Personal Finance Advice

There are plenty of people out there who try very hard to figure out ways to steal money from you, and not all of these plans have anything to do with snatching your wallet.  Crooks come in a variety of forms, from large corporations that try to talk you into signing documents you really shouldn’t sign to “friends” who try to get you to cosign on a loan despite the fact that they have no real intention of making the monthly payments. There is always someone out there looking to part you with your money, but if you know what to look for then you will realize the signs of a scam before you make the mistake of falling for one.

Employment Scams: Look out for agencies that promise to find you the perfect job, especially jobs that you can do from home. If you apply for a job, and then you are asked to pay for your training or something else that does not seem quite right, then you may be dealing with someone who is trying to steal your money.

Grant Scams: There are scholarships and grants out there which can supply you with money that you do not have to pay back. Not everyone is entitled to these funds, however, so if anyone tries to tell you that you can get thousands of dollars from the government for no real reason (but you have to pay someone hundreds of dollars to do so) then you’re probably dealing with a scammer.

Get Rich Quick Scams: There are certainly people who get rich quite quickly, but they generally do not do so by sending away for information from someone who claims to have all the secrets to getting rich quickly. There is no guaranteed investment that will make you a millionaire overnight. There is no easy way to become rich quickly that nobody else knows about except for the one guy selling the information. Don’t fall prey to these scams.

Above-the-Law Scams: There are no secret loopholes that will allow you to stop paying taxes, and there is no agency out there that can tell you how. If a person or company assures you that the secrets of no longer having a tax obligation will be revealed after you fork over some cash, then that’s a scam.

There is a good chance that if you feel like something is a scam, it may very well be. Learn to trust your instincts. While you don’t want to become so cautious that you never accept any level of risk with your money, there is a big difference between accepting some risk and simply throwing your money away.

You start to notice that your credit card balances are creeping up higher and higher, but since you have an automatic payment made every month out of your checking account you decide that maybe you will deal with this issue later. In the meantime, you keep using your credit card whenever you don’t have the cash to buy something you want, and this seems to be happening more and more.

You have a savings account that you opened with a different financial institution because you wanted somewhere separate from your checking account to stash money. The account was supposed to be free of monthly fees, but when you look at your account statement you notice that ever since the account was opened several months ago there has been a recurring $10 monthly service charge. You figure that you must have misunderstood the terms of the account -and besides that, you’re a little embarrassed that you didn’t notice the fee until now- so you don’t say a think to your financial institution and just keep paying the fee.

Your landlord tells you that he will have to raise rent when your lease comes up for renewal in a couple of months. You have no idea if you can afford an increase in rent, but instead of figuring out a budget or looking for a cheaper place to live, you figure you will just deal with it when the time comes.

Life sends plenty of signs our way, and some of the most blatant signs are those that indicate impending financial difficulties. It’s hard for anyone to honestly make the claim that they had no idea their finances were in such disrepair unless someone else handles their finances for them completely, and even then it is not much of an excuse because even if a spouse or accountant handles your money you should still have an idea of what is going on.

It is far better to deal with your money in a proactive way instead of awaiting the real financial difficulties to arise and deal with them in emergency mode. Are your credit card balances getting too high? Stop using the cards and set up a plan to get the debt paid down sooner than later. Is there a recurring fee on an account that isn’t supposed to be there? Speak to a customer service representative and demand the fee is removed from this month and all the previous months, and if they refuse then close the account. Do you have an increase in expenses coming up? Figure out now if you can afford that increase, or figure out an alternate solution. You don’t have to be helpless with your money, especially if you think ahead.

When you use a credit card or debit card to make a purchase you may soon discover that the merchant authorized more than what you expected, and in some cases, that amount may be much more than what you expected. Don’t panic; if the purchase was to a restaurant, gas station, hotel, rental car agency or similar merchant, there is a good chance that there is no fraud occurring. Instead, the merchant has placed a hold on some funds in order to cover and additional purchases.

To be fair, merchants should let you know when a hold will be placed on your card. If you do not realize that a hold has been placed on your card, and you are already close to your credit limit, you may find that the next time you try to use your card for a purchase the card is declined. This can be frustrating, especially when you know there should be enough of a credit limit to cover whatever purchase you are trying to make.

Why do some merchants put a hold on credit cards?

Restaurants: The restaurant authorizes a higher amount than your bill because they are assuming that you are going to leave a tip and put it on the card. This type of hold usually only stays on your account for a day or two and is gone once your final transaction clears.

Gas Stations: When you pay at the pump with a credit or debit card, the gas station has to guess how much money you are about to spend. The preauthorization is usually one set amount for everyone – whether it’s $1, $50, or some other amount- and like the restaurant preauthorization it may take a day or two for the actual transaction amount to clear.

Hotels: You already know how much money you will pay for your hotel stay based on the daily rates, but what the hotel does not know for sure is if you are going to order room service or have a raging party resulting in several broken pieces of furniture. The hold on your credit card is for the hotel’s protection in case they need to charge you for something additional beyond the basic room rate.

Rental Cars: You pay a daily fee similarly to a hotel, but the hold is placed on your card in case you don’t fill up the gas tank, you keep the car an extra day, or you dent the car without the additional coverage from the rental agency. The hold is usually taken off after you turn the car back in and pay your bill in full.

What can you do about holds? There isn’t much you can do to stop them, but you can make sure you are aware of the holds so that you do not exceed your credit limit or find yourself in a situation where you do not have enough credit to make a purchase. You should also check to make sure holds are removed after your transaction is complete. It may take a day or two for this to take place, but if the hold lingers beyond a reasonable length of time you should contact the merchant.

Although many people have tightened their spending habits up quite a bit as a result of the economy, the way people react to trying to change the way they spend their money varies greatly. Some people make grand sweeping changes to their finances, some people go find second jobs to bring in more income, and some people vow to watch their money more closely but never really change the way they spend.

Have you made a decision to manage your money better, but don’t seem to be making any headway in your quest? There could be many reasons for this, but if you have not yet sat down and actually composed a budget and tracked your everyday spending then you may be missing some aspects of your spending that will point you right to where your money is going.

Here is an example. Suppose you realize that you need to make some changes to your budget because by the time the end of the month rolls around you are out of money and didn’t even add anything to your savings account. You start looking at your major expenses and decide that perhaps you can’t afford your car payment for your second car so it may be time to sell the car and start using public transportation for a while and juggle one car for your family. You figure that a monthly savings of $300, which is what you would save without your car payment, will be a huge help for your family finances and totally worth the sacrifice of going down to one car.

While this is a viable option, the mistake you make in this scenario is that you don’t look at where your money is actually going. You look right to the recurring payments that you are familiar with, but do not look closer at your spending to figure out where else you might save a large amount of money.

Suppose that you and your spouse both work outside the home. On the way to work you both have the habit of stopping in for a $4 latte at the local coffee shop. This indulgence has become a routine, but since you each only have to shell out $4 when you buy the latte it really does not seem like such a big expense. On the other hand, take the $4 latte, times it by two since the both of you have this daily habit, and that’s $8 a day. Working five days a week, that translates into $40 a week (more if you tip the barista every time). Four weeks of morning lattes for you and your spouse equals roughly $160, which is more than half of what you pay for the second car you are thinking of getting rid of to save money.

When you are trying to figure out where you can save some money, you may not think about your little indulgences. You may instead automatically start thinking about the larger recurring expenses. Little indulgences do add up, however, so look to these expenses first when you are thinking about limiting your spending.

Not many people like to be judged, but unfortunately it’s a necessity when a potential lender is trying to decide whether or to approve an application for credit. The lender wants to make sure that the applicant has a history of making timely payments to creditors because this points to a good chance that the applicant will continue to make timely payments in the future. For people who do not have very good credit scores, submitting a credit application -and subsequently getting denied the credit as a result of a low credit score- the process may leave them feeling as though they simply aren’t good enough and that their credit score somehow reflects what type of person they are.

It is never easy to ask for something and then to be told that you are not good enough to have it. When it comes to applying for credit, however, it is important to separate your creditworthiness from your personal worthiness.

You are more than your credit score. Perhaps you ran into some financial difficulties and as a result experienced a huge dip in your score. Maybe you have never managed your personal finances very well and consequently have a pretty horrendous credit report that is riddled with delinquencies and charge-offs. This is merely one small aspect of your life, and you should never feel as though your worth is based on your credit score, or for that matter, on the amount of money you have in the bank, the type of car you drive, or how big your house is.

It can be tough to keep things in perspective. Credit scores are such a hot topic that many people become convinced that their credit scores should be at the forefront of their concern at all times. While it is true that a high credit score can make life a little easier, a person with a high credit score is not innately better than a person with a low credit score. A credit score is a reflection of how you have handled your money in the past, and there is more to you than the way you handle your money.  

Don’t allow a credit application denial to affect the way you feel about yourself. Along these same lines, don’t allow your stellar credit to make you feel as though you are somehow better than other people.

If your credit score is low, approach it as a problem that you need to fix, but not as a reflection of who you are. Start paying your bills on time every month and don’t apply for new credit for a while. Pay the debt down and stop using your credit card for impulse purchases. Above all else, however, do not fall into the line of thinking that a credit score defines who you are as a person because this simply isn’t true.

Today is the day that many people have been awaiting anxiously because this is the day that the new credit card laws have come into effect. Creditors have had nearly a year to prepare for the changes required by this law, and as a result many borrowers have also noticed a marked increase in instances of credit lines being closed, terms and conditions of accounts being changed or clarified, and minimum monthly payments becoming a lot higher than they used to be.

The new credit card laws do bring about some changes that will be quite advantageous to the average consumer. In  particular, information you receive from your credit card company should be a lot easier to understand and the total financial impact of any balances you carry from month to month should be a lot more obvious than it was in the past. The credit card laws were designed to not only keep people from getting into too much debt that it becomes overwhelming, but also to make their existing debt situation much more understandable. If you did not realize the full impact of carrying large credit card balances from one month to another, it is about to become much more obvious.

Here are some of the biggest changes you may notice as a result of the new credit card laws:

• If your credit card’s interest rate is going to go up, you will receive at least 45 days notice prior to the change.
• An increase in interest rate to your credit card cannot be applied to an existing balance. The exception to this is if the increase is a result of you defaulting on the payments.
• If your credit card company decides to lower your credit limit, and this lowering will result in you going over the limit, you will receive notification before the change is made to give you a chance to pay the balance down beforehand and avoid a fee resulting from going over your credit limit.
• Payments you make must be applied first to the highest interest rate of your balance. For example, if you use a convenience check to make a purchase, and that convenience check features a higher interest rate than the rest of your balance, payments made must first be applied to the convenience check portion of your balance.
• Credit card companies must now send out statements (either through the mail or electronically) which give accountholders at least 21 days to make the payment. This is designed to cut down on hefty late fees. 

People who are under the age of 21 are going to notice a dramatic change in their ability to obtain credit cards now that the new laws have come into effect. College students used to be a prime target for creditors who counted on college students to rack up debt and pay plenty of fees, but now an applicant who is under the age of 21 has to be able to prove the ability to pay the debt back or must have a creditworthy cosigner. While this may not seem entirely fair to people who are under the age of 21, the truth is that it may save them quite a bit of debt (and hassle) in the future by avoiding credit until they can afford it on their own.

If you have never tried to take a small child on a shopping trip then you can probably just follow the usual rules for saving money while grocery shopping. Write a list beforehand, don’t shop while you are hungry, et cetera. Shopping with a small child (or small children) in tow can totally change the dynamics of any shopping trip. You can walk into a grocery store with a comprehensive list and a stack of coupons, fully prepared to not spend too much money, but if you also bring along a child then there is a good chance the list will wind up abandoned halfway through the trip and the coupons will wind up either stuffed at the bottom of the diaper bag or scattered throughout the store.

While it is true that not all children make it difficult to shop, and while it is true that the obvious solution might seem to be to simply leave the children with someone else so you can get the shopping done, not all kids make shopping easy and it is not always feasible to go solo on a grocery shopping trip. For this reason, follow these rules for shopping without abandoning your hopes of searching for good deals and doing comparison shopping as a result of trying to deal with your young child in the store:

Keep your child occupied. If your child is bored, there is a much higher chance that he or she will start trying to talk you into buying something that is not on your list. Whether it is a candy bar or a toy cleverly placed by store management right in the middle of the store, a bored baby is going to try to reach out and scream for it or an older child is going to demand it (loudly). Keep your child occupied with something else, whether it is a toy you bring from home or a game of I Spy. The point is to avoid giving in to buying things you don’t need just to keep your child happy through the shopping trip.

Have a plan of attack. If you are going to a grocery store that you are familiar with, compose a detailed list and try to write it in the order the items will appear as you walk through the aisles of the store. If you know you will start the trip in the produce section and then the deli, write carrots first and then salami. What does being efficient in the trip have to do with saving money? The quicker you can get in and out with the groceries you need, the less of a chance you will abandon the list and just start grabbing random items off the shelves.

Timing is everything. You already know that you should not go grocery shopping on an empty stomach, but what about your child? If possible, plan the shopping trip after a meal so your child does not start whining about wanting to eat everything he or she sees on the shelves. You should also take care to plan your shopping trip far away from any usual nap times; a cranky, sleepy child is not conducive to a shopping trip where you are able to pay attention to how much money you are spending.

Shop at a grocery store, not a megastore. Unless the all-in-one store is your only local option, or if they truly have the very best prices for groceries, try to avoid doing your grocery shopping in the same store where three aisles away is an extensive toy aisle. It will be too tempting to buy a little toy every time you go shopping just to keep your child happy, but the cost of one toy every shopping trip can really add up over time.

Don’t be afraid to ask for freebies to keep your child content while shopping! Most grocery stores offer free cookies, balloons, or other treats to kids.