Question:
I am 27 years old. I earn $31,000 per year. I just got my MBA and am in lots of debt from student loans. Please help me construct a budget where I can save at least $50 per month. My current budget is: rent $601; car note $375; car insurance: $142 every two months; electric, water, Direct TV: $150; food, etc. $200. I am strapped, and the student loan payments have not started at an estimated $301 per month! Please help. Thanks! – Poor Graduate
Answer:
Congratulations! An MBA from TMMU (Take My Money University) is an honor. You should be proud of the achievement. The unfortunate part is that now you’re getting your doctorate from the school of hard knocks.
Today’s lesson is one that high schools and colleges don’t teach. We’ll learn that it’s hard to repay debt, and there’s a limit to the amount of debt you can take on. So let’s start today’s class.
Your idea of creating a budget is right on. The first thing to recognize about a budget is that it is not a straitjacket. Rather, it’s a tool to tell you what’s happening so that you can decide what changes need to be made.
Generally, there are four big expense areas. These four items are: housing (about 35 percent of your budget), auto (15 percent), food (15 percent) and debt (10 percent). Among them, they account for 75 percent of your take-home pay.
The other 25 percent is needed for medical expenses, clothing, entertainment, cell phone, Internet, gifts, travel, etc. These smaller categories will not throw most people’s finances seriously out of control, nor will they be the solution to any big financial problem.
Now, let’s look at your budget. Your income is $31,000 per year, $25,800 after federal income, Medicare and FICA taxes. About $2,150 per month.
So how do your expenses line up with your income?
- Housing (rent plus utilities): $751 or 35 percent per month. That’s right at the maximum.
- Auto expenses (car plus insurance): $446 per month. Add a tank of gas and a little maintenance, and you’re at $525 per month or 24 percent. That’s too high by 9 percentage points.
- Food: $200 per month. That’s 9 percent of your income. Just about where it should be. (Add food, housing and auto, and you’ve already spent 68 percent of your money each month. It’s easy to see how you’re pushing against your limit, even before beginning to repay student loans.) Now on to the last of the big four categories:
- Debt: The $301 per month for student loans is another 14 percent of your take home pay.
When added to the rest of the Big Four, there’s just not enough money left for everything else. So what can you do? You’ve got three possible options. Increase income, reduce expenses or get some, or all, of the student loans forgiven.
If you want to increase your income, you’ll need another $300 per month in after-tax income to get your budget to balance and pay off the student loans (without any extra for savings). That means you’re looking for roughly a 15 percent pay raise.
Given that, cutting expenses is the most likely solution. The big expenses are home or auto. Taking in a roommate or refinancing your car are possibilities. Refinancing your student loans could also help.
Finally, you can see if you qualify for any student loan forgiveness. To qualify, you’d need to:
- Perform volunteer work.
- Perform military service.
- Teach or practice medicine in certain types of communities.
- Meet other criteria specified by the forgiveness program.
Note that bankruptcy will not help. Generally, student loans are not dismissed in a bankruptcy proceeding.
There’s a lesson in this for all of us. Just because you can borrow money for college doesn’t mean that you’ll have the ability to pay it back. Look at starting salaries in your chosen field. A ballpark rule is not to borrow more than you expect to make in your first year after graduation.
Class dismissed!
By Gary Foreman (CreditCards.com)
Tags: budget, debt plan, Student Loans
21.Jul.10 
Budgeting, Debt Management, Financial Planning, Organization 
Comments (0)
They’re just like you. But with lots of money.
When you think “millionaire,” what image comes to mind? For many of us, it’s a flashy Wall Street banker type who flies a private jet, collects cars and lives the kind of decadent lifestyle that would make Donald Trump proud.
But many modern millionaires live in middle-class neighborhoods, work full-time and shop in discount stores like the rest of us. What motivates them isn’t material possessions but the choices that money can bring: “For the rich, it’s not about getting more stuff. It’s about having the freedom to make almost any decision you want,” says T. Harv Eker, author of Secrets of the Millionaire Mind. Wealth means you can send your child to any school or quit a job you don’t like.
According to the Spectrem Wealth Study, an annual survey of America’s wealthy, there are more people living the good life than ever before—the number of millionaires nearly doubled in the last decade. And the rich are getting richer. To make it onto the Forbes 400 list of the richest Americans, a mere billionaire no longer makes the cut. This year you needed a net worth of at least $1.3 billion.
If more people are getting richer than ever, why shouldn’t you be one of them? Here, five people who have at least a million dollars in liquid assets share the secrets that helped them get there.
1. Set your sights on where you’re going
Twenty years ago, Jeff Harris hardly seemed on the road to wealth. He was a college dropout who struggled to support his wife, DeAnn, and three kids, working as a grocery store clerk and at a junkyard where he melted scrap metal alongside convicts. “At times we were so broke that we washed our clothes in the bathtub because we couldn’t afford the Laundromat.” Now he’s a 49-year-old investment adviser and multimillionaire in York, South Carolina.
There was one big reason Jeff pulled ahead of the pack: He always knew he’d be rich. The reality is that 80 percent of Americans worth at least $5 million grew up in middle-class or lesser households, just like Jeff.
Wanting to be wealthy is a crucial first step.
“The biggest obstacle to wealth is fear. People are afraid to think big, but if you think small, you’ll only achieve small things.” ~ Says Eker
It all started for Jeff when he met a stockbroker at a Christmas party. “Talking to him, it felt like discovering fire,” he says. “I started reading books about investing during my breaks at the grocery store, and I began putting $25 a month in a mutual fund.” Next he taught a class at a local community college on investing. His students became his first clients, which led to his investment practice. “There were lots of struggles,” says Jeff, “but what got me through it was believing with all my heart that I would succeed.”
2. Educate yourself
When Steve Maxwell graduated from college, he had an engineering degree and a high-tech job—but he couldn’t balance his checkbook. “I took one finance class in college but dropped it to go on a ski trip,” says the 45-year-old father of three, who lives in Windsor, Colorado. “I actually had to go to my bank and ask them to teach me how to read my statement.”
One of the biggest obstacles to making money is not understanding it: Thousands of us avoid investing because we just don’t get it. But to make money, you must be financially literate. “It bothered me that I didn’t understand this stuff,” says Steve, “so I read books and magazines about money management and investing, and I asked every financial whiz I knew to explain things to me.”
He and his wife started applying the lessons: They made a point to live below their means. They never bought on impulse, always negotiated better deals (on their cars, cable bills, furniture) and stayed in their home long after they could afford a more expensive one. They also put 20 percent of their annual salary into investments.
Within ten years, they were millionaires, and people were coming to Steve for advice. “Someone would say, ‘I need to refinance my house—what should I do?’ A lot of times, I wouldn’t know the answer, but I’d go find it and learn something in the process,” he says.
In 2003, Steve quit his job to become part owner of a company that holds personal finance seminars for employees of corporations like Wal-Mart. He also started going to real estate investment seminars, and it’s paid off: He now owns $30 million worth of investment properties, including apartment complexes, a shopping mall and a quarry.
“I was an engineer who never thought this life was possible, but all it truly takes is a little self-education,” says Steve. “You can do anything once you understand the basics.”
3. Passion pays off
In 1995, Jill Blashack Strahan and her husband were barely making ends meet. Like so many of us, Jill was eager to discover her purpose, so she splurged on a session with a life coach. “When I told her my goal was to make $30,000 a year, she said I was setting the bar too low. I needed to focus on my passion, not on the paycheck.”
Jill, who lives with her son in Alexandria, Minnesota, owned a gift basket company and earned just $15,000 a year. She noticed when she let potential buyers taste the food items, the baskets sold like crazy. Jill thought, Why not sell the food directly to customers in a fun setting?
With $6,000 in savings, a bank loan and a friend’s investment, Jill started packaging gourmet foods in a backyard shed and selling them at taste-testing parties. It wasn’t easy. “I remember sitting outside one day, thinking we were three months behind on our house payment, I had two employees I couldn’t pay, and I ought to get a real job. But then I thought, No, this is your dream. Recommit and get to work.”
She stuck with it, even after her husband died three years later. “I live by the law of abundance, meaning that even when there are challenges in life, I look for the win-win,” she says.
The positive attitude worked: Jill’s backyard company, Tastefully Simple, is now a direct-sales business, with $120 million in sales last year. And Jill was named one of the top 25 female business owners in North America by Fast Company magazine.
According to research by Thomas J. Stanley, author of The Millionaire Mind, over 80 percent of millionaires say they never would have been successful if their vocation wasn’t something they cared about.
4. Grow your money
Most of us know the never-ending cycle of living paycheck to paycheck. “The fastest way to get out of that pattern is to make extra money for the specific purpose of reinvesting in yourself,” says Loral Langemeier, author of The Millionaire Maker. In other words, earmark some money for the sole purpose of investing it in a place where it will grow dramatically—like a business or real estate.
There are endless ways to make extra money for investing—you just have to be willing to do the work. “Everyone has a marketable skill,” says Langemeier. “When I started out, I had a tutoring business, seeing clients in the morning before work and on my lunch break.”
A little moonlighting cash really can grow into a million. Twenty-five years ago, Rick Sikorski dreamed of owning a personal training business. “I rented a tiny studio where I charged $15 an hour,” he says. When money started trickling in, he squirreled it away instead of spending it, putting it all back into the business. Rick’s 400-square-foot studio is now Fitness Together, a franchise based in Highlands Ranch, Colorado, with more than 360 locations worldwide. And he’s worth over $40 million.
When extra money rolls in, it’s easy to think, Now I can buy that new TV. But if you want to get rich, you need to pay yourself first, by putting money where it will work hard for you—whether that’s in your retirement fund, a side business or investments like real estate.
5. No guts, no glory
Last summer, Dave Lindahl footed the bill for 18 relatives at a fancy mansion in the Adirondacks. One night, his dad looked out at the scenery and joked, “I can’t believe we used to call you the black sheep!”
At 29, Dave was broke, living in a small apartment near Boston and wondering what to do after ten years in a local rock band. “I looked around and thought, If I don’t do something, I’ll be stuck here forever.”
He started a landscape company, buying his equipment on credit. When business literally froze over that winter, a banker friend asked if he’d like to renovate a foreclosed home. “I’m a terrible carpenter, but I needed the money, so I went to some free seminars at Home Depot and figured it out as I went,” he says.
After a few more renovations, it occurred to him: Why not buy the homes and sell them for profit? He took a risk and bought his first property. Using the proceeds, he bought another, and another. Twelve years later, he owns apartment buildings, worth $143 million, in eight states.
The Biggest Secret? Stop spending.
Every millionaire we spoke to has one thing in common: Not a single one spends needlessly. Real estate investor Dave Lindahl drives a Ford Explorer and says his middle-class neighbors would be shocked to learn how much he’s worth. Fitness mogul Rick Sikorski can’t fathom why anyone would buy bottled water. Steve Maxwell, the finance teacher, looked at a $1.5 million home but decided to buy one for half the price because “a house with double the cost wouldn’t give me double the enjoyment.”
By Kristyn Kusek Lewis (Via Yahoo Shine)
21.Jun.10 Uncategorized Comments (0)
Don’t exhale just yet.
The recession is winding down, and shell-shocked consumers can finally begin to repair finances thrashed by the housing bust, stock-market collapse, and wretched job market. But the white-knuckle ride may continue, even as the economy recovers. The whole nation has been living on borrowed money and putting off tough decisions, and the bills are finally getting too big to ignore. Here are six eventualities that will keep the pressure on American families–while providing even more reason to save extravagantly and live carefully:
Taxes will go up. Politicians don’t want to talk about it, but there’s almost no way around the fact that middle-class Americans will have to pay more out of their pocket to keep government functioning. In many states this is already happening. At least 40 states face gaping budget shortfalls this year, with several of them planning to plug the holes by raising income or sales taxes or enacting new taxes on things like services. At the federal level, some taxes are already going up on high earners, but that won’t be nearly enough to cover the gap between what Washington spends and what it takes in every year. “It’s inevitable that they’ll have to find a way to have a truly middle-income tax increase,” says Clint Stretch of Deloitte Tax. That creates a conundrum for President Obama, who has backed himself into a corner by pledging no new taxes on the middle class. That promise seems impossible to keep with the government’s debt approaching $14 trillion–a sum equal to the nation’s entire economic output–and Greece providing an alarming example of what happens when fiscal discipline erodes.
It seems likely that Obama will use the final report from his debt-reduction commission, due December 1 (after the November elections, naturally), as a starting point for a debate on how to get the debt under control. The partisan warfare that follows will make healthcare reform look like a kindergarten sing-along. A new value-added tax on goods and services is one option, with Washington lowering or simplifying income taxes to make it look like a net win for the middle class. Paycheck withholdings for Social Security and Medicare could go up. Long-standing deductions or exemptions for mortgage interest, health benefits, and other privileges could be reduced or eliminated over time. The bite on taxpayers won’t necessarily be severe, but the rancor that comes with it will make everybody feel lousy. A good bet is that Congress dickers for at least two years, with no major changes coming until after the 2012 presidential elections.
How to prepare: Ask your accountant or financial advisor about the tax implications of any big financial decisions–and plan conservatively.
Government services will go down. Like tax increases, this is already happening at the state and local level, and it will trickle up to the federal government soon. The low-hanging fruit is stuff that state and local governments spend the most on: education, Medicaid, and other services for the poor, and public services like the fire and police departments. Several states, like New Jersey, Missouri, and Nebraska, are considering ways to consolidate town and county governments, to provide services with less overhead. The biggest battle at the federal level will be over cutbacks in Medicare and Social Security payments, which account for 35 percent of all federal spending. In addition to that, the postal service will reduce hours and service, and other agencies will follow. There will be fewer government jobs, as federal agencies downsize. And stimulus checks will become a thing of the past–so if you got one over the last couple of years, frame the stub.
How to prepare: If you rely on any type of government service, do contingency planning and make backup plans in case it disappears.
The retirement age will go up. The official retirement age–the point at which you can claim full Social Security benefits–is rising gradually from 65 to 67 by the year 2027. Expect it to go higher, sooner. Social Security is on a path toward insolvency at current payout rates, and one obvious way to fix that is to delay the point at which payouts start. Corporations, local governments, and many other institutions peg their own retirement ages to the Social Security standard, so many folks could end up working longer. A lot of them need to: The majority of Americans lack enough savings to retire, even with full Social Security payments. A few extra years of work might sound like a bummer, but expanding your planned working life also gives you a bit of breathing room to accomplish goals and build a nest egg.
How to prepare: Do your retirement planning under a variety of scenarios, including different retirement ages. Think about part-time work you might do to supplement Social Security payments. And build the biggest nest egg possible.
Incomes will rise slowly. That’s partly because taxes will take a bigger bite out of your paycheck, but also because the job market is likely to stay weak for an uncomfortably long time. The Congressional Budget Office, for example, predicts a higher-than-average unemployment rate through 2015, and with an excess supply of workers, employers will be able to pay less. We’re also in the midst of long period of transition in which big U.S. companies are substituting technology or cheap foreign labor for American workers, further depressing hiring and incomes. The key to getting raises and promotions will be making yourself more valuable–by getting extra training or education, say, or solving problems that stump others.
How to prepare: Start by living within your means and paying down any debt you have. And never take a future raise for granted. It might also be prudent to find a second stream of income, from a small Web business or consulting jobs, for example.
Uncertainty is here to stay. The recession is over, but it’s not back to business as usual. The U.S. economy is fundamentally changing, as foreign competition gets tougher, technology revamps the way companies operate, and old skills become obsolete quickly. There will still be good opportunities for workers who are able to adapt, but those expecting a paycheck for simply showing up every day and doing the same old thing will be the first to go when things change. “Be flexible and work outside your protected comfort zone,” says Susan Goldberg, a New York executive search consultant. “The individuals willing to take risks and operate differently will succeed.”
How to prepare: Ask what could go wrong with your job, income, and finances. Anticipate changes instead of simply waiting for them to happen. Identify your vulnerabilities and address them, whether that means getting more education, changing careers, or downsizing your lifestyle so you can save more.
Big institutions won’t take care of you. Maybe you’ll luck out and get all the support you need from your company, for your entire career. But don’t count on it. One lesson from the last several years is that the era of stable employment and predictable careers is over, with agility and innovation being the new requirements for survival. “It’s important for companies today to be extremely flexible,” says Dan Amos, CEO of insurer Aflac. “They’ve got to be able to turn on a dime.” That’s true for workers as well, and if you’re counting on somebody else for job security, perks or benefits, or retirement income, you’ll be vulnerable when the next wave of transformation hits. Or the one after that.
How to prepare: Enjoy big-company benefits if you’ve got them, but don’t assume they’ll last forever. Exercise your entrepreneurial muscles, even if you work for somebody else, by coming up with new ways to solve problems and get the job done more efficiently. Be as self-sufficient as possible, and if you’ve been doing the same thing for a long time, ask yourself if it’s time to do something more innovative or exciting. You’ll be happy you did.
By: Rick Newman
Tags: Debt, planning, recession
01.Jun.10 Budgeting, Debt Management, Financial Planning Comments (0)
Debit cards are useful financial tools as they offer the convenience of plastic — without the risk of racking up debt. Just like credit cards, though, debit cards can lead to trouble if not used wisely. Here are experts’ nine best tips for managing your debit card. 
1. Know yourself. Do you have bad money habits, such as not balancing your checkbook, losing receipts and getting hit with overdraft charges? If so, avoid pulling out your debit card every time you crave a latte, and pay cash for everyday purchases. “The debit card is a great tool, but it’s not for everyone,” says Susan Tiffany, director of consumer periodicals for the Credit Union National Association. “Just ask yourself upfront: ‘Am I the kind of person who’s going to run into trouble with this?’”
2. Keep track of transactions. Keep good records to avoid bounced checks, overdraft fees and stress. “Write down every purchase right away in your check register,” says Gail Cunningham, spokeswoman for the National Foundation for Credit Counseling. This goes double for those who have joint accounts, according to Catherine Williams, vice president of financial literacy for Money Management International, a national credit counseling firm. “It’s really important that you both record all your transactions and be in close communication with each other,” Williams says.
3. Don’t automatically “opt in.” This summer, new federal regulations prohibit banks from allowing customers to overdraft with debit cards unless they opt in. Banks are urging customers to do so, but Leslie Parrish, a senior researcher at the Center for Responsible Lending, says 80 percent of consumers would rather have their card declined at the checkout counter than get hit with a $30 or more overdraft fee. “Your debit card could become your most expensive credit card if you don’t have enough money in your account and are extended credit,” Parrish says. Instead of opting in, Linda Sherry, national priorities director for Consumer Action, recommends you set up your own overdraft protection by linking your card to a savings account or a line of credit.
Your debit card could become your most expensive credit card if you don’t have enough money in your account and are extended credit.
|
– Leslie Parrish
Center for Responsible Lending |
4. Watch out for holds. Before using your debit card to make hotel reservations, rent a car or even buy gas, ask whether any holds will be placed on your account — and how much and how long those funds will be held. If you don’t want your money tied up for what could be as long as a month, consider using a credit card for hotels and rentals instead, Tiffany recommends. (Or, make the reservation with a credit card and pay the final bill with your debit card.) “If you’re traveling and don’t have the balance to cover the holds they’ve placed, you could go to buy dinner and have your card declined,” Tiffany says.
5. Know the difference: debit versus credit. You’ve just swiped your card to pay for a new pair of jeans, and the clerk asks, “Debit or credit?” If you choose “debit” and punch in your PIN, the transaction happens online and is processed right away. If you choose “credit” and sign instead, the transaction may hit your account several days later, leaving you to think you have more money in your account when you don’t.
6. Be smart about choosing a PIN number. Try to choose a random combination of numbers that you can remember easily, and avoid choosing a PIN that a criminal could guess, such as your initials, your kid’s birthday, the last four digits of your Social Security number or numbers in sequence, recommends Greg Meyer, community relations manager for Meriwest Credit Union. “You wouldn’t believe the number of people who want to choose 0000 or 1111,” Meyer says. “That’s just asking, ‘Please rip me off.’”
7. Go online daily to check your account. Stay on top of every transaction to find out right away about unexpected fees or holds, accidental double charges or fraud. This is especially important with debit cards because any money you lose is your own — not the bank’s, says Tom Harkins, chief strategy officer for Secure Identity Systems and former vice president of security and risk for MasterCard International. By federal law, your losses from fraudulent activity on your debit card are limited to $50 — but only if you notify your bank within two days of noticing a problem.
8. Be careful when linking accounts. If you’re going to link your debit card checking account to a savings account, avoid exposing too much of your money to fraud, Harkins says. “The more accounts you link, the more you’re giving fraudsters free reign,” Harkins says. Your liability might be limited, but it could take days or weeks for the bank to reimburse you. “That’s the risky part — your money is gone, and the mortgage is due tomorrow, you’re going to start bouncing checks and you can’t even make an ATM withdrawal,” he warns.
9. Use a credit card for big purchases. The bottom line: Debit cards don’t offer as many consumer protections as credit cards. Cunningham recommends making large purchases — such as stoves, refrigerators or plane tickets — with a credit card. “You might want that product protection in case there’s a dispute down the road,” Cunningham says. A real-life example: When Steve Rhode, a consumer debt expert at GetOutOfDebt.org, lived in England, he used his credit card to buy plane tickets to fly his family back to the United States, but the airline went out of business before his trip. “I was able to file a claim with the credit card company and they wiped off the charge,” Rhode says. “If I had used a debit card, that money would have been gone for good.”
By Allie Johnson (via CreditCards.com)
Tags: Debt, debti card, fees, Tips
17.May.10 Budgeting, Debit Cards Comments (0)
Think all that’s in the fine print of your credit card is trouble? There may actually be some good news in there: hidden perks, from car rental collision insurance to return protection, that can save you cash.
Introduced to convince cardholders they were getting a bargain despite a hefty annual fee, many of these extra benefits fell by the wayside over time, forgotten in a sea of fine print. But hidden benefits may be seeing the light of day once again. “Over the last 20 years, we saw a dip in benefits,” says Heather Loftus, vice president of Affinion, a marketing company that handles benefits for a number of credit card companies. “Now there’s a renewed interest in making the consumer aware of what they have.”
Call your card issuer
So what’s the best way to figure out what your card actually entitles you to? Call your card issuer and ask for a list of benefits, or search for “cardholder benefits” on your card’s website. While it may be a pain, it’s time well spent, says Ramit Sethi, author of “I Will Teach You To Be Rich.” “You can save $500 a year easily just by using a couple of these benefits.”
Sethi should know. A few months ago, he panicked when he accidentally dumped a cup of coffee onto his brand-new Mac laptop, totally frying it. A repairman estimated it to be a $600 fix. But then Sethi remembered that the Visa card he’d used to buy the computer offered a 90-day guarantee against loss or breakage. “I called and said, ‘I’d like purchase protection to go into effect on this.’ They said, ‘Great, we’ll send you the form.’” A bit of paperwork later, his card ended up covering the entire repair fee.
Of course, as with all credit cards, “the devil is in the details,” says Loftus — so pay attention to the fine print. But first, check out our list to see what perks you might be missing out on, how much they could save you and how you can take advantage.
Perk: First crack at concert tickets.
How it works: Don’t have a prayer of scoring seats at the Lady Gaga concert? Some card issuers offer presale or preferred seating tickets to hard-to-get-into concerts and sporting events; others offer supercheap seats. When Citi rolled out its Private Pass feature, it sold select concert tickets to cardholders for $5 a pop.
What it’s worth: While it may simply save you the stress of trying to nab tickets when they go on sale to the general public, a $100 ticket through your credit card could save you a scalper’s $100 to $200 markup.
What’s in the fine print: The deals come through a third party such as Ticketmaster, so you’ll still have to pay their hefty service fees. Plus, don’t expect a discount, just a chance to buy tickets before your friends do.
Perk: Rental car insurance coverage.
How it works: According to a 2007 survey, one third of drivers spring for extra collision insurance when they rent a car. But most credit cards offer collision insurance for rentals, covering whatever your primary car insurance won’t.
What it’s worth: Prices vary, but a loss-damage waiver often costs an extra $28 a day, so taking a pass on a one-week rental could save you almost $200.
What’s in the fine print: You may not be covered for long-term rentals or rentals in some foreign countries, such as Israel or Ireland. Certain kinds of cars, such as trucks and campers, are excluded. Plus, while your credit card may cover damage, the issuer may resist ponying up for loss-of-use fees while the rental is out of commission.
Perk: Guaranteed returns.
How it works: If you buy an item that gets lost, stolen or destroyed within the first 90 days, your credit card will cover the cost of replacing or repairing it, even when the store that sold it to you won’t take it back. With some cards, you can get your money back, even if you just feel a twinge of buyer’s remorse.
What it’s worth: Card issuers put their own dollar cap on the perk; for Visa Signature cardholders, you can get back up to $500 per item. With American Express, it’s $300 per item or up to $1,000 a year.
What’s in the fine print: Expect to fill out some paperwork or provide proof that what you bought got destroyed. Plus, some cards maintain a list of products that aren’t covered — everything from antiques and jewelry to DVDs and computer software.
Perk: Cell phone replacement insurance.
How it works: If your cell phone gets damaged or stolen, your credit card will buy you a new one.
What it’s worth: Up to $200 for some cardholders; that’s the amount that Citi will pay for your new phone. But you’ll have to kick in a $50 co-pay, so unless you’re using a high-end phone, it may not be worth it.
What’s in the fine print: To be covered, you have to pay your monthly cell phone bill with your credit card, and you may have to file a police report or other paperwork to prove that your phone is gone. Plus, loss isn’t covered, so if you left it behind at the movie theater, you’re out of luck.
Perk: Trip cancellation coverage.
How it works: While only 15 percent of cards offer it, travel cancellation insurance reimburses you the cost of nonrefundable flights if an emergency or illness derails your travel plans. A handful of cards, including the Chase Sapphire, offer protection against travel delays; you’ll get back whatever you spent on meals and lodging while you were stranded during a snowstorm.
What it’s worth: You can get back up to $2,500 from Discover if illness forces you to cancel your trip, and $125 per day if your trip is delayed.
What’s in the fine print: Only a few reasons are considered just cause to cancel: the death of an immediate family member, a serious illness or an injury. You won’t be covered if a pre-existing condition flares up or if your destination turns into a war zone. You’ll also have to provide a doctor’s note to prove your case.
Perk: Cash without an ATM.
How it works: Discover’s Cash-Over program lets cardholders essentially use their credit card as a debit card. You can add an additional $40 (or whatever amount you choose) to your purchase, then pocket the difference in cash. It’s not a cash advance, so there are no fees.
What it’s worth: While it’s mostly a time-saver, you could avoid a few bucks of ATM fees and the hefty costs of a credit card cash advance.
What’s in the fine print: Your cash will still be subject to the same APR you’re paying on other card purchases, and the service is only available at certain stores.
Perk: Emergency travel assistance.
How it works: Get into a bind while you are out of the country, and some credit cards will step into the fray, whether you need help finding an American doctor or replacing a stolen passport. Discover even offers 24-7 translation services over the phone.
What it’s worth: A helping hand is priceless, but an on-the-ground guide could run you $75 an hour or more, depending on where you are.
What’s in the fine print: Some services, like translation, are free, but you’ll be charged for costs involved in, say, getting you a new passport.
Perk: Help with car shopping.
How it works: With American Express’s car-buying program, you use an online interface to build your dream car, then see a low price and a list of certified dealers who will honor it — before you enter your contact info. On used cars, you’re guaranteed to pay less than the Kelley Blue Book price.
What it’s worth: You could potentially save anywhere from a few hundred to few thousand dollars — without the stress of negotiating. Plus, if you find a lower price elsewhere, American Express will refund the difference.
What’s in the fine print: To take advantage of the low-price guarantee, you have to find a better-priced car with the exact same options and features. And you only have three days to do it. Good luck!
Perk: Price protection.
How it works: If you use your credit card to buy anything from a stereo to a sweater, then find the same thing for a lower price elsewhere within 60 days, your credit card will refund the difference. No more shopping anxiety!
What it’s worth: Your credit card sets the limit, but for a Citi MasterCard, you can get back up to $250 a pop, or $1,000 a year.
What’s in the fine print: You’ll have to produce your original receipt and a print ad showing the lower price — and for most cards, that means no online advertisements. (Seasonal sales and close-outs are also on the “no” list.) Most credit cards also have a list of excluded items, such as cell phones, cars and refurbished items.
Perk: Roadside assistance.
How it works: If your car breaks down, simply call your card’s customer service line and they’ll arrange to send a tow truck your way. Jump-starts, tire changes and locksmith services are usually included, too.
What it’s worth: Depending on what help you need, roadside assistance could save you $50 to $100 by charging you only a flat fee for the service call; with a Visa Signature or a Chase BP Multicard, it’s $59.95. Others charge a prenegotiated price for each service you use, so don’t expect to save much besides hassle.
What’s in the fine print: With many cards, you’re merely getting an over-the-phone tow truck referral, not any discount on services.
By: Melody Warnick (via CreditCards.com)
07.May.10 Uncategorized Comments (0)
We are excited to announce our new mobile site! Now you can check balances and transactions for all of your accounts, and even see where you stand in your monthly budget, all from your phone!
The MoneyDesktop mobile site supports any type of Web enabled device from the most basic cell phone to the iPhone, Android and Blackberry. Soon, we’ll be adding more advanced features that you are used to in MoneyDesktop.
Check it out at mobile.moneydesktop.com from any mobile device!
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Tags: android, blackberry, iphone, Mobile, phone
23.Apr.10 Mobile Comments (0)
In a recent article by Mary Pilon at The Wall Street Journal, she describes the suffocating student loan debt from which many professionals are suffering.
“When Michelle Bisutti, a 41-year-old family practitioner in Columbus, Ohio, finished medical school in 2003, her student-loan debt amounted to roughly $250,000. Since then, it has ballooned to $555,000.
It is the result of her deferring loan payments while she completed her residency, default charges and relentlessly compounding interest rates. Among the charges: a single $53,870 fee for when her loan was turned over to a collection agency.”
Pilon goes on to argue that while some people may view student loans as “good debt,” borrowers still need to be cautious when assuming student loans. This is because student loans, unlike mortgages or credit cards, are almost impossible to be dropped if you can’t make the payments.
Read the article here.
Tags: debt management, Student Loans
20.Apr.10 Debt Management, Student Loans Comments (0)
There’s no question that Americans carry a whole lot of plastic. According to one recent survey, the average consumer has 3.5 open credit cards. Add that to the gift cards, club cards and loyalty cards that most of us pick up, and we can easily carry a dozen cards with us wherever we go. That’s 3.6 billion cards that will eventually get used up, expire or become worthless.
But just because you can’t use the cards for their original purpose doesn’t mean you have to send them to the landfill. Julie Charles, one of the crafty folks who is breathing new life into old cards, says people are delighted to donate their plastic to a new cause. “Friends and family are so happy to find someone who can use old hotel keys, expired credit cards and used gift cards,” she says. “They love knowing that they’ll be re-purposed and not end up in a landfill.”
Reuse your plastic to improve your life — and the environment. Here are 8 smart ideas that you can make yourself from your old cards.
- iPhone stand
- Battery card cover
- Earrings
- Grappling hook
- Jacob’s ladder
- Cable organizer
- Magic wallet
- Guitar picks
iPhone stand: You may now have the capacity to watch a full-length movie on your cell phone, but who wants to hold a phone for two straight hours? Not us, that’s for sure. Bryan Casey says his child inspired him to create this clever contraption. “I created it so my kid could watch movies on a plane or at a restaurant,” he says. “I wanted something low-profile enough to fit in my wallet.” Adults can benefit, too; Just use your expired credit cards to create a stand that can be stored flat but quickly assembled to put on your desk or airplane seatback tray. That’ll leave your hands free to eat popcorn and guzzle soda. Check out the details
here.
Battery card cover: If you’ve ever lost the battery cover to a remote control, a mouse or any other small electronic device, you know exactly how exasperating it is to keep your batteries from tumbling onto the floor. Duct tape, rubber bands and twine are all crummy solutions, and buying a whole new gadget seems awfully wasteful. Sidestep these problems with the clever battery card covers designed by
Instructable’s Deathstick. While Deathstick notes that you might have to make small adaptations for the quirks of an individual device, the instructions provided will work for most gadgets.
Earrings: Who says the bling you wear has to be made of gold and diamonds? Jewelry made from credit cards can be just as shiny — and that plastic once had much more value per ounce than most precious stones. Designer Michele Rappaport says if you’re going to wear cards on your ears, don’t bother being subtle. “I like bold, graphic designs in bright colors,” she says. Wear them for good luck at the casino — or maybe just when you’re headed to the mall.
Learn to make them yourself at ehow.com or buy a set at
etsy.com.
Grappling Hook: Instructable’s Noahw doesn’t recommend climbing any vertical surfaces with this MacGyver-like grappling hook, but says you can still have fun with it.
“It’s perhaps better for snagging something off of a coworker’s desk than for actually scaling walls,” he says. “It’s silly, for sure, but fun for people to play around with.” To achieve the best results, Noahw suggests taping two thin cards together, but says a single stiff card might work just as well. Find full instructions here at
Instructables.com.
Jacob’s Ladder: The old-timey toy gets a modern update in Julie Charles’ credit card version of the Jacob’s ladder. In some ways, she says, the new version is an improvement on the old standard: “I love the colors and textures of the cards,” she says.
“It’s very satisfying to make something people enjoy out of materials that would otherwise be thrown away.” Use club cards or expired gift cards for this project because, in the wrong hands, access even to expired credit cards could be dangerous. Take a class to
learn how to make more credit card crafts.
Cable Organizer: Those credit cards helped you buy the computer, the printer and scanner sitting on your desk; they can also help you organize all the cords that help power them. “The credit card is perfect for cable management as it is very strong, and you’re supposed to destroy them anyway,” says DIYer
Creatrop. Creatrop suggests finding a card that’s quite flexible and then gluing multiple cards together if the cards need to support more than a few ounces.
Magic Wallet: What better place to stash your cash, business cards and receipts than in a wallet made of credit cards? This clever storage device has been around for decades, but this 21st century variation helps hide your valuables
within your valuables. Charles says that flat, laminated cards can work especially well for
this project.
Guitar Picks: For musicians, guitar picks are an inexpensive, indispensable tool — but they’re sometimes impossible to find when you need them. Charles says you can create your own endless supply of
guitar picks with some extra credit cards, a Sharpie, and a pair of scissors. She suggests trying a range of different cards to get your preferred thickness and flexibility-but to avoid the laminated cards. “The layers come apart,” she notes.
By Erin Peterson – Via CreditCards.com
Tags: Credit Cards, fun
12.Apr.10 Credit Card Debt Comments (0)
Take these steps to renew, review, refresh and regrow your finances:
You probably have a little money stashed around the house and don’t even know it. But forget turning over those couch cushions and going through old coat pockets. Instead, try a little financial spring cleaning. Here are 10 ways you can find a little extra cash and get more mileage out of the money you do have. And you don’t even have to battle the dust bunnies:
1. Get rid of clutter. Just as spring is a good time to clean out your closets, it’s also a good time to go through your finances and toss out the things that no longer fit your life, says Gary Foreman, editor of frugality-minded Web site The Dollar Stretcher.
Foreman and his family were using one of the inexpensive movie download services so much that they dropped one of their expensive cable subscriptions. “It was rare that we were watching it,” Foreman says.
His tip: “I go through the financial statements and look at them like they’re closets,” he says. Ask: What am I not really using anymore?
2. Sweep away those winter bills. Warmer weather is here, so if you’re still shoveling those leftover Christmas bills, it’s a good time to get rid of them, says Foreman.
One way to handle them is to strategize a one-time idea to make some extra money, such as a garage sale, online sale or even volunteering for overtime at work, he says.
Or just put yourself on a more stringent payment plan. And you can use an online credit card calculator to see how quickly you can deep-six that debt. What you gain financially: peace of mind and a huge amount of interest that you won’t be paying every month.
3. Organize for next year’s taxes. One task to make it easier: create a folder (paper or on computer), to hold all of the charitable deductions you make throughout the year, says Linda Sherry, director of national priorities for Consumer Action, a Washington, D.C.-based advocacy group. Those deductions add up fast, “and it can be difficult to follow up later,” she says.
You can do the same for other spending categories that you need to track throughout the year. And some banks offer software that makes the task easy, she says.
And don’t forget your withholdings. If you were substantially over or under for 2009, this is also a great time to adjust your withholdings for next year.
4. Play with the techno-toys. One thing that can make your life easier: alerts to tell you when you’re approaching your preset limits on credit and debit cards, says Sherry. Often you have the choice of setting them to reach you by e-mail or text message, and they are “tremendously helpful,” she says. By avoiding going over your limits, you bypass having to pay extra fees.
5. Put your savings on autopilot. Set up an automatic draft to your savings account, “even if it’s just $10 a month,” says Barbara Stanny, author of “Overcoming Underearning: A Five-Step Plan to a Richer Life.”
It’s as easy as going to your bank’s Web site and arranging to have the money automatically transferred every month from your checking account or payroll deposit, she says.
Don’t worry about interest rates — they’re pitiful today — but look for a savings account “that has no charges,” Stanny advises.
Planning something special in your future, such as a vacation or new car? Open an account just for that, says Stanny, who says a friend of hers is doing this to save for a dream purchase: a boat. Even saving just a little at a time, “it’s amazing how fast it adds up,” she says.
6 . Scope out your credit cards and credit report. You’re entitled to at least three free copies each year — one from each of the three major credit reporting agencies — TransUnion, Experian and Equifax. Get them for free at AnnualCreditReport.com, the government-mandated site. If you want your credit score, expect to pay for it. Don’t fall for gimmicks from companies that require you to buy a service before getting your so-called free score.
These days, credit reports are being used for everything from setting insurance rates to evaluating job candidates. So making sure your report is accurate can save you some money.
Also, 2009 was a tumultuous year for credit cards. Check the interest rates, credit limits and any rewards programs tied to your plastic. While canceling credit cards can hurt your credit score, you may want to shelve the cards with high APRs and pay down balances on cards with low credit limits to increase your credit utilization ratio. The lower your ratio, the better your credit score. Cash in your rewards, or if your rewards program isn’t working for you, check out other rewards cards that better suit your lifestyle.
7. Check those beneficiaries. Some financial accounts (insurance policies, too) don’t pass through your will, even if you have one. Instead, the assets go directly to the beneficiaries you named when you opened the account or bought the policy.
Over the years, life changes. You get married, divorced, have kids, etc. But too often, you forget to revisit those beneficiary selections. That means if the worst happens, the money in that bank account you opened in college, pre-spouse and kids, could still go to Aunt Edna or your ex.
So take a look at each of your financial accounts and insurance policies to make sure that the money will go where you need it to go now — not where you wanted it to go years ago.
8. Revisit your insurance. The past few years have been a bumpy financial ride for everyone. If your circumstances have changed (cars, job, home or home value), have you changed your insurance too? If not, you could be carrying too much (too expensive) or too little (risky if you have to make a claim). Spring is a great time to take a quick look and make sure that your coverage is, as Goldilocks said, “just right.”
9. Clean house. You know those old household white elephants that have been around so long you don’t even see them anymore? Bad financial habits or outdated decisions are just like that. Lurking on the edge of your life, they take up space and resources without offering much in return. But spring is a great time to examine your financial “big picture” and clear out what isn’t working for you.
Look at the reasons behind your current financial situation, says Foreman. For instance, “is there a reason you’re always carrying $3,000 on your credit cards?” he asks. Or do you need to be a two-car family? And are those family cars you bought then the best ones to meet your needs now?
With this step, you might find that you want to cut spending, increase your income or some combination of the two.
The secret to getting the most out of this one: take off the blinders and really look at everything to find out what is (and isn’t) working for you financially.
10. Think about getting outside. Just as physical spring cleaning gives you a chance to bring the outside in and vice versa, financial spring cleaning has a fun side, too, says Foreman.
“Now’s a good time to start thinking, ‘What are you going to do for a vacation this year?’” he says. And from “stay-cations” to weekend and long-weekend getaways, there are plenty of economical alternatives to the old standard 14-day sojourn.
And a little advance planning can give you a financial advantage. Says Foreman, “You can get information on the Internet, send for a brochure,” and salt away a little money for whatever you choose.
By Dana Dratch
Published: March 24, 2010 on CreditCards.com
Tags: Credit Cards, Organization, Tips
01.Apr.10 Budgeting, Credit Card Debt, Organization, Taxes Comments (0)
Tired of sorting through shoeboxes of receipts and overflowing piles of paper to prepare your taxes? Don’t stop now. This is the time to create a system to organize your financial records that will make the whole process easier next year. It doesn’t have to be anything fancy. But it could save your hide if Uncle Sam comes a-knockin’, if your wallet gets stolen or if your house ever burns down. Not to mention the time you’ll save in the long run. 
Organizing your financial records can also give you a firmer grasp of your finances, so you have a better idea of what you can afford, says professional organizer Julie Morgenstern, author of “Organizing From the Inside Out.” Who knows? You may even end up with some extra cash. “About 70 percent of my clients find money,” Morgenstern says. “They’ll find checks that didn’t get deposited, bank accounts they forgot about or medical bills that they can file to get reimbursement from their insurance company.”
We talked to Morgenstern and other experts to get their top tips on which records to toss, which ones to keep and the best ways to store and organize it all.
Step 1: Toss what you can
A lot of what you’ve got stashed in those piles of paperwork and in your overflowing file cabinets can probably be pitched. Just make sure you protect your identity by shredding anything that contains more personal information than you can find in the phone book. Among the records you can purge:
Receipts. You can throw away receipts for most purchases pretty quickly, especially if you paid with cash. If you paid with a debit or credit card, keep those receipts in an envelope or on a receipt stand (basically, a nail on a base) until you’ve checked to make sure your bank or credit card statement is accurate. The only receipts you really need to keep longer are those for home improvements and major purchases (to get the warranty or prove their value in the event of loss or damage) and those you need for tax purposes. Of course, if there’s a chance you might want to bring back that expensive new coat or pair of shoes, you should hang onto to those receipts as well, at least until the return period is up.
Credit card statements. Most experts say you can toss monthly statements once you’ve checked them for accuracy, unless they’re your only record of a tax-related transaction. If you end up needing a statement for some reason, most banks archive them for you online.
Junk mail. Throw away investment and bank brochures you’ve already read, pre-approved credit offers and catalogs or magazines more than 3 months old. (If they’ve been around that long, you’re never going to read them.) Be ruthless when it comes to invitations to past events, offers you’re not ready to act on immediately and old greeting cards, unless they contain a special handwritten message.
Step 2: Sort and organize
Once you’ve purged, separate must-keep papers into three categories: those you need to keep for one calendar year, those you need to keep for a longer period and hard-to-replace documents like birth and marriage certificates. (See chart: What records to keep, how long to keep them.) Then decide on a home for each. “Just make your system as simple as possible so you actually use it,” says Brandi Kajino, a home office consultant in Vancouver, Wash. “You can have a beautiful filing cabinet but if it’s empty, that’s not helping you.”
Documents you’ll keep for a year. These records are best kept in a filing cabinet or box that’s easy to access, organizers say. Create folders with topics such as pay stubs, bank statements, utilities, phone and auto bills. This is also the place to keep tax-related receipts for business expenses and charitable contributions. If you hate filing or you’re short on space, try an accordion file or a set of stacked letter boxes, Kajino says.
Long-term storage. Most organizers recommend clearing out your files after you do your taxes and placing your return and other documents in a box or bin labeled with the year. To keep them safe and dry, choose a plastic container with a lid. Wondering how long to keep your returns? The IRS has three years to audit you if it discovers good-faith errors; six if you significantly under-reported your income. But many experts say if you have the space, the safest strategy is to keep them forever. “You just never know when you’re going to have to go back and prove something,” says Michael Tonkovic, a director in PricewaterhouseCoopers’ Washington National Tax Services group. “Let’s say you worked for a pizza parlor when you were in college and when it comes time for you to be paid Social Security, you don’t see those wages on your wage statement for Social Security. One way to prove that is if you kept that tax return and W2.” Another scenario: Your employer or tax accountant is being audited for fraud committed 10 years ago. (There’s no time limit if fraud is suspected.) Chances are, the IRS is going to want to see your returns as part of its investigation.
Vital documents. Records such as marriage and birth certificates, passports, Social Security cards, wills, death certificates and titles should be kept in a very safe place. Some experts say a safety deposit box is best, though it might be tough to access at odd hours, and if you die, the box may be sealed. Another good option: a fire and waterproof box or cabinet. Either way, make sure you keep copies of these documents in a separate location. Don’t forget to include a household inventory or video, and a list of all of your important accounts.
Step 3: Stay on top of it
Now that you’ve created a system, the key is to actually use it. Some tips:
Create a home financial center. Choose a single place where you will open bank statements, pay bills and file documents. Your computer, shredder and scanner should be nearby. The best location, says Morgenstern, is where papers naturally accumulate. “If your papers are all over the kitchen counter and your office is upstairs, you have to move your office to the kitchen,” she says. “You need to work where you gravitate because you’re never going to retrain yourself.” That may mean clearing out a cabinet or investing in a rolling file cart.
Plan for incoming paper. To prevent piles from forming again, have a plan for how you will handle mail as it comes in. Kajino recommends a few folders or letter boxes with labels such as “action” for papers you need act on, “data entry” for phone numbers or receipts and “read and review” for newsletters and articles you want to read.
Set home office hours. Whether you spend a little time each night or two hours every Saturday morning, pick a regular time to pay bills and file your financial statements, then put it on your calendar and stick to it. “It should be the same day and time of day every week,” Morgenstern says. “You can’t just do it when you’re in the mood or when you have spare time. Neither of those ever occurs.” Plan to invest a minimum of an hour a week.
Go digital. Check with your bank to set up online bill pay saving them there instead of in paper form. The IRS considers electronic documents to be as good as paper. Just make sure you encrypt the files and store backup copies on a USB flash drive, a CD, a DVD, a portable hard drive or with a Web-based storage service.
MD Tip: MoneyDesktop makes it easy for you to track spending, reconcile your bank statements and eliminate extraneous paper.
By Michelle Crouch, Via CreditCards.com
Published: March 15, 2010
22.Mar.10 Organization, Taxes Comments (0)
