debt management http://www.wisebread.com/taxonomy/term/12011/all en-US How One Inspiring Saver Found True Love, Shook Off Debt Denial, and Paid Off $123,000 http://www.wisebread.com/how-one-inspiring-saver-found-true-love-shook-off-debt-denial-and-paid-off-123000 <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-one-inspiring-saver-found-true-love-shook-off-debt-denial-and-paid-off-123000" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/couple-paying-bills-89654425-small.jpg" alt="couple paying bills" title="couple paying bills" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>American <a href="http://www.nerdwallet.com/blog/credit-card-data/average-credit-card-debt-household/">debt is on the rise</a>, up 3.8% from last year. We're carrying higher mortgage balances, more <a href="http://www.wisebread.com/5-strategies-to-wipe-out-your-credit-card-balance?ref=inarticleinarticle">credit card debt</a>, and significantly higher student loan burdens (which are up an astonishing 11.5% from last year).</p> <p>For students in particular, it's easy to overspend. The cost of college is staggering and, to make matters worse, few students come to campus prepared with financial literacy training. Both federal and private loans are readily available for most students, but so are a barrage of credit card offers. Credit is so easy to obtain for many students that, according to one recent survey, most college graduates are <a href="http://www.fidelity.com/inside-fidelity/individual-investing/college-grads-surprised-by-student-debt-level-exceeds-35000">shocked to discover how much debt they've racked up</a>.</p> <h2>A Young Dentist in Debt</h2> <p>Just ask Paul Amato, DDS at LeCuyer Amato Dentistry who, according to one <a href="http://money.msn.com/debt-management/debt-calculator.aspx">debt calculator</a> I ran his numbers through, owed over 85% of his first year take-home pay to creditors. &quot;When I finally sat down and looked at the numbers,&quot; he says, &quot;the interest was like a gut punch.&quot; Amato had finished dental school and had landed a well-paying job, but even so, the path he'd taken to get there had left him struggling with more debt than he could manage. (See also: <a href="http://www.wisebread.com/5-inspiring-people-who-each-paid-off-over-100000-in-debt?ref=seealso">5 Inspiring People Who Paid off Over $100,000 Each in Debt</a>)</p> <h2>Being in Debt Denial</h2> <p>Amato graduated with $120,000 in <a href="http://www.wisebread.com/can-borrowers-still-pay-off-their-student-loans-in-10-years?ref=inarticle">student loan debt</a> and and another $40,000 in <a href="http://www.wisebread.com/6-warning-signs-that-you-need-to-stop-using-your-credit-cards?ref=inarticle">credit card loans</a>. Shortly after graduation, he took on an additional $40,000 in auto financing. All told, his debt burden was 2.5 times that of his first year take-home pay and he didn't even have a mortgage to show for it. &quot;I had six credit cards,&quot; says Amato. &quot;I never added up how much I was paying on the cards. I just paid the minimum. I wasn't thinking much about the interest. I was really kind of careless.&quot;</p> <p>Looking back, Amato accepts he could have lived on his student loan disbursements alone. He didn't need the credit cards. &quot;I overdid it,&quot; he admits. &quot;I had friends who had money I didn't have and I wanted to hang out with them. I wanted to do the things they were doing.&quot; Amato also accepts that he could have bought a less expensive car. &quot;At first I thought it wasn't a big deal. Then I saw it was a huge deal. I was paying a lot in interest. I paid that car off and I kept it for eight years. But now I have a more practical car.&quot;</p> <p>Amato admits to <a href="http://www.wisebread.com/6-harmful-money-beliefs-that-are-keeping-you-poor?ref=inarticle">being in denial about the debt</a> he was accruing until he and his then girlfriend (and now wife), Rebecca, got serious, moved in together, and started talking about their money. &quot;She noticed that I had a lot of credit card bills coming in,&quot; says Amato. &quot;That's when we sat down and started looking at everything together.&quot;</p> <h2>Getting Motivated</h2> <p>&quot;Rebecca had no debt and she always paid everything off. She was a buy-what-you-can-afford kind of gal,&quot; says Amato. &quot;She wanted me to get my finances in order before we committed to a relationship.&quot; (See also: <a href="http://www.wisebread.com/say-no-7-reasons-why-you-shouldnt-get-married-if-youre-in-debt?ref=seealso">Say No! 7 Reasons You Shouldn't Get Married if You're in Debt</a>)</p> <p>Every month, the two would sit down and review Amato's balance sheet. It quickly became clear that he'd need additional income to make a dent in his debt. &quot;I filled in wherever I could,&quot; says Amato. &quot;I took hygienist shifts. I'd drive one to two hours away to take an extra job. If there was somewhere I could work, I worked.&quot; (See also: <a href="http://www.wisebread.com/what-20-somethings-can-do-about-credit-card-debt?ref=seealso">What 20-Somethings Can Do About Credit Card Debt</a>)</p> <p>In addition to increasing his income, Amato also lowered his living expenses. &quot;We lived on the cheap,&quot; he says. &quot;We lived in a modest apartment in a questionable part of town. We didn't have cable. We rarely went out.&quot;</p> <p>It wasn't always easy, Amato admits. &quot;I wanted to spend my money every time I got paid. Rebecca really kept me rooted in reality. She'd say, 'You can have those things one day but now is not the time.'&quot; (See also: <a href="http://www.wisebread.com/10-dark-side-motivations-to-get-you-out-of-debt?ref=seealso">10 Dark-Side Motivations to Get You Out of Debt</a>)</p> <h2>Digging Out of the Hole</h2> <p>Amato tackled his debt by paying the minimum payments on all debts except his highest interest loan. &quot;I paid off the credit card with the highest rate first and then I kept going, in order,&quot; he says. &quot;Then came the car loan and eventually I started doubling up on my student loan payments.&quot;</p> <h3>Reset Goals</h3> <p>Life isn't always a linear journey, though, and Amato reprioritized his financial goals several times along the way. After making his final credit card payment, Amato bought the engagement ring. A few years later the Amatos bought their first house. The big purchases didn't re-open the door to bad habits, though. &quot;Ever since I paid off the credit card debt, I've been much more savvy about other bills like car or home-owners insurance. I'm a much better saver.&quot; (See also: <a href="http://www.wisebread.com/how-to-trick-yourself-into-better-credit-card-behavior?ref=seealso">How to Trick Yourself Into Better Credit Card Behavior</a>)</p> <h3>Refinance</h3> <p>Amato also consolidated his federally-funded student loans. The rate on his private education debt was substantially higher so he kept those loans separate, and paid them off as early as he could. During those early years, as Amato's income grew, he kept his standard of living low, and paid as much toward his debts as he could.</p> <p>&quot;I became even more Type-A. I could see the light at the end of the tunnel,&quot; says Amato. &quot;If I could run a tighter ship, I could be more profitable.&quot; It was a philosophy that helped Amato with his personal finances, but also within his professional practice.</p> <h3>Shift to Retirement</h3> <p>Eventually, the Amatos eased off their student loan and mortgage repayment strategies and focused more on boosting retirement savings. Today Amato still has $80,000 in student loans and a substantial mortgage balance to contend with. They've since filled the house with 18-month-old twin boys and, because of the frugal choices they made early on, were able to put Rebecca through dental school without taking on any additional debt. &quot;It helped that we didn't have to re-buy books or equipment,&quot; says Amato. &quot;That made her cost less than when I had gone to school.&quot;</p> <h2>Looking Back</h2> <p>&quot;Paying off that credit card debt really gave me a lot of perspective about living beneath my means,&quot; says Amato. &quot;Without that debt I can take life into my own hands and work toward my long-term goals. I want financial freedom. I don't want to be constrained by debt.&quot;</p> <p>What Amato learned is that financial freedom isn't about how much money you make. It's really about how you manage what you have. &quot;I made some poor decisions early on,&quot; he says, &quot;but fortunately I was able to learn from them.&quot;</p> <p><em>Have you retired a significant debt? Tell us your story in comments!</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/alaina-tweddale">Alaina Tweddale</a> of <a href="http://www.wisebread.com/how-one-inspiring-saver-found-true-love-shook-off-debt-denial-and-paid-off-123000">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-tricks-to-save-money-with-credit-cards">10 Tricks to Save Money with Credit Cards</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/watch-out-for-new-credit-card-policies-chase-card-holders-already-hit-with-fees">Watch out for new credit card &quot;policies&quot; - CHASE card holders already hit with fees</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-things-people-with-good-credit-never-do">8 Things People With Good Credit Never Do</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/do-we-really-need-help-in-getting-more-debt">Do we really need help with getting more debt?</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-inspiring-people-who-each-paid-off-over-100000-in-debt">5 Inspiring People Who Each Paid Off Over $100,000 in Debt</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Credit Cards Debt Management credit cards debt debt management debt stories paying debt Fri, 03 Oct 2014 13:00:06 +0000 Alaina Tweddale 1226229 at http://www.wisebread.com 9 Ways Staying on Budget Can Be Fun (Really!) http://www.wisebread.com/9-ways-staying-on-budget-can-be-fun-really <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/9-ways-staying-on-budget-can-be-fun-really" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/mother-daughter-budget-83590568-small.jpg" alt="mother daughter budget" title="mother daughter budget" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Ok, sure, &quot;budget&quot; isn't always synonymous with &quot;rollicking good time.&quot; But there are ways to make the process more fun at every stage, from assessing your finances, to setting goals, to meeting those goals, to reaping the rewards. And the more fun you can make the process, the more likely you are to stick with your budget. (See also: <a href="http://www.wisebread.com/evolve-your-money-management-beyond-the-budget?ref=seealso">Evolve Your Money Management Beyond a Budget</a>)</p> <p>These ideas may help you to stay on course and have fun, while you are budgeting.</p> <h2>1. Try an App</h2> <p>Check out <a href="https://itunes.apple.com/us/app/wally-smart-personal-finance/id610314677?mt=8">Wally,</a> <a href="http://www.moneybookapp.com/moneybook.html">Moneybook</a>, or <a href="https://www.ireconcile.com/iReconcile/Features/iPhoneOS/Budgets">iReconcle</a> (love their rollover feature). Besides smartphones being an enormous help (because they're always with us when we shop), just the act of being able to toy around with a new gadget can make budgeting that more fun. View your finances in cool new infographics and charts, build organized and professional-looking budgets, and just generally nerd out! (See also: <a href="http://www.wisebread.com/10-sites-and-apps-to-help-you-track-your-spending-and-stick-to-your-budget?ref=seealso">10 Sites and Apps to Help You Track spending and Keep a Budget</a>)</p> <h2>2. Get Help From a Celebrity Pro</h2> <p>Check out free forms from <a href="http://www.daveramsey.com/tools/budget-forms/">Dave's Budgeting Forms</a> (Dave Ramsey) or <a href="http://www.suzeorman.com/suze-tools/">Suze Orman</a>. Read their blogs, or follow them on Twitter, and you'll get even more information &mdash; and find other people who share your questions and issues. Join in the conversations and see that you are far from being the only one who needs financial information. You're suddenly in a club!</p> <h2>3. Buddy Up!</h2> <p>Your partner, friend, family member, or co-worker may want to try budgeting and saving money along with you. Try approaching them with an idea about how fun it can be (like this <a href="http://www.onegoodthingbyjillee.com/2012/11/envelope-budgeting-a-simple-way-to-gain-control-of-your-money.html">envelope </a>idea). It's even more fun when you can compare notes, cheer each other on, or get a little competitive. If you feel the urge to spend, a buddy may be able to divert you to a different, free, activity. For instance, I might email my co-worker when I feel like dining out, instead of my brown bag, and she'll remind me about my goals and come eat brown-bag with me. Or, when I want to hit the mall, my girlfriend will say, &quot;Let's go thrift-shopping, instead!&quot; I like to be able to tweet or text my buddies when I am feeling sorely tempted &mdash; they keep me on track.</p> <h2>4. Think Tiny Rewards</h2> <p>If you have brown-bagged it all month instead of going out to lunch, a nice reward is to treat yourself to a moderately-priced restaurant. Some of my girlfriends used to love going out for manicures &mdash; until one of them figured out how to do her own. Hawaii not in the vacation cards this year? Consider a <a href="http://www.wisebread.com/9-fun-and-affordable-vacation-ideas">staycation</a>. Sometimes, just for making my own breakfast and brown-bag lunch, I'll treat myself to an hour at the library (cell phone off, of course!).</p> <p>The point is, you don't want to burn out on budgeting. If the fun factor goes down, you'll regress, and go looking for an expensive activity that will blow your hard work. Find your carrot. Movie night? Trip to the bookstore? What activity, or thing, will help you to feel less deprived?</p> <h2>5. Enjoy Anticipation</h2> <p>We're happier when we wait and <a href="http://www.psychologytoday.com/blog/imperfect-spirituality/201403/are-your-beliefs-about-money-keeping-you-poor">anticipate</a> the purchase, believe it or not. Also, for me, on those really &quot;blah&quot; days at work, knowing I am working for something tangible helps to get me through. Children love marking days off of calendars (I still remember my Advent calendars before Christmas), illustrating how close they are getting to a special day or vacation.</p> <h2>6. Visualize It</h2> <p>Are you budgeting for a vacation? Saving for a new car? Put a picture of your dream location on your refrigerator, desk, or medicine cabinet. Seeing the goal will be a good reminder. Starting a <a href="http://jackcanfield.com/how-to-create-an-empowering-vision-book/">visualization board</a> is a fun thing to do. We have one in our hallway. You can also create a virtual one (or several, for different categories of your budget) on Pinterest.</p> <h2>7. Enlist Your Family</h2> <p>Rally your kids. They are great at collecting change and surprisingly good savers. Count it together each week, or find a Coinstar machine (our credit union offers free use of one). Let 'em go crazy with the couch cushions. Be sure to include the family in the &quot;tiny rewards&quot; to keep the fun going. (&quot;Okay, we saved $20 this week, so let's have ice cream tonight.&quot;)</p> <h2>8. Learn With a Group</h2> <p>Check your local community college, library, YWCA, or even churches to see if classes are offered in financial planning. I was surprised to find several in my area. All seminars were completely free! Many will first help you learn how to get rid of your debt.</p> <h2>9. Learn New Things</h2> <p>Spending a lot of money dining out? Try a cooking class. Maybe you can learn to change your own oil, or start a garden. You might learn a skill that will enable you to make a <a href="http://www.wisebread.com/10-awesome-money-making-hobbies">side income</a>. Several of our neighbors have yard-care businesses. Another does flower arrangements. Saving money may be the ultimate end, but there's no reason the means can't be an adventure in and of themselves!</p> <p><em>See? Budgeting really can be fun. How do you make it fun?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/marla-walters">Marla Walters</a> of <a href="http://www.wisebread.com/9-ways-staying-on-budget-can-be-fun-really">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/47-simple-ways-to-waste-money">47 Simple Ways To Waste Money</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-often-do-you-get-your-paycheck">How often do you get your paycheck?</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-quiet-millionaire-part-2-major-obstacles-to-financial-success">The Quiet Millionaire: Part 2 – Major Obstacles to Financial Success</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/too-broke-to-be-frugal">Too broke to be frugal?</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/start-with-recurring-monthly-expenses">Start with recurring monthly expenses</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Budgeting General Tips budgeting debt management spending Thu, 24 Jul 2014 13:00:06 +0000 Marla Walters 1166029 at http://www.wisebread.com What I Learned From Working at a Bank http://www.wisebread.com/what-i-learned-from-working-at-a-bank <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/what-i-learned-from-working-at-a-bank" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/1226006_97105217.jpg" alt="dollar bill" title="dollar bill" class="imagecache imagecache-250w" width="250" height="188" /></a> </div> </div> </div> <p>My boss has asked me in my last two performance appraisals what I enjoy about my job and each time, I say that having this job will make me 10 times wealthier in my personal life. I don't mean that I'm making a ridiculous salary. (Maybe someday...) I mean that looking at borrowers all day lets you see all kinds of slices of life &mdash; and hopefully learn from them.</p> <p>In the short time I've been at my job, I've seen all kinds of borrower financial statements: conservative borrowers and leveraged borrowers; those who got rich by <a href="http://www.wisebread.com/is-real-estate-a-good-investment" title="Is Real Estate a Good Investment?">investing in real estate</a> and those who inherited money. Those who work for their parents' company and parents who work for their children. Here are some of the best lessons I've learned from working at a bank. (See also: <a href="http://www.wisebread.com/10-life-and-money-lessons-learned-from-immigrant-parents" title="10 Life and Money Lessons Learned From Immigrant Parents">10 Life and&nbsp;Money Lessons Learned From Immigrant Parents</a>)</p> <h3>Don't buy a house you can't afford. Don't buy two houses you can't afford.</h3> <p>Don't roll your eyes at me; I know everyone is saying that in this economy. But I've seen people who have stuck their necks out even in this economy, thinking they could afford that jumbo home because their income would certainly increase in the future. Or their kids need a place in the country to enjoy while they're still young. Or they can sell when the market picks back up, make a profit, and get another nice place. It's never a good idea!</p> <p>Those who are surviving and thriving in the long term are those who stick to the old rule of a mortgage that is 2.5 times their income or less, and 15-20% down. And that second home in Arizona you bought because it was a short sale? If you can afford to hold onto it, then fine. If not, well, as we say in my department: Hope is not a strategy.</p> <h3>If you make $1 million a year, at least have something to show for it.</h3> <p>No, I don't mean toys. Although they're fun, and awesome, and make you look cool, I can tell you when someone lists $450K of furniture and autos on their financial statement, I see a big fat Zero. That is, depreciating assets don't mean anything when it comes to your net worth.</p> <p>Do me a favor: If you win the next $64 million <a href="http://www.wisebread.com/how-to-win-the-lottery-without-paying-a-penny-for-the-ticket" title="How to Win the Lottery">lotto jackpot</a>, at least keep a measly 1% or so of after-tax money in CDs or treasuries. I once saw a guy who made nearly a hundred million dollars in one year, who had about $24K in cash. True, he could have been lying on his statement, but really? How nice would it have been if he saved 10%, especially because he lost nearly that same amount the next year?</p> <h3>Don't bet the farm.</h3> <p>This one is a little heartbreaking, but I see it all the time. Tom has had a small, successful restaurant for 25 years. He makes, say, $100K per year. Not a bad deal. But Tom sees others making oodles of money in real estate investing, so he puts two and two together and decides to build an enormous, gourmet restaurant in the next town over. Then he can double his business and own his own piece of investment real estate! He proceeds to build his $5 million restaurant, using all of the $300K he's saved for retirement, pledging his house as collateral on a bank loan and borrowing $1 million from friends and family.</p> <p>You can guess what happens next. Unless Tom's restaurant does phenomenally well (which restaurants never do), he's DOA. He has lost everything, including his retirement, his house and probably his friends and family. (Side moral: Don't invest in deals like this, people!)</p> <p>Calculated risks are OK. Investing your retirement money in a well thought-out venture when you're 30 is OK. Pledging your house as collateral on a loan is OK. All of these things separately is OK, but not all at once. You have nowhere to turn, and I see it all the time. I've even seen parents pledge their homes as collateral on an adult child's loan. It goes bad, and grandma and grandpa are homeless in retirement.</p> <p>So there you have it: the top things I've learned from working at a bank thus far. Although I'm amazed every day at the poor financial choices some people make, let me be clear: I see at least as many (and probably many more) who make great decisions and grow their net worth year after year. With a host of examples, now I know how to avoid the pitfalls, too.</p> <p><em>Seen anything similar in your own experience? Share your story!</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/janey-osterlind">Janey Osterlind</a> of <a href="http://www.wisebread.com/what-i-learned-from-working-at-a-bank">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-3"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-smart-things-to-do-with-your-bonus">6 Smart Things to Do With Your Bonus</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/credit-cards-vs-debit-cards-a-comprehensive-comparison">Credit Cards vs. Debit Cards: A Comprehensive Comparison</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-times-when-its-okay-to-take-a-loan">6 Times When It&#039;s Okay to Take a Loan</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/life-after-debt-whats-next">Life After Debt: What&#039;s Next?</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/co-signing-for-a-loan-4-things-to-consider-first">Co-Signing for a Loan: 4 Things to Consider First</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Banking Debt Management debt management life lessons Thu, 02 Sep 2010 15:00:05 +0000 Janey Osterlind 223576 at http://www.wisebread.com Life After Debt: What's Next? http://www.wisebread.com/life-after-debt-whats-next <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/life-after-debt-whats-next" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock_000012800204XSmall.jpg" alt="woman holding money" title="woman holding money" class="imagecache imagecache-250w" width="250" height="166" /></a> </div> </div> </div> <p>You've done it. You've worked hard, scrimped, saved, and paid off all your debt. Congratulate yourself as you have now joined an elite club of folks who have finally seen the light AND did something about it. But now that you can turn the page on that goal, what's next? Are you going to Disneyland or getting yourself a treat? Oh, wait a minute. You're facing a new chapter in your financial life, so it's time to set goals. So, now that you are finally debt free, what ARE you going to do?</p> <p>For starters, you can set yourself up for the now and the beyond. Financial experts believe that the true key to financial health is zero debt, an emergency savings fund in a top savings bank and a sound plan for saving for retirement. You have mastered step one. Now it's time to begin focusing on the future.</p> <h2>Goals to Set</h2> <p><strong>The easiest way to set up an emergency fund</strong> is to determine how much money you are now spending monthly in order to stay afloat. This calculation should include your mortgage payment, utilities, groceries, gas, and anything else you can't live without for a full 30 days. Now, take this figure and multiply it by 6. This is the minimum amount of cash you should have in your bank account to cover unexpected situations such as job loss, illness, etc. Now, many financial experts have started telling their clients that six months, while adequate before the recession, is now the minimum amount of cash you need to have stashed away, so saving more will always help. It may be a good idea to use budget management software to track your finances so that you can get a tighter rein on things.</p> <p>Saving for this emergency fund is also pretty easy, even if you are still in debt payment mode. Once you've vanquished your debt, you'll have additional disposable income to do as you wish. Instead of spending all the extra funds on a bunch of stuff you don't need, start funneling the money into a traditional account or online savings account. The same payments you were making towards your debt may now be routed towards your savings. You'll never miss the money and, if you're like most people, this payment should be significant enough to help you reach your goals in as little as one year or less. If your monthly installments aren't as significant as you might like, try increasing it a little bit at a time, or simply be patient, but under no circumstances should you decrease or forgo making this contribution. Remember that slow and steady wins the race.</p> <p><strong>Next, you need to start looking into retirement savings accounts.</strong> Retirement savings accounts go above and beyond traditional savings accounts when it comes to making your money work for you. Thanks to its tax-friendly properties, retirement savings accounts allow your money to earn a greater return than simple savings accounts, making sure that you have the most money you can possibly have when it comes time for you to retire. When you think of retirement accounts, your mind might automatically wander to IRAs.</p> <p>A traditional IRA is a good retirement investment account. You can make regular contributions up to the annual limits and in most cases, tax breaks apply to the money you put in. But, traditional IRAs aren't the only way you can save money for retirement. If you are fortunate enough, the company you work for will have a 401(k) retirement plan. You can make tax free contributions, which your company may match. And folks, this is free money. I urge you to take advantage of your company's 401(k) if your employer contributes anything at all. A 401(k) also has unique features like a low-interest loan feature that allows you to pay yourself back (although borrowing this way is something you need to evaluate very carefully) &mdash; you even get to keep the interest!</p> <p>Other retirement accounts include a <a href="http://www.wisebread.com/what-you-need-to-know-about-roth-iras-in-2010">Roth IRA</a> (which works somewhat like a traditional IRA with other benefits), Keough Plans, and a few others. If you are confused about what product works best for you, sit down with a bank representative and talk the talk. Don't be shy about asking questions. If you can't get satisfactory answers, go somewhere else. And don't forget that it's never too late to start investing. Here is some retirement investing advice.</p> <p>While these are big savings goals to think about, there are also others that may be in your sights, such as saving for college or saving for big ticket items. When you've retired your debt, you'll need to prioritize the new goals you have before you.</p> <p>It may take you a year or even longer to fulfill these goals, but they are the building blocks of having a solid financial future.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/silicon-valley-blogger">Silicon Valley Blogger</a> of <a href="http://www.wisebread.com/life-after-debt-whats-next">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-4"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-inspiring-people-who-each-paid-off-over-100000-in-debt">5 Inspiring People Who Each Paid Off Over $100,000 in Debt</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-ways-to-live-better-without-spending-more">5 Ways to Live Better Without Spending More</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/12-ways-to-make-yourself-save-more-money">12 Ways to Make Yourself Save More Money</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/friends-dont-let-friends">Friends Don&#039;t Let Friends...</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/why-one-third-of-americans-havent-saved-for-retirement">Why One-Third of Americans Haven&#039;t Saved for Retirement</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Debt Management debt management personal finance saving Mon, 09 Aug 2010 12:00:07 +0000 Silicon Valley Blogger 198869 at http://www.wisebread.com How to File For Bankruptcy http://www.wisebread.com/debt/bankruptcy <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/debt/bankruptcy" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock_000005533942XSmall.jpg" alt="Bankruptcy time" title="Bankruptcy time" class="imagecache imagecache-250w" width="250" height="166" /></a> </div> </div> </div> <p>Bankruptcy is the last resort to dealing with <a href="http://www.wisebread.com/debt" title="Debt Management Guide">debt</a>: when a person finds himself in so much debt that paying it off simply isn't an option, bankruptcy can be the only way to handle the situation. It may not be the result of reckless spending &mdash; medical bills and other factors can contribute to the need to declare bankruptcy.</p> <h2>The Types of Bankruptcy</h2> <p>There are two different types of personal bankruptcy available to most people: Chapter 7 and Chapter 13. Chapter 7 requires that nonexempt assets are sold to reduce unsecured debt, such as credit card balances and medical bills. Any unsecured debts remaining after the sale are excused. You are allowed to keep your retirement accounts along with any other exempt assets. While exactly what counts as an exempt asset differs from state to state, most people will be able to keep a car and their home as long as they keep making payments on them.</p> <p>In order to qualify for Chapter 7 bankruptcy, you'll typically need to complete a means test. If the test determines that your income is sufficient to make payments on your debt, you will be unable to file for a Chapter 7 bankruptcy and will need to file Chapter 13. Under a Chapter 13 bankruptcy, you keep your property and agree to a repayment plan for part of your debt that will last either three or five years. As long as you follow the repayment plan, the rest of your unsecured debt will be excused.</p> <p>No matter which type of bankruptcy you file for, you will receive an automatic stay as soon as your paperwork is filed. An automatic stay stops all collection attempts. In the case of secured debt (such as a mortgage or a lien), the stay is only temporary and you must continue to make payments or risk repossession or foreclosure. You'll also be asked to attend a personal finance course and a creditors meeting, although it is unlikely that creditors will attend.</p> <h2>A Smoother Bankruptcy</h2> <p>Bankruptcy is a hard process, both emotionally and financially. It's important to make the process go as well as possible, both to speed it along and reduce the stress.</p> <ul> <li>Put all your paperwork together. When you begin the bankruptcy process, you need documentation of both your debts and income for your lawyer to prepare your paperwork. Gather your pay stubs, deeds, titles, letters from collection agencies, tax returns and any other documentation your attorney requests. You'll also need to prepare a complete list of your <a href="http://www.wisebread.com/credit-card-guide" title="Wise Bread's Guide to Credit Cards">credit cards</a>.<br /> &nbsp;</li> <li>Hire a reputable attorney who specializes in bankruptcy cases. The laws governing bankruptcy are complicated and using a cheap service or a lawyer who is not knowledgeable can result in problems that will cost you extra money, as well as risk your home and other assets.<br /> &nbsp;</li> <li>Reduce your spending as much as possible. If you run up a big bill on your credit cards just before you declare bankruptcy, you may be accused of fraud. The court can require you to pay what you owe on those cards.<br /> &nbsp;</li> <li>Make plans for <a href="http://www.wisebread.com/debt/credit-scores" title="Wise Bread's Guide to Credit Scores">building your credit</a> back up as soon as your bankruptcy is complete. It can be very difficult to obtain new lines of credit after a bankruptcy and options like secured credit cards may be necessary. After a year, you'll likely be able to apply for a regular credit card.<br /> &nbsp;</li> <li>Request your credit history from each of the three credit bureaus after your bankruptcy is complete. You want to make sure that the reports list that all of your unsecured debts have been &quot;discharged in bankruptcy.&quot;</li> </ul> <h2>After Bankruptcy</h2> <p>Once your bankruptcy is complete, you'll have a clean slate for your finances &mdash; mostly. If you have <a href="http://www.wisebread.com/college/federal-student-loans" title="Wise Bread's Guide to Federal Student Loans">student loans</a> or a secured debt, such as a mortgage or a car loan, you'll still be obligated to make payments on those loans. You may also be asked to sign a reaffirmation agreement for your car loan, guaranteeing that you intend to keep the vehicle and make payments on it. It's important to make payments on those loans on time and in full to help rebuild your credit. Having an additional line of credit, such as an installment loan or a secured credit card can also help.</p> <p>Keep a close eye on your finances and work hard on rebuilding your credit. If something happens, it is possible to file for bankruptcy again &mdash; the limitations are that you can only file once under Chapter 7 every eight years and once under Chapter 13 every two years &mdash; but the consequences for your credit are dire. If a lender sees multiple bankruptcies on your credit history, it can become impossible to get credit, even at high interest rates.</p> <h2>When Not to Declare Bankruptcy</h2> <p>If there are debts piling up, bankruptcy may seem like the only way out. However, it's important to consider all the alternatives before choosing bankruptcy. After all, bankruptcies can ruin your credit for years to come. Once you've declared bankruptcy, you'll be looking at higher interest rates on new loans, including credit cards, higher insurance premiums and even a harder time renting a new apartment. Any time someone pulls your credit history, they'll see your bankruptcy on it.</p> <p>There may be alternatives:</p> <ul> <li>Negotiating with creditors to reduce your interest or payments may make your debts manageable.<br /> &nbsp;</li> <li>A <a href="http://www.wisebread.com/dealing-with-debt-credit-counselors">credit counseling</a> agency may be able to help you handle your debts and pay them off.<br /> &nbsp;</li> <li>A combination of cutting expenses and earning extra income, along with a debt repayment plan may make your financial situation manageable.</li> </ul> <p>If you have a chance of paying off your unsecured debts, such as credit cards, in less than five years, declaring bankruptcy could actually do more harm than good. Because a bankruptcy can stay on your credit history for up to ten years (Chapter 7 bankruptcies remain listed for seven to ten years, while Chapter 13 bankruptcies are listed for seven years), any alternative that would let you handle your debts and get the negative information off of your credit report faster is preferable.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/thursday-bram">Thursday Bram</a> of <a href="http://www.wisebread.com/debt/bankruptcy">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-5"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/life-after-bankruptcy-whats-next">Life After Bankruptcy: What&#039;s Next?</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/bankruptcy-is-a-good-thing">Bankruptcy is a good thing</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/9-ways-staying-on-budget-can-be-fun-really">9 Ways Staying on Budget Can Be Fun (Really!)</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/could-your-city-go-bankrupt">Could Your City Go Bankrupt?</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/15-surprising-ways-bad-credit-can-hurt-you">15 Surprising Ways Bad Credit Can Hurt You</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance bankruptcy debt management Thu, 04 Feb 2010 22:50:52 +0000 Thursday Bram 6321 at http://www.wisebread.com Credit Scores http://www.wisebread.com/debt/credit-scores <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/debt/credit-scores" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock_000009122819XSmall.jpg" alt="credit history" title="credit history" class="imagecache imagecache-250w" width="250" height="166" /></a> </div> </div> </div> <p>A good credit score can get you good rates on <a href="http://www.wisebread.com/credit-card-guide" title="Credit Card Guide">credit cards</a>, encourage landlords to rent to you, and even help an employer decide to offer you a job. A bad credit score, on the other hand, can significantly reduce your ability to take out a loan, from getting a mortgage to a credit card. Maintaining a good credit score is important, no matter what your financial goals are.</p> <h2>What Is a Credit Score?</h2> <p>Your credit score signifies the kind of credit risk the three main credit-reporting agencies &mdash; <a href="http://www.equifax.com">Equifax</a>, <a href="http://www.experian.com/">Experian</a> and <a href="http://www.transunion.com/">TransUnion</a> &mdash; think you are.</p> <h3>FICO</h3> <p>The number is calculated with a formula developed by <a href="http://www.fico.com" title="FICO homepage">Fair Isaac Corp</a>, which is why your credit score may also be referred to as a FICO score. Fair Isaac uses a variety of information about your credit history, from the length of your credit history to how quickly you repay debts, to determine the risk a lender would face by extending credit to you.</p> <p>But there are other factors your credit score takes into account, such as the amount of credit available to you and the types of credit you use.</p> <h3>Good and Bad Credit Scores</h3> <p>Credit scores range from 300 to 850. In general, you want to keep your score above 700, especially if you're planning to apply for a mortgage, car loan, or another form of credit. The best interest rates and terms are available only to individuals with excellent credit scores, typically considered to be about 760 (very few people actually receive a credit score of 850). An individual with a credit score below 620 would be considered a risk by most lenders and will usually be charged sub-prime interest rates &mdash; if offered credit at all.</p> <h3>Free Credit Report</h3> <p>While you are legally entitled to a free copy of your credit history from each of the three major credit reporting agencies every year, your credit score is not listed on those reports. Typically, you'll be required to pay to access your credit score. (<a href="http://www.wisebread.com/get-free-credit-score-monitoring-with-credit-karma" title="Review of Credit Karma">Credit Karma</a> gives you your credit score for free.) Each of the credit bureaus offers different tools to purchase your credit score, along with their version of a FICO score. There are both options for a one-time purchase and to subscribe to a monthly report. However, your free credit reports can also be useful in understanding your credit score, as well as improving it. You can receive your free copies through <a href="https://www.annualcreditreport.com" title="Official site for free credit reports">AnnualCreditReport.com</a>.</p> <h2>How to Improve Your Credit Score</h2> <p>There are steps you can take to raise your score, but it's worth noting that your credit score won't be immediately improved. It's a process that takes time, which is why it is important to maintain a high score in the long-term, as well as when you're getting ready to get a loan.</p> <p>The most important step you can take is to pay down any balances you have on existing lines of credit. The percentage of your available credit that you use is a determining factor in your credit score and should be below 30 percent if possible. Even if you pay off your balance every month, keeping your spending below that 30 percent mark can help significantly. Paying your bills on time and in full is also crucial to raising your credit score. Even one late payment can drop your score by 100 points &mdash; and late payments can affect your score for seven years.</p> <p>For those individuals with low credit scores who find it difficult to make payments on time and in full, it may be worth consulting a <a href="http://www.wisebread.com/dealing-with-debt-credit-counselors">credit counseling service</a>. Such consultations do not damage credit scores and may help create a strategy that will reduce or eliminate debt &mdash; which in turn improves credit scores.</p> <p>It's also important to limit the number of requests you make for new credit: each credit card application or other request can take off five points. If you don't have a credit history at all, you will need to get a credit card to start with, but try to limit the number of lines of credit you open. Your credit score will remain low until you've built up a solid credit history.</p> <h2>How to Maintain a High Credit Score</h2> <p>If you already have a high credit score, it's important to maintain that score for the future. In general, maintaining your credit score is a matter of common sense: pay your bills on time, keep balances to a minimum, and don't apply for credit you don't need. But because there are so many factors that can affect your credit score, there are a few other techniques to keep in mind that will help you keep your credit score up.</p> <p>While it might seem that having fewer credit cards would improve your credit score, the truth of the matter is that you shouldn't close any credit card accounts, even if you don't routinely charge any purchases to those cards. The length of your credit history is an important factor in your credit score and closing accounts, especially those that have been open for a long time, can reduce your credit history and therefore drop your score. It makes good financial sense to make sure that you don't carry a balance on your credit cards, but to keep accounts active make a purchase with each card once a month or so. Pay it off in full &mdash; after all, you want to have as much credit available as possible.</p> <p>You should also check your credit history on a regular basis. Mistakes can affect your credit score, even if you didn't make them. As long as you look through your credit report on a regular basis, you can identify any errors and request that the credit bureaus address them. While you are only entitled to one free copy of your credit report from each of the three credit bureaus each year, you can choose to stagger when you request your credit report from each agency. For instance, you can request your report from Experian in January, from TransUnion in May and from Equifax in September. That way, you can review your credit history every four months, without paying for extra copies of your credit reports.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/thursday-bram">Thursday Bram</a> of <a href="http://www.wisebread.com/debt/credit-scores">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-6"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/get-free-credit-score-monitoring-with-credit-karma">Get Your Free Credit Score from Credit Karma</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/identity-theft/prevent-identity-theft">How to Prevent Identity Theft</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/credit-scores-across-the-country-which-third-are-you-in">Credit Scores Across the Country: Which Third are You In?</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/need-a-game-to-learn-to-manage-your-credit">Need a game to learn to manage your credit?</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-warranties-that-arent-worth-it">4 Warranties That Aren&#039;t Worth It</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Consumer Affairs credit report credit scores debt management fico Mon, 04 Jan 2010 19:17:24 +0000 Thursday Bram 6319 at http://www.wisebread.com