One of the worst experiences you’ll ever have is dealing with collection agencies and creditors. There are some reputable ones like mortgage and some car loan creditors, but when it comes to credit card collection agents, forget it. They will do anything and everything to pressure you into paying off your debt now. Let me preface this post by saying that I believe you should always pay back your debts in a timely fashion, but I understand why some people get behind. If you don’t have the money, there’s no way to pay it back! Before you even start talking and negotiating with creditors, you need to set your financial priorities. Your priorities should look something like this:
Whether this was something initiated by Democrats or Republicans, Congress and the Bush administration are finally getting it when it comes to the level of student debt floating around the country. Today, USA Today reports in this article that Bush plans on raising the pell grants for low-income students by about 25%, and he’s going to lower the amount of subsidies to private lenders such as Sallie Mae who dominate the student loan sector. The banks are saying that this will put a monopoly on government run student aid and students will receive IRS-quality customer service. I say, go cry about it some more you corporate bank crooks! Their profit margin will still be plenty fat even by reducing the government subsidies.What this will do is put more money into the pockets of students who come from lower-income families. It will also reduce the amount of money students have to borrow to cover school costs. Current pell grant levels are enough to cover tuition, but if you went through four years of college, you know that the tuition is not the expensive part. Books, food, rent, and other necessities add up quickly and the $7 an hour part-time job just doesn’t cut it sometimes. I am a strong advocate of college students working while in school, but it is not fair to kid who have no support from their parents to be working 60 hours a week and missing out on some of the college experience. This is a good thing and Congress and the Bush administration should be applauded for it.
So, I buckled down last night and busted out my taxes. Mine aren’t that complicated, but they seem to get progressively more complicated each year. If I ever start a business full-time, I’ll definitely be hiring an accountant to file them. I used Tax Act Online, and I highly recommend this service. First of all, if you’re taxes are fairly simple, you can use their free service and file electronically for free. If you want direct deposit, they’ll charge you $14.95, but not bad for the convenience. If you want the deluxe package, it’s $9.95. I opted to get the deluxe package, because it helps explain a lot of the deductions and credits to layman such as me when it comes to taxes. While I was pulling my hair out trying to find all of the information that I needed, I learned something about the education credits and mortgage interest/real estate tax deductions while filing my taxes this year.
You’ve been killing it. You finally said to yourself, I am tired of being swamped in debt and you did something about it. Congratulations if that is you! I’d like to hear your success story of how you got out of debt or what kind of stuff you did to help pay off your debts. Now the question is, what do I do with the new found money that is in my pocket since I’m not paying payments anymore? The best thing to do is build up a big, fat emergency fund. The reason for this is to help prevent from getting back into debt. For those of you who have ever lost a substantial amount of weight, you know how hard it is to keep the weight off. You have to keep the same diet and exercise habits that you formed to get the weight off, or else the weight will come back with a vengence. Debt acts the same way. If you don’t keep the same spending habits that got you out of debt and buiild up a reserve of cash for unexpected expenses, then the debt will come back and could become worse than it was before.
I was browsing Free Money Finance and I came across this article that gives his opinion about getting a “no money down” home mortgage. Read that article, because I share the same opinion as free money finance. I just bought my first home 8 months ago, and it was a nerve racking experience. You feel like you are signing your life away with all of the paper work. We were able to get a conventional 30 year mortgage with 20% down. We paid some of the down payment and my wife’s parents paid some as a loan. Even though I normally advise to shy away from family loans, this works out for both parties. They will get their money back when we sell the condo in a year, and they have the satisfaction of knowing they helped their kids get their feet off the ground. It helped us, because we were able to avoid private mortgage insurance which can increase your monthly payment by $40 to $75 per month. Most conventional loan lenders will make you purchase PMI if you do not put down 20%, because it protects them if you default on your loan.
I don’t think I have ever talked about CDs on this blog in the psat, and that is for a reason. I don’t like them. With the advent of online savings accounts and well-performing mutual funds, CDs do not offer many advantages over other financial products. Basically, they are a financial product that banks use in order to keep your money for longer than you want. They may have been a good short-term financial investment product before the internet and the rise in popularity of mutual funds, but now they are outdated, in my mind.
By Erik Folgate
Good Morning America has been running a series called “Take More Control of Your Life” and this morning’s feature was starting a home-based business for $200 or less. You have heard me talk about it before, and it is a reality that you can become an entrepreneur for very little money. You don’t need thousands in venture capital or a huge small business loan from the bank to get started.
Many of you like to disagree and mock my disgust for credit cards. I will face the facts that I am still well in the minority of people who think that credit cards are a horrible financial tool and they only do more harm than good. But, I’m okay with being in the minority on this one. The first time that you get screwed over by Capital One or Chase, you’ll come back to my site and say, “maybe you were right”.
I was reading the local newspaperr, the Gainesville Sun, and it showed a poll given to teens about how many of them thought that they would be wealthy when they were older. Their biggest dreams were to be rich as the number one reason, famous as the number two answer, and then helping others in need came after that. This is what our culture helps our young people believe. They force the youth to be believe that every one of them can or will be rich and famous. However, what our culture fails to do is teach them how to do it. Kids don’t understand the hard work that goes into building wealth. They don’t realize that 99% of millionaires are self-made millionaires who worked very hard to get where they are today.
I started investing in my 401(k) plan about 14 months ago. In 2006, my portfolio earned about 11% which is outstanding, well, good enough for me to be happy. Some of you might think that’s a waste. But, this is a retirement account, so if it averages 11%, i’ll be very happy. I invest in 5 different mutual funds. They are listed below:
Around this time of year, I usually hear people boasting about how much money they are going to get back from their tax refund. The problem with this is that you shouldn’t be getting back a huge refund if you are properly withholding your federal taxes. Do you really want to give Uncle Sam a free loan on your money for an entire year? Because that is what you are doing if you are letting the government take more taxes than are owed. If you are getting back a big refund this year, make sure you readjust your W-4 with your HR department. It’s much better to have that money go into your pocket every paycheck than let the government hold it for a year. I understand that some credits and deductions aren’t factored into the W-4 deductions which allow you to receive a refund back, but if you’re getting a couple grand back from your refund this year, there is a problem.
By Erik Folgate
If you’ve read enough personal finance blogs, then you’ve probably read enough scenarios about giving up your grande mocha-chino in order to save more money. I understand the reasoning for being more conscious about controlling the spending on life’s smaller luxuries. I tend to think in bigger terms when it comes to saving money. There are a handful of large purchases that you will make many times in your lifetime, and you can save a chunk of money if you control these expenditures rather than how many times you rent a movie in a month.
I’m sure that most of you have seen the show on MTV, “Pimp My Ride”. It’s a great show. Some of the stuff they do to those cars is sick. Some of my personal favorites were the waterfall/river running through the middle of the interior of the car, and another car where they turned the entire trunk into a sweet karaoke machine. Tricking out a car has become wildly popular over the past decade. Honda Civics with 22″ rims, and Eldorados with LCD monitors and playstations installed. Young people love to pour money into their cars, but is it worth it?
A good habit to get into is to check out your retirement account two or three times per year to evaluate your fund’s performance. Some geeky investors might think I am in idiot for thinking that checking your retirement account only a few times per year is a good thing. The reason that I think you should leave your retirement account alone is because I don’t want people to think they can time the market. Unless you are an expert on the market and you stay up on the countless information about the stock market, you’ll never be able to time it. In fact, most good financial professionals will tell you that you lose most of your returns when trying to time the market. If you keep shifting around your money from account to account, then you’ll hurt your investments greatly.
A good habit to establish is reviewing your credit reports at the beginning of each year. The best part is that it is now free to review your credit report from Experian, Transunion, and Equifax one time per year for free! Go to AnnualCreditReport.com to view all three of your credit reports for free. Be aware of other sites with similar domain names that claim to give you your credit report for free, but rather it is a free trial that will charge you money after 30 days if you don’t cancel the membership. The most notorious site doing this is FreeCreditReport.com. Here are three things to do when reviewing your credit report: