Money Spending Mommy

Credit cards are immensely popular forms of payment, but for most users, they are also a method of finance. While many credit card holders are able to avoid interest charges by paying their balances in full, most Americans tend to carry a balance. Since credit cards debts are unsecured, their interest rates are higher than other types of loans. Furthermore, cardholders can continue to incur ever increasing amounts of debt when they use their credit card for their daily spending.

Ultimately, most cardholders will realize that paying off their credit cards is one of their most important, and difficult to achieve financial goals. Fortunately, there are some strategies that people have used to successfully retire their credit card debt.

Make A Budget
The first thing that a cardholder in debt should do is to make a budget. Find out how much money their household is earning, and how much it is spending. The goal should be to reduce expenditures and increase earnings while devoting any remaining income to paying down credit card debts. If a person owes money on multiple different credit cards, he or she should start first by paying off the balance with the highest interest rate. Cardholders should always be paying as much as possible each month, never just the minimum balance.

Using Balance Transfers
One option that credit card customers can use to pay off their debts more quickly is a promotional 0% balance transfer offer. There are many cards that feature a 0% introductory finance rate on money borrowed to pay off an existing balance. These offers can range from six months to nearly two years. The only significant drawbacks of these offers are balance transfer fees. These fees are assessed by the bank that is paying off the cardholder’s existing balance and typically amount to 3%-5% of the amount transferred. Occasionally, a 0% no balance transfer fee credit card can be found, but it is generally best to assume these fees will be charged.

Now, even when carrying a balance that is not incurring interest, cardholders are still responsible for regular monthly payments. Also, when using balance transfer promotions, it is always important to create and maintain a budget with the goal of paying of the entire balance before the promotional rate expires.

Limit Ongoing Purchases
When a cardholder is trying to pay off a balance, it is important to curtail new credit card spending. Like digging a hole in sand, continued charges will replace the amount being paid without reducing the overall level of debt. To avoid additional charges, many cardholders who are struggling to pay off their existing purchases will conduct their new transactions in cash. Using cash for new purchases assures that additional interest is not accrued on these expenditures.

Paying off credit card debt is extremely challenging, but by creating a budget, using balance transfer offers, and limiting new charges, cardholders can emerge from their struggle debt free.

Jeff Weber writes about saving money with balance transfer credit cards at http://www.smartbalancetransfers.com/blog/

Owning a home is clearly number one on the wish list for many of us. However, owning a home outright is a close second. From a financial perspective, paying off your mortgage faster is a smart move. Being mortgage-free allows you to decrease your monthly expenses dramatically and enables you to finally give your retirement, children’s college fund, and day-to-day savings account the attention they deserve. Throughout the first few years of your mortgage, the majority of your payment will go towards interest. These tips can help you avoid the interest-trap and work towards living the mortgage-free life you deserve:

1. Choose a 15-year fixed rate mortgage.
Most homebuyers choose a 30-year fixed rate mortgage because it allows them to pocket several hundred dollars more than a 15-year term each month. While this may be a sensible option, if you’re able to forgo the extra $400 or so in your bank account, choose a 15-year fixed rate.

- If you take out a loan for $200,000 at an interest rate of 6% for 30 years, your monthly mortgage payment will be $1,199 and you’ll pay over $231,000 in interest throughout the course of your mortgage.

- If you take out a loan for $200,000 at an interest rate of 6% for 15 years, your monthly mortgage payment will be $1,688 and you’ll pay just over $103,000 in interest throughout the course of your mortgage.

- Though a 15-year term will force you to pay a higher amount each month, you’ll be free from paying a mortgage in just 180 months and you’ll save $100,000 or more in interest payments.

- 15 year fixed rate mortgages boast lower interest rates because the lender assumes a lesser risk than a 30-year mortgage term.

2. Make regular lump sum payments.
At the start of every year, make an extra lump sum payment towards your principal. When writing the check, specify that this payment should be applied to “principal only” as most lenders will simply apply the extra payment to interest, if given the opportunity.

- Apply your Christmas bonus towards making this extra lump sum payment. Or, if your employer is less generous, simply set aside $25 per week throughout the year and send in an extra check of $1,300 in addition to that month’s mortgage payment.

- Lump sum payments can be made at any time of the year you choose. However, most lenders set restrictions as to how many times per year you can make lump sum payments.

3. Send a second check each month.
As stated above, the majority of your mortgage payment goes towards interest; in many cases up to 75% of your payment is applied towards interest. But, you can beat this catch 22 by sending an extra check to be applied only towards your principal in addition to your monthly mortgage. -By doing this, you continue to pay your interest and heavily decrease the amount you owe on principal over the course of just a few years.

- Only send as much as you can afford. It can be anywhere from $50 to $300 or more. Though paying off your mortgage faster is a priority, it makes little sense to unnecessarily dig yourself into a financial hole.

- Many people opt to send biweekly payments towards the principal (you must arrange this with your broker), but there is security in taking this approach. If your income decreases, or if other expenses increase, you can stop making extra payments towards your principal at any time without penalty.

Other conventional options of paying off your mortgage faster include arranging biweekly mortgage payments, refinancing your home, or opting for a balloon mortgage. But you can avoid the hassle of these more complicated processes by simply working strategically with your existing mortgage.

If you’re strapped for cash and you’re dreaming of an out-of-town vacation this year, there are plenty of ways to make your wish come true. If you’re willing to think out of the box and sacrifice a few luxuries, you can save a bundle while still enjoying a fun trip. Try these strategies to enjoy your vacation on a budget:

1. Stay in an extended stay hotel. Sure, you’ll forgo a few amenities, such as a pool or daily maid service, but most extended stay hotels offer weekly maid service, a courteous staff, a safe setting, and all for a very low price. In addition to your immediate savings, most extended stay hotels offer hotel suites with an efficiency setup. Therefore, you’ll have a kitchenette equipped with a stovetop, kitchen sink, cabinets, and full-sized refrigerator in order to store and prepare your own meals, thus saving money over eating every meal out. Many extended stay hotels have a minimum required stay of 7 nights. However, the rates are severely discounted. An extended stay hotel can cost between $160 and $225, depending on the location, for a week’s stay. This can save you hundreds of dollars!

2. Veer off the beaten path. By simply choosing to stay 10 or 15 miles off of the key tourist paths, your accommodation and meal rates will drop significantly. You may not get a glorious view of the ocean or a panorama of the city, but you’ll be able to save your money for the attractions you’d like to invest in. In addition, you’re more likely to get better service since the hotel staff won’t be bombarded with guests as they would in a high-tourist hotel.

3. Cook your own meals. If you’re staying in an extended stay hotel, you’ll have access to a kitchenette. However, you can still prepare your own meals even if staying in a standard hotel room. Microwavable meals may not be very luxurious, but they’re very inexpensive when compared to dining out three times per day while on vacation. Purchase microwavable pizzas, single-serve meals, and other items to trim down your food costs. Breakfast can be fully prepared in your hotel room. Purchase cereal and milk, pop tarts, or oatmeal packets at the grocery store to completely eliminate the cost of dining out for breakfast.

4. Travel in the off-season. If you don’t have children, your schedule is more flexible as you don’t necessarily need to plan a vacation during the summer. Therefore, you can save significantly on airfare, entertainment, and accommodations by traveling in the off-season (such as in the fall for summery tourist attractions).

The off-season is considered between January and March, and September to early November. Concurrently, hotels will often have special sales going on in the off-season in addition to their lower rates in order to incentivize tourism.

5. Groupon.com. A few months or weeks before your vacation, become an avid visitor to groupon.com. This website offers local deals on fun activities, such as trendy restaurants, afternoon cruise tours, spas, shopping, and even hotels. Consumers dictate the current deals. The Groupons are only activated if a set number of people sign up. Therefore, if the deal misses its mark and doesn’t go into effect, you won’t be charged a fee. The one caveat about Groupon.com is that the deals are very slim for small cities and towns. Therefore, if you’re traveling to a rural destination, Groupon will be of little use to you.

6. Into the wild. Rather than spending an average of $100 per night at a hotel, head to a local campsite and sleep in a tent. Alternatively, you can rent a popup camper from a local RV rental facility for a discounted rate since you’re staying in town. Camping is a fun activity for children. You can still do fun, touristy things throughout the day and, at night, you can sit around a campfire and roast marshmallows. Many of the best memories involve relaxed times like these.

As you can see, there are plenty of ways you can save money while on vacation. Some are as simple as driving to the grocery store, while others may require you to sleep in a tent. But, where there’s a will, there’s a way to make your vacation happen even on a very limited budget.

Eating a well-balanced diet is one of the key things that a person must do in order to stay healthy. It will also help people save money on life insurance for over 50s. The good news is that one does not have to spend a fortune trying to eat healthy. Below are some ways that one can eat healthily and frugally:

Eat at home as much as possible
Studies have shown that the average American family eats out four to five times per week. Restaurant food is generally less healthy than the meals that one can cook at home. Eating out can also be quite costly. That is why people should try to cook at home as much as possible. Eating out should be limited to twice per week. A family of four can save up to $100.00 dollars per week by choosing to eat at home.

Use coupons whenever possible
Healthy food is more expensive than regular food, but people can save money by using coupons. There are many coupons that offer discounts up to 20 percent or more. Grocery coupons can be found in newspapers, natural health magazines and online.

Buy in bulk
Buying in bulk is almost always cheaper than buying a couple of items at a time. Many grocery stores offer discounts to people who buy a certain amount of items. The cost of gas is skyrocketing and frequent trips to the grocery store can also cause one to spend more money on transportation. Additionally, people can also save time when they choose to buy in bulk.

Do not buy junk food
This might seem like a given, but many people do not realize how quickly those cheap treats can add. One should try to avoid items such as chips, cookies, ice cream and packaged foods as much as possible. Those types of foods are usually very high in sugar and saturated fat. One should also avoid buying sodas and other sugary beverages because they have almost no nutritional value. Water is the best choice drink. A person will be healthier and save more money if he avoids buying junk food.

Do not shop when you are hungry
Studies have shown that people who shop when they are hungry more money. They also have a tendency to buy more junk food. That is why people should make sure that they eat a well-balanced meal before they go shopping.

Shop around
People may also want to consider shopping around and comparing prices at several grocery stores before they pick a place to buy their groceries. This will not only help people save money, but they will also be able to burn more calories by walking the grocery aisles.

Cook large portions
Many people choose not to cook at home because they think that they do not have time. However, one can save time and money by cooking in large portions. People should cook a large meal at the beginning of the week. This will allow them to eat for a few days without cooking or eating out.

Eating healthy and frugally is not as hard as many people may think. Comparing the prices of several grocery stores, using coupons, buying in bulk, not buying junk food and cooking large meals at home instead of eating out will help people eat healthy and save money.

In today’s economy, many parents are shopping around for less expensive baby furniture to help offset the costs associated with the introduction of a new infant into the family. Here are some cost-cutting tips for finding good deals on nursery furniture.

Begin With a Plan
Because infant furniture is so cute, it is easy to go overboard with all the choices there are. A good way to avoid getting more (and paying more for) baby furniture than is needed is to carefully plan the nursery space to only contain the necessities. For example, figure out how long certain items such as bassinettes or cradles will be used and consider replacing both choices with a regular size crib with the mattress raised to a higher level.

Cribs and Mattresses
Outlet stores are great places to find good deals on baby cribs and mattresses. You will find many that are in fabulous shape with only a few tiny scratches in some hidden place. Read all the accompanying literature and make sure these items are safe, and you can go home with a new, high quality crib and mattress for hundreds of dollars less than you would pay at a retail baby boutique.

Break Up the Set
Rather than purchasing baby furniture by the set, consider purchasing only the individual pieces that you need. Not only will your nursery look more interesting, you can sometimes save big time at the cash register.

Nursery Theme
If you want a certain theme for your baby’s furniture, why not buy stencils and paint images of lambs or stars or whatever you want the theme to be? Instructions can be found in multiple locations online and doing it yourself is a satisfying way to save a lot of money over furniture that has already been painted.

Hold Off on That Shopping
Statistics show that each time prospective parents go into a store to purchase something for their expected infant, they end up buying two to three other items as well. Why not wait until the final weeks before the baby is born to take a list into the baby shop and purchase in one trip only what the child will need? This can save both time and money.

Don’t Be Shy
When friends, church or family members offer to throw a baby shower for your infant, take them up on it. Don’t be shy about opening registers at online or retail boutiques that will allow a couple of friends to go in together to purchase some of the more high dollar items. Also, be outspoken about the things you need and want. People who are interested in you and your baby will want to get you what you want.

Convertible Bed
Crib models are available these days that will convert into toddler beds as the baby grows. Think of the overall, long-term needs of the child and buy items such as convertible beds and other things that will grow with your baby.

With a little prior planning, there is no reason you can’t save some money when stocking your nursery!

Today’s schools are not known for teaching kids a great deal about managing money. In fact, many young people even graduate from high school without knowing how to balance a checkbook or the importance of saving for the future. So, in order for children to learn how to have a successful financial future, the bulk of their teachings will likely need to come from home. There are a variety of important topics that relate to finances. Here are a few of the top tips that kids should be taught about money:

Don’t Get Into Excessive Debt.
One of the most important topics that kids must understand about money – especially in light of the recent economic downturn – is that they should not ever get themselves into excessive debt. In this case, it is a good idea to teach them the difference between “good” debt, such as a mortgage, and “bad” debt, such as high-interest credit card balances. This is even more essential for those who are preparing to go off to college, as the credit card companies do a lot of advertising about “easy financing” to college students.

Some Financial Instruments Have More Risk Than Others.
Although it is important to invest, kids must understand that different types of investment options will carry varying risk. For instance, although investing in stocks could produce a higher return than bonds, there is also a great deal more risk of losing principal as well.

Know How Liabilities Can Affect the Value of Assets.
When teaching kids about how to build their net worth, they should know that even though they may accumulate a large number of assets, there may also be the need to finance some or all of these assets – essentially lowering their overall amount of value by the balance that is still owed on them. Likewise, kids should also be aware that financing assets that can appreciate such as property is better than financing a depreciating asset such as expensive furniture or home electronics.

It’s Never Too Early to Save for the Future.
Teaching kids that it’s never too early to start saving for the future is another top lesson. By showing them the “magic” of compounding interest, it will be easy for them to see that by starting to save at a young age will allow them to build up the value of their savings by a great deal more than if they wait until later in life to begin.

Pay Yourself First.
Certainly, one of the most essential finance related lessons to teach kids is that they should always “pay themselves first.” This means that no matter what bills are due, it is important to set aside at least some amount for savings on a regular basis, because after all – your most important creditor is YOU.

By showing kids the importance of saving and the value of interest, coupled with a good understanding of risk versus reward, it is likely that they will carry these financial lessons throughout their entire lives.

If you’ve ever bought anything on credit, borrowed money from a bank or credit union, or taken out an auto loan or school loan, you have a credit report with your name on it at the three major credit reporting bureaus – Equifax, TransUnion and Experian. Along with your credit report, you also have a ‘credit score’ that gives potential creditors an idea of how risky it might be to extend credit to you. The most popular credit scoring entity is the Fair Isaac Corporation. This is where the name – FICO Score – came from.

Your FICO Score is a three-digit number between 300 and 850. A FICO Score is simply a snapshot of your financial standing at a point in time. Your score can go up or down depending on activity within your credit report. Your FICO Score can determine whether you get the loan or credit card you applied for, or what your interest rate will be on your mortgage or auto loan. Even though there are various ways to access your credit reports at no charge, you will usually have to pay a fee to get your FICO Score. If you are trying to buy a house or make any other large purchase on credit, it would help you to know your credit score before you apply.

Who might use your credit score to make a decision about you? A lender, utility company, cell phone company, insurance carrier, employer or potential employer, military if you need a security clearance, property rental agencies. A good credit score can help you impress lenders that you are not high risk and you’ll be able to qualify for credit more quickly.

The FICO Score is determined by a formula weighting the following:
35% Your payment history
30% The amounts you still showing owing
15% Length of your credit history
10% How much new credit you’ve recently received
10% Types of credit you’ve used

Just to give you an idea of a “good” FICO score: With 720 or higher you’d be able to qualify for a home mortgage with the lowest interest rates. With 620 or higher, you may be able to qualify for an FHA loan or other lender with higher interest rates. With a FICO score lower than 620, you probably wouldn’t qualify for a home mortgage in today’s market. Your credit score, of course, would be considered along with income, length of employment, etc.

The first step to improving your credit score is finding out what it is. But after you know your score, here are actions you can take to improve it:

1. Pay your bills on time. If you’ve been late, get current and stay current. Late payments hurt your credit.
2. Seriously pay down debt. On credit cards, try to get the balance owed below 30% of the amount of your credit allowed on that card.
3. Even if you pay off credit cards, keep the account open so it can build your longterm credit.
4. Don’t apply for too much new credit all at once. Too many inquiries can hurt your credit.
5. Manage your available credit responsibly and your credit score will grow over time.

Just like with our physical health, there are some key rules that everyone should follow in order to stay financially healthy. By veering away from these basics, you run the risk of not attaining future financial goals, or worse yet, having unmanageable debt.

Tip #1: Pay Yourself First
When asked who their most important creditor is, may people respond that it is their mortgage company or the lender that has financed their auto. Yet, while these are important assets that many people must make regular payments on, the truth is that your most important creditor is YOU. Most people begin saving for retirement while they are still at a young age – and this is critical because the amount of income producing assets you have when you are ready to retire will be crucial to your future lifestyle. Therefore, no matter what your income is today, it is imperative that each and every month, you make a payment to yourself. This deposit could be in the form of a savings account, an employer sponsored retirement account such as a 401(k), or other investment vehicles of your choice that will help get you to where you want to go in the future.

Tip #2: Avoid Unsecured Debt
One of the worst financial traps that anyone can get into – whether young or old – is that of credit card debt. Many young people are bombarded with credit card applications while still in college. But, while the offer of instant credit may sound tempting, it is easy to let balances grow along with excessive interest and fees. If you aren’t able to pay off your credit card balance every month, you can easily get further and further behind until you are using a larger percentage of you income just to keep up with the minimum payment. Unfortunately, as the amount of your debt grows – and especially if you are unable to keep up with the payments – your credit score can be negatively affected. When this happens, it becomes more difficult to get financing from other lenders such are mortgage companies, auto loan companies, and other lending institutions.

Tip #3: Review Your Finances Regularly
Any plan will usually require a periodical update – and this is especially important when considering your financial plan. The goals you set and the milestones you achieve along with way will be imperative to how – and to how well – you will live in the future. So remember that it’s important to get regular financial health “check-ups.” It is a good idea to review your financial situation at least annually. This means that you should really take a look at your income, expenses, and savings in order to determine if you are still on track with your financial goals. In some cases – especially if you’ve had a life changing event such as marriage or the birth of a child – your financial goals may have changed. Therefore, be sure that you make the necessary revisions to your financial plan in order to compensate for new milestones.

Credit is more important than ever these days. If your credit score is in the dumps (and an amazing number of people suffer from bad credit), you need to know how to improve it. Better credit will allow you to enjoy lower interest rates on credit cards and loans, and you’ll find that you qualify for financing that you didn’t before. How do you improve that credit score, though? Here are five of the best options for boosting your credit score.

1. Check Your Credit Report – Your credit report is the key to your credit score. You need to make sure you check it once per year (you get 1 free report each year from each of the 3 major credit bureaus). Checking your report annually will help you ensure that each listing on the report is accurate. If you find items that are not yours, dispute them immediately. Credit reporting agencies make mistakes too, and reporting the item will help improve your credit score.

2. Start Catching Up on Payments – One of the most important things to do is to start paying off your debts. If you have unpaid balances that are past due, these need to be taken care of. 35% of your credit score is made up of payment history, so the more past due accounts you can change to “paid in full”, the better your score will be. Start small if you have to, but start paying off any debts on your credit report listed as past due.

3. Don’t Apply for New Credit – It can be tempting to apply for new credit cards, particularly when you’re bombarded with “pre-approved” letters in the mail. However, it’s important that you avoid opening any new accounts. Not only does this keep you from any additional spending, but too many credit inquiries will reduce your credit score as well.

4. Don’t Close Accounts – Some people recommend closing your accounts, especially if you’re behind on payments. However, closing a credit card account while there is still a balance owed will have a negative effect on your credit score. Keep those accounts open and pay them off. Once they’re paid in full, you can consider closing them. Even once it’s paid off, you might consider keeping a few accounts open so that the lender continues to report your credit limit to the bureaus.

5. Reduce Your Debt-to-Income Ratio – If you have a high debt-to-income ratio, chances are good that your credit score is lower than it should be, even if you are current on your payments. Find out if your lenders will raise your credit limits, or consider cancelling some of your accounts. Sometimes, too much credit is a bad thing.

Bad credit can be crippling. It can force you to pay exorbitant interest rates, and even put you out of consideration for financing. However, with the five tips listed above, you can begin rebuilding your credit and regaining your life.

It seems that with just about any high-dollar purchase, as well as many moderately priced items today, we are asked to purchase extended warranty coverage. In fact, in some cases, the salesperson who sold us the item can just about have us convinced that the item is likely to break at approximately the same time that the manufacturer’s warranty runs out. Yet, although many of the extended warranties that are offered provide easy to repair or replace options, are they really worth the price? The answer to that question is that…it depends.

Review the Item’s Maintenance History
One of the factors to consider when deciding to purchase an extended warranty is the history of repairs that other customers have had to make on the same item. This information is easy to obtain online by going to any number of product review websites.
This is a great way to get a feel for whether or not the item you are considering purchasing has a good or bad reputation for working correctly. One thing to keep in mind, however, is that even if an item has great reviews, there is always the possibility of purchasing a “lemon.”

Consider How Long You Plan to Own the Item
Another factor in your decision to purchase an extended warranty is how long you plan to keep the item. If, for example, you only plan to use it for a short period of time, then it may be worthwhile to take your chances with just the manufacturer’s warranty on the product. On the other hand, if you are buying something you plan to use regularly for the long term, then the extended coverage may be worth the extra cost.

What Type of Protection is Really Being Offered?
Extended warranties are essentially insurance policies. Therefore, many of these plans require similar rules that are often found in other types of coverage such as the payment of a deductible or co-insurance.
Based on this, some questions you should ask prior to purchasing an extended warranty should include:

•Are there any deductibles or copayments that need to be paid prior to obtaining the coverage or reimbursement promised in the extended warranty policy?

•If there is a deductible required, will it need to be paid every time that the item breaks, or only the first time?

•Is there any type of waiting period or minimum ownership time frame in which you have to own the item before coverage will become effective?

Consider the Price of the Item Versus the Cost of the Warranty
One of the biggest criteria that should help you in determining whether or not to purchase extended warranty coverage is the price of the item itself. For instance, if you are purchasing a small electronics item that costs under $100, then it may be worth it to take your chances and forgo the extra coverage. However, if you are purchasing a pre-owned automobile for several thousand dollars, then the purchase of an extended warranty may be well worth the price as it can provide you with both the coverage and the peace of mind in knowing that you won’t need to fund all of the costs of potentially expensive repairs.