Before you speak, listen. Before you write, think. Before you spend, earn. Before you invest, investigate. Before you criticize, wait. Before you pray, forgive. Before you quit, try. Before you retire, save. Before you die, give.

~William A. Ward

Thursday, July 17, 2008

First and MOST essential step in car buying

In an effort to make your search as efficient and painless as possible the first step to car buying is to determine what you are looking for. Below is a list of my Wants vs. Needs.

6 Cylinder
Leather Seats
Power Everything
GPS Navigation
Sun Roof
Black w/ Silver Trim
6 Disc CD
Heated Seats
4 Doors
Remote Starter

4 Cylinder
23/33 MPG
Dark Seats
Power Windows & Doors
Standard CD Player
Keyless Entry
Nissan Altima or other NON- Luxury Vehicle

Wednesday, July 16, 2008

My Search for the "Perfect" Car!!!!

For the past few months I have been searching for the “perfect vehicle”…..of course I have a LONG list of “wants” but very limited cash…..

I have worried many of my friends and family to death with my “indecisiveness” and have begun to become very frustrated with my search.

The true reason for wanting a new car was for better fuel economy. I am currently driving a Durango which is an 8 cylinder with a 5.9L engine….I average about 10 MPG in the city and 15 MPG on the Highway.

If you step into my shoes for a second….you can imagine my frustration every time I pull into a gas station to fill my 20 gallon tank, which of course only last me 200 miles in the city and 300 miles on the highway!!! For the last few months it seems like every time I get in my truck the gas light is on and it seems like I just left the gas station!

After a few months of consistent searching I decided to take a week or two off to “reflect” on my car buying experience. Time to really hone in on what I NEED versus what I WANT and in an effort to clear my mind in addition to helping me dissect and digest all of the car buying material I have come across in the past months I decided to blog my experience. Hopefully someone else will find the information useful as well.

Thursday, May 22, 2008

Individual Development Account = Free Money

What is an Individual Development Account?

An Individual Development Account, or IDA, is a special savings account for people with low incomes. If you save in an IDA, your money will be matched with donations. That means that you can receive another dollar or more for every dollar you save in an IDA. Typically, IDA savings and match money can be used to buy a house, pay for education, or start a small business.

In addition to earning match dollars, you will learn about budgeting, saving, banking and more when you open an IDA. In most cases, people who open IDAs (account holders) are required to attend financial education classes. Account holders may also receive one-on-one counseling and other training with their IDAs.

Why is my money matched?

Your money is matched is to encourage and help you to save enough to buy an asset, such as a house or business. While your paycheck helps you to buy food and clothing and pay your bills each month, an asset provides financial security for the future. If you begin to earn less money or lose your job, having an asset will make it easier for you to continue to pay your bills and meet household needs.

Where do the match dollars come from?

Match dollars for IDAs come from many different places, such as government agencies, private companies, churches, or local charities. Any individual, organization or business can contribute match dollars to IDAs. In most cases, donors can get a tax deduction for contributions to IDAs, and they are also recognized for helping others in their community.

How do IDAs work?

IDAs are usually offered through programs that involve partnerships between local non-profit organizations and financial institutions. The local non-profit is also called the IDA program sponsor. The IDA program sponsor recruits participants for the IDA program, provides financial education classes, and may also provide one-on-one counseling and training to participants. After signing up for an IDA program, each participant will open up an account with the partnering bank or credit union. The bank or credit union handles all transactions to and from the IDA, just as they do with other types of savings accounts. Each month, IDA participants receive a report telling them how much money (individual savings + match + interest) is accumulating in their IDA.

An IDA program can be as short as one year or as long as five years from beginning to end. IDA participants are allowed to withdraw money as soon as they have reached their savings goal, but they must first get approval from the IDA program sponsor. Some IDA participants choose one big savings goal, such as a home, but others save for a number of related goals, such as text books and college tuition.

Do I have to use my IDA savings to buy a house, pay for education, or start a small business?

These are the most common uses for IDA savings, but each program is different. Some IDA programs allow participants to save for home repairs, computers, automobiles, or retirement in addition to the three uses above. Other programs have just one purpose, such as to help people start their own businesses.

Is an IDA right for me?

This is a question that you and an IDA program sponsor will be able to answer together. If you live in a low-income household and would like to own a home, further your education or start a small business, then opening an IDA could be the best way for you to reach your goal. But, if you are paying off a loan or have a lot of credit card debt, you may not be ready for an IDA. Each person and situation is different, so take time to ask questions and learn as much as you can about IDAs.

How can I open an IDA?

There are more than 250 IDA programs in the United States, so the first step is to find a program close to where you live. The fastest way to do this is to go to the IDAnetwork web site at On the IDAnetwork you will find the IDA Program Directory that lists programs by state. Contact the sponsor(s) closest to you to find out more about their IDA programs, any questions you may have and how to apply.

Choosing An IDA Program

More than 250 Individual Development Account (IDA) programs exist in the United States, and no two programs are exactly alike. The length of the program, amount of matching dollars provided, allowable uses for savings and other rules may be different from one program to the next. These differences are good because they allow IDA programs to meet diverse needs. However, they can make it hard for you to choose between IDA programs if there are two or more in your community.

Before you enroll in an IDA program to save for a home, education, or a small business, you should be able to answer the following questions about the program.

What are the program’s eligibility guidelines?

In general, IDA program eligibility is based on all or some of the following information:
• Income: Most IDA programs specify a maximum household income level for IDA applicants. Maximum income levels are most often a percentage of the federal poverty guidelines (usually between 100% and 200%) or the area median income (usually between 65% and 85%).
• Earnings: Many IDA programs also require that all or part of savings come from earned income. A paycheck is the most common source of earned income, but welfare, disability, social security, or unemployment checks are also earnings. Money given as a gift is not considered earnings.
• Net Worth: Some IDA programs also look at the household assets (such as a car, home, savings, etc.) in addition to household income when determining IDA eligibility. If you own assets valued at more than $5,000, you may not qualify for an IDA with these programs.
• Credit History: Debt from credit cards and loans makes it difficult to save. You might not qualify for an IDA if you have a lot of debt or a bad credit history. A program sponsor may ask you to visit a credit-counseling center or pay off your loans before you open an IDA.

What kinds of things can I purchase with my IDA savings?

Most IDA programs allow account holders to use their savings to buy a home, pay for education or training, or start a small business. Some programs, however, allow only one or two of these uses, while others may allow additional uses, including home repairs or computer or automobile purchases. Be sure that you know all of the uses that each program allows.

How long will I be able to save in my IDA?

The savings period or program length will vary from program to program, but most savings periods range from 1 year to 3 years. The savings period indicates the length of time during which your savings will be matched.

What is the program’s match rate?

IDA programs match each dollar you save with additional funds from donors. Most programs offer a 2:1 match rate, which means that for each $1 you deposit in your IDA, $2 in matching funds will be added to your savings. Match rates can be more or less than $2 for each dollar you save. The match funds cannot be withdrawn without the approval of the IDA program sponsor, but they will be reported on monthly account statements so you will know how much money is growing in your IDA.

The program match rate is determined based on the program length and the amount of match funds raised by the sponsoring organization. In general, programs that have a shorter savings period will have higher match rates (so that account holders will be able to save enough to purchase the asset they want.) Be sure to consider whether the savings period and match rate together will enable you to save enough money to purchase your desired asset.

Have 100% of matching funds been raised by the program sponsor?

Before enrolling in an IDA program, you have the right to know if the promised match funds have already been raised and deposited in the bank. Sometimes an IDA program sponsor will raise only some of the match funds before enrolling participants. They expect to raise additional funds later in the year. Enrolling participants with only partial funding is acceptable, but it is risky. You should feel comfortable that your IDA program sponsor is able to raise all of matching funds needed.

Will I be required to save a certain amount of money each month?
Some programs require account holders to deposit a minimum amount each month or every few months in order to stay in the IDA program. Before enrolling, make sure that you can save enough to make the minimum deposit.

Is there a limit to how much money I can save in my IDA?

Some programs will only match up to a certain dollar amount (for example, $500) on an annual basis or during the course of the program. In most cases, you can deposit as much as you like in your account, but deposits over a certain dollar amount will not be matched.

Will I be required to attend financial education classes?

Financial education is an important part of all IDA programs. You will likely be required to attend a certain number of classes to learn about creating and managing household budgets, using credit responsibly, the basics of saving and investing, saving for retirement, and much more. If you feel that these classes are not necessary, or if they are not offered at a convenient time or location, you should discuss this with the IDA program sponsor.

In addition to financial education, some IDA programs also provide training to assist account holders in making good purchases. Examples of this training include home buying training or counseling, small business development courses, or financial aid counseling. This additional training is usually optional, but it can provide important information that will help you to make a good purchase with your IDA savings.

Aside from attending classes and making regular deposits to my IDA, will I be required to do anything else?

Make sure you are aware of all requirements before enrolling in an IDA program. For example, if the program is hosted by a faith-based organization, will you have to attend religious services or other religious activities?

Does the IDA program sponsor provide other services that might be useful to me?

Many IDA program sponsors provide a range of services to low-income families. For example, some organizations may assist families in applying for welfare benefits, obtaining legal aid, preparing income tax returns, or obtaining affordable housing. Be sure to ask each IDA program sponsor about additional services that might be helpful to you.

Does the IDA program sponsor work with other organizations in the community?

IDA program sponsors often partner with other organizations and businesses to provide services to account holders. This is usually good for account holders because they get to know more than one organization in their community through the IDA program.

Wednesday, May 21, 2008

12 Ways to Make Saving a Habit!

1. Spend less time feeling poor. Flipping through catalogs and going to the mall will make you feel like you need things. Instead, do things that offer a sense of well-being. Invite friends over. Walk in the park.

2. Retrain your brain. When you start to feel that "I'm deserving so I'm buying" feeling, visualize a smaller credit-card bill or higher savings-account balance.

3. Look around you. Are you happy with what your hard-earned dollars bought? If not, shift your spending to those things that bring greater long-term satisfaction, including retirement savings.

4. Choose your extravagances. Here's mine: I eat out about once a week. An extravagance I do without: Cable television.

5. Assess weaknesses. "If you were thrifty, how would you look different?" says Gary Buffone, a financial psychologist in Jacksonville, Fla. Identify what you want to change; then shoot for specific targets, such as a six-month hold on buying new tech gadgets.

6. Make trade-offs. Substitute small, free pleasures for those that cost. Have a movie night at home with friends -- you'd be surprised how many people are equally eager to cut costs.

7. Set goals. Meet weekly with family to discuss the spending plan (don't call it a budget) for the months and years ahead. This may involve tough choices, such as forsaking a family vacation. But think of the guilt-free trip you can take after saving the necessary cash.

8. Resist your children. They're going to find it hard to change their expectations. How can you help? Stand firm. The next time they clamor for the latest videogame, remind them of the bigger prize (that family vacation), and tell them their choices here and now are, say, a picnic or a movie rental. Offer options, but don't give in to their push for more consumer goods.

9. Enlist other people. Many people are reticent to talk about money worries, but almost everyone has them, so open up and tap your allies. Hold a contest with friends to see who can save the most in a month, or agree with your spouse to talk before spending more than $100, Mr. Buffone suggests.

10. Post it. Remind yourself by putting post-it notes on your wallet, mirror or steering wheel with the mantra of your choosing: "I want to go to Hawaii in January." "I want to pay off credit-card debt."

11. Automate it. Divert money monthly from your checking account to savings. It will force you to budget, based on what's left in your checking account. If you do nothing else in this list, please take this suggestion! Believe me, you will not realize the money is gone. It forces you to adjust your spending based on the remaining balance in your checking account. Start small and work your way up!

12. Rethink rewards. What are some of your happiest memories? Those are the true rewards. Next time you're about to buy something because you deserve it, ask yourself whether there isn't something you deserve more, such as time at home cooking with your teenager, or a stroll with your husband or best friend.

"We've been conditioned to think that spending the money on clothes, at a restaurant, is going to be the reward," Ms. Gurney says. "But what is the ultimate reward that we want from working hard, in the end?"


Wednesday, April 16, 2008

Your 5-minute guide to credit cards

Credit cards do have some benefits, but it's easy to get into financial trouble if you rely on them too much. Here are more than a dozen tips for using cards wisely.

Use a credit card wisely and you can reap benefits like cash back, bonus points and airline miles, not to mention a better credit score. Use it unwisely and you could end up under a mountain of debt.

The No. 1 rule is: Pay off your balance every month.
Otherwise, you'll pay interest on your purchases. Paying the balance takes discipline. About 40% of households carry credit card debt, according to the Federal Reserve.

Make your payments by the date -- and time -- they're due. Late fees are $29 or more. A couple of late payments will trigger an interest rate increase. Because late and missed payments lower your credit score, the interest rate can go up on your other credit cards and for future loans as well.

Limit the number of cards you have. Experts recommend having two to six cards. Applying for lots of cards can hurt your credit score. Conversely, closing several credit cards at once will trigger a decrease in your score.

Read the fine print. Know the interest rate you will be charged, the grace period for paying your debt before interest kicks in and your credit limit. Does your company use two-cycle billing? (Better look, because two-cycle billing means you could pay interest even when you carry no balance.) Also, almost half come with a "universal default" clause, allowing an increase in your interest rate if you are late paying any other bill.

Negotiate. If your credit score is 700 or above, you may be able to get a lower interest rate or get the company to drop a late fee. (Estimate your credit score.)

Don't exceed 30% of your credit limit on each card. Credit bureaus don't care if you pay off your balance each month. They're interested in how much of your available credit you use. If it's excessive, your credit score will drop.

If you're transferring a balance to a new card with lower interest, find out how much the company will charge for the transfer. Urge that it be done electronically so you don't accumulate interest on both the old and new accounts. Low-interest introductory offers may apply only to the balance transfer and not to new purchases.

Reward cards that provide dividends like rebates and airlines miles sound too good to be true, and can be. The higher interest rate charged by most reward cards can more than offset the reward if you carry a balance. Reward offers can change with little notice and may come with budget-busting conditions -- for instance, you have to spend a certain amount to earn the reward.

If you buy a defective item or protest a charge, your credit card company is obligated to investigate. If your card is stolen, you're liable for no more than $50 for unauthorized charges.

Other "services" offered by credit card companies have potential drawbacks.

Contactless credit cards make it even easier to purchase items because you don't need to swipe your card or hand it to a cashier. But thieves can scan the info on your card. You can buy a signal-blocking sleeve or make one out of aluminum foil.

Don't use "convenience" checks your credit card company sends you unsolicited in the mail. They're costly -- with a fee of 3% or 4% of the amount you write, plus high interest rates with no grace period -- and don't provide the consumer protection you get when you make a purchase with your credit card. (See "Dangerous checks in the mail.")

Credit card protection insurance generally covers only the minimum payment if you become disabled or unemployed, and interest continues to build on your outstanding balance.

Using a credit card issued by a department store you frequent can entitle you to cardholder discounts, but limit yourself to one card. Each department store account you open reduces your credit score.

Getting and using a credit card could be the easiest way to re-establish credit if yours has gone sour. But getting back into the credit game comes with potential hazards.

Cards issued to those considered credit risks come with interest rates in the 18% to 22% range and low spending limits. Such cards sometimes have extra fees hidden in the fine print.

Don't take the bait when companies want to issue you one low-limit card after another. You can find yourself back in debt, paying late fees, over-limit fees and high interest rates on multiple cards.

By MSN Money staff

Monday, March 3, 2008

Dave Ramsey’s Steps to Financial Freedom

1. Save $1,000 to start an Emergency Fund
2. Pay off Debt using Debt Snow Ball (See Debt Snowball for further details)
3. Fully Fund Emergency Fund with 3-6 months of expenses
4. Invest 15% of household income in Roth IRA’s and Pre-Tax Retirement Plans (.e. 401K, 403B, etc.)
5. Start a college fund for children
6. Pay off home early
7. Invest in Mutual Funds and Real Estate – Build Wealth and Give!

Tuesday, February 26, 2008

Let's Start the Saving Process: Step #1

The first step to becoming a "saver" and creating a realistic budget is:

Step # 1: Identify where the money goes.

To accomplish step #1: I recommend using the envelope system and retaining receipts for ALL of your expenses for 2 weeks. The envelope system is an old-fashion simplistic method of budgeting that consists of creating spending categories (i.e. groceries, entertainment, household, etc.) and storing the cash allocated for each category in an empty envelope. The idea is to NOT use your debit/credit cards for any purchases.

Before credit and debit cards were so popular people would withdrawal their paychecks to cover monthly expenses. It has been shown in various studies that we are more prone to spend more when we purchase items with our debit/credit cards due to the physiological disconnect of not "seeing" the money transfer hands. In other words: We do not realize how much money we are actually spending because the "swipe" of a credit card doesn't "sting" as much as passing the cashier a $50 dollar bill for a few gallons of gas.

Therefore, taking it back-to-basics will help you snap back into reality and become more conscious of your daily spending.

Thus, for 2 weeks I want you to do the following: create a budget that consists of the major spending categories (i.e. gas, groceries, entertainment, personal items, etc.) - withdrawal enough cash to fill all of your envelopes and as you spend in each category, account for every penny with a receipt.

Keep in mind - some expenses can not be paid with the envelope system such as rent and other payments that are automatically deducted from your account.

It should also be noted that after an accurate estimate of your monthly spending has been established, if you decide to employ the envelope system as your permanent budgeting mechanism transferring money between envelopes is not allowed, the transference of funds deteriorates the benefits of staying within your allowed amounts. See other posts about the Envelope System for more details.

Monday, February 25, 2008

Creating a Budget you can live with: Step #2

Money is a tool that enables you to reach your goals in life, but until you know where your money goes, you can’t make conscious decisions about how to use this tool effectively. A budget shows you exactly where your money goes and provides a spending plan that lets you save for the things that are important to you: a new house, a new car, a comfortable retirement, a college education, travel, or whatever your particular goals and dreams happen to be.

The first steps to creating a budget are:
1. Determining your net monthly (take-home) pay and monthly fixed expenses (i.e. Housing, Car Payments, Insurance, etc.)
2. Determine your monthly variable and discretionary expenses (i.e. Food, Transportation, Utilities, Personal, etc.)

How do I determine my monthly net income and expenses?
1. Review your monthly bank statements to calculate net monthly income and total fixed expenses
2. Review variable expenses such as utilities, cellular phone bills, transportation, etc. can be determined by averaging 3 months of statements.
3. Discretionary/Personal Expenses can be estimated by closely tracking every penny for a week or two. Using the Envelope system and retaining receipts can help with tracking impulse spending.

Tackle the Credit Card Debt! Step #3

First and Foremost I would advise you to take a hard look at your credit report! To get a copy of the credit reports go to:

After you have received a copy of your credit report total up all of your debts and prioritize them. There are two ways to sort them: By Credit Card Balance or by the Interest Rate on the Credit Card.

If you have been keeping up with my posts you will recall that I am a huge Dave Ramsey fan and an advocate of his baby steps program.

Dave would tell you to sort them by balances and start with the smallest balance. Concentrate on paying that credit card off and once you have succeeded continue on to the next on the list.

However, other financial advisors emphasize the importance of prioritizing your cards based on interest rates, focusing your efforts on the cards with the highest rates first and moving down the list.

I believe the solution depends on the person: If you are a person that must see results to say motivated then Dave’s approach will probably be best: Prioritize your cards based on the cards balance, pay the smallest balance first and once you have completely paid the card off proceed to the next. Always pay the minimums on the rest.

The goal is to improve your credit and become debt free – not ruin your credit by only making payment on one card

However, if you are very analytical and somewhat disciplined: Then I would advice you to focus first on paying down the credit card that is nearly maxed out. Pay minimums on the others. Next, start paying off the card with the highest interest rate. Pay minimums on others.

Be honest with yourself and what it takes you to stay motivated and pick one of the two. Most people need to see results to stay fired up and eventhough prioritizing your cards based on interest rates is the most “logical” answer - you may have to wait a little longer to see results.

Other Tips:

- Call your credit card companies, tell them you've got offers for cards at lower rates and ask them to lower your rate. If you've paid regularly, they are likely to negotiate.
- Stick credit cards in a drawer. Don't use them, but don't close accounts. Closing these accounts can lower your credit score. I highly recommend cutting the cards so you don’t have access to them at all! Out of Site – Out of Mind!
- Do automatic withdrawal from your checking account to your credit cards so you're never late.
- Use only debit cards. Money comes straight out of your checking account. You're not charging anything.
- As you continually pay off cards and free up cash make sure you put any additional cash toward your debt. Do NOT use it toward anything else. You monthly credit card payments should increase as you make progress.

Sunday, February 24, 2008

Step #4: Saving for Retirement: Building a Nest Egg

Most people panic in retirement planning because they think they have to replace their entire salary. You don't. You have to replace your current cash flow, and that's a big difference.

Let's assume that you earn $60,000 a year. You won't need $60,000 from your investments, because you probably didn't live off $60,000. You can adjust your needs downward for:

•Taxes. You paid Social Security and Medicare taxes while you were working, but you won't when you retire. So you can get along with 7.65% less than $60,000, or about $55,000, says Ray Ferrara, a financial planner in Clearwater, Fla. If you're self-employed, the tax was 15.3%.

•Savings. If you put a percentage of your salary into a 401(k) savings plan at work, you won't be able to any more. If you contributed $4,200 to your 401(k) annually, 7% of your salary, that's another big expense you won't have. Assuming you did just fine while you were paying Social Security taxes and saving for retirement, you can adjust your income goal down to $51,000.

•Social Security and pensions. You may not believe you will get Social Security, but you probably will get some benefit. Social Security's online Quick Calculator ( says a 50-year-old earning $60,000 today would get about $1,214 a month in benefits if she retired at 62. That's $14,568 a year in benefits. So you'll really only need to replace about $36,500 in income. Any additional pension you get would reduce that even more.

Before you get too giddy, remember that you'll have to buy health insurance if you retire before age 65, when Medicare kicks in. A 62-year-old male or female in Washington, D.C., would have to pay about $640 a month, or $7,680 a year, for health insurance, Ferrara says. And that's a policy with a $2,500 deductible and a 20% co-pay until you hit $3,500 in deductibles and co-payments.

Assuming our person with $60,000 income gets Social Security and pays for insurance, she will need to replace about $44,200 a year in income at retirement.

It's the big things

What can you do to reduce that more?

•Pay off your mortgage by retirement. Most people pay a quarter or more of their income to their mortgage. If your mortgage is $12,000 a year, that's $12,000 a year that won't have to come from savings.

•Think about moving. If you've made scads of money on your house, consider cashing out — by moving somewhere more affordable. Granted, it's possible only if you would like living elsewhere, but it may be one way to cut expenses.

Retire later. If you retire after 65, you won't have to buy private insurance until Medicare kicks in. (Medigap insurance, which pays what Medicare doesn't, is another story.) And you'll collect more in Social Security benefits.

•Kick the new car habit. Car payments can eat up $300 or more a month. Keeping your car an extra few years can reduce your expenses in retirement.

•Don't lend money you couldn't give away. THIS IS MY MOTTO! I HONESTLY DO LIVE BY THIS! All too often, loans to friends or children become gifts. That's fine, if you can afford it. If you can't, then be leery of lending it. "One of the best retirement investments is making sure your children are financially independent," Shine says.


Every little bit helps, whether you save $5, $50 or $500 you must start somewhere.

Monday, February 18, 2008

Why an Emergency Fund is Imperative

Having an emergency fund can save you a lot of heart ache! Everyone has their rainy days and we all know that bad luck comes in three's. To prevent an unforeseen event from ruining your week, month or even year; save at least 3-6 months of living expenses in a liquid investment.

These funds are not to be used for holiday savings, birthday savings or any other event that is not considered an "emergency". A good place to save the money would be an online savings account, normally they pay a higher rate of interest than your regular saving account with your bank and the money isn't as easily accessible as you don't have a ATM card and normally a transfer from your saving account to your checking account takes a day or two.

Wednesday, February 13, 2008

Question: How can I improve my credit score

Your first step in repairing poor credit should be to obtain a copy of your credit report. The three major credit reporting agencies are Experian, Trans Union, and Equifax. You can obtain a copy of your report by contacting these agencies by phone, by mail, or through their websites. Check the report carefully for any errors and make sure that all the information contained in the report is correct.

Next, you can try mitigating the impact of any derogatory credit you may have on your credit report by adding positive account information to your credit file. Start by contacting creditors with whom you have a good credit relationship and give them permission to release your account information to credit reporting agencies. You should then contact the credit reporting agencies and provide them with the names and telephone numbers of the creditors with whom you have good credit. For a small fee, most credit reporting agencies will call your creditors and add the positive account information to your file.

Another option is to go directly to your creditors and try to clear your credit record. If your poor credit resulted from circumstances that were beyond your control (e.g., hospitalization, layoff), and you have reconciled your account since that time, you may be able to convince your creditors to upgrade your rating.

If you have bad debts that are current, you may be able to negotiate away poor credit by agreeing to pay off your debts over a period of time. Contact your creditors and propose a deal in which you will agree to a reasonable repayment schedule if they agree to upgrade your status with the credit bureau.

You can also add a statement to your credit report that tells your side of the story. You have the right to include a 100-word statement in your credit file. The statement should list any extenuating circumstances that could possibly mitigate the negative credit information in your credit report. Perhaps you were hospitalized for a period of time and were unable to pay your bills, or maybe you were laid off from your job. If your credit history shows that you typically pay your bills on time, this statement could help to explain an isolated instance or period of derogatory credit.

Finally, you can always choose to wait out your credit problems. With some minor exceptions, derogatory credit will be purged from your credit report within seven years. However, if you can show income stability and prompt payment patterns, your situation will improve within one to three years. Keep in mind that you should avoid incurring any more derogatory credit while you try to repair your poor credit. If you do incur derogatory credit, the seven-year clock resets and starts ticking again!

Tuesday, February 12, 2008

Student Loan Fundaments

Understanding the types of loans offered to you in your financial aid package is key to managing your budget effectively. As you review loan types, it is helpful to ask yourself the following questions: "Who takes out the loan" and "Who pays the interest while I'm in school?"

There are three major types of student loans:
- Perkins Loans
- Stafford Loans
- PLUS Loans – Loan for Parents

The primary difference is that students take out Perkins and Stafford loans themselves, while PLUS loans can only be taken out by parents.

The loans that you borrow yourself are often a better deal because PLUS loans require your parents to begin repayment within sixty days of the final disbursement. With the Perkins and Stafford loans, you don't have to start paying them off until six or nine months after you graduate from school, withdraw, or fall below half-time enrollment status.

The question of whether a loan is subsidized or unsubsidized comes down to who pays the interest while you are in school.

Subsidized Stafford loans are need-based and are the BEST OPTION. The government pays the interest on these loans while you are in school and during the first 6 months after you graduate, withdrawal or fall below part-time. The government also pays the interest during any authorized deferment (i.e. if you apply to have loans deferred due to financial hardship).

Unsubsidized Stafford loans are not need-based, and you are responsible for all of the interest that accrues on the loan, including while you are in school. You may however, choose to pay the interest while you are in school.

While subsidized loans are the preferred choice, you are limited to specific amounts each year.

Question: I am a currently a college student and would like to know what is the best approach for tackling my student loan debt?


My only concern are my student loans. I predict that I will have incurred a debt of $80,000 after completing my Masters. I live a comfortable yet modest lifestyle and do not want to be bogged down with too much debt. I do not want to have student loan debt for the rest of my life.

I have not began a career yet, so at this point I feel like I can't make much of a contribution, which is probably where most people go wrong. Ideally, I would like to have my student loans paid off shortly after graduating; however, I don't know where to start.

I am interested in learning more about managing the money that I do have and also working on decreasing my student loan debt.


1st – Get a copy of your credit report to verify that student loan debt is all you have – also verify the amount of Student Loan debt you have accumulated thus far. Request a FREE copy of your report from here:

2nd – You have to create a budget to determine how much extra money you have left after expenses. Creating a budget will help you identify where you spend the most money and what categories you can cut back. After you have trimmed your expenses and accounted for every penny we now have feasible amount that can be contribute toward your debt. See other budgeting articles for details on how to create a budget.

3rd – After you have created your budget and determined how much you can start contributing, we can determine a reasonable timeframe for you to be completely out of debt. Starting now is a great ideal and will help you get out of debt quickly.

Many people make the mistake of waiting until after they complete college to start paying off student loan debt since their loans are in deferrment. The power of compounding interest works both ways! Compounding interest can either work in your favor or work against you! If you have $80,000 in loans your required payment based on a 20-year payment schedule and 5% interest rate is approximately $530/mo.

Guess What.......

About $300 of that is interest!!! If you have Subsidized Loans (you are NOT charged for interest during deferrment); therefore, any payments you make while you are in school or during that 6 month period after graduation will be used ENTIRELY to reduce your principal. I can breakdown the numbers even further to show you how beneficial it is to start early; however, I can see your eyes glazing over due to information overload so I will include that in my future post.

The moral of the story is! START EARLY!!!!

If you have any extra money - use it to pay off those loans! Every penny helps and anything you can scratch up can help you on your journey to becoming debt free.

Tax time is here. If you are receiving a refund, this is the perfect opportunity to contribute toward reducing your debt!

Friday, February 1, 2008

Question: Email your questions to or leave a comment!

Question: I just started my new job and my new employer will not match my contributions for another year. Should I still contribute to the 401k?

What should I do with my 401K from my old employer?

Since they aren’t matching your contribution it might be wise to put the money into a Roth Individual Retirement Account (IRA) for the time being, you will have a better selection of funds and it will help diversify your retirement monies, as you can withdraw funds from your Roth tax-free during retirement. Since your contributions to a 401K will be ongoing. You will mass a substantial amount of 401K funds that WILL be taxable during retirement. Contributing to a Roth and a 401K will give you the diversity of having tax-free and taxable funds to withdraw from during retirement.

As far as your 401K from your past employer: You can do a 401K rollover into an IRA at a brokerage such as Vanguard or Fidelity in which you can mange the funds yourself. If you don’t feel confident in managing the mutual funds on your own, you can contact a fund company or even your local Bank to have it actively managed. Personally I would roll them over into an IRA at Vanguard and pick a diverse group of funds. The rollover process is really simple and the Vanguard Customer Service team can help you if need be. I rolled over an IRA that I started in college into some Vanguard funds because I wasn’t getting a good return with the Bank and I just picked a few funds and “let it ride”.

If you need help picking funds let me know!

To submit your questions: Email me at
For my fellow bloggers: Feel free to use the comments to post questions or add useful tidbits.

I am changing jobs, what should I do with my 401K from my previous employer?

You have decided to change jobs! Congrats! God has a plan for you and following his will, always leads to great things.

Now that you have made the move you have three choices:

1. Cash-out the 401K and spend it on unnecessary items.
2. Leave the money in your previous employers plan
3. Rollover your 401K into an IRA ***The Best Option! ***

Starting with #1: NEVER CASH-OUT YOUR 401K! This is a NO NO! Do not withdraw money from your retirement! Do I have to repeat that……Do NOT cash-out your retirement fund?

If you withdraw your money in a lump sum from a previous employer’s retirement fund, you must pay taxes on the money you withdraw. On top of those taxes, your employer is required to take a 20% withholding from your lump sum, and if you are under age 59 ½, you may also be forced to pay a 10% penalty tax.

Now do you understand why it is important to NOT cash-out your 401K?

Oh, not to mention you will have to work for the rest of your life and never have the pleasure of retiring and leaving that job that you hate! And if you think Social Security will take care of your retirement…..Guess What….THINK AGAIN!

Your second option is to leave the money in your old company’s retirement fund, which isn’t the greatest ideal. Many 401k plan administrators charge record keeping and other fees to manage your account, regardless of whether you are still with the company. These fees can take a significant bite out of your return, especially if you have accounts maintained at several different employers.

Consolidating all of you old 401K accounts into an IRA is your best option and leads us to #3.

If you decide to roll it over (YAY!!!!), you may have the option of rolling your assets into
either an IRA (Individual Retirement Account) or your new employers plan. To avoid paying taxes and penalties, you should have these assets transferred directly to another
IRA custodian. This rollover will still have to be reported to the I.R.S. One
downside is that your retirement rollover cannot be rolled into a Roth IRA.

Since I am sure you have decided to rollover your 401k instead of choosing options 1 & 2. Stay tuned for information on how to roll the funds into an IRA.

Thursday, January 31, 2008

Why is being frugal a bad thing?

Why is being cheap or frugal always looked at as being a negative trait?

My friends and family are ALWAYS calling me cheap. Initially I would get offended when they made remakes about me being "cost conscious"; however, as I have matured and learn to accept and love my uniqueness, I now embrace the criticism and use it as an opportunity to educate others of the potential benefit of being "cost conscious".

I say "cost conscious" because I realize that I have to ease everyone into frugality.....taking baby steps is the key!

A few months ago a friend of mine made a snide comment about me being frugal. Of course I laughed and let it go; however, I bounced a question back her way. I asked, what do they call people who are reckless spenders......another friend chimed in and said that's simple.....they call them BROKE!!!! I thought that was hilarious – she hit the nail right on the head.

A HUGE benefit that I have reaped from being frugal is I have money to spend it WHEN I want to spend it. If I decide I want to go out and buy new furniture or a new car I can do that….I am not being boastful; however, I want to make the tangible benefits of saving as obvious as possible.

I also want to clarify the definition of being frugal. According to, the definition of frugal is: economical in use or expenditure; prudently saving or sparing; not wasteful: a frugal manager.

Please do NOT mistake being frugal for being stingy, selfish or anything other than being “cost conscious” and not being wasteful.

I am a huge Dave Ramsey fan and his philosophy is “live like no one else, so later you can live like no one else”. He advocates saving and investing to build wealth so later you can bless your friends and family. God loves a cheerful giver and being a conscious saver will enhance your ability to do God’s will.

Tuesday, January 29, 2008

Practical Tips to Save Cash

Useful Tips from America Saves


Save your loose change. Putting aside fifty cents a day over the course of a year will allow you to save nearly 40% of a $500 emergency fund.

Keep track of your spending. At least once a month, use credit card, checking, and other records to review what you've purchased. Then, ask yourself if it makes sense to reallocate some of this spending to an emergency savings account.

Never purchase expensive items on impulse. Think over each expensive purchase for at least 24 hours. Acting on this principle will mean you have far fewer regrets about impulse purchases, and far more money for emergency savings.

Pay with a debit card rather than a credit card. You cannot use a debit card (unless it has an overdraft feature) to spend money you do not have. Using a debit card may also prevent you from annually incurring hundreds of dollars in credit card interest charges. Both would mean more money available for emergency savings.


Substitute coffee for expensive coffee drinks. The $2 a day you could well save by buying a coffee rather than a cappucino or latte would allow you, over the course of a year, to completely fund a $500 emergency fund.

Bring lunch to work. If buying lunch at work costs $5, but making lunch at home costs only $2.50, then in a year, you could afford to create a $500 emergency fund and still have money left over.

Eat out one fewer time each month. If it costs you $25 to eat out, but only $5 to eat in, then the $20 you save each month allows you to almost completely fund a $500 emergency savings account

Shop for food with a list and stick to it. People who do food shopping with a list, and buy little else, spend much less money than those who decide what to buy when they get to the food market. The annual savings could easily be hundreds of dollars.

Prescription and Over-the-Counter Drugs

Ask your physician to consider prescribing generic drugs. Generic drugs can cost several hundred dollars less to purchase annually than brand-name drugs.

Find the lowest-cost place to purchase prescription drugs. Make sure to check out not only your local pharmacist but also local supermarkets, area discount centers, and mail-order pharmacies

Purchase storebrand over-the-counter medications. Storebrand medications often cost 20-40 percent less than nationally advertised brands. The savings could easily exceed $100 a year.


Bounce one fewer check each month. The $20-30 you save by not bouncing one check a month would save you enough money to nearly fully fund a $500 emergency savings account.

Reduce credit card debt by $1,000. That $1,000 debt reduction will probably save you $150-200 a year, and much more if you're paying penalty rates of 20-30%.

Make your monthly credit card payment on time. The $30-35 you save by not being charged a late fee each month on one card would save you most of the money you need for $500 in emergency savings

Use only the ATMs of your bank or credit union. Using the ATM of another financial institution once a week could well cost you $3 a withdrawal, or more than $150 over the course of a year.


Shop around for auto and homeowners' insurance: Before renewing your existing policies each year, check out the rates of competing companies (see the website of your state insurance department). Their annual premiums may well be several hundred dollars lower.

Raise the deductibles on auto and homeowners' insurance: Being willing to pay $500-1,000 on a claim, rather than only $100-250, can reduce annual premiums by as much as several hundred dollars.

Assess your need for life insurance coverage. If your children are now on their own, or if your spouse works, you may not need as much life insurance protection. The annual premiums on a term life policy would typically fully fund an emergency savings account

Consider dropping credit insurance coverage on installment loans. Many consumers don't need credit insurance because they have sufficient assets to protect themselves in the event of death, disability, or unemployment. Terminating this coverage often reduces financing costs by three percentage points, a savings of about $1,000 on a four-year $20,000 installment loan.


Keep your car engine tuned and its tires inflated to their proper pressure. Doing both can save you up to $100 a year in gas.

Shop around for gas. Comparing prices at different stations and using the lowest-octane (recommended by the car owner's manual) can save you hundreds of dollars a year.

When driving, avoid fast start-ups and stops. Over time, you will save hundreds of dollars on lower gas and maintenance costs.

Take fewer cab rides. Using public transit instead of cabs can save you $5-10 per trip or more. If you're a frequent cab user, the savings could completely fund your emergency savings account

Check all airlines for cheap fares. Since no website lists all discount carriers, also check out the websites of discount carriers like Southwest and Jet Blue, possibly saving you hundreds of dollars.


Don't pay for space you don't need. Americans have relatively large houses and apartments. Think about more efficiently using space so you can purchase or rent less square footage.

Live relatively near your workplace. While this isn't always possible, driving 5,000 miles less a year can lower transportation costs by more than $1,000.

Refinance your mortgage to lower interest charges. Consider refinancing your mortgage to lower the rate and term. On a 15-year $100,000 fixed-rate mortgage, lowering the rate from 7% to 6.5% can save you more than $5,000 in interest charges over the life of the loan. For each $100,000 you borrow at a 7% rate, you will pay over $75,000 less in interest on a 15-year than a 30-year fixed rate mortgage. And, you will accumulate home equity more rapidly, thus increasing your ability to cover large emergency expenditures.

Choose home repair contractors wisely. Favor contractors who have successfully performed work for people you know. Insist on a written, fixed-price bid. Don't make full payment until satisfactory completion of the work.

Home Heating and Cooling

Ask your local electric or gas utility for a free or low-cost home energy audit. The audit may reveal inexpensive ways to reduce home heating and cooling costs by hundreds of dollars a year. Keep in mind that a payback period of less than three years, or even five years, usually will save you lots of money in the long-term.

Weatherproof your home. Caulk holes and cracks that let warm air escape in the winter and cold air escape in the summer. Your local hardware store has materials, and quite possibly useful advice, about inexpensively stopping unwanted heat or cooling loss

Use window coverings to block or let in sunshine. In summer, use these coverings to block sunlight, keeping your house cool. In winter, open the coverings to let sunshine warm the house. You could easily save more than $100 annually while being more comfortable.


Look for sales at discount outlets. There are huge price differences between clothing on sale at discount stores and that sold regularly at many department and specialty stores, though keep in mind that prices at the latter are often deeply discounted.

Consider purchasing previously-used clothes from Good Will, second-hand stores, or school or church thrift sales. With a little effort, you can find low-priced, high-quality used clothing items that can be worn for many years.

Assess clothing in terms of quality as well as price. An inexpensive shirt or coat is a poor bargain if it wears out in less than a year. Consider fabric, stitching, washability, and other quality related factors in your selection of clothes

Clean clothes inexpensively. Wash and iron clothes yourself. If you use a cleaner, compare prices at different establishments. A 50 cent difference in cleaning a shirt, for example, can add up to $100 a year.


Assess your communications costs. As Internet and wireless use grows, many consumers are overpaying for unneeded communications capacity. For example, if you have a cell phone and two phone lines -- one for your computer -- consider receiving personal calls on your cell phone so you can give up one of the phone lines.

Communicate by e-mail rather than by phone. If you're on-line, e-mail communications are virtually free. Even for subscribers, landline and wireless calls often carry per-minute charges.

Be aware of your cell phone costs and how to reduce them. Cell phone use has dramatically increased communications expenditures in many households. Understand peak calling periods, area coverage, roaming, and termination charges. Make sure your calling plan matches the pattern of calls you typically make

Dial phone calls directly without an operator. Using an operator to place calls can cost you up to $10 extra per call. That could easily save you more than $100 a year.


Research free or inexpensive entertainment in your community. Use local newspapers and websites to learn about free or low-cost parks, museums, film showings, sports events, and other places which you and your family would enjoy.

Give up premium cable channels. It's a lot cheaper to rent one film a week than watch one on premium cable channels that may cost more than $500 a year.

Borrow books rather than purchasing them. Borrowing books and reading magazines at your local library, rather than purchasing reading material, can save you hundreds of dollars a year.

Attend high school rather than college or pro sports events. High school sports events rarely cost more than $5 and are often free, with hot dogs and sodas typically costing $1-2. College and pro football and basketball games rarely cost less than $20,and their concessions are usually several times more expensive.

Family and Friends

Plan gift-giving well in advance. That will give you time to decide on the most thoughtful gifts, which usually are not the most expensive ones. And if these gifts are products that must be purchased, you will have the opportunity to look for sales.

In families, discuss limits on spending for gifts. These limits not only tend to reduce expenditures; they also be greatly appreciated by the least affluent family members.

Socialize at pot-luck meals rather than at restaurants. Because one wants to be generous to friends and family, there may be huge cost savings here.

Monday, January 28, 2008

How to save without drastically cutting your lifestyle

Many people are under the illusion that they don't have any room in there budget to save. As I encourage others to save the number one excuse that I hear is: "I just don't have any extra money"; yet, we make small unnecessary purchases daily that could have been saved. Everyone is guilty of it; however, it becomes a concern when these small purchases affect your savings goals.

Just by making the small changes below and investing your additional savings you will have accumulated over $820,000 over a 40 year period (based on a conservative 8% rate of return). Thus making small changes to your lifestyle can give your retirement funds a HUGE boost!

5 Strategies for Saving

Saving Strategies from America Saves

1. Pay off high-cost debt.
The best investment most borrowers can make is to pay off consumer debt with double-digit interest rates. For example, if you have a $3,000 credit card balance at 19.8%, and you pay the required minimum balance of 2% of the balance or $15, whichever is greater, it will take 39 years to pay off the loan. And you will pay more than $10,000in interest charges.

2. Buy a home and pay off the mortgage before you retire.
The largest asset of most middle-income families is their home equity. Once these families have made their last mortgage payment, they have far lower housing expenses. They also have an asset that can be borrowed on in emergencies or converted into cash through sale of the home.

3. Participate in a work-related retirement program.
Many employees turn down free money from their employer by not signing up for a work-related retirement program such as a 401(k) plan. If they did participate, with a dollar-for-dollar match they would likely receive an annual yield of greater than 100%on their investment.

For additional information, see the American Savings Education Council Web site

4. Outside of work, save monthly through an automative transfer from checking to savings.

These savings will provide funds for emergencies, home purchase, school tuition, or even retirement. Almost all banking institutions will, on request, automatically transfer funds monthly from your checking account to a savings account, U.S. Savings Bond, or stock mutual fund. What you don't see, you will probably not miss.

For additional information, please see the U.S. Securities and Exchange Commission Web site.


Most CDs from a bank or credit union, and Series EE and Series I Savings Bond, currently pay between 3% and 4%. With a 4% yield your money will double in 18 years.

For additional information, please see the Treasury's Savings bond website.

11 ways a budget can improve your life

1. A budget lets you control your money instead of your money controlling you. A budget is a guide that tells you whether you're going in the direction you want to be headed in financially.

2. A budget will tell you if you're living within your means. Many people don't realize they’re living far beyond their means until they're knee deep in debt.

3. A budget can help you meet your savings goals. It includes a mechanism for setting aside money for savings and investments.

4. Following a realistic budget frees up spare cash so you can use your money on the things that really matter to you instead of frittering it away on things you don't even remember buying.

5. A budget helps your entire family focus on common goals.

6. A budget helps you prepare for emergencies or large unanticipated expenses that might otherwise knock you for a loop financially.

7. A budget can improve your marriage. A good budget is not just a spending plan; it's a communication tool, which can bring the two of you closer together as you identify and work towards common goals and reduce arguments about money. That's got to be good for your sex life!

8. A budget reveals areas where you're spending too much money so you can refocus on your most important goals.

9. A budget can keep you out of debt or help you get out of debt.

10. A budget actually creates extra money for you to use on things that matter to you.

11. A budget helps you sleep better at night because you don't lie awake worrying about how you're going to make ends meet.

Sunday, January 27, 2008

How much should I save?

Taking baby steps and being patient is the best philosophy for saving. If you are a beginner and haven't began saving we will start crawling until you pick enough momentum to begin walking and eventually break into a full stride.

Step 1: Establishing an Emergency Fund will be your first priority. Set up automatic transfers from your checking to your savings. Try to save 10% of your salary, if that's to much - save what you can and work your way up to 10%.

After you have established your emergency fund with 3-6 months of expenses, your next savings goal will be:

Step 2: Saving for Retirement. Set up automatic payroll deductions to transfer into your company's 401K or other retirement account. Transfer 15% of your household income into your retirement account to be invested. If 15% will break the budget then contribute AT LEAST enough to get your company's match (usually 6% of your gross salary).

Depending on your household: a college fund may also be a necessity

Step 4: Establishing a College Fund: there are various options for these funds, depending on the age of your child. Percentage of income to be saved will depend on the estimated cost of attendance and other factors. More details on college funds will be posted soon.

If you have completed steps 1-4: CONGRATS!

Personally I have a separate savings account for "other wants" such as buying furniture, new car, holiday & birthday fund or anything else that might require a large amount of cash.

Step 5: Establish a Special Savings account for other discretionary spending.

Saturday, January 26, 2008

There is a way to make saving effortless....Automate it!

Remembering to save is one of the most difficult things to do as it is usually the last thing on your mind. We normally plan on saving whatever is left in the checking account after all bills, personal allowances and impulse purchases are complete. The only flaw with this plan is: THERE IS NEVER ANYTHING LEFT OVER!

There is a simple solution to this obstacle: Automate your savings plan.

You might have heard of this strategy, it is called paying yourself first. The premise behind it is: you don't worry about what will be left over at the end of the month because your savings allowance has been deducted from your paycheck or checking account before you realize the month is gone.

Paying yourself first is so effortless and simple because it takes all of the planning off of your mind and you don't realize the money is missing.

Use the steps below to automate your savings plan. You will feel truly blessed when an unforeseen event occurs and your savings that you might have forgotten you had is there to save the day!

Step 1: Decide how much you want to save weekly. Ten percent is a good place to start. You can always save more later.

Step 2: Find a reputable online bank that pays a good interest rate on savings account. I use Emigrant Direct( but there are a few other good choices out there. Just remember to check with the Better Business Bureau about each bank's reputation. (

Step 3: Set up your online savings account and link it to your regular checking account. To do this log in to your Emigrant Direct account and click on the links tap at the top of the page. Then click "add account," enter your bank account information and follow the instructions.

Step 4: Set your savings account to draft your savings amount from your checking account every payday by clicking on the "transfer money" link and setting your date for the next payday and then every seven days. You may even want to set it for a day before your payday so that it will come out the same day your put your paycheck in. The procedure typically takes until the day after to actually come out of your account

Allow me to introduce myself......

2008 is going to be the year for change. For everyone who struggled through 2007 and prayed for a financial blessing in 2008 with a little patience, determination and the ability to have an open-mind your blessings will be answered. For those who are doing well financially; however, have questions on how to expand their knowledge on saving & investing, debt consolidations, credit repair or whatever questions you may have feel free to send me a message.

My formal education, work experiences and various life experiences (learning the hard way) has helped me to become well versed in financial planning, real estate, credit repair, debt elimination and wealth building.

This blog will be dedicated to the "fundamentals for building wealth". For tips and advice check back daily. It has been my experience that talking about money is usually a touchy subject and sometimes boring. It's my passion so I can talk or read about it all day: since most people don't share my passion I will keep this as interesting as possible.

Let's get ready to rumble.......