Archive for 2012

Ten Dangerous New Year Shopping Debt Traps and How to Avoid Them

cashless society

Shopping on New Year is a hassle for most people; not only do they have to rush to the stores to get the best deals before they run out but also prepare for other festivities at their homes. The trend of shopping on New Year is not something new, people have always wanted to dress up and buy luxury goods on New Year’s Eve as a reward for having worked hard throughout the year.

A lot of companies look at this New Year’s period as an opportunity to increase sales; they make it easier for consumers to purchase goods by offering discounts and deals. A lot of people go on a shopping frenzy and end up going beyond their financial limits and as a result their debts are increased by a considerable amount and they fall into a trap of false necessity.

This spending spree in the spirit of Christmas and New Year may be a nice tradition, but spending beyond your limits is rather unnecessary; however, people only come to this realization once they have made this mistake and gone into debt. These debt traps are definitely avoidable if you know how to avoid them.

Consolidated Credit is the best company which provides a debt calculator, check your debt from there and then check the listed below debt traps that every consumer must be aware of and the ways to avoid them:

 

Plan

Before you go out to shop, make a list of all things you want to buy and stick to it. Unplanned shopping can lead to high spending and will thus increase debts.

Family Talk

Have a discussion with your family and underline the circumstances you are facing, let them know of the budget that is available for spending and make sure that you as a group do not go over it. Less spending now would mean more savings for the future and a debt free life.

Needs over Wants

Every consumer must prioritize, they must be very careful when spending their money or else they could be looking at a huge pile of debt.

Utility bills have to be paid at the end of each month and people should keep this in mind when they go shopping. Control your impulse and do not go overboard at any cost. What’s the point in having a few expensive shirts if you can’t pay your rent or electricity bill?

Credit Cards

Credit Cards are first on the list; they are a major reason why you go into debt. Credit Cards create more problems than they solve. According to a recent study, people using credit cards spent a lot more on shopping than people who paid by cash or debit cards.

Leave your credit card at home, it may be tempting but the costs of buying on your credit outweigh the benefits, so it’s not worth the risk. You will also have to pay high interest rates, so at New Year’s time avoid using your credit card and stay away from debt.

Credit Score

Always check your credit score on a regular basis and try to maintain a good score so that you get benefits and longer pay periods. You must always pay the minimum debt amount on your credit card to avoid a bad rating by your bank.

Store Cards

Stores offer you great incentives to use their cards with up to 15% off on purchases; however, this is another debt trap that most consumers are unaware of. A small discount now could end up as hundreds of dollars in interest payments down the road. These cards often have very short payment periods and low credit limits; a well informed consumer will always avoid using such cards.

Gifts

The New Year is a time for celebration, people normally exchange gifts and many believe that in order to make a good impression you need to get something really expensive. However, this is another false trap and people can put a huge financial burden on themselves in an attempt to impress others.

You do not need to go over budget; instead, you could be creative and come up with solutions that are cheaper but still as effective. Some people invite friends and family over and have home cooked dinners while others go to a park for a picnic.

Save

Even if you overspend on New Year’s, you can still save face if you have an emergency fund saving account. An emergency fund will help you get out of debt and will come in handy in times of need.

The 401(K)

Do not overspend on New Year’s so much that you have to take money out of your retirement plan. This is the worst thing you could do; you must protect your future by conserving these savings so don’t be tempted by the fancy items at the stores and try to avoid this debt trap.

Economical

A lot of stores have fixed low prices. These are aimed at selling to the average consumer, so it is a good idea to check these stores for deals and save unnecessary costs.

Conclusion

These debt traps are created by marketers to earn more profits and consumers are easily lured into them. These tips will help you avoid the NewYear shopping debt traps and improve your finances, Consolidated Credit provide a debt calculator here.

About the Author

AJ is an experienced professional in the field of finance and has written numerous articles and blogs to help consumers with their financial issues. She suggests to those in debt to use a debt calculator from Consolidated Credit.


Some Thoughts on Long Term Care

billion dollar lottery

I’ve been thinking a bit about long term care lately. Maybe it’s because I just got a new job and one of the places I interviewed to work for was a nursing home association (didn’t get that job).

Maybe you have had a close friend with a parent facing a scary health scenario. As we get older, especially into our 30s, we are a bit closer to our own mortality, and getting very close to that point when we have to start dealing with the fact that our parents are getting old.

Major changes in our lives, like new jobs, births, deaths, and sickness always seem to cause us to re-evaluate our financial position. Seeing others go through similar circumstances gives us a good opportunity to consider the effects of a worst case scenario without having to experience it.

Imagine a trio of siblings, all in their thirties. Their parents are in good health and with Americans living longer than ever, there is no reason to think that they don’t have many more years of good health ahead of them.

But the fact that their children are just starting to get settled in life and are making good household incomes presents a good opportunity to set aside a small amount of money each year to deal with immediate concerns should a health emergency arise.

I’m not sure what my parents have for long term care insurance, which means they probably don’t. Which raises an entirely different issue: when is it time for parents to open the vault of secrets and begin to set some plans in place in the event one or both is incapacitated?

Also, as we ourselves make our way through our thirties, how can we force ourselves to set something aside to combat the asset-destroyer that is the need for expensive and prolonged long term nursing care?

Americans are living longer, but they are living worse than ever. So brings a whole new reality for a new generation.

How Much Home Insurance Do You Need?

life is expensive

Many people get an unpleasant surprise when they get a new home insurance quote. The thing with insurance is that the premiums always seem to go up, even if you haven’t made any claims.

However, if you look closely at a home insurance quote, you may find that there are things on there that you don’t particularly want or need.

It’s a question of deciding which features you want included and then choosing whether or not to pay extra for them.

Home insurance is a necessity for most home owners, as you are required to have buildings insurance if you have a mortgage. Contents insurance isn’t obligatory, but often when you get a home owner insurance quote, insurers will offer a combined buildings and contents policy at a discount to individual policies, so you may as well have the baseline contents cover included.

For most people the standard contents cover will be adequate, but if you have particularly valuable items, you should check whether these are covered or need additional insurance as ‘valuable items’. This will increase your premiums, but then again, how much would it cost you to replace them if you lost them through damage or theft?

Then there are additional features that you can have on your house and contents insurance quotes that will give you additional protection, but increase the price of your premiums. One example is personal possessions cover. Many people aren’t aware that contents insurance only covers those contents when they’re in your home, so personal possessions cover is a good way of protecting your phone, camera or bicycle when you’re out and about, but it does cost more.

Any type of insurance is a weighted gamble – how much you want to pay per year against how much you think you’re ever likely to make a claim. It’s down to the individual to work out what they want covered by their home insurance and then to pick a policy that will do all they want it to do at a price that’s right.

Be Proactive in Dealing with Debt

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People who have debts find it hard to sleep at night. The feelings of stress and guilt around being in debt have a massive psychological effect and interfering with your sleep can just be the starting point. Debt can have an indirect effect on your health and well-being and also cause problems in your relationship, quite apart from the practical realities of owing money.

Unless you take steps to deal with your debt, none of these symptoms are going to get any better, and of course, if you don’t start paying off your debts, the amount you owe will just increase through charges and increased interest on unpaid bills.

Although the amount of debt you have may feel insurmountable, there is always a way to work clear of debt. Different options will be open to you, depending on how much you owe and your personal circumstances.

If you are in a position where you earn more than you need to spend on the household every month, then you could work to a strict budget and use any excess income to gradually pay off the debts that you have. You can take steps to minimize your outgoings – such as getting the best deal on utilities that’s on the market, and by cutting your groceries bills – so that you gradually have more left over each month to pay off the debt.

Not everyone in debt will be able to work their way out of it by themselves. It may be that you can’t generate any leftover income, or can’t see how to do so. In this case, you may want to enter into a debt management plan with a debt management company or a financial charity that offers a similar service.

A debt management plan is a more structured way of paying off your debts. The debt management company helps you work out what you need for your household budget, then fixes an affordable monthly payment from you which is then redistributed amongst your creditors on your behalf. There’s a fee for the service, but the company should be able to negotiate interest rate and charges freezes with creditors on your behalf and it will take a lot of the stress out of the situation for you.

Whichever route you take towards being debt free, it’s bound to better than trying to avoid the issue. It’s not going to be an easy ride, but with perseverance, you’ll get there.

Should You Stay or Should You Go? — Relocation to the Middle East

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Should you stay or should you go? — Relocation to the Middle East

Pursuing a career in the Middle East is something many people consider… and then do. Sadly, some people have the same aspirations but never follow them up. So how can you know if moving to the Middle East is the way forward for your career?

To help you decide, here are a few perks that may persuade you to take that job, and others that may make you feel there is no place like home.

Fewer Taxes (if any!)
One of the most attractive features is that in several Middle Eastern countries, income is tax free, although expats may have to pay income tax to their home country. If you’re in Egypt, however, you may benefit from treaties with other countries, so that you only pay income tax on income earned within Egypt. In Qatar, meanwhile, you are only subject to income tax free payable to your own country, and there is no property tax either!

Higher Salaries
Employers in the Middle East who hire workers from abroad normally make the expat’s relocation worthwhile with a higher salary than they might earn in their home country. Expats who have relocated for work also enjoy senior positions.

Employers do a lot of the hard work!

One relocation perk is that employers often arrange health care and housing provision for you. Whether you’re in Egypt or relocating to another Arab world country, they may even open a current account with HSBC for you. The other benefit of being hired from abroad is that employers help you out with work visa applications, taking much hassle out of these bureaucratic processes.

Opportunities Galore
The Middle East holds numerous career opportunities, particularly in Dubai where several sectors are short of experienced professionals. Thanks to Dubai’s free zones, there is also massive scope to start your own business, since businesses in these zones are exempt from taxes and customs duties.

 

And here are some cons to consider:

Sponsorship

Sponsorship is a double-edged sword. By finding you a place to live, arranging health care and helping you with your visa application, your employer makes life much easier for you. However, this sponsorship in some Middle East countries gives them control over your exit visa, which means they can refuse to let you leave the country if they wish.

Language and Culture
Although many people speak English these days, you are moving to countries that have a very different language and culture to those of the Western world. Making your way in social and business spheres can be difficult if you’re not familiar with local customs and conventions. Religious traditions play a big part in daily life, for instance, and you should respect these.

Political Instability
Although employers try to offer extra protection to employees who relocate from the West, there is a certain amount of political turbulence in the Middle East and ill feeling towards Westerners. This can be off-putting.
Now you know some of the things to take in consideration before relocating to the Middle East to work, you can make that decision easier than before. Best of luck!

 

Seven Ways to Tackle Bad Credit

cashless society

For anyone with a bad credit rating, the problems which are inherent with this situation are all too familiar. Bad credit is often an indication that you have County Court Judgments (CCJs) against you and this can be a major deterrent to future creditors.

For those in this situation, addressing their credit rating with the intention of improving it is a major priority – but how exactly can you tackle bad credit?

 

1. Change your spending habits

The first step in tackling bad credit is to address the source of the problem – and this is usually your spending habits. Review how much you spend on a regular basis and identify areas in which you can make cut backs. These don’t always have to be drastic measures and sometimes even small changes can have a profound difference.

2. Improve your home

Some of the largest expenditures which consumers face are related to the home. Making improvements to this area, such as reducing energy consumption, are a great way to tackle high costs and can be relatively easy to implement.

3. Pay on time

If you have any outstanding debts or repayments for bad credit loans then it is important that you pay these on time. Failure to do so will see you fall into further debt, facing higher repayments as a result. This will not help you to become debt free and will directly influence your credit rating.

4. Take loans

It may seem strange, but taking loans can often be a viable way of improving your credit rating. This is because loans which are specifically designed for those with poor credit ratings are intended to be easier to repay and thus help you prove your ability to keep to financial commitments. This can then improve your credit rating with both short and long term loans for bad credit available.

5. Track your finances

One of the biggest problems which individuals encounter when in debt is an inability to keep track of what payments they need to make. This can lead to missed payments, causing the individual to fall into further debt and thus negatively affecting their credit rating. To address this problem, keep a comprehensive list of both your incoming and outgoing finances and balance these at the end of each month.

6. Identify problems

Without knowledge of the problem, there can be no solution so it is important that you identify where it is that your financial management is going awry. Look for areas where you regularly overspend or consider whether you have too many outgoings occurring at a particular time of the month and amend as necessary.

7. Negotiate with creditors

If you find that you are struggling to make repayments then it is important that you speak to your creditors. More often than not they will be willing to negotiate an alternative schedule with you. This will make it easier for you to meet your financial commitments – giving you less to worry about and ensuring your credit rating is not worsened through missed repayments.

Latest CD Rates – Certificates of Deposit

loans

I have been writing a lot lately about saving money, and naturally I’ve been thinking about great places to store that money. In talking to some folks who are more experienced in saving money than I, I was urged to take a look at the latest CD rates, and was pleasantly surprised with what I saw.

After the economy crashed in 2008 and the Federal Reserve system began pushing interest rates into the gutter to encourage investing in equities, high interest savings accounts and certificates of deposit became the red-headed stepchildren of the personal finance world (my apologies to red-headed stepchildren). Many folks were rightly dismayed that the federal government chose as their “fix” for the economy a policy path that punishes savers, otherwise known as people who have their sh*t together and deserve none of the blame for our current financial malaise.

Actually I take that back, because in a strangely perverted way, the people doing the right thing are partly to blame for our sluggish recovery. Businesses have money, they are just hoarding it and paying off bills. Many consumers have savings, but they are hoarding it and not blowing it on consumer goods. In the twisted economy we have built, progress and growth is dependent on borrowing and bad choices.

So back to the CD rates. When I checked them, I was surprised to see some approaching 2 percent, albeit for larger minimum balances like $2,500. But let’s face it, many of the people using certificates of deposit have large balances to protect, and they are often used by institutions like school districts that have large reserve funds. For these types of savers, a minimum balance is not an impediment. I say it should be a goal, part of the process of maturing financially.

By paying off debt and amassing savings, you no longer have to hesitate when the best choice says “$2,500 minimum” “10,000 minimum.” This just means you are part of a special club of winners.

Is the US economy divisive? Yes, intentionally so. That’s what capitalism is, dividing the society into haves and have nots – winners and losers. The sooner you learn the rules of the game, the sooner you can start winning.

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