. Many women are using cheaper products, going to the salon less often and others are turning to weaves as a hair styling option.

Money generated from hair industry for weaving last year was approximately $16 billion. 30 million women are suffering from some form of hair loss. Hair weaving is a big industry.

There are several different kinds of weaves: partial weaves, full weaves, short, long, medium length waves, weaves in all different colors, and hair textures, Remi, Brazilian, Lace, Fusion, Malaysian, Human, Yak, braid weaves, and glue weaving.

Weaves can last up to 3 months. It can take 1-5 hours to add a weave to your hair. You can get weaves, cut, styled or colored any way you like. Weaves can cost anywhere from $100 - $1,000. Here are 4 benefits of a hair weave:

1. Save money on hair stylist costs
2. Protects hair from heat and styling
3. Hair grows faster
4. Provides more flexible with styling and activities – can exercise without worrying about your hairstyle, etc.

Here are 3 disadvantages of a hair weave:
1. Must care for weave on a regular basis
2. Weaves can damage hair if not put on by a trained hair professional
3. All weaves are not the same, go for the quality of a weave versus the cost of the weave

Here is a comparison of salon visits versus a weave

Hair Salon Visit
6 times a year @ $70-$120 a visit = $420-$720 a year
12 times a year @ $70-$120 a visit = $840-$1,440 a year

Remove Hair Weave Fee
Remove fee $40-$80

Sewn in Pieces
4 times a year @ $150-$1,000 a visit = $600-$4,000 a year
2 times a year @ $150-$1,000 a visit = $300-$2,000 a year

Weigh all your options before considering getting a weave. Make sure that a weave is the right option for you.

Wednesday, April 08, 2009

Do You Live in a Debt Loving State

Debt has become a way of life in America. However some states are in debt more than others. If you are in debt you are not alone. According to TransUnion, the average consumer credit card balance is $8,000. Alaska leads the country with the highest average credit card debt of $7,827, followed by Nevada $6,636, Tennessee $6,568, North Dakota $4,403, and West Virginia $4,517. These figures are alarming and should be a wake-up call to become debt free. A goal for this year should be to pay down your debt. Here are 5 tips to pay down debt:

1. Stop charging – stop charging to avoid going further into debt. Pay with cash instead of credit.

2. Create a budget or spending plan – create a budget to track your spending and reduce expenses. Shop at discount stores, outlets, use coupons, carpool, etc. to find extra money, which can be used to pay down debt.

3. Send more than the minimum – sending just the minimum will extend the time it takes to pay the balance. Send at least $10 more than the minimum each month pay down the balance faster.

4. Use automatic payments – setup automatic payments from your checking account the day you receive your paycheck or soon after you receive your paycheck

5. Negotiate – contact your creditor to negotiate a lower interest rate and/or monthly payment, also ask to have any late fees, over-the-limit or other fees waived

Sunday, April 05, 2009

Unemployment Rate Continues to Soar

The unemployment rate has increased to 8.5% or 13.2 million Americans out of work. This also means that 13.2 million Americans do not have health insurance.

Now more than ever Americans must forever change their spending habits to ensure that they can survive a financial crisis. We don't know what the future holds for this country but we do know these things:

1. Buying things that you can't pay off in 3-6 months will lead to excessive interest and finance charges

2. Buying used vs. new will save you money

3. Living below your means will minimize the chances of filing for bankruptcy or foreclosure

4. Create an emergency fund with enough to cover monthly expenses for at least 3-9 months will reduce stress, anxiety, worry and minimize a financial crisis

5. Using a budget will help to track your spending, provide accountability and ensure you have responsible with your spending

6. Mimicking good spending habits will ensure your children practice good spending habits

7. Each time you use a credit card you are making the credit card companies rich and yourself poor

8. Saving for a rainy day does help

For now, we can only hope by the end of the year or early 2010 the country will have recovered and Americans will have learned a valuable lesson - save now or suffer later.

Thursday, April 02, 2009

April is Financial Literacy Month

April is Financial Literacy Month. This month make at least one change to your spending habits to improve your financial life and reduce future financial crises. Making at least one change can: save you money, help pay down debt, and plan for your future.

Make a promise to you and your family that starting in April you will do at least one of the following.

1. Create a budget or spending plan and track spending daily, weekly or monthly

2. Pay bills on time

3. Get current on any late bills – negotiate or setup payment plans

4. Don't buy something if you don't have the cash to pay for it

5. Get overdraft protection to reduce bounced check fees

6. Don't file for bankruptcy

7. Order a copy of your credit report and dispute any errors

8. Pay off at least one credit card this year

9. Create an emergency fund/savings account

10. Reduce spending by using coupons, buying items on sale, in bulk or shopping at discount, wholesale or outlet stores

11. Verify bank statements each month

Improving your financial situation can take time but it is worth it. To educate yourself about your rights as a consumer and about various financial literacy topics visit ftc.gov.