Your FREE guide to Credit Repair and Credit Card Debt Relief!
Mortgage rates are going up!
Rates on 30 year mortgage are going up. The rates are at the highest level in 2 ½ years. The financial markets are now very worried about inflation.
Rising mortgage rates have begun too cool the red hot housing market.
If you owe debt in any form things are going to get rough. This is the time to really start to attach your debt and get yourself in a financially secure spot.
Teens struggle with money
“On average, high school seniors answered correctly only 52.4 percent of questions about personal finance and economics, according to a nationwide survey released Wednesday.”
This should be no surprise to anyone. However it should alarm everyone. Kids in high school have more classes about art, physical education, and home economics then they do about real financial economics.
Many school curriculums have roots base in the 1940’s. Times have changed and educating teenagers on finances in needs reform. Education on debt should be a high priority. Let’s not let our kids fall in to the same credit pit falls we have faced in the last 20 years with the ballooning credit card debt.
We also need to address the old myth of save your money. With the average savings account paying less than 1% interest, it can’t keep pace with inflation. Kids need a real education on the new economics of our time.
The study also breaks down along racial and social economic lines.
For instance, 12th-graders from families with incomes greater than $80,000 a year scored an average of 55.6 percent, while students from families at the lowest rung — less than $20,000 a year — had a score of 48.5 percent.
By race, white students scored an average of 55 percent. Blacks and Hispanics scored 44.7 percent and 46.8 percent respectively. Asians scored an average 49.4 percent.
It’s that dreaded time of the year again. Uncle Sam is asking for his cut of your money!
If you are one of the luck ones who will be getting money back and not sending in a check then, I would highly recommend you use the refund to pay down your debt.
Yes, you could buy a new TV, computer, a great vacation but if you are in debt use that money to pay the debt down.
Your refund is a great way to jump start your debt crushing efforts.
I once used a $4000 check to slam out a credit card. It felt great. Sure I could have had a new Plasma TV but the freedom of getting rid of a debt once and for good was well worth the 4 grand.
Good debt versus Bad debt
Ok, I am very confused, when has it become good to be in debt? I must be missing something? Many financial gurus talk about bad debt; Credit Cards, and good debt Mortgage and school loans.
The theory is a mortgage is a good debt because you are borrowing money to purchase an “asset” that in theory will appreciate over time. Same with a school loan you are investing in yourself and in time your value will rise.
But the fact of the matter is there is no such thing as a good debt. I like to call it the necessary debt. Being in debt is not a good idea by definition (the state of owing something (especially money); “he is badly in debt”.
Most people can’t buy homes, cars and fund education with cash on hand. I understand that better than anyone. But simply because we need these things does not mean its good debt. And I would encourage everyone to pay their debts off as fast as possible, good or bad.
Crush your debt and live life debt free!
Controlling your debt.
You can take some very easy steps to start the process of getting your debt under control and improving your credit.
But let’s talk a little about what is good debt and bad debt. In my eyes there really isn’t such thing as good debt. Before you jump out of your seat and scream well a mortgage is a good debt… A mortgage is a necessary debt and the faster you can pay it off the better. Being in debt means you are not able to take that money and invest it in interest creating entities.
So with that lets look at a some bad debt and some necessary debt and some things you should not do.
Bad Debt:
1. Credit Cards. (Most cards have interest rates in the teens!)
2. Auto Loans
3. Personal loans
4. payday loans
Necessary debt:
1. Home loans
2. Borrowing for school
Things not to do:
1. Don’t let your spending get out of hand. Create a budget and live within your means. Hey if your grandparents did it so can you.
2. Don’t just pay the minimum on your cards. It will take you 30 plus years. It’s a credit card and not a mortgage. Go after that debt.
3. Do not go over your limit. You are just giving your Credit Card Company the authority to push your interest rate up. It’s in your terms of use. Which none of us read but really should.
Things to do:
1. Aggressively pay off your credit cards. There are two schools of thought on this one.
a. Pay off the highest interest rate cards fastest regardless of what is owed. Then take that money and apply it to the next highest interest rate card. Continue until you are debt free.
b. Pay off the card with the lowest balance first. Then take that money and apply it to the next biggest card. Continue until you are debt free.
2. Have an emergency fund. Believe me you will need it. It’s Murphy’s law when you can least afford something it will happen. The car dies; the roof is leaking, doctors bills, etc…. Folks it will happen. So be ready. I suggest at least a minimum of $1000 in the bank. Ideally you want six months of pay check in the bank. I know this is unrealistic for most people who are struggling to make just the minimum payment. So start the $1000 fund.
3. If you need help with your debt situation please face the music sooner than later. Your credit Score will thank you. Word of caution, be very wary of all the debt reduction and relief sites and programs out there. There are a lot of snakes in the grass so don’t get bit! I will write another article on what to look for and what to stay far away from.
As seen on the Yahoo home page:
Citigroup introduces a new product called e-savings accounts. This savings account will give higher than normal interest rates in an effort to attract more customers.
More customers they can then cross sell them on lines of credit and credit cards! Will a 4% interest rate savings account off set the 17% to 30% credit card rates they charge!
No way!!! Be careful of the true intentions of this offer.
The three major credit reporting companies have come up with the “ultimate” new credit worthiness system. The new name of this system is VantageScore.
Hmmm so now that the credit reporting companies now have to give out copies of the old fico reports free isn’t it interesting they have come up with a new product to sell.
Any way you slice it you can be sure this program is not in favor of the consumer.
Google launches finance Web site
The Good news is you have more choice to get financial info. Move over Yahoo and MSN Google has launched their own site.
The site is in beta and is in the no frills style Google is known for… You may want to check it out: http://finance.google.com/finance
Paying late:
This is the number one factor in determining your fico score. Also if you pay late you give your Credit Card company the ”right” to raise your rates some time as high as 30% or more. And guess what they will. They are in business to make money and do not care about you or your family.
Going over the limit:
Again just another chance for your Credit Card Company to raise your rates. Simply put just don’t do it.
Simple rules I know but you would be surprised how many of us do break these two rules and as a result we suffer.
So I went to yahoo.com and clicked on the finance link. There was nothing on the page on how to deal with debt. So I clicked on banking and Credit link and still nothing on how to deal with credit card debt.
I then clicked on Credit Cards and finally there was a link on the left side navigation under education: dealing with debt. Ok so now we are getting somewhere. I click on the link and get an error. The page can’t be found…
Hmmm. So Yahoo really wants you to sign up for Credit and loans but they don’t really want you to manage your debt?
Sounds familiar. Please if you are going to use credit be sure to do so carefully. If you need help please check out the many articles and resources in our blog.
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