student-loans-delinquent As more and more people go back to school to get an education and better themselves, they inherently have to get student loans. In case you didn’t know, it’s quite expensive to go to college these days. I graduated in the late nineties and I honestly believe that if college was as expensive then as it is today, I wouldn’t have gone to school. A semester at my local college runs about $6000 dollars. It’s hard to fathom how young people and students afford college these days. And the fact is, they don’t. They take on more and more debt to try to make a better life for themselves. It’s sad really.

Not only are young people taking on more and more student debt, so are their parents and grandparents. Parents are going back to school to get a better education and grandparents are taking on debt to help their children and grandchildren make ends meet.

So what does that mean? More and more people in retirement age, and those about to retire, are getting behind, way behind on their student loan payments. You may not be aware, but you can’t default or bankrupt money borrowed from Uncle Sam for educational purposes. “So what,” you are thinking, right? But thousands of Americans are finding out that the Federal government is getting its money back by garnishing their Social Security checks. When I saw this news story, I could hardly believe it.

Here’s an excerpt from the San Francisco Chronicle:

According to government data, compiled by the Treasury Department at the request of SmartMoney.com, the federal government is withholding money from a rapidly growing number of Social Security recipients who have fallen behind on federal student loans. From January through Aug. 6, the government reduced the size of 115,000 recipients’ Social Security checks on those grounds. That’s nearly double the pace of the department’s enforcement in 2011; it’s up from about 60,000 cases in all of 2007 and just six cases in 2000.

The amount that the government withholds varies widely, though it runs up to 15 percent. With an average monthly Social Security benefit for a retired worker of $1,234, that could mean a monthly reduction of almost $190. Read more at sfgate.com

Student loan debt in this country seems to be getting out of control. More and more Americans are taking on debt to go school because that is what they are “supposed to do”. Before making the decision to go back to college, make sure that you have a plan for graduating in a field that actually has well-paying jobs.  If you must go back to school, I encourage you. Just take on as little debt as possible. It took me 10 years to pay off my student debt, and I don’t wish the same on you.

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As the economy seems to keep heading in the wrong direction for most of us, what can the average family do to save a few extra dollars to help make ends meet? Well I took a few minutes and came up with 5 ways for families to save money that most all of us can do if we just take the time. So let’s get started.

  1. We all have to go to the store to buy groceries, right? Make sure that you take a list with you to the grocery store. Stick to the list and don’t wander aimlessly down the sugary cereal aisle. You will be amazed at the things that you bring back with you from the grocery store that you really didn’t need. And don’t go to the store hungry! You will buy because you are hungry and not what you need to feed your family.
  2. Call your credit card company and demand a lower rate. Tell them that if you don’t get a better interest rate then you will take your business to another company by transferring your balance. Sounds pretty gutsy doesn’t it? But believe it or not, it can work!
  3. Number 3 goes right along with number 2. If they don’t give you a better rate, in fact a much lower rate, then take your business elsewhere just as you promised. Credit card companies are once again offering zero percent cards to those of us with fairly decent credit. Take advantage of it. You could get zero percent for as long as 18 months.
  4. Call your cell phone company and ask them to evaluate your account to see if you can get on a better plan. Also, consider combining your account with family. Each of you could save forty, fifty or even $100 or more with a shared account. The big cell phone companies are competing heavily again for your business. When your contract is up, shop around, you could save a lot of money.
  5. Say goodbye to your telephone company. Do you still have a landline at home? How much is your bill? Is it 40, 50 or $100 a month? You don’t need a landline any more. At least most of us don’t anyway. I haven’t had a landline since 2002. Unless you have small children at home and want to make sure that 911 is available for you, your family or a babysitter, then strongly consider cutting it off and kissing that extra phone bill goodbye.

Hope these ideas help. These tips are simple things that each and every one of us can do. You don’t have to buy anything to make them work for you.

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improve-credit-scoreAs the economy seems to be dragging along, more and more of us are looking for ways to improve our financial situation. If you have bad credit, you know that it can be an uphill battle to get ahead, right? So here are 3 easy ways to start repairing your credit score so you take control of your finances.

First of all, I am not going to give you the same old tips that all of us have heard and are tired of. The gurus and talk show hosts always talk about paying off your credit cards, spending less than you make and paying your bills on time. Blah, blah blah. Yep, I’ve heard them all too. And yes, paying down your existing debt will help to improve your credit score over time, but you need to fix your credit score a little more quickly, right?

Tip #1: Get a free credit report and fix any errors that you find.

There is no doubt that you have seen television commercials about where to get a free credit report. Yes, those companies advertised do offer free services, but they are going to try to sell you lots of stuff that you simply don’t need. In case you didn’t know it, the law requires the 3 big credit agencies to provide you a report on your credit at no charge once every 12 months. The official site to access your free reports is annualcreditreport.com. Look for late payments and collection items that are inaccurate or are simply not yours. It’s more common than you think to have something on your report that doesn’t belong to you.

Tip #2: Get a secured credit card.

One of the biggest problems with having bad credit is the fact that you can’t get a credit card. A secured credit card functions much like a prepaid debit card. But the big difference is the fact that the money you put up to open the account is collateral for the lender.  Interest rates tend to be fairly competitive and a secured card is a great way to improve your FICO score quickly. Your financial transactions are reported to the agencies and as long as you stay current and pay on time, they will help you dig out of a hole. Even if you have bad credit, good credit or none at all, most everybody will be approved for a secured credit card.

Tip #3: Get a gas station card.

Many times gas station cards can be much easier to get approved for than a regular credit card. The key to using them effectively is to make small monthly charges and pay them off on time every time. And before you know it your score will quickly start to repair itself.

Consumer resource on the Free Credit Reporting Act (FCRA) here.

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spain-needs-bailoutThe Eurozone seems to be in turmoil and quite frankly, Europe is dragging the U.S. economy down with it. So what is the deal with Europe and why are things so bad over there? Simply stated, they are spending more than they make, and they are finding that they cannot tax their way out of this mess.

Just like in the U.S., Spain had a huge housing boom over the last few years. Recently it has gone “bust” just like in the U.S. in between 2008 and the present. Their banks have lots of bad debt and they are just not capitalized very well.  Now they are finding themselves looking for handouts from the IMF and their Eurozone partners in the form of assistance from the EFSF.

The Spanish government maintained Friday that it was waiting for the results of the IMF assessment, which was released ahead of the original expected publication date of Monday. The government also said it was waiting for the results of an independent audit of the banks, due June 21 before it took any decision on aid.

But they have officially accepted “assistance” so to speak, because they do not like the term “bailout”.

So what does the mean for the average American citizen and for the American economy? Well we have two choices. We can let countries like Greece, Italy and Spain get their own houses in order, or we can give them a bunch of money and let the misery continue for a few more years. Economists call it kicking the can down the road. If we wait on them to fix their own problems, then the greater European and U.S. economies will suffer in the short term. It’s an election year here in the States, so what do you think is really going to happen?

Worries about Spain and Greece have negatively affected our stock market here at home. The world is trying to get its mind around how the Eurozone and Euro will be affected if Greece exits the Euro. But the bottom line is, Europe is the one of the United States’ biggest trading partners, so our economies are forever linked, like it or not.

Article Credit: http://www.marketwatch.com/story/spain-bank-bailout-awaited-2012-06-09?link=MW_latest_news

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fdic-payday-loan-investigationWe all know what payday loans are, high interest short term loans, available at highly controversial storefronts, check cashers and cash advance lenders that set up shop in almost all cities and towns. But it looks like the “big-box” banks are starting to dip their toe into these high interest loans to help increase their profits in these lean times.

The FDIC is deeply concerned about these continued reports of banks engaging in payday lending and the expansion of payday lending activities under third-party arrangements, said Martin Gruenberg, acting chairman of the FDIC.

Obviously the banks do not advertise that they participate in this type of lending. You are not going to walk into your local branch and see a poster advertising a cash advance loan. But chances are, your bank may offer them. Yep, you guessed it, they are targeting their customers that need extra funds for an emergency. That’s the same business model that their shady counterparts participate in.

Here is a list of a few banks that have been accused of this less than reputable lending practice.

  • Wells Fargo
  • Fifth Third
  • Regions and
  • US Bank

These banks have been accused of undermining local laws and statutes that prohibit high interest, balloon payment lending that resemble the same practice of payday loans. For example, Regions is offering these types of loans at a rate of $1 for every $10 borrowed. And Wells Fargo join the ranks at $7.50 for every $100 borrowed.

Here’s the bottom line. Banks have lost a lot of revenue over the last few years of being restricted on how they collect and how much they charge for overdraft fees and otherwise bad checks. And banks are looking to increase their revenues anyway that they can. In case you hadn’t noticed, ATM fees keep going up and now many of the big banks and even some credit unions are charging for checking accounts again.

But on the customer’s side, what makes more financial sense? Write a bad check and pay the fees or get a short term cash advance from their local branch to float them until their next payday.

Article Credit: http://www.huffingtonpost.com/2012/06/01/fdic-bank-payday-loans_n_1563143.html

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make-more-moneyThe human condition in modern society is to trade time for money, save a little bit then pay your bills and other expenses. That’s how the vast majority of people handle their personal finances. But there are two burning questions that most of us have. How do I make more money, and how do I save more money?

Let’s start with the premise of making more money.

Like most people today, you go to your job every day, work for 8 or 9 hours, and are miserable all day, hoping that you will get a raise soon to make it easier to work all day long, right?  Well the fact is that you are going to get a raise and possibly a substantial one, very soon. But that just isn’t going to fix the problem that you have. Sometimes making more money just isn’t the solution to the real problem.

Let me elaborate. Many people, once they set their mind to it, know exactly how to make more money. Some people go for more education, while others concentrate on moving up in their organization, gain experience and therefore get paid more. But that doesn’t fix their problems.

The heart of the problem is not how to make more money, but how to KEEP more of the money that you make. Yes, if you are making minimum wage, then you definitely need to concentrate on how to increase your income. But after most people get that figured out, they just end up having more expenses which leads to the real problem, keeping more of the money that you make.

So how do you save or keep more of the money that you make?

The answer to the question is really simple. You must pay yourself before you pay your bills. How exactly does that work? So many people get caught up in earning money just to pay for expenses and bills that they forget how important it is to save. You must set money aside every month as a savings plan to be able to get out of the endless cycle of making an income and paying expenses. Even if you have to sacrifice and eliminate certain expenses, you must pay yourself every month.

Here’s how I learned how to save and keep more of my money.

The way I save is to hide my money from myself. No, I don’t bury it in the back yard or stuff it in a mattress.  I hide my money from myself by utilizing direct deposit and three separate checking accounts. It makes so much sense and it really works!

Here’s how it works.

First of all, you are going to have to make a budget and figure out where all of you money is going. That’s the key to making this work. One account is used only for paying regular bills like my rent, car payment, electrical bills and things like that. Then another account is set up to cover my day to day expenses like groceries, gas for my car and lunch during work. The third account is where I pay myself. I put a set amount every paycheck into this account for saving and then use it for investing. When I set up my direct deposit, I make sure that I put enough in each account to cover those expenses.

Before you know it, you will have several hundred dollars in that savings account or maybe even a few thousand. Wouldn’t it feel great to have say $2500 sitting in an account? That’s too tempting for some people because they don’t see the money as a way to invest; they just see a new 60 in TV.

Remember, it’s not about how much money that you make during your life, it’s how much money that you KEEP that counts

More and more people these days are finding themselves buried under a mountain of ever increasing debt. We are finding ourselves getting one credit card to pay off another and get caught in the trap of revolving debt. Sometimes getting another loan or credit card just isn’t the answer. So what is the answer? The answer is simple and its basic advice that your grandmother would give you. “Get out of debt and do it quickly”. Well that’s easier said than done, right? So how do you see the light at the end of the tunnel?  Here are a few tips to help you get started in your fight to get out of debt quickly.

Tip #1 – Make a Budget!

Yep, makes sense doesn’t it. The plain fact is, most families don’t have a budget. They just live pay check to pay check and hope there is enough money in their account to pay the electric bill, water bill and rent. Sound familiar? That’s the reason why many families are finding themselves under mounting debt. They don’t have enough money at the end of the month, so they make up for the shortfall by using their credit cards. Big mistake.

Putting together a simple budget is very easy. First of all you need to figure out where you money is going. Look at your checking and credit card account statements like your life depended on it. You will find hundreds of dollars of unnecessary spending. One trip to Starbucks once a week is no big deal, right? It’s the small things that start to add up, and that’s were keeping track of it can save you big bucks. If keeping up with it sounds like too much trouble, try a free website like mint.com to get you started.

Tip #2 – Consolidate Your Debt

Sometimes consolidating your debt is the answer. If you only have a couple of credit cards and couple of short term loans, they may give you a head start on your debt by putting it all in one place where you can see it. You may be able to get a better interest rate, but at least your payment shouldn’t go up. But be careful with debt consolidation. If you get a credit card to consolidate your debt and your payment goes down, you may be tempted to get another credit card and start the vicious cycle all over again.

Tip #3 – Figure Out Which Debt to Pay Off First

There are two schools of thought on the concept of how to pay your debt quickly. Do you pay off the smallest debt first, or do you pay off the one with the largest interest rate? Well most people think that they should pay off the largest interest rate debt first. But that may not be the best choice. My personal opinion is to pay off the smallest one first. Here’s why. When you start with smallest and work your way up, you get a sense of accomplishment and you can see the end of your debt. As you pay off the smaller ones, you take the money that you were paying on the smaller ones and apply it to the next larger one. That’s how you can pay off your debt quickly and get the freedom that you deserve.

small-business-loan-tipsAs most experienced and start up small business owners know, actually getting a loan can be a difficult, nerve racking and an overall tiresome process. The best way to make the best of the loan process a success, you should be prepared and educate yourself with a few basic principles. And that’s what I am going to help you with. Hopefully these five small business loan tips will point you in the right direction and help you out with this trying ordeal and potential nightmare.

Tip #1: Put together a legitimate business plan and put it on paper.

As with many entrepreneurs, we have lots of great ideas, but many times we fail to properly put them on paper so others can get a grasp and understand the direction we are headed in, right? Make sure that your business plan is readable and easy to understand for someone that is not intimately familiar with your business. Also, remember to keep it relatively short. Think less in terms of number of pages and make it easy for the reader or banker to scan through it in about 15 minutes or so. The best way to do this is using lists and bullet points effectively. And keep in mind to leave out graphics and other distractions.

Tip #2: Prepare for your small business loan interview.

After you have prepared your business plan, don’t forget that you are going to have to present it in an interview. Yep, it makes me nervous too. Remember that this interview might just make or break your application. Most bankers put a lot of weight in this part of the loan application process. Make sure you present yourself in a positive and professional manner and don’t appear to be desperate. Also make sure that you are prepared to answer questions about the details of your business plan and also direct questions about how you intend to pay the loan back. Be prepared for these questions by having a repayment plan prepared so you can hand it to your banker. She or he will be impressed as this will give the appearance of being experienced.

Tip #3: Consider a local, smaller community bank.

The first type of financing that many first time small business owners think about is from a large national or regional bank, but don’t forget about your local community banks. Small community banks are still the lifeblood of our great nation in my opinion, and they should not be overlooked. Often times the process of getting a small business loan backed by the SBA, Small Business Administration, can be less arduous than with a large national brand. You will typically deal with real people that could possibly live in your neighborhood instead of someone that cares nothing about you, living thousands of miles away.

Tip #4: Develop a relationship with your banker.

This is where choosing a local community bank can be the most effective for start up and first time business owners. Your banker could be your neighbor or even shop at the same Target store as you do. Get to know them by stopping by and offering to take them to lunch. A short get-to-know lunch could make all the difference in the world. Find out what makes your banker tick and what is important to him or her.

Tip #5: Establish credit with your local bank.

In today’s economy, sometimes having a good credit score just isn’t enough. In general, it is a good practice to establish a credit history with your bank of choice. The best way to do this is to get a few small, short term loans with your banker and pay them off quickly and within the term of the agreement. The mistake of so many small business owners is running to the first bank that they can find, not establishing credit or a relationship and asking for several thousands of dollars in loans. It will not make a good impression and you may not even get the opportunity to present your business plan and application.

Remember, one of the most important parts of this process is to present yourself in a tasteful, positive and professional manner. Your appearance and demeanor makes a first impression that you simply cannot take back.

payday-loan-adviceIf you have found yourself in a short term financial emergency, and you have no choice but to use a payday loan, then please use caution and be careful to pay the loan off when it is due. If you have gotten a payday loan online, then more than likely, you got the money through direct deposit. This also means that the lender has access to your checking account. And when the loan is due, the problems begin for a lot of people.

What will happen when the loan is due?

Here is where you should be cautious, and this is the real reason why this type of lending is seen as less than favorable for consumers and even banned or severely restricted in some states. If the lender has access to your checking account, then they will attempt to take the money out of your account about two weeks after you borrowed the money. If there is not enough money in your checking account to cover the loan plus the fees, then the lender will charge you an insufficient funds fee. And what you may not realize, your bank may charge you an insufficient funds fee as well.

If you don’t have the money to pay it back what do you do?

Some online payday lenders may offer to work something out with you if you contact them before the loan is due knowing that you don’t have enough money to pay it back. They may allow you to renew or refinance your payday loan. This simply means that you are allowed to pay the fees only and roll it over for another two weeks, or a month or after an agreed amount of time. This is where so many people get caught in a trap. Week after week and month after month, they pay the fees only and get caught in a seemingly never ending loop. That is why some states have banned them or heavily regulate them.

Remember if you must use a cash advance or payday loan, then make sure that you understand all of the terms before you sign on the dotted line and give them access to your checking account. They can get you badly needed funds in a very short amount of time. But just like anything in life, quick money is very expensive money.

short-term-student-loansFirst of all, let’s consider what a short term student loan is and what it isn’t. This type of student loan is not for the average student to be able to put a little extra money in their pocket for spring break or to have a party. They are for dedicated students, just like you, that need a little extra money to pay for the essential tools of being a productive and successful university student.

These essential tools include basic needs like pens, printing paper and notebooks and binders. But the most common tool that students need to borrow money for, on a short term basis, is text books.  That’s right even in the 21st century, almost all college and universities require their students to purchase physical, heavy text books for the basis of their studies. Text books can be extremely expensive and burdensome to students, just like you, and that’s why you just might need a little extra money to help you get through the semester, right?

So How Do Short Term Student Loans Work?

Basically, short term student loans are loans made from university and college student loan funds administered independently by the university itself. In general, these loans may be made during any semester, but some colleges have restrictions on which semesters money can be borrowed. Typically, these loans must be paid back in the same semester in which they have been borrowed. And that’s why you should be careful when using them, but more on that in a minute.

What are the basic requirements for getting a student loan on a short term basis?

Each university or college will have different requirements, so check with your local financial aid office or student services for the exact details for your situation. But here are some general guidelines that most schools follow:

  1. You must be enrolled as a full time student.
  2. You must be current on all tuition and fees that are related to your account, and that includes parking tickets also.
  3. You must have a good credit history within the university. Sometimes they even run a credit check on you, so keep that in mind.
  4. If you already have a short term student loan with your college or university, you will not be eligible for another one until it is paid in full.
  5. Only one application may be accepted per student per semester.
  6. If you are a foreign student, your loan must be approved by your college administrator and possibly the foreign student affairs office.
  7. Student athletes must obtain approval by the Athletics Department to ensure that all requirements and obligations are supported in accordance of the NCAA, if applicable.

So how much can you borrow and how long do you have to pay it back?

Again, seek support from your local financial aid office, but here are some basic trends with many schools:

  1. Most short term student loans will be in the range of $500 to $1000. You may be able to get more, but it may require special approval by administrators.
  2. Loans may be repayable as early as 30 days from the start of the semester, but most schools will require that the loan will need to be paid back by the end of the semester or term.

Here is why you should be very cautious when getting a loan from your university or college. The premise is very simple.  If you don’t pay the loan back by the end of the semester, you will not be able to register for classes for the next term. You may also invalidate your scholarship or put in jeopardy any other benefits that you have.  Here is another scary point.  If you don’t pay short term student loans back by the semester before you graduate, then the university could prevent you from graduating no matter what your grades are or your standing with the college and there is nothing that you can do about it, other than paying them back.

So the moral of the story is, if you need to borrow money from your school, do so cautiously, or you may regret it for a long time.