Wednesday, August 31, 2016
Many Americans have still not changed their mindset and financial behavior since the recession, government shutdown and huge market declines. Others are hoping that a burst of money will fall down on them and “poof” their financial situation will improve, while others try to hide under a rock and hope that their bills and debts will eventually go away. They do not!
Many people are allowing fear to cause them to make hasty decisions. Don’t let fear cause you to make a decision you will regret in the future. During financial crises, scams, identity theft and other financial schemes increases. If something sounds too good to be true or requires you to pay money to receive a service that usually is free – do not pay for it.
If you owe debt and have the money to pay it off do so. It will maintain your relationship with your creditors, stop those harassing calls, increase your credit score and reduce stress caused by your financial problems.
The first step in getting out of debt is admitting that you have a problem. Next, you have to be committed to getting out of debt, just as you are committed to going to the gym or going to work. Now is a great time to negotiate with creditors to pay back delinquent debt.
To pay back debt and stay out of debt you have to the way you think about money. Money is a tool that can be used either to generate debt or to generate wealth. You have to know how to play to stay in the game. There are several ways to get out of debt and stay out of debt. You can think outside the box and think of creative and unique ways or play it safe and follow the basic rules for getting out of debt.
One way to think about the box to get out of debt and stay out of debt is the follow the Voluntary Simplicity movement that states that you do not buy anything new other than basic necessities such as food and clothing. Shelter is a necessity but does not mean you should buy a home you really cannot afford or a home that has more rooms than you use. It is means examining every aspect of your life to determine what is most important and eliminating everything else.
A simpler model of the Voluntary Simplicity Movement is to buy used versus new or recycle used good. It takes a lot of hard work to get out of debt. Here are eight ways to get out of debt and stay out of debt.
CREATE A BUDGET
A budget helps you identify your total monthly income, how much you owe and how much you spending each month. A budget also quickly identifies areas where you may need to reduce spending.
LIVE BELOW YOUR MEANS
Buy needs vs. wants, control your spending, don't buy in excess or more than you need, keep debt (excluding mortgage or rent) at 15% of your total monthly income (after taxes). Reduce expenses by bringing your lunch to work, taking public transportation, shopping at wholesale stores. Delay buying the things you want until you have the money to purchase them.
PAY IN FULL
Pay the balance in full each month prior to the due date or as soon as you receive the bill, which helps to avoid, paying finance charges. Beware of companies who may move your due date around to prevent you from paying your bill on time in hopes of being able to charge a late fee. Contact the company if you are a victim of this and tell them you want a set payment date. If they refuse, tell them you want to close your account and give your business to another company. However, be sure the account that you close is two years old or less or has a low limit of $1,000 or less because closing an active account in good standing can lower your credit score.
PAY MORE THAN ONCE
Many consumers do not realize that they can send in payments for their debts multiple times a month. You can pay half of the bill balance with first paycheck of the month then pay the remaining balance with second paycheck of the month. Pay weekly instead of monthly. Pay the minimum monthly payment the first week after you get the bill, and then each week pay as much as you can toward the monthly balance and repeat every month. You can also pay as much as you can when you get the bill, and then pay more towards the bill when you get extra money. Some creditors are aware of this may not apply your payment to the current month’s bill. If this happens, contact the creditor and tell them to apply all of your payment to the current month’s bill.
AVOID LATE FEES
Pay your bills on time. If you are unable to make a payment, contact the creditor right away to setup a payment plan or make other arrangements. If you generally make your payments near the due date call the company’s customer service department and ask if there is a certain time of the day (am/pm, or hh:mm) that they need to receive your payment to consider it paid on time and make sure your payments arrive by that time. You can also contact our local post office to find out how long it takes you payment to arrive by mail.
As a consumer, you have the option to negotiate. Do not be afraid to ask exactly for what you what regarding your account. Negotiate for lower interest rates or get fees waived to help reduce the balance owed. This also makes it easier to pay off the credit card debt.
PAY MORE THAN MINIMUM MONTHLY PAYMENT
If you pay the minimum monthly payment, you will end up paying 2 to 3 times what you actually purchased due to finance charges that accrue on your balance. Send more than the minimum monthly payment each month. An easy way to determine how much to send is by reviewing the total amount listed in finance charges field on your statement for the current month. If your finance charges are equal to or more than your minimum monthly payment then your payment should at least equal to your finance charges. If your finance charges are less than your minimum monthly payment, your balance will go down faster, however, as a good money management rule you should still send more the minimum monthly payment.
KEEP BALANCES LOW
Keep credit card balances at 30% or below the credit limit. Having accounts with balances above the credit limit will decrease your credit score and may increase the chances of your credit limit being reduced or your credit card account may be closed.
Following these tips will help you pay down debt, increase your credit score and will you on the path to a debt free life.
Saturday, August 27, 2016
According to a survey, almost 50% of people said they store old phones in a box or drawer at home. The trade-in value of all those old gadgets is $47 billion, according to the annual Mobile Mountain Study conducted by research study group OnePoll. Consumers still do not see the value and profitably in trading in their old mobile phones.
Most Americans are not interested in savings made by buying spare parts because in some instances it can be a hassle. We are a throwaway society - we want instant gratification and do not want to wait to buy anything including repairs.
Appliances and gadgets make life easier. The technology upgrade cycle is approximately 22 months and consumers are eager to oblige. Peers make fun of friends who have older models. Tech companies are aware of this and exploit it. Pressure from companies makes it harder to resist upgrading gadgets. Verizon, AT&T and T-Mobile offer plans that encourage their customers to upgrade their phones every year.
Americans like to take the easy option and buy a new gadget. If their smartphone is broken, they do not want the hassle of going to a retail store or mailing the device back and waiting to get a new one when they can just go to a retail store and purchase a new one in a matter of minutes. In some instances, it is cheaper to repair a broken appliance or gadget than to buy a new one.
However, in some instances, older model appliances can be more costly to repair than purchasing a new one. Consumers have to weigh their options in terms of cost, quality and durability. However, the high demand for appliances and gadgets has caused manufacturers to lower manufacturing costs reducing the quality of the products produced so they can maximize profits. This results in a shorter shelf life of appliances and gadgets. In the past, an appliance could last for up to 10 years if maintained properly. As a result, appliances have to be replaced every two to three years. Cell phones used to last five years, now some barely last a year. According to a Spring cleaning survey, 68 percent of Americans suffer from compulsive gadget hoarding which results in consumers buying products they do not need.
The internet has made it easier to purchase appliances and gadgets and it is responsible for an estimated 3.4 percent of the U.S. gross domestic product. Advertisers do a great job of luring customers to the stores. Some consumers have fought back and are making changes. Some state governments have implemented e-waste laws but we have a long way to go.
Americans are not fully aware of the impact of throwing away gadgets or storing old ones in their home before they have reached the end of their lifespan. Electronics can contain lead, mercury, cadmium and other potentially harmful chemicals. Twenty-five states have passed e-waste-recycling laws, 15 of which include disposal bans. Seventeen states have banned electronic waste from landfills, requiring the waste to be recycled to prevent leach into groundwater.
Electronic gadgets release heavy metals such as lead, cadmium and mercury into the air and ashes. Mercury released into the atmosphere can accumulate in the food chain, particularly in fish - the major route of exposure for the public. If the products contain PVC plastic, highly toxic dioxins and furans are also released. Brominated flame-retardants generate brominated dioxins and furans when e-waste is burned.
There are also hazards with recycling e-waste. The hazardous chemicals in e-waste mean that electronics can harm workers in the recycling yards, as well as their neighboring communities and environment. If you are a gadget waster, consider doing at least one thing to save money and help the environment.
Tuesday, August 23, 2016
Money is Power or Cash is King still applies today. People feel powerless and helpless when they have little to no savings or retirement account, live paycheck to paycheck or experience a financial crisis. You feel more confidence, in control and powerful when you have a savings and/or retirement account - when you do not have to worry about how you will pay for car repairs or a broken furnace.
People who do not save feel a temporary sense of power when they buy something that they believe shows they are powerful such as a “BMW”, “going on vacation to a Caribbean island or buying a designer item such as Luis Vuitton. However, these feelings erode quickly when the credit card bill arrives – they go back to feeling powerless.
They also experience these feelings because they are treated differently by society. For example, someone living paycheck to paycheck may go to a liquor store or checking cashing store to cash his paycheck. However, if that same person went to a bank to deposit their paycheck they would have a different experience emotionally.
If two people went to a Friday’s restaurant and paid with a credit card, one paying with a MasterCard and another with an American Express Centurion Card, the Centurion card owner already feels more powerful due to how they are treated by society and previous experiences. The server may subconsciously or consciously treat the American Express Centurion Card owner differently because the credit card is a status symbol – a symbol of power. The MasterCard owner may not be treated the same because anyone with a certain credit score can be approved for a MasterCard but not everyone can be approved for an American Express Centurion Card.
The key to encouraging yourself or someone else to save is see how savings will benefit you not just in terms of retirement but real life examples of how it will benefit you. Some benefits of a savings account include compound interest, cash back rewards for some debit cards, emergency fund, provides additional payment options (cash, check, money order, cashier’s check, debit card) and to pay for unexpected expenses.
Nothing last forever and nothing stays the same forever. Life happens and things are constantly changing. Possessing a savings account will help you deal with changes in life much easier than applying for a payday loan or making other risky financial decisions because you do not have a savings account.
Set a savings goal, automate savings, look for high interest earning accounts and read your statement monthly to reconcile your savings account.