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The Importance of Budgeting

May 9, 2013 By Leave a Comment

why you should create a budgetIf you’re reading this blog, you’re obviously interested in saving money, paying off debt, or reaching a healthy financial state. Regardless of what your end goal is, it’s vitally important that you create a budget to plan and track where your money goes. So what are the advantages to budgeting?

You’ll immediately find ways to save money by identifying spending leaks. Maybe you spend more money than you realize on fast food or coffee or something else. If you find a number that’s way too high, you’ll know this is an area to cut back on to free up more money.

You’ll be able to prepare for emergencies. Once you identify spending leaks, you can cut back spending in that category, and why not throw the difference into an emergency fund?

You’ll reduce your debt. If you spend $50 a month on clothes, why not use that $50 to pay off the clothes you charged to your credit card last month?

You’ll reduce your stress level. Maybe ignorance is bliss, but when it comes to money, not knowing where you stand can be very stressful. Discovering you’re in more debt than you realized is stressful too, but by creating a budget, you’re taking a healthy step forward with your finances – and taking control will definitely help your stress levels.

You’ll help yourself reach your financial goals. Maybe you want to save for a down payment on a house, or take a dream vacation, or something else. Whatever your goal, you can add a category to your budget to help you save for it. Treat this category just like bills or rent or some other necessary spending category, and contribute that much to your savings account each week no matter what.

You won’t be surprised when your statements come in the mail. Your spending should be about the same every month, so when you’re budgeting and tracking your spending, you won’t get that sticker shock every time you open your credit card statement.

If you’re already a budgeter, what’s the biggest advantage of budgeting to you?

Filed Under: Budgeting, Debt, Featured, Financial Education, Financial Tips and Tricks, Money Management, Reduce Debt

Tax Season Uncertainty: How Will It Affect You?

January 3, 2013 By Leave a Comment

http://www.american.com/graphics/2007/november/Featured_taxes.jpg

If you’re looking to get a head start on filing your taxes this year, you may be out of luck. Tax season usually lasts from mid-January to mid-April, and many families file taxes well before the April deadline, hoping to receive their refunds early as well. But this year, due to Congress acting so late on the Fiscal Cliff, the IRS will be behind on updating its forms and systems based on the new laws. So far, no date has been announced for when consumers can start to file their taxes.

So what does this mean for you? Well, it means your refund will probably arrive later than you hoped if you intended to file early. Many families often file early to use their refund to pay off credit card debt incurred around the holidays – if your family was one of those, you may have to find other ways to pay until the return comes through.

The IRS has only announced that they’ll have more information available “soon” but has not given us anything more specific than that. A similar issue happened about two years ago, when lawmakers came to an agreement in mid-December, pushing the date to begin filing back to mid-February. This year, lawmakers didn’t come to an agreement on the issues until January 1, so tax season may be pushed back even further this year.

Stay tuned to CESI and we’ll keep you updated as more information becomes available. In the meantime, you may want to be saving extra money if you had already planned to have your tax return available early this year. Be sure to follow our Twitter account, @cesidebt, and our Facebook page, to stay in the know about the upcoming tax season!

Filed Under: Consumer News, Debt, Featured, Holiday Spending, In The News, Taxes

Financial Resolutions for 2013

December 28, 2012 By Leave a Comment

http://g2.oswaldroad.net/files/2012/01/new-year-image1.jpg

It’s the end of December and the New Year is about to begin! You know what that means – time to set your New Year’s resolutions. In the past, I have made the same old resolutions most people make – like exercising more, eating healthier, losing weight – only to break them by the end of January. This year I’m taking a different approach, making some financial resolutions. I want to pay off my debt (thankfully, I don’t have much), build up savings, learn to budget better, and stop wasting money (I have resolved to do much more of my regular grocery shopping with coupons this year).

So what are some other financial resolutions to make for 2013?

  1. Keep track of where your money goes. Write down everything you buy, from groceries to your morning coffee to that mid-afternoon caffeine boost from the vending machine. You might be shocked to see how much of your money could be saved by brewing your own coffee at home or bringing lunch to work a few days a week. Writing it down will help you see what areas need to be improved upon.
  2. Monitor your credit. You can get a copy of your credit report from each of the three major credit reporting agencies for free once per year at www.annualcreditreport.com. That means you can check your credit for free every four months. Make sure your information is accurate and there’s nothing suspicious on your report.
  3. Pay off as much debt as possible. If you have a few extra dollars each month, throw it at your credit cards or student loans to avoid accruing more interest. It’s always a good idea to pay your balance in full, but at the very least try to pay more than the minimum payment to get your debts paid off as quickly as you can.
  4. Start an emergency fund. Or build on the one you already have. It’s a good idea to save up at the very least three months’ worth of living expenses, but try to save more to be on the safe side. Putting even a small percentage of each paycheck into a savings account will pay off in the case of an emergency.
  5. Open a 401(k). This is the best thing you can do for your future. Many employers will also contribute to your retirement fund (that is free money!), but you have to open one and contribute to it first. Talk to your employer to see what your company offers.
  6. Spend on your needs, not wants. I know this can be hard sometimes. I love clothes and I’ve been guilty of splurging a few times, but I’ve gotten better about exercising a little will power when it comes to things I actually need. Take care of your needs first – pay your bills and debts, add to your savings accounts, budget for necessities – and treat yourself to a “want” every now and then if you have discretionary income leftover.

Focusing on a few of these resolutions will make you better off financially in 2013. Not only will you save more money and pay off more debt, you’ll be on track to achieve a better financial life for yourself and your family.

Filed Under: Credit, Debt, Featured, Financial Tips and Tricks, Money Management, Reduce Debt, Retirement, Saving

Beware the Department Store Credit Card!

November 14, 2012 By Leave a Comment

http://static2.businessinsider.com/image/4ae9b3180000000000ebb599/creditcards.jpg

Have you started your holiday shopping yet? I do most of mine online to avoid crowds and higher prices. But if you’ll be doing your shopping in brick-and-mortar stores this season, I have one warning: beware the department store credit card!

We’ve all been in this situation before. You’re at a department store at the mall and you’re waiting in line with a couple hundred dollars worth of gifts, dreading the total that will pop up on the register. The cashier rings you up, and sure enough, the total says $217.25. Ouch. But wait! “Would you like to save 20 percent today by opening up our store credit card?”

Hmm. Twenty percent of $217? That’s like…over $40! That’s practically like getting one of those presents for free! And you don’t even have to pay for it all now. This sounds like a great idea!

STOP RIGHT THERE! The card may have the illusion of saving you money since it took $43.45 off your bill, but chances are, it’s actually going to cost you a lot more than that. Most store cards don’t have any introductory or grace period before interest is charged, so more than likely, that $173.55 you just paid is already accumulating interest. There goes part of your discount.

It’s also accumulating interest at a higher rate than most credit cards, on average about 24%. When the bill comes, say you only decide to pay for part of it and you’ll make payments on the balance. Bad idea. Within a few short months, you’ve lost your 20% discount and will actually owe more than you would have originally spent without the credit card.

But say you just decided to make payments anyway. Stores usually set the minimum payments low, hoping people will take as long as possible to pay off their balance, thus earning more money for the store.

It’s so easy to sign up for store cards, so some people practically collect them. But this can do damage to your credit score. Having so many inquiries on your credit report can bring your score down. So can opening several accounts within a short period of time, because it lowers the average age of each account.

I won’t argue that ALL store credit cards are bad for everyone. It probably depends how you treat credit cards in general. If you pay them off in full every month, a store card won’t hurt you nearly as much. I have one store card that I use frequently, and each month I’m sent a 20% or 30% off coupon, good toward everything I buy in the store. If I don’t need anything from the store, I throw the coupons away, because they’re just trying to entice me to come back to spend money. But if I was already planning a trip to the store, I take advantage of those coupons, use my charge card, and pay the balance off immediately. But store cards are extremely dangerous for anyone who can’t do that.

So next time you’re at the checkout register and the cashier is pushing you to get that credit card, just say no. They may be pushy, especially around the holidays because often companies will reward the employee who gets the most people to open a credit account – but just say no to their badgering, and pay with cash or a regular rewards credit card that you’ll pay off immediately.

Filed Under: Credit, credit cards, Debt, Featured, Holiday Spending, Shopping

Voluntary Foreclosure: Is It Right For You?

September 10, 2012 By Leave a Comment

http://www.totalmortgage.com/blog/wp-content/uploads/2012/03/foreclosure.jpg

If you’re one of the millions of Americans behind of their mortgage payments, you’ve probably wondered what your options are. You may have even heard of a process called voluntary foreclosure, in which borrowers essentially “walk away” from their homes, leaving them abandoned for the lender. But voluntary foreclosure should always be your last resort.

Families fall behind on their mortgage payments and see voluntary foreclosure as an option for many reasons. Some have dealt with job loss, injury, illness, or a death in the family that left them unable to keep up with payments. The values of many properties have dropped so much that borrowers have been left with upside-down loans, where the amount owed on the home is more than the home is worth. This makes it impossible to sell the home for enough money to cover the balance of the mortgage, making walking away look like the best solution.

But voluntary foreclosure causes significant damage to your credit and it may not even entirely relieve your debt. Depending on your mortgage type, if the lender sells your home for less than you owe, you may still have to pay the balance owed. Additionally, if you’re still making payments on the house, your credit will be better than if you’ve been foreclosed on – voluntary foreclosure will destroy what credit you do have left.

There are benefits to voluntary foreclosure, but only for the lender and those who are so far behind that the loan will soon default
anyway. It allows borrowers to get out of a bad situation without sinking more money into the home, only to lose it in the near future. The lender benefits by not having to pay for the expensive foreclosure process. Still, voluntary foreclosure should be used as a last resort.

Before considering foreclosure, keep in mind the damage it will do. It will stay on your credit report for 7 to 10 years, making it nearly impossible to obtain another loan during that time. It could even make renting difficult since your credit will be destroyed. You may also suffer emotional and physical effects from the stress of foreclosure, and relationships may suffer as well.

So what should you do instead? Never ignore the problem – always communicate with the lender. The lender would rather work out a repayment plan with you than go through the expensive process of foreclosing on your home. You may also be able to work out a short sale with the bank, where the bank will accept less than the amount owed on the mortgage if your home sells before beginning the foreclosure process. Remember, communicating with the lender will give you more options than ignoring the problem.

Regardless of what you choose, keep in mind the damage voluntary foreclosure will do to your credit. There are some foreclosure
assistance programs that take advantage of families in need of assistance, so always do your research and keep yourself informed. Finally, utilize  resources like CESI that help you take control of your debt!

Filed Under: Bankruptcy, Credit, Debt, Featured, Housing

Cost of Higher Education Up 440% Over Last 25 Years

August 27, 2012 By Leave a Comment

http://blog.vecci.org.au

 

That’s just one of the sobering pieces of information given in the below infographic.

With costs at an all-time high, some feel that getting a professional certification, starting a business, or joining the military would be better investments than going to college.  And of course, there are many success stories from people who never graduated or went to college.

But many still insist that the degree remains worth the cost.  Some studies have shown that those with degrees have more job stability in addition to more opportunities for employment.

Either path could be disastrous if you don’t have some kind of plan.  With so many personal factors that may not be included in studies and infographics (What do the future job prospects look like for your major?  Where do you plan to live?), it is definitely worth taking the time to explore your options and think about well in advance.

 

Click to see full-sized image.

Source: www.schooltutoring.com

 

Filed Under: Debt, Economy, Education Costs, Featured, Student Loans and Education

Debt Isn’t Life or Death- 5 Things to Help Remember That

March 21, 2012 By Leave a Comment
yellow smiley face

image: cartoonlogodesigns.com

 

 

With a large amount of debt and all the other daily stresses, it’s difficult to remember the important things.

After working all day then dealing with finances and whatever other obstacles are in my life, I usually have no time/energy to think about the positive things.  I came up with a list of things to read every day as I get debt-free. Maybe they can help you:

  1. You have your health. Even if you have health issues, you’re alive and that’s the most important thing. You may not have money, nice things, or a great credit score, but you have life
  2. You have love. The people around you don’t care how much debt you have or your level of success. That may seem false when your loved ones criticize you, but it’s because they care about you.  Your debt may be $100,000, but love is priceless.
  3. Stress is motivation. Whether it’s the stress of paying off debt or finishing a task, stress keeps you going and feeling alive. Embrace it- stress is keeping you going and a sign of your passion to achieve.
  4. You’re moving in the positive direction. No matter the amount of your debt or stress, you’re making effort to change things around and move in the right direction.  Remember that you’re going uphill, not down anymore.
  5. Relax. Debt is overwhelming, but in the end it doesn’t mean that much. Take time to breathe and relax.  You deserve it.

 

 

Filed Under: Debt, Featured

Average Credit Card Debt Drops 11% in 2011

January 17, 2012 By 1 Comment
scissors slicing credit card

Image: www.wcgcollects.com

The average consumer had $6,576 in credit card debt in 2011, down 11% from 2010.  These figures come from a report on CreditKarma.com based on data from 300,000 users.

The downward trend continues from 2010, when credit card debt decreased 7%.  However, the decreases may not continue as the economy recovers. Improving consumer confidence and eased credit requirements from banks are key factors in possible credit debt increases. “I believe we are just about at the bottom of the debt trend,” said Ken Lin, CEO of Credit Karma in an interview with CNN.

Consumers in Wisconsin had the lowest credit card debt last year at $5,062, while Alaska had the highest at $7,937.  Here in North Carolina, the average credit debt balance was $6,353, down 10% from 2010.

Mortgage debts stayed the same in 2011 with an average balance of $173,876 per capita.  Auto loan debt went up 2% to $15,504 across the nation. After all debts were summed up, each consumer carried an average $210,236 in debt, down about 1% from 2010.

Note: all numbers and quotes from CNN.com

 

Filed Under: Consumer News, Debt, Featured

Credit Card Debt: Fast Facts

December 10, 2011 By 1 Comment
pile of assorted credit cards

image: inquisitr

 

Credit card debt is tough. While the facts below may not put a smile on your face, they may help reassure you that you are not alone in your journey to live debt-free.

  • 80% of American households have at least one credit card.  (Source: www.cardweb.com)
  • Total credit card debt in the United States:  a whopping $800 billion. (Source: www.cardweb.com and the Federal Reserve)
  • Average household or individual debt (or both) is about $9,300 per household holding at least one credit card. (Source: www.cardweb.com)
  • The average undergraduate is carrying $3,173 in credit card debt.  (Source: Sallie Mae, “How Undergraduate Students Use Credit Cards,” April 2009)
  • 81% of people are very or somewhat unlikely to talk to someone they just met about credit card debt, the same percentage that would be unlikely to talk about details of their love life. (Source: CreditCards.com research, January 2009)
  •  Each cardholder owns an average of seven credit cards — three bank credit cards and four store or gas credit cards. (Source: www.cardweb.com)
  • 21% of consumers believe they are treated unfairly by credit card companies. (source: www.consumerreports.org, September 2009)

 

Credit to ABC News, CreditCards.com, and Hoffman Brinker for gathering these facts.

 

Filed Under: Debt, Featured Tagged With:

How To Hide From Debt Collectors

September 19, 2011 By Leave a Comment

How To Hide From Debt CollectorsHave you ever tried to hide from debt collectors? If you’re like most people, you would much rather spend the rest of your life hiding from debt rather than facing it. If you are looking for some quick ways to avoid thinking about your debt, look no further! So without further ado, here are the best ways I can think of to hide from debt collectors:

Hide From Debt Collectors
  1. Get a new phone number – Just let all your friends and family know you are avoiding debt collectors so you have to get a new number.
  2. Never apply for credit ever again – Who needs it?  You don’t need a house or car… that’s why there are shelters and public transportation.
  3. Change your name – Nothing says fresh like a brand new name.  You can even go crazy with it!  Change your name to Sir Debt Suckzorz or Lols Alot!
  4. Live in a cave – I hear the caves are beautiful this time of year… and you might even find some company!
  5. Don’t get a job – What’s the point?  Your wages will just get garnished!

Of course, you know this advice is absolutely the opposite of what you should do, right? Hiding from your debt might work in the short-term, but chances are it will still catch up with you eventually and you will continue to deal with the stress of knowing it’s there – breathing down your neck. If you want to deal with your debt once and for all, you do have options! Instead of hiding from debt collectors, try these tips instead:

  • Talk to a credit counselor: a licensed, non-profit credit counselor will be able to give you advice and an action plan based on your financial situation.  It’s likely that there are several choices available to you for getting out of debt.
  • Take the initiative and call your creditors: If you are in charge of the situation it’s likely that you won’t feel so intimidated. Let them know that you are experiencing financial difficulty and are working on some solutions that will allow you to address your past-due balances. Creditors are people too, and they will respect your honest communication.
  • Open your mail: This is not a situation where ignorance is bliss! Do you even know how much you REALLY owe? A lot of people think if they don’t know, they won’t have to deal with it. Figure out what you owe and then work toward a realistic plan for addressing it that will allow you to sleep peacefully at night!
  • Realize that YOU are not your debt: It’s easy to fall into the trap of feeling bad about yourself because of your debt situation. Do yourself a favor and remind yourself daily that you are not your debt!
  • Make the necessary changes: Whatever your plan for getting out of debt, it’s going to take some effort and commitment. Whatever spending patterns or habits you may have that will stand in the way of successfully dealing with your situation need to be addressed pronto! Be honest with yourself and then move forward building new habits.

Once you have a solid plan in place and the support of people who can truly help you become debt free, that temptation to hide from debt collectors will go away with time. It’s far less stressful to actually make a problem go away than it is to hide from it!

Contact us and speak to one of our Credit Counselors for a free financial consultation!

*Photo credit evarose.onsugar.com
Filed Under: Debt, Featured Tagged With: ,
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