Personal Finance Blog, Your Guide to Financial Fitness
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Joshua Caucutt
Joshua Caucutt
In November 2011, CNN reported that students who graduated from college in the past year did so with a record level of student loan debt – $25,250 per graduate.
What is most worrisome is that this number is an average – meaning that while some students’ debt stayed below this amount, many carry debt far in excess of $25,000 – some up to or even exceeding $100,000 in student loans. What’s worse is that many former students with significant student loan debt never even received their diploma.
Joshua Caucutt
A new car might be the worst investment in the world. Why? A new car loses 15% to 20% of its value the minute you drive it off the dealership lot! But this phenomenon is not limited to new cars – used cars also quickly lose their value.
If you are financing your car, it is unlikely that your car’s value will be equal to or greater than the amount of financing over the life of the loan. The bottom line is that most people owe far more than their car – new or used – is worth (i.e. upside down car loan), and that can have extremely expensive repercussions in the event of an auto wreck. Gap insurance might be the solution to avoid such a disaster.
Joshua Caucutt
In the last few years, all kinds of industries have jumped on the IRS tax refund bandwagon. Almost half of Americans are issued refunds after filing their taxes, resulting in a profitable marketplace for a number of creative consumer opportunities. There are special deals on cars, deals on furniture, gift cards and more.
Most tax refund deals promise to add some sort of premium to your refund and can be great ideas, especially if the timing is right – say, for example, if you happen to be planning to buy a car or a sofa and that purchase is a part of your regular budget.
Joshua Caucutt
There are times even better than Christmas – like the day that you get your tax refund check. But unlike Christmas, you never know when that exact day will come.
The good news is that the speed of getting one’s tax refund has increased exponentially since the early 1990′s. Back when I was in college, I remember filing my taxes in March or April and then not seeing my paper check refund until as late as June. Plus, there was no real indication of the status of that refund. Information from the IRS was difficult to get in the days before the Internet.
Joshua Caucutt
I remember noticing the letters “FDIC” stenciled on the bank door when I was a little kid. Everyone has seen the acronym at some point: in television commercials, on web advertising or posted somewhere in the bank. The term became especially well known during the financial meltdown of 2008 when FDIC insurance became a major topic.
I never really paid attention to whether or not a bank was carrying FDIC insurance until I started researching banks offering high interest rates on online savings accounts (e.g. ING Direct and Ally Bank). Many banks offered rates in excess of 5% back in 2005 to 2007 . However, I needed to be sure that if I chose to put money in an online account, it would still be safe.
Joshua Caucutt
Do you try to cure the common cold by using the best nose tissues money can buy? Of course not. Though tissues help with symptoms, to avoid a cold, you have to go after the root cause: exposure to the flu virus.
In the same way, when dealing with problems related to money, the root cause is more important than the symptoms of financial dysfunction. However, the biggest issue with a root cause is that while it may sound simple and basic, addressing it can be very difficult.
Joshua Caucutt
Zero percent balance transfer credit cards offers are back. In the past few months, I’ve talked about how to best use a balance transfer, and I’ve offered tips for how to responsibly use 0% balance transfer credit cards to get out of debt. But there’s another way in which you can use a 0% APR balance transfer to your benefit.
Although the best use for a 0% balance transfer is to pay off an existing balance with a high annual percentage rate, you can also use the balance transfer for cash as an emergency fund, earn interest in a savings account like ING Direct or a money market account, or temporarily pad your bank account. But in order to move forward with these options, you’ll have to turn that APR offer into cash. How is this done?
Joshua Caucutt
In another recent article here on Money Crashers, we offered some suggestions on how to opt out and get less junk mail coming to your house. You can even use websites like Catalog Choice to stop junk mail. I think the reasons for blocking junk mail are sound, and probably smart, except… well, I like junk mail.
I’m also the guy who likes to watch infomercials and listen to the full spiel of telemarketers when I have time. I have yet to participate in a telemarketer’s pitch or fall for an infomercial deal, but I still enjoy hearing what they have to say. Similarly, my dad has a hobby of trying to get telemarketers to hang up on him by asking all kinds of questions they can’t answer about the product. Maybe it’s one of those weird genetic things.
Joshua Caucutt
Have you seen the credit card offers yet? You know, the 0% introductory APR balance transfer offers? In late 2010, after a bit of a hiatus, credit card companies started sending out 0% balance transfer offers to potential customers with good credit again. You may have thought that the days of balance transfer arbitrage were over after the peak in the mid-2000s – but they’re now back.
Most people don’t have much use for a 0% APR balance transfer and if you don’t, that’s great. But on the other hand, if you’ve made a few small financial mistakes over the years but you’re truly careful and disciplined now, a 0% balance transfer offer can help you get ahead and on the right track.
Joshua Caucutt
American workers received a 2% pay raise this month (Jan ’11). My paycheck is direct deposited into my checking account and when I logged into my bank account to see that it had been processed, I noticed a few more dollars than usual. My first thought was that I had been paid for a couple of extra things that I do around the office, but the amount of increase was not correct. So when I got to work the next morning, I took a long look at my pay stub and realized that the amount of Social Security withholding had been reduced!
Joshua Caucutt
Many of you may have noticed the headlines announcing possible delays for tax filing. These delays are meant to allow the IRS time to catch up with the tax legislation passed late in the year by Congress and signed into law by President Obama on December 17, 2010 (i.e. Bush tax cuts extension bill).
Some of the headlines I’ve seen have implied that things over at the IRS are out of control and will cause all kinds of problems across our tax filing system. As I have dug into the issue, I’ve realized that everything is going to be okay, and there should not be any major headaches.
Joshua Caucutt
In my last post about balance transfer arbitrage, I pointed out that banks and credit card companies are once again offering 0% introductory rates on transferred balances. Several years ago, it was common to find balance transfer offers where there was no balance transfer fee, no interest, and the user was not charged an annual credit card fee. In recent years, with the tightening of loans during the economic recession came an increase in balance transfer fees to anywhere from 3% to 5%. However, the current crop of offers has started to move back towards 0% balance transfer offerings. How can you take advantage of them? Here are four unique strategies to benefit from these offers:
Joshua Caucutt
Several years ago, in a more naive financial universe, someone discovered the art of “balance transfer arbitrage,” where you could basically take advantage of credit card companies offering 6-12 month 0% loans, put the money in a high-yielding savings account, and make a bunch of money in interest within the time frame. As time went on, the balance transfer’s more cynical cousin, the “app-o-rama” was developed. Here, people would apply for as many credit card applications all at the same time when their credit score was high. The goal was to 1) move higher interest debts to lower interest ones 2) allow for excessive use of the balance transfer arbitrage game 3) get as many sign up rewards as possible 4) build a credit history quickly. In this post, I’m going to detail a bit about the first strategy: balance transfer arbitrage.
