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Student Loan Consolidation

June 1st, 2010    Subscribe To Our Feed

Consumer reports reveal that the cost of education in the United States is much higher compared to other countries. To most, this may seem the only way to get a good job after graduation. Many decide to apply for a loan from various sources which is much easier than getting a competitive scholarship.

When the student has finally graduated, it is time to pay back the creditors for the money that was borrowed. Since many apply for more than one loan, the best thing to do is apply for student loan consolidation.

A student loan consolidation is very similar to what an individual does with credit card debts. Instead of getting separate bills, this is combined into one to make it easier to monitor.

Why is the student loan consolidation program being encouraged among students? This is because it buys time to pay it back at a lower interest rate. After all, the person will also need the money for other things such as bills, renting a place to stay and even buying a car.

There are two types of student consolidation loans. The first is from the federal government called the Federal Family Education Loan Program or FFELP which is also supported by private organizations. The second is called the Federal Direct Loan Program where all the money comes from the taxpayers.

Those who avail of these programs may choose to pay the same amount monthly or contribute a small amount in the first few months then pay a bigger chunk later on. Some people prefer the second option because in theory, the employee has the potential to be promoted and receive a higher pay in the future.

Those who decide to sign up for student loan consolidation should do some research first before signing up for any plan.

When an agreement has been reached, all the person has to do is pay the dues on time. Those who fail to do so are just making the situation worse since penalties will be imposed.

The student loan consolidation program is not just for those who are straight out of college. Those who are working on a master’s or a doctorate can also make use of this since this is payable over a period of 10 years.

If people have more money, it is possible to fast track the plan so the debt is fully paid. The secret is learning to budget one’s finances because this too will affect one’s credit rating.

Money should never be a hindrance in getting quality education. If the future of this nation lies with the youth, the government and private organizations should do whatever it takes to make this an even greater nation.

Credit Monitoring Services - How They Can Help You

May 20th, 2010    Subscribe To Our Feed

One of the most effective ways to repair your post-bankruptcy credit is to get new credit. But, as you get that new credit you need an efficient way to monitor the effect it is having on your credit report. To do that, you should use a credit monitoring service. While you can do the monitoring yourself, using a credit monitoring service is helpful for a number of reasons.

1. Credit monitoring services monitor any inquiry made on your credit report and give you the reason for the inquiry.

By getting regular reports of the queries on your credit report and the reasons for those queries you can easily discover any unauthorized activities being done under your name.

2. Credit monitoring services notify you when any new credit accounts are opened in your name.

Obviously, you’ll know about the accounts you open. But, one of the ways identity thieves use your private information is to open up new credit accounts in your name. Then, they max out those accounts and leave you with the bill. A credit monitoring service protects you from the damages of identity theft because you’ll know immediately if a new credit account has been opened in your name.

3. Credit monitoring services monitor any changes to your mailing address on your credit accounts.

Another tactic of identity thieves is to change your mailing address for your credit cards. They do this so that your credit card statements are sent to them. When they get those statements, they steal your account information and use it to run up charges on your account. If this ever happens to you, it could take you months to sort out the problem and figure out exactly what happened. With a credit monitoring service you’ll get an immediate notification when there are unauthorized changes of address on any of your credit accounts.

4. Credit monitoring services monitor credit limit changes on your credit cards.

Identity thieves like to request increases on your credit card limits. This allows them to run up even more debt for you. A good credit monitoring service alerts you to such changes as soon as they happen.

5. Credit monitoring services give you quick, convenient access to your credit report.

The ability to access your account information online is a big time saver. And, you can opt to have the credit bureaus email you any alerts on your credit report account. Those alerts are delivered as soon as a change is detected in your account. This makes it easier for you to avoid becoming a victim of fraud. Online access to your credit report also makes it much easier for you to correct any inaccurate information on your account very quickly and easily.

Using a credit monitoring service has many benefits for you as you recover from bankruptcy and start the process of rebuilding your credit. If you want to secure you financial future and make the most of your fresh start out of bankruptcy, you owe it to yourself to sign up for a good credit monitoring service.

Home Equity Loans

March 30th, 2010    Subscribe To Our Feed

The equity of your house can be a great source of cash, especially if you have an immediate need for it, through what is called a Home Equity Loan. However, before you plunge right into the process of drawing a loan out of the equity of your property you need to understand different aspects of this loan as they may be easy to acquire, but a nightmare of not done correctly.

Here are some aspects of home equity loan that you need to consider:

Points

Most lenders charge a part of the loan, called ‘points’ for commissions for themselves and for their sub-agents. Actually such points vary from little to exorbitant; it all depends on the company and the type of loan. If you are charged 1 point, this would mean 1 percent of the loan. And so 1 percent of a 100,000 dollar loan is an up front charge of 1000 dollars. So shop around to find the best deal as there are lenders who do not charge any points at all.

Loan Interest Rate Terms

Is the loan a fixed or variable rate type of loan? If it is a fixed loan, then you do not have to worry about external forces such as economic situations directly affecting your interest rate. But on the other hand, if you have a variable rate loan, you could start out with a great interest rate that could become costly over time as your payment will increase as the interest rate increases. Check to see if you can switch from variable to fixed. That way if you see interest rates rising, you could always change over to the fixed rate.

Pre-Payment Penalties

Lenders tend to charge a penalty for paying off your loans early. You have to be aware that indeed, many second time loans have pre-payment penalties. Pre-payment penalties lock you into paying off your loan over its entire duration, and if you still decide on paying it off early, the lending company will add a penalty that could be costly depending on the size of the loan and how much time is remaining on the loan.

Late Payment Penalties

Does a home equity loan’s interest rate go up with late payments? With many lenders, with delinquent payment, penalties usually follow. More so, there sometimes is a clause in the loan, on default interest rate increase, which raises automatically the loan rates when payments are late. This can actually be costly for the borrower.

Insurance

You have to check if the home equity loan that you are prospecting has insurance costs hidden somewhere, a cost that you definitely do not want. Whenever you get a loan, you can take in corresponding credit insurance. You can have credit life insurance, which takes care of your loan in the event that you die. However, if in the case of a home equity loan, if you feel that insurance is just an added cost, then by all means avoid the lender that requires you to pay for them.

Doing due diligence upfront and asking questions to ensure you understand the different aspects of the home equity loan is a must. The better understanding you have before you sign on the line will go a far way to ensure there are no disappointing surprises later on.

How To Make A Budget

February 8th, 2010    Subscribe To Our Feed

Many people turn green when they hear the word ‘budget’, but if asked where their money went, could they account for it? Instead of it being seen as a ‘negative’, having a clear sense of ‘in-come’ and ‘out-go’ can really put you in the driver’s seat of having a great financial future. The real key is to have one before you need one.

So, how do you make a budget? Their are two things absolutely necessary in creating a budget. You need to know what your total income is and what all your expenses are.

Determine Average Monthly Income

For many, knowing their total income for a month or a year is simple and straightforward: that is those who work salaried jobs, who are paid a fixed wage. For others it may take a little more effort to come up with a figure. For people whose income is based on commission, look at your previous year’s net income and divide it by 12 to get an average monthly value. If you have increased or decreased your sales by some percentage, factor that in. For people who have no ‘regular’ income, it’s going to be very important to have a clear understanding of your expenses to know the minimum amount your monthly income needs to be to accomplish your financial goals.

Calculate Average Monthly Expenses

Determining expenses can be a little more tricky. To really get a handle on where your money goes, record for at least a month, even longer, every penny you spend. Though this can be tedious, it can also be very enlightening. Also, checking out those bank statements that so often go unopened, can shed some light on where money is going, if you’ve never paid attention to monthly service fees.

Once you record your monthly expenses, you need to add in expenses that may only occur once or twice a year, such as car or home insurances, school tuition fees, water heater rentals, etc. There are many spreadsheets available online to help identify expenses by categories, and can then be used to do the math for you. (You can get a spreadsheet
here.) If you’re manually doing to calculations, for the expenses that occur only once or twice a year, divide their amounts by 12 to determine what their average monthly cost is and add it into your expense calculations that way.

Compare Monthly Income And Expenses

After you have determined your average monthly income and your average monthly expenses, you need to compare the two figures, and for some - with fingers crossed - hope that the income exceeds the outgo.

Happy Day

For those with greater income than expense, you can consider what you are going to do with the excess, be it developing a strategy to pay down debt, or investigating ways to make it grow.

Decision Time

For those whose expenses exceed their income, it becomes decision time as there are really only two alternatives. One is to look at ways to cut back, the other is to expand your income. I guess it’s three if you do both!

If you decide to cut back, you have to review your expenses and divide them into ‘fixed’ and ‘variable’ categories. Fixed expenses include things like power and rent or mortgage payments, anything which has to be paid. The variable category would contain expenses such as things falling into the entertainment category - the things that are nice to have, such as cable TV, but you wouldn’t die if you didn’t have them (even if you claim you would!!).

Your food expenses could also fall into this category. Yes, you could die if you didn’t have food, but what could potentially change here would be the number of restaurant meals purchased in a month, or the number of ‘prepared’ meals bought from the grocery store. Making coffee at home in the morning instead of stopping somewhere on the way to work - even if all it cost was a dollar a day, makes a difference of $30.00 at the end of the month.

If you decide you’d rather increase your income, be careful not to inadvertently loosen your grip on your pocket book and spend a little extra here or there. Make sure that that extra money you are earning is going to the exact place you went out and earned it for.

Get A Little Help

If you’d like some help with getting a real grip on where your money is going, here is a service that you may be interested in trying out. Note that this is for US residents only.

See Your Budget As Your Friend

Since budget is not a four-letter word the sooner it becomes a friend, the better your chance of sticking to it and ultimately making your money work for you, rather than you having to work for it.

Christmas, Parenting and Debt

December 10th, 2009    Subscribe To Our Feed

The Christmas season is upon us with Christmas Day being less than a month away. With that, for many, the anxiety level may already be on the rise due to the expense the season usually incurs. If you find yourself in this position, consider some truths that can help you make it through.

As a parent you can feel overwhelmed at times like Christmas when you want to give gifts to see your child’s face light up, and yet financially it is just not possible.

The best thing to do is to simply be honest with your family. Children understand a lot more than we give them credit for. If you take the time to talk with your children before Christmas Day, and explain that your current situation will not allow you to buy them what you would like to, you will prevent their hopes from being dashed, and/or eliminate unrealistic expectations.

If that still leaves you feeling anxious, think about your own childhood. Did you always receive everything you wanted? Probably not, but you lived, and looking back, was your life scarred because of it?

If you really stop to think about it, what is it about Christmas that you remember most from your childhood? Is it the presents you received, or the gathering together of friends and family? The fun, the laughter, the being together. Aren’t some of the most treasured memories those that did not cost a penny?

Become Creative

For many people, being blessed by someone doing something with or for them is more meaningful than receiving a present. So stop and think of things you could do with your family and friends and then give them a gift certificate of that special something. They will be excited and appreciate it and it will lessen the impact on your wallet or credit card.

Prevent Overspending

Take the time to determine what the maximum amount you can spend on Christmas is and then stay within that amount. Look through the bundle of flyers that come to your house daily and find the best price on the items you want to buy. If you cannot find the item within the budget, choose a different item.

Pay Cash

One way to ensure you stick within your budget is to pay cash for the items you purchase. Not only will this prevent you from spending above your budgeted amount, but it will also alleviate the anxiety of receiving your next credit card bill and starting 2010 on a sour note.

Finally, remember that children live what they learn. The example you set for them by simply being honest and living within your means, will pay big dividends and last far beyond the length of the toys they may not receive.

Simple Facts To Face To Get Out Of Debt

December 1st, 2009    Subscribe To Our Feed

Recently I had a conversation with a friend who, for the last year or so, has really made an effort in getting a hold of her financial situation. During our conversation we came to the conclusion that in our Western culture, being in debt is so acceptable that unless you truly resolve to not play the game, you will remain in debt.

As she knows that I write for this site, I said to her that at times I feel frustrated as to what to contribute as there is only so many ways that you can say - “If you want to get out of debt, simply quit spending more than you make.” But it has to be a decision that first, you make, and second you stick to come hell or high-water.

Just as with dieting, you won’t be successful if you don’t resist the donuts that show up at the office, or the decadent slice of chocolate cake that’s shouting out your name. Same here, if you are sincere about wanting to get out of debt, you are going to have to stick with your decision even when you walk passed your favorite store and see the 50 Percent Off Entire Stock sign hanging in the window.

If we stick with our dieting comparison, to really maximize your success, it’s going to take a lifestyle change. You have to change your food choices, cut out excess, maybe change the time of day in which you eat, and to really like what you see in the end - you’re going to have to exercise.

So too with getting out of debt, it’s going to take a lifestyle change, or more so, a management change. You will have to go through the exercise process of creating a budget - or at least, go through the process to know exactly what your fixed expenses are and what your variable expenses are. You will then have to compare the sum of those values with your net income to determine how much of the variable spending has to be trimmed, or alternatively, what you are going to do to generate more income.

The option of doing something to generate more income is not something that should be quickly dismissed. In his book Rich Dad Poor Dad, Robert Kiyosaki talks about the mentality of the rich not being ‘I can’t afford it’, but rather ‘How can I get it.’ This outlook is liberating rather than restrictive. The minute you give yourself an ‘I can’t’ or restrict yourself, psychologically you start to want it more.

So really it just all boils down to this: everything has a cost. Plain and simple. Then you have to decide what it’s worth to you and what price you’re willing to pay. Back to the diet. If you tell yourself you can’t have the chocolate cake, you’re going to want it all the more. So instead if you assess the cost at 500 calories, is having to skip supper, or having to increase your exercise time, or staying where you are at, an acceptable price to pay for the brief pleasure of the chocolate cake.

If there is something that you really want to buy, rather than telling yourself you can’t, what can you do to make the purchase? If getting out of debt is your true desire, then what in your current budget gets cut, or what can you do to generate some income to purchase the item?

If you can’t recall a time of someone pointing a gun at your head, forcing you to buy something on credit, then you alone are responsible for your debt. If you lived by the principle of purchasing only that which you paid cash for, you wouldn’t be reading articles on this site. So the question to you is what are you prepared to do to turn things around? Start thinking, think outside the box, write an action plan down, stick to it and watch your life turn around.

Over the next while, we plan on posting articles that might generate some ideas on ways to increase your income. Please feel free to leave a comment with ideas or strategies which have worked for you.

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