A Primer in Money Management
Concerned about your lack of knowledge of basic financing and how to save and invest your money wisely? So is the Canadian government. The Feds have already pulled together expert teams to address our illiteracy when it comes to money management, and they’re looking for ways to teach Canadians to be savvier about their finances.
School systems across the country are also on the move. They’re looking to introduce classes in finance fundamentals to our children as young as grade four and possibly as early as 2011. What both these moves point out is the reality most of us live everyday-that nobody ever taught us how to manage our money, or how to invest it wisely or well.
Good money management does require a few changes in your thinking, almost certainly a few new habits, and some discipline. To develop good money management skills-like any new skill-you have to practice them until they become ingrained into your lifestyle, and monitor yourself to ensure that the old bad habits don’t creep back in to your life, and send you back down the money hole.
What are your bad habits?
Before you can change anything, you need to know where your money pits are. Try this 30-day challenge. Monitor all your purchases-every one of them!-and keep the receipts. Carry a small book around with you-something you can easily slip into your pocket or handbag, and enter every single thing you buy and where. That includes the soda pop you might buy while strolling through the mall, or the quickie meal you pick up on Friday night on your way home from the grocery store. Track all of it. At the end of the month, see where and how (credit, debit, cash) you make unneeded purchases. Add those up. Are you surprised at the total?
How can you replace bad habits?
Now that you’re aware of your bad habits, start changing them. If you use plastic too much, stop using your credit and debit cards. If cash burns a hole in your pocket, stop carrying it. If walking through the mall on Saturdays always means you spend money needlessly, try going somewhere else-like the park or the library. Only carry your cards or cash when you are making a specific purchase like groceries, or paying a bill. Learn to feel okay about not buying anything, and saying “no” to the kids.
What’s next?
If you’ve stopped those bad habits, you may well feel richer-because you are. But don’t let that newly found money go to waste. Take the money you were frittering, and put it towards paying your highest interest bill. Once that bill is paid off, move to the next highest interest bill, and so on, until your debts are paid.
Money basics start with knowing your own spending patterns, changing the ones that cause you to waste money needlessly, and having the discipline to do things differently.
An Even Budget from a Variable Income
If you are one of the many people these days with a variable income, either because you are on periodic shutdowns, temporary layoffs, or cutbacks in working hours, the irregular pay cheque can really throw you for a loop. Taking irregular income and evening it out takes resolve, but it can be done. Here are some tips to help you get through the lean months, not overspend when you are flush, and get cash set aside for when you really need it.
First, go back through three to six months’ worth of your finances. Figure out what bills you owe, and when. For example, do your utility bills only come every second month? If they come due during one of those layoffs, that can make for a rough month-and possibly an unpaid bill-if you haven’t set aside money for them. You want to use the past several months’ financial history to tell you how much you need every month to make ends meet, and avoid unexpected surprises like the electric bill.
Next, open a savings account, if you don’t already have one. In those higher earnings months, set aside the extra money earned to bail yourself out during layoffs, or shorter working hours-whenever your pay cheque might be short. It’s always tempting to treat yourself to something special when you have a few extra bucks in your pocket. But you’ll feel a whole lot better if you don’t, and then, when the bills come home, you have money in your pocket to pay for them.
Here’s the hardest part. Set money aside from your higher paycheques until you have one month’s worth of bills and living expenses in your savings account. This may not happen overnight. It can take six months or even longer, to get this kind of cash together. But, if you can set aside a month’s worth of expenses into your savings account, then you can start living from the savings, and not pay cheque to pay cheque.
Since you know your monthly costs, you transfer only that amount into your chequing account. In the months where you make higher pay, that extra money stays in your savings account. In the lower pay months, you use those savings to ensure your bills are paid on time, and in full.
Setting up this kind of system takes time, and discipline. But it’s worth the rewards of not having to fear a layoff, shorter hours, or forced vacations.
Indebted Canadians…There is Help
More than 116, 300 Canadians filed for bankruptcy in 2009, a 28% increase from 2008. Economists expect that number to hover as long as personal debt loads and unemployment rates remain high. Credit bureaus say the spikes are coming from Canadian’s debt to income ratios as many Canadians sought loan extensions during the historically low interest rates the banks have been offering over the past year.
Several Canadian financial institutions are offering programs to help guide people through the tough times when it comes to debt overload. They say that consumers should monitor their credit profiles to avoid becoming financially overextended and that there are steps that Canadians can take before resorting to bankruptcy.
To keep financial matters in check, it is advised that consumers should keep their housing costs around 28% of their income and overall debt payments around 35%. If consumers are utilizing 30% of their credit limit, it may be a warning sign. If consumers are using 50% of their limit, that is a red flag.
Filing for personal bankruptcy may provide financial relief to consumes who have taken on too much debt, but a bankruptcy will remain on your credit file for many years and can severely impair your ability to borrow in the future. Canadian financial institutions have seen over 30,000 people come to seek financial and debt-paying advice through their programs. Many people are not even aware that most banks offer such programs.
It’s hopeful that Canadians will see better times in the next year as consumer confidence has risen since November. Financial planners recommend consumers have a six-month supply of money saved for emergencies. Only a few years ago these same planners were recommending three-months worth of emergency funds were saved. Savvy planners are able to prepare for unforeseen life events. An insurance policy for $50 a month can easily save you $100,000 in unforeseen medical emergency debt.
If you find yourself on the brink of bankruptcy, reconsider filing. Instead you may want to try altering your budget, using your savings to pay down loans, calling creditors to rework payments, selling a few assets to put towards your debt or consolidating debt to make the monthly payments easier. If you already have bad credit and do not feel traditional banks are an option for consolidating your debt, there are many private financial institutions that specialize in bad credit loans that may be able to help with debt consolidate to help you get your bad credit under control.
Budgets to Change Your Life
First things first. Give yourself a budget-attitude shake. A budget is neither a starvation diet nor a binge approach to money management. It’s a month-by-month strategic plan to care for yourself, your family, and your future. Once you get good at it, your budget can become longer term-some people actually have 5-, 10-, 15-year plans, and more-and peace of mind about their future. You can too.
What a budget can do
- A budget can be a real wake-up call about your finances.
- A budget can tell you what you can really afford, based on how much money you actually make-without lines of credit, plastic, in-store accounts, or other “false” income extenders.
- A budget can help you prepare for unexpected surprises-a furnace breakdown in February, or dental emergency in July.
- Eventually, a budget can even help you plan big purchases-a home, vacation, children’s education, and your retirement.
What a budget cannot do
- A budget cannot change how much money you really make.
And if you’ve never actually compared what you make to what you spend, the reality may be harsh. That 20×30 back deck you were planning to build this spring? It might be more realistic as an 8×12-get the drift?
How to begin
Start with pen and paper. No fancy accounting books or computer programs needed.
Next step
Make two columns. Call one “Fixed costs”, the other, “Variable costs”. Variable costs are ones you can change (as in, spend less)-groceries, liquor, and entertainment. Fixed costs you usually have no control over-like rent and car payments. (Even those costs might be adjustable-don’t dismiss moving for cheaper rent or selling a vehicle.) Don’t count fixed costs if they aren’t. Seriously, how many phones do you need? Basic cable is much cheaper than premium, and beer is not a mandatory food group.
Under one of the two columns, write everything you spend money on each month-groceries, gas, car payments, credit cards, mortgage/rent, phones, television/cable. Add it up. Stay calm. Now write down your income sources, and tally them. Subtract Fixed/Variable costs from your income. Seeing red?
Sharpen your pencil
This is budgeting-choosing how you’ll spend your money. The quickest way to save big bucks is with entertainment, liquor, and groceries. Control those costs by deciding how much you can actually afford. Put those new amounts into your column. Re-tally. Seeing more black?
Tips to control spending
Sometimes you’re so cash strapped, you have to eliminate things-find freebies instead-the library, instead of the movies, the park instead of the mall.
Always buy with cash
From now on, always buy with cash. Melt your credit and debit cards, and close all lines of credit. When you get paid, go to the bank and withdraw the money allotted to variables for that week, and put it into labeled envelopes. When you take out cash to buy those things, put the receipts into the envelope. This way you see where your money goes, and can make a really conscious choice next month about whether you want to spend your hard-earned paycheque that way.
Surprise cash pockets
Don’t squander surprise cash pockets. Every June, after Tax Freedom Day, your paycheque actually jumps a bit-ever notice? From now on, that extra jump is going to be put towards debts, not frittered away. Your income tax return-usually blow it? No more. Pay down debts, highest interest first.
Re-budget and fine tune
It takes time to get budgeting right. But a budget can help you feel like you’re finally in the driver’s seat of your life.
Ending the Not So Merry-go-Round of Credit Card Debt
Do you wake up at 3:00 a.m., worrying about how you’re going to pay your bills? Or maybe you’re not paying your bills at all. Maybe you’re just shuffling them around-paying one debt by creating another-usually using a credit card (or four, or five, or six of them) to bail you out. A bit of a merry-go-round, isn’t it. But your life does not have to be that way. There are alternatives to the nightmare of ongoing credit card debt. So you can get a good night’s sleep.
First things first. Take out your credit cards. Do it with your partner or spouse, if they’ve got cards too. Even get the kids in on it. Make it a family challenge. Then, cut every card up. Yup. Gulp. Take a deep breath, and just do it. Including, by the way, your debit or cash card. From here on in, you’re paying with real green and green alone (that’s the colour of cash, by the way, if you’ve forgotten) for every purchase you make.
Next step. Go through every credit card bill, and every bank statement, and add up only these fees for the past 30 days:
1. How much have you been charged just for exceeding your credit card limit-not the interest you’re also being charged-on every card you carry (you know you’re over on every one of them)
2. How much have you been charged for exceeding your chequing account limit-that is, drawing on the overdraft (or is your credit so bad, your cheques are just flat-out bouncing-then add up those charges)
3. How much has the bank charged you for exceeding your allotted number of debit card withdrawals this month (’cause you know you use that baby like there’s no tomorrow).
What’s the scary total? Don’t pass out; congratulate yourself. Because you’ve moved to cash-only purchases, you’ve just subtracted that amount from monthly mounting debt. See how much free cash you’ve suddenly discovered?
Now. Make a list of every debt you have, credit cards, in-store accounts, rent-to-own agreements, you name it. List every one of them. List the highest interest debts first. Those are the ones you’re going to pay off first, using the money you’re no longer spending on overdrafts and exceeding your credit card limit. See how that works?
Still not enough?
Consider your assets. If your debt is that bad, you need fast action. Think about using your car, or truck, or whatever you drive, to get a car title loan. It can help you get a jump on those bad credit cards, and help you get your debt repayment under control. Instead of paying high interest rates on three, or four, or more credit cards, you can pay one easy monthly installment.
Right now maybe your credit is so bad you think you couldn’t even qualify for a car title loan. But that’s the best part. A car title loan is especially developed for people like you with bad credit, low credit scores, or even bankruptcy. It works because you use your car-if it’s less than eight years old and you own it-as collateral against the money you borrow.
And, because you’ve qualified for a loan, and make regular payments, it can help you improve your credit score, and get you back on the very merry-go-round of good credit. And back to sleep at night.
Credit Repair for Tough Economic Times
Has the economic downturn of the last year or so flushed your own credit down the toilet? Think you’ll never recover from your bad credit? Think again.
Bad credit isn’t the best experience of a lifetime, but it can be fixed. And even in these economically challenging times, you may have more assets to work with than you think.
Know where you stand
First, always get a current credit report. Be sure that your credit rating is accurate. Errors are not uncommon. If there has been a mistake on your credit report, get it fixed. Next, consolidate your loans, if you can, so you make one payment each month. And put those credit cards on ice-literally, if you have to! Then, put yourself on a budget. The whole family can help figure out where you can cut costs, and save some cash. Finally, only use cash to pay for everything you buy, and track your spending. Now you will know where you stand, and how much money you have available to you, each month for life and debts.
A surprising source of credit
Here is something you might not have realized that can help ease your way out of debt and to better credit-your own vehicle.
That’s right. Your vehicle may offer you some help in repairing and rebuilding your credit. If you own your vehicle, and it is less than 8 years old, car title lenders may have help for your bad credit problem.
How car title loans work
Car title loans work in different ways. One, you may be able to re-finance your car to get extra cash to help pay down those pesky bills. That helps you eliminate debt, and it helps you rebuild your credit with one stroke. It may also make the pain of bill repayment and credit repair a bit easier to bear.
Other ways car title lenders work is by helping you to repair your vehicle. If you haven’t been able to work, or you can only work in areas where there is public transit, car title lenders may be the answer to your ride problem. Car title lenders can help you to use the value in your car to repair your vehicle-and get you back on the road to better credit, and a better life.
Bad credit can sometimes seem overwhelming. But there are more ways to credit repair than you might have thought of before, and car title loans may be a good choice for you. Assets such as your vehicle can help you to pay down debt, repair bad credit, and re-start your own engine.
Are You in for Tax Troubles?
Are you like thousands of others, cringing over the thought of having to file your 2009 income taxes because you know you owe? This annual anxiety strikes many people and it causes grief to so many because they know they don’t have the money to pay what they owe.
So many people procrastinate and do not file before April 30th. Of course, if you don’t file by that date and you owe, interest can accrue faster than interest on a credit card. Getting those nasty reminders to file your taxes only adds to the anxiety and as we all know, the government will not go away.
Perhaps getting some advice as to what you can do to avoid this from happening next year is food for thought. A very simple strategy to avoid having to owe the government is asking your employer to take off more tax on every paycheque. It may be a small adjustment to make every time you’re paid, but it will pay off. If you end up paying too much, then you will get a refund. This is smart advice for those who are in no financial position to buy RRSP’s or to execute other financial strategies to get a refund every year.
Now that there is some relief for next year, it doesn’t help matters now. You know you’re going to owe and wanting to file your taxes has become a source of stress. There’s no need to panic because there are always options.
Is your credit in good shape? If it is, then there are numerous options available to you. For so many people, the last recession took their credit rating and obliterated it. If you’re one of those people, you know your chances of getting a loan are slim to nil. There’s no need to feel down, there are options open to you.
If you are not sure what your credit rating is, then you can find out for free. Every year you are entitled to a free credit file disclosure; this is more commonly referred to as a credit report. Once every twelve months you are legally allowed to get your report from Equifax, TransUnion and Experian. This is something that is highly recommended not only to monitor your credit rating, but it is advisable to be diligent in doing this every year to monitor the possibility of identity theft and fraud. If something nefarious has appeared on your rating, you can appeal it.
“Car title loans” are one of those options for people with poor credit. These loans are set up specifically for those who have credit that a bank may view as less-than-desirable. A car title loan is secured based on the value of the borrower’s vehicle. These loans are facilitated much faster and are by far easier to obtain than standard loans.
January Bill Blues
The holidays now seem like a distant memory but the stark reminder of all those fabulous gifts that were purchased is reality. Those credit card statements are a painful reminder that overspending can rapidly sink your financial well-being.
Life may look bleak with statements that leave you with no breathing room on any credit card. The fear of having no back-up funds in case of an emergency is now a brutal truth. It may not alleviate stress, but you are not alone. Thousands of credit card users have spent their cards to the max and are worried about how to create some breathing space.
Credit cards are a great thing until they’re maxed. Paying the minimum monthly payment will keep you in the credit company’s good books, but maintaining a balance that exceeds 75% of the allowable credit will tarnish your credit rating. There’s also the fact that paying only the minimum monthly payment on a maxed card will take you several years to bring down because generally, interest rates are exceedingly high.
If you’re able to pay more than the minimum monthly payment, then do it. However, if you’re like thousands of others, even the minimum payment is difficult to budget. Now is not the time to panic; it’s the time to stay calm and do your research on what options are available to you. It may not seem likely, but out of something negative is always something positive, you just have to look.
Now, more than ever, turning over a new leaf and taking charge of your financial health is a step in the right direction. Having the will and desire will start you off in the right direction.
Take a look to see if you can pay the minimum monthly payment. If this leaves a pit in the stomach, get on the phone and call the credit card companies. These companies can be flexible and are willing to work with you, not against you. Let them know you’re working on a plan, but you are able to make a token payment. Paying something is better than paying nothing. Ignoring a statement will only lead to these companies calling you, and ignoring those phone calls only worsen the situation. When times are tough, protect your credit rating always keep the lines of communication open with your creditors.
Now is the time to work out what money comes in monthly, and what money is required to pay the monthly bills. If there’s no way you can manage on your own then explore loan options to stay afloat. There are options and having a good credit rating is not required for some loans.
BHM Financial is a trusted name in the car title loan industry and we may have the cure to help get rid of the `bill blues.’ Check out our website today, and breathe easier tomorrow!
Is Bad Credit Dampening Your Holiday Season Plans?
The holiday season is upon us and there is a high probability that many of us have already exhausted our credit limits, leaving little or nothing to go-ahead with the much-awaited season’s shopping. Many homeowners find themselves in similar situations during this time of the year when planning family gatherings and refurbishing the house are top priorities. Prices of most commodities, including basic household supplies, tend to rise during the holiday season.
Retailers are able to dictate the prices, as they realize that consumers are pre-occupied with buying during the festive period, without bothering too much about the fairness of the cost. In such a scenario, credit availability becomes an even bigger issue if you have bad credit. Most conventional credit extending organizations are overwhelmed by the large volume of credit-seekers who approach them during the November-to-January period. Thus, chances of a loan request being turned down are even greater since the approving authorities have enough volume to choose those with good credit scores.
Planning to stretch your Credit Card? Think again!
Distressed people, unable to access credit, often turn towards seeking extensions on their credit cards without realizing that they are paying more than the standard interest rates. This happens because credit card companies realize that spending is largely unavoidable for most people during the holiday season and thus, they tend to manipulate the situation in their favor. This is why the holiday season is commonly associated with extensive advertising campaigns by credit card companies, coaxing people to ‘buy more’ with many hidden repayment clauses (hiked-up charges) concealed within the hard-to-understand paperwork.
Considering the predicament of those with bad credit, a car title loan may be the most sensible solution. For starters, this kind of credit is extended without questioning an applicant’s credit history, making it ideal for those who are struggling with a poor credit history. Car title loans are also referred to as easy loans for ’sub-prime borrowers’ which underlines the fact that they are ideally suited for people with bad credit scores. Secondly, car title loans are uncomplicated, as the amount of documentation involved in the entire process is negligible when compared to loans sought from banking institutions. Further, the processing of the loan is transparent, wherein an applicant is duly informed about the loan structure, including the rate of interest charged and the repayment schedule. An applicant needs to be equipped with basic information such as proof of ownership of the vehicle against which the loan is being sought, along with easy-to-furnish documents like residential proof or driver’s license.
The final decision rests with you – whether you want to risk being entrapped with devious, credit card companies or multiply your quotient of happiness by seeking sensible and secured credit in the form of a Car Title Loan.
Bad Credit Doesn’t Have To Leave You High and Dry
If you are one of thousands of Canadians struggling to make ends meet and move forward through these difficult economic times, you may be facing financial challenges you never expected. Having a lower credit score is part and parcel of some of the very real issues facing individuals all across the globe. Living off of credit cards, losing one or more income streams, and trying month after month to pay off pre-existing debt can lead many of us into the bad credit zone. With more and more banks turning a blind eye or a deaf ear to even the most trustworthy clients unless they are presented with a stellar credit report, individuals are finding the lending waters choppy at best.
Fortunately, there is hope for those with bad credit who still need, want and deserve to take out loans. Of course the very act of borrowing money and successfully paying it back will increase your credit score, so it makes sense that finding a solution of this nature will not only benefit the lender and the recipient of the loan, but will assist in improving the overall economic climate as well.
Securing a bad credit personal loan or car title loan can prevent someone from crossing the line from bad credit over to bankruptcy. Car title loans for bad credit are secured using the title of your car. These loans use a paid-off automobile as collateral. Typically, your loan is repaid in monthly installments over a period of one to four years, and is for an amount that is 50% or less of the value of the car. It is possible to obtain car title loans with bad credit. There are many lenders on-line who offer these secure loans, so do your due diligence and research a reputable lender with flexible terms to suit your budget. Car title loan lenders are a very helpful alternative to banks for bad credit loans, and an option many people are turning to in order to get back on track financially.
In addition, the benefits of car title loans outweigh any possible drawbacks. Unlike other loan application processes, the long, drawn out application process is reduced drastically, allowing you to complete the process within the comfort of your own home, and in just a short period of time. No more fretting over medical bills, holiday gift shopping or school supplies for your children. The time is now to take advantage of what many Canadians are finding to be a solid stepping stone in this economy.