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Archive for June, 2010

Cut up your credit cards

July 1st, 2010 at 02:29 am

Its time to cut up your credit cards. This is one of the most crucial steps to getting yourself out of debt. There is no better time than now to rid yourself of credit cards. What has your credit card ever done for you?

I never felt so good like I did when I finally destroyed those credit cards. Just saying your going to stop using your credit cards is not good enough. You need to cut them up and be done forever.

Marriage and Money

June 30th, 2010 at 03:13 am

When two people become married the money becomes both of theirs. There is no more "His Money" or " Her Money" Its "Our Money". There is no hiding money from your spouse or spending money without first discussing it together. I have known couples who each have their own separate checking accounts. That seems really weird to me.

My wife and I do not spend even $1 without letting the other person know what we are doing. Not taking the time to do a budget together and discussing the finances is a good way to bankrupt your bank account and marriage.

The number 1 cause of divorce today is money fights and money problems. Don't become a statistic. Do something about it today and start working with your spouse on the finances. It will pay off in the long run.

Can debt settlement companies help me?

June 29th, 2010 at 08:52 pm

You have seen them on tv many times before. "Let us settle your debt for pennies on the dollar" They advertise being able to settle for 60% off of what you owe. Sounds like a great idea doesn't it? I went through this disaster first hand and want to prevent anybody else going through it.

First thing you need to ask yourself is. Are you behind on your credit card bills? If you answered no, then be prepared to get behind. Because the first thing they are going to tell you to do is to stop paying your bills and to not communicate with your creditors.

But of course they are not going to do this for free. What they do usually is they have you make monthly payments to them. I believe we paid somewhere around $200+ a month. The first 3 months of payments go right into the pocket of this company. Then after that they get half of your monthly payment and the other half goes into an account to "save up" money to pay when a credit card will settle with you.

A credit card company will not settle with you unless your usually 3-6 months behind on your bills. When you are so far behind the credit card company will make you an offer to settle your debt. In the meantime while we were "saving up" with this company to settle our debts, I was sued by 2 different credit cards. That is about enough to scare you to death. I immediately quit using this company and worked out the debts myself

Why would you purposely stop paying on debts that were not behind in the first place to wreck your credit and fill your life with harassing phone calls from credit card companies?

Work through your debts yourself. Don't look for a magic pill to solve all your financial problems because it will only lead to grief.

I need a cosigner

June 29th, 2010 at 02:13 am

Cosigning would rank up there in my top 5 of stupid things to do. First off why do you think banks ask for a co-signer? Its because they know your not going to pay and that you pose too much of a credit risk. So if you are asked by a friend or family member to cosign a on a loan, you better be ready to pay for it.

If you need a cosigner for a loan then you do not really need a loan anyway. But if you follow what I write you shouldn't be borrowing money in the first place.

I have a friend who cosigned on a student loan for his girlfriend and to make a long story short. They are now broke up and guess what?? She isn't paying on the student loan so he is now stuck paying for someone else's education and no longer seeing the girl. Doesn't sound like a good deal to me.

I'm will but it as simple as possible. Cosigning is stupid. If you cosign you are stupid. Unless you like to pay other peoples bills, Don't cosign.

Get it? Got it? Good

I don't want to work hard. Im going to win the lottery.

June 28th, 2010 at 08:21 pm

I have heard many people say "If I could just win the lottery everything will be ok" I'm just going to say that your NOT going to win the lottery. The lottery is a tax on people that can't do math. Haven't you ever seen the kind of people playing the lottery? Yeah I have too. You are more likely to be struck by lightning 5 times and live than you are to win the lottery.

Go stand on your roof with a metal rod in lightning storm and see if you can get struck 5 times and live. If by some miracle you live, go buy a ticket and you might win (probably won't though)

Heres a better idea. Save your money and do something useful with it. You will have a much better return on investment if you just save and invest it.

Borrowing From Family

June 28th, 2010 at 02:31 am

It might seem like a good idea you just need some money to help buy a new car or need money for school. So you decide to head to the bank of Mom and Dad. This is a recipe for disaster. You might think "But its my mom, nothing bad will happen if I borrow money from her".

That is where you are wrong. Remember that 'The borrower is slave to the lender'. No matter what you think will happen its going to create tension between the borrower and the lender.

I learned this the hard way. By borrowing money to pay off credit cards. Later on I learned its just a lot easier to do things for yourself. When you go over to their house there is always a weird tension in the air. All you can think about is getting that family loan paid off. I am so glad that it is done. We have learned it the hard way but it has taught us a lot so I can relay this message onto others.

Credit Scores are Stupid

June 27th, 2010 at 03:29 am

Why to people cling to their credit score like its the most valuable thing in the world? A credit score actually helps keep the bank in business. To keep a high credit score you need to borrow money, borrow it often and pay it back. What is the point? People need to stop worshiping their credit scores.

Lets look at what makes up a credit score.

35%- How you pay your bills

30%-Amount you owe and available credit

15%-Length of Credit History

10% Mix of Credit (credit cards, loans, ect)

10%-New credit applications

But what if I want to buy a house, Don't I need a good credit score? No you don't. Banks can actually give you a mortgage loan by doing what is called manual underwriting. This is where they actually look at you as a person (if you paid rent on time, job history, ect) And not just look at your Credit Score.

If you stop borrowing money your credit score is slowly going to go down, eventually it will be zero. But does that really matter? Not if you promise to never borrow money again. And yes its true that car insurance companies are using your credit score to determine your yearly premium. But I would rather pay a little more on my insurance than keep borrowing a bunch of money just to keep a worthless credit score high.

Its just entertainment

June 26th, 2010 at 02:54 am

Some call it entertainment, some call it gambling. I call it just plain stupid. I just can't seem to wrap my head around what is so entertaining about losing money? I see absolutely no point in it.

But I just want to be able to go relax and have some fun with my friends, So whats wrong with that? I'm sure there are a lot better things to do than waste your money on this meaningless pastime.

Somebody has to be a winner right? Yeah and that someone is the casino. Why do you think they have multi billion dollar facilities? Its not because they pay you out a bunch of money.

What is really sad is the elderly person that brings his social security check to the casino hoping to win it big. And walks home with nothing. Its nothing more than legalized robbery.

I'm desperate. Should I get a payday loan?

June 25th, 2010 at 12:44 pm

Your desperate for money and don't have enough to make it until next week. Should you get a payday loan? Absolutely not!! Payday loans are one of the worst financial products on the market. Lets take a look at exactly how these rip-offs work.

Lets say you want to borrow $500. What is going to happen is your going to write them a postdated check or agree to a authorized withdrawl for $575. In return you would get $500 cash and after 2 weeks they would cash your check for $575. But that is rarely what happens. A typical borrower will not have enough money to cover the check so they will "flip" or "rollover" their loan for another 2 weeks. On average a borrower will flip their loan 8 times before paying it off. In this example that is an APR of 390%. Doesn't sound like such a good deal anymore does it?

High interest payday loans are illegal in 15 states including Washington DC, US Virgin islands and Puerto Rico. That just goes to show you that these loan companies are praying on poor people and need to be shut down everywhere.

This blog stresses the point of having an emergency fund which would keep you out of the payday lenders office.

Car Payment are normal. Right??

June 25th, 2010 at 01:46 am

Do car payments have to be a way of life? I don't think so. But for many people having a car payment seems normal to them, just something that everybody has right? Wrong. The average car payment in America today is $464 over 72 months. And the average price of a new car is $26,000. And after only 4 years your car has lost almost 70% of its value.

So lets do an example, You buy a $26,000 car at 10% interest over 72 months. And after 4 years your cars value has dropped about 70% and its worth about $7800 but you are still going to owe over $10,000. If you keep the car until its completely paid off your going to have paid almost $35,000 for a car that is now worth less than $8000.

A car payment is the largest item people buy that goes down in value. And its the second largest payment people have besides their house.

Let's say you took the average car payment of $464 and saved it in a savings account for 10 months. You would have $4640, don't you think you could buy a decent car to get you around for that much? Yeah I thought so.

Stay out of the vicious circle of car payments and do not worry about what other people think about your car.