According to the National Women's Law Center whether women are insured or uninsured, they have many out-of-pocket costs that they are more likely to avoid health care or struggle paying for health care. Some startling statistics regarding women and health care:
1. 33% of insured women and 68% of uninsured women do not get the care they need because they cannot afford it
2. 23% of insured men and 49% of uninsured men avoid health care because of cost
3. 16% of women are considered underinsured, while only 9% of men are considered underinsured
4. 38% of women struggle with medical bills compared with 29% of men
5. Women have less access to employer-sponsored insurance because they are more likely than men to work part-time
6. Women's access to insurance is less stable because they are more than twice as likely as men to get employer-sponsored insurance through their spouse
7. Women are more likely than men to take prescription drugs
8. 52% of women did not fill a prescription, did not see a specialist when needed, skipped a recommended medical test or treatment, or had a medical problem but did not visit a doctor compared to 39% of men
9. 45% of women had medical debt or reported problems with medical bills compared to 36% of men
10. 45% delayed or did not receive a cancer screening or dental care because of costs compared to 36% of men
Women will also be able to receive preventative medical services like immunizations and mammograms that will be covered in full by private health insurance companies and Medicare. Medicaid will expand services to new mothers and pregnant women, they will offer more family planning services, postpartum support and education and home visiting programs. Employers will be required to give nursing mothers breaks and space to pump breast milk.
Children with pre-existing conditions will now be able to receive health care coverage which is a huge victory since approximately 9 million children are uninsured. Health insurance companies will now allow young adults to remain on their parent's health plan up to age 26.
Older Americans will also receive additional help with prescription drug costs. Small business owners, many who are women will be able to provide health insurance to their employees and will be able to receive business tax credits. Starting in 2010 small business owners can get a 35% tax credit if they have 10 or less employee that earn less than $25,000 a year.
Beginning January 1, 2011, health insurance companies are required to waive co-payments and deductibles on preventive care which includes regular mammograms. Prescription drug companies will be required to provide a 50% discount on brand-name drugs bought in the coverage gap. The federal subsidy for Part D premiums will be reduced for higher-income beneficiaries. Cost sharing for preventive-care services will be eliminated.
A new temporary health insurance program will pay health insurance premiums and is available for retirees ages 55 through 64 who were laid off during the recession. In addition, health insurance companies will no longer be able to impose individual spending limits and terminate patients who have high medical costs.
Wednesday, April 28, 2010
Sunday, April 25, 2010
Why Women Should Support Health Care Reform
Women should support the new health care reform for several reasons: 1) women usually make most of the decisions regarding family health care, 2) women usually live longer than men, 3) women usually require more medical care than men, 4) women have additional medical needs such as pregnancy, childbirth and childcare.
According to a report by the Commonwealth Fund, approximately 64 million women or 70%of Americans have no health insurance coverage, inadequate health care coverage, high medical bills or debt problems, or problems accessing health care because of the rising cost.
Many women have difficulty getting adequate health insurance because you usually need a full-time job which 52% of women versus 73% of men are likely to have. Many women continue to work full-time to continue receiving health care coverage but would prefer to work part-time or stay at home.
According to the Group Health Research Institute in Seattle victims of domestic violence have even higher health costs than other women for three years after the abuse ends totaling $1600 or more after the abuse ends.
According to a 2008 study by the National Law Center, prior to the health care reform, it was legal in most states for companies selling individual health policies to participate in gender rating by charging women more than men for the same coverage, even for policies that did not include maternity care. The health care premium differences ranged from 4% to 48%.
Health care reform will really help women because they can no longer be discriminated against and charged higher insurance premiums than men simply because they are a woman or for a pre-existing condition such as pregnancy, caesarian sections or other issues such as domestic violence and rape. Since women generally make only $.77 for every dollar men make, any reduction in health care costs is appreciated.
According to the National Women's Law Center whether women are insured or uninsured, they have many out-of-pocket costs that they are more likely to avoid health care or struggle paying for health care.
According to a report by the Commonwealth Fund, approximately 64 million women or 70%of Americans have no health insurance coverage, inadequate health care coverage, high medical bills or debt problems, or problems accessing health care because of the rising cost.
Many women have difficulty getting adequate health insurance because you usually need a full-time job which 52% of women versus 73% of men are likely to have. Many women continue to work full-time to continue receiving health care coverage but would prefer to work part-time or stay at home.
According to the Group Health Research Institute in Seattle victims of domestic violence have even higher health costs than other women for three years after the abuse ends totaling $1600 or more after the abuse ends.
According to a 2008 study by the National Law Center, prior to the health care reform, it was legal in most states for companies selling individual health policies to participate in gender rating by charging women more than men for the same coverage, even for policies that did not include maternity care. The health care premium differences ranged from 4% to 48%.
Health care reform will really help women because they can no longer be discriminated against and charged higher insurance premiums than men simply because they are a woman or for a pre-existing condition such as pregnancy, caesarian sections or other issues such as domestic violence and rape. Since women generally make only $.77 for every dollar men make, any reduction in health care costs is appreciated.
According to the National Women's Law Center whether women are insured or uninsured, they have many out-of-pocket costs that they are more likely to avoid health care or struggle paying for health care.
Thursday, April 22, 2010
5 Ways to Handle Collection Accounts
A collection account is a late account that has been forwarded to an agency (also known as asset recovery agency, debt buyers, collection agency or collection agent) for lack of payment. An account is forwarded to a collection agency usually when an account becomes 90 to 120 days late.
Collection accounts are purchased from the original creditors for a fraction of the original amount owed. Creditors send accounts to collection agencies to remove them from their accounts receivables records and then write-off the full debt owed as a loss. Creditors benefit in two ways, one for writing off the debt as a loss on their taxes and two when the money is collected which can be recorded as a profit or accounts receivable.
A paid or unpaid collection account remains on your credit report for seven years from the date of first delinquency. Unfortunately many collection agencies re-age the account changing the date of first delinquency to the date they received the account which extends the time the account remains on your credit report.
A collection agency holds a collection account for a few months, it they are unsuccessful in collecting on the debt owed, and the account is forwarded to another collection agency. This process continues until the account is paid or legal action is taken against the consumer.
Many times when you provide a date when the bill is paid they will ask you why, why not now or similar questions trying to use psychological tactics to get you to pay the bill while they are on the phone.
Remain calm throughout the conversion. A collection agent may ask you to repeat what you just said or write it down. These are all tactics to make you powerless and confused. Here are 5 tips to help you deal with collection accounts.
1. Keep all copies of your credit reports (current and old). If you have made any late payments or have neglected to pay any delinquent accounts compare you old credit reports with your current credit reports to verify all information on your credit report and pay close attention to the dates for collection accounts, bankruptcies, accounts included in bankruptcies and other delinquent accounts.
2. When you receive a letter from a collection agency verify the company is licensed to collect money or delinquent debts, verify the company is a reputable company and that the company has a legal right to collect money or your debt.
3. You may request that the collection agency contact my mail only (use the term cease and desist). A collection agency's goal is to get the money owed paid as soon as possible. They will continue to ask why you can’t make arrangement today.
4. If you setup payment arrangements and fall behind on your arrangement the collection agents are advised to refuse to extend time between payments, shorten the time between payments, and refuse to reduce the monthly account.
5. Whatever arrangements you make with a collection agency stick to it, don't let the collection agency change your mind about what you can afford, use emotions, or scare you into doing something you don't want to do.
Collection accounts are purchased from the original creditors for a fraction of the original amount owed. Creditors send accounts to collection agencies to remove them from their accounts receivables records and then write-off the full debt owed as a loss. Creditors benefit in two ways, one for writing off the debt as a loss on their taxes and two when the money is collected which can be recorded as a profit or accounts receivable.
A paid or unpaid collection account remains on your credit report for seven years from the date of first delinquency. Unfortunately many collection agencies re-age the account changing the date of first delinquency to the date they received the account which extends the time the account remains on your credit report.
A collection agency holds a collection account for a few months, it they are unsuccessful in collecting on the debt owed, and the account is forwarded to another collection agency. This process continues until the account is paid or legal action is taken against the consumer.
Many times when you provide a date when the bill is paid they will ask you why, why not now or similar questions trying to use psychological tactics to get you to pay the bill while they are on the phone.
Remain calm throughout the conversion. A collection agent may ask you to repeat what you just said or write it down. These are all tactics to make you powerless and confused. Here are 5 tips to help you deal with collection accounts.
1. Keep all copies of your credit reports (current and old). If you have made any late payments or have neglected to pay any delinquent accounts compare you old credit reports with your current credit reports to verify all information on your credit report and pay close attention to the dates for collection accounts, bankruptcies, accounts included in bankruptcies and other delinquent accounts.
2. When you receive a letter from a collection agency verify the company is licensed to collect money or delinquent debts, verify the company is a reputable company and that the company has a legal right to collect money or your debt.
3. You may request that the collection agency contact my mail only (use the term cease and desist). A collection agency's goal is to get the money owed paid as soon as possible. They will continue to ask why you can’t make arrangement today.
4. If you setup payment arrangements and fall behind on your arrangement the collection agents are advised to refuse to extend time between payments, shorten the time between payments, and refuse to reduce the monthly account.
5. Whatever arrangements you make with a collection agency stick to it, don't let the collection agency change your mind about what you can afford, use emotions, or scare you into doing something you don't want to do.
Monday, April 19, 2010
Tax Refunds - Use It or Lose It
Many Americans get excited when they find out they are getting a tax refund. However, for many Americans in this economy getting a tax refund means it will be spent as soon as you get it. If you are struggling to pay bills or need to get out of debt your tax refund can be a lifesaver. But, it is up to you to determine how to spend it. Many Americans spend money frivolously and don't really think about their future. Here are 7 smart ways to spend your tax refund and improve your financial life.
1. Get current. If you are behind on your mortgage payment, use the money to catch up. Make sure you get current on all utility bills and car payments.
2. Downsize. If you are in a house that is upside or have a luxury car, downsize. If you are unable to downsize your home consider renting out one or two rooms. You can make a lot of extra money renting out a room in your home. Consider selling your car and buying a used car with no car payment or that costs $5,000 or less.
3. Borrow. Ask family or friends if you can borrow money to help get caught on your mortgage and utility bills. Your main focus is to keep a roof over your head and food on your table. Once you get current on household bills, then you can use any extra money to pay down debt and other bills.
4. Extras. Cancel your internet, long distance, cable service and magazine and newspaper subscriptions. If you absolutely have to have internet and cable service get the cheapest plan possible and call continually to ask about specials.
5. Eating. Skip eating out and buying fast food because you don't feel like cooking. Cooking at home can save you lots on your grocery bill. Buy more fresh fruits and vegetables instead of starches and processed food to save money. Also, use coupons, buy items on sale, buy in bulk or shop at wholesale stores. You can also change your eating habits. Meats are the most expensive items at the grocery store so consider buying cheaper meats, instead of steak buy pork, instead of pork buy turkey, seafood or chicken.
6. Sell. Go through your entire home and if you find anything in your home that has not been used by you or any of your family members in the past 6-12 months, donate the items to charity. You can later write the donations off on your taxes. You can also have a yard sale to get extra money.
7. Buy used. Many people believe the hype from advertisers that you can only get good quality items if they are bought new. Now true. You can visit websites such as freecycle.org and find items that are used for free. That's right free. You can also buy used items on eBay and Amazon.
I hope these tips help you slash your budget and work towards improving your financial life.
1. Get current. If you are behind on your mortgage payment, use the money to catch up. Make sure you get current on all utility bills and car payments.
2. Downsize. If you are in a house that is upside or have a luxury car, downsize. If you are unable to downsize your home consider renting out one or two rooms. You can make a lot of extra money renting out a room in your home. Consider selling your car and buying a used car with no car payment or that costs $5,000 or less.
3. Borrow. Ask family or friends if you can borrow money to help get caught on your mortgage and utility bills. Your main focus is to keep a roof over your head and food on your table. Once you get current on household bills, then you can use any extra money to pay down debt and other bills.
4. Extras. Cancel your internet, long distance, cable service and magazine and newspaper subscriptions. If you absolutely have to have internet and cable service get the cheapest plan possible and call continually to ask about specials.
5. Eating. Skip eating out and buying fast food because you don't feel like cooking. Cooking at home can save you lots on your grocery bill. Buy more fresh fruits and vegetables instead of starches and processed food to save money. Also, use coupons, buy items on sale, buy in bulk or shop at wholesale stores. You can also change your eating habits. Meats are the most expensive items at the grocery store so consider buying cheaper meats, instead of steak buy pork, instead of pork buy turkey, seafood or chicken.
6. Sell. Go through your entire home and if you find anything in your home that has not been used by you or any of your family members in the past 6-12 months, donate the items to charity. You can later write the donations off on your taxes. You can also have a yard sale to get extra money.
7. Buy used. Many people believe the hype from advertisers that you can only get good quality items if they are bought new. Now true. You can visit websites such as freecycle.org and find items that are used for free. That's right free. You can also buy used items on eBay and Amazon.
I hope these tips help you slash your budget and work towards improving your financial life.
Friday, April 16, 2010
How Couples Can Improve Their Finances
Here are some tips on how couples can improve their finances. Small things really do add up.
Erase Debt and Improve Credit
1. Setup payment plans
2. Get current on late accounts
3. Pay more than the minimum monthly payment
4. Keep balances at 30% or below the credit limit
5. Don't use credit card for everyday purchases
Joint Accounts
1. Spending. Spread spending for large purchases over several months to ease the burden.
2. Reconcile. Reconcile bank accounts daily or weekly.
3. Comparison Shop. Shop around for the best price for the product or services you require to maintain your household. This increases your monthly household income and reduces expenses.
4. Shop Together. Go shopping together. This way both of you how much money is being spent and can encourage each other to improve spending habits.
5. Buy needs vs. wants. Prolong items that you want for special occasions or when you have extra money, don't include wants in your budget.
Planning for the Future
1. Create an Emergency Fund. Use an emergency fund to buy small purchases or pay for unexpected expenses and have enough to cover bills for 9-12 months.
2. Retirement. Sign up with your company's 401K especially if your company provides matching funds.
3. Diversify. Control your risks by investing in various mutual funds that are a combination or low, medium and high risk to limit your losses and focus on long-term growth.
4. Buy insurance. Buy health, life, disability. Many Americans go into debt due to medical bills and lack of insurance. Get at least basic health, life and disability coverage.
Erase Debt and Improve Credit
1. Setup payment plans
2. Get current on late accounts
3. Pay more than the minimum monthly payment
4. Keep balances at 30% or below the credit limit
5. Don't use credit card for everyday purchases
Joint Accounts
1. Spending. Spread spending for large purchases over several months to ease the burden.
2. Reconcile. Reconcile bank accounts daily or weekly.
3. Comparison Shop. Shop around for the best price for the product or services you require to maintain your household. This increases your monthly household income and reduces expenses.
4. Shop Together. Go shopping together. This way both of you how much money is being spent and can encourage each other to improve spending habits.
5. Buy needs vs. wants. Prolong items that you want for special occasions or when you have extra money, don't include wants in your budget.
Planning for the Future
1. Create an Emergency Fund. Use an emergency fund to buy small purchases or pay for unexpected expenses and have enough to cover bills for 9-12 months.
2. Retirement. Sign up with your company's 401K especially if your company provides matching funds.
3. Diversify. Control your risks by investing in various mutual funds that are a combination or low, medium and high risk to limit your losses and focus on long-term growth.
4. Buy insurance. Buy health, life, disability. Many Americans go into debt due to medical bills and lack of insurance. Get at least basic health, life and disability coverage.
Tuesday, April 13, 2010
How the Inactivity Fee Affects You
In started back in late summer of 2009, credit card companies found another way to make money, charge consumers more fees. The credit card companies invented inactive or dormant fees. If you don't use your credit card within 6 to 12 months or more you will be charged an inactivity fee of $2-$5.
I belong to a credit union and thought I was shielded from some of the fall out of the credit card companies penalties to consumers after the CARD act became effective February 22, 2010. Wrong! Starting September 1, 2010, customers of my credit union will be charged an inactive fee for accounts that have not had any activity for 12 months and a dormant fee for accounts that have not had any activity for 2 years.
In a report by Bloomberg, customers of Fifth Third Bank are being charged a $19 inactivity fee for a credit card that had no fees associated with it for the past several years. Bank of America, JPMorgan Chase & Co., the Capital One Financial Corp. and Discover Financial Services currently do not have inactivity fees but have increased other fees associated with their credit cards.
Credit card companies have been warned about raising rates and establishing “inactivity fees” during the nine-month “grace period” that started with President Obama’s signing of the credit card reform legislation in May 2009 which ended with the CARD Act’s compliance on Feb. 22, 2010.
On March 3, 2010, the Federal Reserve proposed new rules that define penalty fees under credit card reform laws by prohibiting “inactivity fees”. Fees for “inactivity” are based on failure to use a credit card over a specific period of time or on a balance that is kept at zero for an extended period of time.
Closing an account to avoid paying an inactivity fee may lower your credit score if the account is less than 2 years old. Credit card companies don't want you to use your credit card to the maximum limit but they do want you to use your credit card and if you don't you are penalized because they can't make any money off of you.
Stick to paying for items with cash, that way you avoid paying any fees associated with the credit card, pay less money for the item because you don't have to pay interest and finance charges and you still help the economy because you are making a purchase.
I belong to a credit union and thought I was shielded from some of the fall out of the credit card companies penalties to consumers after the CARD act became effective February 22, 2010. Wrong! Starting September 1, 2010, customers of my credit union will be charged an inactive fee for accounts that have not had any activity for 12 months and a dormant fee for accounts that have not had any activity for 2 years.
In a report by Bloomberg, customers of Fifth Third Bank are being charged a $19 inactivity fee for a credit card that had no fees associated with it for the past several years. Bank of America, JPMorgan Chase & Co., the Capital One Financial Corp. and Discover Financial Services currently do not have inactivity fees but have increased other fees associated with their credit cards.
Credit card companies have been warned about raising rates and establishing “inactivity fees” during the nine-month “grace period” that started with President Obama’s signing of the credit card reform legislation in May 2009 which ended with the CARD Act’s compliance on Feb. 22, 2010.
On March 3, 2010, the Federal Reserve proposed new rules that define penalty fees under credit card reform laws by prohibiting “inactivity fees”. Fees for “inactivity” are based on failure to use a credit card over a specific period of time or on a balance that is kept at zero for an extended period of time.
Closing an account to avoid paying an inactivity fee may lower your credit score if the account is less than 2 years old. Credit card companies don't want you to use your credit card to the maximum limit but they do want you to use your credit card and if you don't you are penalized because they can't make any money off of you.
Stick to paying for items with cash, that way you avoid paying any fees associated with the credit card, pay less money for the item because you don't have to pay interest and finance charges and you still help the economy because you are making a purchase.
Saturday, April 10, 2010
You Still Have Time to File Your Taxes
April 15 is D-Day, the day to file your federal taxes. If you don't file your taxes on April 15, ask for an extension. If you are getting a refund you can file your taxes at any time although the IRS prefers you do so by April 15 each year.
If you owe taxes it is best to work with the IRS as soon as your file your taxes to setup a payment plan. Be sure to keep all of your receipts for future reference. Here are 13 deductions you can claim on your 2009 taxes.
1. Uniforms, job supplies
2. Higher education expenses
3. Purchase of energy efficient appliances and vehicles in 2009
4. Tax preparation fees
5. Job related training
6. Home office business expenses
7. Mortgage refinance fees
8. Charitable donations (cash and non-cash)
9. State Sales Tax
10. Property and estate tax deductions
11. Earned Income Tax Credit
12. Job research expenses
13. Foreclosure tax relief
Take your time if you prepare your taxes yourself. If you use an automated tax preparation tool like Tax Cut or Turbo Tax most of the laws are already installed in the tool so it is less likely that you will make an error or get audited. If you got a refund in the past and never received it, contact the IRS to get your money. The IRS has billions of dollars in refunds that were never picked up by taxpayers. Good luck.
If you owe taxes it is best to work with the IRS as soon as your file your taxes to setup a payment plan. Be sure to keep all of your receipts for future reference. Here are 13 deductions you can claim on your 2009 taxes.
1. Uniforms, job supplies
2. Higher education expenses
3. Purchase of energy efficient appliances and vehicles in 2009
4. Tax preparation fees
5. Job related training
6. Home office business expenses
7. Mortgage refinance fees
8. Charitable donations (cash and non-cash)
9. State Sales Tax
10. Property and estate tax deductions
11. Earned Income Tax Credit
12. Job research expenses
13. Foreclosure tax relief
Take your time if you prepare your taxes yourself. If you use an automated tax preparation tool like Tax Cut or Turbo Tax most of the laws are already installed in the tool so it is less likely that you will make an error or get audited. If you got a refund in the past and never received it, contact the IRS to get your money. The IRS has billions of dollars in refunds that were never picked up by taxpayers. Good luck.
Wednesday, April 07, 2010
Help for Gift Card Buyers
This year we will see a lot of changes in the banking industry. We have seen the CARD act that became effective February 22, 2010. A new regulation for debit cards becomes effective July 1, 2010. Now as part of the CARD Act a new regulation by the Federal Reserve will begin on August 22, 2010 that affects gift cards sold on or after August 22, 2010.
The new regulation applies to gift cards, non-reloadable or promotional program prepaid gift cards and gift certificates. The new regulation puts restrictions on inactivity or service fees which caused many consumers to lose the value on gifts cards or gift certificate due to the outrageous inactivity or service fees charged.
Here are some of the major features of the new gift card regulation:
1. Inactivity or service fees will only be allowed for a gift certificate or gift card that has been inactive for at least one year.
2. Only one fee can be charged per month and the consumer is provided clear disclosures about the fees.
3. Additional fees that are restricted by the regulation include ATM fees, service fees, monthly maintenance fees, balance inquiry fees and transaction based fees.
4. Gift certificate, gifts cards or non-reloadable or promotional program prepaid cards can no longer be sold if the expiration date is less than 5 years from the date of issue or the date the funds are last loaded on the card.
5. Fees will no longer be charged for replacing an expired gift card or gift certificate or for refunding the remaining balance if funds are still available.
Although consumers will no longer be charged these fees you better believe that the banking industry will find other ways to earn the revenue they are losing with all the new regulations so make sure you read my blog for additional updates throughout the year.
The new regulation applies to gift cards, non-reloadable or promotional program prepaid gift cards and gift certificates. The new regulation puts restrictions on inactivity or service fees which caused many consumers to lose the value on gifts cards or gift certificate due to the outrageous inactivity or service fees charged.
Here are some of the major features of the new gift card regulation:
1. Inactivity or service fees will only be allowed for a gift certificate or gift card that has been inactive for at least one year.
2. Only one fee can be charged per month and the consumer is provided clear disclosures about the fees.
3. Additional fees that are restricted by the regulation include ATM fees, service fees, monthly maintenance fees, balance inquiry fees and transaction based fees.
4. Gift certificate, gifts cards or non-reloadable or promotional program prepaid cards can no longer be sold if the expiration date is less than 5 years from the date of issue or the date the funds are last loaded on the card.
5. Fees will no longer be charged for replacing an expired gift card or gift certificate or for refunding the remaining balance if funds are still available.
Although consumers will no longer be charged these fees you better believe that the banking industry will find other ways to earn the revenue they are losing with all the new regulations so make sure you read my blog for additional updates throughout the year.
Sunday, April 04, 2010
Celebrate Financial Literacy Month
President Obama declared April is National Financial Literacy Month. Start this month and make at least one small change to improve your financial life. By deciding to make at least one change you will be able to: pay down debt, create an emergency fund, and plan for your future.
Here are 9 easy ways to improve your financial life.
1. Create a budget or spending plan and track spending daily, weekly or monthly.
2. Get current on any late bills.
3. Negotiate or setup payment plans for large debts.
4. Buy more needs vs wants and pay cash or use lay-a-way.
5. Get a checking account with no fees.
6. Create an emergency fund by using automatic savings plans such as Bank of America's Keep the Change program or Wachovia's Way 2 Save program.
7. Buy in bulk, buy items on sale or at wholesale or discount stores.
8. Buy used instead of new.
9. Pay bills automatically using paycheck deduction or online bill payment.
Remember, every financial decision you make today affects your future tomorrow. It takes hard work, discipline and making sacrifices to get out of debt and improve your financial life but I know you can do it. Start today!
Here are 9 easy ways to improve your financial life.
1. Create a budget or spending plan and track spending daily, weekly or monthly.
2. Get current on any late bills.
3. Negotiate or setup payment plans for large debts.
4. Buy more needs vs wants and pay cash or use lay-a-way.
5. Get a checking account with no fees.
6. Create an emergency fund by using automatic savings plans such as Bank of America's Keep the Change program or Wachovia's Way 2 Save program.
7. Buy in bulk, buy items on sale or at wholesale or discount stores.
8. Buy used instead of new.
9. Pay bills automatically using paycheck deduction or online bill payment.
Remember, every financial decision you make today affects your future tomorrow. It takes hard work, discipline and making sacrifices to get out of debt and improve your financial life but I know you can do it. Start today!
Thursday, April 01, 2010
A Slam Dunk for Student Loan Borrowers
On March 29, 2010, President Obama signed a bill to assist student loan legislation that goes into effect in 2014. One goal of the bill was to produce the most college graduates by 2020 . The bill will:
1. End subsidies to private banks that will no longer be allowed to make student loans with federal money, but may continue to earn income by servicing those loans.
2. Double funding for Pell Grants limits up to $5,550 in 2010 and up $5,975 per student by 2017. The Pell Grant will rise with inflation starting in 2013.
3. Cap a graduate's annual student-loan repayments at 10 percent of his or her income.
4. Help an additional 5 million Americans earn degrees and certificates over the next decade, by revitalizing programs community colleges across the country.
5. Expand Perkins Loan program.
6. Keep student loan interest rate at 3.4%.
7. Increase funding to College Access Challenge Grant Program to increase financial literacy and help retain graduate students.
8. Starting July 1, 2010, federal student loans will be originated through the Direct Loan program instead of through the federally guaranteed student loan program.
9. 100 percent of student loans will be serviced by private lenders who will have to compete for contracts to service federal student loans. Direct Loans can only be serviced by U.S. employees.
Under current legislation the government spends billions of dollars each year subsidizing financial institutions that make guaranteed federal student loans. This new legislation will generate approximately $68 billion in savings over the next 11 years.
The money saved will be used to expand the existing Income Based Repayment program for federal student loans. Under this program, student loan borrowers can have their monthly payments capped at 10 percent of income they have left over after covering basic needs, and any remaining debt will be forgiven after 20 years which will make it easier to pay back student loan debt. The current limit is capped at 15 percent of income left over.
This is great for public service workers such as nurses, teachers, military, etc. who will have their remaining debt forgiven after 10 years. Loans taken out in after July 1, 2014 will have to devote 10 percent of their income to paying back their student loans.
The Pell Grants will now provide $40 billion to eligible students to receive financial aid to help defer college costs including historically black colleges and universities. The legislation also provides new funding for community colleges to develop online courses, build partnerships with local employers, and help students obtain skills to ensure they succeed in the workforce.
Sallie Mae and many other lenders fought hard against the legislation but lost.
1. End subsidies to private banks that will no longer be allowed to make student loans with federal money, but may continue to earn income by servicing those loans.
2. Double funding for Pell Grants limits up to $5,550 in 2010 and up $5,975 per student by 2017. The Pell Grant will rise with inflation starting in 2013.
3. Cap a graduate's annual student-loan repayments at 10 percent of his or her income.
4. Help an additional 5 million Americans earn degrees and certificates over the next decade, by revitalizing programs community colleges across the country.
5. Expand Perkins Loan program.
6. Keep student loan interest rate at 3.4%.
7. Increase funding to College Access Challenge Grant Program to increase financial literacy and help retain graduate students.
8. Starting July 1, 2010, federal student loans will be originated through the Direct Loan program instead of through the federally guaranteed student loan program.
9. 100 percent of student loans will be serviced by private lenders who will have to compete for contracts to service federal student loans. Direct Loans can only be serviced by U.S. employees.
Under current legislation the government spends billions of dollars each year subsidizing financial institutions that make guaranteed federal student loans. This new legislation will generate approximately $68 billion in savings over the next 11 years.
The money saved will be used to expand the existing Income Based Repayment program for federal student loans. Under this program, student loan borrowers can have their monthly payments capped at 10 percent of income they have left over after covering basic needs, and any remaining debt will be forgiven after 20 years which will make it easier to pay back student loan debt. The current limit is capped at 15 percent of income left over.
This is great for public service workers such as nurses, teachers, military, etc. who will have their remaining debt forgiven after 10 years. Loans taken out in after July 1, 2014 will have to devote 10 percent of their income to paying back their student loans.
The Pell Grants will now provide $40 billion to eligible students to receive financial aid to help defer college costs including historically black colleges and universities. The legislation also provides new funding for community colleges to develop online courses, build partnerships with local employers, and help students obtain skills to ensure they succeed in the workforce.
Sallie Mae and many other lenders fought hard against the legislation but lost.
Monday, March 29, 2010
Short Sales Better Than Foreclosure
On April 5, 2010, a new federal program will be implemented to help homeowners facing foreclosure. The new program called the Home Affordable Foreclosure Alternatives (HAFA) will push mortgage companies and banks to allow homeowners to do a short sale instead of foreclosing on their homes. A short sale is when a homeowner sells their home for less than what is owed on the home and does not have the money to pay the lender the difference.
Banks are already lost millions on homes due to foreclosures since 2008. Banks are still in denial and are only concerned with working with customers who can make them a profit. Working with homeowners who are facing foreclosure will help the economy and help current homeowners. Would a bank rather get $0 or get hundreds of thousands of dollars? Either way banks will take a loss but the short sales will be cheaper to process than foreclosures.
Unfortunately the housing crisis is still affecting many Americans. However, the number of foreclosures this time last year was 803,489. According to Realtytrac.com the number of foreclosure as of February 2009 was 624,240, but it is still too early to determine if the rate of foreclosure filings is declining from last year's numbers.
Under the new HAFA program, homeowners who don't qualify for the Home Affordable Modification Program (HAMP) and have mortgages backed by Freddie Mac or Fannie Mae or have missed two consecutive mortgage payments have to be offered a short sale. This will force lenders to forgive the difference.
Homeowners will also have the option of doing a "deed in lieu or foreclosure". Under this option a homeowner can voluntarily give their home back to the mortgage company and the lender records the mortgage as paid in full. However, with either option it will be reported on your credit report and greatly lower your credit score even if you have good credit.
Under the HAFA program, homeowners can get up to $1,500 to help them relocate to a new residence. If a homeowner has a second mortgage they can receive up to $3,000 of the short-sale proceeds.
The program may also lure more investors who are able to snap up homes at record low prices. The short sale program will still produce vacant homes but at a cheaper cost to mortgage companies than foreclosures.
Millions of homeowners were targeted to be helped under the HAMP program but so far due to banks unwillingness to assist homeowners, only a little over 100,000 have been helped by the program. Only time will tell how many homeowners will actually be helped under the HAFA program.
Banks are already lost millions on homes due to foreclosures since 2008. Banks are still in denial and are only concerned with working with customers who can make them a profit. Working with homeowners who are facing foreclosure will help the economy and help current homeowners. Would a bank rather get $0 or get hundreds of thousands of dollars? Either way banks will take a loss but the short sales will be cheaper to process than foreclosures.
Unfortunately the housing crisis is still affecting many Americans. However, the number of foreclosures this time last year was 803,489. According to Realtytrac.com the number of foreclosure as of February 2009 was 624,240, but it is still too early to determine if the rate of foreclosure filings is declining from last year's numbers.
Under the new HAFA program, homeowners who don't qualify for the Home Affordable Modification Program (HAMP) and have mortgages backed by Freddie Mac or Fannie Mae or have missed two consecutive mortgage payments have to be offered a short sale. This will force lenders to forgive the difference.
Homeowners will also have the option of doing a "deed in lieu or foreclosure". Under this option a homeowner can voluntarily give their home back to the mortgage company and the lender records the mortgage as paid in full. However, with either option it will be reported on your credit report and greatly lower your credit score even if you have good credit.
Under the HAFA program, homeowners can get up to $1,500 to help them relocate to a new residence. If a homeowner has a second mortgage they can receive up to $3,000 of the short-sale proceeds.
The program may also lure more investors who are able to snap up homes at record low prices. The short sale program will still produce vacant homes but at a cheaper cost to mortgage companies than foreclosures.
Millions of homeowners were targeted to be helped under the HAMP program but so far due to banks unwillingness to assist homeowners, only a little over 100,000 have been helped by the program. Only time will tell how many homeowners will actually be helped under the HAFA program.
Thursday, March 25, 2010
How the Healthcare Overhaul Affects You
Health insurance costs increase at a rate higher than inflation every year without a justifiable reason for the increase in costs. Subscribers do not get more coverage, better service, advise or quicker appointments. The Health care law that was signed on March 23, 2010 by President Obama will provide health insurance coverage to approximately 32 million Americans and guarantees that 95 percent of Americans will be covered.
In 2014, those Americans who don't get health insurance will have to pay $95 or 1 percent of their income, whichever is greater provided the amount does not exceed the cost of the health plan.
In 2016, those Americans who don't get health insurance will have to pay $695 per uninsured adult and can increase up to $2,085 per household or 2.5 percent of their income, whichever is greater. An adult would be penalized if they went more than three months of the year without health insurance. If your income is below a certain amount, or if the cheapest health insurance would cost 8 percent of the person's income, they would not be charged a penalty for lack of coverage.
Health insurance will be more affordable for the middle class and small business owners. The health care law would provide the largest cuts for the middle class which will reduce health care premiums and out-of-pocket costs. The law will also improve Medicare benefits by providing lower prescription drug costs.
Americans will also have the option to shop for the same type of private health insurance that members of Congress have which will reduce costs.
Health insurance companies will now be accountable by being required to keep premiums down and prevent healthcare coverage denials including pre-existing conditions. Health insurance companies will be required to offer coverage regardless of your health condition and cannot increases rates or cancel your coverage when you get sick.
There will be limits on how much is paid to receive health care coverage. Based on your income millions of Americans will get a tax credit to help pay for coverage.
If you like your current coverage you can keep it. If you have existing individual coverage on your own, your premiums would decrease by 14 to 20 percent and you may qualify for tax credits and will be provided better coverage.
If you get your health insurance coverage through your employer you will also see a decrease in premiums due to a reduction in administration costs and competition between insurance companies by up to 3 percent.
Insurance forms and health plan guidelines will now be written in plain english and forms will be standardized. Insurance companies that raise rates with no valid cause will not be able to sell their insurance poicies in the new insurance market.
In 2014, those Americans who don't get health insurance will have to pay $95 or 1 percent of their income, whichever is greater provided the amount does not exceed the cost of the health plan.
In 2016, those Americans who don't get health insurance will have to pay $695 per uninsured adult and can increase up to $2,085 per household or 2.5 percent of their income, whichever is greater. An adult would be penalized if they went more than three months of the year without health insurance. If your income is below a certain amount, or if the cheapest health insurance would cost 8 percent of the person's income, they would not be charged a penalty for lack of coverage.
Health insurance will be more affordable for the middle class and small business owners. The health care law would provide the largest cuts for the middle class which will reduce health care premiums and out-of-pocket costs. The law will also improve Medicare benefits by providing lower prescription drug costs.
Americans will also have the option to shop for the same type of private health insurance that members of Congress have which will reduce costs.
Health insurance companies will now be accountable by being required to keep premiums down and prevent healthcare coverage denials including pre-existing conditions. Health insurance companies will be required to offer coverage regardless of your health condition and cannot increases rates or cancel your coverage when you get sick.
There will be limits on how much is paid to receive health care coverage. Based on your income millions of Americans will get a tax credit to help pay for coverage.
If you like your current coverage you can keep it. If you have existing individual coverage on your own, your premiums would decrease by 14 to 20 percent and you may qualify for tax credits and will be provided better coverage.
If you get your health insurance coverage through your employer you will also see a decrease in premiums due to a reduction in administration costs and competition between insurance companies by up to 3 percent.
Insurance forms and health plan guidelines will now be written in plain english and forms will be standardized. Insurance companies that raise rates with no valid cause will not be able to sell their insurance poicies in the new insurance market.
Monday, March 22, 2010
It's Not to Late to File Your Taxes
This time of year accountants get very happy because they are busy with many customers. Everyone is not so happy unless you are getting a refund. A lot of the laws from last year have changed so please be sure to read the instructions when filing your 2009 taxes. Here are 6 tips to help you file your taxes. Thanks.
1. Gather all receipts, monthly/quarterly statements, medical bills, student loans, credit card debt, etc.
2. Be cautious when purchasing a tax preparation software. Research the credibility of the company and verify if the software provides automatic updates to tax laws contained in the software. Go to Better Business Bureau website to check out a company's history. Click on the Business Link under the Check It Out section. Use a software package like Quicken or Quick Books to record all of your deductions. If you don't have this software then you can use an Excel spreadsheet with these basic column headings, Item, Date Purchased or Sold, Cost, Quantity, Total Cost. If you don't have the Excel software program just use plain old pencil and paper.
3. Identify all items that can be used as itemized deductions and put them in one pile. Determine if the standard deduction for your tax bracket is greater than your itemized deductions. (The list of items you gathered in step 2 and verified against the tax form instruction manual as items that can be itemized). If your standard deduction is greater than use the standard deduction, if not, use the worksheet included with your taxes to calculate your itemized deductions.
4. To save money file your taxes electronically. You will receive your refund in approximately two weeks from the date of filing.
5. Don't get a tax refund loan or refund anticipation loan. This is a waste of time and of money. You usually have to pay a fee to get the refund loan which usually have high interest rates and associated fees. See the article discussing this issue.
6. If you are owed taxes this year and are unable to pay your taxes by April 15, 2010, file an extension no later than April 15, 2010 or setup a payment plan. If is never wise to owe taxes because the interest and penalties fees that accrue each day will put you further into debt.
1. Gather all receipts, monthly/quarterly statements, medical bills, student loans, credit card debt, etc.
2. Be cautious when purchasing a tax preparation software. Research the credibility of the company and verify if the software provides automatic updates to tax laws contained in the software. Go to Better Business Bureau website to check out a company's history. Click on the Business Link under the Check It Out section. Use a software package like Quicken or Quick Books to record all of your deductions. If you don't have this software then you can use an Excel spreadsheet with these basic column headings, Item, Date Purchased or Sold, Cost, Quantity, Total Cost. If you don't have the Excel software program just use plain old pencil and paper.
3. Identify all items that can be used as itemized deductions and put them in one pile. Determine if the standard deduction for your tax bracket is greater than your itemized deductions. (The list of items you gathered in step 2 and verified against the tax form instruction manual as items that can be itemized). If your standard deduction is greater than use the standard deduction, if not, use the worksheet included with your taxes to calculate your itemized deductions.
4. To save money file your taxes electronically. You will receive your refund in approximately two weeks from the date of filing.
5. Don't get a tax refund loan or refund anticipation loan. This is a waste of time and of money. You usually have to pay a fee to get the refund loan which usually have high interest rates and associated fees. See the article discussing this issue.
6. If you are owed taxes this year and are unable to pay your taxes by April 15, 2010, file an extension no later than April 15, 2010 or setup a payment plan. If is never wise to owe taxes because the interest and penalties fees that accrue each day will put you further into debt.
Friday, March 19, 2010
8 Ways to Use Your Tax Refund
This time of year is when many people file their taxes in hopes of getting a tax refund. A tax refund is free money you get back when you file your taxes. A better way to get your tax refund is to increase your tax withholdings and get your money back during the year.
Getting your tax refund at the end of the year helps the IRS make money but may not help you as much as you think. Some people are not very disciplined and when they get a large sum of money them don't spend it wisely. In some cases they are worse off with the tax refund than they were before they got the refund.
Don't make that mistake. Use your tax refund wisely and improve your financial situation. Do even better next year than you did this year. Here are 8 ways to spend your tax refund.
1. Pay down debt. Pay down credit card balances first, then pay collection accounts, judgments, liens, then pay extra on any loans.
2. Create an emergency fund. Create a savings account to cover bills for 9-12 months.
3. Invest it. Start a retirement account. If you don’t have a retirement account with your employer sign up tomorrow. You can also start you own individual retirement account in addition to your employer account.
4. Save for your children's college education. If you haven't already done so start saving for your children's college education. College tuition increases at 3 times the rate of inflation. Put the money in a 529 plan.
5. Purchase a home. Now is a great time to buy a home. Use the money to put towards down payment and closing costs.
6. Repairs. If your home need major repairs use the money to fix them.
7. Increase job skills. Take an inexpensive class to boost your skills at work. This can help you find a job or increase your chances of staying employed.
8. Donate. Make a tax deductible donation which you can write off on your taxes next year.
Another way to get a tax refund is to check to see if you have an unclaimed refund from a previous tax year. Contact the IRS for more information at irs.gov.
Getting your tax refund at the end of the year helps the IRS make money but may not help you as much as you think. Some people are not very disciplined and when they get a large sum of money them don't spend it wisely. In some cases they are worse off with the tax refund than they were before they got the refund.
Don't make that mistake. Use your tax refund wisely and improve your financial situation. Do even better next year than you did this year. Here are 8 ways to spend your tax refund.
1. Pay down debt. Pay down credit card balances first, then pay collection accounts, judgments, liens, then pay extra on any loans.
2. Create an emergency fund. Create a savings account to cover bills for 9-12 months.
3. Invest it. Start a retirement account. If you don’t have a retirement account with your employer sign up tomorrow. You can also start you own individual retirement account in addition to your employer account.
4. Save for your children's college education. If you haven't already done so start saving for your children's college education. College tuition increases at 3 times the rate of inflation. Put the money in a 529 plan.
5. Purchase a home. Now is a great time to buy a home. Use the money to put towards down payment and closing costs.
6. Repairs. If your home need major repairs use the money to fix them.
7. Increase job skills. Take an inexpensive class to boost your skills at work. This can help you find a job or increase your chances of staying employed.
8. Donate. Make a tax deductible donation which you can write off on your taxes next year.
Another way to get a tax refund is to check to see if you have an unclaimed refund from a previous tax year. Contact the IRS for more information at irs.gov.
Tuesday, March 16, 2010
10 Smart Ways to Cut Back
I hear many clients and other people say that there is no way they can reduce their spending, cut back or stop buying this and that. Yes you can! If I could do it you can to. Reducing your spending is all about control, discipline and changing how you think about money.
You are your worst enemy. Only you can change your current financial life, only you can prevent collections, late payments, liens, judgments. Even if you don't have the money to pay back the debt there are other things you can do to prevent negative marks on your credit report. The first step is by reducing your spending. Here are 10 ways to cut back on spending. You can use the extra money to pay down debt, create an emergency fund and accomplish your financial goals.
1. Live like college. Live like you did when you were in college or when you first moved out on your own.
2. Eat out of a can. Eat noodles, soup, tuna, canned meat, bologna sandwiches, peanut butter & jelly sandwiches and whatever else you can buy for a few dollars. No one has to know.
3. Buy generic brands. Skip buying name brand products when you go to the drug store or grocery store. Many times the generic brands are just as good as the name brands and are in many cases cheaper.
4. Buy on sale. Buy items on sale, in bulk and use coupons. Some stores honor coupons and give you double the coupon.
5. Buy raw foods. Only buy raw foods such as fruits and vegetables in season.
6. Reduce expenses. Reduce expenses such as cable, cell phone, eating out, shopping and entertainment.
7. Reuse. Reuse bags, printer and fax paper, and boxes for shipping.
8. Downsize. Move to a smaller home or trade in a luxury car for a smaller cheaper car. One of the richest men in America, Warren Buffet bought his house for $31,000 and still lives in it and he is worth $47 billion.
9. Skip drinks. Buy water instead of soda or buy generic soda.
10. Make your own. Use fresh fruits and vegetables to make your own juice drinks and smoothies.
You are your worst enemy. Only you can change your current financial life, only you can prevent collections, late payments, liens, judgments. Even if you don't have the money to pay back the debt there are other things you can do to prevent negative marks on your credit report. The first step is by reducing your spending. Here are 10 ways to cut back on spending. You can use the extra money to pay down debt, create an emergency fund and accomplish your financial goals.
1. Live like college. Live like you did when you were in college or when you first moved out on your own.
2. Eat out of a can. Eat noodles, soup, tuna, canned meat, bologna sandwiches, peanut butter & jelly sandwiches and whatever else you can buy for a few dollars. No one has to know.
3. Buy generic brands. Skip buying name brand products when you go to the drug store or grocery store. Many times the generic brands are just as good as the name brands and are in many cases cheaper.
4. Buy on sale. Buy items on sale, in bulk and use coupons. Some stores honor coupons and give you double the coupon.
5. Buy raw foods. Only buy raw foods such as fruits and vegetables in season.
6. Reduce expenses. Reduce expenses such as cable, cell phone, eating out, shopping and entertainment.
7. Reuse. Reuse bags, printer and fax paper, and boxes for shipping.
8. Downsize. Move to a smaller home or trade in a luxury car for a smaller cheaper car. One of the richest men in America, Warren Buffet bought his house for $31,000 and still lives in it and he is worth $47 billion.
9. Skip drinks. Buy water instead of soda or buy generic soda.
10. Make your own. Use fresh fruits and vegetables to make your own juice drinks and smoothies.
Saturday, March 13, 2010
Surviving a Car Recall
Lately we have heard about many products being recalled. There is a consumer protection magazine report called "Consumer Reports" that is sent out every month to inform consumers of products that are recalled and identifies any possible dangers of using the recalled products. Most recently we have heard of the recalls from auto manufacturers. The biggest recall was by Toyota who had to testify before Congress about the cause of the recalls and what the company plans to do to prevent future recalls.
Toyota is currently considering recalling the Toyota Corolla model for complaints of a steering problem. Toyota has recalled 8.5 millions cars in the past four months due to various malfunctions. Here are 5 ways to survive a car recall.
1. Call. Contact the auto manufacturer directly to get accurate information on the model being recalled.
2. Research. Find out what the process is to get your car fixed and if you will be compensated for the recalled part or for the loss of using your car while you car is being repaired.
3. Status. Check on the status of your car repair frequently and document all phone calls with the car dealer and car manufacturer. Ask for a letter in writing from the car manufacturer stating what model what recalled and the process for addressing the recalled model.
4. Car Fund. Credit an emergency car fund so if you have to get your car repaired you are not greatly impacted financially. This also minimizes using your credit card to cover the cost of repairs.
5. Purchase. When purchasing a car do your research and check to see if any of the auto manufacturer's models have been recalled, the date of the recall and what the company did to address the recalled models. Also check the financial stability of the company. Don't purchase cars that may be discontinued because it may be hard to find parts for the car. Make sure you buy a car that has been rated as a good buy.
Toyota is currently considering recalling the Toyota Corolla model for complaints of a steering problem. Toyota has recalled 8.5 millions cars in the past four months due to various malfunctions. Here are 5 ways to survive a car recall.
1. Call. Contact the auto manufacturer directly to get accurate information on the model being recalled.
2. Research. Find out what the process is to get your car fixed and if you will be compensated for the recalled part or for the loss of using your car while you car is being repaired.
3. Status. Check on the status of your car repair frequently and document all phone calls with the car dealer and car manufacturer. Ask for a letter in writing from the car manufacturer stating what model what recalled and the process for addressing the recalled model.
4. Car Fund. Credit an emergency car fund so if you have to get your car repaired you are not greatly impacted financially. This also minimizes using your credit card to cover the cost of repairs.
5. Purchase. When purchasing a car do your research and check to see if any of the auto manufacturer's models have been recalled, the date of the recall and what the company did to address the recalled models. Also check the financial stability of the company. Don't purchase cars that may be discontinued because it may be hard to find parts for the car. Make sure you buy a car that has been rated as a good buy.
Wednesday, March 10, 2010
The CARD Act and Debit Cards
The CARD Act that went into effective on February 22, 2010 has resulted hundreds of changes to credit cards but did you know that the CARD also affects debit cards? Well here are some changes about debit cards you should know about. These new changes implemented by the Federal Reserve go into effect on July 1, 2010. Your bank should be sending you very soon an explanation of their new overdraft services including fees and changes.
Currently, for standard overdraft services your bank will cover the transaction by charging a flat fee of $20-$30 each time you overdraw your account (bounce a check or use your debit card).
If you have an overdraft protection account or service your bank provides a line of credit that is linked to your savings account to cover transactions when you overdraw your account. Banks charge a fee each time you overdraw your account but using the overdraft protection service may be less expensive than using the standard overdraft service.
Under the CARD act, your bank can no longer charge overdraft fees. Your bank must get permission to apply the standard overdraft services to debit and ATM card transactions. You can grant permission by opting in to the overdraft notice your bank sends you.
For existing accounts if you do not opt-in by August 15, 2010, your bank's standard overdraft services won't apply to your debit and ATM transactions and future transactions will be declined when you don't have enough money in your account, and you will not be charged an overdraft fee.
For new accounts opened on or after July 1, 2010, your bank can no longer charge overdraft fees for debit and ATM transactions unless you opt-in. If you open a new account before July 1, 2010 your bank will consider you an existing customer and you will receive a notice about your bank's overdraft services.
Determine if you want the standard overdraft services for debit and ATM transactions. If you decide to opt-in you can cancel at any time. If you do not opt-in before the deadline you can opt-in in the future.
The new overdraft guidelines do not affect checks or automatic bill payments. Your bank may automatically enroll you in their standard overdraft services plan for these transactions. Contact your bank if you decide to cancel the standard overdraft service to verify what options are available.
Currently, for standard overdraft services your bank will cover the transaction by charging a flat fee of $20-$30 each time you overdraw your account (bounce a check or use your debit card).
If you have an overdraft protection account or service your bank provides a line of credit that is linked to your savings account to cover transactions when you overdraw your account. Banks charge a fee each time you overdraw your account but using the overdraft protection service may be less expensive than using the standard overdraft service.
Under the CARD act, your bank can no longer charge overdraft fees. Your bank must get permission to apply the standard overdraft services to debit and ATM card transactions. You can grant permission by opting in to the overdraft notice your bank sends you.
For existing accounts if you do not opt-in by August 15, 2010, your bank's standard overdraft services won't apply to your debit and ATM transactions and future transactions will be declined when you don't have enough money in your account, and you will not be charged an overdraft fee.
For new accounts opened on or after July 1, 2010, your bank can no longer charge overdraft fees for debit and ATM transactions unless you opt-in. If you open a new account before July 1, 2010 your bank will consider you an existing customer and you will receive a notice about your bank's overdraft services.
Determine if you want the standard overdraft services for debit and ATM transactions. If you decide to opt-in you can cancel at any time. If you do not opt-in before the deadline you can opt-in in the future.
The new overdraft guidelines do not affect checks or automatic bill payments. Your bank may automatically enroll you in their standard overdraft services plan for these transactions. Contact your bank if you decide to cancel the standard overdraft service to verify what options are available.
Sunday, March 07, 2010
FICO 8: The New Credit Score
Your credit score it is one of the most critical factors in your financial life and determines if you will be approved for a loan or line of credit. A credit score is a number developed by the Fair Isaac Corporation (FICO) that lenders use to rate potential customers in determining the likelihood that a customer will pay their bills on time.
A credit score determined by using five main criteria as defined by MyFico.com: your payment history (35%), the total amount owed (30%), the length of your credit history (15%), new credit (10%), and types of credit used (10%).
Payment history shows the history of how you paid your bills either on time or late but unfortunately does not show if your bills were paid before the due date. Amounts owed show the total amount of debt you owe. The length of history indicates how long you have had credit. If your credit history is 2 years or less this could lower your credit score.
New credit indicates how many times you have applied for new credit. If you open too many new accounts in a short period of time this may lower your credit score. The types of credit used indicate the types of accounts you have such as revolving or installment accounts. Revolving accounts are usually credit cards and installment accounts are usually mortgages, auto loans, etc.
The FICO 8 credit score which was developed in 2009 ranges from 300-850 with 850 being an excellent score and 300 being the worst score. The FICO 8 uses the existing 5 factors from the original FICO score plus 4 additional ones: high credit card usage so keep credit card balances at 20% or below the credit limit; isolated late payments do not weight as heavily on your credit score as multiple late payments; authorized user accounts are factored into your credit score; and small balance collection accounts with a balance of $100 or less are not factored into the credit score.
Your credit score varies from each credit bureau because each agency collects their own data from various sources and may collect different data for the same account. Your score can vary anywhere from 5-80 points between the three credit bureaus.
Your credit score changes due to updates to your credit report which changes based on account activity such as balance changes or additions to your credit file (i.e. new accounts or deletion of older negative accounts more than 7 or 10 years old). As a result, you may see a difference in your score from one month to the next.
If you plan on purchasing a large item such as a car, house or investment property, pull your credit yourself to see if any negative items appear so you can fix those issues before applying for a loan.
A credit score determined by using five main criteria as defined by MyFico.com: your payment history (35%), the total amount owed (30%), the length of your credit history (15%), new credit (10%), and types of credit used (10%).
Payment history shows the history of how you paid your bills either on time or late but unfortunately does not show if your bills were paid before the due date. Amounts owed show the total amount of debt you owe. The length of history indicates how long you have had credit. If your credit history is 2 years or less this could lower your credit score.
New credit indicates how many times you have applied for new credit. If you open too many new accounts in a short period of time this may lower your credit score. The types of credit used indicate the types of accounts you have such as revolving or installment accounts. Revolving accounts are usually credit cards and installment accounts are usually mortgages, auto loans, etc.
The FICO 8 credit score which was developed in 2009 ranges from 300-850 with 850 being an excellent score and 300 being the worst score. The FICO 8 uses the existing 5 factors from the original FICO score plus 4 additional ones: high credit card usage so keep credit card balances at 20% or below the credit limit; isolated late payments do not weight as heavily on your credit score as multiple late payments; authorized user accounts are factored into your credit score; and small balance collection accounts with a balance of $100 or less are not factored into the credit score.
Your credit score varies from each credit bureau because each agency collects their own data from various sources and may collect different data for the same account. Your score can vary anywhere from 5-80 points between the three credit bureaus.
Your credit score changes due to updates to your credit report which changes based on account activity such as balance changes or additions to your credit file (i.e. new accounts or deletion of older negative accounts more than 7 or 10 years old). As a result, you may see a difference in your score from one month to the next.
If you plan on purchasing a large item such as a car, house or investment property, pull your credit yourself to see if any negative items appear so you can fix those issues before applying for a loan.
Thursday, March 04, 2010
The CARD Act and Your Credit Score
Your FICO credit score and is used to determine if a customer will pay their bills on time. A FICO score is made up of 5 factors: payment history (35%), total amount owed (30%), length of credit history (15%), new credit (10%), and types of credit used (10%). Ninety-percent of the largest banks use the FICO score. Based on the CARD Act effective February 22, 2010 many changes in the act will now affect your credit score in a different way. Here is a comparison of how the CARD act changes affect your credit score:
1. Previously your credit utilization could be 50% or more and it was not seen as a red flag. Since the CARD act, your credit utilization credit usage/credit limit should be 20% or less.
2. Previously if you had bad credit your credit score was greatly reduced by late payments. Now, The higher your score the more points you lose from a late payments or bad credit. The balance on your previous statement is reported to the credit bureaus. If you have bad credit, one 30 day late payment can lower your credit score by approximately 60-80 points and 90-110 points for those with good credit.
3. If you decide to settle do so quickly to increase your credit score. Your payment history is not affected much if you settle a debt, however, if you pay down a debt over a period of time say over 3-6 months this increases your credit score. If you try to settle a debt with the original creditor ask that the account be removed from your credit report. If the account is still open ask that the account be re-aged. Overall settling a debt or debt consolidation can lower your credit score approximately 45-65 points for those with bad credit and by 105-125 points for those with good credit.
4. Previously you could get another home 6 months to one year after a foreclosure if you had bad credit. Now, a foreclosure can lower your credit score by approximately 85-105 points and by 140 to 160 points for those with good credit. If you lose your home to foreclosure, do a short sell or deed-in-lieu of foreclosure and make sure the mortgage company does not report it on your credit report as a settlement usually reported as "settled", "settled for less than the full amount", or "foreclosure", or something similar.
5. Previously you could file bankruptcy and reestablish credit a few months after filing. Now, if you have bad credit and file for bankruptcy your credit score will be lowered by approximately 130-150 points. For those with good credit it can be lowered by approximately 220 to 240 points.
6. Previously you could close a new account and not worry about the impact on your credit score if you had good credit. Now, it's best not to close an account if you have balances on any open accounts because it will lower your credit score. If you have zero balances on all of your credit cards and close an older account your credit score will be lowered but not by much.
7. Previously when paying off debt, paying off the smallest or largest amounts helped increase your credit score. Now, if you are not making any purchases that require viewing your credit score within the next year pay off debt with the highest interest rate first, then tackle debt with the smaller interest rates.
1. Previously your credit utilization could be 50% or more and it was not seen as a red flag. Since the CARD act, your credit utilization credit usage/credit limit should be 20% or less.
2. Previously if you had bad credit your credit score was greatly reduced by late payments. Now, The higher your score the more points you lose from a late payments or bad credit. The balance on your previous statement is reported to the credit bureaus. If you have bad credit, one 30 day late payment can lower your credit score by approximately 60-80 points and 90-110 points for those with good credit.
3. If you decide to settle do so quickly to increase your credit score. Your payment history is not affected much if you settle a debt, however, if you pay down a debt over a period of time say over 3-6 months this increases your credit score. If you try to settle a debt with the original creditor ask that the account be removed from your credit report. If the account is still open ask that the account be re-aged. Overall settling a debt or debt consolidation can lower your credit score approximately 45-65 points for those with bad credit and by 105-125 points for those with good credit.
4. Previously you could get another home 6 months to one year after a foreclosure if you had bad credit. Now, a foreclosure can lower your credit score by approximately 85-105 points and by 140 to 160 points for those with good credit. If you lose your home to foreclosure, do a short sell or deed-in-lieu of foreclosure and make sure the mortgage company does not report it on your credit report as a settlement usually reported as "settled", "settled for less than the full amount", or "foreclosure", or something similar.
5. Previously you could file bankruptcy and reestablish credit a few months after filing. Now, if you have bad credit and file for bankruptcy your credit score will be lowered by approximately 130-150 points. For those with good credit it can be lowered by approximately 220 to 240 points.
6. Previously you could close a new account and not worry about the impact on your credit score if you had good credit. Now, it's best not to close an account if you have balances on any open accounts because it will lower your credit score. If you have zero balances on all of your credit cards and close an older account your credit score will be lowered but not by much.
7. Previously when paying off debt, paying off the smallest or largest amounts helped increase your credit score. Now, if you are not making any purchases that require viewing your credit score within the next year pay off debt with the highest interest rate first, then tackle debt with the smaller interest rates.
Monday, March 01, 2010
13 Easy Tips to Help You Plan for Retirement
There are many ways to plan for retirement. Some people contribute to an employer-sponsored retirement plan or 401K, some people are self-employed and contribute to a Self-employed plan (SEP) and some employers contribute money to a retirement account for employees without a required employee contribution.
Whatever method you choose it is a known fact that unless you are born in a wealthy family you will have to save for retirement. If you are in good health when you retire at age 65 you could live another 10-20 years which means you will need on average $1,000,000 to $1,600,000 depending on your salary.
This translates into contributing to a retirement account for a minimum of 20 years depending on your salary but more likely for 25 to 30 years on a consistent basis. The key to planning for retirement is to start planning as soon as your get your first job, planning early eliminates the need to play catch-up in your later years in life.
However, it is never too late to plan for retirement. No matter what your age you should put some money aside for your retirement even if you have to get a job after retirement which is better than having no money saved at all. Many people do not save enough for retirement and end up having to work well past their desired retirement age or have to get part-time jobs because social security is not enough to cover all of their expenses. Here are 13 tips on how to plan for retirement.
1. Sign up for matching contributions (free money)
2. Increase retirement contributions with each salary increase
3. Save at least 10-20% towards retirement
4. Purchase health, life and disability insurance
5. Pay mortgage off early (bi-weekly, principal) before you retire
6. Keep debt at 15% of your monthly income
7. Need 70%-80% of your income at retirement
8. Setup protections to protect your retirement account(s) such as establishing a will, trust, investing in tax free accounts such as Roth IRA or purchasing an annuity.
9. Establish goals for your retirement years
10. Create an emergency fund to cover expenses for 9-12 months
11. Consultant a financial advisor
12. Don't depend on your spouse's retirement account because your spouse may not have saved enough money for retirement
13. Scale back expenses within at least one year to five years of your retirement date
Whatever method you choose it is a known fact that unless you are born in a wealthy family you will have to save for retirement. If you are in good health when you retire at age 65 you could live another 10-20 years which means you will need on average $1,000,000 to $1,600,000 depending on your salary.
This translates into contributing to a retirement account for a minimum of 20 years depending on your salary but more likely for 25 to 30 years on a consistent basis. The key to planning for retirement is to start planning as soon as your get your first job, planning early eliminates the need to play catch-up in your later years in life.
However, it is never too late to plan for retirement. No matter what your age you should put some money aside for your retirement even if you have to get a job after retirement which is better than having no money saved at all. Many people do not save enough for retirement and end up having to work well past their desired retirement age or have to get part-time jobs because social security is not enough to cover all of their expenses. Here are 13 tips on how to plan for retirement.
1. Sign up for matching contributions (free money)
2. Increase retirement contributions with each salary increase
3. Save at least 10-20% towards retirement
4. Purchase health, life and disability insurance
5. Pay mortgage off early (bi-weekly, principal) before you retire
6. Keep debt at 15% of your monthly income
7. Need 70%-80% of your income at retirement
8. Setup protections to protect your retirement account(s) such as establishing a will, trust, investing in tax free accounts such as Roth IRA or purchasing an annuity.
9. Establish goals for your retirement years
10. Create an emergency fund to cover expenses for 9-12 months
11. Consultant a financial advisor
12. Don't depend on your spouse's retirement account because your spouse may not have saved enough money for retirement
13. Scale back expenses within at least one year to five years of your retirement date
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