Dot Com Note » personal finance

How To Become Debt Free Quickly And Enjoy True Financial Freedom

Dotcom Note — Wed, 02 Jun 2010 20:24:44 +0000

From time to time, either due to our own financial negligence or the pressure of the material world to enjoy things that we cannot afford by paying cash, we become victims of excessive debt. When that happens, it not only ruins our financial lives but also greatly affects other aspects of life. We may feel helpless and cannot see any light at the end of the financial tunnel. We feel that we don’t know how to make our financial life stable again. If you’re suffering from the burden of debt, you can become debt free quickly by easily following a few steps.

I will not suggest you take the route of debt consolidation. Though it is a perfectly legitimate course you can resort to when nothing else works for you. Sometimes, debt consolidation can affect your credit worthiness. If you want to keep you credit record good while embracing financial discipline and a commitment to execute a well thought out debt reduction plan, then you can get out your debt very quickly.

The ideas are not new. Many people have executed these steps to become debt free since modern civilization has made borrowing easy for the masses and college students. Instead of me writing the same things again, I will reproduce the ideas from an excellent blog post originally published at GenXFinance. As you execute the plan to get rid og your debts once and for all, you should also read GenXFinance to improve your financial situations.

1. Lower your existing interest rates. Don’t stick with the same old credit card you’ve had for ages if it has a painfully high interest rate. Spend some time looking around for something better instead — perhaps 0% APR credit cards may work better for you if you can transfer your balance to a card with a 0% intro rate and you can manage to pay off the balance during the intro period.

Debt consolidation is a good idea if it reduces the amount of interest you are paying. Find a good calculator and use it to figure out where you stand. Getting a read on your situation is the first step to improving your financial health.

2. Find ways to bring in more money and to funnel the extra cash toward your debts. You don’t need to take on a part time job: you could have a yard sale or you could try selling unwanted stuff on eBay. You can certainly make several hundred dollars quite easily just by looking around your home. Some enterprising people have even turned the sale of their clutter and second-hand possessions into a business.

You’re probably thinking that there’s no way you could make that much money doing this sort of thing. But you’ll be surprised to know that most people actually have several thousand dollars sitting around their home, tied up in items they no longer need or use. Why not make that cash work for you instead of sitting on it all the time? I made around $750 in a single week once, selling off a load of DVDs I no longer wanted.

3. Cut back on all luxuries for a fixed period of time. Use the cash you save to pay back your debts faster. We all have various luxuries – big or small – that cost money. Now while there is nothing wrong with enjoying luxuries, if you are currently struggling to pay down your credit card, then you could certainly benefit from giving your card a rest for a while.

Try canceling that gym membership or foregoing your subscriptions to your monthly magazines if you have any. Put the money you gain towards paying off your most expensive debt first. That way, you’ll quickly find yourself paying less on interest charges over time. Alternatively, you can pay off your smallest debts first; this way, you’ll gain a sense of accomplishment over wiping out individual debts faster. This strategy has the added bonus of offering you motivation to clear your debt even more aggressively.

Click here for original article.

Though you should have plenty of credit cards, you should also resist the temptation of buying stuff on credit that you you cannot afford to pay back when the payment is due. You should use credit cards to establish a stellar credit rating. Having lots of credit cards and not using them for frivolous purchases will test your financial discipline. Believe me, once you have more money and no credit card debt, you will truly enjoy your life. Adopt the practices discussed in this post and become debt free quickly.

Photo credit: lemonjenny

How To Obtain a Loan With Bad Credits

Dotcom Note — Tue, 18 May 2010 15:31:51 +0000

It is a fact that people with bad credit history will often give up when it comes to obtaining a loan. Though I don’t advocate getting loans for no reason at all or for taking a vacation, sometime it is essential, for example if we want to buy a car, to obtain a loan to meet our financial needs. If your credit history has been stellar, you have squandered your opportunity to obtain a loan at very competitive rate. However, you still can get a loan if you follow some of the tips discussed in this article.

First of all, what constitutes bad credit borrowing? A bad credit borrower is someone who has a credit score of 600 or even less out of a usual total score of 850. Normally, you would have a bad credit history due to loan defaults or court judgments against you.

There are two different types of poor credit personal loans. You have the secured and the unsecured. To get a secured loan you have to get one of your assets as a collateral. This could include your jewelry or your car.

Now to get an unsecured loan you don’t really need any asset. The amount you may be able to borrow would depend on factors like your ability for repayments. The time period for repayments would be from around 5 to 25 years.

To apply for these type of loans you need to personally visit the lender and fill out their application form. Credit Unions where you have a checking account in good standing are often more lenient about giving loans to people with bad credit history. There are however certain lenders who allow online applications. Applying online does have its advantages and disadvantages. Any incorrect information on your online application will cause a delay or even a denial. The feedback from an online application takes longer than if you had submitted the application personally.

After you go through the application the vendors should contact you and discuss rates. You will then be in a position to compare different rates.

Loans given to people with a bad credit rating are aimed at helping them improve their situation. You would now be in a position to make sure that repayments are done regularly. Any missed payment would have a detrimental effect on your credit standing.

The approval of a loan is a chance to improve your credit score by the diligent payment of outstanding amounts when they fall due. Consistent good paying behavior would help bring back good credit ratings.

This should also be a time to use credit cards sparingly and if possible to make more than the usual minimum payments. If your credit card provider gives you an increase in credit limit don’t jump in joy and use up all your credit. If possible don’t use any new credit at all. It’s best at this time to just be paying off your debt.

Whilst debt is something we may not be able to avoid, it is something that we should be able to manage.

How To Setup An Online Banking Account

Dotcom Note — Fri, 26 Mar 2010 16:44:05 +0000

Online banking provides you some great advantages. Few of the advantages are: 1. Time Savings. You don’t have to drive to an ATM or bank office for a transaction to complete. 2. Open for 24 hours. You can do all your banking related transaction from the comfort of your home at any time of the day and night. You don’t need to squeeze out that 20 minutes from your lunch break to go to a bank. 3. Higher Interest Rates. Online saving accounts provide you a higher interest rates compared to their brick-and-mortar counter part.

Though almost all brick-and-mortar banks provide online account management and transactions, this post is all about exclusive online banks. These banks don’t have a physical presence. You cannot go to a bank teller in these banks, though you can always call their phone numbers if you have any problems. An example of an online bank is ING Direct. All online banks offer you high interest savings account and you can directly deposit money by directly transferring it more your local checking account. There is no fee for this type of transaction.

An Online Banking Primer
The first thing to look at is what the differences between a “normal” bank and an online bank are.

With a normal bank, you have your usual checking and savings accounts. They issue you a checkbook with which to write checks and (usually) an ATM card to access your account. When you need to deposit something into your account, withdraw some cash, or make another transaction, you usually visit a branch location, visit an ATM, or use the bank’s online banking services.

With an online bank, all of the above is (typically) true, except that there is no physical branch location to visit. You conduct all of your business with the account via an ATM or via the online banking service.

What do you get in return for a lack of a physical branch to visit? You usually get a better interest rate than you would at a brick-and-mortar bank. You also usually get a very good online banking system and online bill pay service. Most online-only banks usually have minimal fees – no maintenance fees or other things like that. Typically, you get top-notch phone-based and internet-based customer service, too.

For a lot of people, that’s a trade they’re happy to make. The loss of a physical bank can be a big change, but the other benefits of the account make up for that.

How to Distinguish Between Online Banks
There are several things I look at when considering whether to use an online bank.

First, are the rates offered at least reasonably competitive? Banks change their exact interest rates all the time, so I don’t view it as a requirement that an online bank have the best interest rate in the land on a certain given day. However, the rate should be within a percentage point of that. I usually use BankRate.com when researching banks.

Second, is it FDIC insured? I look for the FDIC logo when I visit the website. I usually also follow up at the FDIC website using their bank search to make sure that the bank is registered with the FDIC. The FDIC is essentially insurance for your savings and checking (and CDs) that guarantees up to $250,000 of your account in the event of a bank failure.

Third, is it well-reviewed? Search Google for online bank reviews, particularly reviews of the banks you’re interested in. Get a diversity of opinions; don’t just rely on the first one you see. I have a series of online bank reviews ready to go for The Simple Dollar and will begin posting them soon (once I have a minor legal issue resolved with regards to them).

Fourth, does it offer all of the services you need? Do you need to have a paper checkbook or will online bill pay and an ATM meet all your needs? Do you need a very wide ATM network? Do you need easy access from your cell phone? Do you need Quicken compatibility? Do you have any other particular needs with regards to the account? Know what exactly you need with regards to the account and keep those needs in mind as you look at a few banks.

Fifth, once you decide on a bank, open the new account, but don’t close the old account. Transition slowly in order to ensure that you didn’t forget about any automatic payments or anything else like that. You may even choose to leave the account at your old bank open, particularly if it does not have any annual fees or maintenance fees, because of the convenience of the local branch.

Funding your new account is done electronically. You simply request a transfer using your new bank’s online banking system and the money moves automatically.

Article Sources: An Online Banking Primer.

Visit The Simple Dollar blog for all your personal finance information.

Why You Should Walk Away From Your Mortgage and Credit Card Debts

Dotcom Note — Mon, 18 Jan 2010 20:22:09 +0000

Yes, I know lots of people will frown upon the idea of walking away from your mortgage and credit card debts because as a society we have been taught by the self appointed ethic police, who constantly try to instill the value of obligation in our self consciousness, that it is morally and ethically bad to do so. These people earn millions by talking crap on the TV, doing useless prediction, helping banks gamble your money and when they see the possibility of millions of people pointing their middle fingers to their lenders and credit card debtors, they’re alarmed.

: Image by Mel B. via Flickr

The idea of walking away from your mortgage was in circulation from early 2009 but when columnist Roger Lowenstein suggested that the beleaguered home owners to do the same in his The New Your Times column, a firestorm ensued. The ethic police attacked him for teaching a wrong lesson to the children of those helpless home owners who are on their way to financial ruins.

I recent online poll by Baltimore Sun suggests that at least most online users (86%) will walk away from their so called “obligation” to cut their losses. This is a good news. At least online users are better able to strike a balance between their obligation and personal finance. But ethic loving people with poor financial knowledge will continue to suffer to make a few people rich.

There is no obligation to stay in your home when you know that your personal finance will be ruined for the rest of your life by doing so. When you signed the promissory note for your mortgage, you’re obligated to either make a monthly payment or leave the home for the lenders to possess. And you’re doing exactly that by walking away from your mortgage payment.

If you’re drowned in credit card debts with more than 20% interest rate, you’re giving your money to some fat cats to enjoy all the luxury of life at your expense. You and the banks who issued you those credit cards are both at fault.

We’re constantly bombarded with advertisement and commercials that make us believe that we must have items that we really don’t need. Adult peer pressure and keeping up with Joneses make us blind to our financial health. Banks keep on sending unsolicited credit cards with teaser interest rates. After all, we’re human beings. We’re not saints. We’re not enlightened and in most cases we’re simply stupid and we easily fall for the prey.

Have you ever wondered how many businesses declare bankruptcy every year, how much money banks write off as bad loans to businesses, how many businesses are walking away from their obligation to pay bond holders, lenders, and pension funds? And whose money are they playing with? They’re playing with your money folks. They’re using your money from pension finds, mutual funds, IRAs, savings, money market funds, etc. to play their game in the name of business. If they succeed, you get a pittance and they make big bucks. If they fail, they simply walk away from their obligations, sometime with big bonuses.

I did not see ethic police all over the TV when Morgan Stanely stopped making payments for some of their buildings.

Before you take any action you should assess your financial situation and long-term financial effects of your action, including having a bad credits score and defaults in your credit report. However, you should never listen to the ethic police and anybody who makes it a moral issue. If your advisor is uttering moral and ethical issues, run from him.

PS. I am not a lawyer. Consult a lawyer about your state laws for such an action.

Benefits of Using Credit Cards For Alll Your Purchases

Dotcom Note — Fri, 19 Dec 2008 05:04:42 +0000

Credit cards are wonderful financial transaction tools. But many people think them as an additional income source that they can use to spend beyond their means. They eventually get into deep financial troubles or waste their money on excessive interest payments. If you know how to effectively use credit cards, you can save money and organize your finances easily by using your credit cards.

First, you must remember that if you are not able to pay your credit card charges 100% when it is due, you are simply wasting your money and moving towards financial ruins. So, every time you take that credit card to make a purchase, ask yourself this question, “Am I able to make the full payment when the bill arrives?” If your answer is a “no”, don’t make the purchase.

Photo Credit: http://flickr.com/photos/kalleboo/2346878945/

Are you using your credit cards to withdraw money from ATMs? If you are not able to see your financial doom, get ready for it because it is definitely coming. Banks issuing credit cards charge a steep 3% to 5% cash withdrawal fee and a 20% or more interest rates from the day you take cash out using your credit cards. You have to pay these charges even if you pay your balances in full when it is due.

Are you sharing your cards with your room mate or boy friend? Don’t do it because you don’t have any control over their spending. You are responsible for all the charges they make. Even if they promise to pay you back, there is no guarantee that they will or are able to do so.

If you are a responsible credit card user who pays all of the charges 100% when it is due, you can use credit cards for all your purchases. There are numerous benefits of using a credit card your purchases.

Some banks extend the product warranty when you buy the product using the bank issued credit card. You don’t have to buy any additional warranty which manufacturers or retailers sell for a premium.

You may get extended life insurance coverage when you buy an airline ticket using your credit card. You may also get your expenses like hotel, clothes, toiletry, etc. reimbursed in case of lost luggage and flight delays

If you have a dispute with a merchant and are unable to resolve it to your satisfaction, you can call the credit card issuing bank help you resolve the problem. You can even dispute the charge if you believe that the merchant is a scammer.

Some credit cards will give you 2% to 5% cash back bonus on all your charges. If you are spending $2000 on groceries, utility bills, gas, etc, it can amount to $40 to $100 a month straight into your pocket without doing anything.

If you loose your wallet with cash in it, there is no way to recover your loss. If you lose your credit cards, you can call the issuing banks and get replacement cards without any financial risks.

If you have a few cards, you can use each one for a specific category of purchases. For example, you can use one card for all your grocery purchases, another card for your gas expenses, and yet another card for your lunch spending. At the end of the month, it will be easy for you to see how much you are spending on each category.

In case of emergency while away from your home town, credit cards provide indispensable and immediate help. You don’t need to call your friends and family to wire you money you need to meet unexpected expenses like hospital bills, car breakdowns, etc.

If you are a responsible credit card user, there is nothing wrong using your credit cards for all your purchases. In fact, you will reap benefits by using credit cards for all your purchases.

Tips for Saving Money for Digital Lifestyle

Dotcom Note — Mon, 17 Mar 2008 23:00:53 +0000

So you want to save a few hundred dollars but don’t want to give up your morning latte? While it is easy to preach how to cut your daily habits to save a buck, it is difficult to practice the same for most folks. However, there are other ways to cut your expenses without sacrificing your daily habits.

In today’s technology driven society, we spend a lot of money buying electronics gadgets and accompanying services to make our life easy. Sellers know that we have disposable incomes and they push many services that we absolutely don’t need.

Photo Credit: http://www.flickr.com/photos/cpchannel/123672666/

When you sign up for a cell phone service, they will try to push the loss-damage warranty for $5 a month. When did you last use that warranty to claim a new phone? In most cases you don’t need the service. In the worst case, if you loose or damage the phone, buy a cheap phone from eBay to carry you over till your contract expires.

If you are an occasional mobile phone user, get a pre-pay phone. Using a pre pay phone card that charges 10 cents per minute for talk time, you will be able save a few hundred dollars every year.

If you are in the market for a computer, buy the one on sale in your local electronics store. Every week, all national retailers have laptop and desktop computers on sale. Avoid mail-in rebates. Go for instant rebates.

Today’s cheap computers provide most functionality for majority of users. Don’t buy a high-end computer because the sales person says that the one on sale has slow Internet speed or other such nonsense.

Just buy the computer and don’t buy any software or warranty even if the sales person insists that you absolutely need that anti-virus and word processing software for an additional $300. Check with your broadband provider or the company you work for if they provide anti-virus software for free to install in you personal computer.

Use the Google search engine to find open source anti-virus and word processing software. The key word here is open source. You will find a few excellent open source word processing and anti-virus software. For example, Open Office for word processing and spreadsheet and clamWin for anti-virus.

Don’t buy any computer accessories like memory or hard drive from your local retailers. They charge way too much compared to online stores like newegg, ecost, etc. Sign up with newegg and ecost to get their newsletters full of items on sale every week.

Before you decide to buy a gadget, visit price comparison sites like pricegrabber, bizrate, pricescan, shopzilla, mysimon, etc. Also regularly check out bargain hunting sites like techbargains, dealtime, etc. Don’t forget to search for the item you are looking for in amazon, the grand daddy of all online retail stores.

Drop all those premium movie channels that your cable company has sold you as savings if you purchase them in a bundle. You only need one premium channel. Why subscribe to three and pay an additional $5 to $8 every month?

If you are renting your broadband cable modem for $10 or more every month, buy a new modem for $50 to $75. These modems last for long time and you will recover your money within six months after you drop the modem rental. You will be on you way to savings of at least $10 a month.

If you are paying more than $20 a month for your land phone line, drop it immediately. Get a cheap VoIP phone from lingo for $10 a month. If you are a heavy land phone line user, you will still save by switching to a VoIP phone.

If you frequently drive in unknown places, get a car navigation system. But don’t buy a factory installed in-car navigation system. A car navigation system gives driving directions and suggests alternate routes to take to avoid traffic congestions due to accidents, road constructions, etc.

Factory installed systems are over priced. The price of a portable GPS navigation system has dropped below $200. You can also move your portable system to another vehicle that does not have a navigation system.

We will be spending a lot of money in the years ahead on more gadgets to improve our productivity, make life easy, and for the sheer joy of living. Knowing how to squeeze every penny from those expenses will definitely improve your personal finances.