September 2011 - Posts - Dollar Stretcher Guest Blogger
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September 2011 - Posts

  • Reasons Why Your Mortgage Application Won’t Go Through

    by Kalen Smith

    Applying for a mortgage can be overwhelming. The reason it can be such a stressful ordeal is because you don’t know if your loan will be approved or not. There are a number of things you need to take into consideration before you apply for a mortgage:

    1. You have problems with your income or credit. Lenders want to make sure you have the capability to pay in the future. Your income tells them whether you have the capability to pay. Your past history of paying your bills on time also tells lenders whether or not you are a credit risk.

    2. You are involved in a lawsuit. Whether you are defendant or plaintiff in a lawsuit, lenders will likely see you as a risk. If you’re being sued, you may have to pay a large settlement to the plaintiff. If you are the plaintiff to a lawsuit on the other hand, your legal bills can burn through your savings. Lenders are likely to decline your application until your lawsuit has been settled.

    3. The house is appraised at a low rate. When you buy a house, you will need to have it appraised. Lenders will want to know how much your house is being appraised for. If it isn’t being appraised high enough, they will instantly decline the loan. They want to make sure that you can come up with cash immediately if you run into financial problems. Obviously, the only way most people would be able to do that would be to sell the home. If the house can’t be sold for enough to cover the loan, the lender would have to take a loss after foreclosure.

    4. You are getting a divorce. Lenders may be a little nervous if you are getting a divorce. They won’t necessarily disqualify you, but they are likely to scrutinize you. The lender knows that they will be stuck in the middle of a fight for property, which includes the house. A divorce will also alert the lender that your income could change. If one spouse receives the house but has to pay monthly child support or alimony, that may affect their ability to pay their mortgage.

    5. You just changed jobs. Employers want to make sure you have a stable employment history. As a rule of thumb, they would like to see you in the same job for at least a couple of years. Although that is a general rule, they may get nervous if your income suddenly changes.

    Applying for a mortgage is obviously scary. There are a number of reasons why your application can be declined. It is important to understand what those reasons are. That way, you will have a better idea of when to apply for a loan. If you fall into any of the categories above, you may want to wait until your situation is more stable. Loans can take a long time to process. You don’t want to have to wait to resubmit an application and go through it all over again if your loan has been declined.

    Kalen Smith writes about financial affairs and budgeting at MoneyFile.net, a personal finance blog in the saving and financial advice sector. Kalen also writes about credit cards, investing, mis-sold mortgages, unfair loan agreements and credit rating advice.

  • 7 Tips for Stifling Your Grocery Store Impulse Buys

    by Rae Alton

    It's a shame that many consumers feel powerless in front of a box of gooey-looking frozen treats or in the make-up aisle with row upon row of flashy, brand new packages of mascara. With proper planning and a tablespoon of self control, you can curb your impulse spending without sacrificing too much of the quality you're accustomed to.

    The keyword is control, which is easier said than done! Follow these super simple suggestions and you might be amazed at the check-out.

    • Shop on a full stomach. It's one of the oldest tricks in the book and for good reason. Stuffing yourself almost lethargic will not only keep you from lingering in the snack aisles, but also it will prevent last minute candy bar and soda purchases near the check-out. They'll just melt in your purse or get warmed as you're putting away groceries anyway, right?

    • Keep receipts for possible tax deductions. No one enjoys crunching numbers and rifling through boxes of receipts; everyone enjoys a sweet little break on their income tax, though. Some of the possible deductions include:
      • Food bank donations (must be a non-profit)
      • Menu items for entertaining clients and other work necessities (brown bag lunches not included, unfortunately)
      • Gluten-free foods for family members with Celiac disease
      • Prescriptions
      • School supplies

    • Plan meals, plan meals, plan meals. A well-devised menu is a well-calculated grocery budget. It will also mean fewer trips to the store and plenty of time to find coupons you'll actually use right away and build around your bottom-line savings.

    • Hit up the farmer's market. If you're buying produce and fresh goods on the weekend, you're less likely to make small trips to and from the grocery store more than necessary.

    • Premeditate your splurges. This one's a bit tricky to pull off because switching out one splurge for another seems harmless at the time. This is your reward for being such a clever and frugal shopper! Keeping those rewards within reasonable limitations will give you a quite empowering sense of control without the sense of deprivation. One fun way I let myself splurge every month is by picking up something totally new in the international foods aisle.

    • Don't shop alone. It's remarkable what I'll let myself add to the cart when no one's watching. I'm not talking about judgment; it's positive peer pressure that keeps me from buying an extra bag of pretzels or indulging in a buy-3-get-1 deal on watermelons. Sure, it's a delicious steal and your shopping partner could help carry the load but I'll feel ridiculous as there is simply no way I'm going to eat four watermelons before they rot. I'll end up giving away a lot of melon, and with it, I'll give away my money.

    • Limit your reusable bags. If you have ten fabric shopping bags and only need to fill seven, bring seven. Don't give your "baggage" any leeway! Bags of dog food, cases of laundry detergent and other large items don't count, just use your best judgment; keep track by separating your large non-baggable items in the bottom of your shopping cart.

    Guest contributor Rae Alton is a content specialist and penny pincher from Greensboro, North Carolina. Follow Rae on Twitter at @raezin1984.

  • Financial Loss and Divorce

    by Lee Block

    Before the economy crashed, it seemed as if the gender specific roles post-divorce regarding money were pretty well laid out. But, times they are a changing! No longer are these roles set in stone. No longer is it always the father who pays the child support, while the mother stays home with primary custody. Sometimes, due to financial circumstances, the parents of children of divorce will still share a home, shuttling themselves back and forth instead of the children.

    It is equally important that both the mother and father budget their money and know how to live within their new means. This could mean some fancy footwork when it comes to paying the expenses, but whether you have two left feet or not; you have to learn how to do that dance. Where do you start when times are already tough?

    The first step is to map out a budget. If you are paying child support, this means that the obligation to your children comes before any other obligation you have. Putting that expense on the very top of your list, you still have to figure out how to afford to take care of your children when they are with you, which includes clothing. Taking everything into account, see what fits into your income level, and if you are living above your means, go without some luxuries so you can still put food on your table and pay your child support.

    If you aren’t paying child support, but receiving it, it is important to remember that the child support is not going to cover every expense you have for the children. Just because you are on the receiving end, does not mean you also do not hold financial responsibility to take care of your children and yourself. When you write out your budget, put all your expenses down, and then subtract the amount of child support you receive and the bottom line figure is the amount that you must make in order to meet your obligations.

    It is always easier if you can co-parent with your ex and split expenses down the middle when it comes to the kids activities, education, unpaid medical and birthday parties, but it does not always work that way. If you are on your own in paying for these things, be prepared and start to save for those rainy days that will come up. It is important to try to be as prepared for any type of disaster financially as you can. Now that you are a single parent, those things will fall solely on your shoulders, so it is up to you to be ready to handle them.

    One of the most important things to not do while you are budgeting and changing your lifestyle is to hold resentment towards your ex. If you are paying support, don’t resent your ex for how they use that money. Assume they have the best interest of the children in mind when they spend that money. Remember you both decided to have these children and your ex is still paying their fair share of expenses as well.

    If you are on the receiving end, don’t hold a grudge if you don’t think what you are getting is fair. Think about the kids, and the time they will spend with the other parent. That parent has to spend money while they have the children, which goes above and beyond the cost of the child support that you are currently receiving, so assume they are giving as much as they can and give them credit for giving in more ways than one.

    Each party suffers a financial loss when divorce happens. No one walks away unscathed in the wallet, but in the end, be grateful for what you do have and don’t focus on what you don’t have. And, once again, remember it really is all about the kids.

    Lee Block is a multi-talented, twice divorced mom of two who saw a need in the post-divorce community and created a family of sites centered around fulfilling that need. Lee has successfully launched The Post-Divorce Chronicles, Lee Block.Com, and The Post-Divorce Dating Club, all within a matter of months. Lee writes for the Huffington Post and was recently recognized by Startup Nation as a Leading Mom in Business in 2011.

  • Why Paying Your Mortgage with Credit Cards Is a Bad Idea

    by Daniela Baker

    In recent years, credit card companies have launched marketed campaigns to their customers encouraging them to use their credit cards to pay their major bills, including their mortgage. The credit card companies make this practice appealing by reminding their cardholder of all of the extra rewards points and cash back they will be accruing.

    At first glance, it seems like paying your mortgage with your credit card is a good idea. After all, it’s a bill that you would be paying anyway. Why not get rewarded at the same time? Of course, it is always good to take a step back and examine why a bank would be encouraging you to earn more rewards (which will increase their expenses) and evaluate any negative factors that could affect you.

    Why Credit Card Companies Encourage Credit Card Mortgage Payments

    Several regulations have been introduced in recent years that have started to decrease the income that banks are able to make through overdraft and credit card fees. As a result, they are looking for new ways to earn money. One of these ways is to encourage increased usage of credit cards. This is because financial institutions earn what is known as interchange income for each time their customers spend with their credit cards. By encouraging customers to pay their bills with their credit card, the banks are guaranteed to increase their interchange income.

    4 Reasons Why You Should Avoid This Practice

    Here are four items you will want to keep in mind when determining whether to pay your mortgage with your credit card.

    1. Cost of interest – If you do not pay your balance in full at the end of each month, you will end up paying the interest charges from your mortgage company and then paying the interest from your credit card company. This can result in a huge increase in interest, especially when you consider that the rates on credit cards can run you 13%, 17%, 23% or more.

    2. More likely to default on payment – Charging your mortgage to a credit card can give you a false sense of increased cash flow. This is because you will see the additional money in your bank account that typically would have already been routed to your mortgage company. For many, this can cause them to unwittingly purchase more throughout the month. Then, when it comes time to pay their credit card, they don’t have enough money reserved. This can cause them to miss a credit card payment. This not only results in fee and interest, but it can also cause their interest rate to skyrocket. And once you are stuck with that higher interest rate, it is nearly impossible to get it decreased to your original rate.

    3. Harm to your credit score – Charging your mortgage payment to your credit card is going to cause your debt-to-limit ratio to increase. This ratio is one of the prime factors that is used when determining your credit score. Experts recommend keeping your credit card balance below 30% of the limit. This even applies to consumers who pay their credit cards in full each month. This is because data isn’t necessarily sent to the credit bureaus directly after you have made your payment.

    4. May cause you to get charged fees – There are several fees you may be charged by your credit card when you pay your mortgage with plastic.

    One such fee is the over-the-limit charge, which happens when you exceed your credit limit. Paying your mortgage with your card may lead to this charge because you are more likely to accidentally go over your limit.

    Another charge you may see is cash advance fees. Typically, when people use their credit card to pay for their mortgage, it is charged as a cash advance instead of a typical purchase. Most credit cards charge a fee for cash advances, and cash advance rates may also be higher than the purchase interest rate.

    As a personal finance blogger, Daniela Baker helps consumers learn to earn more and save more with credit card deals at CreditDonkey.

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