Education | Debt Management Credit Counseling Corp.

The 4 Steps to Budget Your Paycheck Starts Today!

December 8, 2022October 2, 2013 by jstokes

Why budget your paycheck today?

It is important to manage your money. It enables you to meet your monthly financial obligations on time. Managing your finances also help increase your capability to save for your retirement, education funds or by simply having extra sitting in the bank.

Budgeting your paycheck is an art. It is designing and planning the future of your wealth. Your financial plan is showing you the direction of your finances and will help you maneuver within your means.

The money that you own and can spend anytime is what you will be able to include in your budget. There are many ways to do your budget but I will show you the 4-steps on how to do budgeting effectively.

The 4-steps to budget your paycheck effectively:

Know how much is your paycheck, after tax deduction
Identify your fixed expenses
Identify your variable expenses
Monitoring and Strategy

Making a financial plan can be seen by many as a balancing act. These four steps on how to budget your paycheck will also help you design your safety nets while walking in a tight money rope. It will allow you to plan in advance if you need additional sources of income or if you need to make a temporary loan to make ends meet.

Without a written budget, you have a very high chance of overspending your money and not knowing what are the consequences that lies ahead. This is what we are trying to avoid here. We know that the effects of overspending or being cash strapped places a heavy toll in our health, wealth and relationships.

Step 1: How much money do you bring home?

You need to know how much income you earn in a weekly, bi-weekly or monthly basis. Knowing how much is your paycheck, after deducting taxes, is the first step in creating your budget.

If you have been earning for a period of time, you already have a fair idea of your average income. To the person who just got its first paycheck, your take home pay is the gross salary minus the federal and state taxes that are deducted from it. Your federal tax rate ranges from 15%-35%, depending on your income tax bracket. Your state tax deduction rate also depends on which state you live in.

Step 2: Identify Your Fixed Expenses

Fixed expenses are your monthly financial obligations that you need to pay on a consistent basis, whether you like them or not. Regardless of your financial activity, fixed expenses are awaiting payment from you every single month.

This means that even if you lose your job or your income, you are still obligated to pay them. During the recent economic recession, when millions of jobs were lost, the way of life of many Americans were affected drastically. Many could not afford to meet their ordinary fixed expenses anymore.

Suggested Examples of Fixed Expense:

House Rental or Mortgage – This is the monthly payment to your landlord or mortgagee
Car payment – It refers to your your monthly car amortization to your lender
Insurance – It includes insurance on your car, health, life and property
Electricity Bill – This is the electric power you use normally around your house. It includes the appliances, furniture and electronic gadgets you use at home
Water and Gas Bill
Telephone and Cellphone Bill
Cable and Internet
Medical and Prescriptions Costs – Your monthly medical needs that your doctor has prescribed for you.
School expenses, tuition fees and books – Yourself and/or your dependent’s K-12 and college school fees, supplies and books.
Grocery – Your food and basic household supplies.
Gas – This expense is a vital part of your car amortization expense. It cannot run without gas.

Fixed expenses are mostly fixed in dollar value on a month-to-month basis.This is not usually affected significantly even if your income increases or decreases at the end of your pay period.

Step 3: Identify Your Variable Expenses

Variable expenses are your expenses that you have full control. This type of bills are your spending habits that you can probably live with or without for a period of time.

Simply put, your controllable expenses are expenses that you can decide based on your wants and not on your basic needs. As brandrocker states, this behavior is also related with your happiness, passion, and impulse. You are likely to spend more during an emotional outbreak – both on its high and low end.

Your variable expenses is directly related to your income. As your paycheck increases, your variable expenses increases along with it. The same is true if your salary decreases, your controllable expenses will decrease too.

Step 4: Monitoring and Strategy

Now it’s time to make the computations on your budget. First, subtract your fixed expenses from your paycheck. The difference between your paycheck and fixed expenses will be the money available to pay for your variable expenses.

Next, you deduct your variable expenses. The difference from deducting your fixed and variable expenses from your income will either be a positive or negative number. A positive number will tell you that you have extra money to save or spend. A negative difference will tell you that you are in trouble.

Budget Example:

Paycheck $2000

Less: Fixed Expenses $1800

Difference $ 200

Less:Variable Expense 350

Shortage on paycheck ($ 150) based on budget

The concept of breaking down your expenses is to emphasize the fact that if your salary or paycheck cannot pay all your fixed and variable expenses, there is data available for you to analyze your spending pattern. You will be able to identify specifically which part of your budget is doing okay and which part has gone wrong.

You have two immediate options to solve your budget shortage or lack of money thereof. The first option is to increase your income or salary by the amount you need. Increasing your income is usually the first choice that you will make. This way, it doesn’t affect the dollar value you have placed on your budget’s fixed and variable expenses.

Strategies to increase your income:

Work overtime
Get a second or third job
Have a part-time work
Put up a garage sale
Start up a small business at home that you are passionate about. Adjust your schedule so that you can work on it at night, during weekends or on your free time.
Turn your hobby into an income generating activity. Usually, your hobby is your craft that you really enjoy doing and is good at it.

The second option is to reduce, constrict, eliminate or sacrifice your Variable Expenses. You can use the trial-and-error approach, adding or subtracting dollar amounts from one controllable expense to another until you arrive at your desired result. The bills you identified as variable expenses are the ones that you can manipulate to make your budget work.

Tips to manage your Variable Expenses:

Bundle your cable, television and telephone lines to get the cheaper upgrades for the services. Most of the these companies have business ties with each other that they offer cheap bundled products. Be aware that their promotion runs for 12 or 24 months only and you need to renew them to keep on paying the promotional rates.

Decide on your vacation plans based on three factors: Affordability, Worth and Priority

Affordability – The question is, can you afford this vacation? Have you been saving up for this trip? Don’t sacrifice your basic needs for a lavish activity that you cannot afford to pay.

Worth – Is the trip worth it? Don’t rely on what you read on the advertisements for your vacation destinations. Do your own extensive research before making your decision.

Priority – Do you have to go on vacation now, or next year, or the year after next? Which of the many vacation plans you have should you do first? Your trips should not have a negative effect in your financial health when you come back home.
Plan recreational activities inside somebody’s house. Getting together with friends and family to spend weekends in a house is cheaper than somewhere else.

Your budget does not have a mind of its own. You have to constantly check your actual expenses versus your budget. Monitoring your expenses ensures that your money is on the right track.

DMCC is a 501 (c)3 nonprofit organization committed to educating consumers on financial issues and providing personal assistance to consumers who have become overextended with debt. Education is provided free of charge to consumers, as well as personal counseling to identify the best options for the repayment of their debt. To speak to a certified credit counselor, call toll-free 866-618-3328 or email contact@dmcconline.org.

Reference : http://thegirls.hubpages.com/hub/How-To-Budget-My-Income

Things To Know About Debt Consolidation

December 8, 2022October 1, 2013 by Aldo Gonzalez

Debt consolidation is a way to collect all your individual debts and lump them into a single loan. It works well to combine overdraft, credit card, and automobile loans. By consolidating your debt you only make one payment to one creditor. Usually, you can negotiate better terms, a lower interest rate, and quicker payoff times. But is debt consolidation always the best idea for you?

When you consolidate your debt make sure you know if it is an unsecured or a secured loan. An unsecured loan is like a signature loan or a good will loan from a friend. You are not required to put anything on the line to guarantee the loan in the event you don’t pay. Money is loaned to you solely on your ability to repay. A secured loan requires that you offer a piece of collateral as insurance, in order for the bank to lend you money. That collateral could be your house, your boat, or a sum of money in an account. If for any reason you don’t pay the loan back, or default, the bank has every right to take whatever you may have secured the loan with.

It is also important to know whether the interest rate on your loan is fixed or variable. A fixed interest rate remains the same until the loan is paid off. The interest rate you start out with will be the interest rate you end with. If the lender’s rates go up and down, it doesn’t matter, because you will have a fixed interest rate. The other type of loan is the variable interest rate. These usually have an introductory offer. The offer can last anywhere from three months to five years. After the offer expires your rate will adjust to a new rate. These loans are popular because the introduction rate is so much lower than other rates. It’s tempting to get a variable rate, but it’s a risk because ultimately you can be negatively affected by rate changes. Consider these carefully.

When you consolidate your debt, look at the bottom line. Many people don’t realize that their debt can cost them 200% more after they’ve made payments over time. The car you bought for $15,000 could end up costing you $45,000 in the end. If possible, get an amortization table on your loan. This will tell you how much interest and how much principle you are paying with each payment. If you can make more than the minimum payment on your loan, you will get out of debt quicker and cheaper.

As with many life choices, the more you know about your financial options, the more likely you’ll be to make the right decision.

Bankruptcy Facts

December 8, 2022September 25, 2013 by Aldo Gonzalez

While bankruptcy may be a life vest for most people drowning in debt, choosing to file is never an easy decision. For some financially distressed debtors, bankruptcy may not always be the best option.

Several events can cause individuals to lose control of their financial situation. Divorce, job loss, lawsuits, foreclosures or credit card debt can drive a person over the financial edge. Generally, filing bankruptcy allows people who are having financial difficulties to wipe out their debts. In most cases, people filing bankruptcy can keep all of their property. Thus, bankruptcy helps people wipe out their debts, keep their property and get a fresh start.

Many people filing for bankruptcy have accumulated a huge credit card debt and in some cases are trying to prevent a foreclosure on their home.

Ten Years of Bad Credit

Although bankruptcy can wipe out all unsecured debts through an order of the court called a discharge, bankruptcy information remains on a credit report for 10 years. Any negative information that appears on a credit report may prevent an individual from buying a home or car, or from obtaining a credit card or loan.

Bankruptcy serves two main purposes:

1. It gives creditors a fair share of the money that the debtors can afford to pay back.

2. It gives debtors a fresh start.

There are two ways in which bankruptcy can provide for payments to creditors and a discharge for debtors – Chapter 7 and Chapter 13.

Chapter 7

In a Chapter 7 bankruptcy, known as the liquidation chapter, debtors give up certain property when they file for bankruptcy. A trustee appointed by the court sells the property and uses the proceeds to pay the creditors. A trustee is usually a lawyer or accountant who specializes in bankruptcy cases. The debtor receives a discharge shortly after the case is filed.Debtors are allowed to keep any money earned after filing for bankruptcy, as well as most other property obtained after the filing. Under this chapter, all unsecured debts are wiped out. These debts include credit card bills, medical and legal fees, utility bills, deficiency balances (the difference between the amount owed and the value of the property), loans from friends and some student loans.

There are some debts that cannot be discharged through the bankruptcy process. These debts, known as non-dischargeable debts, include alimony, child support, some student loans, certain federal, state and local taxes, debts from fraud, larceny, theft, and fines and penalties for items worth over $1,000.

Chapter 13

Chapter 13 is designed for individuals with regular income who want to pay their debts but are currently unable to do so. The purpose of this chapter is to help individuals, under court supervision and protection, to propose and carry out a repayment plan under which creditors are paid over an extended period of time. Under this chapter, debtors are permitted to repay creditors in full or in part, in installments over a three-year period.

Try the following measures before declaring bankruptcy:

• Control spending, either with the help of a credit counselor or a debt consolidation plan.

• Set up repayment plans with creditors.

• Get credit counseling and learn about financial management.

Most experts advise against filing for bankruptcy and recommend finding alternative ways to pay off debt. Most consumers should try paying off their debts through a repayment plan before choosing bankruptcy. These types of programs will teach the consumer ways to reduce expenses and save money.

Organize Your Finances And Do Your Research

December 8, 2022September 22, 2013 by Aldo Gonzalez

If you are considering debt consolidation or consumer credit counseling agencies for credit help, start by getting your act together. Organize your finances and do your research. You will begin to learn the skills you need to fix your money problems and avoid getting in this situation again. Your active participation is key in the success of your financial future.

Visit a credit counselor. There are credit counseling companies who help consumers by offering debt reduction plans to tackle debt. An advisor will work with you to lay out a plan to repay your loans. The counselor will negotiate with lenders on your behalf for the lower rate which, in turn, will reduce your monthly payments as well as keep your credit rating intact. Read the fine print to make sure you understand any fees involved; make sure that your credit rating is not adversely affected too.

Credit counseling is all about you and your financial situation. Make sure to ask the credit counseling organization about what type of customer service they provide. Credit counseling organizations should have someone available for you to talk to during all business hours of the day. Be sure to ask about counseling fees and the type of management and education programs they have in place.

Use cash as much as possible. Paying with cash has a more significant psychological impact than plastic. It feels like you’re spending more money so you spend less.

If you want something, save for it and then buy it. You should only finance items that are absolute necessities (home and car). Don’t finance furniture, small appliances or vacations. If you can’t afford to pay cash for it–you can’t afford it! Also, paying cash for items is a safe way to avoid any financial errors and bank fees. If you only take $50 to the store, that’s all you can spend.

When paying down debt remember: Minimum payments lead to the maximum amount of money paid over time. Paying more than the minimum applies more money to the balance, which decreases the amount of money you will end up paying overall.

If you are going to use any settlement companies be sure that they are registered members of the BBB (Better Business Bureau) and that they have little to no complaints. And if there are any complaints make sure then were resolved to the clients liking.

Chronic spending and debt can be a harmful habit, just like alcoholism or any other addiction. Consult a professional and/or Debtors Anonymous if you feel you might have a problem.

Make Getting Out Of Debt Your #1 Priority

December 8, 2022September 18, 2013 by Aldo Gonzalez

Although it is extremely easy to get into massive amounts of debt very quickly, it takes time, discipline, and commitment to get out of debt. You have to make a life-changing decision that you no longer wish to be in debt because getting out of debt is going to affect every area of your life.

The first thing you need to do is to complete a spending inventory to find out where you are right now. A spending inventory is simply a list of everything you spend for an entire month, whether by check, charge, or cash. This will help you locate the waste in your budget. Most everyone can find $100 to $200 a month in wasteful spending that can be cut. This additional money can be used in your plan to get out of debt.

When you make getting out of debt your top priority, it affects your thinking, decision making, and habits. If you usually walk around the mall at lunchtime and end up compulsively buying things, then you will no longer go to the mall. Instead, you will take a brown bag lunch to work or eat in the company’s cafeteria. You will begin to analyze every purchase to decide if it is really necessary. You will cut unnecessary expenses and learn to live frugally. It’s important, as you start your plan of action, that you do not incur any new debt. Begin to only purchase things that you can pay for in cash.

One of the biggest benefits of being debt-free is peace of mind. You will no longer have to be stressed out about money.

DMCC Providing Homebuyer Education Workshop to South Florida Hispanic Community

April 24, 2015September 17, 2013 by jstokes

Debt Management Credit Counseling Corp (DMCC) (http://www.dmcconline.org), a nonprofit organization, is providing a Spanish language homebuyer education workshop in Boca Raton on September 21, 2013. Attendees will receive credit towards completion of the homebuyer education required to qualify for various financial assistance programs.

Ways People Waste Money

December 8, 2022September 14, 2013 by Aldo Gonzalez

Wasting money is not only detrimental to your overall financial well being, it’s irresponsible. Your house and living expenses make up the major portion of your personal budgeting plan. If you are not careful, they will leave you with little or no money to build financial security, or play with. Just like spending cash unnecessarily, paying for home expenses that are unnecessary is just wasting money. Here are some ways people waste money on household expenses.

Paying for the same service twice.

Most households subscribe to cable T.V. A good portion of cable subscribers also pay additional money for one or more movie channels. It’s not unusual for these same families to rent movies from video stores and/or subscribe to a movie service via mail. In this scenario, there are now three resources included in the household budget for movie viewing entertainment. Which, by the way, is technically a discretionary expense, not even a necessary expense.

You can save by trimming down this expense to one good service that best meets your family’s movie entertainment needs. List and analyze your movie viewing options. Determine which service gives you the most benefit for your money. Then, make an informed decision on which service to keep. Reducing this household expense could save hundreds of dollars per year.

Paying for services that you don’t use or really don’t need.

This is most common with home phone services. Features like call waiting, caller ID, return call service, long distance packages, etc, etc, etc. are extra expenses that you could possibly live without. Is the convenience of caller ID worth a fee of nearly $8 per month? Do you really need it? Eliminating little money leaks like this adds up to significant yearly budget savings. Review all of your household expense bills to see if you’re paying extra for services you don’t need. Eliminate extra services and the fees that go with them whenever possible.

Sometimes making lifestyle changes can reduce expenses significantly. You can minimize costs on essential household expenses by simply being more aware. During Summer months, don’t turn on the air conditioner until you can’t take it anymore. Not using the air conditioner will save the most on home energy expenses. Many gas and electric providers offer energy efficiency evaluations for your house, free of charge. Take advantage of this service to see where you can make home improvements that could mean substantial savings in energy costs. They may also offer suggestions for lifestyle changes that can reduce energy expenses even further. During winter months lower your thermostat a few degrees and dress warmer if necessary.

Review, remove, and reduce expenses to stop wasting money and trim your household budget. Analyze each household expense for necessity and the costs associated with it. Make an effort to reduce each expense to the minimum amount possible, while still meeting your family’s needs. Before you know it you’ll be saving hundreds, if not thousands, of dollars on your household budget expenses each year.

Use Budgeting To Reduce Debt

December 8, 2022September 13, 2013 by Aldo Gonzalez

Many Americans live their daily lives without a budget, possibly why the average American household is over $8,000 in credit card debt. People in these difficult financial situations often say that the reason they have fallen upon hard times is because they do not make enough money. More money does not always solve the problem; more money often leads to more problems. The real solution to financial problems is planning, or budgeting.

With a little knowledge and effort, anyone can begin creating a budget to reduce their overall debt.

First, stop adding debt upon debt. It’s of the upmost importance that you quit accruing debt immediately. Use cash for your purchases, not your credit cards. If you can’t pay cash, you don’t buy it. Period.

Next, figure out how much you pay per month total for all of your expenses. This includes rent/mortgage, car payments, car/home insurance, utilities, credit card debt, other personal loan debt, food, gas, Internet, cable television, clothes, eating out, and entertainment – everything.

Now, determine your total income. Subtract this total from your monthly income total. Where do you stand? Are you comfortably in the positive, or barely? Or are you in the negative?

If you’re barely in the positive, or if you’re in the negative, it’s time to reduce your overall expenses.

What can you get rid of? Eliminate extraneous expenses. Also, shop around for better telephone rates, cell phone rates, and insurance rates. Make changes where you can.

Phone your credit card companies and try to get your interest rates reduced; sometimes they’re even willing to negate past due and over the limit fees. Consider contacting a non-profit credit counseling company. Debt consolidation or debt settlement might be a consideration for your situation. Your goal here is to reduce your overall debt from your credit lenders.

If you shift your focus from short term to a long term point of view, you will find that you will eliminate many of your wasteful spending habits. Furthermore, you may find that you are saving money for a rainy day, possibly even investing. Once your financial maturity reaches this point, you will no longer fall prey to life’s unexpected expenses. This is the only way to reach financial independence.

Credit Card Debt Relief Act 2010

December 8, 2022September 9, 2013 by Aldo Gonzalez

Many Americans are struggling with out of control credit card debt. As a result, several debt relief options have been introduced to the market including debt consolidation, debt settlement, and credit counseling. The Federal Trade Commission (FTC) recently passed provisions regulating the credit card debt relief industry, mainly targeting for-profit debt settlement companies. Many of these companies promised they could help consumers “cut credit card debt in half”. The problem was, however, that there was no guarantee for consumers, many of which had to pay large upfront fees to the debt settlement companies. Too many of these companies, instead of leaving consumers better off, push them deeper into debt, even bankruptcy.

The Credit Card Debt Relief Act 2010 prevents settlement companies from charging heavy fees even before the completion of the deal. This legislation is intended to provide significant protection for consumers who enter into a debt relief program and stop deceptive and abusive practices by debt relief providers that have targeted consumers in financial distress.

The purpose of the Act is to give consumers with over $10,000 in unsecured debt, who are facing financial hardship, a real and legitimate option for achieving debt relief. Since creditors and card issuers receive nothing in a bankruptcy filing, they are eager to work with genuine debt settlement companies to collect at least some of their money back.

Other provisions of the Act require settlement companies to specify to the defaulter exactly how long the total process will take and also the cost in such a circumstance. Moreover, the borrower can, at any point in time, choose not to continue with the program and in such a case, all his or her funds have to be refunded. The FTC debt settlement provisions also make it mandatory for the companies to inform the concerned customer about the negative effects, if any, of going for such a program.

Will these new regulations put legitimate debt management companies out of business along with the abusive, deceptive, and unfair debt companies? It’s very possible that this Act will have a detrimental effect on consumers, leaving many of them to resort to bankruptcy instead of debt management. Although the intention of the FTC is to protect consumers, it’s yet to be seen if the Credit Card Debt Relief Act will achieve the Commission’s desired result.

Avoiding Bank Fees

December 8, 2022September 3, 2013 by Aldo Gonzalez

Watch Out for Those Overdraft Charges

Have you ever looked at your bank statement and felt like screaming at the top of your lungs? Do you feel like you are throwing money out the window? Maybe you purchased an item for $197.99 and you have $197.85 in your checking account. Congratulations, you have mastered the art of bouncing a check! Most banks will charge you anywhere from $30 – $36, for being short 14 cents. This has probably affected almost all consumers at one time or another.

According to a recent National Public Radio story by Chris Arnold, banks have always explored new ways to debit money from their customers. Almost all banks have adopted the policy of cashing your biggest transactions first, such as mortgage or car payments. This information will be provided in the terms and conditions of your account or in the account agreement. Here is a direct quote from a banks policy statement:

“When processing withdrawals from your account, such as those made through checks, in-person withdrawals, Automated Teller Machines, point of sale, or by any other electronic means, it is our policy to pay the largest item first.”

Let us assume you have $500 in a bank account and in one day, the bank debits your account for three of your checks and a cash withdrawal at an ATM. Chronologically, your account would be debited as follows: Check #1 for $25, Check #2 for $40, ATM debit for $22, and check #3 for $495, totaling $586. If the bank cashed the checks and ATM charge in the order they were processed, you would be charged only one overdraft fee ($30) for check #3 ($495). Instead, the banks clear the largest check first. By doing this you will be charged three overdraft fees totaling $90. This has been an expensive day.

How to Avoid Overdraft Fees

Overdraft fees are not only costly, but also aggravating, so learn how to use all the tools at your disposal to manage your accounts and avoid these charges. Most banks have a toll free automated system that provides 24-hour account access. You can check your balance, verify what payments have been processed and which checks have cleared. Most FDIC institutions offer online banking services as well, so take advantage of your banks website. Some banks can even issue alerts to your email or cell phone when bills are due and can automatically issue payments each month for your regular expenses, like car loans or mortgage payments. Almost all of the online banking services will archive your purchases and bill payments. This can help you keep track of which bills you have paid and on what date. Also, if you have the possibility to use a direct deposit feature through your employer, take advantage of it. Getting your paycheck transferred directly into your bank account can help tremendously. If using the internet is inconvenient, then just keep a small calculator with you and log each transaction into your checkbook. The most important part is to deduct every purchase from your total balance to avoid those overdraft charges.

I Keep Getting Overdraft Fees

The good news is that most institutions have some kind of overdraft protection plan. Overdraft protection is a service to help you prevent from exceeding your checking account balance with purchases. By being enrolled in overdraft protection, funds from a savings account, money market account or a line of credit can cover the amount of the transaction not covered by your checking. Most institutions offer this service free of charge for signing up, but can assess fees up to $25 for each overdraft. So if you are tired of acquiring overdraft charges and you have tried tracking your purchases, it may be a good idea to contact your institution to see what they have to offer for overdraft protection.

Facts About Debit Cards

December 8, 2022September 2, 2013 by Aldo Gonzalez

Debit cards also known as check cards, ATM cards, and express checking cards can be used to withdraw cash from your bank account via ATM and make purchases without using credit. They look similar to a credit card and work by taking the money directly out of your bank account.

Two types of Debit Cards

A traditional debit card is issued through your bank and requires a personal identification number, or PIN, to complete a transaction. A PIN-based or direct debit card removes a purchase price from your checking account almost immediately. These kinds of debit cards are accepted at gas stations, supermarkets and stores such as Wal-Mart, Walgreen’s and Target. A deferred debit card is also issued through your bank but bears a logo of a major credit card company. To use it you can enter a PIN or sign for the purchase as you would with a credit card. A signature-based or deferred debit card has a Visa or MasterCard logo. These cards are accepted anywhere Visa and MasterCard are accepted. Just hand the clerk your card and sign a sales slip and you’re done. The purchase amount will be removed from your bank account in two or three days. When you swipe your card through at the checkout line, you’ll be asked if you want to pay by debit or credit. If you hit “debit,” you’ll need to input your PIN number. If you hit “credit,” you’ll need to sign the sales slip.

PIN offers the best protection

Some consumer experts urge people to choose PIN-based, direct debit cards only. With a PIN-based debit card you have to know the PIN number to make a purchase. With a signature-based debit card, anyone could pick up the card and sign your name to it. It may limit the number of places you can use it. But that’s the tradeoff you make for extra security.

Return policies can vary

According to the ABA many merchants treat a debit card purchase as they would a personal check or cash. This means you may get several hundred dollars in store credit instead of a refund for debit card purchases. So as a dissatisfied debit card customer you’re pretty much stuck trying to resolve the dispute with a merchant on your own. It could go on for weeks or months and when it’s all said and done you may not get your money back. When you make a purchase with a credit card you have the option of withholding payment should you be unsatisfied with the quality of an item. This right is protected under the Fair Credit Billing Act. This federal law does not apply to debit card purchases. In summary it makes sense to use credit cards when ordering merchandise from the Internet or a catalog or for big-ticket items or expensive services. Debit cards are a great way to pay for everyday items such as gas or groceries. A debit card can also be a good money management tool if you’re diligent about recording every single transaction in your checkbook.

Fees

According to the Wall Street Journal one in five banks add a charge for each transaction completed by entering a PIN. Other fees are levied for minimum balance requirements, ATM use or even for having the debit card itself. The Board of Governors of the Federal Reserve estimates that 15% of all consumers with debit cards are subject to debit transaction fees. Therefore when you chose a debit card first find out what kind your bank offers and ask about the fees. If you chose to have overdraft protection, please refer to the overdraft protection article from DMCC for additional information.

Automobiles: Buying vs. Leasing

December 8, 2022September 2, 2013 by Aldo Gonzalez

There are many things to consider when deciding whether to buy or lease your next new automobile. To help you decide, we are reprinting an excerpt from www.leaseguide.com, with their permission. This website will give you the answers and information necessary for you to make an educated and informed decision.

Leases and loans are simply two different methods of automobile financing. One finances the use of a vehicle and the other finances the purchase of a vehicle. Each has its own benefits and drawbacks. It’s not possible to simply say that one is always better than the other because it depends on your own particular situation and preferences.

You must not only look at the financial comparisons but also at your own personal priorities. Is having a new vehicle every two or three years with no major repair risks more important to you than long-term cost? Are long-term cost savings more important to you than lower monthly payments? Is ownership more important to you than low upfront costs and no down payment?

Buying and leasing are different.

When you buy, you pay for the entire cost of a vehicle regardless of how many miles you drive it. You typically make a down payment, pay sales taxes in cash or roll them into your loan, and pay an interest rate determined by your loan company. You make your first payment after you sign your contract.

When you lease, you pay for only a portion of the vehicle’s cost, which is the part that you “use up” during the time you are driving it. You have the option of not making a down payment, you pay sales tax only on your monthly payments (in most states), and pay a money factor that is similar to the interest rate on a loan. With leases you may also pay extra fees and possibly a security deposit that you do not pay when you buy. You make your first payment at the time you sign your contract.

If you lease a car that costs $20,000 but is worth only $13,000 after 24 months, you pay for the $7000 difference (this is called depreciation), the finance charges, and additional fees. When you buy, you pay the entire $20,000 plus finance charges. This is fundamentally why leasing offers significantly lower monthly payments than buying.

Lease payments are made up of two parts: a depreciation charge and a finance charge. The depreciation part of each monthly payment compensates the leasing company for the portion of the vehicle’s value that is lost during your lease. The finance part is interest on the money the lease company has tied up in the car while you are driving it. The principal pays off the vehicle purchase price, while the finance charge is loan interest. However, since vehicles depreciate in value by the same amount regardless of whether they are leased or purchased, part of the principal charge of each loan payment can be considered as a depreciation charge, just like with leasing. It is money you never get back, even if you sell the vehicle in the future.

The remainder of each loan principal payment goes toward equity. It is what remains of your car’s original value at the end of the loan after depreciation has taken its toll. Equity is resale value – what you get back if you sell the vehicle. The longer you own and drive a vehicle, the less equity you have.

So, buying a car with a loan is essentially like putting money into a declining-value savings account. You never get out as much as you put in. A portion of every payment you make is lost to depreciation, a terrible investment by any measure.

Leasing is similar to buying but without the “savings account.” You only pay for what you use. It is true that you’ll own nothing at the end of a lease, but what you do not own is the same part of the car – the depreciated part – that a buyer also does not own at the end of his loan.

There are hidden cost differentials to consider. Automobile insurance options may differ when you lease rather than own a vehicle. When you purchase a new vehicle and sell it or trade it in you will receive a dollar amount that has been determined by means of a book value. When you return a lease vehicle, although the dollar value has been determined at the time you signed the lease agreement, you may be assessed other costs (i.e. excessive wear and tear, mileage beyond the agreed terms, etc.). You will be liable for these cost at the termination of the contract. Therefore, it is imperative you review all documents before you sign the agreement.

Advice For Dealing With Creditors

December 8, 2022August 28, 2013 by Aldo Gonzalez

At one time or another, all of us have forgotten to pay a bill or fallen behind on payments to credit cards, mortgages, autos, medical bills, or other situations involving bills. We have all therefore been contacted by a bill collector, ether through the mail or telephone call. Some these calls and correspondence can become a terror attack from creditors. Some creditors call at all hours at home and work. Some even may call the neighbors, the family, and/or employers. Some collectors can be obnoxious, condescending and downright rude. Despite laws governing their actions, many creditors and collection companies feel that an individual will not have the time, money or emotional strength to pursue them in court. Therefore, they get away with the outrageous and, sometimes, illegal acts.

If you have filed bankruptcy, and received an automatic stay, it is against the law for the creditor or his collection company to contact you without permission of the Bankruptcy Court. If your case is discharged, then creditors and their collection companies are permanently barred from contacting you unless they have received special permission from the Bankruptcy Court, or your debt is one that is excepted from your discharge.

If you have entered into debt consolidation or debt settlement with a non-profit debt counseling service, make sure you know your rights for protection from creditor calls from your representative.

You have other legal rights which protect you against certain collection practices. First, you should know what to do when you start getting bills. If you feel you do not owe the debt, or the amount the bill collector is claiming is incorrect, you should write a letter to both the collection company and the original creditor stating you do not agree you owe the money, or that the amount owed is incorrect. You should also ask for a record of your payments.

If the bill collectors report the debt to a credit reporting agency, you should write to the credit reporting agency and tell them the bill is in dispute. Whenever you write to a bill collector or to the reporting agency, you should sign the letter, date it, and keep a copy for your own file. Remember, just calling the bill collector to say you do not owe the money may not leave a permanent record of the call. Like most bureaucracies, if it is not in writing, it does not exist.

You can stop annoying collection. If the collectors continue to call you, you can send them a letter requesting they cease communication with you under the terms of the Fair Credit Collection Practices Act, 15 U.S.C.S. Section 1692. When you write your letter, do not forget to date it, sign it, and keep a copy. If you really want them to pay attention, send the letter CERTIFIED. By sending the letter CERTIFIED, you have proof that you sent the letter. If you send this letter, it will not only stop letters to you, but will also stop telephone calls to you.

Also, The Fair Credit Collection Practices Act forbids bill collectors from calling you at inconvenient times, such as before 8:00 a.m. or after 9:00 p.m.. The collectors or agents cannot communicate with third parties such as your neighbor, your friend, or your family members. They cannot contact you at work if they know (notice must be in writing) that your employer prohibits it. They cannot threaten you with criminal prosecution or call you on the phone repeatedly with the intention of harassing you.

Document all your discussions and communications with any debt collectors. If the collection company continues to ignore your warnings and refuses to comply with the law then you could sue them. But their behavior must be truly offensive, not just annoying. You could bring an action in small claims court, or hire a lawyer. But, you must have proof of their actions in order for any court to find in your favor.

Are You Buying A Lemon?

December 8, 2022August 26, 2013 by Aldo Gonzalez

Buying a vehicle can be both a stressful and rewarding experience, especially if you plan on purchasing a used vehicle. Even if you get great financing and find the exact car you want with all the extras, there is still a chance that the car may not be as reliable as you hoped. To avoid any future headaches, and empty bank accounts, be sure to do all of your homework first.

Read independent reviews from people who own the car you want. Web sties like www.edmunds.com and www.cars.com have a Consumer Review section for every car by make, year and model. Here, owners have the opportunity to share their views and experiences. These reviews are a great source of first hand information and can tell you exactly what to expect, from problems to compliments. Just make sure you read a few of them so as not to get a biased perspective. Once you found the car you like and know the good and the bad about it, all you need next is to find someone selling the car.

More specifically, you should find a car with a clean history. Worse then buying a car that with seats that seem to get more uncomfortable the longer you drive is buying a car with water damage. This usually means that the electrical system, the interior and the cars engine have been sitting in water for a period of at least two days. Traditionally these vehicles are taken to junkyards and are stripped for usable parts. However, this is not always the case.

The practice of selling damaged vehicles is kept alive by curbstoners. Curbstoners purchase damaged cars in volume, fix and resell them to dealerships and consumers who are interested in buying a less expensive automobile. Frequently, these cars are only minimally repaired and taken out of state to be re-titled as undamaged vehicles and are more commonly found after severe weather, such as after a flood or hurricane. Water damage to a car is tough to identify because the vehicle will continue to run, but its days are numbered. To ensure the safety of the future driver and the cars reliability, you will need to pull out a magnifying glass and start investigating.

What to do when looking at a used car:

– Have the car looked at by a trusted mechanic for a thorough inspection

– Check the reputation of the dealership

– If purchasing a vehicle through the classifieds, check for multiple listings by the same owner (compare the advertised phone number to call)

– Review the vehicles history. www.carfax.com, is a good website for this purpose (you will need the vehicles VIN number) Inspect the car for water lines and signs of rust (check the glove compartment and underneath the seats)

If you do not feel 100% comfortable with a seller (or the vehicle), then perhaps it is a sign you should walk away from the deal. Visit www.consumeraction.gov for free educational information and warning signs to look out for when purchasing a used vehicle. If you believe you have purchased a lemon, contact the Department of Consumer Affairs in your state to find out what you can do.

Budgeting Basics

December 8, 2022August 24, 2013 by Aldo Gonzalez

A budget, or spending plan, is the best way to get control of spending and review if your money is used the way that will benefit you best. Managing money is a skill, and like most skills it requires a bit of discipline and lots of practice.

Step 1: Journalize Your Spending

Using a spending diary can help identify areas where you can reduce unnecessary expenses. Logging your spending trends, such as the daily coffee and donut, the daily newspaper, or even the soda for lunch, can be a rude awakening. The coffee and donut can cost you $1,092 a year (assuming you are spending $3 for a medium coffee and a donut…$3 x 7 days a week = $21, $21 x 52 weeks per year = $1,092).

Step 2: Estimate Your Monthly Take-home Income and Expenditures

Gather all your bills including credit card statements, receipts for groceries, gas or anything else that you buy with cash. You should also have your checkbook register available to review additional expenditures. Write down all of your expenses, broken down into categories for (1) fixed expenses like the house payment, credit card payments and car payments; (2) flexible expenses that vary each month, including the phone and electric bills; and (3) discretionary expenses, such as a gift for someone’s birthday or a scheduled outing. Add up your total monthly expenses and total monthly income. Then subtract the total expenses from the total income. The difference is available for you to use as you desire. If the total difference is a negative amount, then you are spending more than you are earning. In this case you should take immediate action to adjust your lifestyle and expenses so you do not continue to accumulate more debt.

Step 3: Plan

It is comforting and almost second nature to think that you will have more money next year. But it will not happen without some serious commitment. Before making any promises and thinking that your financial situation will change automatically, plan for change. Sit down and make some goals. Goals give you direction to realize your dreams. Establishing goals for the short, mid and long term will help you achieve financial security. Short-term goals can be met within a year, mid-term goals would probably take a little longer, perhaps five years, and long-term goals may take ten to fifteen years to achieve. Be descriptive and define the means to the end. If your goals are specific enough, you will be motivated to cut down on your spending to reach those goals. For example, you can use this tactic:

Goal(s) _____________________________

Estimated Cost _______________________

Target Date__________________________

Monthly Savings ______________________

Step 4: Reduce Your Spending

The hardest part of the budgeting process is over; now comes the commitment. Although it may seem impossible to cut your ties with some of your expenditures, you will soon become comfortable with your new spending plan. Cutting expenses is perhaps the biggest challenge people face. This can be because they are already just meeting their financial responsibilities. However, it can be accomplished. There are a few suggestions to consider:

• Pay with cash instead of writing checks or swiping your credit card. It is so easy to just write out a check or to pay with plastic. The after effects are not felt until it is too late.

• Withdraw a set amount of money every week. If you only have $50 to spend in one week, you will monitor and perhaps be a little more frugal when it comes to buying something you do not need.

• Do not create more debt. If you cannot pay for it up front, do not buy it. Should you come across something you think you cannot live without, step back and reconsider. Do you really need the extra stress of one more bill? How is making that purchase going to affect your planned goals? Even when you know you deserve something, put your wants on hold until you have the cash to pay for them up front.

• Remember your weakness. If you like to shop for clothes on a weekly basis, try to avoid going to the mall or places of temptation. If you find yourself somewhere and you want to shop, only spend the allotted amount you budgeted for.

• Rethink your shopping style. Comparison shop! Plan your purchases before you buy. Make a list of things you need before you go into the grocery store – and stay within the list.

Step 5: Pay Yourself first

The easiest way to save is to think of this category as an expense. Try not to wait until the end of the month to see if you will have money left over to put into savings. Set up a separatmoney grow. It is very important to routinely compare your budget to how much you are actually spending. Once you become comfortable with the process you will be able to alter your categories and perhaps put a little more into savings.

Bankruptcy

December 8, 2022August 22, 2013 by Aldo Gonzalez

courtesy of http://online-bankruptcy-lawyer.com/

The thought of personal bankruptcy is very frightening, however over 5.4 per 1,000 people have filed for bankruptcy last year, and this rate has been growing at an average of nearly 7 percent. Researchers have determined that the primary cause of personal bankruptcy is uncontrollable levels of consumer debt oftentimes coupled with an unexpected event, such as a major medical expense not covered by insurance, the loss of a job, divorce or death of a spouse.

According to economists’ surveys, the classic bankruptcy filer is a blue collar, high school graduate who is the head of a household in the lower middle-income class with heavy use of credit. In order to protect both debtor, and creditor, laws were enacted to provide equal, and fair measures to satisfy the objectives of all parties. The primary purpose of the laws of bankruptcy are: (1) to give an honest debtor a fresh start in life by relieving the debtor of most debts, and (2) to repay creditors in an orderly manner to the extent that the debtor has property available for payment.

There are two types of structured plans for filing for personal bankruptcy, Chapter 7 or Chapter 13. Over two-thirds of personal filers choose Chapter 7 bankruptcy. Basically Chapter 7 requires the debtor to liquidate all non-exempt assists, and have them distributed among creditors. Some examples of exempt assists include equity in a primary residence, and a retirement program. On the other hand, Chapter 13 does not require liquidation, rather a debtor agrees to a specific payment plan, whereby a portion of any unsecured debts is paid, and the balance is forgiven. It must be stressed, that under both plans, certain debts are ineligible for bankruptcy protection. These debts include government student loans, child support, alimony, and income tax debt. These must be paid back in full.

Some analysts are concerned that this unprecedented level of debt might pose a risk to the financial health of American households. In an attempt to reverse the increasing trend in personal bankruptcy, the federal government has recently implemented sweeping bankruptcy reform legislation. On March 10, 2005, the Senate passed S. 256, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. On April 20th, President Bush signed into law the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (Bankruptcy Act of 2005). This act makes filing for bankruptcy more difficult through income-means testing, tougher guidelines for the homestead exemption, increased lawyer liability and required credit counseling.

Car Insurance

December 8, 2022August 22, 2013 by jstokes

courtesy of http://www.car-insurance-usa.com

Congratulations, you have just purchased the car of your dreams; you worked a great deal, now it is time to insure it. Car insurance is mandatory in all states, and must be maintained throughout ownership. Insurance quotes can vary from company to company, and there are a few factors that you can control, and other factors you cannot. A full understanding of how insurance quotes are arrived at, will give you the best rate, and maximum coverage.

Factors that cannot be controlled include the age of the driver. Common sense tells us that a new driver would be more of a risk to an insurance company, than an established driver. Therefore a driver in their early 20’s would pay a higher premium than a driver in their 40’s. Further, elderly drivers have poor reaction time, and similarly would pay more of a premium. The ideal driving age would be between 35 to 55 years; anyone younger, or older would pay more.

Gender is another uncontrolled factor that insurance quotes are based on. Statistically, insurance companies see females as safer drivers than males. As a result, female drivers pay less than their male counterparts.

There are factors, which we can control, namely the amount of traffic tickets and accidents. A ticket is a violation of law that could potentially result in an accident. Insurance companies frown on this, and will penalize the driver with higher rates. Similarly, accidents could indicate a pattern of behavior; as such the driver is penalized with higher rates.

Where you live is another controlling factor that effects insurance quotes. Living in a rural area, puts the driver at much less risk of accident or theft as compared to living in a city. As a result, city drivers will pay a larger premium than rural drivers with very few exceptions.

Want to drive a Porsche 911 Carrera? It will cost you. The more your car is worth, the higher your insurance quote will be. The logic should be obvious.

Car insurance companies are now looking at your credit worthiness. Do you have excessive, outstanding credit, or no credit at all? If so, you are a risk in the eyes of the insurance companies, and will get socked with higher insurance quotes. Keeping your credit in check will show the insurance companies you are responsible, both financially, and on the road. As a result, you will pay lower premiums.

Your occupation can put you at a higher risk. Jobs that require many hours of driving, or driving in hazardous conditions, or places will put your quote at a higher rate. Less driving, and exposure to high-risk opportunities, will result in lower premiums. Additionally you want to keep your annual mileage down to a minimum. The more miles you drive, the greater the risk of accident.

Vehicle theft is a risk factor that can easily be minimized. Most companies will give you a discount for having better security for your vehicle. An alarm, or another approved anti-theft device will usually result in some discount. Some companies may insist on having such devices installed on more expensive and desirable cars before they even consider offering you a price.

Some companies look favorably on drivers who have taken a defensive driver’s course. They see this as a commitment to safer driving, thereby lowering the risk of accident, resulting in lower premiums.

Keep in mind these are just general guidelines, and the difference in price between various companies can be significant. What one company may consider a high-risk factor another company may not view as so important. The bottom line, keep your credit in check, be careful on the road and choose a car that fits your budgets.

Reduce Debt By Taking Charge

December 8, 2022August 20, 2013 by Aldo Gonzalez

Getting out of debt and staying out of debt is not easy. If you’ve already amassed a fair amount of debt and are thinking it will be impossible to ever get out from under it all, don’t despair, you can learn how to stop incurring new debt and take charge of your life.

The first thing you must do is STOP increasing your debt! If you have any credit cards that are maxed out, destroy them. The best way to manage your debt is to get spending under control by eliminating all of your credit cards, except one. Use your one credit card ONLY to buy “must haves” until you can get your finances in check.

Avoiding more debt starts with knowing what you are spending your money on. Record your spending. This is key to getting out of debt. You’re in debt because you spent money you didn’t have. If you’re like most people, your debt didn’t come from a single large purchase; it was trickles of spending amassed over time. Each day for at least one month, write down every penny you spend, no matter how small.

The next step is to categorize your spending. Put your monthly expenses into groups of “Must have,” “Should have,” and “Like to have.” “Must haves” are things that will cause harm if you don’t buy them, such as food, rent, medicine, pet food, etc. “Should haves” are things that you need, but can do without for a little while, e.g., new clothes for work, gym membership, etc. “Like to haves” are things that you don’t need, but enhance your life, e.g., magazine subscriptions, newspaper, cable tv, coffee with friends, etc. By doing this, you’ll have a good idea of what you spend your money on, and you’ll be able to figure out where you might need to cut back on spending. You don’t want to eliminate all of the “should haves” and the “like to haves,” but take a look at those first.

Now, make a budget based on your spending record. Looking at your new budget, you’re going to be able to see areas where you might be able to cut back. Chances are, your budget has some fat that can be trimmed. Be realistic, but vigilant. Over time you will be able to hold back on purchases and you will be able to come up with a dollar amount that can be put toward paying down your debt.

To begin paying off your debt, first figure out how much you owe, to whom, and on what terms. Debt can often feel overwhelming because you really don’t have a clear idea of how much in debt you really are. Gather your bills, and make a simple list of all the debts you have. Write down all the pertinent facts, including name of the creditor, your total balance, your minimum monthly payment, and your interest rate.

Prioritize your debts. Debts that are past due, ones where the creditors are hounding you, and those with exceedingly high interest rates should be considered top priorities. You should pay the minimum on your low interest rate debts, and apply the bulk of your available funds to the highest interest rate notes. Once you pay off one creditor, each debt gets easier to pay off than the last. Continue to pay off each debt in your priority list. You’ll refine your budget over time, increase the amount of money you can pay yourself, and the amount you can put toward debt.

Once things become more manageable, make sure you always pay more than the minimum required, otherwise it will take an extremely long time to eliminate your debt. For example, a single credit card with just a $1,000 balance and 19% interest will take about FIVE YEARS to pay off by making only the minimum payment of $26. Paying the minimum, you will spend $1556.40, with the Total Interest Paid: $556.40! Paying only the minimum payment will equate to giving them 55% more than you actually borrowed.

Don’t give up. You probably didn’t get into debt in a day, and you won’t get out of debt in a day. There are no quick fixes. Consider contacting a credit counseling agency to consolidate or settle your debts. Learning how to manage your money can bring great peace into your life, and will give you the freedom to spend your energy on other things.

Don’t Succumb To Financial Stress

December 8, 2022August 16, 2013 by Aldo Gonzalez

Financial stress is common if you are facing economic distress as a result of a lost job, divorce, death in the family, or being over your head in debt. This can lead to feelings of insecurity, fear, anxiety, anger, and depression.

These feelings can cause you to continue to make poor money management decisions. These poor decisions can lead to even heavier debt loads, and start a vicious cycle that never seems to end.

If you reach the point where your feelings of helplessness and hopelessness become overwhelming, get the help you need. Talk to a friend, loved one, your doctor, pastor, a debt counselor , someone.

No situation is hopeless. With just a little guidance, a few well thought out goals, and emotional support from family and friends, you can take steps in the right direction. As with many obstacles you overcome in life, you will emerge with a new outlook, new skills, and best of all, a new feeling of self-esteem.

You may want to consider debt consolidation or debt settlement to pay off your credit cards. One payment, usually a lot lower than your credit card payments, can help you get back on track.

The well being of you, and your family, has to be your priority during times of financial stress. Make the decision now to learn how to cope, to make the changes you can, to stay focused and goal-oriented, and to let anxiety and financial stress go.

Goal Setting Your Way Out Of Debt

December 8, 2022August 14, 2013 by Aldo Gonzalez

Everyone talks about the importance of setting goals, but how many people really understand the process of effective goal setting? Goal setting is the foundation for both personal and professional growth and should rank high on your priority list, especially when it comes to the area of finances. If you are in debt, ignoring it is not going to benefit you. You must first asses your situation so you can determine what your options are.

If you are barely getting by financially and have no money in savings, contacting a credit counselor, who can offer advice on how to manage outstanding debts and answer related credit questions, may help you head in the right direction. You may want to consider entering a debt management program to allow credit counselors to negotiate with your creditors for lower balance, no fees and a lower rate of interest. If you have over $10,000 in unsecured debt, you may qualify for debt settlement. Bankruptcy, although a last resort, may ultimately be your best alternative. Whatever your situation is, the first step is to determine the best path for you. Only then can you begin to set realistic goals that will give you your desired results.

Once you’ve achieved this, you are ready to set your goals. Start by prioritizing which goals you’d like to focus on immediately. Goals should be specific, measurable, action-oriented, reasonable, and timely. You should have laser focus on what you want to achieve, how you are going to achieve it, and when you expect results.

Another important aspect to successful goal planning is positive language. Too often goals sound like painful work! Instead of a “to-do” list, how about an “action list” or “an action plan”. Instead of thinking in terms of what you don’t have, celebrate what you do have. Proper language should inspire, motivate and give you solutions, not cause you stress and be something you dread.

Breaking a goal into manageable steps is another helpful tool. Often we set goals, get overwhelmed, and give up. If a goal seems too big, pump it into steps that are achievable, but still challenge you.

Plan your weekly and daily goals and rank them in order, from most critical, to least. Your goals should consistently be rotated up the priority level and to accomplish them more efficiently.

Finally, visualization is an amazing tool to have in your toolbox when it comes to goal setting. Seeing yourself debt free is a powerful motivator that will keep you energized and on track.

Whatever debt relief solution you decide to embark upon, goal setting is an important component in the success of your venture.