"The time to save is now. When a dog gets a bone, he doesn't go out and make a down payment on a bigger bone. He buries the one he's got". - Will Rogers
Another good thing about having a nice savings account is that you don't have to depend on anyone else to help you out in a pinch. You really find out who your true friends are when it comes time to borrow money!
I've offered to help her but she has refused my help. At this point, I'm not really sure what to do. I'm really concerned that the only way she will leave that house is in a body bag. As harsh as it sounds, I think this is what it will eventually come to.
If you are like me and watched the value of your 401k disappear right before your eyes, that probably caused you some financial fear and a few sleepless nights. I can't even imagine the fear and anxiety of those that were close to retirement.
- Open an account today using the code "EOSAVE".
- Use your debit card to make 3 signature transactions (choose credit instead of debit) within the first 45 days.
- On day 50, ING will deposit $121 into your account.
They are also offering a 12 month CD @ 2%.
- Free $50 Bonus and a Rewards Debit Card That Earns Rewards
- How Long Will It Take You To Payoff That Debt?
- 10 Tips For Controlling Your Credit Card Debt
- RIP Grandpa - Thanks For Teaching Me About Life and Money
- Save Money on Your Auto Insurance
- The $50,000 Savings Challenge
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If you are in the enviable position of many who have their high interest consumer debt paid off and firmly in control then you have likely reached a point in your financial life where you are maybe in somewhat of a befuddled mindset about how to best make the transition from solely working for your money to putting your hard earned money to work for you as your servant with you being it's master rather than vice versa.
This transition of how to best deploy your hard earned cash is a great place to be because now you are no longer in the "pay off high interest debt as quickly as possible" stage but rather you are about to enter the stage of "Wow, I had always hated watching interest rates climb when I had a balance on my credit cards but now I love high interest rates because it just means that my interest earning bank account balance is going up even faster!"
Granted, this was a rather broad introduction but I think it is appropriate because I think two of the very best ways to jump feet first into the "making money work for you" stage is by using a combination of a high yield checking account (sometimes called a rewards checking account) and a rewards credit card.
- Interest rates can be astonishingly high (the highest rate that I was able to find from the chart linked to above was 6.01% APY with the average yield for all 483 high yield checking accounts surveyed being 3.74% APY). Compare those rates with the rates that you would get (if you can find a personal checking account that earns interest at all in the first place) on a regular checking account at Bank of American or Wells Fargo or any one of a number of national banks and you will quickly see that even the average high yield checking account's interest rate will quickly send the checking accounts from the big bad national banks crying home to momma.
- Debit card access. It is rare to see any type of checking account without debit card access be it a regular checking account or a high yield checking account. Many high yield checking accounts have the same Visa or MasterCard backed debit cards as their regular checking account counterparts.
- Balance caps. Every single one of the 483 high yield checking accounts on the list that I searched through had a balance cap of anywhere from $25,000 to $100,000 with the average balance cap being $34,451. What this means is that you can certainly keep more than the balance cap in the account but the maximum base that they will pay out interest on is limited to the balance cap number.
- Number of debit card transactions. Most high yield checking accounts institute a requirement that you use your debit card a minimum number of times every month or else the interest rate will decrease to close to nothing. Usually the minimum is set at 10 transactions every month.
- Maximum deposit levels. Another restriction that some banks and credit unions impose on high yield checking accounts is that they set a maximum deposit amount that will be able to earn interest. This means that if the maximum deposit amount is $5,000 and you deposit $10,000 then at best only $5,000 of your deposit will earn interest and at worst none of your deposit will earn interest because it exceeded the preordained maximum deposit amount. The exact implementation of this requirement, if at all, will of course depend upon the specific bank of credit union.
- Various bank fees. I almost didn't even add this bullet point because it seemed like a no brainer. Understanding that there are many potential bank fees is a no brainer but I think it's important to just mention this quickly because we all need to be reminded about how quickly those bank fees could potentially eat into our interest if we aren't careful. Whatever you do make sure that you don't throw your money away on bank fees.
- Cash back. You really can't help but love cash back. As long as you use your cash back credit card properly and make sure to pay off the balance in full every month then if your card gets 1% to 3% cash back on every purchase then you are essentially only having to pay 97% to 99% of full price for everything you buy. This is like your own little plastic coupon that guarantees that you will never have to pay full price for anything no matter where you buy it (unless they don't accept credit cards for payment of course).
- Additional rewards. Even though my personal favorite is cash back (I use the American Express TrueEarnings Costco Card) there are many different rewards cards that offer anything from free flights to free hotel stays.
- Purchase protection. Just like any other credit card if you make your purchases with a credit card you have a level of protection that you just don't have with cash or checks (although many Visa or MasterCard backed debit cards offer just as much protection as a credit card so this is not really that much of a distinguishing feature for most rewards credit cards vs. high yield checking account comparisons).
- Potential for mismanagement. If you carry a balance on your rewards credit card for even one month then you can potentially wipe out an entire years worth of cash back savings. If you think that you might feel at all tempted to just run up a bunch of purchases on your card without having the money in the bank to pay the balance off in full every month then you should seriously consider either scheduling your credit card payments to be made automatically from your checking account to your card and for the bill scheduler to be set to automatically pay off the balance in full every month (which will force you to spend responsibly) or if that still doesn't work then you should reconsider using a rewards credit card in the first place until you can get a firm grasp on managing credit responsibly.
- Fine print. This is true of a high yield checking account just like it is true of a rewards credit card because you can see from the above high yield checking account cons that there are quite a few hoops that one has to jump through to earn the high interest rate for the checking account but I think it is important to point out on the credit card side of things because it seems that many people tend to gloss over the details for their credit card. Wander blindly into a new credit card application at your own peril. Take a few minutes and really compare credit cards in depth to make sure that you understand the features and the fine print.
Being debt free can be a euphoric feeling that brings on a freer, less complicated lifestyle. Being debt free can be very difficult to achieve completely, especially in this credit heavy world we live in. You want it? You got it-just sign here. Look around your home at all the things you have purchased over the past three years. Flat panel TV, new smart phone, lots of shoes (lots), shiny car and a few sunny weekends in Bermuda. Wow, I bet you really did not need all that stuff and probably now think of some (most) of it as cluttering up your home. Now, look at your home……
Part of being debt free is owing zero on your home. A lot of people never think they will be able to and should pay off their mortgage early, but they can.
There are two schools of thought on having no mortgage:
A. Some people believe that you need to have some debt, have some leverage on the equity of your home and need an income tax write-off from somewhere.
B. Other people believe that it is best to have the lowest possible overhead for your day-to-day living. This means that if you lost your job tomorrow, you would be able to manage living with very little overhead. Hopefully there is a 6-12 month cushion in the bank account to do this. I am of the second school of living completely debt free including your home.
I am not saying you should buy a house for cash or play the horses and pay it off with the winnings. I am saying that you should include your home in your total assets and include the mortgage in your total liability and payment in your monthly expenses. Paying off a mortgage can be achieved in the same vain as paying off your credit card debt. Just pay a little more each month.
From your first monthly payment due on your mortgage, you can begin accelerating the mortgage payoff. By simply making the equivalent of one extra payment of principle and interest each year, you can knock a 30 year mortgage down to 24 years and four months. This is the same as reducing the interest paid over the 30 year period by a 1/3. Saving a third of your total interest is the same as lowering your effective interest rate by 2%!! So, by paying a little extra each month, you knock off so much interest it might not even pay to refinance. (For those math majors and picky-Annies out there, these numbers are approximated.)
There are a few ways you can do this:
- Divide the monthly principle and interest payment by 12 and add this to each monthly payment
- Make a full principle and interest payment once each year the same time (birthday, July 4th, etc)
- Make 26 half payments every two weeks
Here is an example:
Anne has a 30 year fixed mortgage for $300,000. The interest rate is 6%. If she pays it off per the terms of the loan, she will have a monthly payment of $1,798 and will pay $347,515.44 total interest over the entire life of the loan! If she simply pays $1,800 dollars extra each year (using any of the 3 methods above) she will pay the loan off in 24 ½ years, with a total lifetime interest of $273,870.
Anne will save a whopping $73,644 on interest. By simply finding an additional $1,800 a year; she can save 40 x that in interest. I say, that is a lot of shoes!! Why would someone not want to do that?
So, you see how easy it can be to have your mortgage into the big picture and include it in your plan of being debt free. This is great when you go to sell the home, lose part of your household income or want to retire early. It might not be good for people who are definitely selling their home within 5 years, never plan on moving or just don’t care about mortgage debt. I always suggest calling the lender and asking them the best way to calculate the accelerated payments and how should you make them. Again, shy away from their offer to put you in a bi-weekly service plan. You can follow the reduction of principle on-line with the lender and trust me this feels good!
This is a guest post from Dale Robyn Siegel; a licensed attorney in New York and owner of Circle Mortgage Group, a boutique mortgage broker in White Plains, New York. She is an adjunct professor at Baruch College as well as NYU Schack Institute of Real Estate. Dale has been speaking to the public and teaching real estate professionals about mortgage finance for the past ten years. You can learn more about The New Rules for Mortgages at http://www.thenewrulesformortgages.com, and you can purchase a copy here: http://www.amazon.com/Rules-Mortgages-Dale-Robyn-Siegel/dp/1592579485 To learn more about this virtual book tour, please visit http://virtualblogtour.blogspot.com/2009/09/new-rules-for-mortgages-by-dale-robyn.html
You didn't get into debt overnight (hopefully) and you won't get out of debt overnight; unless you are lucky enough to win the lottery or come into money some other way. There is no ancient chinese secret to getting out of debt, but it does take patience and determination.
- Don't take on any new debt!!
- Minimize the amount of interest you pay each month so that more money goes towards the principal. If you have good credit, consider applying for a balance transfer with a credit card with a 0% interest rate so any money you pay towards your debt goes toward principal only.
- Pay as much as you can comfortably afford each month toward the debt. Small amounts help tremendously.
- Find sources of additional income and minimize expenses - second job, selling items on Ebay, garage sales, online surveys, using coupons, etc.
Once you’ve established the goal, it’s time to discuss ways of cutting back on spending in order to save money for the desired reward. Eating in rather than dining at an expensive restaurant, delaying purchase of a new t-shirt or a video game, and cutting back on costly snacks and extras may seem like small steps, but taken in aggregate these expenditures can mount up. By eliminating just a few of the luxuries you and your family take for granted, you can realize enough savings to achieve your goal quickly. As soon as you’ve saved enough money, carry through with your plan. Enjoying the reward is an essential part of teaching your family the value of saving for a goal.
Assign your children specific jobs and pay them for performing them rather than simply giving them an allowance or, worse yet, handing out money when they ask for it. Requiring your children to earn their money will create a twofold benefit; first, it will instill a work ethic that will serve them well in later life, and second, they will better understand the value of money as related to work. Encouraging children to save toward items they want can be an effective method of teaching the value of savings and promoting a lifelong habit of financial responsibility.
Another method for inspiring your family to participate in your savings plan is to initiate a profit-sharing plan. Large companies use this method with good results; the same incentives will work in your own home. By sharing a small portion of the savings realized through cutting back on luxuries and practicing financial responsibility, you can motivate your family to participate in the savings plan and create a fiscally sensible environment.
This guest article was contributed by Christine Howell who frequently writes about online degrees and college related topics for Online College Guru, a directory of accredited online colleges.
There are several ways that you can control your credit debt. Having a huge debt hanging over your head is never a good thing. Debt creates stress and anxiety for everyone. The ultimate goal should be to get rid of the debt so you can move forward with your life.
Given below are the 10 best tips for controlling credit debt:
1. Create a budget - If you are going to continue using your credit cards, then it is best to minimize spending, or at least stop purchasing things you do not need altogether. Forget about the fancy clothes and other big purchases.
2. Start Paying Off Existing Debts - Come up with a doable payment plan, but be realistic. If you are $10,000 in debt, expect it to take you a couple of years to get out of debt.
3. Use Only One Credit Card - If you are the type who just has to use a credit card, get rid of all of them except for one. That way, you are still allowing yourself the luxury of spending, just not as much.
4. Seek Debt Counseling - Because it can be so difficult to pay off debts, many people find it necessary to seek debt counseling. They usually charge a small fee, but help you to get out of debt rather quickly.
5. Get a Debt Consolidation Loan - Again, this is another option that may or may not be a good idea, but if you are in a substantial amount of debt, it will definitely help out. You can usually pay off your credit debt and save 40-60% on your overall expenses.
6. Find a Way to Make Some Extra Money - The more money you have, the more you can spend, so you may not have to alter your current lifestyle as much as you think. Getting a part-time or weekend job to devote solely to paying off your debt is a great way to get everything back under control.
7. Stop Putting It Off - Everyone has the tendency to want to "wait till next month" to start paying off their debts. Even if you don't make a lot of money, you can still start by paying as little as $5.00 at a time! Every little bit counts, so get started now.
8. Stop Living So Frivolously - Other than cutting back on what you do not need, you should also cut back on the things you do need. Instead of going out to eat twice a week, go once every two weeks. Keep the lights turned off when you are not using them and don't travel as much. Over time, you will have a lot more money in your pocket to put toward getting rid of your debt.
9. Believe That You Can - No matter your financial situation or how horribly you are currently in debt, there is a way out. Sometimes getting out of debt is as easy as maintaining a positive attitude. Once you believe there is a way, just like magic, there really is!
10. Imagine Being Free From Debt - This will help you to become motivated to actually put your money toward your credit card bills. Think about what it would be like to not be in debt at all. It can happen, but you have to want it badly enough. The key is to stay focused and not get off track. If you fall off, pick yourself back up and continue.
This is a guest post from Mirsad of Think Credit Cards. Be sure to drop by Think Credit Cards and say hi.
About Kathryn Katz
Here are some fees you can avoid:
Bank Fees. There are way too many free accounts out there. If you don't know if you are being charged for your account, be sure to check your bank statement. If you like the bank you are currently with, check and see if you can switch to a different type of account that does not charge fees. If your employer offers direct deposit, many banks will waive the monthly service charge on your account.
ATM Fees. Fees for using another banks ATM can run as high as $3 and then you may be charged again by your bank for using another banks ATM. If your bank does not have many ATM's, consider switching to a bank that will refund ATM fees. My current checking account is with a small community bank that only has 2 branches. I like the account because they pay 4% on checking balances up to $50,000. They compensate for their lack of ATM's by reimbursing fees for using another banks ATM up to $20. Another way to avoid an ATM fee is to use your debit card at a grocery store or stores like Wal-Mart and Target and get cash back.
Overdraft Charges. Here's another charge you can easily avoid. I won't say that I am perfect and have never made a mistake. I too have made a mistake in my balance and bounced a check or two in my lifetime. The important thing is to make sure it doesn't happen all the time. Keep your account in balance and don't try to "float" checks. If you don't have the money, you don't have the money. It's very simple; if you have $5 in your checking account, don't write a $10 check hoping your paycheck will beat the $10 check to the bank. Checks clear a lot faster these days and that $10 check may just end up costing you $25 - $35 more depending on what your bank charges for overdrafts. Don't rely on the balance you are given at the ATM because there may be items that have not cleared yet.