Credit Options for your Used Car Purchase

Though the economy may slow down, you can’t do so. You have to live, support and family and plan for your children’s future, your retirement and a host of other things. Probably in search for better financial position realized that you need a car. Going by your financial status you may have decided to settle for a used care for the time being to get things moving (no pun intended). Without sufficient cash, you have to look at credit to make the purchase. There are many options at your disposal for purchasing the car.

photo credit: ninjapoodles

Importance of Good Credit Scores

Getting a loan of any kind requires that you have a good credit rating. Though this is not always mandatory, it does help in securing favorable clauses. Even if you don’t have a great credit score, you need not put your car purchase plans in the back burner as yet. There are credit agencies that can give you loans to make the purchase. However, it cannot be all roses – there will be some thorns. In this case, the thorns are some steep interest rates and higher charges. Regardless of how good your credit score is, you should be able to find companies offering you loans.

Dealing with Dealers

This is an important phase in your car purchase. If you can get an excellent car dealership firm, you have a great chance of getting a good loan offer too. The dealers make money from the sales, so they would go that extra mile to get you favorable loans so that you purchase the used car from their firm. You must use this to your benefit. Approach multiple dealers to find out what they have to offer and compare their services. Play with their mutual competition, pit one against another and secure a great car deal.

Getting Loan Information

You don’t always have to rely on car dealers to get you the best loan information. You can do some research yourself to get the best offers. Just like dealers, even lending firms compete with each other for clients. Some of them are target only clients with good credit score, while others target bad credit scores. Find out a list of lenders that can serve you, approach them, get their offers and again try to compare and get the best deals.

Getting All The Information

You can get all this information for comparison sitting in the comfort of your house. You don’t have to go out looking for dealers, just search for them on your favorite search engine. The websites of lenders and dealers should give you lots of information about their services. You don’t have to face a exciting dealer trying to convince you that his dealership is the best and all that. Look at all the information and take a neutral stand and analyze what will suit you the best.

Read All Clauses

After doing all the background work, negotiations,etc. It is important that you close the deal in the proper fashion. Read through all the terms and conditions of the loan process before signing the dotted line. Once you sign, you are making a commitment to abide by those rules. If you don’t read them you could have problems during repayment.

Good Debt Management Can Get You Out of Debt

Many people have been shocked by the economic slowdown. Some may have been affected by the job loss and are now working at much lower salaries. In effect, your planned lifestyle goes for a toss. You had expected that your present job should get you through the loans, debts and other credits. Unfortunately, it didn’t work out that way and the fines and higher interests on missed payments is wrecking havoc in your life. You are now being cornered by regular phone calls, mails and messages from collectors and wondering, “What exactly went wrong?”. If you find yourself in such a situation or something close, cheer up. This is not the end. There is light at the end of the tunnel, but unless you walk through the tunnel you cannot get to it. So get up as start walking.

photo credit: Andres Rueda

The best way to walk through your finances during such credit crisis is to follow good debt management practices.

Budgeting
Budgeting is the powerful tool that you can help you take control of your finances very quickly. Now taking control doesn’t mean getting out of debt, it just means that with budgeting you ca start to work towards coming out of debt. As a part o budgeting, get all your income and expenses together and record them in two separate columns. Try to be as extensive in your records as possible. This would give you a good idea of how your money comes in and goes out. Now start working on cutting costs and increasing income.
Cutting costs need not necessarily mean depriving you of certain requirements; that would mean change in lifestyle and it is not something that you can do overnight. So start by getting rid of the additional frills like special services on your phone, television,etc. You could also look to cut down on movie trips, rentals, etc. and the weekly parties with friends in pubs. It doesn’t amount to saying that you should not have a life, but you can surely scale down on such expenses. And in future budget them in advance.

Housing
If you are unmarried and are ready to share the accommodation with someone else, do so. You could either someone to stay with you or you could go and move in with someone. Either way, you’ll a significant dip in your monthly expenses which is great. If you already have a family, look to move to a cheaper house. This may be a bit further than your present house, in a different locality, etc. but it is still savings. But before making this move look at other aspects too, like the increase and decrease in your associated expenses like travel charges, groceries, etc. Typically a house shift can get you more than rent savings.

Sell Unnecessary Stuffs
If you were to look around your house, you should see plenty of items collected over the years that you really don’t use. It is great time to sell them off and make some extra buck. Initially, you may not want to sell many of those things. Look at extra TV sets, old players, DVDs, etc. They may be fit to sell as you can do without them. With the success of your over all debt management plans and your sales, chances are that more and more items start to qualify for the sale. You not only clean up your house, but if you decide to move out, you have lesser things to carry with you.

Remember that debt management is just a phase when your sole aim should be to get out of debt and repair your credit score. Once you do that, you are free to regain your original lifestyle. In fact the second time around, with your debt management experience, you would be better placed than the first time.

Personal Finance Management Tips for Students

Student life is that time when you are maturing and getting ready to shoulder responsibility. Well besides the obvious studies, there are some other survival skills that you must learn during this time. If you mess it at this stage you could repent it for a long time later. The first among those skills is managing your finance. A college or university student life is the transition from dependence on parents to complete independence. You would have your parents’ financial backing, but to meet your needs you would have to look to save money and earn from other sources.

photo credit: Symic

Planning Income

Why Should You Make a Budget?

You say you know where your money goes and you don’t need it all written down to keep up with it? I issue you this challenge. Keep track of every penny you spend for one month and I do mean every penny.

photo credit: r-z

You will be shocked at what the itty-bitty expenses add up to. Take the total you spent on just one unnecessary item for the month, multiply it by 12 for months in a year and multiply the result by 5 to represent 5 years.

That is how much you could have saved and drawn interest on in just five years. That, my friend, is the very reason all of us need a budget.

If we can get control of the small expenses that really don’t matter to the overall scheme of our lives, we can enjoy financial success.

The little things really do count. Cutting what you spend on lunch from five dollars a day to three dollars a day on every work day in a five day work week saves $10 a week… $40 a month… $480 a year… $2400 in five years….plus interest.

See what I mean… it really is the little  things and you still eat lunch everyday AND that was only one place to save money in your daily living without doing without one thing you really need. There are a lot of places to cut expenses if you look for them.

Set some specific long term and short term goals. There are no wrong answers here. If it’s important to you, then it’s important period.

If you want to be able to make a down payment on a house, start a college fund for your kids, buy a sports car, take a vacation to Aruba… anything… then that is your goal and your reason to get a handle on your financial situation now.

College Student Credit Cards: A Boon or a Bane?

Credit cards have changed from the rich man’s affluence symbol to almost an inevitable form of payment. With growing popularity of the credit cards, the companies are now looking to target various sections of the society. The college students are good target audience for credit cards in many ways  - some good and some bad. Regardless of the impact a credit card has on the student’s financial status it is great for the credit card company.

photo credit: Majdan

It is the student’s responsibility to ensure that if credit card company is benefiting from him / her using the credit card, he or she must benefit equally too.

Credit Card a Boon

College is a great time to own a credit card. It immediately gives you a credit history. You can build on the credit record with discipline and good habits during the student days. Once you graduate and come out in the market to work, you already have an excellent  credit history and getting your firs card, first house or even a plasma television would not be a problem for you.

Besides, credit card ownership at such an early stage gives you good training for maintaining credit cards in your future life too. The best part about student credit cards is that they tend to have a very favorable set of conditions in terms of low APR, low interest rates, longer grace periods, better introductory offers, etc. These help you take the first steps in handling the credit card more easily. Even if you make minor mistakes you are punished commensurately.

Credit Card a Bane

Credit card can also be an evil tool to be handing out to college students. These students may not be immature, but they are not fully mature to understand credits, and the importance of a good credit record. For them, the credit card is tool to overspend without having the money to do so. If they get this feeling, they would ruin their credit scores even before they start earning. With that goes their dreams of the first car, house, etc.

Students need to understand that credit card bills need to be paid on time and at least the minimum balance must be paid. Though the student credit card interest rates are lower, they are not so low that they would not cause a financial problem to the student who may not be earning enough or earning at all.

Thus it is clear that college student credit cards are a double edged sword. They can help the student financially or destroy the student’s credit history even before graduation. The credit card companies are just focused on getting more clients and charging them interests, so they will never train the student on good credit card habits. It is the responsibility of the parents and guardians to instill this habit in the student. On the other hand, a well trained student in handling and managing credit cards would be   excellently equipped to exploit the credit loans to get the best in his / her life.

Save Money on Home Heating Bills This Winter

Saving and cost cutting seems to be occupying everyone’s mind now-a-days. Everybody is looking to budget their expenses, to cut down on their expenses, change their lifestyle, etc just to keep the expenses down. While focusing on your lifestyle, there are some simple utilities too that can help you save some money.  What’s more they don’t warrant you to change your lifestyle too. Heating is an important expense that swells during the winter months. You cannot do without it, but you can take some simple precautions to make sure that it does not increase your monthly expenses drastically.

photo credit: PinkMoose

1. Run some checks in your house to ensure that your insulation and heating systems are all in place and working properly. With better insulation, you have to expend less heat to warm up your house and it can stay warm longer. Check your doors for any gaps that could let the heat escape. Similarly check to ensure that your windows and fireplace are all in proper condition.
2. If you have a centrally heated house, plan the time durations when you want to start the heating. If you regularly spend some time of the day outside – like at office – running the heating systems at that time is useless. So adjust the timings to coincide with the time when you are at home. A programmable thermostat could serve you well in this regard.
3. Don’t heat rooms with no occupants like guest rooms. Turn out the radiators in those rooms. This itself can save you lot of power in heating.
4. It is common for us to run the heating system at high temperatures initially to heat the house quickly, later we don’t turn the thermostat down sufficiently enough. Decide on a temperature suitable for your house and set the thermostat to that temperature. If you carried out your energy audit properly, your house should retain the heat the system generates properly.
5. If you use a boiler to heating purposes, keep checking and servicing it regularly. An efficient boiler can save lots of money in heating systems. Look at the latest combi-boilers. These reuse the heat and save money.
6. Kitchen and baths are great places to generate heat. Don’t waste the heat generated in these rooms by switching on the ventilators. This heat can improve the warmth of your house. Especially if you have used an oven to cook a pizza or cake, keep the door open to let the warmth through. Besides, you would also have the aroma light up the entire house.
7. Look to do your laundry at lower temperatures. There are detergents available in the market today that work effectively even at lower temperatures. Invest in such detergents and you can save a lot in water and power costs.

Thus you see, there are many minor changes and checks that you need to do to reduce your heating bills during winter months. These don’t require any great sacrifice from you, as some other cost cutting and saving tips may. It is just a question of adjusting your heating systems to your timings and optimizing them.

Why Look to Rollover Your 401K to IRA?

A good retirement savings account is of great importance for your post-retirement life. However with the economic uncertainty it is always good to maximize your retirement plan investments while you are still earning. There are multiple avenues that you can look at, each having its pros and cons.

photo credit: _e.t

401k Retirement plans

The biggest advantage of the 401k is that employer contributes an equal amount to your account as you do, so your savings grow at a decent clip. This makes it a great retirement savings plan.

If you switch a job, you can transfer this plan from your previous employer to the current one. It only requires you to change the custodian of your 401k plan. If the two companies get service from the same custodian, your transfer can be less of a hassle. These are some of the advantages of the 401k plan.

Typically, the 401k savings are invested by the custodians in various avenues to help grow the investments quickly. A common investment product is the mutual funds. Mutual funds help diversify your investments into stocks and bonds. With stocks a part of your investment is in a high risk, high return market and with bonds part of your savings are in safer tools with lower returns. This distribution helps spread the risks.

One drawback of the 401k plan is that the custodian companies decide on how your investments get used. It is true that they have the technical expertise and the professional to manage your funds better, but their realm of investments are limited by the expertise of their experts. However, you may have some other plans with your savings, which you cannot try out.

Other Avenues for IRA Investment

Rolling over your 401k to an IRA allows you to decide how your savings get invested. This is useful as there are some other avenues where you can put your money and get a better return than stocks – real estate. To take control of your retirement savings you have execute a self-control rollover of your 401k to IRA. Custodians that offer the self-control services would allow you to invest your money in a host of avenues as dictated by the tax laws. In a self controlled IRA plan, you can continue to invest in bonds, stocks like your custodian in 401k, but in addition you can also look at real estate alternatives too.

Real estate is an excellent investment option as it gives you something tangible in return unlike stocks. The real estate market is volatile like the stock markets, but on any given day you will still own a piece of land or a house regardless of its market value. With stocks, a host of aspects can affect your stock – a bad news about the company, a new rule against the industry in general, their annual performance, etc.

If properly invested, your real estate can give you much greater returns than the regular savings or even stock markets.

Thus rolling over your 401k to a self controlled IRA gives you the freedom to invest your retirement savings as you like and get better returns than 401k.

Inculcate Saving Culture in Your Children with Budgeted Allowances

Children are like a clay – you can mold them into the shape that you want if you start early. The recent economic downturn must have proved to you that financial safety is of top importance in future survival skills. So along with good morals and good education you also need to teach your children the importance of money and inculcate the culture of saving for the future. This is best if you start early.

photo credit: freeparking

Most children get allowances from their parents for their needs. This allowance is the best  tool to teach your children the benefits of saving and budgeting expenses. Allowance is, in  most cases, the first source of income for your child. Make him/her understand that the  allowance is limited and that he/she must learn to curtail their spending within that limit.

Kids are a lot sharper than adults, which is why if you give them a practical example they  would understand the concept a lot sooner than you think. Once they understand that their  spending power and hence the things that they can get is limited by their income, they can  be introduced to the idea of saving. Explain to them that this saved amount can be used by  them to purchase anything special that they desire like a latest toy car, a computer game, a  video game, etc.

So how do you start training your child to budget and save money?

• Allocate Allowances
  As parent you are the best judge of your child’s financial needs. You  will know how much they need for the school expenses, travel, food, books, stationery, etc.  Based on these, you make a rough estimate of the monthly allowance.
• Transfer Ownership
  Your role should be limited to just deciding the allowance, the decision  of how to spend it should be left to your children. However, that does not mean that  you  leave them to fend for themselves with a handful of cash. You let them make the purchases  and act only as a supervisor and a guide.
• Prioritize Expenses
  Initially children would not be able to differentiate between important  expenses and unimportant ones. They cannot plan a week or a month in advance. You need to  make them understand this difference. With proper training, they would soon start  prioritizing their expenditures and allocating money accordingly.
• Review Performance
  Sit with your children on a daily or weekly basis to look at what they  have spent and what’s left. Discuss with them to see if they have taken care or other  expected spending in the coming weeks. Appreciate their thoughtfulness if they are correct  and guide them if they go amiss.
• Saving for Future
  Once they understand the idea of planning and budgeting, teach them to  save. Make them understand that by saving a small part of their allowance every month they  would have sufficient money to purchase the thing that the love with their own money.

Make sure that they learn to document their income and expenditure everyday so that they  have a record to discuss their budget with you. This practice will also inculcate good habit  of documenting their expenses. This will help them in budgeting their finances in future  too.

Taking Care of Your Credit Repair

Lines of credit have become an important part of the modern life. With the growing need for credit, comes greater chance of defaults. To protect against this the credit rating bureaus come out with a credit score for every person ever involved in a credit transaction. These scores form the basis for the verification of application by the credit lenders. To build good credit ratings, you need to have a good history of past debt payments.

photo credit: TheTruthAbout…

The mortgage and loan companies rely on your credit scores to evaluate their risks of giving you their money. If you have a good track record, you should get favorable terms and conditions, if not you may be denied the loan or sanctioned at steep interest rates. In conclusion, it is mandatory that you maintain a good credit score if you want access to affordable loans and mortgages.

If you have been negligent in the past, you probably have a poor credit rating. If your loan and credit card applications are getting rejected on a regular basis, this might be the reason; so you have to start working on credit repairs. You can either take professional help or do it yourself. Professional help is great as you have experts working for you, but it also comes at a cost. With the current credit crunch, you may not be inclined to increase your expenses more. So working on it yourself is a good option. But where to start? How to go about cleaning the credit report?

Repairing your credit scores yourself can be a very tedious effort requiring lot of hardwork, dedication and focus from you; but it is also one of the most rewarding exercises. You can make a plan to get your credit ratings straight and work on it. As you execute your plans, you get the satisfaction of making something work and at the end you will have control over your finances and a great credit score allowing you to get those favorable loans for your dreams.

Here are some steps that you can follow:

1. Know Your Credit Rating
   Order a copy of your credit score from the credit bureau and analyze it. Find out what is your score and look for discrepancies in your report. Due to various reasons, your credit report may have some erroneous entries that you can clean up to boost your ratings.
2. Phase Your Applications
   All your loan applications could potentially land in your report and a string of rejects in a short space of time would damage your ratings. So apply for these loans in phases. Also focus on your monthly utilities like mobile bills, utilities, television, even loan repayment installations, etc. If you make regular and prompt payments, they will add to your ratings.
3. Don’t go Overboard
   Never take more credits and loans than you can handle. Handling doesn’t mean just monetarily, but personally too. If you have to juggle with payment of multiple credit card bills, utilities, etc you are bound to miss some and that impacts your ratings. If you have unused credit cards, or any other service that you don’t use regularly, get rid of them.
4. Don’t Get Bogged Down
   You need not be extravagant, but you need to be vigilant while repairing your credit. If you are employed, it boosts your chances of getting your loans and credit cards approved, so apply while you are still employed, especially if you expect a layoff in near future. Also, if you miss payments call up your lender and discuss ways of sorting it out rather than defaulting.

Lastly, never try to hide any information however bad it may be while applying for your loan. Chances are that the lender may look at that information and give you an alternate deal. If you hide something and get a good loan, you will struggle to pay it and that would damage your ratings. Besides, by hiding information you are liable for legal charges too.

Managing Your Personal Finance

Personal finance is an important idea that your need to manage well for a long, stress free life with minimum financial surprises. What’s more if you master the art of financial planning, you can teach it to your children too. Regardless of how you spent your life, no parent would want their children to face an uncertain financial freedom. In today’s turbulent world if you cannot assure them a good job, at least teach them good financial management and save for their future. All this requires you to gain control of your finances.

photo credit: George Vnoucek

Managing your personal finance is based on some rules that you must not breach

• It is a continuous process, so never let your guard down once you see some positive returns
• It requires vigilance to look out for problems, dedication to plan alternatives and contingencies and the steadfast determination to execute your plans perfectly.
• Commit mistakes, we all do but learn from them and learn quickly.
• Be flexible with your lifestyle, a fixed lifestyle can be tough to maintain through varying economic conditions, especially if it is a high profile lifestyle.
• Maintain discipline in your spending patterns. Don’t over spend at the same time don’t deprive yourself of opportunities and benefits.

Based on these rules, you can look at various aspects of managing personal finance:

Set Targets and Plan Accordingly