Financial Tips | Debt Management

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Tips and Techniques for Applying for Credit Cards

The biggest factors you need to consider when applying for a credit card are (1) interest rate; (2) fees; and (3) terms. In addition to these important considerations, you need to gauge whether you need more credit or whether your current credit score will allow you to obtain a particular credit card. If you have never had a credit card before, you may not be able to get the best credit card available. The same is true if you have bad credit and/or a low credit score. However, this does not mean that you have to settle for a bad credit card.

If you currently own a credit card and want another card so that you can increase your purchasing power, increase your credit to debt ratio, and/or get a new card with better terms, a better interest rate, and/or a better fee schedule, you possess the power to find a great card with great terms, interest rates, and fees.

The first thing you need to look at is the interest rate of your prospective credit card. A low, fixed rate should be your priority. However, you may not be able to find a fixed rate credit card. If such is the case, look for a low, adjustable rate but make sure that the interest rate on the credit card, although adjustable, cannot exceed 9.99%. If the adjustable rate that you are looking at can possibly go over 9.99%, do not get the card. The lower the interest rate on your prospective credit card, the better. However, do not pay an annual fee or other fees in order to get that lower interest rate.

An annual fee is the worst thing you can have on your credit card. The fee simply does not make sense. Basically, you are paying a credit card company solely because you own the credit card regardless of whether or not you actually use the card. You should never pay for something unless you use it. As such, why should you pay for carrying a piece of plastic in your wallet or purse? The point is, avoid annual fees. It is important to remember, however, that some fees (such as late fees, over the limit fees, etc.) are unavoidable because every credit card on earth will have such fees. However, this does not mean that all of the fees are the same. As such, obtain a credit card with no annual fee and the lowest "unavoidable" fees.

You credit card terms are also very important. Credit card terms include the grace period between payments, rewards programs, and customer service. The longer the grace period between payments, the better. Some credit cards have 20 day grace periods while others have 30. Obviously, having an additional 10 days to pay your credit card bill can help. Rewards programs can also be good because you can accumulate points from purchases for travel or products, get cash back on the total amount of your charges, and/or get tickets to concerts and events.

Search for a low, fixed rate credit card. If, however, you cannot find a fixed rate credit card, look for an adjustable rate card that cannot go over 9.99%. Never get a card with an annual fee and try to get the lowest "unavoidable" fees that you can find. Last, look for good terms such as long grace periods and a good rewards program. Following these tips will help you get a great credit card


Who is Better, Visa vs Mastercard?

The four major credit card companies (Visa, MasterCard, American Express, and Discover) are all constantly trying to set themselves apart from the others. Whether by credit card services offered, credit cards offered, credit card terms offered, or rewards programs offered, to name a few, each company is constantly trying to convince the public that their company is the best when it comes to credit cards. However, with all of the conflicting advertising and consumer reports that you may have heard, read, or seen, how do you discover which card offers the best service?

With respect to Visa and MasterCard, the question of service can be broken down into two parts (1) acceptance around the world; and (2) customer service. The category "acceptance around the world" refers to the number of places that each card is accepted. Because of the vast amount of marketing and money that both of these companies have, the difference between the amount of locations in which each card is accepted is minimal. As such, it is very hard to distinguish between Visa and MasterCard on this subject. Because of this fact, neither credit card company gains an advantage over the other in regard to credit card service.

In regard to customer service, my personal experiences have led me to favor MasterCard over Visa. As far as telephone customer service, I found both services to be friendly and willing to help. However, as far as actual help is concerned, MasterCard actually delivers on its promises. My opinion on this situation is derived from the following experience.

My father and I have the same name. However, because I am named after my father, my name has the suffix "II" following my name. Despite this fact, from time to time I find my father's credit card activity being reported on my credit report. On one such occasion, both a MasterCard and a Visa belonging to my father were being reported on my credit report. After contacting both of the credit granting institutions and receiving instructions on how to remove my father's credit information from my credit report, the MasterCard account has since correctly been removed from my credit report while the Visa account belonging to my father still remains on my credit report.

Based upon this experience, I feel that MasterCard better protects its cardholders by correcting problems when they arise. On the other hand, it feels that Visa is more interested in protecting its own interests. Granted, your own experiences will dictate your opinion of each company. However, based upon my experiences, MasterCard has better credit card service.


Comparing Credit Card Rewards Programs

Credit card rewards programs are great in that they reward you for credit card use. However, there are two important things you should know: (1) you should never pay for a card (via annual fees or a higher interest rate) simply because the credit card offers a rewards program; and (2) you should not charge more purchases or spend more money than you normally would simply because the credit card has a rewards program. If you can avoid these two common mistakes, your rewards card should by a nice addition to your credit card repertoire.

There are many different rewards cards from which to choose. Some rewards cards offer airline miles that you can redeem for airline travel, some rewards cards offer points that can be redeemed for anything from the latest electronic gadget to a ski resort vacation, and still other rewards credit cards offer cash back bonuses. Your individual tastes and needs should be the determining factors when deciding which rewards credit card you should obtain. However, before you make your decision, there are some things you should know.

If you want a travel rewards card, make sure that there are no blackout dates for travel and that the miles never expire. Additionally, make sure that the miles that you accumulate can be used for an airline that you actually use. It does not help your situation if your miles can be redeemed only on some unknown airline company.

In regards to rewards cards that offer strictly points that can be redeemed for a whole catalog of things, you have to again make sure that you would actually use your accumulated points on their merchandise. It does not make for a good rewards card if all you can redeem your rewards points for is an outdated clock radio. Also, as with the travel rewards card, make sure that your points never expire.

Of all the rewards programs available, many people choose the cash back rewards cards. I understand the appeal of getting cash back from your normal credit card use, but usually the cash back percentage is so small (usually one percent (1%) of your total purchases) that you have to spend a very large sum of money to actually receive something other than a nominal amount back. As such, I am not a big fan of cash back rewards programs. However, if you are a "big spender," a cash back program may be the right option for you.

The point is, use this information to decide which rewards program credit card you would like to pursue and do so by finding the best credit card that offers the rewards program that you want.


How Much Credit is Too Much?

Credit is an important financial tool to possess. Having good credit can help you get loans and can save you money by way of lower interest payments. Therefore, should you need to obtain a loan for investment purposes, having good credit will help you get that loan. Additionally, the investment that you pursue could help you make money and thus, the loan that you took effectively made you money. However, all of this is possible only if you have a good credit. Therefore, it is in your best interest to obtain and maintain good credit.

There are certain things that factor into your credit score. One such factor is your credit to debt ratio. The higher your credit to debt ratio, the better that it is for your credit score. In other words, if you have a lot of available credit and a little bit of debt, lenders look at this favorably. Ideally, you should have no more than 30% of each credit card's credit limit in use. Additionally, your total debt should be at most 30% of your overall credit. For example, if your total available credit is $50,000, you should have no more than $15,000 in total debt.

Having a lot of credit is good as long as you make sure that you follow certain guidelines in obtaining such credit. Such guidelines include not acquiring the credit too quickly and not to use it as soon as you get it.

Acquiring credit too quickly is looked upon with disfavor in the credit reporting bureaus. This is a fact because the bureaus believe that when a person acquires a lot of credit quickly, they are set to incur a lot of debt. As such, your ability to repay such debt, if acquired, may be impaired. Obviously, is you cannot pay your debt, this will negatively affect your credit score.

In accord with the above paragraph, should you incur a substantial amount of debt immediately after you obtain your credit, your credit score will be decreased. This is bad because the whole point of obtaining more credit is to increase your credit score.

It is important to know that even though having a high credit to debt ratio can increase your credit score, you should not have too much credit because you may be tempted to use it. Having a high credit limit can be abused should you start to utilize it wastefully. Therefore, if you are tempted by credit cards, you probably should not have too high of a credit limit.

Maintain a high credit to debt ratio, never have more than 30% of your total credit in use, and do not acquire debt too quickly or else your credit score will suffer.


Tips for Travel Rewards Credit Cards

Credit cards have become an integral part in the financial lives of many people. If used properly, a credit card can be a great financial asset that assists you (assist by way of a good credit score not by way of purchasing power) in making big purchases and enabling you to get important loans. However, if abused, credit cards can make your financial life a living nightmare. As such, always practice sound credit card and debt management. That being said, it is important to note that not all credit cards are created equally.

Companies are doing everything these days to entice people into obtaining a credit card. For example, many companies will offer no interest on cash advances, balance transfer, or purchases for the first year that you own the credit card. Some companies offer a great introductory interest rate and follow that up with a low, fixed interest rate. Still other credit card companies offer rewards in the form of points or airline miles that can be redeemed once the credit card owner obtains enough points. Of all of these rewards, airline miles can be the most beneficial.

If you are the kind of person that uses a credit card for one particular task (e.g., getting gas for your car/truck), a rewards card may be a great option for you. A rewards card is a great option because your credit card use is going to continue regardless. As such, why not get rewarded in more than one way for consistent and proper use?

With the price of fuel increasing and airlines going out of business, it seems that the average airline ticket has greatly increased in price. Additionally, things that used to be complimentary (e.g., an in-flight beverage, checking more than two pieces of luggage, and an in-flight snack, to name a few) now cost money. As such, using points to get discounts on or even free airline tickets, hotel rooms, and/or rental cars (especially if you travel a lot) can save you a lot of money. Therefore, a travel rewards card may be in your best interest.

Basically, a travel rewards card works the same as a "points" rewards card. Each dollar spent equals a certain amount of travel points. Once you have accumulated a predetermined amount of travel points, you can redeem them for flights, hotel rooms, and/or rental cars. However, if you get a travel rewards card, you still have to make sure it is a good credit card. For example, you should not pay an annual fee simply because it is a rewards card. Additionally, the rewards card interest rate should not be higher than your other credit cards merely because it is a rewards card.

Do not fall into the trap of paying too much for a rewards card merely because it offers rewards. Make sure that there is no annual fee, a low interest rate, and that the points can be redeemed for any flight at any time (i.e., no blackout dates). If your rewards card has these attributes, you will have added a great credit card to your financial arsenal.


How to Get Help with Credit Repair Services

Many people have a problem controlling their credit card spending habits. As such, many people have a lot of credit card debt and thus, have financial problems because of it. Because of this constantly increasing debt, many people are late making payments, have charge-offs, and/or fail to pay a bill altogether. These practices lead to the destruction of a person's credit report and ultimately negatively affect a person's credit score. Most negative credit report information takes anywhere between seven (7) to ten (10) years to be removed from your credit report. However, a credit repair service can help you overcome these problems and put you on the fast track to credit report recovery.

Speaking from personal experience, credit repair companies can help you restore your credit report. When I was in college, I made the mistake of obtaining credit cards regardless of the terms attached to the same. As such, I ended up with numerous credits with ridiculous annual fees and very high interest rates. Additionally, because I lacked the knowledge on how to correctly use credit cards, I used my credit cards like a second bank account. Needless to say, my debts caught up with me, and I was soon in financial trouble.

The good news was that I was young enough to learn a lesson from my experience. However, the bad news was that my credit report was left in shambles. I did not want to wait the seven (7) to ten (10) years it normally takes for negative information to be removed. As such, I asked around and received a referral from a friend for a credit repair company.

Credit repair companies dispute the negative information in your credit report by using the law of the Fair Credit Reporting Act. Basically, if negative information in your credit report cannot be "verified" it must, by law, be removed from your credit file. Credit repair agencies use this federal law to basically exploit the fact that credit card companies usually do not keep exact records. As such, many times the negative information in your credit report cannot be verified and thus, it must be removed.

Credit repair companies can help, but you have to be aware of certain things. First, there will be a fee for their services. However, you should not pay too much money (no more than a couple of hundred dollars, depending on how much negative information is in your credit report). Also, you have to be patient. Depending on how much negative information is in your credit report, the entire process could take a year or more. This is so because by law, the credit reporting bureaus (TransUnion, Equifax, and Experian) have up to thirty (30) days to respond to your dispute. Additionally, you may have to dispute some information more than once. As such, the timeline gets longer.

If you have negative information in your credit report, credit repair services is an option that you should consider. However, do not pay too much, be patient, and keep your credit repair company aware of any correspondences you get from any credit card company or any of the credit reporting bureaus.

Tips for Obtaining Credit Cards With Bad Credit

If you have bad credit, you probably should not be obtaining a credit card. As is evident by your credit score, you have gotten in trouble with debt in the past and may not have acquired the education necessary to avoid this trap again in the future. That being said, if you are adamant about obtaining a credit card for whatever your reason, there are some things you should know.

First and foremost, because you have bead credit, you are in a weaker bargaining position. As such, you may have to accept some terms on your credit card that you should not ordinarily accept. One such term is a high interest rate. However, this does not mean that you should pay the highest interest rate possible. If the credit card you are looking at has an interest rate at twenty percent (20%) of higher, walk away from the credit card offer. Regardless of the level of your need for a credit card, obtaining a card at twenty percent (20%) interest or more, even with bad credit, is pure lunacy. If you were to make a purchase with such a card, absent you paying off the outstanding balance once the bill arrived, you would be throwing money away.

Another concession you may have to make, and not a bad one at that, is that you may have to settle for a card with a lower credit line. Based upon the severity of the negative information in your credit report and your credit score, you may be approved for something as small as a three hundred dollar ($300) credit line. This is a very small credit line that probably will not do much for your situation, but the good news is that such a small credit line will also help protect against you accumulating too much debt.

Regardless of how low your credit score is and how much negative information is in your credit report, you should always avoid secured credit cards. Secured credit cards are basically credit-debit cards. With secured credit cards, you have to deposit a certain sum of money with the bank (for example, $500) that issued the credit card. This deposit becomes your credit line and you charge purchases based upon your deposit. However, instead of paying off the purchase from your deposit, the bank sends you a bill. Your deposit money simply sits there, not collecting interest and not helping your situation. Additionally, secured credit cards usually have ridiculous fees (such as account set-up fees, annual fees, program fees, and account maintenance fees, to name a few), which do nothing but cost you money, and extremely high interest rates. The bottom lines is that even though secured credit cards may help to rebuild your credit, because of the enormous amount of fees and the extremely high interest rates, it may be better for you to wait the seven (7) to ten (10) years it takes for negative information to be removed from your credit report instead of getting the secured credit card.

If you have bad credit, know that you may have to pay a higher interest rate and may have a lower credit line. However, you should stay clear of secured credit cards because the small benefit your credit report receives from using such a card does not make up for the enormous amount of money that these cards cost.

How to Find "No Fee" Credit Cards

One of the biggest mistakes you can make when obtaining a credit card is to obtain one with unnecessary fees. The most common "unnecessary fee" that people pay is an annual fee. An annual fee is a fee that a credit card company charges cardholders once per year merely because they own the card. Regardless of whether you actually use the credit card, you are charged this yearly fee.

The biggest problem that I have with annual fees is that they are nonsense fees. Paying the fee does not get you a better interest rate. It does not help you get better service or discounts on merchandise. As such, you pay this fee for no other reason but for the fact that you own the card. That is like paying an extra $50 per year on your cellular phone bill merely because you own a cellular phone. With so many other credit card options available, paying unnecessary fees (like an annual fee) is not a smart proposition. As such, where can you find no fee credit cards?

The best place to start is at your local bank. Banks usually have great credit cards with no annual fee. To further refine your search for the best "no fee" credit card, start at banks with which you already have an established relationship (i.e., already have a checking account, savings account, etc.) because you may find better deals and credit card offers that are not advertised to the general public.

Another great place to find a "no fee" credit card is on the Internet. However, you have to be cautious where you look. Randomly searching Internet websites is not only dangerous (because you will have to divulge private, financial information in order to apply for the credit card), it is also inefficient. The best place to start searching on the Internet is on the major credit card websites (e.g.,,,,, etc.) because they offer many different products that can be easily compared. Additionally, these major credit card websites have many security precautions and thus, you can rest assured that should you apply for one of their cards, your information will be safe.

When applying for a "no fee" card, make sure that the card is truly "no fee." One thing that some banks like to do is state that their credit card has no annual fee when in fact it does have such a fee. For example, during your search you may come across a credit card offer that states that there is no annual fee "as long as you make at least one purchase per year using that card." And, in the event you do not make a purchase, there is a fee of X amount of dollars. This kind of "no fee" card does in fact contain a fee. Forcing you to make a purchase is the same as charging an annual fee. Do not fall into this trap and avoid these cards.

Remember, you have several options. Therefore, do not take the first credit card offer you receive. Look around, do some comparative shopping, and find the best no fee, low interest credit card for your needs.


How to Get a Credit Card in a Tight Credit Market

Getting a credit card in a good economy is a very easy task. In a good economy, companies will extend you credit even if you have a poor credit score. The credit these companies extend will not be good (i.e., the credit card will have numerous fees and an extremely high interest rate), but these companies will still be willing to hand out credit cards. However, in a down economy, credit cards are not as easy to come by.

Companies are less likely to overlook credit score mishaps when evaluating whether to approve you for a credit card. Due to this fact, how do you get a credit card in a tight credit market?

The simplest and most obvious answer to this question is to repair your credit if you have bad credit. Repairing your credit will not only enable you to have a better chance of obtaining credit in a tight credit market, it will also help you in the long run to obtain a loan for a big purchase (e.g., a home, car, etc.) and/or a big event (e.g., a wedding, college education, etc.). As such, cleaning up your credit is one of the best things you can do for your financial future. Coincidentally, repairing your credit will also help you get a credit card in a down economy.

Another way to obtain a credit card in a tight credit market is to shop around at various banks, banking institutions, and financial institutions. Even if the general consensus is that the credit market as a whole is "tight," this does not mean that every credit granting institution is cutting back or otherwise curtailing their credit card business. You may have to look to uncommon banks or financial institutions, but you should be able to find a company that is willing to give you a credit card.

Talking to banks with which you already have a relationship can also help you get a credit card in a tight credit market. In a down economy, banks are more willing to extend credit to customers that have an established track record with that bank. However, this does not mean that new customers have no options. Banks will often offer new customers a deal (such as offering a credit card when that person opens a checking account) to entice such customers into becoming long term clients.

There are many things you can do to get a credit card in a tight credit market. It is important, however, to note that you should not settle for a bad credit card merely because the credit market is "tight." If you are in the market for a credit card and it does not seem that any good credit terms exist on any credit card offers you have investigated, you should reevaluate your need for a credit card at that particular moment. If your credit issues are more of a "want" than a "need," wait until things get better before getting a credit card. If, however, the opposite is true, make sure you pick the better of the two evils.


How to Create a Debt Elimination Plan

Getting out of debt is the quickest way to becoming financially secure. It is important to note that not all debt is bad. There is such a thing as good debt. Good debt is debt that makes you money. For example, a real estate development loan from which you can collect rents as a result of a commercial development is good debt. Therefore, your debt elimination plan should focus on your bad debt. Bad debt is debt that costs you money. An example of bad debt is credit card debt. Another common bad debt is a car loan. Cars depreciate in value and thus, taking out a loan to buy a car will cost you money.

Eliminating your bad debt is important should you want to achieve financial security. The most important thing that you have to realize is that, absent you winning the lottery or inheriting a large sum of money, your bad debt is not going to disappear overnight. Therefore, getting out of debt is a process. The point is, however, should you stick to an economically feasible plan, you will start to notice a drastic decrease in your overall debt. Therefore, you will pay less in interest payments and thus, will save money on your debt.

A very common mistake that people make when enacting a debt elimination plan is that they continue to accumulate debt while trying to pay off the same. The debt payments that you make and the debt reduction techniques that you enact will be for not if you continue to offset these advances by accumulating more debt. You cannot reduce your debt and create more at the same time. Therefore, if your debt elimination plan does not include a plan to prevent the accumulation of debt, your debt elimination plan will be useless.

In order to have an effective debt elimination plan, you have to pay off the highest interest debt first. Your highest interest debt will most likely be your credit cards. Therefore, you need to pay off your credit cards first in order to get out of debt more quickly and to decrease the amount of money that you waste on interest payments. This is not to say that you should refrain from paying your other debts during this time. Put simply, you have to contribute more of your payment dollars to the higher interest items. Therefore, for example, should you have $100 per month to pay of your debts and one debt has a 22% interest rate and another debt has a 7% interest rate, you should pay a certain percent to each debt, the higher one to the 22% interest rate (for example, you might want to pay 80% to the 22% interest rate (which would be $80) and 20% to the 7% interest rate (which would be $20) so that you can pay off the higher interest debt sooner).

Focus on your bad debt, be patient, refrain from accumulating debt while paying off your existing debt, and pay the higher interest rate debt first. Doing this will insure that your debt elimination plan is a success.


The Truth About Rewards Credit Cards

Rewards programs are supplements to credit cards and should not be the primary reason as to why you get the card. The best reason to get a credit card is a low interest rate (and of course no annual fee, because there is absolutely no reason to have a credit card with an annual fee). Additionally, the credit card that you obtain should have a high credit limit.

Before you choose a rewards card, you should look carefully at rewards card advertising. Many advertisements state that you can get cash back from using your credit card. The problem with these advertisements is that they are a little misleading. Do not get me wrong, you absolutely will get cash back from one of these cards. However, the amount that you have to charge and pay off is vastly disproportionate to the amount of cash that you get back. For example, most cash back rewards cards offer you 1% cash back. This means that you will have to charge and pay off $10,000 in order to get only $100 back. That is not a typo, $10,000 to get $100. Is it really worth it to apply for a card that offers 1% cash back? Additionally, these cards usually have a higher interest rate than the non-rewards cards. Therefore, as you are paying higher interest, you are barley getting any money back.

Also, make sure that the rewards card you want actually offers rewards that you want. Almost all of the credit card companies that have a rewards program offer some kind of "shopping mall" in which you can redeem your rewards points. However, many times there are products and trips that you will not want. Therefore, even if you have all of these rewards points, you will not be interested in anything and thus, will never use the rewards points. Therefore, the reason that you obtained the card is no longer useful. Thus, you may have just obtained a card that you will never use. In the end, you will end up with a bunch of reward points that you will never use or, if you redeem your points, you will end up with a piece of merchandise that you do not want.

The point is, do not be awe struck by a credit card solely because it offers rewards. Get a credit card that has no annual fee, has a low, fixed interest rate, and has a high credit limit. If you find a couple of credit cards that meet these criteria, then you can choose based on rewards. However, you have to make sure that the rewards program is simply a collateral matter and not the primary reason that you choose a card.


How to Consolidate Your Debt

A consolidation loans is a loan, generally taken out by college students upon graduation, which is used to pay off various student loans that you have accumulated during your years as a college student. However, a consolidation loan is not restricted only to student loans. In other words, you can take out a consolidation loan for your regular debts (such as credit card debt).

The effect of a consolidation loan is that upon consolidation you have to pay back only one loan (the consolidated loan) instead of the numerous loans that the graduate took out during college or the various debts that you have as a result of credit cards. Make no mistake, the amount of the debt that you owe does not decrease. The only change that occurs is that you now have to make only one payment instead of several. Additionally, because after you consolidate you have to deal with only one company, your loan payments and interest rate are both lower.

Debt consolidation can offer many great benefits, such as a lower monthly student loan and credit card payments, as the case may be, reduced interest rates, the prevention of being assessed late and over-the-limit fees, and faster debt reduction, to name a few. However, there are also some disadvantages that accompany debt consolidation. In regard to consolidation loans for credit cards, you may have a freeze of your credit using privileges, closed credit accounts, and consolidation fees. Knowing how to weigh the positives against the negatives and becoming completely informed (or as well informed as possible) about consolidation are two important factors you need to consider before making a decision as to whether or not you should consolidate your student loans or your credit card debt.

The easiest way to consolidate your loans, whether they are student loans or credit card debts, is by contacting a debt consolidation company. Keep in mind that there are companies that deal exclusively with student loans and there are companies that deal exclusively with credit card debt. Therefore, make sure that you have contacted the correct company for the product that you need.

Once you have chosen a company, you will have to give the company all of your loan information for the loans that you want to consolidate. Basically, the company will either pay off all of your loans and then you pay back that company at a particular interest rate, or the company will talk to all of your creditors and work out a lower monthly payment that is combined with all of your other monthly payments so that a total lump sum payment is calculated that you pay each month.

That is the gist of what you have to do. Keep in mind that the entire process is relatively simple, but it can be tedious. Therefore, be patient and you will be rewarded.


How to Get a Debit Card

A debit card looks exactly like a credit card. It will have the same shape, color, and magnetic strip that a credit card has. A debit card is used almost exactly the same way as a credit card. In fact, there are times when a debit card is used exactly the same way as a credit card. For example, if you are at the grocery store and you want to pay with a debit card, you swipe your card through the machine and type in your PIN (PIN means personal identification number). If the bill clears, your debit is approved and on you go. However, if you are in a restaurant, you card is swiped like a credit card and instead of having to type in a PIN, you have to sign a receipt.

Debit cards are cards that draw against your checking account. Basically, when you make a purchase with your debit card, the purchase price is deducted from a pool of money that you already have on deposit with your bank. If you spend more than you have on deposit, you are likely to pay overdraft fees and whatever other fees your bank is allowed to charge based upon your debit card agreement.

Some of you may have used your debit card as a credit card at the gas station and/or grocery store. In other words, you may have pushed the "credit" button on the payment machines available at these locations. You did not have to enter your pin and you had to sign a receipt or enter your zip code. Even though the transaction was executed and approved like a typical credit transaction, your debit card purchase is not reflected on your credit report and the purchase price is debited from your checking account within a business day or two. Therefore, although transacted like a credit transaction, it is not in fact a credit transaction when you use your debit card. You do not get any credit report benefits and such transactions and subsequent debiting on your checking account does not affect your credit score.

Obtaining a debit card is very easy. Because a debit card is linked to a checking account, the first thing you need is a checking account. The easiest way to get a debit card is to obtain one from the one bank in which you opened your checking account. Nowadays, banks automatically give you a debit card when you open a checking account. If, however, you do not have a debit card but you have a checking account, go to the bank in which you have a checking account and request a debit card. You may have to fill out a paper, but because the card is linked to your checking account, there is no approval process.

Getting a debit card is that easy. Therefore, if you do not have one, obtain one today.

Are Credit Cards Attractive?

One of the biggest financial problems is people using credit irresponsibly. Many people think of credit as a second bank account. Basically, they spend until the card is "maxed out." These people do not realize what they did until the credit card bills start coming in. The minimum payments do not seem like much, but after six months of payments have barely reduced their overall debt, the realization of the debt problem occurs. They realize the mistake that they have made but only after it is too late.

This situation occurs because credit cards are very appealing. People get a feeling of power and success when they use their credit card. They seem to forget that every dollar that they charge must be repaid with interest. As such, the problems discussed above come to fruition. The interesting part about the appeal of credit cards is that many people do not learn their lesson after discovering that they have a debt problem. Instead, these people obtain more credit cards and "max out" those cards too. Eventually, the debt becomes so overwhelming that the only viable option is to file for bankruptcy.

In order to make credit cards more attractive, credit card companies have started making credit cards out of other materials instead of plastic. Additionally, credit card companies have added "cool" colors and personalization options to credit cards. Most recently, one credit card company allows its customers to put any picture that they want on their credit card. The theory is, if a credit card company offers an option to personalize the card, more people will apply for and obtain the card. Additionally, because it is personalized, the card will be used more often. Funny enough, this theory most likely has more basis in fact than in theory.

The worst thing you can do is fall for clever advertising or obtain a card merely because it looks good or is "pretty." You should obtain a credit card with no annual fee, with a low, fixed interest rate, and with a high credit limit. If your credit card does not have these basic things, it does not matter how good it looks because it is not a good credit card.

The point is, even though credit cards can be attractive, you have to avoid being seduced. If you become seduced by credit cards, you may fall victim to reckless spending and card misuse. This can lead to same very unsavory financial situations.

Financial Planning in Your Twenties

If you are in your twenties, the good news is that you have a lot of time before retirement and thus, you can build a very large retirement account and/or savings "nest egg." The bad news about being in your twenties is that you may not have yet reached an extremely high paying position in your career and thus, you may not have a lot of capital with which to invest. Therefore, your financial plan may have to be progressive to compensate for your current financial condition. When I say "progressive," I mean that as you get older or as you earn more money, you should invest more dollars because more may become available.

Being in your twenties also creates the dilemma of split priorities. Basically, you have to strike the delicate balance of saving enough money for the future but not saving too much such that it interferes with your ability to address present financial concerns. If you are in your twenties, chances are that you have just graduated from college (if you went to college), may be thinking of graduate school, may be in the market to buy a home, may be in the market to buy a car, may be getting married, or may be starting a family, to name a few. As such, all of these things require a lot of money. Therefore, you should be concerned about these expenses.

As stated above, because you are in your twenties, you have a long time before you retire (under the traditional model) and thus, because you have a lot of time to profit from investments, your investment strategy for retirement should be pretty aggressive. The theory behind such a strategy is that being aggressive now will give you the opportunity to make a large profit. However, should you lose money, because you are so young, you will have more than enough time to recover any losses. Additionally, as you age, you should move your investments into less aggressive stocks because as you age, your focus should be to maintain you current profit levels and to receive consistent returns.

If you are not sure how to start or what to do, talk to a professional. There are many competent financial planners out there that can help you obtain and maintain a winning strategy for short and long term growth based upon your goals. Therefore, find one today to help you take the steps toward financial security.

Credit Card Wisdom

Spending on credit cards can become a very large problem if you do not keep track of what you are doing. If a you have one credit card, it is easy enough for you to keep track of your spending. Additionally, if a credit card has a low credit limit, that limit will be a ceiling for your spending habits. Keep in mind that I am not suggesting that you use your credit card until you "max it out." I am merely suggesting that the credit limit, if low, will prevent you from getting too deeply into debt. However, a low credit limit is like a double edged sword because even though it will prevent you from charging too much, a low credit limit is looked upon with disfavor by lenders because it means that you either are new to credit or are not a responsible user of credit.

As I stated, if you only have one credit card, it is relatively simple to keep track of your spending. However, what if you have more than one credit card? Two credit cards should still be easy to track, but what about three, four, or even five cards? At what number does credit management become difficult? This is the problem that many credit users face.

Many people become seduced by credit cards. They get a feeling of power and start to abuse their credit card privileges. Abuse of credit cards is always a problem, but this problem magnifies when you have more than one card. Could you imagine the financial burdens that would arise if you had five credits and all had been abused? The point is, wise credit card use goes beyond the traditional good advice of paying your bills on time, paying more than your minimum payment, and keeping your debt low. Wise credit card use includes knowing when you are abusing your credit and knowing how to stop before the problem becomes insurmountable.

The best way to prevent credit card abuse is to keep track of your spending. If you do not keep track of your spending, you will soon discover that your credit card bills will start to spiral out of control. This is sad because credit cards should never be a cause for financial concern. Credit cards should only benefit your situation. Therefore, wise credit card use denotes that if your credit cards are not improving your financial situation, you are abusing your credit cards.

Use your credit cards wisely and you will reap great financial rewards.


Best Places for Hiding Money at Home

First of all, I have to admit that you should not hide money in your house. Should your house get broken into or should something happen to your house (such as a fire, flood, earthquake, hurricane, or tornado) the money that is lost in such a disaster will be lost forever. However, should you have your money in a bank and that bank is FDIC (federal deposit insurance company) insured, your deposits are protected up to $100,000 in the event that the bank goes under. Therefore, if the money is in your house, it is unprotected and unsecured, but if the money is in your bank, it is protected and insured. Of course, if you have some kind of security system, your money will be protected to a point, but should a natural disaster hit, a security system will do little to protect your money. Thus, you should always keep your money in some kind of bank (whether the money is in an account of some kind or in a safety deposit book) so that it remains protected and is insured against loss.

However, should you feel the need or choose that you want to hide money in your house, the best place to hide money is in a safe. By putting your money in a safe it will be secure and safe. However, you have to remember that your money is only as protected as your safe is. Therefore, if your safe is not bolted to the floor, a thief could easily steal the entire safe and open it later. Thus, should you decide to utilize a safe in order to hide money in your house, make sure that it is bolted to the floor and that it is both fireproof and waterproof.

You should avoid hiding your money in places like your kitchen. Thieves commonly look in your kitchen for hidden money because the kitchen is refuted to be the most used room in a house. Therefore, a thief will look in your kitchen drawers, in your cookie jars, and every other common place that you have thought of for hiding money. Additionally, because this room is the most commonly used, there are not many places that you could hide your money that would keep it secret. Therefore, avoid the kitchen at all costs.

As stated above, you should not hide your money in your house. However, should you decide to do so, never hide your money in a your kitchen, use a safe to hide your money, and make sure that the safe is bolted to the floor so that your safe is not stolen or ruined.


Tips for Buying New or Used Automobiles

Buying a car, whether it is new or used, is a game. The buyer is trying to purchase the car for the lowest price possible. The seller, on the other hand, is trying to sell his/her car for the highest price possible. Therefore, because the buyer's goals are completely at odds with the seller's, there will be some haggling and negotiations involved in the transaction.

There are many factors that are involved in a car sale that could create leverage for either the seller or the buyer. Should you be purchasing a car from a car dealership and require financing, your credit score could be a bargaining chip for you if your score is good or could be a bargaining chip for the dealership if your score is low. Additionally, depending on the age of the car and the popularity of the car in which you are interested, these factors could be bargaining chips for you or the dealership. Therefore, if you want a really good deal on a car, make sure that you have enough leverage so that you can purchase the car for the price that you want.

When you want to buy a car, you have to be realistic with your offer. Obviously, you are trying to get the car you want for the lowest price possible. However, you have to present an offer that is credible. For example, if the car is worth $40,000 and you offer $15,000, there is probably no chance that you will be able to purchase the car (absent some extremely big financial problem of the owner of the car) for such a low price. Therefore, when you are negotiating, start with an offer that is low but credible.

One of the biggest problems with buying a used car or a car from a private seller is that you will receive no warranties. Thus, unless you are a mechanic or have some education about cars, you will need to have a used car inspected before you purchase the same. The last thing that you want to do is buy a car that has no warranties and that breaks on you in a couple of weeks.

When purchasing a car, utilize the leverage that you have in order to get the best price. Make your opening offer low, but credible. And, if you are buying a used car and it has no warranties, make sure that you have the car inspected before you purchase it.

Credit Card 101: Facts About Credit Cards

There are many things that you should know about credit cards before applying for one. For example, not all credit cards are the same. Some credit cards are secured and some are not secured. In addition to this difference, there are usually "hidden" provisions in a credit card agreement that most people neglect to read. Such provisions include the differences between the interest rate for a purchase and a cash advance, and whether or not the credit card company from which you obtained a credit card engages in the practice of universal default.

A secured credit card is a credit card that is that is tied to a monetary fund of some kind (whether it is a deposit, bank account, or some other account). The monetary fund can be accessed and used by the credit card company in the event that the credit card holder defaults on a payment. These kinds of credit cards usually have an obscenely high interest rate and an inordinate amount of fees. Basically, they are terrible credit cards that target people with bad credit.

As an alternative to getting a secured credit card, you should look at non-major credit cards. These types of credit cards include credit cards from various retail stores, department stores, and even gasoline cards. These cards usually have a high interest rate, however, the usually have no fees attached to them as secured credit cards do. Additionally, these "non-major" credit cards are unsecured, therefore, you do not have to put up a big deposit or tie the credit card to a bank account. It is easy to qualify for non-major credit cards, and thus, they provide an attractive alternative to secured credit cards should your credit be bad.

In regard to the different interest rates for purchase and cash advances, if you look at your credit card statement, you will see a section that shows you your interest rate. There are usually two interest rates shown: (1) your purchases interest rate; and (2) your cash advance interest rate. I can almost guarantee that the cash advance interest rate will be several points higher than your purchases interest rate. For example, you regular purchases interest rate may be 12.95% while you cash advance interest rate may be 19.95%. Why the big difference? This difference exists because your monthly payments will not count towards your cash advance balance until you fully pay off your regular purchases balance. Therefore, the credit card company will be able to charge you a higher interest rate while you are paying off your primary debt.

Universal default is a credit practice where you will be in default on one card because you are in default on another unrelated credit account. For example, let us pretend you have two completely unrelated credit cards; Credit Card A and Credit Card B. Further, let us pretend that Credit Card B has a universal default provision in the credit card agreement. Now, pretend that you are late or default on a payment to Credit Card A. The credit card company that gave you Credit Card B can now put Credit Card B into default even if you have never missed nor been late on a payment to Credit Card B.

The effect of this is that it is possible for you to be charged a credit default fee for Credit Card B (even though you have never missed nor been late on a payment to Credit Card B) and that another negative impact will occur on your credit report.

These are just a couple of credit card facts of which you need to be aware before you obtain a credit card.

How Does a Credit Card Work?

Credit can be a very powerful financial tool. Having good credit can help you get loans, can lower the interest rate that you pay for such loans, and get help you get favorable loan terms. Therefore, having good credit will help you get loans and will help you save money. On the other hand, should you have bad credit the exact opposite will happen. You will most likely be denied for loans. Additionally, should you get a loan, the interest rate will be very high and the loan terms will not be favorable to you. As such, you should strive to obtain and maintain a good credit score. However, in order to obtain a good credit score you have to known how credit works.

You should always think of credit as a loan. If you think of credit as a loan, it will put you in the proper mindset when you use your credit cards. In other words, you will not forget that using the credit card means that you have to pay back the amount that you charge. If you think of a credit card as a second bank account, you are going to get into a lot of financial trouble. Basically, you will not keep track of your charges, and you will not be responsible with your credit card use.

How credit works is very simple. When you obtain a credit card you are given a particular credit limit. This credit limit is the total amount of money that you can borrow on your credit card. You can utilize your entire credit limit at once or you can use your credit card for a bunch of purchases until the total amount of the purchases equal the credit limit.

Basically, when your credit card is swiped by the store, restaurant, or other location from which you purchased something, the credit card company pays the store, restaurant, or other business the amount that you owe. In exchange for this service, you are able to defer your payment of such a bill until a later date. In addition, credit card companies allow you to pay over time instead of in one single lump. In exchange for allowing you to pay this debt over time, the credit card company charges you an interest rate. Your credit card agreement will dictate how often the interest rate is charged on your outstanding balance.

In a nutshell, a credit card purchase is a loan from your credit card company. The most amount of money you can borrow is dictated by your credit limit. You have to pay back this loan either at one time or over time in the form of monthly payments. Should you choose to pay over time, the credit card company will charge you an interest rate on your outstanding balance. This is how credit cards work.


What fees are charged when you use credit cards?

Yes, credit cards can have costs. There are two main costs associated with credit cards: (1) interest rates; and (2) annual fees. Interest charges result only from the use of a credit card. Annual fees, on the other hand, are charged regardless of whether or not you actually use your credit card.

You should never have to pay to use credit cards. However, this is the exact effect of an annual fee. An annual fee is a payment by you to the credit card company for the privilege of using that credit card. There are far too many good credit cards out there that do not have an annual fee for you to obtain one with an annual fee. In essence, do not get a card with an annual fee, it is that simple.

In addition to annual fees, credit card companies charge other fees of which you may not be aware. If you are ever late on a payment, there is usually a fee. If you go over your credit limit, there is usually a fee. Know what these fees are and factor them into your decision as to whether to obtain that particular card. It is important to note that almost every credit card will have these fees. Therefore, do not refrain from obtaining a good credit card simply because these fees exist. Should you do so, you will not find a credit card.

Interest rates are another fee charged by credit card companies. First, you should notice that the interest rate is different for credit purchases and cash advances. Cash advances always carry a higher interest rate. Additionally, your monthly payment will not count towards your cash advance balance until your credit purchases balance is paid off. This is because cash advances carry a higher interest rate. Therefore, the longer that your balance remains unpaid, the more money the credit card company makes.

Also, make sure that the interest rate that is advertised is not an "introductory" rate or a "variable" rate. Introductory rates only last a couple of months (at most, one year). After that introductory period, your interest rate resets to the default rate. The default rate is usually a lot higher than the introductory rate. Therefore, be aware of what you are getting yourself into because you do not want to see your interest rate jump over twenty points at the end of your "introductory" period.

Variable rates change with economic conditions. Therefore, you could have a great rate one month and a terrible rate another month. Granted, the rate changes are not dramatic. Therefore, you will not go to bed one night with a 9% interest rate and wake up the next morning with a 20% interest rate. The changes are gradual. However, do not play a guessing game with your credit card interest rate. Get a low fixed rate, and you will be much happier.

Know the costs that are associated with a credit card. By doing this, you will be able to make the best decision possible based on your needs and wants.

How to save money and reduce your debt with zero percent credit cards

When it comes down to it, a zero percent interest rate credit card can save you money as long as (1) the fees for owning the card do not amount to more money than would an interest rate; (2) you do not spend more on the card just because the interest rate is zero; and (3) the default interest rate on the credit card after the promotional period ends is not astronomically high.

First things first, think about this interest rate issue logically. If a credit card company does not charge interest, how does it make money? In lieu of interest, the credit card company may be charging some kind of annual fee and some other maintenance fees. If the fees cost more than the interest would, you are not saving any money. Additionally, if you have a low credit limit, the ratio of annual fee to credit limit may be higher than an interest rate. This, again, does not save you money and in fact, costs you money. Therefore, should you decide to utilize a zero percent credit card, make sure that you actually save money by using it.

The most common way a credit card will have a zero percent interest rate is in the form of an "introductory" rate. Basically, a credit card company will charge you zero interest for a set amount of time if you obtain their credit card and transfer a balance from one of your other cards.

Depending on the amount of your debt on your older car, it may be advantageous for you to transfer that balance to one of these zero interest, "introductory" rate credit cards. Many credit care companies will give you a zero percent interest rate for a set amount of time on these transfers. Therefore, should you transfer your balance, all of your monthly payments during this time will go towards paying your principal and thus, you debt will be paid sooner.

It is important to note that there are some disadvantages to this method. First, you have to open a new credit card and thus, instead of having one, as in our example above, you will have two. If this is the case, you cannot use the old card again because this would negate the purpose of transferring the balance. Additionally, you have to make sure that the interest rate of the new card is not higher than your old card. Remember, the zero percent interest rate does not last forever, and thus, should the new card have a higher interest rate, you will offset any savings that you have made while paying zero percent interest.

The point is, a zero percent interest credit card can save you money. However, should the costs of the new card offset any savings you get from transferring, you should think twice before doing so.

Using Worksheets in Planning Personal and Family Budgets

Budgets can be a helpful way for you to get your finances under control. In order for budgets to work, you have to make sure that the budget is feasible and that you maintain the budget. If the budget is not feasible, trying to stick to the same will be an exercise in futility. Therefore, if you want to get your finances under control you have to make sure that you make enough money to cover all of the items in your budget, or you have to take things out of your budget that you cannot afford. Additionally, should you create a feasible budget, you have to maintain it in order for the budget to be successful. You cannot stop using your budget after a couple months because it is "too hard." It will take time for you to become accustomed to your budget. However, once that occurs, your budget will become second nature.

One of the biggest mistakes that people make in forming a budget is that they do not write their budget down. Therefore, the budget gets lost or becomes forgotten in the jumble and stress of everyday life. If this occurs, you cannot possible stick to the budget because you will not know what your budget is. Therefore, the entire budget making process that you endured will be for not, and your financial situation may suffer as a result.

Many people do not know where to start when forming a budget. It you are one of these people, you may want to think about obtaining budgeting worksheets. A budgeting worksheet is basically a chart that you use to allocate certain amounts of your monthly pay for the purposes of paying bills, saving money, or for whatever else is in your budget. Having a budgeting worksheet will make it easy for you to figure out where your monthly money should go. You may not think of everything for your budget and you may allocate too much money to a particular item. A budgeting worksheet will help you refrain from making these budgeting mistakes.

As stated above, a budget can help you save money, but unless you know where to start and how to form a budget, the budget that you attempt to create will be ineffective. As such, you may want to utilize budgeting worksheets in order to get your budget up and rolling.

Beware of Credit Repair Services

It is true that many companies exist that will claim to clean up your credit report for a fee. Some of these companies are less than ethical and some are outright scams. However, there are many legitimate companies that will clean up your credit report for a small fee. Many people believe that all of these credit repair companies are cheats that take your money and do no work to help you out. This is simply untrue. However, if you do not know what you are doing or do not keep tabs on the credit repair company that you may hire, you may be take advantage of, your credit report may not be fixed, or both could occur.

If you have late payments, collection accounts, bankruptcies, or any or all of these things in your credit report, you know that these things lower your credit score (some more than others). If you have these things in your credit report, you may have to hire the services of a professional "credit cleaner" in order to maximize the use of your credit report. For the most part, these companies dispute inaccurate information on your credit report in attempts to remove some of the late payments, collection data, and other negative information that have been compiled in your report. The thing that you have to be most concerned about is that these companies not only behave ethically, but that they also behave legally. Creating a new social security number or a new identity in order to avoid your debt obligations is fraud. Therefore, do not engage in such activity.

Many skeptics argue that everything that these credit repair companies do can be done yourself for less money. This is 100% true, but I do not see how that is relevant. I can make dinner at home for less money than going to a restaurant. However, under the skeptics' logic, I should not go to the restaurant because it will cost more than making dinner at home. The point is, if you use a credit repair company, you are paying for experience and convenience.

Keep in mind that you do not have to use a credit repair company is you do not want. As stated in the above paragraph, you can clean your credit report yourself. However, if you decide that your credit report needs to be repaired, you should analyze your situation and decide which option (paying a company to do it or doing it yourself) is best for you. Either way, if done correctly, the results will be worth the time and money.


How Being Involved in Your Community Can Help Your Business Grow

Being a small business owner can be a great way to build financial prosperity and ultimately build financial security. However, neither of these things will happen unless you have enough customers and/or clients coming in the door. Without customers and/or clients, you cannot make a profit. Without profit, your business will not be successful. Therefore, the issue becomes obtaining customers and/or clients.

Advertising is the most common way to obtain customers and/or clients. However, popular advertising methods cost a lot of money. For example, television advertising can cost you several thousands of dollars. If you are a small business, you may not have such a large advertising budget and thus, a television commercial may be out of the question. You can always utilize the Internet, but unless you are Internet and computer savvy or unless you are willing to pay a professional to construct a website for you, your Internet presence will be nonexistent. Additionally, if you do not get traffic to your website, your website will be ineffective. Therefore, in order to obtain traffic, you will have to pay an additional fee. The point is, if your advertising budget is small, you will have to think of creative yet effective ways to advertise your business.

If you are a small business, one great way for you to advertise your business would be to get involved in your community. Community involvement is a great way to get your business's name know. Additionally, depending upon the community activity that you organize, participate in, or sponsor, you could obtain a lot of positive word of mouth advertising. Positive word of mouth advertising is an extremely powerful form of advertising. This form could have many community members coming in your door and using your services or buying your products. The best part about positive word of mouth advertising is that it is free. Therefore, you get the benefits of advertising without having to pay the expenses.

If you are a small business, you will have to advertise in order to survive. However, many forms of popular advertising can cost a lot of money. Therefore, an attractive alternative to television and the Internet is word of mouth advertising. You can obtain a lot of word of mouth advertising by getting involved in your community. Therefore, you should get involved in your community in order to generate a buzz for your company.

How Long Can a Bad Credit Report Haunt You?

A good credit report is an important financial asset to possess. A good credit report can help you obtain loans (including the big loans such as a mortgage, a car loan, and/or a college loan, to name a few), help you obtain a low interest rate on those loans, and will help you obtain favorable loan terms. Therefore, a good credit report will help you obtain loans and will help you save money by way of lower interest payments.

There are many things that you can do to your credit report that will negatively affect it. Some things are small (such as having a low credit to debt ratio, having too many credit report inquiries, and closing a credit card account, to name a few), but there are many "big" things that you can do that will severely lower your credit score.

A bankruptcy is probably the worst, one trick pony that can happen to your credit report. Before you decide to file for bankruptcy, you need to think long and hard about the benefits and penalties. The most obvious benefit is that most of your debts will be discharged (with the exception of certain debts like mortgages, student loans, and IRS liens), however, a bankruptcy also means that your credit report and your credit score will be severely damaged. By severally damages, I mean that your credit score will decrease by several hundred points.

Things such as late payments, charge offs, and collection accounts can also dramatically reduce your credit score. These things will not reduce your credit score to the same extent as a bankruptcy, but they will still do some pretty heavy damage. Therefore, you should consistently pay your monthly payments on time so these things do not happen to you and thus, will not be reported in your credit report.

Even though these things will dramatically reduce your credit score, many people may think that this is not a big deal because the information will be removed from their credit report eventually. What these people do not know is that late payments, charge offs, and collection accounts can stay on a credit report for up to seven years. Therefore, should you do things to improve your credit score during this time, those improvements will be offset by the negative information that remains. Even worse than the seven year time frame for the above listed credit report problems is a bankruptcy. A bankruptcy can stay on your credit report for up to ten years.

The point is, these problems do not go away overnight and thus, should you engage in this kind of behavior, you will pay for it for many years.

Financial Crisis: There is Plenty of Blame to go Around

Ground zero for the United States economy started with both greedy banks and greedy consumers. First, greedy banks would offer loans to uninformed borrowers. These loans would begin with a tiny interest rate but would balloon into a large interest rate that would prevent a borrower from making monthly mortgage payments. However, as in Las Vegas itself was at the helm, greedy consumers would gamble on a home purchase. Greedy consumers would purchase a home that was far above their financial capabilities. Once the home was purchased, these greedy consumers would gamble that they could resell their newly purchased home for a profit before their interest rate ballooned into a payment they could not afford. Everything went great for a couple of years until the price of homes peaked. Once home sales started slowing, greedy consumers could no longer sell their heavily overpriced homes. As such, their interest rate eventually ballooned and because they could not make the monthly mortgage payments, the home fell into foreclosure. People lost their homes and lenders lost their money.

When home foreclosures started skyrocketing, small home lenders were the first victims. Large banks also felt the pressure because of the growing number of defaulting subprime loans. Banks are business savvy and as such, had insurance in the event their loans defaulted.

Insurance companies started getting many claims from many banks. However, the greedy insurance companies had learned how to exploit a loophole that allowed it to essentially insure a loan without having to set aside a matching amount of money in a reserve account. As such, the dollar amount of the bank claims was soon more than the insurance company could pay. Therefore, insurance companies started failing.

Before claims started coming into the insurance companies, some of the largest investment banks in the world had invested substantial amounts of money into funds made up of subprime loan paper. At first, the return on this paper was great, but as the foreclosure rate started rising, these funds became increasingly worthless. As a result, billions of investment dollars were wiped out because investment banks did not accurately assess the risk involved in these investments. Additionally, the fact that these subprime loans were not adequately insured made the risk far outweigh any potential returns.

As such, this snowball effect started to occur because greedy lenders borrowed too much money from greedy banks who were willing to lend to uniformed consumers. As the banks' greed caught up with them, they had to start trying to collect on their insurance policies. However, the greedy insurance companies insured more money than it had on reserve. As such, the insurance companies started to fail. As the insurance companies failed, so did the investment banks that had invested in the now toxic subprime paper and in the failed insurance company.

In response to this growing problem, the government tried to treat symptoms without fixing the underlying problems. First, the government tried to cut interest rates. However, because banks were failing, banks needed to hold onto as much money as possible in order to stay "adequately funded" per the FDIC guidelines. This in turn created the current credit freeze. As such, regardless of how low the interest rates got, banks were still unwilling to lend money. As such, no problem was solved.

Second, the government tried an "economic stimulus" package in which it gave people anywhere between $300 - $1,200. The government encouraged people to use the money to make a mortgage payment. However, being able to make one mortgage payment does not mean that the borrower can now afford the loan. As such, the effect of the "economic stimulus" package was that the inevitable was delayed for a couple of months.

Last, and most recently, the government attempted a $700 billion dollar bailout of the financial sector of the United States economy. No current effects have been realized, but given the state of things, this plan will also have to effect of merely delaying the inevitable "bottoming out" of the United States economy.

The point is, everybody is to blame for this economic disaster, and it is going to take everybody to get the United States out of its current financial state.

How Market Knowledge Helps to Sell Products

It is important for any salesperson to have a thorough understanding of the market in which he/she sells his/her product. By understanding and having a vast knowledge of the market in which you are selling, you will be able to distinguish your product from the competition, be able to answer potential buyers' questions, and will be able to show the strengths of your particular product.

Being able to distinguish your product from the competition is important because doing so will enable the buyer to make an informed decision about your product's quality. By comparing your product to the competitions' products, you can point out their products' weaknesses and your product's strengths. Additionally, you will be able to inform the potential customer about the differences in pricing and service.

Potential buyers always have a lot of questions. Unless you are familiar with the market in which you are selling your product, you may not be able to fully or convincingly answer the potential buyers' questions. This can prevent you from getting sales, and, more importantly, will prevent you from getting repeat sales. However, by simply learning about your particular product's market, you can instill confidence in a buyer by fully and accurately answering questions and by reassuring the buyer that your product is the best on the market.

Knowing the market in which you sell your product will also help you attack another product's weakness while simultaneously promoting the strengths of your product. You will not be able to tell a potential buyer why your product is better if you yourself are unaware of the features of the competition's products. As such, possessing knowledge of your product's market will give you this advantage.

Everything comes down to perception and confidence. If you are perceived as unknowledgeable about your product and/or its market, a buyer will not buy your product. If you, as a salesperson, are not confident in your ability to answer customer questions or are not confident in your comprehensive knowledge of the product, such things will show when you deliver your pitch to customers. This again will lead to a negative perception of you, and because you are the one selling the product, this will lead to a negative perception of the product.

The key to success is preparation. If you are prepared to sell your product (such preparation can be had by knowing the competitors, market conditions, and the needs of your potential buyers), buyers will respond by way of purchases. If your product delivers what you promised it would, those buyers become repeat buyers. Repeat buyers means that your company will accomplish continued success.


How to Improve Your Net Profit

Improving your business's profits is not an easy task. It would be a lie to state that there exists a "quick fix" that will make your company profitable or will increase your company's profits overnight. However, some traditional ideas of how to increase your company's profitability still hold true. In essence, there are only two ways to make your company more profitable: (1) increase your revenue while creating a justifiable increase in your costs; or (2) decreasing your costs.

By far, the easier of the two options to implement is to decrease your costs. Decreasing your costs can be as simple as laying off workers, discontinuing a product or a particular product line, reducing your advertising efforts, and/or any and all of these options. However, even though these options will reduce your costs, you have to be aware that other problems arise when you implement any of these cost cutting measures. A lay-off of workers, for example, can lead to a negative community image of your company. Additionally, should you need to rehire skilled workers in the future, such workers may be hard to find or such workers may be apprehensive about working for your company.

Additionally, discontinuing a product or a particular product line and decreasing your advertising efforts may cause reduced revenue. Granted, the cost savings may more than make up for the decreased revenue, but the fact that revenue will be reduced still needs to be taken into account when determining the financial strength of your company.

As is shown above, reducing costs is easier to do because it does not require customer support to implement. You can unilaterally reduce your workforce, product line, and your advertising budget without customers' help. Raising revenue, however, is a different story. Raising your revenue generally means that you need to increase your sales. As such, customer support is needed.

The key is not simply to raise revenue. Raising revenues in and of itself is not a difficult task. The key is to raise revenues will keeping costs the same or by keeping costs at a justifiable level. In other words, it is easy to spend $1 million to increase a business's revenue by $100,000, but obviously, this is not a sustainable business model. If, however, you increase your costs by $100,000 and by doing so increase your revenue by $1 million, then that increased $100,000 cost is justifiably because your company is more profitable.

There is no "cookie-cutter" answer on how to increase a business's revenue while keeping any increased cost justifiable. Every business has a unique situation and thus, needs to be analyzed by its particular situation. However, once a proper analysis is completed, you will be able to implement revenue raising measures that can increase your company's profitability.


How to Save Money on Stamps

Every year it seems that the government is raising the price of stamps. Mailing letters, bills, and packages is getting more expensive. However, the good news is there are many alternatives you can utilize. You do not have to keep purchasing stamps to mail bills and letters. Nor do you have to keep paying whenever the price of stamps goes up.

The best way to avoid having to purchase stamps to mail your letters is by using e-mail. E-mail is fast, convenient, and easy to use. Best of all, e-mail is basically free. The only cost of e-mail is your monthly cost for an internet connection. However, there are many places where you can use the Internet for free (e.g., public library, your office, Internet cafes, etc.) and thus, do not have to incur this monthly expense. By using e-mail, your recipient receives your message instantaneously, and you can have multiple communications without having to attach a stamp to each communication.

Also, the Internet has made it extremely easy to send your friends and family pictures. You no longer have to get special padded envelopes and pay an extraordinary amount to ship your pictures. Sending pictures is now as easy as point and click.

The Internet also allows you to pay your bills on-line. Many banks offer their customers free, online bill pay. Basically, you tell the bank to pay your bills by telling the bank when to send payment and to whom. The bank sends the creditor a check and automatically deducts the money from your checking or savings account. No stamps, no mess, and no cost.

As shown above, the Internet can save you a lot of money because you will not have to purchase stamps to mail letters, bills, or even pictures. However, even with the popularity of the Internet, there are still many people who like to do things "the old fashioned way." As such, for the non-Internet users out there, you can still save money on stamps by doing two things, using your telephone or buying forever stamps.

If you want to say something to a friend, pick up the telephone. If something needs to be sent to somebody, send a fax (which uses a telephone line). When sending a fax, you use no ink and you do not have to print anything. Simply dial in the phone number and press "send." The machine will take care of the rest.

Some people may think that long distance telephone plans cost too much or that fax machines are too expensive and too complicated. Although I do not agree with either of these beliefs, there is a solution for people who refuse to embrace technology. That solution is the "forever" stamp.

Forever stamps are stamps that you can buy from any post office. These stamps can be used to mail a one-ounce letter regardless of when the stamps were purchased or used and no matter how prices may change in the future. Therefore, if you pay forty-two cents per forever stamp today but ten years from now a letter costs sixty-five cents to mail, you can still use a forever stamp that you purchased for forty-two cents.

The Internet is the best way to save money on stamps, but if you do not like computers or the Internet, you can always use a phone and/or fax machine. If those two options do not work, forever stamps are the way to go.

How to Avoid the Credit Card Trap for College Students

For most people, college is the first time in their life that they are living by themselves. This means that they have to pay bills, get a job, make adult decisions, and take on adult responsibility. It is also usually the time when a person gets his/her first credit card. As such, this can be a time of tremendous financial hardship and temptation.

Many college students abuse their credit card. College students see a credit card as an extra bank account. However, they quickly forget that every dollar they spend with the credit card has to be paid back in full, with interest. Additionally, because these are college students, the credit card usually carries an extremely high interest rate. This means that it is very easy to accumulate more debt that you can handle.

In order to avoid becoming a victim of credit card debt, you have to know from the beginning that credit is a tool that can either make or break your financial future. You do not want to leave college with a low credit score.
Doing so can prevent you from getting student loans (should you want to go to graduate school) and can also prevent you from making the "big" purchases in life (for example, a home or a car). Therefore, the solution is to prevent yourself from being put into this position.

In order to prevent being put in the position of having too much debt, you have to realize that debt takes time. You do not go to bed one night with no debt and wake up the next morning with $10,000 of credit card debt. Debt accumulation is a process of bad choices. If you realize this and you notice that you are being careless with your credit card, you can break the cycle before it spirals out of control.

Another way to prevent a large accumulation of credit card debt is too limit yourself to one credit card.
By having only one credit card, you cannot get yourself in too deep should you start to abuse the privilege of having credit. Additionally, make sure that the limit on your credit card is no more than $500.
This is another "safety net" that you can put in place in order to avoid overusing your card.

The best way to prevent credit card debt accumulation while in college is to use the credit card for emergencies only. An emergency is not a late night run to your local fast food restaurant. An emergency means your car broke down on the highway in the middle of nowhere, you have no cash, and the tow truck costs money.

Realize that credit is a privilege, keep track of your spending and break the cycle before your debt gets too big to contain, keep only one card and make sure the credit limit is not above $500, and use your card for emergencies only. Follow these tips and you can leave college with an A+ credit score.


How to Lower Interest with Credit Card Consolidation

Depending on what kind of credit cards you have, you may be paying an extraordinarily high interest rate. For example, credit cards offered on college campuses tend to have higher interest rates then credit cards offered at banks. Additionally, "student" credit cards tend to have higher interest rates than traditional credit cards. This is generally true because college students and young adults are just starting to establish their creditworthiness. As such, to offset the risk of giving credit to somebody without an established credit history, credit card companies charge higher interest rates and annual fees for these cards. The interesting thing is that you probably still use some of those cards today even though they are inferior to other credit products available to you.

It is important that you do not close these high interest credit card accounts (there is an exception discussed below). Closing a credit account will negatively affect your credit score. As such, in order to save money and your credit score, you should consolidate your debt onto one low interest credit card.
Consolidating your credit card debt onto one low interest credit card can save you money in more ways than one.

First on all, your old credit cards or your high interest cards carry a far higher interest rate than do other, easy to obtain credit cards. Additionally, many credit cards offer zero percent interest for up to one year on balance transfers. Therefore, if you transferred your debt from your high interest card onto a zero percent interest card, you would save a lot of money in interest payments, and you would pay down your debt faster.

Annual fees usually accompany high interest credit cards as another mechanism to offset the risk of the credit card companies. Annual fees are pointless. The only time a credit card should have an annual fee is if it is a charge card (if it is a charge card, you pay no interest and therefore, an annual fee is the only way for the company to make money). As such, if your high interest credit card has an annual fee, you should call that credit card company and see if you can get that annual fee eliminated.

If the credit card company is unwilling to accommodate you, transfer your balance on that card to a zero interest card and close the account. By closing the account, your credit score will take a small hit. However, this small hit is easily offset by maintaining a good history with the new zero percent interest card. Additionally, you will no longer have the expense of an annual fee.

Save yourself the expense of high interest and annual fees by consolidating your debt onto a low interest or no interest credit card.