Debt Consolidation

The Facts About Debt

UWSA Consumer Credit and Wall Street Reform News: August

Filed under: Banks
Written by: Simos
August 27, 2010
This picture says a thousand words ...

This picture says a thousand words ...
Photo by: Copta (Stock Exchange)

Since the explosion of action on Capital Hill related to credit and Wall Street reform, new regulations continue to go into effect, impacting bottom-line bills for credit card consumers.

As the debate heats up and “Main Street” feels change in the air (and hopefully, in our pockets!) the UWSA financial blog is stepping in to help you stay abreast of current news and make sense of the trends. (more…)

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Basic Credit Hygiene: Your Credit Score

Filed under: Banks
Tags: — Written by: Simos
August 6, 2010
Is your credit score “on target” for prime rates?

Is your credit score “on target” for prime rates?
Photo by: ilco (Stock Exchange)

Previously on UWSA, we discussed your credit report, the three major credit reporting agencies, and how to obtain your report for free.

For many purposes, the information in your report is enough to gauge the health of your credit history: you’ll be able to pinpoint problem accounts, inaccuracies, and potential fraud, all of which are major sources of trouble with your credit score.

But the credit score itself is a complementary tool, a reflection of the report developed by each agency; and in virtually all cases, it isn’t free.

Before you pay to check your credit score, a little explanation is in order. (more…)

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UWSA Wall Street Reform Update

Filed under: Banks
Tags: — Written by: Simos
June 4, 2010
Is Washington’s reform push “the end” for big banks’ casino capitalism?

Is Washington’s reform push “the end” for big banks’ casino capitalism?
Photo by: Richard Styles (Stock Exchange)

America’s love for its financial elites is at an all-time low. Everywhere you look, ordinary folks are in revolt against abusive debt collectors, becoming savvy about debt refinancing, and “moving their money” – not only to cards with lower interest rates, but to different (and smaller) banks. But there’s arguably no greater sign of a change in the air than the amazing speed with which Wall Street reform has taken shape over the last few weeks. At UWSA, we want to make sure you understand what “Wall Street reform” means for you on Main Street, so here’s an overview of the situation. (more…)

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Unhappy With Your Bank? Just “Move Your Money”

Filed under: Banks
Tags: , , — Written by: Simos
April 23, 2010
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Photo by: Mark Csabai (Stock Exchange)

In a previous post, we discussed staying out of debt and maximizing your savings by staying aware of the terms, fees, and features your bank offers and, most importantly, moving to a new one if you discover terms that suit you better. This time, we’re going to share a few more resources to help you locate those deals in your region and compare what’s available. Your bank is immensely important in your financial world, and a little part of it goes with you everywhere in the form of your debit card, so it’s worth getting the most out of it. Even if there weren’t many other options when you first started banking, there probably are now — and lots of people are hunting for the best ones. (more…)

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Never Saved Before? “Keep the Change” Might Be The Answer

Filed under: Banks, Saving
Tags: , , , — Written by: Simos
April 9, 2010

Loose change

Photo by: ajajulian (Stock Exchange)

Household savings is one of your first lines of defense against debt, but most people have more experience with credit than they do with saving cash. If you’re having trouble putting money away, use a little psychology and your bank account to help you out. Remember: it takes longer than a day or two to settle into new habits, and though resolving to save more and spend less is a good start, you’ll have to find a way to endure after enthusiasm starts to dry up. That’s where “Keep the Change” comes in. (more…)

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Does Debt Stacking Really Work?

Filed under: Banks, Debt, Debt Consolidation
Tags: , , , , — Written by: Lyuda
March 29, 2010

Too Much Credit
Photo by: Andres Rueda (flickr)

Looking through some of our older articles on UWSA I found some on the subject of Debt Stacking. A few people have asked me whether this is a good idea, and whether it does what it says for people. I’ve never used debt stacking myself, though it is really just a high tech way to follow through on making sure you’re not paying a bunch of extra fees and interest to maintain multiple credit lines. That is a pretty common sense part of maintaining your credit rating. Here’s a little on making debt stacking work, and seeing if it’s right for you.

Firstly a little on what debt stacking is. The basic concept is that once you pay off a debt with a monthly payment you continue to apply the money previously allocated to the monthly payment to the payments for other debts. If you’re trying to get out of debt it’s pretty obvious that is a good idea. What is not obvious is which debts to apply the freed up money to.

Mathematically if you want to get out of debt faster there is a relationship between both the amount of a monthly payment, the balance, and the interest rate. No I don’t know the formula off the top of my head, but there are a lot of computer programs that do, and will allow you to input basic information about your debts and spit out the order in which to pay them off or ’stack’ them.

Tip number one would be not paying a lot for a program; if the goal is spending less repaying your debt and getting out of debt faster burning a bunch of money on a program doesn’t make sense. There are free tools out there to figure this information out, and sometimes professionals will offer that information free of charge or at a reduced fee as well.

One thing debt stacking does do is to avoid what is called ‘the shotgun approach’ to repaying debt. This is where one month you put a little extra on one bill, and next month you do another. Using that approach is a great way to maximize how long you stay in debt.

Tip number two, which is true of any debt repayment strategy, is stick to the plan. The benefits of debt stacking can be great, and include very reduced interest on one’s debts. These benefits drop fast though for every month you don’t make the payments in the manner suggested. If you cannot do this by yourself debt consolidation with a credit councilor or debt consolidation service might make more sense.

Debt stacking can be really helpful in repaying debt, and save you a ton of money. It is also usually free and because generally you are not modifying your repayment plan significantly it can help build your credit rating as well. The key is keeping to the plan, and knowing your limits. As always though the plan only works if it works for your.

Too Much Credit Photo by: Andres Rueda (flickr)

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Cash or Credit?

Filed under: Banks, Debt, Saving
Tags: , , , — Written by: Lyuda
March 22, 2010

Photo by: mangpages (flikr)

Since living through the 1990s economic collapse back home in Russia, I have always preferred using cash instead of credit cards – or even debit cards. I think I just got used to cash.

Since there was no equivalent of the US Federal Deposit Insurance Corporation (FDIC), many people lost all their savings when banks crashed. Forget credit – almost no one could obtain that.

The result? Most of us just came to accept that cash was the only option. The upside is that using cash made it very difficult to run up excessive debt.

Without getting into a discussion about the complexities of post-Soviet banking, I’m feeling a bit of dé ja vu these days. Bank collapses and difficulty getting credit and economic hardships..it’s all so familiar. The time has come to take a closer look at the merits of using cash.

It’s not just the parallels between Russia’s collapse and the one we’re living through now. There are also timeless reasons to use cash instead of a credit or debit card.

The first advantage of using cash is that you know where you stand financially. You don’t have to look at a bank ledger or a checkbook balance or a web page. When you need money, you know right where it is and how much you have. You also don’t have to write down how much you’ve spent in order to know much is left because it’s right there to count. You don’t have to worry about any fees caused by usage, as you might with credit or debit cards. Cash is also pretty much universally accepted; you don’t have to worry what bank’s name is written on it.

The second advantage of cash is that it can help keep you out of debt. There are so many ways that credit and debit cards encourage you to rack up fees, and I’ve seen people get into trouble with too much debt or with overdraft fees. With banks seeing lower profits on their traditional services, they are coming up with new and more complicated ways to recoup those loses through some rather creative fee strategies.

You can avoid those new tricks of the trade by sticking to cash. It reduces the need to consult the fine print in the latest correspondence from your credit card company. And watch out for new rules on checking accounts and debit cards. Cash also keeps you from overdrawing your account, avoiding interest charges and possibly other hidden fees.

Another smart move is to have an emergency fund in cash. While it is not a bad idea to have an emergency credit card, keeping out of debt if you can is a better idea. In Russia, we called cash emergency money “black day’ funds.” A black day is a day when everything seems to go wrong at once. One Sunday morning, a tire blows out and the fridge breaks down. With an emergency cash fund you don’t have to reach for a credit card or worry about whether the bank is open or if you have enough money in your account. Your can pay the car mechanic and the appliance repair person from your emergency fund.

There are some drawbacks to cash. Recovering stolen cash is very difficult so you have to worry a lot more about security. You also can’t do much shopping over the internet. And you need to budget your expenditures well as the only amount you have is the amount that’s in your pocket. If you can’t cover the groceries with what you have, you need to make another trip to the bank and then to the store. But these are obstacles that be overcome. After all, people used cash for centuries, when there was no such thing as a credit or debit card. And, as I said, I’ve gotten used to it myself. And the benefits of using cash for most transactions, having an emergency cash fund, and tossing out the credit or debit card except in case of emergencies.

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Is it time to throw out your debit card?

Filed under: Banks, Debt, Debt Consolidation
Tags: , , , — Written by: Lyuda
March 12, 2010

Chip on Debit Card
Photo by: Declan Jewell (Flickr)

The only thing about as bad as fees you can’t afford to pay due to economic hard times is fees that you don’t even realize you’re paying. Thanks to declining returns on services customers do opt for however that’s exactly the kind of fees banks are starting to love. An easy way to rope you into fees is bank debit cards, and even if you have never had a problem with one you may want to take a look now.

The first way these lock you into fees is you pretty much require overdraft protection to use one. Many argue that if you manage your account well and treat a debit card transaction like a check you won’t get into trouble. Unfortunately this is not true at all. Banks use a number of tricks in how they process transactions that make it impossible to be certain when a charge will take place, or for what amount. One bank manager I talked to said he was frustrated because he honestly couldn’t understand how they process these transactions; he said he always leaves a couple hundred dollars just in case, even though he is very sure of what money comes out of his account. These cards are seriously designed to encourage Non-sufficient funds fees with balances that do not consistently update and a ‘courtesy’ of letting you overdraw your account by hundreds of dollars before they decline a charge. A courtesy that can result in hundreds of dollars worth of fees; a postage stamp could cost you more than forty dollars!

Another hidden debit card fee is annual membership to some ‘rewards’ program. Typically the rewards aren’t amazing, and the ‘points’ earned are no more consistent than the order in which debit card transactions are processed. In almost any situation you’d see a lot more rewards by opting out of this program and just saving the money in a savings account. A similar ‘rewards’ program is to acquire points for ‘being green’. In reality this one is more about saving the bank from paper costs than it is about the environment, but it can also keep you less informed about your account balances.

Frequently also these days there is a charge just to have a debit card, or to use one. If you receive an updated notice in the mail regarding your card make sure to see if there is a new annual or monthly fee, or even a new transaction fee. Careful management of funds can only happen when you know for sure what fees may post to your account. A new 35-cent fee for a specific type of transaction could have you literally seeing a bright red 35-dollar insufficient funds charge!

Many people, especially younger people who have grown up with debit cards, find it hard to manage without them. It does take getting used to but it’s worth the cash saved, and avoiding disastrous NSF fees. Keeping enough money on hand, and keeping a low fee credit card ONLY for emergencies makes a lot more sense then letting the bank borrow your money while you essentially pay THEM interest on it in subtle fees. If you really can’t live without the convince of a card then make sure you always know what fees are charged, opt out of high interest overdraft protection, and keep a safety net of at least a couple hundred dollars in your account in case an unsuspected fee posts to your account.

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Three Little Piggy Banks

Filed under: Banks, Children, Debt, Saving
Tags: , , — Written by: Lyuda
March 9, 2010

Piggy BankPhoto by: Marcelo Moura (Stock Exchange)

Piggy Bank #1: The Three Little Piggy Banks

Piggy Bank is a UWSA blog series discussing ways to save small amounts on a regular basis and how the savings add up surprisingly quickly. Please feel free to share your ideas and your stories about how saving “pocket change” added up and helped you and your family reach a meaningful financial goal.

In the grocery store check-out line the other day, I watched a mom struggling to say “no” to her two sons who were begging her to buy them each a little car that the store had strategically placed at their eye level. There were a whole bunch of toys and trinkets there – meant to encourage impulse purchasing in kids – and in parents who instantly decide that a couple of extra bucks is an easy way to make their child happy. Parents beware! These are NOT cheap toys; impulse purchases add up to big bucks very quickly, especially for parents on a budget. Worse, they encourage terrible spending habits in children from the very earliest of ages. We want to teach our kids how to save, not just spend.

The approach I took with my son, who’s two, is the “three piggy banks” system.” The idea is simple and you can make your “three little pigs” system easier or more complex, depending on your child’s age.

The first step is to get three piggy banks for each child. You can purchase inexpensive ones or make your own out of jars or plastic containers. Perhaps you want to let your child pick out the piggy banks or do a craft with them to turn used containers into piggies.

Next, label the piggy banks as follows: “Savings,” “Spending,” and “Sharing.”

The “Savings” piggy bank is for collecting money that your child will keep on adding to over time. One idea is to have the child periodically deposit the money from the “Savings” piggy bank into their very own passbook savings account. This lets them get used to going to the bank and watching the total in their account go up and up — and they’ll see how their money earns interest.

The “Spending” piggy bank is to help your child save for a long-term goal. This depends on age, but with prices nowadays, it’s probably not hard to imagine that even a younger child wants something that will require accumulating enough money. If they choose to purchase something else with this money, like an impulse toy, it means you have a chance to remind them of their other goal and that it will take longer for them to get “the big thing” they’re saving for. This helps children begin to understand the concept of “cost” as opposed to “price.” Their decisions will have real consequences for them – positive and negative. To reach the long-term goal, they will learn to be more patient and not give in to impulse buying and other diversions.

The “Sharing” piggy bank is for donations to a charity that is important to the child or to your family. The satisfaction of helping those in need it is a wonderful feeling to experience at any age. Charitable giving is as American as apple pie. We have the highest level of individual donations in the world year after year after year.

Once the piggy banks are set up, whenever your child receives money, whether it’s allowance, a birthday gift, payment for shoveling the neighbor’s driveway etc., it gets divided evenly among the three piggy banks.

The three piggy banks can teach children to see money in many ways, not just in terms of what it can buy them. They also see that money can grow into more money and that it can help them help other people. It’s never too soon to start.

The three piggy banks is also a way to encourage your child to spend from the “Spending” piggy bank, rather than your wallet. It might not stop a child from asking you to buy them a trinket they spot at the check out counter, but it will give them an understanding of why you say “no” and a true sense of appreciation on the rare occasion that you say “yes.”

Got a great story about saving money? Please share your inspiration! Write to me at: staff@uwsa.com

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Should I Invest in Gold

Filed under: Banks, Investments
Tags: , , , , — Written by: Lyuda
March 3, 2010
South African Krugerrands

South African Krugerrands
Photo By Lyudmila Green

The stock market has been as volatile lately as a poker table at Las Vegas casino. Many traditionally conservative investments have seen unheard of volatility. Savers have begun asking the question, “What can I invest in to make sure I at least keep the principle of my investment?” For many investors, gold has come up on the list of options.

Before buying a boat load of gold, one should consider the reasons gold is valuable and what gold is useful for in terms of investments. Gold has industrial value, but there is frankly plenty of gold that is already mined and available for industrial purposes; so much so that you can easily find 30$ gold plated 2 foot S-Video cables at your local electronics supplier. Gold is useful either to preserve an investment, or as a hedge against falling currency. If you feel currency is unsafe, or your portfolio is overexposed to a specific currency, adding gold to your portfolio could be wise.

(more…)

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