All Financial Matters

It was scary enough to think of them driving a car at sixteen. Now they are heading off to college. Most parents are not worried about their teenagers getting their hands on a credit card — the plastic of choice for college students. But should they have credit cards in the first place?

It never fails. If you advice your child against something, they will want to do it even more. That goes for credit cards, too.

College students are the fastest growing untapped market. They are not fully adults but not children either. They represent millions of dollars in buying power. They qualify for loans to attend college and other financial aid.

Credit card companies often make deals with colleges to distribute applications to their students in exchange for credit cards that carry the college logo or school name. It’s too bad that those applications are not accompanied by some literature or a course in money management. When the college students qualify for those high credit limits, they don’t account for the fact that they don’t have the income to repay their purchases.

The question is not whether college students should have credit cards but instead, who should give them one. They will acquire one whether parents want them to or not. To head off disaster, parents can be the one to supply the credit card for their college student.

You can add your college student to your own credit card account. You can have a card issued to them in their name but where you can see what they purchase on the account. Set some ground rules and see what becomes of the situation. If good money management has been a part of their life up until then, the student will have a fighting chance of resisting the temptations of plastic.

Go over the statements once a month with them. This can be done over the phone if they attend school far away, or in person if they can make it home for a weekend. Keeping in touch and setting up payments adds accountability to the equation. With a credit card, they will need that from you.

Another option is to open a bank account and get a debit card. Your college student can use the debit card like a Visa or MasterCard. By adding a certain amount of money to the account each month, you are setting a “credit limit” for them. If they can manage the money in this account over a period of time, they could prove themselves ready for a credit card.

College students may not realize the importance of a good credit score, but their parents do. In an attempt to keep their credit good, help them ease into the world of plastic by providing a proving ground of your own making to test their mettle.

There are many different attitudes when it comes to money matters; some people spend what they earn in a hand-to-mouth fashion whilst some people save for a rainy day. Why is that? It’s our attitudes and thinking about money that determine our spending behaviour. That means in order to change the way you spend you also need to change your attitude towards money.

How do you view money? We all learn from an early age about money. We watch our parents and how they handle the money that they earn. Some may have had very little because Mom and Dad were low paying jobs whilst others had a lot of money because Mom and Dad had a good income.

Whatever your environment, your money views were probably shaped by those around you. This is where unhealthy views of money begin. If money was a bone of contention in your home, you will likely make every effort to avoid confrontation when it comes to money. That could lead to overspending becoming a hush-hush topic in the home.

If money flowed freely, then you could become a free spender as an adult. Even if your means are more limited than your parents’, you may continue to spend as if you had a million dollars. This type of money attitude can lead to a debt burden too big for you to carry.

Many scenarios can be drawn from childhood exposure to money. Remember Ebenezer Scrooge? He grew up with no money and it took over his life. During his adult years he shunned all other pleasures for his obsession with money. I’m sure nobody wants to end up like that.

It’s not an easy process to change your attitude towards money, but having the desire to do so is the first step. Having the determination to make a change gives you a real chance of making it happen.

It’s important you visit a financial advisor and discuss with them your money problems and your views about money. Let them know what it is you want to accomplish with your money. A financial advisor can take your money and other assets and create a portfolio for you. The portfolio includes how to invest and what to invest in.

A financial advisor may be able to help with a budget. For frugal spenders, a budget can set aside money for one’s enjoyment each month. A frugal person may not take more than one day of freedom, but it is a start. As time goes on, they will relax the reins and learn to enjoy money now and in the future.

A big spender will use a budget to curb spending. It is okay to spend, but make it special and not an everyday occurrence. Money doesn’t always flow freely unless we plan for it to do so. That requires a spender to realize that it is okay not to spend it all at once, but to save some for later.

Ask yourself, what is your money attitude? Is it beneficial or setting you back? To improve your life, why not meet with a financial expert to discuss healthy changes to your money attitude?

Few people will actually want to file for bankruptcy even if you often hear about big corporations doing it all the time, but individuals are very difference from corporations.  As an individual, finding an alternative to bankruptcy can save you a lot of trouble in the long run as it isn’t a solution without side-effects.

First off, consider loan to consolidate your existing debts.  Debt consolidation means that all of your debt is grouped together and a loan secured for the overall amount.  Creditors get paid what is owed to them and the bank that issues the loan is given a monthly payment that the consumer can afford. Very much a win-win situation for all concerned.

Debt consolidation mostly includes unsecured debt.  This would be credit cards, store credit cards, unsecured lines of credit from companies, and gas cards.  Unsecured debt is what creditors have a hard time recouping from people because it is not backed up by any collateral.

If you can’t find a bank that will give you a debt consolidation loan then try going through an agency.  The agency counselors are used to working with creditors and can negotiate on your behalf.  They can even get your debt dropped by as much as sixty percent.  You then make just one monthly payment to the agency, and they take care of the rest with the creditors.

Debt consolidation does not involve liquidating your assets.  With bankruptcy proceedings, the court may rule that you have to sell your belongings at much less than their market value in order to pay your creditors.  On the other hand, debt consolidation allows you to keep the things that you have and offers up another solution.

Another option is to get a second job.  It isn’t necessarily a pleasant option, but if getting another job will allow you to make a sizeable credit card payment each month for a year or two until your debt is repaid, then it will prove to be well worth it.  If a second job is not feasible, ask about overtime at your current job.  You need to find a way to make more money if you want to reduce your debt.

A second job can be a way to supplement your income while you are paying off a debt consolidation loan.  Things come up without warning and you may need more cash than you have available.  A second job will help you to save for a rainy day and still make payments on your debt.

You could also consider starting a home business.  For those who are in a time crunch that prevents a second job, a home business may be the most suitable option.  Most can be started with little or no money.  For example, selling unwanted items from around your home on eBay can bring in some extra money when you need it most.

Do you have a special skill?  Market that to others who could use your services.  Remember to earmark the money to be used for resolution of debt and not to spend freely and incur more debt.

Bankruptcy is not the way to go if you don’t absolutely have to.  Always try to seek alternatives to this final course of action.  Any changes you make don’t have to be permanent, just until you get out of debt and back on a more stable financial footing is what you’re aiming for.

When you’re deeply in debt, it’s only natural to want to be out of it as soon as possible. Interest charges can mount up and having too much debt can make it difficult or even impossible to borrow for the things you really need. When faced with what seems to be an overbearing amount of debt, it’s important to take the time to formulate an achievable plan.

If you can get out of debt on your own then you should do so. If you can’t then don’t make the common mistake of trying to clear off your debts too quickly. It’s very easy to set goals that are impossible to reach and all too easy to lose your momentum as you fail to reduce your debt. An all too common end to this path is bankruptcy because people feel there’s nowhere left to turn.

Rather than setting lofty goals, the best approach is to be as realistic as possible about what you can achieve and in what time frame you can achieve it. Having a budget is an essential step towards being debt-free. Just ensure you include everything you spend money on each month. Once you have a list of your regular expenses, take a critical view and ask yourself whether or not each expense is absolutely necessary. Obviously, things like rent and groceries are pretty hard to do without, but do you really need to eat out so often?

Here’s just a few of the non-essentials that can often be cut out:

1) Dining out. If you eat out a lot or buy ready made meals for lunch then you might be surprised at just how much money can be saved by eating at home and taking lunch into work.

2) Vices. Coffee house coffees, alcoholic drinks and cigarettes are just a few examples of modern day habits. These are the kinds of things we can definitely do without, at least reduce whilst we’re trying to be frugal.

3) Leisure. Whilst a life without entertainment might be a bit of a drag, there are ways to have fun without the expense. For example, rent a movie for you and your friends to watch at home together instead of going to the cinema and buying individual tickets. You can be sure the snacks will be cheaper!

4) Travel. As fuel prices continue to rise, reducing the amount of travel can bring a significant saving on your budget. Instead of commuting alone in your car, consider carpooling or even using public transport. As well as helping your wallet, you’ll also be helping the environment by doing so.

With proper planning, you could pay off your debt in years or even months, depending on how much money you can divert from your other expenses and the amount of debt you have to start with. As long as you can make your minimum repayments and whatever else you have left in your budget, you’ll be on the right track. As well as clearing your debt, another benefit of keeping up your payments is that you’ll also be building your credit history.

Whilst reducing your outgoings in any one area might not seem to offer much benefit, when you add all of the little savings up it can make a significant difference. Remember that the more you can save on your regular expenses, the more you can whittle away on your debt.

Today’s modern society is built on a dependence upon plastic. Not the plastic associated with cosmetic surgery, but the kind of plastic you keep in your purse. The kind of plastic you never leave home without. It’s a wonder how people paid for goods and services before credit cards were invented! Along with the convenience that credit cards have provided comes a slippery slope to uncontrollable debt. If this sounds all too familiar to you then you should seriously consider cutting up those cards.

Most people would balk at the idea of pay near 30 percent interest on a loan and yet there are plenty of people willing to use credit cards that charge just as much in interest. Considering you wouldn’t want such a high interest rate when borrowing to pay for your home or your car, why would you on your credit card purchases? Then there are some credit card companies that offer a low introductory rate only to raise their rates to such dizzying heights after a fixed term or after your first default. When you’re considering any such offer, it literally pays to scrutinise the small print and shop around for the best deal. Offering credit is a great money maker for lenders so there are always good deals to be had as they’ll want to attract your business.

Credit cards aren’t all bad especially if you’re trying to establish some sort of credit history. Almost everything you borrow on credit is recorded against your credit history. An established credit history can be very valuable because it shows potential lenders whether you’re a risk or not. When it comes to borrowing large sums, buying a house for example, a good credit history is essential if you want to secure the lowest possible rate of interest as higher risk loan applicants attract higher interest rates. Using credit cards to build up a credit history can be very beneficial as long as you stay on top of your spending and never miss a payment.

When you’re borrowing against a credit card, it’s especially important that you don’t stretch your finances to the point where you can’t afford to pay off your balance without incurring a large interest charge. A relatively small debit balance left for a few months can quickly grow into a significant amount of money.

When you’re spending with a credit card, be aware that the convenience factor can mask some of the triggers that help your brain register a financial transaction. For example, when buying goods for cash, you get to experience a real sense of loss (of the money) whilst experiencing the receiving of something (the goods). When you buy intangible goods or services you lose part of the buying experience. When you make your purchases with a credit card then you have even less triggers for your brain to register. This can make for very easy, guilt-free spending which is not a good thing when you’re trying to get out of debt.

Although we talk about cutting up your credit cards, it’s not absolutely necessary to do. As we’ve seen, there are some benefits to be had from having one and they can be genuinely useful in an emergency situation. You just need to be disciplined enough to only use it when absolutely necessary and then clear the balance as soon as possible.

Of course, that doesn’t mean you should keep all of your credit cards just in case the unexpected happens. The fewer active cards you have, the less credit limit you’ll have available to spend. Your plan should be to decide which credit cards to keep and then clear the balances from the other cards as quickly as possible.

When you’re going through the process of cancelling your credit card, don’t allow the lenders efforts to keep you onboard change your mind. Remember why you’re closing your account, all of the sacrifices you’ve had to make along the way and the financial mess you could end up in.

Once you’ve done away with your excess cards and have cleared your debt, start saving before you start spending again and only buy what you can afford at the time. If you don’t have enough money then wait until you do. Either what you want will still be available or you would have gone off the idea altogether meaning you’ve saved money. Discipline really is the key to keeping clear of debt once and for all.