5 Details Your Banker Will Avoid to Mention
The truth is, the banks don’t want you to know about the fees on their products or how the interest is calculated on your credit card because they don’t want you to know how to avoid them. Therefore, you need to take control of your financial education and find out the top five things your bank will avoid telling you.
1 You can earn interest on your interest
When you talk about savings accounts this is a positive thing because compounding interest allows your funds to grow faster because you are earning interest on your interest and on your principal balance. However, when it comes to your credit card this is not good news because if your interest for the next month of your credit card cycle is being calculated on interest which has already been applied to your account from the previous month then you are being charged interest again and again.
This is not a common practice among all banks, but all of the big banks do it and most of the second tier banks too. Not only are you probably being charged interest on your credit card interest, you could also be being charged interest on your fees. Some credit card providers will simply take the closing balance of your account – including your purchases, your interest charges from previous months and any fees which have been added to your account – and calculate interest for the next month based on the entire balance, rather than just on the purchases you have made.
2 You’ll be charged the cash advance rate at the end of a balance transfer
You may already be aware that if you have chosen a limited time balance transfer offer, that any balance remaining at the end of that period will be charged a higher interest rate. However, what you may not have noticed in the fine print of many balance transfer offers is that this higher rate is not just the credit card’s purchase rate, but is the cash advance rate which can be another 5% higher than the standard purchase rate of the card.
3 Your credit card payments may not register
Your credit card statement will arrive on the same day each month, and your payment will be due on the same day each month. However, if you make an additional payment to your credit card outside of the specified payment period, that amount will not go towards your monthly payment – even if it is enough to cover the monthly payment – and your account will register as being in default.
This is because you have not paid the amount during the right period, and even if you have extra funds available and want to pay your bill early to get a jump on the next month, your payment will be received as an additional payment and will reduce your balance, but unless you make another payment of the amount due before the due date, your account will be in default.
4 Fees and interest charges are variable
On a high interest savings account, the interest rate your savings earn is variable and you can only receive a fixed interest payment in a term deposit account. Similarly the interest rates charged on your credit card are subject to change, and while the banks are required to notify you of a change in interest rates, there is nothing you can do to stop the change. The fees on a credit card or transaction account are not fixed either and can change at any time, meaning an account with a reasonable annual fee can suddenly have a much higher fee than the competition.
5 Automatic reinvestment of term deposit
In the fine print of a term deposit account you may find that unless you specify to your term deposit provider in the specified time window what you want to do with your funds at maturity, they will automatically be reinvested. This can mean your entire principal and all of your interest earnings are rolled over into a new term deposit account, for the same term, at the new interest rate. The interest rate on your term may have been competitive when you opened the account, but during your term your provider could have changed their rates, and they could lock you into a term with a lower interest rate than you would have chosen. Most term deposit accounts will not change their fees of interest rates during your term, but look for the place in your fine print where this is spelt out, just to be sure.
Just because the banks are in the business of making money from your money, it doesn’t mean you can’t arm yourself with the information you need to beat them at their own game. It is possible to secure high savings account interest rates, avoid credit card interest rates and choose bank accounts with $0 fees so your money works harder for you, not for your bank.
Alban is a personal finance writer. He helps people to compare and choose the best credit cards online
Why you should track every dollar you spend?
A lot of people don’t track their expenses. Once they receive their paycheck, they just spend their money without keeping a record of it. They buy this, they subscribe to that and in the end they are shocked for nothing’s left in their pocket. They wonder where the money goes.
If they’d just keep a record of their expenses, then everything might just fall well. It’s not really hard to track your expenses. Start by carrying a small notebook and record all your spending, however small or big it is. You can also use a 3 x 5 card, a computer text file, or a spreadsheet. Any of these will do.
You can use this as a guide for your budgeting. Here are some advantages of having a record of your expenses:
- You will be able to identify the areas where you spend a lot, then find ways on how you could trim the expenses.
- You will find all the unnecessary spending you’ve made and try to eliminate this as well.
- It will help you budget your money by spending just the right amount, not exceeding your monthly net income.
It would be easier for you to track your expenses if you will save your receipts and record all withdrawals you’ve made. Make a habit of putting all your receipts in one place so that you know where to find them
You can do this tracking every week, or every month. It really depends on how you want it. What’s important is to make it a habit. In the end, you will be amazed how this thing could improve your financial activity.
By tracking every penny you have, you will be able to control your money, not the other way around.
6 Cheap family activity ideas
Is staying home with your family watching television making you bored out of your mind? Why not spend your time wisely with these cheap family activities? Here are some possibilities:
- Visit the nearest mall. Malls are often decorated festively – especially during holidays. You can take this as a chance for your family to hang-out and enjoy your time together. Going to mall doesn’t mean buying stuff, etc. You can simply visit the exhibit or the show and eat hotdogs or ice cream.
- Visit the park. This is also a nice way to spend family activities. Enjoy the swing, see-saw, and slides with your children. Prepare a home-made snack as well for the little “picnic” in the park. You may even want to bring a camera to capture every smile, yell and laughter of every family member.
- Visit relatives. Well this is a great idea especially if you only got to see them once in a while. This will keep family-ties together. Visit them, have light conversations with the grandparents, cook with your aunts, play in the playground with cousins, etc.
- Camping in the backyard. This is also one of the cheapest ways to have a family activity. Just bring out the tent; you could also do some grilling outside (barbeque, hotdogs). Make some games like hide and seek.
- Watch shooting stars. On a nice evening, you can go outside, bring a blanket and lay – down comfortably. You could trace constellations as well. Ghost stories could also spice up the evening.
- Just take a walk. You could bring your pet with you and just take a walk with your children.
Family activities don’t require much effort, time, and money. You just have to be creative and think of new ways you could spend great time with your family.
How to work the debt snowball
Paying off debt is quite a hard task for anyone who is buried in financial struggles. You might not know where to start just to lessen the burden of being in a debt crisis.
There are a lot of ways to manage your financial problems and eliminate your debts. Debt snowball is just one them, it is a very powerful tool to answer your paying- off-debt problems.
It’s a pretty simple technique, thus anyone could truly follow how it works.
1. Make a list of all your debts.
2. Make an ascending rank of these debts according to the amount ( from smallest to highest)
3. Make a minimum payment on all your debts except to the smallest.
4. Pay the most on the smallest debt until it is paid off.
5. Once that smallest debt is paid off, focus on the next smallest, making the same payment you had been making on the smallest debt plus the minimum payment you had already been making on the second smallest. This builds your snowball as you move through the list.
6. Repeat the process until all of your debts are paid off.
Some experts might recommend listing your debts according to the interest rate. Prioritize the one with the highest interest. In that way, you can save the most money by reducing the debts that grow faster because of the interest added every month.
It really depends on you which one you would follow. What’s important is you are making a way in reducing or eliminating your financial problems.
Once your debts disappear, go and celebrate! You will need this to encourage you in solving your financial problems. It requires a lot of courage and sacrifices for this to work. Once you’re successful in paying off your debt, you will learn the lesson from it. You will know how to value your money and to control it the right way.
What is an emergency fund?
An emergency fund is a cash reserve that you keep in a safe place and use only for any unexpected financial emergencies. It can be a separate account, such as checking or savings accounts so you could have a quick access in emergency situations.
The purpose of the fund is to improve financial security by creating a safety net of funds that can be used to meet emergency expenses as well as reduce the need to use high interest debt, such as payday loan, cash advances, and credit cards, as last resorts.
It might be hard for some people to create an emergency fund especially if they have a tight budget. But the truth is, it’s not that hard to save for this fund. Here are some tips on how you can start creating an emergency fund:
1. Start small. Maybe you can start at $50 a month. A little goes a long way especially when it comes to savings. Just start. It will slowly grow and you will be glad to see at least a little in your savings, and will soon be motivate to try to save more.
2. Spend less. Focus on basic needs not wants. Don’t buy unnecessary things. You have to spend less in order to save money. Instead of subscribing for a monthly issue of magazine, why not save it and put it in your emergency fund? Cut out your luxuries and just save the allotted amount for your future needs.
3. Set up automatic deposits. Make saving easy by scheduling automatic deposits to your emergency fund. You can set up an online savings account that would automatically deduct an amount every payday.
4. Prioritize your emergency fund. Treat your fund as one of the regular bills you’ve got to pay, an obligation you have to fulfill. Set a due date for it, such as your payday, so you will not forget to “pay” your fund.
5. Make extra income. Take your skills and market them as a freelancer, or get a second job on the side. You can also start a small business at home. Take the extra income and bank it. This is one of my strategies, and it works great.
6. Set a time frame to complete the fund. You can set a possible time frame to reach you goal – for example, to finish your emergency fund in a year. That will be possible if you will believe in yourself.
7. Sell some stuff. Make use of eBay, Craigslist, or other classifieds services to sell things of value around your house. Is that DVD collection you never watch really more important that your financial security?
With a little effort, you can start saving and prepare not just yourself, but your entire family for future emergency situations.
Family Vacations on a Budget
Family vacations are sometimes hard to schedule because it requires a big budget. Most of the time, we parents, set aside money for more important things like education, foods, bills, etc rather than saving for a vacation. But there are family vacation ideas that are in a budget and at the same time, be enjoyable for your family as well.
Why not organize a vacation in your relative’s place for a couple of days? This idea is really inexpensive for you don’t have to make hotel accommodations anymore. You just have to make sure that you get along well with these relatives, and of course, they allow you to stay with them. This idea could even tighten your relationship with them.
Another suggestion is a camping vacation. This includes hiking as well. This could be a lot of fun for your kids especially if they love nature. Camping is always one of the best ideas for its cheap but very educational for it builds self reliance, confidence, and boost your child’s self esteem. This idea doesn’t require a high budget because all you will need is a tent. Again, you could just save the hotel fee and allot it for your food budget instead.
Vacation doesn’t necessarily mean that you have to go to other place away from your home. You can simply have a vacation just by staying home for a week with your family. Take this chance as a bonding time with them. You can simply watch in your home theater with your kids while eating homemade pop corn and pizza. Take this time to teach your kids your very own recipe. Also, don’t forget the board games and hide and seek. You can also play backyard table tennis or simply jump to the pool if you got one.
There are a lot of ideas you could consider to take your family for a vacation, just be creative and use your imagination. Also, don’t forget to ask for your family member’s ideas as well. They might have the best possible way to spend your vacation in a budget.
Why you should never enter a payday loan store!
Payday loans are a small, short-term loan that is granted to borrowers to cover expenses (mostly intended for emergency situations) until they receive the next paychecks. The borrower must repay the total amount of the loan plus fees, most of the time, at a very high interest rate. The lender may process the check traditionally or through electronic withdrawal from the borrower’s checking account.
It is commonly called as “cash advance”.
If you’re thinking of applying for a payday loan, have a break. Think twice, and consider the following disadvantages to help you decide.
High interest rate. Typically, payday store charges $25 for every $100 borrowed. This is because, there’s no collateral (like credit check) required.
Delays. Some payday store deposits the money right into the borrower’s checking account, thus causing some delays for the withdrawal of the money. This is not good for emergency situations.
You must repay the full borrowed amount for a span of 1 month. This will let you sacrifice your budget for other needs. Most borrowers can’t repay the full amount in a month. The tendency is they extend the term. Leaving them the option of just paying the interest every month, thus causing more problems in paying off their debt.
You can’t ask for a specific amount. The payday store decides how much they will grant depending on your monthly income, checking account transactions and other variables. The amount you get might not be what you’re looking for.
Fraud issues. This is especially applicable to the online payday loans. They will hook the borrower with their impressive – looking website. Borrowers, not knowing of the hidden charges, might get in a deeper debt because of these scam companies. Thus, extra precautions are advised when dealing with online payday stores.
Having an emergency fund is the best answer to avoid getting into payday stores. Right budgeting is the key to have a debit-free life. Start saving now and have a peaceful mind, not worrying of unexpected expenses you might encounter in the future.
9 Steps to Save Money on Groceries
Not everyone wants to be a grocery guru or coupon queen. The following list will help you save money on your grocery bill without cutting coupons and watching for the latest & greatest sale prices. While this works and it is a great way to save money, not everyone has the time or interest. This article will show you ways you can make the best use of resources so you are not wasting food, and how to cut down on trips to the grocery store.
- Start by making a list of dishes you like to eat. Think back on what you have eaten the past couple of month, or meals that you really like that you haven’t had in a while.
- For each meal, make a list of ingredients you will need to make the meal.
- For each ingredient, put a number between 1-4 representing how long the ingredient generally lasts. For example, if the menu calls for fresh vegetables, put a one next to the vegetables. If the menu item is something like spaghetti, noodles and spaghetti sauce can store much longer so you can put a 4 next to these ingredients. Based on the numbers in your ingredients, use the lowest number and write that next to your meal. This number will help in planning later.
- Determine how often you want to go to the store. This will vary by family. Some families can manage to go to the store once per month. Others go every other day. It will depend on your circumstances. For example, if your family goes through 4 gallons of milk in a week, and that is all the milk you can store in your refrigerator, you will need to go each week. I would guess that most families can get by going to the store every two weeks. The less trips you plan to make, the less likely you are to overspend.
- Raid the fridge. Go through items you currently have. Make note of items that may go bad or expire soon so you can be sure to use them in your meal plans.
- Plan your meals. Print out a blank calendar. CalendarsThatWork.com has many calendars you can print out for free. Using your list of meals and make a plan for the time period you have specified in the previous step. So, if you have planned to go to the grocery store every two weeks, plan two weeks worth of meals. Us the numbers from step 3 above to help you plan. So, if you have a meal that contains ingredients that go bad after only one week, put that meal in the first week of your plan.
- Create your shopping list. Using your meal plan, determine the ingredients you are lacking in order to make each meal. Get the adequate amount of ingredients for each meal.
- Buy your groceries.
- Stick to the plan! You may not feel like eating something you have planned. If this is the case, try swapping out meal days. Avoid the temptation to eat out. If you want to eat out, put that in your meal planning before you go shopping.
Other useful tips:
- Never go shopping on an empty stomach. This is when you will tend to splurge. Eat a hearty meal before doing your grocery shopping.
- Stay within a budget. Set a limit on how much you want to spend on food each grocery trip. Plan you meals according to the amount you have budgeted to spend. Put a set amount of cash in an envelope each pay-check you get in order to prevent overspending on your groceries. You may also make use of envelope budgeting software for more convenience.
- Buy non-perishables in bulk. As you continue to follow this plan, you will find some meals are cheaper than others. If you eat a particular meal on a regular basis, you may find it cheaper to buy the non-perishable ingredients in bulk.
Remember, when you fail to plan, you plan to fail. A little bit of planning ahead of time can stretch your dollar a great deal and help you save money on groceries and eliminating the need to through out expired food.
Why You Should Never Lease a Car
Leasing a car means using a car for a fixed period of time at a stated payment with no form of ownership included. The car must be returned at the end of the lease. In many leases you will have the option of buying the car at the end of the lease.
People who like to drive a new car every few years will usually pay less by leasing than buying a new one. Also, they don’t have to deal with getting rid of their old car — they just turn it in at the end of the lease period. As a result, many people lease in order to drive a more expensive car than they could afford to buy.
Although you may be eager to drive an expensive new set of wheels, consider the following disadvantages to leasing a car before you make your final decision:
- No Equity — your lease payments don’t go towards owning anything. If you look forward to paying off your car and owning it free and clear, don’t lease.
- You may pay extra – The lease states out how many miles you may drive per year; if you drive a lot and you fail to consider this, you could be paying a lot of extra cash at the end of the contract. Also, you’ll have to pay up for any damage to the car beyond normal wear and tear when you turn it in. In addition to that, If you decide to buy the car at the lease-end, you’ll pay several thousands of dollars more than if you had bought it initially.
- Insurance May Come Up Short – If you total the car or it gets stolen, your insurance will only reimburse you for the car’s market value, which might not cover what you still owe on your lease. You can buy extra “gap coverage” to protect against this and some lease deals include it automatically.
- You don’t have a car – This is pretty obvious. With a lease, you don’t actually own a car. When the contract is up, you have to give it back and you got nothing left for you.
- Stuck in a bad situation – If circumstances happen to change in your life, and you can no longer afford the lease payment, you will have a very difficult time getting out of your situation. Owing more money on your car than the car is worth is often referred to as being “upside-down”. It is not a good place to be!
The bottom line is this: there are too many risks to leasing a car. Many car dealers will give you all the reasons why you should lease a car. They will neglect to give you the reasons you SHOULD NOT lease a car. Don’t learn how to buy or lease a car from a dealer! In most cases you will come out ahead by saving up and buying less car than by leasing a new car.
Paying Off Debt
Are there nights when you can’t sleep because of the overwhelming debts you have? Actually, paying off debt is one of the most hard-to-solve financial problems. It seems like there’s no solution once you bring yourself in debt. This article will show you how you can pay off your debts with an eliminate-your-debt program.
Tips in paying off your debt:
1. Have faith that you can do it
You have to believe and trust yourself that you can do eliminate your debts even one step at a time. Once you believe in yourself, you’re ready to do the necessary actions.
2. Set your goals.
Your goal is to eliminate your debts. You have to commit yourself in your goal in order to attain it. Setting a target date when you will be able to meet this goal could be your map to measure your progress. This will help you to get more focused and headed in the right direction.
A goal not written down is only a wish. Write down your goals and the date you wish to accomplish them.
3. Create a debt elimination plan.
List all of your debts along with minimum payments. You can order them by smallest amount first, or highest interest rate first. Pay minimum payments on all of your debts. Whichever debt is at the top of the list, put any extra money you can squeeze out of your budget on top of this one. Once the top debt is paid off, take the money you were using to pay for this and apply it to the next one on the list. This is often referred to as the “debt snowball”.
Once you prepare yourself in eliminating your debts, you should stop incurring more of it. Paying off debt may seem tough, but you can use some strategies to make it possible. One way is through using balance transfer credit cards. This can be done by transferring your debt from a higher interest credit card to a lower interest credit card. This will speed up the debt elimination process, but think also of the consequences in doing this. Balance transfer could come with fees.
4. Make paying off your debt as your primary financial goal.
There is power in focus. Make sure that you will stick to your plan to be able to reach your goal. You should avoid temptations, like impulsive buying. As for the unexpected expenses, make sure you have an emergency fund where you could get the money from. Avoid using credit cards for emergency expenses. This will just worsen your financial issues.
5. Simply record your progress in elimination your debts
You could make a chart for your financial progress by tracking your credit standing before, during and after the debt elimination program. As you see your debts decrease over time, this will provide motivation to keep going.
6. Have a break.
Give yourself a break once in a while by treating yourself to simpler rewards when you reach certain milestones in your plan or debt reduction schedule.
7. Think of strategies to increase your income.
You could reach your goal easier if you will cut back your expenses and work more to gain an increase to your income. You could start a simple business or get a second job as a part-time. This will accelerate your debt repayment.
From these few sacrifices you will find the extra dollars needed to increase your debt repayments.
With determination, focus and belief in yourself, you can definitely reach your goal – to pay off your debts.
