Everyone is looking for ways to save money. One of the ways that you can save money is by taking better care of your automobile. After purchasing a home, buying a car is the second most expensive purchase that you will ever make. Let’s take a look at a few ways that you can save some cash during the winter driving season. The following is a guest post from Money Super Market.
Payday Loans Are a Financial Nightmare
January 6, 2010 By 4 Comments
A friend of mine was telling me about how he took out a few payday loans over a year ago. He said that he was strapped for cash and needed money in a hurry. He didn’t want to ask friends or family so he went to a payday lender. He then proceeded to tell me a story of a never ending cycle of usurious interest rates, high processing fees and payments that kept him in debt for 16 months. He explained how a loan of $1500 ended up in a repayment of over $10,000.
When I heard his story I decided to look deeper into payday loans. I started by googling the phrase “payday loans”. Over 5.75 million entries were returned by google search, I clicked on a few sites to do some investigating. To qualify for a payday loan you just need 2 forms of identification, bank statement, pay stub, personal check, social security number and a utility bill. That sounds simple enough. Payday lenders often refer to themselves as the quick and easy solution to your cash flow problems. Bad credit? No problem. Caught between paychecks? No problem. Short on cash? No problem. The problems come when you take a deeper look at the fine print in payday loan agreements.
Payday loan websites make it as difficult as possible to determine the APR that they are charging. The most popular websites have interest rates ranging from 500% to a whopping 1630%. For every $100 borrowed many payday lenders will charge a “service charge” of $25 every two weeks. For example if you borrowed $1,000. You would pay $250 biweekly to keep the loan active and none of this money would be applied to the principal. You would be making a $500 payment every month and not a dime would go to the principal of the loans. Payday loans have no maturity date and continue in perpetuity until you have enough money to pay more then the weekly service charge.
The terrible part about payday loans is that they have onerous terms designed to prey upon the working poor that have bad credit. The interest rates offered are ridiculous. If someone is desperate enough to visit a payday lender for $1,000, what do you think the chances are that the same person will have $1,250 in two weeks to pay off the loan? Little to none. Most people just scrounge up enough money to keep paying the service charges to keep the loan active. If a person is fortunate enough to ever pay the loan off, they will likely find themselves in need of another payday loan due to the bad terms of the first loan. What payday lenders fail to tell people is that what many people believe to be a lifeline utlimately turns out to be an albatross driving them deeper and deeper into financial ruin.
Higher Cable Prices Coming
January 3, 2010 By 1 Comment
Goodbye free TV. You may soon see a bump in your cable bill coming. Traditional broadcast networks CBS and Fox are now telling cable companies that they will be unable to carry their programming unless they receive a slice of cable carriers ad revenue. Fox was reportedly asking for $1 per subscriber from Time Warner Cable. And who do you think those charges will be passed along too? That’s right!…. you and I. I think that we will see a significant increase in cable and satellite bills over the next decade as networks demand higher programming fees. Prices could rise 7-8% per year as companies pass higher costs along to consumers.
Why are the broadcast networks looking for cable dollars? The business model is broken for traditional media. Until recently ABC, CBS, Fox and NBC used to support their operations through advertising revenue. As cable programming has become more popular market share has shrank for the Big Four. The shrinking market share has led to lower ad revenues as ad dollars have moved to cable and online. Now they are seeking to make up for lost ad revenue by getting a piece of the cable subscription pie.
Here are a few changes that I think will take place in the near future.
(1) You will see more cable providers seek to acquire network stations such as the NBC acquisition by Comcast. I wouldn’t be surprised to see Time Warner Cable make a play for ABC from Disney. This would allow cable companies to save on programming costs over time and gain a competitive advantage over rivals. They could offer the channels to competitors at a higher cost thus making their prices appear discounted. Any competitor that didn’t carry the channel would be at a severe disadvantage.
(2) Cable companies will be forced to unbundle programming. We are currently forced to pay for many channels that we don’t even watch. For example I never watch HLN, Fine Living Network, REEL, Travel Channel, TRU, NASA, Current and JewelryTV but I am forced to pay for these channels anyway. That’s just a few of them. I could come up with at least 50 more channels I never watch. I think it is only a matter of time before the cash strapped consumer is fed up and looks for other options. Satellite and cable companies could slash programming fees by offering consumers content that they actually want to see.
(3) Traditional broadcast networks will have to utilize streaming media for additional ad revenue. Maybe the broadcast networks join up with the rumored Apple venture to offer television subscriptions over the Internet.
Banks bid for your business
December 7, 2008 By 1 Comment
I stumbled across a new website called Money Aisle http://www.moneyaisle.com/. Money Aisle is a live auction site where banks bid for your banking business. Money Aisle is a site for consumers looking for the highest rate on CD’s and savings accounts. It seems pretty simple to use. You enter your state pf residence and deposit amount. The minimum deposit is $100. Member banks bid by offering higher interest rates for your business. The winning bank is the one that offers the highest interest rate. Money aisle then puts you in contact with the winning bank. I have never used the site so I can’t speak for its results. It is something that I may be interested in trying out to see how it works.
Put more cash in your pocket
December 6, 2008 By 3 Comments
During these turbulent times of rising unemployment and scarce credit; smart money management is becoming increasingly important. Here is a money management tip to help you keep more cash in your pocket this upcoming year.
Eliminate your huge income tax windfall. If you received a big tax refund last year then you are withholding too much money. Think of it this way: A big tax refund is an interest free loan to the federal government. This is money that you could use to build your savings or pay off some bills. Consider changing the number of withholding allowances that you claim. It’s simple and easy to do. Ask your employer for a W-4 form and just switch your number of personal allowances. You will get less money back at tax time but have more money added to your paycheck. This will be useful in helping you to make it through a tough 2009.
Suze Orman or Dave Ramsey?
December 1, 2008 By 7 Comments
Suze Orman offers financial planning advice on the Suze Orman Show on CNBC and on suzeorman.com. She has written numerous best sellers on personal finance including the 9 steps to Financial Freedom. Dave Ramsey offers personal finance advice on the Dave Ramsey Show on Fox Business and on daveramsey.com. His most famous book is the Total Money Makeover.
Who do you think is the better personal finance expert? Whose advice do you find more useful? Is there another personal finance expert that I am leaving out? I would like to know what you think. I have my own opinion but will save it for a later post.
10 Simple Changes To Your Daily Routine That Can Save You Money
November 27, 2008 By 2 Comments
1. Skip the winter warm up. Letting your engine idle is unnecessary for modern cars. It puts excess wear on your engine and wastes gas. Just drive off slowly and don’t mash the gas pedal.
2. Pack your lunch. Eating out will eat a hole in your budget. $5 here, $10 there…..It adds up.
3. Cancel any newspaper and magazine subscriptions. You can find the same information online for free.
4. Skip the bottled water. Switch to tap water. Not only are you saving the environment, you are saving money.
5. Skip the convenience store. Convenience stores grossly overcharge you for the so called ”convenience”.
6. Sell your fad collectible. Remember when beanie babies were fetching ridiculous amounts of money. Not so today. If you have a valuable collectible sell it while it has some value.
7. Turn your thermostat down 5 degrees. This will save you roughly 15% off your heating bill.
8. Buy generic products when possible. Forget brand names. Store brand food items taste just as good as the name brand items but at a fraction of the cost.
9. Do your Christmas shopping at troubled retailers. Retailers like Circuit City and Mervyn’s have to liquidate their inventory. You can find some great deals at these stores facing tough times.
10. Cancel your home telephone service. Eliminate an unnecessary bill. Take advantage of the free nights and weekend plans for your cell phone.
Good Debt vs. Bad Debt
November 22, 2008 By 3 Comments
I have read numerous books and articles that detail the difference between good debt and bad debt. Television financial experts tell us that debt is not a bad thing. That its all about how you manage debt. We have been taught that good debt is borrowing money to purchase something with the expectation that the price will rise. Home mortgage loans, student loans and business loans are examples of good debt. Conversely, we are taught that bad debt is borrowing money to purchase something that will depreciate in value. Auto loans and credit card loans are examples of bad debt. I have a different point of view on debt. I think that there is basically no distinction between good debt and bad debt. All debt is bad debt. There is no such thing as good debt. Any form of debt is a liability that must be repaid. Debt can turn into an albatross that stays with you for years and years and years.
Money that is borrowed must be repaid at a specified interest rate regardless of the value of the purchase. There is no guarantee that an asset purchased through the use of credit will appreciate in value. There are countless examples of this type of situation. Individuals that bought homes during the housing boom because they believed that real estate could only appreciate in value. individuals that purchased stocks on margin because they believed that the stock market would only increase in value.
Am I saying that it is never worth using debt for things such as financing your education or purchasing a home? No, I just want us to rethink our views on using debt. Situations may arise where we have to use debt to pay for a necessity. But that still does not make it good debt. The only people that debt is good for are the lending institutions. Capital One, American Express, Bank of America and JP Morgan Chase are some of the biggest beneficiaries of our use of “good debt”. Sometimes I think about the headaches that I could have saved myself from by not relying on so called good debt.
5 Ways to Live Debt Free
November 17, 2008 By 3 Comments
Use these 5 ways to live debt free.
1) Renegotiate your high interest rate loans.
High interest credit card debt can be renegotiated with your credit card company. You can call your credit card company and negotiate a lower interest rate. If your company refuses you can threaten to transfer your balance to a lower interest credit card. Many times this will make the company grant your request. Credit card companies do not want to lose your business to a rival company. If that doesn’t work then transfer the balance to another card with a lower rate. High interest automobile loans can be refinanced at your local credit union in as little as nine months. Lowering your interest rate from 18% to 8% is the same as receiving a 10% return on your money. It allows you to keep more of your own money.
2) Live within your means.
Attitudes and habits that condone overspending can really hurt your future goals of achieving financial security. Habits such as spending money consistently on new clothes, shoes and jewelry. You would be surprised at how quickly entertainment expenses such as buying movies, music, going out to eat add up. Always having to have the latest car for example can also hinder your ability to save. These types of habits will keep a person debt ridden for years. Too many Americans already live paycheck to paycheck. It is critical to adopt the perspective of having your money work for you. Whenever you save, your money is earning interest and working for you. Whenever you are spending, you are working for your money. Always remember that just because you have the credit to pay for something does not mean that you can afford it.
3) Never pay the minimum.
Paying only the minimum will keep you in debt for years. It also ensures that you will pay thousands of dollars in interest to your credit card company. For example, if an individual with an $8,000 credit card balance at an 18 percent interest rate makes only the minimum payment. It will take him over 30 years to pay off the balance. Paying an extra $20 or $30 per month can greatly reduce your balance over time. Remember that you only agree to pay back the principal when you borrow money; never the interest.
4) Watch out for hidden fees.
Lenders make a fortune by charging fees to consumers for any violation of the account agreement. These fees are typically located in the small print of your agreement. Companies charge fees for late payment, overdrafts, account maintenance, inactivity and more. Be sure to read your agreement carefully to avoid hidden fees. One late payment can change your interest rate to the highest rate allowed by law.
5) Create a safety net.
Remember to save money while you are paying off your debt. Sometimes people will pay their debt off and have no remaining cash. Then they are forced to begin using their credit all over again. The best way to create a safety net is to make a firm commitment to save a certain amount of money each month. Pick an amount that you will be able to stick to each month. A good rule of thumb is to begin by saving 10% of every dollar that you receive. Automatic deductions to these accounts can ensure that you make regular contributions at the same time each month.
