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August 2009 - Posts
contributed by Christina
When shopping for a planned-for item, we've all occasionally stumbled on that other "great value" or "perfect thing" that was not on the list. You're in the store to buy the bed sheets on sale, and, shazam!, there are the perfect, black suede pumps you spent all last winter hunting for to no avail. You know the feeling, "Oh, my! They're exactly right! And what a great price! I'll never find these again. I'm going to be kicking myself for the rest of my life if I don't jump on these here and now!"
Well, sometimes it is wise to hop right onto that bargain. In most instances, though, if finances are a consideration, this is the time to resist. In comes "The 20 Minute Rule." Like the craving for a cigarette, I find that most impulses to buy pass within a given period of time. For me, that's usually 20 minutes.
In a nutshell: I make a note of the tempting item's location and leave immediately to do what I came to the store to do. I find by the time I've ambled over to that department, selected and paid for my planned purchase, generally at least 20 minutes have elapsed, and I may have forgotten all about the "must-have" impulse find.
Next, I head for the exit. If that "find" is still calling to me as I'm walking through the door, I turn back, re-examine the item, and do the math. Can I afford it on top of the purchase I've already made? Is it truly a good value? Is now the right time to buy? Could I or should I put it on layaway?
If it truly is a purchase that makes sense at this time, I then ask the sales clerk to hold it for two days. Most of the time, they're glad to do it. During that cooling-off period, I generally get a clearer picture undistorted by the endorphin-high of surprise. Most of the time, I find that I can live without it and not even feel sorry of myself. In fact, my shopping high is often replaced by a moral high: "Aren't I something? I'm so strong I resisted that. I kicked the craving!"
Hope this helps with those budget-busting, "gotta have it" blues.
Everyone is smart about something! That's why we have The Dollar Stretcher Guest Blog. If you have a story that could help save time or money, please send it by email to MyStory@Stretcher.com
contributed by Bill Hardekopf, LowCards.com
Millions of students will go to college in the next few weeks, making this the perfect time for parents to talk to their son or daughter about the correct usage of credit cards and the dangers of debt. But it is also the last full semester before the Credit CARD Act goes into effect in February of 2010. At that time, the marketing of credit cards to students will have a number of new restrictions.
The Credit CARD Act will prohibit issuers from lending to anyone under the age of 21 unless he or she has a co-signer or has proof of the ability to make payments. Unsolicited card offers will be prohibited to everyone under 21. Credit card companies cannot try to lure students into signing up for a credit card with any tangible item anywhere on or near a college campus or a college-sponsored event.
These regulations will make it much harder for responsible college students to get a credit cards and begin building their credit score. In general, credit scores are growing in importance for young adults. Lenders, employers, and apartment managers are using credit scores to help make judgments about the applicant and reduce their own risk. A low or non-existent credit score could mean higher rates for loans or a missed job opportunity at a time in life when a young adult needs a break.
So the law places an unintended penalty on those financially responsible students. But in looking at a recent Sallie Mae study, it is easy to see why lawmakers put these restrictions in place. 84% of college students have at least one credit card, up from 76% in 2004. The average amount of debt carried by college cardholders is $3,173, which represents a 46% increase over the 2004 figure of $2,169. The average number of cards per student is 4.6. Only 17% pay off their entire balance each month and 22% make just the minimum payment.
Issuers have aggressively marketed cards to college students because they know that many parents will pay off the bill if the student runs up debt. In addition, brand loyalty is determined early in life, so many young cardholders keep their first card for many years.
These Sallie Mae statistics show the importance of teaching college student how to correctly use a credit card. If parents don't teach them, the young adult will be forced to learn from their own mistakes.
Parents should teach their student how to budget, spend wisely, and use credit. Start with your credit card bill and use it to explain interest rates, grace periods, and minimum payment. Explain the high rates of cash advances and how to avoid these loans. Show them examples of how much they will pay in interest by only making the minimum payments. Tell them what is a good time to use a credit card for payment (textbooks, emergencies) and what isn't (clothing, food, entertainment). Advise how to avoid credit card theft: keep the card with you and don't let someone else use your card.
Explain the fees and penalties. Use online payment with reminders to help avoid late payment. Know your credit limit and if you must carry a balance, keep it under 30% of your credit limit.
Make it clear that credit cards are loans that have to be repaid in full each month. If you can't afford to pay for the item with cash, then you can't afford the item. Credit cards aren't to be used to purchase something you can't afford. Show them a copy of your own credit report and use that as an example of building a good (or bad) payment history with credit cards.
The CARD Act will force parents to take more responsibility for credit cards for their college students. Co-signing is one of the options to help your student get a card. The card is in his/her name and they pay the bills, but your name is also on the card. If your co-signer makes a late payment or runs up a balance, this impacts your credit score. If they can't pay the loan, you are responsible.
You can also make your student an authorized user on your account. As an authorized user, they can make charges to your account. If you have good credit and they use the card responsibly, this will help build their credit score. However, if the parent or student has late payments or a high balance, it will pull down all credit scores. Authorized and co-signed accounts give parents a chance to monitor the student's spending.
Another option is a secured card. These have more fees and the interest rate is high, so pay it off each month, but secured cards are relatively easy for anyone to get because it is secured by a prepaid deposit. Make sure that the card reports to a credit agency. Secured cards from Orchard Bank and First Option Visa both report to credit agencies.
Bill Hardekopf is the CEO of LowCards.com, a site that simplifies the confusion of shopping for credit cards. It is a free, independent website that helps consumers easily compare credit cards in a variety of categories, such as lowest rates, rewards, rebates, balance transfers and lowest introductory rates. It also gives an unbiased ranking and review for each card.
by Bill Hardekopf, CEO of LowCards.com
The initial provisions of the Credit CARD Act have just gone into effect, giving consumers more notice on interest rate hikes, more time to receive their bills and the ability to say no to APR increases.
The more significant aspects of the bill, signed into law in May, don't go into effect until February of 2010. Those provisions include restrictions on interest rate increases and marketing credit cards to people under 21.
Three changes go into effect today:
1. Issuers must now give a 45-day notice instead of 15 days before a rate increase. This gives the cardholder a chance to shop around or pay off the card.
The extra month of notification is good for consumers but it is still our responsibility to notice these changes. Rate increases are fairly widespread right now, so pay attention to your bill inserts, email notifications, or the plain white envelopes in your mail. This is how most issuers will notify you about a rate increase. This longer period also gives you time to shop around for a card with a lower rate and possibly transfer your balance to a different card. Keep in mind that balance transfer offers aren't as generous as they once were and most cards now charge at least a 3% fee for a balance transfer.
Surprisingly, the CARD Act requires advance notification of a rate increase, but does not require advance notification if an issuer closes your account or decreases the credit limit on your card. Cardholders are being caught off guard by these practices. The cash register is not a good time to learn that your card has been cancelled or that you have exceeded your limit. It seems that both of these changes should have been included in the bill.
2. Monthly statements now have to be mailed to consumers at least 21 days before it is due. Previously, issuers could mail the bill 14 days before the due date.
Don't look at this as an extra week to wait and pay your bill. Keep your regular payment schedule and be appreciative for the extra cushion to make sure your issuer receives it on time. If you use this extra time to procrastinate paying your bill, you may forget and incur a costly late fee.
3. The right to opt out of rate hikes and fee increases. Currently, many issuers allow consumers to opt out, but the CARD Act makes it mandatory.
If you decline the increase, you can no longer make new purchases with the card and you must pay off the balance under the existing rates within five years. If you opt out, you must let the issuer know in a timely manner by mailing an opt out letter to your issuer declining the rate increase. Send the mail registered receipt and keep a copy of the letter for your records. You will then pay off the balance at the original rate. The closed account will appear on your credit report.
Bill Hardekopf is the CEO of LowCards.com a site that simplifies the confusion of shopping for credit cards. It is a free, independent website that helps consumers easily compare credit cards in a variety of categories such as lowest rates, rewards, rebates, balance transfers and lowest introductory rates.
contributed by Anne
This tip is in the "little luxuries" vein, but may seem a bit unusual. The very best way to forget your own money troubles and to feel good is to do something helpful for someone else. Here are just a few examples:
- Buy some cheap nonperishable nutritious snacks to keep in your car, and hand out to the homeless person at the corner holding a sign. I've handed out cans of Vienna sausage, plastic cups of applesauce or fruit, pudding cups, granola bars, cracker/peanut butter packets, packets of tuna salad. You could also grab an apple or an orange along with your car keys to hand out. Make sure to look the person in the eye, smile, and wish them well. This acknowledges their humanity and follows most religious teachings to give to those who ask!
- Haunt your nearby thrift shop for their very cheapest bargains on towels and blankets, and buy some to donate to your animal shelter. The animal shelters are continuously in need of more of these to help dogs and puppies especially have a place to lie down besides the cold concrete or cage floor. At my local Savers, for example, on Thursdays everything in the store with some particular color of tag costs $1 each, including towels and blankets.
- "Adopt" a child for $20 or so per month through one of the foreign-children groups. This is more expensive but hugely rewarding. Typically the child is enrolled in their program to receive medical checkups, school supplies, and care in emergencies, as well as you writing letters and hearing back from them.
- Think of someone you know who is elderly or chronically ill, and think of something cheerful you could do for that person. Call that person, visit, send a note, bring some flowers from your own garden, whatever suits their situation.
You don't have to spend much to help others! And it helps you MUCH more than having a little luxury would.
Everyone is smart about something! That's why we have The Dollar Stretcher Guest Blog. If you have a story that could help save time or money, please send it by email to MyStory@Stretcher.com.
contributed by Ally of Lake Worth, FL
It's that school supply time of year. Even if you're not going back to school, take advantage of these sales. School supplies have many uses all year round. I thought since I have the day off today that I should make a note of that.
I was shopping for myself, since I am going back to college. Then I added a few items for the church give away box. A great number of kids are in need this time of year and even one extra pack of paper in my bag could make a difference to one of them.
I bought the notebook paper I need for this semester and the next in eight packs at 75 cents each. Paper prices go up every year, so I may as well stock up. Single subject notebooks with wire binding were selling for 15 cents at Walmart. These seem so useful all year round that I bought a whole stack, maybe 30 of them. I take notes in class. I take notes by the phone. I take notes when I am cleaning the fridge, as to what is needed next. I have to write things down when I'm on the computer too. So for 15 cents a notebook, they are very handy and affordable to have around the house. I also found that pens, pencils, highlighters and white-out are all cheaper now than they will be during tax season. So it would be smart to plan for that now rather than waiting for April and paying regular prices. Now is the time to refill your office.
If you need to clean the garage, now is the time to buy storage containers. Stores are selling them cheap for the back to college crowd. Teens need cheap stuff in their dorm rooms. I found the plastic file crates that I normally use for filing on sale at Walmart for $2.50. They are normally over $5. I bought three for my son's playroom. If you stack them three high, with the opening to the front, this makes a great place for kids to store toys or books. I tied his together with my excess twist ties from the bread bags. I have mine three across on top of a low table, and he loves that he can reach it. I love that for a total of $7.50, I could clean up that messy room. They also sell storage containers much cheaper now than they will be at Christmas time. I know your Christmas stuff is all packed up already, but it's cheaper to buy the new containers now than to wait until after Christmas. You'll find yourself regretting as you repack the nasty cardboard boxes from the hot garage or attic. Storage bins are great toy boxes too. It helps to have a few so you can alternate the toys that your child plays with. Keep one in the playroom and two in the garage and each week you can switch bins.
Crayons, scissors and glue are very cheap right now too. Priced at 25 cents for a box of crayons or glue, and 70 cents for scissors. Whether you have small kids or not, you should run and buy this stuff. I keep a small shoe box at my house for crafts. I keep this stuff with a few 15 cent notebooks and have crafts available. If you do have kids, now is your chance to replace all the crummy broken crayons. If your kid is under five years old, he or she doesn't need the super big box with the 64 colors. The 25 cent box with 24 colors is just perfect. In fact, I bought about four boxes. So, when they are opened and plunked together in a bigger container, t looks like we have so much more for the buck.
For those of us on the perpetual organizing plan, there are a few goods for us too. The regular sized index cards are 44 cents a pack at Walmart. I bought about eight packs to use for recipes, small notes in my purse, address cards, box labels and such. 44 cents is a great price for such versatility. They are normally over a dollar a pack. Since I have to study this semester, I will need them to make note cards to study with. If you have school-aged kids, you can help them make study cards and show them how to use them. Ready-made flash cards are a dollar at the dollar stores. But, they don't always have exactly what your kid needs. Here's your chance to buy the index cards and make your own flash cards. Crayola markers were on sale for $1. So your flash cards can be in color!
As well, the three-ring binder has served many purposes. I have a binder for all the warrantees that come with the appliances in my house. This was better than a file. I hate filing things, and after one use, I hate filing it back. A binder makes it easy to look at what I need, close it and put back on the shelf. All the warrantees stay together. As well, I use a binder for an address book. It seems so big it is silly. However, the size makes it easy to find, and it fits on the bookshelf. I print my address book from my computer, so no more messy pages. I update the address book by printing new pages and tossing the old. The binder has served me well and is now $2.50 at Walmart for some really pretty colors. That price beats the fancy little address books that I have to hand write all the names and numbers, and then it is so little and compact that I lose it.
I hope to inspire some ideas for you. We have about two weeks before the school supply season is done, so if you have other ideas of how you use the school supplies for other stuff around the house, I sure would like to know now.
Everyone is smart about something! That's why we have The Dollar Stretcher Guest Blog. If you have a story that could help save time or money, please send it by email to MyStory@Stretcher.com.
by Bill Hardekopf, CEO of LowCards.com
Two new studies give a clearer explanation of the effects of the credit card crisis: banks are tightening credit card lending standards at a time when more households are depending on credit cards to get them through the month.
The Office of the Comptroller of Currency recently released its 2009 Survey of Underwriting Practices which shows that 68% of lenders tightened credit card underwriting standards, almost double from the 2008 survey (35%).
A Demos survey released this week shows that more than one-third of low- and middle-income households used credit cards to cover basic living expenses (including rent, mortgage payments, groceries and utilities) on average in five of the last twelve months.
These statistics again show how difficult the credit situation is for both issuers and credit cardholders. Credit card issuers look at the present and future and see increased risk of defaults and more loan losses, so they tighten their credit standards and raise their rates. This hurts the low- and middle-income households who are using their credit cards just to make it through the month. According to the Demos study, one in four of these indebted households are paying more than 20% in interest rates on their credit cards. This makes a bad financial situation much worse. Many households are using credit cards not only for emergencies, but to fill the gap left because their wages or retirement benefits aren't enough. They can't afford their bills, and high credit card interest rates certainly aren't helping.
The Demos study, "The Plastic Safety Net," examined credit card debt among low- and middle-income households (defined as income between 50% and 120% of the local median income). Some of the findings include:
- For almost half of these households, out-of-pocket medical expenses contributed to a family's credit card debt, with an average of $2,194 related to out-of-pocket medical expenses.
- Consumers in these households paid an average interest rate of 14.8% on their credit card. Almost 1 in 4 of these indebted households paid more than 20% interest on their card.
- Three out of four low- and middle- income households use credit cards as a safety net to help pay for car repairs, house repairs, college expenses, or starting or running a business.
- In these low- and middle-income households, cardholders 65 and older had an average credit card debt of $10,235 in 2008, up 26% from $8,138 in 2005.
Indebted households don't have much reason to hope for relief, even with The Credit CARD Act and consumer regulations that go into effect next year. According to the Survey of Underwriting Practices, examiners expect credit risk to continue to increase over the next 12 months at 87% of the banks, particularly in home equity and credit card portfolios.
Increased risk and uncertain economic conditions are some of the primary reasons that issuers increase rates and fees, especially for anyone they consider to have less than excellent credit. So, low and middle-income households can expect issuers to continue pricing for this," says Hardekopf. "Households shouldn't look for government regulations to provide real assistance with debt problems. A better option is working with a reputable credit counselor to help create a plan to get out of debt. The National Foundation for Credit Counseling is a good place to start.
Bill Hardekopf is the CEO of LowCards.com. It is a free, independent website that helps consumers easily compare credit cards in a variety of categories such as lowest rates, rewards, rebates, balance transfers and lowest introductory rates. It also gives an unbiased ranking and review for each card. The LowCards.com Complete Credit Card Index is the most objective and comprehensive resource on the Internet, which allows consumers to compare rates for all 1060 credit cards offered in this country.
(NAPSA) - A term commonly associated with Wall Street could apply on Main Street more often than you might expect. According to a new national poll released by The Allstate Foundation, 86 percent of Americans fail to see a connection between domestic violence and "economic abuse." In fact, when given a choice of definitions, the survey revealed that nearly eight out of 10 Americans link economic abuse to Wall Street woes or irresponsible spending.
Economic abuse is a tactic commonly used by abusers to control their victims' finances and prevent them from leaving a dangerous relationship. Many women stay in abusive relationships due to lack of resources to stand on their own two feet.
Ask Kalyn Risker to define economic abuse and you'll hear of an abusive ex-boyfriend who caused her to lose her job, spent all her money and destroyed her personal property, including her clothing and car, to keep her from leaving him. This picture of abuse rarely comes into the American mind-set.
"Many people associate domestic violence with physical attacks, but damage to your credit score and being cut off from access to money create lasting scars that make it hard, if not impossible, for abuse victims to recover," said Jennifer Kuhn, manager of the Economics Against Abuse program at the Foundation. "For victims of domestic violence, economic abuse is much more personal-and dangerous."
The poll also found that more than 70 percent of Americans know someone who is or has been a victim of domestic violence. With millions of Americans touched by domestic violence in some way, The Allstate Foundation is educating Americans on economic abuse and its dangerous signs:
- Taking money, credit card or property from a partner without permission
- Racking up debt without a partner's knowledge
- Purposely ruining a partner's credit score
- Preventing a partner from earning money or attending school
- Being forced by a partner to hand over paychecks
- Canceling insurance or credit cards without the partner's knowledge
- Harassing a partner at work to negatively impact a job
Building financial skills is an important key to overcoming economic abuse. Now more than ever, it is important that domestic violence survivors build economic skills to overcome financial instability-the leading barrier to exit and stay out of an abusive situation.
For more information on economic abuse or to access the Financial Empowerment Curriculum to help domestic violence survivors achieve financial independence, please visit www.clicktoempower.org.
Domestic violence survivors in need of immediate assistance are encouraged to call the National Domestic Violence Hotline, (800) 799-SAFE (800-799-7233).
contributed by a Long Time Professor
In response to the article about saving money in college at www.stretcher.com/stories/09/09jul20c.cfm
To get the most out of your education, use your professors! The only stupid questions are the ones you don't ask. Teachers have office hours (maybe are required to do so), but these are much under-used. Often students will be frustrated in silence, rather than asking questions that will help them complete assignments, improve their studying for tests, have work looked at before it is due, etc. These relationships might also lead you to working on special projects or other opportunities that will help you learn more and be better poised for the job market.
Also, if you are going to want your teachers to be references for you for work or graduate school, get yourself known for your work ethic and character by how you interact with them. Even just showing that you plan your work and plan ahead (most students are procrastinators), puts you ahead of your classmates.
Your school might also have a free tutoring center, so check with them if you need help, either with a specific class or with general study habits. If you are a good student, you might find work there.
For college entertainment, especially in the residence halls, remember that everyone else is watching their money as well, whether they let on or not. If you are used to making your own fun, such as outdoors or with cards and board games or crafts, you can make friends and all save together. Being away from home, students often miss holidays they are used to unless they make a point to celebrate them, however inexpensively.
Get in the habit of asking for student discounts at all businesses in town, though a discount isn't a discount if it makes you buy more than you would have otherwise. Also, check online for student discount programs on travel, train, bus, museum admissions, theatre tickets, etc.
If you are not required to live on campus and choose to have your own apartment, be sure you consider all the expenses of both options. In an apartment, you have to commit to eating cheaply. You will need to equip your kitchen, bathroom, etc. If you take your time and buy quality items, you will have those for after college. Things like paper towels, a smoke detector, light bulbs, and toilet paper aren't provided, so those are also part of your budget. Parking and transportation can be expensive either way. Security on-campus might be better. Computer services are probably included in everyone's student fees, though you might pay again for internet off-campus. Parents' homeowners' insurance might cover residence hall living (check that), but probably not an apartment.
If living off-campus, you also need to make a point to interact with people on-campus, or to make friends among your neighbors. College is a time as well as a place, and you will pay differently for different opportunities!
Everyone is smart about something! That's why we have The Dollar Stretcher Guest Blog. If you have a story that could help save time or money, please send it by email to MyStory@stretcher.com