Tag: Personal Finance (page 2 of 2)

Strategies for Quick Debt Repayment

John J Bowman Jr - Debt Repayment

It’s a warm Saturday afternoon, and you’ve decided that you deserve a day out on the town with your friends. You’re exhausted and burned out from a too-long work week, sick of the grind and needing a break. You’ve been so thoughtful lately, you think, minding your budget, that you deserve to splurge a little. You hit the mall with a gaggle of friends and start swiping; more than a few bag handles circle your wrists as you reach for your credit card to pay for overpriced popcorn and soda at the complex’s theatre. You haven’t gotten your paycheck yet, but that’s okay – you know that your credit will cover you for now. When you check your banking app the next day, though, you can’t quite believe the number that blinks up at you. How can your credit balance be so high?

 

Sometimes, using a credit card to cover purchases can feel like playing with Monopoly money. We spend and spend and spend, knowing that we don’t have to pay back our debt right now. The fact that the money will need to be paid back at some point is a concern for later…until later rolls around to the present, and we face a veritable mountain of debt. According to a 2017 nerdwallet study on household debt, the average American consumer owes $15,983 in credit card debt. Totaled across the nation, that’s $931 billion owed by US consumers. Paying off this debt is an intimidating endeavor, but not an impossible one. Here, I provide a few strategies for a quick and efficient debt repayment.

 

Put the Cards Down

If you want to lower the mountain, why would you add to its height? Stop using your credit cards, and avoid making purchases that would add to your overall balance. Steering clear of credit for a few days or weeks might help you keep better tally of how much you actually spend in a day; the dues feel dearer when you have to pay them immediately, rather than at some hazy later date.

 

Revisit Your Budget

Take a closer look at your current budget! Can you trim any of your costs? Be tough but fair with yourself; you probably don’t need Netflix, Hulu, and HBOGo. Being on a budget doesn’t require you to give up all entertainment, but treating yourself should only go so far. Once you have a pared-down budget, you can start crunching the numbers and make an estimate of how much you can afford to apply towards your debt each month. Remember, paying off your balance now will greatly decrease what you pay in interest later!

 

Pick Up a Side Hustle

Trimming a budget can only go so far. In the end, you’ll make more from a part-time job or side hustle than you would ever save by canceling subscriptions or couponing. Find a money-making gig that can fit with your schedule!

 

Apply Unexpected Income Sources Towards Your Balance

It can be tempting to splurge when you find yourself with an unexpected windfall. However, the money you spend on luxuries now could be handicapping your ability to pay for more basic needs later. Put bonuses, inheritances, and tax refunds towards paying off your debt! Once you live debt-free, you will be able to afford splurging now and again.

 

Be Consistent

Debt repayment won’t happen unless you hold yourself to a firm budget and repayment schedule. Be consistent! As much as it might hurt to pass on dinners out or afternoons at the mall, your debt-free future self will be much happier and more financially secure for your efforts.

 

Credit Card Do’s and Don’ts

john j bowman jr accountant - credit card

Credit cards are like keys; they open doors to affordable mortgages, nice cars, low-interest loans, and ideal rental options. As useful as these thin plastic cards are, though, they aren’t without their dangers. When over- or thoughtlessly used, credit cards can cause consumers to spiral deep into debt, and ultimately have a negative impact on a person’s ability to borrow money. To (safely) get the most out of a credit card, you need to use them properly. Here are five do’s and don’ts to using credit cards.

 

Don’t Carry a Balance

 

Credit card companies charge high monthly interest rates. While paying the minimum balance may seem like a great idea, it won’t do much to bring down the balance. It’s important that credit card holders pay as much money as possible each month. Depending on the card’s interest rate, the average card owner will save anywhere from 10% to 29% a year in interest.

 

Use a Credit Card Instead of a Debit Card

 

Again, there is nothing wrong with using credit cards. The issue is the irresponsibility of credit card use. Credit cards and debit cards are not the same. Credit cards offer a greater level of fraud protection. In situations where fraud occurs, it’s easier to get a refund with a credit card.

 

Avoid Cash Advances

 

Cash advances may seem like a great idea. However, cash advances do not have a grace period. An automatic fee is added each time a person uses this card feature. Also, cash advances come with higher interest rates than the rest of the credit card balance.

 

Don’t Use All of the Available Credit

 

The amount spent on a card should not exceed 20% to 30% of the available credit limit. Using any more than this will affect the FICO score. Even if the balance is paid off in full, card issues do not like when borrowers reach their card’s credit limit.

 

Take Advantage of Balance Transfers

 

Credit cards with high annual percentage rate cost consumers a lot of money. One way to alleviate some of these costs is by taking advantage of balance transfers. Some cards allow consumers to transfer the balance without paying a fee. The advantage of transferring the balance to another card includes paying lower interest fees.

 

Credit cards are useful. When used correctly they are convenient financial tools. Using these cards irresponsibly can lead to financial issues that may last years. Hopefully, these tips will help consumers avoid the pitfalls of credit card usage.

Tips for Keeping Your Credit Score Healthy

John J Bowman Accountant - Credit Score

Using a credit card is deceptively dangerous. When the money you spend isn’t draining directly from your checking account, it’s easy to assume that you have more than you do – and to find yourself under a mounting pile of debt. Using a credit card irresponsibly can lead you into debt, poor credit, and financial troubles down the line.  Maintaining a healthy credit score is essential if you are interested in taking out loans or if you prefer having the ability to have a credit card in your name. There are a number of benefits to having a healthy credit score; a positive score makes securing an apartment, car, or even mortgage far easier than it would be otherwise. Follow these tips to keeping your credit score high regardless of how much income you earn or debt you carry.

 

Pay Your Credit Card Bills On Time

 

Whenever you make a purchase using your credit card it is imperative to pay your bill off in its entirety as soon as it arrives. Paying off your credit card in full each month is one of the quickest ways to build your credit without putting an overdue burden on yourself.

 

Maintain a Low Credit Card Balance

 

Keep a low credit card balance each month while always remaining self-aware of your current budget and expenses whenever you are making a purchase using your credit card. Maintaining a low credit card balance minimizes the risk of you being unable to pay your credit card balance in full once your bill arrives. The higher your credit card balance becomes, the more difficult it is likely to be to make full payments if you are on a set or limited income that does not fluctuate.

 

Use a Credit Report Monitoring Service

 

One of the best ways to protect your credit score and to keep it healthy at all times is to use a credit report monitoring service like Credit Karma. Credit report monitoring services provide you with a complete overview of your credit reports as well as your scores according to the top credit reporting agencies in the country. Using a credit report monitoring service is a way for you to ensure you are not missing any payments and that your credit score is exactly where you expect it to be before making any future financial decisions.

 

Taking the right steps to maintain a positive credit score is extremely useful when you want to improve the quality of your financial standing in the future. Whether you are currently in debt or building your credit score from the ground up, implementing the right tips along the way is essential to guarantee success.

Leasing Vs. Buying a Car: Which Wins?

John J Bowman Jr Accountant - Buying v Leasing

It can be easier to take a car for granted when you’re young and learning to drive. After all, Mom and Dad already did the financial heavy lifting of purchasing, maintaining, insuring, and – in some cases – fueling the car. While these young drivers might need to spend a twenty now and again to cover extra gas costs, they don’t truly feel the pinch of automobile costs until the end of college rolls around and they realize that they can’t keep their parents’ SUV forever. Instead, they need to crunch their budgets to see if they can afford to own and keep a car without their parents’ help. In this blog post, I’ll discuss the relative merits of buying a car versus leasing one.

 

Leasing

 

Pros:

 

Leasing has its perks. Under a lease, drivers can take a new car home every two to three years while paying lower monthly fees than the average auto loan demands. Because the car is newer, it will have fewer mechanical problems and remain under warranty for the duration of a term. Leasing will thus cost you less in expensive maintenance than a comparatively priced older car might if you bought it outright. With a lease, you also don’t need to worry about offloading your car when you want a new one; you simply trade it in for a newer model at the term of your lease agreement expires.

 

Cons:

 

Leasing may not be for everyone, however. While a lease gives you possession of the car, it does not give you ownership. Lessees are not permitted to alter or damage the car in any way, even if the change is a simple paint job customization. Drivers must keep the cars in top condition and mind their mileage limits; otherwise, they might find themselves holding pricy wear and tear fees when they return the leased vehicle. In the end, signing a lease simply may not make financial sense. While the monthly bill for a lease is typically less than what a car loan would demand, leases often cost more in the long run when those monthly payments are added up – and backing out early isn’t usually an option. Leases tend to include penalties against early termination in the fine print.

 

Buying

 

Pros:

 

Who doesn’t want to own their car outright? Car ownership allows drivers the right to customize and drive their vehicles without needing to mind mileage limits or vehicle quality. By keeping the same car over a period of years, owners spread out the cost to be significantly less than the total bill of a lease.

 

Cons:

Car owners don’t have the baked-in perks of a lease. When a bought-and-sold car’s warranty runs out, the weight of maintenance costs falls squarely on the owner’s shoulders – and depending on the age of the car and the nature of the problem, these issues can become expensive. In the short term, car owners also face higher monthly bills for their car loans. If they decide to sell their car, the responsibility of finding a buyer and filing the proper paperwork is entirely their responsibility.

 

Conclusions

 

In the end, the decision comes down to the individual situation. What are the driver’s finances? Can they afford the monthly expense of a lease, but not the heftier burden of a car loan? Does their daily commute to work push their mileage count above what a lease would allow? All of these questions need to be asked and considered before a driver makes their final decision.

Tips for Saving Money While Traveling Abroad

Traveling abroad is an ideal way to become more culturally sensitive and aware. At any stage of life, traveling abroad allows you to gain skills and experience that can benefit you professionally. The only downside to traveling abroad is that it may prove to be quite expensive. Here are some tips to help you save money while traveling abroad:
Credit Card

The first tip is to make sure that you have a credit card that is going to be able to be used in a foreign country. You are going to need to do some research before you do any traveling internationally since some credit cards offer better benefits than others. Be sure to look at the fine print to see if you will be charged a foreign currency transaction fee.

Contact the credit card company

Next, make sure that you inform the credit card company with all of the dates that you are going to be traveling abroad. This is going to need to be done at least a week before you travel. There is a high chance the credit card company will assume the international purchases are fraudulent and will freeze the account if they are unaware of your travel plans.

Travelers’ check

An often neglected tip is obtaining a travelers’ check. These can offer you a bit more of security if your credit card cannot be used in the foreign country or if your credit card is stolen.

Local Currency

Save some money by exchanging your cash into the local currency as soon as your arrive instead of doing it at the airport. Most airports  have a lo of different fees that they are going to charge you.

References

The final tip to saving money when you travel abroad is to make sure that you have created a reference list of the credit card companies. This should include all of their phone numbers.

Stay tuned for more personal finance tips.
Safe travels!

Top 5 Personal Finance Podcasts

Podcasts sure have a come a long way since their early years over a decade ago. They are now considered a serious alternative to get valuable information on just about any and everything under the sun. The truth is there are many people who feel uncomfortable lending their voice for TV or radio, will do so for podcasts. This includes personal finance podcasts. The following are some of the best examples.

1. Stacking Benjamins
Joe Saul-Sehy, the host, definitely knows his stuff. A retired financial planner and former radio financial-show host for 15 years, Saul-Sehy brings you a ton of money-management experience. Stacking Benjamins’ format includes interviews with money experts like Mark Iwry from the US Department of Treasury.

2. Feed The Pig
Not one of your typical finance podcasts, Feed The Pig is a static podcast that isn’t updated very often. However, it is a top-rated financial podcast because it goes to great length to assemble some of the best minds in the financial world for you, such as members of The American Institute of Certified Public Accountants. From advice on buying your first car to mutual-fund investing, this podcast covers all basic stuff you need to know and that never gets old.

3. The Clark Howard Show
Clark Howard has been in the personal finance advice industry for years and hosts one of the most-popular and listened to financial podcasts. By age 30 Howard had made enough money to retire and now hosts a radio show from 1 to 3 p.m. EST. The show focuses mainly on how you can reduce expenses, build savings and smell money scams from 10 miles away.

4. Smart Passive Income
A solid personal finance podcast, Smart Passive Income teaches you how to earn more while working less. Host Pat Flynn interviews successful entrepreneurs who’ve generated large amounts of passive income. The show’s goal is teaching you some of the proven strategies for running a successful online business and how to optimize it to generate your own passive income.

5. Mad Money
Master finance guru and host of “Cramerica,” Jim Cramer ran a hugely-successful hedge fund for over 20 years, averaging over a 20-pecernt return for his investors. If you want learn how to invest in stocks, smartly and safely, Jim is your go-to guy. Cramer has a daily TV show that is also aired as a podcast.