Archive for March, 2011

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The Plastic Trap – Personal Responsibility For Your Debt

Monday, March 28th, 2011

Recently, I read a report called The Plastic Safety Net: The Reality Behind Debt In America. This report is all about Americans using and building up credit debt due to life emergencies and trying to keep up with standard cost of living expenses such as rent, utilities, medical care, tuition for children and even food. Furthermore it makes it seems as if people who have gotten into debt, especially low to mid income citizens, are victims and have very little control over why they have gotten into debt.

It is very well researched and has a lot of eye opening truths and facts in it that I must agree with, mainly because Ive been there and done that as far as being in credit card debt myself.

To jump ahead, I will tell you my happy ending now. After being in almost $14,000.00 in credit card debt alone, at the age of thirty I made a plain, distinct decision, that no matter what, I would pay it all off without adding more to it and enjoy my life without ever getting into that kind of needless debt again.

I paid off the entire amount in about 4 to 5 years, all on my own. It took dedication, discipline and all out self control. I now live a life where I do not use credit for anything, anymore. My whole financial philosophy has changed. I have learned the hard way, that saving the money first is far easier than getting into debt. Learning skills for saving money, plus a little determination has so many personal benefits. When a person saves money towards a worthy goal, it gets easier as time goes on and the money is actually growing by adding to it. If an unexpected emergency happens, it doesnt hit that hard. There is some money saved, that can be used. Striving for the goal of saving a certain amount of money and becoming successful does wonders to a self-esteem level. There is control over planning a budget of how much can be saved from each paycheck. Its very basic stuff. Now, using credit does the exact opposite. Its a form a self-destruction because, the main thing that happens is hopelessness. Credit bills start piling up and the payments HAVE to be made every month, with interest added. There is no control then. Since its already bad, feeling worse by adding more to it becomes mute. Its easy to fall into an indifferent mode. Self-esteem gets torn down because in reality, you are failing financially.

Now granted, I was a young adult on my own without a family to support. But here is my message. It fits in with why many people, no matter what circumstances or backgrounds they come from, get into this trap of credit card debt. They really think its easier than saving money first. It all goes back to self-indulgence and instant gratification. For many people these habits dont start when they are in dire need of financial help when a life emergency occurs. It started way before that, when they obtained their first credit card in college, possibly. Before they got married, before they had a house, before they had children. Its easier for young adults to use credit to obtain new things they want, right now. The habit starts with something that simple.

When an individual allows themselves to fall into this trap, I cant help but to say it is like a drug. Soon after aquiring all the great wanted items that feel good on credit, it snowballs. It becomes a trap because you have added bills (most people in credit card debt have an average of 6 to 8 credit card bills per month) and you are then forced to use credit cards even more just to survive. Like paying for rent, utilities, medical expenses, vehicle payment and maintenance, and of course food. Lets not forget, what happens when a special event or a yearly holiday comes around. Its all self perpetuated and it does become a vicious cycle. I was a prime example of this cycle as a young adult, on my own. Looking back, I can easily say that if I had learned better budgeting skills and not used credit lines haphazardly in the first place, I would have been able to afford to live very well on the income I was earning, in the career of my choice.

It is possible to get through emergencies without going into further debt. I had three major unexpected emergencies happen to me while paying off my debt and I did not go into further debt because of them. I used my brain, skills, resources, and further commitment to get through my unexpected emergencies. My car got stolen, after I had just paid it off. Then, I got into a car accident with my brothers car. I was let go from a job, where I thought I was very secure. These emergencies all happened to me in the course of about 6 months of time. Because of a weird turning of the universe, these kinds of problems usually happen for most people almost all at once.

As far as people paying for their childrens tuition and yes, this is an American dream to be able to put a child through a great learning establishment and then into a good college.etc but if a family cant afford it, then public school is always still there. A child can be conditioned to learn they will need to become responsible enough to pay for their own college education if that is what they are striving for. Plenty of successful adults have put themselves through college, by working and staying committed to their goal. Families earning two incomes, yet paying outlandish childcare fees are fighting a losing financial battle, because they are not willing to cut costs on everyday items to make ends meet with one income of who ever is the bread winner. They are not willing to own older, yet reliable vehicles. They cant live without cable TV or cell phones. Though they are not splurging on expensive vacations or going to high cost events all the time, they still believe there are everyday services and products they cant live without. There are so many ways to save money on basic food items a family needs to survive, it could make your head spin, but it takes effort that many people would rather avoid. I believe this is the deep seeded truth as to why millions of Americans are suffering with major credit card debts.

Millions of Americans can stop the insanity of living the way The Plastic Safety Net describes simply by making what I call a personal attitude adjustment. Being debt free can be a very accomplishable goal. For the people who say I cant it mainly boils down to I dont want to. They live with excuses for nearly everything, so why not their debt problems. I had this problem and I made a commitment to change it. The new attitude has changed my life 100% and it can happen for millions of other people.

The Plastic Safety Net report in a PDF download can be veiwed on http://www.demos.org/pub654.cfm

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Loyalty Cards Think Again!

Sunday, March 27th, 2011

Are credit card loyalty schemes worth the plastic theyre printed on? According to a recent study by moneysavingexpert .com the answer is a resounding NO. The study investigated 80 reward schemes and was especially unimpressed by Tescos Clubcard, Nectar and Airmiles. With the average value of each Tesco Clubcard point being worth from 1 to 4 pence, a Nectar point being worth 0.54 pence and an Airmile being valued at 7.9 pence, their reaction is hardly surprising.

In actual fact, an expenditure of 10,000 per annum will earn a reward of 50 with Marks & Spencer, John Lewis and Asda, for instance. There is an Egg scheme which would only reward you with 10 per 10.000, although internet banks Egg Money Card offers a better rate, at 100. With the Nat West Black card, there is an annual charge of 250 in order to earn 51 per 10,000 of spending! Can you afford to make the saving?

There have been some very big changes in the benefits available recently. Some of the larger stores have ditched their schemes totally, whilst others have radically reduced the rewards on offer. Barclaycard is no longer linked with the Nectar scheme and Tesco has reduced the value of its scheme to new customers. Consumers dont know where theyre up to with all the changes and this is causing a complete lack of interest in loyalty cards in general.

It appears that consumers are bewildered by the sheer number of different award schemes and its virtually impossible to make comparisons, due to clever marketing. The typical one per cent paid by the retailer to the credit card companies is not being returned to the customer and its felt that the vast majority of these reward schemes are a rip-off.

The basic idea of stores using the cards to encourage customers to remain loyal, not to mention to increase their spending power, seems sound. The points gained offer discounts on a range of goods, family days out and flights. In fact the rewards are so trivial that it is felt that its a far better idea to leave the reward card at home, or even better, bin it and instead use a card which offers rewards via cashback and if using it as a credit card, aim for one which gives a low interest rate.

American Express Platinum offer a 2 per cent cash back deal if you spend more than 7,500 per year, so for 10,000 spent you would be rewarded with 200.

The BAA Worldcard came out well. It pays an impressive 795 for 10,000 spent. They offer discount shopping vouchers which can be exchanged for goods, meals and drinks at BAA airports in the United Kingdom. The GM card offers car discounts. If you buy a new Vauxhall or Saab you will get a 300 discount.

The conclusion is that youd be better off switching to a cashback type of credit card. Theres a wide choice available and maybe now is the time to make the change.

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The Legal Procedure Of Wage Garnishment

Saturday, March 19th, 2011

A legal procedure, in which some portion of a persons earning is required to be withheld by an employee for the payment of the debt, is called as wage garnishment. Most of these garnishments are made by court orders. There are some other legal procedures also which include IRS levies or state tax collection agency levies. They levy for the taxes, which are unpaid.

There are assignments in which the employees voluntarily agree that their employers will deposit a particular specified amount of their earnings to their creditor. But in the case of wage garnishment this voluntary assignment does not work.

Title III of Consumer Credit Protection Act says that person has his pay garnished for only one debt then the Act limits the amount of that employees earning that may be garnished. It even protects the employee from being fired also. If any garnished controversy in wage garnishment is arises, then the query solution part has to be taken directly to the court or the agency initiating that withholds the action. In the case of wage garnishment, Wage and the House Division, which administers the Title III Act cannot do anything.

The Garnishment law protects everyone from receiving their personal earnings like pensions, salaries, commissions, wages, bonus, etc. this law implies in all the 50 states. Wage garnishment is not prohibited if an employees earnings are garnished for or more debts.

There are some restrictions also on wage garnishment. The amount of pay subject to wage garnishment is based on the employees disposable earnings which includes federal state and local taxes and the share of employee in State unemployment Insurance and social security. These disposable earnings for wage garnishment under the CCPA many deductions are not made from the employees gross earnings such as voluntary wage assignments, union dues, health and life insurance, savings bonds purchased, payments made for payroll advances, contributions to charitable causes. Only the retirement plan contributions are deducted and that too only those which are required by the law.

For wage garnishment, the garnishment law sets the maximum amount that can be garnished from a person in a particular pay period. During the fixing of the amount, the law does not consider the member of garnishment orders received by the employer. In case of ordinary wage garnishment, which does not include bankruptcy etc., the amount of garnishment in a week may not exceed the lesser of the two figures. The garnishment amount maybe 25% of the disposable earning of the employee or the amount by which his disposable earnings are greater than 30 times the federal minimum wages. Of the pay period is weekly and the disposable earnings are lesser than the amount calculated through the federal minimum wage, then the garnishment cannot be done. A maximum of 25% can be garnished. The law for wage garnishment specifies that the restriction on garnishment does not apply to certain cases where the bankruptcy court order is issued or there are outstanding debts for the federal or state taxes.

Wage garnishment is the last option that an employer goes for. When all the other options for settling the due debts exhaust, then the employer opts for wage garnishment. Most of the wage garnishment requires a court order and even in that they are required to notify the worker 20 days before the garnishment goes into the effect.

If someone ignores the IRS, then wages are the first place that goes in for garnishment. It is not only the IRS but also the state government; private creditors or even an ex-spouse seeking alimony can go in for garnishment. The government creditors can garnish more than the paychecks. But the Title III of the Credit Consumer Protection Act limits the amount of wage garnishment from the workers paycheck. This facility leaves an employee with some income and at the same time creditor also get paid up regularly also prevents the creditor to speed up the recovery procedure.

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Tips on Saving Energy Dollars in Your Home

Thursday, March 17th, 2011

A typical U.S. family spends more than $1,600 a year on home utility bills, yet making some simple changes around the home can save money and make heating and cooling systems more efficient, according to World Energy Solutions, a publicly traded energy services company based in St. Petersburg, Fla.

By evaluating facilities and equipment, World Energy Solutions (symbol: WEGY) helps businesses lower their utility consumption and maintenance costs and extend the life of their equipment.

“Many of the energy-saving strategies we use for our commercial customers can also be applied to the home,” says Benjamin Croxton, chief executive officer of World Energy Solutions. “There are many common-sense, low-cost and no-cost ways to lower your home energy use as well as many new technologies that can be applied to your home’s energy-consuming systems.”

Here are some tips from the American Council for an Energy Efficient Economy on things homeowners can do to make their homes more energy efficient:

* Turn down the temperature of your water heater to the warm setting.

* Use energy-saving settings on refrigerators, dishwashers, washing machines and clothes dryers.

* Use compact fluorescent bulbs, which can save three-quarters of the electricity used by incandescents. First to be replaced should be any 60-watt to 100-watt bulbs that are used several hours a day.

* Have your heating and cooling systems serviced in the fall and spring. Duct sealing can also improve the energy efficiency and overall performance of your furnace or central air conditioner.

* Clean or replace furnace, air conditioner and heat-pump filters.

* Assess your heating and cooling systems to determine if you should replace or retrofit them to make them work more efficiently to provide the same comfort, or better, with less energy.

“If your home’s central air-conditioning system is over 10 years old, a new state-of-the-art system can save you 30 percent or more of your home’s air-conditioning expense,” says George Walker, air-conditioning expert with World Energy Solutions.

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Low Interest Credit Cards Are Considered by Many The Most

Wednesday, March 16th, 2011

Low Interest Credit Cards Are Considered by Many The Most Popular Credit Cards

Knowledge can give you a real advantage. To make sure you’re fully informed about low Interest credit cards, keep reading. Imagine the next time you join a discussion about low Interest credit cards. Your friends will be amazed when you start to share your knowledge about low interest credit cards.

If you’re not using a low interest credit card, ask yourself why? This credit card have numerous advantages such as the 0% Intro APR (annual percentage rate) that enables the consumer to save on interest expense. Several factors should be considered in choosing the right credit card. Depending on your situation a fixed low APR interest rate might be a better choice than the 0% intro APR if you are planning to carry a credit card balance each month. If the 0% intro APR changes to a low fixed rate after the promotional period ends then this will be an ideal situation. If the interest rate jumps up to over 20% then this might not be the best deal. This is why customers need to know what the interest rate will be at the end of the introductory period. For customers deciding on the 0% intro credit card offer will save money on interest expense which can be used to pay off the loan much sooner.

Low interest credit cards main benefit is to save money on interest expense. These credit cards are very essential in saving money on interest expense when used to transfer balance from a high interest credit card to a low interest credit card. They may also be beneficial to cardholders who make large purchases and carry a balance forward every month. Banks charge a fee for balance transfers. Since this fee varies from bank to bank, customers should compare offers to find out which banks charge the lowest fees. Individuals with excellent credit can request to have the balance transfer fee waived.

Customers may be pleasantly surprised to find that low interest cards offer many features similar to standard credit cards. Features can be similar to a standard credit card such as cash back, rewards, no annual fees, bonus miles etc. Its important to compare features of low interest cards and to apply for the one that fulfils your needs and save you the most money. Individuals who are able to pay the balance off each billing cycle will save the most on interest expense. This is because credit card companies usually waive interest charges if the entire balance is paid on time each month. Unfortunately, many customers are unable to pay their credit card balance off each month because they are not making enough money or they may be having financial problems. However, using a low interest credit card could be the best alternative to save on interest expense if you are planning to make purchases and maintain a credit card balance from month to month.

Individuals with bad credit pay an astronomical amount of money for interest expense and fees to credit card companies. With this kind of financial problem it can be a daunting task to get out of debt. As you can see, having excellent credit is very important because it makes it possible to get approved for a low interest credit card which in turn will save you a vast amount of money on interest expense. Be aware that credit card companies are able to change the interest rate on your low interest credit card because of late payment or they can change the interest rate for no reason at all. Managing your credit wisely is extremely important for financial success. Make sure to report errors on your credit report to the three major credit bureaus which are: Equifax, Trans Union and Experian to correct the errors on your credit report promptly.

If you are overwhelmed with bills and credit card debts, why not consolidate your loans into one loan. This will save an enormous amount of money on interest expense. Consolidating your credit card debts into one loan can improve your financial situation by making your monthly payment more manageable. This is an excellent opportunity to start the process of improving your credit score. Consolidating simplifies your paperwork and saves time and energy by only keeping records for a single loan instead of several loans.

Card holders will need to know about grace period and the way it relates to their specific low interest credit card. The grace period is between 20 to 25 days. You have this free period to pay no interest if your payment is credited to your account during that time frame and your account carries no balance. Customers monthly payment must be received by the creditor during this time frame. Learning about grace period as it relates to your specific credit card is very important. Usually credit cards without a grace period are charged finance charges immediately on new purchases even if your previous month’s bill was paid in full. The internet is best place to do credit card research and submit online credit card application. The credit card types are organized into categories making it easy to find the credit card you are looking for. Just by clicking on the low interest credit card category will bring up a vast amount of information. The best thing about applying for a credit card on the internet is the speed and convenience of processing your online credit card application. No need to travel from banks to banks trying to find the right credit card then having to wait weeks for banks to process your application. Individuals with good credit can receive instant online approval. This means that the credit card applicant can receive an online approval within minutes of filling out their online credit card application.

Some card holders may believe that that they can use their low interest credit cards to make new purchases and take cash advance with the 0% introductory offer. They will be surprised when they found out that they are charged different interest rates for balance transfer, new purchases and cash advance. Protect yourself from identify theft by shredding credit card offers and reporting stolen or lost credit card to your credit card issuer as soon as possible. Also, it is very important to read the credit card agreement to avoid surprises and unnecessary financial problems. Reading the credit card agreement will give you the knowledge and confidence in choosing and using the card correctly.

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Tips on how to save money

Saturday, March 12th, 2011

Money is an essential element in every bodys life. It is the one that we exchange to get all the necessary things in life. And that is exactly the reason why we work all day and sometimes night. Since the flow of money in ones life is not uniform, it is only prudent to save some money for the crunch days. Economics permits one to spend his/her money in any amount as he/she wishes. But how rationally one could plan so as to maintain a minimum level of backup in any given day is directly linked with his/her ability to save.

In daily life, even if we know that we are spending money to buy things we need, most of us tend to over see the fact that more than 50% of the spending is for purposes that are quite unnecessary or those expenditures can be avoided without affecting ones basic life style. Exactly this is the point from where one should start thinking of saving money.

Distinguish between and clearly understand your needs and wants. Needs are those things one require to sustain his/her basic needs. Want on the other hand refers to anything that is not an absolute necessity but which presence enhances ones way of life. For example, a car can be a need but a $40,000 SUV is a want.

It is a human nature to insist on the best and the biggest even if the same quality is available at a lower cost. Spending $100 in a posh restaurant when one can afford the same sumptuous meal at $20 or buying a $20 shirt with a $30 trendy label attached all belong to this category of keeping up with the Joneses. A bit of intelligent spending here can save a lot.

It is a good idea to try a commodity and get a feel of it before actually buying one. Because there is no point in buying something you may never use or hardly use. Such an analysis is relevant especially when the item under consideration is a costly one. Rent one, borrow one, and try one out before making the final call.

Mortgages can easily be the biggest single expense most families have in their monthly budget. Here, zeroing on the best deal is where the trick lies. Calculated comparisons can make a difference of few thousand dollars in the entire deal. Another big expense is linked with the vehicles a person owns. One should see if he/she is getting the best deal on the maintenance, insurance and repairs.

True, food is a need as well as a recurring expense. Keeping a check over the money spend on food to a necessary extend – can make a big difference in the money one could save at the end of the month. Plan food purchases in advance, go for generics or store brands and stock up the items that you regularly use when available on sale.

Another expenditure that drains a lot of money is ones fascination for clothes. Unlike electronic goods, the price of clothes is continuously on an upward spiral. Hence it is a good idea to buy quality clothes that lasts a longer period. Such clothes are better than the throw away types. The cost of clothes is not going to come down either. Therefore, buying in advance for a season ahead is a logical correct step. But never over do it. Getting clothes for 5 years in advance is stupid!

Telephone is a common thing in every house hold. This is one department where money drains like an open tap. Though local phone service has a fixed price long distance calls matters. Shop around to find out the best deal as far as the service provider is concerned. Keep in mind, a saving of $16.75 a month can add up to $200 a year.

If you are a travel addict, travel expenses can make a big difference if not having the right travel agent. Even if it is the same place, airline, hotel or car rental, the difference between two travelers can easily exceed $1000. Keep ones eyes and ears open when hunting for a traveler.

Remember, saving money is not putting all the dollars that one earns in his/her savings account. But it is all about intelligently spending the bucks, at the same keeping a check on all the unnecessary expenses. Good Luck!

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Savings account: A great tool to save money

Thursday, March 10th, 2011

Meant to encourage the habit of saving money amongst people, a savings bank account not only ensures safe keeping of your funds, it also helps you keep your expenses under control. Use of savings account to save money has become a much-touted concept in economic forums in recent times.

According to a recent survey, most of the money problems arise out of people’s indifferent attitude towards their own financial reality. In our day-to-day life we can be a little more ambitious and try to save money by coming up with thousands of innovative ways. We can maintain savings account so that we can put aside a portion of their liquid assets that could be used to make purchases later on.

With the technology revolution, the web media is bombarded with clear and impartial information and expert guidance for investors, entrepreneurs looking for ways to save money. With the money saved in the savings account, you can also make some more money. Most of the banks have Money Market Savings Accounts. These accounts have got higher interest rates than the savings accounts. Online banks provide higher interest rates due to the fact that the banks do not have to pay for buildings and staff.

There are many online banking facilities, which offer you with latest updates on money saving techniques. By adopting a few resource-saving techniques, you can save your money from flying away from your pockets. You need to learn how to manage your money in order to save it from being wasted in avoidable costs every month.

But, you need to allot enough time for it. A recent. If you are an avid smoker then with a little bit of self-control you can curtail your smoking habits. You can also bring down your housing expenses and earn some money by renting out your spare room. To augment your savings you can deposit your monthly earnings into two different accounts at two different banks.

This will help you to monitor your savings very easily. You can also monitor your personal spending via online banking and stay within your budget. Through debit/ATM card you can withdraw money from the ATM centers of a particular bank which remains open 24 hours a day. Many of the banks also offer Internet banking facility for the convenience of their clients. Savings Bank Account can be opened in the name of an individual or in joint names by filling up a simple form.

Young adults are now increasingly warming up to the idea of saving their money in a savings account. The trend has already set in and it will be only a matter of time when children will also be taught about saving money as part of their school curriculum.

So, without wasting any further time, make it a point to save a portion of your money in a bank account every time you get your salary check. Increase your financial prowess adopting a few tricky money-saving techniques and be assured of a peace of a lifetime.

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