Debt Suggestions » debt tips

Credit Repair Can Be your Ticket to Lower Living Expenses

admin — Sat, 20 Mar 2010 16:34:23 +0000

There are few problems in life that can be more damaging than poor credit. Poor credit translates into a low credit score, causing all manner of trouble for American citizens.

A low credit score can have very damaging effects on one’s financial life and well being. For example, a low credit score can mean higher interest rates when purchasing a home.

Higher interest rates on a home mean a higher house payment. Having a house payment start at a high level means that one will not be able to afford as nice a house as he or she would if he or she were starting with a high credit score.

Some people with low credit scores would like to refinance the home they do own, but are unable to because the interest rate they receive will make their house payment too steep.

Even with the abundance of credit card offers most of us receive in the mail, those with low credit scores do not have the opportunity to obtain a credit card. Credit cards are often portrayed in a negative light, but they do have their uses.

For example, take the case of a family with a low credit score and no credit card who would like to go on a vacation. This family would run into two problems when attempting to plan the vacation.

For starters, the family would have much difficulty obtaining a reservation for accommodations. Most hotels and vacation rental companies require a credit card number to reserve a room or vacation home.

Secondly, the family would not be able to make a reservation for a rental car. As with accommodations, rentals on cars can only be made with credit cards.

If someone with poor credit would take the necessary steps to increase their credit rating, many benefits would immediately be in place.

Suddenly, this person would be able to make reservations for vacation accommodations and rental cars. When attempting to purchase a car, he or she would be able to obtain financing easily and with a lower interest rate.

When house hunting, this person would realize that he or she could afford a nicer home with the same payments he or she was making previously without an increase in monthly house payment.

Basically, those with higher credit scores are able to live more cheaply than those with lower credit scores. Those with higher credit scores have saved countless dollars over their lifetimes while those with lower credit scores needlessly spend money.

In addition to financial burdens, those with low credit scores must deal with other inconveniences.

Many people with low credit scores do not make their payments on time. Therefore, they must deal with phone calls from debt collectors that can be embarrassing and frightening.

So, how can a credit score be repaired? There are certain steps individuals can take that will help them start on the road to credit recovery.

The first step is to know what is in the credit report. There are three agencies that handle credit reports and information should be obtained from all three.

Once armed with knowledge of the credit report, an individual is ready to take action.

By writing letters and calling the credit agencies, credit scores can increase. These means of communication must be well planned and be executed in a calm and professional manner.

Once credit agencies have been contacted, the individual must begin paying off debt. The highest interest debt needs to be paid first. Once the highest interest debt is paid, an individual should pay off the next debt with the highest interest rate and so forth.

In addition, there are many books and web sites devoted to helping individuals increase their credit scores. It is worthwhile to explore these options and consult professionals.

Credit scores should be closely monitored by everyone. When one has a low credit score, the individual should take immediate action to increase the credit score. By increasing the credit score, the individual is given the freedom to spend money more wisely while saving money in the process.

Avoiding bank fees

admin — Wed, 22 Apr 2009 17:15:14 +0000

1) Watch for fees

Here are some fees you should be on the lookout for:

–ATM fees: According to the latest bankrate.com study, ATM fees average $1.97. That’s 11 percent higher than the prior year

–Overdraft fees: Overdraft fees kick in when you don’t have enough money in your account to cover a transaction

–Maintenance fees: Some banks charge a monthly fee regardless of your balance, while others will ding you only if you fall below a minimum balance

–Teller fees: Some banks will charge you just for going to the teller –perhaps if you have an express, or an online account.. you could even be dinged for writing too many checks

2) Avoiding fees

Don’t use another bank’s ATM. 99.2 percent of ATMs surcharge according to bankrate.com. So, to avoid these ever-growing fees, use your debit card to make a purchase, and just ask for cash back. If you really just need an ATM, make sure you avoid the ones at airports, casinos or any other place where the machine is the only way you can access money. Overdraft fees can be brutal. As high as $40 in some cases and Consumer Reports estimates that translates to over 1000 percent interest rate. Here’s how you can avoid them. First, link your checking account to your savings account. Next, keep track of your deposits/withdrawals and finally, keep a cash cushion (especially if you have companies that withdraw money from your account automatically) .

Getting Out of Debt

admin — Fri, 14 Sep 2007 18:48:10 +0000

Here are a few suggestions on ways to get out of general debt:

Review your living expenses, decide where you can cut some spending.

A change in lifestyle can be a simple and effective adjustment. I see friends who MUST have their Starbucks daily, so lets do some math:

I sometimes get a Vanilla Bean Venti size Cappuccino, it comes out to $4.something, so if we round down to $4 even we get $4 x 30 days in a month = $120/mo for something that you can live without. So given the fact I know these friends are spending around $75-$150 a month on Starbucks visits, I see that money spent as covering most power and water bills combined, if not more.

Is that change in lifestyle really going to kill you?

On a typical day at a local cafe near my office I see people spend anywhere from $7-$12 on lunch, and they have great food but it’s nothing they couldn’t live without. Yes, humans have to eat…but look at the math of buying lunch every day vs. making your own lunch.

$8 x 20 workdays = $160 a month to eat out, vs. roughly a third of that to buy the goods and make your own lunch every day. So there you have around $100 a month to put towards paying off that credit card. You also don’t have to totally cut yourself off from eating out, treat yourself to a nice lunch every Friday. You’re still saving a lot of money, and giving yourself a treat. If you happen to have one of those jobs with bad Monday’s switch your treat from Friday to Monday to make your day a bit better. Since you’re saving money, go ahead and splurge a little and treat yourself to a really nice lunch.

With some of the basic savings advice above the money you would save would easily give you a chance to double or triple a credit card payment. Try it for a month, it surely won’t cost you anything so see how much you save. Remembering the saying from my first grade teacher on math problems, “always do the easy problems first, then go back and work on the hard ones” the same rule can be applied to debt…pay off the small debts first, then go back and work on the larger debts. You’ll also feel better about the debt since one or two large debts hanging over your head is much better to manage than a lot of small ones driving you crazy.